NORCROSS, Ga., Nov. 5, 2009 (GLOBE NEWSWIRE) -- S1 Corporation (Nasdaq:SONE), a leading global provider of customer interaction financial and payment solutions, today announced financial results for the third quarter of 2009:
* Total revenue in the third quarter of 2009 increased three percent to $60.3 million from $58.6 million in the third quarter of 2008. Total revenue in the nine months ended September 30, 2009 increased six percent to $179.5 million from $169.8 million in the nine months ended September 30, 2008. * GAAP earnings were $6.9 million or $0.12 per share (diluted) in the third quarter of 2009 compared to GAAP earnings of $6.2 million or $0.11 per share (diluted) in the third quarter of 2008. GAAP earnings were $20.5 million or $0.37 per share (diluted) in the nine months ended September 30, 2009, a $0.09 increase over GAAP earnings of $16.5 million or $0.28 per share (diluted) in the nine months ended September 30, 2008. These figures include a stock based compensation benefit of $139 thousand and an expense of $412 thousand in the third quarter of 2009 and 2008, respectively, and an expense of $421 thousand and $4.6 million in the nine months ended September 30, 2009 and 2008, respectively. * Adjusted EBITDA in the third quarter of 2009 was $11.7 million compared to $10.5 million in the third quarter of 2008. Adjusted EBITDA in the nine months ended September 30, 2009 was $33.9 million compared to $32.5 million in the nine months ended September 30, 2008. Adjusted EBITDA does not include stock based compensation expense and is described below (1) and reconciled to GAAP Net income in Tables 4, 5 and 6. * Total revenue from international operations in the third quarter of 2009 increased one percent to $17.8 million from $17.7 million in the third quarter of 2008. Total revenue from international operations in the nine months ended September 30, 2009 increased six percent to $51.3 million from $48.3 million in the nine months ended September 30, 2008. * Under a previously announced stock repurchase program, the Company repurchased 755 thousand shares of its common stock for $5.0 million during the third quarter of 2009. The Company ended the third quarter of 2009 with $70.9 million in cash, cash equivalents and short-term investments. * The Company expects to generate approximately $25 to $26 million in revenue from State Farm in 2010. * The Company reaffirms its full year guidance of $240 to $245 million in revenue and $47 to $50 million in Adjusted EBITDA.
"I am pleased that we were able to post another quarter of year-over-year growth in both revenue and Adjusted EBITDA despite the challenging economic environment," said Johann Dreyer, Chief Executive Officer of S1. "Although financial institutions are proceeding very cautiously with making investment decisions, we continue to see excellent sales opportunities around the world, particularly with our payments and cash management offerings. I am also very excited about the positive feedback we continue to receive on our new Internet banking platform."
(1) Adjusted EBITDA
See Tables 4, 5 and 6 for reconciliations of Adjusted EBITDA to GAAP Net income.
This press release includes references to Adjusted EBITDA, a non-GAAP financial measure, the most directly comparable GAAP equivalent of which is Net income. We define Adjusted EBITDA as Net income less net interest income, plus income taxes, depreciation, amortization of intangibles, and stock-based compensation expense. A reconciliation of our non-GAAP financial measure to the most directly comparable financial measure is detailed in the reconciliation of GAAP to non-GAAP financial measures in Tables 4, 5 and 6. We believe that the presentation of this non-GAAP financial measure provides useful information to investors regarding our results of operations.
We believe that excluding depreciation, amortization, stock-based compensation expense, net interest income and income tax expense provides supplemental information and an alternative presentation useful to investors' understanding of the Company's core operating results and trends. Not only are depreciation and amortization expenses based on historical costs of assets that may have little bearing on present or future replacement costs, but they are also based on management estimates of remaining useful lives. Additionally, while stock-based compensation is an important part of overall compensation expense, a portion of our stock-based compensation expense is the result of cash-settled stock appreciation rights that are revalued each quarter for GAAP earnings based on the closing price of the Company's stock on the last day of the quarter. Consequently, fluctuations in our stock price can have a significant impact on the Company's reported GAAP earnings. Additionally, it is possible that the Company may begin recording income tax provisions for GAAP earnings despite being able to reduce taxes payable through the potential use of net operating loss carry forwards and other tax credits.
