How The TransFirst Acquisition Impacted TSYS’ Q2 Earnings

Back in April, TSYS completed its acquisition of TransFirst, cementing a $2.4 billion cash deal that certainly impacted the second quarter numbers that were reported on Tuesday (July 26). In comments made to analysts and investors to discuss results, M. Troy Woods, chairman and CEO of TSYS, stated that the deal has seen both “integration and synergy goals on track,” with the end result eyeing a single entity for processing needs. The firm said that 80 percent of the net revenues of roughly $795 million came from direct channels, and the overall top line was up 28 percent from the previous year, while net income was down slightly on integration costs.

Within the merchant segment, synergies from the deal should reach $15 million by next year for this segment, which has been boosted by TransFirst to be as high as one-third of the top line, a significant jump from the 19 percent that it had been in the year ago period. The only segment larger than that has been the 37 percent derived from North American issuer processing.

The broadening revenue stream, geographically speaking, has taken business derived from the European landscape to a 7–10 percent range, noted Paul Michael Todd, CFO of the firm. The impact likely would be at the lower end of that range, said the executive.

Looking elsewhere at results, the goal had been to bring EBITDA margin up by at least 100 basis points in the latest quarter, with a 130-point boost in the latest quarter. The adjusted operating margin was 28.6 percent, with an attendant boost of more than 200 points year over year.



The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.

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