Summary
Fiserv Inc.'s first quarter 2019 results show a 4% increase in total revenue, reaching $1,502 million, driven by growth in the Payments segment. However, net income saw a significant decrease to $225 million from $423 million in the prior year, primarily due to a substantial gain on the sale of a business in Q1 2018 which did not recur in 2019. Operating income also declined by 39%, largely influenced by this gain/loss comparison and increased expenses related to the pending acquisition of First Data Corporation. The company is actively preparing for this transformative $22 billion all-stock acquisition, which is expected to close in the second half of 2019 and is being financed through significant debt facilities. Despite the year-over-year drop in net income, the underlying operational performance in the Payments segment remains robust with a 9% revenue increase, partly due to the acquisition of Elan Financial Services. The Financial segment experienced a slight revenue decline, mainly due to the prior year's divestiture of the Lending Solutions business. Investors should monitor the integration progress and synergy realization from the First Data acquisition, as well as the impact of increased debt levels on future financial performance. The company has adopted new lease accounting standards (ASC 842) which impacts its balance sheet but not significantly its income statement or cash flows.
Financial Highlights
50 data points| Revenue | $1.50B |
| Cost of Revenue | $174.00M |
| Gross Profit | $1.33B |
| SG&A Expenses | $341.00M |
| Operating Expenses | $1.13B |
| Operating Income | $373.00M |
| Interest Expense | $59.00M |
| Net Income | $225.00M |
| EPS (Basic) | $0.58 |
| EPS (Diluted) | $0.56 |
| Shares Outstanding (Basic) | 391.70M |
| Shares Outstanding (Diluted) | 399.10M |
Key Highlights
- 1Total revenue increased by 4% to $1,502 million in Q1 2019 compared to $1,440 million in Q1 2018.
- 2Net income decreased significantly by 47% to $225 million ($0.56/share diluted) in Q1 2019 from $423 million ($1.00/share diluted) in Q1 2018, largely due to a large gain on sale of business in the prior year.
- 3Operating income decreased by 39% to $373 million in Q1 2019 from $608 million in Q1 2018, impacted by the prior year's gain and increased expenses.
- 4The company announced a definitive merger agreement to acquire First Data Corporation in an all-stock transaction valued at approximately $22 billion, expected to close in the second half of 2019.
- 5The Payments segment revenue grew by 9% driven by the Elan acquisition and organic growth in electronic payments and card services.
- 6The Financial segment revenue decreased by 3%, primarily due to the disposition of the Lending Solutions business in March 2018.
- 7The company adopted new lease accounting standards (ASC 842) effective January 1, 2019, resulting in the recognition of lease liabilities and right-of-use assets on the balance sheet.