Although we believe, for the foregoing reasons, that our presentation of a non-GAAP financial measure provides useful supplemental information to investors regarding our results of operations, our non-GAAP financial results should only be considered in addition to, and not as a substitute for or superior to, our financial measures prepared in accordance with GAAP.
Use of non-GAAP financial measures is subject to inherent limitations because they do not include all the expenses that must be included under GAAP and because they involve the exercise of judgment of which charges should properly be excluded from the non-GAAP financial measure. Management accounts for these limitations by not relying exclusively on non-GAAP financial measures, but only using such information to supplement GAAP financial results. We urge investors not to consider non-GAAP financial measures as a substitute for, or superior to, any measure of financial performance prepared in accordance with GAAP. Our non-GAAP financial measure may be different from such measures used by other companies.
Adjusted EBITDA is not a measure of liquidity calculated in accordance with accounting principles generally accepted in the United States, and should be viewed as a supplement to -- not a substitute for -- our results of operations presented on the basis of accounting principles generally accepted in the United States. Adjusted EBITDA does not purport to represent cash flow provided by, or used in, operating activities as defined by accounting principles generally accepted in the United States. Our statement of cash flows presents our cash flow activity in accordance with accounting principles generally accepted in the United States. Furthermore, Adjusted EBITDA is not necessarily comparable to similarly-titled measures reported by other companies.
We believe Adjusted EBITDA is used by and is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. We believe that Adjusted EBITDA is widely used by investors to measure a company's operating performance without regard to items such as interest expense, taxes, depreciation and amortization, and stock-based compensation expense which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired.
Our management uses Adjusted EBITDA as a measure of operating performance to assist in comparing performance from period to period on a consistent basis; as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations; and in communications with the Board of Directors, stockholders, analysts and investors concerning our financial performance.
Conference Call Information
Company management will host a conference call for interested parties to discuss its third quarter results on Friday, November 6, 2009, at 8:30 a.m. ET. A webcast of the call will be available through the Company's website, www.s1.com. The conference call will contain forward-looking statements and other material information. A replay of the call will be available for two weeks following the call on the Company's website.
About S1 Corporation
Leading banks, credit unions, retailers, and processors need technology that adapts to the complex and challenging needs of their businesses. These organizations want solutions that can respond quickly to changes in the marketplace and help grow their businesses. For more than 20 years, S1 Corporation (Nasdaq:SONE) has been a leader in developing software products that offer flexibility and reliability. Over 3,000 organizations worldwide depend on S1 for payments, online banking, mobile banking, voice banking, branch banking and lending solutions that deliver a competitive advantage. www.s1.com
Forward-Looking Statements
This press release contains forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act. These statements include statements with respect to our financial condition, results of operations and business. The words "believes," "expects," "may," "will," "should," "projects," "contemplates," "anticipates," "forecasts," "intends" or similar terminology identify forward-looking statements. Forward-looking statements may include projections of our revenue, expenses, Adjusted EBITDA, capital expenditures, earnings per share, product development projects, future economic performance or management objectives. These statements, including without limitation statements regarding expected revenue from State Farm, are based on our beliefs as well as assumptions made using information currently available to us. Because these statements reflect our current views concerning future events, they involve risks, uncertainties and assumptions. Therefore, actual results may differ significantly from the results discussed in the forward-looking statements. The risk factors included in our reports filed with the Securities and Exchange Commission (and available on our web site at www.s1.com or the SEC's web site at www.sec.gov) provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Except as provided by law, we undertake no obligation to update any forward-looking statement for any reason, even if new information becomes available.
