Pansoft Announces Second Fiscal Quarter 2010 Financial Results
JINAN, China, Feb. 9 /PRNewswire-Asia-FirstCall/ -- Pansoft Company Limited (Nasdaq: PSOF) ("Pansoft" or the "Company"), a leading ERP software service provider for the oil and gas industry in China, today announced financial results for the second fiscal quarter ended December 31, 2009.
Highlights for the Second Quarter 2010
-- Total revenues were $4.9 million, an increase of 47% compared to $3.3 million for the quarter ended December 31, 2008
-- Gross profit was $2.6 million, an increase of 56% compared to $1.7 million for the quarter ended December 31, 2008
-- Gross margin was 53%, compared to 50% in the for the quarter ended December 31, 2008
-- Operating profit was $2.1 million, an increase of 93% compared to $1.1 million for the quarter ended December 31, 2008
-- Net income was $1.9 million, an increase of 94% compared to $1.0 million for the quarter ended December 31, 2008
-- Diluted earnings per share was $0.36, an increase of 64% compared to $0.22 for the quarter ended December 31, 2008
-- Adjusted net income excluding share-based compensation expenses was $2.01 million, an increase of 80% compared to $1.16 million for the quarter ended December 31, 2008.
-- Adjusted Diluted EPS excluding share-based compensation expenses was $0.42, an increase of 68% compared to $0.25 for the quarter ended December 31, 2008
On December 11, 2009, Pansoft's Board of Directors authorized a change in the Company's fiscal year end to June 30 from December 31 because the new fiscal year end is more consistent with the purchasing cycle of its major customers. As a result of this change, the quarter ended December 31, 2009 represents the second quarter of the fiscal year ending June 30, 2010.
To assist shareholders with understanding the change in fiscal year, the company is presenting pro-forma financial information for the twelve-month period ended December 31, 2009.
Highlights for Twelve-Month Period ended December 31, 2009
-- Total revenues were $10.0 million, an increase of 46% compared to $6.9 million for the twelve months ended December 31, 2008, exceeding the company's previous guidance of a 40% increase
-- Gross profit was $5.0 million, an increase of 43% compared to $3.5 million for the twelve months ended December 31, 2008
-- Gross margin was 50%, compared to 51% for the twelve months ended December 31, 2008
-- Operating profit was $3.1 million, an increase of 22% compared to $2.6 million for the twelve month ended December 31, 2008
-- Net income was $3.0 million, an increase of 31% compared to $2.3 million for the twelve months ended December 31, 2008
-- Adjusted net income excluding share-based compensation expenses was $3.65 million, an increase of 46%, compared to $2.5 million for the twelve months ended December 31, 2008
-- Diluted earnings per share was $0.55, an increase of 10% compared to $0.50 for the twelve months ended December 31, 2008
-- Adjusted Diluted EPS excluding share-based compensation expenses was $0.67, an increase of 24% compared to $0.54 for the twelve-month period ended December 31, 2008
"Once again we delivered solid quarter and calendar year results driven by our focus on execution," said Guoqiang Lin, Pansoft's CEO. "We continued to see large orders from our long-term customers and their subsidiaries. Our centralized accounting system has been implemented at our two largest clients, PetroChina and Sinopec, and is also in the process of being integrated with other ERP systems within their operations, which should provide continued demand for our services. In addition, we have taken a number of initiatives to penetrate into new markets and win new clients and have achieved preliminary success, although yet to significantly impact our total revenue. We believe that our strategy to expand our business operations and diversify our customer base will position Pansoft well to achieve our long-term growth and profitability objectives."
"We enjoyed healthy top and bottom line growth in the second quarter of fiscal year 2010 and over the last twelve months. Adjusted EPS increased by 24% year-over-year driven by our exceptional financial and operational performance," added Allen Zhang, Pansoft's Chief Financial Officer. "Looking ahead, increasing investments in engineering capabilities, sales and marketing efforts, and system development efficiencies will continue to be key drivers for Pansoft."
Financial Results Highlights for the Three Months Ended December 31, 2009
Total revenue for the three months ended December 31, 2009 was $4.9 million, a 47% increase from $3.3 million in the three months ended December 31, 2008. The increase in revenue was due to the increased number and value of contracts for development and integration services.
Cost of sales was $2.3 million, an increase of 38% from $1.7 million in the three months ended December 31, 2008. Cost of sales increased at a slower pace than revenue as a result of cost control measures designed to contain expenses.
Gross profit in the quarter was $2.6 million, an increase of 56% from $1.7 million in three months ended December 31, 2008. Gross margin was 53%, compared to 50% in the three months ended December 31, 2008.
