GAAP Results: Net income for the second quarter was $13.0 million, compared to a net loss of $1.9 million for the same quarter last year. Earnings per share were $0.14 for the second quarter of fiscal 2005, compared to a loss per share of $0.02 for the second quarter of last year. Net cash provided by operating activities was $65.8 million for the second quarter of fiscal 2005, compared to $41.4 million for the same period last year.
Underlying Results: Underlying net income for the second quarter was $33.7 million, compared to $23.4 million for the same quarter of last year. Underlying earnings per share were $0.36 for the second quarter of fiscal 2005, compared to $0.25 for the second quarter of last year. Underlying net income and earnings per share exclude the amortization of acquisition-related intangible assets and related tax benefits for the second quarters of fiscal 2004 and 2005, and for the second quarter of fiscal 2004, also primarily exclude the cost of early redemption of our convertible debt and related tax benefits.
"Each business delivered solid, focused performance this quarter, putting us ahead of our expectations," said Pete Kight, CheckFree's Chairman and Chief Executive Officer. "The Electronic Commerce division experienced steady growth in transactions processed. We saw continued portfolio growth in the Investment Services division as the separately managed accounts industry finds traction within the domestic financial markets, and we delivered better-than-expected license sales in our Software business. We believe we are well-positioned for continued solid execution for the current fiscal year, which has allowed us to increase our projected earnings for the full year," Kight concluded.
Second Quarter Highlights
The Company reported that its Electronic Commerce division processed 219.4 million transactions for the quarter, a 7 percent increase over the previous quarter, and delivered 32.8 million electronic bills, an increase of 11 percent over the previous quarter. The Company reported more than 1.7 million portfolios under management in its Investment Services division. "For the third quarter of fiscal 2005, we expect revenue in the range of $187 to $192 million, and GAAP earnings per share in the range of $0.12 to $0.14," said CheckFree Chief Financial Officer, David Mangum. "This equates to underlying earnings per share in the range of $0.34 to $0.36. We expect sequential quarterly transaction growth for the upcoming quarter to be in the range of 4 to 7 percent."
"Based on our strong performance through the first two quarters and our outlook for the remainder of the year, we have increased our full-year expectations for earnings per share to $0.46 to $0.50 on a GAAP basis, or $1.34 to $1.38 on an underlying basis," he continued. "These expectations reflect an outlook for continued growth in electronic billing and payment transactions, solid performance from our Investment Services and Software businesses, and increased investment spending in all three businesses. We now expect to generate more than $160 million in free cash flow for the full year, exceeding our earlier expectations," Mangum concluded. The difference between GAAP and underlying earnings expectations for fiscal 2005 and the third quarter of fiscal 2005 is due to expected acquisition-related intangible amortization expense and related tax benefits.