S1 Corporation
Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
TABLE 1
Three Months Ended Nine Months Ended
9/30/2009 9/30/2008 9/30/2009 9/30/2008
------------------------- -------------------------
Revenue:
Software
licenses $ 10,225 $ 9,208 $ 34,154 $ 26,860
Support and
maintenance 13,472 12,259 39,569 36,557
Professional
services 25,787 24,939 72,952 69,797
Data center 10,853 12,243 32,792 36,596
------------------------- -------------------------
Total revenue 60,337 58,649 179,467 169,810
------------------------- -------------------------
Operating expenses:
Cost of software
licenses (1) 623 938 2,735 3,075
Cost of
professional
services,
support and
maintenance (1) 19,200 19,422 55,997 54,947
Cost of data
center (1) 7,079 6,743 21,169 19,701
Selling and
marketing 7,500 8,360 23,751 25,919
Product
development 8,996 7,658 26,141 21,440
General and
administrative 5,578 6,094 17,581 18,912
Depreciation and
amortization of
intangible
assets 2,298 2,257 7,298 6,685
------------------------- -------------------------
Total
operating
expenses 51,274 51,472 154,672 150,679
------------------------- -------------------------
Operating income 9,063 7,177 24,795 19,131
Interest and
other (expense)
income, net (516) 296 (1,034) 714
Income tax
expense (1,637) (1,282) (3,276) (3,328)
------------------------- -------------------------
Net income $ 6,910 $ 6,191 $ 20,485 $ 16,517
========================= =========================
Earnings per
share:
Basic $ 0.13 $ 0.11 $ 0.38 $ 0.29
Diluted $ 0.12 $ 0.11 $ 0.37 $ 0.28
Weighted average
common shares
outstanding -
basic 52,598,922 56,559,777 52,766,275 56,577,987
Weighted average
common shares
outstanding
- diluted 53,452,888 57,526,966 53,494,437 57,330,269
------------------------
(1) Excludes charges for depreciation. Cost of software licenses
includes amortization of acquired technology of $400 thousand
and $700 thousand for the three months ended September 30, 2009
and 2008, respectively, and $1.4 million and $2.1 million for
the nine months ended September 30, 2009 and 2008,
respectively.
S1 Corporation
Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)
TABLE 2
September 30, December 31,
2009 2008
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 67,407 $ 63,840
Accounts receivable, net 56,873 42,561
Prepaid expenses 5,004 5,123
Other current assets 5,527 3,575
------------- -------------
Total current assets 134,811 115,099
Property and equipment, net 23,207 23,015
Intangible assets, net 5,392 7,585
Goodwill, net 126,618 124,362
Other assets 9,274 8,625
------------- -------------
Total assets $ 299,302 $ 278,686
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 2,079 $ 1,366
Accrued compensation and benefits 12,930 16,147
Accrued restructuring 2,158 2,323
Accrued other expenses 9,440 10,271
Deferred revenues 30,984 25,271
Current portion of debt obligation 2,004 3,917
------------- -------------
Total current liabilities 59,595 59,295
Debt obligation, excluding current
portion 5,188 6,196
Accrued restructuring, excluding current
portion 1,901 3,443
Other liabilities 1,594 1,012
------------- -------------
Total liabilities $ 68,278 $ 69,946
------------- -------------
Stockholders' equity:
Preferred stock 10,000 10,000
Common stock 522 528
Additional paid-in capital 1,790,141 1,791,924
Accumulated deficit (1,567,472) (1,587,957)
Accumulated other comprehensive loss (2,167) (5,755)
------------- -------------
Total stockholders' equity 231,024 208,740
------------- -------------
Total liabilities and stockholders'
equity $ 299,302 $ 278,686
============= =============
Preferred shares issued and outstanding 749,064 749,064
Common shares issued and outstanding 52,203,371 52,799,310
S1 Corporation
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
TABLE 3
Three Months Ended Nine Months Ended
9/30/2009 9/30/2008 9/30/2009 9/30/2008
--------------------- ---------------------
Cash flows from
operating activities:
Net income $ 6,910 $ 6,191 $ 20,485 $ 16,517
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization 2,735 2,917 8,650 8,752
Provision for doubtful
accounts receivable and
billing adjustments (257) 43 (534) (342)
