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Tier Technologies Inc. Reports Operating Results (10-Q)

May 10, 2010 | About:
10qk

10qk

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Tier Technologies Inc. (TIER) filed Quarterly Report for the period ended 2010-05-06.

Tier Technologies Inc. has a market cap of $141.94 million; its shares were traded at around $7.82 with and P/S ratio of 1.11. TIER is in the portfolios of Jim Simons of Renaissance Technologies LLC, 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 $30.0 million for the three months ended March 31, 2010 and $61.9 million for the six months ended March 31, 2010. For the three months ended March 31, 2010, transaction volume increased 34.4% and total dollars processed increased 20.7% over the same period last year. For the six months ended March 31, 2010, transaction volume increased 47.0% and total dollars processed increased 22.4% over the same period last year. Our EPS operations reported a net loss of $0.8 million and $1.7 million, respectively, for the three and six months ended March 31, 2010. 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 net losses reported for the three and six months ended March 31, 2010. We have successfully streamlined our costs to support our Wind-down operations, while still effectively managing our ongoing contracts, which has resulted in a minimal net loss from Wind-down operations of $30,000 for the three months ended March 31, 2010 and net income from Wind-down operations of $0.2 million for the six months ended March 31, 2010.

Our Discontinued Operations consists of businesses we have divested through fiscal year 2009. We incur minimal residual expense relating to our divested operations. During the three months ended March 31, 2010, we received an earn-out payment pursuant to our sales agreement from our former GBPO operations of $0.6 million, resulting in net income of $0.3 million and $0.2 million, respectively, from Discontinued Operations for the three and six months ended March 31, 2010.

EPS generated $30.0 million of revenues during the three months ended March 31, 2010, a $2.7 million, or 10.0%, increase over the three months ended March 31, 2009. During the three months ended March 31, 2010, we processed 34.4% more transactions than we did in the same period last year, representing 20.7% more dollars. The lower growth in dollars processed as compared with growth in transactions is due primarily to the success of our stated strategic intent to develop new verticals to diversify the business and lower average dollar transactions in our various tax verticals. A significant amount of the new transactions were from verticals with lower average dollar size, which resulted in lower revenue per transaction. For example, average utility payments per transaction are lower than in our established property tax and income tax businesses and therefore produced lower average revenue per transaction. At the same time we introduced ACH as a payment option in the utility vertical and several other verticals. In the last year, we have also seen that this shift in payment type has reduced our average revenue per transaction and our average direct costs per transaction. For this reason, the shift in payment type has increased our average “profit” per transaction, when profit is calculated on a percentage basis, even though the average “profit” per transaction may not have increased on an absolute dollar basis. Most of our verticals experienced an increase in transactions processed during the three months ended March 31, 2010 compared to the same period last year, ranging from 9.5% to 54.1%. During the three months ended March 31, 2010, we added 207 new payment types, which contributed to the increase in revenues.

During the six months ended March 31, 2010, EPS generated $61.9 million of revenues, a $6.4 million, or 11.5%, increase over the same period last year. During the six months ended March 31, 2010, we processed 47.0% more transactions than we did the same period last year, representing 22.4% more dollars. See the paragraph above for an explanation of the lower growth in dollars processed as compared with growth in transactions. During the six months ended March 31, 2010, most of our verticals experienced an increase in the transactions processed when compared to the six months ended March 31, 2009, ranging from 11.3% to 107.6%. During the six months ended March 31, 2010, we added 330 new payment types.

Read the The complete Report

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