10-KPeriod: FY2017

FISERV INC Annual Report, Year Ended Dec 31, 2017

Filed February 22, 2018For Securities:FISV

Summary

Fiserv, Inc. (FISV) in its 2017 10-K filing demonstrates a solid financial performance with total revenue reaching $5.7 billion and operating income of $1.5 billion. The company, a global provider of financial services technology, serves over 12,000 clients, with its revenue primarily driven by account and transaction-based fees from long-term contracts. The company operates through two main segments: Payments and Financial Institution Services, both showing revenue growth, with the Payments segment experiencing a 5% increase and the Financial segment a 2% increase in 2017. Key strategic initiatives include portfolio management through acquisitions and divestitures, enhancing client relationships, driving operational efficiency, maintaining capital discipline, and fostering innovation. Fiserv highlights its strong market position, recurring revenue model, and integrated solutions as key drivers for continued growth. The company also benefited from tax reform, recording a significant tax benefit in 2017. Despite competitive pressures and evolving market dynamics, Fiserv's focus on essential, non-discretionary services for financial institutions positions it for resilience and expansion.

Financial Highlights

50 data points
Beta

Revenue

$5.70B

87.1% Gross Margin

Net Income

$1.25B

21.9% Net Margin

EPS (Diluted)

$2.89

Total Assets

$10.29B

Free Cash Flow

$1.20B

Financial Statements
Beta
Revenue$5.70B
Cost of Revenue$733.00M
Gross Profit$4.96B
SG&A Expenses$1.15B
Operating Expenses$4.16B
Operating Income$1.53B
Interest Expense$176.00M
Net Income$1.25B
EPS (Basic)$2.95
EPS (Diluted)$2.89
Shares Outstanding (Basic)422.30M
Shares Outstanding (Diluted)431.30M

Key Highlights

  • 1Fiserv reported total revenue of $5.7 billion in 2017, with 85% derived from processing and services revenue, indicating a stable, recurring revenue model.
  • 2The company operates with strong profitability, achieving $1.5 billion in operating income and $1.5 billion in net cash from operating activities in 2017.
  • 3Fiserv serves a diverse client base of over 12,000 financial institutions and businesses worldwide, mitigating concentration risk.
  • 4Strategic acquisitions in 2017 (OBS, PCLender, Dovetail, Monitise) aimed at expanding digital banking, payments, and lending solutions.
  • 5The company experienced a significant positive impact from the Tax Cuts and Jobs Act, recognizing a $275 million tax benefit in 2017.
  • 6Fiserv maintains a disciplined capital allocation strategy, including share repurchases, with $1.17 billion spent in 2017.
  • 7The company is undergoing a divestiture of a 55% interest in its lending solutions business to form a joint venture, announced in February 2018.

Frequently Asked Questions

Fiserv's primary revenue streams are derived from processing and services (85% of total revenue in 2017) and product sales (15%). The company operates through two main segments: Payments and Industry Products (Payments), which focuses on electronic payment transactions and digital channel solutions, and Financial Institution Services (Financial), which provides core account processing, item processing, and lending solutions to financial institutions.

Key risks identified by Fiserv include intense competition from existing and new players, the need to adapt to rapid technological changes, potential failure to renew client contracts favorably, adverse impacts from consolidation in the banking industry, risks associated with security breaches and cyberattacks, operational failures, software defects, a heightened regulatory environment in financial services, and the risks associated with acquisitions.

The Tax Cuts and Jobs Act enacted in December 2017 had a significant positive impact, resulting in a provisional tax benefit of approximately $275 million for Fiserv in 2017. This was primarily due to the re-evaluation of deferred tax assets and liabilities to reflect the lower U.S. federal corporate tax rate of 21% and a one-time transition tax on certain un-repatriated earnings of foreign subsidiaries.

Fiserv's strategy focuses on active portfolio management (acquisitions and divestitures), enhancing client relationships through integrated products and services, improving operational effectiveness, disciplined capital allocation (including share repurchases), and driving innovation. The company aims to be a global leader in transaction-based technology solutions.