Shares of S1 sink on growth concerns

The Internet financial services company's shares fall 27 percent after it reports earnings and warns of a possible revenue slowdown.

2 min read
Shares of S1 fell 27 percent today after the Internet financial services company reported earnings and warned of a possible revenue slowdown.

In late Nasdaq trading, the Atlanta-based company's shares fell $6.94 to $18.50 on a volume of 6.9 million shares, more than four times the stock's average daily volume. The shares are down 76 percent so far this year and have traded between $142.25 and $17.25 during the past 52 weeks.

S1 reported a second-quarter net loss of $2.82 a share from operations, compared with a loss of 8 cents last year.

The provider of financial software and transaction services generated revenue of $59.1 million, up from $15.7 million in the same quarter a year ago.

Analysts surveyed by First Call/Thomson Financial expected a loss of $2.72 a share. Excluding merger-related costs and other noncash charges, the company lost 27 cents a share, in line with some analysts' expectations.

The company cautioned investors that business conditions might crimp growth in the future, however.

S1 said pricing pressures, international operations and the revenue from two recently completed acquisitions hampered growth in the second quarter.

In addition, it said pricing pressure could slow revenue in the future.

"As we focus on maintaining our leadership position in account aggregation and the large domestic financial institution spaces, the existing pricing pressures could have a future impact on revenues and gross margins," chief financial officer Robert Stockwell said in a statement.

Account aggregation helps businesses and consumers keep track of all their accounts in one place. Yodlee, a privately held aggregation company, has signed up large institutions such as Citigroup, Chase Manhattan and Merrill Lynch. Corillian, another competitor, recently signed Lehman Brothers as a customer.

Further complicating the picture is how S1 will integrate its recent acquisitions.

S1 completed its acquisitions of Davidge Data Systems and Q UP Systems in the second quarter. The company has also acquired VerticalOne and Edify.

S1 plans a conference call for analysts at 2 p.m. PT today.