Ipayment (NASDAQ:IPMT)
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iPayment, Inc. (NASDAQ:IPMT) today announced financial
results for the first quarter ended March 31, 2005. For the first
quarter of 2005, revenues doubled to $163,363,000 from $79,969,000 for
the first quarter of 2004. Net income increased 37.4% to $6,872,000
from $5,002,000. Earnings per diluted share increased 35.7% to $0.38
for the first quarter of 2005 from $0.28 for the first quarter of
2004.
Commenting on the announcement, Gregory S. Daily, Chairman and
Chief Executive Officer of iPayment, said, "We are proud to report
another quarter of strong, profitable growth. Our growth strategy
remained on track, both through organic channels and acquisitions.
Charge volume more than doubled to $6,248 million in the first quarter
of 2005 from $2,863 million in the first quarter of 2004. Our recent
acquisition of a portfolio of merchant accounts from First Data Corp.
performed as expected in the first quarter and both acquisitions in
the petroleum and convenience store market remain on solid growth
tracks. We continued to streamline operations during the quarter,
successfully converting the processing of certain portfolios serviced
in our Chicago operating center to First Data's platform from higher
cost industry processors. Integrating acquisitions allows us to
maintain lower headcount and increase revenues per employee (average)
by 60%. We closed the first quarter with 346 employees. Looking
forward, we remain confident in our ability to execute our profitable
growth strategy through organic channels and additional acquisitions
in the fragmented small-merchant market."
Outlook
The following statements summarize iPayment's guidance for 2005 as
well as guidance for long-term growth in its revenues and operating
margin. For 2005, iPayment is increasing its target range for annual
revenues to approximately $650 million to $675 million and currently
expects an annual operating margin of approximately 9.5% to 10.0%,
with sequential improvement during the year. iPayment expects net
interest expense of approximately $9.0 million to $9.5 million, an
effective income tax rate of approximately 39%, and diluted weighted
average shares outstanding of approximately 18.5 million, including
662,000 share equivalents from outstanding convertible promissory
notes. iPayment remains comfortable with a range for earnings per
diluted share for 2005 of approximately $1.83 to $1.88. Beyond 2005,
iPayment targets long-term growth in revenues more in line with the
industry growth rate through a combination of internal growth and
acquisitions. iPayment reiterates its long-term target range for its
annual operating margin of 10% to 15% of revenues, with gradual
improvement over time. As in the past, the operating margin may
fluctuate on a quarterly basis, and the percentage may change as a
result of acquisitions with higher or lower operating margins than
iPayment's margins.
The Company will host a conference call to discuss this release
today at 10:30 a.m. Eastern time. Participants will have the
opportunity to listen to the conference call over the Internet by
going to www.ipaymentinc.com or www.earnings.com. Participants are
encouraged to go to the selected web sites at least 15 minutes early
to register, download, and install any necessary audio software. The
online replay will be available at approximately 1:30 p.m. (Eastern
Time) and continue for one week. A telephonic replay of the call will
also be available through May 12, 2005, at 719-457-0820 (Confirmation
Number 4170594).
This press release contains forward-looking statements about
iPayment, Inc. within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934, and
pursuant to the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. For example, statements in the future
tense, words such as "anticipates," "estimates," "expects," "intends,"
"plans," "believes," and words and terms of similar substance used in
connection with any discussion of future results, performance or
achievements identify such forward-looking statements. Those
forward-looking statements involve risks and uncertainties and are not
guarantees of future results, performance or achievements, and actual
results, performance or achievements could differ materially from the
Company's current expectations as a result of numerous factors,
including but not limited to the following: acquisitions; liability
for merchant chargebacks; restrictive covenants governing the
Company's indebtedness; actions taken by its bank sponsors; migration
of merchant portfolios to new bank sponsors; the Company's reliance on
card payment processors and on independent sales organizations;
changes in interchange fees; risks associated with the unauthorized
disclosure of data; imposition of taxes on Internet transactions;
actions by the Company's competitors; and risks related to the
integration of companies and merchant portfolios the Company has
acquired or may acquire. These and other risks are more fully
disclosed in the Company's filings with the U.S. Securities and
Exchange Commission, including without limitation the Company's Annual
Report on Form 10-K for 2004. The Company undertakes no obligation to
revise or update any forward-looking statements in order to reflect
events or circumstances that may arise after the date of this release.
iPayment, Inc. is a provider of credit and debit card-based
payment processing services to over 130,000 small merchants across the
United States. iPayment's payment processing services enable merchants
to process both traditional card-present, or "swipe," transactions, as
well as card-not-present transactions, including transactions over the
internet or by mail, fax or telephone.
