CheckFree Corp. has raised its earnings guidance for the current fiscal year, crediting strong demand for its online bill-payment services
Peter J. Kight, the chairman and chief executive of the Atlanta bill-pay giant, said banks’ promotion of their bill-pay services has boosted his company’s revenue.
“CheckFree’s electronic commerce business is both a key driver of the trend and … a primary beneficiary,” Mr. Kight said during a conference call with analysts Thursday to discuss the quarter that ended Dec. 31, the second of its fiscal year.
Net income was $13 million, or 14 cents a share, compared with a $1.9 million loss a year earlier. Revenue grew 24%, to $185.8 million.
For the current quarter the company predicts earnings of 12 to 14 cents a share on revenue of $187 million to $192 million. The full-year estimate of 39 to 45 cents has been raised to 46 to 50 cents.
CheckFree said it processed 142.9 million bill payments in the December quarter, 7% more than in July through September, and expects a rise of 4% to 7% in the current quarter.
Mr. Kight said online bill presentment, the electronic delivery of detailed bills, has been important in making online bill payment more popular. CheckFree delivered 38.2 million electronic bills in the last quarter, 11% more than in the one just before, he said.
The figure had grown faster — 14% — in the July-September quarter, and in fact the growth of online presentment has been slowing for a year. But Beth Robertson, a senior analyst at MasterCard International’s TowerGroup Inc. research unit in Needham, Mass., said the slowdown simply reflects the larger overall numbers.
Banks are still eager to deliver more bills electronically because doing so increases their bill-payment volume and adds bill-pay subscribers, Ms. Robertson said. Furthermore, CheckFree’s online services enable banks to “actually measure the differences in consumer retention and services used” between people who bank online and those who do not, she said.
Mr. Kight said an online bill payment and presentment package is “one of the most profitable investments” that banks can make — and that “they continue to invest in it.”
He also said that he intends to invest in American Payment Systems, which CheckFree acquired in June. APS operates a string of walk-in bill-payment centers. Under an October agreement, people can now make payments to APS biller-customers through the payment kiosks that Cyphermint Inc. of Marlborough, Mass., has installed in stores.
Mr. Kight said there are “very large opportunities for automating more of the APS process.” Ms. Robertson said CheckFree may want to introduce check imaging at its APS stores, because doing so would accelerate payments.
David Mangum, CheckFree’s chief financial officer, said that APS’ volume declined last quarter because of seasonal factors that should continue this quarter. “We’re not out of the winter yet,” he observed.
But Mr. Kight said APS is performing “exactly as we wanted it to perform.”
He also said that CheckFree is continuing to convert banks to the latest version of its Web bill payment and presentment software, which is based on the version it developed for Bank of America Corp. Within six months, he said, half of the people now using the old version will be using the new one.
