Earlier in April, private equity firm KKR agreed to buy First Data (NYSE:FDC) for a whopping $27 billion. This huge validation for transaction-processing businesses should also have been good news for CyberSource (NASDAQ:CYBS) -- but no such luck. Despite solid results, the company's stock price has stayed lackluster so far this year.

CyberSource provides customers with software tools and infrastructure for e-commerce transactions. Its clients include Hewlett-Packard (NYSE:HPQ), Home Depot (NYSE:HD), and Nike (NYSE:NKE).

Fiscal first-quarter revenues surged 42% to 22.1 million, and transaction volumes increased 35% to 264.2 million. The company added 2,000 more customers in the quarter, increasing its total to 20,000. Net income dropped 22% to $700,000, but CyberSource generated $2.3 million in cash flow from operations, and it still has roughly $57.7 million in the bank.

Roughly a year ago, CyberSource purchased the assets of BidPay.com to capitalize on person-to-person online payments. eBay's (NASDAQ:EBAY) PayPal is the No. 1 player here, but CyberSource thinks it can be No. 2. The company's conference call suggests its efforts in this segment are on track to produce $3 million to $4 million in revenues. Keep in mind that CyberSource's person-to-person payment operations probably won't produce cash flow until next year.

While e-commerce continues to grow 20% per year in North America, its opportunities in Asia and South America look even more attractive, spurring CyberSource to invest in these regions as well.

In the long and short terms alike, CyberSource's growth story looks impressive. It's also encouraging to observe private equity's willingness to pay big bucks for a piece of the payments sector. For Foolish investors, CyberSource is definitely a company to watch.

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Fool contributor Tom Taulli, author of The Complete M&A Handbook, does not own shares mentioned in this article. He is currently ranked 2,719 out of 25,386 in CAPS. The Fool has a disclosure policy.