Interim report January 1–September 30, 2008
Positive development in a volatile market
The annualized value of existing customer contracts rose by SEK 45.3m, or 9%, compared to Q2 2008. Orc’s operations in the Americas accounted for 40%, or SEK 18.2m, of the increase. Sales to existing and new customers were strong and exceeded reductions in customer contracts, although these were higher than in the past few quarters. Strengthening of the US dollar and euro against the Swedish krona also had a positive impact on the order book.
The annualized value of existing customer contracts at the end of Q3 2008 was SEK 562.5m (456.0), up by SEK 106.5m, or 23%, compared to Q3 2007. On a fixed exchange rate basis the increase was SEK 103.4m, or 23%.
July – September 2008
• Net revenue of SEK 142.0m (131.3)
• Revenue growth of 8% (29)
• Operating income of SEK 36.0m (32.5)
• Operating margin of 25% (25)
• Income after tax of SEK 27.8m (36.7)*
• Basic earnings per share of SEK 1.83 (2.35)
January – September 2008
• Net revenue of SEK 417.3m (369.5)
• Revenue growth of 13% (24)
• Operating income of SEK 84.3m (89.4)
• Operating margin of 20% (24)
• Income after tax of SEK 60.7m (78.3)*
• Basic earnings per share of SEK 3.99 (5.07)
* The comparative figure includes a gain of SEK 15.5m on the divestment of shares in Infront AS
CEO Thomas Bill comments:
The global financial markets are experiencing one of the worst crises of all times. Against this background, it is no small achievement that we succeeded in increasing both our sales and order book during the past quarter. The order book has also been positively affected by an upswing in the US dollar and euro.
Continued financial volatility has resulted in record trading volumes on the derivative exchanges, which are the trading venues where the majority of our customers are active.
Although several banks reduced their contracts during Q3, this has been more than offset by sales to new and existing customers among the specialized trading firms.
The accelerated shift toward automated trading is reflected in increased sales for the period, with sales of Orc Liquidator reaching a new all-time high in Q3.
Orc’s sales in the Americas showed the sharpest increase during Q3, even adjusted for a stronger dollar. One key driver behind this trend is particularly strong growth among the specialized trading firms in Chicago, which are benefiting from Orc’s automated trading solutions.
Our business model creates stability and provides a good planning horizon, and subscription revenue under long-term contracts now makes up more than 90% of our total revenue. Furthermore, Orc is entirely unleveraged.
The market turbulence and problems facing the banks in general are naturally making future development harder to predict, but so far our solutions are attracting sustained strong demand from both existing and new customers. Should we experience a worsening of the order book situation, our business model provides good opportunity for timely action to adjust our costs.
For the full year 2008 we stand by our earlier expectation to increase both revenue and the order book compared to 2007.
About Orc Software
Orc Software (SSE: ORC) is the leading global provider of powerful solutions for the worldwide financial industry in the critical areas of advanced derivatives trading and low latency connectivity. Orc’s competitive edge lies in its depth of knowledge of the derivatives trading world gained by deploying advanced solutions for sophisticated traders for over 20 years.
Orc Trading and Orc Connect provide the tools for making the best trading and connectivity decisions… strong analytics, unmatched market access, powerful automated trading functionality, high performance futures and options trading capabilities, ultra-low latency, and risk management.
Orc’s customers include leading investment banks, trading and market-making firms, exchanges, brokerage houses, institutional investors and hedge funds.
Orc provides timely sales and quality support services from its offices across EMEA, Americas and Asia Pacific.
For more information, please visit www.orcsoftware.com
CEO Thomas Bill, phone: +46 8 506 477 35
CFO Anders Berg, phone: +46 8 506 477 24