Shares of Fundtech Corp., a developer of payment software, have risen 66% since the company went public March 16, most recently fueled by an announcement of better-than-expected earning.
The San Francisco-based company, founded in 1994, went public last month at about $12 per share. Its initial offering raised $31 million.
First-quarter net income of $231,000, or 3 cents per share, beat Wall Street's expectations by 2 cents per share. First-quarter revenues were $3 million - 243% higher than the year-earlier period.
Fundtech "has had a remarkable start to life as a public company," said Gary Craft, an analyst at BancAmerica Robertson Stephens LLC.
Michael Carus, senior vice president and chief financial officer of Fundtech, attributed the company's growth to brisk sales of its Windows- based software, which simplifies bank initiations of Fed Wire payments.
Fed Wire money transfer systems for mainframe systems can cost several million dollars. Fundtech's client/server system, which uses Windows-based technology, costs about $100,000.
"Smaller and middle-sized banks also have a need for the kinds of technology that only big banks could afford," Mr. Carus said.
The company has sold its software to more than 100 financial institutions including Fidelity Investments, Visa International, and Washington Mutual Inc.
The domestic market is Fundtech's strength, but it also is eyeing overseas markets, Mr. Carus said. Many countries are developing real-time gross settlement systems that resemble Fed Wire, the Federal Reserve's high-speed large-value payment system. Fundtech's system can be adapted to these.
Mr. Craft expects Fundtech to earn 45 cents per share in 1998 based on revenues of $16.5 million. Next year's revenues could grow to $46 million.
He recently added 5 cents to his per-share earnings estimates for next year because of Fundtech's $18 million acquisition of Checkfree Corp.'s cash management and wire transfer businesses. These businesses generated about $9 million in revenues last year.
The Checkfree products are used by the corporate customers of 69 banks. Fundtech plans to integrate the acquired cash management software with its existing products.
Also, it is developing an Internet-based software, which Mr. Carus said would be "much easier to distribute."
At one time Checkfree was looking to compete with Fundtech, but it opted instead to become a reseller of the company's products.
The Atlanta-based company had been the largest third-party distributor of Fundtech's wire transfer software, accounting for 31% of Fundtech's revenues last year. The companies are forging a referral agreement.
Checkfree is shedding several other software products as part of an effort to focus on the electronic payments processing business. It plans to keep its popular automated clearing house software, which has been licensed to 300 banks.
Fundtech's wire transfer software is also distributed by Fiserv Inc., M&I Data Services Inc., Sterling Commerce, and the Society for Worldwide Interbank Financial Telecommunication.
