Tier Technologies Inc. has a market cap of $134.5 million; its shares were traded at around $7.41 with and P/S ratio of 1. TIER is in the portfolios of Chuck Royce of ROYCE & ASSOCIATES.
Highlight of Business Operations:Our Continuing Operations consists of our Electronic Payment Solutions, or EPS, Operations, and certain operations we intend to wind down over the next three years. Revenues from our EPS Operations were $31.9 million for the period ended December 31, 2009. As of December 31, 2009, transaction volume increased 65.0% and total dollars processed increased 23.8% over the same period last year. Our EPS Operations reported a net loss of $0.9 million for the three months ended December 31, 2009. The seasonality of our business causes fluctuations from one quarter to the next within our revenues and direct costs. However, our general and administrative and selling and marketing expenses are more fixed in nature. This type of revenue and cost structure has resulted in a net loss for the first quarter of fiscal 2010. We have successfully streamlined our costs to support our Wind-down operations, while still effectively managing our ongoing contracts, which have resulted in reported net income from Wind-down operations of $0.2 million.
EPS generated $31.9 million of revenues during the three months ended December 31, 2009, a $3.7 million, or 13.0%, increase over the three months ended December 31, 2008. During the three months ended December 31, 2009, we processed 65.0% more transactions than we did in the same period last year,
EPS Direct Costs: Consistent with the growth of our EPS revenues, EPS direct costs rose $2.0 million, or 9.1%, during the three months ended December 31, 2009 compared to the same period last year. Discount fees increased $1.5 million, or 7.3%, over the same period last year, attributable to an increased number of transactions processed offset by several cost savings initiatives and a shift in vertical payment
Other costs increased $0.5 million, or 48.0%, over the same period last year, primarily due to increased telephonic costs of $0.3 million associated with increased usage of our customer and client support centers. Labor and labor-related costs increased $0.2 million, primarily attributable to the acquisition of ChoicePay, offset by reduced consulting fees of $0.1 million, as a result of our efforts to decrease dependency of outside resources. Other costs attributable to the support of our contracts and clients increased $0.1 million, of which the acquisition of ChoicePay is the largest contributor.
EPS General and Administrative: During the three months ended December 31, 2009, EPS incurred $6.2 million of general and administrative expenses, a $0.3 million, or 5.3%, decrease over the same period last year. During the three months ended December 31, 2009, we experienced decreases of $0.3 million in consulting and outside services, primarily due to the completion of strategic initiatives during fiscal 2009 as well as our efforts to decrease dependency on outside resources. In addition, our labor and labor-related costs decreased $0.2 million over the same period last year, consisting of a $0.3 million decrease in severance expense, as a result of the completion of the consolidation of our San Ramon, California office with our Auburn, Alabama office during fiscal 2009, offset by a $0.1 million increase for performance stock unit and incentive pay expense. We also reported a $0.1 million decrease in travel and travel-related expenses, due to decreased travel by our executive team.
Offsetting these decreases were: the increase of $0.1 million in legal fees, primarily associated with the settlement with one state in a money transmitter license issue; a $0.1 million in increased software maintenance expense, primarily attributable to increased data security efforts as well as the acquisition of ChoicePay; and $0.1 million in bad debt expense, as a result of longer payment cycles.
Read the The complete Report