updated 3/10/2011 5:16:29 PM ET 2011-03-10T22:16:29

Revenue Backlog in Payments and Banking: Large FI Segments Increased to
$62.8 Million, a 60% Increase Compared to December 31, 2009

Sales Bookings in Payments and Banking: Large FI Segments Increased to $68.3 Million in Six Months Ended December 31, 2010, a 74% Increase Compared to Six Months Ended December 31, 2009

Generated $37.2 Million in Net Cash From Operations in 2010, a 132% Increase Compared to 2009

Fourth Quarter 2010 Revenue Reduced by $5.0 Million Due to Change in Scope of Custom Project

Introduces 2011 Guidance: Expects to Generate Revenue of $225 to $235 Million and Adjusted EBITDA of $22 to $27 Million

NORCROSS, Ga., March 10, 2011 (GLOBE NEWSWIRE) -- S1 Corporation (Nasdaq:SONE), a leading global provider of payments and financial services software solutions, today announced financial results for the fourth quarter and the full year ended December 31, 2010:

Financial Results and Operating Highlights

  • Total revenue decreased 12% to $52.5 million in the fourth quarter of 2010 compared with $59.5 million in the fourth quarter of 2009. As discussed in further detail below, revenue in the fourth quarter was reduced by $5.0 million due to a change in the scope of the project with the international branch customer that is one of our Custom Projects. Total revenue for the year ended December 31, 2010 decreased 12% to $209.1 million from $238.9 million in the year ended December 31, 2009. The decrease in revenue was primarily attributed to a $13.2 million reduction in professional services revenue from State Farm, an $11.6 million reduction in professional services revenue from an international branch customer (collectively, the "Custom Projects"), and the impact of recognizing a lower percentage of software licenses upon delivery due to an increase in projects where revenue is recognized using the percentage of completion method.
  • U.S. GAAP net loss was $4.3 million, or ($0.08) per share, in the fourth quarter of 2010 compared with U.S. GAAP net income of $9.9 million, or $0.18 per share (diluted), in the fourth quarter of 2009. U.S. GAAP net loss was $6.3 million, or ($0.12) per share, in the year ended December 31, 2010 compared with U.S. GAAP net income of $30.4 million, or $0.55 per share (diluted), in the year ended December 31, 2009. These figures include stock-based compensation expense of $2.3 million and $1.2 million in the fourth quarter of 2010 and 2009, respectively, and stock-based compensation expense of $3.7 million and $1.6 million in the year ended December 31, 2010 and 2009, respectively.
  • Adjusted EBITDA was $0.8 million in the fourth quarter of 2010 compared with $12.5 million in the fourth quarter of 2009. Adjusted EBITDA in the year ended December 31, 2010 was $10.4 million compared with $46.4 million in the year ended December 31, 2009. Adjusted EBITDA does not include stock-based compensation expense and is described below and reconciled to the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP in Tables 4, 5, 6 and 7, provided below.
  • Net cash provided by operating activities increased 132% to $37.2 million in the year ended December 31, 2010 compared with $16.0 million in the year ended December 31, 2009. The Company had cash and cash equivalents of $61.9 million as of December 31, 2010.
  • Revenue backlog, which is discussed in further detail below, in the Company's Payments and Banking: Large FI segments increased to $62.8 million as of December 31, 2010, an 11% increase compared with $56.7 million as of September 30, 2010 and a 60% increase compared with $39.2 million as of December 31, 2009.
  • The Company added 41 new customers in 2010.  
  • Notable fourth quarter 2010 contract signings include:
  • One of the 20 largest U.S. headquartered commercial bank holding companies for S1's payments solution;
  • One of the top 20 banks in the world for S1's Corporate Banking and Trade Finance solutions;
  • A top four bank in South Africa for S1's payments solution;
  • A top supermarket chain in the United Kingdom for S1's payments solution;
  • The leading independent global provider of fleet cards for S1's payments solution; and
  • Two of the top five banks in the U.S. for S1's Trade Finance solution.
  • In 2011, the Company expects to generate revenue of $225 to $235 million and Adjusted EBITDA of $22 to $27 million. 

