10-QPeriod: Q2 FY2015

FISERV INC Quarterly Report for Q2 Ended Jun 30, 2015

Filed July 30, 2015For Securities:FISV

Summary

Fiserv, Inc. (FISV) reported its second-quarter and first-half 2015 financial results, demonstrating steady revenue growth and improved operating income. Total revenue for the quarter increased by 4% year-over-year, driven by a 5% increase in the Payments segment and a 2% increase in the Financial segment. For the first six months, revenue grew 3% overall, with the Payments segment up 4% and the Financial segment up 3%. The company successfully managed expenses, with total expenses as a percentage of revenue decreasing, leading to improved operating income and margins across both key segments. A notable event during the quarter was the early extinguishment of $1.1 billion in senior notes, which resulted in an $85 million pre-tax loss but was undertaken as part of a larger debt refinancing strategy. This resulted in increased interest expense for the quarter. Despite the debt extinguishment charges and a slightly lower net income from continuing operations compared to the prior year, the company's core business operations remain strong, supported by recurring revenue streams and ongoing efficiency initiatives.

Financial Highlights

46 data points
Beta

Revenue

$1.30B

87.1% Gross Margin

Net Income

$127.00M

9.8% Net Margin

EPS (Diluted)

$0.27

Total Assets

$9.59B

Free Cash Flow

$141.00M

Financial Statements
Beta
Revenue$1.30B
Cost of Revenue$168.00M
Gross Profit$1.13B
SG&A Expenses$262.00M
Operating Expenses$972.00M
Operating Income$326.00M
Interest Expense$49.00M
Net Income$127.00M
EPS (Basic)$0.27
EPS (Diluted)$0.27
Shares Outstanding (Basic)473.00M
Shares Outstanding (Diluted)480.80M

Key Highlights

  • 1Total revenue for the three months ended June 30, 2015, increased by 4% to $1.30 billion compared to $1.25 billion in the prior year period.
  • 2Operating income for the three months ended June 30, 2015, increased by 6% to $326 million, with operating margin improving to 25.1% from 24.5%.
  • 3The Payments segment showed strong revenue growth of 5% for the quarter, driven by processing and services revenue.
  • 4The Financial segment also contributed to growth, with revenue increasing by 2% for the quarter.
  • 5The company incurred an $85 million pre-tax loss on early debt extinguishment in May 2015 related to refinancing efforts.
  • 6Operating cash flow for the first six months of 2015 increased by 5% to $600 million.
  • 7Capital expenditures increased significantly by 35% to $203 million in the first six months of 2015, reflecting investments in facilities and technology.

Frequently Asked Questions

Fiserv's total revenue for the second quarter of 2015 increased by 4% to $1.30 billion, up from $1.25 billion in the same period of 2014. This growth was primarily driven by increases in the Payments segment (+5%) and the Financial segment (+2%).

In May 2015, Fiserv redeemed $1.1 billion of its senior notes, resulting in a pre-tax loss on early debt extinguishment of $85 million. This charge reduced net income and also contributed to an increase in interest expense for the period.

Fiserv demonstrated improved profitability, with operating income increasing by 6% to $326 million for the second quarter of 2015. The operating margin also improved to 25.1% from 24.5% in the prior year, reflecting strong operational leverage and efficiency initiatives.

Fiserv's liquidity position remains strong, supported by $530 million in cash and cash equivalents as of June 30, 2015, and an undrawn revolving credit facility. Operating cash flow increased by 5% to $600 million for the first six months of 2015, and the company indicated its ability to fund operations, debt obligations, and capital expenditures.