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| S1 Corporation Reports Second Quarter 2007 Results |
Revenues increased 13% with GAAP EPS of $0.08
Increases full year guidance and stock repurchase authorization
NORCROSS, Ga., Aug. 9 /PRNewswire-FirstCall/ -- S1 Corporation (Nasdaq: SONE), a leading global provider of customer interaction financial and payment solutions, today announced financial results for the three and six months ended June 30, 2007.
-- Revenue for the second quarter of 2007 was $52.6 million, compared to
$46.7 million in the second quarter of 2006, a 13 percent increase.
For the six months ended June 30, 2007, revenue increased 11 percent to
$100.2 million from $90.2 million in 2006.
-- GAAP earnings per share of $0.08 for the second quarter of 2007 was an
$0.11 improvement over the $0.03 loss per share in the second quarter
of 2006. These figures include stock based compensation expense of
$3.1 million and $1.2 million in the second quarter of 2007 and 2006,
respectively.
-- EBITDA for the second quarter of 2007 was $7.7 million, compared to
$1.3 million in the second quarter of 2006. For the six months ended
June 30, 2007, EBITDA was $13.1 million compared to $2.7 million for
the six months ended June 30, 2006. EBITDA is described and reconciled
to our GAAP income from continuing operations below.(1)
-- Software license revenue includes subscription revenue of $1.8 million
and $0.5 million for the three months ended June 30, 2007 and 2006,
respectively. For the six months ended June 30, 2007 and 2006,
software license revenue includes subscription revenue of $3.6 million
and $1.1 million, respectively.
-- The Board of Directors approved a $20.0 million increase to the
Company's stock repurchase program, bringing the total authorization to
$50.0 million, under which S1 may repurchase shares of its common stock
from time to time in open market and privately negotiated transactions
as market and business conditions warrant. The Company repurchased
1.9 million shares of its common stock for a total cost of
$15.0 million during the three months ended June 30, 2007.
-- The Company increased GAAP earnings per share guidance for the full
year 2007 to $0.26 - $0.29 and now estimates full year 2007 revenue to
be in the range of $202 - $206 million. Full year GAAP earnings per
share guidance includes stock based compensation expense of
approximately $11 million.
"I am very pleased with our second quarter performance," said Johann Dreyer, Chief Executive Officer of S1. "We posted strong year-over-year growth in both revenue and net income as we continued to execute effectively against our business plan. Our change in guidance reflects our continued optimism about the prospects for the Company."
(1) EBITDA Reconciliation
For the three months ended June 30, 2007
Enterprise Postilion Total
EBITDA $3,715 $3,983 $7,698
Depreciation (1,142) (595) (1,737)
Amortization (127) (821) (948)
-------- -------- --------
Operating income $2,446 $2,567 $5,013
Interest income, net 848
Income tax expense (784)
--------
Income from continuing operations $4,949
========
For the six months ended June 30, 2007
Enterprise Postilion Total
EBITDA $6,200 $6,947 $13,147
Depreciation (2,361) (1,210) (3,571)
Amortization (409) (1,685) (2,094)
-------- -------- --------
Operating income $ 3,430 $4,052 $7,482
Interest income, net 1,655
Income tax expense (1,221)
--------
Income from continuing operations $7,916
========
See tables 4, 5 and 6 for reconciliations of EBITDA
This press release includes references to EBITDA, a non-GAAP financial measure, the most directly comparable GAAP equivalent of which is net income (loss). EBITDA excludes depreciation and amortization, income taxes, and net interest income. 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 above. We believe that presentation of this non-GAAP financial measure provides useful information to investors regarding our results of operations. Stock based compensation costs are included in our reported EBITDA which are presented in tables 4, 5 and 6. We believe that excluding depreciation and amortization 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. Although we believe, for the foregoing reasons, that our presentation of non-GAAP financial measure provides useful supplemental information to investors regarding our results of operations, our non-GAAP financial measure 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 measures. 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. We define EBITDA as Income (loss) from continuing operations less net interest income, plus income taxes, depreciation, and amortization of goodwill and other purchased intangibles. 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. 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, EBITDA is not necessarily comparable to similarly-titled measures reported by other companies. We believe 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 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, 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 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. A reconciliation of EBITDA to income (loss) from continuing operations, the most directly comparable GAAP measure, for each of the fiscal periods indicated is included herein. Conference Call Information Company management will host a conference call for interested parties to discuss its second quarter results on Thursday, August 9, 2007, at 8:30 a.m. EST. 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 through August 23 on the Company's website. About S1 S1 Corporation (NASDAQ: SONE) delivers customer interaction software for financial and payment services and offers unique solution sets for financial institutions, retailers, and processors. S1 employs over 1,400 people in operations throughout North America, Europe and Middle East, Africa, and Asia- Pacific regions. Worldwide, more than 3,000 customers use S1 software solutions, which are comprised of applications that address virtually every market segment and delivery channel. S1 partners with best-in-class organizations to provide flexible and extensible software solutions for its customers. Additional information about S1 is available at 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. These statements 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.
