Exhibit 99.1
S1 CORPORATION REPORTS FIRST QUARTER 2006 RESULTS
Customer-Alignment of Business Segments Contributes to Strong Performance
ATLANTA, April 26 /PRNewswire-FirstCall/ -- S1 Corporation (Nasdaq: SONE), a
leading global provider of customer interaction financial and payment solutions,
today announced financial results for the first quarter ended March 31, 2006.
o Revenue for the first quarter of 2006 was $48.5 million compared to
$46.0 million in the quarter ended December 31, 2005.
o Net loss from continuing operations was $1.0 million in the first
quarter of 2006, including approximately $1.6 million in stock-based
compensation recorded with the adoption of SFAS 123R and $333,000 of
restructuring costs related to actions announced in the fourth quarter
of 2005. Excluding stock-based compensation and restructuring charges,
the Company had income from continuing operations of $0.9 million in
the first quarter.
o Adjusted EBITDA(1) for the first quarter of 2006 was $3.2 million. The
Company ended the quarter with $115 million in cash and investments
after paying the final $14 million of contingent purchase price for
Mosaic Software. Adjusted EBITDA is described and reconciled to our
GAAP operating loss below.
Going forward, in addition to the Risk and Compliance Segment, S1 will report
the results of two new operating segments, which were previously reported as the
combined Financial Institution Segment. These segments are the Enterprise
Segment, which will represent North America retail banking solutions, global
wholesale banking solutions, and State Farm; and the Postilion Segment, which
will represent the community financial business, the global ATM/payments
business, and the retail banking business outside of North America. Selected
results for these segments for first quarter of 2006 are presented below.
o The Enterprise Segment had revenue of $25.9 million, up $1.9 million
from the fourth quarter of 2005, and generated an operating loss of
$2.0 million, including approximately $1.1 million of the stock-based
compensation.
o The Postilion Segment had revenue of $17.5 million, up $1.9 million
from the fourth quarter of 2005, and operating income of $390,000,
including approximately $378,000 of the stock-based compensation.
o The Risk and Compliance Segment had revenue of $5.1 million, down $1.2
million from the fourth quarter of 2005, and generated an operating
loss of $251,000, including approximately $63,000 of the stock
based-compensation.
"I am extremely pleased with the results in our first full quarter under our new
structure," said James S. Mahan III, Chairman and CEO of S1 Corporation. "The
positive feedback from our Enterprise 3.5 customers and the delivery of
multi-factor authentication solutions to our community bank customers point to
the progress we are making against our plan to deliver long-term value to our
shareholders, customers and employees."
"Evidenced by our rapid improvement in the first quarter and our continued
momentum in the current quarter, the S1 Board and management team unanimously
believe that the right thing to do is to stay the course," continued Mr. Mahan.
"We believe there is significant potential embedded in our Enterprise product
suite that will be realized as we execute against our product delivery and
go-to-market plans."
Under its new customer-oriented structure, S1 achieved several milestones this
quarter that contributed to the Company's first quarter performance:
o Product Quality and Delivery: In February, the Company released
all of its Enterprise 3.5 products, which include branch and call
center automation, retail and business Internet banking, and
analytical solutions, to the Managed Introduction Program
participants. Early indications from the S1 teams working with of
the nine financial institutions on this whole-organization
readiness program have been positive, and the Company anticipates
a broader rollout of these solutions to the market in the third
and fourth quarters of this year. The best practices that were
implemented in the Company's global engineering and development
organization, along with the extra time given to the Enterprise
team, have delivered solid results in the latest versions of these
solutions. For the community bank market, S1 made significant
strides in delivering a multi-factor authentication ready
solution, with several customers currently testing the solution.
In addition, the team is working on the next generation
self-service banking solutions that are being developed and
working aggressively with select customers on the prototype to
refine the direction of this new solution, with an anticipated
rollout later this year.
o Customer Satisfaction and Growth: S1 continued to concentrate on
customer satisfaction across all areas of its business. In the
Enterprise Segment, customer upgrades to a more current version of
the Enterprise suite began, and the Company believes this will be
a critical step in improving satisfaction and reducing costs.
During the quarter, the Enterprise Segment posted several wins
with new and existing customers. In addition, S1 took a large
European-based institution live on its Personal Banking product in
its U.S. Data Center. The Postilion Segment added eight customers,
including community banks, processors, and several large European
and Middle Eastern financial institutions on its ATM/payments
product.
