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 By admin The question is: will the NFC market respond to these alternatives and get organized, or will it continue on its own path? Demand for these services and related mobile money services, such as banking, domestic person-to-person payments, ... Healthcare Store Online | ||
| In Flex We Trust » (Video) Tech Talk Rumor: What Does Siri Know ... By Shotta Dru And will it have new hardware, like an LTE radio for connecting to high-speed networks and an NFC chip for mobile payments? Or those cases that are supposedly made for the iPhone 5? Apple, of course, has remained mum on any and all ... In Flex We Trust | ||
| Analyst: Biometrics Will Become a "Must Have" on All Mobile Devices By Jose Ricardo Whether it is for protecting the physical device or for providing strong authentication and identity verification for a remote service, such as NFC-based mobile payments, mobile phone-based biometrics can offer a wide variety of solutions – the ... Tech 4 Business |
Wednesday, August 1, 2012
Analyst: Biometrics Will Become a "Must Have" on All Mobile Devices
Visa Celebrates Michael Phelps as Most Decorated Olympian of All-Time with Real-Time Congratulatory Commercial
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Visa Celebrates Michael Phelps as Most Decorated Olympian of All-Time with Real-Time Congratulatory Commercial
Select U.S. Fans Who Joined “Global Cheer” Appear in Special Edition Go World Commercial on NBC During Olympic Games Programming
SAN FRANCISCO--()--Visa, a Worldwide Olympic Games Sponsor for 26 years, introduced a new congratulatory advertisement celebrating 19-time Olympic medalist Michael Phelps as the most decorated Olympian of all-time. With last night’s gold medal win in the 4 x 200m freestyle relay, Phelps upped his Olympic medal total to 19, besting the record of 18 career medals set by Russian gymnast Larissa Latynina in 1964. During the London 2012 Olympic Games, Phelps also captured a silver medal in the 4x100m freestyle relay and a silver medal in the 200m butterfly. To view the commercial, click here.
“We’ve collected tens of millions of cheers from fans around the world for Team Visa athletes, including Michael, and are thrilled to feature some of these expressions of support to underscore the impact that cheering has on inspiring athletes to achieve unforgettable performances at the Olympic Games.”
For the first time, Visa used actual video and photo cheers from fans in the U.S. that were submitted via Visa’s Cheer application on Facebook to star alongside Michael Phelps. The spot, entitled “Congratulations Michael,” aired on NBC following his win in the 4 x 200m freestyle relay. Leading up to the London 2012 Olympic Games, Phelps appeared in a number of Go World commercials including The Difference and 100th of a Second and was featured in more than 40 countries as part of Visa’s global marketing campaign.
“We’re honored to celebrate Michael Phelps as the most decorated Olympian of all-time and his memorable and historic Olympic Games performance through our real-time Go World congratulatory commercial,” said Kevin Burke, global CMO of core products for Visa, Inc. “We’ve collected tens of millions of cheers from fans around the world for Team Visa athletes, including Michael, and are thrilled to feature some of these expressions of support to underscore the impact that cheering has on inspiring athletes to achieve unforgettable performances at the Olympic Games.”
Visa’s first congratulatory commercial featuring Michael Phelps aired on NBC following his win in the 200 meter butterfly at the Beijing 2008 Olympic Games. Visa continued this tradition during the Vancouver 2010 Olympic Winter Games, releasing special-edition ads in the U.S. for Julia Mancuso (skiing), Johnny Spillane (skiing), Angela Ruggiero (ice hockey) and Seth Wescott (snowboarding) and in Canada, celebrating the country’s first gold medal on home soil (“First Gold”).
Visa’s Olympic Games-themed integrated marketing campaign for the London 2012 Olympic and Paralympic Games – Go World – is the largest global and most social initiative in company history. The campaign, activated in more than 70 countries, utilizes popular social media platforms, along with television and digital advertising and usage promotions, to turn the passion of fans into online cheers that will help inspire athletes worldwide as they compete at the Games.
