<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, 2002

                                       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 11, 2002: 69,568,253

================================================================================
<PAGE>
                         S1 CORPORATION AND SUBSIDIARIES

                    QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002

                                TABLE OF CONTENTS


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


Item 1.  Financial Statements:

         Condensed Consolidated Balance Sheets as of September 30, 2002 and December 31, 2001.............            3

         Condensed Consolidated Statements of Operations for the Three and Nine Months Ended
           September 30, 2002 and 2001....................................................................            4

         Condensed Consolidated Statements of Cash Flows for the Nine Months Ended
           September 30, 2002 and 2001....................................................................            5

         Notes to Condensed Consolidated Financial Statements as of September 30, 2002....................            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.......................................           24

Item 4.  Controls and Procedures..........................................................................           24

                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings................................................................................           25

Item 6.  Exhibits and Reports on Form 8-K.................................................................           25

Signature.................................................................................................           26
</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,
                                                                                           2002                 2001
                                                                                           ----                 ----
                                              ASSETS                                    (UNAUDITED)
<S>                                                                                  <C>                  <C>
Current assets:
     Cash and cash equivalents..................................................     $       106,091      $     119,632
     Short-term investments.....................................................              32,928             28,818
     Accounts receivable, net...................................................              38,654             56,502
     Prepaid expenses...........................................................               6,190              3,906
     Other current assets.......................................................               4,384              3,996
     Assets held for sale, net .................................................              51,051                 --
                                                                                     ---------------      -------------
         Total current assets...................................................             239,298            212,854
Property and equipment, net.....................................................              33,268             41,253
Intangible assets, net..........................................................              17,648             31,500
Goodwill, net...................................................................              85,170             79,723
Other assets....................................................................               6,392              6,707
                                                                                     ---------------      -------------
     Total assets...............................................................     $       381,776      $     372,037
                                                                                     ===============      =============

                          LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable...........................................................     $         7,802      $       4,617
     Accrued compensation and benefits..........................................              12,269             19,884
     Accrued restructuring......................................................               4,698              5,165
     Accrued other expenses.....................................................              23,146             19,937
     Deferred revenues..........................................................              28,152             27,499
     Capital lease obligation...................................................               2,775              5,925
     Liabilities of business held for sale......................................              13,522                 --
                                                                                     ---------------      -------------
         Total current liabilities..............................................              92,364             83,027
Deferred revenues...............................................................               3,364                288
Capital lease obligation, excluding current portion.............................                 404              1,450
Deferred income tax liability...................................................               1,597              5,615
Accrued restructuring, excluding current portion................................               3,074              6,189
Other liabilities...............................................................                 965                850
                                                                                     ---------------      -------------
         Total liabilities......................................................             101,768             97,419
                                                                                     ---------------      -------------

Stockholders' equity:
     Preferred stock............................................................              18,328            241,975
     Common stock...............................................................                 711                614
     Additional paid-in capital.................................................           1,895,605          1,640,972
     Common stock held in treasury, at cost.....................................              (7,042)                --
     Accumulated deficit........................................................          (1,624,701)        (1,607,148)
     Accumulated other comprehensive loss.......................................              (2,893)            (1,795)
                                                                                     ---------------      --------------
           Total stockholders' equity...........................................             280,008            274,618
                                                                                     ---------------      -------------
           Total liabilities and stockholders' equity...........................     $       381,776      $     372,037
                                                                                     ===============      =============

Preferred shares issued and outstanding.........................................           1,398,244          1,635,744
                                                                                     ===============      =============

Common shares issued............................................................          71,077,449         61,444,554
Common shares held in treasury..................................................           1,477,000                 --
                                                                                     ---------------      -------------
Common shares outstanding.......................................................          69,600,449         61,444,554
                                                                                     ===============      =============
</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,
                                                                          -------------             -------------
                                                                      2002          2001         2002           2001
                                                                      ----          ----         ----           ----
<S>                                                             <C>              <C>         <C>          <C>
Revenues:
   Software licenses........................................    $      15,321    $   9,371   $    50,490  $     26,810
   Support and maintenance..................................           10,822        7,555        32,187        19,579
   Professional services....................................           22,850       24,746        69,461        79,246
   Data center..............................................            9,279       15,419        30,956        37,514
   Other ...................................................              245           49           994           997
                                                                -------------    ---------   -----------  ------------
     Total revenues.........................................           58,517       57,140       184,088       164,146
                                                                -------------    ---------   -----------  ------------

Operating expenses:
   Cost of software licenses................................               66           84           115           474
   Cost of professional services, support and maintenance...           18,127       17,847        56,302        63,126
   Cost of data center......................................            5,638        6,479        16,509        19,535
   Cost of other revenue....................................              381           33           963           691
   Selling and marketing....................................            9,510        6,951        29,161        20,007
   Product development......................................           10,066       10,136        30,915        30,729
   General and administrative, including stock compensation
     expense of $212 and $1,111 in the three and nine months
     ended September 30, 2002, respectively, and $244 and
     $828 in the three and nine months ended  September 30,
     2001, respectively.....................................            9,502       11,623        32,851        32,414
   Depreciation and amortization............................            5,279        6,909        16,198        20,235
   Merger related costs and restructuring charges...........               --           --         2,022         9,211
   Acquired in-process research and development.............               --           --           257            --
   Amortization of acquisition intangibles..................            4,275       14,530        12,454        45,741
                                                                -------------    ---------   -----------  ------------
     Total operating expenses...............................           62,844       74,592       197,747       242,163
                                                                -------------    ---------   -----------  ------------
       Operating loss.......................................           (4,327)     (17,452)      (13,659)      (78,017)
Interest and other (expense) income, net....................               (3)      (1,499)        1,100         2,490
Loss on sale of subsidiaries................................               --           --            --       (53,186)
Equity interest in net loss of affiliate....................               --       (7,021)           --       (20,648)
                                                                -------------    ----------  -----------  -------------
                                                                       (4,330)     (25,972)      (12,559)     (149,361)
Income tax benefit..........................................              791        1,062         1,910         3,019
                                                                -------------    ---------   -----------  ------------
Loss from continuing operations.............................           (3,539)     (24,910)      (10,649)     (146,342)
Loss from discontinued operations, net of tax...............           (1,661)      (4,706)       (6,904)      (18,924)
                                                                --------------   ----------  ------------ -------------
Net loss ...................................................    $      (5,200)   $ (29,616)  $   (17,553) $   (165,266)
                                                                =============    =========   ===========  ============

Loss per common share from continuing operations............    $       (0.05)   $   (0.42)  $    (0.16)  $       (2.49)
Loss from discontinued operations, net of tax...............            (0.02)       (0.08)       (0.10)          (0.33)
                                                                --------------   ----------  -----------  --------------
Basic and diluted net loss per common share.................    $       (0.07)   $   (0.50)  $    (0.26)  $       (2.82)
                                                                =============    =========   ==========   =============

Weighted average common shares outstanding..................       70,410,161    59,252,335   67,121,167    58,689,726
                                                                =============    ==========  ===========  ============
</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,
                                                                                            2002             2001
                                                                                            ----             ----
<S>                                                                                  <C>                <C>
Cash flows from operating activities:
   Net loss.....................................................................     $      (17,553)    $    (165,266)
   Adjustments to reconcile net loss to net cash provided
             by operating activities:
     Depreciation and amortization including acquisition intangibles............             31,366            82,266
     Acquired in-process research and development...............................                350                --
     Loss on sale of subsidiaries...............................................                 --            53,186
     Equity interest in net loss of affiliate...................................                 --            20,648
     Compensation expense for stock options.....................................              1,111               828
     Provision for doubtful accounts receivable and billing adjustments.........              6,123             4,384
     Gain on the sale of investment securities available for sale...............                 --              (931)
     Benefit for deferred income taxes..........................................             (2,261)           (2,621)
     Write down of cost basis investments.......................................                 --             3,497
     Loss on disposal of property...............................................                 --             1,822
   Changes in assets and liabilities, excluding effects of divestitures and
     acquisitions:

