CheckFree Reports Fourth Quarter Earnings of 5 Cents Per Share,
Delivers $250 Million in Revenue and EPS of 4 Cents for Fiscal 1999
Company More Than Doubles Contracts with Billers During the Year, Bringing Signed Total to 64 of Top Billers in the Nation; 29 Can Distribute Bills for Payment on the Internet Today
ATLANTA, Aug. 10 /PRNewswire/ -- CheckFree Holdings Corporation (Nasdaq: CKFR - news) today announced revenues of $70.8 million for the fourth quarter ended June 30, 1999 compared to $63.5 million for the same quarter of 1998. Total revenues for the quarter increased 19 percent over the comparative quarter of last year, adjusted for the effects of acquisitions and divestitures. Revenues for the year ended June 30, 1999 were $250 million, up 21 percent over the prior year, adjusted for the effects of acquisitions and divestitures.
Excluding a net gain on the disposition of assets and one-time charges related to the Company's secondary stock offering which was withdrawn in June, real estate transactions, and the service disruption the Company experienced in April, CheckFree reported net income for the quarter of $2.8 million, or 5 cents per share, diluted, compared to 3 cents per share, diluted, for the same period in fiscal 1998.
Excluding non-recurring gains and charges for fiscal 1999, the Company reported a profit of $2 million, equating to 4 cents per share, compared with a net loss of just over $2.8 million, representing a loss of 5 cents per share, in fiscal 1998.
CheckFree Chairman and CEO Pete Kight said, ''These results are directly on our expectations. While our financial performance was solid, I am even more pleased with how we extended our leadership in non-financial metrics, such as subscribers, signed biller contracts, bills distributed on the Internet, live distribution sites on the Internet, and improvements in electronic processing efficiency.''
Kight noted that after increasing subscribers by 6 percent in the fourth quarter, the Company ended the year with nearly three million subscribers, up from 2.4 million at the close of fiscal 1998. Kight also said that sequential quarterly growth in Internet-based subscribers in the fourth quarter continued to exceed 20 percent, as it did in the third quarter.
''Consumers want to get on the 'Net to access financial services, including billing and payment,'' Kight said. ''Financial institutions are listening. At the close of 1998, four of our financial institution customers offered our services over the Internet. Today, 34 -- including banks, credit unions, brokerage firms and Intuit's Quicken.com Internet portal -- do. This year, banks and other financial institutions have made strong progress in connecting with consumers on the 'Net, and we expect this to continue in 2000.''
Kight also noted that the Company continues to enjoy relationships with more than 350 financial institutions, including nine of the top 10 and 23 of the top 25. He also noted that major retail brokerage firms -- including market heavyweights Schwab and Merrill Lynch -- are in market with Internet services, and are offering their customers electronic billing and payment solutions powered by CheckFree services.
During the quarter, the Company transitioned processing for 71 additional financial institutions to its state-of-the-art electronic billing and payment platform, Genesis. The Company began these migrations in September of 1998 to improve quality and operating efficiencies, and to enable the Company to focus development on a single platform. The Company is now processing transactions for more than two million subscribers on Genesis, up from 5,000 at the beginning of the year. All planned migrations will be completed by the end of August, according to CheckFree President and Chief Operating Officer Pete Sinisgalli.
''Consolidating most of our transaction processing on a single, state-of- the-art platform has been one of our most important accomplishments this year,'' Sinisgalli said. ''With an infrastructure built to support transactions for 30 million households, Genesis is the largest electronic billing and payment processing engine operating in the U.S. today, and is a tremendous strategic advantage. Genesis represents years of experience and talent from three pioneering electronic bill payment companies, and we are pleased with its performance. We also are pleased to be completing the migration plan months ahead of our December goal.''
Sinisgalli noted that CheckFree processed more than 125 million transactions in 1999, up from just under 100 million in 1998, and that the Company exited the year with a processing run rate of more than 12 million transactions per month.
Biller Momentum Continues
CheckFree signed contracts for electronic billing and payment services with 43 billers during the year, two-and-one-half times as many as the Company signed last year. CheckFree now has contracts with 64 of the nation's top billers, and 29 of these enable their customers to receive and pay bills on the Internet today. The Company said another 21 are in the process of implementing solutions now.
''To the best of our knowledge, our nearest competitor can manage the distribution and payment of electronic bills for five billers. This gives us a tremendous market lead that we plan to extend in 2000,'' Kight said.
Kight noted that during the year CheckFree signed contracts with billers that increased the Company's ability to manage the distribution and payment of bills for leading companies in the telecommunications industry from 56 percent to 70 percent of bills, in major credit cards from 14 percent to 28 percent of bills, in leading mortgage servicers from 8 percent to 22 percent of bills, and in targeted utilities from 7 percent to 24 percent of bills.
Kight said the count of actual bills that CheckFree distributed for review and payment over the Internet increased 44 percent in the quarter, to more than 13,000 in the month of June. ''This is just a fraction of the bills we have under contract,'' Kight said. ''Getting billers and distribution points live in 2000 to continue this growth is a top priority.''
Divisions Perform As Expected
CheckFree's Electronic Commerce division reported revenue of $46.5 million for the quarter, representing 20 percent growth over the same quarter of fiscal 1998. The division posted an operating profit of $1.3 million, after adjusting for the financial impact of a service disruption the Company experienced in April, compared to a loss of $500,000 for the same period last year. The number of subscribers to CheckFree services grew 6 percent, bringing the total to nearly 3 million.
CheckFree Investment Services reported revenue of $12.3 million for the fourth quarter, a 31 percent increase over the same quarter last year, after adjusting for the acquisition of Mobius Group. Revenue for the year was $39.3 million, a nearly 26 percent increase over fiscal 1998, again adjusted for the acquisition of Mobius Group. Operating income was $2.9 million for the quarter and $8.1 million for the year, adjusted for the effects of writing off in-process research and development related to the acquisition of Mobius Group. These results represent increases of 42 percent and 30 percent respectively over the fourth quarter and full year of fiscal 1998. During the quarter the division grew the number of portfolios under its management to 715,000, up more than 13 percent for the quarter, and up more than 46 percent for the year.
The Company's Software division reported revenue in the quarter of $11.9 million, an increase of five percent over the $11.3 million generated by these same businesses in the fourth quarter of fiscal 1998. For the year, retained businesses in CheckFree's software division generated revenue of $39.6 million, a six percent increase over the $37.4 million reported for these same businesses last year. Operating income was $5.9 million for the quarter and $16.2 million for the year, representing increases of 44 percent for the quarter and 52 percent for the year.
Sinisgalli said consolidated revenues for the first quarter of fiscal 2000 should be in the range of $65 to $70 million, with a loss per share of around 8 to 10 cents.
About CheckFree
CheckFree, the operating subsidiary of CheckFree Holdings Corp., is the leading provider of financial electronic commerce services, software and related products. CheckFree designs, develops and markets services that enable three million consumers to receive and pay bills over the Internet or electronically through a variety of bill aggregation points, including banks, brokerage firms, portals and interactive content sites on the Internet, and personal financial management (PFM) software. CheckFree's range of services and products are focused on enabling customers to make electronic payments and collections, automate paper-based recurring financial transactions and conduct secure Internet transactions.
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