Johann Dreyer, Chief Executive Officer, said, "Although our 2010 financial performance was impacted by the transition of our business model and a reduction in revenue from the Custom Projects, the fundamentals of our core businesses were strong as evidenced by the significant increases in revenue backlog, sales bookings, and cash flows.  We ended 2010 with another strong quarter of sales bookings and entered 2011 with a 60% increase in revenue backlog as compared to 2010. With the progress we made in the transition of our business model during 2010, and the greater visibility we have with the increase in revenue backlog, we have resumed providing annual financial guidance."

Custom Projects – International Branch Customer

During the fourth quarter of 2010, the scope of the project with the international branch customer that is one of our Custom Projects increased significantly.  Since we recognize revenue for this project using the percentage of completion method, our revenue in the fourth quarter was reduced by $5.0 million as a result of this change. However, we will recognize this amount as revenue over the remainder of the project, expected primarily in 2011 and 2012. In an effort to reduce the likelihood of any further increases in the scope of this project and accelerate cash flows from this customer, in February 2011 we amended certain agreements with this customer to (i) reduce the scope of the project, and (ii) revise billing milestones.

Conference Call, Webcast and Slide Information

Management will host a conference call to discuss its fourth quarter and full year 2010 results on Friday, March 11, 2011, at 8:30 a.m. ET. Participants may access the call by dialing (877) 899-9075 (United States) or (706) 758-0819 (International) and entering passcode 42730048. Investors also may access a slide presentation and live audio webcast of this conference call by visiting www.s1.com and entering the Investor Relations section under "About S1."

A replay of the webcast will be available approximately two hours after the conclusion of the call. A telephone replay will also be available approximately two hours after the conclusion of the call through March 25, 2011. To access the replay, please dial (800) 642-1687 or (706) 645-9291 and enter passcode 42730048.

Non-GAAP Measures and Reconciliation to U.S. GAAP

Our results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). In addition to U.S. GAAP financial measures, we use non-GAAP measures to evaluate our financial performance, assist management decisions, and in communications with our Board of Directors, stockholders, analysts and investors concerning our financial performance. Although we believe that our presentation of non-GAAP financial measures provides useful supplemental information to investors regarding our results of operations, our non-GAAP financial measures should only be considered in addition to, and not as a substitute for or superior to, our financial measures prepared in accordance with U.S. GAAP. The use of non-GAAP financial measures is subject to inherent limitations because they do not include all the expenses that must be included under U.S. GAAP and because they involve the exercise of management's judgment of which charges should properly be excluded from the non-GAAP financial measure. Management accounts for these limitations by not relying exclusively on non-GAAP financial measures, but only using such information to supplement U.S. GAAP financial results. Our non-GAAP financial measures may be different from such measures used by other companies.

We are presenting Adjusted EBITDA, a non-GAAP financial measure, below and reconciling to the most directly comparable U.S. GAAP equivalent of which is Net income for our consolidated results and Operating income for our segment results. We define Adjusted EBITDA as, in the case of our consolidated results, Net income plus interest and other expense (income), plus income taxes or, in the case of our segment results, Operating income, in each case adjusted for depreciation, amortization of intangibles, and stock-based compensation expense. We believe that excluding depreciation, amortization, stock-based compensation expense, interest and other expense (income) and income taxes provides supplemental information and an alternative presentation useful to investors understanding our core operating results and trends. Not only are depreciation and amortization expenses based on historical costs of assets that may have little bearing on present or future replacement costs, but they are also based on management's estimates of remaining useful lives. Additionally, while stock-based compensation is an important part of overall compensation expense, a portion of our stock-based compensation expense is the result of cash-settled stock appreciation rights that are revalued each quarter for U.S. GAAP earnings based in part on the closing price of our stock on the last day of the quarter. Consequently, fluctuations in our stock price can have a significant impact on our reported U.S. GAAP earnings. See Tables 4, 5, 6 and 7 for reconciliations of non-GAAP Adjusted EBITDA.