The campaign has generated more than 38 million cheers leading up to the London 2012 Olympic Games. Visa reports that the top seven most-active “cheering” countries are the United States, Brazil, Russia, Canada, Mexico, Japan, and Australia.
Fans can continue to voice their support for Phelps, as well as other Team Visa athletes still competing at the London 2012 Olympic Games in the form of cheers by submitting photos, videos and text cheers, performing one-click cheers, and viewing content through Visa’s Cheer application on Facebook and by viewing and sharing video content on YouTube.
Michael Phelps is a longstanding member of Visa’s global athlete support program, Team Visa. For the London 2012 Olympic Games, Visa is supporting 69 Olympic and Paralympic hopefuls (Team Visa London) along with national teams from more than 30 countries, providing financial support and valuable marketing exposure to assist them in pursuit of their Olympic and Paralympic goals.
To learn more about Go World or to view and download images, videos and other assets, visit www.visa.com/olympicmediakit.
About Visa Inc.
Visa (NYSE:V) is a global payments technology company that connects consumers, businesses, financial institutions and governments in more than 200 countries and territories to fast, secure and reliable digital currency. Underpinning digital currency is one of the world's most advanced processing networks--VisaNet--that is capable of handling more than 20,000 transactions a second, with fraud protection for consumers and guaranteed payment for merchants. Visa is not a bank, and does not issue cards, extend credit or set rates and fees for consumers. Visa's innovations, however, enable its financial institution customers to offer consumers more choices: Pay now with debit, ahead of time with prepaid or later with credit products. For more information, visit www.corporate.visa.com.
MasterCard Incorporated Reports Q2 2012 Financial Results
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MasterCard Incorporated Reports Second-Quarter 2012 Financial Results
- Net income of $713 million, or $5.65 per diluted share, excluding a special item
- Net income of $700 million, or $5.55 per diluted share, including a special item
- Net revenue increase of 9%, to $1.8 billion
- Gross dollar volume up 15% and purchase volume up 13%
PURCHASE, N.Y.--()--MasterCard Incorporated (NYSE: MA) today announced financial results for the second quarter of 2012. Excluding a special item, the company reported net income of $713 million, up 17%, and earnings per diluted share of $5.65, up 19%, in each case versus the year-ago period. Including the special item, an incremental $13 million after-tax charge related to the U.S. merchant litigations, the company reported net income of $700 million, or $5.55 per diluted share. The company’s total operating expenses, operating income, net income and earnings per share, excluding the special item, are non-GAAP financial measures that are reconciled to their most directly comparable GAAP measures in the accompanying financial tables.
“Though economic uncertainties continued to persist, we experienced solid volume and processed transaction growth in all regions as we are focused on driving our global business to expand the reach of electronic payments”
Net revenue for the second quarter of 2012 was $1.8 billion, a 9% increase versus the same period in 2011. On a constant currency basis, net revenue increased 13% compared to the same period in 2011. Net revenue growth was driven by the impact of the following:
- A 15% increase in gross dollar volume on a local currency basis, to $890 billion;
- An increase in processed transactions of 29%, to 8.5 billion; and
- An increase in cross-border volumes of 17%.
These factors were partially offset by an increase in rebates and incentives, primarily due to new and renewed agreements and increased volumes.
Worldwide purchase volume during the quarter was up 13% on a local currency basis versus the second quarter of 2011, to $661 billion. As of June 30, 2012, the company’s customers had issued 1.8 billion MasterCard and Maestro-branded cards.
“Though economic uncertainties continued to persist, we experienced solid volume and processed transaction growth in all regions as we are focused on driving our global business to expand the reach of electronic payments,” said Ajay Banga, MasterCard president and CEO. “We are executing on strategic partnerships as demonstrated by our recent announcement with Deutsche Telekom and the completion of AliPay’s integration with the DataCash payment platform, which will expand AliPay’s reach to online retailers outside of China. We also continue to work with government entities around the world, like the South African Social Security Agency, to help them implement more efficient and secure ways to deliver social benefits and to increase transparency and financial inclusion.”
