Exhibit 99.1
S1 CORPORATION REPORTS FOURTH QUARTER 2003 RESULTS
RESULTS HIGHLIGHT GROWING ENTERPRISE SUCCESS
Atlanta, February 12, 2004 -- S1 Corporation (Nasdaq:SONE), a leading global
provider of Enterprise software solutions, today announced financial results
for its fourth quarter and year ended December 31, 2003.
- Revenue for the quarter ended December 31, 2003 was $61.7
million, a sequential increase of 7% over revenue for the
quarter ended September 30, 2003.
- The company reported net income of $3.4 million, or $0.05 per
share, for the quarter ended December 31, 2003 compared to a
net loss of $4.4 million, or ($0.06) per share, for the
quarter ended September 30, 2003.
- Gross margin was 59% for the quarter ended December 31, 2003
versus 54% for the quarter ended September 30, 2003.
- Revenue and earnings per share for the quarter ended December
31, 2003 exceeded the company's previous guidance.
"Our solid financial performance in the fourth quarter marks the successful
transition of our revenue model in 2003 and the continuing progress of our
Enterprise strategy," commented Jaime Ellertson, chief executive officer of S1
Corporation. "More than 100 financial institutions have committed to S1
Enterprise, clearly validating the value of integrating all customer-facing
channels and applications. Our continued focus on operational excellence,
coupled with strong market enthusiasm for our Enterprise applications, enables
us to enter 2004 with a high degree of confidence in our ability to
continue to successfully execute on our business plan."
For the year ended December 31, 2003, S1's revenue was $252.6 million, a 14%
decrease from $292.2 million reported for the year ended December 31, 2002. Net
loss for the year ended December 31, 2003, was $36.7 million, or ($0.52) per
share, compared to a net loss of $16.4 million, or ($0.24) per share for the
year ended December 31, 2002.
RECENT OPERATING HIGHLIGHTS
- - Signed an additional 11 Enterprise deals, bringing the total to more
than 100 financial institutions committed to the S1 Enterprise
Platform. This quarter's wins include the first contracts for our
Enterprise branch and call center products, which will become
generally available on a worldwide basis with the release of
Enterprise 3.0 later this year.
- - Successfully completed the deployment of S1 Enterprise at eight
institutions this quarter, bringing the total to nearly 50
institutions now in full production on the S1 Enterprise Platform.
Significant progress in the efficiency and maturing these products
and implementation processes was made throughout 2003, resulting in
the standard Enterprise hosted implementation taking 50 percent less
time and 75 percent less effort, compared to this time last year.
- - Signed more than 70 new customers and added more than 150 cross sales
this quarter, demonstrating the value of S1's customer base and
feature-rich products that can be implemented as standalone solutions
or as an integrated suite.
- - Continued progress with S1's global strategic alliances, evidenced by
another strategic win with IBM in Asia at Commercial Bank of Siam.
- - Instituted a share repurchase program as discussed in the previous
quarter.
- - Generated positive cash flow from operations of
approximately $14 million.
FINANCIAL GUIDANCE
S1's revenue and EPS guidance for Q1 and full year 2004 is as follows:
S1 CORPORATION
FINANCIAL GUIDANCE
FOR Q1 AND FULL YEAR 2004
IN MILLIONS
QUARTER ENDING MARCH 31, 2004 FULL YEAR 2004
------------------------------------------------ ------------------------------------------
FI EDIFY TOTAL FI EDIFY TOTAL
PREVIOUS GUIDANCE
Revenue $187 - $190 $29 - $31 $214 - $220
Income (Loss) Per Share $.03 - $.06 $(.02) - $.00 $.00 - $.05
CURRENT GUIDANCE
Revenue $42 - $44 $7.5 - $8.0 $50 - $52 $187 - $192 $30 - $32 $217 - $224
Earnings (Loss) Per Share $(.05) - $(.03) $0.00 $(.05) - $(.03) $.03 - $.06 $.00 - $.02 $.03 - $.08
COSTS AND EXPENSES
Direct Costs $20 - $21 $3.5 - $4.0
Cash Expenses $22 - $23 $3.8 - $4.2
Non Cash Expenses $3.5 $0.3
- -----------------------------------------------------------------------------------------------------------------------------
Shares - Basic 71.0
Shares - Diluted 74.0
CONFERENCE CALL INFORMATION
Company management will host a conference call to discuss fourth quarter
results on Thursday, February 12, 2004 at 5:00 p.m. EST. Interested parties may
access a live webcast of the call through the company's corporate website,
www.s1.com. The conference call will contain forward-looking statements and
other material information. A replay of the webcast will be available until
February 19, 2004.
