InteliData Technologies Corp. reported a sharply higher first-quarter loss Wednesday, and its chief executive said it had retained an investment bank to evaluate a sale and other options.
The Reston, Va., company offers a combined electronic bill payment and presentment software package. It plans to unbundle the package to stimulate sales, which have lagged with banks' slow adoption of electronic bill delivery.
Alfred S. Dominick Jr., the chairman and CEO, said the company had hired the Wachovia Securities unit of Wachovia Corp. to help it assess strategic alternatives. That move could lead to new investments by outsiders, partnerships with other companies, or the sale of part or all of InteliData.
"We are pursuing every option available to protect and enhance your investment," Mr. Dominick told investors and analysts Wednesday night in a conference call to discuss first-quarter results.
InteliData reported a net loss of nearly $1.5 million, or 3 cents a share, against $147,000 (virtually break-even on a per-share basis) in the year-earlier period. Revenue fell 36%, to $3.6 million.
Peter Spear, an analyst at Delafield Hambrecht Inc. in Seattle, said InteliData is not facing an imminent cash-flow crisis but that the vendor is under growing to break out of its sales slump.
"They have enough cash to stay in business," Mr. Spear said. InteliData's balance sheet includes $6.8 million in cash; that it went through only $800,000 in the first quarter indicates InteliData could remain in the market for several quarters without bringing in new revenue, Mr. Spear said. "They're not going anywhere in the next couple years."
But investors and customers probably will not sit still for that long, Mr. Spear said. "This is a wait-and-see story, to wait and see if the banks" will respond to InteliData's plans, he said. The company will "have to do something strategically - and quickly."
On the conference call Mr. Dominick acknowledged that his company's sales of electronic bill payment and presentment software have failed next to CheckFree Corp., the EBPP leader, and others.
Many banks now offer some form of online bill payment, often outsourced to CheckFree or another provider. But they have not taken to InteliData's package of software applications that combine bill presentment with related functions. Mr. Dominick said the company would begin separate marketing of these components right away. "Our product has always been modular," he said.
InteliData hopes this approach will spur sales by offering banks only the functions they are asking for. "We probably pushed too hard for a revolution when banks prefer evolution." Mr. Dominick said. "We are now promoting an infrastructure solution that a bank can implement in manageable phases."
A bank could buy InteliData's payment warehouse software, for example, while continuing to offer its customers the bill-payment service that it already uses. Later it could add online bill presentment, or InteliData's software for least-cost routing of payments.
Mr. Spear, the only analyst who provides formal coverage of InteliData, cut his recommendation late Wednesday to "hold" from "buy." He speculated that a software vendor such as S1 Corp. or an Internet banking service provider such as Digital Insight Corp. could be interested in partnering with or buying InteliData.
S1 did not respond to a request for comment. A spokeswoman for Digital Insight noted that in the company's April 22 earnings conference call, Jeffrey E. Stiefler, its chairman, president and CEO, said he had considered offering an in-house payment service rather than outsourcing the work to CheckFree and Metavante Corp.
But he added, "It is not intuitively obvious to me that we would benefit from having our own bill-pay product as opposed to working very closely with our two partners."
Mr. Dominick said he has no plans for a share-buyback program as a way to boost his company's stock price, which fell below $1 this week. "We are conserving our cash so we can continue to be a player in this marketplace," he said in response to an investor's question on the call.
He reiterated that InteliData has no immediate plans to replace John R. Polchin who resigned unexpectedly last week as chief financial officer. (Convera Corp., a search software maker in nearby Vienna, Va., announced this week that Mr. Polchin had joined it as executive vice president, chief financial officer, and treasurer.) InteliData's controller, Dieu Hua, has stepped in to handle the CFO duties.
