Heartland Payments Systems Inc. posted a $7.5 million third-quarter profit that reversed a $37.1 million loss a year earlier attributable to a $35.6 million charge to cover costs related to a data breach, but at least one analyst was not impressed.

“Revenue missed expectations, while margins remained weak,” David J. Koning, a senior research analyst at Milwaukee-based Robert W. Baird & Co., wrote in a research note.

Revenue for the quarter ended Sept. 30 totaled $499.1 million, up 12.8% from $442.6 million during the same period last year.

Transaction volume for the Princeton, N.J.-based merchant processor set a record at $16.6 billion, up 5.9%, according to Robert Carr, Heartland chairman and CEO.

“Same-store sales [were] up for the second consecutive quarter, and new margin installed, though down relative to a year ago, was still the best since the fourth quarter of last year,” Carr told analysts during a conference call Nov. 3. New margin installations represent the number of new merchants Heartland brings onto its processing network.

The pace of new merchants has been “growing nicely, with September being the best month of 2010 and October close to the best month since 2008,” Carr said.

Carr also expressed optimism that Heartland has put behind it much of its troubles stemming from a data breach announced in 2009 (see story). 

Heartland still is working with some regulators and has a pending issuer class-action lawsuit, but it has settled with the card brands, the last being Discover in September, Carr said (see story). http://www.paymentssource.com/news/heartland-settles-discover-3003169-1.html

Carr anticipates Heartland now will be better able to focus on competing for merchants.

Heartland’s third quarter had some bright spots, as it saw improvement in same-store sales and in the number of new merchants. Still, Koning was disappointed in the company’s volume growth. He had expected transaction volume to grow by 9% instead of the 5.9% than it did.

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