Fundtech Ltd., a Jersey City maker of banking software for corporate cash management and foreign exchange, has added to its payment arsenal by buying software tools from Troy Group Inc. of Costa Mesa, Calif., for automated clearing house transactions.
The purchase, which Fundtech announced Tuesday, was its second this month. Two weeks ago it bought Accountis Ltd., the U.K. maker of an automated financial document exchange and payment product that links companies' accounts receivable systems.
Reuven Ben-Menachem, Fundtech's chairman and chief executive, said opportunities are emerging for banks to automate corporate clients' supply chains.
"I believe that the largest banks see an area of electronic invoice presentment and payment is an exciting growth area for them," he told analysts on an earnings call Tuesday.
The vendor said that it paid $1.5 million in cash, and that the transaction closed this month.
Troy announced the deal last month, without naming the buyer, and said the buyer would assume $2.3 million of debt and could pay an additional $400,000 in contingent consideration.
Patrick Dirk, Troy's chairman and CEO, said at that time that selling the ACH software would allow his company to focus on its core printing business. Troy sells magnetic ink character recognition printers, check-printing software, and related products.
Analysts said Fundtech is performing strongly in a difficult market.
"The payments software business has been growing at a double-digit rate, and Fundtech has been growing even faster than that," said Gil B. Luria of Wedbush Morgan Securities, who has a "buy" rating on the stock. "Since ACH is becoming an even more important category, they decided to build on that."
John Kraft, an analyst at D.A. Davidson & Co., said he was encouraged by Fundtech executives' outlook for this year.
"They're not seeing any real evidence that banks are spending less. These are mission-critical systems for the banks," said Mr. Kraft, who also rates the stock a "buy."
Fundtech's fourth-quarter net income grew 65% from a year earlier, to $2.7 million. Revenue grew 27%, to $29.4 million. Using the company's preferred method of measuring its profits, adjusted net income of 22 cents a share met the average Wall Street projection.
For this year, Fundtech projected adjusted earnings of 70 to 80 cents a share on $120 million to $125 million of revenue. The Wall Street consensus calls for adjusted earnings of 77 cents a share on $113.2 million of revenue.
Also Tuesday, ACI Worldwide Inc. of New York said it lost $2 million, or 6 cents a share, in the fourth quarter, compared with net income of $2.6 million, or 7 cents a share, a year earlier. Revenue grew 8.6%, to $101.3 million.
Philip G. Heasley, ACI's president and CEO, said he was pleased with the results. His company spent much of last year restating results for previous periods, but in December it announced a marketing alliance with International Business Machines Corp.
"2007 was a challenging transitional year with legacy issues, and yet it was extremely gratifying to see the business perform so well in the fourth quarter," Mr. Heasley said. "Our organic performance and the new IBM alliance will both position ACI to grow strongly in 2008 and beyond."
Mr. Luria said ACI's position is strong, though it has not converted its pipeline of prospects into revenue as quickly as investors would like.
"ACI has a very large, established customer base," he said. "A lot of the new sales they've been talking about have yet to materialize."
