Please stand by we are about to begin. Greetings ladies and gentlemen and welcome to the Online Resources Second Quarter 2009 Earnings Results Conference Call. Please note that this call is being recorded. At this time I would now like to turn the call over to Online Resources' Senior Director of Corporate Communication, Beth Halloran. Ms. Halloran, please go ahead.

Thank you to everyone who has joined us today on our conference call for second quarter 2009 results. Shortly, Matt Lawlor, Chairman and CEO; Ray Crosier, President and COO, and Cathy Graham, Executive Vice President and CFO will present Online Resources’ financial and operating performance. Before we get started I want to invite you to view our press release in the Press Room and in the Investors section of our website at orcc.com. But first I would like to preface our remarks today by taking full advantage of the Safe Harbor provisions of the Securities Litigation Reform Act. The following conference call contains statements about future events and expectations of Online Resources that are forward-looking and involve risks and uncertainties detailed in filings made by the company with the Securities and Exchange Commission. I’ll provide a more detailed review of the Safe Harbor provisions at the end of this call. Now to you, Matt.

Thanks to everyone for participating in our call today. We will cover three topics. First, we’ll discuss our second quarter financial results. We grew adjusted EBITDA and core earnings substantially over the prior year exceeding consensus estimates and revenue was inline with guidance. Cathy will provide more detail and update our guidance for the third quarter and full year. Second, we will discuss quarterly operating fundamentals, we made excellent progress in new client signings, but transaction growth slowed especially in our eCommerce product lines that are more sensitive to the economy. Ray will elaborate further in his operating report. Finally, as is our usual practice at mid-year I will discuss our prospects and strategy for the reminder of the year and into 2010.

Good afternoon everyone. For the second quarter, our earnings metrics were all above or equal to the high end of the guidance ranges we previously provided, while revenue was inline with guidance. Both adjusted EBITDA and core net income per share grew nicely over the prior year period. Adjusted EBITDA grew to $9.3 million, up 26% over the second quarter of 2008. And EBITDA margin expanded to 25% from 20%. Core net income per share also grew by 33% to $0.08 per share. We continue to move towards positive GAAP earnings as our net loss available to common stockholders decreased almost 50% from the same quarter of 2008, to $0.06 per share. This reflects the growth in our EBITDA and core earnings, but also lower interest expense and continuing declines in the amortization of acquired intangibles. Revenue for the second quarter grew 2% over the same quarter of the prior year. The relatively low growth was primarily the result of sharp interest rate declines during the past 12 months and the impact of economic deterioration on our transaction volume and average payment amounts. On a sequential basis revenue was down as we had forecasted. You will recall that we normally see a seasonal decline in biller transactions during the second quarter, as well as lower banking payments growth. Additionally, we did not have a recurrence of various one-time professional service revenue items recognized in the first quarter. Strong earnings growth on a modest revenue increase is the result of expense control measures we implemented in response to the uncertainties of current economic conditions. We have been layering in expense controls since early 2008 reflecting a conscious decision to focus on earnings measures during this period rather than on less controllable revenue growth. We took the difficult step about six months…

Thanks Cathy. For me the headlines of the quarter are good operating performance, hitting our revenue and earnings targets, a mixed bag of payment transaction results and the second consecutive record quarter for new client signings. First, we hit our second-quarter revenue and earnings targets, executing against our plan to control cost and manage through the bottom line both tactically and strategically. Tactically, we did all the things you would expect us to do in the short-term, control headcount and salaries and discretionary spending. Strategically, we increased the percentage of in network payments processed at marginal cast from 50% in the first quarter to 60% in the second. That's a meaningful increase in just three months, if you remember that number was 25% at the time of the Princeton acquisition. It's important not only because it provides long-term sustainable cost savings, but is also a big differentiator for us in the marketplace. Moving to the second headline, although some transaction metrics are down, they don't pay a complete picture; I would like to take a moment to put some contest around the trends. Please refer to the operating data chart attached to the press release. Today, payment transactions for our company totally grew 3% year-over-year, this was soft, but it's not the whole story. Our eCommerce transactions grew a solid 24% year-over-year, while in the banking sector we experienced a 4% decline. That banking number swings to a positive 8% if you look only at same-store clients, this factors out both departing and incoming clients as well as the least cost routing transactions, which fluctuate wildly and candidly aren't material from a revenue perspective. This rate would have been some – somewhere in the low-to-mid teens at payments per bill pay user now dropped 10% over the last 12 months.…

