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[S1 LOGO]
EXHIBIT 99.1
CONTACTS:
John Chalk Marcy Theobald
S1 Corporation S1 Corporation
404-812-6671 404-812-6254
[email protected] [email protected]
S1 CORPORATION REPORTS RECORD SECOND QUARTER 2000 RESULTS
HIGHLIGHTS:
- SECOND QUARTER REVENUES OF $59.1 MILLION INCREASED 277% OVER SECOND
QUARTER 1999 AND 17% OVER FIRST QUARTER 2000.
- TOTAL GROSS MARGIN OF $26.1 MILLION IMPROVED 285% OVER SECOND QUARTER 1999
AND 45% OVER FIRST QUARTER 2000.
- EXCLUDING MERGER-RELATED COSTS AND OTHER NON-CASH CHARGES, EBITDA TOTALED
($14.6) MILLION OR ($0.27) PER SHARE IN Q200.
- S1 DATA CENTER END USERS TOTALED 552,000 AT THE END OF JUNE 2000, UP 382%
OVER SECOND QUARTER 1999 AND UP 34% OVER FIRST QUARTER 2000.
- CASH AND INVESTMENT SECURITIES TOTALED $285 MILLION AT END OF THE QUARTER.
- OVER 900 FINANCIAL INSTITUTIONS NOW USING S1 SOFTWARE PRODUCTS.
- TOTAL END-USERS OF S1 PRODUCTS OVER 4 MILLION.
ATLANTA, AUGUST 1, 2000 - S1 Corporation (NASDAQ:SONE), a leading
provider of Internet-based solutions for the financial services industry,
reported revenues of $59.1 million for the quarter ended June 30, 2000, a 277%
increase over the $15.7 million recorded for the prior year quarter. Excluding
merger related and non-cash charges, the Company posted an EBITDA (earnings
before interest, taxes, depreciation and amortization) loss of $14.6 million or
$0.27 per share.
"A significant component of our strategy has been to leverage our
global infrastructure and partner network to continue to expand our market
share, product breadth and business model around the world in areas, such as
Europe, Latin America, Asia Pacific and Japan, where the adoption rates of
Internet-based and wireless eFinance are rapidly increasing," said James S.
Mahan III, CEO of S1 Corporation. "We will continue to execute on this
strategy, as well as maximize the opportunities here in the United States in
the large and community financial service marketplace, to maintain our
leadership position and the momentum generated by the successes of our core
financial service operations, our subsidiary businesses and our increasing
network of strategic alliances."
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Software license revenues in the second quarter were $15.3 million, or
558% higher than the prior year quarter. Professional services revenues
increased to $37.2 million in the second quarter 2000, a 241% increase over the
prior year quarter. Data Center revenues of $5.3 million in the second quarter
were 160% above the second quarter 1999. The Company recorded a 34% quarterly
sequential increase in the number of end users processed through the S1 Data
Center, an increase of 382% over the second quarter 1999. As of June 30, 2000,
the total number of end users in the Data Center was 552,000.
FINANCIAL SUMMARY:
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
SECOND QUARTER
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2000 1999
---------- -----------
<S> <C> <C>
Revenues $ 59,084 $ 15,675
Direct costs 32,981 8,892
------ -----
Gross margin $ 26,103 $ 6,783
EBITDA(1) ($ 14,574) ($ 962)
EBITDA per share(1) ($ 0.27) ($ 0.04)
</TABLE>
(1) Excludes merger-related costs, stock option compensation expense, acquired
in-process research and development and non-cash marketing expense.
During the second quarter, the $59.1 million in revenues were derived
from the following sources:
<TABLE>
<CAPTION>
SECOND QUARTER 2000
-------------------
Licenses Services Data Center Other Total
-------- -------- ----------- ----- -----
<S> <C> <C> <C> <C> <C>
Financial Institution Division $ 7,652 $33,224 $4,733 $1,207 $46,816
Edify Call Center Technology Division 7,678 4,006 11,684
VerticalOne Division 584 584
Total $15,330 $37,230 $5,317 $1,207 $59,084
<CAPTION>
FIRST QUARTER 2000
------------------
Licenses Services Data Center Other Total
--------- -------- ----------- ------ -----
<S> <C> <C> <C> <C> <C>
Financial Institution Division $ 3,666 $30,969 $3,193 $1,761 $39,589
Edify Call Center Technology Division 7,053 3,413 10,466
VerticalOne Division 314 314
Total $10,719 $34,382 $3,507 $1,761 $50,369
</TABLE>
License revenues increased from $10.8 million in the first quarter
2000 to $15.3 million in the second quarter of 2000, primarily as a result of
the inclusion of $3.3 million in license sales from the acquisition of Q Up
during the quarter. Data Center revenues increased to $5.3 million, or 52% over
the
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first quarter of 2000 due to growth in financial institutions and end users now
running in S1 Data Centers.
