<PAGE>
================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001

                                       OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         FOR THE TRANSITION PERIOD FROM         TO

                        COMMISSION FILE NUMBER: 000-24931

                                 S1 CORPORATION
             (Exact name of registrant as specified in its charter)

                    DELAWARE                               58-2395199
         (State or other jurisdiction of                (I.R.S. Employer
         incorporation or organization)                Identification No.)

           3500 LENOX ROAD, SUITE 200
                ATLANTA, GEORGIA                              30326
         (Address of principal executive                   (Zip Code)
                    offices)

       Registrant's Telephone Number, Including Area Code: (404) 923-3500

                                 NOT APPLICABLE
                   (Former name if changed since last report.)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.

                                 Yes [X]    No [ ]

         Shares of common stock outstanding as of November 8, 2001:  60,758,733

================================================================================


<PAGE>

                         S1 CORPORATION AND SUBSIDIARIES

                    QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001

                                TABLE OF CONTENTS


<TABLE>
<S>                                                                                                                  <C>
                                            PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements:

         Condensed Consolidated Balance Sheets as of September 30, 2001 and December 31, 2000.............            3

         Condensed Consolidated Statements of Operations for the Three Months and Nine Months Ended
           September 30, 2001 and 2000....................................................................            4

         Condensed Consolidated Statements of Cash Flows for the Nine Months Ended
           September 30, 2001 and 2000....................................................................            5

         Notes to Condensed Consolidated Financial Statements as of September 30, 2001....................            6

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations............           14

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.......................................           23

                                             PART II - OTHER INFORMATION

Item 1.  Legal Proceedings................................................................................           24

Item 6.  Exhibits and Reports on Form 8-K.................................................................           24

Signature.................................................................................................           25
</TABLE>



2


<PAGE>

PART 1 - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

                         S1 CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>

                                                                                       SEPTEMBER 30,        DECEMBER 31,
                                                                                           2001                 2000
                                                                                           ----                 ----
                                              ASSETS                                    (UNAUDITED)
<S>                                                                                  <C>                  <C>
Current assets:
     Cash and cash equivalents..................................................     $       139,382      $     173,266
     Accounts receivable, net...................................................              67,987             97,134
     Prepaid expenses...........................................................               7,263              5,905
     Other current assets.......................................................               3,248              6,660
                                                                                     ---------------      -------------
         Total current assets...................................................             217,880            282,965
Property and equipment, net.....................................................              44,963             62,667
Investment in equity interest of affiliate......................................              42,251                 --
Intangible assets, net..........................................................              37,216             57,798
Goodwill, net...................................................................              94,451            195,428
Other assets....................................................................               4,276              7,846
                                                                                     ---------------      -------------
             Total assets.......................................................     $       441,037      $     606,704
                                                                                     ===============      =============

                          LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable...........................................................     $        12,346      $      15,869
     Accrued compensation and benefits..........................................              18,234             13,261
     Accrued restructuring......................................................               6,767              7,180
     Accrued other expenses.....................................................              22,628             41,375
     Deferred revenues..........................................................              29,014             27,471
     Notes payable..............................................................                  --              3,822
     Capital lease obligations..................................................               7,302              8,283
                                                                                     ---------------      -------------
         Total current liabilities..............................................              96,291            117,261
Deferred revenues...............................................................               1,075              1,016
Capital lease obligations, excluding current portion............................               2,275              6,226
Deferred income tax liability...................................................               6,622             10,380
Accrued restructuring, excluding current portion................................               5,291              3,381
Other liabilities...............................................................                 847                695
                                                                                     ---------------      -------------
         Total liabilities......................................................             112,401            138,959
                                                                                     ---------------      -------------

Stockholders' equity:
     Preferred stock............................................................             252,800            252,781
     Common stock...............................................................                 606                580
     Additional paid-in capital.................................................           1,639,541          1,610,096
     Receivable from the sale of stock..........................................             (11,880)           (11,454)
     Accumulated deficit........................................................          (1,550,871)        (1,385,605)
     Accumulated other comprehensive income (loss):
         Net unrealized gains on investment securities available for sale,
           net of taxes........................................................                   22                840
         Cumulative foreign currency translation adjustment.....................              (1,582)               507
                                                                                     ---------------      -------------
           Total stockholders' equity...........................................             328,636            467,745
                                                                                     ---------------      -------------
           Total liabilities and stockholders' equity...........................     $       441,037      $     606,704
                                                                                     ===============      =============
Preferred shares issued and outstanding.........................................           1,829,244          1,186,564
                                                                                     ===============      =============
Common shares issued and outstanding............................................          60,556,280         57,965,770
                                                                                     ===============      =============
</TABLE>

           See accompanying notes to unaudited condensed consolidated
                             financial statements.


3

<PAGE>

                         S1 CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>

                                                                       THREE MONTHS ENDED         NINE MONTHS ENDED
                                                                          SEPTEMBER 30,             SEPTEMBER 30,
                                                                          -------------             -------------
                                                                      2001          2000         2001           2000
                                                                      ----          ----         ----           ----
<S>                                                             <C>              <C>         <C>          <C>
Revenues:
   Software licenses........................................    $      17,908    $  14,586   $    49,043  $     40,635
   Support and maintenance..................................           11,051        6,884        28,723        20,436
   Professional services....................................           26,133       35,322        83,480        93,382
   Data center..............................................           15,419        5,789        37,514        14,613
   Other ...................................................               49        1,798           997         4,766
                                                                -------------    ---------   -----------  ------------
     Total revenues.........................................           70,560       64,379       199,757       173,832
                                                                -------------    ---------   -----------  ------------

Operating expenses:
   Cost of software licenses................................              411        1,136         2,916         3,883
   Cost of professional services and support and maintenance,
     including stock compensation expense of $0 and $24 in
     the three and nine month periods ended September 30,
     2000, respectively.....................................           18,248       28,471        64,720        80,244
   Cost of data center......................................            6,479        4,915        19,535        13,073
   Cost of other revenue....................................               33        1,542           691         4,220
   Selling and marketing, including stock compensation
     expense of $190 and $564 in the three and nine month
     periods ended September 30, 2000, respectively.........           13,354       13,856        38,260        39,032
   Product development, including stock compensation
     expense of $418 and $1,274 in the three and nine month
     periods ended September 30, 2000, respectively.........           14,009       17,342        41,479        49,020
   General and administrative, including stock compensation
     expense of $244 and $828 in the three and nine month
     periods ended September 30, 2001, respectively, and
     $725 and $2,195 in the three and nine month period
     ended September 30, 2000, respectively.................           13,047       11,075        37,006        33,347
   Depreciation and amortization............................            7,477        6,536        22,125        16,069
   Marketing cost from warrants issued......................               --           --            --         4,962
   Merger related costs and restructuring charges...........               --        5,055         9,211        18,213
   Acquired in-process research and development.............               --           --            --        14,100
   Amortization of acquisition intangibles..................           19,330      112,360        60,141       301,873
                                                                -------------    ---------   -----------  ------------
     Total operating expenses...............................           92,388      202,288       296,084       578,036
                                                                -------------    ---------   -----------  ------------
       Operating loss.......................................          (21,828)    (137,909)      (96,327)     (404,204)
Interest and other (expense) income, net....................           (1,796)       1,809         1,975        39,900
Loss on sale of subsidiaries................................               --           --       (53,186)           --
Equity interest in net loss of affiliate....................           (7,021)          --       (20,648)           --
                                                                -------------    ---------   -----------  ------------
                                                                      (30,645)    (136,100)     (168,186)     (364,304)
Income tax benefit..........................................            1,029           --         2,920            --
                                                                -------------    ---------   -----------  ------------
Net loss ...................................................    $     (29,616)   $(136,100)  $  (165,266) $   (364,304)
                                                                =============    =========   ===========  ============
Basic and diluted net loss per common share.................    $       (0.50)   $   (2.46)  $    (2.82)  $      (6.83)
                                                                =============    =========   ==========   ============
Weighted average common shares outstanding..................       59,252,335    55,389,682   58,689,726    53,359,206
                                                                =============    ==========  -==========  ============
</TABLE>


                       See accompanying notes to unaudited
                  condensed consolidated financial statements.


4


<PAGE>

                         S1 CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                               NINE MONTHS ENDED
                                                                                                 SEPTEMBER 30,
                                                                                            2001             2000
                                                                                            ----             ----
<S>                                                                                  <C>                <C>
Cash flows from operating activities:
   Net loss.....................................................................     $     (165,266)    $    (364,304)
   Adjustments to reconcile net loss to net cash provided by (used in)
     operating activities:
     Depreciation and amortization including acquisition intangibles............             82,266           317,942
     Acquired in-process research and development...............................                 --            14,100
     Loss on sale of subsidiaries...............................................             53,186                --
     Equity interest in net loss of affiliate...................................             20,648                --
     Compensation expense for stock options and marketing cost for warrants.....                828             8,648
     Provision for doubtful accounts receivable and billing adjustments.........              4,384             3,155
     Benefit for deferred income taxes..........................................             (2,621)               --
     Gain on the sale of investment securities available for sale...............               (931)          (35,057)
     Write down of cost basis in investments....................................              3,497                --
     Loss on disposal of property...............................................              1,822                --
   Changes in assets and liabilities, excluding effects of divestitures and
     acquisitions:
     Decrease (increase) in accounts receivable.................................             24,799           (26,694)
     Decrease (increase) in prepaid expenses and other assets...................                458            (1,196)
     Decrease in accounts payable...............................................             (3,115)          (23,063)
     Decrease in accrued expenses and other liabilities.........................            (19,674)           (6,972)
     Decrease in deferred revenue...............................................                (51)           (4,089)
                                                                                     ---------------    --------------
       Net cash provided by (used in) operating activities......................                230          (117,530)
                                                                                     --------------     -------------
Cash flows from investing activities:
   Net cash transferred with subsidiaries sold..................................            (15,073)               --
   Net cash (advanced) acquired in connection with acquisitions.................             (4,424)            6,040
   Proceeds from sales of investment securities available for sale..............              1,044            36,546
   Investments in and advances to unconsolidated companies......................                 --            (6,883)
   Proceeds from payment on notes receivable....................................                 --               500
   Purchases of property and equipment..........................................            (11,266)          (32,084)
                                                                                     --------------     -------------
       Net cash (used in) provided by investing activities......................            (29,719)            4,119
                                                                                     ---------------    -------------
Cash flows from financing activities:
   Sale of preferred stock, net of expenses.....................................                 --           231,957
   Proceeds from payment on stock subscription receivable.......................                 --               451
   Proceeds from sale of common stock under employee stock purchase and
     stock option plans.........................................................              4,569            16,706
   Payments on capital lease obligations........................................             (5,025)           (3,344)
   Payments on borrowings.......................................................             (3,822)           (2,242)
                                                                                     --------------     -------------
     Net cash (used in) provided by financing activities........................             (4,278)          243,528
                                                                                     --------------     -------------
Effect of exchange rate changes on cash and cash equivalents....................               (117)              (72)
                                                                                     --------------     -------------
Net (decrease) increase in cash and cash equivalents............................            (33,884)          130,045
Cash and cash equivalents at beginning of period................................            173,266            67,850
                                                                                     --------------     -------------
Cash and cash equivalents at end of period......................................     $      139,382     $     197,895
                                                                                     ==============     =============
Noncash investing and financing activities:
   Equity interest in affiliate received in connection with subsidiary sold.....     $       62,900     $          --
   Conversion of preferred stock to common stock................................              6,179             2,265
   Acquisition of businesses through issuance of stock..........................             23,479           440,626
   Liabilities incurred or assumed through acquisition of businesses............              5,639             8,339
   Equipment purchased with capital lease obligations...........................                 --            17,703
</TABLE>