That completes our second quarter 2009 performance report. I want to take a few minutes now to address our strategy for weathering the economy this year and how we are positioning ourselves to return to higher growth going forward. Last fall we laid out a strategy for 2009 to drive earnings and cash flow with less dependence on revenue expansion in the weak economy. I believe we are executing well on our plan. Since third quarter last year, we have increased cash from $16 million to about $30 million, while repaying nearly $11 million in bank debt. Along with the expansion of industry multiples, this de-leveraging has been a key factor in our increased shareholder value. While we have tactically addressed cost to yield more immediate returns, we've also addressed strategic opportunities and needs. Cathy previously mentioned some of the strategic initiatives that have resulted in sustainable efficiencies. This is showing up in our increased margins, adjusted EBITDA margin has increased from 19% to 23% in the first six months of 2009 over the prior year. And we expect fourth quarter margin of 28% or more. At the same time we have not been ignoring the top line, I am confident that we have the foundation for a return to more typical revenue growth even if the economy remains relatively week. Here are my reasons, first we have a strongly differentiated offering in both banking and eCommerce and we are winning deals. These sales are typically conversions, when implemented they will bring immediate users, these new client sales have been accelerating through the year, so the revenue contribution won't show up until late 2009 and into 2010. Second, our improving balance sheet supports growth. Strong cash flow builds client confidence or can be invested directly in revenue expansion. It is…

(Operator Instructions). We'll take our first question from John Kraft with D.A. Davidson.

Good afternoon guys.

Hi, John.

Great job on the cost controls.

Thank you.

A couple questions for Ray, first. As this is the second quarter in a row of a record in annual contract value as you put it. Can you qualify that in dollar?

Well, we don’t talk about the dollar value that we sell, but let me give you a couple of statistics that that may give you some color. Obviously, first quarter was a record, you're not going to beat that by very much and we did, we were up 3% over first quarter. But when I compare that to a year ago it's 31% higher. From a numbers standpoint, we were up let's say – we were up some 66% in number of clients sold. So, we are really winning bigger deals and more deals and that’s really good. The other thing I will throw in there John is and I remember the comment, when asked a question, well it typically takes you about three to six months to reload the pipeline, and after a record Q1 that was a little vary, well not only did we reload it, we closed it and we yeah, reloaded it again and that I'm really, really pleased with.

Oh, that's encouraging. And secondly on your comments, and you sort of addressed this, but I guess the dynamic between the Biller Paid and the User Paid, I mean there certainly we are seeing a divergence and did I hear you correctly that you sort of view that as more of just the times we are in rather than a longer term strategic shift?

Yeah. In the User Paid John, you've got, typically the credit card transactions and they're in the dollars not in the cents and you think about where those are being made they are being made in the utility sector, they're being made in the ARM sector, with the ARM business are being hammered. The placements are sky high, because of delinquencies for all the clients that they serve, but with the 10% unemployment, they're not getting payment, so the ones that they're getting are lower dollar value. So, that drives, when you get a lower number of transactions and for lower dollar amounts, and you're variably priced, you're going to end up with lower revenue. The good news there is we continue to fill in business in that sector and when that comes back and Matt quoted a very reputable source there. When that comes back we are ready. We are absolutely ready to help our clients move forward. And I guess one other thing about that whole Biller Paid, when you think about that you not only got User, but Biller and even in the Biller you've got credit card and just regular process transactions and they vary widely. So, the good news is, when you take it, take it all in, we are up and we are up a sizeable percent, some 24%, but there is a lot mix shift going on there.