Operating expenses were $0.5 million, a decrease of 13% from $0.6 million in the three months ended December 31, 2008.
Operating profit was $2.1 million, an increase of 93% from $1.1 million in the three months ended December 31, 2008. Operating margin was 42% compared to 32% in three months ended December 31, 2008.
Net income was $1.9 million, an increase of 94% from $1.0 million in the corresponding period in 2008. The significant increases in our operating and net profits were due to a substantial increase in revenues from our major contracts and reduction of operating expenses. Diluted earnings per share were $0.36, an increase of 64% from $0.22 in the corresponding period in 2008. Adjusted Diluted EPS excluding share-based compensation expenses was $0.42, an increase of 68% compared to $0.25 for three months ended December 31, 2008.
Financial Results Highlights for the Twelve Months ended December 31, 2009
Pansoft has changed its fiscal year end to June 30. A transition report on Form 20-F will be filed for the six-month transition period ended June 30, 2009. The results for the six-month period ended December 31, 2009 will be included in the annual report on Form 20-F for the fiscal year ending June 30, 2010. To further assist shareholders in understanding the transition to the new fiscal year, pro-forma operating results for the twelve months ended December 31, 2009 are provided below.
Total revenue for the twelve months ended December 31, 2009 was $10.0 million, an increase of 46% from $6.9 million in the twelve months ended December 31, 2008. The increase in revenue was mainly due to increase in number of contracts as well as size of contracts signed with our major long-term clients. This is consistent with Pansoft's strategy to become an important part of the clients' IT platform and solicit their IT expansion projects.
Cost of sales was $5.1 million, an increase of 49% from $3.4 million in the twelve months ended in 2008. Cost of sales increased at a faster rate than revenue growth due to a significant increase in the number of employees as a part of our corporate expansion strategy and technical team enhancement.
Gross profit was $5.0 million, an increase of 43% from $3.5 million in the twelve months ended in 2008. Gross margin was 50%, compared to 51% for the twelve months ended December 31, 2008.
Operating expenses were $1.9 million, an increase of 100% from $0.9 million in the twelve months ended in 2008. Operating expenses consist primarily of general and administrative expenses, selling expenses, professional fees and stock option expenses. The increase in operating expenses in 2009 was mainly due to the increase in stock-based compensation and public listing expenses, which accounted for 34% and 20% of total operating expenses, respectively.
Operating profit was $3.1 million, an increase of 22% from $2.6 million in the twelve months ended December 31, 2008. Operating margin was 31%, compared to 37% in the twelve months ended December 31, 2008.
Net income was $3.0 million, an increase of 31% from $2.3 million in the corresponding period in 2008. Adjusted net income, excluding stock-based compensation totaled $3.7 million, an increase of 46% compared to $2.5 million in the twelve months ended December 31, 2008. Diluted earnings per share were $0.55, an increase of 10% from $0.50 in the corresponding period in 2008. Adjusted diluted EPS excluding share-based compensation expenses was $0.67, an increase of 24% from $0.54 for the twelve months ended December 31, 2008.
As of December 31, 2009, Pansoft's cash and cash equivalents are $14.7 million, an increase of 21% compared to $12.2 million on December 31, 2008. The increase in cash and cash equivalents was primarily a result of increased collection of accounts receivable in the last calendar quarter of 2009. Cash flow from operating activities in 2009 was $2.8 million, an increase of 80% compared to $1.5 million from the twelve months ended December 31, 2008.
Business Outlook
Despite the worldwide financial crisis and economic recession in 2009, Pansoft has delivered strong performance, including a 46% increase in revenue in the twelve months ended December 31, 2009, exceeding its previous guidance of 40% revenue growth. In addition, Pansoft's net profit increased by 31% and adjusted net income increased by 46%.
The Company expects its customization, integration services and solutions will continue to win major contracts from large customers. Going forward the Company intends to expand its business by reorganizing its technical service and development force by establishing four new business departments with the objective to penetrate into new markets and industries. Pansoft's management believes that demand for its services will continue to grow as the Company leverages its advanced technology and application development expertise within the system integration services domain. Pansoft expects to achieve 40% organic growth in revenue year-over-year for the fiscal year ending in June 30, 2010.
"In addition, the Company has RMB 100 million, or approximately $14.7 million, in cash or cash equivalent on its balance sheet. This cash reserve allows the Company to focus aggressively on potential acquisition targets as part of its strategy to expand into additional industries," said Hugh Wang, Chairman of Board. |
