Earnings reports reveal strong payments industry

Reports released by major card brands and payment processors show continued growth in earnings and transaction volume. Card companies Visa Inc., MasterCard Worldwide and Discover Financial Services, as well as alternative payment provider PayPal Inc., reported robust increases over 2010 in their latest quarterly reports.

Payment processing companies Heartland Payment Systems Inc., First Data Corp. and Total System Services Inc. (TSYS) also reported healthy growth and increased confidence in the long-term strength of its business.

Following are some of the companies' reported earnings data and perspectives on their results. Categories used were provided by the companies and are not uniform.

Card brands

Visa fourth quarter results, released Oct. 26, 2011:

• Net income: $880 million, 14 percent increase over same quarter 2010
• Earnings: $1.27 per share, 20 percent increase over same quarter 2010
• Revenue: $2.4 billion, 13 percent increase over same quarter 2010
• Payment volume: $970 billion, 13 percent increase over same quarter 2010
• Total Transactions: 13 billion, 9 percent increase over same quarter 2010

Visa 2011 earnings results, released Oct. 26, 2011:

• Net income: $3.6 billion, 22 percent increase over 2010
• Earnings: $4.99 per share, 28 percent increase over 2010
• Revenue: $9.2 billion, 14 percent increase over 2010
• Data processing revenues: $3.5 billion, 11 percent increase over 2010
• Total transactions: 51 billion, 12 percent increase over 2010
• Comment: "Visa continues to deliver strong results, with fourth quarter and full year performance reflecting a business that is both resilient and flexible enough to adapt and flourish in a changing business environment," said Visa Chairman and Chief Executive Officer Joseph Sanders.

MasterCard third quarter earnings results, released Nov. 2, 2011:

• Net income: $717 million, 38.4 percent increase over same quarter 2010
• Earnings: $5.63 per share, 42.9 percent increase over same quarter 2010
• Revenue: $1.8 billion, 27.3 percent increase over same quarter 2010
• Purchase volume: $628 billion, 17.2 percent increase over same quarter 2010
• Processed transactions: 20.5 percent increase over same quarter 2010
• Comment: "We are pleased with our strong results this quarter, which were driven by several factors including double-digit increases in volumes and processed transactions in most regions across the globe," said MasterCard President and CEO Ajay Banga. "Economic indicators across the world remain mixed, with the uncertainties in Europe and the United States weighing on sentiment and dominating headlines. Nonetheless, we continue to focus on displacing cash and winning share across markets."

Discover third quarter earnings results, released Sept. 22, 2011:

• Net income: $649 million, up from $261 million over same quarter 2010
• Earnings: $25.16 per share, up from $14.51 in same quarter 2010
• Card sales volume: $26.3 billion, 9 percent increase over same quarter 2010 (a record)
• Payments services pretax income: $38 million, 3 percent increase over same quarter 2010
• Transaction volume: $45 billion, 15 percent increase over same quarter 2010
• Comment: Discover Chairman and CEO David Nelms said, "We are pleased to report the reemergence of year-over-year growth in Discover card receivables and continued strong growth in our personal loan and private student loan businesses."

Acquirers/processors

First Data third quarter earnings results, released Nov. 2, 2011:

• Net income: $54 million loss, down 88 percent from prior $431 million loss in same quarter 2010
• Adjusted earnings: $564 million, 7 percent increase over same quarter 2010
• Net revenue: $2.7 billion, 4 percent increase over same quarter 2010
• Comment: First Data attributed revenue growth to increases in debit network fees and favorable changes in foreign currency.

TSYS third quarter earnings results, released Oct. 25, 2011:

• Net income: $58.1 million, 27.1 percent increase over same quarter 2010
• Net earnings: $0.30 per share, 30.6 percent increase over same quarter 2010
• Total revenue: $459.7 million, 6.1 percent increase over same quarter 2010
• Transactions: up 12.7 percent over same quarter 2010
• Comment: TSYS indicated this was the seventh consecutive quarter of increased growth and the fourth consecutive quarter with double digit growth.

Heartland third quarter earnings results, released Oct. 27, 2011:

• Net income: $12.7 million, up from $8 million in 2010
• Net earnings: 31 cents per share, up from 20 cents per share in 2010
• Net revenue: $122.2 million, 5.9 percent increase over same quarter 2010
• Processing volume: $17.8 billion, 6.9 percent increase over same quarter 2010
• Total transactions: 873 million, 5.8 percent increase over same quarter 2010 (a record)
• Comment: Heartland President and CEO Robert O. Carr said, "As a result of the success we've enjoyed this year, and our confidence that we will benefit from our strategy to pass all of the savings of new, lower debit interchange fees to our merchants, we are both raising our guidance for the remainder of 2011 and announcing a share repurchase program to create even more value for our stockholders."

Alternative payment provider

PayPal third quarter earnings results, released Oct. 19, 2011:

• Active Accounts: 103 million, 14 percent increase over same quarter 2010
• Revenue: $1.107 billion, 32 percent increase over same quarter 2010
• Net payment volume: $29.3 billion, 31 percent increase over same quarter 2010
• Total transactions: 46 billion, 29 percent increase over same quarter 2010
• Comment: PayPal predicted it will generate more than $3.5 billion in total mobile payment volume in 2011, up from $750 million in 2010.

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