Based on the company’s decision to enter into settlement agreements in the U.S. merchant litigations, the company recorded a $20 million pre-tax charge, or $13 million on an after-tax basis, in the second quarter of 2012. This special item is incremental to the charge taken in the fourth quarter of 2011 to reflect the company’s total financial portion of $790 million in the settlement of these cases.
Excluding the special item, total operating expenses increased 6%, to $826 million in the second quarter of 2012. On a constant currency basis, operating expenses increased 9%. The increase in total operating expenses was primarily driven by higher personnel costs related to strategic initiatives. Including the special item, total operating expenses for the second quarter of 2012 increased 8% versus the year-ago period, to $846 million.
Excluding the special item, operating income for the second quarter of 2012 increased 12% over the year-ago period and the company delivered an operating margin of 54.6%.
MasterCard reported other expense of $1 million in the second quarter of 2012 versus other income of $7 million in the second quarter of 2011. The change was primarily driven by increased expenses from investments in joint ventures.
Including the special item, the effective tax rate was 28.0% in the second quarter of 2012, versus a rate of 31.8% in the comparable period in 2011. The decrease was primarily due to discrete benefits relating to additional export incentives and the conclusion of tax examinations in certain jurisdictions. A more favorable geographic mix of earnings also contributed to the decrease.
During the second quarter of 2012, MasterCard repurchased approximately 1.6 million shares of Class A common stock at a cost of $671 million. Quarter-to-date through July 26, the company repurchased an additional 132,250 shares at a cost of approximately $57 million, with $1.4 billion remaining under the most recent $1.5 billion repurchase program authorization.
Year-to-Date 2012 Results
For the six months ended June 30, 2012, MasterCard reported net income of $1.4 billion, or $11.01 per diluted share, excluding the special item from the second quarter of 2012. Including the special item, diluted earnings per share was $10.91.
Net revenue for the six months ended June 30, 2012 was $3.6 billion, an increase of 13% versus the same period in 2011, or 16% on a constant currency basis. Gross dollar volume growth of 17%, transaction processing growth of 29% and cross-border volume growth of 18% contributed to the net revenue growth in the year-to-date period. These factors were partially offset by an increase in rebates and incentives, primarily due to new and renewed customer agreements and increased volumes.
Excluding the special item, total operating expenses increased 9%, to $1.6 billion, for the six months ended June 30, 2012, primarily due to higher personnel costs related to strategic initiatives. Excluding currency fluctuations, total operating expenses increased 12%. Including the special item, total operating expenses increased 11%.
Excluding the special item, operating income increased 16% for the first half of 2012 versus the first half of 2011, delivering an operating margin of 55.7%.
MasterCard reported total other expense of $2 million for the six months ended June 30, 2012, versus other income of $7 million in the same period last year. This change was primarily driven by increased expenses from investments in joint ventures.
MasterCard’s effective tax rate was 30.0% in the six months ended June 30, 2012, including and excluding the special item, versus a rate of 32.3% in the comparable period in 2011. The decrease was primarily due to discrete benefits relating to additional export incentives and the conclusion of tax examinations in certain jurisdictions. A more favorable geographic mix of earnings also contributed to the decrease.
Second-Quarter Financial Results Conference Call Details
At 9:00 a.m. ET today, the company will host a conference call to discuss its second-quarter results. The dial-in information for this call is 866-383-8008 (within the U.S.) and 617-597-5341 (outside the U.S.) and the passcode is 96010404. A replay of the call will be available for one week following the meeting. The replay can be accessed by dialing 888-286-8010 (within the U.S.) and 617-801-6888 (outside the U.S.) and using passcode 11595402.
The live call and the replay, along with supporting materials, can also be accessed through the Investor Relations section of the company’s website at mastercard.com.
