Capping off a year that included sizeable new deals for its prepaid debit cards, NetSpend Holdings reported a rise in revenue and profits in the fourth quarter.
The Austin-based financial services company said revenue for the quarter ended Dec. 31 grew 17 percent over the same quarter a year ago to $89.7 million.
Net income for the quarter increased 5 percent from a year ago to $10.1 million, the company said.
“We had a banner year of signing up new partners, executing our retail expansion efforts and growing our business in every channel,” NetSpend CEO Dan Henry said in a statement. “From the momentum we created last year, we expect a continued fast pace of growth in all areas of our business.”
Founded in 1999, NetSpend sells prepaid debit cards and other financial services, targeting consumers who do not have traditional bank accounts but want an option besides cash or money orders.
Prepaid debit cards allow users to deposit cash on the card and then use it for credit or debit transactions. The cards include fees for activation and often a fee each time they are used.
For the year, NetSpend’s revenue was $351.3 million, up 15 percent from a year ago. Net income was $18.9 million, down 43.3 percent. The company said the decline was due to legal expenses and settlements.
Among NetSpend’s new partnerships announced last year:
•An agreement to provide its prepaid cards with TurboTax and QuickBooks products sold by software giant Intuit. The company said the deal gives it access to millions of potential customers.
•An agreement to sell its Visa prepaid debit cards at more than 7,000 Family Dollar stores across the country.
•An agreement to sell Visa prepaid debit cards at more than 5,000 7-Eleven stores nationwide.
NetSpend, which is considered a leader in the prepaid debit industry, is facing increasing competition from banks. Chase has launched a prepaid card called Chase Liquid, while American Express has teamed with Wal-Mart to offer a pre-paid debit card called Bluebird.
“It’s clear that the big banks have served notice that they’re coming in,” said Odysseas Papdimitriou, CEO of CardHub.com, a website that compares card offers. “The message is: you have been making too much money for too long and we’ve noticed you.”
NetSpend, which raised $204 million in an initial public offering in 2010, has about 500 employees, most of them based in Austin. The company plans to add 40 people over the next year, Henry said.
The company’s results were announced after the markets closed Wednesday. NetSpend’s shares closed at $11.42, up 8 cents or .7 percent, in Nasdaq trading on Wednesday.