CyberSource Announces Third Quarter 2009 Financial Results
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MOUNTAIN VIEW, Calif., Oct. 22 /PRNewswire-FirstCall/ -- CyberSource Corporation (Nasdaq: CYBS), a leading provider of electronic payment and risk management solutions, today announced financial results for its third quarter ended September 30, 2009.
(Logo: http://www.newscom.com/cgi-bin/prnh/19990513/CYBRSOURCELOGO)
-- Third quarter revenue was $65.7 million, a 14% increase compared to
$57.7 million in the same period the previous year.
-- On a GAAP basis, net income for the third quarter of 2009 was $2.7
million and earnings per share was $0.04, compared to net income of
$207,000 and breakeven earnings per share in the third quarter of 2008.
-- Non-GAAP net income for the third quarter was $14.8 million, a 26%
increase compared to $11.7 million for the third quarter of 2008.
Non-GAAP earnings per share for the third quarter was $0.20, a 25%
increase compared to $0.16 earnings per share for the third quarter of
2008. Non-GAAP net income excludes stock-based compensation expense,
the non-cash portion of the tax provision, depreciation and amortization
expense, and certain non-recurring items. A reconciliation of certain
historical GAAP to non-GAAP measures is attached.
-- During the third quarter, CyberSource processed a record 611 million
billable transactions, a 30% increase over the same period the previous
year. The value of transactions processed was $29.0 billion, a 6%
increase over Q3 2008.
-- CyberSource signed 35,000 new customers in the quarter, up 26% over the
prior year, increasing its customer base to approximately 284,000 active
customers.
"Our strong results this quarter reflect our expanding customer base and our successful expansion internationally. Even with a turbulent economy, our transaction volumes were up 30% over the prior year, to a record 611 million transactions, and we added 35,000 new customers and over 500 new channel partners. I am very pleased with the strength and underlying trend of these numbers, which reflect our broad base of channel partners and the growth of new business formation in eCommerce. Our GAAP Gross Profit was $34.8 million, and Non-GAAP Gross Profit was $38.5 million, both up 18% over last year, primarily as a result of the strength in our gateway and small business offerings," said Bill McKiernan, Chairman and Chief Executive Officer of CyberSource.
"I am also very excited to announce that effective January 1, 2010, the Board of Directors has promoted Michael Walsh to President & Chief Executive Officer of CyberSource. Mike has been with CyberSource for over ten years and has served as Senior Vice President of Worldwide Sales for the last five years. Prior to CyberSource, Mike was at Oracle and Merrill Lynch. Mike's sharp intellect, knowledge of the payment space, and embodiment of CyberSource values, make him the perfect candidate to be our new CEO," said Bill McKiernan, Chairman and Chief Executive Officer of CyberSource. "I founded CyberSource and have been CEO for the last 15 years, and I believe that change is good for an organization as it brings in new perspectives and fresh ideas. On January 1, I will give up the CEO role and focus on my duties as Executive Chairman. We have an excellent team with highly experienced leaders in all the key areas, and I'm confident that with Mike as CEO, we will keep the things that have made the company successful, and he will challenge all of us to achieve even greater success. In addition, Scott Cruickshank, our President and COO, will be leaving the company. We thank Scott for his many contributions to the business, and we wish him well in his future endeavors."
Business Highlights
-- Customers: CyberSource added approximately 35,000 new customers in the
quarter, bringing its customer base to approximately 284,000. New
enterprise customer wins this quarter include: GE Consumer & Industrial,
Make A Wish International, Palm Inc., Rosetta Stone, Sierra Trading
Post, and Sur La Table. Existing customers that added new services or
renewed agreements during the quarter include: American Cancer Society,
Citrix Online a division of Citrix Systems, and Check Point Software
Technologies.
-- International: CyberSource continues to drive strong growth outside the
U.S. CyberSource's European operations processed a record 156.0 million
transactions in the third quarter, an increase of 52% over the same
period last year. The Company's European business is comprised of
revenue generated by customers domiciled outside the US, and represented
about 8% of revenue in the quarter.
-- Global acquiring: CyberSource generated $20.3 million of global
acquiring revenue during the third quarter, up 5% sequentially and 1%
over the prior year. CyberSource added approximately 800 new acquiring
customers during the quarter, and now has over 6,000 global acquiring
customers.
-- Channel Partners: CyberSource's partner program of over 4,500 resellers
and affiliate partners continues to be a major driver for new customer
leads and provides an increasingly broad base of partners selling
CyberSource services. In the third quarter, CyberSource signed over 500
new Independent Sales Organizations (ISOs) and affiliate partners.
Stock Buyback
During the third quarter, we did not repurchase any shares of our common stock.
