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TSYS Faces Pricing Pressure in Q2 2014 Growing Revenues 34.2% by Acquisitions and Reduced Pricing

TSYS has announced Q2 2014 revenues, for the period ending June 30, 2014, of $538.1m, up 34.2% year-over-year. Revenues including reimbursables were $602.0m up 30.4% year-over-year.

Q2 2014 revenues (and revenue change) by activity, excluding reimbursables, were:

  • North America: $233.2m (+8.7%)
  • International: $84.7m (+10.6%)
  • Merchant services: $108.3m (-4.1%)
  • Netspend: $116.8m (n.m., acquired Q2 2013)
  • Intersegment: ($5.1m) (-59.1%).

TSYS grew its revenues slower than it grew its transaction volumes in:

  • North America (transactions +20.7%)
  • International (transactions +13.3%)
  • Merchant services (transactions -8.0%, a slower shrink)

TSYS is facing pricing difficulties in its core businesses and volume/revenue shrink in what should be its primary growth engine. Its overall revenues have primarily grown due to its acquisition of Netspend.

TSYS has announced a new CEO (starting on July 31, 2014) who will face the task of putting its organic business back on track for revenue growth at profitable margins. Since the payments market is strong overall, if TSYS focuses on aggressive contract pursuits at good prices, it should be able to resume revenue growth with good margins. 

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