News Column

SunGard Announces Second Quarter 2014 Results

August 21, 2014



By a News Reporter-Staff News Editor at Computer Weekly News -- SunGard Data Systems Inc. ("SunGard" or the "Company"), one of the world's leading software and technology services companies, reported results for the second quarter ended June 30, 2014. For the second quarter, revenue was $673 million, flat year over year (down 1% adjusting for currency). Operating income was $77 million in the quarter, down 16% year over year, driven by a 3% increase in total costs and expenses, and the operating margin was 11.4%, down 2.2 points year over year. Adjusted EBITDA was $159 million, down 12% year over year, and the adjusted EBITDA margin was 23.7%, down 3.3 points year over year. Excluding the $10 million reduction in costs and expense in the prior year quarter from the change to the Company's vacation liability estimate, Adjusted EBITDA declined 7% year over year and the EBITDA margin declined 1.8 points. Adjusted EBITDA is defined in Note 1 attached to this release.

Year to date, revenue was $1.3 billion, up 1% year over year (flat adjusting for currency). Year to date, the Company incurred an operating loss of $212 million, which includes a $339 million impairment charge. Excluding this charge, operating income was $127 million, down 6% year over year, driven by a 2% increase in total costs and expenses, and operating margin was 9.5%. Adjusted EBITDA was $304 million, down 2% year over year, and adjusted EBITDA margin was 23%, down 0.7 points year over year. See Notes 2 and 3 attached to this release for historical financial information which presents the results of Availability Services in discontinued operations.

Russ Fradin, president and chief executive officer, commented, "Our second quarter results reflect some encouraging trends and the investments we're making in sales capacity, new product development and the infrastructure to support faster services growth. On the revenue front, we're pleased with the growth in our recurring revenue base as well as the increase in professional services revenue over the past several quarters. We were, however, disappointed in the relatively low level of software license fees, largely due to the timing of renewals which tend to vary from quarter to quarter. Overall, the market continues to be receptive to our new product introductions and our expanded managed services offerings, as evidenced by the trend towards higher recurring revenue. I'm confident we're making the right investments to deliver long-term growth and create greater value for our clients." Financial Systems ("FS") segment revenue was $618 million in the second quarter, flat year over year (down 1% year over year adjusting for currency) as growth in services was offset by a decline in software license fees, largely tied to the timing of customer renewals. FS segment costs and expenses were $464 million, up 4% year over year. Excluding the $10 million reduction in costs and expense in the prior year quarter from the change to our vacation liability estimate, FS costs and expenses increased 2% year over year. Investments were made in sales, development and infrastructure to support our improving recurring revenue base. Adjusted EBITDA for the period was $154 million, down 12% from the prior year, and the Adjusted EBITDA margin was 24.9%, down 3.3 points from last year. Excluding the change to our vacation liability estimate in the prior year quarter, Adjusted EBITDA declined 7% year over year and the EBITDA margin declined 1.7 points.

Year to date, FS revenue was $1.2 billion, up 1% year over year (flat adjusting for currency). For the same period, adjusted EBITDA was $293 million, a decrease of 3%, compared to the prior year, and the adjusted EBITDA margin was 24.1%, down 0.9 points from last year.

Keywords for this news article include: Software, Information Technology, SunGard Data Systems Inc, Information and Data Systems.

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Source: Computer Weekly News


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