Exhibit 99.1
S1 Corporation Reports Third Quarter 2004 Results;
New Top 10 Bank Success Fuels Revenue and Profit Growth
ATLANTA--(BUSINESS WIRE)--Oct. 28, 2004--S1 Corporation
(Nasdaq:SONE), a leading global provider of integrated front-office
applications for financial institutions, today announced financial
results for its third quarter ended September 30, 2004.
-- Net income for the quarter was $3.2 million, or $0.04 per
share, compared to net income of $0.6 million, or $0.01 per
share, for the quarter ended June 30, 2004.
-- Revenue for the quarter was $62.3 million, compared to revenue
of $60.9 million for the quarter ended June 30, 2004,
exceeding previous guidance.
-- Total license revenue increased 25% to $11.7 million.
-- Top 10 U.S. financial institution signed on to S1 Enterprise,
making four of the Top 10 U.S. banks S1 Enterprise customers.
-- The Company closed 16 Enterprise deals, indicating continued
traction in all sizes of financial institutions.
-- Announced plans to divest its Davidge business unit in
November that will strengthen the Company's cash reserves.
"I am pleased with the strong revenue and profit performance we
delivered this quarter, which reflects the continued acceptance of S1
Enterprise, the industry's first integrated multi-channel solution,"
said Jaime Ellertson, chief executive officer of S1 Corporation. "This
quarter marked several significant developments for our Enterprise
strategy, including a new Enterprise relationship with SunTrust Bank
and the transition to a subscription-based pricing model for our
multi-channel Enterprise suite of products. Coinciding with our
earnings release, we are also announcing the rollout of a new
Enterprise product, co-developed with Wells Fargo Bank."
The S1 Enterprise Partner Value Program participants continued to
make substantial progress in Q3 and are all engaged in long-term
implementation planning cycles focused on multiple applications.
According to Ann P. Baughan, State Farm's Vice President of Enterprise
Internet Services, "With the help of S1, we have identified strategic
opportunities that focus on customer access points and systems
integration. S1's Enterprise suite of solutions offers us the
opportunity to have a more comprehensive view of our customer
interactions, which will enable State Farm to provide enhanced service
and better anticipate customer needs."
Operating Highlights
-- Signed 16 Enterprise deals, 8 of which are new relationships
with financial institutions and 8 being substantial new
application or service add-on contracts. Several of the
world's largest financial services providers, including
SunTrust and China Pacific Insurance Company, were added to
the growing list of more than 150 companies using S1
Enterprise.
-- Global distribution partners continue to deliver new
Enterprise deals, including wins at Housing Bank of Jordan,
one of the largest institutions in the Middle East; Commercial
International Bank of Egypt, one of the largest banks in
Egypt; and OCBC, one of the largest banks in Asia.
-- Signed 89 new customers and added more than 220 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.
-- Acquired lending solution provider X/Net Associates, adding to
our already robust retail and commercial Internet, call center
and branch offerings.
-- Another solid performance from Edify.
Financial Guidance
For Q4 and Full Year 2004
Q4 04 Full Year 04
------------- ---------------
Lo Hi Lo Hi
------ ------ ------- -------
FI Segment:
- -----------
Revenue $52.0 $54.0 $202.0 $204.0
Direct Costs $22.0 $22.5
Operating Expense $23.5 $24.0
EPS $0.03 $0.05 $ 0.10 $ 0.12
Edify Segment:
- --------------
Rev $ 8.5 $ 9.5 $ 36.0 $ 37.0
EPS $0.00 $0.01 $ 0.00 $ 0.01
Consolidated
- ------------
Rev $60.0 $63.0 $236.0 $238.0
EPS $0.03 $0.05 $ 0.10 $ 0.12
Fully Diluted Shares 73.0 73.0 73.0 73.0
(in millions)
Conference Call Information
Company management will host a conference call to discuss third
quarter results on Thursday, October 28, 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 November 4, 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)
September 30 December 31,
2004 2003
-------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 123,737 $ 150,064
Short term investments, held-to-
maturity 6,074 14,126
Accounts receivable, net of allowances 47,714 37,188
Prepaid expenses 7,562 5,745
Other current assets 1,696 3,218
-------------- -------------
Total current assets 186,783 210,341
Property and equipment, net 14,419 15,661
Intangible assets, net 13,817 14,073
Goodwill, net 96,840 93,462
Other assets 3,633 3,551
-------------- -------------
Total assets $ 315,492 $ 337,088
============== =============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 5,079 $ 6,166
Accrued salaries and benefits 11,033 11,500
Accrued other expenses and
restructuring 17,264 27,437
