NASHVILLE, TN – 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).
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.
