NORCROSS, Ga., April 30, 2009 /PRNewswire-FirstCall/ -- S1 Corporation , a leading global provider of customer interaction financial and payment solutions, today announced financial results for the first quarter of 2009:
-- Total revenue for the first quarter of 2009 increased seven percent to $58.3 million from $54.7 million in the first quarter of 2008. -- GAAP earnings were $8.9 million or $0.16 per share for the first quarter of 2009, a $0.07 increase over GAAP earnings of $5.2 million or $0.09 per share for the first quarter of 2008. These figures include stock based compensation (benefit) expense of ($2.5 million) or ($0.04) per share and $1.9 million or $0.03 per share in the first quarter of 2009 and 2008, respectively. -- Adjusted EBITDA for the first quarter of 2009 was $10.6 million compared to $10.9 million in the first quarter of 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 for the first quarter of 2009 increased seven percent to $15.9 million from $14.8 million in the first quarter of 2008. -- Net cash provided by operating activities was $7.3 million for first quarter of 2009, a $2.5 million improvement over the first quarter of 2008. The Company ended the first quarter of 2009 with $66.4 million in cash and cash equivalents.
"We posted another strong quarter of year-over-year growth in revenue and achieved several operating milestones including entering into one of the largest agreements in the history of our Postilion payments business, licensing our new Postilion self-service banking application to multiple new credit union customers, and executing an agreement with Longtop Financial to market S1 Enterprise applications to financial institutions in China," said Johann Dreyer, Chief Executive Officer of S1. "We also continue to see the benefits of investing some of the growth we have achieved back into customer satisfaction initiatives as I have highlighted over the past several quarters. Although the economic environment remains difficult, we continue to see our sales pipeline grow and reaffirm our full year guidance of $240 to $245 million in revenue and $47 to $50 million in Adjusted EBITDA."
(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 first quarter results on Friday, May 1, 2009, at 8:30 a.m. ET. A webcast of the call will be available through the Company's website, http://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
S1 Corporation delivers customer interaction software for financial and payment services and offers unique solution sets for financial institutions, retailers, and processors under three brand names: Postilion, S1 Enterprise and FSB Solutions. Additional information about S1 solutions is available at http://www.s1.com/, http://www.postilion.com/, http://www.s1enterprise.com/, and http://www.fsb-solutions.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 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 http://www.s1.com/ or the SEC's web site at http://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 3/31/2009 3/31/2008 -------------------- Revenue: Software licenses $11,618 $9,535 Support and maintenance 12,485 11,703 Professional services 23,075 21,122 Data center 11,110 12,313 ------------------ Total revenue $58,288 $54,673 ------------------ Operating expenses: Cost of software licenses (1) 840 992 Cost of professional services, support and maintenance (1) 18,351 17,492 Cost of data center (1) 6,881 6,557 Selling and marketing 6,822 8,216 Product development 8,172 6,755 General and administrative 4,516 6,435 Depreciation and amortization of intangible assets 2,573 2,225 ------------------ Total operating expenses (2) 48,155 48,672 ------------------ Operating income 10,133 6,001 Interest and other income, net 10 294 Income tax expense 1,199 1,105 ------------------ Net income $8,944 $5,190 ================== Earnings per share: Basic $0.16 $0.09 Diluted $0.16 $0.09 Weighted average common shares outstanding - basic 52,833,689 56,551,448 Weighted average common shares outstanding - diluted 53,433,880 57,074,788 (1) Excludes charges for depreciation. Cost of software licenses includes amortization of acquired technology. (2) Includes stock-based compensation (benefit) expense of ($2.5 million) and $1.9 million for the three months ended March 31, 2009 and 2008, respectively. Please refer to Tables 4, 5 and 6 for further details. S1 Corporation Consolidated Balance Sheets (In thousands, except share data) TABLE 2 (Unaudited) March 31, December 31, 2009 2008 ----------- ------------ Assets Current assets: Cash and cash equivalents $66,388 $63,840 Accounts receivable, net 51,535 42,561 Prepaid expenses 5,248 5,123 Other current assets 2,548 3,575 -------- -------- Total current assets 125,719 115,099 Property and equipment, net 23,706 23,015 Intangible assets, net 6,845 7,585 Goodwill, net 124,362 124,362 Other assets 8,171 8,625 -------- -------- Total assets $288,803 $278,686 ======== ======== Liabilities and Stockholders' Equity Current liabilities: Accounts payable $1,823 $1,366 Accrued compensation and benefits 10,476 16,147 Accrued restructuring 1,942 2,323 Accrued other expenses 11,079 10,271 Deferred revenues 33,781 25,271 Current portion of debt obligation 2,319 3,917 -------- -------- Total current liabilities 61,420 59,295 Debt obligation, excluding current portion 5,864 6,196 Accrued restructuring, excluding current portion 2,923 3,443 Other liabilities 975 1,012 -------- -------- Total liabilities $71,182 $69,946 -------- -------- Stockholders' equity: Preferred stock 10,000 10,000 Common stock 528 528 Additional paid-in capital 1,792,885 1,791,924 Accumulated deficit (1,579,013) (1,587,957) Accumulated other comprehensive income (6,779) (5,755) -------- -------- Total stockholders' equity 217,621 208,740 -------- -------- Total liabilities and stockholders' equity $288,803 $278,686 ======== ======== Preferred shares issued and outstanding 749,064 749,064 Common shares issued and outstanding 52,841,532 52,799,310 S1 Corporation Consolidated Statements of Cash