Guidance for the fourth quarter and full year 2009
CyberSource is providing guidance for the fourth quarter of 2009 and full year 2009 based on information available as of October 22, 2009. We assume no duty to update these numbers at any time.
For the fourth quarter ending December 31, 2009:
-- Total revenue is expected to be between $73.0 and $74.0 million.
-- The company expects to process between 670 and 680 million billable
transactions.
-- GAAP gross profit is expected to between $36.7 and $37.0 million, while
GAAP operating expenses are expected to be between $32.7 and $33.0
million. The company expects to record GAAP net income in the fourth
quarter of between $2.1 and $2.6 million and earnings per share of
between $0.03 and $0.04 based on a weighted average share count of 74
million shares.
-- Non-GAAP net income for the fourth quarter is expected to be between
$14.7 and $15.2 million and non-GAAP earnings per share to be between
$0.20 and $0.21 based on a weighted average share count of 74 million
shares.
For the full year 2009:
-- Total revenue for 2009 is expected to be between $262.0 and $263.0
million, compared to prior guidance of between $260.0 and $263.0
million.
-- GAAP net income for 2009 is expected to be between $7.9 and $8.4
million, compared to prior guidance of between $6.5 and $7.0 million.
-- GAAP earnings per share is expected to be $0.11 per share, based on a
weighted average share count of 73 million shares, compared to prior
guidance of between $0.09 and $0.10 per share.
-- Non-GAAP net income for the full year 2009 is expected to be between
$55.8 and $56.3 million, compared to prior guidance of $54.0 and $55.0
million. Non-GAAP earnings per share is expected to be between $0.76 and
$0.77, based on a weighted average share count of 73 million shares,
compared to prior guidance of between $0.74 and $0.75.
Public call/web cast details
CyberSource will host a public conference call today, October 22, 2009 at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss the third quarter results. The call can be accessed in either of the following ways:
Live conference call
888-585-4496 (U.S. and Canada), 706-634-9580 (local and international). The call's conference ID number is: 32990443. A taped replay of this call will be available through December 31, 2009. The dial-in numbers for the taped replay are: 800-642-1687 (U.S.) 706-645-9291 (local and international). Conference ID is as above.
Live web cast
http://ir.cybersource.com/events.cfm
A replay of this web cast will remain available at this location through December 31, 2009.
About CyberSource
CyberSource Corporation is a leading provider of electronic payment and risk management solutions. CyberSource solutions enable electronic payment processing for Web, call center, and POS environments. CyberSource also offers industry leading risk management solutions for merchants accepting card-not-present transactions. CyberSource Professional Services designs, integrates, and optimizes commerce transaction processing systems. Approximately 284,000 businesses use CyberSource solutions, including half the companies comprising the Dow Jones Industrial Average. The company is headquartered in Mountain View, California, and has sales and service offices in Japan, the United Kingdom, and other locations in the United States including Bellevue, Washington and American Fork, Utah. For more information on CyberSource please visit www.cybersource.com or email info@cybersource.com. For more information on Authorize.Net small business solutions, please visit www.authorize.net or email sales@authorize.net.
GAAP versus non-GAAP Results and Guidance
In addition to financial results presented on a GAAP basis, the company has provided non-GAAP measures of gross profit, operating expenses, net income and earnings per share, which are adjusted to exclude certain non-cash items. For purposes of this release, non-GAAP gross profit, operating expenses, net income and earnings per share exclude stock based compensation expense under SFAS 123R, the non-cash portion of the income tax provision, depreciation and amortization expense, and certain non-recurring items. A reconciliation of these historical GAAP to non-GAAP measures is attached with the financial statements. The company believes that presentation of non-GAAP financial measures may provide investors with additional meaningful and relevant financial information. Management believes the non-GAAP measures help indicate trends in the company's business, and management uses the non-GAAP measures to plan and forecast future periods. Non-GAAP information is not determined using GAAP and should not be considered superior to or as a substitute for GAAP measures or data prepared in accordance with GAAP. Furthermore, non-GAAP information may not be comparable across companies, as other companies may use different non-GAAP measures. The company does not provide guidance for certain financial measures such as depreciation and stock-based compensation expense, and, as a result, is not able to provide a reconciliation of GAAP and non-GAAP financial measures for forward-looking data. The company intends to calculate the various non-GAAP financial measures in future periods consistent with the methodology used in the three months ended September 30, 2009, as presented in this release.
