Headlines:
Online Resources Revenue Up 42%
The Internet banking software vendor Online Resources Corp. of Chantilly, Va., beat its second-quarter earnings projection, citing growth in online bill-payment volume and several new customers.
"We had a strong quarter," said Matthew P. Lawlor, Online Resources' chairman and chief executive, during a conference call with analysts Wednesday. "We exceeded our guidance as bill-pay adoption continued to grow robustly."
Revenue of $14.3 million was up 42% from the same period last year. Net income of $1.8 million was up 48%. Per-share earnings of 7 cents topped the company's forecast by a penny and the year-earlier figure by 2 cents, or 17%. Chief financial officer Catherine Graham said a secondary offering completed in April of 4.4 million shares was the main reason for the lag behind net-income growth.
The company also increased its guidance for the current quarter and the year. For the quarter, it said, it expects revenue of $15 million and net income of $2.4 million to $2.8 million. For the year it predicted revenue of $60 million to $61 million and net income of $9.4 million to $10.3 million.
But Ms. Graham said that because of dilution, expectations of per-share earnings are unchanged: 8 to 10 cents for the current quarter, and 36 to 39 cents for the year. Furthermore, "it will not be easy to achieve our 2005 EPS target," she said.
Online Resources signed 32 new banking customers in the second quarter. Half of those deals were conversions from other vendors and therefore brought in an established base of online banking customers, president and chief operating officer Raymond T. Crosier noted during the conference call.
In the fourth quarter only 15% of new customers were conversions, Mr. Crosier said. "That's a nice trend," he said.
Caribbean Purchase Gives Lift to Certegy
The transaction processor Certegy Inc. of St. Petersburg, Fla., said new customers for its card processing unit and an acquisition that extended its reach in the Caribbean helped drive second-quarter earnings higher.
Revenue of $276 million was up 8% from a year earlier. Net income from continuing operations rose 19%, to $25.3 million.
Per-share earnings totaled 75 cents. For the year Certegy is predicting $1.83 to $1.86.
The company also reported an after-tax gain of $27.3 million from selling its merchant acquiring business during the quarter to Nova Information Systems Inc., the merchant processing division of U.S. Bancorp.
Certegy's card services unit increased revenue 13.2%, to $164.1 million. The company credited a 30.6% rise in the unit's international revenue partly to the 2004 acquisition of Caribbean CariCard Services Inc., which helped win new customers.
Revenue of the check services unit inched up only 1.1%, to $111.9 million, and Certegy said its check guarantee volume declined because of lower retail sales and growth in consumers' use of payment cards.
Gregory W. Smith, an analyst for Merrill Lynch Global Securities, wrote that though the check service gains were meager, the unit fared well against its main rival First Data Corp.'s TeleCheck Services Inc.
"Last week First Data reported that its TeleCheck subsidiary continues to struggle with revenues down 10% year over year," Mr. Smith wrote in a research note. "We attribute this largely to Certegy taking business."
Lee A. Kennedy, Certegy's chairman and chief executive, said Thursday during a conference call with analysts that his company has focused on winning check authorization customers nationwide, while TeleCheck has focused on the regional level.
Under its deal with Nova, he said, Certegy will be able to use Nova's client base to reach more potential regional customers. The deal "is going to enable us to get into that regional base cost-effectively."
