CyberSource Achieves Record Revenue, Net Income and Transaction Volume in Q4

$10.4 million revenue, 127 million transactions processed

MOUNTAIN VIEW, Calif., January 27, 2005 -- CyberSource Corporation (NASDAQ: CYBS), a leading provider of electronic payment and risk management solutions, today announced financial results for its fourth quarter and year ended December 31, 2004.
Revenue was $10.4 million for the fourth quarter of 2004, a 35% increase compared to $7.7 million for the same period in 2003.

Net income was $2.7 million or $0.07 per share for the fourth quarter compared to $56,000 or $0.00 per share for the same period last year. Net income in the fourth quarter of 2004 included a $1.5 million reversal of previously recorded restructuring charges related to the company`s lease on its Mountain View facility. See below for further details on the reversal of these restructuring charges.

Transaction volume was 127.2 million for the fourth quarter, a 48% increase compared to the 85.8 million transactions processed in the same period last year.

CyberSource added approximately 1,600 new customers in the fourth quarter, a 305% increase over the 395 added in the fourth quarter of 2003.

"These fourth quarter results are a great ending to a record-setting year," said Bill McKiernan, CyberSource chairman and CEO. "CyberSource processed over 436 million transactions during 2004, a 50% increase over the year before. This growth was not confined to a few customers, but was accomplished by transaction growth across our installed base as well as from new customers we added in 2004. We added more customers in the fourth quarter than we added in all of 2003. We have had considerable success in penetrating the small and medium business market this year. This success was in part due to the number of financial institutions and technology partners that chose to resell CyberSource as their preferred gateway offering. We are also especially pleased by the market acceptance of two new products that we believe are important to our future growth, global payments and risk management."

Fourth Quarter 2004 Financial Highlights
Revenue: Total revenue of $10.4 million for the quarter surpassed previous guidance of $9.6 million. Transaction and support services revenue was $8.5 million, enterprise software and professional services revenue were $0.8 million and $1.1 million, respectively. The increase in total revenue was due primarily to broad-based transaction volume growth.

Gross profit/margin: The Company recorded gross profit of $6.7 million in the fourth quarter compared to $5.5 million in the same period last year. Gross margin decreased from 71% in the fourth quarter last year to 64% in the fourth quarter of 2004. The decrease in gross margin is due in part to an increase in revenue from our global payment initiative which has a higher gross profit contribution but a lower associated gross margin.

Operating expenses: Operating expenses for the fourth quarter of 2004 were $4.2 million compared to $5.5 million in the same period last year. Included in operating expenses in the fourth quarter of 2004 is a $1.5 million reversal of previously recorded restructuring charges. These charges, which were recorded in the fourth quarter of 2001 and subsequent quarters, represented future rent related to unoccupied space at our Mountain View facility. During the fourth quarter of 2004, the Company reviewed its future facility needs and determined that its forecasted growth would require the utilization of this unoccupied space during 2005. As a result, the Company extended the lease on its Mountain View facility through 2011 and reversed the remaining balance of previously recorded restructuring charges related to this facility. In addition, effective January 1, 2007, the Company`s monthly lease payment for its Mountain View facility will decrease from $208,800 to $80,640, a savings of approximately 61%.

Balance sheet: Cash, cash equivalents, and short-term investments increased by $800,000 during the fourth quarter from $43.9 million to $44.7 million. The Company has no long term debt.

2004 Financial Highlights
Revenue: For the year ended December 31, 2004, total revenue was $36.7 million compared to $27.5 million for the prior fiscal year, an increase of 33%.

Net income: Net income for the year was $4.5 million, or $0.12 per share, compared to last year`s net loss of $5.4 million or a net loss per share of $0.17. Net income in 2004 included a $1.5 million reversal of previously recorded restructuring charges related to the company`s lease on its Mountain View facility.

Other developments during the quarter
Customer growth detail:
CyberSource signed approximately 1,600 new customers in the fourth quarter of 2004. Included among the customers signed during the fourth quarter are Ariba, online ticket seller RazorGator, Roxio, Sara Lee Direct, domain registrar The GoDaddy Group, and Viewsonic Corporation.

Existing customers that added new services or renewed agreements during the quarter include Analog Devices, DHL, Educational Testing Service, H&R; Block, House of Blues, K-Swiss, Overstock.com, and UCLA.

Progress on key initiatives:
International. CyberSource UK customers processed a record 11.8 million transactions in the fourth quarter of 2004. CyberSource UK also signed a number of new enterprise customers during the quarter, including Debenham`s, a £1.9 billion department store chain with 106 stores in the UK and the Republic of Ireland, and Polaroid U.K.

Global Payment Types. The CyberSource global payment initiative continues to attract key customers. As of year end, the Company signed 31 customers for its Global Payment Suite, 16 of which are already processing transactions. There continues to be a strong pipeline of prospective customers. Global Payment Suite includes support for locally-preferred payment types (such as Switch/Solo in the U.K. and Carte Bleue in France), fraud prevention, export and tax compliance tools--all available through a single connection to CyberSource. Use of the Global Payment Suite also eliminates the need for merchants to establish multiple international banking relationships and provides consolidated reporting and reconciliation.