S1 Corporation (Nasdaq: SONE), a leading global provider of customer interaction financial and payment solutions, today announced financial results for the second quarter of 2009:
- Total revenue in the second quarter of 2009 increased 8 percent to $60.8 million from $56.5 million in the second quarter of 2008. Total revenue in the six months ended June 30, 2009 increased 7 percent to $119.1 million from $111.2 million in the six months ended June 30, 2008.
- GAAP earnings were $4.6 million or $0.08 per share (diluted) in the second quarter of 2009 compared to GAAP earnings of $5.1 million or $0.09 per share (diluted) in the second quarter of 2008. GAAP earnings were $13.6 million or $0.25 per share (diluted) in the six months ended June 30, 2009, a $0.07 increase over GAAP earnings of $10.3 million or $0.18 per share (diluted) in the six months ended June 30, 2008. These figures include stock based compensation expense of $3.1 million or $0.06 per share and $2.3 million or $0.04 per share in the second quarter of 2009 and 2008, respectively, and $560 thousand or $0.01 per share and $4.2 million or $0.07 per share in the six months ended June 30, 2009 and 2008, respectively.
- Adjusted EBITDA in the second quarter of 2009 was $11.6 million compared to $11.1 million in the second quarter of 2008. Adjusted EBITDA in the six months ended June 30, 2009 was $22.2 million compared to $22.0 million in the six months ended June 30, 2008. Adjusted EBITDA does not include stock based compensation expense, and is described below(1) and reconciled to GAAP Net income in Tables 4, 5 and 6.
- Total revenue from international operations in the second quarter of 2009 increased 12 percent to $17.6 million from $15.8 million in the second quarter of 2008. Total revenue from international operations in the six months ended June 30, 2009 increased 9 percent to $33.4 million from $30.6 million in the six months ended June 30, 2008.
- Net cash provided by operating activities was $16.5 million and $16.3 million in the six months ended June 30, 2009 and 2008, respectively. The Company ended the second qccond quarter of 2009 with $75.2 million in cash and cash equivalents.
"We had another solid quarter of revenue growth and I am pleased with the progress we have made executing on our 2009 business plan," said Johann Dreyer, Chief Executive Officer of S1. "Despite the challenging economic environment, our sales momentum and pipeline remain strong and we are reaffirming our full year guidance of $240 to $245 million in revenue and $47 to $50 million in Adjusted EBITDA."
(1) Adjusted EBITDA
See Tables 4, 5 and 6 for reconciliations of Adjusted EBITDA to GAAP Net income.
This press release includes references to Adjusted EBITDA, a non-GAAP financial measure, the most directly comparable GAAP equivalent of which is Net income. We define Adjusted EBITDA as Net income less net interest income, plus income taxes, depreciation, amortization of intangibles, and stock-based compensation expense. A reconciliation of our non-GAAP financial measure to the most directly comparable financial measure is detailed in the reconciliation of GAAP to non-GAAP financial measures in Tables 4, 5 and 6. We believe that the presentation of this non-GAAP financial measure provides useful information to investors regarding our results of operations.
We believe that excluding depreciation, amortization, stock-based compensation expense, net interest income and income tax expense provides supplemental information and an alternative presentation useful to investors' understanding of the Company's core operating results and trends. Not only are depreciation and amortization expenses based on historical costs of assets that may have little bearing on present or future replacement costs, but they are also based on management estimates of remaining useful lives. Additionally, while stock-based compensation is an important part of overall compensation expense, a portion of our stock-based compensation expense is the result of cash-settled stock appreciation rights that are revalued each quarter for GAAP earnings based on the closing price of the Company's stock on the last day of the quarter. Consequently, fluctuations in our stock price can have a significant impact on the Company's reported GAAP earnings. Additionally, it is possible that the Company may begin recording income tax provisions for GAAP earnings despite being able to reduce taxes payable through the potential use of net operating loss carry forwards and other tax credits.
Although we believe, for the foregoing reasons, that our presentation of a non-GAAP financial measure provides useful supplemental information to investors regarding our results of operations, our non-GAAP financial results should only be considered in addition to, and not as a substitute for or superior to, our financial measures prepared in accordance with GAAP.
Use of non-GAAP financial measures is subject to inherent limitations because they do not include all the expenses that must be included under GAAP and because they involve the exercise of judgment of which charges should properly be excluded from the non-GAAP financial measure. Management accounts for these limitations by not relying exclusively on non-GAAP financial measures, but only using such information to supplement GAAP financial results. We urge investors not to consider non-GAAP financial measures as a substitute for, or superior to, any measure of financial performance prepared in accordance with GAAP. Our non-GAAP financial measure may be different from such measures used by other companies.
Adjusted EBITDA is not a measure of liquidity calculated in accordance with accounting principles generally accepted in the United States, and should be viewed as a supplement to -- not a substitute for -- our results of operations presented on the basis of accounting principles generally accepted in the United States. Adjusted EBITDA does not purport to represent cash flow provided by, or used in, operating activities as defined by accounting principles generally accepted in the United States. Our statement of cash flows presents our cash flow activity in accordance with accounting principles generally accepted in the United States. Furthermore, Adjusted EBITDA is not necessarily comparable to similarly-titled measures reported by other companies.
We believe Adjusted EBITDA is used by and is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. We believe that Adjusted EBITDA is widely used by investors to measure a company's operating performance without regard to items such as interest expense, taxes, depreciation and amortization, and stock-based compensation expense which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired.
Our management uses Adjusted EBITDA as a measure of operating performance to assist in comparing performance from period to period on a consistent basis; as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations; and in communications with the Board of Directors, stockholders, analysts and investors concerning our financial performance.
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