Deferred revenues 31,667 38,536
Current portion of capital lease
obligation 1,118 762
-------------- -------------
Total current liabilities 66,161 84,401
Other liabilities 9,467 8,873
-------------- -------------
Total liabilities 75,628 93,274
-------------- -------------
Stockholders' equity:
Preferred stock 10,000 10,000
Common stock 737 732
Additional paid-in capital 1,910,515 1,907,918
Treasury stock (21,236) (10,438)
Accumulated deficit (1,657,434) (1,661,717)
Accumulated other comprehensive
income:
Cumulative foreign currency
translation adjustment (2,718) (2,681)
-------------- -------------
Total stockholders' equity 239,864 243,814
-------------- -------------
Total liabilities and
stockholders' equity $ 315,492 $ 337,088
============== =============
S1 CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended
9/30/2004 9/30/2003
------------ ------------
Revenues:
Software licenses $ 11,736 $ 16,161
Support and maintenance 15,689 14,193
Professional services 24,385 16,815
Data center 9,923 8,840
Other 522 1,452
------------ ------------
Total revenues 62,255 57,461 (1)
------------ ------------
Direct costs:
Software licenses 1,514 1,156
Professional services, support and
maintenance 19,223 18,503
Data center 4,585 5,177
Other 279 1,424
------------ ------------
Total direct costs 25,601 26,260
------------ ------------
Gross margin 36,654 31,201
------------ ------------
Operating expenses:
Selling and marketing 9,099 9,334
Product development 12,029 10,415
General and administrative 8,308 7,607
Depreciation and amortization 2,708 3,545
Merger related and restructuring
costs - 4,052
Amortization of acquisition
intangibles 836 768
------------ ------------
Total operating expenses 32,980 35,721
------------ ------------
Operating income (loss) 3,674 (4,520)
Interest, investment and other income,
net 180 171
Income tax expense (635) (11)
------------ ------------
Net income (loss) $ 3,219 $ (4,360)
============ ============
Net income (loss) per share:
Net income (loss) per common share -
basic $ 0.05 $ (0.06)
============ ============
Net income per common share - diluted $ 0.04 N/A
============ ============
Weighted average common shares
outstanding - basic 70,506,931 69,876,641
Weighted average common shares and
equivalents - diluted 72,699,694 N/A
Common shares outstanding at end of
period 70,195,318 70,825,678
Gross margin percentages:
Software licenses 87% 93%
Professional services, support and
maintenance 52% 40%
Data center 54% 41%
Other 47% 2%
------------ ------------
Total gross margin 59% 54%
------------ ------------
(1) Results for the quarter ended September 30, 2003 include $8.2
million license revenue associated with the Zurich Insurance Company
contract.
(2) Results for the nine months ended September 30, 2003 include
$33.2 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 AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
Nine Months Ended
9/30/2004 9/30/2003
------------ ------------
Revenues:
Software licenses $ 32,733 $ 45,312
Support and maintenance 47,361 44,210
Professional services 68,382 63,137
Data center 30,407 35,571
Other 2,186 2,618
------------ ------------
Total revenues 181,069 190,848 (2)
------------ ------------
Direct costs:
Software licenses 4,819 3,014
Professional services, support and
maintenance 55,545 66,091
Data center 14,333 18,567 (2)
Other 1,757 2,438
------------ ------------
Total direct costs 76,454 90,110
------------ ------------
Gross margin 104,615 100,738
------------ ------------
Operating expenses:
Selling and marketing 26,703 30,988
Product development 38,891 33,789
General and administrative 22,682 24,637
Depreciation and amortization 7,996 13,983 (2)
Merger related and restructuring
costs - 20,564
Amortization of acquisition
intangibles 2,437 16,625
------------ ------------
Total operating expenses 98,709 140,586
------------ ------------
Operating income (loss) 5,906 (39,848)
Interest, investment and other income,
net (525) (74)
Income tax expense (1,098) (130)
------------ ------------
Net income (loss) $ 4,283 $ (40,052)
============ ============
Net income (loss) per share:
Net income (loss) per common share -
basic $ 0.06 $ (0.58)
============ ============
Net income per common share - diluted $ 0.06 N/A
============ ============
Weighted average common shares
outstanding - basic 70,692,776 69,493,376
Weighted average common shares and
equivalents - diluted 73,106,864 N/A
Common shares outstanding at end of
period 70,195,318 70,825,678
Gross margin percentages:
Software licenses 85% 93%
Professional services, support and
maintenance 52% 38%
Data center 53% 48%
Other 20% 7%
------------ ------------
Total gross margin 58% 53%
------------ ------------
(1) Results for the quarter ended September 30, 2003 include $8.2
million license revenue associated with the Zurich Insurance Company
contract.
