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Longtop: update

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(Updated) I used the revenue number from company report and calculated the growth rate, using google spreadsheet. Revenue, in thousand of $, the following columns may not align right, click the G speadsheet above if you like.

FY ending
3/31/2007 3/31/2008 growth rate 3/31/2009 growth rate
Q1 9238 11530 24.81% ?
Q2 11204 20200 80.29% ?
Q3 11581 15500 33.84% ?
Q4 7750 10770 38.97% ?
Total 39773 58000 45.83% 80000 37.93%

Couple things:
1) Seasonality: the past quarter (ending Sept. 30) is the strongest. The company did say summer and fall are typical strong quarters. Note the seasonality is quite different from typical US software company, where Q4 (quarter ending Dec 31) is ususally the strongest.

2) Healthy growth overall. The recent boom can be attributed to the boom of Chinese banking industry. The question is can the company can sustain this 40% growth rate?

(Original) A week after Nov. 19 conference call, Longtop put up adjusted fiscal 2006 and 2007 financial statements here at its IR site. Pretty fast. Although there is no credibility issue here because the company did adjustment mainly because of the change of the fiscal year, I would be careful here. I am going to read it, digest it and do my homework using google spreadsheet.

Separately, did you see Deckers (Nasdaq: DECK; the maker of UGG boots) fly high in last 2 trading sessions?

Another Crocs in the making 🙂

2 replies on “Longtop: update”

Thanks for your note. I like your blog.
Revenues are not adjusted, but expenses are. For example,
07Q1 operating expenses are adjusted down to 2.0M from 3.6M,
hence net income are adjusted up to 2.8M from 0.8M.
Looking at EPS of 07Q1,Q2,Q3, before adjustment: 0.02,0.12,0.24, after adjustment 0.07,0.14,0.28. The total EPS for the first nine months was up from 0.38 to 0.49. So numbers are adjusted to be better.

I think they should explain in simple words why they made the adjustment. They seem to have made the adjustment “quietly”
on their website.

XG,
Thanks for your comments. Not to defend the management of Longtop. Here is the main reason for adjustment, as stated in their latest quarter report:

http://biz.yahoo.com/prnews/071119/cnm023.html?.v=16

====
NON-GAAP DISCLOSURE (“ADJUSTED”)

To supplement the unaudited consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles (“GAAP”), Longtop’s management reports and uses non-GAAP (“Adjusted”) measures of revenues, cost of revenues, operating expenses, net income and net income per share, which are adjusted from results based on GAAP…

One-Time Items, if applicable, are excluded from Adjusted Operating Income and Adjusted Net Income. These items are one-time in nature and non-recurring, infrequent or unusual, and have not occurred in the past two years or are not expected to recur in the next two years. GAAP results include one-time items…
======

I agree the effect is like you said. I also note after adjustment, they made the 2006 revenue number lower, which also means 2007 will compare better with 2006…

Oh, well, the key is to make sure the business is healthy.

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