Higher One Holdings, Inc. Reports Second Quarter 2013 Financial Results

Updated

Higher One Holdings, Inc. Reports Second Quarter 2013 Financial Results

  • Revenue was $40.0 million, up 2% year-over-year

  • Total Signed School Enrollment (SSE) increased to approximately 13 million students at quarter end

  • OneDisburse new sales over 100,000 SSE

NEW HAVEN, Conn.--(BUSINESS WIRE)-- Higher One Holdings, Inc. (NYS: ONE) ("Higher One" or the "Company"),a leader in providing financial services and data analytics to over 1,600 college and university campuses across the U.S., today announced financial results for the second quarter of 2013.

Higher One reported revenue of $40.0 million, as compared to $38.9 million in the second quarter of 2012. The Company reported GAAP net income of $3.6 million for second quarter 2013, and non-GAAP adjusted net income, which excludes certain non-recurring or non-cash items, of $2.2 million. GAAP diluted EPS was $0.07 in the quarter, as compared to $0.07 in the second quarter of 2012. Non-GAAP adjusted diluted EPS was $0.05, as compared to $0.09 for the same period a year ago. In the second quarter of 2013, non-GAAP adjusted EBITDA was $5.9 million.


Mark Volchek, Chief Executive Officer, said, "The second quarter is a seasonally slower period for company revenue. While organic revenue was lower on a year over year basis, we were able to grow overall revenue as a result of the additions of the Campus Labs suite of data analytics software, and the Campus Solutions business, which we acquired from Sallie Mae during the second quarter. We have successfully completed the integration of our sales teams and are pleased with the overall feedback we are receiving from schools about the acquisition."

Volchek continued, "We have made changes to the fee schedule for the OneAccount over the past year. These changes make the account even more consumer-friendly than it already was, as we continue to compare favorably to the other student checking and prepaid card options for students. The issues of how the fee changes will roll out, the changes in the rate of adoption of the OneAccount, the variations in financial aid volumes and the unpredictability of enrollment trends make it challenging to provide accurate guidance at this time. As such, we are suspending providing revenue and earnings guidance."

Total enrollment at higher education clients that have purchased the OneDisburseĀ® service increased to 4.8 million, an increase of approximately 300,000 from 4.5 million at the end of the second quarter of 2012. Total enrollment at higher education clients that have signed up for at least one of our OneDisburse, CASHNet, Campus Labs or Campus Solutions modules totals approximately 13 million.

The number of OneAccounts at the end of the second quarter of 2013 was approximately 2.2 million, up 14% from the second quarter of 2012. The number of OneAccounts was essentially flat on a sequential basis.

Conference Call Information

Higher One will host a conference call at 8:30 a.m. ET today to discuss second quarter results. The dial in phone number is 866-318-8613 for domestic listeners and 617-399-5132 for international listeners. The conference ID # is 25495047. A live webcast of the conference call, together with a slide presentation that includes supplemental financial information and reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures can be accessed through Higher One's investor relations website at http://www.ir.higherone.com. In addition, an archive of the webcast will be available for 90 days through the same link.

About Higher One Holdings

Higher One Holdings, Inc. (NYS: ONE) partners with colleges and universities to lower their administrative costs and to improve graduation rates. We provide a broad array of payment, refund disbursement and data analytics and management tools to institutions that help them save money and enhance institutional effectiveness. And for students, we offer financial literacy programs and convenient, flexible and affordable transaction options to help them manage their finances. Higher One is a leader in higher education, supporting more than 1,600 schools and 13 million enrolled students. More information about Higher One can be found at www.ir.higherone.com.

Forward-Looking Statements

This press release contains statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Management's projections and expectations are subject to a number of risks and uncertainties that could cause actual performance to differ materially from that predicted or implied. Forward-looking statements may be identified by the use of words such as "expect," "anticipate," "believe," "estimate," "potential," "should" or similar words intended to identify information that is not historical in nature. Forward-looking statements contained herein include, among others, statements about the expected benefits of the acquisition of Sallie Mae's Campus Solutions business by Higher One and such statements are based on the current beliefs and expectations of Higher One and Sallie Mae's management, as applicable, and are subject to known and unknown risks and uncertainties. There are a number of risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements, including, but not limited to Higher One being unable to achieve expected synergies and operating efficiencies in the acquisition within the expected time-frames or at all and to successfully integrate Sallie Mae's Campus Solutions business operations into those of Higher One; such integration may be more difficult, time-consuming or costly than expected; revenues following the transaction may be lower than expected; operating costs, customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers) may be greater than expected following the transaction; the retention of certain key employees in the Campus Solutions business at Sallie Mae; the outcome of any legal proceedings that may be instituted against the parties and others related to the acquisition agreement and the amount of the costs, fees, expenses and charges related to the acquisition. These statements speak only as of the date they are made, and the company does not intend to update or otherwise revise the forward-looking information to reflect actual results of operations, changes in financial condition, changes in estimates, expectations or assumptions, changes in general economic or industry conditions or other circumstances arising and/or existing since the preparation of this press release or to reflect the occurrence of any unanticipated events. The forward-looking statements in this press release do not include the potential impact of any acquisitions or divestitures that may be announced and/or completed after the date hereof. Information about the risks and factors that could affect future performance can be found in our recent SEC filings.