About MasterCard Incorporated
MasterCard (NYSE: MA), www.mastercard.com, is a global payments and technology company. It operates the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter @MasterCardNews, join the discussion on the Cashless Conversations Blog and subscribe for the latest news.
TNS, Inc. Announces Q2 2012 Financial Results
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TNS, Inc. Announces Second Quarter 2012 Financial Results
- Q2 Revenues of $136.9 Million; GAAP Net Income of $0.09 per Share
- Q2 Adjusted Earnings of $0.54 per Share
- Updated 2012 Outlook of $540 - $550 Million in Revenue and $2.17 – $2.32 in Adjusted Earnings per Share
- Aligning Management Structure with the Transition to Growth Services
- Board of Directors Authorizes $30 Million Share Repurchase Program
RESTON, Va.--()--TNS, Inc. (NYSE: TNS), a leading provider of business-critical, cost-effective data communications services for transaction-oriented applications, today reported its second quarter 2012 results.
Henry H. Graham, Jr., CEO, commented, “Second quarter 2012 revenue was slightly below our outlook while adjusted earnings achieved the midpoint of our outlook range. However, there are a number of factors affecting our business that have caused us to reduce our 2012 outlook and take decisive action. These factors fall into three categories: the global economy and its effect on transaction volumes and on the financial services industry; timing changes in the recording of revenue and in the launching of mobile applications products; and areas of challenge, particularly in the Telecommunication Services Division, that we have already begun to address. We are now making changes to our management structure to better navigate the transitions in our business and more effectively sell into our markets. TNS’ suite of network, gateway and applications solutions remains very well positioned across the payments, fraud and mobile markets. We are focused for the remainder of the year on realizing the opportunity of our product investments, continuing to manage our costs and growing earnings. We are confident in our ability to achieve annual adjusted earnings increases going forward while we manage these transitions and gain further traction in growth services.”
Second Quarter 2012 Results
Total revenue for the second quarter of 2012 decreased 3.3% to $136.9 million from second quarter 2011 revenue of $141.6 million. On a constant dollar basis, revenues for the second quarter of 2012 decreased 1.5% to $139.5 million.
Second quarter 2012 GAAP net income was $2.3 million, or $0.09 per share, compared to GAAP net income of $1.1 million, or $0.04 per share, for the second quarter 2011.
Adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA) for the second quarter of 2012 decreased 6.9% to $32.3 million, or 23.6% of revenue, from $34.7 million, or 24.5% of revenue, for the second quarter of 2011. On a constant dollar basis, adjusted EBITDA for the second quarter of 2012 was $33.3 million, or 23.9% of revenue.
Adjusted earnings decreased 3.1% to $13.4 million, or $0.54 per share, for the second quarter of 2012 compared to adjusted earnings of $13.8 million, or $0.54 per share, for the second quarter of 2011. On a constant dollar basis, adjusted earnings increased 8.8% to $14.1 million, or $0.57 per share, for the second quarter 2012.
Adjusted EBITDA, adjusted earnings and adjusted earnings per share are non-GAAP measures. See “Non-GAAP Measures” below for a discussion of these metrics.
The table below discloses adjusted earnings and adjusted earnings per share. Amounts for 2011 exclude results from discontinued operations.
(In millions, except per share amounts)
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| Revenues | $136.9 | $141.6 | (3.3)% | $139.5 | (1.5)% | |||||||||||||||||
| After tax adjusted earnings | $13.4 | $13.8 | (3.1)% | $14.1 | 8.8% | |||||||||||||||||
| Adjusted earnings per share | $0.54 | $0.54 | 0.6% | $0.57 | 12.9% | |||||||||||||||||
| Shares Outstanding | 24.8 | 25.7 | (3.6)% | 24.8 | NA | |||||||||||||||||
Additional Financial Review:
Second Quarter 2012
Second quarter 2012 total revenue decreased 3.3% to $136.9 million from second quarter 2011 revenue of $141.6 million. On a constant dollar basis, revenues for the second quarter of 2012 decreased 1.5% to $139.5 million. Excluding the reductions of $0.8 million in pass-through revenues and $0.8 million from the restructuring from an FSD customer agreement as mentioned below, second quarter 2012 revenue was approximately flat at $141.1 million.