We are presenting Cash earnings per share, a non-GAAP financial measure, below and reconciling to the most directly comparable U.S. GAAP equivalent of which is Net income and earnings per share. We define Cash earnings as Net income plus amortization of intangibles, stock-based compensation and deferred income taxes. We calculate Cash earnings per share by adding back the per share impact of adjustments from diluted earnings per share. We believe Cash earnings per share is a useful financial measure which provides supplemental information and an alternative presentation useful to investors understanding trends of our income. Amortization of intangibles is generally expensed over several periods and may not be indicative of current cash expenditures. We believe the exclusion of stock-based compensation provides useful supplemental information to help understand the changes in our earnings per share due to the fluctuations of our cash-settled stock appreciation rights included in stock compensation. We exclude the impact of deferred income taxes on earnings as the temporary differences and the changes in valuation allowances may be misleading for trend analysis. See Table 1 for reconciliation of non-GAAP Cash earnings per share to U.S. GAAP Diluted earnings per share.

We are presenting an estimate of revenue backlog for our Payments and Banking: Large Financial Institution segments which is defined as an estimate of revenue for software licenses, including term licenses, professional services, and hosting services, in each case as specified in executed contracts that we believe will be recognized in revenue over the next 12 months. The portion of the estimate from our Banking: Large Financial Institution segment does not include revenue associated with the Company's Custom Projects. We believe that presenting this estimate provides supplemental information and an alternative presentation useful to investors understanding trends in our business including the shift we are experiencing toward recognizing more software license revenue using the percentage of completion method.

Our estimate of revenue backlog requires substantial judgment of our management, is based on a number of assumptions, which may turn out to be inaccurate or wrong, and is subject to a number of factors and uncertainties, many of which are outside of our control. Such assumptions, factors and uncertainties include, but are not limited to, the following:

  • Revenue for term licenses and hosting services are the annualized amount expected over the next 12 months as of the date presented;
  • Foreign currency exchange rates are assumed to remain constant over the 12 month period for contracts stated in currencies other than the U.S. Dollar;
  • Perpetual licenses and professional services are based on current estimates of project completion over the next 12 months;
  • Our customers may attempt to renegotiate or terminate their contracts for a number of reasons, including mergers, changes in their financial condition or general changes in economic conditions within their industries or geographic locations;
  • We may experience delays in the development or delivery of products or services specified in customer contracts; and
  • Our estimate is based on constant hosting transaction volumes, and changes in hosting transaction volumes may impact the amount of revenue actually recognized in future periods.

Estimates of future financial results are inherently unreliable. Accordingly, there can be no assurance that the amounts included in our estimate of revenue backlog will be recognized over the next 12 months, or at all. Additionally, because our estimate of revenue backlog is an operating metric, it is not subject to the same level of internal review or control as a U.S. GAAP financial measure.

About S1 Corporation

Leading banks, credit unions, retailers, and processors need technology that adapts to the complex and challenging needs of their businesses. These organizations want solutions that can respond quickly to changes in the marketplace and help grow their businesses.  For more than 20 years, S1 Corporation (Nasdaq:SONE) has been a leader in developing software products that offer flexibility and reliability. Over 3,000 organizations worldwide depend on S1 for payments, online banking, mobile banking, voice banking, branch banking and lending solutions that deliver a competitive advantage. More information is available at www.s1.com .

Forward-Looking Statements

This press release contains forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act. These statements include statements with respect to our financial condition, results of operations and business. The words "believes," "expects," "may," "will," "should," "projects," "contemplates," "anticipates," "estimates," "forecasts," "intends" or similar terminology identify forward-looking statements. Forward-looking statements may include projections of our revenue, expenses, Adjusted EBITDA, revenue backlog, capital expenditures, earnings per share, product development projects, future economic performance or management objectives. These statements are based on our beliefs as well as assumptions made using information currently available to us. Because these statements reflect our current views concerning future events, they involve risks, uncertainties and assumptions. Therefore, actual results may differ significantly from the results discussed in the forward-looking statements. The risk factors included in our reports filed with the Securities and Exchange Commission (and available on our web site at www.s1.com or the SEC's web site at www.sec.gov ) provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Except as provided by law, we undertake no obligation to update any forward-looking statement for any reason, even if new information becomes available.

