1
[S1 LETTERHEAD] [S1 LOGO]
EXHIBIT 99.1
-------------
CONTACTS:
Bob Zwerneman Marcy Theobald
Vice President, Investor Relations Manager
Investor Relations S1 Corporation
S1 Corporation 404-812-6254
404-812-6225 marcy.theobald@s1.com
bobz@s1.com
S1 CORPORATION REPORTS RECORD FIRST QUARTER 2000 RESULTS
HIGHLIGHTS:
- - FIRST QUARTER 2000 REVENUES INCREASED 320% OVER FIRST QUARTER 1999.
- - GROSS MARGINS IMPROVED 271% OVER FIRST QUARTER 1999.
- - EXCLUDING MERGER-RELATED COSTS AND OTHER NON-CASH CHARGES, EBITDA TOTALED
($17.7) MILLION OR ($0.35) PER SHARE IN Q100.
- - S1 DATA CENTER END USERS TOTALED 412,000 AT THE END OF MARCH 2000, UP 311%
OVER FIRST QUARTER 1999 AND UP 82% OVER FOURTH QUARTER 1999.
- - GLOBAL INTEGRATION OF ACQUISITIONS ACCELERATED DURING Q100.
- - CASH AND INVESTMENT SECURITIES OF $121.5 MILLION AT END OF QUARTER.
ATLANTA, MAY 2, 2000 - S1 Corporation (NASDAQ:SONE), a leading provider
of Internet-based solutions for the financial services industry, reported
revenues of $50.4 million for the quarter ended March 31, 2000, a 320% increase
over the $12.0 million recorded for the quarter ended March 31, 1999. Excluding
merger-related and non-cash charges, the Company posted an EBITDA (earnings
before interest, taxes, depreciation and amortization) loss of $17.7 million or
$0.35 per share. The net loss for the quarter, which included $35.1 million of
gains on the sales of investment securities, totaled $75.2 million or $1.49 per
share.
"The state of our business has never been more exciting or full of
opportunity," stated James S. Mahan III, CEO of S1 Corporation. "Exactly at the
time when the financial services world has embraced the Internet as a strategic
means to enhance their businesses, S1 has emerged as a leading provider that
offers fully-scalable solutions that span various lines of business, market
segments and delivery channels. Albeit a welcomed challenge, our global sales
teams are inundated with opportunities, and we are gaining tremendous traction
2
in Asia and Europe, mirroring the successes we are seeing in the U.S. with
financial institution customers of all sizes."
"Marking the first full quarter of operations as S1 Corporation, our
first quarter results reflect a combination of new and old customer contracts
melded with disparate business models," added Daniel H. Drechsel, S1's COO. "We
knew going into 2000 that our first consolidated quarter would be the most
challenging given that we had to redefine the business models of Edify and FICS.
We are pleased that we have maintained strict discipline in framing new customer
contracts around S1's recurring revenue model. We firmly believe this approach
will lead to incremental financial results in the years ahead."
Software license revenues in the first quarter were $10.7 million, or
364% higher the prior year quarter. Professional services revenues increased to
$34.4 million in the first quarter 2000, a 345% increase over the prior year
quarter.
Data Center revenues of $3.5 million in the first quarter were 127%
above the first quarter 1999. The Company recorded an 82% quarterly sequential
increase in the number of end users processed through the S1 Data Center and an
increase of 311% over the first quarter 1999. A significant component of the
increase in Data Center end users was attributable to one customer, which
enabled approximately 100,000 of their customers on S1's software near the end
of March. This increase in end users is part of an arrangement with the
customer, which includes combined professional service and Data Center fees. As
of March 31, 2000, the total number of end users was 412,000.
FINANCIAL SUMMARY:
(In thousands, except per share amounts)
FIRST QUARTER
-------------------------------------------
2000 1999
---------- -------
Revenue $ 50,369 $ 12,000
Direct Costs $ 32,351 $ 7,119
--------- ---------
Gross Margin $ 18,018 $ 4,881
EBITDA(1) ($ 17,731) ($ 2,081)
EBITDA per share(1) ($ 0.35) ($ 0.08)
Net Loss ($ 75,208) ($ 3,258)
Loss per share ($ 1.49) ($ 0.13)
Weighted average 50,456 24,698
shares outstanding
(1) Excludes charges in the amounts of $93.1 million for Q100 and $1.4 million
for Q199 respectively, for amortization of intangibles and other non-cash and
merger-related charges.
