Total Revenues of US$18.6 million, Up 60.9% Year-on-Year; Adjusted
Net Income of US$10.5 million, an Increase of 99.1% Year-on-Year
XIAMEN, China, Feb. 21 /Xinhua-PRNewswire/ -- Longtop Financial
Technologies Limited ("Longtop") (NYSE: "LFT"), a leading software
developer and solutions provider targeting the financial services
industry in China, announced today unaudited financial results for
the quarter ended December 31, 2007, which is the third quarter of
its fiscal year ending March 31, 2008. FINANCIAL HIGHLIGHTS FOR THE
DECEMBER 31, 2007 QUARTER: -- Total revenue of US$18.6 million, an
increase of 60.9% year-on-year ("YoY") compared to Adjusted
Revenues for the quarter ended December 31, 2006. -- Software
development revenues amounted to US$15.6 million, up 61.1% YoY
compared to Adjusted Software Development Revenues for the quarter
ended December 31, 2006. -- Adjusted Income from Operations of
US$9.4 million, an increase of 55.3% YoY. -- Adjusted Net Income of
US$10.5 million, an increase of 99.1% YoY, or US$0.22 per fully
diluted share. Explanation of the Company's Adjusted (ie non-GAAP)
financial measures and the related reconciliations to GAAP
financial measures are included in the accompanying "Non-GAAP
Disclosure" and the "Consolidated Adjusted Statements of
Operations." "I am pleased that our dedicated efforts to expand
customer and solution diversity have resulted in continued growth
during the quarter," commented Weizhou Lian, CEO of Longtop. "In
addition to expanding our strong relationships with Big Four Banks,
we have been successful at diversifying our customer base through
new business wins across multiple sectors which has enabled us to
continue to gain market share." "Our discussions with customers
indicate IT spending will remain robust as Chinese institutions
continue to upgrade their IT infrastructure with software and
services forming a larger percentage of their IT budget." continued
Weizhou Lian. " Therefore, as the leading domestic player in the
financial services IT sector with substantially all of our revenues
coming from China, we believe our fiscal year 2009 financial
results will not be negatively impacted by the current market
conditions in the United States. With continued underlying strength
in the marketplace and our progress in integrating FEnet, we are
excited about our prospects as we enter our fiscal 2009 with
significant momentum." RECENT OPERATIONAL HIGHLIGHTS: --
Demonstrated continued success in customer diversification as
revenues from Other Banks and the Insurance sector, increased
40,928.6% and 1,649.7% year-on-year respectively, together
accounting for 53.7% of software development revenues in the
December 31, 2007 quarter, compared to 1.7% for the same period of
2006. -- Integration of FEnet, the number one domestic provider of
business intelligence solutions to the financial and insurance
industry in China, which closed in October 2007 has been completed.
-- Continued investment to expand employee base during the quarter
to meet demand for solutions and services - on December 31, 2007,
Longtop had 1,494 employees as compared to 1,094 employees on
September 30, 2007 and 622 employees at December 31, 2006. DECEMBER
31, 2007 QUARTER DETAILED FINANCIAL RESULTS 2008 Revenue and 2007
Adjusted Revenue 2008 Revenue and 2007 Adjusted Revenue - US$000s
Three months ended December December % Change 31, 2006 31, 2007
(Decrease) Software Development $9,664 $15,567 61.1% Other Services
$1,917 $3,063 59.8% Total Adjusted Revenue $11,581 $18,630 60.9%
Nine months ended December December % Change 31, 2006 31, 2007
(Decrease) Software Development $23,980 $42,056 75.4% Other
Services $8,043 $8,304 3.2% Total Adjusted Revenue $32,023 $50,360
57.3% Total revenues for our third fiscal quarter were US$18.6
million, compared to Adjusted Revenues of US$11.6 million for the
quarter ended December 31, 2006. Software development revenues of
US$15.6 million contributed 83.6% of total revenues, and increased
61.1% YoY compared to Adjusted Software Development Revenues for
the corresponding period in the previous fiscal year. Total
revenues for the nine months ended December 31, 2007 were US$50.4
million, compared to Adjusted Revenues of US$32.0 million for the
nine months ended December 31, 2006, a YoY increase of 57.3%.
