Online Resources Corporation (Nasdaq:ORCC), a leading provider
of online financial services, today reported financial and
operating results for the three months and full year ended December
31, 2009. For the fourth quarter:
- Revenue was $38.2 million,
compared to $37.2 million in the fourth quarter of 2008.
- Adjusted Ebitda, a non-GAAP
measure that adjusts Ebitda for equity compensation expense and
other expense was $10.2 million, compared to $9.6 million in the
prior year period.
- Net loss available to common
stockholders was $1.1 million, or $0.04 per share, compared to net
income available to common stockholders of $1.3 million or $0.04
per diluted share in the fourth quarter of 2008.
- Core net income, a non-GAAP
measure, was $1.8 million, or $0.06 per diluted share,
compared to $2.0 million, or $0.07 per diluted share, in the same
quarter of 2008.
Excluding a tax provision charge of $0.9 million related to
equity compensation, as well as costs of $0.4 million related to
the departure of the Company’s former CEO (not including an equity
compensation benefit of $0.2 million), adjusted Ebitda, net loss
available to common stockholders per share and core net income per
diluted share would have been $10.7 million, $0.00 and $0.10,
respectively.
For the full year 2009, Online Resources reported revenue of
$151.9 million, compared to $151.6 million in 2008; adjusted Ebitda
of $37.7 million, compared to $32.7 million in 2008; net loss
available to common stockholders of $0.14 per share, compared to
$0.24 per share in 2008 and core net income of $0.29 per diluted
share, compared to $0.24 per share in 2008.
“Despite a revenue environment that remained challenging, we
closed the year with strong new client signings, particularly for
our customizable Internet banking products. We also forged several
new distribution partnerships that will give us broader access to
the small financial institution market,” said Raymond T. Crosier,
the Company’s president, chief operating officer and interim chief
executive officer. “In addition, we achieved our goals for earnings
and cash flow for the quarter and the year, which enabled us to
significantly accelerate the pace of reducing our senior debt.”
On December 1, 2009, the Company prepaid $15 million of the
senior secured debt it incurred to finance the acquisition of
Princeton eCom. Of the $85 million originally borrowed, $48.8
million now remains outstanding.
“During the current leadership transition, the Board is very
pleased to have deep operating expertise within the Company that
allows us to continue to drive the business and maintain our
focus,” said John Dorman, co-chairman of the Company’s Board of
Directors. “We are also working actively with management to
thoroughly examine all aspects of the business for new ways to
drive additional growth and profitability. Meanwhile, the Board has
made excellent progress in identifying CEO candidates with proven
track records of driving revenue and profitability and expects to
be able bring this process to a conclusion quickly.”
Outlook for First Quarter 2010
Online Resources provided the following guidance for the first
quarter of 2010. These statements are forward-looking, and actual
results may differ materially.
- Revenue for the first quarter is
expected to be between $35.5 and $37.5 million.
- Adjusted Ebitda1,2 for the
quarter is expected to be between $7.4 and $8.7 million.
- Core net income1,3,4,5 is
expected to be between $0.04 and $0.06 per share.
The adjusted Ebitda and core net income guidance excludes any
charges that may be incurred in the first quarter related to the
departure of the Company’s former CEO. This may include litigation
costs as the parties were not able to reach a financial
settlement.
(1) The Company uses non-GAAP (Generally Accepted Accounting
Principles) financial measures, including adjusted Ebitda and core
net income, to evaluate performance and establish goals. It
believes that these measures are valuable to investors in assessing
the Company’s operating results when viewed in conjunction with
GAAP results. (2) Adjusted Ebitda is defined as earnings before
interest, taxes, depreciation and amortization, preferred stock
accretion, other (income) expense and equity compensation expense.
(3) Core net income is defined as net income available to common
stockholders before, on a pre-tax basis, the amortization of
acquisition-related intangible assets, equity compensation expense,
income tax benefit from the release of valuation allowance, income
(costs) related to the fair market valuation of certain derivatives
and mark-to-market investments, preferred stock accretion related
to the redemption premium and all other non-recurring charges. Some
or all of these items may not be applicable in any given reporting
period. (4) Excludes estimates for amortization of
acquisition-related intangible assets of $1.6 million, equity
compensation expense of $1.0 million and preferred stock accretion
related to the redemption premium of $0.4 million. (5) Core net
income per share calculated using estimated fully diluted shares
outstanding of 32.5 million.
