Exhibit 99.1
S1 Corporation Reports Second Quarter 2004 Results
ATLANTA--(BUSINESS WIRE)--July 29, 2004--
New Large Bank Wins Demonstrate Continued S1 Enterprise
Success and Company Raises Guidance
S1 Corporation (Nasdaq:SONE), a leading global provider of integrated
front-office applications for financial institutions, today announced financial
results for its second quarter ended June 30, 2004.
-- Revenue for the quarter was $60.9 million, a sequential increase of 5%
over the quarter ended March 31, 2004.
-- Revenue for the second quarter exceeded the Company's previous
guidance and the Company raised revenue guidance for the remainder of
2004.
-- Net income for the quarter was $0.6 million, or $0.01 per share,
compared to net income of $0.4 million for the quarter ended March 31,
2004. Second quarter results include a $0.01 charge associated with an
equity investment in a technology partner made this quarter.
-- Third consecutive quarter of profitability in line with the Company's
guidance.
-- The Company closed 19 Enterprise deals indicating continued traction
in all-sized financial institutions.
"I am pleased with the strong revenue performance that we delivered this
quarter, which reflects the increased traction of our S1 Enterprise products in
both top U.S. and international financial institutions," said Jaime Ellertson,
chief executive officer of S1 Corporation. "As we prepare to launch the
industry's first integrated multi-channel front-office solution -- S1 Enterprise
3.0 - in the next few weeks, we believe our opportunities will continue to
increase as banks of all sizes and geographies recognize the substantial
benefits that an enterprise front-office will provide."
Operating Highlights
-- Signed 19 Enterprise deals, 11 of which are new relationships with
financial institutions at an average sale price of over $1.0 million
and eight being substantial new application or service add-on
contracts, with an average sale price of over $800,000.
-- Signed several multi-year contracts with large financial institutions,
including Alliance & Leicester, a Top 10 bank in the U.K. with nearly
$100 billion in assets; Bank of Toyko Mitsubishi, a Top 10 Asian bank
with $800 billion in assets; and a Top 50 U.S. bank with approximately
$35 billion in assets.
-- Signed 78 new customers and added nearly 200 cross sales this quarter,
which highlights the value of S1's customer base and feature-rich
products that can be implemented either as a standalone solution or an
integrated suite.
-- Continued to make progress with the S1 Enterprise 3.0 Customer Value
Program participants, covering virtually every S1 Enterprise product,
from the branch and call center to the Internet. In the early stages
of their pilot programs, these relationships are delivering key
learnings for our entire organization as well as significant value for
each institution.
Financial Guidance
S1 Corporation
Financial Guidance
For Q3 and Full Year 2004
Q3 04 Full Year 04
------------- ---------------
Lo Hi Lo Hi
------ ------ ------- -------
FI Segment:
- ------------------
Revenue $50.0 $52.0 $202.0 $206.0
Direct Costs 22.0 23.0
Operating Expense 23.0 24.0
EPS $0.01 $0.03 $ 0.07 $ 0.09
Edify Segment:
- ------------------
Rev $ 8.5 $ 9.5 $ 36.0 $ 38.0
EPS $0.00 $0.01 $ 0.00 $ 0.02
Consolidated
- ------------------
Rev 58.0 61.0 236.0 242.0
EPS $0.01 $0.04 $ 0.07 $ 0.11
Fully Diluted Shares 74.0 74.0 74.0 74.0
Conference Call Information
Company management will host a conference call to discuss first quarter
results on Thursday, July 29, 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 call will be available through
August 5, 2004.
About S1
S1 Corporation (Nasdaq: SONE) is a leading global provider of integrated
front-office applications for more than 4,000 banks, credit unions and insurance
providers around the world. Comprised of applications that address virtually
every market segment and delivery channel, S1 solutions help integrate and
optimize an institution's entire front office, resulting in increased
operational efficiencies, revenue opportunities and overall customer
satisfaction. 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.
