First Data Corporation today reported financial results for the third quarter ended September 30, 2014. Consolidated revenue for the third quarter was $2.8 billion, up 3% versus the prior year period. Adjusted revenue, modified for various items such as the exclusion of pass-through debit network fees and postage, was up 3% versus the prior year period to $1.8 billion, driven by 7% growth in Financial Services and 4% growth in International.
For the third quarter, the net loss attributable to First Data was $235 million (adversely impacted by a $260 million charge for the extinguishment of debt), compared to a loss of $220 million in the prior year period. The quarter reflected material year over year improvements in operating profit and a reduction in interest expense. Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) was $656 million, up 5% versus the prior year period due to growth in revenue and positive operating leverage. EBITDA margin for the quarter was 37%, flat versus the prior year period.
For the quarter, the company generated $194 million in cash flow from operations after $630 million in cash interest payments. The company finished the quarter with $1.1 billion in unrestricted liquidity.
“Our results this quarter demonstrate how we are developing innovative products and solutions, collaborating with global brands and strengthening our balance sheet, all while continuing to grow our business,” said Chairman and CEO Frank Bisignano.
Merchant Solutionssegment revenue for the third quarter was $920 million, flat versus the prior year period. Merchant acquiring revenue increased 3% versus the prior year period. Product revenue declined 5% versus the prior year period, adversely impacted by the sale of Electronic Funds Source, LLC, (EFS) as well as the continued decline in check processing, offset by growth in prepaid and equipment. Segment EBITDA was $413 million, up 1% versus the prior year period. EBITDA margin for the third quarter was 45%, flat versus the prior year period. EFS contributed $13 million in revenue and $6 million of EBITDA in the third quarter of 2013.
Financial Services segment revenue for the third quarter was $372 million, up 7% versus the prior year period, the highest year-over-year growth since First Data's privatization in 2007. Growth was driven by the continued benefit of new business wins and growth in existing portfolios. Segment EBITDA was $185 million, up 14% versus the prior year period. EBITDA margin for the third quarter was 50%, up 3 percentage points versus the prior year period, reflecting positive operating leverage.
International segment revenue for the third quarter was $450 million, up 4% versus the prior year period. On a constant currency basis revenue was up 6% versus the prior year period, with merchant acquiring revenue up 5% on volume growth and issuing revenue up 6% on growth in volume and cards on file. Segment EBITDA was $127 million, up 1% versus the prior year period and up 4% on a constant currency basis. EBITDA margin for the third quarter was 28%, down 1 percentage point versus the prior year period reflecting continued investments in new geographies.
First Data Supports Apple Pay
On September 9, First Data announced its collaboration with Apple Pay, a new category of service that will transform mobile payments with an easy, secure and private way to make purchases from a mobile device. First Data's support of Apple Pay will allow it to offer innovative and secure single-touch payment solutions to its acquiring and issuing clients.
Acquisition of Gyft
On August 12, First Data completed the acquisition of Gyft, the leading digital platform that enables consumers to buy, send, manage and redeem gift cards using mobile devices. Gyft's exceptional capabilities, combined with First Data's long-standing leadership in prepaid solutions, create a distinct combination in a rapidly growing market for virtual gift cards. Additionally, in October Gyft became the first gift card solution to enable consumers to buy virtual gift cards with Apple Pay's in-app payment functionality.