Conference Call and Web Cast
The Company’s management will host a conference call to discuss
the results today at 5:00 p.m. ET. The conference call dial-in
number is (888) 296-4215 for domestic participants and (719)
457-2674 for international participants. Alternatively, a live web
cast of the call will be available through the "Investors" section
of Online Resources' web site at www.orcc.com.
The call and web cast will be recorded and available for
playback from 8:00 p.m. ET on February 25th until midnight on
Thursday, March 4th. For the conference call playback, dial (888)
203-1112 for domestic participants and (719) 457-0820 for
international participants and enter code 4579785. For web cast
replay, go to the “Investors” section of www.orcc.com.
About Online Resources
Online Resources (Nasdaq:ORCC) powers financial interactions
between millions of consumers and the Company’s financial
institution and biller clients. Backed by its proprietary payments
gateway that links banks directly with billers, the Company
provides web and phone-based financial services, electronic
payments and marketing services to drive consumer adoption. Founded
in 1989, Online Resources is the largest financial technology
provider dedicated to the online channel. For more information,
visit www.orcc.com.
This news release contains statements about future events and
expectations, which are "forward-looking statements." Any statement
in this release that is not a statement of historical fact may be
deemed to be a forward-looking statement. Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors which may cause the company's actual results, performance
or achievements to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements. Specifically factors that might cause
such a difference include, but are not limited to: the company's
history of losses and anticipation of future losses; the company's
dependence on the marketing efforts of third parties; the potential
fluctuations in the company's operating results; the company's
potential need for additional capital; the company's potential
inability to expand the company's services and related products in
the event of substantial increases in demand for these services and
related products; the company's competition; the company's ability
to attract and retain skilled personnel; the company's reliance on
the company's patents and other intellectual property; the early
stage of market adoption of the services it offers; consolidation
of the banking and financial services industry; and those risks and
uncertainties discussed in filings made by the company with the
Securities and Exchange Commission, including those risks and
uncertainties contained under the heading "Risk Factors" in the
company's Form 10-K, latest 10-Q, and S-3 as filed with the
Securities and Exchange Commission. These factors should be
considered in evaluating the forward-looking statements, and undue
reliance should not be placed on such statements.
Online Resources Corporation
Quarterly Operating
Data1
(Unaudited) 1Q08
2Q08 3Q08 4Q08
1Q09 2Q09 3Q09
4Q09 BANKING SERVICES
Payment Services2 Revenue $19.7 $18.1 $18.4
$17.9 $17.5 $17.2 $17.1 $16.7 Bill Payment Transactions 41.8 39.0
39.1 39.4 39.0 37.3 38.5 37.8 Other Revenue $4.5 $5.1 $5.6
$5.3 $5.4 $5.9 $5.7 $7.7
eCOMMERCE SERVICES Payment
Services - User Paid Revenue $7.0 $6.4 $6.2 $5.8 $6.5 $5.8 $4.7
$4.1 Bill Payment Transactions 1.7 1.7 1.7 1.6 1.7 1.6 1.4 1.2
Payment Services - Biller Paid Revenue $5.2 $5.6 $6.0 $6.2
$7.1 $7.0 $7.2 $7.3 Bill Payment Transactions 10.3 10.5 11.3 11.8
12.7 13.5 13.7 14.2 Other Revenue3 $2.8 $2.0 $1.9 $2.0 $2.7
$1.9 $1.9 $2.4
OTHER KEY METRICS Internet Banking
Adoption Rate4 28.2% 32.8% 33.6% 35.4% 38.3% 40.8% 43.2% 46.0%
Banking Billpay Adoption Rate 9.0% 9.4% 10.0% 10.2% 10.4% 10.7%
11.1% 11.4% Enterprise Users 13.5 12.6 13.0 13.2 13.8 14.0 14.3
14.8
Notes:
1. In millions except adoption rates. 2. Includes the
revenues and transactions for large client Corporate Network eCom,
which departed in 2Q08. 3. Includes revenues for large client
Certegy, which departed in 2Q08. 4. The Company refined its
definition of an Internet banking user in 1Q09 to incorporate a
stricter definition of an active user. In order to make them
consistent with the new definition, the Internet banking adoption
rates for prior periods have been adjusted. User counts under the
new definition have been estimated for the prior periods.