                  See accompanying notes to unaudited condensed
                       consolidated financial statements.


5


<PAGE>

                         S1 CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1.       BACKGROUND AND BASIS OF PRESENTATION

         S1 Corporation is a leading global provider of enterprise software
solutions to more than 2,600 banks, credit unions, insurance providers, and
investment firms. We are enabling financial service providers to create a
complete Integrated eFinance Experience(TM) by delivering the tools necessary to
meet the evolving demands of their customers across various lines of businesses,
market segments and delivery channels. Through our Open eFinance
Architecture(TM), we offer a broad range of applications that empower financial
institutions to increase revenue, strengthen customer relationships and gain
competitive advantage. Additionally, our professional services organization can
implement S1 applications in-house or we can host these applications for our
customers in an S1 data center.

         We have prepared the accompanying unaudited condensed consolidated
financial statements pursuant to the rules and regulations of the Securities and
Exchange Commission regarding interim financial reporting. Accordingly, they do
not contain all of the information and footnotes required by generally accepted
accounting principles for complete financial statements and should be read in
conjunction with the consolidated financial statements and notes thereto
included in our Annual Report on Form 10-K, as amended, for the year ended
December 31, 2000. In our opinion, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments (consisting of only
normal recurring adjustments) considered necessary for a fair presentation of
our financial condition as of September 30, 2001, the results of our operations
for the three months and nine months ended September 30, 2001 and 2000 and its
cash flows for the nine months ended September 30, 2001 and 2000. The data in
the condensed consolidated balance sheet as of December 31, 2000 was derived
from our audited consolidated balance sheet as of December 31, 2000, as
presented in our Annual Report on Form 10-K, as amended, for the year ended
December 31, 2000. Certain items in the prior year financial statements have
been reclassified to conform to the current year presentation. The condensed
consolidated financial statements include the accounts of S1 and its wholly
owned subsidiaries after the elimination of all significant intercompany
accounts and transactions. We account for investments in affiliated entities,
which we do not manage and over which we exert significant influence, under the
equity method. Operating results for the three months and nine months ended
September 30, 2001 are not necessarily indicative of the operating results that
may be expected for the year ending December 31, 2001.

         In November 1999, we completed the acquisition of FICS Group, N.V.
which included the Financial Reporting Systems, or FRS, business unit, which we
reported in our financial statements as held for sale. As a result, we did not
include the operating results of FRS in our statements of operations for 1999 or
2000. During the first quarter of 2001, we determined that there was no
reasonable market for the sale of FRS and that we would continue to operate FRS
until we (1) identified a suitable market for sale of the FRS business or (2)
determined that continued operation of the FRS business was no longer viable.
Accordingly, we have included the results of the FRS operations, which are not
considered to be material, in our statement of operations for 2001 as part of
the Financial Institutions segment.

2.       RECENT ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts and for hedging activities. We adopted
this statement effective January 1, 2001, with no material impact on our
consolidated financial statements. To date, we have not engaged in any
derivative or hedging activities.

         In September 2000, the FASB issued SFAS No. 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities."
This statement replaces SFAS No. 125 "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities" and is effective for
transfers and servicing occurring after June 30, 2001 and, for certain
provisions, fiscal years ending after December 15, 2000. We adopted this
statement effective July 1, 2001, with no material impact on our consolidated
financial statements.


6

<PAGE>

         In July 2001, the FASB issued SFAS No. 141, "Business Combinations,"
and SFAS No. 142, "Goodwill and Other Intangible Assets." Under these new
standards, the FASB eliminated accounting for certain mergers and acquisitions
as poolings of interests, eliminated amortization of goodwill and indefinite
life intangible assets and established new impairment measurement procedures for
goodwill. For S1 and other companies with calendar year ends, the standards
become effective for all acquisitions completed on or after June 30, 2001,
except with regard to business combinations initiated prior to July 1, 2001. As
a result, we applied these new standards in connection with our acquisition of
Software Dynamics, Incorporated, or SDI, as further discussed in Note 3 below.
Accordingly, as prescribed by the standards, we will not amortize the goodwill
that arose from the acquisition of SDI.

         Changes in financial statement treatment for goodwill and intangible
assets arising from mergers and acquisitions completed prior to June 30, 2001
become effective January 1, 2002. We are still assessing the impact of
implementing these standards; however, based on our review to date, we expect
the following impacts upon adoption of SFAS 142 on January 1, 2002:

         -        We will be required to reclassify approximately $7.0 million
                  of unamortized assembled workforce intangible assets into
                  goodwill.

         -        The balance of goodwill and assembled workforce is expected to
                  be approximately $65.3 million, excluding goodwill recorded
                  for the SDI transaction discussed in Note 3 below, and we will
                  discontinue amortizing these assets at that time. We estimate
                  that the resulting reduction in amortization expense will be
                  approximately $56.3 million for 2002, $6.8 million for 2003
                  and $2.2 million for 2004.

         -        We will be required to perform a transitional goodwill
                  impairment test as of January 1, 2002. The impairment test
                  will require us to: (1) identify our reporting units, (2)
                  determine the carrying value of each reporting unit by
                  assigning assets and liabilities, including existing goodwill
                  and intangible assets, to those reporting units, and (3)
                  determine the fair value of each reporting unit. If the
                  carrying value of any reporting unit exceeds its fair value,
                  we will determine the amount of any goodwill impairment
                  through a detailed fair value analysis of each of the assigned
                  assets (excluding goodwill). At this time, we do not
                  anticipate any charge resulting from the transitional
                  impairment test.

         -        Following the transitional impairment test, our goodwill
                  balances will be subject to annual impairment tests using the
                  same process described above. If any impairment were indicated
                  as a result of the annual test, we would record an impairment
                  charge as part of income (loss) from operations.

         In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." The statement provides accounting and reporting
standards for recognizing obligations related to asset retirement costs
associated with the retirement of tangible long-lived assets. We are required to
adopt this statement no later than January 1, 2003 and do not expect it to have
a material impact on our consolidated financial statements.

         In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," which is effective for fiscal
years beginning after December 15, 2001. This statement supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of." However, it retains the fundamental provisions of SFAS No. 121
for the recognition and measurement of the impairment of long-lived assets to be
held and used and the measurement of long-lived assets to be disposed of by
sale. Impairment of goodwill is not included in the scope of SFAS No. 144 and
will be treated in accordance with SFAS No. 142. According to SFAS No. 144,
long-lived assets are measured at the lower of carrying amount or fair value
less cost to sell, whether reporting in continuing or discontinued operations.
We are required to adopt this statement no later than January 1, 2002 and do not
expect it to have a material impact on our consolidated financial statements.

         In July 2001, the FASB's Emerging Issues Task Force issued Topic No.
D-98 as a result of inquiries about the financial statement classification and
measurement of securities subject to mandatory redemption requirements or whose
redemption is outside the control of the issuer with regards to financial
statement classification. This pronouncement


7


<PAGE>

clarifies that ordinary liquidation events, which involve the redemption and
liquidation of all equity securities, should not result in a security being
classified outside of permanent equity. However, deemed liquidation events that
require one or more particular classes or types of equity security to be
redeemed cause those securities to be classified outside of permanent equity.
This pronouncement is to be applied retroactively in the first fiscal quarter
ending after December 15, 2001 and earlier application is encouraged. We will
adopt this pronouncement when required and do not expect it to have a material
impact on our consolidated financial statements.

3.       ACQUISITION OF SOFTWARE DYNAMICS, INCORPORATED

         On September 20, 2001, we acquired all of the fully diluted shares of
SDI, a privately held premier provider of branch automation, call center and
customer relationship management, or CRM, solutions for financial institutions.
As a result of this acquisition, we now deliver software solutions to financial
institutions for four major customer interaction channels - branch, call center,
phone, Internet - and all core lines of business. In addition to gaining SDI's
extensive domain knowledge in branch, teller, call center and CRM solutions, we
increased our customer base worldwide with this acquisition. SDI's product line
gives us a presence in bank branch networks, creating a link of account
information at the branch level in real time with the other platforms. SDI's
PLUS and ZEUS product lines provide us with proven branch automation technology.
We believe this unique fit will allow our customers to quickly begin realizing
the benefits and costs savings generated by the acquisition. SDI's assets will
enable us to more rapidly execute on our `banking everyware' strategy of
delivering all products and all services across all channels. In addition to
SDI's technology, SDI's existing customer base will provide us with reliable
economic benefits, stemming mainly from maintenance and relicensing activity. In
addition, SDI's customers present us with a ready market to sell other S1
systems and services.

         We accounted for the acquisition of SDI using the purchase method of
accounting prescribed by SFAS No. 141. For accounting purposes, we treated the
acquisition as if it occurred on September 30, 2001. Accordingly, our
consolidated results of operations for the three and nine months ended September
30, 2001 do not include the results of operations of SDI for those periods.

         Under the terms of the acquisition agreement:

         -        We issued 1,257,109 shares of common stock with a value
                  recorded of $16.1 million. The value of the common shares
                  issued was determined based on the average market price of our
                  common shares over the 2 trading day period before and the 2
                  trading day period after the terms of the acquisition were
                  agreed to and announced, less the estimated costs to register
                  the securities.

         -        We also issued 649,180 shares of series E preferred stock. The
                  value of the preferred shares of $6.2 million was determined
                  based on the value of the as-converted common stock, less the
                  estimated amount of contingent consideration of $2.1 million.
                  Of the total series E preferred shares issued, we placed in
                  escrow for the selling shareholders 318,098 shares of series E
                  preferred stock in connection with a general indemnity
                  provision and the collection of specific funds under a pending
                  sale of software licenses. The shares related to the general
                  indemnity provision were included in the determination of the
                  purchase price as they did not relate to specific
                  contingencies and we do not expect that any claims will arise.
                  The value of the contingent consideration that we deducted
                  from the value assigned to the preferred shares is equal to
                  the value of the specified funds receivable. If the funds are
                  collected, we will record the value of the contingent
                  consideration at that time, which will increase the amount of
                  goodwill that we recorded in connection with this acquisition.

         -        We converted all outstanding options to purchase SDI stock for
                  101,784 options to purchase S1 common stock with an estimated
                  fair value of $1.2 million. We estimated the fair value of the
                  S1 stock options using the Black Scholes option-pricing model.

         -        Finally, we paid $4.5 million from available cash to SDI
                  shareholders and accrued $0.8 million for direct acquisition
                  costs, including principally advisory, legal and accounting
                  fees.

         Of the total purchase price of $28.8 million, $5.3 million was
allocated to existing SDI technology (estimated useful life of 5-7 years), $2.2
million to the installed customer asset (estimated useful life of 10 years) and
net liabilities of $1.3 million, based on their estimated fair values at the
date of acquisition. The remaining $22.6 million was assigned to goodwill. As of
the acquisition date, SDI did not have research and development activities
underway that qualified as in-process research and


8

<PAGE>

development under SFAS No. 2 "Accounting for Research and Development Costs" and
FASB Interpretation No. 4 "Applicability of FASB Statement No. 2 to Business
Combinations Accounted for by the Purchase Method." The value assigned to the
identifiable intangible assets was based on analysis performed by an independent
third party as of the date of acquisition. We are in the process of finalizing
this valuation; thus, the allocation of the purchase price is preliminary and
subject to change.

         The following table summarizes the estimated fair values of the assets
acquired and liabilities assumed at September 30, 2001 (in thousands):

<TABLE>
         <S>                                  <C>
         Current assets                       $  2,876
         Property and equipment                    496
         Other non-current assets                   80
         Identified intangible assets            7,500
         Goodwill                               22,616
         Current liabilities                    (4,671)
         Non-current liabilities                  (114)
                                              --------
                                              $ 28,783
                                              ========
</TABLE>

         We did not present unaudited pro forma results of operations of S1 and
SDI for the nine months ended September 30, 2001 and 2000 because our pro forma
results for those periods would not be materially different from our actual
results for those periods as a result of the acquisition of SDI.

         SDI's business is part of our Financial Institutions operating segment.
Accordingly, the entire amount of goodwill stemming from the acquisition of SDI
was assigned to the Financial Institutions operating segment. The goodwill is
not tax deductible.

4.       CREDIT FACILITY

         On September 4, 2001, we entered into an arrangement with a bank for a
$10.0 million secured line of credit, which expires on September 3, 2002. As of
September 30, 2001, the full $10.0 million was available for borrowing under the
secured line of credit. We are required to pay an annual commitment fee of 0.20%
on the undrawn portion of the commitment. For any borrowings under the secured
line of credit, we may choose to pay interest based on the lender's prime rate,
LIBOR plus 0.50% or a rate quoted by the lender. Certain of our assets with a
value of $10.0 million secure the line of credit.

5.       STOCKHOLDERS' EQUITY

         On September 20, 2001, we issued 649,180 shares of newly authorized
Series E convertible preferred stock in connection with the acquisition of SDI
as described in Note 3 above. The Series E preferred stock is initially
convertible into common stock at a rate of one common share for each series E
preferred share. The terms of the series E preferred stock provide holders with
identical rights to common stockholders with respect to dividends and
distributions in the event of liquidation, dissolution, or winding up of S1. The
holders of the series E preferred stock are entitled to voting rights equal to
those of the common stockholders on an as-converted basis.

         During the third quarter of 2001, one holder of series D convertible
preferred stock exercised its right to exchange its preferred shares for S1
common stock at a rate of 29.283 common shares for each preferred share.
Accordingly, we issued 190,339 shares of S1 common stock in exchange for 6,500
shares of series D convertible preferred stock.

6.       LOSS ON SALE OF SUBSIDIARY AND EQUITY INTEREST IN NET LOSS OF AFFILIATE

         On January 16, 2001, we sold our VerticalOne subsidiary to Yodlee.com,
Inc. in a stock-for-stock transaction under which we received an ownership
interest in Yodlee of approximately 33%. In connection with this transaction, we
recorded a loss on sale of $52.3 million, which represented the difference
between the carrying value of VerticalOne and the appraised value of our
interest in Yodlee. The investment in Yodlee is being accounted for on the
equity basis. At the transaction date, the


9


<PAGE>

carrying value of our investment in Yodlee exceeded our share of the underlying
net assets of Yodlee by $26.2 million. Substantially all of this excess was
allocated to goodwill, which is being amortized over a period of five years.
During the nine months ended September 30, 2001, we recorded a non-cash charge
of $20.6 million based on our equity interest in the net loss of the affiliate
and amortization of the underlying goodwill and other intangible assets. We are
a reseller of account aggregation services through our relationship with Yodlee.
As a result of additional third-party equity investments made in Yodlee, our
ownership interest in Yodlee as of September 30, 2001 was approximately 32%.

7.       COMMITMENTS AND CONTINGENCIES

         We are involved in certain legal proceedings that are described in our
2000 Annual Report on Form 10-K, as amended, for the year ended December 31,
2000, as filed with the Securities and Exchange Commission.

         Commencing May 8, 2000, several substantially similar complaints were
filed in the United States District Court in Atlanta, Georgia against S1, Michel
Akkermans, James Mahan and Robert Stockwell, alleging violations of Section
10(b) of the Securities Exchange Act of 1934 and Rule 10(b)(5), promulgated
thereunder and Section 20 of the Securities Exchange Act of 1934. The Court
appointed a Lead Plaintiff on March 9, 2001. A Consolidated Amended Complaint
was filed on April 24, 2001. The Consolidated Amended Complaint is substantially
similar to the prior complaints. On October 23, 2001, the Court dismissed the
Consolidated Amended Complaint for failure to state a claim upon which relief
may be granted. The Lead Plaintiff was given twenty (20) days to file an amended
complaint. As of November 12, 2001, the Lead Plaintiff had not filed an amended
complaint. The Lead Plaintiff, however, has thirty (30) days from the entry of a
final judgment in favor of the defendants to file a notice of appeal if he so
chooses. We believe that the allegations in the Consolidated Amended Complaint
are wholly devoid of merit and we and the individual defendants intend to
continue to defend ourselves vigorously against these claims.

8.       COMPREHENSIVE LOSS

         The components of comprehensive loss are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                        THREE MONTHS ENDED         NINE MONTHS ENDED
                                                                           SEPTEMBER 30,             SEPTEMBER 30,
                                                                           -------------             -------------
                                                                         2001         2000          2001        2000
                                                                         ----         ----          ----        ----
<S>                                                                    <C>         <C>           <C>         <C>
Net loss...........................................................    $(29,616)   $(136,100)    $(165,266)  $(364,304)
Foreign currency translation adjustment............................       1,223         (206)       (2,089)        270
Unrealized loss on investment securities available for
      sale, net of taxes...........................................        (403)     (20,573)         (250)    (16,154)
                                                                       --------    ----------    ----------  ----------
         Comprehensive loss........................................    $(28,796)   $(156,879)    $(167,605)  $(380,188)
                                                                       ========    =========     =========   =========
</TABLE>


9.       RESTRUCTURING CHARGES

         In November 2000, we approved a restructuring plan related to the
streamlining of our operations, as well as a decision to discontinue development
on the Edify retail banking platform. As a result of the restructuring plan, we
reduced our workforce by approximately 220 employees and closed several of our
facilities worldwide. During the fourth quarter of 2000, we recorded a charge of
$14.7 million for the estimated costs associated with the restructuring plan.
During the second quarter of 2001, we determined that, as a result of a
softening in the domestic real estate markets, our original estimate of the
costs to dispose of unused real estate was below the currently anticipated
costs. Accordingly, we increased our reserves for lease termination costs and
recorded an additional restructuring charge of $3.6 million. Finally, during the
third quarter of 2001, in connection with the closing of certain office
facilities, we wrote-off leasehold improvements of $1.2 million, which were not
previously anticipated in the restructuring accrual.

         During the second quarter of 2001, we approved a restructuring plan
related to the streamlining of our European operations. In connection with this
plan, we reduced our European workforce by approximately 77 people and
consolidated the majority of our European operations into two locations. As a
result of these activities, we recorded a charge of $5.6 million for the
estimated costs associated with the restructuring plan.


10

<PAGE>

         The restructuring charges and their utilization as of September 30,
2001 and for the nine months then ended are summarized as follows (in
thousands):

<TABLE>
<CAPTION>
                                                    RESERVE                                                      RESERVE
                                                  BALANCE AT                                                   BALANCE AT
                                                 DECEMBER 31,                      AMOUNTS                    SEPTEMBER 30,
                                                     2000          ADDITIONS      UTILIZED      ADJUSTMENTS       2001
                                                     ----          ---------      --------      -----------       ----
<S>                                              <C>             <C>              <C>           <C>          <C>
Severance and other employee
    termination costs.......................     $       3,170   $      1,692     $   (4,491)   $       400  $        771
Lease termination costs.....................             6,762          2,897         (2,565)         3,235        10,329
Other.......................................               629            976         (1,889)         1,242           958
                                                 -------------   ------------     ----------    -----------  ------------
                                                 $      10,561   $      5,565     $   (8,945)   $     4,877  $     12,058
                                                 =============   ============     ==========    ===========  ============
</TABLE>


         We expect to make future cash expenditures related to these
restructuring activities of approximately $12.1 million, of which we anticipate
approximately $6.8 million will be paid within the next twelve months.