Deferred income tax 209 -- 240 --
Stock based compensation
(benefit) expense (139) 412 421 4,605
Changes in assets and
liabilities
(Increase)decrease in
accounts receivable (285) 5,017 (11,730) (3,610)
(Increase) decrease in
prepaid expenses and
other assets (677) 1,156 (1,962) 1,263
(Decrease) increase in
accounts payable (735) (1,023) 646 134
(Decrease) increase in
income taxes payable (1,565) 870 (938) 2,099
(Decrease) increase in
accrued expenses and
other liabilities (824) 1,719 (1,557) (290)
(Decrease) increase in
deferred revenues (2,758) (2,420) 5,429 2,053
--------------------- ---------------------
Net cash provided
by operating
activities 2,614 14,882 19,150 31,181
Cash flows from investing
activities:
Maturities of investment
securities 1,587 9,203 2,504 20,653
Purchases of investment
securities (5,224) (2,465) (5,224) (3,447)
Amounts released in
escrow related to sale
of business -- -- -- 3,712
Purchases of property,
equipment and
technology (1,858) (2,556) (6,364) (7,273)
--------------------- ---------------------
Net cash (used in)
provided by
investing
activities (5,495) 4,182 (9,084) 13,645
Cash flows from financing
activities:
Proceeds from exercise
of employee stock
options 50 30 192 858
Payments on capital
leases and debt
obligations (376) (917) (2,921) (2,785)
Repurchase and
retirement of common
stock (4,971) (8,428) (4,971) (10,167)
--------------------- ---------------------
Net cash used in
financing
activities (5,297) (9,315) (7,700) (12,094)
Effect of exchange rate
changes on cash and cash
equivalents 378 (1,796) 1,201 (2,357)
--------------------- ---------------------
Net (decrease) increase in
cash and cash equivalents (7,800) 7,953 3,567 30,375
Cash and cash equivalents
at beginning of period 75,207 67,433 63,840 45,011
--------------------- ---------------------
Cash and cash equivalents
at end of period $ 67,407 $ 75,386 $ 67,407 $ 75,386
===================== =====================
S1 Corporation
Consolidated Statements of Operations
(In thousands)
(Unaudited)
TABLE 4
Three Months Ended Nine Months Ended
9/30/2009 9/30/2008 9/30/2009 9/30/2008
--------------------- ---------------------
Revenue:
Software
licenses $ 10,225 $ 9,208 $ 34,154 $ 26,860
Support and maintenance 13,472 12,259 39,569 36,557
Professional services 25,787 24,939 72,952 69,797
Data center 10,853 12,243 32,792 36,596
--------------------- ---------------------
Total revenue 60,337 58,649 179,467 169,810
--------------------- ---------------------
Operating expenses:
Cost of software
licenses 623 938 2,735 3,075
Cost of professional
services, support and
maintenance 19,200 19,422 55,997 54,947
Cost of data center 7,079 6,743 21,169 19,701
Selling and marketing 7,500 8,360 23,751 25,919
Product development 8,996 7,658 26,141 21,440
General and
administrative 5,578 6,094 17,581 18,912
Depreciation and
amortization of
intangible assets 2,298 2,257 7,298 6,685
--------------------- ---------------------
Total operating
expenses (1) 51,274 51,472 154,672 150,679
--------------------- ---------------------
Operating income 9,063 7,177 24,795 19,131
Interest and other
(expense) income, net (516) 296 (1,034) 714
Income tax expense (1,637) (1,282) (3,276) (3,328)
--------------------- ---------------------
Net income $ 6,910 $ 6,191 $ 20,485 $ 16,517
===================== =====================
Reconciliation to
Adjusted EBITDA:
Net income $ 6,910 $ 6,191 $ 20,485 $ 16,517
Interest and other
(expense) income, net 516 (296) 1,034 (714)
Income tax expense 1,637 1,282 3,276 3,328
Depreciation 2,022 1,974 6,457 5,837
Amortization 713 943 2,193 2,915
Stock based compensation
(benefit) expense (139) 412 421 4,605
--------------------- ---------------------
Adjusted EBITDA $ 11,659 $ 10,506 $ 33,866 $ 32,488
===================== =====================
(1)Includes stock
based compensation
(benefit) expense of:
Cost of professional
services, support and
maintenance $ 6 $ 31 $ 67 $ 104
Cost of data center 35 29 78 76
Selling and marketing (364) (5) (437) 1,601
Product development 36 15 142 599
General and
administrative 148 342 571 2,225
--------------------- ---------------------
