CheckFree Confirms Full-Year Guidance for Fiscal 2002, Posts First Quarter
Results First Quarter Revenue, EPS and Subscriber Growth in Line With
Management's Guidance Company Confirms Full-Year Guidance of Pro Forma Earnings
Per Share In the Mid To High Single Digits Efficiency Improvements Aided by
Electronic Percentage Rate Gain to 66 Percent
ATLANTA, Oct 23, 2001 /PRNewswire via COMTEX/ -- CheckFree Corporation (Nasdaq:
CKFR) today announced revenues of $116.7 million for the first quarter ended
September 30, 2001 compared to $90.8 million for the same quarter of fiscal
2001. Total revenues for the quarter increased 29 percent over the comparative
quarter of last year.
CheckFree reported a pro forma loss for the quarter of $1.9 million, or two
cents per share, which compares to a pro forma loss of $5.5 million, or nine
cents per share, for the same period in fiscal 2001. Pro forma results exclude
the impact of acquisition-related amortization and any one-time charges. On a
GAAP basis, the company reported a loss per share of $1.02, compared to a loss
per share of $0.91 in the first quarter of fiscal 2001.
CheckFree Chairman and CEO Pete Kight said, "Despite a challenging overall
economic climate, CheckFree continued to show solid progress. Revenues and
earnings were in-line with our forecasts, and we continued to deliver increased
efficiency across each of our business units. While subscriber growth was at the
low end of our expectations, our ongoing experience, and the body of recent
market research, continues to confirm that consumers, billers and financial
institutions highly value -- and will continue to support -- mainstream adoption
of electronic billing and payment services, and other types of electronic
financial transactions.
"Therefore, we will continue with our planned investments and other strategic
programs for fiscal 2002, which will improve our ability to come out of the
economic slowdown in a stronger position than our competitors," Kight continued.
"Because of strong improvements in efficiencies across our businesses -- and
operating cost controls already implemented -- we believe we can continue with
our planned R&D programs and still meet our fiscal year goals for EPS and cash
flow," he concluded.
Core Electronic Billing and Payment Metrics
Performance across key operating metrics for the first quarter includes:
* Sequential quarterly subscriber growth rate for the first quarter was
seven percent, distributed across Consumer Service Providers that use
CheckFree services. A total of 5.6 million subscribers now use these
services, compared with just over 3.8 million at the end of the first
quarter of fiscal 2001.
* CheckFree Confirms Full Year Guidance, Posts First Quarter Results/
More than 400 sites are now live with full electronic billing and
payment, up from just over 300 at the end of the fourth quarter of
fiscal 2001 and compared to just over 250 at the close of the first
quarter of fiscal 2001.
* Gains related to CheckFree's biller channel were challenged most by the
toughening economic climate. The Company signed deals for electronic
billing and payment distribution with eight primary billers in the
first quarter, bringing to 279 the total roster of primary bills that
have been signed for distribution through CheckFree's network.
However, the Company also added nine primary bills to the number it
offers to consumers through scraping technology, making a total of 15
available through that method.
* Primary billers with electronic bills live on the Internet increased by
two in the quarter, bringing the total to 175 primary bills available
now to consumers for viewing and payment through traditional
distribution on CheckFree's network. The additional 15 primary bills
that are available through scraping technology takes the total of live
primary bills 190. Adding the 28 non-primary bills -- which are those
that can potentially be distributed to 100,000 or fewer consumers --
takes the total of all bills that consumers can view and pay
electronically today through CheckFree's network to 218.
* CheckFree distributed nearly 600,000 bills over the Internet in
September, up from about 500,000 bills distributed in June, and up from
about 140,000 bills distributed in September of fiscal 2001. This
equates to a run rate of 7.2 million bills per year.
* For the full quarter, the company processed more than 69 million
transactions, an increase of four percent from the less than 67 million
transactions processed in the quarter ended June 30, 2001.
* Process efficiencies continued to improve CheckFree's electronic
payment rate, which gained two percentage points in the quarter,
reaching 66 percent. Gains in the percentage of payments processed
electronically contribute to improved customer quality by lowering
exception and claims rates.