Sure. Now you just mentioned the collections product, Matt you said that you're now just getting up and running a bunch of these clients, I guess two parts, one why are they taking so long to get up and running and two what's the customer count now?

We are still at the same customer count, John. The reason I will tell you, I think both our clients and ourselves are little disappointed we are not further along. To be absolutely square, they love the product and they want to customize it more than maybe we would like them do sometime. At the same time, we understand it and support it, so our professional services are doing fine, but we are not getting those that leverage in transactions. So, we've slipped a quarter or two with some of these big clients and a number of them by the way are live, which is that we haven't converted all, they're different credit portfolios, such as, in one case it might be credit cards and we haven’t done the loans yet, we are doing the process of doing loans. So, they are very, very, large clients that are just taking longer than we like and they like.

Multiple steps it sounds like?

Yeah. And maybe we should have anticipated this, but bottom line, I don't think anybody anticipated it including our clients, but they want a little bit more and that's – that's good, it will be better product, but we are interested to get going there obviously.

Sure. And then Cathy, I am assuming you're probably not kind of want to talk specifically too much about fiscal '10, but, as you look broadly towards the out year to use '09 growth and EPS at the mid-point, you're talking 15% or something, it doesn't sound reasonable that we would expect that again in 2010, but can you talk about maybe an operating margin target for the out year and then also as far as revenue I mean, is it reasonable to assume that the kind of revenue growth rate you might see in Q4 could be sustained throughout '010?

Yeah. And let's take those in opposite order, I think that if you use implied fourth quarter revenue guidance kind of as your baseline and roll that forward into 2010, that's certainly a reasonable thing to do. We expect to see a little bit more acceleration going into fourth quarter from where we've seen in second and are expecting to see in third quarter, but we certainly are not anticipating a return to what we would consider to be more normal revenue growth until we get some economic recoveries. So, that's not something, its something we hope we will see going through 2010, but not something that we can probably bank on. As far as the growth numbers on the earning side, I think that that you're absolutely correct, I mean just, large number is going to say as your numbers go up, your percentages go down. That said, I think if you look at where we are getting growth rate sort of coming out of the year on earnings and moderate though somewhat. We should still see earnings growth at both the EBITDA and the core level that are in multiple or multiples of revenue growth. Similarly, to what we have seen this year on kind of multiples basis. So, I think you're still looking for significantly higher revenue growth. Probably, the best thing that we can give you is looking at continuing progress in EBITDA margin.

Yes.

If you look at full year EBITDA margin expectations for 2009, we would probably still expect a, something similar to what we have seen in the past, which is kind of a, 1.5, 2% increase in full year average EBITDA margin going into 2010.

Well, good enough. That helps. Thank you guys.

Sure.

We have next to Bob Napoli with Piper Jaffray.

Thank you. Good afternoon.

Hi Bob.

The expenses, the G&A obviously, pretty severe cuts and is that the 6.9 million in G&A from this quarter. If you look over the last couple of quarters it was 6.9 in the fourth quarter, 9.7 in the first quarter, 6.9 million this quarter, what is, how can you have that much improvement in one quarter and what is a reasonable run rate for the G&A?

Let me take that one Bob. I think part of the reason why you have remember, part o the reason that you saw a tick up, a pretty significant step up in Q1 was because of proxy costs, which are not recurring. Just to give you some color on that in the second quarter we did incur some proxy cost, but they were not particularly material. Additionally, we had made some accruals in Q1 that where the expense levels came in lower than expected. So effectively, you have no proxy cost impacting, we use those accruals to offset any second quarter costs. So, basically you have no impact of proxy costs in second quarter. There is I think that the Q2 levels are pretty good as far as looking at a sustainable run rate with one exception and that exception is that we did an equity compensation adjustment. Equity compensation adjustment where we reversed some accruals of previously accrued equity compensation expense in second quarter a few $100,000. So if you look at total G&A levels and up and by a few $100,000 that’s probably a very good baseline and that what we are talking about uping it in the second quarter, the second quarter number is a non-cash number.