ABOUT S1
S1 (Nasdaq: SONE) is a leading global provider to approximately 4,000 banks,
credit unions, insurance providers, and investment firms of enterprise software
solutions that create one view of customers across multiple channels,
applications and segments. S1's Enterprise software solutions uniquely combine
customer interaction and financial transaction capabilities, resulting in a
more compelling experience for the customers and a more profitable relationship
for the financial institution. S1 is the only provider with the proven
experience, breadth of products and financial strength to empower financial
services companies' enterprise strategies. 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.
CONTACTS:
Matthew Hale
Chief Financial Officer, S1 Corporation
404.923.3500
matt.hale@s1.com
Sterling Hager, Inc. for S1 Corporation
Brian Gendron
617/926-6665 ext. 244
bgendron@sterlinghager.com
S1 CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
DECEMBER 31, DECEMBER 31,
2003 2002
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 150,064 $ 127,842
Short term investments, held-to-maturity 14,126 14,843
Accounts receivable, net of allowances 37,188 54,815
Prepaid expenses 5,745 7,601
Other current assets 3,218 7,232
----------- -----------
Total current assets 210,341 212,333
Property and equipment, net 15,661 30,626
Intangible assets, net 14,073 17,585
Goodwill, net 93,462 106,971
Other assets 3,551 9,459
----------- -----------
Total assets $ 337,088 $ 376,974
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,166 $ 13,354
Accrued salaries and benefits 11,500 11,710
Accrued other expenses and restructuring 25,937 24,407
Deferred revenues 38,536 40,305
Current portion of capital lease obligation 762 1,563
----------- -----------
Total current liabilities 82,901 91,339
Other liabilities 8,873 5,874
----------- -----------
Total liabilities 91,774 97,213
----------- -----------
Stockholders' equity:
Preferred stock 10,000 18,328
Common stock 730 713
Additional paid-in capital 1,907,920 1,896,111
Treasury stock (10,438) (9,250)
Accumulated deficit (1,660,217) (1,623,545)
Accumulated other comprehensive income:
Net unrealized gains on investment securities
available for sale, net of taxes -- 62
Cumulative foreign currency translation adjustment (2,681) (2,658)
----------- -----------
Total stockholders' equity 245,314 279,761
----------- -----------
Total liabilities and stockholders' equity $ 337,088 $ 376,974
=========== ===========
S1 CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED YEAR TO DATE
12/31/2003 12/31/2002 12/31/2003 12/31/2002
---------- ---------- ---------- ----------
REVENUES:
Software licenses $ 16,307 $ 19,586 $ 61,619 $ 88,742
Support and maintenance 15,172 15,463 59,382 59,814
Professional services 20,316 27,345 83,453 101,779
Data center 9,639 9,604 45,210 40,560
Other 299 280 2,917 1,274
--------- --------- --------- ---------
Total revenues 61,733 72,278 252,581 292,169
--------- --------- --------- ---------
DIRECT COSTS:
Software licenses 1,034 1,723 4,048 6,973
Professional services,
support and maintenance 19,481 22,446 85,572 90,775
Data center 4,495 5,793 23,062 22,919
Other 185 304 2,623 1,267
--------- --------- --------- ---------
Total direct costs 25,195 30,266 115,305 121,934
