InteliData Technologies Corp., a vendor of electronic bill payment and presentment technology and services, continued to have difficulty making sales in the second quarter and took a much larger hit to earnings.
The Reston, Va., company also said that it had made no progress in its efforts to sell itself, and that it hopes to improve sales by marketing to smaller banks than the giants it has been aiming at.
InteliData reported Thursday that its net loss widened to $27.8 million, or 54 cents per share, from $11,000, or essentially break-even on a per-share basis, a year earlier.
Revenue fell 37%, to $3.7 million, largely because of the loss of outsourcing customers that decided to take their electronic bill presentment and payment programs in-house, InteliData said. Though these customers are still using InteliData software, the company has been unable to replace the lost service fees, it said.
“Generating revenue from new business remains our biggest challenge,” said Alfred S. Dominick Jr., InteliData’s chairman and chief executive, during a conference call with analysts and investors Thursday evening.
He did not provide detailed financial guidance for the rest of the year but said that he expects the third and fourth quarters to resemble the second. Despite the poor results, Mr. Dominick said he remains optimistic about the company.
“Yes, I am disappointed, but no, I am not discouraged,” he said.
The company also took a noncash charge of $26.2 million, or 51 cents per share, to write down the value of goodwill on its balance sheet. Excluding that, the loss would have been $1.6 million, or 3 cents per share.
It also announced another high-level departure. Michael E. Jennings, its president and chief operating officer since May 2003, will retire in mid-August and will join its board of directors.
Mr. Dominick said the move had “been planned for some time.” Mr. Jennings joined the company in June 2000.
Karen Kracher, who joined InteliData in January as its chief sales and marketing officer, will become president.
Chief financial officer John R. Polchin resigned in April to take a job with another company. No successor has been named.
InteliData said in May that it had retained an investment bank to study strategic alternatives, which could involve a sale of all or part of the company. Mr. Dominick said Thursday he had nothing to report on that effort.
Mr. Dominick said InteliData would look beyond its primary target market, the nation’s top 50 banks, to midtier institutions, by marketing EBPP software that runs on relatively modest server computers rather than large-scale mainframes. He estimated there could be as many as 2,000 banks in that category, and that those companies might need no more than 5,000 bill-pay customers to justify the purchase of the software.
He mentioned two vendors of core banking software that runs on servers: the Kirchman software unit of Metavante Corp. and the Sanchez Computer Associates Inc. unit of Fidelity National Financial Inc. “Our new product is very compatible with that application.”
Both Metavante, the technology unit of the Milwaukee banking company Marshall & Ilsley Corp., and Fidelity National, of Jacksonville, Fla., have been active in the past year in acquiring other banking vendors and because of this technological similarity, could be seen as potential acquirers for InteliData.
A spokesman for Metavante had no comment on whether the company had an interest in acquiring InteliData. Fidelity National has been in a quiet period since May, when it announced plans to spin off its technology unit as a separate company, and calls to the company were not returned on Friday.
Mr. Dominick did not speak of either company as a prospective buyer, but he said InteliData has been taking steps to mend its relations with Fidelity National, which provides online hosting for InteliData’s outsourcing service. That relationship predates Fidelity National’s acquisition of the hosting business from Alltel Corp., which had signed a joint-marketing agreement with InteliData
Mr. Dominick has complained in the past that Fidelity National was doing little to market InteliData’s service to its customers. But on Thursday, Mr. Dominick said, “I am pleased with the progress we have made” with Fidelity National, which he called “an old strategic partner who is re-engaged.”
He also voiced optimism about a new marketing deal with Striata Inc. of New York, a software developer that specializes in the online delivery of financial documents. The two companies said they would market each other’s products to their customers.
InteliData suffered a significant setback last month when Wachovia Corp., its most prominent software customer, said it would switch from an in-house EBPP system that uses InteliData software, to outsource that work to CheckFree Corp. of Atlanta.
“It is still not clear what impact that will have on us,” Mr. Dominick said. He added that InteliData would not feel the loss financially for at least 18 months
InteliData received notice in June that its stock faces delisting from the Nasdaq National Market because its price is below $1. (Shares closed Friday at 45 cents) Mr. Dominick said the company had until at least December to lift that price.
Despite its difficulties, Mr. Dominick expressed confidence in the future of in-house EBPP. “Ultimately, institutions will require a single system of record for all transactions,” he said.
Peter Spear, an analyst at the securities firm Delafield Hambrecht Inc. in Seattle, said he was not optimistic about InteliData, which he rates a “hold.”
“Big or small, banks are banks. They still have long lead times” to make technology decisions, Mr. Spear said in an interview Thursday. “At this point InteliData is a wait-and-see story.”