Okay. A question on the number of transactions per user, you said it was down 10% and then how have you seen, has it steadied a down 10%, when can you kind of give a little more color on, the trend in, the transactions into the third quarter, are you seeing stabilization a little more color on that please?

Bob, it's Ray.

Hi, Ray.

We study that that number and so if I started with the company that number almost hasn't changed, and that's 12 years ago. We look back over the previous five years prior to 2008 and that's a flat line, you get x number of payments per user and it doesn't fluctuate up and down 1 or 2% it's just as flattish like it can be, like we hit 2Q of 2008 and it starts down, and you don't know whether you've got an aberration on your hand or whether you've got startup a trend, that number from 2Q to now has been steady down to today Q2 of '09 from 2Q of '08, which dropped 10% and that's significant. Obviously, when you take that over the million of users we have and that hundreds of millions of transactions that's significant, whether it turns, I don’t think we are prepared to say, we certainly haven't seen it turn and its really too soon in Q3 to even comment on where it might go.

The user is likely…

Bob

Yeah. Sure, Matt.

Just to expand over the prior five years, the average payments was somewhere between 4.25 and 4.5 payments per user. And as Ray kind of said that's dropped a lot 10% and the line is headed south it doesn't not seem to be or got is that it will bottom.

Yeah

And but it doesn’t show we got up, yet in the curve and again we want to be very conservative as to where we think transaction revenue is going.

Is any of that Matt.

So, exactly…

Matt is any of that due to the lower transactions due to some of the users becoming inactive with the product or is it.

No, no. In fact there has been more culling of the inactive users than ever before, obviously, you're a bank, you don't want to be paying us for inactive users. It's just plain and simple and we have done research on this announced it the last year, it's basically budgeting if you have a discretionary bill such as, you've got two cellphones or an extra of this or an extra of that, you're not going to pay it and so other bill pay providers we believe to the best of our knowledge are seeing the same thing and this by the way is mere is what's going on in the economy in fact in some ways ironically bill pay is doing pretty good. You guys signature debit and pin debit due pretty strong, bill pay is hanging in there, but if you look at credit card transactions are way down. Credit card volume is way, way down, ACH from some of the cash management industry providers they are out there they are saying 7% declines. So, bill pay is hanging in there, but we definitely see in the bill pay world, a declining number of users as consumer's budget and pay the important bills and the less important ones get put on the side.

And I will jump in here Bob. I did my own research the other day. I was talking to the person who cuts my hair and she is employed and I asked her what's going on in her world and she says well its pretty simply Ray, she says I am having a tough time, she says what I do is I pay my cable and my cell phone every other month because neither one of them charges me a late fee and neither one cuts me off. And to me I said that's four bills now just become two. Now, I don't know whether that's scientific research, but when you think about she is employed, what do people do that are unemployed, they get rid of anything that they can that they think is a luxury. So, I got to believe the economy is putting some downward pressure on this and hopefully it will come back.

And if you, Roy answer it, sorry to beat you there. Because it's a interesting part.

Sure.

I know you're trying to assess where we are going and we are learning ourselves, but if you put together the 8% same-store growth that we got with the impact of this 10% that puts you in the middle teens, which is pretty much where most of us thinking the industries secular growth should be, that's what the outsiders are saying and so it hangs together. Again some likeness in bill pay per users and its hitting us, but at the same time, relative to other payments bill pay is hanging in there along with the pin debt and signature debit.

Great. And just a real quick last question, how and I get out for others, the new Board of Directors, how is that working out at this point?

Well, we've got, I must say, we've just had one Board meeting. The, as you know, pretty much after the election Tennenbaum ourselves got together, we put a joint press release, I think in that release its right there, Tennenbaum wants to grow Online Resources, we want to grow Online Resources and the new Board members have all been through orientation, they're offering a fresh perspective, we had a meeting just last month just to organize committees, you can see some of those new committees posted. But right now, I think as everybody pulling on how can we drive shareholder value and I think that's maybe there will be some differences in the future, but for right now, I think everybody pulling on the same order.

Thank you.

