• Second quarter revenue was a record $55.7 million, a 143% increase compared to $22.9 million in the same period the previous year, which was prior to the Company's acquisition of Authorize.Net.
• On a GAAP basis, net loss for the second quarter of 2008 was ($45,000) and earnings per share was breakeven, compared to net income of $160,000 or breakeven earnings per share in the second quarter of 2007.
• Non-GAAP net income was $11.3 million, a 362% increase compared to $2.4 million for the second quarter of 2007. Non-GAAP earnings per share was $0.16 per share, a 129% increase compared to $0.07 per share for the second quarter of 2007. Non-GAAP net income excludes stock-based compensation expense, the reduction in the deferred tax asset valuation allowance, the non-cash portion of the tax provision, depreciation and amortisation expense, and certain non- recurring items. A reconciliation of certain historical GAAP to non-GAAP measures is attached.
• During the second quarter, CyberSource processed a record 449 million billable transactions, a 67% increase over the same period the previous year. The value of transactions processed was $27.4 billion, a 158% increase over Q2 2007.
• CyberSource signed a record 26,000 new customers in the quarter increasing the active customer base to approximately 238,000.

"CyberSource had a very strong second quarter and an excellent first half of 2008. Our results this quarter reflect the power of our combined value proposition with Authorize.Net, and the strength of the eCommerce market. Cash flow from operating activities was $12.5 million in the second quarter of 2008, compared to $2.9 million for the second quarter of 2007," said Bill McKiernan, chairman and chief executive officer of CyberSource. "This quarter we signed the highest number of new customers in the history of the Company. This is a key indicator of the momentum in our business and the success of the Authorize.Net integration."

Business Highlights

• International: CyberSource continues to see significant momentum outside the US. CyberSource's European operations processed a record 87.8 million transactions in the second quarter, an increase of 90% over the same period last year. The Company's European business represents about 7% of revenue and includes revenue generated by merchants domiciled outside the US. This revenue does not include transactions originated by consumers outside the US who purchased from CyberSource's US-based merchants.
• Global acquiring: CyberSource achieved significant growth in its global acquiring services during the second quarter, generating approximately $19.7 million of revenue, up 116% over the previous year. CyberSource added approximately 1,000 new acquiring customers during the quarter, which is the highest number ever of new acquiring customers in CyberSource's history, and seven times higher than before the Authorize.Net acquisition.
• Customers: CyberSource added approximately 26,000 new customers in the quarter, bringing its installed base of customers to approximately 238,000. New enterprise customer wins this quarter included IBM Canada, Hertz Europe, National Lampoon, and Samsonite. Existing customers that added new services or renewed agreements during the quarter include: JetBlue Airways, LOT Polish Airlines, and The Art Institute of Chicago.
• Small Business Market: CyberSource continues to generate strong growth in the small business segment (SMB). There are several initiatives that are driving the success in this market. The CyberSource channel management team has been working closely with its base of 4,000 resellers and partners to provide them with the additional tools, training and programs necessary to increase sales of CyberSource's products and services. 70% of our 75 largest resellers have increased merchant setup activity with Authorize.Net over last year. In the first half of 2008, CyberSource also made significant investments and improvements in its customer support department. These efforts have resulted in some of the best customer support metrics in the history of the SMB platform.

Six-month financial highlights

Revenue for the six-month period ended June 30, 2008 was $109.1 million compared to $45.0 million for the same six-month period last year, an increase of 142%. GAAP net income was $488,000 or $0.01 per share for the six months ended June 30, 2008 compared to $896,000 or $0.02 per share for the same period last year. Non-GAAP net income was $22.8 million or $0.32 per share for the six months ended June 30, 2008 compared to $5.5 million or $0.15 per share for the same period last year.

Stock buyback programme

During the second quarter, the Company did not repurchase any shares of common stock under the $10 million stock repurchase plan that was approved by the Board of Directors in May 2008. However, subsequent to quarter-end, the company repurchased 172,900 shares of common stock at an average stock price of $14.45 per share.

Guidance for the third quarter and full year 2008 CyberSource is providing guidance for the third quarter of 2008 and full year 2008 based on information available as of July 24, 2008. Guidance does not take into account any further reductions in the company's valuation allowance against its deferred tax assets, which would result in a tax benefit during the period of the reduction. CyberSource will continue to evaluate whether a further reduction is appropriate.

For the third quarter ending September 30, 2008:

• Total revenue is expected to be between $55.8 and $56.0 million.
• The company expects to process between 450 million and 455 million billable transactions.
• GAAP gross profit is expected to be between $28.3 and $28.5 million, while GAAP operating expenses are expected to be between $29.5 and $29.7 million.
• he company expects to record a GAAP net loss in the third quarter of ($400,000) to ($600,000) and a loss per share of ($0.01) based on a weighted average share count of 72.5 million shares.
• Non-GAAP net income for the third quarter is expected to be between $10.1 and $10.3 million and non-GAAP earnings per share is expected to be $0.14 based on a weighted average share count of 72.5 million shares.
  

Based on the financial results for the first half of 2008, CyberSource is raising its full year 2008 guidance for revenue, net income, and earnings per share.

• Total revenue for 2008 is expected to be between $220.0 and $225.0 million, versus previous guidance of between $215.0 and $220.0 million.
• GAAP net income for 2008 is expected to be between $800,000 and $1.3 million, versus previous guidance of between breakeven and a ($1.0) million loss.
• GAAP earnings per share is expected to be between $0.01 and $0.02, based on a weighted average share count of 72.5 million shares, versus previous guidance of between breakeven and a ($0.01) loss per share.
• Non-GAAP net income for the full year 2008 is expected to be between $45.0 and $46.2 million, versus previous guidance of between $42.5 and $44.0 million.
• Non-GAAP earnings per share is expected to be between $0.62 and $0.64 based on a weighted average share count of 72.5 million shares, versus previous guidance of between $0.59 and $0.61 per share.