Online Resources Corp. says the departures of four large customers in the past year held down revenue growth in the second quarter.
The Chantilly, Va., financial technology provider said Tuesday that the losses of BB&T Corp., Jack Henry & Associates Inc., Certegy Inc., and Corporate Network eCom LLC reduced its revenue by about $3 million.
"Only one was really a competitive loss," Cathy Graham, Online Resources' chief financial officer, said in an interview Wednesday. "Another one was due to an acquisition, and for the remaining two, we chose not to re-compete in their RFP processes." Online Resources is looking forward to "easier-to-track revenue rates" beginning this quarter, she said, because Certegy and Corporate Network eCom were on its books for one month last quarter.
Second-quarter revenue rose 16% from a year earlier, to $37.2 million, but was shy of both the average analyst estimate of $39.11 million and the company's goals.
The company's loss increased 167%, to $3.2 million.
Online Resources lowered its full-year revenue guidance to a range of $152 million to $157 million, from a range of $154.5 million to $164.5 million issued in May. It also said it expects to post a full-year net loss of 28 to 32 cents a share, versus a previous forecast of 16 to 26 cents.
Ms. Graham said that her company expects its third-quarter results to be "at the low end of our previous guidance." However, it "chose for conservatism purposes to move our ranges down so that the low end was in the middle of the new guidance range."
Matthew McCormack, an analyst with Friedman, Billings, Ramsey Group Inc.'s FBR Capital Markets Corp., wrote in a research note Wednesday that this is the third time in the last four quarters that Online Resources "has lowered expectations" for this year. He lowered his share price target by $2, to $10, citing low investor confidence and the company's dependence on the ailing financial services sector.
Larry Berlin, an analyst with First Analysis Corp., said in an interview that Online Resources is "being a bit conservative" and will likely meet its revised guidance.
It has not felt "much effect from the economy," and recent contracts will help increase revenue, he said.