We will take our next question from Wayne Johnson with Raymond James.

Hi, yes, good afternoon. I just want to touch pace on one of the comments about the environment, you have mentioned the macro-environment, but the weak macro-economy putting downward pressure on transaction volumes, billing in particular, but also what about on a competitive front, what's changed today versus a year ago, it sounds like you guys are successful in winning new business, but it also sounds like the competition is becoming stiffer for tough and harder to hold on to your current customers, is that a fair assessment or is that, am I adding too much of a draconian thought to that?

Wayne is right. I think competitions always fears. I think it fears everyday it always has been, but especially in these tough economic times, where our clients the financial institutions are looking for anyway, billers too are looking for any way that they can save money. So, when it comes time to renew a contract, we are going to negotiate with you hard and we're seeing more of those go out to RFP and whether that's to lower your down or to really think about switching who in the heck knows. So all I can tell you is competitions fears, but the ones that we tend to loose are the less sticky kind of payment only deals, go pay only deals. And those are the lower margin business for us than any of the full service businesses on both sides, banking and eCommerce. But remember that competition works both ways Wayne, we've had two record quarters of sales in a row, 100% of our banking wins come from at least one other provider and typically two, we take it away from a banking provider, and we take it away from a bill pay provider, because they're not the same entity. On the eCommerce side, 85% of our wins come from competition and we are winning our first share. So, I think we are right to be cautious, I think we should absolutely have our guard up, we should take care of our customers, like we've never taken care of them before and we think we have grey out it already and that's the way we will weather this.

Well it sounds like the prior cost cutting initiatives and the renaissance project and the integration with Princeton eCom is, is paying off on the new client win side, on if I could just follow up real quick here, could you talk about the win/loss ratio in the RFP process. If you have 166 new clients in the second quarter that would constitute, out of how many total opportunities did you have?

Well I can't answer exactly the way that you asked it, I don't think because I don't have that data, but from a renewal perspective, so these are contracts that were up four renewal in the first half of the year. We had 94 come up for renewal across the company and we renewed 84 of them, so that's a 90% renewal rate. And I think that's pretty good. I haven't heard and I am fairly close to it. I haven't heard of any of the RFPs, where one of our clients, put one out. And then we lost it after that process came back, and I think what people are doing more often then not is getting themselves a gauge MI price fairly, if someone else come in at some astronomical number underneath of this, and as you can worth my while to think about changing. And I think what they do is they get satisfied that they've got a very good value for the services that they get. The success rate tends to go up and down with the market, the reserve and the community bank markets we are extremely targeted there. And there are so the – the win rate if you can define that, we don't think this way, we have pipelines and we rate, we rate each the profitability of the sales as go through the pipelines. So the concept of win/loss is a little different than what you're talking about, which is qualitatively in the community banking market, we are much more targeted than we are in say the larger bank market, where there are fewer and there is more of an RFP process in the community bank and credit union market, yet there are RFPs, but little less so and we have some unique capabilities that don't lend themselves to RFPs, where the client likes what we have and really it's also the incumbent. In the eCommerce market, again that's all over the place in terms of the segment that it serves and we are – we are a major player there, we have some unique advantages because of our suite and it's, again not an easy concept, but we tend to target well and more so in one market than the next and we tend because of that targeting to win more than we lose.

All right. Great. Thank you.

We'll now take our next question from Brett Huff with Stephens Incorporated.

Good afternoon.

Hey.

One question on the revenue guidance decline I heard a couple of different comments and I want to see what was the main driver of that decline, Ray I think you mentioned that there were some delayed implementations and just a slower ramp of those accounts that have been implemented on the, I think on the eCommerce side and Matt I think you also mentioned just the in general we've been talking about how bill paid option has slowed in the negative 10% usage bills per user. What is that, if you had to chose a primary driver or is that one of those two or is it something else?

