10-QPeriod: Q3 FY2010

FISERV INC Quarterly Report for Q3 Ended Sep 30, 2010

Filed November 5, 2010For Securities:FISV

Summary

Fiserv, Inc. (FISV) reported solid results for the nine months ended September 30, 2010, demonstrating resilience in its recurring revenue-based business model amidst challenging economic conditions. Total revenue grew 1% to $3.1 billion, with operating income increasing 7% to $740 million, leading to a diluted EPS from continuing operations of $2.54, up from $2.21 in the prior year period. The company successfully managed expenses, with total expenses decreasing slightly year-over-year, contributing to an improved operating margin of 24.2% compared to 22.9% in the same period of 2009. Financially, Fiserv strengthened its balance sheet through strategic debt management, including the issuance of new senior notes and repayment of existing debt. Operating cash flow remained robust, providing ample liquidity to fund operations and debt obligations. The company also continued its share repurchase program, demonstrating a commitment to returning value to shareholders. The company's enterprise priorities for 2010, focusing on revenue growth, cultural enhancement, and product innovation, appear to be on track, positioning Fiserv to capitalize on market trends.

Financial Highlights

49 data points
Beta

Revenue

$1.02B

87.5% Gross Margin

Net Income

$132.00M

12.9% Net Margin

EPS (Diluted)

$0.22

Total Assets

$8.61B

Cash & Equivalents

$743.00M

Free Cash Flow

$178.00M

Financial Statements
Beta
Revenue$1.02B
Cost of Revenue$128.00M
Gross Profit$897.00M
SG&A Expenses$185.00M
Operating Expenses$774.00M
Operating Income$251.00M
Net Income$132.00M
EPS (Basic)$0.22
EPS (Diluted)$0.22
Shares Outstanding (Basic)598.80M
Shares Outstanding (Diluted)603.60M

Key Highlights

  • 1Total revenue for the nine months ended September 30, 2010, increased by 1% to $3.1 billion compared to the same period in 2009.
  • 2Operating income rose by 7% to $740 million for the nine months ended September 30, 2010, compared to $690 million in 2009, indicating improved operational efficiency.
  • 3Diluted earnings per share from continuing operations grew to $2.54 for the nine months ended September 30, 2010, up from $2.21 in the prior year.
  • 4The company successfully managed its expense base, with total expenses for the nine months decreasing slightly year-over-year, resulting in an expanded operating margin to 24.2%.
  • 5Fiserv issued $750 million in senior notes and repaid $480 million of its senior term loan, demonstrating active debt management.
  • 6Net cash provided by operating activities from continuing operations was $654 million for the nine months ended September 30, 2010, a 2% increase year-over-year.
  • 7The company continued its share repurchase program, buying back approximately 5.2 million shares for $254 million in the first nine months of 2010.

Frequently Asked Questions

For the third quarter of 2010, total revenue increased by 3% to $1,025 million compared to $992 million in the same quarter of 2009. For the first nine months of 2010, total revenue grew 1% to $3,055 million compared to $3,015 million in the first nine months of 2009. Revenue growth was primarily driven by the Payments segment, with increases in processing and services revenue.

Fiserv maintained a strong liquidity position with $743 million in cash and cash equivalents and $970 million available under its revolving credit facility as of September 30, 2010. Operating cash flow for the nine months ended September 30, 2010, was $654 million, an increase of 2% year-over-year, supporting operations and debt servicing.

Fiserv actively managed its debt. In September 2010, the company issued $750 million in senior notes and used proceeds to repay $480 million of its senior term loan. It also completed a tender offer to purchase $250 million of its 6.125% senior notes due in 2012. The company entered into a new $1.0 billion revolving credit facility and was in compliance with all covenants as of September 30, 2010.

Operating income increased due to revenue growth, particularly in the Payments segment, and improved operating leverage in recurring revenue businesses. Furthermore, the company benefited from operating efficiency initiatives and a decrease in selling, general, and administrative expenses, partly due to lower merger and integration costs and employee severance expenses recognized in the prior year. The decrease in interest expense, driven by lower average outstanding borrowings and the impact of interest rate hedges, also contributed positively to net income.