--------- --------- --------- ---------
Gross margin 36,538 42,012 137,276 170,235
--------- --------- --------- ---------
OPERATING EXPENSES:
Selling and marketing 8,137 13,497 39,125 58,140
Product development 11,359 10,650 45,148 51,178
General and administrative 10,680 9,550 35,317 38,701
Depreciation and amortization 2,932 5,240 16,915 22,635
Merger related and restructuring costs (706) (339) 19,858 2,417
Acquired in-process research and development -- -- -- 350
Amortization of acquisition intangibles 768 3,489 17,392 17,460
--------- --------- --------- ---------
Total operating expenses 33,170 42,087 173,755 190,881
--------- --------- --------- ---------
Operating income (loss) 3,368 (75) (36,479) (20,646)
Interest, investment and other income, net 165 330 90 1,479
Income tax benefit (expense) (153) 901 (283) 2,770
--------- --------- --------- ---------
NET INCOME (LOSS) $ 3,380 $ 1,156 $ (36,672) $ (16,397)
========= ========= ========= =========
NET INCOME (LOSS) PER COMMON SHARE:
Net income (loss) per common share - basic $ 0.05 $ 0.02 $ (0.52) $ (0.24)
========= ========= ========= =========
Net income per common share - diluted $ 0.05 $ 0.02 NA NA
========= =========
Weighted average common
shares outstanding - basic 70,997 69,506 69,872 67,725
Weighted average common shares
and equivalents - diluted 74,175 72,221 NA NA
COMMON SHARES OUTSTANDING AT END OF PERIOD 71,125 69,354 71,125 69,354
GROSS MARGIN PERCENTAGES:
Software licenses 94% 91% 93% 92%
Professional services, support and maintenance 45% 48% 40% 44%
Data center 53% 40% 49% 43%
Other 38% (9%) 10% 1%
--------- --------- --------- ---------
Total gross margin 59% 58% 54% 58%
========= ========= ========= =========
S1 CORPORATION
STATEMENTS OF OPERATIONS BY SEGMENT
FOR THE QUARTER ENDED DECEMBER 31, 2003
(UNAUDITED)
FINANCIAL INSTITUTIONS
---------------------------------
S1 BASE
BUSINESS ZFS SUBTOTAL EDIFY ELIMINATIONS TOTAL
-------- ------ -------- -------- ------------ --------
Software licenses $ 6,027 $8,176 $ 14,203 $ 2,288 $ (184) $ 16,307
Support and maintenance 11,474 11,474 4,422 (724) 15,172
Professional services 17,568 1,500 19,068 1,264 (16) 20,316
Data center 9,639 9,639 -- -- 9,639
Other 293 293 6 -- 299
-------- ------ -------- -------- ------ --------
TOTAL REVENUE: 45,001 9,676 54,677 7,980 (924) 61,733
-------- ------ -------- -------- ------ --------
DIRECT COSTS:
Software licenses 316 316 902 (184) 1,034
Professional services, support and
Maintenance 17,169 17,169 3,052 (740) 19,481
Data center 4,495 4,495 -- -- 4,495
Other 162 162 23 0 185
-------- ------ -------- -------- ------ --------
Total direct costs 22,142 -- 22,142 3,977 (924) 25,195
-------- ------ -------- -------- ------ --------
Gross margin 22,859 9,676 32,535 4,003 -- 36,538
-------- ------ -------- -------- ------ --------
OPERATING EXPENSES:
Selling and marketing 6,082 6,082 2,055 8,137
Product development 10,108 10,108 1,251 11,359
General and administrative 9,791 9,791 889 10,680
Depreciation and amortization 3,036 3,036 (104) 2,932
Merger related and restructuring costs (706) (706) -- (706)
Amortization and impairment of acquisition
Intangibles 693 693 75 768
-------- ------ -------- -------- ------ --------
Total operating expenses 29,004 -- 29,004 4,166 -- 33,170