"While we were pleased with the sequential growth in the Edify Call
Center Technology Division, the international operations and the incremental
revenues associated with the two acquisitions completed during the second
quarter, domestic competitive pricing pressures impacted the revenue growth
both in the Americas and in the VerticalOne subsidiary," stated Robert F.
Stockwell, CFO of S1 Corporation. "As we focus on maintaining our leadership
position in the account aggregation and the large domestic financial
institution spaces, the existing pricing pressures could have a future impact
on revenues and gross margins."
The Company's gross margin for the second quarter 2000 was $26.1
million, or 44% compared to 36% in the immediate prior quarter and 43% for the
second quarter of 1999. The Company's software license margin improved from 86%
in the first quarter of 2000 to 92% in the second quarter of 2000. The increase
in the software license margin was primarily driven by a change in the product
mix sold through the Edify Call Center Technology Division. The professional
services margin increased to 31% in the second quarter versus 25% in the first
quarter of 2000 as a result of increasing services margins across all S1
Divisions. S1's Data Center margin was 10% in the second quarter 2000 compared
to 4% in the first quarter 2000. While data center revenues grew at a strong
pace, costs also increased as a result of the consolidation of the Data Center
operations of the two acquisitions completed during the quarter. S1 is
currently in the process of integrating the acquired Data Center operations
into its existing Data Center facility which should result in future cost
efficiencies in the operation.
In the second quarter 2000, S1 incurred a net loss of $153 million, or
$2.82 per share, compared to a net loss of $2.2 million, or $0.08 per share,
for the second quarter 1999. The second quarter loss includes $126.5 million or
$2.34 per share of amortization of acquisition intangibles and a charge for
acquired in-process research and development. At the end of the second quarter,
the Company had cash and marketable securities of $285 million available to
fund operations.
OPERATIONAL REVIEW HIGHLIGHTS:
ACQUISITIONS
- During the second quarter S1 completed its acquisitions of Davidge Data
Systems and Q UP Systems.
STRATEGIC ALLIANCES
- S1 and IBM entered into an alliance to jointly market and sell the S1
Corporate Suite, with IBM expanding its financial services e-business
practice to include S1 specialists focused on providing consulting,
customization and integration services.
- S1 received equity investments totaling US$244 million from five of the
world's largest financial service providers: Zurich Financial Services
Group (SWX:ZUAN and LSE:ADZ), Allianz AG (DAX:G.ALL), FleetBoston
Financial Corporation (NYSE:FBF), J.P. Morgan (NYSE:JPM) and a large,
US-based insurance company.
- S1 formed an alliance with LendingTree to integrate LendingTree's
Lend-X(sm) technology into the S1 Consumer Suite platform to provide
enhanced Internet-based loan management capabilities.
PRODUCT UPDATE
- S1 launched its consumer insurance application, making the S1 Consumer
Suite the industry's first solution that provides financial institutions
with fully integrated banking, insurance and brokerage Internet-based
applications.
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VERTICALONE MILESTONES
- VerticalOne signed FreeRealTime, INTRUST Bank, YouDecide.com, CNBC,
LifeMinders, Centura Banks, and Internet Appliance Network to distribute
its service, bringing the total of its live destination partners to 30. At
June 30, 2000, VerticalOne had more than 131,000 end users live on its
service.
EDIFY MILESTONES
- Edify added Wireless Application Protocol (WAP) technology to its Internet
application. Edify signed Australia and New Zealand Banking Group Limited
(ANZ) as its first customer scheduled to integrate the company's wireless
Internet application into its existing Internet banking platform. Edify
also announced that its wireless Internet solutions now include support
for Short Messaging Services (SMS), a feature of the GSM protocol, the
world's most widely deployed protocol for mobile telephones and devices.
Q UP SYSTEMS
- During the second quarter, Q Up announced several product developments,
including the launch of its e-Commerce Portal, a partnership with
InsureRate, and its plans to distribute VerticalOne's account aggregation
service within Q Up's solutions.
DATA CENTER
- S1's European Data Center remains on track to open in the fourth quarter
2000. In addition, OCBC's finatiQ, Asia's first Internet-only bank, is
live in S1's Asia Pacific Data Center. During the quarter, VerticalOne
hosting was moved to the S1 Data Center.
