MOUNTAIN VIEW, Calif., July 19 /PRNewswire-FirstCall/ -- CyberSource
Corporation (Nasdaq: CYBS), a leading provider of electronic payment and
risk management solutions, today announced financial results for its second
quarter ended June 30, 2007.
(Logo: http://www.newscom.com/cgi-bin/prnh/19990513/CYBRSOURCELOGO)
-- Revenue in the second quarter was a record $22.9 million, a
40% increase over the same period last year.
-- Net income for the second quarter of 2007 was $0.2 million on a GAAP
basis compared to $0.8 million for the second quarter of the prior
year. Non-GAAP net income, which excludes stock-based compensation
expense, the reduction in the tax allowance, the non-cash portion of
the tax provision, depreciation and amortization expense, and
certain non-recurring charges and income was $2.4 million compared
to $2.6 million for the second quarter of the prior year. A
reconciliation of the historical GAAP to non-GAAP measures is
attached.
-- GAAP earnings per share for the second quarter of 2007 was breakeven
compared to $0.02 in the same period last year. Non-GAAP earnings
per share for the second quarter was $0.07 compared to $0.07 in the
same period last year.
-- Transaction volumes increased to a record 269.2 million during the
quarter, a 35% increase over the 198.7 million transactions
processed in the same period last year.
-- CyberSource added approximately 2,100 new customers in the second
quarter of 2007.
Second quarter 2007 financial results
Revenue
-- CyberSource's second quarter revenue was $22.9 million, surpassing
prior guidance of $22.6 million and a 40% increase compared to
$16.4 million in the same period last year.
Gross profit
-- GAAP gross profit was $10.5 million, above prior guidance of
$10.3 million.
Operating expenses
-- GAAP operating expenses were $11.0 million, above the company's
prior guidance of $10.8 million.
Net income
-- GAAP net income was $0.2 million, above prior guidance of
$0.1 million.
-- Non-GAAP net income was $2.4 million, above prior guidance of
$2.1 million.
Earnings per share
-- GAAP earnings per share was breakeven, consistent with prior
guidance.
-- Non-GAAP earnings per share was $0.07, above prior guidance of
$0.06.
Balance sheet
-- Cash, cash equivalents, and short-term investments at the end of the
second quarter of 2007 were $61.2 million, compared to $50.6 million
at the end of the second quarter last year. During the second
quarter CyberSource generated $1.2 million in proceeds from employee
stock option exercises and used $0.4 million to repurchase 30,400
shares of the company's common stock.
Cash flow
-- Cash flow from operating activities was $2.9 million during the
second quarter of 2007, compared to $2.8 million during the same
period last year.
Other developments during the quarter
-- On June 18, 2007, CyberSource announced the signing of a definitive
agreement to acquire Authorize.Net Holdings, Inc. (Nasdaq: ANET) in
a stock and cash transaction valued at approximately $565 million,
as of the close of the NASDAQ Global Market System on June 15, 2007.
The transaction is expected to close early in the fourth quarter
2007.
-- Among the 2,100 customers signed during the second quarter were:
Craigslist, jetBlue Airways, The Kroger Company, PING Golf, Public
Broadcasting Service, Timberland Switzerland, and WinZip Computing.
-- Net new customers added this quarter increased the company's total
customer count to over 20,000.
-- Existing customers that added new services or renewed agreements
during the quarter included Ask.com, Duke University, Eastman Kodak,
Hearst Corporation, Seagate Technology, and UCLA.
-- Approximately 150 customers selected CyberSource for merchant
acquiring account services during the quarter. CyberSource now has
over 1,600 acquiring customers.
-- CyberSource's Managed Risk Service continues to attract new
customers. With this service, CyberSource experts work with
customers to define risk management goals, design and implement
solutions, develop quantified performance metrics, and manage the
order acceptance processes. During the second quarter, customers
who signed up for the CyberSource Managed Risk Service included a
large university, an online PC retailer, a worldwide fashion house,
a shoe retailer, and a currency conversion service.
-- CyberSource UK customers processed a record 46 million transactions
in the second quarter of 2007 which represents approximately 17% of
total transaction volume.
