Summary
Fiserv Inc. (FISV) reported stable total revenue growth of 4% for both the second quarter and the first six months of 2011 compared to the prior year, reaching $1.065 billion and $2.113 billion, respectively. While revenue showed resilience, operating income remained flat year-over-year for the quarter at $251 million but declined 3% for the six-month period to $472 million. This decline in operating income for the year-to-date was largely driven by a significant increase in operating losses within the 'Corporate and Other' segment, primarily due to severance costs, legal expenses, and merger/integration costs. A notable event impacting net income was a pre-tax loss of $61 million recorded in the second quarter due to early debt extinguishment related to the repayment of senior notes, which significantly reduced diluted earnings per share from continuing operations by $0.26. The company is actively pursuing strategic growth through acquisitions, announcing a $465 million deal for CashEdge Inc. and completing smaller acquisitions for $49 million in the first quarter. These strategic moves underscore a focus on advancing digital payments and mobile channel capabilities. Despite increased debt associated with these activities and refinancing efforts, Fiserv maintained its credit facility covenants and demonstrated sufficient liquidity, with $675 million in cash and cash equivalents and significant availability under its revolving credit facility. Investors should monitor the integration of CashEdge and its impact on future financial performance, as well as the ongoing management of debt and operational costs, particularly within the corporate segment.
Financial Highlights
50 data points| Revenue | $1.06B |
| Cost of Revenue | $145.00M |
| Gross Profit | $920.00M |
| SG&A Expenses | $190.00M |
| Operating Expenses | $814.00M |
| Operating Income | $251.00M |
| Interest Expense | $49.00M |
| Net Income | $90.00M |
| EPS (Basic) | $0.16 |
| EPS (Diluted) | $0.15 |
| Shares Outstanding (Basic) | 570.00M |
| Shares Outstanding (Diluted) | 576.80M |
Key Highlights
- 1Total revenue increased by 4% for both the three and six months ended June 30, 2011, compared to the prior year, reaching $1.065 billion and $2.113 billion, respectively.
- 2Operating income remained flat year-over-year for the three months ended June 30, 2011, at $251 million, but decreased by 3% ($17 million) for the six-month period to $472 million.
- 3A significant pre-tax loss of $61 million was recognized in Q2 2011 due to early extinguishment of debt, negatively impacting net income and EPS.
- 4The company announced a $465 million acquisition of CashEdge Inc. in June 2011, aimed at strengthening digital payments and channel strategies, and completed smaller acquisitions totaling $49 million in Q1 2011.
- 5Operating expenses increased by 6% for both the three and six-month periods, outpacing revenue growth and contributing to pressure on operating margins, particularly in the 'Corporate and Other' segment.
- 6Fiserv ended the period with $675 million in cash and cash equivalents, and had $972 million in available borrowings under its revolving credit facility, indicating strong liquidity to fund operations and acquisitions.