Brett let me take that one. Let me just start out by saying first of all with regard to bringing down our revenue guidance. We have been saying since late year and early this year at least that revenue was uncertain in the current environment. So, we want to make sure that we reiterate that and we've said that you should probably expect this to be at the low end of guidance. So, let's start move, sort of give you a reconciliation from that $160 million low-end of our previous guidance. Between that and the current midpoint of our guidance, which is 154 about a third of the decrease is from those lower transaction volumes and amounts. Another third of it is from lower or slower revenues from client implementations. And yet the last third is from higher than anticipated client losses on some of the things we've been talking about in the intensively competitive environment. But that said, I want to reiterate that for the first half of the year, we hit our earnings guidance and we are maintaining our earnings guidance for the full year despite changing the revenue expectations, which is largely because of the expense control actions we've taken, but also one of the things that Ray mentioned, which is that some of the client losses we have seen and things that we are building in are at lower margin business than the new stuff that we are signing in that are our average things. So, really if you think about it, its three main drivers, they're about equal to lower transaction volumes and amounts lower, lower revenue from new clients and we’re building in higher anticipated client losses.

Okay. And I don't know if this is a related question or not, but Ray you mentioned a sort of same-store sales number of plus 8% on the bank based side of the things, and you said that excluded obviously the normal stuff, so it also excluded that least cost routing group of transactions. And 1Q was kind of light on that and it sounds like that's continued, is that the way to interpret that.

Yeah. The least cost routing transactions I think the words I used will fluctuate widely. But when I said fluctuate, but they do they move all over the board and there were a fair number of those, but when I added all up, its absolutely immaterial from a revenue perspective there, they're a couple of pennies, each. So, while, you may a couple of million of them and that comes right out of that transaction number and it jumps right off that page, agile, it didn't mean anything from a revenue perspective.

Okay, that's helpful. Those are my two main questions, but I did have just one follow-up, in term of CapEx guidance, can you update us on that a little bit, is there any additional color you can give us?

Yeah. From what we have said before I think that you can plan on us, our current expectations are that we will come in slightly lower then what we've sort of said originally about capital expenditures, but not materially may be $1 million or some thing like that. So we would probably, where I think we had said somewhere in the $14 million, sorry in the $12 million range in total will probably come in closer to a 11, and again I think probably half of that in hard costs and half of that in capitalized software development labor is, 60% maybe in cap software development, labor 40 and hard costs, it's probably about rate.

Okay. That's what I needed. Thank you.

(Operator Instructions). We will now move to Doug Campbell with Spirit Capital.

Thank you. Couple of questions is, in your client base any has any of your banking clients have been taken over by the FDIC, do you see people on watch list that you're worried about currently looking to future difficulties?

Doug, we’ve actually got two on the watch list, we haven't lost any yet, but we have got two on the watch list and we did get a letter from the FDIC the other day saying that there, which one is probably eminent and so we have signed the NDA and send it back to them and I suspect they'll tell us who that is, pretty soon. If its who we suspected is, it's a mid-size guy, but immaterial from an overall revenue perspective.

In general do you sense stability among your client base or is this still a moving target?

Now actually we I think our base is in – is in very good shape, we did serve in predominantly the community banks and credit unions has turned out to be something very good to help us weather this, those aren't the ones who are typically running into trouble, the ones that I read about and from across my stream, give banks closed yesterday I go look and they're tiny little institutions, we don't typically, we are not typically there. These are four or five that maybe affiliated with the parent, but they're very small ones, they get placed with somebody the very next morning and open up under some other name, so really while we look at it closely, we just don't see any dark clouds on the horizon.

Then some earlier questions on your ability to gain new business, which has been pretty favorable, very good developments for you. If you could characterize, do people sort of tumble for a particular service or skill set you have – or is it basically perhaps the products line to act up by good reliable service and then there is sort of an overall package?

Doug I would like to say all those things, but on both the banking and the eCommerce side what we offer is a fully integrated suite of services and that really resonates with prospect especially in these tough times, there are service benefits, there are packaging benefits, there are cost benefits, and there are operational benefits. And to keep it all with one provider that certainly lowers that institution's cost, because they're not having to deal with multiple vendors and at the end I got to believe that our products is broader and more comprehensive than anyone else out there including anything you could cobble together by using services from multiple vendors, that's what we hear from our clients whey they sign the contract, because we also ask them, why did you ultimately pick-up instead of somebody else, and really those are the kinds of the things that we hear.