Included in second quarter 2012 revenue are the following components:
- Revenue from the Telecommunication Services Division decreased $0.8 million, or 1.0%, to $70.7 million for the three months ended June 30, 2012, from $71.5 million for the three months ended June 30, 2011.
- Revenue from mobile applications (Cequint) increased $0.8 million, or 29.9%, to $3.6 million due to an increase of $1.1 million in TNS’ wireless caller name product that was introduced in partnership with a tier one mobile operator in the third quarter of 2011. This was partially offset by a $0.3 million reduction in CityID revenues primarily from another tier one mobile operator that is transitioning to TNS’ wireless caller name product.
- Revenue from identity and verification services increased $0.2 million, or 1.0%, to $30.2 million due to $1.8 million from caller name storage contract wins and $1.7 million due primarily to market share gains and volume growth in our caller name access business. These were partially offset by decreases of $1.5 million due to an anticipated peering partner contract price concession as the wireless caller name model transitions, $1.2 million due to lower queries to wireless data, $0.3 million due to the renewal of certain customer contracts, and $0.3 million from lower volumes in legacy payphone fraud and validation services.
- Revenue from network services decreased $1.3 million, or 4.6%, to $26.5 million. Included in this decrease was a reduction of $0.8 million of pass-through revenues from regulatory message signaling unit charges (MSUs). Excluding this decrease, network services revenue decreased $0.5 million, or 1.9%, due to $1.4 million related primarily to price concessions on call signaling routes from industry consolidation. This was partially offset by increased revenue of $0.9 million due to higher demand for connectivity and wireless transport services from mobile customers.
- Revenue from roaming and clearing products increased $0.3 million, or 6.2%, to $5.1 million due primarily to increased demand for data services. This was partially offset by a reduction in traffic from certain customers entering into direct peering relationships.
- Revenue from registry services decreased $0.9 million, or 14.7%, to $5.2 million due to $0.2 million related to the expiry in May 2011 of a transition services agreement acquired through the CSG acquisition and $0.7 million due to price concessions on the renewal of certain customer contracts due primarily to industry consolidation.
- Revenue from the Payment Services Division decreased $3.5 million, or 6.5%, to $49.7 million for the three months ended June 30, 2012 from $53.2 million for the three months ended June 30, 2011. The negative effect of foreign currency translation on a year-over-year basis was $2.4 million. Excluding the effect of foreign exchange rates, revenues decreased $1.1 million to $52.1 million as follows:
- Network services decreased $1.1 million, or 2.7%, to $40.7 million, as follows:
- North America: revenue decreased $0.9 million, or 6.7%, due to $0.5 million in lower average transaction pricing from the renewal of certain customer contracts at the end of the second quarter 2011 and $0.4 million of reductions in dial transaction volumes.
- Europe: revenue decreased $0.2 million, or 0.7%, primarily due to $0.9 million decrease in dial-based network services in the UK, France and Spain, partially offset by an increase of $0.7 million in market share gains for dial services and IP-based network services, primarily in the UK, Spain and Romania.
- Asia Pacific: revenue was flat due to $0.6 million of expansion of a global customer’s agreement to provide dial services in multiple markets in Asia beginning in Taiwan, offset by $0.6 million in lower transaction volumes in Australia.
- Payment gateway services increased $0.6 million, or 6.6%, to $9.6 million. Certain 2011 amounts have been reclassified to the North American region from the Asia Pacific region to conform to current-period regional presentations of revenue. The increase is due to the following:
- North America: revenue increased $0.2 million, or 7.9%, to $2.8 million. Included in second quarter 2011 results was an additional $0.3 million related to the timing of revenue recognition associated with the expansion of an existing customer’s contract; the year-to-date positive revenue change from this contract expansion was $1.1 million. Excluding this timing difference, revenue increased $0.5 million from market share gains in cardholder-not-present services.
