10-QPeriod: Q1 FY2014

FISERV INC Quarterly Report for Q1 Ended Mar 31, 2014

Filed April 30, 2014For Securities:FISV

Summary

Fiserv, Inc. (FISV) reported strong first-quarter 2014 results, demonstrating robust revenue growth and improved profitability. Total revenue increased by 7% to $1.234 billion, driven by a 9% rise in the Payments segment and a 5% increase in the Financial segment. This growth was supported by new clients and increased transaction volumes across key business lines. Profitability saw a significant boost, with operating income up 28% to $271 million and diluted earnings per share from continuing operations rising to $0.65 from $0.43 in the prior year. This improvement was largely due to strong revenue performance, operational leverage, and a favorable comparison to the prior year which included higher merger and integration expenses related to the Open Solutions acquisition. The company also reported a lower effective tax rate due to the favorable resolution of tax matters. Fiserv maintained a strong liquidity position and continued its share repurchase program.

Financial Highlights

49 data points
Beta

Revenue

$1.23B

85.4% Gross Margin

Net Income

$168.00M

13.6% Net Margin

EPS (Diluted)

$0.33

Total Assets

$9.47B

Cash & Equivalents

$307.00M

Free Cash Flow

$222.00M

Financial Statements
Beta
Revenue$1.23B
Cost of Revenue$180.00M
Gross Profit$1.05B
SG&A Expenses$242.00M
Operating Expenses$963.00M
Operating Income$271.00M
Interest Expense$41.00M
Net Income$168.00M
EPS (Basic)$0.33
EPS (Diluted)$0.33
Shares Outstanding (Basic)508.80M
Shares Outstanding (Diluted)517.20M

Key Highlights

  • 1Total revenue increased by 7% to $1.234 billion for the three months ended March 31, 2014.
  • 2Operating income grew significantly by 28% to $271 million.
  • 3Diluted earnings per share from continuing operations increased to $0.65 from $0.43 in the prior year.
  • 4The Payments segment showed strong revenue growth of 9%, and the Financial segment grew by 5%.
  • 5Total expenses as a percentage of revenue decreased from 81.7% to 78.1%, improving operating margin.
  • 6The effective income tax rate decreased to 28.5% from 34.2% due to favorable tax matter resolutions.
  • 7Fiserv repurchased $335 million of its common stock during the quarter.

Frequently Asked Questions

Revenue growth was primarily driven by increases in both the Payments segment (up 9%) and the Financial segment (up 5%). This growth was attributed to new clients, increased transaction volumes in card services and bill payment, as well as growth in digital channels for the Payments segment, and for the Financial segment, contributions from the Open Solutions acquisition and higher contract termination fees.

Profitability significantly improved with operating income increasing by 28%. This was due to strong revenue growth, improved operating leverage, and a decrease in total expenses as a percentage of revenue. A key factor was the favorable comparison to the first quarter of 2013, which included higher merger and integration expenses related to the Open Solutions acquisition, including a $30 million non-cash impairment charge.

Fiserv maintained a solid liquidity position, with $307 million in cash and cash equivalents at the end of the quarter. The company has access to its revolving credit facility and generates strong operating cash flow. Total debt remained stable at approximately $3.85 billion. Fiserv's policy is to use operating cash flow for debt repayment, capital expenditures, acquisitions, and share repurchases, rather than paying dividends.

The filing notes the issuance of Accounting Standards Update No. 2014-08 in April 2014, which changes criteria for reporting discontinued operations and disclosures of disposals. This update is effective prospectively for periods after December 15, 2014, with early adoption permitted. For the current period, no major changes impacting the reported results were noted other than standard updates and disclosures.