Online Resources Corporation (Nasdaq: ORCC), a leading provider
of online financial services, today reported financial and
operating results for the three months and full year ended December
31, 2010. For the fourth quarter:
- Revenue was $37.8 million, compared to
$38.2 million in the fourth quarter of 2009.
- Ebitda, a non-GAAP measure, was $6.3
million, compared to $9.3 million in the same quarter of 2009.
- Adjusted Ebitda, a non-GAAP measure
that adjusts Ebitda for equity compensation expense and other
expense, was $7.0 million, compared to $10.2 million in the prior
year period.
- Net loss available to common
stockholders was $2.0 million, or $0.06 per share, compared to $1.1
million or $0.04 per share in the fourth quarter of 2009.
- Core net income, a non-GAAP measure,
was $1.0 million, or $0.03 per diluted share, compared to $1.8
million, or $0.06 per diluted share, in the same quarter of
2009.
For the full year 2010, Online Resources reported revenue of
$149.5 million, compared to $151.9 million in 2009; Ebitda of $28.0
million, compared to $33.6 million in 2009; adjusted Ebitda of
$30.9 million, compared to $37.7 million in 2009; net loss
available to common stockholders of $0.14 per share, compared to
$0.14 per share in 2009; and core net income of $0.19 per diluted
share, compared to $0.29 per diluted share in 2009.
Long-Term Strategy
The Company’s Board of Directors announced that, after careful
consideration, it has terminated its evaluation of potential
business combinations and is not actively pursuing alternatives to
the Company’s long-term strategic growth plan.
“The Board of Directors determined that the completion of a
transaction on acceptable terms was unlikely at this time and that
the best course of action to achieve the highest shareholder value
is to continue to aggressively pursue our long-term strategic
growth plan,” said Joseph L. Cowan, president and chief executive
officer of Online Resources. “We have identified clear objectives
to re-focus and maximize our technology, products and
organizational structure to drive revenue and earnings growth. We
are bullish about the opportunities that lie ahead for Online
Resources.”
Details of the Company’s long-term strategic growth plan will be
provided during a conference call and web cast to be hosted by
management at 4:30 p.m. ET today.
Outlook for First Quarter 2011
Online Resources provided the following guidance for the first
quarter of 2011. These statements are forward-looking, and actual
results may differ materially.
- Revenue for the first quarter is
expected to be between $38.2 and $38.7 million.
- Ebitda1,2 for the quarter is expected
to be between $4.4 and $4.7 million
- Adjusted Ebitda1,2 for the quarter is
expected to be between $5.0 and $5.3 million.
- Core net loss1,3,4,5 is expected to be
between $(0.02) and $(0.01) per share.
The above guidance does not include costs associated with the
potential business combination evaluation process or any
restructuring costs that may be incurred during the quarter.
(1)
The Company uses non-GAAP (Generally
Accepted Accounting Principles) financial measures, including
Ebitda, adjusted Ebitda and core net income, to evaluate
performance and establish goals. It believes that these measures
are valuable to investors in assessing the Company’s operating
results when viewed in conjunction with GAAP results.
(2)
Ebitda is defined as net income before
interest, taxes, depreciation and amortization expense. Adjusted
Ebitda is defined as net income before interest, taxes,
depreciation and amortization, and equity compensation expense and
other expense.
(3)
Core net loss is defined as net income
available to common stockholders before, on a pre-tax basis unless
otherwise noted, the amortization of acquisition-related intangible
assets, equity compensation expense, income tax benefit or expense
from the change in valuation allowance, income (costs) related to
the fair market valuation of certain derivatives and mark-to-market
investments, preferred stock accretion related to the redemption
premium and all other non-recurring charges. Some or all of these
items may not be applicable in any given reporting period.
(4)
Excludes estimates for amortization of
acquisition-related intangible assets of $1.3 million, equity
compensation expense of $0.6 million and preferred stock accretion
related to the redemption premium of $0.4 million.
(5)
Core net loss per share calculated using
estimated shares outstanding of 31.5 million.
Conference Call and Web Cast: Results and Strategic
Overview
Management will host a conference call to discuss fourth quarter
and full year results and an overview of the Company’s long-term
growth strategy at 4:30 p.m. ET today. Management will refer to a
presentation during the strategic portion of the call that is
labeled “Strategic Growth Plan,” which is available in the Press
Room and the Investors sections of our web site at orcc.com.
