CheckFree Reports Second Quarter Results
-- Revenue and EPS results better than expectations --
-- 89 billers under contract, 62 live, with CheckFree's electronic billing
and payment service --
-- Sites where consumers can get and pay bills more than double, exceed 100
--
ATLANTA (January 25, 2000) ? CheckFree Holdings Corporation (NASDAQ: CKFR)
today announced revenues of $73.0 million for the second quarter of fiscal
2000, ended December 31, 1999, compared to $59.6 million for the same
quarter of fiscal 1999, a 22 percent increase.
The Company reported a net loss for the quarter of $4.0 million, or 8 cents
per share, diluted, compared to a break-even result for the same period in
fiscal 1999, adjusted for non-recurring items.
CheckFree Chairman and CEO Pete Kight said, "We continue to deliver very
solid results this year, with both revenue and earnings per share coming in
slightly better than expected for the second quarter. Revenue beat the
high end of the expected range by $1 million, and EPS was a penny better
than the positive side of the range expected for loss-per-share. These
results reflect strong sales in each of our divisions, and
less-than-expected downward pressure from Y2K concerns."
Distribution More Than Doubles, 22 More Billers Get to The 'Net for Total
of 62
CheckFree reported strong progress in both billers and distribution points
committed to electronic billing and payment services, and in getting
electronic bills to the Internet. The Company signed 12 new contracts with
billers in the second quarter, for a total of 89 billers set to offer
electronic billing and payment through CheckFree. Of these, 62 now make
electronic bills available for payment, compared with 40 at the end of last
quarter.
"Last quarter we realigned our sales, implementation and account management
teams to focus on condensing the time between signing an E-bill contract to
getting bills on the 'Net," said Pete Sinisgalli, CheckFree's president and
chief operating officer. "This quarter, we reaped the benefits: 11 billers
moved from planning to implementation, and 22 moved from implementation to
live. With 62 billers live, we have met two-thirds of our June 30 goal of
having 90 billers live."
"When the transaction closes, we expect our acquisition of BlueGill to help
us sign more billers and further speed the process of making bills
available on the Internet," Sinisgalli added.
The Company also disclosed that more than 100 Internet sites now offer
electronic billing and payment through CheckFree, up from 53 at the end of
the first quarter. "Much of this impressive growth came from community
banks and credit unions," said Kight. "These typically are supported
through our relationships with Equifax, Fiserv and other reseller partners
who make it easy for community banks and credit unions to offer Internet
billing and payment services quickly and cost-effectively," he added.
The Company nearly doubled the number of bills it distributed over the
Internet, sending more than 38,000 in December, up from 20,000 in the prior
September. The Company processed more than one million more transactions
per month at the end of the second quarter compared to at the end of the
first quarter, tallying 14 million transactions processed in December.
Meeting expectations the Company shared last quarter, the number of
subscribers using CheckFree services remained flat at about three million.
Subscriber growth of 7 percent during the quarter was offset by the removal
of subscribers using non-Y2K-compliant personal financial management
software for system access who failed to upgrade by December.
"Sequential quarterly growth in the number of Internet-based subscribers
continued on its strong trend of greater than 20 percent growth this
quarter," said Sinisgalli. "So, despite our overall subscriber count
remaining at three million, the quality of the subscribers is increasing.
More of them are high-frequency users over the Internet. They are
conducting more transactions, more often, evidenced by our transaction
count increasing by more than one million. Moving forward, transactions
processed will deserve deeper analysis as a barometer of how consumers are
changing their behavior as they move their financial lives to the 'Net."
Sinisgalli expressed comfort with the Company's ability to achieve its
revenue and earnings-per-share targets for the year, and said the Company
is reconsidering its target of approaching five million subscribers by June
30. "Given that we are halfway through our fiscal 2000, achieving a
subscriber count approaching five million by June 30 will be more difficult
than we had expected six months ago. However, given the difficulty of
accurately predicting the exact timing of partner marketing campaigns, we
are not yet ready to concede our ability to reach this target by June 30,"
Sinisgalli said.
Sinisgalli said the Company's targets had been based, in part, on
expectations for when certain Internet service providers would launch
electronic billing and payment services. "Those Internet services did not
launch in the timeframe built into our planning assumptions, but they will
launch," Sinisgalli said. "And, while we can't share specifics, we now
expect to launch through this calendar year at more Internet sites -- both
bank-based and portal-based -- than we had originally planned six months
ago," he added.
