10-KPeriod: FY2018

FISERV INC Annual Report, Year Ended Dec 31, 2018

Filed February 21, 2019For Securities:FISV

Summary

Fiserv, Inc.'s 2018 Form 10-K highlights a year of steady revenue growth, driven primarily by its Payments segment, which saw a 7% increase in revenue. The company reported total revenue of $5.82 billion and operating income of $1.75 billion. A significant development for the company is the announced all-stock merger with First Data Corporation for approximately $22 billion, expected to close in the second half of 2019. This strategic move aims to combine two leaders in financial services technology, creating a more comprehensive offering for clients. The company continued its strategy of portfolio management through acquisitions, notably the purchase of Elan Financial Services' debit card processing business, which expanded its capabilities in debit card processing. Financially, Fiserv demonstrated strong operating cash flow of $1.55 billion. However, the company also highlighted increased debt levels and investments in its infrastructure and product development to stay competitive in the rapidly evolving financial technology landscape. Investors should closely monitor the integration progress and the financial implications of the First Data merger.

Financial Highlights

54 data points
Beta

Revenue

$5.82B

87.2% Gross Margin

Net Income

$1.19B

20.4% Net Margin

EPS (Diluted)

$2.87

Total Assets

$11.26B

Cash & Equivalents

$415.00M

Free Cash Flow

$1.19B

Financial Statements
Beta
Revenue$5.82B
Cost of Revenue$745.00M
Gross Profit$5.08B
SG&A Expenses$1.23B
Operating Expenses$4.07B
Operating Income$1.75B
Interest Expense$193.00M
Net Income$1.19B
EPS (Basic)$2.93
EPS (Diluted)$2.87
Shares Outstanding (Basic)405.50M
Shares Outstanding (Diluted)413.70M

Key Highlights

  • 1Announced a definitive merger agreement to acquire First Data Corporation in an all-stock transaction valued at approximately $22 billion.
  • 2Total revenue for the year ended December 31, 2018, was $5.82 billion, a 2% increase from the prior year.
  • 3The Payments segment revenue grew by 7% to $3.47 billion, driven by card services and electronic payments.
  • 4The Financial segment experienced a 5% decrease in revenue to $2.40 billion, partly due to divestitures.
  • 5Operating income increased by 14% to $1.75 billion, with operating margins improving to 30.1%.
  • 6Generated strong operating cash flow of $1.55 billion, supporting investments and strategic initiatives.
  • 7Acquired Elan Financial Services' debit card processing, ATM Managed Services, and MoneyPass network for $660 million.
  • 8Total debt increased to $5.96 billion, partly due to funding acquisitions and refinancing activities.

Frequently Asked Questions

The most significant strategic development is the announced definitive merger agreement to acquire First Data Corporation in an all-stock transaction valued at approximately $22 billion. This merger, expected to close in the second half of 2019, is poised to create a larger, more integrated financial technology company.

Fiserv reported total revenue of $5.82 billion in 2018, a 2% increase over the previous year. The Payments segment was the primary growth driver, with revenue increasing by 7% to $3.47 billion, largely due to growth in card services and electronic payments. The Financial segment saw a 5% revenue decline, influenced by divestitures, though account processing services provided some offset.

Fiserv has a policy of using operating cash flow primarily for capital expenditures, acquisitions, and debt repayment, rather than paying dividends. The company repurchased significant amounts of its stock in 2017 and 2018. However, it deferred share repurchases starting January 16, 2019, until the close of the First Data acquisition.

Key risks include the potential challenges in integrating the First Data acquisition, including achieving expected synergies and potential operational disruptions. The company's debt level also increased significantly due to the pending acquisition and prior financing activities, which could impact financial flexibility. Furthermore, the company faces risks related to competition, technological changes, cybersecurity, and regulatory environments.