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

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

  *Total Signed School Enrollment (SSE) increased to 11.2 million students at
    quarter end
  *Acquires Sallie Mae’s Campus Solutions Business

       *Higher One now serves over 1,600 campuses, representing over 13.2
         million students

  *Updates 2013 Financial Outlook
  *Investments made in product development and compliance

Business Wire

NEW HAVEN, Conn. -- May 7, 2013

Higher One Holdings, Inc.  (NYSE: 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 first quarter of 2013.

Higher One reported revenue of $57.4 million, as compared to $57.8 million in
the first quarter of 2012. The Company reported GAAP net income of $9.8
million for first quarter 2013, and non-GAAP adjusted net income, which
excludes certain non-recurring or non-cash items, of $12.0 million. GAAP
diluted EPS was $0.20 in the quarter, as compared to $0.23 in the first
quarter of 2012. Non-GAAP adjusted diluted EPS was $0.25, as compared to $0.25
for the same period a year ago. In the first quarter of 2013, non-GAAP
adjusted EBITDA was $21.6 million.

Mark Volchek, Chief Executive Officer, said, “I am extremely excited to
announce the acquisition of Sallie Mae’s Campus Solutions business. This
acquisition provides Higher One the opportunity to expand our refund and
payments client base and further solidifies our competitive market leading
position. We welcome the Campus Solutions team to the Higher One family and
look forward to further enhancing our product and service offerings to schools
and students.”

Volchek continued, “During the quarter, we continued to diversify our revenue
streams as evidenced by the strong growth we experienced in our Campus Labs®
and CASHNet® products. Additionally, I believe our account offerings provide
some of the best-in-class value on the market, tailored specifically for
student needs. Although some headwinds are putting pressure on results in the
near-term, I’m confident that we are making the right decisions to position
the business for sustainable, long-term value creation.”

Total enrollment at higher education clients that have purchased the
OneDisburse® service increased to 4.7 million, an increase of approximately
400,000 from 4.3 million at the end of the first quarter of 2012. Total
enrollment at higher education clients that have signed up for at least one of
our OneDisburse, CASHNet, or Campus Labs modules totals more than 11.2
million.

The number of OneAccounts at the end of the first quarter of 2013 was
approximately 2.2 million, up 1.8% from the first quarter of 2012. The number
of OneAccounts grew 10% on a sequential basis, up from 2.0 million at the end
of the fourth quarter of 2012.

Acquisition of Sallie Mae’s Campus Solutions

In a separate press release today, Higher One also announced the acquisition
of Sallie Mae’s Campus Solutions business. The company will provide more
details on the transaction on the quarterly earnings call scheduled today at 5
p.m. ET.

Financial Guidance Update

The Sallie Mae Campus Solutions acquisition will directly impact the Company’s
2013 annual revenue and earnings. As a result, Higher One is updating its
full-year 2013 revenue guidance range to $220 – $230 million. Full-year 2013
non-GAAP adjusted diluted EPS is now expected to be in the range of $0.58 –
$0.64.

Conference Call Information

Higher One will host a conference call at 5 p.m. ET today to discuss first
quarter results. 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. (NYSE: ONE) is a leading company focused on creating
cost-saving efficiencies for higher education institutions and providing
high-value services to students. Higher One offers a wide array of
technological services on campus, ranging from streamlining the institution’s
performance analytics and financial aid refund processes to offering students
innovative banking services, tuition payment plans, and the basics of
financial management. Higher One works closely with colleges and universities
to allocate resources more efficiently in order to provide a higher quality of
service and education to students.

Founded in 2000 on a college campus by college students, Higher One now serves
more than half of the higher education market, providing its services to over
1,600 campuses and over 13.2 million students at distinguished public and
private institutions nationwide. 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. For
further information regarding the risks associated with Higher One and Sallie
Mae’s businesses, please refer to the respective filings with the Securities
and Exchange Commission, including Annual Reports on Form 10-K for the most
recent fiscal year end, Quarterly Reports on Form 10-Q and Current Reports on
Form 8-K.

