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Official Payments Reports Results from Second Quarter of Fiscal Year 2013:
May 09, 2013 (01:05 PM EDT)
NORCROSS, Ga., May 9, 2013 /PRNewswire/ -- Official Payments Holdings, Inc. (Nasdaq: OPAY), a leading provider of electronic payment solutions, reported results today for its fiscal year 2013 second quarter (Q2 fiscal 2013). The Company is hosting a call/webcast today at 5:00 p.m. EDT to review its results:
Q2 Fiscal 2013 Highlights:
Official Payments Holdings, Inc. reported revenue from continuing operations of $32.7 million for Q2 fiscal 2013, a decrease of $0.1 million compared to Q2 fiscal 2012. Q2 fiscal 2013 Payment Solutions net revenue, which reflects Payment Solutions revenues less related processing and interchange fees, was $12.1 million compared to $11.5 million in Q2 fiscal 2012. $2.3 billion of payment transactions were processed in Q2 fiscal 2013 compared to $2.0 billion of payment transactions in Q2 fiscal 2012 with average payment size increasing 15.7%. General and administrative and selling and marketing expenses decreased a combined 3.7% versus Q2 fiscal 2012, primarily due to lower compensation related expenses.
Official Payments reported a net loss from continuing operations of $0.4 million, or $0.02 per share for Q2 fiscal 2013, compared to the prior year's net loss from continuing operations of $1.4 million, or $0.08 per share for Q2 fiscal 2012. Continuing operations consists of the Payment Solutions segment, which contributed more than 99% of the company's revenue from continuing operations in fiscal 2013, with nominal revenue contributions from the legacy voice and systems automation (VSA) operations that are in the process of being wound down.
Adjusted EBITDA from continuing operations was $1.9 million in Q2 fiscal 2013 compared to $1.0 million in Q2 fiscal 2012.
Payment Solutions net revenue and Adjusted EBITDA from continuing operations are non-GAAP financial measures. These measures are defined and reconciled to GAAP financial measures below.
Cash Position and Use of Cash
Official Payments' cash and cash equivalents increased by approximately $2.5 million from $39.1 million at fiscal year-end 2012 to $41.6 million at March 31, 2013. Official Payments cash position includes $6.7 million of net settlement funds outstanding and $5.5 million of accrued discount fees, thus leaving cash available for company use of $29.4 million.
Alex P. Hart, President and CEO, stated, "We're very pleased to report a sixth consecutive quarter of positive Adjusted EBITDA. We're particularly excited about the launch of electronic bill delivery (e-Bill) and mobile payment apps for the iPad, iPhone, and Android phones and tablets, all of which will give consumers even more ways to utilize our services. On the operations front, our platform consolidation project continues to progress, and the infrastructure upgrade we completed last year yielded tremendous results during the recently completed tax season. We handled a peak volume of 460,000 transactions on April 15th without incident, a record number of transactions, but well below our peak capacity: as a result of the infrastructure upgrade, our system is capable of handling one million transactions in a 24 hour period."
"The record IRS tax season bodes very well for our anticipated third quarter results and is cause for optimism for the remainder of FY13 and beyond," said Hart. "The most critical part of tax season occurs between March 1st and April 21st, and IRS transactions during that period were up 74% versus last year and dollar volume was up 82% versus last year. These increases were driven by a combination of the quality and availability of our upgraded user interfaces across multiple channels, a sizeable increase in volume from taxpayers who use TurboTax to calculate and pay their federal income taxes (up more than 100% for both transactions and dollars), the fact that we were listed in the first position on the list of payment providers on the IRS website, our improved search engine optimization and email marketing efforts, the reintroduction of our ChoicePay brand for taxpayers seeking more inexpensive payment options, and the ongoing increase in the adoption of electronic tax filing and electronic payment. The quality of this tax season, and our continued ability to handle significant increases in volume without incident, gives us confidence that we're on the right track, technologically, operationally and financially."