Software development revenues, which were 83.5% of total revenues
for the nine months ended December 31, 2007, amounted to US$42.1
million, up 75.4% YoY compared to Adjusted Software Development
Revenues in the corresponding period a year ago. Adjusted Software
Development Revenue by customer type - US$000s Three months ended
Nine months ended December December % Change December December %
Change 31, 2006 31, 2007 (Decrease) 31, 2006 31, 2007 (Decrease)
Big Four Banks $8,101 $5,202 (35.8%) $18,854 $21,665 14.9% Other
Banks $14 $5,744 40928.6% $2,029 $12,426 512.4% Insurance $149
$2,607 1649.7% $466 $4,504 866.5% Enterprises $1,400 $2,014 43.9%
$2,631 $3,461 31.5% Total $9,664 $15,567 61.1% $23,980 $42,056
75.4% Adjusted Software Development Revenue customer concentration
analysis % of Adjusted Three months ended Nine months ended
Software December December % Change December December % Change
Development 31, 2006 31, 2007 (Decrease) 31, 2006 31, 2007
(Decrease) Revenue from Big Four Banks 83.8% 33.4% (50.4%) 78.6%
51.5% (27.1%) Other Banks 0.2% 36.9% 36.7% 8.5% 29.6% 21.2%
Insurance 1.5% 16.8% 15.3% 1.9% 10.7% 8.8% Enterprises 14.5% 12.9%
(1.5%) 11.0% 8.2% (2.7%) Total 100.0% 100.0% 0.0% 100.0% 100.0%
0.0% Software development revenue growth for the three months and
nine months ended December 31, 2007 was driven mainly by growth in
new customers and higher sales to existing customers from Other
Banks and the Insurance sector. In the nine months ended December
31, 2007, Other Banks YoY revenue growth was 512.4% and the
Insurance sector grew at 866.5%. Other Banks excludes the Big Four
Banks and includes national commercial banks, city banks and China
Post Bank. During the first nine months of fiscal 2008 Longtop
acquired sixteen new Other Bank customers including China Bohai
Bank, Bank of Beijing, Urumbqi City Commercial Bank, Bank of
Jiangsu, Rural Commercial Bank of Zhangjiagang and China Minsheng
Bank. Other Banks accounted for 36.9% and 29.6% of software
development revenues for the three and nine months ended December
31, 2007 as compared to 0.2% and 8.5%, respectively, in the
corresponding year ago periods. Longtop first began targeting the
Insurance sector in the later part of fiscal 2007 and demonstrated
strong execution with the Insurance sector revenues for the first
three quarters of fiscal 2008 growing 866.5% YoY. Insurance
customers accounted for 16.8% and 10.7% of software development
revenues for the three and nine months ended December 31, 2007 as
compared to 1.5% and 1.9%, respectively, in the corresponding year
ago periods. "I am pleased with our success in the execution of our
strategy in acquiring Other Banks and Insurance customers over the
past nine months. The acquisition of new customers was attributable
to our ability to leverage our experience with Big Four Banks
combined with a realignment of our sales and solution development
efforts. We believe both Other Banks and Insurance customers will
continue to be a strong growth engine for Longtop and will not be
impacted by the current US market conditions," commented Wei Wu,
Vice President of Sales. Adjusted Software Development Revenue by
solution type US$000s Three months ended Nine months ended December
December % Change December December % Change 31, 2006 31, 2007
(Decrease) 31, 2006 31, 2007 (Decrease) Channel 904 1,800 99.2%
4,953 6,871 38.7% Core Banking 1,135 2,470 117.6% 4,379 8,515 94.5%
Management 4,287 3,863 (9.9%) 8,663 12,421 43.4% Business
Intelligence 1,175 5,302 351.2% 2,719 9,938 265.6% Others 2,163
2,133 (1.4%) 3,267 4,310 31.9% Total 9,664 15,567 61.1% 23,980
42,056 75.4% Longtop demonstrated continued solution innovation as
all categories experienced healthy YoY growth during the nine
months ended December 31, 2007. Growth was especially strong with
business intelligence related solutions growing 351.2% and 265.6%
YoY in the three and nine months ended December 31, 2007. The
demand for business intelligence was driven by banks and insurance
companies building out data warehouses to conduct business and
decision-making analysis in order to provide more information on
their customer's behavior and the effectiveness of their products.