The Company's gross margin for the first quarter 2000 was $18.0
million, or 36% compared to 46% in the immediate prior quarter and 40% for the
first quarter of 1999. The decline in the gross margin was due to higher
professional services revenues which carried a 25% margin, offset by lower
software licenses which were impacted as a result of changes in the business
practices of the acquired companies. S1's Data
3
Center margin was 4% in the first quarter 2000 compared to 2% in the fourth
quarter of 1999. The Data Center gross margin was impacted by the inclusion of
costs associated with the VerticalOne data center. Upon integration of the
VerticalOne data center operation in the S1 Data Center, the duplicate costs
will be eliminated.
In the first quarter 2000, S1 incurred a net loss of $75.2 million, or
$1.49 per share, compared to a net loss of $3.3 million, or $0.13 per share, for
the first quarter 1999. The Company recorded gains on the sales of investment
securities in the amount of $35.1 million or $.69 per share during the first
quarter.
At the end of the first quarter, the Company had cash on hand of $83.0
million and marketable securities of $38.5 million.
OPERATIONAL REVIEW
To date in 2000, S1 has entered into several strategic initiatives while making
substantial in-roads in product development, global sales, integration, and the
establishment of its overseas Hosting Services operations.
HIGHLIGHTS:
ACQUISITIONS
- - S1 announced plans to acquire privately held Q UP Systems to strengthen
its presence in the Windows NT-based, community financial services market.
S1 also announced plans to acquire privately held Davidge Data Systems
Corporation to facilitate rapid implementations of the S1 Consumer
Investments application. Both transactions closed in the second quarter
2000.
STRATEGIC ALLIANCES
- - S1 announced a global strategic alliance with IBM to deliver comprehensive
e-business solutions to assist financial institutions in offering
Internet-based corporate banking solutions, with plans to extend to other
S1 products. S1 also established alliances with Financial Fusion to offer
OFX capabilities and DotsConnect Corporation to add consumer self-service
options for credit card services to its solutions.
PRODUCT UPDATE
- - S1 released the Consumer Suite 5.1 and the Corporate Suite 5.1 to the
marketplace and the first implementations are underway. In addition, the
U.S. Department of Commerce's Patent and Trademark Office granted S1
Corporation U.S. Patent #6,023,684 for its three-tier financial transaction
system.
VERTICALONE MILESTONES
- - VerticalOne signed CNBC.com, OnMoney.com, FreeRealTime.com, YouDecide.com,
WFN, Financial Network for Women, and Intrust Bank, which is its second
financial institution win, to distribute its service. VerticalOne also
released version 2.0 of its Personal
4
Account Aggregation. At the end of the first quarter 2000, VerticalOne had
more than 100,000 accounts on its service.
DATA CENTER
- - S1's European Data Center is on track to open in the third quarter 2000.
In addition, the first Asian S1/Andersen Consulting customer is live in the
Singapore Data Center.
CUSTOMERS
- - S1 had 23 new clients in production at March 31, 2000 and 90 customer
projects are currently underway, including 73 implementation projects for
25 institutions and 17 new projects in the Data Center. In total, S1 had
2.9 million end users worldwide at the end of the first quarter 2000.
EDIFY MILESTONES:
- - In the first quarter 2000, Edify released its Internet and voice
e-commerce solutions using wireless application protocol (WAP) technology,
began its first WAP application installation at ANZ in Australia and
received their first orders in China and Japan.
ABOUT S1 CORPORATION
S1 (NASDAQ:SONE), the pioneer of Internet banking, is today's global
provider of innovative Internet-based financial services solutions. S1 offers a
broad range of applications that empower financial organizations to increase
revenue, strengthen customer relationships and gain competitive advantage by
meeting the evolving needs of their customers across various lines of business,
market segments and delivery channels. Through its professional services
organization, S1's applications can be implemented in-house or outsourced to the
S1 Data Center. Additional information about S1 is available at
http://www.s1.com.
