Exhibit 99.1
News
For Immediate Release
Investor Contact:
Billy Newman
VP, Finance
703.653.2223
wnewman@orcc.com
Online Resources Posts Third Quarter 2012 Results
- Better than expected results as growth investments accelerate -
Chantilly, Va., November 8, 2012 – Online Resources Corporation (NASDAQ: ORCC), a leading provider of digital financial services, today reported its financial and operating results for the three months ended September 30, 2012.
| • | Revenue was $41.3 million, compared to $38.4 million in the third quarter of 2011. |
| • | Net loss available to common stockholders was $0.2 million, or $0.01 per share, compared to a net loss of $1.7 million, or $0.05 per share, in the third quarter of 2011. |
| • | Ebitda, a non-GAAP measure, was $6.8 million, compared to $5.7 million in the third quarter of 2011. |
| • | Adjusted Ebitda, a non-GAAP measure that adjusts Ebitda for equity compensation expense and other expenses, was $7.8 million, compared to $7.1 million in the third quarter of 2011. |
| • | Core net income, a non-GAAP measure, was $1.8 million, or $0.05 per diluted share, compared to $0.7 million, or $0.02 per diluted share, in the third quarter of 2011. |
“Revenue and earnings were better than expected in the third quarter,” said Joseph L. Cowan, president and chief executive officer of Online Resources. “During the quarter we benefited from higher professional services revenue in our banking business that is non-recurring in nature. Excluding the higher professional services revenue, revenue and earnings would still have been at the high end of guidance.”
“As can be seen from the sequential decline in earnings in the third quarter, we have entered the major investment stage of our strategic growth plan,” he added. “We anticipate that these investments will continue to grow in the fourth quarter of 2012. These investments in product management, marketing, sales and client services, operations and technology should allow us to drive increased revenue and earnings growth in late 2013 and beyond.”
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Outlook for Fourth Quarter 2012
Online Resources provided the following guidance for the fourth quarter of 2012. These statements are forward-looking, and actual results may differ materially.
| • | Revenue for the quarter is expected to be between $39.1 and $41.1 million. |
| • | Ebitda1,2 for the quarter is expected to be between $3.5 and $5.0 million |
| • | Adjusted Ebitda1,2,5 for the quarter is expected to be between $4.9 and $6.2 million. |
| • | Core net income1,3,4,5,6 is expected to be between $0.00 and $0.02 per share. |
| (1) | The Company uses non-GAAP (Generally Accepted Accounting Principles) financial measures, including Ebitda, adjusted Ebitda and core net income, to evaluate performance and establish goals. It believes that these measures are valuable to investors in assessing the Company’s operating results when viewed in conjunction with GAAP results. |
| (2) | Ebitda is defined as net income (loss) before interest, taxes, depreciation and amortization expense. Adjusted Ebitda is defined as net income (loss) before interest, taxes, depreciation and amortization, equity compensation expense, reserve for potential legal liability, strategic alternatives process costs, transition costs (including severance, retention, advisory and ORCC India start up costs) and other income (expense). Some or all of these items may not be applicable in any given reporting period. |
| (3) | Core net income is defined as net income (loss) available to common stockholders before, on a pre-tax basis unless otherwise noted, the amortization of acquisition-related intangible assets, equity compensation expense, income tax benefit or expense from the change in valuation allowance, income (costs) related to the fair market valuation of certain derivatives and mark-to-market investments, preferred stock accretion related to the redemption premium, reserve for potential legal liability, net of tax, strategic alternatives process costs, net of tax, transition costs (including severance, retention, advisory and ORCC India start up costs), net of tax, and all other non-recurring charges. Some or all of these items may not be applicable in any given reporting period. |
| (4) | Excludes estimates for amortization of acquisition-related intangible assets of $0.6 million, equity compensation expense of $0.9 million and preferred stock accretion related to the redemption premium of $0.4 million. |
| (5) | Adjusted Ebitda and core net income exclude $0.3 million in transition costs. These costs are tax-effected in the calculation of core net income. |
| (6) | Core net income per share calculated using estimated shares outstanding of 33.3 million. |
Conference Call and Web Cast
The Company’s management will host a conference call to discuss the results at 5:00 p.m. EST today. The conference call dial-in number is (877) 303-6496 for domestic participants and (707) 287-9318 for international participants. Alternatively, a live web cast of the conference call will be available through the “Investors” section of Online Resources’ web site atwww.orcc.com. The conference call and web cast will be recorded and available for playback from 8:00 p.m. EST on November 8th until midnight on Thursday, November 15th. For the conference call playback, dial (855) 859-2056 for domestic participants and (404) 537-3406 for international participants and enter code 58810948. For web cast replay, go to the “Investors” section ofwww.orcc.com.
