Online Resources Corp. expects revenue to grow next year, despite the loss of a major customer.
In guidance released last week, the McLean, Va., online banking and payments vendor forecast that its first-quarter revenue would rise about 23% from a year earlier, to $37 million to $39 million, and that its full-year revenue would rise about 19% over the anticipated total for this year, to $156 million to $166 million.
However, Online Resources also predicted a net loss of 12 to 15 cents a share for the first quarter and 12 to 24 cents for the full year.
The company has lost some of the customers it inherited in its July 2006 purchase of Princeton eCom Corp., notably the core processor Jack Henry & Associates Inc. Online Resources disclosed the Jack Henry loss during its third-quarter earnings call in October; its stock fell more than 30% the next day.
Matthew Lawlor, the company's chief executive, told analysts in a conference call last week that the company expects no more defections, which will mean a more consistent revenue stream next year,
"The bottom line is that we have substantially lowered the risk for additional client losses," he said.
All of Online Resources' large clients have either renewed their contracts or dropped the vendor, he said, and "none of our large clients — those representing over 2% of revenue — are up for renewal" next year.
Matthew McCormack, an analyst at Friedman, Billings, Ramsey & Co. Inc., wrote in a research note published Friday that Online Resources' disclosure about client renewals was especially reassuring. "We believe that increasing confidence in the company's ability to execute is what will lead the shares higher," and last week's "reiterations are a step in the right direction."
