Carreker Corp., which has staked its fortunes on digital imaging, reported a fiscal fourth-quarter loss Tuesday and said bank purchases of its technology have lagged.
The Dallas vendor’s chairman and chief executive, John D. “Denny” Carreker, acknowledged his disappointment in its 2004 results during a conference call with analysts Tuesday, but he characterized the year as one of “building out in preparation for years of growth in 2005 and 2006.”
He said Carreker, which sells payment software and consulting services, is building a backlog of sales and contracts that will help it increase revenue and return to profitability this year, though executives were cautious about making detailed forecasts.
Carreker had based its planning on the assumption that major banks would shift much of their check processing to images last year, he said. However, because of “certain miscalculations” about the adoption of image exchange networks, “we were obliged to change our course midstream.”
Nevertheless, Mr. Carreker said he expects sales to improve this year as banks shift away from payment silos and toward a enterprise-wide payment and risk management strategy.
“All signs point to banks spending more on IT this year,” he said. “We are less likely to encounter the delays that marked 2004.”
Lisa Peterson, an executive vice president at Carreker and its chief financial officer, said its backlog — work that has been contracted but not yet performed — is growing. The first-quarter backlog, which Carreker had projected at $8.4 million during its third-quarter conference call, now stands at $21.2 million, and the second-quarter backlog is $14.1 million.
The full-year backlog has more than doubled, to $55.2 million, because of improved sales in the fourth quarter, she said.
Carreker reported a net loss of $1.1 million, or 4 cents a share, for its fiscal fourth quarter, which ended Jan. 31, compared with a year-earlier profit of $1.4 million, or 6 cents a share. Its revenue fell 13%, to $28.9 million.
Excluding a $700,000 charge for work-force reductions announced last week, the loss of 1 cent a share matched analysts’ expectations.
For its full fiscal year, Carreker posted a net loss of $1.2 million, or 5 cents a share, against a fiscal 2003 profit of $3.7 million, or 15 cents a share. Full-year revenue fell 8%, to $118.9 million.
Carreker offered limited guidance; it said it expects its first-quarter revenue to be in line with the fourth-quarter total, with operating earnings near the break-even point or slightly below. It also said it plans to post a profit for fiscal 2005.
On Monday, Carreker said it had started offering a fraud-detection product, Carreker Fraud Manager, which was developed in conjunction with International Business Machines Corp. of Armonk, N.Y. The product builds on Carreker’s fraud-detection tools and incorporates IBM’s infrastructure and middleware components.
“IBM will open some doors for us,” Mr. Carreker said. However, because the agreement has just been signed, following six months of negotiations, Carreker has not built in IBM’s contributions to its sales projections for the rest of the year, he said.
Carreker has begun offering nine new products in the past year and has five more in development, Mr. Carreker said.