About Online Resources Corporation
Online Resources Corporation (NASDAQ: ORCC) powers financial interactions between millions of consumers and the company’s financial institution and biller clients. Backed by its proprietary payments gateway that links banks directly with billers, the company provides web and phone-based financial services, electronic payments and marketing services to drive consumer adoption. Founded in 1989, Online Resources is the largest financial technology provider dedicated to the online channel. For more information, visitwww.orcc.com.
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This news release contains forward-looking statements based on Online Resources Corporation management’s current expectations and beliefs and a number of assumptions concerning future events made with information that is currently available. The words “will,” “would,” “may,” “should,” “estimate,” “project,” “forecast,” “intend,” “expect,” “believe,” “target,” “designed,” “plan,” and similar expressions are intended to identify forward-looking statements. Readers are cautioned not to place undue reliance on such forward-looking statements, which are not a guarantee of any results or performance and are subject to a number of known and unknown risks, uncertainties and other factors which could cause actual performance or results to differ materially and adversely from any results or performance expressed or implied by such forward-looking statements. Certain factors that might cause such a difference include, but are not limited to: a history of losses and anticipation of future losses; potential fluctuations in operating results; dependence on the marketing efforts of third parties; potential loss of one or more material clients; potential need for additional capital; potential inability to prevent systems failures and security breaches; potential inability to expand certain services and products in the event of a substantial increase in demand for such services and products; competitive pressures; ability or inability to attract and retain skilled personnel; reliance on patents and other intellectual property; potential change in the rate of user adoption of certain products and services; exposure to consolidation in the financial services industry; and government regulatory developments. For a more detailed description of the factors that could cause such differences, readers are advised to review Online Resources Corporation’s latest filings with the Securities and Exchange Commission, including (but not limited to) the information provided under the heading “Risk Factors” in our latest Annual Report on Form 10-K (which filings are available, among other places, from the SEC’s EDGAR database atwww.sec.gov and via the Company’s website at www.ORCC.com). Online Resources assumes no obligation to, and expressly disclaims any obligation to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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Online Resources Corporation
Quarterly Operating Data
(In millions, Unaudited)
| 4Q10 | 1Q11 | 2Q11 | 3Q11 | 4Q11 | 1Q12 | 2Q12 | 3Q12 | |||||||||||||||||||||||||
BANKING SERVICES | ||||||||||||||||||||||||||||||||
Payment Services - Full Service | ||||||||||||||||||||||||||||||||
Revenue | $ | 8.2 | $ | 8.4 | $ | 8.1 | $ | 7.8 | $ | 7.9 | $ | 7.8 | $ | 7.6 | $ | 7.5 | ||||||||||||||||
Bill Payment Transactions | 11.1 | 11.6 | 11.3 | 11.3 | 11.4 | 11.5 | 11.4 | 11.5 | ||||||||||||||||||||||||
Payment Services - Remittance | ||||||||||||||||||||||||||||||||
Revenue | $ | 6.5 | $ | 5.9 | $ | 5.6 | $ | 5.5 | $ | 5.1 | $ | 5.3 | $ | 4.8 | $ | 4.5 | ||||||||||||||||
Bill Payment Transactions - LCR | 6.3 | 6.6 | 6.7 | 6.0 | 6.0 | 6.1 | 6.0 | 5.8 | ||||||||||||||||||||||||
Bill Payment Transactions - Non LCR | 20.5 | 19.8 | 19.3 | 19.4 | 19.0 | 19.8 | 19.3 | 18.9 | ||||||||||||||||||||||||
Other Revenue | $ | 7.7 | $ | 6.8 | $ | 7.2 | $ | 6.9 | $ | 7.2 | $ | 6.7 | $ | 6.3 | $ | 8.2 | ||||||||||||||||
EBPP SERVICES | ||||||||||||||||||||||||||||||||
Payment Services - User Paid | ||||||||||||||||||||||||||||||||