(1) ADJUSTED EBITDA RECONCILIATION
Operating loss $ (1,873)
Stock based compensation 1,576
Restructuring costs 333
Depreciation 1,858
Amortization 1,263
-------------
Adjusted EBITDA $ 3,157
=============
(1) The Company defines adjusted EBITDA as earnings before interest, taxes,
depreciation, and amortization, stock-based compensation and restructuring
charges.
CONFERENCE CALL INFORMATION
Company management will host a conference call for interested parties to discuss
its first quarter results on Wednesday, April 26, 2006, at 5:30 p.m. EDT. A live
webcast of the call will be available through the Company's 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 May 3, 2006 on the
Company's website.
ABOUT S1
S1 Corporation (NASDAQ: SONE) delivers customer interaction software for
financial and payment services and offers unique solution sets for financial
institutions, retailers, and processors. S1 employs 1,500 people in operations
throughout North America, Europe and Middle East, Africa, and Asia-Pacific
regions. Worldwide, more than 3,000 customers use S1 software solutions, which
are comprised of applications that address virtually every market segment and
delivery channel. S1 partners with best-in-class organizations to provide
flexible and extensible software solutions for its customers. 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.
Investor Contact:
John Stone
Chief Financial Officer, S1 Corporation
404.923.3500
john.stone@s1.com
Press Contact:
Chris Watson
Vice President of Marketing, S1 Corporation
404.923.6775
Chris.watson@s1.com
S1 CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
THREE MONTHS ENDED
---------------------------------------------
3/31/2005 12/31/2005 3/31/2006
------------- ------------- -------------
REVENUES:
Software licenses $ 11,602 $ 7,881 $ 7,595
Support and maintenance 13,379 12,240 12,593
Professional services 20,521 14,653 16,191
Data center 9,664 10,272 11,586
Other 312 910 571
------------- ------------- -------------
Total revenues 55,478 45,956 48,536
------------- ------------- -------------
OPERATING EXPENSES:
Cost of software licenses 1,631 1,445 1,190
Cost of professional services, support
and maintenance * 17,454 19,435 16,812
Cost of data center * 4,849 5,199 5,416
Cost of other revenue 169 1,093 321
Selling and marketing * 7,512 6,620 6,531
Product development * 12,283 10,743 10,706
General and administrative * 7,866 8,705 6,910
Restructuring costs - 10,775 333
Depreciation 2,408 2,167 1,858
Amortization of other intangible assets 329 307 332
------------- ------------- -------------
Total operating expenses 54,501 66,489 50,409
------------- ------------- -------------
Operating income (loss) 977 (20,533) (1,873)
Interest and other income, net 190 231 1,222
Income tax expense (437) (371) (347)
------------- ------------- -------------
Income (loss) from continuing operations, net of tax $ 730 $ (20,673) $ (998)
(Loss) gain from discontinued operations (10) 24,076 554
------------- ------------- -------------
Net income (loss) $ 720 $ 3,403 $ (444)
============= ============= =============
NET INCOME (LOSS) PER SHARE:
BASIC:
Continuing operations $ 0.01 $ (0.29) $ (0.01)
Discontinued operations - 0.34 -
------------- ------------- -------------
Net income (loss) $ 0.01 $ 0.05 $ (0.01)
============= ============= =============
DILUTED:
Continuing operations $ 0.01 $ (0.29) $ (0.01)
Discontinued operations - 0.34 -
------------- ------------- -------------
Net income (loss) $ 0.01 $ 0.05 $ (0.01)
============= ============= =============
Weighted average common shares outstanding - basic 70,593,614 70,351,999 70,422,757
Weighted average common shares and equivalents - diluted 72,494,535 n/a n/a
GROSS MARGIN PERCENTAGES:
Software licenses 86% 82% 84%
Professional services, support and maintenance 49% 28% 42%
Data center 50% 49% 53%
Other 46% (20)% 44%
------------- ------------- -------------
Total gross margin 57% 41% 51%
============= ============= =============
* Includes stock based compensation expense of:
Professional services, support and maintenance $ - $ - $ 163
Data center - - 35
Selling and marketing - - 411
Product development - - 404
General and administrative - - 563
------------- ------------- -------------
$ - $ - $ 1,576
============= ============= =============