 S1 Corporation 
 Consolidated Statements of Operations 
 (In thousands, except share and per share data) 
 (Unaudited) 
TABLE 1
     
   Three Months Ended   Twelve Months Ended 
  12/31/2010 12/31/2009 12/31/2010 12/31/2009
         
Revenue:        
 Software licenses  $ 8,902  $ 8,978  $ 26,237  $ 35,196
 Support and maintenance  16,598  15,905  63,034  59,602
 Professional services  12,498  22,013  65,180  94,965
 Hosting  14,475  12,564  54,635  49,164
 Total revenue  52,473  59,460  209,086  238,927
         
Operating expenses:        
Cost of software licenses (1)  488  453  2,242  3,188
Cost of professional services, support and maintenance (1)  21,392  18,189  82,778  74,186
Cost of hosting (1)  6,853  6,978  27,595  28,147
Selling and marketing   8,165  7,582  28,172  30,725
Product development   8,936  8,478  35,508  34,619
General and administrative   8,413  6,675  27,134  24,864
Depreciation and amortization   2,551  2,295  10,161  9,593
 Total operating expenses   56,798  50,650  213,590  205,322
         
Operating (loss) income   (4,325)  8,810  (4,504)  33,605
         
 Interest income   50  99  214  433
 Interest expense   (105)  (200)  (455)  (721)
 Other non-operating expense   (500)  (83)  (1,367)  (930)
Interest and other expense, net  (555)  (184)  (1,608)  (1,218)
         
(Loss) income before income tax expense  (4,880)  8,626  (6,112)  32,387
 Income tax benefit (expense)  535  1,312  (171)  (1,964)
Net (loss) income  $ (4,345)  $ 9,938  $ (6,283)  $ 30,423
         
(Loss) income per share:        
Basic  $ (0.08)  $ 0.18  $ (0.12)  $ 0.56
Diluted  $ (0.08)  $ 0.18  $ (0.12)  $ 0.55
         
Weighted average common shares outstanding - basic   53,253,106  52,040,660  52,495,265  52,583,832
Weighted average common shares outstanding - diluted  53,253,106  52,692,876  52,495,265  53,290,836
         
         
Reconciliation to Cash (loss) income per share:        
Diluted (loss) income per share  $ (0.08)  $ 0.18  $ (0.12)  $ 0.55
Amortization of intangibles  0.02  0.01  0.05  0.05
Stock-based compensation expense  0.04  0.02  0.07  0.03
Deferred income taxes  0.01  (0.05)  --   (0.05)
Non-GAAP Cash (loss) income per share  $ (0.01)  $ 0.16  $ 0.00  $ 0.58
         
(1) Excludes charges for depreciation. Cost of software licenses includes amortization of acquired technology. 
 
 S1 Corporation 
 Consolidated Balance Sheets 
 (In thousands, except share data) 
(Unaudited)
TABLE 2
     
   December 31,   December 31, 
  2010 2009
     
 Assets     
 Current assets:     
 Cash and cash equivalents   $ 61,917  $ 61,784
 Accounts receivable, net   44,370  64,470
 Prepaid expenses   4,827  4,729
 Other current assets   6,612  4,931
 Total current assets   117,726  135,914
 Property and equipment, net   22,330  23,018
 Intangible assets, net   11,846  4,895
 Goodwill, net   147,544  126,605
 Other assets   10,207  9,634
 Total assets   $ 309,653  $ 300,066
     
 Liabilities and Stockholders' Equity     
 Current liabilities:     
 Accounts payable and accrued expenses   $ 9,779  $ 7,707
 Accrued compensation and benefits   9,705  11,569
 Current portion of debt obligation   5,046  1,170
 Accrued restructuring   1,528  2,096
 Income taxes payable   1,950  1,586
 Deferred revenues   38,022  26,837
 Other current liabilities   2,853  2,007
 Total current liabilities   68,883  52,972
 Debt obligation, excluding current portion   35  5,026
 Accrued restructuring, excluding current portion   --   1,381
 Other liabilities   3,122  2,046
 Total liabilities   $ 72,040  $ 61,425
     
