B2B Payments

Q3 2016 (Mostly) Hits The Target

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It’s earnings season yet again, and we check in on the performance of some of B2B FinServ’s top players. For the most part, firms hit their targets, though there were some disappointments. Data from WEX, Earthport and SAP looked promising, but could trouble be ahead for LendingTree and American Express?

 

WEX

The commercial card player announced its quarterly earnings report this week with some impressive data points. WEX reported a 9.7 percent increase in payments processing revenue, which hit $146.2 million last quarter. Revenue from its fleet solutions operations spiked by nearly 30 percent to $184.8 million, with payment processing transactions volume seeing 15 percent growth. Meanwhile, its travel and corporate solutions unit similarly saw a revenue increase by 12.1 percent, reaching $63.32 million.

“We exceeded our expectations on both the top and bottom line driven by continued focus on organic growth, execution against our strategic priorities and the performance of our latest acquisition, EFS,” said WEX CEO Melissa Smith during an earnings call. “Overall, I am very pleased with our performances this quarter in the underlying organic growth, which sets us up for a solid path going forward.”

 

Earthport

The cross-border payments firm released its full-year 2016 report this week, and CEO Hank Uberoi highlighted revenue increases across the globe. For the year ended June 30, 2016, Earthport saw a 64 percent increase in payment volume, hitting $11 billion this year. The firm also reported what it said is a “record number” of transactions processed, reaching 6.6 million, an 89 percent increase from last year. Uberoi pointed to strategic investments in North America and Europe this fiscal year that helped the company gain traction, though didn’t specify which deals; Earthport has recently made deals with Aftab Currency Exchange Limited, Ria Money Transfer and others. The company also reported a 91 percent increase in the number of transactions processed for Q1 FY2017 compared to the same period a year before.

 

LendingTree

In what is perhaps more evidence of the U.S.’s slumping alternative lending industry, LendingTree missed the mark with its Q3 figures, sending stocks plummeting this week by as much as 18 percent. While the company reported a 36 percent sales increase compared to Q3 2015, analysts had set higher expectations: LendingTree recorded $94.6 million in revenue for the quarter, short of analysts’ $96.9 million forecasts.

For LendingTree Founder, Chairman and CEO Doug Lebda, the quarter was one to celebrate. “The third quarter’s results once again demonstrate our ability to perform through varying market environments,” he said in a statement. Small business finance may be a bright spot for the company: LendingTree reported more than 200 percent growth in small business loan revenue in the quarter.

 

SAP

The enterprise cloud conglomerate didn’t “wow” investors but still reported strong growth. SAP saw a 24 percent increase in new cloud bookings for Q3, while cloud subscriptions and support grew by 28 percent. With an 8 percent increase in revenue from a year ago, hitting $5.9 billion, SAP found Asia-Pacific to be its most successful region in terms of revenue growth, up 13 percent. The Americas saw a 9 percent increase in revenue, while EMEA saw 6 percent.

Despite the positive figures, some analysts aren’t convinced that SAP is performing as well as it could or should. Specifically, analysts questions the growth rate of adoption of SAP’s latest HANA solution and noted a deceleration in cloud bookings. Still, SAP has raised its full-year outlook.

 

American Express

Amex reported encouraging Q3 2016 results, with a $200 million decrease in segment expenses and revenue at $7.77 billion — slightly below target. Stocks spiked by 5 percent after the stats were released, but analysts largely attributed this confidence to strong consumer spending behavior. According to American Express, consumer spending for the firm is “on track” with expectations.

But when it comes to the card giant’s corporate services, things aren’t looking as bright. Net income for American Express’ Global Commercial Services unit stayed flat at $466 million, with total revenues net of interest expense also remaining unchanged at $2.4 billion. Could this signal a slowdown in Amex’s commercial card strength?

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 Pay Advances: The Gig Economy’s New Normal, a PYMNTS and Mastercard collaboration, examines pay advances – full or partial payments received before an ad hoc job is completed – including how gig workers currently use them and their potential for future adoption.

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