The Company will hold a conference call to discuss first
quarter 2000 results at 5:00 PM EST on May 2, 2000. Simultaneous to the call,
management's presentation will be available on the Web at www.s1.com/Q1. S1 will
also broadcast the call over the Internet at Vcall and Yahoo Finance. To listen
to the conference call, go to Vcall:
- - http://www.vcall.com/NASApp/VCall/EventPage?Accept=C&ID=16087
Or Yahoo Finance:
- - http://webevents.broadcast.com/financecalls/event/index.asp?Earnings ID=857
FORWARD-LOOKING STATEMENTS
The statements contained in this release that are forward-looking are based on
current expectations that are subject to a number of
5
uncertainties and risks, and actual results may differ materially. These
forward-looking statements are not guarantees of future performance and are
subject to risks and uncertainties that could cause actual results to differ
materially from the results contemplated by the forward-looking statements.
These risks and uncertainties include, but are in no way limited to:
- - the possibility that the anticipated benefits from our recent acquisition
transactions will not be fully realized;
- - the possibility that costs or difficulties related to our integration of
recent acquisitions will be greater than expected;
- - our dependence on the timely development, introduction and customs
acceptance of new internet services;
- - rapidly changing technology and shifting demand requirements and internet
usage patterns;
- - other risks and uncertainties, including the impact of competitive
services, products and prices, the unsettled conditions in the internet
and other high-technology industries and the ability to attract and retain
key personnel; and
- - other risk factors as may be detailed from time to time in our public
announcements and filings with the SEC, including the Company's annual
report on Form 10-K for the year ended December 31, 1999.
In addition, nothing in the press release should be viewed as an update or
comment on earlier forward looking statements provided by S1 Corporation. As
noted above, because actual results, performance or developments may differ
materially from forward-looking statements, S1 will not update such statements
over the course of future periods.
# # #
3390 Peachtree Rd., Ste. 1700
Atlanta, Georgia 30326
6
S1 CORPORATION
Selected Financial Data
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended
March 31,
2000 1999
Revenues:
Software licenses $10,719 $2,308
Professional services 34,382 7,722
Data center 3,507 1,547
Other 1,761 423
Total revenues 50,369 12,000
Direct costs:
Software licenses 1,521 133
Professional services 25,884 4,955
Data center 3,352 1,687
Other 1,594 344
Total direct costs 32,351 7,119
Gross margin 18,018 4,881
Operating expenses:
Selling and marketing 11,406 1,079
Product development 14,992 4,321
General and administrative 9,351 1,562
Depreciation and amortization 3,404 1,194
Stock option compensation expense 1,125 107
Marketing cost from warrant issued 4,600 ---
Merger related costs 6,814 ---
Acquired in-process research and development --- ---
Amortization of intangibles 77,127 103
Total operating expenses 128,819 8,366
Operating loss (110,801) (3,485)
Interest and investment income 35,593 227
Net loss $(75,208) $(3,258)
Net income (loss) per common share:
Income (loss) per common share from
continuing operations before amortization
of intangibles, acquired in-process
research and development, merger related
costs, marketing cost from warrant issued,
stock option compensation expense and
one time charges $0.29 $(0.13)
Loss per common share from amortization of
intangibles, acquired in-process research
and development, merger related costs,
marketing cost from warrant issued, stock
option compensation expense and one time