     (Increase) decrease in accounts receivable.................................             (4,398)           24,799
     (Increase) decrease in prepaid expenses and other assets...................             (2,728)              458
     Increase (decrease) in accounts payable....................................              5,009            (3,115)
     Decrease in accrued expenses and other liabilities.........................             (8,437)          (19,674)
     Increase (decrease) in deferred revenues...................................              4,128               (51)
                                                                                     --------------     --------------
       Net cash provided by operating activities................................             12,710               230
                                                                                     --------------     -------------
Cash flows from investing activities:
   Net cash paid in connection with acquisitions and divestitures...............             (3,943)          (19,497)
   Maturities of short-term investment securities...............................             42,882            44,427
   Purchases of short-term investment securities................................            (46,992)          (53,554)
   Purchase of long-term certificate of deposit.................................             (2,500)               --
   Proceeds from sales of investment securities available for sale..............                 --             1,044
   Purchases of property and equipment..........................................             (9,426)          (11,266)
                                                                                     --------------     -------------
       Net cash used in investing activities....................................            (19,979)          (38,846)
                                                                                     --------------     --------------
Cash flows from financing activities:
   Proceeds from sale of common stock under employee stock purchase and
     option plans...............................................................              5,076             4,569
   Payments on capital lease obligations........................................             (4,484)           (5,025)
   Repurchase of common stock, held in treasury.................................             (7,042)               --
   Payments on borrowings.......................................................                 --            (3,822)
                                                                                     --------------     -------------
     Net cash used in financing activities......................................             (6,450)           (4,278)
                                                                                     ---------------    --------------
Effect of exchange rate changes on cash and cash equivalents....................                178              (117)
                                                                                     --------------     -------------
Net decrease in cash and cash equivalents.......................................            (13,541)          (43,011)
Cash and cash equivalents at beginning of period................................            119,632           153,505
                                                                                     --------------     -------------
Cash and cash equivalents at end of period......................................     $      106,091     $     110,494
                                                                                     ==============     =============
Non-cash investing and financing activities:
   Equity interest in affiliate received in connection with subsidiary sold.....     $           --     $      62,900
   Conversion of preferred stock to common stock................................            225,778             6,179

   Acquisition of businesses through issuance of common stock...................             22,768            23,479
   Liabilities assumed..........................................................              9,990             5,639
   Equipment purchased with capital lease obligation............................                250                --
</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 global provider of enterprise software solutions
for financial organizations including banks, credit unions, insurance companies
and investment firms. Our solutions automate the channels by which financial
institutions interact with their customers. These channels target full-service
channels that support a person-to-person interaction, such as talking to a
teller in a bank branch or working with an insurance agent or a customer support
representative over the phone, and self-service channels that support
person-to-machine interactions conducted via the Internet, interactive voice
response units (IVR) or automated teller machines (ATMs). Our solutions also
support automated, or machine-to-machine, interactions. Our applications are
designed to support all of the financial institution's market segments from
retail end-users to small businesses to large corporations, as well as financial
institution employees including bank tellers, insurance agents, contact center
representatives and financial advisors. In addition, we provide customer
relationship management (CRM), wealth management and statutory financial
reporting solutions for global, national, regional and local financial
organizations. We offer account aggregation services through our reseller
relationship with our affiliate, Yodlee, Inc.

         Through our Edify Corporation subsidiary, we provide self-service and
assisted service applications to companies in a variety of industries, including
principally retail, transportation, telecommunications and financial services.
In July 2002, we announced our plan to sell this business together with
the non-financial business of our recently acquired Point Holdings operations
(collectively referred to herein as the "Contact Center Automation" business).
Following the planned divestiture of these combined businesses, all of our
remaining businesses will be focused on the financial services market.

         We are accounting for our planned divestiture of our contact center
automation segment as a business "held for sale". As a result, beginning with
our financial statements for the quarter ending September 30, 2002, we have:

         -        presented the total assets of the contact center automation
                  business on one line as "assets held for sale" in our
                  consolidated balance sheet for the current period;
         -        presented the total liabilities of the contact center
                  automation business on one line as "liabilities of business
                  held for sale" in our consolidated balance sheet for the
                  current period;
         -        presented the results of operations for the contact center
                  automation business as "discontinued operations" on one line
                  in our consolidated statements of operations for all periods
                  presented, which required a retroactive reclassification of
                  revenues and expenses for prior periods previously reported;
                  and
         -        discontinued depreciation of fixed assets and amortization of
                  intangible assets associated with the contact center
                  automation business.

         The classification of the contact center automation business assets
and liabilities as "held for sale" will continue until such time that we sell
the business, which we anticipate will happen no later than June 30, 2003.

         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 for the year ended December 31, 2001.
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, 2002 and our results of operations for the three
and nine months ended September 30, 2002 and cash flows for the nine months
ended September 30, 2002. The data in the condensed consolidated balance sheet
as of December 31, 2001 was derived from our audited consolidated balance sheet
as of December 31, 2001, as presented in our Annual Report on Form 10-K for the
year ended December 31, 2001. Certain items in the prior financial statements
have been


                                       6
<PAGE>

reclassified to conform to the current 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. Our operating results for the three and nine months ended
September 30, 2002 are not necessarily indicative of the operating results that
may be expected for the year ending December 31, 2002.

2.       RECENT ACCOUNTING PRONOUNCEMENTS

         In June 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards 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 reported in continuing or discontinued operations. We
adopted this statement on January 1, 2002 with no material impact on our
consolidated financial statements. We applied SFAS No. 144 in accounting for our
planned divestiture of our contact center automation business.

         In November 2001, the FASB's Emerging Issues Task Force reached a
consensus on EITF Issue 01-09, "Accounting for Consideration Given by a Vendor
to a Customer or a Reseller of the Vendor's Products," which is a codification
of EITF 00-14, 00-22 and 00-25. This issue presumes that consideration from a
vendor to a customer or reseller of the vendor's products to be a reduction in
the selling prices of the vendor's product and, therefore, should be
characterized as a reduction of revenue when recognized in the vendor's income
statement and could lead to negative revenue under certain circumstances.
Revenue reduction is required unless consideration related to a separate
identifiable benefit and the benefit's fair value can be established. We adopted
EITF 01-09 effective January 1, 2002 with no material impact on our consolidated
financial statements.

         In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." This statement requires that a
liability for a cost that is associated with an exit or disposal activity be
recognized when the liability is incurred. It nullifies the guidance of EITF
Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." Under EITF Issue No. 94-3, an entity recognized a liability for
an exit cost on the date that the entity committed itself to an exit plan. In
this statement, the Board acknowledges that an entity's commitment to a plan
does not, by itself, create a present obligation to other parties that meets the
definition of a liability. This statement also establishes that fair value is
the objective for the initial measurement of the liability. The provisions of
this statement will be effective for exit or disposal activities that are
initiated after December 31, 2002. We will adopt this statement as required and
do not expect it to have a material impact on our financial statements.

3.       ACQUISITIONS

         On February 14, 2002, we completed the acquisition of Regency Systems,
Inc., a Dallas, Texas based provider of telephone and Internet banking
applications and web design services for community and mid-market banks. The
Regency acquisition enhanced our product offering with a telephone banking
solution for community and mid-market banks and added over 1,000 customers. We
accounted for the acquisition of Regency using the purchase method of accounting
prescribed by SFAS No. 141. For accounting purposes, we treated the acquisition
as if it had occurred on February 1, 2002. Accordingly, our consolidated results
of operations for the nine months ended September 30, 2002 include eight months
of operating results for Regency.

         On March 27, 2002, we acquired the assets and subsidiaries of Point
Holdings, Ltd., a Dublin, Ireland based multi-channel CRM provider. The
acquisition of Point strengthened our product offering, extended our insurance
customer base and


                                       7
<PAGE>

expanded our presence in Europe. We accounted for the acquisition of Point using
the purchase method of accounting prescribed by SFAS No. 141. For accounting
purposes, we treated the acquisition as if it had occurred on March 31, 2002.
Accordingly, our consolidated results of operations for the nine months ended
September 30, 2002 include six months of operating results for Point.

         Under the terms of the acquisition agreements, we issued common stock
and paid cash to the sellers and paid direct acquisition costs, including
principally advisory, legal and accounting fees. The values of the common shares
issued were determined based on the average market price of our common shares
over the 2 day trading period before and the 2 day trading period after the
respective acquisition agreements were signed, less the costs to register the
securities. We calculated the purchase price for Regency and Point
as follows (in thousands, except share data):

<TABLE>
<CAPTION>
                                                                   REGENCY       POINT
                                                                   -------       -----
         <S>                                                  <C>           <C>
         Common shares issued......................               400,561      1,073,986
         Value of common shares issued.............           $     6,051   $     16,717
         Cash consideration........................                 6,478            500
         Direct acquisition costs..................                    70            633
                                                              -----------   ------------
         Total purchase price......................           $    12,599   $     17,850
                                                              ===========   ============
</TABLE>

         The Regency business and the operations of the Point business that are
focused on financial institutions are included in continuing operations. The
remaining Point operations (those that are not focused on financial
institutions) are included in the contact center automation business. We
allocated the goodwill associated with the Point acquisition between continuing
and discontinued operations. The amounts allocated to in-process research and
development were expensed upon acquisition because technological feasibility had
not been established and no future alternative uses existed. We expect the
projects under development at the time of the acquisitions to be completed
within 12 months of the acquisition dates. Costs incurred to complete these
projects are expected to be less than $2.1 million in the aggregate.

         We assigned the total purchase price to the net assets and identifiable
intangible assets of the acquired entities with the remaining amount assigned to
goodwill. The value assigned to the identifiable intangible assets was based on
an analysis performed by an independent third party as of the date of the
acquisitions. The following table summarizes the estimated fair values of the
assets acquired and liabilities assumed at the acquisition date
(in thousands):

<TABLE>
<CAPTION>
                                                               REGENCY       POINT
                                                               -------       -----
          <S>                                               <C>            <C>
          Current assets................................    $     1,027    $  6,664
          Property and equipment........................            250         552
          Other non-current assets......................             31          --
          Developed technology (1)......................          2,600       2,200
          In-process research and development (2).......            200         150
          Customer relationship assets (3)..............          3,900       1,500
          Goodwill......................................          8,611      12,754
          Current liabilities...........................         (3,977)     (5,970)
          Non-current liabilities.......................            (43)         --
                                                            -----------    --------
               Total purchase price.....................    $    12,599    $ 17,850
                                                            ===========    ========
</TABLE>
---------------
(1)      Developed technology has an estimated useful life of five years.
(2)      We expensed in-process research and development immediately upon
         closing the acquisitions.
(3)      Regency's customer relationship assets have an estimated useful life of
         ten years and Point's customer relationship assets have an estimated
         useful life of five years.

         We did not present unaudited pro forma results of the operations of S1
and the acquired companies for the nine months ended September 30, 2002 or 2001
because our pro forma results for those periods would not be materially
different from our actual results for those periods.


                                       8
<PAGE>

         In May 2002, we amended the purchase agreement for Software Dynamics,
Inc., a business we acquired in September 2001. The amendment eliminated a
contingency associated with the total consideration paid for SDI. Previously, we
did not assign the full value of the series E preferred stock issued to the
sellers because of a contingency that may have required the sellers to return up
to $2.1 million of the series E preferred stock. As a result of the amendment,
the condition was removed and we reflected the full value of the series E
preferred stock issued to the sellers by increasing the reported value of the
series E preferred stock. The additional purchase price was assigned to
goodwill.

4.       DISCONTINUED OPERATIONS

         On July 30, 2002, we announced our intent to pursue the sale of our
contact center automation business assets, composed primarily of our Edify
Corporation subsidiary and the non-financial institution assets of the acquired
Point business. These businesses are not focused specifically on the financial
institution market, which is our primary strategic market. Following the planned
divestiture of these combined businesses, all of our remaining businesses will
be focused on our strategic financial services market.

           Beginning in the third quarter, we accounted for this business as
"held for sale" and presented its results for the current and prior year periods
as "discontinued operations" according to the provisions of SFAS No. 144. We
anticipate the sale of these assets to be completed by June 30, 2003.

         Revenues and pretax loss from the discontinued operations are as
follows (in thousands):

<TABLE>
<CAPTION>
                                                                       THREE MONTHS ENDED         NINE MONTHS ENDED
                                                                          SEPTEMBER 30,             SEPTEMBER 30,
                                                                          -------------             -------------
                                                                      2002          2001         2002           2001
                                                                      ----          ----         ----           ----
   <S>                                                          <C>              <C>         <C>          <C>
   Revenues.................................................    $      13,494    $  13,420   $    35,803  $     35,611

   Pretax loss from discontinued operations.................           (1,757)      (4,673)       (6,863)      (18,825)
</TABLE>

         Assets and liabilities of the discontinued operations as of September
30, 2002 were as follows (in thousands):

<TABLE>
          <S>                                               <C>
          Current assets................................    $   22,214
          Property and equipment, net...................         1,068
          Other non-current assets......................           454
          Intangible assets.............................         3,419
          Goodwill......................................        23,896
          Current liabilities...........................       (13,187)
          Non-current liabilities.......................          (335)
                                                            ----------
               Net assets of discontinued operations....    $   37,529
                                                            ==========
</TABLE>

5.       SHORT TERM INVESTMENTS

         Short term investments consist of investments in certificates of
deposit, commercial paper and other highly liquid securities with original
maturities exceeding 90 days but less than one year. All of these investments
are held to maturity and are reported at amortized cost. We have the ability and
the intent to hold these investments to maturity. The fair value of these
investments is not significantly different from their carrying value at
September 30, 2002.

         Certain of our investments are made with financial institutions who are
also our customers. These investments are made at market rates in arms-length
transactions.

6.       GOODWILL AND OTHER INTANGIBLE ASSETS - ADOPTION OF SFAS NO. 142

         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


                                       9
<PAGE>

measurement procedures for goodwill. For S1, the standards became effective for
all acquisitions completed on or after June 30, 2001. Changes in financial
statement treatment for goodwill and intangible assets arising from mergers and
acquisitions completed prior to June 30, 2001 became effective January 1, 2002.
We implemented SFAS 142 on January 1, 2002 with the following effects:

-        We reclassified $7.0 million of unamortized assembled workforce
         intangible assets into goodwill.

-        We discontinued amortization on goodwill and assembled workforce of
         $64.5 million, excluding goodwill recorded for the Software Dynamics
         Inc. transaction that was never subject to amortization. We estimate
         that the resulting reduction of amortization expense will be
         approximately $55.5 million for 2002, $6.8 million for 2003 and $2.2
         million for 2004.

-        We performed a transitional goodwill impairment test as of January 1,
         2002. The impairment test required 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. Based on the results of the transitional
         impairment test, we believe that the fair value of our reporting units
         exceed their carrying value. Accordingly, we concluded that our
         goodwill was not impaired at January 1, 2002.

         Following the transitional impairment test, our goodwill balances will
be subject to impairment tests using the same process described above, at least
once annually. If the carrying value of any reporting unit exceeds its fair
value in future periods, we will determine the amount of any goodwill
impairment, if any, through a detailed fair value analysis of each of the
assigned assets (excluding goodwill). 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.

         At September 30, 2002, our other intangible assets consisted of the
following:

<TABLE>
<CAPTION>

                                                   GROSS                   ACCUMULATED
                                              CARRYING VALUE              AMORTIZATION
                                              --------------              ------------
                                                           (IN THOUSANDS)
<S>                                        <C>                          <C>
Purchased and acquired technology.......   $          35,364            $         (25,118)
Customer relationships..................              25,455                      (18,053)
Other...................................                  48                          (48)
                                           -----------------            -----------------
Total...................................   $          60,867            $         (43,219)
                                           =================            =================
</TABLE>

         We recorded amortization expense of $4.3 million and $12.5 million
during the three and nine months ended September 30, 2002, respectively. We
estimate aggregate amortization expense for 2002 and the next four calendar
years to be as follows (in thousands):

<TABLE>
<CAPTION>
                                               2002            2003           2004           2005            2006
                                               ----            ----           ----           ----            ----
<S>                                          <C>             <C>            <C>            <C>             <C>
Continuing operations                        $  15,618       $  3,175       $  2,208       $  2,208        $  2,208
Contact center automation business (1)           1,517          --             --             --              --
</TABLE>

---------------------------
(1)      In connection with the classification of our contact center automation
         business as "held-for-sale" in July 2002, we discontinued amortization
         of intangible assets associated with that business as required by SFAS
         No. 144. Accordingly, the total amortization expense for the contact
         automation business for 2002 and the next four calendar years presented
         above only includes amortization expense recorded during the six months
         ended June 30, 2002.


                                       10
<PAGE>

         The changes in the carrying value of our goodwill for the nine months
ended September 30, 2002 are as follows:

<TABLE>
<CAPTION>
                                                     CONTINUING       CONTACT CENTER
                                                     OPERATIONS     AUTOMATION BUSINESS    TOTAL
                                                    ------------    -------------------    -----
                                                                (IN THOUSANDS)
<S>                                          <C>               <C>              <C>
Balance, January 1, 2002............         $         70,909  $         15,861 $         86,770
Goodwill acquired...................                   13,330             8,035           21,365
Purchase price adjustment for SDI...                    2,351                --            2,351
Utilization of acquisition related
    income tax benefits.............                  (1,420)                --           (1,420)
Transferred to assets held for sale.                       --           (23,896)         (23,896)
                                             ----------------  ---------------- ----------------
Balance, September 30, 2002.........         $         85,170  $             -- $         85,170
                                             ================  ================ ================
</TABLE>

         The goodwill allocated to the contact center automation business
reflects the estimated amount of goodwill associated with the operations of
Point that are not focused on financial institutions.

         The following table shows our net loss from continuing operations and
net loss per share from continuing operations as adjusted for amortization of
goodwill and assembled workforce for all periods reported in our statements of
operations.

<TABLE>
<CAPTION>
                                                                            THREE MONTHS ENDED       NINE MONTHS ENDED
                                                                               SEPTEMBER 30,           SEPTEMBER 30,
                                                                               -------------           -------------
                                                                            2002          2001        2002         2001
                                                                            ----          ----        ----         ----
                                                                              (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                                    <C>            <C>         <C>          <C>
Reported net loss from continuing operations.......................    $     (3,539)  $  (24,910) $  (10,649)  $ (146,342)
Add back: Goodwill amortization....................................              --        9,687          --       34,406
Add back: Assembled workforce amortization ........................              --          411          --          924
                                                                       ------------   ----------  ----------   ----------
Adjusted net loss from continuing operations.......................    $     (3,539)  $  (14,812) $  (10,649)  $ (111,012)
                                                                       ============   ==========  ==========   ==========

Basic and diluted net loss per share from continuing operations:

     Reported net loss per share from continuing operations........    $     (0.05)   $    (0.42) $    (0.16)  $    (2.49)
     Add back: Goodwill amortization...............................              --         0.16          --         0.59
     Add back: Assembled workforce amortization ...................              --         0.01          --         0.02
                                                                       ------------   ----------  ----------   ----------
     Adjusted net loss per share from continuing operations........    $     (0.05)   $    (0.25) $    (0.16)  $    (1.88)
                                                                       ===========    ==========  ==========   ==========
</TABLE>

7.       STOCKHOLDERS' EQUITY

         On April 30, 2002, our series D convertible preferred stock
automatically converted into S1 common stock at a rate of 29.283 common shares
for each preferred share. Accordingly, we issued 6,954,712 shares of S1 common
stock in exchange for 237,500 shares of series D convertible preferred stock.

         In July 2002, our board of directors approved a $10.0 million stock
repurchase program. This program has been and will continue to be funded from
available cash and short-term investments. As of September 30, 2002, we had
repurchased 1,477,000 shares of our common stock at a cost of $7.0 million under
this program.

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,
                                                                               -------------           -------------
                                                                            2002          2001        2002         2001
                                                                            ----          ----        ----         ----
<S>                                                                    <C>            <C>         <C>          <C>
Net loss...........................................................    $     (5,200)  $  (29,616) $  (17,553)  $ (165,266)
Foreign currency translation adjustment............................             271        1,223      (1,372)      (2,089)
Unrealized (loss) gain on investment securities
      available for sale, net of taxes.............................              15         (403)        (61)        (250)
                                                                       ------------   ----------- -----------  -----------
         Comprehensive loss........................................    $     (4,914)  $  (28,796) $  (18,986)  $ (167,605)
                                                                       ------------   ----------  ----------   -----------
</TABLE>


                                       11
<PAGE>


9.       MERGER RELATED AND RESTRUCTURING CHARGES

         In connection with the acquisition of Point, we incurred merger related
costs of $3.7 million related to exit costs for certain of our European
operations during the first quarter of 2002. Under this exit plan, we will
reduce headcount, consolidate offices and dispose of redundant equipment.
Additionally, during the first quarter of 2002, we reduced merger related
accruals of $1.7 million related to the settlement of pending litigation for
less than the amount originally accrued.

         In 2000 and 2001, we approved restructuring plans to streamline our
global operations and to consolidate product development. As a result of the
plans, we reduced our workforce and closed several of our facilities worldwide.
At various times during 2001, we determined that, as a result of weakening
conditions in the domestic real estate markets, our original estimate of the
costs to dispose of unused real estate was below the updated anticipated costs.
The restructuring reserves as of December 31, 2001 and September 30, 2002 and
their utilization for the nine months ended September 30, 2002 are summarized as
follows:

<TABLE>
<CAPTION>
                                                      PERSONNEL COSTS       LEASE COSTS       OTHER           TOTAL
                                                      ---------------       -----------       -----           -----
                                                                              (IN THOUSANDS)
<S>                                                   <C>                   <C>            <C>             <C>
Balance, December 31, 2001                              $        78         $   10,716     $       560     $   11,354
Amounts utilized                                                (37)            (3,495)            (50)        (3,582)
                                                         -----------        ----------     -----------     ----------
Balance, September 30, 2002                             $        41         $    7,221     $       510     $    7,772
                                                         ===========        ==========     ===========     ==========
</TABLE>

         We expect to make future cash expenditures, net of anticipated sublease
income, related to these restructuring activities of approximately $7.8 million,
of which we anticipate to pay approximately $4.5 million within the next twelve
months.

10.      SEGMENT REPORTING AND SIGNIFICANT CUSTOMERS

         We operate and manage S1 in one business segment which develops,
markets and implements integrated, transactional and brandable enterprise
applications for financial institutions worldwide, available as in-house
solutions or solutions that can be hosted by us in one of our data centers.

         Currently, we have two major customers (defined as those customers who
individually contribute more than 10% of total revenues). We derived 27% and 35%
of our revenues from continuing operations from State Farm Mutual Automobile
Insurance Company during the nine months ended September 30, 2002 and 2001,
respectively.

         The other major customer, Zurich Insurance Company and certain of its
affiliates or subsidiaries, accounted for 17% of our revenues from continuing
operations during the nine months ended September 30, 2002. This customer
contributed less than 10% of our total revenues for the same period in 2001.
Effective April 1, 2002, we amended the terms of our arrangement with this
customer. Under the terms of the revised agreement, we will provide a
subscription license until December 31, 2003 (previously the contract expired in
2005), data center services through December 31, 2004 and professional services,
for which we expect to receive total fees of $73.3 million. Of this total
amount, we expect to record license revenue of approximately $57.2 million
ratably over the term of the subscription license. Under the subscription
license agreement, the customer is entitled to unspecified S1 products, as well
as unspecified upgrades and enhancements over the term of the license.


                                       12
<PAGE>

11.      NET LOSS PER COMMON SHARE

         We calculate basic net loss per common share as the 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 through the exercise of stock
options or stock warrants or upon the conversion of preferred stock would have
an anti-dilutive effect on our net loss per share. The total number of common
shares that would have been included in our computation of diluted loss per
share if they had been dilutive is as follows (in thousands):


<TABLE>
<CAPTION>
                                                                          THREE MONTHS ENDED            NINE MONTHS ENDED
                                                                             SEPTEMBER 30,                SEPTEMBER 30,
                                                                             -------------                -------------
                                                                          2002           2001          2002           2001
                                                                          ----           ----          ----           ----
<S>                                                                     <C>            <C>          <C>           <C>
Weighted average common shares outstanding...................               70,410        59,252       67,121          58,690
Weighted average effect of common stock equivalents:
      Convertible preferred stock............................                1,719         8,062        4,711           8,163
      Stock options..........................................                1,042         5,307        3,485           4,672
                                                                       -----------    ----------    ---------     -----------
      Weighted average diluted shares outstanding............               73,171        72,621       75,317          71,525
                                                                       ===========    ==========    =========     ===========
</TABLE>


                                       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 the beliefs of management as well as
assumptions made using information currently available to management. Because
these statements reflect the current views of management 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 for the year ended December 31, 2001, 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 herein and in our Annual Report on Form 10-K for the year ended
December 31, 2001. Other than the section titled "Loss from discontinued
operations," this discussion of our financial condition and results of
operations relates to our continuing operations.

OVERVIEW

         We derive a significant portion of our revenues from licensing our
solutions and providing professional services. We generate recurring data center
revenues by charging our data center customers a monthly fixed fee or a fee
based on the number of their end users who use the solutions we provide, subject
to a minimum charge. We also generate recurring revenues by charging our
customers a periodic fee for maintenance.

         We generate revenues from two principal product groups: S1 Enterprise
(or multi-channel) financial solutions and legacy (or single channel) financial
solutions. We define S1 Enterprise revenue as those fees that we earn from sales
of our recently released S1 Enterprise applications, such as S1 Personal Banking
or S1 Business Banking, as well as fees that we earn from customers who have
signed an S1 Enterprise agreement. Revenues from non-S1 Enterprise single
channel financial solutions represent fees that we earn from customers who only
use one of our legacy channel solutions. Our strategy is to upgrade a
significant number of our customers to the S1 Enterprise platform and cross sell
and/or up sell additional channel applications to our installed base of
customers to migrate them to an S1 Enterprise solution. During the three months
and nine months ended September 30, 2002, we recorded revenue of $8.5 million
and $18.0 million, respectively, from our S1 Enterprise solutions. In future
periods, we expect revenues from our S1 Enterprise solutions to increase as a
percentage of our total revenues.

         Our S1 Enterprise solutions target financial institutions in two market
segments: top 70 financial institutions and mid-market and regional financial
institutions. We earned a significant portion of our revenues in 2001 and 2002
from a few large financial institution customers. In connection with our
acquisitions of SDI, Regency and Point, we have significantly increased the
number of our financial institution customers to over 4,000. Most of these
financial institution customers are mid-sized and regional financial
institutions. As a result, we expect that a greater percentage of our future
revenues will be earned from mid-sized and regional financial institutions.
While we expect to generate a considerably higher number of contracts each year
from mid-market and regional financial institutions, the average contract value
and therefore, margin contribution from each contract is significantly lower
than the legacy contracts from large financial institution customers.

         Currently, we have two major customers (defined as those who
individually contribute more than 10% of total revenues). Revenues from State
Farm Mutual Automobile Insurance Company were 27% and 30% of our revenues from
continuing operations during the three months ended September 30, 2002 and 2001,
respectively, and 27% and 35% for the nine months ended September 30, 2002 and
2001, respectively. The revenue from this customer for the three-month and
nine-month periods ended September 30, 2002 decreased $1.2 million and $8.8
million from the same periods in 2001 due to a decrease in projects performed
for that customer in 2002. We expect that professional services revenues from
this major customer will continue to decrease in the fourth quarter of 2002 and
in fiscal 2003.

         Including revenues from our discontinued operations, revenues from
State Farm accounted for 22% and 24% of our total revenues during the three
months ended September 30, 2002 and 2001, respectively, and 23% and 29% of our
total revenues during the nine months ended September 30, 2002 and 2001,
respectively.