Alternatively, investors may click on the web cast link in the
Investors section of the web site to both listen to the call and
view the slides.
The conference call dial-in number is (877) 303-6496 for
domestic participants and (707) 287-9318 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 March 15th until
midnight on Tuesday, March 22nd. For the conference call playback,
dial (800) 642-1687 for domestic participants and (706) 645-9291
for international participants and enter code 51158192. For web
cast replay, go to the “Investors” section of www.orcc.com.
About Online Resources
Online Resources (Nasdaq: ORCC) powers financial interactions
between millions of consumers and the Company’s financial
institution and biller clients. Backed by its proprietary real-time
payments gateway that links banks directly with billers, the
Company provides web and phone-based financial services, electronic
payments and marketing services to drive consumer adoption. Founded
in 1989, Online Resources is the largest financial technology
provider dedicated to the online channel. For more information,
visit www.orcc.com.
This press release provided by Online Resources Corporation (as
well as other written and oral statements made by the company from
time to time) contains forward-looking statements which are based
on our management's current expectations and beliefs, and on a
number of assumptions concerning future events made with
information that is currently available. The words "will," "would,"
"may," "should," "estimate," "project," "forecast," "intend,"
"expect," "believe," "target," "designed," "plan," and similar
expressions are intended to identify forward-looking statements.
Readers are cautioned not to place undue reliance on such
forward-looking statements, which are not a guarantee of any
results or performance and are subject to a number of known and
unknown risks, uncertainties and other factors (including those
which are outside of Online Resources’ control) which could cause
actual performance or results to differ materially and adversely
from any results or performance expressed or implied by such
forward-looking statements. Certain factors that might cause such a
difference include, but are not limited to: our history of losses
and anticipation of future losses; potential fluctuations in our
operating results; our dependence on the marketing efforts of third
parties; the potential loss of one or more material clients; our
potential need for additional capital; our potential inability to
prevent systems failures and security breaches; our potential
inability to expand our services and related products in the event
of a substantial increase in demand for such services and products;
competition in our markets; our ability to attract and retain
skilled personnel; our reliance on patents and other intellectual
property; potential change in the rate of user adoption of the
products and services we offer; our exposure to consolidation in
the financial services industry; and government regulation
affecting our business and client base. For a more detailed
description of the factors that could cause such a difference,
please refer to Online Resources’ filings with the Securities and
Exchange Commission, including the information under the heading
"Risk Factors" in our Annual Report on Form 10-K filed with the SEC
on March 15, 2011. Online Resources assumes no obligation to update
or supplement any forward-looking statements.
Online Resources Corporation
Quarterly Operating
Data1
(Unaudited)
1Q09 2Q09 3Q09
4Q09 1Q10 2Q10
3Q10 4Q10 BANKING SERVICES Payment
Services Revenue $17.5 $17.2 $17.1 $16.7 $16.4 $15.7
$15.3 $14.7 Bill Payment Transactions 39.0 37.3 38.5
37.8 35.9 36.6 37.9 37.7 Other Revenue $5.4 $5.9 $5.7 $7.7
$7.0 $6.5 $7.0 $7.7
eCOMMERCE SERVICES Payment
Services - User Paid Revenue $6.5 $5.8 $4.7 $4.1 $4.8 $4.1 $3.9
$3.9 Bill Payment Transactions 1.7 1.6 1.4 1.2 1.4 1.3 1.4 1.4
Payment Services - Biller Paid Revenue $7.1 $7.0 $7.2 $7.3
$8.6 $8.4 $8.5 $8.8 Bill Payment Transactions 12.7 13.5 13.7 14.2
15.4 15.9 16.6 17.9 Other Revenue $2.7 $1.9 $1.9 $2.4 $1.9
$1.7 $2.0 $2.6
OTHER KEY METRICS Internet Banking
Adoption Rate 38.3 % 40.8 % 43.2 % 46.0 % 45.2 % 47.9 % 49.4 % 49.4
% Banking Billpay Adoption Rate 10.4 % 10.7 % 11.1 % 11.4 % 11.6 %
11.9 % 12.2 % 13.1 % Enterprise Users 13.8 14.0 14.3 14.8 14.7 15.0
15.8 16.6
Notes:
1.