S1 Corporation
Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
TABLE 1
Three Months Ended Six Months Ended
6/30/2006 6/30/2007 6/30/2006 6/30/2007
--------------------- ---------------------
Revenues:
Software licenses $6,369 $7,755 $12,412 $13,517
Support and
maintenance 11,197 11,227 21,854 21,702
Professional services 16,950 21,681 31,571 41,113
Data center 11,911 11,730 23,497 23,430
Other 312 205 845 402
--------------------- ---------------------
Total revenues 46,739 52,598 90,179 100,164
--------------------- ---------------------
Operating expenses:
Cost of software licenses 1,062 940 2,092 1,832
Cost of professional
services, support and
maintenance 15,761 15,830 30,451 30,942
Cost of data center 5,759 6,390 11,175 12,189
Cost of other revenue 133 130 449 272
Selling and marketing 6,683 7,767 12,558 15,165
Product development 9,876 6,798 19,483 13,692
General and
administrative 6,479 7,710 12,195 14,409
Merger related and
restructuring costs 549 - 882 -
Depreciation 1,971 1,737 3,723 3,571
Amortization of other
intangible assets 327 283 654 610
--------------------- ---------------------
Total operating
expenses 48,600 47,585 93,662 92,682
--------------------- ---------------------
Operating (loss) income (1,861) 5,013 (3,483) 7,482
Interest and other income,
net 1,040 784 2,249 1,655
Income tax expense (263) (848) (654) (1,221)
--------------------- ---------------------
(Loss) income from
continuing operations,
net of tax $(1,084) $4,949 $(1,888) $7,916
Loss from discontinued
operations (1,027) - (667) -
--------------------- ---------------------
Net (loss) income $(2,111) $4,949 $(2,555) $7,916
===================== =====================
Net (loss) income per
share:
Basic:
Continuing operations $(0.02) $0.08 $(0.03) $0.13
Discontinued operations (0.01) - (0.01) -
--------------------- ---------------------
Net (loss) income $(0.03) $0.08 $(0.04) $0.13
===================== =====================
Diluted:
Continuing operations $(0.02) $0.08 $(0.03) $0.13
Discontinued operations (0.01) - (0.01) -
--------------------- ---------------------
Net (loss) income $(0.03) $0.08 $(0.04) $0.13
===================== =====================
Weighted average common
shares outstanding -
basic 70,958,696 61,217,364 70,692,207 61,360,540
Weighted average common
shares outstanding -
diluted n/a 62,226,463 n/a 61,969,133
S1 Corporation
Consolidated Balance Sheets
(In thousands, except share and per share data)
TABLE 2
(Unaudited)
December 31, June 30,
2006 2007
------------ ------------
Assets
Current assets:
Cash and cash equivalents $69,612 $87,766
Short-term investments 21,392 -
Accounts receivable, net 53,371 49,411
Prepaid expenses 4,036 2,896
Other current assets 2,308 5,640
------------ ------------
Total current assets 150,719 145,713
Property and equipment, net 12,137 10,437
Intangible assets, net 12,903 10,809
Goodwill, net 125,300 125,033
Other assets 6,746 6,541
------------ ------------
Total assets $307,805 $298,533
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $3,750 $2,340
Accrued compensation and benefits 9,642 10,157
Accrued restructuring 9,092 6,467
Accrued other expenses 12,801 11,800
Deferred revenues 29,265 28,339
Current portion of capital lease
obligation 2,942 2,595
------------ ------------
Total current liabilities 67,492 61,698
Other liabilities 16,084 15,050
------------ ------------
Total liabilities 83,576 76,748
============ ============
Stockholders' equity:
Preferred stock 10,000 10,000
Common stock 613 601
Additional paid-in capital 1,845,529 1,835,868
Treasury stock - (871)
Accumulated deficit (1,629,302) (1,621,386)
Accumulated other comprehensive
income (2,611) (2,427)
------------ ------------
Total stockholders' equity 224,229 221,785
------------ ------------
Total liabilities and
stockholders' equity $307,805 $298,533
============ ============
Preferred shares issued and
outstanding 749,064 749,064
Common shares issued and outstanding 61,290,973 60,107,020
