The year’s second quarter is a mixed bag for the financial firms servicing businesses. Muted corporate spend tempered American Express’ performance in its commercial card segment, and regulatory uncertainty is on the radar for Fifth Third Bancorp. IBM missed the mark, Kyriba boasted its growth, and SAP has its S/4HANA solution to thank for a strong quarter. Here’s all the financial data you need to know from some of the largest B2B finance and tech businesses.
American Express Global Commercial Services
Overall, American Express surpassed expectations, with analysts tying that success to lending and the ability stay strong despite costly rewards programs. So how did the credit card giant do in the commercial card area?
Card billings increased 5 percent year-over-year, hitting $109 billion, under American Express Global Commercial Services, the division that houses its corporate card products. Billed business increased 4 percent for 1H compared to the same period last year, and net income dropped 13 percent year-over-year to $500 million. According to American Express, the decline is due to the loss of the U.S. Costco card products, bought by Citi last year.
According to CEO Jeff Campbell, larger corporates saw slower spending increases than their smaller business peers.
“As we’ve said for a while now, we expect the large and global client segment to remain slower growth rates as corporations look to manage their travel and entertainment expenses,” he said.
Fifth Third Bancorp
Fifth Third beat analysts’ expectations for Q2 2017, despite revenue at $1.5 billion for the quarter, hitting earlier estimates of $1.53 billion. Net income improved 4 percent year-over-year, while non-interest expenses declined 3 percent, the bank said.
In its quarterly earnings call, Fifth Third had President and CEO Greg Charmichael reflect on the quarter and the current market climate.
“Given the political gridlock, the timing of potential changes to the regulatory environment remains uncertain, and expectations for more fiscal stimulus have been tampered,” he said last week. “On the other hand, the data on jobs growth is encouraging and we, like other banks, are benefiting from recent Fed rate hikes. A strong jobs outlook combined with modern inflation and healthy consumer spending also leads me to believe the yield curve will steepen as long-term interest rates begin to rise.”
The cloud treasury and finance management solution provider released its 1H 2017 results last week, highlighting what Kyriba said was record sales growth at 43 percent for the half. The company also said it added more than 100 new customers during the period, and although the firm stayed mum on any specifics when it comes to finances, its CEO said the company’s growth during the first half of the year can be attributed to “our ability to help modern CFOs and finance teams streamline key processes, protect against loss from risk and fraud, and drive strategic growth through improved decision support and forecasting.”
Kyriba also identified market volatility in both the currency and political markets, as well as “rampant fraud and increasing regulatory requirement” that are pushing businesses to adopt cloud-based cash management solutions.
Earnings may have surpassed expectations for IBM at $2.95 a share (surpassing forecasts of $2.75 per share), but the company missed the mark when it came to revenue, reports last week said. Analysts had pegged IBM revenue for Q2 2017 to hit $19.5 billion, but the company reported $19.29 billion, down year-over-year from $20.2 billion. Still, IBM said it was pleased with the results as 1H revenue was up 8 percent, with Q2 revenue up 5 percent.
“We finished the first half of the year where we expected, including continued strong free cash flow generation,” said IBM Senior Vice President and Chief Financial Officer Martin Schroeter in a statement. “This allowed us to continue strong R&D investment levels and return more than $5 billion to shareholders through dividends and gross share repurchases during the first half.”
SAP is thanking S/4HANA for its strong performance in Q2. The company posted a 5 percent revenue increase, a new record for the company previously set by Q2 2016. The cloud giant also said it landed a 33 percent increase in new cloud bookings and a 70 percent year-over-year increase in more S/4HANA customers. The numbers weren’t all rosy, though, with operating profits down 27 percent.
In a statement, CFO Luka Mucic described the data as reflecting SAP’s “fantastic momentum.”
“Our cloud and software revenue growth rate in the first half of the year is at the upper end of our full-year guidance range,” he said.