Lightbridge Announces Fourth Quarter and Year End 2006 Financial Results
Authorize.Net Fourth Quarter Revenue Grows 23% Year Over Year; Net Merchant Adds of 8,400, Up Over 40% From Prior Year
BURLINGTON, MA -- (www.AllPayNews.com) -- January 31, 2007 -- Lightbridge, Inc. (NASDAQ: LTBG), a leading e-commerce, analytics and decisioning company, today reported financial results for the quarter and year ended December 31, 2006.
Revenue from continuing operations for the fourth quarter of 2006 was $20.6 million compared to $27.3 million for the fourth quarter of 2005. This represents a decrease of 25% compared to the prior year due to lower revenue from Telecom Decisioning Services (TDS) clients. Authorize.Net revenue for the fourth quarter of 2006 was a record $15.7 million, an increase of 23% over the $12.8 million reported in the fourth quarter of 2005.
Income from continuing operations was $22.0 million, or $0.77 per fully diluted share for the fourth quarter of 2006, versus $4.0 million, or $0.14 per fully diluted share, reported for the fourth quarter of 2005.
Income for the fourth quarter reflects a partial reversal of a valuation allowance against deferred tax assets. Based on achieving sustained profitability and an assessment of our expected future results, the Company concluded that, pursuant to Statement of Financial Accounting Standards No. 109, a portion of the valuation allowance should be released. As a result, the Company reduced its valuation allowance, resulting in recognition of a deferred tax asset of $20.3 million which had the effect of increasing the Company's diluted earnings per share in the fourth quarter by $0.71 cents.
Fourth quarter 2006 results included share-based compensation expense of $539,000 reflecting the adoption of SFAS 123(R). Restructuring charges related to the Company's decision to exit the TDS business were $1.8 million. There were no significant comparable charges in the fourth quarter of 2005. For the fourth quarter of 2006, income from continuing operations before share-based compensation expense, restructuring charges and the partial reversal of the valuation allowance for deferred tax assets (a non-GAAP financial measure) was $4.0 million, or $0.14 per fully diluted share. A detailed reconciliation of the GAAP and non-GAAP measures is included at the end of this release.
Total revenue from continuing operations for the full year 2006 was $95.6 million compared to $108.3 for the full year of 2005. Authorize.Net revenue for the full year 2006 was a record $57.5 million, an increase of 27% over the $45.3 million reported in the prior year. Income from continuing operations for the full year 2006 was $24.3 million, or $0.86 per fully diluted share, versus income from continuing operations of $8.8 million, or $0.32 per fully diluted share, for the full year 2005. The 2006 results include share-based compensation expense of $4.0 million, restructuring and asset impairment charges of $7.3 million, the NetMoneyIN, Inc. patent litigation settlement of $1.5 million and the partial reversal of the valuation allowance for deferred tax assets of $20.3 million. Included in the 2005 results were $0.4 million in share-based compensation expense and $1.3 million in restructuring and asset impairment charges.
For the full year ended December 31, 2006, income from continuing operations before share-based compensation expense, restructuring and asset impairment charges, the patent litigation settlement and the partial reversal of the valuation allowance for deferred tax assets (a non-GAAP financial measure) was $16.7 million, or $0.59 per fully diluted share. A detailed reconciliation of the GAAP and non-GAAP measures is included at the end of this release.
Stock Repurchase Program
The Company announced in November 2006 that, in line with its efforts to increase shareholder value and demonstrate confidence in the Company's long-term prospects, the Company's board of directors authorized a stock repurchase program for up to $15.0 million of its common stock. The repurchase program is in place through December 31, 2008. As of December 31, 2006, there were no purchases made through this program.
"The fourth quarter capped an excellent year at Authorize.Net and marked the turning point for Lightbridge becoming a company solely focused on the payment processing industry," said Robert Donahue, president and CEO. "We are pleased to report that Authorize.Net completed another strong quarter of revenue and profit performance. For the full year Authorize.Net's performance was outstanding. We take tremendous pride in our ability as a team to have achieved attractive profit margins and cash flow performance. We delivered consistently strong revenues, accelerated growth in our merchant base and achieved solid growth across our key performance indicators."
Donahue continued, "We made great strides in 2006 as we introduced new products and services to our ISO channel and merchant base and formed strategic partnerships with Card Present (CP) and Card Not Present (CNP) solution providers. These solution providers include shopping cart vendors, auction integration tools, web developers, and retail-based shopping applications.