Common shares held in treasury - 109,100
S1 Corporation
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
TABLE 3
Six Months Ended
June 30, June 30,
2006 2007
------------ ------------
Cash flows from operating
activities:
Net (loss) income $(2,555) $7,916
Adjustments to reconcile net (loss)
income to net cash provided by
(used in) operating activities:
Depreciation and amortization 6,479 5,665
Gain on disposal of
discontinued operations (554) -
Provision for doubtful accounts
receivable and billing adjustments 1,918 994
Stock based compensation expense 2,803 5,013
Changes in assets and liabilities
(Increase) decrease in accounts
receivable (13,752) 2,947
Decrease in prepaid expenses and
other assets (320) (1,969)
Increase (decrease) in accounts
payable 900 (1,429)
Decrease in accrued expenses and
other liabilities (9,725) (5,555)
Increase (decrease) in deferred
revenues 11,086 (666)
------------ ------------
Net cash (used in) provided by
operating activities (3,720) 12,916
Net cash (used in) provided by
investing activities (6,223) 19,521
Net cash provided by (used in)
used in financing activities 4,018 (14,487)
Effect of exchange rate changes on
cash and cash equivalents 44 204
------------ ------------
Net (decrease) increase in cash and
cash equivalents (5,881) 18,154
Cash and cash equivalents at
beginning of period 85,108 69,612
------------ ------------
Cash and cash equivalents at end of
period $79,227 $87,766
============ ============
S1 Corporation
Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
TABLE 4
Three Months Six Months
Ended Ended
6/30/ 6/30/ 6/30/ 6/30/
2006 2007 2006 2007
---------------- -----------------
Revenues:
Software licenses $6,369 $7,755 $12,412 $13,517
Support and maintenance 11,197 11,227 21,854 21,702
Professional services 16,950 21,681 31,571 41,113
Data center 11,911 11,730 23,497 23,430
Other 312 205 845 402
---------------- -----------------
Total revenues 46,739 52,598 90,179 100,164
---------------- -----------------
Operating expenses:
Cost of software licenses 1,062 940 2,092 1,832
Cost of professional services,
support and maintenance * 15,761 15,830 30,451 30,942
Cost of data center * 5,759 6,390 11,175 12,189
Cost of other revenue 133 130 449 272
Selling and marketing * 6,683 7,767 12,558 15,165
Product development * 9,876 6,798 19,483 13,692
General and administrative * 6,479 7,710 12,195 14,409
Merger related and restructuring
costs 549 - 882 -
Depreciation 1,971 1,737 3,723 3,571
Amortization of other intangible
assets 327 283 654 610
---------------- -----------------
Total operating expenses 48,600 47,585 93,662 92,682
---------------- -----------------
Operating (loss) income (1,861) 5,013 (3,483) 7,482
Interest and other income, net 1,040 784 2,249 1,655
Income tax expense (263) (848) (654) (1,221)
---------------- -----------------
(Loss) income from continuing
operations, net of tax $(1,084) $4,949 $(1,888) $7,916
Loss from discontinued operations * (1,027) - (667) -
---------------- -----------------
Net (loss) income $(2,111) $4,949 $(2,555) $7,916
================ =================
Reconciliation to EBITDA:
(Loss) income from continuing
operations, net of tax $(1,084) $4,949 $(1,888) $7,916
Interest income, net (1,040) (784) (2,249) (1,655)
Income tax expense 263 848 654 1,221
Depreciation 1,971 1,737 3,723 3,571
Amortization 1,233 948 2,465 2,094
---------------- -----------------
EBITDA $1,343 $7,698 $2,705 $13,147
================ =================
* Includes stock based compensation
expense of:
Cost of professional services,
support and maintenance $124 $191 $287 $278
Cost of data center 13 20 48 35
Selling and marketing 345 1,495 756 2,414
Product development 175 665 571 1,007
General and administrative 475 737 985 1,279
Discontinued operations 94 - 155 -
---------------- -----------------
$1,226 $3,108 $2,802 $5,013
================ =================
S1 Corporation
Enterprise Segment
Statements of Operations
