Heartland Payment Systems (HPY) 8-K Heartland Payment Systems Announces 56% Increase in First Quarter Net Income

EXHIBIT 99.1

Heartland Payment Systems Announces 56% Increase in First Quarter Net Income

Processing Volume Grows 21%, Operating Income Up 67%,

Diluted Earnings per Share Up 55%

Board Authorizes 1.1 Million Share Increase to Stock Buyback

Princeton, N.J., May 4, 2007 —Heartland Payment Systems, Inc. (NYSE: HPY), the nation’s sixth largest provider of merchant acquiring services, today announced that net income for the quarter ended March 31, 2007 increased 56% to $6.9 million from $4.4 million in the first quarter of 2006. For the first quarter, fully diluted earnings per share rose 55% to $0.17 from $0.11 in the year earlier period. Results were driven by a 67% increase in operating income, which rose to $10.7 million in the quarter from $6.4 million a year ago, as the operating margin expanded to 15.6% in the quarter from 11.4% in the first quarter of 2006. First quarter 2006 operating income and operating margin was reduced by the impact of a $2.0 million pre-tax non-recurring charge to reflect a change in estimate of the amount of accrued on-line debit interchange expense. Also, first quarter 2006 net income benefited from a pre-tax gain of $0.8 million recorded in other income resulting from a cash legal settlement.

Robert Carr, Chairman and CEO, said, “We continue to grow faster than the industry with a straightforward strategy dedicated to providing Main Street merchants with the same competitive edge enjoyed by major retailers with sophisticated internal purchasing organizations. At the heart of our success is a dedicated and motivated sales organization, which increased to 1,480 this quarter and installed a record number of new merchants in our seasonally slowest quarter. We are leveraging this growth with some of the industry’s most advanced technology. In the first quarter, 81% of new merchants installed and 71% of total transactions were on HPS Exchange. In addition, the performance of our Passport back end processing system continues to improve, with no significant added costs. As a result of the increasing efficiency of our technology investments, processing and servicing expense ratios are trending down, a key to driving further expansion in our operating margin. With the industry’s leading customer-focused sales organization and our state-of-the art processing and customer service infrastructure, we have developed a winning combination that should enable us to continue to gain market share and create value for our shareholders.”

Total revenues in the first quarter were $284.2 million, up 20% compared to $236.9 million in the first quarter of 2006. Processing volume for the three months ended March 31, 2007 increased 21% to $11.2 billion from $9.2 billion during the same period in 2006. The Company’s active merchant count rose to 144,000 at March 31, 2007, a 21% increase over the past twelve months. Same store sales at our installed base rose 3.4% during the quarter and continue to make a meaningful contribution to the Company’s growing processing volumes.

Mr. Carr continued, “Clearly, our transparent, Fair Deal pricing philosophy has enabled us to shift the merchant buying decision to a more comprehensive value proposition. The ability to add more Main Street merchants to the Heartland family enables us to leverage our efficient, end-to-end processing and servicing infrastructure, enhancing our customer relationships, thereby further strengthening our franchise and creating long-term shareholder value.”

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FULL YEAR 2007 GUIDANCE:

The Company is reaffirming 2007 full year guidance. We expect net revenue (total revenues less interchange, dues and assessments) to grow by 21% - 23%; operating income as a percentage of net revenue to be 19% - 21%; a tax rate of approximately 37%; and earnings per share of $1.00 - $1.05, which excludes $0.04 per share of after-tax SFAS No. 123R stock-based compensation expense currently anticipated for fiscal 2007.

BOARD INCREASES SHARE REPURCHASE AUTHORIZATION AND DECLARES QUARTERLY DIVIDEND

The Company also announced today that its Board of Directors has authorized a 1,100,000 share increase to the current share repurchase authorization, to a total of 2,000,000 shares. Further, the Company has been authorized to use general corporate funds for any share repurchases.

The Company also declared a quarterly dividend of $0.05 per common share. The dividend is payable to shareholders of record on May 25, 2007 and will be paid on June 15, 2007.