Stock based compensation
(benefit) expense $ (139) $ 412 $ 421 $ 4,605
===================== =====================
S1 Corporation
Enterprise Segment
Statements of Operations
(In thousands)
(Unaudited)
TABLE 5
Three Months Ended Nine Months Ended
9/30/2009 9/30/2008 9/30/2009 9/30/2008
--------------------- ---------------------
Revenue:
Software licenses $ 2,478 $ 1,696 $ 6,948 $ 5,722
Support and maintenance 4,792 4,200 14,459 12,405
Professional services 18,850 19,741 55,165 54,935
Data center 6,957 7,269 21,183 21,404
--------------------- ---------------------
Total revenue 33,077 32,906 97,755 94,466
--------------------- ---------------------
Operating expenses:
Cost of software
licenses 150 236 663 988
Cost of professional
services, support and
maintenance 10,446 11,714 32,767 33,345
Cost of data center 3,995 4,015 12,052 11,695
Selling and marketing 2,835 3,643 9,853 11,614
Product development 5,209 4,584 15,891 13,154
General and
administrative 2,620 3,202 8,559 10,141
Depreciation and
amortization of
intangible assets 1,168 1,127 3,705 3,392
--------------------- ---------------------
Total operating
expenses (1) 26,423 28,521 83,490 84,329
--------------------- ---------------------
--------------------- ---------------------
Operating income $ 6,654 $ 4,385 $ 14,265 $ 10,137
===================== =====================
Reconciliation to
Adjusted EBITDA:
Operating income $ 6,654 $ 4,385 $ 14,265 $ 10,137
Depreciation 1,168 1,127 3,705 3,392
Amortization 62 62 184 269
Stock based compensation
(benefit) expense (152) 214 128 2,934
--------------------- ---------------------
Adjusted EBITDA $ 7,732 $ 5,788 $ 18,282 $ 16,732
===================== =====================
(1)Includes stock based
compensation (benefit)
expense of:
Cost of professional
services, support and
maintenance $ 40 $ 51 $ 117 $ 89
Cost of data center 11 7 19 30
Selling and marketing (379) (36) (518) 1,092
Product development (21) (29) 5 478
General and
administrative 197 221 505 1,245
--------------------- ---------------------
Stock based compensation
(benefit) expense $ (152) $ 214 $ 128 $ 2,934
===================== =====================
S1 Corporation
Postilion Segment
Statements of Operations
(In thousands)
(Unaudited)
TABLE 6
Three Months Ended Nine Months Ended
9/30/2009 9/30/2008 9/30/2009 9/30/2008
--------------------- ---------------------
Revenue:
Software licenses $ 7,747 $ 7,512 $ 27,206 $ 21,138
Support and maintenance 8,680 8,059 25,110 24,152
Professional services 6,937 5,198 17,787 14,862
Data center 3,896 4,974 11,609 15,192
--------------------- ---------------------
Total revenue 27,260 25,743 81,712 75,344
--------------------- ---------------------
Operating expenses:
Cost of software
licenses 473 702 2,072 2,087
Cost of professional
services, support and
maintenance 8,754 7,708 23,230 21,602
Cost of data center 3,084 2,728 9,117 8,006
Selling and marketing 4,665 4,717 13,898 14,305
Product development 3,787 3,074 10,250 8,286
General and
administrative 2,958 2,892 9,022 8,771
Depreciation and
amortization of
intangible assets 1,130 1,130 3,593 3,293
--------------------- ---------------------
Total operating
expenses (1) 24,851 22,951 71,182 66,350
--------------------- ---------------------
--------------------- ---------------------
Operating income $ 2,409 $ 2,792 $ 10,530 $ 8,994
===================== =====================
Reconciliation to Adjusted
EBITDA:
Operating income $ 2,409 $ 2,792 $ 10,530 $ 8,994
Depreciation 854 847 2,752 2,445
Amortization 651 881 2,009 2,646
Stock based compensation
expense 13 198 293 1,671
--------------------- ---------------------
Adjusted EBITDA $ 3,927 $ 4,718 $ 15,584 $ 15,756
===================== =====================
(1)Includes stock based
compensation expense of:
Cost of professional
services, support and
maintenance $ (34) $ (20) $ (50) $ 15
Cost of data center 24 22 59 46
Selling and marketing 15 31 81 509
Product development 57 44 137 121
General and
administrative (49) 121 66 980
--------------------- ---------------------
Stock based compensation
expense $ 13 $ 198 $ 293 $ 1,671
===================== =====================