(In thousands)
(Unaudited)
TABLE 5
Three Months Six Months
Ended Ended
6/30/ 6/30/ 6/30/ 6/30/
2006 2007 2006 2007
---------------- -----------------
Revenues:
Software licenses $1,093 $1,287 $2,540 $2,342
Support and maintenance 3,293 3,972 6,755 7,388
Professional services 12,934 17,303 24,630 32,776
Data center 5,398 6,089 10,326 11,794
Other 100 158 270 313
---------------- -----------------
Total revenues 22,818 28,809 44,521 54,613
---------------- -----------------
Operating expenses:
Cost of software licenses 356 361 718 659
Cost of professional services,
support and maintenance * 10,316 10,645 19,541 20,571
Cost of data center * 3,000 3,733 5,975 7,014
Cost of other revenue 12 24 29 66
Selling and marketing * 3,220 3,545 5,981 6,729
Product development * 5,867 2,965 12,007 5,980
General and administrative * 3,295 3,948 6,188 7,758
Merger related and restructuring
costs 330 - 637 -
Depreciation 1,300 1,142 2,421 2,361
Amortization of other intangible
assets 45 - 88 45
---------------- -----------------
Total operating expenses 27,741 26,363 53,585 51,183
---------------- -----------------
Operating (loss) income $(4,923) $2,446 $(9,064) $3,430
================ =================
Reconciliation to EBITDA:
Operating (loss) income $(4,923) $2,446 $(9,064) $3,430
---------------- -----------------
Depreciation 1,300 1,142 2,421 2,361
Amortization 282 127 562 409
---------------- -----------------
EBITDA $(3,341) $3,715 $(6,081) $6,200
================ =================
* Includes stock based compensation
expense of:
Cost of professional services,
support and maintenance $124 $172 $279 $236
Cost of data center 8 15 30 28
Selling and marketing 261 796 582 1,275
Product development 142 374 513 559
General and administrative 278 393 558 693
---------------- -----------------
$813 $1,750 $1,962 $2,791
================ =================
S1 Corporation
Postilion Segment
Statements of Operations
(In thousands)
(Unaudited)
TABLE 6
Three Months Six Months
Ended Ended
6/30/ 6/30/ 6/30/ 6/30/
2006 2007 2006 2007
---------------- -----------------
Revenues:
Software licenses $5,276 $6,468 $9,872 $11,175
Support and maintenance 7,904 7,255 15,099 14,314
Professional services 4,016 4,378 6,941 8,337
Data center 6,513 5,641 13,171 11,636
Other 212 47 575 89
---------------- -----------------
Total revenues 23,921 23,789 45,658 45,551
---------------- -----------------
Operating expenses:
Cost of software licenses 706 579 1,374 1,173
Cost of professional services,
support and maintenance * 5,445 5,185 10,910 10,371
Cost of data center * 2,759 2,657 5,200 5,175
Cost of other revenue 121 106 420 206
Selling and marketing * 3,463 4,222 6,577 8,436
Product development * 4,009 3,833 7,476 7,712
General and administrative * 3,184 3,762 6,007 6,651
Merger related and restructuring
costs 219 - 245 -
Depreciation 671 595 1,302 1,210
Amortization of other intangible
assets 282 283 566 565
---------------- -----------------
Total operating expenses 20,859 21,222 40,077 41,499
---------------- -----------------
Operating income $3,062 $2,567 $5,581 $4,052
================ =================
Reconciliation to EBITDA:
Operating income $3,062 $2,567 $5,581 $4,052
Depreciation 671 595 1,302 1,210
Amortization 951 821 1,903 1,685
---------------- -----------------
EBITDA $4,684 $3,983 $8,786 $6,947
================ =================
* Includes stock based compensation
expense of:
Cost of professional services,
support and maintenance $- $19 $8 $42
Cost of data center 5 5 18 7
Selling and marketing 84 699 174 1,139
Product development 33 291 58 448
General and administrative 197 344 427 586
---------------- -----------------
$319 $1,358 $685 $2,222
================ =================
SOURCE S1 Corporation CONTACT:Investors: John Stone Chief Financial Officer +1-404-923-3500 john.stone@s1.com or Press,: Leisha Richardson Director of Corporate Communications +1-512-336-3028 leisha.richardson@s1.com both of S1 Corporation |