Cautionary Statement under the Private Securities Litigation Reform Act of 1995
Statements in this release that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, without limitation, statements regarding expectations, objectives, anticipations, plans, hopes, beliefs, intentions or strategies regarding the future. Forward-looking statements in this release include, without limitation, statements regarding: (1) strength of the third quarter results reflecting an expanding customer base and successful expansion internationally; (2) strength of the underlying trend of growth in transaction volume, customer count, and number of channel partners reflecting the Company's broad base of channel partners and the growth of new business formation in eCommerce; (3) strength in the Company's gateway and small business offerings; (4) Michael Walsh being the perfect candidate to the Company's new CEO; (5) change being good for an organization; (6) Michael Walsh being able to achieve even greater success; (7) the Company driving strong growth outside of the U.S.; and, (8) financial guidance including, without limitation, those regarding revenue, transaction volume, gross profit, operating expenses, net income, and earnings per share. There is no assurance that any forward-looking statement will be realized. Achievement of future results is subject to risks, uncertainties, and potentially inaccurate assumptions. These risks and uncertainties include, among others, those discussed under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in CyberSource's most recent Annual Report on Form 10-K, filed on February 27, 2009, and subsequent Quarterly Reports on Form 10-Q as well as the consolidated financial statements, related Notes, and the other financial information appearing elsewhere in those reports and other CyberSource filings with the Securities and Exchange Commission. The factors that could cause actual results to differ materially from the forward-looking statements include risks and uncertainties such as: changes in Generally Accepted Accounting Principles and the application thereof; changes in customer needs; the risks of failures, disruptions or illiquidity in national and global banking, credit, and financial systems and the impact of those risks on CyberSource's business; the risk of the economy, in general, and online economy, in particular, slowing down; security breaches; new products and services offerings by CyberSource and its competitors; and any unforeseen system failures. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could differ materially from past results and those anticipated, estimated or projected. Readers should bear this in mind when considering forward-looking statements. CyberSource undertakes no obligation to publicly update forward-looking statements, whether as a result of new information, future events, or otherwise.
2009 CyberSource Corporation. All rights reserved. CyberSource is a registered trademark in the U.S. and other countries. All other brands and product names are trademarks or registered trademarks of their respective companies.
CyberSource Corporation
GAAP Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Revenues $65,662 $57,693 $189,042 $166,772
Cost of revenues 30,843 28,119 88,055 81,505
------ ------ ------ ------
Gross profit 34,819 29,574 100,987 85,267
Operating expenses:
Product development 7,407 5,826 20,473 16,936
Sales and marketing 18,073 17,466 53,229 51,023
General and administrative 5,970 6,460 18,947 17,748
----- ----- ------ ------
Total operating expenses 31,450 29,752 92,649 85,707
------ ------ ------ ------
Income (loss) from operations 3,369 (178) 8,338 (440)
Other income, net 301 145 269 384
Interest income 29 346 236 1,104
--- --- --- -----
Income before income taxes 3,699 313 8,843 1,048
Income tax provision 1,005 106 2,958 353
----- --- ----- ---
Net income $2,694 $207 $5,885 $695
====== ==== ====== ====
Basic net income per share $0.04 $- $0.08 $0.01
===== === ===== =====
Diluted net income per share $0.04 $- $0.08 $0.01
===== === ===== =====
Weighted average number of shares
used in computing basic net income
per share 69,714 69,444 69,308 69,157
====== ====== ====== ======
Weighted average number of shares
used in computing diluted net
income per share 72,353 72,250 71,543 72,033
====== ====== ====== ======
Non-GAAP Financial Metrics:
Gross profit $38,521 $32,669 $110,955 $94,087
Operating expenses $23,387 $21,276 $68,102 $60,785
Net income $14,790 $11,714 $41,188 $34,518
Basic net income per share $0.21 $0.17 $0.59 $0.50
Diluted net income per share $0.20 $0.16 $0.58 $0.48
CyberSource Corporation
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
GAAP gross profit $34,819 $29,574 $100,987 $85,267
Add FAS123R expense 493 428 1,357 1,175
Add depreciation expense 1,852 1,217 4,540 3,295
Add amortization of intangible
assets 1,357 1,450 4,071 4,350
----- ----- ----- -----
