Longtop Financial's 1Q Profit Jumps 38 Percent

Chinese financial software developer Longtop Financial Technologies Ltd. said Tuesday its fiscal first-quarter profit rose nearly 38 percent on growing demand across its customer base, and boosted its revenue and profit expectations for the full fiscal year.

Longtop reported net income for the three months ended June 30 of $8.4 million, or 16 cents per American Depositary Share, up from a profit of $6.1 million, or 12 cents per ADS, in the year-ago quarter. Excluding stock-based compensation and other one-time costs, Longtop's profit in the latest quarter totaled 20 cents per ADS.

On that basis, analysts surveyed by Thomson Reuters expected a slightly higher profit of 21 cents per ADS, on average.

Revenue rose 47 percent to $28.5 million — beating analysts' forecast of $27.1 million — from $19.3 million in the year-ago period. Revenue from Longtop's core software development business primarily serving Chinese banks and insurance companies rose nearly 54 percent, while revenue from other services posted a more modest gain of nearly 16 percent.

"We are seeing strong demand across all customer and product segments, and we see this trend continuing," said Longtop CEO Weizhou Lian.

However, Chief Financial Officer Derek Palaschuk said the company faces "some headwinds" in its "other services" business, which includes system integration and ATM maintenance services. The business segment accounts for under 15 percent of the company's total sales.

Longtop raised its full-year forecast for fiscal 2010 to an adjusted profit of $65 million, or $1.22 per ADS, from previous guidance of $63 million, or $1.20 per ADS, a forecast issued three months ago. Analysts expect a full-year profit of $1.19 per share, on average.

Longtop now expects full-year revenue of $145 million, slightly above its earlier forecast of $142 million and analysts' average estimate of nearly $143.5 million.