-- On April 25, 2007, CyberSource announced a major enhancement to its
global payment capabilities, expanding its international payment
reach and simultaneously adding anti-fraud and security measures. A
single connection with CyberSource now provides on-demand access to
processing services for credit cards, debit cards, direct debits,
and bank transfers reaching over 190 countries. The global payment
services are backed by new fraud screening capabilities that allow
merchants to effectively manage online payment risk in many
different international markets. The newly expanded services also
include secure payment data storage which allows merchants to
transact globally without storing sensitive payment data on their
systems.
Guidance for the third quarter and full year 2007:
-- For the third quarter ending September 30, 2007: Total revenue is
expected to be $23.8 million. Transaction and support revenue is
expected to be $22.4 million, of which $0.4 million is expected from
BidPay.com, Inc. Enterprise software revenue is expected to be
$0.6 million and professional services revenue is expected to be
$0.8 million. The company expects to process between 270 million
and 275 million transactions in the third quarter. GAAP gross
profit is expected to be $10.5 million, while GAAP operating
expenses are expected to be $12.4 million. The company expects to
record a GAAP net loss for the third quarter of $0.8 million, or a
loss per share of $0.02, based on a weighted average share count of
38 million shares. Non-GAAP net income for the third quarter is
expected to be $2.2 million and non-GAAP earnings per share is
expected to be $0.06 based on a weighted average share count of
38 million shares.
-- For the full year 2007: Not taking into account the acquisition of
Authorize.Net, which the company expects to close early in the
fourth quarter 2007, and excluding integration costs associated with
the acquisition that may be incurred, the company reiterates
guidance for the full year.
Public call/web cast details
CyberSource will host a public conference call today, July 19, 2007 at
4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss the second
quarter results. The call can be accessed in either of the following ways:
Live conference call
Dial 888-542-8515 (U.S. and Canada) 706-634-2163 (International).
The call's ID number is: 6115380. A taped replay of this call will
be available through July 30, 2007. The dial-in numbers for the
taped replay are 800-642-1687 (U.S.) 706-645-9291 (local or
international). The call's ID number is 6115380.
Live web cast
http://www.cybersource.com/cgi-bin/ir.pl
A replay of this web cast will remain available at this location
through July 30, 2007.
About CyberSource
CyberSource Corporation is a leading provider of electronic payment and
risk management solutions. CyberSource solutions enable electronic payment
processing for Web, call center, and POS environments. CyberSource also
offers industry leading risk management solutions for merchants accepting
card-not-present transactions. CyberSource Professional Services designs,
integrates, and optimizes commerce transaction processing systems. Over
20,000 businesses use CyberSource solutions, including half the companies
comprising the Dow Jones Industrial Average. The company is headquartered
in Mountain View, California, and has sales and service offices in Japan,
the United Kingdom, and other locations in the United States. For more
information, please visit CyberSource's web site at
http://www.cybersource.com or email info@cybersource.com.
GAAP versus non-GAAP Results and Guidance
In addition to financial results presented on a GAAP basis, the company
has provided non-GAAP measures of gross profit, operating expenses, net
income and earnings per share, which are adjusted to exclude certain non-
cash items. For purposes of this release, non-GAAP gross profit, operating
expenses, net income and earnings per share exclude stock based
compensation expense under SFAS 123R, the non-cash portion of the income
tax provision, a reduction in the tax allowance, depreciation and
amortization expense, and certain non-recurring charges and income. A
reconciliation of the historical GAAP to non-GAAP measures is attached with
the financial statements. The company believes that presentation of non-
GAAP financial measures may provide investors with additional meaningful
and relevant financial information. Management believes the non-GAAP
measures help indicate trends in the company's business, and management
uses the non-GAAP measures to plan and forecast future periods. Non-GAAP
information is not determined using GAAP and should not be considered
superior to or as a substitute for GAAP measures or data prepared in
accordance with GAAP. Furthermore, non-GAAP information may not be
comparable across companies, as other companies may use different non-GAAP
measures. The company does not provide guidance for certain financial
measures such as depreciation and stock-based compensation expense and as a
result, is not able to provide a reconciliation of GAAP and non-GAAP
financial measures for forward-looking data. The company intends to
calculate the various non-GAAP financial measures in future periods
consistent with the methodology used in the three and six months ended June
30, 2007, as presented in this release.