Conference Call:

Heartland Payment Systems, Inc. will host a conference call on May 4, 2007 at 8:30 a.m. Eastern Time to discuss financial results and business highlights. The conference call may be accessed by calling 973-633-8200 at 8:25 AM Eastern time on May 4, 2007. Please provide the operator with PIN number 8728655. The conference call will also be Web cast where it can be accessed on the investor relations portion of Heartland’s website at http://www.heartlandpaymentsystems.com.

A digital replay of the conference call will be available within two hours of the conclusion of the call and will remain available through Thursday, July 4, 2007. The number to call for the taped replay is 973-341-3080 and the conference PIN 8728655. The webcast will also be archived within two hours of the live call on the investor relations portion of the Company’s website and will remain available through Thursday, July 4, 2007.

About Heartland

Heartland Payment Systems, Inc. (HPS), a NYSE company trading under the symbol HPY, delivers credit/debit card processing and payroll solutions to over 144,000 small to medium-sized merchants throughout the United States. HPS also provides additional services to its merchants such as gift and loyalty card programs, paper check authorization, and sells and rents point-of-sale devices and supplies.

With over 1,450 sales and servicing professionals nationwide, HPS builds long-term business relationships in local sales territories, providing merchants with enhanced technology tools that assist them in more effectively operating their businesses.

Heartland processed its first transaction in 1997, and, since 2000, has grown at a compound annual rate of more than 30% to become the sixth largest merchant processor in the United States and fifteenth largest merchant processor in the world.

http://www.heartlandpaymentsystems.com

Forward-looking Statements:

This press release may contain statements of a forward-looking nature which represent our management’s beliefs and assumptions concerning future events. Forward-looking statements involve risks, uncertainties and assumptions and are based on information currently available to us. Actual results may differ materially from those expressed in the forward-looking statements due to many factors. Information concerning these factors is contained in the Company’s Securities and Exchange Commission filings. We undertake no obligation to update any forward-looking statements to reflect events or circumstances that may arise after the date of this release.

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CONTACT:

Joe Hassett or Paul Johnson

Gregory FCA

27 West Athens Ave.

Ardmore, PA 19003

Tel: 610-642-8253

Email:Heartland_ir@gregoryfca.com

Tables Follow

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Heartland Payment Systems, Inc. and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share data)

(unaudited)

	Three Months Ended March 31,
	2007			2006
Total Revenues	$	284,212		$	236,919
Costs of Services:
Interchange		205,337			172,229
Dues and assessments		10,459			8,586
Processing and servicing		31,330			28,151
Customer acquisition costs		10,391			8,172
Depreciation and amortization		1,724			1,363
Total costs of services		259,241			218,501
General and administrative		14,299			12,009
Total expenses		273,540			230,510
Income from operations		10,672			6,409
Other income (expense):
Interest income		459			254
Interest expense		(112	)		(120	)
Other, net		(95	)		814
Total other income (expense)		252			948
Income before income taxes		10,924			7,357
Provision for income taxes		4,072			2,969
Net income	$	6,852		$	4,388
Net income	$	6,852		$	4,388
Other comprehensive income, net of tax: Unrealized gains (losses) on investments		3			(3	)
Comprehensive income	$	6,855		$	4,385
Earnings per common share:
Basic	$	0.18		$	0.12
Diluted	$	0.17		$	0.11
Weighted average number of common shares outstanding:
Basic		37,507			35,128
Diluted		39,971			39,817

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Heartland Payment Systems, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except share data)

(unaudited)