S1 CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
MARCH 31, DECEMBER 31,
2006 2005
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 83,123 $ 85,108
Short-term investments 31,971 44,170
Accounts receivable, net 52,320 48,659
Prepaid expenses 5,270 4,885
Other current assets 4,683 3,870
------------- -------------
Total current assets 177,367 186,692
Property and equipment, net 12,863 11,351
Intangible assets, net 17,112 18,375
Goodwill, net 126,863 125,808
Other assets 2,120 2,297
------------- -------------
Total assets $ 336,325 $ 344,523
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,863 $ 5,292
Accrued compensation and benefits 7,253 8,267
Accrued other expenses and restructuring 20,526 25,262
Accrued purchase price consideration - 12,900
Deferred revenues 36,552 27,499
------------- -------------
Current portion of capital lease obligation 1,202 1,222
Total current liabilities 70,396 80,442
Other liabilities 10,757 11,695
------------- -------------
Total liabilities 81,153 92,137
------------- -------------
Stockholders' equity:
Preferred stock 10,000 10,000
Common stock 749 744
Additional paid-in capital 1,919,017 1,915,617
Treasury stock (25,000) (25,000)
Accumulated deficit (1,647,648) (1,647,204)
Accumulated other comprehensive income (1,946) (1,771)
------------- -------------
Total stockholders' equity 255,172 252,386
------------- -------------
Total liabilities and stockholders' equity $ 336,325 $ 344,523
============= =============
S1 CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
THREE MONTHS ENDED
------------------------------
MARCH 31, MARCH 31,
2006 2005
------------- -------------
Cash flows from operating activities:
Net (loss) income $ (444) $ 720
Adjustments to reconcile net (loss) income to net cash
used in operating activities:
Depreciation and amortization 3,121 3,793
Gain on disposal of discontinued operations (554) -
Provision for doubtful accounts receivable and
billing adjustments 570 1,150
Stock based compensation expense 1,576 -
Changes in assets and liabilities, excluding
effects of acquisition:
Increase in accounts receivable (4,330) (9,233)
(Increase) decrease in prepaid expenses and other assets (1,090) 1,804
Decrease in accounts payable (528) (879)
Decrease in accrued expenses and other liabilities (6,344) (10,631)
Increase in deferred revenues 9,036 8,227
------------- -------------
Net cash provided by (used in) operating activities 1,013 (5,049)
Net cash (used in) provided by investing activities (4,617) 4,292
Net cash provided by (used in) financing activities 1,527 (1,731)
Effect of exchange rate changes on cash and cash equivalents 92 (204)
------------- -------------
Net decrease in cash and cash equivalents (1,985) (2,692)
Cash and cash equivalents at beginning of period 85,108 43,223
------------- -------------
Cash and cash equivalents at end of period $ 83,123 $ 40,531
============= =============
S1 CORPORATION
SEGMENT RESULTS
FOR THE QUARTER ENDED MARCH 31, 2006
(In thousands)
(Unaudited)
RISK &
ENTERPRISE POSTILION COMPLIANCE TOTAL
------------ ------------ ------------ ------------
REVENUES:
Software licenses $ 2,870 $ 3,173 $ 1,552 $ 7,595
Support and maintenance 5,522 5,135 1,936 12,593
Professional services 12,123 2,498 1,570 16,191
Data center 5,211 6,375 - 11,586
Other 165 368 38 571
------------ ------------ ------------ ------------
Total Revenue: 25,891 17,549 5,096 48,536
------------ ------------ ------------ ------------
OPERATING EXPENSES:
Cost of software licenses 595 435 160 1,190
Cost of professional services,
support and maintenance * 9,711 4,979 2,122 16,812
Cost of data center * 2,672 2,744 - 5,416
Cost of other revenue 17 299 5 321
Selling and marketing * 2,639 3,236 656 6,531
Product development * 7,859 1,748 1,099 10,706
General and administrative * 2,911 2,805 1,194 6,910
Restructuring costs 307 26 - 333
Depreciation 1,089 663 106 1,858
Amortization of other intangible assets 103 224 5 332
------------ ------------ ------------ ------------
Total operating expenses 27,903 17,159 5,347 50,409
------------ ------------ ------------ ------------
Operating (loss) income $ (2,012) $ 390 $ (251) $ (1,873)
============ ============ ============ ============
Adjusted EBITDA $ 1,069 $ 2,140 $ (52) $ 3,157
============ ============ ============ ============
