S1 posts Q2 loss

• Revenue for the second quarter was $46.7 million compared to $43.4 million in the quarter ended March 31, 2006, an eight percent increase
• The second quarter results included presenting the FRS business, the Risk and Compliance Segment, in discontinued operations
• The loss from continuing operations was $1.1 million, including approximately $1.1 million in stock-based compensation recorded with the adoption of SFAS 123R and $549,000 of restructuring costs in the second quarter. Excluding stock-based compensation and restructuring charges, the Company generated income from continuing operations of $599,000 in the second quarter
• Second quarter operating results included $728,000 of costs associated with the exploration of strategic alternatives announced on May 3, 2006 and $350,000 related to the settlement of a disputed patent claim
• Adjusted EBITDA for the quarter was $3.0 million. The Company ended the quarter with $112 million in cash and investments. Adjusted EBITDA is described, and reconciled to our GAAP operating loss below

Further highlights for our Enterprise Segment, which represents North America retail banking solutions, global wholesale banking solution, and State Farm; and the Postilion Segment, which represents the community financial business, global ATM/payments business, and the retail banking business outside of North America, for second quarter are presented below.

• The Enterprise Segment had revenue of $28.3 million, up $2.4 million from the first quarter of 2006, and generated an operating loss of $1.8 million, including approximately $818,000 of the stock-based compensation and $330,000 of facilities restructuring
• The Enterprise business continues to make progress against its goal of upgrading customers to the latest versions of its software applications, which will improve customer satisfaction and reduce operating costs. The success of its Managed Introduction Program is reflected in the positive reception the Company is getting from customers involved with the product and organizational readiness plan for the Enterprise 3.5
• The Postilion Segment had revenue of $18.4 million, up $860,000 from the first quarter of 2006, and an operating loss of $58,000, including approximately $316,000 of the stock-based compensation and $219,000 of facilities restructuring
• The Postilion business attracted new financial institutions, processors and retailers from around the world to its customer base. Product development of the next generation solution is on target, and the Company plans to preview this product to its customers next month at S1's annual customer conference

"I'm proud that our team delivered another solid quarter, showing continued improvement in revenue, cost containment and customer satisfaction," said James S. Mahan III, Chairman and CEO of S1 Corporation. "As we prepare to more broadly deliver our next generation software solutions later this fall, the substantial progress we are making in every facet of the business gives us a solid foundation for capitalizing on the growing demand for integrated, multi-channel software solutions."

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