(2) Results for the nine months ended September 30, 2003 include
$33.2 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 (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 September 30, 2004
(In thousands, except share and per share data)
(Unaudited)
Financial
Institutions Edify Eliminations Total
------------ ------------ ----------- ------------
Software licenses $ 8,791 $ 3,077 $ (132) $ 11,736
Support and
maintenance 11,511 4,791 (613) 15,689
Professional
services 23,251 1,141 (7) 24,385
Data center 9,923 - - 9,923
Other 522 - - 522
------------ ------------ ----------- ------------
Total Revenue: 53,998 9,009 (752) 62,255
------------ ------------ ----------- ------------
Direct costs:
Software licenses 721 925 (132) 1,514
Professional
services,
support and
maintenance 17,633 2,210 (620) 19,223
Data center 4,585 - - 4,585
Other 279 - - 279
------------ ------------ ----------- ------------
Total direct
costs 23,218 3,135 (752) 25,601
------------ ------------ ----------- ------------
Gross margin 30,780 5,874 - 36,654
------------ ------------ ----------- ------------
Operating expenses:
Selling and
marketing 6,435 2,664 9,099
Product
development 10,461 1,568 12,029
General and
administrative 7,193 1,115 8,308
Depreciation and
amortization 2,440 268 2,708
Amortization and
impairment of
acquisition
intangibles 836 - 836
------------ ------------ ----------- ------------
Total operating
expenses 27,365 5,615 - 32,980
------------ ------------ ----------- ------------
Operating income 3,415 259 - 3,674
Interest,
investment and
other income 174 6 180
Income tax expense (635) - (635)
------------ ------------ ----------- ------------
Net income $ 2,954 $ 265 $ - $ 3,219
============ ============ =========== ============
Net income - basic $ 0.04 $ 0.00 $ 0.05
============ ============ ============
Net income -
diluted $ 0.04 $ 0.00 $ 0.04
=========== =========== ===========
Weighted average
common shares
outstanding -
basic 70,506,931 70,506,931 70,506,931
Weighted average
common shares
outstanding -
diluted 72,699,694 72,699,694 72,699,694
S1 Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Nine Months Ended
September 30, September 30,
2004 2003
------------ -------------
Cash flows from operating activities:
Net income (loss) $ 4,283 $ (40,052)
Adjustments to reconcile net income
(loss) to net cash used in
operating activities:
Depreciation and amortization and
goodwill impairment charge 10,433 30,608
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 1,087 4,674
Other - 1,582
Changes in assets and liabilities,
excluding effects of acquisition:
(Increase) decrease in
accounts receivable (11,584) 9,678
Decrease in prepaid expenses
and other assets 913 4,317
Decrease in accounts payable (1,148) (10,703)
(Decrease) increase in accrued
expenses and other liabilities (11,177) 5,495
Decrease in deferred revenue (7,764) (735)
------------ -------------
Net cash (used in)
provided by operating
activities (14,207) 8,795
------------ -------------
Cash flows from investing activities:
Cash paid in connection with
acquisition (5,278) -
Purchases of short-term investment
securities (22,834) (20,416)
Maturities of short-term investment
securities 30,886 14,853
Proceeds from sale of investment
securities available for sale - 2,001
Investment in unconsolidated
subsidiary (750) -
Purchases of property and equipment
and purchased technology (5,156) (4,528)
------------ -------------
Net cash used in investing
activities (3,132) (8,090)
------------ -------------
Cash flows from financing activities:
Proceeds from sale of common stock
under employee stock purchase
and option plans 2,602 1,078
Payments on capital lease
obligations (739) (1,756)
Repurchase of common stock held in
treasury (10,798) (750)
------------ -------------
Net cash used in financing
activities (8,935) (1,428)
------------ -------------
Effect of exchange rate changes on cash
and cash equivalents (53) 1,000
------------ -------------
Net (decrease) increase in cash and cash
equivalents (26,327) 277
Cash and cash equivalents at beginning of
period 150,064 127,842
------------ -------------
Cash and cash equivalents at end of
period $ 123,737 $ 128,119
------------ -------------
Property and equipment acquired through
leases $ 1,547 $ 1,293
Maintenance agreement financed through
vendor $ 1,201 $ -
Davidge Data Systems
A Subsidiary of S1 Corporation
Income Statement
(Unaudited)
Period ending
September 30, 2004
------------------
3 months 9 months
-------- --------
License $ 339 $ 386
Services 429 1,662
Support & Maintenance 217 635
Data Center 770 2,384
Other 190 186
-------- --------
Total Revenue $ 1,945 $ 5,253
-------- --------
Total Direct Costs 1,398 3,867
-------- --------
Gross Margin 547 1,385
-------- --------
Total Operating Expenses 658 2,433
-------- --------
(Loss) Income before tax $ (111) $(1,048)
-------- --------
CONTACT: S1 Corporation, Atlanta
Investor Contact
Matthew Hale, 404/923-3500
matt.hale@s1.com
or
Press Contact
Peter Herbert, 404/923-6647
peter.Herbert@s1.com