Earnings

First Data 1Q Report Beats Street Amid Traction In GBS, Clover Efforts

First Data reported earnings results on Monday (April 30) that topped Wall Street expectations, powered by organic growth and what looks to be a continued turnaround in its North American operations.

The headline numbers disclosed earnings of $0.29 a share, three pennies better than anticipated.

The company said its overall segment revenue grew 5 percent year over year on a constant currency basis to $2 billion.

Within Global Business Solutions (GBS), the top line was $1.3 billion, gathering 7 percent year over year on an organic constant currency basis. North American results grew 4 percent year over year, said CFO Himanshu Patel. Partner services growth was among the fastest-growing subsegments, and small business direct business showed a positive contribution.

“The key message here is that GBS North America has clearly begun to grow as the contribution from strengthening partner solutions and direct channels far outweighs some lingering softness in our JV [(joint venture)] channel, which itself is on a gradual path to recovery,” said the CFO.

As for digitization, the CFO stated that “they are broad-based; there is significant progress on [the digital front]. You’ll see some of that happening in Q2, more of it in Q3. It is very active with the JV alliances. But you’re right that those digitization efforts are also being tested through portions of our direct business — mainly SMB direct, where there [are] a lot of partners that are equally interested in the toolset that we’ve built there.”

Elsewhere, Frank Bisignano, CEO, stated that Clover continues to gain traction, with $58 billion of annualized volume processed, up more than 50 percent year over year. The company plans to launch in Germany later this year, said the CEO, noting that integration of CardConnect and BluePay have left the company well-positioned with strong independent software vendor capabilities.

International businesses, he said, are performing “fabulously,” with $500 million in revenue outside the United States, where growth was 14 percent year over year. Additionally, merchant and client businesses are taking share in developed markets.

Backlog in the enterprise business has increased by more than 50 percent to $300 million year over year.

Digitization for bank partners continues apace, said Bisignano, with JV partners promoting end-to-end digital experiences for signing up merchants, online and in-branch.

Global Financial Solutions (GFS) rose 1 percent to $400 million. Within that segment, management said, North America was down 2 percent on contract renewals, as the company had disclosed previously. In addition, GFS was up 6 percent year over year, led in part by revenue from the Europe, Middle East and Africa region, where growth was 5 percent.

Network Solutions stood at $362 million, with stored value revenues in the mid-teens and exchange-traded funds up mid-single digits, as were security and fraud businesses.

The company raised its guidance for the current year to a range of 6 percent to 7 percent, tightening a previous range of 5 percent to 7 percent. Earnings per share should be a range of $1.42 to $1.47, where consensus stands at $1.38.

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