 Stockholders' equity:     
 Preferred stock   --   10,000
 Common stock   533  517
 Additional paid-in-capital   1,802,795  1,787,772
 Accumulated deficit   (1,563,817)  (1,557,534)
 Accumulated other comprehensive loss   (1,898)  (2,114)
 Total stockholders' equity   237,613  238,641
 Total liabilities and stockholders' equity   $ 309,653  $ 300,066
     
     
Preferred shares issued and outstanding  --   749,064
Common shares issued and outstanding  53,317,063  51,712,710
 
 S1 Corporation 
 Consolidated Statements of Cash Flows 
 (In thousands) 
 (Unaudited) 
TABLE 3
   
  Three Months Ended Twelve Months Ended
  12/31/2010 12/31/2009 12/31/2010 12/31/2009
         
 Cash flows from operating activities:         
 Net (loss) income   $ (4,345)  $ 9,938  $ (6,283)  $ 30,423
 Adjustments to reconcile net income (loss) to net cash from operating  activities:         
 Depreciation and amortization   2,843  2,520  11,216  11,170
 Provision for doubtful accounts receivable and billing adjustments   (152)  461  1,388  995
 Deferred income taxes   714  (3,052)  57  (2,812)
 Stock-based compensation expense   2,269  1,181  3,700  1,602
 Changes in assets and liabilities:         
 Decrease (increase) in accounts receivable   9,533  (8,470)  19,880  (22,396)
 Decrease (increase) in prepaid expenses and other assets   545  498  (1,760)  792
 Decrease in accounts payable and other liabilities   (451)  (8)  (292)  (920)
 Decrease in accrued compensation and benefits   (85)  (1,584)  (1,985)  (2,711)
 (Decrease) increase in income taxes payable   (1,050)  (499)  310  (1,437)
 Increase (decrease) in deferred revenue   1,358  (4,100)  11,018  1,329
 Net cash provided by (used in) operating activities   11,179  (3,115)  37,249  16,035
 Cash flows from investing activities:         
 Maturities of investment securities  --   3,224  1,384  5,728
 Purchases of investment securities  --   --   (1,117)  (3,224)
 Purchases of restricted investment securities  --   --   --   (2,000)
 Acquisitions, net of acquired cash  --   --   (31,198)  -- 
 Purchases of property, equipment and technology  (2,633)  (1,828)  (6,773)  (8,192)
 Net cash (used in) provided by investing activities   (2,633)  1,396  (37,704)  (7,688)
 Cash flows from financing activities:         
 Proceeds from exercise of employee stock awards  836  1,149  810  1,341
 Payments on capital leases and debt obligations  (166)  (996)  (1,174)  (3,917)
 Repurchases and retirement of common stock  --   (4,625)  --   (9,596)
 Net cash provided by (used in) financing activities   670  (4,472)  (364)  (12,172)
 Effect of exchange rate changes on cash and cash equivalents   619  568  952  1,769
 Net increase (decrease) in cash and cash equivalents   9,835  (5,623)  133  (2,056)
 Cash and cash equivalents at beginning of period   52,082  67,407  61,784  63,840
 Cash and cash equivalents at end of period   $ 61,917  $ 61,784  $ 61,917  $ 61,784
 
 S1 Corporation 
 Consolidated Statements of Operations 
 (In thousands) 
 (Unaudited) 
TABLE 4
         
   Three Months Ended   Twelve Months Ended 
  12/31/2010 12/31/2009 12/31/2010 12/31/2009
         
Revenue:        
 Software licenses  $ 8,902  $ 8,978  $ 26,237  $ 35,196
 Support and maintenance  16,598  15,905  63,034  59,602
 Professional services  12,498  22,013  65,180  94,965
 Hosting  14,475  12,564  54,635  49,164
 Total revenue  52,473  59,460  209,086  238,927
         
