10-QPeriod: Q3 FY2020

FISERV INC Quarterly Report for Q3 Ended Sep 30, 2020

Filed October 28, 2020For Securities:FISV

Summary

Fiserv, Inc. reported solid financial performance for the nine months ended September 30, 2020, with total revenue increasing significantly by 79% to $11.02 billion, largely driven by the acquisition of First Data Corporation in July 2019. Net income attributable to Fiserv, Inc. for the same period was $658 million. The company's operating income also saw an increase, reflecting strong performance across its key segments, though operating margin saw some compression in the nine-month period due to integration costs. The company has strategically managed its debt, issuing new senior notes and using proceeds for debt repayment. Despite the ongoing economic uncertainties related to the COVID-19 pandemic, Fiserv has maintained robust operating cash flows, demonstrating resilience. Management's focus remains on integrating acquired businesses, driving revenue growth, enhancing client relationships, and delivering innovation.

Financial Highlights

49 data points
Beta

Revenue

$3.79B

Net Income

$264.00M

7.0% Net Margin

EPS (Diluted)

$0.39

Total Assets

$72.37B

Cash & Equivalents

$951.00M

Free Cash Flow

$841.00M

Financial Statements
Beta
Revenue$3.79B
SG&A Expenses$1.41B
Operating Expenses$3.24B
Operating Income$542.00M
Interest Expense$176.00M
Net Income$264.00M
EPS (Basic)$0.39
EPS (Diluted)$0.39
Shares Outstanding (Basic)669.80M
Shares Outstanding (Diluted)680.30M

Key Highlights

  • 1Total revenue for the nine months ended September 30, 2020, increased by 79% to $11.02 billion, primarily due to the acquisition of First Data.
  • 2Net income attributable to Fiserv, Inc. for the nine months ended September 30, 2020, was $658 million.
  • 3Operating income for the nine months ended September 30, 2020, increased by 18% to $1.336 billion.
  • 4The company completed several strategic acquisitions in 2020, including MerchantPro, Bypass, and Inlet, to expand its merchant services and payment capabilities.
  • 5Fiserv generated strong operating cash flow of $2.96 billion for the nine months ended September 30, 2020, a significant increase from the prior year.
  • 6The company successfully managed its debt, issuing $2.0 billion in senior notes and utilizing proceeds for debt repayment.
  • 7Fiserv is actively managing the impacts of the COVID-19 pandemic, noting its effect on transaction volumes but also observing recovery trends.

Frequently Asked Questions

The acquisition of First Data Corporation on July 29, 2019, was the primary driver of Fiserv's significant revenue growth. For the nine months ended September 30, 2020, First Data contributed $5.067 billion in incremental revenue, leading to a 79% increase in total revenue to $11.02 billion. While this acquisition boosted top-line growth, it also contributed to increased expenses, including amortization of acquired intangible assets, impacting operating margins.

Fiserv acknowledged that the COVID-19 pandemic has adversely impacted global economic activity and its operating performance, particularly in merchant acquiring and payment-related businesses due to reduced transaction volumes. However, the company noted a recovery trend in payment volumes starting in May 2020. Management's strategy includes focusing on integrating First Data, delivering high-quality revenue growth, enhancing client relationships with a focus on digital and payment solutions, and driving innovation. The company is taking measures to protect employees and manage discretionary costs.

Fiserv has actively managed its debt. During the nine months ended September 30, 2020, the company issued $2.0 billion in senior notes, using the proceeds to repay $850 million of 2.7% senior notes and $1.1 billion in borrowings under its revolving credit facility. At September 30, 2020, the company had $18.1 billion in fixed-rate senior notes, $219 million on its revolving credit facility, and $1.8 billion in variable rate term loans. The company stated it was in compliance with all financial debt covenants.

Effective in the first quarter of 2020, Fiserv realigned its reportable segments to Merchant Acceptance ('Acceptance'), Financial Technology ('Fintech'), and Payments and Network ('Payments') to reflect its new operating model post-First Data acquisition. The 'Corporate and Other' segment includes unallocated corporate expenses, amortization of acquisition-related intangibles, and results from businesses not assigned to specific operating segments, such as gains or losses on business sales. This realignment helps provide a clearer view of performance across distinct business areas.