10.      SEGMENT REPORTING

         During 2001, we are operating and managing our operations in two
business segments: Financial Institutions and Call Center Technology. Through
our Financial Institutions segment, we build, deliver and operate integrated,
transactional and brandable Internet applications for financial institutions
worldwide, available as an in-house solution or one that can be out-sourced to
our data centers. Through our Call Center Technology segment, we offer
enterprise customer interaction solutions, including: interactive voice
response, voice recognition, e-mail management, web chat navigation and
collaboration and computer telephony integration. In 2000, we operated a third
segment, Internet Aggregation Services, through our VerticalOne subsidiary.
Through this segment, we provided technology that enables consumers to aggregate
personal account information from multiple sources. We sold our VerticalOne
subsidiary to Yodlee in January 2001, as described in Note 6. Accordingly, we
eliminated the Internet Aggregation Services segment in 2001.

         We evaluate the performance of our operating segments based on
revenues, direct costs and operating income (loss), excluding depreciation and
amortization, marketing cost from warrants issued, merger related costs and
restructuring charges, acquired in-process research and development and
amortization of acquisition intangibles. In addition, we provide general and
administrative services to the operating segments on a shared service basis.
Accordingly, we include the general and administrative costs in the "Other"
category. We do not use any asset-based metrics to measure the operating
performance of our operating segments.

         Currently, a large portion of our Call Center Technology segment
revenues comes from financial institutions. Our strategy is to leverage this
domain expertise and the cross-sell opportunities to benefit our entire
organization. We are currently changing our management structure to be organized
around functional and geographic areas. As a result, we believe our 2002
operating segments may change to reflect the new management structure.

<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED SEPTEMBER 30, 2001 (IN THOUSANDS)
                                                            ----------------------------------------------------
                                                                                            CALL
                                                           FINANCIAL        CENTER        INTERNET
                                                          INSTITUTIONS    TECHNOLOGY     AGGREGATION        OTHER            TOTAL
                                                          ------------    ----------     -----------        -----            -----
<S>                                                       <C>             <C>            <C>               <C>              <C>
Revenues ...........................................        $55,544        $15,016        $      --        $     --         $70,560
Operating expenses:
     Cost of revenues ..............................         22,202          2,969               --              --          25,171
     Selling and marketing .........................          7,299          6,055               --              --          13,354
     Product development ...........................         10,789          3,220               --              --          14,009
     General and administrative ....................             --             --               --          13,047          13,047
                                                            -------        -------        ---------        --------         -------
Total operating expenses (1) .......................         40,290         12,244               --          13,047          65,581
                                                            -------        -------        ---------        --------         -------
Segment operating income (loss) ....................        $15,254        $ 2,772        $      --        $(13,047)        $ 4,979
                                                            =======        =======        =========        ========         =======

(1) Includes non cash stock compensation expense ...        $    --        $    --        $      --        $    244         $   244
</TABLE>


11

<PAGE>

<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED SEPTEMBER 30, 2000 (IN THOUSANDS)
                                                         ----------------------------------------------------
                                                                          CALL
                                                         FINANCIAL       CENTER        INTERNET
                                                        INSTITUTIONS   TECHNOLOGY     AGGREGATION        OTHER            TOTAL
                                                        ------------   ----------     -----------        -----            -----
<S>                                                     <C>            <C>            <C>               <C>              <C>

Revenues ...........................................       $53,478       $10,342       $     559        $     --        $ 64,379
Operating expenses:
     Cost of revenues ..............................        32,420         3,018             626              --          36,064
     Selling and marketing .........................         8,013         4,179           1,664              --          13,856
     Product development ...........................        11,474         2,403           3,465              --          17,342
     General and administrative ....................            --            --              --          11,075          11,075
                                                           -------       -------       ---------        --------        --------
Total operating expenses (1) .......................        51,907         9,600           5,755          11,075          78,337
                                                           -------       -------       ---------        --------        --------
Segment operating income (loss) ....................       $ 1,571       $   742       $  (5,196)       $(11,075)       $(13,958)
                                                           =======       =======       =========        ========        ========

(1)Includes non cash stock compensation expense ....       $    --       $    --       $     608        $    725        $  1,333
</TABLE>


<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED SEPTEMBER 30, 2001 (IN THOUSANDS)
                                                         ----------------------------------------------------
                                                                          CALL
                                                         FINANCIAL       CENTER        INTERNET
                                                        INSTITUTIONS   TECHNOLOGY     AGGREGATION        OTHER            TOTAL
                                                        ------------   ----------     -----------        -----            -----
<S>                                                     <C>            <C>            <C>               <C>              <C>
Revenues ...........................................       $160,246      $39,511       $      --        $     --        $199,757
Operating expenses:
    Cost of revenue ................................        78,237         9,625              --              --          87,862
    Selling and marketing ..........................        21,519        16,741              --              --          38,260
    Product development ............................        32,973         8,506              --              --          41,479
    General and administrative .....................            --            --              --          37,006          37,006
                                                           -------       -------       ---------        --------        --------
Total operating expenses (1) .......................       132,729        34,872              --          37,006         204,607
                                                           -------       -------       ---------        --------        --------
Segment operating income (loss) ....................       $27,517       $ 4,639       $      --        $(37,006)       $ (4,850)
                                                           =======       =======       =========        ========        ========

(1)Includes non cash stock compensation expense ....       $    --       $    --       $      --        $    828        $    828
</TABLE>


12


<PAGE>

<TABLE>
<CAPTION>
                                                          NINE MONTHS ENDED SEPTEMBER 30, 2000 (IN THOUSANDS)
                                                          ---------------------------------------------------
                                                                          CALL
                                                         FINANCIAL       CENTER        INTERNET
                                                        INSTITUTIONS   TECHNOLOGY     AGGREGATION        OTHER            TOTAL
                                                        ------------   ----------     -----------        -----            -----
<S>                                                     <C>            <C>            <C>               <C>              <C>
Revenues ...........................................       $139,883      $32,492       $   1,457        $     --        $173,832
Operating expenses:
    Cost of revenue ................................        89,220        10,885           1,315              --         101,420
    Selling and marketing ..........................        23,110        11,939           3,983              --          39,032
    Product development ............................        35,060         6,128           7,832              --          49,020
    General and administrative .....................            --            --              --          33,347          33,347
                                                           -------       -------       ---------        --------        --------
Total operating expenses (1) .......................       147,390        28,952          13,130          33,347         222,819
                                                           -------       -------       ---------        --------        --------
Segment operating (loss) income ....................       $(7,507)      $ 3,540       $ (11,673)       $(33,347)       $(48,987)
                                                           =======       =======       =========        ========        ========

(1)Includes non cash stock compensation expense ....       $    --       $    --       $   1,862        $  2,195        $  4,057
</TABLE>


11.      NET LOSS PER COMMON SHARE

         We calculate basic net loss per common share as loss available to
common stockholders divided by the weighted average number of common shares
outstanding during the period. Diluted earnings per share is calculated to
reflect the potential dilution that would occur if stock options or other
contracts to issue common stock were exercised and resulted in additional common
stock that would share in the earnings of S1. Because of our net losses, the
issuance of additional shares of common stock under stock options and warrants
or upon the conversion of preferred stock would be antidilutive. The total
number of weighted average common shares that we would have used in our
computation of diluted earnings per share for the three month periods ended
September 30, 2001 and 2000 was 72,621,659 and 68,036,634, respectively. The
total number of weighted average common shares that we would have used in our
computation of diluted earnings per share for the nine month periods ended
September 30, 2001 and 2000 was 71,525,011 and 71,717,822, respectively.

12.      STOCK OPTION EXCHANGE PROGRAM

         On June 8, 2001, we offered eligible employees the opportunity to
exchange outstanding stock options to purchase shares of our common stock that
have an exercise price of $18.00 per share or more for new options which under
the S1 Corporation 1997 Employee Stock Option Plan. Through July 6, 2001, the
expiration date of the exchange offer, we accepted for exchange and canceled
2,937,162 stock options from eligible employees. Eligible employees who are not
senior managers will receive new options equal to the number of options
exchanged. Senior managers will receive new options equal to the number of
options exchanged multiplied by 0.75. We will grant the new options on or about
January 8, 2002, which is the first business day that is at least six months and
one day following the date we canceled the options accepted for exchange. To
receive the new options, eligible employees who participated in this voluntary
exchange program must remain continuously employed by S1 or one of our
consolidated subsidiaries from the date the options were tendered for exchange
through the date we grant the new options. We do not expect to record a charge
for stock compensation expense as a result of this stock option exchange
program.

13.      SUBSEQUENT EVENT

         On May 16, 1999, we entered into a Stock Purchase and Option Agreement
with Intuit. Under the agreement, Intuit purchased 970,813 shares of S1 common
stock for $50.0 million and we granted Intuit an option to purchase 5,024,187
shares of our common stock with an exercise price of $51.50 that vested upon the
occurrence of certain events. At September 30, 2001, 4,757,387 of these options
were exercisable. Concurrent with the Stock Purchase and Option Agreement, we
entered a five-year cross-license and distribution agreement with Intuit. There
was no activity under the cross-license and distribution agreements during 2000
or 2001. On October 31, 2001, we terminated the cross-license and distribution
agreement with Intuit, as well as Intuit's right to purchase shares of our
common stock pursuant to the option. We do not expect the termination of these
agreements to have a material impact on our financial statements.


13


<PAGE>

ITEM 2.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATIONS

         This quarterly report contains forward-looking statements and
information relating to our subsidiaries and us. The words "believes,"
"expects," "may," "will," "should," "projects," "contemplates," "anticipates,"
"forecasts," "intends" or similar terminology identify forward-looking
statements. These statements are based on our beliefs as well as assumptions
made using information currently available to us. Because these statements
reflect our current views concerning future events, they involve risks,
uncertainties and assumptions. Therefore, actual results may differ
significantly from the results discussed in the forward-looking statements. You
are urged to read the risk factors described in our Annual Report on Form 10-K,
as amended, for the year ended December 31, 2000, as filed with the Securities
and Exchange Commission. Except as required by law, we undertake no obligation
to update publicly any forward-looking statement for any reason, even if new
information becomes available.

