CyberSource Corporation (Nasdaq: CYBS), a leading provider of electronic payment and risk management solutions, today announced financial results for its fourth quarter ended December 31, 2008.
- Fourth quarter revenue was a record $62.3 million, a 37% increase compared to $45.4 million in the same period the previous year. Fourth quarter 2007 includes two months of Authorize.Net results, as the acquisition closed on November 1, 2007.
- On a GAAP basis, net income for the fourth quarter of 2008 was $10.0 million and earnings per share was $0.14, compared to net income of $1.2 million or $0.02 earnings per share in the fourth quarter of 2007. Fourth quarter 2008 and 2007 GAAP net income include tax benefits of $9.7 and $1.0 million, respectively, resulting primarily from reversals of the company's valuation allowance against its deferred tax assets.
- Non-GAAP net income for the fourth quarter was $13.6 million, a 47% increase compared to $9.2 million for the fourth quarter of 2007. Non-GAAP earnings per share for the fourth quarter was $0.19, a 27% increase compared to $0.15 per share for the fourth 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 amortization expense, and certain non-recurring items. A reconciliation of certain historical GAAP to non-GAAP measures is attached.
- During the fourth quarter, CyberSource processed a record 547 million billable transactions, a 31% increase over the same period the previous year. The value of transactions processed was $28.0 billion, a 33% increase over Q4 2007.
- CyberSource signed a record 27,700 new customers in the quarter increasing the installed base to approximately 253,000 active customers.
"CyberSource had an exceptionally strong fourth quarter and an outstanding year in 2008. I am very pleased with our extraordinary operating and financial results for the year, especially in light of the challenging economic environment. In 2008 we saw gains in market share, channel penetration, cel penetration, customer satisfaction and in virtually every financial metric. We also completed a very successful integration of Authorize.Net. Cash flow from operating activities was $10.6 million in the fourth quarter of 2008, compared to $3.5 million for the fourth quarter of 2007 and we ended the year with $61 million in cash, which excludes funds payable to merchants at quarter-end," said Bill McKiernan, chairman and chief executive officer of CyberSource. "With the global economy struggling, the online channel represents one bright spot of economic news and remains an area of intense focus for many businesses as they look to shift share from traditional channels. Similarly, consumers continue to be attracted to the Internet as a source of good value and convenience. I do not believe that these shifts to online channels will abate in the foreseeable future. Our business reflected these trends in both the $28 billion in transactions we processed and the 27,700 new customers we signed last quarter, the highest numbers in CyberSource's history."
- International: CyberSource continues to see strong momentum outside the US. CyberSource's European operations processed a record 127.4 million transactions in the fourth quarter, an increase of 72% over the same period last year. The Company's European business is comprised of revenue generated by merchants domiciled outside the US, and represented about 7% of revenue in the fourth quarter.
- Global acquiring: CyberSource generated approximately $21.7 million of global acquiring revenue during the fourth quarter, up 37% over the previous year. CyberSource added 1,000 new acquiring approximately 4,700 global acquiring customers.
- Customers: CyberSource added approximately 27,700 new customers in the quarter, bringing its installed base of customers to approximately 253,000. New enterprise customer wins this quarter include: Avis Car Rental, the Democratic National Committee, Facebook, Fandango, Obama Transition Project, and Sony BMG Music Entertainment. Existing customers that added new services or renewed agreements during the quarter include: Educational Testing Service, NCO Financial Systems, a leading provider of business process outsourced solutions, and ScanSource, a distributor of specialty technology products such as automatic identification and data capture solutions.
- Channel Partners: CyberSource continues to grow its partner relationships and the number of new merchants they are bringing to the CyberSource platform. In the fourth quarter, CyberSource signed up 450 new ISO and Affiliate resellers. CyberSource also continues to be a preferred provider of payment processing solutions for leading financial institutions and system integrators. CyberSource is pleased to announce a new referral agreement with First Data Merchant Services. First Data will now actively send customer referrals to the CyberSource sales team, who in turn will sell the full range of CyberSource's payment and risk offerings to First Data merchants. CyberSource also set-up a new reseller agreement with HSBC Mexico to resell CyberSource fraud solutions to HSBC customers through their Mexican Payment Gateway.
Annual financial highlights
For the year ended December 31, 2008, total revenue was $229 million compared to $117 million for the prior year, an increase of 96%. On a GAAP basis, net income for the year ended December 31, 2008 was $10.7 million and earnings per share was $0.15 compared to $2.4 million and $0.06 in the prior year, an increase of 342% and 150% respectively. Non- GAAP net income was $48.1 million and earnings per share was $0.67 for the year ended December 31, 2008 compared to $18.1 million and $0.42 per share in the prior year, an increase of 165% and 60% respectively.
Stock buyback program
During the fourth quarter, we repurchased 596,081 shares of common stock at an average stock price of $13.15 per share under the stock repurchase plans that were approved by the Board of Directors in May 2008 and November 2008.
Guidance for the first quarter and full year 2009
CyberSource is providing guidance for the first quarter of 2009 and full year 2009 based on information available as of January 29, 2009.
For the first quarter ending March 31, 2009:
- Total revenue is expected to be approximately $60.0 million.
- The company expects to process between 520 to 525 million billable transactions.
- GAAP gross profit is expected to be approximately $31.2 million, while GAAP operating expenses are expected to be approximately $31.3 million. The company expects to record GAAP net income in the first quarter of approximately $200,000 and breakeven earnings per share based on a weighted average share count of 71 million shares.
- Non-GAAP net income for the first quarter is expected to be approximately $10.5 million and non-GAAP earnings per share to be $0.15 based on a weighted average share count of 71 million shares.
For the full year 2009:
- Total revenue for 2009 is expected to be between $258 and $263 million.
- Total gross profit for 2009 is expected to be between $135 and $138 million.
- Total operating expenses for 2009 is expected to be between $127 and $129 million.
- GAAP net income for 2009 is expected to be between $6.0 and $6.5 million.
- GAAP earnings per share is expected to be between $0.08 and $0.09 per share based on a weighted average share count of 73 million shares.
- Non-GAAP net income for the full year 2009 is expected to be between $52.5 and $54.0 million. Non-GAAP earnings per share is expected to be between $0.72 and $0.74 based on a weighted average share count of 73 million shares.
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