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NetSpend's Profits Rise on Direct Deposit Gains

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NetSpend Holdings earned $10.1 million in the fourth quarter of last year, a 5% increase from the same period a year earlier, the company announced Feb. 13.

The prepaid card issuer also said that its earnings per share rose to 15 cents, up from 13 cents per share in the fourth quarter of 2011.

"We ended the fourth quarter hitting all of our targets and delivered strong financial results for 2012," Dan Henry, NetSpend’s chief executive officer, said in a news release. "From the momentum we created last year, we expect a continued fast pace of growth in all areas of our business."

The earnings announcement came after the stock market closed, but Netspend’s share price was up 4% in after-hours trading.

NetSpend’s revenues in the fourth quarter totaled $89.7 million, up 17% from the same quarter a year earlier, according to the company.

NetSpend, based in Austin, Texas, has been seeking to increase its share of the direct-to-consumer market for prepaid cards. In 2011, it announced partnerships with 7-Eleven, Walgreens, CVS and Dollar General, among other retailers.

The company has been focused on getting the users of its prepaid cards to enroll in direct deposit. In 2012, NetSpend saw 25% growth in direct-deposit accounts, Henry said during a conference call with analysts.

NetSpend also released guidance regarding its financial outlook for 2013, saying that it expects revenue to be between $414 million and $424 million. That compares to reported revenue of $351 million in 2012.

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