Non-GAAP Financial Measures
Official Payments uses the following non-GAAP financial measures in this press release: Adjusted EBITDA from continuing operations and Payment Solutions net revenue. We define Adjusted EBITDA from continuing operations as net loss from our continuing operations before interest expense net of interest income, income taxes, depreciation and amortization, restructuring charges and share-based compensation expense. We define Payment Solutions net revenue as Payment Solutions gross revenue less discount fees. Discount fees include interchange fees and other processing-related dues, assessments and fees. Payment Solutions gross revenue is defined as revenue from continuing operations less revenue from VSA operations.
Management believes these measures are useful for evaluating our performance against the performance of peer companies within the electronic payments industry, and that they provide investors with additional transparency on the financial measures used in management's decision-making. Management believes that Payment Solutions net revenue provides additional information about our business, as we wind-down our VSA operations. We also use Adjusted EBITDA from continuing operations, together with other criteria, in our executive compensation program. Non-GAAP financial measures should not be considered a substitute for the reported results prepared in accordance with generally accepted accounting principles in the United States, or US GAAP. Our definitions used to calculate non-GAAP financial measures may differ from those used by other companies.
These measures are reconciled to GAAP financial measures in the tables below:
About Official Payments Holdings, Inc. (www.OPAY.OfficialPayments.com):
Official Payments provides electronic payment solutions for over 3,000 clients across all 50 states, Puerto Rico and the District of Columbia. During the past year more than 12 million Customers and Constituents of our Clients utilized our services. Official Payments' solutions enable government agencies, educational institutions, utility companies, charitable organizations, and other billers to seamlessly accept secure, convenient payments by credit card, debit card and electronic check via mobile, web (www.OfficialPayments.com), telephone and point of sale.
Forward looking statements
Statements made in this press release that are not historical facts are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to future events or Official Payments' future financial and/or operating performance and generally can be identified as such because the context of the statement includes words such as "may," "will," "intends," "plans," "believes," "anticipates," "expects," "estimates," "shows," "predicts," "potential," "continue," or "opportunity," the negative of these words or words of similar import. Official Payments undertakes no obligation to update any such forward-looking statements. Each of these statements is made as of the date hereof based only on current information and expectations that are inherently subject to change and involve a number of risks and uncertainties. Actual events or results may differ materially from those projected in any of such statements due to various factors, including, but not limited to: intense competition in the marketplace; our ability to increase Payment Solutions revenues and reduce operating costs, including discount fees; our ability to execute on our sales, marketing and product development strategy and expand our business including introduction of new services, products, and product enhancements into the marketplace; timely consolidation of our payment platforms; maintaining secure systems and protecting against security breaches, loss of privacy/data, and fraud; litigation; unanticipated claims as a result of the failure of software providers, processors, vendors, or subcontractors to satisfactorily perform and complete engagements; the renewal, extension or early termination of client contracts or projects; and compliance with government regulations and the impact of regulatory requirements. For a discussion of these and other factors which may cause our actual events or results to differ from those projected, please refer to the sections, "Risk Factors" and "Management Discussion and Analysis of Financial Condition and Results of Operations" in the periodic reports on Form 10-K and Form 10-Q that we file with the Securities and Exchange Commission.
(1) Reflects revenues from the company's legacy VSA operations which are being wound down of $0.2 million and $0.4 million, respectively, in Q2 fiscal 2013, and Q2 fiscal 2012 and $0.3 million and $0.9 million for the six months ended March 31, 2013, and 2012, respectively.
(2) Reflects VSA income (loss) from continuing operations before and after taxes of $0.1 million and ($0.1) million, respectively, in Q2 fiscal 2013 and Q1 fiscal 2012 and $0.2 million and $0.3 million, for the six months ended March 31, 2013, and 2012, respectively.
SOURCE Official Payments Holdings, Inc.