MOUNTAIN VIEW, Calif.,
April 29 /PRNewswire-FirstCall/ --
CyberSource Corporation (Nasdaq: CYBS), a leading provider of
electronic payment, risk management, and payment security
solutions, today announced financial results for its first quarter
ended March 31, 2010.
(Logo:
http://www.newscom.com/cgi-bin/prnh/19990513/CYBRSOURCELOGO)
- First quarter revenue was $76.6
million, a 27% increase compared to $60.5 million in the same period the previous
year.
- On a GAAP basis, net income for the first quarter of 2010 was
$3.8 million and earnings per share
was $0.05, compared to net income of
$1.0 million and earnings per share
of $0.01 in the first quarter of
2009.
- Non-GAAP net income for the first quarter was $16.8 million, a 33% increase compared to
$12.6 million for the first quarter
of 2009. Non-GAAP earnings per share for the first quarter
was $0.23, a 28% increase compared to
earnings per share of $0.18 for the
first quarter of 2009. Non-GAAP net income excludes
stock-based compensation expense, a reduction in the valuation
allowance against deferred tax assets, the non-cash portion of the
tax provision, depreciation and amortization expense, and certain
non-recurring items. A reconciliation of certain GAAP to
non-GAAP measures is attached.
- During the first quarter, CyberSource processed a record 738
million billable transactions, a 34% increase over the same period
the previous year. The value of transactions processed was
approximately $38.7 billion, a 40%
increase over the first quarter 2009.
“After fifteen years as a standalone entity, I am pleased to
announce that on April 21, 2010, we
entered into a definitive agreement for Visa to purchase
CyberSource at a price of $26 per
share or approximately $2.0 billion
in cash. This is an incredible opportunity to join Visa, the
leading company in the payment space, which is also one of the
fastest growing and most successful companies in the world.
We’ve had a long working relationship with Visa, an early
investor in CyberSource before our IPO, and have collaborated with
them on fraud models built into our automated fraud management
solutions since 1999. The combination with Visa provides a
great platform to build innovative payment solutions for eCommerce
merchants, and helps secure our position as a global payment
leader,” said Bill McKiernan,
Executive Chairman and Founder.
“Our strong first quarter results show continued strength in
eCommerce and international expansion. CyberSource continues
to succeed in selling value added payment services to its
customers, reflected in our dramatic transaction growth this
quarter of 34% over the prior year to a record 738 million
transactions. The affiliate channel saw record growth in
partner adds, and our first quarter results reflect our focus on
these key partnerships and our drive to provide them the tools
needed to effectively promote and sell our small business
platform,” said Michael Walsh,
President and Chief Executive Officer of CyberSource.
Business Highlights
- Visa: Visa announced on April 21, 2010 that they entered into a
definitive agreement to purchase CyberSource at a price of
$26.00 per share, or total
consideration of approximately $2.0
billion to be paid with cash on hand. The transaction
is subject to customary closing conditions, including approval by
the stockholders of CyberSource and required regulatory approvals.
The transaction, which has been approved by the Visa and
CyberSource boards of directors, does not require a Visa
stockholder vote and is expected to close in Visa's fourth fiscal
quarter of 2010. CyberSource's President and CEO,
Michael Walsh, will continue to
oversee CyberSource's operations. CyberSource's Executive
Chairman and Founder, William S.
McKiernan, will join Visa as an Executive Advisor to assist
in the integration of the two businesses.
- Customers: CyberSource added approximately 31,700
new customers in the quarter, bringing its total customer base to
approximately 305,000. Other large enterprise customers added
this quarter include: Air China, IKEA, LeapFrog Enterprises, and
RyanAir. Existing customers that added new services or
renewed agreements during the quarter include: Check Point Software
Technologies, Hearst Communications, and Payless ShoeSource.
- Channel Partners: In the first quarter,
CyberSource signed over 900 new Independent Sales Organizations and
affiliate partners. CyberSource’s partner program of
approximately 4,800 active resellers and affiliate partners
continues to be a major driver for new customer leads.
- International: CyberSource continues to drive
strong growth outside the U.S. CyberSource’s European
operations processed a record 210 million transactions in the first
quarter, an increase of 53% 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
$25.3 million of global acquiring
revenue during the first quarter, up 33% over the prior year.
CyberSource added approximately 1,200 new acquiring customers
during the quarter, and now has approximately 7,400 global
acquiring customers.
Given the Visa announcement on April
21st, CyberSource will not be providing quarterly guidance
for Q2 2010, or be updating yearly guidance for 2010 at this time.