S1 Corporation and Subsidiaries
Consolidated Balance Sheets
(In thousands)
(Unaudited)
June 30, December 31,
2004 2003
------------ -------------
Assets
Current assets:
Cash and cash equivalents $ 126,145 $ 150,064
Short term investments, held-to-maturity 14,647 14,126
Accounts receivable, net of allowances 44,758 37,188
Prepaid expenses 7,248 5,745
Other current assets 1,650 3,218
------------ -------------
Total current assets 194,448 210,341
Property and equipment, net 15,315 15,661
Intangible assets, net 12,853 14,073
Goodwill, net 94,158 93,462
Other assets 3,736 3,551
------------ -------------
Total assets $ 320,510 $ 337,088
------------ -------------
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 5,521 $ 6,166
Accrued salaries and benefits 9,864 11,500
Accrued other expenses and restructuring 16,961 27,437
Deferred revenues 37,395 38,536
Current portion of capital lease
obligation 1,026 762
------------ -------------
Total current liabilities 70,767 84,401
Other liabilities 8,631 8,873
------------ -------------
Total liabilities 79,398 93,274
------------ -------------
Stockholders' equity:
Preferred stock 10,000 10,000
Common stock 735 732
Additional paid-in capital 1,909,692 1,907,918
Treasury stock (15,807) (10,438)
Accumulated deficit (1,660,653) (1,661,717)
Accumulated other comprehensive
income:
Cumulative foreign currency
translation adjustment (2,855) (2,681)
------------ -------------
Total stockholders' equity 241,112 243,814
------------ -------------
Total liabilities and
stockholders' equity $ 320,510 $ 337,088
============ =============
S1 CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended
6/30/2004 6/30/2003
------------ ------------
Revenues:
Software licenses $ 9,369 $ 14,185
Support and maintenance 16,371 14,575
Professional services 23,930 23,044
Data center 10,558 14,970
Other 678 951
------------ ------------
Total revenues 60,906 67,725 (1)
------------ ------------
Direct costs:
Software licenses 1,940 1,014
Professional services, support and
maintenance 18,662 22,997
Data center 4,911 6,664 (1)
Other 559 858
------------ ------------
Total direct costs 26,072 31,533
------------ ------------
Gross margin 34,834 36,192
------------ ------------
Operating expenses:
Selling and marketing 9,259 10,124
Product development 13,198 10,268
General and administrative 7,661 7,803
Depreciation and amortization 2,578 4,703 (1)
Merger related and restructuring
costs - 8,418
Amortization of acquisition
intangibles 765 788
------------ ------------
Total operating expenses 33,461 42,104
------------ ------------
Operating income (loss) 1,373 (5,912)
Interest, investment and other income,
net (752) (491)
Income tax expense (1) -
------------ ------------
Net income (loss) $ 620 $ (6,403)
============ ============
Net income (loss) per share:
------------ ------------
Net income (loss) per common share -
basic $ 0.01 $ (0.09)
============ ============
Net income per common share - diluted $ 0.01 N/A
============ ============
Weighted average common shares
outstanding - basic 70,590,274 69,348,903
Weighted average common shares and
equivalents - diluted 74,623,944 N/A
Common shares outstanding at end of
period 70,729,342 71,439,802
Gross margin percentages:
Software licenses 79% 93%
Professional services, support and
maintenance 54% 39%
Data center 53% 55%
Other 18% 10%
------------ ------------
Total gross margin 57% 53%
------------ ------------
(1) Results for the quarter ended June 30, 2003 include $14.1 million
license and data center revenue and $0.9 million in data center expenses and
$0.4 million in depreciation expense associated with the Zurich Insurance
Company contract.
