Online Resources Posts Fourth Quarter and Full Year 2008 Results

CHANTILLY, Va. – Online Resources Corporation (Nasdaq: ORCC), a leading provider of web-based financial services, today reported financial and operating results for the three months and full year ended December 31, 2008.

Fourth Quarter 2008

• Revenue was $37.2 million, down 2 percent from $38.1 million in fourth quarter 2007, reflecting the departure of three large clients in late 2007 and early 2008.
• Ebitda, a non-GAAP measure adjusted for stock compensation and preferred stock accretion, was $9.6 million, compared to $10.3 million in the prior year.
• Net income available to common stockholders was $1.3 million or $0.04 per diluted share, compared to $12.1 million or $0.40 per diluted share in the prior period. Adjusted for tax valuation allowance benefits of $0.2 million in 2008 and $13.7 million in 2007, income was $1.1 million or $0.04 per diluted share, versus a loss of $1.6 million or $0.05 per diluted share in the prior year.
• Core net income, a non-GAAP measure, was $2.0 million versus $3.3 million in 2007. Core net income per share was $0.07 per share, down from $0.11 per share in 2007.

Full Year 2008

• Revenue was $151.6 million, a 12 percent increase from $135.1 million in 2007.
• Ebitda, a non-GAAP measure, was $32.7 million, the same as the prior year.
• Net loss available to common stockholders was $7.0 million or $0.24 per diluted share, compared to income of $2.6 million or $0.09 per diluted share in the prior period. Adjusted for tax valuation allowance benefits of $0.2 million in 2008 and $13.7 million in 2007, the loss was $7.1 million or $0.25 per diluted share, versus a loss of $11.1 million or $0.41 per diluted share in the prior year.
• Core net income, a non-GAAP measure, was $7.3 million, the same as the prior year. Core net income per share was $0.24 per diluted share, down from $0.25 per share in 2007.

“We finished the year well, with a substantial increase in cash flow and earnings from the third quarter of 2008,” said Matthew P. Lawlor, chairman and chief executive officer of the Company. “Despite the weakened economy, we signed 5 major deals this past quarter capping a record sales year as measured by total contract value. We also extended 11 major client contracts in the quarter and ended the year with a 100 percent renewal rate for large bank clients.”

“Year-over-year comparisons continue to be distorted by the cluster of large acquisition-related client departures in 2007 and early 2008. We believe we have now minimized this risk with our current client diversification and renewal schedules.”

Lawlor added, “While client sales and renewals were strong, slower than expected billpay transaction growth impacted fourth quarter revenue. In response, we trimmed costs resulting in our maintaining sequential earnings growth. First quarter 2009 transaction growth started slowly but has picked up in the last month.”

“We enter 2009 with a comfortable cash position and increased year-over-year cash flow and earnings expectations. Now half way through our five-year strategic plan, Online Resources has made appropriate mid-course corrections and is poised to leverage past shareholder investment in its series of transforming acquisitions.”

Lawlor believes that the company’s long-term risk-reward outlook continues to be favorable, stating that, “The huge negative impact of declining interest rates on our revenue growth has already occurred. Dilutive acquisition bank debt is being paid-off on schedule. Heavy incremental spending on new products is behind us. We are now getting these products into our distribution channels, gaining meaningful competitive advantages and benefiting from our recurring revenue business model.”

2008 Highlights

• Double-digit revenue growth for 10th consecutive year and named to the Fast 500, a list of the nation’s fastest growing technology companies, for the 5th time in 8 years
• Strengthened balance sheet by reducing bank debt by 11 percent, while increasing our cash and investment position by 12 percent
• Re-signed 100 percent of large banking clients up for renewal during the year
• Continued string of 20+ percent annual increases in total company transactions and billpay users
• Record new client signings, measured by total contract value
• Four new “top 10” credit card issuer clients for web-based collections, further securing position as the market leader
• Successfully launched industry’s first integrated expedited payments service with 500+ banks
• Large expansion of biller network, increasing captive in-network payments (at negligible cost) to over 50 percent of our bank-originated electronic payments
• Continued significant investment in infrastructure (e.g. MIS, business continuity, security, billing systems, customer relationship management, network management)
• Received Collections Advisor magazine’s award for the industry’s most influential product

About Online Resources
Online Resources (Nasdaq: ORCC) powers financial interactions between millions of consumers and the company’s financial institution and biller clients. Backed by its proprietary payments gateway that links banks directly with billers, the company provides web and phone-based financial services, electronic payments and marketing services to drive consumer adoption. Founded in 1989, Online Resources is the largest financial technology provider dedicated to the online channel. For more information, visit www.orcc.com.