Revenue of $64.4 million and EBITDA loss of $0.23 per share
Highlights:
* Third quarter revenues of $64.4 million increased 160% over third
quarter 1999 and 9% over second quarter 2000.
* Total gross margin of $28.3 million improved 194% over third quarter
1999 and 8% over second quarter 2000.
* Excluding merger-related costs and certain non-cash charges, EBITDA
totaled $(12.6) million or $(0.23) per share in the third quarter 2000.
* S1 Data Center end users totaled 722,000 at the end of September 2000,
up 343% over third quarter 1999 and up 31% over second quarter 2000.
* Cash and investment securities totaled $220.5 million at end of the
quarter.
* More than 950 financial institutions now using S1 software products.
* Total end users of S1 products now estimated at over 4.75 million.
ATLANTA, Nov. 7 /PRNewswire/ -- S1 Corporation (Nasdaq: SONE), a leading
global provider of eFinance software and services, reported revenues of
$64.4 million for the quarter ended September 30, 2000, a 160% increase over
the $24.8 million recorded for the prior year quarter. Excluding merger-
related and certain non-cash charges, the Company posted an EBITDA (earnings
before interest, taxes, depreciation and amortization) loss of $12.6 million
or $0.23 per share.
Software license revenues in the third quarter were $14.6 million, or 545%
higher than the prior year quarter. Professional services revenues increased
to $42.2 million in the third quarter 2000, a 186% increase over the prior
year quarter. Data Center revenues of $5.8 million in the third quarter were
179% above the third quarter 1999. The Company recorded a 31% increase over
the second quarter in the number of end users processed through S1 Data
Centers, an increase of 343% over the third quarter 1999. As of September 30,
2000, the total number of end users in S1 Data Centers was 722,000.
"We are excited about our direction at S1. After successfully integrating
five companies in the last year, we have channeled our energies into the core
eFinance platforms that enable our customers to differentiate their products
in the financial services marketplace," said James S. Mahan III, CEO of S1
Corporation. "Large financial services companies are focused on wealth
management and demand the control and flexibility afforded by S1's multi-
operating system Consumer Suite platform. Smaller financial services
companies demand the packaged and simple solutions that our community bank
products provide. S1 is strategically positioned to meet those needs and our
third quarter results affirm S1's leadership position in the marketplace."
Financial Summary:
(In thousands, except per share amounts)
Third Quarter
2000 1999
Revenues $64,379 $24,799
Direct costs 36,064 15,167
Gross margin ($) $28,315 $9,632
EBITDA(1) $(12,625) $(33)
EBITDA per share(1) $(0.23) $(0.00)
Gross margin (%) 44% 39%
(1) Excludes merger-related cost and stock option compensation expense.
During the third quarter, the $64.4 million in revenues were derived from
the following sources:
Third Quarter 2000
Segment Licenses Services Data Center Other Total
Large Financial
Institutions $5,048 $36,672 $4,845 $1,798 $48,363
Community Bank 3,268 1,462 385 5,115
Call Center
Technology 6,270 4,072 10,342
Account
Aggregation559 559
Total $14,586 $42,206 $5,789 $1,798 $64,379
Contribution by Segment(2)
Segment Q1 Q2 Q3
Large Financial Institutions $ (6,668) $ (4,221) $ 418
Community Bank 1,811 1,153
Call Center Technology 1,342 1,906 742
Account Aggregation (3,054) (2,619) (4,588)
(2) Segment gross margin less sales and marketing and product
development expenses.
"We are pleased with the sequential growth in S1's revenues and the
continued gross margin growth of our core large financial institutions
segment, said Robert F. Stockwell, CFO of S1 Corporation. "S1 maintained a
gross margin of 44% across the company as a whole. Our large financial
institution segment contribution before G&A improved from a negative
$6.7 million in the first quarter of this year to a positive $418 thousand in
the third quarter. The gross margin in the segment also improved from 29% at
the beginning of the year to 36% in the third quarter."
The Company's gross margin for the third quarter 2000 was $28.3 million,
or 44%. This equates to a gross margin on par with last quarter of 44%. The
Company's software license margin was 92% and remained the same as in the
second quarter of 2000. As the demand for S1 services continued to grow, the
professional services margin increased to 33% in the third quarter. S1's Data
Center revenues increased to $5.8 million and the gross margin was 15%.
In the third quarter 2000, S1 incurred a net loss of $136.1 million, or
$2.46 per share, compared to a net loss of $2.7 million, or $0.10 per share,
for the third quarter 1999. The third quarter loss includes $125.3 million or
$2.23 per share of merger-related costs, stock option compensationexpense and
other non-cash charges. At the end of the third quarter, the Company had cash
and marketable securities of $220.5 million available to fund operations.
