Merchant Services Growth Drives Vantiv Q3 Gains

Payments processing firm Vantiv posted third-quarter results on Thursday (Oct. 26) that showed traction in core businesses even as the company prepares, through its deal with Worldpay, to push deeper into eCommerce.

In a news release, the company said that net revenues were up 13 percent to $554 million, edging consensus by roughly $3 million and above the company’s own $544 million to $554 million guidance. Adjusted earnings came in at 90 cents a share, a penny above the Street.

Segment results showed that the merchant unit, which accounts for the bulk of the top line, was up 15.9 percent year over year to $469 million. That increase came as transactions were up nine percent, and with an attendant six percent boost in revenues per transaction. All in, organic growth was in the high single-digit percentages.

Details in the press release showed that in terms of the Worldpay acquisition, there will be modest dilution to earnings in 2018, and then accretion to the bottom line thereafter. Management boosted guidance, seeing 11 percent growth for the top line, where the range had previously been 10 to 11 percent.

On the conference call with analysts, CEO Charles Drucker said that by combining with Worldpay, the company will “leapfrog from our number one position in the U.S. to become a global acquirer with leading eCommerce capabilities.”  He said the two companies are complementary to one another, noting that the eCommerce market is growing twice as fast as the overall payments market and that the combined company will be able to support 300 different payment methods, across 146 countries and more than 120 currencies.

Both Drucker and CFO Stephanie Ferris noted the success the company has had with Moneris and Paymetric, pointing out that client attrition rates have been better than expected.

Digging a bit deeper into the merchant business, management stated that the company continues to see high growth (in excess of 20 percent) from the small- to mid-sized enterprise customer base. Growth in that segment also comes in tandem with the launch of FastAccess Funding, which allows for settlement of transactions in minutes where they once took days, and also allows funds to be pushed to debit cards in real time.

The financial institutions segment saw net revenues decline by one percent, likely a lingering effect of the de-conversion of a major client. Ferris said the segment is expected to return to growth in the second half of 2018, even as the FI business becomes a lesser contributor to the combined Vantiv/Worldpay top line in terms of revenue percentage.