- Europe: revenue increased $1.0 million, or 45.7%, to $3.3 million due primarily to $0.6 million in market share gains and to a lesser extent from increases in transaction volumes of cardholder present services from existing customers in the UK and an increase in development revenue of $0.4 million in France.
- Asia Pacific: revenue decreased $0.6 million, or 15.0%, to $3.5 million, due to a $1.0 million decrease in development revenue, partially offset by an increase of $0.4 million related to increased volumes from new and existing customers.
- Payment processing and other services decreased $0.6 million, or 23.8%, to $1.8 million, due primarily to decreases in transaction volumes and to a lesser extent lower average transaction pricing.
- Network services decreased $1.1 million, or 2.7%, to $40.7 million, as follows:
- Revenues from the Financial Services Division decreased $0.5 million, or 3.2%, to $16.5 million for the three months ended June 30, 2012, from $17.0 million for the three months ended June 30, 2011. The negative effect of foreign exchange translation on a year-over-year basis was $0.2 million. Excluding the impact of foreign exchange rates and the impact from the restructuring of an FSD customer agreement mentioned below, FSD revenue increased 2.7%, or $0.5, million to $17.5 million on a constant currency basis as follows:
- North America: revenue decreased $0.9 million, or 8.6%. On October 1, 2011, TNS restructured an agreement with a customer which resulted in a reduction of both revenue and commission payable (which was included in sales, general, and administrative expenses) to this customer by $0.8 million. Excluding this change, revenue decreased $0.1 million, or 1.5%, due to $0.8 million from the loss of endpoints and market data access services believed to be attributable to negative economic factors impacting the financial services industry. This was partially offset by $0.7 million in sales of bandwidth-based services marketed primarily to participants in the foreign exchange community.
- Asia Pacific: revenue increased $0.4 million, or 14.8%, due to the continued expansion of the number of customer endpoints connected to the network, partially offset by disconnects of customer trading connections as the financial services industry consolidates in certain markets in this region.
- Europe: revenue increased $0.3 million, or 7.6%, due to market share gains of $0.4 million which were partially offset by $0.1 million related to the loss of customer endpoints.
- The primary driver was a decrease in the Telecommunication Services Division contribution margins as a result of increased costs in identity and verification services primarily from increased revenue share costs related to the addition of a new wireless storage contract in the second quarter of 2011, and to a lesser extent price compression from network and registry services. This is partially offset by a beneficial product mix shift toward wireless service offerings and, to a lesser extent, from cost saving initiatives to reduce network services costs.
- In addition, Financial Services Division contribution margins decreased primarily due to the loss of equity trading partner connections and, to a lesser extent, to investments to expand the reach and capacity of the network.
- These declines were partially offset by increases in the Payments Services Division contribution margins due primarily to increased scale of the payment gateway services and, to a lesser extent, from cost saving initiatives to reduce network services costs.
Aligning Management Structure with Transition from Core Services to Growth Services
TNS is evaluating its organizational structure with the intention of more directly matching management responsibilities and skill sets to the transition of its business model. As part of this realignment, Dan Dooley, President of the Telecommunication Services Division is leaving TNS, effective immediately, to pursue other opportunities.
Separately, Ray Low, President of the Payment Services Division will, after a transitional period, be leaving TNS. Mr. Graham stated, “During his more than 15-year tenure at TNS, Ray Low was a partner in management and a catalyst for our development and growth in key markets, and was instrumental in establishing our gateway strategy. TNS’ board and management team join me in thanking him for his depth of expertise and service.”
During the abovementioned evaluation, Michael Keegan, President and Chief Operating Officer, will assume day-to-day oversight of TSD and Payments in order to drive further alignment between the two divisions, with these divisions’ product and sales teams reporting to him.
