First Data Narrows Loss as Payments Firm Said to Weigh IPO

Updated on

First Data Corp. narrowed its quarterly loss as the payments company owned by private-equity firm KKR & Co. considers an initial public offering.

First-quarter net loss was $112 million, compared with $201 million a year earlier, the Atlanta-based payments processor said Monday in a statement. Consolidated revenue rose 2 percent to $2.7 billion, according to the company, which has been mired in debt since KKR took it private in a leveraged buyout just before the financial crisis.

First Data is the biggest bet ever by KKR, the firm run by billionaires Henry Kravis and George Roberts. Frank Bisignano, First Data’s chief executive officer since 2013, has sought to boost profitability and has expanded technology offerings to merchants by scooping up startups and partnering with companies including Apple Inc.

“It’s a big task to go from being a processor to being a value-added technology company,” Gil Luria, an analyst at Wedbush Securities Inc., said before earnings were released. “What’s critically important at this point is profitability.”

First Data, which last quarter posted its first profit since being bought in 2007, could go public as soon as this year, people familiar with the matter have said. Boosting annual adjusted earnings before interest, taxes, and amortization closer to $3 billion may increase the chances of an IPO, First Data said last year. In the first-quarter, EBITA fell 8 percent to $563 million, the firm said.

Fraud Prevention

First Data runs a debit-card network and processes bank-card transactions for banks and merchants. The company also helps small businesses detect fraud, and provides data analytics and other services to merchants.

“Our first quarter reflected good business momentum and validated our strategy,” Bisignano, a former JPMorgan Chase & Co. executive, said in the statement. “We continue to invest aggressively in key areas of our business such as distribution and new products, and are beginning to see the revenue growth associated with those investments.”

KKR valued its three investments in First Data at 1.2 times cost as of March 31, after holding them below cost for most of its ownership.

“This is the second consecutive quarter that we’ve written up First Data,” Scott Nuttall, KKR’s head of global capital and asset management, said last month on a conference call discussing first-quarter earnings.

Shares of KKR rose 0.7 percent to $22.77 in New York. The stock has declined 1.9 percent this year.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE