Heartland Payment Systems is making investments in tablet technology to attract merchant clients while combatting mobile payments startups.
"Heartland is making progress in creating an open platform that we feel represents the future of the industry," said Robert Carr, Heartland's chairman and CEO, during the processor's third quarter earnings conference call. Heartland reported record quarterly net revenue of $153.2 million for the third quarter, up 9.5% from the third quarter of 2012. Its net income of $22 million was up 13% from a year earlier.
Recent investments in Leaf and Tabbedout, new partnerships with companies like Bigcommerce, and the introduction of Heartland's SaaS (software as a service) product in Heartland School Solutions demonstrate how Heartland is transforming its business to accommodate the evolution in digital payments, Carr said.
Leaf, through its LeafPresenter tablet and app store, "offers us a truly open system that gives merchants the freedom to work with payments systems that work with their business," Carr said.
Heartland plans to use Leaf's technology as foundation for a wide range of payments innovation from Heartland and outside developers, Carr said. "We will be leveraging Leaf to build an array of value-added apps such as payroll and online ordering apps," he said.
Heartland will work with Tabbedout, a restaurant-focused payments company, on alternative payments acceptance, tokenization, promotions, reservation and waitlist management, e-commerce and business management. "The restaurants will be able to offer targeted rewards and find ways to attract new customers," Carr said.
The company reported growth in small to medium sized enterprise (SME) processing volume was up 3.9% from the third quarter, to $19.6 billion.
Heartland added 22 relationship managers during the quarter and 34 sales people, totaling more than 100 additions to its sales force over the course of the year, Carr said.
For the full year 2013, Heartland expects net revenue to be between approximately $600 million and $605 million, a slight trim off of prior projections of $600 to $610 million. Adjusted earnings are expected to be between $2.30 and $2.33 per share, a slight increase from earlier projections of $2.29 to $2.33.
Carr, who recently agreed to remain CEO for "another five or six years," painted a bullish picture of the company's future.
"We are achieving the kind of production that, if maintained, will lead to faster overall card transaction processing and net revenue growth in the future," Carr said. "The strengths we have built will allow us over the next few years to build a 'business solutions' business and not just a payments business."