S1 Corporation (SONE), the provider of software to the financial services industry, saw revenue grow 7% year-over-year. The company has surprised on estimates 2 out of the last 4 quarters by an average of 17.17%. SONE has a P/B ratio of 1.6.

Company Description

S1 Corporation provides customer interaction software for financial and payment services to 3,000 customers around the world. Customers include community, regional and national banks, credit unions, retailers, and processors.

The company has three brands: Postilion, S1 Enterprise and FSB Solutions.

Revenue Jumped 7% in the First Quarter of 2009

S1 Corporation did what many others are not able to do in this economic environment and that’s actually grow its business. On Apr 30, the company reported first quarter results that saw revenue grow 7% to $58.3 million from $54.7 million in the year ago period.

Net income rose to $8.9 million, or 16 cents, from $5.2 million, or 7 cents, in the first quarter of 2008. This was a surprise of 77.78%, or 7 cents a share, as analysts’ expected only 9 cents.

“We posted another strong quarter of year-over-year growth in revenue and achieved several operating milestones including entering into one of the largest agreements in the history of our Postilion payments business, licensing our new Postilion self-service banking application to multiple new credit union customers, and executing an agreement with Longtop Financial to market S1 Enterprise applications to financial institutions in China,” said Johann Dreyer, CEO.

Liquidity

S1 had $66.4 million in cash and cash equivalents on hand at the end of the first quarter.

2009 Guidance Reaffirmed

S1 is optimistic about the rest of 2009 as it continues to see its sales pipeline grow. It reaffirmed its full year revenue guidance of $240 to $245 million.

Consensus Estimates Rise

Covering analysts are moving to adjust earnings estimates after the big first quarter beat and reaffirmation of guidance. Second quarter estimates are up 1 cent to 11 cents in the last week.

Since the earnings report, full-year 2009 estimates climbed 13% to 51 cents. Analysts expect year over year earnings growth of 33.16%.

Value Fundamentals

S1 has a forward P/E of 13 and a price-to-book of 1.6. The Zacks #1 Rank (strong buy) stock has a solid 1-year return on equity (ROE) of 12.43%.

Zacks Investment Research
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