Stock Buyback
During the first quarter, we did not repurchase any shares of
our common stock.
Public call/web cast details
CyberSource will host a public conference call today,
April 29, 2010 at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss the first
quarter results. The call can be accessed in either of the
following ways:
Live conference call
800-230-1951 (U.S. and Canada),
(612) 288-0337 (local and international). The call's conference ID
number is: 153512. A taped replay of this call will be available
through June 30, 2010. The dial-in
numbers for the taped replay are: (800) 475-6701 / (320) 365-3844
(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 June 30, 2010.
About CyberSource
CyberSource solutions enable electronic payment processing for
Web, call center, and POS environments. CyberSource also offers
industry leading risk management and payment security solutions for
merchants accepting card-not-present transactions. CyberSource
Professional Services designs, integrates, and optimizes commerce
transaction processing systems. Approximately 305,000
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, Singapore, 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,
a reduction in the valuation allowance against deferred tax assets,
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 March 31,
2010, 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) the opportunity to join Visa; (2) the anticipated
closing time for the proposed merger with Visa; (3) the respective
roles of our Executive Chairman and CEO in the combined company;
(4) strength in eCommerce and international expansion; (5)
resellers and partners continuing to be a major driver for new
customer leads; and (6) the company continuing to drive strong
growth outside the U.S. 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 26,
2010, 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. The
forward-looking statements in this release speak only as of this
date. CyberSource undertakes no obligation to publicly update
forward-looking statements, whether as a result of new information,
future events, or otherwise.
Additional Information about the Merger and Where to Find
It
In connection with the proposed merger, CyberSource will file a
proxy statement with the SEC. Additionally, CyberSource will file
other relevant materials with the SEC in connection with the
proposed acquisition of CyberSource by Visa pursuant to the terms
of an Agreement and Plan of Merger by and among Visa, CyberSource
and Market St. Corp., a wholly-owned subsidiary of Visa. The
materials to be filed by CyberSource with the SEC may be obtained
free of charge at the SEC's web site at www.sec.gov. Investors and
stockholders also may obtain free copies of the proxy statement
from CyberSource by contacting its investor relations department by
telephone at (650) 965-6000 or by mail at CyberSource, Investor
Relations, 1295 Charleston Road, Mountain
View, California 94043. Investors and security holders of
CyberSource are urged to read the proxy statement and the other
relevant materials when they become available before making any
voting or investment decision with respect to the proposed merger
because they will contain important information about the merger
and the parties to the merger.
CyberSource, Visa and their respective directors, executive
officers and other members of its management and employees, under
SEC rules, may be deemed to be participants in the solicitation of
proxies of CyberSource stockholders in connection with the proposed
merger. Investors and security holders may obtain more detailed
information regarding the names, affiliations and interests of
certain of CyberSource's executive officers and directors in the
solicitation by reading CyberSource's proxy statement for its 2009
annual meeting of stockholders, the Annual Report on Form 10-K/A
for the fiscal year ended December 31,
2009 containing Part III information when filed with the SEC
on or before April 30, 2010, and the
proxy statement and other relevant materials filed with the SEC in
connection with the merger when they become available. Investors
and security holders may obtain more detailed information regarding
the names, affiliations and interests of certain of Visa's
executive officers and directors by reading Visa's proxy statement
for its 2010 annual meeting of stockholders. Information concerning
the interests of CyberSource's participants in the solicitation,
which may, in some cases, be different than those of CyberSource's
stockholders generally, will be set forth in the proxy statement
relating to the merger when it becomes available. Additional
information regarding CyberSource directors and executive officers
is also included in CyberSource's proxy statement for its 2009
annual meeting of stockholders and will be included in the Annual
Report on Form 10-K/A for the fiscal year ended December 31, 2009 containing Part III
information.
© 2010 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.
*In March 2010, CyberSource paid
approximately $300,000 as
consideration for settling a lawsuit that was filed against
CyberSource in April 2009.