Yahoo! E-Bill Live, AT&T Bill Now Available, Marketing Programs Expected
Kight said that the Company expects its partners to launch marketing
promotions to heighten consumer awareness, interest and enrollment during
the calendar year. He noted that Yahoo! has begun to market its
mid-December launch of Yahoo! E-Bills, following the earlier launch of
Yahoo! Bill Pay. Promotions include targeted banner advertising campaigns
throughout the Yahoo! network of properties, including a link from the
front page of Yahoo! (www.yahoo.com).
Yahoo plans to integrate the service into some of the other properties
across its network, and plans to pursue online marketing programs with
select E-billers.
"We are also pleased to note the largest biller in the United States, AT&T,
which mails more than 90 million statements per month, now has its consumer
bills available to users of Yahoo! E-Bills. The combination of these two
powerful brands will heighten awareness of the convenience and time savings
associated with electronic billing and payment," Kight concluded.
Strong Division Performance
CheckFree's Electronic Commerce division reported revenue of $50.7 million
for the quarter, representing 23 percent growth over the same quarter of
fiscal 1999. The division posted an operating loss of $5 million,
compared to a loss of $1 million for the second quarter of fiscal 1999,
reflecting the Company's planned investments in infrastructure and programs
to support future growth.
The division increased the proportion of transactions it processes
electronically from 52 to 54 percent during the quarter, which improves
processing efficiency.
Sinisgalli noted that a new pricing structure the Company introduced for
its largest strategic partners last quarter has been well received. The
structure offers much lower per-subscriber fees, combined with transaction
fees and service-level base fees, and is designed to encourage heightened
promotion to consumers. Sinisgalli said that the contract CheckFree
announced with Wells Fargo during the quarter reflects this structure.
"Wells Fargo is clearly a market leader in electronic banking," Sinisgalli
said. "Their confidence in CheckFree is a clear indication of the overall
success we expect to achieve with this plan."
CheckFree Investment Services reported revenue of $13.2 million for the
quarter, a 26 percent increase over the same quarter last year, adjusted
for the acquisition of M”bius Group. Operating income for the quarter was
$3.1 million, compared to $1.5 million, adjusted for non-recurring items,
in the second quarter of fiscal 1999. During the quarter the division grew
the number of portfolios under its management to 820,000, up 7 percent over
the prior quarter, and up more than 43 percent over portfolios managed at
the close of the second quarter of fiscal 1999.
The Company's Software division reported revenue in the quarter of $9.1
million, a decrease of 4% from the $9.5 million generated in the second
quarter of fiscal 1999. These results were as expected, reflecting the
Company's planning for buying moratoriums due to Y2K concerns. Results do
not reflect the Company's planned acquisition of BlueGill Technologies,
since the transaction has not yet closed.
Software division operating income was $2.3 million for the quarter, as
compared to $3.7 million in the second quarter of fiscal 1999. "Operating
margins in this business remain healthy," Sinisgalli said. "Results
reflect investments in new initiatives, such as the highly-successful
launch of Missingmoney.com, a state-sponsored Internet site jointly
developed with the National Association of Unclaimed Property
Administrators, to enable consumers to find and claim money owed to them
from non-refunded deposits, unclaimed securities, and other accounts held
by states," Sinisgalli said.
Third Quarter Expectations
Sinisgalli noted that the Company is comfortable with published financial
analyst expectations of a nine- to 11-cent loss per-share for the third
quarter. The Company expects consolidated third quarter revenues to be in
the range of $73 to $78 million, and management remains confident in its
expectation, shared in August, of closing the year at break-even or
slightly positive EBITDA, with a loss per share of 40 cents or better.
These expectations exclude the impact of consolidating BlueGill
Technology's results, pending the completion of the transaction to acquire
BlueGill.
"Assuming two months of consolidated reporting, BlueGill will contribute
roughly $2 million in revenue, and will be dilutive by about 4 cents per
share, prior to amortization of goodwill and other intangibles, in the
third quarter," Sinisgalli said. "For the year, BlueGill will contribute
about $5 million in revenue, and be dilutive by about 10 cents per share,
before amortization of goodwill and other intangibles," Sinisgalli said.
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.
Second Quarter 2000 Highlights
January 14, 2000 ?CheckFree announced that one of its largest customers,
Wells Fargo, has signed a material extension to its contract for
electronic billing and payment services.
January 11, 2000 ? DocuCorp International announced an agreement with
CheckFree Corporation to provide an integrated electronic billing and
payment (EBP) solution to DocuCorp customers. DocuCorp's technology
will enable customers to view bills, statements and other documents over
the Internet.
