Kurt Peters , Senior Executive Editor
MOUNTAIN VIEW, Calif., January 25, 2007 -- CyberSource Corporation (NASDAQ: CYBS), a leading provider of electronic payment and risk management solutions, today announced financial results for its fourth quarter ended December 31, 2006.
• Revenue in the fourth quarter was $20.9 million, a 40% increase over the same period last year.
• Net income for the fourth quarter of 2006 was $12.5 million on a GAAP basis compared to $5.2 million for the fourth quarter of the prior year. Net income for the fourth quarter of 2006 and 2005 includes a reduction in the tax allowance of $9.9 million and $3.2 million, respectively. Non-GAAP net income, which excludes stock-based compensation expense, the reduction in the tax allowance, the non-cash portion of the tax provision, depreciation and amortization expense, and other non-recurring charges and income was $3.3 million compared to $2.2 million for the fourth quarter of the prior year. A reconciliation of the historical GAAP to non-GAAP measures is attached with the financial statements.
• GAAP earnings per share for the fourth quarter of 2006 was $0.34 compared to $0.14 in the same period last year. Non-GAAP earnings per share for the fourth quarter was $0.09 compared to $0.06 in the same period last year.
• Transaction volumes increased to a record 255.2 million during the quarter, a 32% increase over the 192.7 million transactions processed in the same period last year.
• CyberSource added approximately 1,800 new customers in the fourth quarter of 2006.
Fourth quarter 2006 financial results Revenue
• CyberSource`s fourth quarter revenue was $20.9 million, surpassing prior guidance of $19.8 million and a 40% increase compared to $14.9 million in the same period last year.
• GAAP gross profit was $9.9 million, above prior guidance of $9.4 million.
• GAAP operating expenses were $9.0 million, below the company`s prior guidance of $9.3 million.
• GAAP net income was $12.5 million, above prior guidance of $0.4 million. Our prior guidance did not take into account any reversals of the tax allowance.
• Non-GAAP net income was $3.3 million, above prior guidance of $2.5 million.
Earnings per share
• GAAP earnings per share was $0.34, above prior guidance of $0.01 per share. Our prior guidance did not take into account any reversals of the tax allowance.
• Non-GAAP earnings per share was $0.09, above prior guidance of $0.07.
• Cash, cash equivalents, and short-term investments at the end of the fourth quarter of 2006 were $54.9 million, compared to $54.5 million at the end of the third quarter. The total includes $0.7 million in proceeds from employee stock option exercises and excludes $1.3 million in cash used to repurchase 136,205 shares of the company`s common stock
• Cash flow from operating activities was $1.6 million during the three months ended December 31, 2006, compared to $1.3 million during the same period last year.
2006 Fiscal Year Financial Highlights
• For the fiscal year ended December 31, 2006, total revenue was $70.3 million compared to $50.5 million for the prior fiscal year, an increase of 39%.
GAAP net income
• The company recorded GAAP net income of $14.4 million or $0.39 per share for the fiscal year ended December 31, 2006 compared to net income of $9.2 million or $0.26 per share for the prior fiscal year, an increase of 56%.
Non-GAAP net income
• Non-GAAP net income was $10.5 million or $0.29 per share for the fiscal year ended December 31, 2006 compared to non-GAAP net income of $6.8 million or $0.19 per share for the prior fiscal year, an increase of 54%.
• Cash flow from operating activities was $9.8 million in 2006 compared to $3.9 million in 2005.
Other developments during the quarter
• CyberSource signed over 1,800 new customers in the fourth quarter, including: Abe`s of Maine, Iron Mountain Information Management, Next Day Blinds, Shell Global Solutions, Sonoco Products Company and the Smithsonian Institute.
• Net new customers added this quarter increased the company`s total customer count to over 18,000.
• Existing customers that added new services or renewed agreements during the quarter include: Air Canada, BBC Worldwide, Curves International, Eastman Kodak, Home Depot, and Seagate.
• Approximately 150 customers selected CyberSource for merchant acquiring account services during the quarter. CyberSource now has approximately 1,400 acquiring customers.
• CyberSource UK customers processed a record 39.5 million transactions in the fourth quarter of 2006.
• Findings from CyberSource`s 8th annual fraud survey were released during the quarter. Among the key take-aways:
• Fraudsters siphoned an estimated $3 billion from U.S. eCommerce in 2006.
• Though the percent of revenues lost to fraud improved slightly from 1.6% in 2005 to 1.4% in 2006, dollar losses to U.S. eCommerce grew due to the rapid growth of eCommerce sales.