In millions except adoption rates.
Online Resources Corporation
Consolidated Statements of
Operations
(In thousands, except per share
data)
THREE MONTHS ENDED TWELVE MONTHS
ENDED DECEMBER 31, DECEMBER 31, 2010
2009 2010 2009
(Unaudited) (Unaudited) Revenues: Account
presentation services $ 2,733 $ 2,321 $ 9,408 $ 8,198 Payment
services 27,431 28,165 113,007 118,291 Relationship management
services 1,909 2,107 8,408 8,162 Professional services and other
5,704 5,653 18,690
17,212 Total revenues 37,777 38,246 149,513 151,863
Expenses: Cost of revenues 20,547 18,764
78,953 77,260 Gross profit
17,230 19,482 70,560 74,603 General and administrative 8,718
7,576 32,146 31,140 Selling and marketing 4,875 4,796 19,532 20,747
Systems and development 2,498 2,763
9,901 9,394
Total expenses
16,091 15,135 61,579
61,281 Income from operations 1,139 4,347 8,981
13,322 Other income (expense) Interest income 26 13 65 117
Interest expense (675 ) (965 ) (226 ) (4,265 ) Other income
(expense) 66 - (32 ) 91
Total other income (expense) (583 ) (952 )
(193 ) (4,057 ) Income before tax provision 556 3,395
8,788 9,265 Income tax provision 130 2,185
3,412 4,135 Net income 426 1,210
5,376 5,130 Preferred stock accretion 2,437
2,347 9,560 9,208 Net income
(loss) available to common stockholders $ (2,011 ) $ (1,137 ) $
(4,184 ) $ (4,078 ) Net income (loss) available to common
stockholders per share: Basic $ (0.06 ) $ (0.04 ) $ (0.14 ) $ (0.14
) Diluted $ (0.06 ) $ (0.04 ) $ (0.14 ) $ (0.14 ) Shares
used in calculation of net income (loss) available to common
stockholders per share: Basic 31,264 30,092 30,954 29,947 Diluted
31,264 30,092 30,954 29,947
Online Resources Corporation
Condensed Consolidated Balance
Sheets
(In thousands)
DECEMBER 30, DECEMBER 31,
2010 2009 (Unaudited) ASSETS Current
assets: Cash and cash equivalents $ 29,127 $ 22,907 Accounts
receivable, net 20,410 17,457 Deferred tax asset, current portion
3,893 7,477 Prepaid expenses and other current assets 5,039
4,043 Total current assets 58,469 51,884 Property and
equipment, net 25,145 25,561 Deferred tax asset, less current
portion 22,536 22,490 Goodwill 181,516 181,516 Intangible assets
14,157 19,972 Deferred implementation costs, less current portion,
and other assets 8,762 7,067 Total assets $ 310,585 $
308,490
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable $ 2,410 $ 2,008 Accrued expenses
6,293 3,739 Notes payable, senior secured debt, current portion
27,188 8,250 Deferred revenues, current portion, and other current
liabilities 8,232 6,820 Total current liabilities
44,123 20,817 Notes payable, senior secured debt, less
current portion 9,563 40,500 Deferred revenues, less current
portion, and other long-term liabilities 6,956 6,888
Total liabilities 60,642 68,205 Redeemable convertible
preferred stock 110,182 100,623 Stockholders' equity
139,761 139,662 Total liabilities and stockholders' equity $
310,585 $ 308,490
Online Resources Corporation
Condensed Consolidated Statements of
Cash Flows
(In thousands)
TWELVE MONTHS ENDED DECEMBER 31, 2010
2009 (Unaudited) Operating
activities Net income $ 5,376 $ 5,130 Adjustments to reconcile
net loss to net cash provided by operating activities: Deferred tax
expense 3,538 3,568 Depreciation and amortization 19,052 20,236
Equity compensation expense 2,853 4,201 Write off and amortization
of debt issuance costs 310 285 Loss on disposal of assets - (14 )
Provision for losses on accounts receivable 200 77 Loss on
investments - (91 ) Change in fair value of theoretical swap
derivative (1,336 ) (106 ) Changes in certain other assets and
liabilities (105 ) (79 ) Net cash provided by
operating activities 29,888 33,207
Investing activities