January 10, 2000 - theRent.com, a premier source of Intranets for
apartment communities, announced an agreement with CheckFree Corporation
to facilitate their online rent payment feature.
December 22, 1999 ? The Associates unveiled its E-Bill payment option
with CheckFree for Amoco customers. Associates First Capital Corporation
became the first company to offer an entire gasoline credit card
portfolio--3.5 million Amoco consumer gasoline credit card customers--an
opportunity to receive monthly statements and make payments through
their computers. The Associates owns and manages Amoco's private label
oil and bank credit card portfolios.
December 21, 1999 ? CheckFree announces plans to acquire BlueGill
Technologies to accelerate the availability of bills on the Internet.
The move strategically extends CheckFree's market position by adding
BlueGill's open standards-based biller software products, experience in
creating both business-to-consumer and business-to-business software
solutions for the Internet, Value-Added-Reseller partnership network,
and international reach to CheckFree's market-leading electronic billing
and payment infrastructure and distribution network.
December 17, 1999 ? VIFI and CheckFree announced a non-exclusive
agreement that allows VIFI customers the option of selecting CheckFree
as their electronic billing and payment provider through VIFI BillPayer,
VIFI's electronic bill payment product. Under the terms of the
agreement. VIFI will resell the CheckFree Web Billing and Payment
solution to its financial institutions.
December 15, 1999 ? CheckFree Investment Services announced the
availability of its new tax-aware trading tools to professional money
manager and financial advisor clients of the CheckFree APL and APL WRAP
systems.
December 13, 1999 ? Yahoo! announced the expansion of its relationship
with CheckFree to provide millions of users with the ability to receive
and view bills online. Yahoo! users currently using Yahoo! Bill Pay
(http://bills.yahoo.com) to pay their bills electronically can also have
their bills delivered to them, further simplifying and streamlining the
way in which they manage their online finances.
December 7, 1999 ? CheckFree announced the third generation of its
CheckFree Web Billing and Payment solution for financial institutions
and other consumer service providers. The CheckFree Web Billing and
Payment v 3.0 offering gives financial institutions a highly brandible
user interface that ties into the CheckFree Genesis 2000 engine.
December 7, 1999 ? edocs announced that the e-bill applications it has
deployed in conjunction with CheckFree are able to manage the electronic
delivery and payment of more than 400 million bills annually. This
represents more than 2 percent of the 18 billion total recurring bills
produced annually in the United States.
November 23, 1999 ? CheckFree and Intuit announced that CheckFree will
be providing infrastructure for Intuit's electronic billing and payment
services, including those offered through America Online (AOL).
CheckFree will provide the routing, tracking and payment engine to
support Intuit's offering for CheckFree's billers. The company will also
provide the payment engine for the "Pay Everyone" functionality that
Intuit's new service will offer.
November 23, 1999 ? CheckFree Holdings Corporation announced that it had
completed pricing of its previously announced offering of convertible
subordinated notes, and that the transaction will be consummated on
Monday, November 29, 1999.
November 17, 1999 ? CheckFree Holdings Corporation announced plans to
offer $100 million in seven-year convertible subordinated notes. The
Company also will grant the initial purchasers an option to purchase up
to an additional $15 million in aggregate principal to cover
over-allotments, if any. CheckFree intends to use the proceeds of this
offering for general corporate purposes, including possible future
acquisitions.
November 16, 1999 ? CheckFree announced CheckFree Genesis 2000, the
first and only integrated electronic billing and payment engine
operating. Genesis 2000 gives CheckFree clients the ability to offer
their customers an electronic billing and payment service that
integrates electronic bills, "pay everyone" capabilities and an
infrastructure that can scale to support up to 30 million U.S.
households (a third of households nationwide).
November 16, 1999 ? BlueGill Technologies and CheckFree announced that
CheckFree has selected BlueGill's flagship product suite, the i-Series?,
for installation in the CheckFree Electronic Commerce Center
(ECenter). This decision gives billers implementing the CheckFree
E-BillSM service an outsourced option for creating and delivering bills
and enables CheckFree to quickly transform complex billing data into a
presentment-ready format.
November 8, 1999 ? CheckFree and the National Association of Unclaimed
Property Administrators (NAUPA) have announced the launch of Missing
Money.com, the nation's exclusive, state sponsored Web search engine and
database to benefit the U.S. public by searching for unclaimed property
records nationwide, at no cost.
