Ingenico Reports 135% Growth In First-Half Net Income

Ingenico S.A.’s strategy of building recurring, services-based revenue appears to be paying off.

The France-based point-of-sale terminal maker July 29 reported net income of $14.6 million for the first half of 2010, a 135% increase from the $6.2 million during the same period last year. Revenue totaled I $516.6 million, up 24.8% from $414.1 million.

 “Their core business for payment terminals is doing well in most regions of the world,” Gil Luria, vice president of equity research at Wedbush Securities Inc., a Los Angeles-based equity research firm, tells PaymentsSource. Ingenico’s transaction-based business acquisitions are performing well, too, he says.

“Their [profit] margins are going up as they get into better and better businesses,” Luria says.

In June, Ingenico announced it anticipates generating 1 billion euros ($1.2 billion) in annual revenue by 2013 (see story). 

Much of the Ingenico’s forecasted growth will come from recurring revenue, such as transactions from easycash Beteiligungen GmbH, a Germany-based payment processor Ingenico bought in 2009 (see story). 

Thus far this year Ingenico has acquired Transfer To, a Singapore-based mobile phone top-up company, and First Data Ibérica, a privately-owned petroleum industry payment company based in Spain. The company is not affiliated with Atlanta-based First Data Corp., which sold its 50% ownership in the company in 2008, a First Data spokesperson says.

“They’re buying a local presence with local companies,” Luria says.

But the strategy also may open Ingenico to its competitors, suggests George Sutton, senior research analyst at Craig-Hallum Capital Group LLC, a Minneapolis-based investment firm.

“Ingenico’s active [merger-and-acquisition] strategy is showing an interesting transition into a broader range of value-added services,” Sutton tells PaymentsSource. “While these moves are proving to help the reported results, we continue to hear from the point-of-sale competitors that the Ingenico strategy shift is opening up sizeable new opportunities for share-taking.”

Ingenico’s primary competitors, Scottsdale, Ariz.-based Hypercom Corp. and San Jose, Calif.-based VeriFone Systems Inc., similarly are concentrating on building recurring revenue.

One of Hypercom’s most-recent initiatives involves Phoenix Managed Networks LLC, a company formed late last year through a joint venture with The McDonnell Group LLC to run Hypercom’s HBNet transaction-transport business (see story). 

Hypercom expects its transaction-transport service, which provides data-communication links for transaction-based applications to such diverse industry players as payment processors, financial institutions and retailers, to get a huge boost from the new venture. Hypercom has a 40% stake in Phoenix Managed Networks.

VeriFone is building its taxi business for payment acceptance and in-taxi advertising. That business unit has gone from generating nothing three years ago to a projected $60 million in annual revenue this fiscal year, which ends Oct. 30 (see story).

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