Use of Non-GAAP Financial Measures

This release includes certain metrics presented on a non-GAAP basis, including non-GAAP adjusted EBITDA, non-GAAP adjusted net income, and non-GAAP adjusted EPS. We believe that these non-GAAP measures, which exclude amortization of intangibles, stock-based compensation, and certain non-recurring or non-cash impacts to our results, all net of taxes, provide useful information regarding normalized trends relating to the company's financial condition and results of operations. Reconciliations of these non-GAAP measures to their closest comparable GAAP measure are included in this press release.

Higher One Holdings, Inc.

Consolidated Income Statement

(In thousands of dollars, except share and per share amounts)

Three Months

Six Months

Ended June 30,

Ended June 30,

2013

2012

2013

2012

Revenue:

Account revenue

$

25,944

$

30,033

$

69,307

$

77,143

Payment transaction revenue

6,086

4,172

12,787

9,501

Higher education institution revenue

7,725

4,027

14,866

8,651

Other revenue

268

681

443

1,399

Revenue

40,023

38,913

97,403

96,694

Cost of revenue

17,894

17,141

40,194

38,465

Gross margin

22,129

21,772

57,209

58,229

Operating expenses:

General and administrative

13,576

11,077

26,665

22,303

Product development

2,444

1,085

4,339

1,991

Sales and marketing

4,632

2,946

7,839

5,813

Merger and acquisition related

(5,011)

-

(4,465)

-

Total operating expenses

15,641

15,108

34,378

30,107

Income from operations

6,488

6,664

22,831

28,122

Interest income

20

32

39

64

Interest expense

(766)

(108)

(1,395)

(217)

Other income

78

78

155

155

Net income before income taxes

5,820

6,666

21,630

28,124

Income tax expense

2,261

2,614

8,269

10,684

Net income

$

3,559

$

4,052

$

13,361

$

17,440

Net income available to common stockholders:

Basic

$

3,559

$

4,052

$

13,361

$

17,440

Diluted

$

3,559

$

4,052

$

13,361

$

17,440

Weighted average shares outstanding

Basic

46,704,451

54,653,888

46,489,470

55,350,851

Diluted

48,382,828

57,717,127

48,354,283

58,588,952

Net income available to common stockholders per common share:

Basic

$

0.08

$

0.07

$

0.29

$

0.32

Diluted

$

0.07

$

0.07

$

0.28

$

0.30

Higher One Holdings, Inc.

Consolidated Balance Sheet

(In thousands of dollars, except share and per share amounts)

June 30,

December 31,

2013

2012

Assets

Current assets:

Cash and cash equivalents

$

6,823

$

13,031

Investments in marketable securities

247

247

Accounts receivable

11,317

4,860

Income receivable

13,523

7,466

Deferred tax assets

5

37

Prepaid expenses and other current assets

9,104

10,890

Restricted cash

-

2,000

Total current assets

41,019

38,531

Deferred costs

4,224

4,665

Fixed assets, net

52,905

52,686

Intangible assets, net

59,859

38,143

Goodwill

66,548

47,000

Loan receivable related to New Markets Tax Credit financing

7,633

7,633

Other assets

1,059

740

Restricted cash

1,500

1,500

Total assets

$

234,747

$

190,898

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$

2,596

$

3,756

Accrued expenses

13,391

12,526

Contingent consideration, current portion

535

2,230

Deferred tax liabilities

-

356

Deferred revenue

21,129

16,027

Total current liabilities

37,651

34,895

Deferred revenue and other non-current liabilities

2,404

2,517

Loan payable and deferred contribution related to New Markets Tax Credit

financing

9,336

9,490

Debt

112,000

80,000

Contingent consideration, non-current portion

-

3,520

Deferred tax liabilities

4,078

2,764

Total liabilities

165,469

133,186

Commitments and contingencies

Stockholders' equity:

Common stock, $.001 par value; 200,000,000 shares authorized; 58,842,813

shares issued and 46,929,787 shares outstanding at June 30, 2013; 58,045,404

shares issued and 46,660,781 shares outstanding at December 31, 2012

60

59

Additional paid-in capital

178,418

174,218

Treasury stock, 11,913,026 and 11,384,623 shares at June 30, 2013 and

December 31, 2012, respectively

(137,899)

(131,903)

Retained earnings

28,699

15,338

Total stockholders' equity

69,278

57,712

Originally published