10-QPeriod: Q3 FY2018

FISERV INC Quarterly Report for Q3 Ended Sep 30, 2018

Filed November 1, 2018For Securities:FISV

Summary

Fiserv Inc. (FISV) reported steady revenue growth for the nine months ended September 30, 2018, with total revenue increasing by 2% to $4.27 billion compared to the same period in 2017. This growth was primarily driven by the Payments segment, which saw a 7% increase in revenue, offsetting a 4% decline in the Financial segment largely due to recent dispositions. Profitability metrics showed a significant improvement in operating income, which rose by 19% to $1.32 billion for the nine-month period. This was largely due to a substantial gain on the sale of a 55% interest in its Lending Solutions business, which contributed $227 million. Diluted earnings per share also saw a notable increase to $2.16 from $1.62 in the prior year period. The company also completed a significant debt refinancing in September 2018, issuing $2.0 billion in senior notes and repaying existing debt.

Financial Highlights

48 data points
Beta

Revenue

$1.41B

87.2% Gross Margin

Net Income

$227.00M

16.1% Net Margin

EPS (Diluted)

$0.55

Total Assets

$10.75B

Free Cash Flow

$274.00M

Financial Statements
Beta
Revenue$1.41B
Cost of Revenue$181.00M
Gross Profit$1.23B
SG&A Expenses$305.00M
Operating Expenses$1.06B
Operating Income$356.00M
Interest Expense$47.00M
Net Income$227.00M
EPS (Basic)$0.56
EPS (Diluted)$0.55
Shares Outstanding (Basic)403.80M
Shares Outstanding (Diluted)412.00M

Key Highlights

  • 1Total revenue for the nine months ended September 30, 2018, increased by 2% to $4.27 billion.
  • 2Payments segment revenue grew by 7% year-over-year for the nine months ended September 30, 2018.
  • 3Operating income saw a significant increase of 19% to $1.32 billion for the nine months ended September 30, 2018, boosted by a gain on sale of business.
  • 4Diluted EPS increased to $2.16 for the nine months ended September 30, 2018, up from $1.62 in the prior year.
  • 5The company generated $981 million in operating cash flow for the nine months ended September 30, 2018.
  • 6Fiserv completed a substantial debt refinancing, issuing $2.0 billion in senior notes in September 2018.
  • 7The company adopted new accounting standards (ASC 606) for revenue recognition, impacting reported revenues and expenses.

Frequently Asked Questions

For the three months ended September 30, 2018, total revenue increased by 1% to $1.41 billion. For the nine months ended September 30, 2018, total revenue increased by 2% to $4.27 billion compared to the same periods in 2017.

Fiserv saw a revenue increase in its Payments segment, partly due to acquisitions made in 2017. However, the Financial segment's revenue declined due to dispositions, including the sale of a 55% interest in its Lending Solutions business. The gain on this sale significantly boosted operating income and net income for the nine-month period.

In September 2018, Fiserv completed a significant debt restructuring, issuing $2.0 billion in senior notes. They also repaid $540 million of a term loan and $1.1 billion from their revolving credit facility. Additionally, they initiated a tender offer to repurchase some of their outstanding senior notes, resulting in a small loss on early extinguishment of debt.

Fiserv adopted ASC 606 effective January 1, 2018, using a modified retrospective approach. This adoption resulted in adjustments to reported revenues and expenses, and the cumulative effect increased retained earnings by $208 million. The tables show the 'As reported' figures and the 'Adjustments' made due to ASC 606 adoption for the periods presented.