That sounds very good to me. I tend to dream about the day that revenue start to go up and…

Evenly above.

It sounds like you guys are running a very lean shop, but it also sounds like you are providing the level of services that you need to in order to maintain and grow the client base. So, what kind of incremental margins, operating or gross margins, whatever you want to use, would you expect from that first dollar of incremental revenues and how much additional revenue could you take on before you start having to build up your expense base again?

Doug, it's Cathy let me take that one. We are seeing we found most of our savings and in things that are below the line in our operating cost. So we are not looking to see great gross margin expansion though some of the things that we did on the technical side will hopefully help that sneak up incrementally. The actual margin on the various products and what the incremental margin is will vary across our product line quite significantly I think that the best thing that we could give you is that we are looking probably for next year to get that probably 2 incremental percentage points, 1.5 to 2 incremental percentage points on EBITDA, even on very, even on if we have lower than expected or lower than what we would expect is normal. We have products where the incremental margin on revenue will be 80%, we have others where the incremental margin will probably be 40% or 50%. There are lots of other things quite frankly that that could go on, if we were to see next year a steep increase in interest rates that would take margins up quite significantly. The other thing is we, I think Ray mentioned we've increased the number of on us transactions in our network if we pick up another 10 percentage points there that could save us another $500,000 at today's volumes. So, I know it’s a round about way of answering your question, but the problem is, is that we have such a variety of margins within there, probably the best thing to say to you is that even on, on lower than normal revenue growth we would still expect to see normal growth in EBITDA margins.

That's is helpful. I'll just think that you're in, you're in inflation play.

There is an aspect there.

There is an aspect. There is the interest rates, but…

Just, just an quick final comment there, this is probably the most challenging question that we're faced as a company today, we've got a number of very, very promising products and market share opportunities and we don’t want to, we don't want to blow this opportunity. So, this long term versus short-term, are we cutting too much, are we too lean and are we short cutting great opportunities is one that we wrestle with all the time, we think we've made the right judgments here, we're committed to and said publicly that we need to be more short-term this year to drive cash flow, at the same time, you can fetch your bottom dollar that every, every moment that we think about this cost control stuff, we know we have huge revenue opportunities and we are asking ourselves, are being too short-term and are we spending enough. So I think the trick here is to be flexible and to keep checking, checking, checking, and being as realistic as we can with respect to what our future benefits and candidly here we're being, we are taking down revenue and we don't like doing that, but I think we realistically need to do that if and we are going to play in on that, but at the same time, if we see an uptick here, it will be, it will be a surprise to us as well as to our investors, it will be a pleasant surprise and we will be ready to pounce on that business with an expansion of the, expenses to support that as necessary. So its where we're right now as a company, drive cash flow, but keep that revenue engine going and really position ourselves for an expansion and enjoy some of the margins that Cathy has been talking about.

That's great. On the first line I think you're taking it at right stance and asking yourself the right questions. Thank you very much.

We will now take our last question in queue from Glenn Greene with Oppenheimer.

Thank you. Good afternoon everyone.

Hi Glenn.

I just want to go back to the competitive environment, candidly this kind of a first time I had to recall that you sort of emphasized that as much as you have not only in the press release, but kind of in your prepared remarks as well and Matt if I heard you right, you kind of suggest that there might be some further client losses in the back half. Could you just give us a little bit more color on what you're seeing competitively has that really meaningfully changed in the last six months and who are you seeing it from or am I reading this incorrectly?

