B2B Payments

Heartland SMB Investment Cuts Into Earnings

Heartland is methodically building out its platform to offer a full suite of payments services to small business. While its recent announcement of its e-Invoicing play made news, its investment in a small business payments platform last year failed to contribute to earnings this quarter, and Q1profits dropped by 24 percent.

New business initiatives helped drive Heartland Payment Systems’ first quarter performance, as total revenues jumped 4.4 percent, to $523.3 million from $501.2 million during the same period ended March 31 last year.  Net revenues rose 5.9 percent, to $155.5 million.

The company’s profit dropped 24 percent, to $14.9 million from $19.6 million.

Last year, Heartland invested $20 million in point-of-sale tablet provider Leaf. However, the company reported that results from Leaf reduced earnings by 5 cents per share. Despite the drop in Leaf sales, the new margin installed hit a record of $19.8 million, a 24.3 percent increase from the first quarter in 2013.

“We continue to deliver record earnings, notwithstanding the negative impact of the severe winter weather on the entire industry,” Robert O. Carr, chairman and CEO, said in the company’s 8K filing with the Securities and Exchange Commission.  “The strong momentum of our sales efforts will begin to drive faster card processing volume and associated revenue growth as we move through the year.”

Card transaction, processing volume in the small and midsize enterprise (SME) segment was up 3.7 percent, and related net revenue was up 3 percent during the quarter, new CFO Samir Zabaneh said during an April 30 conference call with analysts to discuss the quarter’s earnings.

“The SME card results were impacted by severe winter weather, with same-store sales down 0.2 percentage points, our first quarterly decline since the first quarter of 2010,” Zabaneh said during the earnings call. “However, we see no fundamental change in our outlook for the economy. We continue to expect that same-store sales will increase by 1 percent to 2 percent, and attrition will remain stable during this year.”

On April 27, Heartland announced it was going to offer U.S. customers a cloud-based paperless invoicing and payment solution.  With the new solution, merchant’s customers will have the option to pay using credit or debit cards. They will also have the capability to track an invoice once sent, when their customer received and viewed the invoice, and when the payment was made.

Heartland is hoping that by adding new services, the second quarter can continue to show growth. “Overall, these first-quarter results are encouraging. Our success is a sign of the market’s increasing awareness of the complexity of card processing and the corresponding need to find a trusted, knowledgeable partner,” Carr said. “This growing recognition builds great value both in our franchise and for our shareholders.”

 

 

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