Business Activity Highlights:
* Five S1 customers agreed to migrate to the new version of the S1
Consumer Suite providing integrated banking, brokerage and insurance
applications. Of these five, Michigan National is currently live, and
Principal Bank is scheduled to go live within the next few weeks.
* S1 expanded its global footprint by completing the initial development
of its world wide data center facilities in the United Kingdom and
Singapore. Additionally, S1 completed the deployment of its
applications at OCBC's direct bank, finatiQ, based in Singapore.
* In extending its platform to other operating systems, S1 significantly
advanced the port of its Consumer Suite to the IBM 390 Enterprise
Server environment, which is optimally designed to take advantage of
large volumes of transactions. S1's implementation teams are working
closely with a large international bank to be the first in production
on this platform early next year.
* In a further extension of S1's capabilities, S1 Development Labs
completed the initial port of the S1 Consumer Suite to the Microsoft
Windows NT environment, and expects to fully port the applications to
Microsoft Windows 2000 next year.
* S1 entered into a global agreement with Aether Systems and its European
venture, SILA Communications, to be the first to provide wireless-
enabled applications, called Mobile eFinance, through data centers that
are equipped to handle virtually any carrier and any device, enabling
institutions to more easily support a broad base of wireless users.
These applications are scheduled to be available in the fourth quarter
of 2000.
* S1 joined forces with Citibank,Wells Fargo, Enron, and I2 Technologies
to streamline payments processing for business-to-business e-commerce
with the formation of FinancialSettlementMatrix.com.
About S1 Corporation
S1 (Nasdaq: SONE), the pioneer of Internet banking, is a leading global
provider of innovative eFinance solutions and services that are centered on
banking, brokerage and insurance. S1 is enabling financial service providers
to create a complete Enterprise eFinance Experience by delivering the tools
necessary to meet the evolving demands of their customers across various lines
of businesses, market segments and delivery channels. Through its Open
eFinance Architecture, S1 offers a broad range of applications that empower
financial institutions to increase revenue, strengthen customer relationships
and gain competitive advantage. Additionally, through the Company's
professional services organization, S1 applications can be implemented in-
house or hosted in an S1 Data Center. Additional information about S1 is
available at s1.com.
The Company will hold a conference call to discuss third quarter 2000
results at 5:00 PM EST on November 7, 2000. Simultaneous to the call,
management's presentation will be available on the Web at www.s1.com/Q3. S1
will also broadcast the call over the Internet at VCall and Yahoo Finance.
To listen to the conference call, go to VCall:
vcall.com
Or Yahoo Finance:
webevents.broadcast.com
Forward-Looking Statements
This press release includes statements and other matters which are
forward-looking and subject to a number of risks and uncertainties that could
cause actual results to differ materially from expectations. The statements
contained in this release that are forward-looking are based on current
expectations and are subject to risks and uncertainties that could cause
actual results todiffer materially from the results contemplated by the
forward-looking statements. These risks and uncertainties include, but are in
no way limited to:
* the possibility that the anticipated benefits from our acquisition
transactions will not be fully realized;
* the possibility that costs or difficulties related to our integration
of acquisitions will be greater than expected;
* our dependence on the timely development, introduction and customers
acceptance of new internet services;
* rapidly changing technology and shifting demand requirements and
internet usage patterns;
* other risks and uncertainties, including the impact of competitive
services, products and prices, the unsettled conditions in the internet
and other high-technology industries and the ability to attract and
retain key personnel; and
* other risk factors as may be detailed from time to time in our public
announcements and filings with the SEC, including the Company's annual
report on Form 10-K for the year ended December 31, 1999.
In addition, nothing in the press release should be viewed as an update or
comment on earlier forward looking statements provided by S1 Corporation. As
noted above, because actual results, performance or developments may differ
materially from forward-looking statements, S1 will not update such statements
over the course of future periods.
