Alliance Data’s net profit rises 27 percent

Alliance Data Systems, a Dallas-based provider of transaction, credit and marketing services, said its fourth-quarter profit rose 27 percent last year, helped by a strong performance from its marketing services segment.

The company reported net income of $39.6 million, up from a net income of $31.3 million in the fourth quarter of 2005.

Fourth-quarter 2006 revenue rose 25 percent to $524 million, from $421.2 million in the year-ago period.

Alliance Data said its fourth-quarter results were driven by a 40 percent increase in revenue in its marketing services revenue.

The segment, which includes database marketing firm Epsilon and the Canadian Air Miles Reward Program, reported $245.4 million in revenue, up from $175.6 million in the previous year’s fourth quarter.

In the quarter, the Air Miles reward program further extended its track record of more than 20 percent organic growth over the prior year period. The company added Budget Rent a Car to its list of Air Miles sponsors through the signing of a multi-year, Canada-wide agreement.

Alliance said Epsilon – its fastest growth engine – had an outstanding fourth quarter, with a combination of organic growth, new client signings and acquisitions.

For example, during the quarter, Epsilon signed a multi-year agreement to provide integrated e-mail and marketing solutions for Inc., the leading online network for connecting families.

The company also recently announced it had reached agreement to acquire Abacus, a provider of data, data management and analytical services for the retail and catalog industry.

Alliance says the addition of Abacus will complement, expand and strengthen Epsilon’s suite of services.

For the year, Alliance Data reported net income of $189.6 million, up 37 percent from net income in 2005 of $138.7 million. Revenue for the year was $2 billion, up 29 percent from $1.55 billion in revenue in 2005.

The company also said it was raising its full-year 2007 earnings forecast based on its strong performance so far this year.

The company now expects full-year revenue of at least $2.2 billion instead of the previous forecast of $2.1 billion.

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