         The following discussion should be read in conjunction with the
unaudited condensed consolidated financial statements and notes appearing
elsewhere in this report and the audited consolidated financial statements and
notes thereto in our Annual Report on Form 10-K, as amended, for the year ended
December 31, 2000.

GENERAL

         In November 1999, we completed the acquisition of FICS Group, N.V.
which included the Financial Reporting Systems, or FRS, business unit, which we
reported in our financial statements as held for sale. As a result, we did not
include the operating results of FRS in our statements of operations for 1999 or
2000. During the first quarter of 2001, we determined that there was no
reasonable market for the sale of FRS and that we would continue to operate FRS
until we (1) identified a suitable market for sale of the FRS business or (2)
determined that continued operation of the FRS business was no longer viable.
Accordingly, we have included the results of the FRS operations, which are not
considered to be material, in our statement of operations for 2001 as part of
the Financial Institutions segment.

         During 2000, we operated and managed three business segments: Financial
Institutions, Call Center Technology and Internet Aggregation. In January 2001,
we sold our VerticalOne subsidiary, which comprised the Internet Aggregation
segment, to Yodlee.com, Inc. Accordingly, we eliminated the Internet Aggregation
segment in 2001.

         During the fourth quarter of 2000, we approved a restructuring plan
related to the streamlining of our worldwide operations, including discontinuing
development on the Edify retail banking platform. During the second quarter of
2001, we approved a restructuring plan related to the streamlining of our
European operations. We continue to review our cost structure on a worldwide
basis and look for additional ways to streamline our operations. We believe that
our efforts to streamline operations, including headcount reductions and
consolidation of our operating facilities, have resulted in cost savings that
have improved our margins and our cash flows from operating activities during
the nine months ended September 30, 2001.

         On September 20, 2001, we acquired all of the fully diluted shares of
Software Dynamics, Incorporated, a privately held premier provider of branch
automation, call center and customer relationship management, or CRM, solutions
for financial institutions. As a result of this acquisition, we now deliver
software solutions to financial institutions for four major customer interaction
channels - branch, call center, phone, Internet - and all core lines of
business. In addition to gaining SDI's extensive domain knowledge in branch,
teller, call center and CRM solutions, we increased our customer base worldwide
with this acquisition. SDI's product line gives us a presence in bank branch
networks, creating a link of account information at the branch level in real
time with the other platforms. SDI's PLUS and ZEUS product lines provide us with
proven branch automation technology. We believe this unique fit will allow our
customers to quickly begin realizing the benefits and costs savings generated by
the acquisition. SDI's assets will enable us to more rapidly execute on our
`banking everyware' strategy of delivering all products and all services across
all channels. In addition to SDI's technology, SDI's existing customer base will
provide us with reliable economic benefits, stemming mainly from maintenance and
relicensing activity. In addition, SDI's customers present us with a ready
market to sell other S1 systems and services. For accounting purposes, we
treated the acquisition as if it occurred on September 30, 2001. Accordingly,
our consolidated results of operations for the three and nine months ended
September 30, 2001 do not include the results of operations of SDI for those
periods.

         During 2001, we have been investing in our development of the new
integrated S1 Enterprise Platform as the new technology foundation for our
Enterprise family of products. Our Enterprise Platform enables financial
services providers to


14


<PAGE>

leverage the interfaces built to their back-end systems, share customer data
across their enterprise and deliver comprehensive, integrated marketing
programs. Our Enterprise Platform provides an open, flexible, and scalable
architecture that leverages existing legacy and third-party applications.
Additionally, our Enterprise Platform allows financial services providers to
move toward a standard platform to unify their channel strategy and provide the
most robust transactional and CRM capabilities to both their external and
internal customers. Through our Market Leadership Partner program, certain
customers are providing us with valuable input on the architectural requirements
and business capabilities that financial services providers need to deliver a
consistent eFinance experience across all customer interaction channels. We
expect that Enterprise Platform 1.0 will be available for general release during
the first quarter of 2002.

         Generally, we do not capitalize software development costs because of
the insignificant amount of costs we incur between completion of beta testing
and general release of a product. To date, we have not capitalized any costs in
connection with the development of Enterprise Platform 1.0. However, we may be
required to capitalize some of these development costs in the fourth quarter of
2001 and through the date of general release in the first quarter of 2002.

FINANCIAL INSTITUTIONS SEGMENT

         Our Financial Institutions segment builds, delivers and operates
integrated, transactional and brandable Internet software applications and
services for financial institutions worldwide, available as an in-house solution
or one that we host in an S1 data center. The Financial Institutions segment
provides highly customized solutions to large global and national financial
institutions, as well as solutions that require little or no customization,
which are primarily sold to small and mid-market financial institutions.

CALL CENTER TECHNOLOGY SEGMENT

         Our Call Center Technology segment offers enterprise customer
interaction solutions, including: interactive voice response, voice recognition,
e-mail management, web chat navigation and collaboration and computer telephony
integration. These solutions allow financial institutions and other
organizations to automate, integrate and personalize interactions with customers
through multiple channels, yielding stronger, more profitable relationships.
Using customer-determined profiles and interests, our clients can notify their
customers about new products or services. Calls that do require human assistance
can automatically be routed to the most appropriate person. All of these goals
can be accomplished through a combination of channels, including telephone,
Internet, e-mail, fax, and pager. In addition, we offer a natural language
speech recognition product and an optional marketing campaign management
component that enables businesses to deliver products and services to targeted
prospects consistently through multiple channels.

         Currently, a large portion of our Call Center Technology segment
revenues comes from financial institutions. Our strategy is to leverage this
domain expertise and the cross-sell opportunities to benefit our entire
organization. We are currently changing our management structure to be organized
around functional and geographic areas. As a result, we believe our 2002
operating segments may change to reflect new management structure.


15


<PAGE>

THREE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED WITH THREE MONTHS ENDED
SEPTEMBER 30, 2000

         The following table presents selected financial data for our operating
segments for the three months ended September 30, 2001 and 2000. We evaluate the
performance of our operating segments based on revenues, direct costs, gross
margins and operating expenses, excluding depreciation and amortization,
marketing cost from warrants issued, merger related costs and restructuring
charges, acquired in-process research and development and amortization of
acquisition intangibles. In addition, we provide general and administrative
services to the operating segments on a shared service basis. Accordingly, we do
not include general and administrative costs in the determination of our segment
operating income or loss.

                             SELECTED FINANCIAL DATA
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED
                                                              SEPTEMBER 30, 2001
                                         -----------------------------------------------------------
                                           FINANCIAL      CALL CENTER
                                         INSTITUTIONS      TECHNOLOGY        OTHER           TOTAL
                                         -----------------------------------------------------------
<S>                                      <C>              <C>              <C>             <C>
Revenues:
 Software licenses                         $   9,371       $   8,537       $      --       $  17,908
 Support and maintenance                       7,071           3,980              --          11,051
 Professional services                        23,634           2,499              --          26,133
 Data center                                  15,419              --              --          15,419
 Other                                            49              --              --              49
                                         -----------------------------------------------------------
  Total revenues                              55,544          15,016              --          70,560
                                         -----------------------------------------------------------
DIRECT COSTS:
 Software licenses                                84             327              --             411
 Support and maintenance
  and professional services                   15,606           2,642              --          18,248
 Data center                                   6,479              --              --           6,479
 Other                                            33              --              --              33
                                         -----------------------------------------------------------
  Total direct costs                          22,202           2,969              --          25,171
                                         -----------------------------------------------------------
GROSS MARGIN:                                 33,342          12,047              --          45,389
                                         -----------------------------------------------------------
OPERATING EXPENSES:
 Selling and marketing                         7,299           6,055              --          13,354
 Product development                          10,789           3,220              --          14,009
 General and administrative                       --              --          13,047          13,047
                                         -----------------------------------------------------------
  Total operating expenses                    18,088           9,275          13,047          40,410
                                         -----------------------------------------------------------
SEGMENT OPERATING INCOME (LOSS)            $  15,254       $   2,772       $ (13,047)      $   4,979
                                         ===========================================================

GROSS MARGIN PERCENTAGES:
 Software licenses                                99%             96%             --              98%
 Support and maintenance
  and professional services                       49%             59%             --              51%
 Data center                                      58%             --              --              58%
 Other                                            33%             --              --              33%
                                         -----------------------------------------------------------
   Total gross margin                             60%             80%             --              64%
                                         -----------------------------------------------------------
<CAPTION>
                                                                       THREE MONTHS ENDED
                                                                       SEPTEMBER 30, 2000
                                         --------------------------------------------------------------------------
                                           FINANCIAL      CALL CENTER        INTERNET
                                         INSTITUTIONS      TECHNOLOGY      AGGREGATION      OTHER           TOTAL
                                         --------------------------------------------------------------------------
<S>                                      <C>              <C>              <C>             <C>            <C>
Revenues:
 Software licenses                         $   8,316       $   6,270       $      --       $      --      $  14,586
 Support and maintenance                       4,314           2,570              --              --          6,884
 Professional services                        33,820           1,502              --              --         35,322
 Data center                                   5,230              --             559              --          5,789
 Other                                         1,798              --              --              --          1,798
                                         --------------------------------------------------------------------------
  Total revenues                              53,478          10,342             559              --         64,379
                                         --------------------------------------------------------------------------
DIRECT COSTS:
 Software licenses                               559             577              --              --          1,136
 Support and maintenance
  and professional services                   26,030           2,441              --              --         28,471
 Data center                                   4,289              --             626              --          4,915
 Other                                         1,542              --              --              --          1,542
                                         --------------------------------------------------------------------------
  Total direct costs                          32,420           3,018             626              --         36,064
                                         --------------------------------------------------------------------------
GROSS MARGIN:                                 21,058           7,324             (67)             --         28,315
                                         --------------------------------------------------------------------------
OPERATING EXPENSES:
 Selling and marketing                         8,013           4,179           1,664              --         13,856
 Product development                          11,474           2,403           3,465              --         17,342
 General and administrative                       --              --              --          11,075         11,075
                                         --------------------------------------------------------------------------
  Total operating expenses                    19,487           6,582           5,129          11,075         42,273
                                         --------------------------------------------------------------------------
SEGMENT OPERATING INCOME (LOSS)            $   1,571       $     742       $  (5,196)      $ (11,075)     $ (13,958)
                                         --------------------------------------------------------------------------

GROSS MARGIN PERCENTAGES:
 Software licenses                                93%             91%             --              --             92%
 Support and maintenance
  and professional services                       32%             40%             --              --             33%
 Data center                                      18%             --            -12%              --             15%
 Other                                            14%             --              --              --             14%
                                         ---------------------------------------------------------------------------
   Total gross margin                             39%             71%           -12%              --             44%
                                         ===========================================================================
</TABLE>


         REVENUES. Total revenues increased by $6.2 million to $70.6 million for
the three months ended September 30, 2001 from $64.4 million for the three
months ended September 30, 2000, an increase of 10%. The increase in revenues
resulted principally from increases in our strategic revenue streams, including
software licenses, support and maintenance and data center fees. During the
three months ended September 30, 2001, data center revenue increased $9.6
million, or 166%; support and maintenance revenue increased $4.2 million, or
61%; and software license revenue increased $3.3 million, or 23%. Our strategy
is to focus on activities that will continue to increase these revenue streams
while placing less emphasis on professional services, which during the three
months ended September 30, 2001 decreased $9.2 million, or 26%.

