First Data Corporation today reported its financial results for the first quarter ended March 31, 2010. Consolidated revenue for the quarter was up 16% to $2.4 billion. Consolidated revenue growth was primarily driven by the formation of the Bank of America Merchant Services alliance which has substantially extended First Data's leadership in merchant acquiring.
Adjusted revenue increased 3% for the quarter due mainly to growth in the Retail and Alliance Services segment and growth in the International segment revenue helped by a weaker U.S. dollar.
For the first quarter, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $424 million, compared with $472 million for the first quarter of 2009. The timing of incentive compensation accruals increased expenses by $37 million year over year and EBITDA was also lower due to the termination of services by Washington Mutual, which was acquired by J.P. Morgan Chase. For the quarter, the net loss attributable to First Data was $240 million, which includes after tax interest expense of $283 million.
"In the first quarter, First Data focused on growth," said Joe Forehand, chairman and CEO. "The consistency of our strategy has positioned us well in an improving economy."
Retail and Alliance Services segment revenue for the first quarter was $737 million, up 7%. Favorable drivers of segment revenue included transaction growth of 9% (excluding the effects of the Bank of America Merchant Services Alliance) and growth in the prepaid and point-of-sale equipment lines of business. During the quarter, Retail and Alliance Services added three revenue share agreements, 14 referral agreements, and 21 new independent sales organizations. Segment EBITDA was $249 million compared with $265 million for the first quarter of 2009. Segment EBITDA declined due to the timing of incentive compensation accruals of $9 million, unfavorable changes in product mix, price compression, and new product development expense. Margin was 33.8%.
Financial Services segment revenue for the first quarter was $346 million, down 7%. The previously disclosed loss of Washington Mutual accounted for $20 million of the decline. Excluding the Washington Mutual termination, segment revenue declined 2%. New business growth was offset by price compression and a decline of 5% in active card accounts on file. Segment EBITDA was $133 million, compared with $162 million for the first quarter of 2009. Segment EBITDA declined due to lower revenue, the timing of incentive compensation accruals and an increase in technology expenses. Margin was 38.5%.
International segment revenue for the first quarter was $392 million, up 15%. Segment revenue on a constant currency basis was up 4%, due in part to strong transaction growth of 14%, a 5% increase in card accounts on file and acquisitions. Segment EBITDA was $78 million, compared with $72 million for the first quarter of 2009. Margin was 19.9%. On a constant currency basis, segment EBITDA was $70 million, down 4%, and margin was 19.7%. Constant currency segment EBITDA decreased primarily due to the timing of incentive compensation accruals offset in part by higher revenue.
Commerzbank Extends Processing Agreement with First Data
On April 15, First Data announced the extension of a debit processing agreement with Commerzbank. Under the terms of the renewal agreement, First Data will continue to provide technical processing for cross-border Maestro transactions for Germany's second-largest financial institution until 2015.
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