Business related solutions which include solutions directed at
executing banking transactions such as international trade finance,
payments and settlements and credit card operations grew 117.6% and
94.5% YoY in the three and nine months ended December 31, 2007,
respectively. Adjusted Gross Margins Adjusted Gross Margin
percentage Three months ended Nine months ended December December %
Change December December % Change 31, 2006 31, 2007 (Decrease) 31,
2006 31, 2007 (Decrease) Software Development Gross Margin 86.4%
71.4% (14.9%) 86.6% 77.2% (9.3%) Other Services Gross Margin 59.6%
65.0% 5.4% 74.1% 69.6% (4.5%) Total Gross Margin % 83.3% 71.5%
(11.8%) 84.6% 76.9% (7.7%) Software Development Revenue by
development methodology as a percentage of Total Adjusted Software
Development Revenue Three months ended Nine months ended December
December % Change December December % Change 31, 2006 31, 2007
(Decrease) 31, 2006 31, 2007 (Decrease) Customized 36.7% 65.2%
28.5% 49.0% 56.5% 7.5% Standardized 57.3% 24.8% (32.5%) 43.3% 37.2%
(6.1%) Maintenance 6.0% 10.0% 4.0% 7.7% 6.3% (1.4%) Total 100.0%
100.0% 0.0% 100.0% 100.0% 0.0% Adjusted Gross Margin of 71.5% in
the third quarter and 76.9% for the nine months ended December 31,
2007 declined from 83.3% and 84.6% in the respective corresponding
periods of the previous year. The reduction in Adjusted Gross
Margin was primarily due to lower gross margins in software
development. Adjusted Software Development Gross Margins of 71.4%
in the third quarter and 77.2% for the nine months ended December
31, 2007 declined from 86.4% and 86.6% in the respective periods of
the prior year. The software development gross margin decline was
due to a higher mix in 2008 of customized revenue (see above table)
which has a lower gross margin than standardized revenue. The
increase in the customized revenue mix was due to a number of
factors including the growth in our business intelligence
solutions, the fastest growing area for Longtop, solutions for the
Insurance sector and first time sales to Other Banks which at this
time are mainly sold as a customized solution. Also contributing to
the decline was lower gross margins from FEnet, which was
consolidated for the first time in the third quarter of 2008.
Additionally, in order to meet business demand the Company
continued to invest aggressively in software delivery headcount. As
of December 31, 2007 the Company had 827 employees working on
software development delivery as compared to 634 as of September
30, 2007 and 267 as of December 31, 2006. Adjusted Operating
Expenses Three months ended Nine months ended December December %
Change December December % Change 31, 2006 31, 2007 (Decrease) 31,
2006 31, 2007 (Decrease) Adjusted Operat- ing Expenses - - US$000s
$3,469 $3,758 8.3% $7,017 $9,761 39.1% Adjusted Operat- ing
Expenses - - % of revenue 30.4% 20.5% -- 22.2% 19.6% -- For the
quarter ended December 31, 2007, Longtop's Adjusted Operating
Expenses totaled US$3.8 million, a slight increase of 8.3% YoY
primarily due to additional headcount related expenses. Adjusted
Operating Expenses as a percentage of revenue for the three and
nine months ended December 31, 2007 were largely unchanged at 20.5%
and 19.6%, respectively. Profitability Adjusted Operating Income
Three months ended Nine months ended December December % Change
December December % Change 31, 2006 31, 2007 (Decrease) 31, 2006
31, 2007 (Decrease) Adjusted Operating Income - US$000s $6,021
$9,352 55.3% $19,706 $28,501 44.6% Adjusted Operating Income - % of
revenue 52.0% 50.2% -- 61.5% 56.6% -- Adjusted Operating Income of
US$9.4 million increased 55.3% for the quarter and Adjusted
Operating Income of US$28.5 million for the nine months ended
December 31, 2007, increased 44.6% YoY. Adjusted Net Income Three
months ended Nine months ended December December % Change December
December % Change 31, 2006 31, 2007 (Decrease) 31, 2006 31, 2007
(Decrease) Adjusted Net Income - US$000s $5,263 $10,481 99.1%
$14,097 $27,546 95.4% Adjusted Net income per Diluted Share -
US$000s $0.13 $0.22 63.9% $0.37 $0.62 69.7% Adjusted Net Income - %
of revenue 45.4% 56.3% -- 44.0% 54.7% -- Adjusted Net Income for
the third quarter of US$10.5 million or US$0.22 per fully diluted
share increased 99.1% and 63.9% as compared to Adjusted Net Income
of US$5.3 million and US$0.13 per fully diluted share in 2007.