"The TDS business experienced a difficult year in terms of financial results due to the effects of industry consolidation and pricing pressures. In October 2006, we announced our decision to exit our TDS business, which will allow us to fully focus on the payment processing business. We are working diligently to transition the business in the best way possible for our clients as well as our shareholders including a possible sale of the business.
"As I look forward, I am optimistic about the growth opportunities that exist for us, both in the short and long term. I believe Authorize.Net should be able to achieve attractive results in 2007, leveraging our resources to explore opportunities to accelerate growth. I am pleased with our Company's accomplishments in 2006, excited about fulfilling our strategic vision of providing one-stop shopping for our merchants and remain positive about our outlook for the future."
-- Processed a record $8.8 billion of merchant transactions in the fourth
quarter, up 29% compared to the same period in 2005.
-- Processed a record 87.2 million transactions in the fourth quarter, a
21% increase over the comparable quarter last year.
-- Gross merchant adds in the fourth quarter of 2006 were a record
17,906, with net merchant adds totaling a record 8,411, up 31% and 43%,
respectively, compared to the same period in 2005.
-- Active merchants as of December 31, 2006 were a record 166,280, up 22%
over the prior year.
Cash and Short-Term Investments
At December 31, 2006, Lightbridge's cash and short-term investment position was $116.2 million, compared to $84.8 million at December 31, 2005. This includes funds held for merchants of $8.8 million compared to $7.1 million at December 31, 2005.
Company Performance versus Previous Guidance - Fourth Quarter 2006
Lightbridge's revenue of $20.6 million was toward the high end of the Company's guidance of $19.3 million to $21.1 million for the fourth quarter of 2006. The Company's guidance included revenue expectations for Authorize.Net of $15.3 to $16.1 million, with actual results for this business reported at $15.7 million.
Lightbridge's previously issued guidance for earnings (loss) per fully diluted share was ($0.03) to $0.05, and did not anticipate the partial reversal of the valuation allowance for deferred tax assets that resulted in an increase of $0.71 to the fourth quarter earnings per fully diluted share results. Fully diluted earnings per share were $0.77 for the fourth quarter of 2006, which, if adjusted for the valuation allowance described above, would be $0.06 (a non-GAAP financial measure), exceeding the high end of our guidance range. Earnings per fully diluted share before share-based compensation expense, restructuring charges and the partial reversal of the valuation allowance for deferred tax assets (a non-GAAP financial measure) were $0.14, at the high end of the guided range of $0.06 to $0.14 for the fourth quarter of 2006.
Guidance for the first quarter is only current as of today, January 31, 2007. The Company undertakes no obligation to update its estimates.
-- The Company anticipates revenue for the first quarter of 2007 to be in
the range of $17.6 to $18.8 million, reflecting reduced TDS revenue
expectations as we wind down the business. Authorize.Net expects to
contribute in the range of $15.9 to $16.7 million.
-- The Company anticipates net income (loss) per fully diluted share for
the first quarter of 2007 to be in the range of ($0.03) to $0.05. The
Company anticipates share-based compensation expense in the first quarter
of 2007 associated with the expensing of stock options in accordance with
SFAS 123(R) in the range of $400,000 to $600,000, or $0.01 to $0.02 per
fully diluted share. The Company uses the modified prospective method to
report compensation charges associated with the expensing of stock options.
The Company expects to record restructuring and asset impairment charges in
the range of $1.3 to $2.0 million or $0.05 to $0.07 per fully diluted share
in the first quarter related to the decision to exit the TDS business.
-- For the first quarter of 2007, net income per fully diluted share
before share-based compensation expense and restructuring and asset
impairment charges related to the decision to exit the TDS business (a non-
GAAP financial measure) is anticipated to be in the range of $0.06 to
In addition to reporting financial results in accordance with generally accepted accounting principles, (GAAP), the Company has provided non-GAAP financial measures, which it believes are useful to help investors better understand its financial performance, competitive position and prospects for the future. Such measures exclude share-based compensation expense, restructuring and asset impairment charges, the NetMoneyIN, Inc. patent litigation settlement expense in the second quarter of 2006 and the partial reversal of the valuation allowance for deferred tax assets under the Statement of Financial Accounting Standards No. 109. The Company uses the modified prospective method to report compensation charges associated with the expensing of stock options. Results for prior periods have not been adjusted to reflect non-GAAP financial performance. Management believes these non-GAAP financial measures assist in providing a more complete understanding of the Company's underlying operational results and trends and in allowing for a more comparable presentation of results in the reported period to those in prior periods that did not include SFAS 123(R) share-based compensation. Management uses these measures along with their corresponding GAAP financial measures to help manage the Company's business and to help evaluate its performance compared to the marketplace. However, the presentation of non-GAAP financial measures is not meant to be considered in isolation or as superior to or as a substitute for financial information provided in accordance with GAAP. The non-GAAP financial measures used by the Company may be calculated differently from, and, therefore, may not be comparable to, similarly titled measures used by other companies. Investors are encouraged to review the reconciliations of these non-GAAP financial measures to the comparable GAAP results, contained in the attached exhibits and found on the Company's website at: www.lightbridge.com.
