S1 posts Q2 results; expects to close Funtech deal in Q4

Financial Results and Operating Highlights

• Total revenue in the second quarter of 2011 increased 22% to $63.3 million from $51.8 million in the second quarter of 2010. Total revenue in the six months ended June 30, 2011 increased 18% to $121.2 million from $102.9 million in the six months ended June 30, 2010. This increase was due primarily to growth in Software licenses, Professional services, and Support and maintenance revenue in our Payments and Banking: Large FI segments and higher Hosting revenue in our Banking: Community FI segment.
• U.S. GAAP net income was $1.5 million, or $0.03 per share, in the second quarter of 2011 compared with U.S. GAAP net loss of $1.8 million, or ($0.03) per share, in the second quarter of 2010. GAAP earnings were $2.2 million, or $0.04 per share, in the six months ended June 30, 2011 compared with U.S. GAAP net loss of $2.8 million, or ($0.05) per share, in the six months ended June 30, 2010. These figures include stock based compensation expense of $1.6 million and $0.8 million in the second quarter of 2011 and 2010, respectively, and $2.5 million and $1.2 million in the six months ended June 30, 2011 and 2010, respectively.
• Adjusted EBITDA was $9.3 million in the second quarter of 2011 compared with $3.2 million in the second quarter of 2010. Adjusted EBITDA in the six months ended June 30, 2011 was $14.4 million compared with $6.0 million in the six months ended June 30, 2010. Adjusted EBITDA does not include stock-based compensation expense or transaction related costs for the Fundtech merger and is described below and reconciled to the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP in Tables 4, 5, 6 and 7, provided below.
• Net cash provided by operating activities was $16.9 million in the six months ended June 30, 2011 compared with $23.3 million in the six months ended June 30, 2010. The Company had cash and cash equivalents of $71.7 million as of June 30, 2011.
• Revenue backlog, which is discussed in further detail below, in the Company's Payments and Banking: Large FI segments increased 35% to $65.3 million as of June 30, 2011 compared with $48.2 million as of June 30, 2010.
• Sales bookings in the Company's Payments and Banking: Large FI segments were $54.1 million in the six months ended June 30, 2011, an 8% increase compared to $49.9 million in the six months ended June 30, 2010.
• On June 27, 2011, the Company and Fundtech Ltd. announced that they entered into a definitive agreement to combine businesses through a stock-for-stock merger. Under the terms of the agreement, Fundtech shareholders will receive 2.72 shares of S1 common stock for each Fundtech ordinary share they own. The merger is expected to close in the fourth quarter of 2011 and is subject to approval by S1 and Fundtech shareholders, receipt of regulatory and court approvals, and the satisfaction of customary closing conditions.
• The Company raised its full year 2011 financial guidance to $240 to $250 million in revenue and $27 to $31 million in Adjusted EBITDA, up from $230 to $240 million in revenue and $24 to $28 million in Adjusted EBITDA.

"I am extremely pleased with our second quarter results in which we generated a 22% increase in revenue and grew our Adjusted EBITDA by 190% year-over-year," said Johann Dreyer, Chief Executive Officer, S1 Corporation. "We also continued to see very strong demand for our products around the world as evidenced by another increase in our sales bookings. I believe that the shift in our business model is behind us and we are raising our full year 2011 financial guidance to $240 to $250 million in revenue and $27 to $31 million in Adjusted EBITDA." 

Read the full statement here: