Electronic Checks Help Drive Up Revenue for ECHO

Electronic Clearing House Inc., an electronic transaction processor based in Camarillo, Calif., today announced a 22% increase in revenue in its October to December 2003 quarter over the same quarter in 2002. Revenue for the most recent quarter reached $11.4 million. This result was fueled by increases in both bank card revenue, which went up 15% to $8.6 million, and in check processing, which shot up 53% to $2.7 million. The company reported the jump in check-processing business was attributable to growth in the company's Visa POS check service as well as strong increases in check-conversion and other services based on the automated clearing house. ACH transactions in the quarter ballooned 613% to 7.3 million. Gross profit from processing activity increased to $4.4 million from $2.9 million in the year-ago quarter, representing an increase in gross margin from 31.8% to 38.9%. The company was able to increase gross profitability, it said, because its higher-margin check business now accounts for 24% of revenue, up from 19% a year ago. At the same time, income from operations improved despite a 39% rise in other operating costs, to $1.34 million, as a result of “a substantial increase in personnel costs to undertake training and program implementation” stemming from the Visa POS check service. The company said its expects revenue growth of 15% to 20% for fiscal 2004, which ends Oct. 31. It also expects a gross margin of 36% to 38% “largely due to a recently announced increase in the interchange rates in our bank card business.”