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Online Resources' second-quarter revenue grew 5.4% year-over-year, to $38.3 million, from higher sales of e-commerce services.
August 4 -
Online Resources Corp. remains an appealing acquisition target despite posting a first-quarter loss and being ordered to pay its founder and former chief executive $5.3 million, analysts said.
May 11 -
Online Resources Corp. is taking a less-is-more approach, consolidating many of the platforms bankers rely on after a series of poorly executed acquisitions gave it a hodgepodge of overlapping software.
March 16
A resurgence in demand for online billing services is helping fuel growth at Online Resources Corp., which is in the midst of restructuring its business.
Online Resources' second-quarter results showed particular strength for its software and services used by billers, with a 23.3% year-over-year increase in bill-payment transactions, to 21.2 million. Revenue from such payments rose 24%, to $17.6 million, it said Thursday. The Chantilly, Va., vendor provides software and processing services that billers use to accept electronic payments. It also provides online banking and bill-payment software to financial institutions.
"Over the last several quarters we've seen a pickup that we would attribute more to industry economic recovery," Cathy Graham, an executive vice president and chief financial officer of Online Resources, said during an earnings conference call.
Graham said that e-commerce same-store growth bottomed out in the high single digits and recovered to the low teens. "It's kind of stayed there for a couple of quarters, so with a little bit of luck we will see that continue."
The pickup has helped to offset slow growth in transactions from bill-payment services offered through banks, of which Online Resources offers two varieties. Its full version provides banks with both the front-end software that their customers access to view and make payments from their accounts as well as the back-end processing service used to remit payments to billers. It also offers remittance-only services to banks that use their own front-end software or that of another vendor.
In the second quarter, the number of bill-payment transactions made through the services rose 1.9%, to 37.3 million. Revenue from the services fell 5.9%, to $20.9 million.
John Kraft, an analyst with D.A. Davidson & Co., said the positive growth in e-commerce services, particularly for a segment of the category in which consumers pay a fee to make a payment, reflects economic improvement. A big portion of that segment is from walk-up bill-payment services.
"As it turns out, that subsegment within bill pay was much more affected [during] the recession," Kraft said. "We're seeing a cyclical pickup and that was one of the headwinds that they had been facing. That's normalizing."
Online Resources in March announced it was consolidating several of the software platforms that it acquired to cut costs and improve customer service. The company made progress on those efforts in the second quarter, Joseph Cowan, its president and chief executive, said during the call. Part of the process includes building a technology operations center in India, which it eventually plans to use to sell into international markets.
Online Resources does not plan a forced migration of its clients to new platforms, Cowan said. Rather, it plans to work with them on timing. "This is a scary thing when you talk about consolidating platforms for customers and we want our customers to know that that's not the approach we will take," Cowan said. "We will continue to support them and that's part of the reason for going to an environment like India, so that we can do that."
Online Resources' second-quarter revenue climbed 5.4% year-over-year, to $38.3 million. Its net loss attributable to stockholders widened by 79.2%, to $2.3 million, or 7 cents per diluted share, from $1.3 million, or 4 cents per diluted share.