"Safe Harbor" statement under the Private Securities Litigation Reform
Act of 1995
Statements in this release that are not purely historical are forward-
looking statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934, including,
without limitation, statements regarding the company's expectations,
objectives, anticipations, plans, hopes, beliefs, intentions or strategies
regarding the future. Forward-looking statements in this release include,
without limitation, statements regarding: (1) Managed Risk services
continuing to attract new customers, (2) financial guidance including,
without limitation, those regarding revenue, transaction volume, gross
profit, operating expenses, net income, earnings per share, and deferred
tax assets; and, (3) the acquisition of Authorize.Net closing. Factors that
could cause actual results to differ materially from the forward looking
statements include risks and uncertainties such as changes in Generally
Accepted Accounting Principles and the application thereof, changes in
customer needs, new products and services offerings by the company and its
competitors, any unforeseen event or any unforeseen system failures, and
other risks indicated in our filings with the Securities and Exchange
Commission. Factors that could cause actual results to differ materially
from the forward looking statements include risks and uncertainties such as
changes in Generally Accepted Accounting Principles and the application
thereof, changes in customer needs, new products and services offerings by
the company and its competitors, any unforeseen event or any unforeseen
system failures, inability to obtain regulatory approval, inability to
obtain shareholder approval, and other risks indicated in our filings with
the Securities and Exchange Commission. It is important to note that actual
outcomes could differ materially from those in such forward- looking
statements. Readers should also refer to the documents filed by CyberSource
with the Securities and Exchange Commission, specifically the annual report
filed on Form 10-K for the year ended December 31, 2006, filed with the
Securities and Exchange Commission on March 13, 2007, and our quarterly
reports filed on Form 10-Q from time to time, all of which identify
important risk factors.
(C) 2007 CyberSource Corporation. All rights reserved. CyberSource is a
registered trademark in the U.S. and other countries. Bidpay is a
registered trademark in the U.S. All other brands and product names are
trademarks or registered trademarks of their respective companies.
(Tables follow)
CyberSource Corporation
GAAP Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
Revenues:
Transaction and
support $21,307 $14,511 $42,039 $28,106
Enterprise software 601 764 1,268 1,547
Professional services 985 1,123 1,711 2,329
Total revenues 22,893 16,398 45,018 31,982
Cost of revenues:
Transaction and
support 11,895 7,068 23,353 13,506
Enterprise software 70 56 135 114
Professional services 452 580 845 1,229
Total cost of
revenues 12,417 7,704 24,333 14,849
Gross profit 10,476 8,694 20,685 17,133
Operating expenses:
Product development 2,892 2,269 5,483 4,383
Sales and marketing 4,829 3,494 9,198 6,899
General and
administrative 3,255 2,562 6,047 4,499
Total operating
expense 10,976 8,325 20,728 15,781
Income (loss) from
operations (500) 369 (43) 1,352
Other income 19 400 72 400
Interest income 722 554 1,395 1,036
Income before income
taxes 241 1,323 1,424 2,788
Income tax provision 81 533 528 1,123
Net income $160 $790 $896 $1,665
Basic net income per share $- $0.02 $0.03 $0.05
Diluted net income per
share $- $0.02 $0.02 $0.04
Weighted average number
of shares used in
computing basic net
income per share 35,276 34,616 35,144 34,419
Weighted average number
of shares used in
computing diluted net
income per share 37,472 37,325 37,439 37,002
Non-GAAP Financial Metrics:
Gross profit $11,022 $9,086 $21,760 $17,817
Operating expenses $9,304 $7,040 $17,726 $13,770
Net income $2,445 $2,570 $5,466 $5,020
Basic net income per
share $0.07 $0.07 $0.16 $0.15
Diluted net income per
share $0.07 $0.07 $0.15 $0.14
CyberSource Corporation
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