Operating expenses:        
Cost of software licenses  488  453  2,242  3,188
Cost of professional services, support and maintenance   21,392  18,189  82,778  74,186
Cost of hosting  6,853  6,978  27,595  28,147
Selling and marketing   8,165  7,582  28,172  30,725
Product development   8,936  8,478  35,508  34,619
General and administrative   8,413  6,675  27,134  24,864
Depreciation and amortization   2,551  2,295  10,161  9,593
 Total operating expenses (1)  56,798  50,650  213,590  205,322
         
Operating (loss) income   (4,325)  8,810  (4,504)  33,605
         
 Interest income   50  99  214  433
 Interest expense   (105)  (200)  (455)  (721)
 Other non-operating expense   (500)  (83)  (1,367)  (930)
Interest and other expense, net  (555)  (184)  (1,608)  (1,218)
         
Income (loss) before income tax expense  (4,880)  8,626  (6,112)  32,387
 Income tax benefit (expense)  535  1,312  (171)  (1,964)
Net (loss) income  $ (4,345)  $ 9,938  $ (6,283)  $ 30,423
         
Reconciliation to Adjusted EBITDA:        
Net (loss) income   $ (4,345)  $ 9,938  $ (6,283)  $ 30,423
Interest and other expense, net  555  184  1,608  1,218
Income tax (benefit) expense  (535)  (1,312)  171  1,964
Depreciation  2,088  2,023  8,459  8,480
Amortization  755  497  2,757  2,690
Stock-based compensation expense  2,269  1,181  3,700  1,602
Non-GAAP Adjusted EBITDA  $ 787  $ 12,511  $ 10,412  $ 46,377
         
(1) Includes stock-based compensation expense of:        
 Cost of professional services, support and maintenance  $ 81  $ 94  $ 310  $ 161
 Cost of hosting  36  37  133  115
 Selling and marketing  615  191  504  (246)
 Product development  244  112  270  254
 General and administrative  1,293  747  2,483  1,318
 Stock-based compensation expense   $ 2,269  $ 1,181  $ 3,700  $ 1,602
 
 S1 Corporation 
 Payments Segment 
 Statements of Operations 
 (In thousands) 
 (Unaudited) 
TABLE 5
         
   Three Months Ended   Twelve Months Ended 
  12/31/2010 12/31/2009 12/31/2010 12/31/2009
         
Revenue:        
 Software licenses  $ 5,281  $ 3,616  $ 14,402  $ 18,063
 Support and maintenance  6,298  5,340  22,291  18,905
 Professional services  4,121  5,022  16,796  18,814
 Hosting  285  212  1,168  761
 Total revenue  15,985  14,190  54,657  56,543
         
Operating expenses:        
Cost of software licenses  --   134  121  1,359
Cost of professional services, support and maintenance   5,676  4,416  19,735  15,914
Cost of hosting  256  201  868  674
Selling and marketing   3,985  2,662  12,338  11,344
Product development   1,282  1,400  5,856  5,380
General and administrative   3,042  1,445  8,453  5,766
Depreciation and amortization   537  433  1,999  1,615
 Total operating expenses (1)  14,778  10,691  49,370  42,052
         
Operating income  $ 1,207  $ 3,499  $ 5,287  $ 14,491
         
         
Reconciliation to Adjusted EBITDA:        
Operating income  $ 1,207  $ 3,499  $ 5,287  $ 14,491
Depreciation  404  310  1,497  1,125
Amortization  133  225  502  1,507
Stock-based compensation expense   710  252  1,232  422
Non-GAAP Adjusted EBITDA  $ 2,454  $ 4,286  $ 8,518  $ 17,545
         
         
(1) Includes stock-based compensation expense of:        
 Cost of professional services, support and maintenance  $ 19  $ 40  $ 70  $ (40)
 Cost of hosting  5  1  17  2
 Selling and marketing  229  67  315  227
 Product development  25  18  90  116
 General and administrative  432  126  740  117
 Stock-based compensation expense   $ 710  $ 252  $ 1,232  $ 422
 
 S1 Corporation 
 Banking: Large Financial Institution Segment 
 Statements of Operations 
 (In thousands) 
 (Unaudited) 
TABLE 6
         
