10-QPeriod: Q2 FY2001

FISERV INC Quarterly Report for Q2 Ended Jun 30, 2001

Filed July 24, 2001For Securities:FISV

Summary

Fiserv Inc. (FISV) reported solid revenue growth of 13.5% for the second quarter of 2001, reaching $472.6 million, and a 14.0% increase for the first six months to $926.6 million. This growth was primarily driven by the Financial Institution Outsourcing, Systems, and Services segment, which saw a significant revenue increase of approximately 19.7% for the first six months. However, the Securities Processing and Trust Services segment experienced a revenue decline of about 16.4% for the same period, attributed to weaker retail financial markets and lower transaction volumes, although this was partially offset by a termination fee. Net income for the second quarter rose by 15.5% to $52.0 million, or $0.41 per diluted share, compared to $45.0 million, or $0.36 per diluted share, in the prior year. For the first six months, net income grew by 16.5% to $102.8 million, or $0.81 per diluted share, versus $88.2 million, or $0.70 per diluted share, in the prior year. The company also completed four acquisitions in the first half of 2001, totaling approximately $93.1 million, indicating a continued strategy of inorganic growth. Despite a challenging environment in certain segments, Fiserv demonstrates continued profitability and revenue expansion, supported by strategic acquisitions and operational efficiencies in its core business.

Key Highlights

  • 1Total revenues increased by 13.5% to $472.6 million for the second quarter of 2001 and by 14.0% to $926.6 million for the six months ended June 30, 2001, compared to the prior year periods.
  • 2Net income for the second quarter of 2001 increased by 15.5% to $52.0 million, or $0.41 per diluted share, compared to $45.0 million, or $0.36 per diluted share, in the second quarter of 2000.
  • 3The Financial Institution Outsourcing, Systems, and Services segment showed strong revenue growth of 19.7% for the six months ended June 30, 2001, and a significant increase in operating income.
  • 4The Securities Processing and Trust Services segment experienced a revenue decline of 16.4% for the six months ended June 30, 2001, due to reduced transaction volumes and market weakness.
  • 5Fiserv completed four acquisitions during the first six months of 2001 for approximately $93.1 million, indicating an ongoing strategy of inorganic growth.
  • 6Operating income for the second quarter of 2001 increased by 11.3% to $88.4 million, and for the six months increased by 10.5% to $175.0 million.
  • 7The company recorded $12.3 million in pre-tax restructuring charges in the second quarter of 2001 related to consolidating securities processing operations and eliminating redundancies.

Frequently Asked Questions

Revenue growth is primarily driven by the Financial Institution Outsourcing, Systems, and Services segment, which benefits from sales to new and existing clients, price increases, and revenues from recently acquired businesses. Acquisitions are a significant contributor, accounting for approximately 55% of total revenue growth in the first six months of 2001.

The Securities Processing and Trust Services segment is experiencing revenue declines due to significantly lower transaction volumes, reflecting overall weakness in the United States retail financial markets. This segment also incurred $12.3 million in restructuring charges in the second quarter of 2001 to improve efficiency.

Fiserv continues to pursue an active acquisition strategy. In the first six months of 2001, the company completed four acquisitions for approximately $93.1 million, which contributed significantly to revenue growth. The company believes these acquisitions enhance its market position and service offerings.

While overall costs of revenue have increased in line with revenue growth, the company is focused on operational efficiencies. This is evident in the Financial Institution Outsourcing segment's operating margin improvement. However, the company also incurred restructuring charges of $12.3 million to consolidate operations and reduce redundancies, primarily impacting the Securities Processing segment.