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Online Resources Posts First Quarter 2005 Results
Revenue and Earnings Exceed Raised Guidance
CHANTILLY, Va., April 20, 2005
Online Resources Corporation (Nasdaq: ORCC), a leading outsourcer of Internet financial services, today reported financial and operating results for the three months ended March 31, 2005. The Company's results included, for the first time, results from the acquisition of Incurrent Solutions.
Revenue for the first quarter of 2005 was $15.1 million, a 55 percent increase over first quarter 2004 revenue of $9.8 million.
Earnings before interest, taxes, depreciation and amortization (EBITDA) was $3.8 million, compared to $1.4 million in the prior year. EBITDA per share was $0.17 per share, a 143 percent increase versus $0.07 in the prior year.
Net income was $2.4 million, compared to $419,000 in 2004. Net income per share was $0.11 per share, a 450 percent increase over $0.02 per share in 2004. Due to delays in the requirement to expense equity compensation, the Company postponed such expensing, which had been expected to have an impact on earnings of $0.02 per share.
"Revenue and earnings exceeded both our original and upwardly revised guidance, even before our decision to delay the expensing of equity compensation," stated Matthew P. Lawlor, chairman and chief executive of the Company. "We were also quite pleased with the lift in Banking division client signings, and the performance of our new Card division."
Banking division results were fueled primarily by continued increases in consumer adoption of the Company's account presentation and bill payment services. The division also expanded its distribution channel to 740 banks and credit unions with the signing of 33 new clients.
The Card division benefited from the acceleration of certain consulting services revenue and by increased consumer adoption. Approximately $1.0 million of first quarter 2005 revenue was attributable to Sears, which is expected to migrate off the Company's platform in the second quarter due to the previously announced acquisition of that portfolio by Citibank.
Because of the recent Securities and Exchange Commission decision to delay implementation of the requirement to expense equity compensation, the Company decided to postpone adoption until 2006. Lawlor stated that, "we were, and continue to be, prepared to implement such expensing. But to do so now would be premature, given its irreversibility and our desire to report comparably with other public companies, who have not yet broadly adopted this policy."
"We have revised our 2005 guidance to reflect this delay," added Lawlor. "We continue to expect a sequential decline in second quarter results, as previously announced clients who were acquired come off our platform. We also expect that this will be followed by a return to sequential growth for the third and fourth quarters. Once these acquired clients come off our platform, no single financial institution client will contribute more than 3 percent of our total revenue."
2005 Business Outlook
The Company provided new guidance for the second quarter 2005 and revised guidance for full year 2005. This guidance assumes no release of the Company's tax loss valuation allowance. Guidance also incorporates the follow-on public offering of 4.4 million shares of its common stock at $8.50 per share, completed subsequent to the close of the first quarter. The information below is in millions except for per share data. These statements are forward-looking, and actual results may differ materially.
| |
Second Quarter |
Full Year |
| |
2004 Actual |
2005 Guidance |
% Change |
2004 Actual |
2005 Guidance |
% Change |
| Revenue |
$10.1 |
$13.5-13.9 |
36% |
$42.3 |
$56.5-58.0 |
35% |
| Gross Profit Margin |
61% |
58-60% |
-3% |
62% |
60-62% |
-2% |
| EBITDA (1) |
$2.1 |
$2.6-3.0 |
33% |
$8.6 |
$13.0-14.0 |
57% |
| Per share |
$0.11 |
$0.10-0.12 |
0% |
$0.43 |
$0.51-0.55 |
23% |
| Net Income |
$1.2 |
$1.4-1.6 |
25% |
$5.0 |
$9.2-9.9 |
91% |
| Per share |
$0.06 |
$0.05-0.06 |
-8% |
$0.25 |
$0.36-0.39 |
50% |
| Fully Diluted Shares |
20.0 |
25.8 |
29% |
20.1 |
25.5 |
27% |
| Supplemental Information -For Disclosure Purposes Only |
| Pro Forma Equity Compensation Expense |
N/A |
$0.2-0.3 |
N/A |
N/A |
$1.3-1.6 |
N/A |
| Per share |
N/A |
$0.01 |
N/A |
N/A |
$0.05-0.06 |
N/A |
| Tax Equivalent Net Income (2) |
$0.7 |
$0.9-1.0 |
36% |
$3.1 |
$5.7-6.1 |
90% |
| Per share |
$0.04 |
$0.03-0.04 |
-13% |
$0.15 |
$0.22-0.24 |
53% |
|
(1) EBITDA is defined as earnings before interest, taxes, depreciation, amortization and non-cash equity compensation expense.
(2) Presents the Company's net income and net income per share expectations as if they were to be reported on a fully taxed basis, at an estimated corporate tax rate of 38 percent. The Company has approximately $90 million in tax loss carry-forwards and does not expect to pay material cash taxes in the foreseeable future.
The Company's management will host a conference call to discuss the results today at 4:15 p.m. ET. The conference call dial-in number is (800) 938-1087 for domestic participants and (706) 679-7266 for international participants. Alternatively, a live web cast of the call will be available through the "Investors" section of Online Resources' web site at www.orcc.com. The call and web cast will be recorded and available for playback from 8:00 p.m. ET on April 20 until midnight on Wednesday, April 27. For the conference call playback, dial (800) 642-1687 for domestic participants and (706) 645-9291 for international participants and enter code 4696828. For web cast replay, go to the "Investors" section of www.orcc.com.
Annual Shareholder Meeting
The Company will hold its Annual Shareholder Meeting on Wednesday, May 4, 2005 at 2 p.m. ET at the Harvard Club in New York, New York.
About Online Resources
Online Resources powers Internet financial services for over 700 firms nationwide. The Company's account presentation, payment and relationship management services are branded to its client banks, credit unions, card issuers and payment acquirers. The Company serves over three million consumer and business end-users and processes over $10 billion in payments annually. Founded in 1989, Online Resources (Nasdaq: ORCC, Website: www.orcc.com) has been widely recognized as one of the nation's fastest growing technology firms.
This news release contains statements about future events and expectations, which are "forward-looking statements." Any statement in this release that is not a statement of historical fact may be deemed to be a forward-looking statement. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Specifically factors that might cause such a difference include, but are not limited to the Company's: history of losses; dependence on the marketing efforts of third parties; potential fluctuations in operating results; ability to make and successfully integrate acquisitions of new businesses; potential need for additional capital; potential inability to prevent systems failures and security breaches; potential inability to expand services and related products in the event of substantial increases in demand; competition; ability to attract and retain skilled personnel; reliance on patents and other intellectual property; exposure to the early stage of market adoption of the services it offers; exposure to the consolidation of the banking and financial services industry; and additional risks and uncertainties discussed in filings made by the Company with the Securities and Exchange Commission, including those risks and uncertainties contained under the heading "Risk Factors" in the Company's Form 10-K, latest 10-Q, and S-3 as filed with the Securities and Exchange Commission. These factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements.
Media Contact: Beth Halloran,
Director, Corporate Communications
703.653.2248
bhalloran@orcc.com
Investor Contact: Catherine Graham,
EVP & Chief Financial Officer
703.653.3155
cgraham@orcc.com
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