Divisions Perform Steadily
CheckFree's Electronic Commerce division reported revenue of $84.8 million for
the quarter, modestly above revenues in the fourth quarter of fiscal 2001, and
representing 35 percent growth over the same quarter of fiscal 2001. The
division posted pro forma operating income of $2.9 million, compared with a pro
forma operating income of $400,000 in the fourth quarter of 2001, and compared
with a pro forma operating loss of $4.8 million for the first quarter of fiscal
2001.
"Although sequential quarterly subscriber and revenue growth were challenged by
tighter economic times, we are benefiting from improved efficiency from our
Electronic Commerce division," said Pete Sinisgalli, CheckFree's president and
chief operating officer.
"We are pleased that our Consumer Service Provider partners are continuing with
the marketing programs they have planned for the remainder of the calendar year
to promote electronic billing and payment services to consumers. Recent
announcements -- such as the one made publicly by Bank of America -- that
customers who receive and pay bills online with the bank are four to five times
more profitable than those who simply bank online -- continue to underline the
strategic importance of electronic billing and payment services to financial
institutions," he concluded.
CheckFree Investment Services reported revenue of $19.4 million for the quarter,
a 24 percent increase over the same quarter last year. Pro forma operating
income for the quarter was $5.4 million, a 34 percent increase from the first
quarter of fiscal 2001.
The Company's Software businesses reported revenue in the quarter of $12.5
million, up three percent over revenue generated in the first quarter of fiscal
2001. This division had a pro forma operating loss of $1.3 million dollars,
compared to a pro forma operating loss of $815,000 in the first quarter of
fiscal 2001.
"Top-line results across our three divisions reflect the increasingly difficult
economy," Sinisgalli noted. "Most challenged was the i-Solutions unit within our
Software division, which faced the pressure of budget tightening, both at
billers and at Biller Service Provider companies, or BSPs. We have programs and
resources in place to address these challenges, including offering
CheckFree-hosted EBP solutions to billers, which streamlines both cost and
implementation cycles, and tailoring our i-Series Select offerings to the needs
of specific vertical industries.
"We are realizing the benefits of scale and efficiency investments we have made
in our three divisions," Sinisgalli added. "Plus, the strategic investments we
are making today should result in even greater defendable competitive advantage
when the economy recovers," he said.
Second Quarter Expectations
"We expect the second quarter to look much like the first, and are forecasting
revenues to be in the range of $115 million to $120 million, with a pro forma
loss per share of around one to three cents," said David Mangum, CheckFree's
chief financial officer. "In addition, we expect sequential quarterly subscriber
growth for the second quarter to be in the range of six to eight percent,
reflecting overall economic conditions, but also continued investments in
electronic billing and payment marketing programs by our Consumer Service
Provider partners," Mangum continued.
"For fiscal 2002, we continue to expect to post positive earnings per share on a
pro forma basis, in the mid-to-high single digit range. In addition, we continue
to anticipate being significantly EBITDA positive and cash flow break even to
moderately positive for fiscal 2002. Furthermore, we expect to achieve these
results while continuing investments in research and development and market
expansion programs critical to CheckFree's long-term competitive position,"
Mangum added.
About CheckFree
CheckFree Corporation is the leading provider of financial electronic commerce
services, software and related products. Through its operating subsidiaries,
CheckFree designs, develops and markets services that enable more than 5.6
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 receive electronic bills and statements, make
electronic payments and collections, automate paper-based recurring financial
transactions and conduct secure Internet transactions.
First Quarter Highlights
September 24 -- CheckFree i-Solutions announced that Dominion has selected its
complete suite of software and payment services to enhance its existing
electronic billing and payment initiative.
September 18 -- CheckFree launched CheckFree RECON Confirmations(TM), a
client/server solution that enables organizations to automatically match foreign
exchange confirmation advice messages as an extension of its core,
market-leading reconciliation platform CheckFree RECON-Plus(TM) for Windows(R).
Since its launch in 1995, more than 200 industry-leading banks and brokerage
clients have selected RECON-Plus for Windows.