CUSTOMERS
- S1 had 72 new clients in production at June 30, 2000 and 165 customer
projects are currently underway for 119 institutions with 35 new projects
targeted for the Data Center. In total, S1 had more than four million end
users worldwide at the end of the second quarter 2000.
ABOUT S1 CORPORATION
S1 (NASDAQ:SONE), the pioneer of Internet banking, is today's global
provider of innovative Internet-based financial services solutions. S1 offers a
broad range of applications that empower financial organizations to increase
revenue, strengthen customer relationships and gain competitive advantage by
meeting the evolving needs of their customers across various lines of business,
market segments and delivery channels. Through its professional services
organization, S1's applications can be implemented in-house or outsourced to
the S1 Data Center. Additional information about S1 is available at
http://www.s1.com.
The Company will hold a conference call to discuss second quarter
2000 results at 5:00 PM EST on August 1, 2000. Simultaneous to the call,
management's presentation will be available on the Web at www.s1.com/Q2. S1
will also broadcast the call over the Internet at VCall and Yahoo Finance. To
listen to the conference call, go to VCall:
- http://www.vcall.com/NASApp/VCall/ConsoleFrameset?ID=3341
Or Yahoo Finance:
- http://webevents.broadcast.com/financecalls/event/index.asp?EarningsID=1276
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FORWARD-LOOKING STATEMENTS
This press release includes statements and other matters which are
forward-looking and subject to a number of risks and uncertainties that could
cause actual results to differ materially from expectations. The statements
contained in this release that are forward-looking are based on current
expectations and are subject to risks and uncertainties that could cause actual
results to differ materially from the results contemplated by the
forward-looking statements. These risks and uncertainties include, but are in
no way limited to:
- the possibility that the anticipated benefits from our acquisition
transactions will not be fully realized;
- the possibility that costs or difficulties related to our integration of
acquisitions will be greater than expected;
- our dependence on the timely development, introduction and customers
acceptance of new internet services;
- rapidly changing technology and shifting demand requirements and internet
usage patterns;
- other risks and uncertainties, including the impact of competitive
services, products and prices, the unsettled conditions in the internet and
other high-technology industries and the ability to attract and retain key
personnel; and
- other risk factors as may be detailed from time to time in our public
announcements and filings with the SEC, including the Company's annual
report on Form 10-K for the year ended December 31, 1999.
In addition, nothing in the press release should be viewed as an update or
comment on earlier forward looking statements provided by S1 Corporation. As
noted above, because actual results, performance or developments may differ
materially from forward-looking statements, S1 will not update such statements
over the course of future periods.
# # #
3390 Peachtree Rd., Ste. 1700
Atlanta, Georgia 30326
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S1 CORPORATION
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
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2000 1999 2000 1999
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<S> <C> <C> <C> <C>
REVENUES:
Software licenses $15,330 $2,330 $26,049 $4,638
Professional services 37,230 10,911 71,612 18,633
Data center 5,317 2,044 8,824 3,591
Other 1,207 390 2,968 813
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Total revenues 59,084 15,675 109,453 27,675
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DIRECT COSTS:
Software licenses 1,226 99 2,747 232
Professional services 25,865 6,431 51,749 11,386
Data center 4,806 2,029 8,158 3,716
Other 1,084 333 2,678 677
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Total direct costs 32,981 8,892 65,332 16,011
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Gross margin 26,103 6,783 44,121 11,664
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OPERATING EXPENSES:
Selling and marketing 13,396 1,174 24,802 2,253
Product development 15,830 4,439 30,822 8,760
General and administrative 11,451 2,132 20,802 3,694
Depreciation and amortization 6,129 1,267 9,533 2,461
Stock option compensation expense 1,599 107 2,724 214
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C>
Marketing cost from warrants issued 362 - 4,962 -
Merger related costs 6,344 250 13,158 250
Acquired in-process research and development 14,100 - 14,100 -
Amortization of acquisition intangibles 112,386 103 189,513 206
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Total operating expenses 181,597 9,472 310,416 17,838
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Operating loss (155,494) (2,689) (266,295) (6,174)
Interest and investment income 2,498 527 38,091 754
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NET LOSS $(152,996) $(2,162) $(228,204) $(5,420)
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EBITDA per share (1) (0.27) (0.04) (0.62) (0.12)
Loss per common share from depreciation, amortization and other
charges (2.60) (0.06) (4.47) (0.12)
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Loss per common share from operations (2.87) (0.10) (5.09) (0.24)
Interest and investment income per share 0.05 0.02 0.73 0.03
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Net loss per common share $(2.82) $(0.08) $(4.36) $(0.21)
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WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 54,167,563 26,051,942 52,332,810 25,378,877
COMMON SHARES OUTSTANDING AT END OF PERIOD 54,988,454 27,557,074 54,988,454 27,557,074
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, DEC. 31,
2000 1999
---------------------------
<S> <C> <C>
Cash and investment securities $284,519 $130,604
Accounts receivable, net 81,659 70,136
Deferred revenue 34,513 29,752
</TABLE>
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(1) Excludes merger related costs, stock option compensation expense, acquired
in-process research and development and non-cash marketing expense.