S1 CORPORATION
Consolidated Statements of Operations
(Dollars in thousands, except share, per share,
data)
(Unaudited)
09/30/1999 12/31/1999 03/31/2000 06/30/2000 09/30/2000
Revenues:
Software
licenses $2,260 $12,152 $10,719 $15,330 $14,586
Professional
services 14,769 23,030 34,382 37,230 42,206
Data center2,072 3,195 3,507 5,317 5,789
Other 5,698 2,039 1,761 1,207 1,798
Total
revenues 24,799 40,416 50,369 59,084 64,379
Direct costs:
Software
licenses 99 311 1,521 1,226 1,136
Professional
services 8,480 16,461 25,884 25,865 28,471
Data center 2,163 3,129 3,352 4,806 4,915
Other 4,425 2,010 1,594 1,084 1,542
Total direct
costs 15,167 21,911 32,351 32,981 36,064
Gross margin 9,632 18,505 18,018 26,103 28,315
Operating expenses:
Selling and
marketing 1,153 8,763 11,406 13,396 13,666
Product
development 5,221 10,055 14,992 15,830 16,924
General and
admini-
strative 3,291 6,928 9,351 11,451 10,350
Depreciation
and
amortization 1,465 2,998 3,404 6,129 6,536
Stock option
compensation
expense 107 797 1,125 1,599 1,333
Marketing cost
from warrants
issued -- 715 4,600 362 --
Merger related
costs 1,851 6,643 6,814 6,344 5,055
Acquired
in-process
research and
development -- 59,300 -- 14,100 --
Amortization
of acquisition
intangibles -- 40,000 77,127 112,386 112,360
Total
operating
expenses 13,088 136,199 128,819 181,597 166,224
Operating
loss (3,456) (117,694) (110,801) (155,494) (137,909)
Interest and
investment
income777 706 35,593 2,498 1,809
Net loss $(2,679) $(116,988) $(75,208) $(152,996) $(136,100)
EBITDA (A) $(33) $(7,241) $(17,731) $(14,574) $(12,625)
EBITDA per
share (A)$ $(0.00) $(0.19) $(0.35) $(0.27) $(0.23)
Loss per
common share
from
depreciation,
amortization,
other charges
and interest
and investment
income (0.10) (2.86) (1.14) (2.55) (2.23)
Net loss
per common
share $(0.10) $(3.05) $(1.49) $(2.82) $(2.46)
Weighted
average
common
shares
out-
standing 27,628,446 38,339,221 50,456,210 54,167,563 55,389,682
Common
shares
outstanding
at end of
period 27,701,489 48,831,243 51,163,353 54,988,454 55,868,136
Gross margin percentages:
Software
licenses 96% 97% 86% 92% 92%
Professional
services 43% 29% 25% 31% 33%
Data center (4%) 2% 4% 10% 15%
Other 22% 1% 9% 10% 14%
Gross margin
before other
revenue 39% 46% 36% 44% 44%
Data center
revenue per
quarterly
average end
-users $14.52 $15.45 $12.43 $11.04 $9.09
Number of
data center
end-users 163,000 226,000 412,000 552,000 722,000
Number of
data center
end-user
accounts 254,000 347,000 570,000 709,000 864,000
(A) Excludes merger related costs, stock option compensation expense,
acquired in-process research and development and marketing cost from
warrants issued.
S1 CORPORATION
Selected Financial Data
(In thousands, except share and per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
Revenues:
Software
licenses $14,586 $2,260 $40,635 $6,898
Professional
services 42,206 14,769 113,818 33,402
Data center 5,789 2,072 14,613 5,663
Other 1,798 5,698 4,766 6,511
Total
revenues 64,379 24,799 173,832 52,474
Direct costs:
Software
licenses 1,136 99 3,883 331
Professional
services 28,471 8,480 80,220 19,866
Data center 4,915 2,163 13,073 5,879
Other 1,542 4,425 4,220 5,102
Total direct
costs 36,064 15,167 101,396 31,178
Gross margin 28,315 9,632 72,436 21,296
Operating expenses:
Selling and
marketing 13,666 1,153 38,468 3,406
Product
development 16,924 5,221 47,746 13,981
General and
administrative 10,350 3,291 31,152 6,985
Depreciation
and
amortization 6,536 1,465 16,069 3,926
Stock option
compensation
expense 1,333 107 4,057 321
Marketing cost
from warrants
issued -- -- 4,962 --
Merger related
costs 5,055 1,851 18,213 2,101
Acquired in-
process
research and
development -- --14,100 --
Amortization of
acquisition
intangibles 112,360 -- 301,873 206
Total operating
expenses 166,224 13,088 476,640 30,926
Operating loss (137,909) (3,456) (404,204) (9,630)
Interest and
investment
income 1,809 777 39,900 1,531
Net loss $(136,100) $(2,679) $(364,304) $(8,099)
EBITDA per
share (A) $(0.23) $(0.00) $(0.84) $(0.12)
Loss per common
share from
depreciation,
amortization,
other charges and
interest and
investment income (2.23) (0.10) (5.99) (0.19)
Net loss per
common share $(2.46) $(0.10) $(6.83) $(0.31)
Weighted average
common shares
outstanding 55,389,682 27,628,446 53,359,206 26,136,974
Common shares
outstanding
at end of
period 55,868,136 27,701,489 55,868,136 27,701,489
September 30, December 31,
2000 1999
Cash and
investment
securities $220,506 $130,604
Accounts
receivable,
net 95,739 70,136
Deferred
revenue 29,399 29,752
(A) Excludes merger related costs, stock option compensation expense,
acquired in-process research and development and marketing
cost from warrants issued.
SOURCE S1 Corporation
-0- 11/07/2000
/CONTACT: Sam Perkins of S1 Corporation, 404-812-6671, or
sam.perkins@s1.com /
/Web site: s1.com
(SONE)
CO: S1 Corporation
ST: Georgia
IN: FIN MLM
SU: ERN
KW-DG
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