SunGard, one of the world’s leading software and technology services companies, today reported results for the second quarter ended June 30, 2010. For the quarter, revenue was $1.30 billion, down 5% year over year, and income from operations was $126 million. Adjusted EBITDA was $354 million, down 1% year over year, and adjusted income from operations was $269 million, down 3% year over year. Excluding the results of one of our trading systems businesses, a broker/dealer, revenue was up 4% and adjusted income from operations was up 5% compared to the same quarter last year. Adjusted EBITDA and adjusted income from operations are defined in Notes 1 and 2 in the Notes attached to this release.
Organic revenue (defined as revenue from businesses owned for at least one year and adjusted for both businesses sold in the previous twelve months and the impact of currency exchange rates) was down 4% year over year in the second quarter. Excluding one of our trading systems businesses, a broker/dealer, organic revenue was up 4% year over year. This broker/dealer revenue was down 64% compared to the prior year due primarily to the industry-wide dynamic by which active trading firms are opting to become broker/dealers and trade on their own behalf. See Note 3 in the Notes attached to this release.
Cristóbal Conde, president and chief executive officer, commented, "We are pleased with our performance in the quarter, particularly the strong showing by our Financial Systems business. Customers are looking to get more mileage out of the systems they already have in place and are prepared to spend on professional services to get more functionality. While we continue to see long sales cycles and pricing pressure, we are seeing bigger transaction sizes and our value message and services-led approach continue to resonate with our customers. Overall, our competitiveness is very strong and we are executing well on the ground.”
For the six months ended June 30, 2010, revenue decreased 6% year over year to $2.55 billion, and income from operations was $200 million. Adjusted EBITDA was $650 million and adjusted income from operations was $486 million for the first six months of 2010. Excluding the broker/dealer business mentioned above, revenue was up 3% and adjusted income from operations was up 1% compared to the first six months of 2009.
Financial Systems revenue decreased 8% year over year to $703 million in the second quarter. Organic revenue decreased 7% year over year. Excluding the broker/dealer business mentioned above, revenue was up 8% and organic revenue was up 10% compared to the second quarter of 2009. License fees were $66 million for the quarter, an increase of $33 million compared to the same quarter of 2009.
Notable deals in the quarter included the following:
- A leading trust company selected SunGard to provide an integrated wealth management platform that includes SunGard’s Investor’sView, AddVantage and SunGard Global Network.
- A global investment bank selected SunGard’s Stream GMI as its U.S. clearing and accounting system for exchange-traded derivatives.
- A leading provider of ultra-low latency direct market access trading technology, risk management solutions and brokerage services chose SunGard’s Valdi Sponsored Access and Valdi Correspondent Clearing Services to support its core operations.
Higher Education revenue, all of which was organic, declined 1% year over year to $131 million in the second quarter. License fees were $10 million for the quarter, an increase of $5 million compared to the prior year.
Notable deals in the quarter included the following:
- A leading polytechnic institution in Canada selected Banner Digital Campus to provide an integrated suite of administrative solutions.
- A public university in Oklahoma selected SunGard Higher Education to provide a comprehensive suite of solutions and services.
- A public university in Delaware expanded its relationship with SunGard Higher Education by outsourcing IT services for managing its Banner Digital Campus.
Public Sector revenue increased 4% year over year to $99 million in the second quarter. Organic revenue increased 5% year over year. License fees were $4 million for the quarter, a decrease of $3 million compared to the same quarter of 2009.
Notable deals in the quarter included the following:
- A city in Florida selected SunGard Public Sector to provide public safety solutions for computer-aided dispatch, records management and mobile computing.
- A campus public safety agency for a major state university in Texas selected SunGard to provide technology solutions for dispatch, mobile computing and other needs.
- A school district in Washington chose SunGard Public Sector to provide a finance and human resources solution.
Availability Services revenue decreased 3% year over year to $365 million in the second quarter. Organic revenue also decreased 3% in the quarter.
Notable deals in the quarter included the following:
- A global provider of stock transfer and employee equity plan services chose SunGard to provide hosting, recovery solutions, technology migration support and IT consulting services.
- A leading mutual fund manager selected SunGard for business continuity and data recovery.
- A leading U.S. discount retailer extended its relationship with SunGard to include advanced recovery solutions and managed recovery services.
Financial Position
At June 30, 2010, total debt was $8.3 billion and cash balances were $729 million. During the six months ended June 30, 2010, the Company generated $247 million in cash flow from operations and invested $148 million in capital expenditures. Beginning this quarter, a statement of cash flows has been included in the quarterly release of financial results.
Conference Call & Webcast
A conference call to review the results is scheduled for today at 9:00 a.m. (Eastern Time). The dial-in number for the conference call is 706-902-1370, and the conference ID number is 90067600. You may also listen to the call at www.investorcalendar.com by clicking on the "audio" icon for SunGard. An audio replay will be available two hours after the call ends through midnight on August 19, 2010. To listen to the replay, please dial 1-800-642-1687 or 706-645-9291 and enter the conference ID number 90067600. A replay will also be available two hours after the call ends through midnight on August 19, 2010 at www.investorcalendar.com.