Deal-Maker iPayment Reports Strong First-Quarter Results

Nashville-based card payments processor iPayment Inc. reported financial results today that included a more than doubling in charge volume processed as well as hefty increases in revenue and net income. The company, which closed at the end of 2003 on a $55 million cash acquisition from First Data Corp. that brought it a portfolio 18,000 small merchants served by some 170 agent banks, said it processed $2.863 billion in volume in the first quarter, compared to $1.338 billion in the year-ago period. Revenue climbed 71% to almost $80 million from $46.7 million in the first quarter of 2003, while profit soared to $5 million from $450,000. On the expense side, interchange fees, which account for more than half of iPayment's costs, rose 55% in the quarter to $37.3 million from $24 million. The First Data deal added $4 billion in annual charge volume to iPayment's system and was the latest in a string of deals the 12-year-old company, which went public a year ago, has put together in recent years. Cash flow in the first quarter, the company said, was strong enough to allow iPayment to repay $11 million of the $45 million it borrowed to finance the acquisition from First Data. Further acquisitions may be in the offing. “Looking forward, we remain confident in our ability to execute our profitable growth strategy through our [independent sales organization] and bank channels, with occasional acquisitions in the fragmented small merchant market,” Gregory S. Daily, chairman and chief executive of the processor, said in a statement. The company now processes credit and debit card transactions for more than 92,000 small retailers nationally. In its outlook, the company said it expects to meet its long-term goal for annual growth in revenues of 20%, with 10% to 15% of that stemming from organic growth. For 2004, it said it expects revenue to reach $335 million to $340 million, which would give it a 50% growth rate over the $226 million it took in last year.