S1 CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE, PER SHARE, END-USER AND PER END-USER DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
6/30/1999 9/30/1999 12/31/1999 3/31/2000 6/30/2000
----------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUES:
Software licenses $2,330 $2,260 $12,152 $10,719 $15,330
Professional services 10,911 14,769 23,030 34,382 37,230
Data center 2,044 2,072 3,195 3,507 5,317
Other 390 5,698 2,039 1,761 1,207
----------------------------------------------------
Total revenues 15,675 24,799 40,416 50,369 59,084
----------------------------------------------------
DIRECT COSTS:
Software licenses 99 99 311 1,521 1,226
Professional services 6,431 8,480 16,461 25,884 25,865
Data center 2,029 2,163 3,129 3,352 4,806
Other 333 4,425 2,010 1,594 1,084
--------------------------------------------------
Total direct costs 8,892 15,167 21,911 32,351 32,981
----------------------------------------------------
Gross margin 6,783 9,632 18,505 18,018 26,103
----------------------------------------------------
OPERATING EXPENSES:
Selling and marketing 1,174 1,153 8,763 11,406 13,396
Product development 4,439 5,221 10,055 14,992 15,830
General and administrative 2,132 3,291 6,928 9,351 11,451
Depreciation and amortization 1,267 1,465 2,998 3,404 6,129
Stock option compensation expense 107 107 797 1,125 1,599
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C> <C>
Marketing cost from warrant
issued - - 715 4,600 362
Merger related costs 250 1,851 6,643 6,814 6,344
Acquired in-process research and
development - - 59,300 - 14,100
Amortization of acquisition
intangibles 103 - 40,000 77,127 112,386
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Total operating expenses 9,472 13,088 136,199 128,819 181,597
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Operating loss (2,689) (3,456) (117,694) (110,801) (155,494)
Interest and investment income 527 777 706 35,593 2,498
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NET LOSS $(2,162) $(2,679) $(116,988) $(75,208) $(152,996)
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EBITDA (1) $(962) $(33) $(7,241) $(17,731) $(14,574)
EBITDA per share (1) $(0.04) $(0.00) $(0.19) $(0.35) $(0.27)
Loss per common share from depreciation,
amortization and other charges (0.06) (0.13) (2.88) (1.85) (2.60)
----------------------------------------------------------
Loss per common share from operations
(0.10) (0.13) (3.07) (2.20) (2.87)
Interest and investment income per share 0.02 0.03 0.02 0.71 0.05
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Net loss per common share $(0.08) $(0.10) $(3.05) $(1.49) $(2.82)
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WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 26,051,942 27,628,446 38,339,221 50,456,210 54,167,563
COMMON SHARES OUTSTANDING AT END OF PERIOD 27,557,074 27,701,489 48,831,243 51,163,353 54,988,454
GROSS MARGIN PERCENTAGES:
Software licenses $2,231 $2,161 $11,841 $9,198 $14,104
Percentage 96% 96% 97% 86% 92%
Professional services $4,480 $6,289 $6,569 $8,498 $11,365
Percentage 41% 43% 29% 25% 31%
Data center $15 $(91) $66 $155 $511
Percentage 1% (4%) 2% 4% 10%
</TABLE>
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<TABLE>
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<S> <C> <C> <C> <C> <C>
Gross margin before other revenue $6,726 $8,359 $18,476 $17,851 $25,980
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Percentage 44% 44% 48% 37% 45%
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Other
$57 $1,273 $29 $167 $123
Percentage 15% 22% 1% 9% 10%
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Total gross margin $6,783 $9,632 $18,505 $18,018 $26,103
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Percentage 43% 39% 46% 36% 44%
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DATA CENTER REVENUE PER QUARTERLY AVERAGE END-USERS $18.34 $14.52 $15.45 $12.43 $11.04
NUMBER OF DATA CENTER END-USERS 114,500 163,000 226,000 412,000 552,000
NUMBER OF DATA CENTER END-USER ACCOUNTS 181,000 254,000 347,000 570,000 709,000
</TABLE>
(1) Excludes merger related costs, stock option compensation expense, acquired
in-process research and development and non-cash marketing expense.
SOURCE: S1 Corporation
