Carreker Corporation(NASDAQ: CANI), a leading provider of payments technology and consulting solutions for the financial services industry, today reports its third quarter results. For the quarter-ended October 31, 2004, the Company reports revenues of $30.6 million, net income of $513,000 and diluted earnings per share of $0.02.
Notable items during the quarter include:
- Q3 revenue was approximately $1 million higher than Q2 04. The Company experienced increases in all revenue categories, except consulting revenue,in comparison to Q2 04.
- SG&A expenses decreased by approximately $650,000 from Q2 04. Contracted sales in Q3 decreased significantly from Q2 04.KeyCorp and Wells Fargo accepted and deployed Carreker software for image exchange and image quality.
- Coley Clark, retired EDS Executive, and Gregory B. Tomlinson, retired "Big Four" Audit Partner, joined Carreker Board of Directors.
"For the second half of 2004 and the first half of 2005, we will have more products released or scheduled for release than at any other comparable time in the Company's history. Complex buying decisions and continued high levels of competition are causing some delays though we are encouraged by the growth in our qualified sales opportunities," said J. D. (Denny) Carreker, chairman and chief executive officer of Carreker Corporation.
Third quarter 2004 revenue was $30.6 million as compared to the second quarter 2004 revenue of $29.6 million and revenue of $31.4 million in the third quarter 2003. In the third quarter 2004, the Company experienced increases over second quarter 2004 in all revenue categories, except consulting, with revenue from software license, maintenance and implementation fees each increasing by approximately $1 million. Software license, maintenance, and implementation fees all decreased in third quarter 2004 relative to third quarter 2003 but were partially offset by increased consulting revenue.
Third quarter 2004 operating income of $366,000 decreased in comparison to the $631,000 reported for the second quarter 2004 and the $1.4 million operating income in the third quarter 2003. The decrease in third quarter 2004 relative to second quarter 2004 was due, in part, to increases in cost of revenue and R&D expenses in third quarter 2004. The increases in these expenses more than offset the favorable impact of higher revenue and decreased SG&A expenses in third quarter 2004. Contributing to the decrease in operating income from third quarter 2003 to third quarter 2004 were higher third quarter 2003 revenues, increased research and development expense in third quarter 2004, and a $540,000 benefit in third quarter 2003 recorded in other operating costs related to the reversal of certain merger costs where actual costs were lower than the estimated amounts.
Net income for the third quarter 2004 was $513,000, or $0.02 earnings per diluted share, as compared to second quarter 2004 net income of $199,000, or $.01 per diluted share, and third quarter 2003 net income of $1.3 million, or $0.05 per diluted share.
Although the Company had anticipated that the strong contracted sales in the GPT business segment in the second quarter would continue in the third quarter, that trend did not materialize as delays in decision making by clients contributed to softness in contracted sales in third quarter. The fourth quarter 2004 outlook remains very sensitive to the volume and timing of sales, product delivery, client implementation schedules and client-dependent timing on a small number of engagements in our revenue enhancement business segment. We expect revenues for the fourth quarter to be flat to slightly down and operating profit to be approximately break-even or slightly negative. During the third quarter, the Company qualified an increased number of Check 21 and other potential sales opportunities and anticipates that contract sales will improve in the fourth quarter and beyond as an expanded array of new products becomes available. Accordingly, the Company believes this will result in revenue growth in 2005.