Conference Call Information
Lightbridge will conduct a conference call today, January 31, at 4:30 pm (EST) to discuss the information contained in this news release. Investors wishing to listen to a webcast of the conference call should link to the "Investor Relations" section of www.lightbridge.com at least 15 minutes prior to the broadcast and follow the instructions provided to assure the necessary audio applications are downloaded and installed. The call will be available online at the Company's website for one week. The call can also be accessed live over the phone by dialing 1-877-427-0636. The replay will be available approximately one hour after the call and can be accessed by dialing 877-519-4471. The passcode number is 8315509. The replay will be available until Wednesday, February 14, 2007.
Lightbridge, Inc. (NASDAQ: LTBG) is a leading e-commerce, analytics and decisioning company that businesses trust to manage customer transactions. Lightbridge adds value to fraud screening, credit qualification, and payment authorization. Lightbridge solutions leverage intelligent automated systems and human expertise, delivered primarily through the efficiencies and cost savings of an outsourced business model. Businesses use Lightbridge to make smarter decisions, deliver better services, provide secure payments, reduce costs and enhance the lifetime value of their customers. For more information, visit www.lightbridge.com.
Note to Editors: LIGHTBRIDGE and AUTHORIZE.NET are registered trademarks and the Lightbridge logo is a trademark of Lightbridge, Inc. All other trademarks and registered trademarks are the properties of their respective owners.
Certain statements in this news release that are not historical facts, including, without limitation, those relating to the Company's focus on the payment processing business, optimism about growth opportunities, exploration of opportunities to accelerate growth, belief in Authorize.Net's ability to achieve attractive results in 2007, positive outlook for the future, strategic vision of providing one stop shopping for our merchants, first quarter 2007 financial guidance and belief that its presentation of non-GAAP financial measures is useful to investors are forward-looking statements that involve risks and uncertainties. Such statements are based upon the current beliefs and expectations of the management of the Company. Actual results may vary materially from those contained in forward-looking statements based on a number of factors including, without limitation, (i) the adverse impact that the Company's decision to exit the TDS business will have on its revenues, net income, stock price, and future business and operations, (ii) risks and costs associated with the Company's continuing commitments under TDS customer contracts and TDS related operating leases and the difficulty of transitioning TDS customers to other vendors and subleasing or exiting facilities, as the case may be, (iii) risks and costs associated with the termination of employees, (iv) the Company's revenue concentration in the wireless telecommunications business, (v) continuing rapid change in the telecommunications industry, payment processing industry, and other markets in which the Company does business that may affect both the Company and its clients, (vi) current and future economic conditions generally and particularly in the telecommunications and payment processing industry, (vii) uncertainties about the Company's ability to execute on, and about the impact on the Company's business and operations of, its objectives, plans or strategies as a result of potential technological, market or competitive factors, or its decision to exit the TDS business, (ix) the impact of compensation expense, restructuring, asset impairment and other charges on the Company's business and operations including, without limitation, those related to the Company's decision to exit the TDS business, (viii) integration, employee retention, recognition of cost and other benefits and revenue synergies, and other risks associated with acquisitions, (x) the industry risks associated with Authorize.Net's business and operations including, without limitation, illegal or improper uses of Authorize.Net's payment system, unauthorized intrusions and attacks on Authorize.Net's payment system that may impair the operation of its payment systems, changes in or failures to comply with credit card association rules and governmental regulations, changes in the application of existing laws and the impact of new laws, dependence on relationships with resellers, certain financial institutions and third party payment processors, and unintended or unauthorized releases of personal consumer data, and (xi) the factors disclosed in the Company's filings with the U.S. Securities and Exchange Commission including, without limitation, its 2005 Annual Report on Form 10-K, third quarter 2006 Quarterly Report on Form 10-Q and other public filings. The Company undertakes no obligation to update any forward-looking statements.