September 10 -- CheckFree Investment Services announced that Huntington Beach
(CA)-based Allegiance Capital, Inc., a manager of taxable fixed income
securities for institutional and high net worth clients with over $2.1 billion
in assets under management, will run approximately 1,400 separately managed
accounts on CheckFree APL WRAP.
September 10 -- CheckFree i-Solutions announced that a unit of Williams will
pilot the use of the CheckFree i-Series 4.0 software platform to deliver bills
online to business customers. Using the latest version of the i-Series software,
Williams' energy marketing and trading unit expects to improve customer
satisfaction while reducing costs associated with traditional
business-to-business billing.
September 5 -- The U.S. Postal Service today announced unique enhancements to
its USPS eBillPay and Priority Mail services that tie electronic financial
transactions to the Postal Service's traditional delivery of packages. These
enhancements provide consumers with the ability to send money to others
electronically, and to electronically pay for merchandise at the time it is
delivered, rather than in advance of delivery.
August 27 -- US Dataworks Inc., a wholly owned subsidiary of SonicPort Inc., and
CheckFree renewed their business alliance to provide an end-to-end solution for
converting checks to ACH (Automated Clearing House) transactions.
August 20 -- CheckFree i-Solutions announced that 70 million Federated credit
card customers can now receive and pay their bills online at their choice of
CheckFree-powered sites. Federated operates 450 stores across 34 states, Guam
and Puerto Rico, including Bloomingdale's, The Bon Marche, Burdines,
Goldsmith's, Lazarus, Macy's and Rich's, as well as macys.com, bloomingdales.com
and Bloomingdale's By Mail.
August 8 -- Fortis Health selected CheckFree RECON-Plus(TM) for Windows(R) to
automate manual processes and support daily reconciliation for its bank activity
and general ledger accounts. Fortis Health also will implement CheckFree
APECS(TM) to ensure compliance with abandoned property reporting requirements
for its divisions nationwide.
August 1 -- CheckFree Investment Services announced that Barclays Stockbrokers,
a business unit of Barclays Bank plc and the largest UK-based retail brokerage,
will use CheckFree APL WRAP to automate its Barclays Managed Account Program
(BMAP), a separately managed account service for the firm's high net worth
clients.
July 26 -- CheckFree i-Solutions announced that Smartel, Italy's major supplier
of electronic payment systems, will add CheckFree i-Series e-billing software to
its existing point-of-sale and smart card technology to create an end-to-end
outsourced billing service for Italy's business-to-business and
business-to-consumer markets. The new billing service provider is to be called
eBill S.p.A.
July 16 -- CheckFree i-Solutions announced new packaged software and hosting
options for billers. The new i-Series Select offerings speed implementations by
providing "out of the box" software capabilities for delivering bills and
statements over the Internet. New CheckFree hosting options give billers the
ability to launch e-billing and payment applications without purchasing and
deploying software.
July 16 - American Family Life Assurance Company of Columbus (AFLAC), a leading
writer of supplemental insurance marketed at the worksite, will use CheckFree
APECS(TM) to automate abandoned property management and reporting. A CheckFree
client of 12 years, AFLAC is further streamlining its operations using CheckFree
solutions to fully comply with state-by-state reporting of unclaimed property in
all 50 states plus the District of Columbia, Guam, Puerto Rico and the Virgin
Islands.
July 9 -- Circle Trust Company, a subsidiary of the Orbitex Financial Services
Group, selected CheckFree RECON Securities(TM) to support daily securities and
cash account reconciliation for its operations.
July 2 -- CheckFree i-Solutions announced that Hawaiian Electric Company (HECO)
has fully implemented and deployed its CheckFree i-Utility software for
electronic billing and payment. Developed specifically for needs of utility
companies, CheckFree's i-Utility software allows HECO's almost 350,000
residential customers to use their online bills to help them save time and
money.