Revenue | $ | 3.9 | $ | 4.7 | $ | 4.5 | $ | 4.7 | $ | 4.7 | $ | 5.8 | $ | 5.4 | $ | 5.5 | ||||||||||||||||
Bill Payment Transactions | 1.4 | 1.6 | 1.6 | 1.7 | 1.7 | 1.9 | 1.6 | 1.7 | ||||||||||||||||||||||||
Payment Services - Biller Paid | ||||||||||||||||||||||||||||||||
Revenue | $ | 8.8 | $ | 10.8 | $ | 10.0 | $ | 10.1 | $ | 10.1 | $ | 12.0 | $ | 11.6 | $ | 11.9 | ||||||||||||||||
Bill Payment Transactions | 17.9 | 20.5 | 19.6 | 20.5 | 21.0 | 22.8 | 23.2 | 23.9 | ||||||||||||||||||||||||
Other Revenue | $ | 2.6 | $ | 2.7 | $ | 3.1 | $ | 3.4 | $ | 3.7 | $ | 3.7 | $ | 4.7 | $ | 3.7 | ||||||||||||||||
Online Resources Corporation
Consolidated Statements of Operations
(In thousands, except per share data)
| THREE MONTHS ENDED SEPTEMBER 30, | NINE MONTHS ENDED SEPTEMBER 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
Revenues: | ||||||||||||||||
Account presentation services | $ | 2,744 | $ | 2,918 | $ | 8,548 | $ | 8,378 | ||||||||
Payment services | 29,384 | 28,082 | 89,662 | 85,948 | ||||||||||||
Relationship management services | 1,505 | 1,664 | 4,565 | 5,195 | ||||||||||||
Professional services and other | 7,661 | 5,747 | 20,234 | 16,497 | ||||||||||||
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Total revenues | 41,294 | 38,411 | 123,009 | 116,018 | ||||||||||||
Expenses: | ||||||||||||||||
Cost of revenues | 21,691 | 21,194 | 62,362 | 63,960 | ||||||||||||
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Gross profit | 19,603 | 17,217 | 60,647 | 52,058 | ||||||||||||
General and administrative | 8,743 | 7,966 | 26,556 | 27,127 | ||||||||||||
Reserve for potential legal liability | — | — | — | 7,700 | ||||||||||||
Selling and marketing | 5,001 | 4,760 | 14,674 | 15,165 | ||||||||||||
Systems and development | 2,470 | 2,605 | 7,849 | 7,951 | ||||||||||||
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Total expenses | 16,214 | 15,331 | 49,079 | 57,943 | ||||||||||||
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Income (loss) from operations | 3,389 | 1,886 | 11,568 | (5,885 | ) | |||||||||||
Other income (expense) | ||||||||||||||||
Interest income | 29 | 21 | 78 | 77 | ||||||||||||
Interest expense | (463 | ) | (308 | ) | (1,261 | ) | (376 | ) | ||||||||
Other income (expense) | 11 | (2 | ) | (16 | ) | (2 | ) | |||||||||
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Total other income (expense) | (423 | ) | (289 | ) | (1,199 | ) | (301 | ) | ||||||||
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Income (loss) before tax provision (benefit) | 2,966 | 1,597 | 10,369 | (6,186 | ) | |||||||||||
Income tax provision (benefit) | 602 | 771 | 3,671 | (2,383 | ) | |||||||||||
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Net income (loss) | 2,364 | 826 | 6,698 | (3,803 | ) | |||||||||||
Preferred stock accretion | 2,590 | 2,501 | 7,671 | 7,389 | ||||||||||||
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Net loss available to common stockholders | $ | (226 | ) | $ | (1,675 | ) | $ | (973 | ) | $ | (11,192 | ) | ||||
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Net loss available to common stockholders per share: | ||||||||||||||||
Basic | $ | (0.01 | ) | $ | (0.05 | ) | $ | (0.03 | ) | $ | (0.35 | ) | ||||
Diluted | $ | (0.01 | ) | $ | (0.05 | ) | $ | (0.03 | ) | $ | (0.35 | ) | ||||
Shares used in calculation of net loss available to common stockholders per share: | ||||||||||||||||
Basic | 32,723 | 32,032 | 32,512 | 31,815 | ||||||||||||
Diluted | 32,723 | 32,032 | 32,512 | 31,815 | ||||||||||||
Online Resources Corporation
Condensed Consolidated Balance Sheets
(In thousands)
| SEPTEMBER 30, | DECEMBER 31, | |||||||
| 2012 | 2011 | |||||||
| (Unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 34,455 | $ | 31,290 | ||||
Accounts receivable, net | 19,900 | 17,596 | ||||||
Deferred tax asset, current portion | 2,189 | 2,189 | ||||||
Prepaid expenses and other current assets | 5,661 | 5,751 | ||||||
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Total current assets | 62,205 | 56,826 | ||||||
Property and equipment, net | 18,351 | 20,987 | ||||||
Deferred tax asset, less current portion | 23,590 | 26,713 | ||||||
Goodwill | 181,516 | 181,516 | ||||||