Adjusted Net Income for the third quarter of 2008 included a US$1.1
million income tax refund. Adjusted Net Income for the nine months
ended December 31, 2007 was US$27.5 million or US$0.62 per fully
diluted share as compared to US$14.1 million and US$0.37 in the
comparative year ago period which was an increase of 95.4% and
69.7%, respectively. The difference of US$24.5 million between the
US GAAP net loss for the third quarter of 2008 of US$14.0 million
and Adjusted Net Income of US$10.5 million was primarily due to
US$24.1 million of share-based compensation expenses, of which
US$22.2 million related to ordinary shares that prior to the IPO
were sold by one of our Founders to Longtop's employees in exchange
for notes receivable. The US$22.2 million was a one time expense as
a result of the Founder forgiving these notes, did not increase the
total shares outstanding because the shares were issued prior to
the IPO and had no impact on the cash flow or net assets of the
Company. Unrestricted cash balances at December 31, 2007 were
US$209.8 million giving the Company sufficient resources for
potential acquisitions in the fragmented China financial IT
services sector. Commenting on the results, Derek Palaschuk, CFO of
Longtop, said: "While the integration of FEnet, our continued
investment in headcount and our increased percentage of sales from
customized solutions impacted our gross margins, these are integral
aspects for the future growth of Longtop. Overall we have
demonstrated superior top and bottom line growth, and we believe
this will continue as we deliver industry leading solutions."
BUSINESS OUTLOOK Longtop anticipates for the quarter ending March
31, 2008: i) Total revenues, including US$1.0 million of revenues
from FEnet which closed in October 2007, of US$12.5 million, an
increase of 60.2% from revenues of US$7.8 million in the
corresponding year ago period. Although we expect that there will
be a sequential quarterly revenue decline from the December 31,
2007 quarter due to the typical seasonality of the business
associated with the first calendar quarter of the new year, this
outlook indicates our expectation that there will be healthy growth
from the year ago period. ii) Software development revenues to be
US$11.0 million, an increase of 86.4% from software development
revenue of US$5.9 million in the corresponding period a year ago.
iii) Adjusted Net Income to be US$4.5 million as compared to US$2.8
million in the comparable period a year ago an increase of 60.7%.
iv) Fully diluted Adjusted Earnings per Share, to be US$0.08, based
on 54 million weighted average fully diluted shares outstanding.
Longtop anticipates for its fiscal year ending March 31, 2008: i)
Total revenues, of US$62.9 million an increase of 58.0% from
Adjusted Revenues of US$39.8 million in the corresponding year ago
period. ii) Software development revenues of US$53.0 million, an
increase of 77.8% from Adjusted Software Development Revenue of
US$29.8 million in the corresponding period a year ago. iii)
Adjusted Income From Operations of US$33.0 million an increase of
42.9% from US$23.1 million in the previous fiscal year. iv)
Adjusted Net Income to be US$32.0 million an increase of 89.3% from
US$16.9 million from the previous fiscal year. v) Fully diluted
Adjusted Earnings Per Share to be US$0.68 an increase of 58.1% from
US$0.43 in 2007. Longtop anticipates for its fiscal year ending
March 31, 2009: i) Total revenues, of US$86.0 million, an increase
of 36.7% from estimated revenues of US $62.9 million in fiscal
2008. ii) Software development revenues of US$76.0 million, an
increase of 43.4% from estimated software development revenue in
fiscal 2008. iii) Adjusted Income From Operations of US$43.0
million an increase of 30.3% from Adjusted Income From Operations
in fiscal 2008. iv) Assuming no statutory change in the income tax
rate for fiscal 2009 as compared to fiscal 2008, no requirement to
accrue withholding taxes on undistributed China profits and that US
dollar deposit rates remain above 2.5%, Adjusted Net Income to be
US$44.0 million an increase of 37.5% from Adjusted Income in fiscal
2008. v) Fully diluted Adjusted Earnings Per Share to be US$0.80,
based on 55 million weighted average fully diluted shares
outstanding. CONFERENCE CALL AND WEBCAST Longtop's management team
will host a conference call at 7:00 PM ET, February 21, 2008 (or
4:00 PM U.S. Pacific Time on February 21, 2008 and 8:00 AM,
February 22, 2008 Beijing/Hong Kong time). A live audio webcast of
the conference call will be available on Longtop's website at
http://www.longtop.com/en. To listen to the conference call, please
use the dial in numbers below: USA Toll Number: +1 800 860 2442
International: +1 412 858 4600 A replay of the call will be
available for two weeks following the call and can be accessed on
the Company website or by dialing the numbers below: USA Replay
Number: +1 877 344 7529 International: +1 412 317 0088 Passcode:
415969 NON-GAAP DISCLOSURE ("ADJUSTED") To supplement the unaudited
consolidated financial statements presented in accordance with
United States Generally Accepted Accounting Principles ("GAAP"),
Longtop's management reports and uses non-GAAP ("Adjusted")
measures of revenues, cost of revenues, operating expenses, net
income and net income per share, which are adjusted from results
based on GAAP. Management believes these non-GAAP financial
measures enhance the user's overall understanding of our current
financial performance and our prospects for the future and,
additionally, uses these non-GAAP financial measures for the
general purpose of analyzing and managing the Company's business.