No you're not reading it incorrectly and Ray kind of said it right there is always serious competition, but looks we are in some unique, we are in an unique environment here you got banks that are struggling you've got processors who are striving for revenue and there are unique circumstances that are happening right now. We know of a couple of circumstances, where we hadn't anticipated the loss of a client and we may have that loss. So, we just said we got to be conservative here and realistic and plan for it and understand that these are unique kinds of cases we had one case that we know of where there was an acquisition of one of our clients, the target, their target, their processor, the processor of the target had very high termination fees and they were huge and instead they waved them to keep the business that will probably end up losing the business, now it's not official, but that's its very unique to this environment, unique to the consolidation its not like we have seen this before and anybody who thinks that that doesn’t exist right now is not being truthful and we need to be truthful with you our investors and ourselves. I think we are going to lose more clients and we had a thought and we have tried to reflect that in the numbers that we have shown at the same time, don’t forget that while there is that downside risk we are seeing opportunities like we have never, never seen before and hopefully here we minimize those loses and maximize those gains.

Okay. That’s a very sincere answer and thank you. I guess one way to frame this is, it would be helpful if you could sort of frame the annual contract value you signed relative to start of assumed revenue loss either competitively due to pricing or due to consolidation you have talked about the annual contract value being under record, but we don’t really know what that means sort of an absolute dollars is there any way to frame it relative to the loss revenue.

Let me give you a couple of ways that you might think about that Glenn is, we have we have won 56 new deals in the first two quarters and we have lost 10 clients to norm renewal. So it's not like we are barely thread and water and keeping our head up, we are obviously winning more than we are losing. I specifically mentioned that when we lose them, we tend to lose them in the payment only space, where we don't control the front end and that’s probably going to be the core processor, who is the core and is getting very creative and how they package and so forth. The deals we are winning today are larger in size then the average client that we have typically served. So, if we are losing average, then we are still actually going to be ahead of the game, not as much as we'd like, but there is always a timing issue. When we lose a client, we lose it immediately, its like turning out the lights, its gone, the revenue stops instantly. When we sign a new client it's going to be six to nine months before we them implemented and meant there may or may not be a ramp, let's assume there isn't, but you've got this gap in timing. So, we are really encouraged about Q1 and 2 and candidly I'm pretty I'm smiling about what I think Q3 could be from a sales perspective, but gone it, we are going as hard and as fast as we can to get them implemented so that we could close that time gap from those that we lose.

Glenn just a little bit on what Ray said and we will go back and think about how we can let some of our investors know maybe in the next quarter we talk a little more about this we hear you loud and clear. And we've raised the issue and want to be transparent as possible, but what Ray said is, is that we're signing [ACD], the ACD of those that we are signing is higher than the ACD of those that are, we are losing. However, the ones that we are losing are basically low margin relatively commodity business, [payment] processing for example or some kind biller processing worth relatively quick that they come off of our platform. Whereas the ACD that we are signing is relatively complex sticky high margin business such as what we are doing in Internet banking, such as what we are doing with the web-based collections and that's taking longer time to implement. So, we could do ACD sales versus an ACD losses kind of ratio, this is timing of aspect that's just hard to describe. I don't know with that helps, but it should give you a flavor why we are want to be, why we can be on one hand very optimistic about where our market share and signings are going, while at the same time, I think being realistic that the competition is really stepping up given the economy.

Okay. Thank you very much.

And with no further questions in queue I'd like to turn it over to Matt Lawlor for any additional comments and closing remarks.

Thank you everyone again for participating in our call. I’ll now turn it back over to Beth for some final Safe Harbor statements.

As a reminder, of our intent to take advantage of Safe Harbor provisions. Any statement in the preceding conference call that is not a statement of historical fact, maybe deemed to be a forward-looking statement. These statements include forecasted growth in Online Resource’s customer base, increases in transaction being processed by customers and growth in the number of customers using online banking and bill paying services. Other forward looking statements include those regarding Online Resources’ business outlook for 2009 and beyond and statements containing words such as anticipate, believe, plan, estimate, expect, seek, intend, and other similar words that signify forward looking statements. We encourage you to review Online Resources’ detailed periodic filings of the Securities and Exchange Commission for a full disclosure of risks and uncertainties. Thank you for joining us. This concludes our call.

This concludes today's presentation. Thank you for your participation.