Reconciliation to EBITDA:
Operating (loss) income $ (2,012) $ 390 $ (251) $ (1,873)
Stock based compensation 1,135 378 63 1,576
Restructuring 307 26 - 333
Depreciation 1,089 663 106 1,858
Amortization 550 683 30 1,263
------------ ------------ ------------ ------------
Adjusted EBITDA $ 1,069 $ 2,140 $ (52) $ 3,157
============ ============ ============ ============
* Includes stock compensation costs of:
Professional services, support and maintenance 130 32 1 163
Data center 22 13 - 35
Selling and marketing 317 94 - 411
Product development 388 7 9 404
General and administrative 278 232 53 563
S1 CORPORATION
SEGMENT RESULTS
FOR THE QUARTER ENDED DECEMBER 31, 2005
(In thousands)
(Unaudited)
RISK &
ENTERPRISE POSTILION COMPLIANCE TOTAL
------------ ------------ ------------ ------------
REVENUES:
Software licenses $ 2,433 $ 2,834 $ 2,614 $ 7,881
Support and maintenance 5,744 4,609 1,887 12,240
Professional services 10,816 2,061 1,776 14,653
Data center 4,283 5,989 - 10,272
Other 716 190 4 910
------------ ------------ ------------ ------------
Total Revenue: 23,992 15,683 6,281 45,956
------------ ------------ ------------ ------------
OPERATING EXPENSES:
Cost of software licenses 612 642 191 1,445
Cost of professional services, support and
maintenance 11,928 5,087 2,420 19,435
Cost of data center 2,775 2,424 - 5,199
Cost of other revenue 801 276 16 1,093
Selling and marketing 2,593 3,115 912 6,620
Product development 7,126 1,851 1,766 10,743
General and administrative 4,257 3,463 985 8,705
Restructuring costs 5,866 4,909 - 10,775
Depreciation 1,274 791 102 2,167
Amortization of other intangible assets 100 222 (15) 307
------------ ------------ ------------ ------------
Total operating expenses 37,332 22,780 6,377 66,489
------------ ------------ ------------ ------------
Operating (loss) income $ (13,340) $ (7,097) $ (96) $ (20,533)
============ ============ ============ ============
Adjusted EBITDA $ (5,653) $ (716) $ 36 $ (6,333)
============ ============ ============ ============
Reconciliation to EBITDA:
Operating loss $ (13,340) $ (7,097) $ (96) $ (20,533)
Restructuring 5,866 4,909 - 10,775
Depreciation 1,274 791 102 2,167
Amortization 547 681 30 1,258
------------ ------------ ------------ ------------
Adjusted EBITDA $ (5,653) $ (716) $ 36 $ (6,333)
============ ============ ============ ============
S1 CORPORATION
SEGMENT RESULTS
FOR THE QUARTER ENDED MARCH 31, 2005
(In thousands)
(Unaudited)
RISK &
ENTERPRISE POSTILION COMPLIANCE TOTAL
------------ ------------ ------------ ------------
REVENUES:
Software licenses $ 3,497 $ 6,081 $ 2,024 $ 11,602
Support and maintenance 6,391 5,209 1,779 13,379
Professional services 16,225 2,156 2,140 20,521
Data center 4,306 5,358 - 9,664
Other 249 54 9 312
------------ ------------ ------------ ------------
Total Revenue: 30,668 18,858 5,952 55,478
------------ ------------ ------------ ------------
OPERATING EXPENSES:
Cost of software licenses 407 807 417 1,631
Cost of professional services, support and
maintenance 10,776 4,619 2,059 17,454
Cost of data center 2,755 2,094 - 4,849
Cost of other revenue 188 20 (39) 169
Selling and marketing 3,687 3,247 578 7,512
Product development 9,185 1,979 1,119 12,283
General and administrative 3,031 3,600 1,235 7,866
Restructuring costs - - - -
Depreciation 1,482 836 90 2,408
Amortization of other intangible assets 104 225 - 329
------------ ------------ ------------ ------------
Total operating expenses 31,615 17,427 5,459 54,501
------------ ------------ ------------ ------------
Operating (loss) income $ (947) $ 1,431 $ 493 $ 977
============ ============ ============ ============
Adjusted EBITDA $ 1,084 $ 2,950 $ 583 $ 4,617
============ ============ ============ ============
Reconciliation to EBITDA:
Operating (loss) income $ (947) $ 1,431 $ 493 $ 977
Stock based compensation - - - -
Depreciation 1,482 836 90 2,408
Amortization 549 683 - 1,232
------------ ------------ ------------ ------------
Adjusted EBITDA $ 1,084 $ 2,950 $ 583 $ 4,617
============ ============ ============ ============
SOURCE S1 Corporation
-0- 04/26/2006
/CONTACT: Investors, John Stone, Chief Financial Officer, +1-404-923-3500,
or john.stone@s1.com, or Press, Chris Watson, Vice President of Marketing,
+1-404-923-6775, or Chris.watson@s1.com, both of S1 Corporation/
/Web site: http://www.s1.com/
(SONE)