Non-GAAP gross profit $38,521 $32,669 $110,955 $94,087
======= ======= ======== =======
GAAP operating expenses $31,450 $29,752 $92,649 $85,707
Less FAS123R expense (2,193) (1,958) (6,223) (5,995)
Less depreciation expense (587) (470) (1,542) (1,302)
Less amortization of intangible
assets (5,283) (5,719) (15,850) (17,155)
Less restructuring charges - (329) (932) (470)
--- ---- ---- ----
Non-GAAP operating expenses $23,387 $21,276 $68,102 $60,785
======= ======= ======= =======
GAAP net income $2,694 $207 $5,885 $695
Add FAS123R expense 2,686 2,386 7,580 7,170
Add non-cash tax provision (benefit) 331 (64) 1,034 81
Add depreciation expense 2,439 1,687 6,082 4,597
Add amortization of intangible
assets 6,640 7,169 19,921 21,505
Add restructuring charges - 329 932 470
Less settlement proceeds* - - (246) -
--- --- ---- ---
Non-GAAP net income $14,790 $11,714 $41,188 $34,518
======= ======= ======= =======
GAAP basic net income per share $0.04 $- $0.08 $0.01
Add FAS123R expense 0.04 0.03 0.11 0.10
Add non-cash tax provision - - 0.01 -
Add depreciation expense 0.03 0.03 0.09 0.07
Add amortization of intangible
assets 0.10 0.10 0.29 0.31
Add restructuring charges - 0.01 0.01 0.01
--- ---- ---- ----
Non-GAAP basic net income per share $0.21 $0.17 $0.59 $0.50
===== ===== ===== =====
GAAP diluted net income per share $0.04 $- $0.08 $0.01
Add FAS123R expense 0.04 0.03 0.11 0.10
Add non-cash tax provision - - 0.01 -
Add depreciation expense 0.03 0.03 0.09 0.06
Add amortization of intangible
assets 0.09 0.10 0.28 0.30
Add restructuring charges - - 0.01 0.01
--- --- ---- ----
Non-GAAP diluted net income per
share $0.20 $0.16 $0.58 $0.48
===== ===== ===== =====
*In May 2009, CyberSource received approximately $246,000 as
consideration for dismissing a lawsuit that CyberSource filed against
VeriSign, Inc. in June 2008.
CyberSource Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
September 30, December 31,
2009 2008
---- ----
Assets
Current assets:
Cash and cash equivalents $106,557 $73,292
Accounts receivable, net 19,176 18,251
Prepaid expenses and other current assets 7,293 5,310
Deferred income taxes 2,635 2,635
----- -----
Total current assets 135,661 99,488
Property and equipment, net 22,742 16,188
Intangible assets, net 109,722 129,643
Goodwill 289,278 289,278
Non-current deferred income taxes 19,710 20,512
Other non-current assets 2,694 2,539
Restricted cash 1,516 1,548
----- -----
Total assets $581,323 $559,196
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $1,189 $588
Funds due to merchants 12,876 12,162
Other accrued liabilities 16,747 18,272
Deferred revenue 5,650 4,519
Accrued restructuring 1,074 847
----- ---
Total current liabilities 37,536 36,388
Deferred revenue, less current portion 1,140 996
Other non-current liabilities - 1,099
Accrued restructuring, less current portion 706 832
Other non-current tax liabilities 2,015 1,928
----- -----
Total liabilities 41,397 41,243
Total stockholders' equity 539,926 517,953
------- -------
Total liabilities and stockholders'
equity $581,323 $559,196
======== ========
CyberSource Corporation
Consolidated Statements of Cash Flows
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $2,694 $207 $5,885 $695
Adjustments to reconcile net income
to net cash provided by operating
activities:
Amortization expense 6,640 7,169 19,921 21,505
Depreciation expense 2,439 1,687 6,082 4,597
Income on investment in joint
venture (73) (62) (292) (161)
Stock-based compensation 2,686 2,386 7,580 7,170
Changes in operating assets and
liabilities:
Accounts receivable (1,517) (594) (925) (646)
Prepaid expenses and other
current assets (149) (350) (1,983) (532)
Deferred income taxes 317 - 802 -
Other non-current assets 197 1,212 169 1,145
Accounts payable 527 (130) 601 525
Accrued liabilities 1,100 3,859 (2,523) 3,806
Funds due to merchants 570 1,195 714 1,770
Deferred revenues 153 352 1,275 1,115
Other non-current tax liabilities 29 (1,181) 87 (1,095)
--- ------ --- ------
Net cash provided by operating
activities 15,613 15,750 37,393 39,894
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and
equipment (6,040) (5,151) (12,636) (10,425)
------ ------ ------- -------
Net cash used in investing
activities (6,040) (5,151) (12,636) (10,425)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common
stock 4,167 1,610 7,727 6,996
Tax benefit from employee stock
options 16 - 177 -
Repurchase of common stock - (2,867) - (2,867)
--- ------ --- ------
Net cash provided by (used in)
financing activities 4,183 (1,257) 7,904 4,129
Effect of exchange rate changes
on cash (252) (824) 604 (827)
---- ---- --- ----
Increase in cash and cash
equivalents 13,504 8,518 33,265 32,771
Cash and cash equivalents at
beginning of period 93,053 64,646 73,292 40,393
------ ------ ------ ------
Cash and cash equivalents at end
of period $106,557 $73,164 $106,557 $73,164
======== ======= ======== =======
SOURCE CyberSource Corporation
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