• The number of merchants using automated decision systems to reduce the likelihood of fraud grew 30%.
• On November 14, 2006, CustomerSat, Inc. announced that CyberSource was one of 14 recipients of its Achievement in Customer Excellence Award. This is the second consecutive year CyberSource has received the honor. Companies qualify for the award through a combination of customer satisfaction mean scores and top ratings by customers over the course of a year.
Stock buyback program
• The Board of Directors has authorized the use of up to $10 million for the repurchase of CyberSource common stock. The purchases will be made in the open market from time to time over the next twelve months as market and business conditions warrant. All purchases are subject to the availability of shares and, accordingly, there is no guarantee as to the timing or number of shares to be repurchased, if any. During 2006, the Company repurchased 268,005 shares of common stock at an average price per share of $9.18 for a total cost of approximately $2.5 million.
Guidance for the first quarter and full fiscal year 2007:
CyberSource is providing guidance for the first quarter of 2007 and for the full fiscal year 2007 based on information available as of January 25, 2007.
• For the first quarter ending March 31, 2007: Total revenue is expected to be $20.6 million. Transaction and support revenue is expected to be $19.3 million, of which $0.4 million is expected from BidPay. Enterprise software revenue is expected to be $0.6 million and professional services revenue is expected to be $0.7 million. The company expects to process between 245 and 250 million transactions in the first quarter. GAAP gross profit is expected to be $9.3 million, while GAAP operating expenses are expected to be $10.4 million. The company expects to record a GAAP net loss for the first quarter of $0.3 million or ($0.01) per share based on a weighted average share count of 37 million shares. Non-GAAP net income for the first quarter is expected to be $1.4 million and non-GAAP earnings per share is expected to be $0.04 based on a weighted average share count of 37 million shares.
• For the full year 2007: Total revenue is expected to be between $90 and $95 million, GAAP gross profit is expected to be between $44 and $46 million, and GAAP operating expenses are expected to be between $40 and $43 million. GAAP net income for 2007 is expected to be between $3.5 and $4 million or $0.09 to $0.11 per share. GAAP earnings per share is based on a weighted average share count of 38 million shares. Guidance does not take into account any further reductions in the company`s valuation allowance against its deferred tax asset, which would result in a tax benefit during the period of the reduction. CyberSource will continue to evaluate whether a further reduction is appropriate. Non-GAAP net income for the full year 2007 is expected to be between $13.5 and $14.5 million or $0.36 to $0.38 per share. Non-GAAP earnings per share is based on a weighted average share count of 38 million shares.
Public call/web cast details
CyberSource will host a public conference call today, January 25, 2007 at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss the fourth quarter and fiscal year results. The call can be accessed in either of the following ways:
Live web cast
A replay of this web cast will remain available at this location through February 4, 2007.
Live conference call
Dial 888-542-8515 (U.S. and Canada) 706-634-2163 (International). The call`s ID number is: 5779846.
A taped replay of this call will be available through February 4, 2007. The dial-in numbers for the taped replay are 800-642-1687 (U.S.) 706-645-9291 (local or international). The call`s ID number is 5779846.
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. Over 18,000 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. For more information, please visit CyberSource`s web site at www.cybersource.com or email firstname.lastname@example.org.
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, a reduction in the tax allowance, depreciation and amortization expense, and other non-recurring charges and income. A reconciliation of the 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 and twelve months ended December 31, 2006, as presented in this release.
"Safe Harbor" 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 and Section 21E of the Securities Exchange Act of 1934, including, without limitation, statements regarding the company`s expectations, objectives, anticipations, plans, hopes, beliefs, intentions or strategies regarding the future. Forward-looking statements in this release include, without limitation, statements regarding: financial guidance including, without limitation, those regarding revenue, transaction volume, gross profit, operating expenses, net income, earnings per share, and deferred tax assets. 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, new products and services offerings by the company and its competitors, any unforeseen event or any unforeseen system failures, and other risks indicated in our filings with the Securities and Exchange Commission. It is important to note that actual outcomes could differ materially from those in such forward-looking statements. Readers should also refer to the documents filed by CyberSource with the Securities and Exchange Commission, specifically the annual report filed on Form 10-K for the year ended December 31, 2005, filed with the Securities and Exchange Commission on March 10, 2006, and our quarterly reports filed on Form 10-Q from time to time, all of which identify important risk factors.
© 2006 CyberSource Corporation. All rights reserved. CyberSource is a registered trademark in the U.S. and other countries. CyberSource eCommerce Transaction Suite is a service mark of CyberSource Corporation. All other brands and product names are trademarks or registered trademarks of their respective companies.