Flows (In thousands) (Unaudited) TABLE 3 Three Months Ended March 31, March 31, 2009 2008 --------- --------- Cash flows from operating activities: Net income $8,944 $5,190 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 3,031 2,970 Provision for doubtful accounts receivable and billing adjustments (399) 343 Stock based compensation (benefit) expense (2,531) 1,888 Changes in assets and liabilities Increase in accounts receivable (8,791) (5,265) Decrease in prepaid expenses and other assets 282 240 Increase in accounts payable 415 1,026 Decrease in accrued expenses and other liabilities (2,135) (1,493) Increase (decrease) in deferred revenues 8,473 (140) ------- ------- Net cash provided by operating activities 7,289 4,759 Cash flows from investing activities: Maturities of short-term investment securities 686 5,855 Purchases of short-term investment securities - (181) Amounts released in escrow related to sale of business - 3,712 Purchases of property, equipment and technology (3,022) (2,211) ------- ------- Net cash (used in) provided by investing activities (2,336) 7,175 Cash flows from financing activities: Proceeds from exercise of employee stock options 154 775 Payments on capital leases and debt obligations (1,930) (933) Repurchase and retirement of common stock - (1,739) ------- ------- Net cash used in financing activities (1,776) (1,897) Effect of exchange rate changes on cash and cash equivalents (629) 75 ------- ------- Net increase in cash and cash equivalents 2,548 10,112 Cash and cash equivalents at beginning of period 63,840 45,011 ------- ------- Cash and cash equivalents at end of period $66,388 $55,123 ======= ======= S1 Corporation Consolidated Statements of Operations (In thousands) (Unaudited) TABLE 4 Three Months Ended 3/31/2009 3/31/2008 -------------------- Revenue: Software licenses $11,618 $9,535 Support and maintenance 12,485 11,703 Professional services 23,075 21,122 Data center 11,110 12,313 ------------------ Total revenue $58,288 $54,673 ------------------ Operating expenses: Cost of software licenses 840 992 Cost of professional services, support and maintenance 18,351 17,492 Cost of data center 6,881 6,557 Selling and marketing 6,822 8,216 Product development 8,172 6,755 General and administrative 4,516 6,435 Depreciation and amortization of intangible assets 2,573 2,225 ------------------ Total operating expenses (1) 48,155 48,672 ------------------ Operating income 10,133 6,001 Interest and other income, net 10 294 Income tax expense 1,199 1,105 ------------------ Net income $8,944 $5,190 ================== Reconciliation to Adjusted EBITDA: Net income $8,944 $5,190 Interest and other income, net (10) (294) Income tax expense 1,199 1,105 Depreciation 2,291 1,942 Amortization 740 1,028 Stock based compensation (benefit) expense (2,531) 1,888 ------------------ Adjusted EBITDA $10,633 $10,859 ================== (1) Includes stock based compensation (benefit) expense of: Cost of professional services, support and maintenance $(152) $46 Cost of data center 20 25 Selling and marketing (1,220) 724 Product development (130) 322 General and administrative (1,049) 771 ------------------ $(2,531) $1,888 ================== S1 Corporation Enterprise Segment Statements of Operations (In thousands) (Unaudited) TABLE 5 Three Months Ended 3/31/2009 3/31/2008 -------------------- Revenue: Software licenses $2,787 $1,589 Support and maintenance 4,665 3,706 Professional services 18,574 17,090 Data center 7,240 7,103 ------------------ Total revenue $33,266 $29,488 ------------------ Operating expenses: Cost of software licenses 310 334 Cost of professional services, support and maintenance 11,591 10,632 Cost of data center 4,016 3,945 Selling and marketing 2,386 3,838 Product development 5,055 4,098 General and administrative 2,323 3,600 Depreciation and amortization of intangible assets 1,308 1,155 ------------------ Total operating expenses (1) 26,989 27,602 ------------------ Operating income $6,277 $1,886 ================== Reconciliation to Adjusted EBITDA: Operating income $6,277 $1,886 Depreciation 1,308 1,155 Amortization 61 145 Stock based compensation (benefit) expense (1,514) 1,310 ------------------ Adjusted EBITDA $6,132 $4,496 ================== (1) Includes stock based compensation (benefit) expense of: Cost of professional services, support and maintenance $38 $23 Cost of data center 2 13 Selling and marketing (1,074) 558 Product development (170) 279 General and administrative (310) 437 ------------------ $(1,514) $1,310 ================== S1 Corporation Postilion Segment Statements of Operations (In thousands) (Unaudited) TABLE 6 Three Months Ended 3/31/2009 3/31/2008 -------------------- Revenue: Software licenses $8,831 $7,946 Support and maintenance 7,820 7,997 Professional services 4,501 4,032 Data center 3,870 5,210 ------------------ Total revenue $25,022 $25,185 ------------------ Operating expenses: Cost of software licenses 530 658 Cost of professional services, support and maintenance 6,760 6,860 Cost of data center 2,865 2,612 Selling and marketing 4,436 4,378 Product development 3,117 2,657 General and administrative 2,193 2,835 Depreciation and amortization of intangible assets 1,265 1,070 ------------------ Total operating expenses (1) 21,166 21,070 ------------------ Operating income $3,856 $4,115 ================== Reconciliation to Adjusted EBITDA: Operating income $3,856 $4,115 Depreciation 983 787 Amortization 679 883 Stock based compensation (benefit) expense (1,017) 578 ------------------ Adjusted EBITDA $4,501 $6,363 ================== (1) Includes stock based compensation (benefit) expense of: Cost of professional services, support and maintenance $(190) $23 Cost of data center 18 12 Selling and marketing (146) 166 Product development 40 43 General and administrative (739) 334 ------------------ $(1,017) $578 ==================
S1 Corporation
CONTACT: Investors: Paul M. Parrish, Chief Financial Officer, S1
Corporation, +1-404-923-3500, paul.parrish@s1.com
Web Site: http://www.s1.com/