Specifically, we believe the non-GAAP financial measures provide
useful information to both management and investors by excluding
certain items that we believe are not indicative of our core
operating results. The presentation of this additional information
is not meant to be considered superior to, in isolation from or as
a substitute for results prepared in accordance with US GAAP. We
encourage investors to examine the reconciling adjustments between
the GAAP and non-GAAP measures contained in this release and which
we discuss below. Readers are cautioned not to view non-GAAP
results on a stand-alone basis or as a substitute for results under
GAAP, or as being comparable to results reported or forecasted by
other companies. Definitions of Non-GAAP Measures Adjusted Revenue
is defined as revenue excluding, if applicable: software
development revenue deferred on standardized contracts from
previous years to financial periods ending on or prior to December
31,2006 because Longtop did not have Vendor Specific Objective
Evidence ("VSOE") or evidence that costs of Post Contract Service
("PCS") had been immaterial. Subsequent to January 1,2007, Longtop
had evidence that PCS for standardized contracts was immaterial and
adjustments were not required after this date. Adjusted Cost of
Revenue is defined as cost of revenue excluding, if applicable: (1)
non-cash compensation expense and (2) amortization of acquired
intangibles. Adjusted Gross Margin is defined as Adjusted Revenue
less Adjusted Cost of Revenue. Adjusted Operating Expenses is
defined as operating expenses excluding, if applicable: (1)
non-cash compensation expense, (2) amortization of acquired
intangibles and goodwill impairment, and (3) one-time items.
Adjusted Operating Income is defined as Adjusted Gross Margin less
Adjusted Operating Expenses. Adjusted Net Income is defined as
Adjusted Operating Income plus/minus other income/(expenses), less
income taxes, excluding: (1) one-time items and (2) discontinued
operations. Adjusted EPS is defined as Adjusted Net Income divided
by diluted shares. One-Time Items, if applicable, are excluded from
Adjusted Operating Income and Adjusted Net Income. These items are
one-time in nature and non-recurring, infrequent or unusual, and
have not occurred in the past two years or are not expected to
recur in the next two years. GAAP results include one-time items.
For the three and nine months ended December 31,2007, there were no
one-time adjustments from the US GAAP results. For the three and
nine months ended December 31,2006, there was US$537,000 and
US$697,000, respectively, in one- time adjustments from general and
administrative expenses associated with the initial public
offering. Non-Cash Expenses That Are Excluded From Our Non-GAAP
Measures Non-cash compensation expense consists principally of
expense associated with the grants, including unvested grants
assumed in acquisitions, of restricted stock, restricted stock
units and stock options. These expenses are not paid in cash, and
we include the related shares in our fully diluted shares
outstanding which, for restricted stock units and stock options,
are included on a treasury method basis. Longtop's management
believes excluding the share-based compensation expense from its
non-GAAP financial measure is useful for itself and investors.