Capital expenditures (12,741 ) (9,260 ) Sale of short-term
investments - 2,146 Net cash used in
investing activities (12,741 ) (7,114 )
Financing activities
Net proceeds from issuance of common stock 1,093 568 Repayment of
2007 notes (12,000 ) (26,687 ) Repayment of capital lease
obligations (20 ) (36 ) Net cash used in financing
activities (10,927 ) (26,155 ) Net increase
(decrease) in cash and cash equivalents 6,220 (62 ) Cash and cash
equivalents at beginning of year 22,907 22,969
Cash and cash equivalents at end of period $ 29,127 $
22,907
Online Resources Corporation
Reconciliation of Non-GAAP
Measures
(In thousands, except per share
data)
THREE MONTHS ENDED TWELVE MONTHS
ENDED DECEMBER 30, DECEMBER 30, 2010
2009 2010 2009
(Unaudited) (Unaudited) Reconciliation of ebitda
(See Note 1): Net income $ 426 $ 1,210 $ 5,376 $ 5,130
Depreciation and amortization (incl. loss on disposal of assets)
5,069 4,976 19,052 20,222 Interest expense, net 649 952 161 4,148
Income tax provision 130 2,185
3,412 4,135 Ebitda (See Note 1) $ 6,274
$ 9,323 $ 28,001 $ 33,635
Reconciliation of adjusted ebitda (See Note 2): Net income $
426 $ 1,210 $ 5,376 $ 5,130 Depreciation and amortization (incl.
loss on disposal of assets) 5,069 4,976 19,052 20,222 Equity
compensation expense 756 894 2,851 4,201 Other (income) expense 583
952 193 4,057 Income tax provision 130 2,185
3,412 4,135
Adjusted Ebitda (See Note 2)
$ 6,964 $ 10,217 $ 30,884 $ 37,745
Reconciliation of core net income (See Note 3 and Note
4): Net income (loss) available to common stockholders $ (2,011
) $ (1,137 ) $ (4,184 ) $ (4,078 ) Preferred stock accretion
related to redemption premium 408 400 1,622 1,590 Change in fair
value of theoretical swap derivative 340 (114 ) (1,336 ) (106 )
Change in fair value of mark to market investments - - - (91 )
Change in tax valuation allowance (59 ) 2 123 36 Restructuring
costs, net of tax 201 - 952 - Equity compensation expense 756 894
2,851 4,201 Amortization of intangible assets 1,316
1,779 5,949 7,697 Core
net income (see Note 3) $ 951 $ 1,824 $ 5,977
$ 9,249
Reconciliation of core net income per
share (See Note 4): Diluted net income (loss) available to
common stockholders $ (0.06 ) $ (0.04 ) $ (0.14 ) $ (0.14 )
Preferred stock accretion related to redemption premium 0.01 0.01
0.05 0.05 Change in fair value of theoretical swap derivative 0.01
- (0.04 ) - Change in fair value of mark to market investments - -
- - Change in tax valuation allowance - - - - Restructuring costs,
net of tax 0.01 - 0.03 - Equity compensation expense 0.02 0.03 0.09
0.14 Amortization of intangible assets 0.04 0.06 0.19 0.26 Other,
including impact of treasury method and rounding -
- 0.01 (0.02 ) Core net income
per share $ 0.03 $ 0.06 $ 0.19 $ 0.29
Notes:
1.
Ebitda is a non-GAAP measure we define as
net income before interest, taxes, depreciation and amortization
expense.
2.
Adjusted ebitda is a non-GAAP measure we
define as net income before interest, taxes, depreciation and
amortization and equity compensation expense and other expense.
3.
Core net income is a non-GAAP measure we
define as net income available to common stockholders before the
amortization of acquisition-related intangible assets, equity
compensation expense, income tax benefit or expense from the change
in valuation allowance, income (costs) related to the fair market
valuation of certain derivatives and mark to market investments,
preferred stock accretion related to the redemption premium and all
other non-recurring charges. Some or all of these items may not be
applicable in any given reporting period.
4.
Restructuring costs, net of tax consist of
severance and consulting costs
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