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iPayment, Inc.
Financial Highlights
(in thousands, except per share data)
Consolidated Income Statements Three months ended March 31,
----------------------------
2005 2004
-------------- -------------
(Unaudited) (Unaudited)
Revenues $163,363 $79,969
Interchange 97,421 37,315
Other costs of services 48,775 31,702
Selling, general and administrative 3,524 2,886
-------------- -------------
Total operating expenses 149,720 71,903
-------------- -------------
Income from operations 13,643 8,066
Other expense (income)
Interest expense 2,297 710
Other expense (income) 81 (339)
-------------- -------------
Income before income taxes 11,265 7,695
Income tax provision 4,393 2,693
-------------- -------------
Net income $6,872 $5,002
============== =============
Earnings per share
Basic $0.41 $0.30
Diluted $0.38 $0.28
Weighted average shares outstanding
Basic 16,721 16,459
Diluted 18,230 18,050
Percentages of Revenues
Interchange 59.6% 46.7%
Other costs of services 29.9% 39.6%
Selling, general and administrative 2.2% 3.6%
Income from operations 8.4% 10.1%
Effective tax rate 39.0% 35.0%
iPayment, Inc.
Consolidated Balance Sheets
(in thousands)
March 31, December 31,
Assets 2005 2004
------------ ------------
(Unaudited)
Current assets:
Cash and cash equivalents $1,024 $888
Accounts receivable, net 17,330 17,031
Prepaid expenses and other 7,311 6,765
------------ ------------
Total current assets 25,665 24,684
Restricted cash 2,532 3,248
Property and equipment, net 2,895 2,749
Intangible assets, net 215,551 219,331
Goodwill, net 90,260 79,360
Other assets 7,134 6,876
------------ ------------
Total assets $344,037 $336,248
============ ============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $1,898 $2,418
Accrued liabilities and other 9,416 11,377
------------ ------------
Total current liabilities 11,314 13,795
Long-term debt 169,527 168,437
------------ ------------
Total liabilities 180,841 182,232
------------ ------------
Stockholders' equity:
Common stock 132,815 130,507
Retained earnings (deficit) 30,381 23,509
------------ ------------
Total stockholders' equity 163,196 154,016
------------ ------------
Total liabilities and stockholders' equity $344,037 $336,248
============ ============
iPayment, Inc.
Consolidated Statements of Cash Flows
(in thousands)
Three months ended March 31,
----------------------------
2005 2004
------------- -------------
Cash flows from operating activities: (Unaudited) (Unaudited)
Net income $6,872 $5,002
Adjustments to reconcile net income to
net cash provided by
operating activities:
Depreciation and amortization 10,086 4,627
Noncash interest expense 249 141
Changes in assets and liabilities:
Accounts receivable (299) (1,775)
Prepaid expenses and other current
assets (556) (2,067)
Other assets (395) (143)
Accounts payable, accrued liabilities
and other (1,439) 1,383
------------- -------------
Net cash provided by operating
activities 14,518 7,168
------------- -------------
Cash flows from investing activities:
Changes in restricted cash 716 8,001
Expenditures for property and equipment (443) (97)
Acquisitions of businesses, portfolios
and other intangibles (16,556) (295)
------------- -------------
Net cash (used in) provided by
investing activities (16,283) 7,609
------------- -------------
Cash flows from financing activities:
Net borrowings (repayments) on line of
credit 1,000 (11,000)
Repayments of debt and capital lease
obligations - (4,507)
Proceeds from issuance of common stock 901 525
------------- -------------
Net cash provided by (used in)
financing activities 1,901 (14,982)
------------- -------------
Net increase (decrease) in cash 136 (205)
Cash and cash equivalents at beginning of
period 888 733
------------- -------------
Cash and cash equivalents at end of
period $1,024 $528
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