CheckFree Loss Narrows

The company raises its pro forma estimates for the full year.

Author:: Kristen French
Publish date:: Apr 23, 2002 6:07 PM EDT

Electronic bill presentment and payment company

CheckFree

(CKFR)

narrowed its fiscal third-quarter loss despite a raft of writedowns and special charges, and raised its estimate of full-year results before those items.

After items including a $90.3 million charge to write down acquisitions, a $15.9 million reorganization charge and $22.8 million in related tax benefits, CheckFree reported a fiscal third quarter loss of $77.5 million, or 89 cents a share, compared to a loss of $101.1 million, or $1.17 a share last year.

On a pro forma basis that excludes those items and which doesn't reflect generally accepted accounting principles, the company turned a profit in its fiscal third quarter, beating analyst estimates on better-than-expected software sales and increased efficiencies in technology and bill processing. The company also raised its earnings targets for 2002

CheckFree reported a pro forma profit of $5.9 million, or 7 cents a share, up from a pro forma loss of $3.5 million, or 4 cents a share in the year-ago quarter. Revenues rose 10% vs. the year-ago quarter to $124.6 million. Analysts were expecting a 2-cent profit and $123 million in revenue.

The company raised its full year pro forma earnings per share to between 17 and 19 cents a share from previous guidance of the low to mid-teens. In 2001 the company lost 18 cents a share on a pro forma basis. CheckFree also forecast revenues of $125 million to $130 million for its fiscal fourth quarter, and pro forma earnings of 12 to 14 cents a share, including "announced efficiencies from exiting the Bank of America California platform, as well as the efficiencies we recognized on March 19."

"I am pleased that we are ahead of the schedule we set for delivering pro forma profitability this year," said CheckFree Chairman and CEO Pete Kight in a statement. "The combination of continuing gains in efficiency coming from our technology and processing scale, and better than expected software sales, led to our finishing the quarter with pro forma earnings per share higher than the top of the range we had anticipated."

CheckFree shares closed up 4.14% Tuesday to $16.84. The stock has risen over 50% since early February.

CheckFree processed 82 million transactions in the quarter, up 9% from the previous quarter and a 32% increase from the year-ago quarter. Subscribers grew 5% vs. the previous quarter and 31% vs. the previous year, to 6.3 million. CheckFree forecast subscribers will grow 5%-7% in the fourth quarter vs. the third quarter.

CheckFree's Electronic Commerce division reported revenue of $89.8 million, up 12% from a year earlier, and a pro forma profit of $9.4 million, up from a loss of $2.5 million in the year-ago quarter. CheckFree's investment services segment reported revenue rose 12% to $20.0 million, and a pro forma profit of $6.9 million, up 33% from the year ago.

The company's software business reported revenue fell 3% to $14.8 million, down 3% versus the previous year, while its pro forma profit was $2.5 million, vs. a loss of $400,000 last year.

"Top-line growth in our software division continues to reflect the softness in the software industry overall, but prudent expense management is helping us to achieve better operating performance from this division," the company wrote.