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.
Unaudited Condensed Consolidated Statements of Operations
(in thousands of dollars, except share and per share amounts)
                                                                  
                                             Three Months
                                             Ended March 31,
                                             2013               2012
Revenue:
Account revenue                              $ 43,363           $ 47,110
Payment transaction revenue                    6,701              5,329
Higher education institution revenue           7,141              4,624
Other revenue                                 175              718        
Revenue                                        57,380             57,781
Cost of revenue                               22,300           21,324     
Gross margin                                  35,080           36,457     
Operating expenses:
General and administrative                     13,089             11,226
Product development                            1,895              906
Sales and marketing                            3,207              2,867
Merger and acquisition related                546              -          
Total operating expenses                      18,737           14,999     
Income from operations                         16,343             21,458
Interest income                                19                 32
Interest expense                               (629       )       (109       )
Other income                                  77               77         
Net income before income taxes                 15,810             21,458
Income tax expense                            6,008            8,070      
Net income                                   $ 9,802           $ 13,388     
                                                                  
Net income available to common
stockholders:
Basic                                        $ 9,802            $ 13,388
Diluted                                      $ 9,802            $ 13,388
                                                                  
Weighted average shares outstanding:
Basic                                          46,268,310         55,343,943
Diluted                                        48,303,907         58,766,590
                                                                  
Net income available to common
stockholders per common share:
Basic                                        $ 0.21             $ 0.24
Diluted                                      $ 0.20             $ 0.23
                                                                             

                                                            
Higher One Holdings, Inc.
Unaudited Condensed Consolidated Balance Sheets
(in thousands of dollars, except share and per share amounts)
                                                                  
                                                  March 31,       December 31,
                                                  2013            2012
Assets
Current assets:
Cash and cash equivalents                         $ 11,051        $  13,031
Investments in marketable securities                247              247
Accounts receivable                                 6,549            4,860
Income receivable                                   6,915            7,466
Deferred tax assets                                 -                37
Prepaid expenses and other current assets           6,127            10,890
Restricted cash                                    2,000           2,000
Total current assets                               32,889          38,531
Deferred costs                                      4,382            4,665
Fixed assets, net                                   52,175           52,686
Intangible assets, net                              37,690           38,143
Goodwill                                            47,000           47,000
Loan receivable related to New Markets Tax          7,633            7,633
Credit financing
Other assets                                        821              740
Restricted cash                                    1,500           1,500
Total assets                                      $ 184,090       $  190,898
                                                                     
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable                                  $ 3,224         $  3,756
Accrued expenses                                    18,190           12,526
Contingent consideration, current portion           5,839            2,230
Deferred tax liabilities                            154              356
Deferred revenue                                   16,420          16,027
Total current liabilities                           43,827           34,895
Deferred revenue and other non-current              2,362            2,517
liabilities
Loan payable and deferred contribution
related to New Markets
TaxCredit financing                                9,413            9,490
Debt                                                63,000           80,000
Contingent consideration, non-current               -                3,520
portion
Deferred tax liabilities                           2,073           2,764
Total liabilities                                  120,675         133,186
Commitments and contingencies (Note 7)
                                                                     
Stockholders' equity:
Common stock, $.001 par value; 200,000,000
shares authorized;
58,342,323 shares issued and 46,429,297
shares outstanding at March
31, 2013; 58,045,404 shares issued and
46,660,781 shares outstanding
at December 31, 2012                                59               59
Additional paid-in capital                          176,115          174,218
Treasury stock, 11,913,026 and 11,384,623
shares at March 31, 2013
andDecember 31, 2012, respectively                 (137,899)        (131,903)
Retained earnings                                  25,140          15,338
Total stockholders' equity                         63,415          57,712
Total liabilities and stockholders' equity        $ 184,090       $  190,898
                                                                     


Higher One Holdings, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands of dollars)
                                                Three months ended
                                                   March 31,
                                                   2013          2012
Cash flows from operating activities
Net income                                         $ 9,802           13,388
Adjustments to reconcile net income to net
cash provided by
operatingactivities:
Depreciation and amortization                        3,111           2,213
Amortization of deferred finance costs               111             34
Non-cash fair value adjustment of contingent         89              -
consideration
Stock-based compensation                             1,485           1,410
Deferred income taxes                                (856    )       (388    )
Income tax benefit related to exercise of            (148    )       -
stock options
Other income                                         (77     )       (78     )
Loss on disposal of fixed assets                     8               20
Changes in operating assets and liabilities:
Accounts receivable                                  (1,689  )       (1,722  )
Income receivable                                    551             802
Deferred costs                                       (184    )       (256    )
Prepaid expenses and other current assets            4,763           15,392
Other assets                                         (92     )       107
Accounts payable                                     (532    )       823
Accrued expenses                                     5,954           117
Deferred revenue                                    238           338     
Net cash provided by operating activities           22,534        32,200  
Cash flows from investing activities
Purchases of available for sale investment           -               (9,770  )
securities
Proceeds from sales and maturities of                -               3,700
available for sale investment securities
Purchases of fixed assets, net of changes in
payables of ($153) and
($8,242), respectively                               (1,259  )       (16,002 )
Additions to internal use software                   (631    )       (811    )
Proceeds from development related subsidies         -             330     
Net cash used in investing activities               (1,890  )      (22,553 )
Cash flows from financing activities
Proceeds from line of credit                         3,000           -
Repayments of line of credit                         (20,000 )       -
Tax benefit related to stock options                 148             1,420
Proceeds from exercise of stock options              224             564
Purchases of common stock                           (5,996  )      (16,898 )
Net cash used in financing activities               (22,624 )      (14,914 )
Net change in cash and cash equivalents              (1,980  )       (5,267  )
Cash and cash equivalents at beginning of           13,031        39,085  
period
Cash and cash equivalents at end of period         $ 11,051       $ 33,818  
                                                                             

