English

Interim report January 1 – June 30, 2010

Report this content

First joint Orc/Neonet business transaction effected
– Cost synergies confirmed

The integration between Orc and Neonet is almost finished and the anticipated cost synergies of SEK 40m have been secured. During the quarter, the first joint business transaction was carried out after the merger with Neonet. Orc’s Technology operations are growing further with continuing high margins. Activities have also been launched to increase the revenues and margins of Orc’s transaction operations. During the quarter, income was charged with SEK 29.3m in nonrecurring costs related to the merger.

Adjusted for the SEK 29.3m in nonrecurring costs, operating income was SEK 39.3m. Synergies have thus been secured and costs will decline by another SEK 10m, on a quarterly basis, as a result. Including these synergies, the operating margin would be 18%. 

The annualized contract value (ACV) at the end of Q2 2010 was SEK 750.6m (674.6), an increase of SEK 76.0m, or 11%, compared to Q2 2009. On the merger date, ACV in Neonet amounted to SEK 52.1m.

The transaction net was SEK 31.7m (-) and the transaction margin was 35% (-) for the second quarter 2010.


April - June 2010

  • Operating revenue of SEK 282.7m (180.1)
  • Revenue growth of 57%
  • Operating income of 10.0m (42.1)
  • Operating margin of 4% (23)
  • Income after tax of SEK 6.0m (31.0)
  • Basic earnings per share of SEK 0.26 (2.04) 

January - June 2010

  • Operating revenue of SEK 453.0m (343.9)
  • Revenue growth of 32%
  • Operating income of SEK 37.3m (92.0)
  • Operating margin of 8% (27)
  • Income after tax of SEK 24.9m (67.3)
  • Basic earnings per share of SEK 1.30 (4.43) 

The Neonet Group has been consolidated as of April 1, 2010. The actual transaction date was April 7. 


CEO Thomas Bill comments:
Due to a good trend of sales in all regions during the quarter, our Annualized Contract Value (ACV) increased by SEK 19m, despite a higher churn. Positive foreign exchange effects and customer contracts received in connection with the merger with Neonet were other contributing factors, and as a whole, ACV increased by SEK 97m. The higher churn was primarily attributable to operations that were discontinued because of changed conditions or poor profitability. However, in our opinion, this does not indicate a long-term return to the levels of 2009. 

The integration of Orc and Neonet is almost finished. We can note that we completed our first joint business transaction and several more are in progress. We can already confirm our cost synergies and the new organization is in place and working on achieving our common targets. We are very confident that this will lead to solid opportunities for growth, especially for Managed Services solutions. 

We have launched efforts to increase the sales and margins of our transaction business and are convinced they will bear fruit. 

New laws have been introduced in the U.S. and discussions are in progress in Europe within the financial area. No one knows what the exact consequences will be. However, in our judgment, the business opportunities created by these changes will be considerably bigger than the risks for Orc. 

With our new common and strong technology portfolio, our concentration on Managed Services solutions, the new efficient organization and our focused and target-oriented work to leverage opportunities afforded by our transaction business, we look positively toward our growth during the remainder of 2010. 

If we should already include the secured cost synergies, we would have an adjusted operating margin of 18%, making us feel confident about reaching our goals of an anticipated operating margin not lower than about 20% in a weak market and a potential operating margin of 35% or higher in a buoyant market. 

About Orc Software
Orc Software is the leading global provider of technology and services for advanced trading in financial instruments. Orc’s competitive edge lies in its depth of knowledge of the trading world, gained by deploying sophisticated trading solutions for over 20 years. 

Orc Trading and Orc Connect provide the tools for making the best trading and connectivity decisions with strong analytics, unmatched market access, high performance derivatives trading capabilities, automated trading strategies and execution, ultra-low latency and risk management. 

Through the merger with Neonet, Orc also delivers neutral, high-speed brokerage services to professional market participants, with clients in over 20 countries globally. With subsidiary CameronTec, Orc is the leading provider of FIX infrastructure and low latency connectivity. 

Orc’s customers include leading banks, trading and market-making firms, exchanges, brokerage houses, institutional investors and hedge funds. 

Orc provides sales and quality support services from its offices across EMEA, Americas and Asia Pacific. 

Orc Software is listed on NASDAQ OMX Stockholm (SSE: ORC). 

For more information, please visit: www.orcsoftware.com

Contact Information
CEO Thomas Bill, phone: +46 8 506 477 35
CFO Anders Berg, phone: +46 8 506 477 24 

N.B. The English text is a translation of the Swedish text. In case of discrepancy between the Swedish and the English text the Swedish version shall prevail.

Documents & Links