         The other major customer, Zurich Insurance Company and certain of its
affiliates or subsidiaries, accounted for 16% and 17% of our revenues from
continuing operations during the three months and nine months ended September
30, 2002, respectively. This customer contributed less than 10% of our total
revenues for the same periods in 2001. Effective April 1, 2002, we amended the
terms of our arrangement with this customer. Under the terms of the revised
agreement, we will provide a subscription license until December 31, 2003
(previously the contract expired in 2005), data center services through December
31, 2004 and professional services, for which we expect to receive total fees of
$73.3 million. Of this total amount, we expect to record license revenue of
approximately $57.2 million over the term of the subscription license. In
September 2002, this customer announced its plan to discontinue operations
running in our data center. We do not expect this decision to affect their
obligation to us under the data center services agreement.

         Including revenues from our discontinued operations, revenues from
Zurich accounted for 13% and 14% of our total revenues during the three and
nine months ended September 30, 2002.

         Our results of operations and cash flows during the three and nine
months ended September 30, 2002 were affected by the results of operations from
acquired businesses, including Software Dynamics, Inc. (September 2001), Regency
Systems, Inc. (February 2002) and the assets and subsidiaries of Point Holdings,
Ltd. (March 2002). Revenues and expenses


                                       14
<PAGE>

from the operations of these acquired businesses were included in our current
year operations from their respective dates of acquisition. Our prior year
results do not include results of operations for these acquired businesses.
During the three months and nine months ended September 30, 2002, we recorded
total revenues of $11.1 million and $30.1 million in these acquired businesses.
We believe that the results achieved in the acquired businesses significantly
exceed that which they would have achieved on a stand-alone basis. We made these
acquisitions because the acquired products and technologies are integral to our
S1 Enterprise suite of applications. We have been able to cross sell existing S1
offerings into the acquired customer base and acquired product offerings into
our existing customer base. Furthermore, we believe that we have been able to
leverage our combined resources to increase the sales opportunities for these
acquired products, especially those of SDI, whose revenues increased
approximately 79% and 68% during the three months and nine months ended
September 30, 2002 over the same periods in 2001, respectively. You should also
read our discussion of "Acquisitions" below and in Note 3 to our condensed
consolidated financial statements.

         In addition, our results of operations were affected by the adoption of
a new accounting principle, Statement of Financial Accounting Standards No. 142
"Goodwill and Other Intangible Assets." Effective January 1, 2002, we stopped
amortizing goodwill and assembled workforce. Amortization of these intangible
assets is included in our prior year results. Retroactive application of this
new accounting treatment is prohibited by SFAS 142. However, pro forma results
for our prior periods are presented in Note 6 to our condensed consolidated
financial statements giving effect to the accounting change as if it were
applicable to those prior periods.

         During the nine months ended September 30, 2002, we continued our
transition to a new business focus and a new market - multi-channel integrated
financial applications. During March 2002, we released for general availability
the first two applications to be deployed on the S1 Enterprise Platform: S1
Personal Banking and S1 Business Banking. During the third quarter of 2002, we
announced the successful implementation for our first S1 Enterprise customer and
their transition into live production. As of the date of this report, seven
financial institutions are in production mode with a hosted or on-premise S1
Enterprise solution.

         During July 2002, we realigned our product development organization to
be more efficient. The realignment effort included creating five "centers of
development excellence" throughout the world: three in the United States, one in
Europe and one in Asia. We will continue to consolidate domain expertise in
these locations taking into consideration the skills of the local development
organization and the local workforce.

         We are continually reviewing our cost structure on a worldwide basis
and look for additional ways to streamline our operations. In the second and
third quarters of 2002, we realigned our resources domestically and
internationally to match costs with expected revenues. Before the additional
personnel from acquisitions, we reduced our headcount by approximately 100
people in all areas of our business. We will continue to execute similar cost
reductions in the fourth quarter of 2002 resulting in the elimination of
additional positions throughout the organization. In this cost alignment, we
expect to reduce our headcount by over 100 positions.

         In July 2002, we announced our intent to pursue the sale of our contact
center automation assets, composed of our Edify Corporation subsidiary and the
non-financial assets of our acquired Point business. Beginning in the third
quarter of 2002, we accounted for these combined businesses as "held for sale"
and presented their combined results under "discontinued operations." You should
read Note 1 and Note 4 to our condensed consolidated financial statements for a
more complete description of the accounting treatment that has been applied to
the contact center automation business in the third quarter of 2002.

ACQUISITIONS

         In March 2002, we acquired the assets and subsidiaries of Point
Holdings, Ltd., a Dublin, Ireland based multi-channel CRM application provider.
In February 2002, we acquired Regency Systems, Inc., a Dallas, Texas based
provider of telephone and Internet banking applications and web design services
for community and mid-market banks. We accounted for these acquisitions using
the purchase method of accounting with the excess of the purchase price over the
estimated fair value of the net assets (liabilities) recorded as goodwill. Other
intangible assets include developed technology and customer base. Additionally,
for each acquisition, we allocated a portion of the purchase price to in-process
research and development, which was expensed immediately upon closing of the
acquisition during the quarter ended March 31, 2002.


                                       15
<PAGE>
         The consolidated financial statements include the results of operations
for the acquired companies from the date of acquisition, which for accounting
purposes was February 1, 2002 for Regency and March 31, 2002 for Point. Regency
is part of our continuing operations. Point operations related to financial
institution customers have been included in continuing operations. The remaining
Point operations have been included in the contact center automation business.

COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001

         Our results for the three months ended September 30, 2002 include the
acquired operations of SDI, Regency and the financial institution business of
Point, hereafter referred to as the "acquired FI businesses."

         REVENUES. Total revenues from continuing operations increased by $1.4
million to $58.5 million for the three months ended September 30, 2002 compared
to $57.1 million for the same period in 2001, an increase of 2%.

         Software license revenues were $15.3 million for the three months ended
September 30, 2002, an increase of $6.0 million from the same period in 2001.
Although most of our license revenue has to be replaced each period, license
revenue earned from our major customer in Europe comprised $8.2 million of our
license revenue during the three months ended September 30, 2002, an increase of
$6.1 million over the prior year period. This revenue comes from a subscription
license which will continue through December 2003. S1 Enterprise license
revenues for the quarter ended September 30, 2002 were $1.3 million. Single
channel licenses, which comprise the remainder of the license revenues,
decreased $5.2 million from the prior year period. License revenues generated
from products from the acquired FI businesses, which are included in both S1
Enterprise and single point solutions, totaled $3.2 million.

         Support and maintenance revenues were $10.8 million for the three
months ended September 30, 2002, an increase of $3.3 million from the same
period in 2001. The increase is primarily attributable to support and
maintenance fees earned from the acquired FI businesses.

         Professional services revenues were $22.9 million for the three months
ended September 30, 2002, a decrease of $1.9 million from the same period in
2001. This decrease is principally attributable to the decrease in professional
services revenues from large projects, partially offset by increases from the
acquired businesses of approximately $3.4 million. In future periods, we expect
professional services revenues to become a smaller percentage of total revenues
as large projects are completed and as we move towards a more packaged S1
Enterprise solution.

         Data center revenues were $9.3 million for the three months ended
September 30, 2002, a decrease of $6.1 million from the same period in 2001. The
decrease in data center revenue was primarily due to the loss of several large
data center customers, offset by an increase in the number of community and
mid-sized financial institutions utilizing S1 solutions in our data centers.
Several large financial institution customers have moved their Internet banking
solutions in house either on our S1 Enterprise platform or on a competitor's
platform. In addition, some have shut down their internet applications entirely.
As some of our customers transferred their S1 applications in house, we were
able to replace a portion of these data center revenue streams with software
license fees and support and maintenance fees. We believe this transition will
be complete and data center revenues will stabilize by the end of 2002. As we
add new hosted customers on our S1 Enterprise products, we expect data center
revenues to increase in 2003. The acquired FI businesses do not have a data
center solution; accordingly, there was no data center revenue from the
acquired FI businesses during the three months ended September 30, 2002.

         Other revenues are primarily related to the sale of third party
hardware and software that is used in connection with our products. Other
revenue fluctuates based on the mix of products and services sold.

         DIRECT COSTS AND GROSS MARGINS. Direct costs decreased slightly by $0.2
million to $24.2 million for the three months ended September 30, 2002 from the
three months ended September 30, 2001. Overall gross margins were 59% and 57%
for the three months ended September 30, 2002 and 2001, respectively. The
overall decrease in direct costs and corresponding increase in gross margins are
primarily the result of reductions in employee headcount and higher cost outside
contractors, and reduced facilities costs resulting from the consolidation of
offices, offset by the added costs of the acquired FI businesses.

         Direct costs exclude charges for depreciation and amortization of
property and equipment.

         Cost of software licenses for our products are generally minimal
because we internally develop most of the software


                                       16
<PAGE>


components, the cost of which is reflected in product development expense as it
is incurred. We anticipate that cost of software licenses will increase in
future periods as we license and install more of our new S1 Enterprise products
because these products include some software components that we license from
third parties. However, cost of software licenses will continue to vary with the
mix of products sold.