                                                              
Higher One Holdings, Inc.
Unaudited Supplemental Operating Data
(in thousands)
                                                                     
                        Three Months Ended
                        March 31,  June 30,   Sept 30,   Dec 31,    March 31,
                        2012        2012       2012       2012       2013
                                                                     
OneDisburse SSE         4,330       4,480      4,589      4,642      4,709
(1)
y/y growth              27     %    22     %   16     %   11     %   9       %
                                                                     
Total Company SSE       6,204       6,437      10,843     10,929     11,170
(2)
y/y growth              16     %    16     %   87     %   82     %   80      %
                                                                     
Ending                  2,122       1,896      2,083      2,004      2,161
OneAccounts (3)
y/y growth              20     %    10     %   3      %   0      %   2       %
                                                                     

              OneDisburse SSE is defined as the number of students enrolled at
              institutions that have signed contracts to use the OneDisburse
    (1)  service by the end of a given period as of the date the contract
              is signed (using the most up-to-date IPEDS data at that point in
              time)
              Total Company SSE is defined as the number of students enrolled
              at institutions that have signed contracts to use one or more
        (2)   OneDisburse, CASHNet, or Campus Labs modules by the end of a
              given period as of the date the contract is signed (using the
              most up-to-date IPEDS data at that point in time)
        (3)   Ending OneAccounts is defined as the number of accounts with a
              non-zero balance at the end of a given period


Higher One Holdings, Inc.
Unaudited Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA
(in thousands)
                                               Three Months Ended
                                                  March 31,
                                                  2013        2012
                                                  (unaudited)
                                                  (in thousands)
                                                                 
Net income                                        $  9,802     $ 13,388
Interest income                                      (19)        (32)
Interest expense                                     629         109
Income tax expense                                   6,008       8,070
Depreciation and amortization                       3,111      2,213
EBITDA                                               19,531      23,748
Merger and acquisition related expenses              546         -
Stock-based compensation expense                    1,485      1,410
Adjusted EBITDA                                   $  21,562    $ 25,158
                                                                 


Unaudited Reconciliation of GAAP Net Income and Diluted EPS to Non-GAAP
Adjusted Net Income
and Adjusted Diluted EPS
(in thousands, except per share amounts)
                                                        Three Months Ended
                                                           March 31,
                                                           2013      2012
                                                           (unaudited)
                                                           (in thousands)
                                                                        
Net income                                                 $ 9,802    $ 13,388
                                                                        
Merger and acquisition related                               546        -
Stock-based compensation expense - incentive stock           484        507
options
Stock-based compensation expense - non-qualified             1,001      903
stock options
Amortization of intangibles                                  1,130      768
Amortization of deferred finance costs                      111       34
Total pre-tax adjustments                                    3,272      2,212
Tax rate                                                     38.5%      38.2%
Tax adjustment                                              1,073     651
Adjusted net income                                        $ 12,001   $ 14,949
                                                                        

                                          
Higher One Holdings, Inc.
Business Outlook
                                               
                             Twelve Months Ending
                             December 31, 2013
                             GAAP              Non-GAAP (a)
Revenues (in millions)       $220.0-$230.0   $220.0-$230.0
Diluted EPS                  $0.42-$0.48     $0.58-$0.64
                                               

(a) Estimated Non-GAAP amounts above for the twelve months ending December 31,
2013 reflect the estimated annual adjustments, that exclude (i) the
amortization of intangibles and finance costs of approximately $6.0 million,
(ii) stock-based compensation expense of approximately $4.5 million, and (iii)
M&A related expenses of $1.5 - $2.0 million.

Contact:

Higher One Holdings, Inc.
Investor Relations:
Joseph Villalta, 203-776-7776 x4462
joseph.villalta@higherone.com
or
Media Relations:
Shoba Lemoine, 203-776-7776 x4503
slemoine@higherone.com