Intangible assets | 6,493 | 9,288 | ||||||
Deferred implementation costs, less current portion, and other assets | 9,193 | 9,042 | ||||||
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Total assets | $ | 301,348 | $ | 304,372 | ||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 1,417 | $ | 1,251 | ||||
Accrued expenses | 15,754 | 17,566 | ||||||
Notes payable, senior secured debt, current portion | 11,250 | 12,750 | ||||||
Deferred revenues, current portion, and other current liabilities | 8,053 | 8,412 | ||||||
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Total current liabilities | 36,474 | 39,979 | ||||||
Notes payable, senior secured debt, less current portion | — | 7,500 | ||||||
Deferred revenues, less current portion, and other long-term liabilities | 4,132 | 4,979 | ||||||
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Total liabilities | 40,606 | 52,458 | ||||||
Redeemable convertible preferred stock | 127,765 | 120,095 | ||||||
Stockholders’ equity | 132,977 | 131,819 | ||||||
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Total liabilities and stockholders’ equity | $ | 301,348 | $ | 304,372 | ||||
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Online Resources Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
| NINE MONTHS ENDED SEPTEMBER 30, | ||||||||
| 2012 | 2011 | |||||||
| (Unaudited) | ||||||||
Operating activities | ||||||||
Net income (loss) | $ | 6,698 | $ | (3,803 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Deferred tax expense (benefit) | 3,123 | (2,579 | ) | |||||
Depreciation and amortization | 9,795 | 12,274 | ||||||
Equity compensation expense | 2,136 | 1,785 | ||||||
Write off and amortization of debt issuance costs | 439 | 187 | ||||||
Loss on disposal of assets | 828 | 5 | ||||||
Provision for losses on accounts receivable | 304 | 73 | ||||||
Change in fair value of theoretical swap derivative | (244 | ) | (555 | ) | ||||
Reserve for potential legal liability | — | 7,700 | ||||||
Changes in certain other assets and liabilities | (5,706 | ) | 1,108 | |||||
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Net cash provided by operating activities | 17,373 | 16,195 | ||||||
Investing activities | ||||||||
Purchases of property and equipment | (5,168 | ) | (5,630 | ) | ||||
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Net cash used in investing activities | (5,168 | ) | (5,630 | ) | ||||
Financing activities | ||||||||
Net proceeds from issuance of common stock | (72 | ) | 750 | |||||
Repayment of 2007 notes | (9,000 | ) | (14,500 | ) | ||||
Debt issuance costs | — | (815 | ) | |||||
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Net cash used in financing activities | (9,072 | ) | (14,565 | ) | ||||
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Net increase (decrease) in cash and cash equivalents | 3,133 | (4,000 | ) | |||||
Impact of foreign currency | 32 | (35 | ) | |||||
Cash and cash equivalents at beginning of year | 31,290 | 29,127 | ||||||
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Cash and cash equivalents at end of period | $ | 34,455 | $ | 25,092 | ||||
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Online Resources Corporation
Reconciliation of Non-GAAP Measures
(In thousands, except per share data)
| THREE MONTHS ENDED SEPTEMBER 30, | NINE MONTHS ENDED SEPTEMBER 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
Reconciliation of ebitda (See Note 1): | ||||||||||||||||
Net income (loss) | $ | 2,364 | $ | 826 | $ | 6,698 | $ | (3,803 | ) | |||||||
Depreciation and amortization (incl. loss on disposal of assets) | 3,386 | 3,819 | 10,623 | 12,279 | ||||||||||||
Interest expense, net | 434 | 287 | 1,183 | 299 | ||||||||||||
Income tax provision (benefit) | 602 | 771 | 3,671 | (2,383 | ) | |||||||||||
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Ebitda (See Note 1) | $ | 6,786 | $ | 5,703 | $ | 22,175 | $ | 6,392 | ||||||||
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Reconciliation of adjusted ebitda (See Note 2): | ||||||||||||||||
Net income (loss) | $ | 2,364 | $ | 826 | $ | 6,698 | $ | (3,803 | ) | |||||||
Depreciation and amortization (incl. loss on disposal of assets) | 3,386 | 3,819 | 10,623 | 12,279 | ||||||||||||