         Costs of professional services, support and maintenance consist
primarily of personnel and related infrastructure costs. Direct costs associated
with professional services, support and maintenance were $18.1 million for the
three months ended September 30, 2002, a slight increase from $17.8 million for
the same period in 2001. The increase resulted from the added costs of the
acquired businesses, offset by reductions in professional services headcount,
outside contractors and associated facilities costs.

         Costs of data center consist of personnel costs, facility costs and
related infrastructure costs to support our data center business. Direct data
center costs decreased $0.9 million to $5.6 million for the three months ended
September 30, 2002 from $6.5 million for the three months ended September 30,
2001. The decrease is primarily the result of reductions in personnel, outside
contractors and purchases of non-capital equipment and services.

         SELLING AND MARKETING EXPENSES. Total selling and marketing expenses
increased by $2.5 million to $9.5 million for the three months ended September
30, 2002 from $7.0 million for the three months ended September 30, 2001. This
increase is primarily attributable to the added costs of the acquired businesses
(approximately $1.8 million) plus costs associated with strengthening our
internal sales force. These additional costs were offset by a $0.6 million
reduction in bad debt expense and a $0.3 million reduction in spending on
marketing programs.

         PRODUCT DEVELOPMENT EXPENSES. Total product development expenses
remained flat at $10.1 million for the three months ended September 30, 2002 and
2001. Cost savings achieved from realignment of our product development
organization in 2001, including replacing outside contractors in our domestic
operations with lower cost offshore contractors, were offset by the added costs
of the acquired businesses. Historically we have not capitalized software
development costs because of the insignificant amount of costs incurred between
technological feasibility and general customer release; however, we may be
required to capitalize certain software development costs in the future.

         GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses decreased by $2.1 million to $9.5 million for the three months ended
September 30, 2002 from $11.6 million for the three months ended September 30,
2001. As a percentage of revenues, general and administrative expenses were 16%
and 20% for the three months ended September 30, 2002 and 2001. The decrease in
general and administrative expenses was primarily attributable to a decrease in
compensation and benefits, professional services fees and recruiting fees,
offset in part by the added costs of the acquired businesses (approximately $1.1
million). During 2002, we reduced our general and administrative headcount and
our use of external resources.

         DEPRECIATION AND AMORTIZATION. Depreciation and amortization decreased
to $5.3 million for the three months ended September 30, 2002 from $6.9 million
for the three months ended September 30, 2001, due to reductions in capital
expenditures during recent periods as compared with those made in 1999 and 2000.
A significant portion of those items that we bought in 1999 and 2000, especially
those related to the build-out of our global data centers, became fully
depreciated by the end of 2001. This decrease was offset partially by the added
costs of the acquired businesses.

         AMORTIZATION OF ACQUISITION INTANGIBLES. Amortization of acquisition
intangible assets decreased $10.2 million to $4.3 million for the three months
ended September 30, 2002 from $14.5 million for the three months ended September
30, 2001. In connection with the adoption of SFAS No. 142, "Goodwill and Other
Intangible Assets" on January 1, 2002, we stopped recording amortization expense
on goodwill and assembled workforce. This reduced our amortization expense for
the three months ended September 30, 2002 by approximately $10.1 million.
Otherwise the expiration of amortized assets was completely offset by additional
amortization associated with the other intangible assets of the acquired
businesses.

         INTEREST AND OTHER (EXPENSE) INCOME, NET. Interest and other expense
net was almost zero for the three months ended September 30, 2002, a decrease of
$1.5 million from the three months ended September 30, 2001. This decrease
resulted from the following:

         -        a non-cash charge of $3.5 million we recorded during the
                  three months ended September 30, 2001 to write down


                                       17
<PAGE>
                  our basis in certain equity investments (accounted for on a
                  cost basis) as a result of impairment in the value of these
                  assets which we believe is other than temporary; offset by

         -        a $1.0 million decrease in interest income during the three
                  months ended September 30, 2002 due principally to a decrease
                  in interest rates from the prior year period; and

         -        a $0.8 million decrease in other income during the three
                  months ended September 20, 2002.

         LOSS ON SALE OF SUBSIDIARIES AND EQUITY INTEREST IN NET LOSS OF
AFFILIATE. During the three months ended September 30, 2001, we recorded a
non-cash charge of $7.0 million based on our equity interest in the net loss of
Yodlee and the amortization of the underlying intangible assets. In the fourth
quarter of 2001, we wrote down our equity investment in Yodlee to $1.0 million
after which time we are not required to record our share of Yodlee's net losses.

         INCOME TAX BENEFIT. We recorded an income tax benefit of $0.8 million
during the three months ended September 30, 2002 compared to $1.1 million for
the three months ended September 30, 2001. The income tax benefit resulted from
the amortization of intangible assets acquired in the acquisition of FICS offset
by foreign income tax expense incurred in certain European countries. The
decrease in the benefit is principally attributable to increases in taxable
foreign income.

         LOSS FROM DISCONTINUED OPERATIONS. We recorded a loss from discontinued
operations of $1.7 million during the three months ended September 30, 2002
compared to a loss of $4.7 million for the three months ended September 30,
2001. The decrease in the loss from discontinued operations was primarily
attributable to a $5.2 million decrease in depreciation and amortization expense
as a result of the application of the accounting treatment for assets held for
sale. Revenues for the three months ended September 30, 2002 were $13.5 million
compared to $13.4 million for the three months ended September 30, 2001. The
additional revenues from the acquired Point non-financial institution business
were more than offset by an adjustment to reduce revenues for billing allowances
of $1.8 million, including $0.9 million for the accounting matter discussed
below. Direct costs and operating expenses increased as a result of the
inclusion of the Point non-financial institution business. Selling and marketing
and product development costs declined due to the cost alignment activities
undertaken during the second and third quarters of 2002.

         During the three months ended September 30, 2002, we identified and
corrected two accounting matters in our discontinued operations with a
cumulative impact on earnings of approximately $1.5 million that occurred over
the six previous quarters. One of the matters resulted in us improperly
recognizing an aggregate of $0.9 million in revenue over a four quarter period
ended June 30, 2002. The other matter resulted in us not recording certain
operating expenses totaling $0.6 million over a six quarter period ended June
30, 2002. The impact of these matters in any one of the affected quarters was
less than $0.01 per share. We corrected these matters in the current quarter by
reducing revenues $0.9 million and recognized expenses of $0.6 million. These
matters were in our discontinued operations and had the effect of increasing
loss per share from discontinued operations by $0.02 per share during the three
months ended September 30, 2002. These matters did not affect our revenues,
expenses or loss from continuing operations.

COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001

         REVENUES. Total revenues increased by $20.0 million to $184.1 million
for the nine months ended September 30, 2002 from $164.1 million for the same
period in 2001, an increase of 12%.

         Software license revenues were $50.5 million for the nine months ended
September 30, 2002, an increase of $23.7 million from the same period in 2001.
Although most of our license revenue has to be replaced each period, license
revenue earned from our major customer in Europe comprised $23.6 million of our
license revenue during the nine months ended September 30, 2002, an increase of
$19.1 million over the prior year period. This revenue comes from a subscription
license which will continue through December 2003. S1 Enterprise license
revenues for the nine months ended September 30, 2002 were $7.2 million. Single
channel licenses, which comprise the remainder of the license revenues,
decreased $14.2 million from the prior year period. License revenues generated
from products from the acquired FI businesses, which are included in both S1
Enterprise and single point solutions, totaled $11.6 million.

         Support and maintenance revenues were $32.2 million for the nine months
ended September 30, 2002, an increase of $12.6 million from the same period in
2001. The increase is primarily attributable to support and maintenance fees
earned from the acquired businesses.

         Professional services revenues were $69.5 million for the nine months
ended September 30, 2002, a decrease of $9.8 million from the same period in
2001. This decrease is principally attributable to the decrease in professional
services revenues from large projects, partially offset by increases from the
acquired businesses of approximately $6.4 million.

         Data center revenues were $31.0 million for the nine months ended
September 30, 2002, a decrease of approximately


                                       18
<PAGE>

$6.6 million from the same period in 2001. The decrease in data center revenue
was primarily due to the loss of several large data center customers, offset by
an increase in the number of community and mid-sized financial institutions
utilizing S1 solutions in our data centers. The acquired FI businesses do not
have a data center solution, accordingly there was no data center revenue from
the acquired FI businesses during the nine months ended September 30, 2002.

         Other revenues are primarily related to the sale of third party
hardware and software that is used in connection with our products. Other
revenue fluctuates based on the mix of products and services sold.

         DIRECT COSTS AND GROSS MARGINS. Direct costs decreased by $9.9 million
to $73.9 million for the nine months ended September 30, 2002 from $83.8 million
for the nine months ended September 30, 2001, a decrease of 12%. Overall gross
margins were 60% and 49% for the nine months ended September 30, 2002 and 2001,
respectively. The overall decrease in direct costs and corresponding increase in
gross margins are primarily the result of reductions in employee headcount and
higher cost outside contractors, and reduced facilities costs resulting from the
consolidation of offices, offset by the added costs of the acquired FI
businesses.