         The increase in our data center revenue was due to an increase in the
total number of financial institutions who are live in our global data centers
as well as an increase in the number of end-users. Much of this increase is
attributable to our European data center which opened during the fourth quarter
of 2000. We had one large customer in our European data center from


16


<PAGE>
which we derived a portion of the total increase in data center revenue. We
also experienced significant growth in our small to mid-market financial
institution data center customers in the United States. Although we expect many
of our mid-sized financial institution customers to choose our data center
solution, we do not expect future growth rates to match that which we produced
during 2001. Furthermore, the effect of the large European customer on our data
center revenue will diminish, and we believe that many of our larger financial
institution customers may consider moving their internet banking platform to one
of our in-house solutions. As those transitions are made, we expect the related
revenue stream will move from data center to software license fees and support
and maintenance fees.

         For the three months ended September 30, 2001, our Financial
Institutions operating segment revenues grew $2.1 million to $55.5 million over
the comparable prior year period. This growth is primarily attributable to the
increase in data center revenues as discussed above, an increase in support and
maintenance fees charged to an increasing installed base of customers, and the
inclusion of revenues from our FRS business unit that was previously classified
as held for sale. These increases in revenues were partially offset by a
decrease to professional service revenues and license and support and
maintenance revenue resulting from the shut down of our Edify banking product in
the fourth quarter of 2000.

         Revenues for our Call Center Technology operating segment increased
$4.7 million to $15.0 million for the three months ended September 30, 2001.
Much of this increase is attributable to increases in license fees and
professional service fees resulting primarily from the cross selling of our call
center products to financial institutions. Also there was an increase in support
and maintenance fees charged to an increasing installed base of customers.

         Other revenues are primarily related to the sale of third party
hardware and software that is used in connection with our products. Other
revenue decreased $1.7 million to $49,000 for the three months ended September
30, 2001 from $1.8 million for the three months ended September 30, 2000, a
decrease of 97%. Other revenue generally fluctuates based on the mix of products
and services sold.

         DIRECT COSTS AND GROSS MARGINS. Direct costs decreased by $10.9 million
to $25.2 million for the three months ended September 30, 2001 from $36.1
million for the three months ended September 30, 2000, a decrease of 30%.
Overall gross margins were 64% and 44% for the third quarter of 2001 and 2000,
respectively. The decrease in direct costs and corresponding increase in gross
margins are primarily the result of headcount reductions, including S1 employees
and outside professional consultants in the service areas of the business, as
well as reduced facilities charges from the consolidation of offices.

         Direct software license costs for our Financial Institution software
products are generally minimal because we internally develop most of the
software components, the cost of which is reflected in product development
expense as it is incurred. Direct software license costs for our Call Center
products consist of third-party software used in the products. Overall direct
software license costs decreased $0.7 million to $0.4 million for the three
months ended September 30, 2001 from $1.1 million for the three months ended
September 30, 2000. Gross margins were 98% and 92% for the three months ended
September 30, 2001 and 2000, respectively.

         Direct costs for support and maintenance and professional services
consist primarily of personnel and infrastructure costs. Direct costs associated
with support and maintenance and professional services decreased by $10.2
million, or 36%, to $18.2 million for the three months ended September 30, 2001.
This decrease in direct costs is primarily the result of reducing professional
services headcount and associated facilities costs to a level that is more
closely aligned with the projects and services under contract.

         Direct data center costs consist of personnel and infrastructure to
support the applications we host for our customers. Direct data center costs
increased $1.6 million to $6.5 million for the three months ended September 30,
2001 from $4.9 million for the three months ended September 30, 2000. The
increase in costs relates to additional personnel and infrastructure necessary
to support new customers and add new applications for our existing customers.
The gross margin for data center operations was 58% and 15% for the three months
ended September 30, 2001 and 2000, respectively. We increased the gross margin
on our data center operations through our ability to leverage increasing revenue
against the fixed data center costs.

         SELLING AND MARKETING EXPENSES. Total selling and marketing expenses
decreased by $0.5 million to $13.4 million for the three months ended September
30, 2001 from $13.9 million for the three months ended September 30, 2000. We
eliminated $1.7 million of selling and marketing expenses in connection with the
sale of VerticalOne. This was offset by an increase of $1.2 million to selling
and marketing expenses related to the strengthening of our sales team and
marketing programs.


17


<PAGE>
         PRODUCT DEVELOPMENT EXPENSES. Total product development expenses
decreased by $3.3 million to $14.0 million for the three months ended September
30, 2001 from $17.3 million for the three months ended September 30, 2000. This
decrease is primarily attributable to the elimination of $3.5 million of
product development expenses in connection with the sale of VerticalOne. For
the three months ended September 30, 2001, most of our product development
efforts were directed towards the development of our new integrated Enterprise
Platform.

         GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses increased by $1.9 million to $13.0 million for the three months ended
September 30, 2001 from $11.1 million for the three months ended September 30,
2000. As we continue to strengthen our executive and management teams, our
general and administrative salaries and related personnel charges increased from
the prior year period.

         DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased
by $1.0 million to $7.5 million for the three months ended September 30, 2001
from $6.5 million for the three months ended September 30, 2000, an increase of
14%. These increases were primarily the result of the depreciation recorded on
additional property and equipment.

         AMORTIZATION OF ACQUISITION INTANGIBLES. Amortization of acquisition
intangibles decreased $93.1 million to $19.3 million for the three months ended
September 30, 2001 from $112.4 million for the three months ended September 30,
2000. In the fourth quarter of 2000, we recorded an impairment charge of $664.9
million to reduce the carrying value of acquisition intangibles. As a result of
the reduced carrying value, amortization of acquisition intangibles decreased
during the three months ended September 30, 2001 as compared to the same period
in 2000. We continually monitor our results of operations and other developments
to determine if any adjustment is necessary to the carrying value of our
intangible assets. We determined that no such charge was required during the
three months ended September 30, 2001.

         INTEREST, INVESTMENT AND OTHER (EXPENSE) INCOME. Interest, investment
and other expense was $1.8 million for the three months ended September 30,
2001. This was a decrease of $3.6 million compared to $1.8 million of interest,
investment and other income recorded in the three months ended September 30,
2000. During the three months ended September 30, 2001, we recorded non-cash
charges of $3.5 million to write down our basis in certain cost basis
investments as a result of impairment in the value of these assets which we
believe is other than temporary.

         EQUITY INTEREST IN NET LOSS OF AFFILIATE. During the three months ended
September 30, 2001, we recorded non-cash charges of $7.0 million based on our
equity interest in the net loss of Yodlee and amortization of the underlying
goodwill and other intangible assets.


18


<PAGE>

NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED WITH NINE MONTHS ENDED SEPTEMBER
30, 2000

         The following table presents selected financial data for our operating
segments for the nine months ended September 30, 2001 and 2000. We evaluate the
performance of our operating segments based on revenues, direct costs, gross
margins and operating expenses, excluding depreciation and amortization,
marketing cost from warrants issued, merger related costs and restructuring
charges, acquired in-process research and development and amortization of
acquisition intangibles. In addition, we provide general and administrative
services to the operating segments on a shared service basis. Accordingly, we do
not include general and administrative costs in the determination of our segment
operating income or loss.

                             SELECTED FINANCIAL DATA
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                               NINE MONTHS ENDED
                                                              SEPTEMBER 30, 2001
                                         -----------------------------------------------------------
                                           FINANCIAL      CALL CENTER
                                         INSTITUTIONS      TECHNOLOGY        OTHER           TOTAL
                                         -----------------------------------------------------------
<S>                                      <C>              <C>              <C>             <C>
Revenues:
     Software licenses                     $  26,810       $  22,233       $      --       $  49,043
     Support and maintenance                  18,356          10,367              --          28,723
     Professional services                    76,569           6,911              --          83,480
     Data center                              37,514              --              --          37,514
     Other                                       997              --              --             997
                                         -----------------------------------------------------------
           Total revenues                    160,246          39,511              --         199,757
                                         -----------------------------------------------------------

DIRECT COSTS:
     Software licenses                           175           2,741              --           2,916
     Support and maintenance
      and professional services               57,836           6,884              --          64,720
     Data center                              19,535              --              --          19,535
     Other                                       691              --              --             691
                                         -----------------------------------------------------------
           Total direct costs                 78,237           9,625              --          87,862
                                         -----------------------------------------------------------
GROSS MARGIN:                                 82,009          29,886              --         111,895
                                         -----------------------------------------------------------
OPERATING EXPENSES:
     Selling and marketing                    21,519          16,741              --          38,260
     Product development                      32,973           8,506              --          41,479
     General and administrative                   --              --          37,006          37,006
                                         -----------------------------------------------------------
           Total operating expenses           54,492          25,247          37,006         116,745
                                         -----------------------------------------------------------
SEGMENT OPERATING INCOME (LOSS)            $  27,517       $   4,639       $ (37,006)      $  (4,850)
                                         ===========================================================

