First Data Corp. (NYSE: FDC) is a payment-processing company that offers retailers card and mobile payment acceptance capabilities for online and point-of-sale (POS) transactions. First Data is one of the largest processing companies in the world and provides these services to approximately 6 million retail locations and more than 4,000 financial institutions in 100 countries. Speaking to its immense size, the company processes 2,800 transactions per second and $2.2 trillion in payment volume per year.
Lately, growth has stalled, as fierce competition from deft and disruptive competitors such as Square and Global Payments have hit the company hard. In the third quarter, total segment revenue was $1.9 billion, just a 3% year-over-year increase on an organic constant currency basis. While net income was $296 million, a whopping 124% year-over-year increase, this was largely driven by "a significant discrete tax item" related to its $750 million acquisition of CardConnect earlier in the quarter. The company's free cash flow during the quarter actually dropped to $370 million, a 13% decrease year over year.
To make matters worse, First Data is still saddled with a lot of debt, stemming from its spin-off from private equity group KKR. This debt has acted like a yoke around First Data's neck, as it has prevented the company from investing in growth and innovation as much as it should have been in years past.
Source: Fool.com