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First Data stock crashes 9% after missing Q3 earnings estimates

First Data Corporation’s (FDC) shares plummeted over 9% in premarket hours on Monday after the company reported better-than-expected revenues but missed estimates on earnings for the third quarter of 2018.

Total revenues were $2.36 billion, down 22% from the same period last year, impacted by the adoption of a new revenue recognition standard. Total segment revenue grew 4%, on a reported basis, to $2.15 billion from last year.

First Data third quarter 2018 Earnings Infographic
First Data Q3 2018 Earnings Infographic

Net income attributable to First Data improved more than 30% to $401 million, or $0.42 per share, from the prior-year period, primarily driven by gains from some business divestitures and better operating performance.

Adjusted net income dropped 9% to $340 million while adjusted EPS fell 13% to $0.35, primarily driven by a normalized adjusted effective tax rate and unfavorable foreign currency movements.

In the Global Business Solutions segment, the company posted a 10% growth in revenue year-over-year, driven by revenue increases across all regions. The North America region saw strong performance driven by growth in the ISV and agent businesses within the Partner Solutions channel combined with growth in the Direct channel. Revenue growth in EMEA and Latin America was driven by growth in the UK, Brazil and Argentina. The APAC region also saw strength, driven by good growth in India.

In the Global Financial Solutions segment, revenues dropped 2%, with decreases across North America and EMEA. The Latin America and APAC regions posted revenue growth versus the previous year, driven by strength in areas like Argentina and Colombia.

In the Network & Security Solutions segment, revenue dropped 7%. Within the business, EFT revenue grew mid-single digits while Stored Value revenue fell high-single digits, but was up double digits excluding the impact of the non-renewal of a low-margin plastics contract.

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During the quarter, First Data closed the divestitures of its check remittance processing business and its card processing businesses in Greece and Central/Eastern Europe.

First Data revised its full-year 2018 guidance and now expects reported constant currency segment revenue growth to be in the range of 6.3% to 7.3%, reflecting the impact of divestitures done in the third quarter. Reported constant currency segment EBITDA growth is now expected to come in the range of 7.6% to 9.6%.

Adjusted EPS is now expected to be $1.38 to $1.40 versus the previous guidance of $1.42 to $1.47. The revision reflects negative impacts from foreign currency movements and a modest dilutive impact from recent divestitures.


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