10-KPeriod: FY2013

FISERV INC Annual Report, Year Ended Dec 31, 2013

Filed February 20, 2014For Securities:FISV

Summary

Fiserv Inc. (FISV) operates as a leading global provider of financial services technology, serving a diverse client base including banks, credit unions, and merchants. In 2013, the company reported total revenue of $4.8 billion, a 9% increase year-over-year, driven by strong performance in its Financial segment, notably due to the acquisition of Open Solutions. The company's business model is largely based on recurring, transaction-based fees, providing a resilient revenue stream. Fiserv is focused on strategic initiatives including portfolio management, client relationship value enhancement, operational effectiveness, capital discipline, and innovation. Key risks identified include economic downturns, intense competition, technological obsolescence, and regulatory changes such as the Dodd-Frank Act. Despite these risks, Fiserv demonstrates a solid financial foundation with robust operating cash flow and a well-managed debt structure.

Financial Highlights

51 data points
Beta

Revenue

$4.81B

85.6% Gross Margin

Net Income

$648.00M

13.5% Net Margin

EPS (Diluted)

$1.22

Total Assets

$9.47B

Cash & Equivalents

$400.00M

Free Cash Flow

$803.00M

Financial Statements
Beta
Revenue$4.81B
Cost of Revenue$695.00M
Gross Profit$4.12B
SG&A Expenses$977.00M
Operating Expenses$3.75B
Operating Income$1.06B
Interest Expense$163.00M
Net Income$648.00M
EPS (Basic)$1.24
EPS (Diluted)$1.22
Shares Outstanding (Basic)524.80M
Shares Outstanding (Diluted)532.20M

Key Highlights

  • 1In 2013, Fiserv reported $4.8 billion in total revenue, a 9% increase from $4.4 billion in 2012, demonstrating continued growth.
  • 2The company's revenue is predominantly generated from recurring account- and transaction-based fees (84% of consolidated revenue in 2013), indicating a stable business model.
  • 3Fiserv completed the significant acquisition of Open Solutions in Q1 2013, which contributed $270 million in revenue and expanded its account processing client base.
  • 4Operating income remained strong at $1.06 billion in 2013, with an operating margin of 22.0%, although slightly down from 23.6% in 2012 due to integration costs.
  • 5Net cash provided by operating activities was robust at $1.04 billion in 2013, up 26% from $826 million in 2012, showcasing strong cash generation.
  • 6The company actively manages its capital structure, evidenced by $3.85 billion in long-term debt as of December 31, 2013, and ongoing share repurchase programs.
  • 7Fiserv highlighted the risks associated with the evolving regulatory landscape, particularly the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, on its business and clients.

Frequently Asked Questions

Fiserv is a global provider of financial services technology. Its primary business involves offering account processing systems, electronic payments processing, and internet/mobile banking solutions. The majority of its revenue (84% in 2013) is generated from recurring account- and transaction-based fees under long-term contracts, which provides a stable and predictable revenue stream.

The acquisition of Open Solutions in January 2013 was a significant event. It contributed $270 million to Fiserv's 2013 revenue and expanded its account processing client base. While it boosted revenue and strategic positioning, the acquisition also led to increased merger and integration costs, including a $30 million non-cash impairment charge related to system replacement, which impacted operating income and expenses in 2013.

Fiserv identifies several key risks, including the adverse impact of U.S. and global economic conditions on its financial services clients, intense competition in the technology services market, the need to adapt products and services to rapid technological changes, potential for security breaches or cyber-attacks, and the evolving regulatory environment, particularly stemming from the Dodd-Frank Act which could affect both Fiserv and its clients.

Fiserv maintains a significant amount of long-term debt, primarily senior notes and a term loan. As of December 31, 2013, total long-term debt was $3.85 billion. The company generated strong operating cash flow ($1.04 billion in 2013) which is used to fund operations, debt repayment, capital expenditures, and acquisitions. They also have a substantial revolving credit facility available and engage in share repurchase programs.