IBS Journal February 2015
Infosys anticipates Finacle growth after Q3 FY2015 results
Infosys is upbeat about the future pros- pects of its Finacle core banking system, following the publication of its Q3 FY2015 financial results. The company has post- ed 2.2 per cent growth in net profits ($5.5 million) on the previous quarter ($463 million) – in line with a general improve- ment in the company’s performance, since Vishal Sikka took over as CEO in August 2014. In relation to the performance of Fina- cle specifically, Michael Reh, the new glob- al head of the business line, downplayed its previous underperformance (Finacle posted a 5.4 per cent decline in quar- ter-on-quarter revenue for Q2 FY2015 in October 2014). Speaking to IBS in Decem- ber 2014, he said that he found Finacle
to be a ‘very comprehensive and robust universal banking solution’, and did not foresee any sales execution issues or slow- downs in any of the geographies. Instead, he blamed any perceived underper- formance on the way that Finacle books its revenue – according to percentage of com- pletion instead of upfront. He maintained this positive outlook
during the company’s Q3 FY2015 confer- ence call with investors, in which he stat- ed that the Finacle system had achieved 5.1 per cent quarter-on-quarter growth (showing a gradual clawing back of loss- es made in 2014). He also claimed that the system had gained 18 new wins, as well as going live in 20 different locations global- ly. Reh added that he believed the system
has been gaining momentum with a ‘good uptick in our demand, especially in western markets’. This ‘uptick’, he claimed, is due to market conditions, in which many banks are now actively seeking new technology, following a period of delay in modernisa- tion efforts.
Emphasis was also placed on Finacle’s
go-live at Discover Financial Services. Sikka said that the system would help Discover ‘bring new products to the market faster, automate compliance and deliver a great banking experience and enhance Discov- er’s operational efficiency’. Elsewhere, the Finacle Payment Solution has ‘set a new global benchmark’, according to Sikka, with the capability to process 75 million pay- ments per hour.
Temenos share price plunges after sales warning
Temenos has issued a sales warning ahead of the publication of its 2014 yearly finan- cial results in February, with software licensing revenue down by as much as $22 million compared to previous guid- ance. The Temenos share price suffered as a result, with shares falling by almost a fifth on the SIX Swiss Exchange. In a statement, Temenos’ CEO, David
Arnott, attributed the slump in sales to weak growth in markets such as Asia Pacif- ic. In May last year, Temenos appointed a new head of APAC, Martin Frick, who joined after several years with Temenos’ Swiss rival, Avaloq, in a similar role. ‘The Q4 licensing figure was very disappointing and owed to weak sales execution predom- inantly in the Asia Pacific region, where sales contracted in the year,’ he said. ‘Look- ing into 2015, given the strong progress made on large deals and the fact that we did not lose any significant deals in Q4, we expect licence revenue growth of at least ten per cent.’ In an interview given to a Swiss busi- ness magazine following the announce- ment, Temenos CFO, Max Chuard, is on record as saying ‘we still need to under- stand exactly what happened’.
The 2014 figures o Like-for-like software licensing growth of zero per cent to five per cent, equating to software licence revenue of between $136 million to $143 million, versus the previous implied guidance range of $151 million to $158 million. o Total non-IFRS like-for-like revenue growth of zero per cent to two per cent, implying non-IFRS revenue of $466 million
to $476 million, versus the previous implied guidance range of $489 million to $512 million. o Non-IFRS earnings before interest and tax (EBIT) growth of between eleven per cent and 20 per cent, implying $125 mil- lion to $130 million compared to the previ- ous implied dollar range of $124 million to $130 million.
Temenos share price on SIX Swiss Exchange on 13th January 2015
Source: SIX Swiss Exchange © IBS Intelligence 2015
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