         Cost of revenues excludes charges for depreciation and amortization of
property and equipment.

         Cost of software licenses 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. We anticipate that cost of software licenses will
increase in future periods as we license and install more of our new S1
Enterprise products because these products include some software components that
we license from third parties; however, cost of software licenses will continue
to vary with the mix of products sold.

         Costs of professional services, support and maintenance consist
primarily of personnel and related infrastructure costs. Direct costs associated
with professional services, support and maintenance was $56.3 million for the
nine months ended September 30, 2002, a decrease of $6.8 million from the same
period in 2001. This decrease is primarily a result of reductions in
professional services headcount, outside contractors and associated facilities
costs to a level that is more closely aligned with the projects and services
under contract, offset by the added costs of the acquired businesses.

         Costs of data center consist of personnel costs, facility costs and
related infrastructure costs to support our data center business. Direct data
center costs decreased $3.0 million to $16.5 million for the nine months ended
September 30, 2002 from $19.5 million for the same period in 2001. The decrease
is primarily the result of reductions in personnel, outside contractors and
purchases of non-capital equipment.

         SELLING AND MARKETING EXPENSES. Total selling and marketing expenses
increased by $9.2 million to $29.2 million for the nine months ended September
30, 2002 from $20.0 million for the same period in 2001. This increase is
primarily attributable to the added costs of the acquired businesses
(approximately $5.3 million) plus costs associated with the strengthening of our
internal sales force. These additional costs were offset by a $0.6 million
reduction in spending on marketing programs and a $0.4 million reduction in bad
debt expense.

         PRODUCT DEVELOPMENT EXPENSES. Total product development expenses
increased slightly by $0.2 million to $30.9 million for the nine months ended
September 30, 2002 from $30.7 million for the nine months ended September 30,
2001. Added product development costs from the acquired businesses were offset
by cost savings achieved from replacing outside contractors in our domestic
operations with lower cost offshore contractors. Historically we have not
capitalized software development costs because of the insignificant amount of
costs incurred between technological feasibility and general customer release;
however, we may be required to capitalize certain software development costs in
the future.

         GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses increased by $0.4 million to $32.9 million for the nine months ended
September 30, 2002 from the same period in 2001. As a percentage of revenues,
general and administrative expenses decreased to 18% for the nine months ended
September 30, 2002 from 20% for the same period in 2001. The increase in general
and administrative expenses resulted principally from the added costs of the
acquired businesses (approximately $2.6 million) offset by a decrease in
compensation and benefits, professional services fees and recruiting fees.
During 2002, we reduced our general and administrative headcount and our use of
external resources.

         DEPRECIATION AND AMORTIZATION. Depreciation and amortization decreased
$4.0 million to $16.2 million for the nine


                                       19
<PAGE>

months ended September 30, 2002 from $20.2 million for the nine months ended
September 30, 2001, due to reductions in capital expenditures during recent
periods as compared with those made in 1999 and 2000. A significant portion of
those items that we bought in 1999 and 2000, especially those related to the
build-out of our global data centers, became fully depreciated by the end of
2001. This decrease was offset partially by the added costs of the acquired
businesses.

         MERGER RELATED COSTS AND RESTRUCTURING CHARGES. During the nine months
ended September 30, 2002, we incurred merger related costs of $3.7 million in
connection with the acquisition of Point. These costs, incurred in connection
with our plan to reorganize certain of our European operations, include
headcount reduction, consolidation of S1 and acquired Point office facilities
and disposal of redundant or obsolete computer equipment. This merger related
restructuring charge was partially offset by a $1.7 million decrease in reserves
for legal claims, which was established in connection with our acquisition of
FICS Group, N.V. in November 1999. We were able to resolve this legal matter
during the first quarter of 2002 for less than previously estimated amounts.

         During the first nine months of 2001, we approved a restructuring plan
related to the streamlining of our European operations and recorded a charge of
$5.6 million for the estimated costs associated with the restructuring plan.
Also in the first half 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 previously established during the fourth quarter of 2000.

         ACQUIRED IN-PROCESS RESEARCH AND DEVELOPMENT. In connection with the
purchase price allocation for the Regency and Point acquisitions during the nine
months ended September 30, 2002, we allocated $257,000 to acquired in-process
research and development, which we expensed immediately in accordance with the
applicable accounting rules. Acquired in-process research and development costs
for the Point acquisition of $93,000 were assigned to the discontinued
operations.

         AMORTIZATION OF ACQUISITION INTANGIBLES. Amortization of acquisition
intangible assets decreased $33.2 million to $12.5 million for the nine months
ended September 30, 2002 from $45.7 million for the nine months ended September
30, 2001. In connection with the adoption of SFAS No. 142, "Goodwill and Other
Intangible Assets" on January 1, 2002, we ceased recording amortization expense
on goodwill and assembled workforce. This reduced our amortization expense for
the nine months ended September 30, 2002 by approximately $35.3 million.
Otherwise the expiration of amortized assets was completely offset by additional
amortization associated with the other intangible assets of the acquired
businesses.

         INTEREST AND OTHER (EXPENSE) INCOME, NET. Interest and other income,
net was $1.1 million for the nine months ended September 30, 2002, a decrease of
$1.4 million from the nine months ended September 30, 2001. This decrease
resulted from the following:

         -        a non-cash charge of $3.5 million we recorded during the nine
                  months ended September 30, 2001 to write down our basis in
                  certain equity investments (accounted for on a cost basis) as
                  a result of impairment in the value of these assets which we
                  believe is other than temporary; offset by
         -        a gain of $0.9 million on the sale of investment securities
                  available for sale we recorded during the nine months ended
                  September 30, 2001;
         -        a $3.6 million decrease in interest income during the nine
                  months ended September 30, 2002 due to a decrease in average
                  cash to invest and a decrease in interest rates from the prior
                  year period; and
         -        a decrease in other income of approximately $0.4 million.

         LOSS ON SALE OF SUBSIDIARIES AND EQUITY INTEREST IN NET LOSS OF
AFFILIATE. On January 16, 2001, we sold our VerticalOne subsidiary to Yodlee,
Inc. in a stock-for-stock transaction in 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 intangible assets. In the fourth quarter of 2002,
we wrote down our equity investment in Yodlee to $1.0 million after which time
we are not required to record our share of Yodlee's net losses.


                                       20
<PAGE>

         During the nine months ended September 30, 2001, we recorded a charge
of $0.8 million in connection with the sale of our subsidiary Write! N.V.

         INCOME TAX BENEFIT. We recorded an income tax benefit of $1.9 million
during the nine months ended September 30, 2002 compared to $3.0 million for the
nine months ended September 30, 2001. The income tax benefit resulted from the
amortization of intangible assets acquired in the acquisition of FICS offset by
foreign income tax expense incurred in certain European countries. The decrease
in the benefit is principally attributable to increases in taxable foreign
income.

         LOSS FROM DISCONTINUED OPERATIONS. The loss from discontinued
operations for the nine months ended September 30, 2002 was $6.9 million, a
decrease of 63% from a loss of $18.9 million for the same period in 2001. This
decrease was primarily attributable to a $13.6 million decrease in depreciation
and amortization expense recorded in the nine months ended September 30, 2001.
This was a combination of ceasing depreciation and amortization expense on June
30, 2002 as a result of the accounting treatment for assets held for sale and
the cessation of amortizing the acquisition intangibles of goodwill and
assembled workforce under the provisions of SFAS No. 142. Revenues were $35.8
million for the nine months ended September 30, 2002 compared to $35.6 million
for the same period in 2001. Direct costs and operating expenses increased as a
result of the inclusion of the Point non-financial institution business and a
change in the mix of products sold, offset by decreases in selling and marketing
and product development expenses as a result of cost alignment actions taken in
the second and third quarter of 2002.

LIQUIDITY AND CAPITAL RESOURCES

     The following tables show information about our cash flows during the nine
months ended September 30, 2002 and 2001 and selected balance sheet data as of
September 30, 2002 and December 31, 2001:

<TABLE>
<CAPTION>
                                                                   NINE MONTHS ENDED SEPTEMBER 30,
                                                                    2002                   2001
                                                                    -----                  ----
                                                                        (IN THOUSANDS)
<S>                                                           <C>                     <C>
Net cash provided by operating activities before
         changes in operating assets and liabilities          $       19,136           $         (2,187)
Change in operating assets and liabilities                            (6,426)                     2,417
                                                               --------------          ----------------
Net cash provided by operating activities                             12,710                       230
Net cash used in investing activities                                (19,979)                  (38,846)
Net cash used in financing activities                                 (6,450)                   (4,278)
Effect of exchange rates on cash and cash equivalents                    178                      (117)
                                                               --------------          ----------------
Net decrease in cash and cash equivalents                     $      (13,541)          $       (43,011)
                                                               ==============          ================
</TABLE>

<TABLE>
<CAPTION>
                                                                              AS OF
                                                          SEPTEMBER 30, 2002        DECEMBER 31, 2001
                                                          ------------------        -----------------
                                                                         (IN THOUSANDS)
<S>                                                      <C>                 <C>
Cash and cash equivalents .                              $     106,091       $     119,632
Short term investments                                          32,928              28,818
Working capital                                                146,934             129,827
Working capital, excluding deferred revenues                   175,086             157,326
Total assets                                                   381,776             372,037
Total stockholders' equity                                     280,008             274,618
</TABLE>

         OPERATING ACTIVITIES. During the nine months ended September 30, 2002,
cash provided by operations was $12.7 million compared to $0.2 million for the
nine months ended September 30, 2001. The improvement in net cash flows from
operating activities generally reflects the decrease in our net loss offset in
part by the effects of changes in operating assets and liabilities. Changes in
operating assets and liabilities, 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.