Further, the amount of share-based compensation expense cannot be
anticipated by management and business line leaders and these
expenses were not built into the annual budgets and quarterly
forecasts, which have been the basis for information Longtop
provides to analysts and investors as guidance for future operating
performance. As share-based compensation expense does not involve
any upfront or subsequent cash outflow, Longtop does not factor
this in when evaluating and approving expenditures or when
determining the allocation of its resources to its business
segments. As a result, the monthly financial results for internal
reporting and any performance measure for commission and bonus are
based on non-GAAP financial measures that exclude share-based
compensation expense. Amortization of acquired intangibles is a
non-cash expense relating to acquisitions. At the time of an
acquisition, the intangible assets of the acquired company, such as
backlog, customer relationships, and intellectual property are
valued and amortized over their estimated lives. While it is likely
that we will have significant intangible amortization expense as we
continue to acquire companies, we believe that since intangibles
represent costs incurred by the acquired company to build value
prior to acquisition, they were part of transaction costs. OTHER
INFORMATION Safe Harbor Statement Under the Private Securities
Litigation Reform Act of 1995 It is currently expected that the
Business Outlook will not be updated until the release of Longtop's
next quarterly earnings announcement; however, Longtop reserves the
right to update its Business Outlook at any time for any reason.
This announcement contains forward-looking statements within the
meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. In some cases, you can identify
forward-looking statements by such terms as "believes," "expects,"
"anticipates," "intends," "estimates," the negative of these terms,
or other comparable terminology. Factors that could cause actual
results to differ include the effectiveness, profitability, and
marketability of the company's solutions; the Company's limited
operating history; its reliance on a limited number of customers
that continue to account for a high percentage of the Company's
revenues; risk of payment failure by any of its large customers,
which could significantly harm the Company's cash flows and
profitability; the ability of the Company to operate effectively as
a public company; future shortage or availability of the supply of
employees; general economic and business conditions; the volatility
of the company's operating results and financial condition; the
company's ability to attract or retain qualified senior management
personnel and research and development staff; and other risks
detailed in the company's filings with the Securities and Exchange
Commission. These forward-looking statements involve known and
unknown risks and uncertainties and are based on current
expectations, assumptions, estimates and projections about the
companies and the industry. The company undertakes no obligation to
update forward-looking statements to reflect subsequent occurring
events or circumstances, or to changes in its expectations, except
as may be required by law. Although the company believes that the
expectations expressed in these forward looking statements are
reasonable, they cannot assure you that their expectations will
turn out to be correct, and investors are cautioned that actual
results may differ materially from the anticipated results. Our
actual results of operations for the quarter ended December 31,
2007 are not necessarily indicative of our operating results for
any future periods. Any projections in this release are based on
limited information currently available to us, which is subject to
change. About Longtop Financial Technologies Limited Longtop is a
leading software development and solutions provider targeting the
financial services industry in China. Longtop develops and delivers
a comprehensive range of software applications and solutions with a
focus on meeting the rapidly growing IT needs of the financial
services institutions in China. Longtop has five solution delivery
centers, three research centers and thirty-four service centers
located in 20 provinces throughout China. Longtop was founded in
1996 by Jia Xiaogong, our Chairman and Lian Weizhou, our CEO, as a
