First-quarter growth in transaction-processing volume and same-store sales reflect strengthening business conditions and contributed to improved quarterly earnings for Heartland Payment Systems Inc., the company announced May 6.
The Princeton, N.J.-based transaction processor reported net income of $14.2 million, a vast improvement from the $2.5 million net loss for the same quarter ended March 31 last year. Net revenue reached $103.8 million, up 5.4% from $98.5 million.
“Growth rates in our two key performance metrics, transaction-processing volume and same-store sales, both improved each month in the quarter, reflecting our merchants’ strengthening business conditions,” Robert Carr, Heartland chairman and CEO, said in a statement. “The recovery in same-store sales is encouraging, including positive March same-store sales, the first monthly increase in nearly two years.”
Small and midsize merchant transaction-processing volume increased 7.2%, to $14.4 billion from $13.43 billion during the same quarter last year. The increase primarily is because of the increase in Discover Financial Services and American Express Co. activity and growth in other small and midsize merchant volume, according to Heartland.
Though same-store sales were down, they improved 370 basis points to minus-1.5% from minus-5.2% in the fourth quarter of 2009. It is the third quarter of sequential same-store sales improvement, notes Heartland. A basis point is one-hundredth of a percentage point.
“The improvement in same-stores sales is a step in the right direction,” says Meghna Ladha, associate analyst with Susqueheanna Financial Group LLLP, a Bala Cynwyd, Pa.-based trading firm. While same-store sales remained negative for the quarter overall, Heartland reported positive same-store sales in March after negative sales in January and February, says Ladha. “They are improving,” she says.
Heartland expects business conditions to continue improving.
“With the economy showing signs of stabilization, if not improvement, transaction-processing volume is expected to experience better performance as cards increasingly become the payment vehicle of choice,” Carr said.