Despite feeling the effects of a down economy, ISOs continue to propel much of Global Payments Inc.’s revenue growth, executives from the payment processor said last week during the company’s fiscal third-quarter earnings conference call with analysts.
ISOs’ “growth has been impacted significantly” by the recession, Paul R. Garcia, Global Payments chairman and CEO, tells ISO&Agent Weekly in an interview after the conference call. “Here’s the difference: They still grow. They’re still adding business.”
For the quarter ended Feb. 28, Global Payments earned net income of $48.5 million, reversing a $106.8 million loss for the same period last year. Revenue totaled $398.5 million, up 10.8% from $359.5 million.
Revenue was up in all regions. In North America, including Canada and the United States, merchant-services revenue totaled $293.3 million, up 6.9% from $274.4 million. International merchant-services revenue grew by 23.7%, to $105.3 million from $85.1 million.
Global Payments’ transaction volume grew by 14%, but the processor would not release specific totals.
The average ticket size also grew during the quarter, by 6%, from the previous quarter but was down 6% from the third quarter of 2009, Global Payments says.
Global Payments also faces competition from Chase Paymentech LLC, a Dallas-based payment processor that recently began recruiting ISOs.
“We’ll see how this develops,” Garcia says. “We have a lot of competition already.”
Signing ISOs is challenging because often they prefer to stay with their current processors, he says. “We’re all at pricing levels that are pretty comparable. Now it’s about the relationship, products and service.”
Garcia during the call also noted the recent hiring of Jeffrey S. Sloan, a former Goldman Sachs & Co. partner, as president beginning June 1.
“I’ve been recruiting him for 10 years, ever since I met him,” Garcia tells ISO&Agent Weekly. “He knows our space exceedingly well.” Sloan handled Global Payment’s 2000 initial public offering.
Sloan’s expertise will be useful in planning Global Payments’ growth strategy, including acquisitions, Garcia says.
Sloan’s hiring has analysts speculating Global Payments might increase its acquisition activity. “This management hire makes it increasingly likely that Global will become more active in the [mergers-and-acquisitions] front over the balance of … 2010 and into 2011,” Christopher Shutler, an analyst at Chicago-based William Blair & Co. LLC, noted in an April 1 research note .
Sloan’s connections may be the company’s biggest benefit, suggests Robert Dodd, an analyst with Morgan Keegan & Co., a Memphis, Tenn.-based firm. “Anyone can overpay for an acquisition,” Dodd says. “If you don’t want to overpay, you have to have better contacts to find acquisitions without getting into a bidding war.”
Sloan’s experience heading Goldman’s financial-technology group will help in that regard, Dodd says.