GROSS MARGIN PERCENTAGES:
     Software licenses                            99%             88%             --              94%
     Support and maintenance
      and professional services                   39%             60%             --              42%
     Data center                                  48%             --              --              48%
     Other                                        31%             --              --              31%
                                         -----------------------------------------------------------
           Total gross margin                     51%             76%             --              56%
                                         -----------------------------------------------------------

<CAPTION>
                                                                        NINE MONTHS ENDED
                                                                       SEPTEMBER 30, 2000
                                         --------------------------------------------------------------------------
                                           FINANCIAL      CALL CENTER        INTERNET
                                         INSTITUTIONS      TECHNOLOGY      AGGREGATION      OTHER           TOTAL
                                         --------------------------------------------------------------------------
<S>                                      <C>              <C>              <C>             <C>            <C>
Revenues:
     Software licenses                     $  19,634        $  21,001       $      --      $      --      $  40,635
     Support and maintenance                  13,409            7,027              --             --         20,436
     Professional services                    88,918            4,464              --             --         93,382
     Data center                              13,156               --           1,457             --         14,613
     Other                                     4,766               --              --             --          4,766
                                         --------------------------------------------------------------------------
           Total revenues                    139,883           32,492           1,457             --        173,832
                                         --------------------------------------------------------------------------
DIRECT COSTS:
     Software licenses                           843            3,040              --             --          3,883
     Support and maintenance
      and professional services               72,399            7,845              --             --         80,244
     Data center                              11,758               --           1,315             --         13,073
     Other                                     4,220               --              --             --          4,220
                                         --------------------------------------------------------------------------
           Total direct costs                 89,220           10,885           1,315             --        101,420
                                         --------------------------------------------------------------------------
GROSS MARGIN:                                 50,663           21,607             142             --         72,412
                                         --------------------------------------------------------------------------
OPERATING EXPENSES:
     Selling and marketing                    23,110           11,939           3,983             --         39,032
     Product development                      35,060            6,128           7,832             --         49,020
     General and administrative                   --               --              --         33,347         33,347
                                         --------------------------------------------------------------------------
           Total operating expenses           58,170           18,067          11,815         33,347        121,399
                                         --------------------------------------------------------------------------
SEGMENT OPERATING INCOME (LOSS)            $  (7,507)       $   3,540       $ (11,673)     $ (33,347)     $ (48,987)
                                         ===========================================================================

GROSS MARGIN PERCENTAGES:
     Software licenses                            96%              86%             --             --             90%
     Support and maintenance
      and professional services                   29%              32%             --             --             29%
     Data center                                  11%              --              10%            --             11%
     Other                                        11%              --              --             --             11%
                                         --------------------------------------------------------------------------
           Total gross margin                     36%              66%             10%            --             42%
                                         --------------------------------------------------------------------------
</TABLE>

         REVENUES. Total revenues increased by $26.0 million to $199.8 million
for the nine months ended September 30, 2001 from $173.8 million for the nine
months ended September 30, 2000, an increase of 15%. The increase in revenues
resulted principally from increases in our strategic revenue streams, including
software licenses, support and maintenance and data center fees. During the nine
months ended September 30, 2001, data center revenue increased $22.9 million, or
157%; support and maintenance revenue increased $8.3 million, or 41%; and
software license revenue increased $8.4 million, or 21%. Our strategy is to
focus on activities that will continue to increase these revenue streams while
placing less emphasis on professional services, which during the nine months
ended September 30, 2001 decreased $9.9 million, or 11%.

         The increase in our data center revenue was due to an increase in the
total number of financial institutions who are live in our global data centers,
as well as an increase in the numbers of end-users. Much of this increase was
related to our European data center which opened during the fourth quarter of
2000. We had one large customer in our European data center from which we
derived a portion of the total increase in data center revenue. We also
experienced significant growth in our small to mid-market financial institution
data center customers in the United States. Although we expect many of our
mid-sized financial institution


19


<PAGE>

customers to choose our data center solution, we do not expect future growth
rates to match that which we produced during 2001. The effect of the large
European customer on our data center revenue will diminish, and we believe that
many of our larger financial institution customers may consider moving their
internet banking platform to one of our in-house solutions. As those transitions
are made, we expect the related revenue stream will move from data center to
software license fees and support and maintenance fees.

         For the nine months ended September 30, 2001, our Financial
Institutions operating segment revenues grew $20.4 million, or 15%, to $160.2
million over the comparable prior year period. This growth is primarily
attributable to the increase in data center revenues as discussed above, the
inclusion of a full nine months of revenue for Davidge Data Systems and Q-Up
Systems, Inc., which were acquired during the second quarter of 2000, and the
inclusion of the revenues of our FRS business unit that was previously
classified as held for sale. These increases in revenues were partially offset
by a decrease in professional service revenues and license and support and
maintenance revenue resulting from the shut down of our Edify banking product in
the fourth quarter of 2000.

         Revenues for our Call Center Technology operating segment increased
$7.0 million to $39.5 million for the nine months ended September 30, 2001. This
increase is attributable to an increase in support and maintenance fees charged
to an increasing installed base of customers. Also, there were increases in
license fees and professional service fees resulting primarily from the cross
selling of our call center products to financial institutions.

         Other revenues are primarily related to the sale of third party
hardware and software that is used in connection with our products. Other
revenue decreased $3.8 million to $1.0 million for the nine months ended
September 30, 2001 from $4.8 million for the nine months ended September 30,
2000, a decrease of 79%. Other revenue generally fluctuates based on the mix of
products and services sold.

         DIRECT COSTS AND GROSS MARGINS. Direct costs decreased by $13.5 million
to $87.9 million for the nine months ended September 30, 2001 from $101.4
million for the nine months ended September 30, 2000, a decrease of 13%. Overall
gross margins were 56% and 42% for the first nine months of 2001 and 2000,
respectively. The decrease in direct costs and corresponding increase in gross
margins are primarily the result of headcount reductions, including S1 employees
and outside professional consultants in the service areas of the business, as
well as reduced facilities charges from the consolidation of offices.

         Direct software license costs for our Financial Institution software
products are generally minimal because we internally develop most of the
software components, the cost of which is reflected in product development
expense as it is incurred. Direct software license costs for our Call Center
products consist of third-party software used in the products. Overall direct
software license costs decreased $1.0 million to $2.9 million for the nine
months ended September 30, 2001 from $3.9 million for the nine months ended
September 30, 2000. Gross margins were 94% and 90% for the nine months ended
September 30, 2001 and 2000, respectively.

         Direct costs for support and maintenance and professional services
consist primarily of personnel and infrastructure costs. Direct costs associated
with support and maintenance and professional services decreased by $15.5
million, or 19%, to $64.7 million for the nine months ended September 30, 2001.
This decrease in direct costs is primarily the result of reducing professional
services headcount and associated facilities costs to a level that is more
closely aligned with the projects and services under contract.

         Direct data center costs consist of personnel and infrastructure to
support the applications we host for our customers. Direct data center costs
increased $6.4 million to $19.5 million for the nine months ended September 30,
2001 from $13.1 million for the nine months ended September 30, 2000. The
increase in costs relates to additional personnel and infrastructure necessary
to support new customers and add new applications for our existing customers.
The gross margin for data center operations was 48% and 11% for the nine months
ended September 30, 2001 and 2000, respectively. We increased the gross margin
on our data center operations through our ability to leverage increasing revenue
against the fixed data center costs.

         SELLING AND MARKETING EXPENSES. Total selling and marketing expenses
decreased by $0.7 million to $38.3 million for the nine months ended September
30, 2001 from $39.0 million for the nine months ended September 30, 2000. We
eliminated $4.0 million of selling and marketing expenses in connection with the
sale of VerticalOne. This


20


<PAGE>
was offset by an increase of $3.3 million to selling and marketing expenses
related to the strengthening of our sales team and marketing programs and the
addition of Davidge and Q-Up.

         PRODUCT DEVELOPMENT EXPENSES. Total product development expenses
decreased by $7.5 million to $41.5 million for the nine months ended September
30, 2001 from $49.0 million for the nine months ended September 30, 2000. This
decrease is primarily attributable to the elimination of $7.8 million of product
development expenses in connection with the sale of VerticalOne. For the nine
months ended September 30, 2001, most of our product development efforts have
been focused on the development of Enterprise Platform 1.0.

         GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses increased by $3.7 million to $37.0 million for the nine months ended
September 30, 2001 from $33.3 million for the nine months ended September 30,
2000. A portion of the increase reflects the addition of Q-Up and Davidge, both
of which were acquired in the second quarter of 2000. As we continue to
strengthen our executive and management teams, our general and administrative
salaries and related personnel charges have increased from the prior year
period.

         DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased
by $6.0 million to $22.1 million for the nine months ended September 30, 2001
from $16.1 million for the nine months ended September 30, 2000, an increase of
37%. These increases were primarily the result of the depreciation recorded on
additional property and equipment.

         MARKETING COST FROM WARRANTS ISSUED. We recorded $5.0 million of
marketing costs for the nine months ended September 30, 2000. The marketing cost
was primarily for warrants issued in connection with a pilot project and
distribution agreement between a third-party and one of our subsidiaries. The
fair value of the warrants was determined based on the Black-Scholes
option-pricing model. We recognized the entire cost of the warrants in 2000.

         MERGER RELATED COSTS AND RESTRUCTURING CHARGES. During the second
quarter of 2001, we approved a restructuring plan related to the streamlining of
our European operations. In connection with this plan, we reduced our European
workforce by approximately 77 people and consolidated most of our European
operations into two locations. As a result, we recorded a charge of $5.6 million
for the estimated costs associated with the restructuring plan. Also in the
second quarter of 2001, as a result of a softening in the domestic real estate
markets, we determined our original estimate of costs to dispose of our unused
real estate was below the currently anticipated costs. Accordingly, we recorded
a charge of $3.6 million to increase our restructuring reserves that were
established during the fourth quarter of 2000.

         During the nine months ended September 30, 2000, we incurred merger
related costs of $18.2 million in connection with three acquisitions completed
in the fourth quarter of 1999 and two acquisitions completed in the second
quarter of 2000. These costs were incurred to integrate the products and
platforms of the acquired companies, to train personnel on the new products
acquired and to build the infrastructure necessary to support a global
operation.