-------- ------ -------- -------- ------ --------
Operating (loss) income (6,145) 9,676 3,531 (163) -- 3,368
Interest, investment and other income (expense) 266 266 (101) 165
Income tax expense (155) (155) 2 (153)
-------- ------ -------- -------- ------ --------
NET (LOSS) INCOME $ (6,034) $9,676 $ 3,642 $ (262) $ -- $ 3,380
======== ====== ======== ======== ====== ========
NET (LOSS) INCOME PER COMMON SHARE - BASIC $ (0.08) $ 0.13 $ 0.05 $ (0.00) $ 0.05
======== ====== ======== ======== ====== ========
NET (LOSS) INCOME PER COMMON SHARE
- FULLY DILUTED $ (0.08) $ 0.13 $ 0.05 $ (0.00) $ 0.05
======== ====== ======== ======== ====== ========
Weighted average common shares
outstanding - basic 70,997 70,997 70,997 70,997 70,997
Weighted average common shares
outstanding - fully diluted 74,175 74,175 74,175 74,175 74,175
S1 CORPORATION
STATEMENTS OF OPERATIONS BY SEGMENT
FOR THE YEAR ENDED DECEMBER 31, 2003
(UNAUDITED)
FINANCIAL INSTITUTIONS
------------------------------------------
S1 BASE
BUSINESS ZFS SUBTOTAL EDIFY ELIMINATIONS TOTAL
--------- --------- --------- --------- ------------ ---------
Software licenses $ 22,158 $ 32,704 $ 54,862 $ 7,745 $ (988) $ 61,619
Support and maintenance 45,158 -- 45,158 16,403 (2,179) 59,382
Professional services 76,276 1,500 77,776 5,872 (195) 83,453
Data center 36,576 8,634 45,210 -- -- 45,210
Other 2,910 -- 2,910 7 -- 2,917
--------- --------- --------- --------- --------- ---------
TOTAL REVENUE: 183,078 42,838 225,916 30,027 (3,362) 252,581
--------- --------- --------- --------- --------- ---------
DIRECT COSTS:
Software licenses 1,565 -- 1,565 3,471 (988) 4,048
Professional services,
support and
maintenance 74,228 -- 74,228 13,718 (2,374) 85,572
Data center 21,213 1,849 23,062 -- 23,062
Other 2,594 -- 2,594 29 2,623
--------- --------- --------- --------- --------- ---------
Total direct
costs 99,600 1,849 101,449 17,218 (3,362) 115,305
--------- --------- --------- --------- --------- ---------
Gross margin 83,478 40,989 124,467 12,809 137,276
--------- --------- --------- --------- --------- ---------
OPERATING EXPENSES:
Selling and marketing 27,733 -- 27,733 11,392 39,125
Product development 39,275 -- 39,275 5,873 45,148
General and
administrative 30,952 -- 30,952 4,365 35,317
Depreciation and
amortization 15,543 718 16,261 654 16,915
Merger related and
restructuring
costs 15,599 -- 15,599 4,259 19,858
Amortization and
impairment of
acquisition
intangibles 3,730 -- 3,730 13,662 17,392
--------- --------- --------- --------- --------- ---------
Total
operating
expenses 132,832 718 133,550 40,205 -- 173,755
--------- --------- --------- --------- --------- ---------
Operating (loss) income (49,354) 40,271 (9,083) (27,396) -- (36,479)
Interest, investment and
other income (expense) 245 -- 245 (155) 90
Income tax expense (278) -- (278) (5) (283)
--------- --------- --------- --------- --------- ---------
NET (LOSS) INCOME $ (49,387) $ 40,271 $ (9,116) $ (27,556) $ -- $ (36,672)
========= ========= ========= ========= ========= =========
NET (LOSS) INCOME PER
COMMON SHARE - BASIC $ (0.71) $ 0.58 $ (0.13) $ (0.39) $ (0.52)
========= ========= ========= ========= ========= =========
Weighted average common
shares outstanding - basic 69,872 69,872 69,872 69,872 69,872