TSYS Q3 Marked By Transactions, Card Growth

Wall Street Reform

On Wednesday (Oct. 25), TSYS reported earnings results that showed organic revenue growth across its payments processing and card segments.

TSYS earnings came in at $0.88 a share on an adjusted basis, $0.07 better than Wall Street predicted, and revenues on a net basis were up 8 percent to $852.7 million.

Of that top line, Issuer Solutions was 46 percent of the tally, Merchant Solutions 33 percent and Netspend the remainder.

Within the Issuer Solutions segment, the company said it had a record number of accounts on file.  The number of accounts at quarter’s end totaled 562.1 million, up 10 percent, while in constant currency the revenues gleaned from this segment showed 5.8 percent growth to $401.1 million, and total transactions were up 8.6 percent. Core processing activity remains strong, according to remarks on the analyst conference call by M. Troy Woods, CEO. Woods also said on the call that business development included contract extensions with Green Dot and M&T Bank.

During the call, Troy Woods stated that key technology initiatives in the issuer segment included technology tied to fraud and risk management. During the quarter, the company logged its first implementation with risk scoring via machine learning with Foresight Score. The pilot phase has shown users improving fraud detection efforts by 15 percent.

Speaking generally of mobile technology, in response to an analyst question about digital activity, the executive stated that mobile device use for payments at the point of transaction has yet to really take off, but usage is likely to increase moving forward.

In the Merchant Solutions segment, revenue was up more than 7 percent to $281.8 million. Woods noted that international efforts in this segment will be a key focus moving forward, with a callout to movement into Australia via ProPay and the payments facilitator model.

Netspend results were boosted by organic gross dollar volume growth, up 13.7 percent to $7.2 billion. The segment’s revenues were up 15.8 percent to $179.9 million. Within its customer base, while adding another 100,000 demand deposit accounts, Total System has seen its small business gross daily volume grow by 50 percent year over year in the latest quarter. Management said both retail and direct channels showed growth.

Paul Todd, the company’s chief financial officer, said on the call that the firm, boosting its guidance for the remainder of the year, now sees net revenue up 10 percent to 12 percent, with earnings growing faster than that on an adjusted basis from a range of 18 percent to 20 percent.