First Data Sees Clover Volumes Up 50 Pct Year Over Year

Payments processor First Data posted results that topped expectations, buoyed by continued traction in its Global Business Services (GBS) segment, and with continued double-digit growth for Clover, its point-of-sale (POS) business.

The general numbers that beat the Street: Adjusted earnings per share came in at $0.39, two pennies better than expected, while revenues were $2.5 billion, as compared to consensus of $2.4 billion.

Additional financial data that accompanied the general earnings release showed that the company’s segment revenues were up 6 percent overall, as defined on an organic constant currency basis, to $2.2 billion. Breaking that down a bit, GBS was up 8 percent on the same organic basis, with that segment at the largest contributor to the top line, at $1.4 billion. Growth in other segments stood in the low single digits, with Global Financial Services (GFS) up 4 percent to $414 million, and Network and Security Solutions showing 3 percent growth to $371 million.

Management noted after the release, and during the conference call with analysts, that growth has been seen over broad economic regions, and that Europe and, notably, Latin America had seen strong traction through the quarter.

Speaking specifically to Clover, CEO Frank Bisignano stated that Clover is “well-positioned in the market” and has been processing in excess of $65 billion in transaction volume on a global basis, up 50 percent year over year.

Distribution partnerships are showing a boost in digital signups, and First Data is moving beyond European focus into countries such as Argentina and Canada. Digital initiatives are just beginning, Bisignano said, in terms of a timeframe, with benefits to accrue to First Data beginning next year.

Regional Strength

North American revenues gathered 6 percent growth on an organic basis, with partner solutions acting as a tailwind. The joint venture business continued its slight decline, which had been expected, and where the company expects to see “gradual” recovery. Within GBS, North American transaction growth was 8 percent, an acceleration versus previous quarters, where that tally has been 6 percent, driven by large merchants.

International revenues now stand at $500 million, up 16 percent year over year. International growth helped spur the GFS segment results, where APAC regions saw 13 percent gains and APAC stood at 25 percent.

Turning to competitive dynamics, Bisignano and CFO Himanshu Patel said the company is grabbing share in the independent software vendor (ISV) space. International growth has been strong in Brazil, and Bisignano pointed to “robust revenue growth” in excess of 50 percent, with 94 ISVs signed up in the quarter.

Management also stated on the call, in reference to a question of regulatory oversight in the U.K. that might touch on merchant acquisition, the country accounts for less than 2 percent of sales, and thus such impact would not be material.