GAAP gross profit $10,476 $8,694 $20,685 $17,133
Add FAS123R expense 198 146 380 256
Add depreciation
expense 326 231 651 411
Add amortization of
intangible assets 22 15 44 17
Non-GAAP gross profit $11,022 $9,086 $21,760 $17,817
GAAP operating
expenses $10,976 $8,325 $20,728 $15,781
Less FAS123R expense (1,554) (1,173) (2,763) (1,802)
Less depreciation
expense (106) (104) (215) (196)
Less amortization of
intangible assets (12) (8) (24) (13)
Non-GAAP operating
expenses $9,304 $7,040 $17,726 $13,770
GAAP net income $160 $790 $896 $ 1,665
Add FAS123R expense 1,752 1,319 3,143 2,058
Add non-cash tax
provision 67 503 493 1,060
Less settlement proceeds* - (400) - (400)
Add depreciation expense 432 335 866 607
Add amortization of
intangible assets 34 23 68 30
Non-GAAP net income $2,445 $2,570 $ 5,466 $ 5,020
GAAP basic net income
per share $- $0.02 $0.03 $0.05
Add FAS123R expense 0.05 0.04 0.09 0.06
Add non-cash tax
provision - 0.01 0.02 0.03
Less settlement proceeds* - (0.01) - (0.01)
Add depreciation expense 0.02 0.01 0.02 0.02
Add amortization of
intangible assets - - - -
Non-GAAP basic net
income per share $0.07 $0.07 $0.16 $0.15
GAAP diluted net income
per share $- $0.02 $0.02 $0.04
Add FAS123R expense 0.05 0.04 0.09 0.06
Add non-cash tax
provision - 0.01 0.02 0.03
Less settlement proceeds* - (0.01) - (0.01)
Add depreciation expense 0.02 0.01 0.02 0.02
Add amortization of
intangible assets - - - -
Non-GAAP diluted net
income per share $0.07 $0.07 $0.15 $0.14
* In April 2006, CyberSource received $400,000 as consideration for
dismissing a lawsuit that CyberSource filed against CardSystems
Solutions, Inc. in October 2005.
CyberSource Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
June 30, December 31,
2007 2006
Assets
Current assets:
Cash and cash equivalents $28,397 $21,701
Short-term investments 32,788 33,243
Accounts receivable, net 10,835 9,614
Prepaid expenses and other current assets 2,594 1,823
Deferred income taxes 1,827 2,320
Total current assets 76,441 68,701
Property and equipment, net 3,556 3,618
Intangible assets, net 2,777 2,845
Non-current deferred income taxes 9,629 9,629
Other noncurrent assets 2,280 2,250
Total assets $94,683 $87,043
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $363 $409
Other accrued liabilities 7,751 6,056
Deferred revenue 1,995 1,950
Total current liabilities 10,109 8,415
Total stockholders' equity 84,574 78,628
Total liabilities and stockholders' equity $94,683 $87,043
CyberSource Corporation
Consolidated Statements of Cash Flows
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $160 $790 $896 $1,665
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization 466 358 934 637
Income on investment
in joint venture (37) - (83) -
Stock-based
compensation 1,752 1,319 3,143 2,058
Loss on disposal of
property and equipment 8 - 8 -
Changes in operating
assets and
liabilities:
Accounts receivable (563) 402 (1,221) 116
Prepaid expenses
and other current
assets (474) 288 (771) 1,166
Deferred income
taxes 67 503 493 1,060
Other noncurrent
assets 6 (280) 53 (560)
Accounts payable (80) 14 (46) (37)
Accrued liabilities 1,582 (590) 1,695 (1,377)
Deferred revenue (26) 16 45 127
Net cash provided by
operating activities 2,861 2,820 5,146 4,855
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property
and equipment (337) (754) (812) (1,063)
Acquisition of BidPay.com - - - (1,990)
Purchases of short-term
investments (21,085) (10,140) (35,868) (19,580)
Maturities of short-term
investments 20,265 9,780 36,331 18,872
Net cash used in
investing activities (1,157) (1,114) (349) (3,761)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from issuance
of common stock 1,193 744 2,163 2,773
Repurchase of common
stock (363) (1,123) (363) (1,123)
Net cash provided by
(used in) financing
activities 830 (379) 1,800 1,650
Effect of exchange rate
changes on cash 110 156 99 166
Increase in cash and cash
equivalents 2,644 1,483 6,696 2,910
Cash and cash equivalents
at beginning of period 25,753 15,810 21,701 14,383
Cash and cash equivalents
at end of period $28,397 $17,293 $28,397 $17,293
SOURCE CyberSource Corporation
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