Mr. Graham stated, “TNS is working through the evolution of our business to capture the long-term growth opportunities in the payments, fraud, and mobile markets. A successful transition requires a divisional management structure that properly supports this strategy, matching end market skill sets to our sales and marketing efforts. We are evaluating our organizational structure to streamline and facilitate these plans.”
Board of Directors Authorizes New Share Repurchase Program
TNS’ Board of Directors has authorized a share repurchase program for up to $30 million of the company's common stock subject to compliance with financial and other covenants of the company’s senior secured credit agreement. The program will have a term of three years, expiring July 31, 2015. Under the repurchase program, TNS will repurchase shares from time to time in open market transactions or in privately negotiated transactions in accordance with applicable federal securities laws. TNS plans to fund the repurchase program using excess operating cash flow.
First Data Reports Q2 2012 Results
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First Data Reports Second Quarter 2012 Financial Results
- Second quarter 2012 consolidated revenue of $2.7 billion, down 2%; adjusted revenue of $1.7 billion, up 3%
- Second quarter net loss attributable to First Data improved $18 million to $157 million; adjusted EBITDA of $621 million, up 11%
- Ended the quarter with $1.7 billion in unrestricted liquidity
ATLANTA--()--First Data Corporation today reported its financial results for the second quarter ended June 30, 2012. Consolidated revenue for the second quarter was $2.7 billion, down $64 million, or 2%, compared to a year ago on a $92 million decline in debit network fees partially offset by an increase in merchant acquiring revenue. Debit network fees are passed directly to customers and therefore did not impact operating income. Adjusted revenue, which excludes certain items including debit network fees, increased $43 million, or 3% year-over-year to $1.7 billion.
“There are tremendous opportunities to continue to grow this business through both mobile payments and emerging markets. With our strong customer relationships, distribution channels, assets and people, we are well-positioned to benefit from the changes occurring in the payments space.”
For the second quarter, the net loss attributable to First Data was $157 million, compared to a loss of $176 million a year ago. The change was largely driven by a $56 million improvement in operating income, offset by higher interest rate hedge losses. Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) was $621 million, up $60 million, or 11%, compared to $561 million in the second quarter of 2011, driven by revenue growth in the U.S. business and lower overall expense.
For the quarter, First Data generated $449 million in operating cash flow, after a $254 million increase in interest payments. The company finished the quarter with $1.7 billion in unrestricted liquidity—$223 million in cash available for corporate use plus $1.5 billion under the revolving credit facility.
“For a third consecutive quarter, First Data grew adjusted EBITDA at a double-digit rate on continued merchant acquiring growth and cost management,” said Chief Executive Officer Jonathan J. Judge. “There are tremendous opportunities to continue to grow this business through both mobile payments and emerging markets. With our strong customer relationships, distribution channels, assets and people, we are well-positioned to benefit from the changes occurring in the payments space.”
Segment Results
Retail and Alliance Services segment revenue for the second quarter was $914 million, up $70 million, or 8%, compared to $844 million in 2011. Merchant revenue was up 11% driven by lower debit interchange rates, new processing revenue from the Bank of America Merchant Services alliance and volume growth. Transaction growth was 3%, credit mix was 72% and regional average ticket was $68, down slightly compared to a year ago. Product revenue was up 1% as growth in prepaid open-loop and equipment leasing was offset by declining check-processing as consumers migrate from checks to electronic payments. Segment EBITDA was $415 million, up $63 million, or 18%, compared to 2011 driven primarily by revenue growth. Margin for the second quarter improved to 45%, up 400 basis points. During the quarter, Retail and Alliance Services added 6 bank referral agreements, 1 new revenue sharing agreement and 13 new independent sales organizations.