This press release contains statements that are not purely historical, and as
such are forward-looking statements under the federal securities laws. These
include forward-looking statements regarding management's intentions, plans,
hopes, beliefs, expectations or projections of the future, and include
statements in this document regarding forecasts of revenues, pro forma earnings
(loss), earnings before interest, taxes, depreciation and amortization, cash
flows and sequential subscriber growth for the fiscal second quarter, and fiscal
2002 as a whole (paragraphs 4, 20 and 21). These forward-looking statements
involve risks and uncertainties, including without limitation, whether the
planned technology developments will be successful and accepted by the Company's
customers; whether the Company can deliver its services at the pace demanded by
the marketplace; whether consumers will sign up for and use the Company's
services when and as expected; whether the Company's customers, particularly
financial institutions and Internet portals, timely announce, actively offer and
aggressively market such services to their clients and users; whether the
Company's business and market assumptions supporting its current revenue and
earnings projections will prove to be accurate; and the various risks inherent
in the Company's business and other risks and uncertainties detailed from time
to time in the Company's periodic reports filed with the Securities and Exchange
Commission, including the Company's Form 10-K for the year ended June 30, 2001,
filed September 27, 2001, and subsequent amendments. One or more of these
factors have affected, and could in the future affect, the Company's business
and financial results in future periods, and could cause actual results to
differ materially from plans and projections. There can be no assurance that the
forward-looking statements made in this press release will prove to be accurate,
and issuance of such forward-looking statements should not be regarded as a
representation by the Company, or any other person, that the objectives and
plans of the Company will be achieved. All forward-looking statements made in
this press release are based on information presently available to management,
and the Company assumes no obligation to update any forward-looking statements.
CHECKFREE CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Operations
(Unaudited)
(In thousands, except per share data)
Three months ended September 30,
2000 2001
Revenues:
Processing and servicing $76,159 $100,923
License fees 5,047 4,061
Maintenance fees 4,647 6,139
Other 4,904 5,552
Total Revenues 90,757 116,675
Expenses:
Cost of processing, servicing
and support 53,072 68,162
Research and development 13,918 14,724
Sales, marketing and royalties 14,304 15,005
General and administrative 11,492 11,626
Depreciation and amortization 55,734 119,203
In process research and
development 18,600 ---
Total Expenses 167,120 228,720
Loss from operations (76,363) (112,045)
Interest, net 325 (529)
Loss before income taxes (76,038) (112,574)
Income tax benefit (17,680) (23,627)
Net loss $(58,358) $(88,947)
Basic loss per share:
Net loss per common share $(0.91) $(1.02)
Equivalent number of shares 64,216 87,090
Diluted loss per share:
Net loss per common share $(0.91) $(1.02)
Equivalent number of shares 64,216 87,090
CHECKFREE CORPORATION AND SUBSIDIARIES
Supplemental Pro Forma Consolidated Condensed Statements of Operations
(Unaudited)
(In thousands, except per share data)
Three months ended September 30,
2000 2001
Revenues:
Processing and servicing $76,159 $100,923
License fees 5,047 4,061
Maintenance fees 4,647 6,139
Other 4,904 5,552
Total Revenues 90,757 116,675
Expenses:
Cost of processing, servicing
and support 53,072 68,162
Research and development 13,918 14,724
Sales, marketing and royalties 14,304 15,005
General and administrative 11,492 11,626
Depreciation and amortization 7,833 9,633
Total Expenses 100,619 119,150
Pro forma loss from operations (9,862) (2,475)
Interest, net 325 (529)
Pro forma loss before income taxes (9,537) (3,004)
Income tax benefit (4,006) (1,111)
Pro forma net loss $(5,531) $(1,893)
Basic pro forma loss per share:
Pro forma net loss per common share $(0.09) $(0.02)
Equivalent number of shares 64,216 87,090
Diluted pro forma loss per share:
Pro forma net loss per common share $(0.09) $(0.02)
Equivalent number of shares 64,216 87,090
This supplemental pro forma statement of operations for the three months
ended September 30, 2000 and 2001 is for illustrative purposes only and is
not prepared in accordance with generally accepted accounting principles.
It presents the operating results of the Company, excluding acquisition
related charges of $66.5 million for the three months ended
September 30, 2000, which represents $47.9 million of intangible asset
amortization and $18.6 million of in-process research and development
charges and of $109.6 million for the three months ended September 30,
2001, which represents intangible asset amortization. The tax benefit in
both periods has been adjusted for the impact of deductible intangible
asset amortization at a marginal rate of 40%. |
