Metavante Corp. said that cross-selling helped drive up sales in the second quarter.
“Growth has been across the entire customer base” and “our cross-sales have been very strong,” Metavante president and chief executive Frank R. Martire said Monday on an earnings conference call for the parent company, Marshall & Ilsley Corp. of Milwaukee.
The banking technology vendor’s revenue grew 22% compared with last year’s second quarter, to $373.5 million. Income rose 35%, to $40.4 million, and accounted for about 19.8% of M&I’s net income for the period (see story
Metavante has long employed a strategy of integrating acquired companies and cross-selling their products and services. Mr. Martire said that lately most of the cross-selling opportunity has come from its payment-processing and imaging businesses.
Metavante is more focused this year on increasing revenue than on cutting costs at the companies it has acquired in the past few quarters, Mr. Martire said.
In January, Metavante bought the health-care payments company AdminiSource Corp. of Carrollton, Tex., and in November it bought Link2Gov Corp. of Nashville, a payment services provider for government agencies.
On June 29 Metavante announced it had agreed to buy Vicor Inc., a Richmond, Calif., payment processing software provider. The deal is expected to close in the third quarter but is not expected to have a meaningful effect on the quarter’s earnings.
However, Mr. Martire noted that some products and services could be expanded into additional Metavante businesses to cut costs, such as the processing capabilities of the NYCE debit network. Metavante bought NYCE in 2004 from First Data Corp. and four banking companies that owned a combined 36% stake: JPMorgan Chase & Co., Citigroup Inc., HSBC Holdings PLC, and Bank of America Corp.
JPMorgan Chase, a longtime NYCE customer, is shifting much of its automated teller machine and debit transaction volume from NYCE to First Data and Visa U.S.A. Mr. Martire acknowledged that the move will cut into NYCE’s business.
“We still have a large relationship with JPMorgan Chase,” he said. “Admittedly some of the volume will be taken away,” but JPMorgan Chase “still will be a member of the NYCE system,” he said.
David Konrad, an analyst with Keefe, Bruyette & Woods Inc., called Metavante’s second quarter “pretty solid.”
Its revenue was flat compared with the first quarter, and its net income rose 17%, largely due to a tax credit. Mr. Konrad said it is unusual for second-quarter revenue to be on a par with the preceding quarter, and the jump in income was a pleasant surprise, he said. “As a rule, the second quarter is their slowest,” he said.
Heather Wolf, an analyst for Merrill Lynch & Co., said in a research note published Monday that Metavante’s revenue missed her projection by 2% even though its earnings exceeded her expectation by 7%. But the “shortfall is likely more caused by difficult comparables as opposed to any real weakness in the underlying business,” she wrote.
