First Data’s Finances Continue To Brighten as New Clover POS Products Debut

Processing giant First Data Corp. didn’t manage to record a second consecutive profitable quarter, but its financial picture did continue to brighten. Simultaneously, First Data officially launched two new, smaller-footprint products in its Clover line of mobile point-of-sale technology.

The Atlanta-based company on Monday announced it had taken a $112 million loss in the quarter ended March 31, down from $201 million in red ink in the same period in 2014. In the fourth quarter, First Data had posted net income of $12 million, its first quarterly profit since 2007.

With its first-quarter results, First Data also introduced a new profit measure intended to better reflect recurring earnings. According to this new measure, the company posted $40 million in adjusted net income, a $49 million swing from a negative $9 million a year ago.

All told, First Data’s adjusted revenue totaled $1.68 billion, up 2% from $1.64 billion a year ago.

First Data’s biggest unit, its Merchant Solutions segment, posted $888 million in revenue, up 4% from a year ago. The rise was driven largely by merchant-acquiring revenue, which increased 6%, and revenue growth in new products, according to executive vice president Himanshu Patel, who spoke during a Monday afternoon conference call to discuss the company’s results.

The newest products are Clover Mobile and Clover Mini, two variants in the Clover line, which represents a major effort by First Data to leverage an industry trend toward mobile, app-based POS technology. The new products are meant to appeal to merchants who want systems that occupy a smaller POS footprint than the full-scale Clover Station, according to Patel. With these new Clover products, the full product line “covers the waterfront for most of the markets we want to touch,” he noted.

Patel also referred to work First Data is undertaking to expand and improve its Star debit network, which processes PIN-debit transactions at the point of sale and at ATMs. “Star is receiving a healthy amount of investment,” Patel said, without giving details.

The Financial Services segment, of which Star is a part and also provides processing services for card issuers, saw revenue grow 7% year-over-year to $372 million. The International unit, meanwhile, posted $398 million in revenue, a 5% drop.

First Data paid $407 million in interest expense in the quarter, down from $467 million in 2014. The company has been chipping away at the huge debt it incurred eight years ago in a $29 billion leveraged buyout led by Kohlberg, Kravis, Roberts & Co. According to a timeline provided by the company and running through 2022, no significant debt maturities are expected until 2017, when $1.46 billion falls due, followed by $5.94 billion in 2018.