Financial Results and Operating Highlights

-- Total revenue decreased 11% to $53.7 million in the third quarter of 2010 compared with $60.3 million in the third quarter of 2009. Total revenue for the nine months ended September 30, 2010 decreased 13% to $156.6 million from $179.5 million in the nine months ended September 30, 2009. The decrease in revenue was primarily attributed to a reduction in revenue from State Farm and the custom development for an international branch customer ("Custom Projects"), lower professional services revenue, and the impact of recognizing a lower amount of software licenses upon delivery.
-- U.S. GAAP net income was $0.9 million, or $0.02 per share (diluted), in the third quarter of 2010 compared with U.S. GAAP net income of $6.9 million, or $0.12 per share (diluted), in the third quarter of 2009. U.S. GAAP net loss was $1.9 million, or $0.04 per share, in the nine months ended September 30, 2010 compared with U.S. GAAP net income of $20.5 million, or $0.37 per share (diluted), in the nine months ended September 30, 2009. These figures include stock-based compensation expense of $0.2 million and a benefit of $0.1 million in the third quarter of 2010 and 2009, respectively, and stock-based compensation expense of $1.4 million and $0.4 million in the nine months ended September 30, 2010 and 2009, respectively.
-- Adjusted EBITDA was $3.6 million in the third quarter of 2010 compared with $11.7 million in the third quarter of 2009. Adjusted EBITDA in the nine months ended September 30, 2010 was $9.6 million compared with $33.9 million in the nine months ended September 30, 2009. Adjusted EBITDA does not include stock-based compensation expense and is described below and reconciled to the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP in Tables 4, 5, 6 and 7, provided below.
-- Net cash provided by operating activities increased 36% to $26.1 million in the nine in the nine months ended September 30, 2010 compared with $19.2 million in the nine months ended September 30, 2009. The Company had cash and cash equivalents of $52.1 million as of September 30, 2010.
-- Revenue backlog, which is discussed in further detail below, in the Company's Payments and Banking: Large FI segments increased to $56.7 million as of September 30, 2010, an 18% increase compared with $48.2 million as of June 30, 2010 and a 45% increase compared with $39.2 million as of December 31, 2009.
-- In connection with opening an office in Latin America, in August 2010 the Company purchased certain assets of, and hired certain employees from, a company that resold S1's products in Latin America for $1.9 million, net of cash acquired.
-- Notable third quarter 2010 contract signings include:

-- A merchant acquirer in the U.S. for S1's payments solution;
-- A top 20 retailer in the UK for S1's payments solution;
-- One of the 15 largest commercial banks in the U.S. for S1's corporate online banking solution; and
-- A top 20 credit union in the U.S. for S1's consumer and business online banking and mobile banking solutions.

"I am very pleased with the progress we made in the third quarter, as we closed a significant amount of business and continued to increase our revenue backlog," said Johann Dreyer, Chief Executive Officer. "We believe the shift in our business model is progressing well and, with a forty-five percent increase in revenue backlog since the end of 2009, we expect to enter 2011 with greater levels of visibility and predictability. We also continue to expect some normalization in our Adjusted EBITDA by the end of the fourth quarter as we previously communicated."