Financial Services segment revenue for the second quarter was $349 million, up $4 million, or 1%, compared to $345 million in the same quarter of 2011, as new business and volume growth offset lost business and price compression. Active card accounts on file were up 17% compared to the prior year, primarily driven by a new customer conversion. Debit issuer transactions were down 5%, impacted by a large customer deconversion. Absent this impact, debit issuer transactions were up 14% on new STAR network business and continued growth from existing customers. Segment EBITDA was $150 million, up $8 million, or 5%, compared to $142 million in 2011. Margin for the second quarter improved to 43%. During the quarter, Financial Services renewed more than 420 contracts with financial institutions.
International segment revenue for the second quarter was $425 million, down $27 million, or 6%, compared to $451 million in the prior year. On a constant currency basis, segment revenue was up 1%. Merchant acquiring revenue, on a constant currency basis, grew 3% on higher transaction volumes and growth in terminal sales in Latin America partially offset by exiting lower margin business. Issuing revenue, on a constant currency basis, declined 1% as lost business and product mix shifts away from lower margin revenue was partially offset by new business and a software license fee. Segment EBITDA was $118 million, down $2 million or 1%, compared to $119 million in 2011 and reflects a $7 million unfavorable impact from foreign currency. Margin improved to 28%, up 200 basis points.
Recent Events
First Data Acquires Remaining Equity Stake in OmniPay from FEXCO
On April 30, 2012, First Data and FEXCO, a specialist provider of financial transaction processing, foreign exchange and outsourcing services, announced an agreement whereby First Data acquired FEXCO’s equity stake in OmniPay, a global provider of card and electronic payment processing services to merchant acquiring banks, bringing First Data’s ownership to 100 percent. The OmniPay platform will support First Data’s alliances and other strategic business units as part of the company’s technology portfolio.
First Data OfferWise Solution Enables Universal Commerce for Offer Publishers and Merchants
On June 18, 2012, First Data announced the extension of the First DataSM OfferWiseSM solution to all offer publishers and the first wave of First Data’s network of more than four million U.S. merchant locations. Over 500,000 merchant locations are now enabled to leverage the OfferWise solution for customized offers programs and other electronic incentive solutions, with more than 100 publishers using the platform to develop innovative, card-linked services. Introduced in February, the First Data OfferWise solution is an open platform that dramatically simplifies the offer redemption process and creation of card-linked services for consumers and merchants.
Scoutmob Continuing to Disrupt Local Mobile Discovery with First Data Payments Integration
On May 24, 2012, Scoutmob announced it is teaming up with First Data to help close the loop between offer, purchase and loyalty for local merchants. Combining Scoutmob’s strength in mobile offers with First Data’s strength in payment technology presents a powerful opportunity to innovate the way that consumers interact at the point of sale. The partnership with First Data gives Scoutmob the potential to work with First Data’s network of over four million U.S. merchant relationships, allowing Scoutmob to link the consumer’s intent to their resulting purchase with the First Data OfferWise solution.
Non-GAAP Measures
In certain circumstances, results have been presented that are non-GAAP (generally accepted accounting principles) measures and should be viewed in addition to, and not in lieu of, the company's reported results. Reconciliations to comparable GAAP measures are available in the accompanying schedules and in the "Investor Relations" section of the company's website at investor.firstdata.com.
Investor Conference Call
The company will host an investor conference call and webcast on Wednesday, Aug. 1, 2012 at 10 a.m. EDT to review second quarter 2012 financial results. First Data Chief Financial Officer Ray Winborne will lead the call and will be joined by Chief Executive Officer Jonathan J. Judge.
The webcast of the call and accompanying slide presentation will be available on the “Investor Relations” section of the First Data website at investor.firstdata.com.
To listen to the call, dial 888-771-4371 (U.S.) or 847-585-4405 (outside the U.S.); pass code 32545075, at least 10 minutes prior to the start of the call.
A replay of the call will be available through Aug. 31, 2012, at 888-843-7419 (U.S.) or 630-652-3042 (outside the U.S.); pass code 32545075# and via webcast atinvestor.firstdata.com.
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