CyberSource
Corporation
|
|
GAAP Condensed
Consolidated Statements of Income
|
|
(In thousands,
except per share data)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
March 31,
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
Revenues
|
|
$
76,589
|
|
$
60,491
|
|
|
|
|
|
|
|
Cost of revenues
|
|
36,733
|
|
27,981
|
|
|
|
|
|
|
|
Gross profit
|
|
39,856
|
|
32,510
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
Product development
|
|
7,739
|
|
6,454
|
|
Sales and marketing
|
|
18,354
|
|
17,554
|
|
General and administrative
|
|
7,642
|
|
6,980
|
|
Total operating
expenses
|
|
33,735
|
|
30,988
|
|
|
|
|
|
|
|
Income from operations
|
|
6,121
|
|
1,522
|
|
Other income (loss), net
|
|
73
|
|
(18)
|
|
Interest income
|
|
20
|
|
133
|
|
Income before income taxes
|
|
6,214
|
|
1,637
|
|
|
|
|
|
|
|
Income tax provision (benefit)
|
|
2,384
|
|
627
|
|
Net income
|
|
$
3,830
|
|
$
1,010
|
|
|
|
|
|
|
|
Basic net income per share
|
|
$
0.05
|
|
$
0.01
|
|
|
|
|
|
|
|
Diluted net income per share
|
|
$
0.05
|
|
$
0.01
|
|
|
|
|
|
|
|
Weighted average number of shares used in
computing basic net income per share
|
|
70,591
|
|
68,983
|
|
|
|
|
|
|
|
Weighted average number of shares used in
computing diluted net income per share
|
|
73,398
|
|
70,905
|
|
|
|
|
|
|
|
Non-GAAP Financial Metrics:
|
|
|
|
|
|
Gross profit
|
|
$
43,275
|
|
$
35,505
|
|
Operating expenses
|
|
$
26,059
|
|
$
22,451
|
|
Net income
|
|
$
16,766
|
|
$
12,580
|
|
Basic net income per share
|
|
$
0.24
|
|
$
0.18
|
|
Diluted net income per share
|
|
$
0.23
|
|
$
0.18
|
|
|
|
|
|
|
CyberSource
Corporation
|
|
Reconciliation of GAAP to
Non-GAAP Financial Measures
|
|
(In thousands, except per
share data)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
March 31,
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
GAAP gross profit
|
|
$
39,856
|
|
$
32,510
|
|
Add FAS123R expense
|
|
419
|
|
401
|
|
Add depreciation expense
|
|
1,920
|
|
1,237
|
|
Add amortization of intangible assets
|
|
1,080
|
|
1,357
|
|
Non-GAAP gross profit
|
|
$
43,275
|
|
$
35,505
|
|
|
|
|
|
|
|
GAAP operating expenses
|
|
$
33,735
|
|
$
30,988
|
|
Less FAS123R expense
|
|
(2,343)
|
|
(1,859)
|
|
Less depreciation expense
|
|
(668)
|
|
(463)
|
|
Less amortization of intangible assets
|
|
(4,365)
|
|
(5,283)
|
|
Less restructuring charges
|
|
-
|
|
(932)
|
|
Less settlement charges*
|
|
300
|
|
-
|
|
Non-GAAP operating expenses
|
|
$
26,659
|
|
$
22,451
|
|
|
|
|
|
|
|
GAAP net income
|
|
$
3,830
|
|
$
1,010
|
|
Add FAS123R expense
|
|
2,762
|
|
2,260
|
|
Add non-cash taxes provision
|
|
1,841
|
|
38
|
|
Add depreciation expense
|
|
2,588
|
|
1,700
|
|
Add amortization of intangible assets
|
|
5,445
|
|
6,640
|
|
Add restructuring charges
|
|
-
|
|
932
|
|
Add settlement charges*
|
|
300
|
|
-
|
|
Non-GAAP net income
|
|
$
16,766
|
|
$
12,580
|
|
|
|
|
|
|
|
GAAP basic net income per share
|
|
$
0.05
|
|
$
0.01
|
|
Add FAS123R expense
|
|
0.04
|
|
0.03
|
|
Add non-cash taxes provision
|
|
0.03
|
|
-
|
|
Add depreciation expense
|
|
0.04
|
|
0.03
|
|
Add amortization of intangible assets
|
|
0.08
|
|
0.10
|
|
Add restructuring charges
|
|
-
|
|
0.01
|
|
Non-GAAP basic net income per share
|
|
$
0.24
|
|
$
0.18
|
|
|
|
|
|
|
|
GAAP diluted net income per share
|
|
$
0.05
|
|
$
0.01
|
|
Add FAS123R expense
|
|
0.04
|
|
0.03
|
|
Add non-cash taxes provision
|
|
0.03
|
|
-
|
|
Add depreciation expense
|
|
0.04
|
|
0.03
|
|
Add amortization of intangible assets
|
|
0.07
|
|
0.10
|
|
Add restructuring charges
|
|
-
|
|
0.01
|
|
Non-GAAP diluted net income per share
|
|
$
0.23
|
|
$
0.18
|
|
|
|
|
|
|
|
*In March 2010, CyberSource paid approximately
$300,000 as consideration for settling a lawsuit that was filed
against CyberSource in April 2009.
|
|
|
|
|
|
|
CyberSource
Corporation
|
|
Condensed Consolidated Balance
Sheets
|
|
(In thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
143,223
|
|
$
128,044
|
|
Accounts receivable, net
|
|
23,220
|
|
22,878
|
|
Prepaid expenses and other current
assets
|
|
7,870
|
|
7,797
|
|
Deferred income taxes
|
|
3,770
|
|
3,770
|
|
Total current
assets
|
|
178,083
|
|
162,489
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
20,593
|
|
21,022
|
|
Intangible assets, net
|
|
97,968
|
|
103,413
|
|
Goodwill
|
|
289,278
|
|
289,278
|
|
Non-current deferred income taxes
|
|
14,422
|
|
16,224
|
|
Other non-current assets
|
|
2,425
|
|
2,520
|
|
Restricted cash
|
|
1,516
|
|
1,516
|
|
Total
assets
|
|
$
604,285
|
|
$
596,462
|
|
|
|
|
|
|
|
Liabilities and Stockholders'
Equity
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
1,295
|
|
$
1,003
|
|
Funds due to merchants
|
|
16,288
|
|
14,378
|
|
Other accrued liabilities
|
|
17,451
|
|
20,694
|
|
Deferred revenue
|
|
6,128
|
|
5,630
|
|
Accrued restructuring
|
|
1,095
|
|
1,155
|
|
Total current
liabilities
|
|
42,257
|
|
42,860
|
|
|
|
|
|
|
|
Deferred revenue, less current portion
|
|
1,188
|
|
1,154
|
|
Accrued restructuring, less current
portion
|
|
690
|
|
927
|
|
Other non-current tax liabilities
|
|
1,841
|
|
1,814
|
|
Total
liabilities
|
|
45,976
|
|
46,755
|
|
|
|
|
|
|
|
Total stockholders' equity
|
|
558,309
|
|
549,707
|
|
Total
liabilities and stockholders' equity
|
|
$
604,285
|
|
$
596,462
|
|
|
|
|
|
|
CyberSource
Corporation
|
|
Consolidated Statements of
Cash Flows
|
|
(In thousands, except per
share data)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
March 31,
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
Net income
|
|
$
3,830
|
|
$
1,010
|
|
Adjustments to reconcile net income to net cash
provided by operating activities:
|
|
|
|
|
|
Amortization expense
|
|
5,445
|
|
6,640
|
|
Depreciation expense
|
|
2,588
|
|
1,700
|
|
Income on investment in joint
venture
|
|
(100)
|
|
(110)
|
|
Stock-based compensation
|
|
2,762
|
|
2,260
|
|
Changes in operating assets and
liabilities:
|
|
|
|
|
|
Accounts receivable
|
|
(342)
|
|
(207)
|
|
Prepaid expenses and other current
assets
|
|
(73)
|
|
(1,176)
|
|
Deferred income taxes
|
|
1,802
|
|
(37)
|
|
Other non-current assets
|
|
195
|
|
(52)
|
|
Accounts payable
|
|
292
|
|
284
|
|
Accrued liabilities
|
|
(3,540)
|
|
(3,055)
|
|
Funds due to merchants
|
|
1,910
|
|
(133)
|
|
Deferred revenues
|
|
532
|
|
528
|
|
Other non-current tax
liabilities
|
|
27
|
|
29
|
|
Net cash provided by operating
activities
|
|
15,328
|
|
7,681
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
Purchases of property and equipment
|
|
(2,159)
|
|
(2,451)
|
|
Net cash used in investing activities
|
|
(2,159)
|
|
(2,451)
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
Proceeds from issuance of common stock
|
|
2,649
|
|
867
|
|
Tax benefit from employee stock options
|
|
14
|
|
47
|
|
Net cash provided by financing
activities
|
|
2,663
|
|
914
|
|
Effect of exchange rate changes on cash
|
|
(653)
|
|
(248)
|
|
Increase in cash and cash equivalents
|
|
15,179
|
|
5,896
|
|
Cash and cash equivalents at beginning of
period
|
|
128,044
|
|
73,292
|
|
Cash and cash equivalents at end of
period
|
|
$
143,223
|
|
$
79,188
|
|
|
|
|
|
|
SOURCE CyberSource Corporation