Six Months Ended
6/30/2004 6/30/2003
------------ ------------
Revenues:
Software licenses $ 20,997 $ 29,151
Support and maintenance 31,672 30,017
Professional services 43,997 46,322
Data center 20,484 26,731
Other 1,664 1,166
------------ ------------
Total revenues 118,814 133,387 (2)
------------ ------------
Direct costs:
Software licenses 3,305 1,858
Professional services, support and
maintenance 36,322 47,588
Data center 9,748 13,390 (2)
Other 1,478 1,014
------------ ------------
Total direct costs 50,853 63,850
------------ ------------
Gross margin 67,961 69,537
------------ ------------
Operating expenses:
Selling and marketing 17,604 21,654
Product development 26,862 23,374
General and administrative 14,374 17,030
Depreciation and amortization 5,288 10,438 (2)
Merger related and restructuring
costs - 16,512
Amortization of acquisition
intangibles 1,601 15,857
------------ ------------
Total operating expenses 65,729 104,865
------------ ------------
Operating income (loss) 2,232 (35,328)
Interest, investment and other income,
net (705) (245)
Income tax expense (463) (119)
------------ ------------
Net income (loss) $ 1,064 $ (35,692)
============ ============
Net income (loss) per share:
------------ ------------
Net income (loss) per common share -
basic $ 0.02 $ (0.52)
============ ============
Net income per common share - diluted $ 0.01 N/A
============ ============
Weighted average common shares
outstanding - basic 70,786,719 69,298,568
Weighted average common shares and
equivalents - diluted 74,363,265 N/A
Common shares outstanding at end of
period 70,729,342 71,439,802
Gross margin percentages:
Software licenses 84% 94%
Professional services, support and
maintenance 52% 38%
Data center 52% 50%
Other 11% 13%
------------ ------------
Total gross margin 57% 52%
------------ ------------
(2) Results for the six months ended June 30, 2003 include $25.0
million license and data center revenue and $1.8 million in data
center expenses and $0.7 million in depreciation expense associated
with the Zurich Insurance Company contract.
S1 Corporation
Statements of Operations by Segment
For the Quarter Ended June 30, 2004
(In thousands, except share and per share data)
(Unaudited)
Financial
Institutions Edify Eliminations Total
------------ ------------ ---------- -----------
Software licenses $ 6,435 $ 3,033 $ (99) $ 9,369
Support and
maintenance 11,936 4,620 (185) 16,371
Professional
services 22,308 1,624 (2) 23,930
Data center 10,558 - 10,558
Other 678 - 678
------------ ------------ ---------- -----------
Total Revenue: 51,915 9,277 (286) 60,906
------------ ------------ ---------- -----------
Direct costs:
Software licenses 1,149 890 (99) 1,940
Professional
services,
support and
maintenance 15,978 2,871 (187) 18,662
Data center 4,911 - 4,911
Other 559 - 559
------------ ------------ ---------- -----------
Total direct
costs 22,597 3,761 (286) 26,072
------------ ------------ ---------- -----------
Gross margin 29,318 5,516 - 34,834
------------ ------------ ---------- -----------
Operating expenses:
Selling and
marketing 6,567 2,692 9,259
Product
development 11,721 1,477 13,198
General and
administrative 6,617 1,044 7,661
Depreciation and
amortization 2,355 223 2,578
Amortization and
impairment of
acquisition
intangibles 765 - 765
------------ ------------ ---------- -----------
Total operating
expenses 28,025 5,436 - 33,461
------------ ------------ ---------- -----------
Operating income 1,293 80 - 1,373
Interest,
investment and
other income
(expense) (714) (38) (752)
Income tax expense (20) 19 (1)
------------ ------------ ---------- -----------
Net income $ 559 $ 61 $ - $ 620
------------ ------------ ---------- -----------
Net income - basic $ 0.01 $ 0.00 $ 0.01
============ ============ ============
Net income -
diluted $ 0.01 $ 0.00 $ 0.01
============ ============ ============
Weighted average
common shares
outstanding -
basic 70,590,274 70,590,274 70,590,274
Weighted average
common shares
outstanding -
diluted 74,623,944 74,623,944 74,623,944
S1 Corporation
Statements of Operations by Segment
For the Quarter Ended March 31, 2004
(In thousands, except share and per share data)