November 4, 1999 ?nFront Inc, a leading outsource provider of Internet
banking services, today announced an agreement with CheckFree that will
enable electronic bills to be presented to a growing number of Internet
banking users.
November 1, 1999 ? CheckFree announced the opening of its new Contact
Center in Phoenix, Arizona. The new facility allows the company to
heighten electronic billing and payment support for the growing
number of billers and financial institutions in the region.
October 22, 1999 ? CheckFree Investment Services launches M-Plan, a
system from M”bius Group for integrating retirement, capital needs, tax,
education and estate planning.
October 12, 1999 ? CheckFree Investment Services signs partnership deal
with BlackBook Software to link critical CheckFree APL data sets to
dynamic front-office application for enhanced relationship
management
October 6, 1999 ? CheckFree and Carolina Power & Light sign agreement to
offer electronic billing and payment to 1.2 million electricity and
energy services customers in the Carolinas.
First Quarter 2000 Highlights
September 29, 1999 - CheckFree signed a three-year agreement with Fleet
Services Corporation, a wholly owned subsidiary of Fleet Financial
Group, to provide expanded Automated Clearing House (ACH) system support
through CheckFree's Alliance Services platform.
September 15, 1999 - CheckFree extends agreement with Bank One to
incorporate providing services, including electronic billing and
payment, to WingspanBank.com.
September 13, 1999 - The Financial and Compliance Solutions business
unit of CheckFree launches its Solution Series of reconciliation
products to the public, offering businesses the power to identify,
manage, resolve and report financial exceptions.
September 13, 1999 - Pentagon Federal Credit Union and The Golden 1
Credit Union announce joint effort to provide Internet-based electronic
billing and payment to their members.
September 8, 1999 - Yahoo! and CheckFree unveil Yahoo! BillPay, a
service that gives Yahoo!'s millions of users in the United States the
ability to securely pay bills from any computer connected to the
Internet.
September 7, 1999 - CheckFree launches the CheckFree Guarantee Program
to help promote confidence in any financial service provider or biller
Web site that is offering electronic billing and payment backed by
CheckFree.
August 25, 1999 ? CheckFree and Equifax launch electronic billing and
payment services for more than 40 financial institutions.
August 23, 1999 - CheckFree Investment Services reaches a milestone in
portfolio management with a client base maintaining more than 700,000
portfolios on the CheckFree APL and APL WRAP systems.
August 18, 1999 - CheckFree and North Carolina Power announce the
availability of electronic billing and payment to NC Power customers
throughout northeastern North Carolina.
July 26, 1999 - ALLTEL, the leader in the mortgage loan automation
industry and the largest U.S. provider of software and processing
services to firms servicing residential mortgage loans, and CheckFree
announce an agreement to provide mortgage lenders with electronic
billing and payment capabilities. ALLTEL currently provides
loan-servicing automation for more than 20 million mortgage loans, with
balances exceeding $2 trillion.
July 21, 1999 - Virginia Power, the principal subsidiary of Dominion
Resources Inc., and CheckFree announce the launch of electronic billing
and payment for Virginia Power's two million customers.
July 13, 1999 - CheckFree, in partnership with the New Zealand Post,
launches a program that will enable New Zealanders to view and pay their
bills electronically through the Internet. This program is the first
electronic billing and payment offering that CheckFree has provided
outside the United States.
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: the expected impact of the
BlueGill acquisition on the number of billers and subscriber growth
(paragraph 6); the expectation that the number of transactions processed
will become a barometer of consumer behavior (paragraph 10); the Company's
expectation of the number of subscribers at the end of fiscal 2000
(paragraph 11); the Company's expectation of when Internet portals
launching the Company's products and services (paragraphs 12, 13 and 14),
the Company's expectations of losses for the third quarter of fiscal year
2000 (paragraphs 23 and 25), the Company's expected revenues and losses for
fiscal year 2000 (paragraphs 23, 24 and 25), and the financial impact of
the acquisition of BlueGill on the Company (paragraph 25). 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 the Company
can successfully and profitably expand and operate internationally; whether
the conditions to the BlueGill merger, including stockholder, regulatory
and other approvals, can be satisfied or obtained to permit the closing of
the acquisition; whether BlueGill can be successfully integrated with the
Company's operations; 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. These SEC filings
include Form 10-K for the year ended June 30, 1999 (filed September 24,
1999), Form 10-Q for the quarter ended September 30, 1999 (filed November
15, 1999), and Form S-3 Registration Statement (filed January 14, 2000).
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. |
