S1 Corporation (Nasdaq: SONE), a leading global provider of customer interaction financial and payment solutions, today announced financial results for the first quarter ended March 31, 2006.
Revenue for the first quarter of 2006 was $48.5 million compared to $46.0 million in the quarter ended December 31, 2005.
Net loss from continuing operations was $1.0 million in the first quarter of 2006, including approximately $1.6 million in stock-based compensation recorded with the adoption of SFAS 123R and $333,000 of restructuring costs related to actions announced in the fourth quarter of 2005. Excluding stock-based compensation and restructuring charges, the Company had income from continuing operations of $0.9 million in the first quarter.
Adjusted EBITDA for the first quarter of 2006 was $3.2 million. The Company ended the quarter with $115 million in cash and investments after paying the final $14 million of contingent purchase price for Mosaic Software. Adjusted EBITDA is described and reconciled to our GAAP operating loss below.
Going forward, in addition to the Risk and Compliance Segment, S1 will report the results of two new operating segments, which were previously reported as the combined Financial Institution Segment. These segments are the Enterprise Segment, which will represent North America retail banking solutions, global wholesale banking solutions, and State Farm; and the Postilion Segment, which will represent the community financial business, the global ATM/payments business, and the retail banking business outside of North America. Selected results for these segments for first quarter of 2006 are presented below.
The Enterprise Segment had revenue of $25.9 million, up $1.9 million from the fourth quarter of 2005, and generated an operating loss of $2.0 million, including approximately $1.1 million of the stock-based compensation.
The Postilion Segment had revenue of $17.5 million, up $1.9 million from the fourth quarter of 2005, and operating income of $390,000, including approximately $378,000 of the stock-based compensation.
The Risk and Compliance Segment had revenue of $5.1 million, down $1.2 million from the fourth quarter of 2005, and generated an operating loss of $251,000, including approximately $63,000 of the stock based-compensation.
"I am extremely pleased with the results in our first full quarter under our new structure," said James S. Mahan III, Chairman and CEO of S1 Corporation. "The positive feedback from our Enterprise 3.5 customers and the delivery of multi-factor authentication solutions to our community bank customers point to the progress we are making against our plan to deliver long-term value to our shareholders, customers and employees.
"Evidenced by our rapid improvement in the first quarter and our continued momentum in the current quarter, the S1 Board and management team unanimously believe that the right thing to do is to stay the course," continued Mr. Mahan. "We believe there is significant potential embedded in our Enterprise product suite that will be realized as we execute against our product delivery and go-to-market plans."
Under its new customer-oriented structure, S1 achieved several milestones this quarter that contributed to the Company's first quarter performance:
Product Quality and Delivery: In February, the Company released all of its Enterprise 3.5 products, which include branch and call center automation, retail and business Internet banking, and analytical solutions, to the Managed Introduction Program participants. Early indications from the S1 teams working with of the nine financial institutions on this whole-organization readiness program have been positive, and the Company anticipates a broader rollout of these solutions to the market in the third and fourth quarters of this year. The best practices that were implemented in the Company's global engineering and development organization, along with the extra time given to the Enterprise team, have delivered solid results in the latest versions of these solutions.
For the community bank market, S1 made significant strides in delivering a multi-factor authentication ready solution, with several customers currently testing the solution. In addition, the team is working on the next generation self-service banking solutions that are being developed and working aggressively with select customers on the prototype to refine the direction of this new solution, with an anticipated rollout later this year.
Customer Satisfaction and Growth: S1 continued to concentrate on customer satisfaction across all areas of its business. In the Enterprise Segment, customer upgrades to a more current version of the Enterprise suite began, and the Company believes this will be a critical step in improving satisfaction and reducing costs. During the quarter, the Enterprise Segment posted several wins with new and existing customers. In addition, S1 took a large European-based institution live on its Personal Banking product in its U.S. Data Center. The Postilion Segment added eight customers, including community banks, processors, and several large European and Middle Eastern financial institutions on its ATM/payments product.Download the document now 44.9 kb (Adobe Acrobat Document)