Online Resources Corporation Consolidated Statements of
Operations (In thousands, except per share data)
Three Months Ended Twelve
Months Ended December 31, December 31,
2009 2008
2009 2008
(Unaudited) (Unaudited) Revenues: Account
presentation services $ 2,321 $ 1,789 $ 8,198 $ 7,909 Payment
services 28,165 29,821 118,291 122,301 Relationship management
services 2,107 1,977 8,162 8,068 Professional services and other
5,653 3,573 17,212
13,364 Total revenues 38,246 37,160 151,863 151,642
Expenses: Cost of revenues 18,764 18,546
77,260 77,353 Gross profit
19,482 18,614 74,603 74,289 General and administrative 7,576
6,916 31,140 33,445 Selling and marketing 4,796 5,526 20,747 24,207
Systems and development 2,763 2,408
9,394 9,906 Total expenses
15,135 14,850 61,281
67,558 Income from operations 4,347 3,764 13,322 6,731
Other income (expense) Interest income 13 98 117 531
Interest expense (965 ) 1,462 (4,265 ) (3,612 ) Other (expense)
income - (392 ) 91 (556 )
Total other income (expense)
(952 ) 1,168 (4,057 ) (3,637 )
Income before tax provision 3,395 4,932 9,265 3,094 Income tax
provision 2,185 1,399 4,135
1,175 Net income 1,210 3,533 5,130 1,919
Preferred stock accretion 2,347 2,260
9,208 8,873 Net (loss) income available
to common stockholders $ (1,137 ) $ 1,273 $ (4,078 ) $
(6,954 ) Net (loss) income available to common stockholders
per share: Basic $ (0.04 ) $ 0.04 $ (0.14 ) $ (0.24 ) Diluted $
(0.04 ) $ 0.04 $ (0.14 ) $ (0.24 ) Shares used in
calculation of net (loss) income available to common stockholders
per share: Basic 30,092 29,387 29,947 29,111 Diluted 30,092 30,062
29,947 29,111
Online Resources Corporation
Condensed Consolidated Balance Sheets (In thousands)
December 31, December 31,
2009 2008 (Unaudited) ASSETS Current
assets: Cash and cash equivalents $22,907 $22,969 Short-term
investments - 1,009 Accounts receivable, net 17,457 15,742 Deferred
tax asset, current portion 7,477 8,782 Prepaid expenses and other
current assets 4,043 4,013 Total current assets 51,884 52,515
Property and equipment, net 25,561 28,707 Deferred tax
asset, less current portion 22,490 25,295 Goodwill 181,516 181,516
Intangible assets 19,972 27,668 Deferred implementation costs, less
current portion, and other assets 7,067 7,976 Total assets $308,490
$323,677
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable $2,008 $1,198 Accrued expenses 3,739
3,618 Notes payable, senior secured debt, current portion 8,250
15,937 Interest payable 27 6 Deferred revenues, current portion,
and other current liabilities 6,793 7,513 Total current liabilities
20,817 28,272 Notes payable, senior secured debt, less
current portion 40,500 59,500 Deferred revenues, less current
portion, and other long-term liabilities 6,888 6,377 Total
liabilities 68,205 94,149 Redeemable convertible preferred
stock 100,623 91,415 Stockholders' equity 139,662 138,113
Total liabilities and stockholders' equity $308,490 $323,677
Online Resources Corporation Condensed Consolidated
Statements of Cash Flows (In thousands)
Twelve Months Ended December 31,
2009 2008
(Unaudited) Operating activities Net income $
5,130 $ 1,919
Adjustments to reconcile net
income to net cash provided by operating activities:
Deferred tax expense 3,568 778 Depreciation and amortization 20,236
21,270 Equity compensation expense 4,201 4,696 Write off and
amortization of debt issuance costs 285 372 (Gain) loss on disposal
of assets (14 ) 50 Provision for losses on accounts receivable 77
56 (Gain) loss on investments (91 ) 556 Change in fair value of
stock price protection - 1,565 Change in fair value of theoretical
swap derivative (106 ) (3,574 ) Loss on cash flow hedge derivative
security - 261 Changes in operating assets and liabilities, net of
acquisitions: Consumer deposit receivable - 8,279 Consumer deposit
payable - (10,555 ) Changes in certain other assets and liabilities
(79 ) 1,929 Net cash provided by operating
activities 33,207 27,602
Investing activities
Purchases of property and equipment (9,260 ) (13,471 ) Sale of
property and equipment 46 - Sales of short term securities 2,100
6,570 Acquisition of Internet Transaction Solutions, Inc., net of
cash acquired - (110 ) Net cash used in
investing activities (7,114 ) (7,011 )
Financing
activities Net proceeds from issuance of common stock 568 827
Repurchase of shares issued related to ITS acquisition - (1,965 )
Payments for ITS stock protection - (112 ) Repayment of 2007 notes
(26,687 ) (9,563 ) Repayment of capital lease obligations
(36 ) (36 ) Net cash used in by financing activities
(26,155 ) (10,849 ) Net (decrease) increase in cash and cash
equivalents (62 ) 9,742 Cash and cash equivalents at beginning of
year 22,969 13,227 Cash and cash
equivalents at end of period $ 22,907 $ 22,969
Online Resources Corporation Reconciliation of Non-GAAP
Measures (In thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31, 2009
2008 2009 2008 (Unaudited)
(Unaudited) Reconciliation of adjusted Ebitda (See
Note 1): Net income $ 1,210 $ 3,533 $ 5,130 $ 1,919
Depreciation and amortization (incl. loss on disposal of assets)
4,976 5,149 20,222 21,320 Equity compensation expense 894 725 4,201
4,696 Interest Expense, net 952 (1,560 ) 4,148 3,081 Other (income)
expense - 392 (91 ) 556 Income tax provision 2,185
1,399 4,135 1,175
Adjusted Ebitda (See Note 1) $ 10,217 $ 9,638 $
37,745 $ 32,747
Reconciliation of core net
income (See Note 2): Net (loss) income available to common
stockholders $ (1,137 ) $ 1,273 $ (4,078 ) $ (6,954 ) Preferred
stock accretion related to redemption premium 400 392 1,590 1,558
Change in fair value of stock price protection - 127 - 1,692 Change
in fair value of theoretical swap derivative (114 ) (2,885 ) (106 )
(3,574 ) Change in fair value of mark to market investments - 393
(91 ) 556 Equity compensation expense 894 725 4,201 4,696 Tax
valuation allowance benefit 2 (186 ) 36 (186 ) Amortization of
intangible assets 1,779 2,170
7,697 9,518 Core net income (see Note 2) $
1,824 $ 2,009 $ 9,249 $ 7,306
Reconciliation of core net income per share: Diluted net
(loss) income available to common stockholders $ (0.04 ) $ 0.04 $
(0.14 ) $ (0.24 ) Preferred stock accretion related to redemption
premium 0.01 0.01 0.05 0.05 Change in fair value of stock price
protection - - - 0.06 Change in fair value of theoretical swap
derivative - (0.10 ) - (0.12 ) Change in fair value of mark to
market investments - 0.01 - 0.02 Equity compensation expense 0.03
0.02 0.14 0.15 Tax valuation allowance benefit - (0.01 ) - (0.01 )
Amortization of intangible assets 0.06 0.07 0.26 0.33 Other,
including impact of treasury method and rounding -
0.03 (0.02 ) - Core net income
per share $ 0.06 $ 0.07 $ 0.29 $ 0.24
Notes:
1. Adjusted Ebitda is a non-GAAP measure defined as earnings
before interest, taxes, depreciation and amortization, other
(income) expense, preferred stock accretion and equity compensation
expense. 2. Core net income is a non-GAAP measure defined as net
income available to common stockholders before, on a pre-tax basis,
the amortization of acquisition-related intangible assets, equity
compensation expense, income tax benefit from the release of
valuation allowance, income (costs) related to the fair market
valuation of certain derivatives and mark to market investments,
preferred stock accretion related to the redemption premium and all
other non-recurring charges. Some or all of these items may not be
applicable in any given reporting period.
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