         AMORTIZATION OF ACQUISITION INTANGIBLES. Amortization of acquisition
intangible assets decreased $241.8 million to $60.1 million for the nine months
ended September 30, 2001 from $301.9 million for the nine months ended September
30, 2000. In the fourth quarter of 2000, we recorded an impairment charge of
$664.9 million to reduce the carrying value of acquisition intangibles. As a
result of the reduced carrying value, amortization of acquisition intangibles
decreased during the three months and nine months ended September 30, 2001 as
compared to the same periods in 2000. We continually monitor our results of
operations and other developments to determine if any adjustment is necessary to
the carrying value of our intangible assets. We determined that no such charge
was required during the nine months ended September 30, 2001.

         INTEREST, INVESTMENT AND OTHER INCOME. Interest, investment and other
income was $2.0 million for the nine months ended September 30, 2001, a decrease
of $37.9 million from the nine months ended September 30, 2000. During the nine
months ended September 30, 2001, we recorded non-cash charges of $3.5 million to
write down our basis in certain cost basis investments. During the nine months
ended September 30, 2000, we recorded a one-time gain of $35.0 million on the
sale of investment securities available for sale.


21


<PAGE>

         LOSS ON SALE OF SUBSIDIARIES AND EQUITY INTEREST IN NET LOSS OF
AFFILIATE. On January 16, 2001, we sold our VerticalOne subsidiary to Yodlee in
a stock-for-stock transaction under which we received an ownership interest of
approximately 33% in Yodlee. In connection with this transaction, we recorded a
loss on sale of $52.3 million, which represented the difference between the
carrying value of VerticalOne and the appraised value of our interest in Yodlee.
During the nine months ended September 30, 2001, we recorded non-cash charges of
$20.6 million based on our equity interest in the net loss of the affiliate and
amortization of the underlying goodwill and other intangible assets.

         During the second quarter of 2001, we recorded a charge of $0.8 million
in connection with the sale of our subsidiary Write! N.V.

LIQUIDITY AND CAPITAL RESOURCES

         The following tables show information about our cash flows during the
nine months ended September 30, 2001 and 2000 and selected balance sheet data as
of September 30, 2001 and December 31, 2000:

<TABLE>
<CAPTION>
                                                                                           NINE MONTHS ENDED SEPTEMBER 30,
                                                                                             2001                 2000
                                                                                          ----------           ----------
                                                                                                    (in thousands)
<S>                                                                                       <C>                  <C>
Net cash used in operating activities before changes in operating assets and liabilities  $   (2,187)          $  (55,516)
Increase (decrease) in operating assets and liabilities                                        2,417              (62,014)
                                                                                          ----------           ----------
Net cash provided by (used in) operating activities                                              230             (117,530)
Net cash (used in) provided by investing activities                                          (29,719)               4,119
Net cash (used in) provided by financing activities                                           (4,278)             243,528
Effect of exchange rates on cash and cash equivalents                                           (117)                 (72)
                                                                                          ----------           ----------
Net (decrease) increase in cash and cash equivalents                                      $  (33,884)          $  130,045
                                                                                          ==========           ==========
</TABLE>


<TABLE>
<CAPTION>
                                                       SEPTEMBER 30, 2001        DECEMBER 31, 2000
                                                       ------------------        -----------------
                                                                        (in thousands)
<S>                                                    <C>                       <C>
Cash and cash equivalents                                       $ 139,382                $ 173,266
Working capital                                                   121,589                  165,704
Working capital, excluding deferred revenues                      150,603                  193,175
Total assets                                                      441,037                  606,704
Total stockholders' equity                                        328,636                  467,745
</TABLE>


         OPERATING ACTIVITIES. During the nine months ended September 30, 2001,
cash provided by operations was $230,000 compared to cash used in operations of
$117.5 million for the nine months ended September 30, 2000. The changes in net
cash provided by (used in) operating activities generally reflect the changes in
our net loss plus the effects of changes in working capital. Changes in working
capital, especially trade accounts receivable, trade accounts payable and
accrued expenses, are generally the result of timing differences between the
collection of fees billed and payment of operating expenses.

         Although we recorded a net loss of $165.3 million for the nine months
ended September 30, 2001, a significant portion of our loss was comprised of
non-cash items including $82.3 million of depreciation and amortization
including acquisition intangibles, $53.2 million in losses recorded on the sale
of subsidiaries, and $20.6 million in the equity interest in net loss of an
affiliate. The decrease in working capital of $44.1 million was primarily due to
the decrease of $33.9 million in cash and cash equivalents and a decrease of
$24.8 million in accounts receivable as a result of aggressive collection
efforts, offset in part by an decrease of $22.8 million in accounts payable and
accrued expenses as a result of the timing of payments.

         Cash used in operations for the nine months ended September 30, 2000
was primarily the result of the net loss for the period of $364.3 million offset
by non-cash items of $340.7 million and the a gain on the sale of investment
securities of $35.1


22


<PAGE>

million, the reduction of accounts payable and accrued expenses of $30.0 million
and an increase in accounts receivable of $26.7 million.

         INVESTING ACTIVITIES. Cash used in investing activities was $29.7
million for the nine months ended September 30, 2001 compared to net cash
provided by investing activities of $4.1 million in the comparable period of
2000. During the nine months ended September 30, 2001, we sold our VerticalOne
subsidiary, which at the time of sale held $15.0 million in cash. Additionally
in September 2001, we expended $4.5 million from available cash in connection
with the acquisition of SDI. During the nine months ended September 30, 2000, we
sold $36.5 million of investment securities held for sale. During the nine
months ended September 30, 2000 a total of $6.9 million of investments were made
in companies that are considered to have technology or products that complement
our product and services offerings. No such investments were made in 2001. In
2001, we purchased $11.3 million of property and equipment as compared to $32.1
million in the prior year period. During 2001, our property and equipment
purchases were primarily related to leasehold improvements for our new corporate
headquarters and computer equipment. The purchases of property and equipment
made in 2000 were primarily related to the purchase of equipment required for
our global data centers.

         FINANCING ACTIVITIES. Cash used in financing activities was $4.3
million for the nine months ended September 30, 2001 compared to cash provided
by financing activities of $243.5 million in the comparable period of 2000. The
primary difference between the two periods is the receipt of $231.9 million in
net proceeds from a preferred stock sold in 2000 and $16.7 million of stock sold
under the Employee Stock Purchase and Option Plans during the nine months ended
September 30, 2000.

         During the nine months ended September 30, 2001, we repaid $3.8 million
of borrowings. We entered into an arrangement for a $10.0 million secured line
of credit during the third quarter of 2001. At September 30, 2001, we had no
borrowings outstanding and the full $10.0 million was available for borrowing
under the secured line of credit.

         We believe that our expected cash flows from operations together with
our existing cash and cash equivalents will be sufficient to meet our
anticipated cash needs for working capital and capital expenditures for at least
the next 12 months. If cash generated from operations is insufficient to satisfy
our liquidity requirements, we may seek to sell additional equity or debt
securities or establish an additional credit facility. The sale of additional
equity or convertible debt securities could result in additional dilution to our
stockholders. The addition of indebtedness would result in increased fixed
obligations and could result in operating covenants that would restrict our
operations. We cannot assure you that financing will be available in amounts or
on terms acceptable to us, if at all.

ITEM 3.           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Quantitative and qualitative disclosures about market risk were
included in Item 7A of our 2000 Annual Report on Form 10-K, as amended. There
have been no significant changes in our market risk from December 31, 2000.


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<PAGE>



PART II -- OTHER INFORMATION

ITEM 1.           LEGAL PROCEEDINGS.

                           We are involved in certain legal proceedings that are
                  described in our 2000 Annual Report on Form 10-K, as amended.

                           Commencing May 8, 2000, several substantially similar
                  complaints were filed in the United States District Court in
                  Atlanta, Georgia against S1, Michel Akkermans, James Mahan and
                  Robert Stockwell, alleging violations of Section 10(b) of the
                  Securities Exchange Act of 1934 and Rule 10(b)(5), promulgated
                  thereunder and Section 20 of the Securities Exchange Act of
                  1934. The Court appointed a Lead Plaintiff on March 9, 2001. A
                  Consolidated Amended Complaint was filed on April 24, 2001.
                  The Consolidated Amended Complaint is substantially similar to
                  the prior complaints. On October 23, 2001, the Court dismissed
                  the Consolidated Amended Complaint for failure to state a
                  claim upon which relief may be granted. The Lead Plaintiff was
                  given twenty (20) days to file an amended complaint. As of
                  November 12, 2001, the Lead Plaintiff had not filed an amended
                  complaint. The Lead Plaintiff, however, has thirty (30) days
                  from the entry of a final judgment in favor of the defendants
                  to file a notice of appeal if he so chooses. We believe that
                  the allegations in the Consolidated Amended Complaint are
                  wholly devoid of merit and we and the individual defendants
                  intend to continue to defend ourselves vigorously against
                  these claims.


ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K.

(a)               Exhibits

                  None.

(b)               Reports on Form 8-K.

                           We filed the following Current Reports on Form 8-K
                  with the Securities and Exchange Commission during the quarter
                  ended September 30, 2001:

                           Current Report on Form 8-K filed with the SEC on
                  August 2, 2001 (date of report July 31, 2001) (regarding a
                  press release and an analyst conference call related to second
                  quarter 2001 results and S1 and its operations).

                           Current Report on Form 8-K filed with the SEC on
                  August 8, 2001 (date of report August 6, 2001) (regarding a
                  press release announcing the proposed acquisition of Software
                  Dynamics, Incorporated).

                           Current Report on Form 8-K filed with the SEC on
                  August 23, 2001 (date of report August 10, 2001) (regarding
                  the filing of certain trading plans under Rule 10b5-1).

                           Current Report on Form 8-K filed with the SEC on
                  September 10, 2001 (date of report September 10, 2001)
                  (regarding a slide presentation regarding S1 and its
                  operations presented at an analyst conference on September 10,
                  2001).

                           Current Report on Form 8-K filed with the SEC on
                  September 27, 2001 (date of report September 27, 2001)
                  (regarding the purchase of S1 common shares by an S1
                  executive).


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<PAGE>

                                    SIGNATURE

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, as of November 14, 2001.


                              S1 CORPORATION


                              By: /s/ Matthew Hale
                                  ----------------------------------------
                                    Matthew Hale
                                    Senior Vice President Finance
                                    (Principal Financial Officer and
                                    Principal Accounting Officer)


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