system integration company focusing on the financial services
industry in China and made the transition to a software and
solutions provider in 2001. For more information, please visit:
http://www.longtop.com/ . CONSOLIDATED BALANCE SHEETS March 31,
2007 December 31, 2007 Unaudited Unaudited (In U.S. dollar
thousands, except share and per share data) Assets Current assets:
Cash, bank deposits and cash equivalents $69,920 $209,632
Restricted cash 3,395 12,558 Accounts receivable, net 19,495 27,731
Inventories 1,081 1,588 Amounts due from related parties -- 50
Deferred tax assets 644 1,079 Other current assets 3,231 4,447
Total current assets 97,766 257,085 Fixed assets, net 4,835 4,972
Intangible assets, net 8,040 7,910 Goodwill 9,112 14,636 Deferred
tax assets 33 -- Other assets 646 563 Total assets $120,432
$285,166 Liabilities, mezzanine equity and shareholders' equity
Current liabilities: Short-term borrowings $8,669 $12,326 Accounts
payable 4,581 5,322 Deferred revenue 4,725 13,069 Amounts due to
related parties -- 11,825 Deferred tax liabilities -- 156 Accrued
and other current liabilities 9,714 17,636 Total current
liabilities 27,689 60,334 Long-term liabilities: Obligations under
capital leases, net of current portion 219 88 Deferred tax
liabilities 617 1,625 Other non-current liabilities -- 520 Total
liabilities 28,525 62,567 Mezzanine equity: Series A convertible
redeemable preferred shares: $0.01 par value (6,360,001 and nil
shares authorized, issued and outstanding as of March 31, 2007 and
December 31, 2007, respectively, liquidation value $23,416) $23,214
-- Series B convertible redeemable preferred shares: $0.01 par
value (3,858,005 and nil shares authorized, issued, and outstanding
as of March 31, 2007 and December 31, 2007, respectively,
liquidation value $24,826) 24,673 -- Total mezzanine equity 47,887
-- Shareholders' equity: Ordinary shares $0.01 par value
(68,640,000 shares authorized, 29,705,267 and 50,274,126 shares
issued and outstanding as of March 31, 2007 and December 31, 2007)
$297 $502 Additional paid-in capital 19,120 246,650 Subscription
receivable -- -- Retained earnings 22,320 (31,825) Accumulated
other comprehensive income 2,283 7,272 Total shareholders' equity
44,020 222,599 Total liabilities, mezzanine equity and
shareholders' equity $120,432 $285,166 CONSOLIDATED STATEMENTS OF
OPERATIONS Three Months Ended Nine Months Ended December 31,
December 31, 2006 2007 2006 2007 Unaudited Unaudited Unaudited
Unaudited (In U.S. dollar thousands, except share and per share
data) Revenues: Software development $10,605 $15,567 $28,767
$42,056 Other services 1,917 3,063 8,043 8,304 Total revenues
12,522 18,630 36,810 50,360 Less business taxes (182) (284) (444)
(588) Net revenues 12,340 18,346 36,366 49,772 Cost of revenues:
Software development 1,998 11,858 3,722 16,734 Other services 966
1,345 2,489 3,231 Total cost of revenues 2,964 13,203 6,211 19,965
Gross profit 9,376 5,143 30,155 29,807 Operating expenses: Research
and development 752 2,151 1,453 3,041 Sales and marketing 1,744
5,935 2,369 7,563 General and administrative 4,210 12,226 8,113
16,147 Total operating expenses 6,706 20,312 11,935 26,751 Income
(loss) from operations 2,670 (15,169) 18,220 3,056 Other income
(expenses): Interest income 173 1,682 300 2,155 Interest expense
(144) (318) (474) (756) Other income, net 55 180 80 246 Total other
income (expenses) 84 1,544 (94) 1,645 Income (loss) before income
tax expense 2,754 (13,625) 18,126 4,701 Income tax expense (842)
(415) (5,515) (2,600) Income (loss) from continuing operations
1,912 (14,040) 12,611 2,101 Loss from discontinued operations (76)
- (233) (1,293) Net income (loss) 1,836 (14,040) 12,378 808 Net
income (loss) per share: Continuing operations $0.05 $(0.31) $0.37
$0.05 Discontinued operations $(0.00) $-- $(0.01) $(0.03) Basic
ordinary share $0.05 $(0.31) $0.36 $0.02 Continuing operations
$0.05 $-- $0.37 $0.05 Discontinued operations $(0.00) $-- $(0.01)
$(0.03) Basic preferred share $0.05 $-- $0.36 $0.02 Continuing
operations $0.05 $(0.31) $0.33 $0.05 Discontinued operations
$(0.00) $-- $(0.01) $(0.03) Diluted $0.05 $(0.31) $0.32 $0.02
Shares used in computation of net income (loss) per share: Basic
ordinary share 29,648,270 45,103,478 29,682,535 34,835,235 Basic
preferred share 7,326,201 -- 4,726,956 7,699,292 Diluted 39,251,429
45,103,478 38,460,167 44,279,893 Includes share-based compensation