(Unaudited)
Financial
Institutions Edify Eliminations Total
------------ ------------ ------------------------
Software licenses $ 8,630 $ 3,306 $ (308) $ 11,628
Support and
maintenance 11,158 4,431 (288) 15,301
Professional
services 18,459 1,668 (60) 20,067
Data center 9,926 - 9,926
Other 986 - 986
------------ ------------ ----------- ------------
Total Revenue: 49,159 9,405 (656) 57,908
------------ ------------ ----------- ------------
Direct costs:
Software licenses 970 703 (308) 1,365
Professional
services,
support and
maintenance 15,063 2,945 (348) 17,660
Data center 4,837 - 4,837
Other 919 - 919
------------ ------------ ----------- ------------
Total direct
costs 21,789 3,648 (656) 24,781
------------ ------------ ----------- ------------
Gross margin 27,370 5,757 - 33,127
------------ ------------ ----------- ------------
Operating expenses:
Selling and
marketing 5,540 2,805 8,345
Product
development 12,108 1,556 13,664
General and
administrative 5,738 975 6,713
Depreciation and
amortization 2,494 216 2,710
Amortization and
impairment of
acquisition
intangibles 761 75 836
------------ ------------ ----------- ------------
Total operating
expenses 26,641 5,627 - 32,268
------------ ------------ ----------- ------------
Operating income 729 130 - 859
Interest,
investment and
other income
(expense) 138 (91) 47
Income tax expense (441) (21) (462)
------------ ------------ ----------- ------------
Net income $ 426 $ 18 $ - $ 444
============ ============ =========== ============
Net income - basic $ 0.01 $ 0.00 $ 0.01
============ ============ ============
Net income -
diluted $ 0.01 $ 0.00 $ 0.01
============ ============ ============
Weighted average
common shares
outstanding -
basic 70,983,164 70,983,164 70,983,164
Weighted average
common shares
outstanding -
diluted 74,143,891 74,143,891 74,143,891
S1 Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended
June 30, June 30,
2004 2003
--------- ---------
Cash flows from operating activities:
Net income (loss) $ 1,064 $(35,692)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization and goodwill
impairment charge 6,889 26,295
Equity in net loss of unconsolidated
subsidiary 750 -
Loss on disposal of property and equipment - 3,931
Provision for doubtful accounts receivable
and billing adjustments 1,163 3,948
Other - 1,582
Changes in assets and liabilities,
excluding effects of acquisition:
Increase in accounts receivable (8,748) (5,418)
(Increase) decrease in prepaid
expenses and other assets (30) 450
Decrease in accounts payable (706) (7,695)
(Decrease) increase in accrued
expenses and other liabilities (12,652) 8,120
(Decrease) increase in deferred
revenue (1,296) 3,963
--------- ---------
Net cash used in operating activities (13,566) (516)
-------- --------
Cash flows from investing activities:
Cash paid in connection with acquisition (1,198) -
Purchases of short-term investment securities (22,834) (11,356)
Maturities of short-term investment securities 22,313 15,851
Proceeds from sale of investment securities
available for sale - 92
Investment in unconsolidated subsidiary (750) -
Purchases of property and equipment and
purchased technology (3,642) (3,599)
--------- ---------
Net cash (used in) provided by investing
activities (6,111) 988
-------- --------
Cash flows from financing activities:
Proceeds from sale of common stock under
employee stock purchase and option plans 1,777 640
Payments on capital lease obligations (491) (1,582)
Repurchase of common stock held in treasury (5,369) (750)
--------- ---------
Net cash used in financing activities (4,083) (1,692)
--------- ---------
Effect of exchange rate changes on cash and cash
equivalents (159) 811
--------- ---------
Net decrease in cash and cash equivalents (23,919) (409)
Cash and cash equivalents at beginning of period 150,064 127,842
--------- ---------
Cash and cash equivalents at end of period $126,145 $127,433
--------- ---------
Property and equipment acquired through leases $ 1,249 $ 1,293
CONTACT: S1 Corporation, Atlanta
Matthew Hale, 404/923-3500
matt.hale@s1.com
or
SHIFT Communications for S1 Corporation
Brian Gendron, 617/681-1226
bgendron@sterlinghager.com