   Three Months Ended   Twelve Months Ended 
  12/31/2010 12/31/2009 12/31/2010 12/31/2009
         
Revenue:        
 Software licenses  $ 2,167  $ 3,150  $ 5,879  $ 9,003
 Support and maintenance  5,361  5,742  20,696  21,265
 Professional services  7,478  15,606  44,037  70,710
 Hosting  6,352  7,122  25,321  28,254
 Total revenue  21,358  31,620  95,933  129,232
         
Operating expenses:        
Cost of software licenses  155  135  1,073  798
Cost of professional services, support and maintenance   10,348  9,533  41,233  42,240
Cost of hosting  3,521  3,771  14,648  15,794
Selling and marketing   2,841  2,992  9,994  12,136
Product development   4,385  5,180  16,412  21,071
General and administrative   3,348  3,411  11,787  12,578
Depreciation and amortization   1,061  1,129  4,381  4,834
 Total operating expenses (1)  25,659  26,151  99,528  109,451
         
Operating (loss) income  $ (4,301)  $ 5,469  $ (3,595)  $ 19,781
         
         
Reconciliation to Adjusted EBITDA:        
Operating (loss) income  $ (4,301)  $ 5,469  $ (3,595)  $ 19,781
Depreciation  1,061  1,129  4,381  4,834
Amortization  61  61  245  245
Stock-based compensation expense   1,030  617  1,587  746
Non-GAAP Adjusted EBITDA  $ (2,149)  $ 7,276  $ 2,618  $ 25,606
         
         
(1) Includes stock-based compensation expense of:        
 Cost of professional services, support and maintenance  $ 49  $ 39  $ 185  $ 156
 Cost of hosting  13  11  49  30
 Selling and marketing  366  102  114  (416)
 Product development  41  75  55  80
 General and administrative  561  390  1,184  896
 Stock-based compensation expense   $ 1,030  $ 617  $ 1,587  $ 746
 
 S1 Corporation 
 Banking: Community Financial Institution Segment 
 Statements of Operations 
 (In thousands) 
 (Unaudited) 
TABLE 7
         
   Three Months Ended   Twelve Months Ended 
  12/31/2010 12/31/2009 12/31/2010 12/31/2009
         
Revenue:        
 Software licenses  $ 1,454  $ 2,212  $ 5,956  $ 8,130
 Support and maintenance  4,939  4,823  20,047  19,432
 Professional services  899  1,385  4,347  5,441
 Hosting  7,838  5,230  28,146  20,149
 Total revenue  15,130  13,650  58,496  53,152
         
Operating expenses:        
Cost of software licenses  333  184  1,048  1,031
Cost of professional services, support and maintenance   5,368  4,240  21,810  16,032
Cost of hosting  3,076  3,006  12,079  11,679
Selling and marketing   1,339  1,928  5,840  7,245
Product development   3,269  1,898  13,240  8,168
General and administrative   2,023  1,819  6,894  6,520
Depreciation and amortization   953  733  3,781  3,144
 Total operating expenses (1)  16,361  13,808  64,692  53,819
         
Operating loss   $ (1,231)  $ (158)  $ (6,196)  $ (667)
         
         
Reconciliation to Adjusted EBITDA:        
Operating loss  $ (1,231)  $ (158)  $ (6,196)  $ (667)
Depreciation  623  584  2,581  2,521
Amortization  561  211  2,010  938
Stock-based compensation expense   529  312  881  434
Non-GAAP Adjusted EBITDA  $ 482  $ 949  $ (724)  $ 3,226
         
         
(1) Includes stock-based compensation expense of:        
 Cost of professional services, support and maintenance  $ 13  $ 15  $ 55  $ 45
 Cost of hosting  18  25  67  83
 Selling and marketing  20  22  75  (57)
 Product development  178  19  125  58
 General and administrative  300  231  559  305
 Stock-based compensation expense   $ 529  $ 312  $ 881  $ 434
CONTACT: Investor Contact:
         Paul M. Parrish
         Chief Financial Officer
         404.923.3500
         paul.parrish@s1.com

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