                                       21
<PAGE>

         Cash provided by operations for the nine months ended September 30,
2002 included the effects of:

         -        our net loss for the period of $17.6 million offset by
                  non-cash charges including $31.4 million of depreciation and
                  amortization expense, including acquisition intangibles;
         -        a $4.4 million increase in accounts receivable;
         -        a $2.7 million increase in prepaid expenses and other assets;
                  and
         -        a decrease in accounts payable and accrued expenses of $3.4
                  million as a result of the timing of payments.

         Cash provided by operations for the nine months ended September 30,
2001 included the effects of:

         -        our net loss for the period of $165.3 million offset by
                  non-cash charges of approximately $156.1 million;
         -        a decrease in accounts receivable of $24.8 million; and
         -        a reduction of accounts payable and accrued expenses of $22.8
                  million.

         INVESTING ACTIVITIES. Cash used in investing activities was $20.0
million for the nine months ended September 30, 2002 compared to $38.8 million
in the comparable period of 2001.

         In the first nine months of 2002, we:

         -        purchased $9.4 million of property and equipment;
         -        paid $3.9 million, net of cash received, in connection with
                  the acquisitions of Regency and Point;
         -        invested $2.5 million in a long-term (greater than one year)
                  certificate of deposit; and
         -        moved a net amount of $4.1 million from short-term investments
                  to cash and cash equivalents.

In the first nine months of 2001, we:

         -        sold our VerticalOne subsidiary, including $15.0 million in
                  cash;
         -        paid $4.5 million in cash in connection with our acquisition
                  of SDI;
         -        moved a net amount of $9.1 million from cash and cash
                  equivalents to short-term investments; and purchased $11.3
                  million of property and equipment.

         FINANCING ACTIVITIES. Cash used in financing activities was $6.5
million for the nine months ended September 30, 2002 compared to cash used in
financing activities of $4.3 million in the nine months ended September 30,
2001.

         In the first nine months of 2002 and 2001, we received $5.1 million and
$4.6 million from the sale of common stock under our employee stock plans,
respectively. We paid $4.5 million and $5.0 million for capital lease
obligations in the nine months ended September 30, 2002 and 2001, respectively.
During the first nine months of 2001, we repaid $3.8 million borrowed under
various credit arrangements.

         In July 2002, our board of directors approved a $10.0 million stock
repurchase program. This program has been and will continue to be funded from
available cash. Through September 30, 2002, we repurchased 1,477,000 shares of
our common stock for $7.0 million under this program.

         In 2001, we entered into an arrangement for a $10.0 million secured
line of credit with a bank. During the quarter ended September 30, 2002, the
secured line of credit expired unused. Therefore, we have no current borrowing
arrangement.


                                       22
<PAGE>

         We believe that our expected cash flows from operations together with
our existing cash and short term investments and proceeds we expect to receive
from the sale of our contact center automation business 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
issue debt securities or establish a 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.


                                       23
<PAGE>
ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Quantitative and qualitative disclosures about market risk were
included in Item 7A of the Company's 2001 Annual Report on Form 10-K. There have
been no significant changes in our market risk from December 31, 2001.

ITEM 4.   CONTROLS AND PROCEDURES

Within the 90 days prior to the date of filing this Form 10-Q, we carried out an
evaluation, under the supervision and with the participation of management,
including the chief executive officer and the chief financial officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the
chief executive officer and the chief financial officer concluded that our
disclosure controls and procedures are effective in timely alerting them to
material information required to be included in our periodic SEC filings. There
have been no significant changes in our internal controls or in other factors
which could significantly affect internal controls subsequent to the date we
carried out our evaluation.


                                       24
<PAGE>

PART II -- OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

         There is no material pending legal proceeding, other than routine
         litigation incidental to our business, to which S1 or its subsidiaries
         are a party or of which any of our property is the subject.

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

(a)      Exhibits

         99.1     Certificate of Chief Executive Officer and Chief Financial
                  Officer

 (b)     Reports on Form 8-K.

                  S1 filed the following Current Reports on Form 8-K with the
         Securities and Exchange Commission (the "SEC") during the quarter ended
         September 30, 2002:

                  Current Report on Form 8-K filed with the SEC on August 1,
         2002 (date of report July 30, 2002) (regarding a press release and an
         analyst conference call related to second quarter 2002 results and S1
         and its operations).

                  Current Report on Form 8-K filed with the SEC on September 19,
         2002 (date of report September 19, 2002) (regarding a press release
         announcing an investor conference and S1 and its operations).


                                       25
<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, 2002.

                                  S1 CORPORATION

                                  By: /s/ Matthew Hale
                                     -------------------------------
                                     Matthew Hale
                                     Chief Financial Officer
                                     (Principal Financial Officer and
                                     Principal Accounting Officer)




                               10-Q CERTIFICATION

         CERTIFICATIONS*

         I, Jaime W. Ellertson, certify that:

         1. I have reviewed this quarterly report on Form 10-Q of S1
         Corporation;

         2. Based on my knowledge, this quarterly report does not contain any
         untrue statement of a material fact or omit to state a material fact
         necessary to make the statements made, in light of the circumstances
         under which such statements were made, not misleading with respect to
         the period covered by this quarterly report;

         3. Based on my knowledge, the financial statements, and other financial
         information included in this quarterly report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this quarterly report;

         4. The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:

         a) designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

         b) evaluated the effectiveness of the registrant's disclosure controls
         and procedures as of a date within 90 days prior to the filing date of
         this quarterly report (the "Evaluation Date"); and

         c) presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

         5. The registrant's other certifying officers and I have disclosed,
         based on our most recent evaluation, to the registrant's auditors and
         the audit committee of registrant's board of directors (or persons
         performing the equivalent function):

         a) all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

         b) any fraud, whether or not material, that involves management or
         other employees who have a significant role in the registrant's
         internal controls; and

         6. The registrant's other certifying officers and I have indicated in
         this quarterly report whether or not there were significant changes in
         internal controls or in other factors that could significantly affect
         internal controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.

         Date: November 14, 2002

         /s/ Jaime W. Ellertson
         ----------------------------
         Chief Executive Officer




                               10-Q CERTIFICATION

              CERTIFICATIONS*

              I, Matthew Hale, certify that:

              1. I have reviewed this quarterly report on Form 10-Q of S1
              Corporation;

              2. Based on my knowledge, this quarterly report does not contain
              any untrue statement of a material fact or omit to state a
              material fact necessary to make the statements made, in light of
              the circumstances under which such statements were made, not
              misleading with respect to the period covered by this quarterly
              report;

              3. Based on my knowledge, the financial statements, and other
              financial information included in this quarterly report, fairly
              present in all material respects the financial condition, results
              of operations and cash flows of the registrant as of, and for, the
              periods presented in this quarterly report;

              4. The registrant's other certifying officers and I are
              responsible for establishing and maintaining disclosure controls
              and procedures (as defined in Exchange Act Rules 13a-14 and
              15d-14) for the registrant and we have:

              a) designed such disclosure controls and procedures to ensure that
              material information relating to the registrant, including its
              consolidated subsidiaries, is made known to us by others within
              those entities, particularly during the period in which this
              quarterly report is being prepared;

              b) evaluated the effectiveness of the registrant's disclosure
              controls and procedures as of a date within 90 days prior to the
              filing date of this quarterly report (the "Evaluation Date"); and

              c) presented in this quarterly report our conclusions about the
              effectiveness of the disclosure controls and procedures based on
              our evaluation as of the Evaluation Date;

              5. The registrant's other certifying officers and I have
              disclosed, based on our most recent evaluation, to the
              registrant's auditors and the audit committee of registrant's
              board of directors (or persons performing the equivalent
              function):

              a) all significant deficiencies in the design or operation of
              internal controls which could adversely affect the registrant's
              ability to record, process, summarize and report financial data
              and have identified for the registrant's auditors any material
              weaknesses in internal controls; and

              b) any fraud, whether or not material, that involves management or
              other employees who have a significant role in the registrant's
              internal controls; and

              6. The registrant's other certifying officers and I have indicated
              in this quarterly report whether or not there were significant
              changes in internal controls or in other factors that could
              significantly affect internal controls subsequent to the date of
              our most recent evaluation, including any corrective actions with
              regard to significant deficiencies and material weaknesses.

              Date: November 14, 2002

              /s/ Matthew Hale
              ----------------
              Chief Financial Officer


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