CyberSource Volume Jumps 47%, While Acquiring Expands Fast

CyberSource Corp., a publicly held Internet gateway for online merchants, reports it processed 147.2 million transactions in the second quarter, up 47% over the year-ago period and 7% over the first quarter. The Mountain View, Calif.-based company, which reported the transaction figures as part of its second-quarter earnings release last week, attributes the increase in part to some 2,600 new merchants added during the quarter, most of which are small businesses, bringing the total merchant base to 10,000. By contrast, the company recruited 600 new customers in the second quarter of 2004. The company offers its gateway as a software product or on a hosted basis. “Our transaction concentration is becoming more dispersed over a larger base,” said William S. McKiernan, chairman and chief executive of CyberSource, in a conference call with with analysts. “Our installed base is growing.” Most of CyberSource's transaction volume remains U.S.-based, with 17 million transactions in the second quarter coming from the United Kingdom. CyberSource also reported its rapidly growing acquiring business now accounts for 20% of its revenues, up from 5% a year ago. Second-quarter revenue totaled $11.9 million, up 38% over the year-ago period, while net income rang in at $1.4 million, a 151% jump. McKiernan told analysts that merchant losses have been “negligible” for the company, despite this pronounced growth in acquiring. “We have been conservative in the merchants we have chosen to underwrite,” he said. He added, in answer to analysts' questions, that the company doesn't rule out buying an independent sales organization to bolster its growth in acquiring. “We're always looking for ways to expand our sales reach,” he said. Asked by Digital Transactions News for further details, a company spokesman said later the company has taken no steps toward an acquisition. He added the company is no more inclined toward such an acquisition now than it has been in previous months.