Equity compensation expense | 712 | 585 | 2,136 | 1,785 | ||||||||||||
Reserve for potential legal liability | — | — | — | 7,700 | ||||||||||||
Strategic process costs | — | — | — | 874 | ||||||||||||
Transition costs | 332 | 844 | 2,782 | 3,396 | ||||||||||||
Other (income) expense | 423 | 289 | 1,199 | 301 | ||||||||||||
Income tax provision (benefit) | 602 | 771 | 3,671 | (2,383 | ) | |||||||||||
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Adjusted Ebitda (See Note 2) | $ | 7,819 | $ | 7,134 | $ | 27,109 | $ | 20,149 | ||||||||
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Reconciliation of core net income (See Note 3): | ||||||||||||||||
Net loss available to common stockholders | $ | (226 | ) | $ | (1,675 | ) | $ | (973 | ) | $ | (11,192 | ) | ||||
Preferred stock accretion related to redemption premium | 423 | 415 | 1,263 | 1,238 | ||||||||||||
Change in fair value of theoretical swap derivative | 35 | (36 | ) | 244 | (555 | ) | ||||||||||
Reserve for potential legal liability, net of tax | — | — | — | 4,736 | ||||||||||||
Strategic alternaitves process costs, net of tax | — | — | — | 538 | ||||||||||||
Transition costs, net of tax | 265 | 436 | 1,797 | 2,089 | ||||||||||||
Change in tax valuation allowance | — | (192 | ) | — | (192 | ) | ||||||||||
Equity compensation expense | 712 | 585 | 2,136 | 1,785 | ||||||||||||
Amortization of intangible assets | 603 | 1,135 | 2,809 | 3,767 | ||||||||||||
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Core net income (see Note 3) | $ | 1,812 | $ | 668 | $ | 7,276 | $ | 2,214 | ||||||||
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Reconciliation of core net income per share: | ||||||||||||||||
Diluted net loss available to common stockholders | $ | (0.01 | ) | $ | (0.05 | ) | $ | (0.03 | ) | $ | (0.35 | ) | ||||
Preferred stock accretion related to redemption premium | 0.01 | 0.01 | 0.04 | 0.04 | ||||||||||||
Change in fair value of theoretical swap derivative | — | — | 0.01 | (0.02 | ) | |||||||||||
Reserve for potential legal liability, net of tax | — | — | — | 0.15 | ||||||||||||
Strategic alternaitves process costs, net of tax | — | — | — | 0.02 | ||||||||||||
Transition costs, net of tax | 0.01 | 0.01 | 0.05 | 0.07 | ||||||||||||
Change in tax valuation allowance | — | (0.01 | ) | — | (0.01 | ) | ||||||||||
Equity compensation expense | 0.02 | 0.02 | 0.06 | 0.06 | ||||||||||||
Amortization of intangible assets | 0.02 | 0.04 | 0.08 | 0.12 | ||||||||||||
Other, including impact of treasury method and rounding | — | — | (0.01 | ) | (0.01 | ) | ||||||||||
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Core net income per share | $ | 0.05 | $ | 0.02 | $ | 0.22 | $ | 0.07 | ||||||||
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Notes:
| 1. | Ebitda is a non-GAAP measure we define as net income (loss) before interest, taxes, depreciation and amortization expense. |
| 2. | Adjusted Ebitda is a non-GAAP measure we define as net income (loss) before interest, taxes, depreciation and amortization, equity compensation expense, reserve for potential legal liability, strategic alternatives process costs, transition costs (including severance, retention and ORCC India start up costs), restructuring costs and other expense. Some or all of these items may not be applicable in any given reporting period. |
| 3. | Core net income is a non-GAAP measure we define as net income (loss) available to common stockholders before the amortization of acquisition-related intangible assets, equity compensation expense, income tax benefit or expense from the change in valuation allowance, income (costs) related to the fair market valuation of certain derivatives and mark to market investments, preferred stock accretion related to the redemption premium, reserve for legal liability, net of tax, strategic alternatives process costs (including severance, retention and ORCC India start up costs), net of tax, transition costs, net of tax, restructuring costs, net of tax, and all other non-recurring charges. Some or all of these items may not be applicable in any given reporting period. |