related to: Cost of revenues software development $833 $7,545 $838
$7,551 Cost of revenues other services $-- $86 $-- $86 General and
administrative expenses $2,051 $10,599 $3,548 $11,013 Sales and
marketing expenses $502 $4,437 $526 $4,459 Research and development
expenses $147 $1,392 $147 $1,392 CONSOLIDATED ADJUSTED STATEMENTS
OF OPERATIONS Three Months Ended Nine Months Ended December 31,
December 31, 2006 2007 2006 2007 Unaudited Unaudited Unaudited
Unaudited (In U.S. dollar thousands, except share and per share
data) Revenues: Software development $10,605 $15,567 $28,767
$42,056 Other services 1,917 3,063 8,043 8,304 Total revenues
12,522 18,630 36,810 50,360 Less business taxes (182) (284) (444)
(588) Net revenues 12,340 18,346 36,366 49,772 Software development
revenue adjustments: Revenue deferred to 2006 because of lack of
VSOE (941) -- (4,787) -- Adjusted revenues: Software development
9,664 15,567 23,980 42,056 Other services 1,917 3,063 8,043 8,304
Total revenues 11,581 18,630 32,023 50,360 Less business taxes
(182) (284) (444) (588) Net adjusted revenues 11,399 18,346 31,579
49,772 Cost of revenues: Software development 1,998 11,858 3,722
16,734 Other services 966 1,345 2,489 3,231 Total cost of revenues
2,964 13,203 6,211 19,965 Cost of revenue adjustments: Share-based
compensation software development (833) (7,545) (838) (7,551)
Amortization of acquired intangible assets other services (222)
(319) (517) (801) Amortization of acquired intangible assets
software development -- (103) -- (103) Adjusted cost of revenues:
Software development 1,165 4,210 2,884 9,080 Other services 744
1,026 1,972 2,430 Total adjusted cost of revenues 1,909 5,236 4,856
11,510 Gross profit 9,376 5,143 30,155 29,807 Adjusted gross profit
9,490 13,110 26,723 38,262 Operating expenses: Research and
development 752 2,151 1,453 3,041 Sales and marketing 1,744 5,935
2,369 7,563 General and administrative 4,210 12,226 8,113 16,147
Total operating expenses 6,706 20,312 11,935 26,751 Operating
expense adjustments: Share-based compensation research and
development (147) (1,392) (147) (1,392) Share-based compensation
sales and marketing (502) (4,437) (526) (4,459) Share-based
compensation general and administrative (2,051) (10,599) (3,548)
(11,013) Amortization of acquired intangible assets sales and
markeing -- (100) -- (100) Amortization of acquired intangible
assets general and administrative -- (26) -- (26) Non-recurring
costs general and administration (537) -- (697) -- Initial public
offering expenses written off (537) -- (697) -- Adjusted operating
expenses: Research and development 605 759 1,306 1,649 Sales and
marketing 1,242 1,398 1,843 3,004 General and administrative 1,622
1,601 3,868 5,108 Total adjusted operating expenses 3,469 3,758
7,017 9,761 Income (loss) from operations 2,670 (15,169) 18,220
3,056 Adjusted income from operations 6,021 9,352 19,706 28,501
Other income (expenses): Interest income 173 1,682 300 2,155
Interest expense (144) (318) (474) (756) Other income, net 55 180
80 246 Total other income (expenses) 84 1,544 (94) 1,645 Income
(loss) before income tax expense 2,754 (13,625) 18,126 4,701
Adjusted income before income tax expense 6,105 10,896 19,612
30,146 Income tax expense (842) (415) (5,515) (2,600) Income (loss)
from continuing operations 1,912 (14,040) 12,611 2,101 Adjusted net
income 5,263 10,481 14,097 27,546 Loss from discontinued operations
(76) -- (233) (1,293) Net income (loss) 1,836 (14,040) 12,378 808
Adjusted net income per share: Basic ordinary share $0.14 $0.23
$0.41 $0.65 Diluted $0.13 $0.22 $0.37 $0.62 Shares used in net
income (loss) per share computation: Basic ordinary share
36,974,471 45,103,478 34,409,491 42,534,526 Diluted 39,251,429
47,679,365 38,460,167 44,279,893 For more information, please
contact: Longtop Financial Technologies Limited Huiying Yang Email:
Phone: +86-592-239-6888 x1312 Financial Dynamics Julian Wilson
Email: Phone: +86-10-8591-1951 Peter Schmidt Email: Phone:
+86-10-8591-1953 DATASOURCE: Longtop Financial Technologies Limited
CONTACT: Huiying Yang of Longtop Financial Technologies Limited,
+86-592-239-6888 x1312 or ; or Financial Dynamics - Julian Wilson,
+86-10-8591-1951 or ; or Peter Schmidt, +86-10-8591-1953 or , both
for Longtop Financial Technologies Limited Web Site:
http://www.longtop.com/en
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