Eye on Earnings: Ingenico North America up 11%; Sales Up, Profits Down at TSYS

The U.S. migration to the EMV chip card standard continues to pay off for point-of-sale terminal maker Ingenico Group as the company reported a 14% increase in its North America revenue for the first six months of 2016.

France-based Ingenico, in its earnings results released Tuesday, said it recorded 148 million euros (US$162.8 million) in revenue in the first half of 2016, a 14% increase from 132 million euros (US$145.2 million) in the same period a year ago. Second-quarter North America revenue increased 11% from 69 million euros (US$75.9 million) to 74 million euros (US$81.4 million).

Much of that growth is due to the ongoing shift to chip card payments, which requires merchants to install EMV-capable POS devices. And, like its competitor VeriFone Systems Inc., Ingenico experienced some challenges.

“We see the U.S. bottlenecks in the certification process, and it is delaying the migration for small and medium businesses, and we think that EMV migration should also drive sales up in 2017,” Nathalie Lomon, executive vice president of finance and business performance, said during a conference call with analysts.

Currently, slightly more than 50% of merchants have migrated to EMV, she said. While larger retailers have the financial and staffing resources to certify their own EMV POS systems, small and mid-size businesses rely on independent sales organizations to handle the certification, Lomon said. “So it’s taking more time because it’s a brand-new process and that has many customers to deal with,” she said, according to a SeekingAlpha.com transcript. As these merchants contend with EMV chargebacks, they’ll be motivated to adopt EMV, she said. In turn, merchants will demand faster deployment of EMV equipment.

She expects recent card-brand moves to ease certification testing will alleviate some EMV-related chargeback headaches and sees them as positive moves that should accelerate the migration.

Ingenico’s overall revenue for the first half of 2016 was 1.133 billion euros (US$1.246 billion), up 12% from 1.058 billion euros (US$1.162 billion) last year.

Columbus, Ga.-based processor Total System Services Inc. (TSYS) also reported its second-quarter earnings amid its integration of acquirer TransFirst Holdings Inc.

TSYS had quarterly revenue of $1.15 billion, up 66.3% from $692.7 million in the same quarter a year ago. Net income decreased 15.9% from $82.8 million to $69.7 million. The results now include TransFirst, which is well under way with its integration into TSYS, the company noted.

“We have just completed our first quarter of the TransFirst acquisition and we are pleased to report that the integration work and synergy goals are both on-track,” M. Troy Woods, chairman and chief executive, said during a conference call with analysts.

“Both TransFirst and our legacy merchant business are meeting our profit expectations, but given the success of the integration and the movements between our businesses to competitively align our offerings, we already view this business as one entity as opposed to two separate businesses,” Paul M. Todd, senior executive vice president and chief financial officer, told analysts during the call.