charges $(1.78) $--
Net loss per common share $(1.49) $(0.13)
Weighted average common shares outstanding 50,456,210 24,698,334
Common shares outstanding at end of period 51,163,353 25,076,292
7
March 31, Dec.31,
2000 1999
Cash $83,001 $67,850
Investment securities 38,549 62,754
Accounts receivable, net 64,689 70,136
Deferred revenue 27,649 29,752
S1 CORPORATION
Consolidated Statements of Operations
(Dollars in thousands, except share, per share,
end-user and per end-user data)
(Unaudited)
03/31/1999 06/30/1999 09/30/1999 12/31/1999 03/31/2000
Revenues:
Software
licenses $2,308 $2,330 $2,260 $12,152 $10,719
Professional
services 7,722 10,911 14,769 23,030 34,382
Data center 1,547 2,044 2,072 3,195 3,507
Other 423 390 5,698 2,039 1,761
Total revenues 12,000 15,675 24,799 40,416 50,369
Direct costs:
Software licenses 133 99 99 311 1,521
Professional
services 4,955 6,431 8,480 16,461 25,884
Data center 1,687 2,029 2,163 3,129 3,352
Other 344 333 4,425 2,010 1,594
Total direct
costs 7,119 8,892 15,167 21,911 32,351
Gross margin 4,881 6,783 9,632 18,505 18,018
Operating expenses:
Selling and
marketing 1,079 1,174 1,153 8,763 11,406
Product
development 4,321 4,439 5,221 10,055 14,992
General and
administrative 1,562 2,132 3,291 6,928 9,351
Depreciation
and amortization 1,194 1,267 1,465 2,998 3,404
Stock option
compensation
expense 107 107 107 797 1,125
Marketing cost
from warrant
issued --- --- --- 715 4,600
Merger related
costs --- 250 1,851 6,643 6,814
Acquired in-process
research and
development --- --- --- 59,300 --
8
Amortization of
intangibles 103 103 --- 40,000 77,127
Total operating
expenses 8,366 9,472 13,088 136,199 128,819
Operating loss (3,485) (2,689) (3,456) (117,694) (110,801)
Interest and
investment income 227 527 777 706 35,593
Net loss $(3,258) $(2,162) $(2,679) $(116,988) $(75,208)
EBITDA (excluding
acquired in-process research and development) $(2,188) $(1,319) $(1,991) $(15,396) $(30,270)
EBITDA (1) $(2,081) $ (962) $ (33) $(7,241) $(17,731)
EBITDA per share (1) $(0.08) $(0.04) $(0.00) $(0.19) $(0.35)
Net loss per common share:
Loss per common share from continuing
operations before amortization of intangibles,
acquired in-process research and development, merger
related costs, marketing cost from warrant issued,
stock option compensation expense and one time charges $(0.13) $(0.07) $(0.03) $(0.25) $0.29
Loss per common share from amortization of intangibles,
acquired in-process research and development, merger
related costs, marketing costs from warrant issued,
stock option compensation expense and one time
charges --- (0.01) (0.07) (2.80) (1.78)
Net loss per common share $(0.13) $(0.08) $(0.10) $(3.05) $(1.49)
Weighted average common shares outstanding 24,698,334 26,051,942 27,628,446 38,339,221 50,456,210
Common shares outstanding at end of period 25,076,292 27,557,074 27,701,489 48,831,243 51,163,353
Gross margin percentages:
Software licenses $2,175 $2,231 $2,161 $11,841 $9,198
Percentage 94% 96% 96% 97% 86%
Professional services $2,767 $4,480 $6,289 $6,569 $8,498
Percentage 36% 41% 43% 29% 25%
Data center $(140) $15 $(91) $66 $155
Percentage (9%) 1% (4%) 2% 4%
Gross margin before other revenue $4,802 $6,726 $8,359 $18,476 $17,851
Percentage 41% 44% 44% 48% 37%
Other $79 $57 $1,273 $29 $167
9
Percentage 19% 15% 22% 1% 9%
Total gross
margin $4,881 $6,783 $9,632 $18,505 $18,018
Percentage 40% 43% 39% 46% 36%
Data center
revenue per
quarterly
average
end-users $15.99 $18.34 $14.52 $15.45 $12.43
Number of data
center
end-users 100,200 114,500 163,000 226,000 412,000
Number of data
center end-user
accounts 161,000 181,000 254,000 347,000 570,000
(1) Excludes merger related charges, non-cash stock option compensation
expense and non-cash marketing expense.
SOURCE: S1 Corporation