	March 31, 2007			December 31, 2006
Assets
Current assets:
Cash and cash equivalents	$	24,759		$	16,054
Funds held for payroll customers		23,210			16,960
Receivables, net		111,796			107,154
Investments		1,087			1,082
Inventory		2,065			2,252
Prepaid expenses		2,203			2,030
Current tax asset		16,799			19,227
Current deferred tax assets, net		670			757
Total current assets		182,589			165,516
Capitalized customer acquisition costs, net		59,186			56,705
Deferred tax assets, net		4,912			4,562
Property and equipment, net		26,721			23,135
Goodwill and intangible assets		1,747			1,757
Deposits and other assets		52			93
Total assets	$	275,207		$	251,768
Liabilities and stockholders’ equity
Current liabilities:
Due to sponsor bank	$	32,008		$	27,253
Accounts payable		17,885			16,936
Deposits held for payroll customers		23,210			16,960
Current portion of accrued buyout liability		11,781			11,519
Merchant deposits and loss reserves		7,685			8,210
Accrued expenses and other liabilities		11,224			9,649
Current portion of borrowings and financing arrangements		97			174
Total current liabilities		103,890			90,701
Reserve for unrecognized tax benefits		789			—
Long-term portion of accrued buyout liability		22,667			21,774
Total liabilities		127,346			112,475
Commitments and contingencies		—			—
Stockholders’ equity
Common Stock, $.001 par value, 100,000,000 shares authorized, 38,808,039 and 38,488,880 shares issued at March 31, 2007 and December 31, 2006; 37,699,839 and 37,405,680 shares outstanding at March 31, 2007 and December 31, 2006		38			38
Additional paid-in capital		158,722			153,997
Accumulated other comprehensive loss		(18	)		(21	)
Retained earnings		15,269			10,804
Treasury stock, at cost (1,108,200 and 1,083,200 shares at March 31, 2007 and December 31, 2006)		(26,150	)		(25,525	)
Total stockholders’ equity		147,861			139,293
Total liabilities and stockholders’ equity	$	275,207		$	251,768

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Heartland Payment Systems, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flow

(In thousands)

(unaudited)

	Three Months Ended March 31,
	2007			2006
Cash flows from operating activities
Net income	$	6,852		$	4,388
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of capitalized customer acquisition costs		10,062			8,013
Other depreciation and amortization		2,131			1,768
Stock-based compensation		389			232
Deferred taxes		(263	)		1,223
Changes in operating assets and liabilities:
(Increase) decrease in receivables		(4,643	)		5,667
Decrease in inventory		188			247
Payment of signing bonuses, net		(9,488	)		(7,091	)
Increase in capitalized customer acquisition costs		(3,055	)		(4,541	)
(Increase) decrease in prepaid expenses		(173	)		230
Decrease in current tax asset		4,380			609
Decrease in deposits and other assets		41			—
Excess tax benefits on options exercised under SFAS No. 123R		(1,951	)		(14,517	)
Increase in reserve for unrecognized tax benefit		276			—
Increase (decrease) in due to sponsor bank		4,755			(10,221	)
Increase (decrease) in accounts payable		948			(892	)
Increase in accrued expenses and other liabilities		1,574			2,099
(Decrease) increase in merchant deposits and loss reserves		(524	)		1,640
Payouts of accrued buyout liability		(2,229	)		(3,819	)
Increase in accrued buyout liability		3,384			4,699
Net cash provided by (used in) operating activities		12,654			(10,266	)
Cash flows from investing activities
Purchase of investments		(32	)		(838	)
Maturities of investments		13			322
Increase in funds held for payroll customers		(6,233	)		(6,621	)
Increase in deposits held for payroll customers		6,251			6,630
Acquisition of business, net of cash acquired		—			(3,452	)
Purchases of property and equipment		(5,708	)		(3,536	)
Net cash used in investing activities		(5,709	)		(7,495	)
Cash flows from financing activities
Principal payments on borrowings and financing arrangements		(77	)		(57	)
Proceeds from exercise of stock options		2,385			15,152
Excess tax benefits on options exercised under SFAS No. 123R		1,951			14,517
Repurchase of common stock		(625	)		(15,890	)
Dividends paid on common stock		(1,874	)		—
Net cash provided by financing activities		1,760			13,722
Net increase (decrease) in cash and cash equivalents		8,705			(4,039	)
Cash and cash equivalents at beginning of year		16,054			8,724
Cash and cash equivalents at end of period	$	24,759		$	4,685

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