Despite a first-quarter earnings drop, Online Resources Corp. said its bill payment volume had improved, and it highlighted new projects that could improve earnings next year.
The Chantilly, Va., online banking and bill payment provider said Monday that its revenue rose 11% from a year earlier, to $16.7 million.
Net income fell 66%, to $800,000. However, Online Resources said it had changed its accounting practices, and it provided a "core net income" figure, which it said offers a more accurate comparison with past results. Its core net income fell 34%, to $1.5 million.
"It was one of the busiest, most challenging quarters I can remember," Matthew P. Lawlor, the vendor's chairman and chief executive, said in a conference call with analysts.
Under its new accounting method, Online Resources is treating equity compensation and taxes as expenses. For the first quarter, it reported $600,000 of equity compensation.
The company reiterated its full-year guidance: $72 million to $75 million of revenue and $6.1 million to $6.7 million of net income. For the second quarter it expects to report $17.4 million and $17.9 million of revenue and $1 million to $1.3 million of net income.
Online Resources said that more of its customers are offering bill-payment services for free; 62% do so now, compared with 59% in the fourth quarter.
Also, more of those companies' customers are using Online Resources for bill payment - 10.3% at the end of the first quarter, compared with 9.6% a quarter earlier.
Mr. Lawlor described a "pipeline of innovation," which includes a stored-value product it will pilot test this quarter. "If this product gains traction, it could contribute meaningfully by mid-2007," he said. The company is also working on an expedited bill-payment service that banks could offer for a fee.
