Magazine article American Banker

eFunds Says Net Surged 48% in the Third Quarter

Magazine article American Banker

eFunds Says Net Surged 48% in the Third Quarter

Article excerpt

eFunds Corp., which provides electronic payments software and outsourcing services, reported strong third-quarter earnings and said the newly acquired WildCard Systems, a prepaid card company, bolstered revenue.

Net income totaled $15.8 million, 48% more than a year earlier, the Scottsdale, Ariz., company said Wednesday.

Revenue fell 4.9%, to $133.2 million, but the year-earlier figure included results from eFunds' automated teller machine business, which it sold a year ago to the ATM operator TRM Corp. for $150 million.

Excluding the divested business but including WildCard, revenue was up about 25%, the company said. It bought WildCard in July.

Net revenue for eFunds' electronic payments segment, which houses the WildCard business, was $71 million, up 45%, chairman and chief executive Paul F. Walsh told analysts during a conference call Wednesday. That includes $20 million of revenue from WildCard and a 21% increase in revenue in eFunds' bank electronic funds transfer processing business.

"I'm pleased to say that the performance of ... [WildCard] is exceeding our original expectations," Mr. Walsh said.

The WildCard operation had a $2.1 million operating loss, but eFunds said it is expected to be accretive to earnings in the current quarter. WildCard is expected to generate net revenue this quarter of $24 million to $27 million.

One positive result from the WildCard deal was the extension of a prepaid card processing contract with Bank of America Corp. to May 2006. "Wildcard had received notice that this contract was going to be terminated at the end of 2005 before we signed an agreement to buy them," Mr. Walsh said. "So we're pleased with the continuing progress of our discussion with this institution."

A weak spot in eFunds' lineup is its software business. Mr. Walsh said software sales were slightly down, and the company is trying to beef up the operation by hiring more people. …

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