CheckFree's Q1 earnings and revenues rise

Source: CheckFree Corporation

CheckFree Corporation (NASDAQ:CKFR) today announced first quarter revenue of $228.6 million, a 7 percent increase over the same period last year.

The Company's Generally Accepted Accounting Principles (GAAP) net income for the quarter was $31.4 million, or $0.34 per share, and underlying net income was $38.6 million, or $0.42 per share. Free cash flow was $37.1 million for the first quarter as outlined in Attachment A.

GAAP Results: Net income for the first quarter of fiscal 2007 was $31.4 million, compared to net income of $26.4 million for the same quarter last year. Earnings per share were $0.34 for the first quarter of fiscal 2007, compared to earnings per share of $0.28 for the first quarter of last year. Net cash provided by operating activities was $47.6 million for the first quarter of fiscal 2007, compared to $43.5 million for the same period last year.

Underlying Results: Underlying net income for the first quarter was $38.6 million, compared to $43.1 million for the same quarter of last year. Underlying earnings per share were $0.42 for the first quarter of fiscal 2007, compared to $0.46 per share for the first quarter of last year.

Underlying net income and earnings per share for the first quarter of fiscal 2007 exclude the amortization of acquisition-related intangible assets, the SFAS 123(R) impact of options issued prior to July 1, 2004 and the tax benefits of both. Underlying net income and earnings per share for the first quarter of fiscal 2006 exclude the amortization of acquisition-related intangible assets; exclude the SFAS 123(R) impact of options issued prior to July 1, 2004; include the historical effect of discontinued operations on revenue and expense, resulting from a divestiture in the third quarter of fiscal 2006; and exclude the combined net tax benefits from each of the foregoing. A reconciliation of CheckFree's underlying results to its GAAP results is included in Attachment A.

"CheckFree's businesses delivered good results for the quarter," said Pete Kight, CheckFree Chairman and Chief Executive Officer. "Electronic billing and payment transactions for consumer service providers (CSP) grew at expected rates, portfolios under management continued to increase and software license revenues exceeded our target. This quarter showed a healthy balance in growth across all three business lines."

First Quarter Highlights

For the first quarter of fiscal 2007, the Company reported that the Electronic Commerce Division processed 311.7 million transactions. CSP transactions at banks, credit unions and other financial institutions increased 4 percent sequentially and non-CSP transactions grew 2 percent, reflecting an overall sequential transaction growth rate of 3 percent. During the first quarter, the Company delivered 51.8 million electronic bills, a 3 percent sequential quarterly increase.

CheckFree Investment Services reported more than 2.3 million portfolios under management, compared to 2.0 million in the first quarter of fiscal 2006, representing a 15 percent year-over-year increase. The Software Division reported results that exceeded expectations. Refer to Attachment B for details on the financial performance of CheckFree's divisions in the first quarter of fiscal 2007, and Attachment C for electronic billing and payment metrics.

Financial Outlook for the Second Quarter

"For the second quarter of the fiscal year, we expect revenue between $230 million and $235 million, with GAAP earnings per share in the range of $0.33 to $0.35, which equates to underlying earnings per share in the range of $0.40 to $0.42," said David Mangum, CheckFree's Chief Financial Officer.

"In the Electronic Commerce Division for the second quarter, we expect sequential transaction growth of 5 to 7 percent in our CSP channel and a modest decline in non-CSP transactions," Mangum continued. "We expect portfolio growth in Investment Services and revenue performance in our Software Division to be consistent with our first quarter results."

The difference between GAAP and underlying earnings expectations for the second quarter of fiscal 2007 is due to expected acquisition-related intangible amortization expenses, the SFAS 123(R) impact of options issued prior to July 1, 2004, and the combined tax benefits from each of the foregoing.

The Company also announced that it repurchased more than 2.6 million shares of its common stock for approximately $100 million during the first quarter of fiscal 2007.» Download the document now 49.5 kb (Adobe Acrobat Document)

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