With three purchases in two months, CheckFree Corp. is broadening its offerings to financial companies, in the payments business and beyond, and is solidifying its position as a major vendor of banking software.
In a deal announced Monday CheckFree said it would pay $28 million in cash for substantially all the assets of Upstream Technologies LLC in Boston, a developer of online tools for asset managers.
Hilary Fiorella, the vice president of marketing in the CheckFree investment services unit, said that Upstream's 26 employees would join her division, which is based in Jersey City.
The deal would enable the company to accelerate the transformation of its CheckFree APL portfolio accounting service, she said, which manages nearly 2.6 million investment portfolios.
She would not say how much new business the deal would bring CheckFree once it closes late this month. The company said, however, that the impact would be "inconsequential" to revenue and earnings per share in the fiscal year that ends June 30.
CheckFree plans to use Upstream's user interface as the front end of APL, which the company is rewriting, she said.
"We're not point-and-click. It's older technology," she said. Upstream's technology is very new, very advanced. It has the Web-based interface that everybody is used to today."
CheckFree could begin to introduce the interface and features as soon as this summer, Ms. Fiorella said. It will work with its clients individually to move to the next-generation service, which it plans to call EPL, for "enhanced portfolio lifecycle," she said.
CheckFree closed its $245 million purchase of Corillian Corp. in Hillsboro, Ore., last week and the $206 million deal for Carreker Corp. of Dallas in April. Corillian develops software for Internet banking and related applications, and Carreker, for check and check-image processing.
As CheckFree expands from its bill-pay base into other payments areas, some rivals are encroaching on its home turf. Metavante Corp., the technology company being spun off by the Milwaukee banking company Marshall & Ilsley Corp., announced last week that it has developed a reward program that its customer banks can use to promote online bill payment. Metavante got into the online bill-payment business in 2002 by buying Spectrum EBP LLC of Atlanta, a system developed by three large banking companies.
And Fidelity National Information Services Inc. in Jacksonville, Fla., said last month that it is considering deals in areas including bill payment and core banking. William P. Foley 2nd, Fidelity's chairman and chief executive, said on a conference call with analysts at the time, "In bill pay, we're not where we need to be."
Though this spring's deals are expected to dampen CheckFree's earnings through its fiscal 2008, they are also making the company a more formidable presence, based on the top line.
CheckFree has not given detailed guidance on the financial impact of its recent deals, but it reported in April that its revenue was $230.2 million in its fiscal third quarter, which ended March 31. Corillian reported revenue of $16.5 million in the March 31 quarter, and Carreker's revenue was $28.4 million in the third quarter of 2006, the latest figure available. This points toward annual revenue of about $1.1 billion.
Metavante had revenue of $1.5 billion for the four quarters through March 31; Fidelity's was $4.4 billion.
CheckFree has expanded through acquisition to diversify its business in the past. It bought American Payment Systems Inc. for $110 million in June 2004 to provide walk-in bill payment and PhoneCharge Inc. in Ansonia, Conn., for $100 million in December 2005 so customers could make last-minute bill payments by phone.
