10-QPeriod: Q1 FY2022

FISERV INC Quarterly Report for Q1 Ended Mar 31, 2022

Filed April 28, 2022For Securities:FISV

Summary

Fiserv, Inc. (FISV) reported a strong first quarter for 2022, demonstrating significant year-over-year growth in both revenue and operating income. Total revenue increased by 10% to $4.14 billion, driven by growth across all segments, particularly the Acceptance segment, which saw an 18% increase. This top-line growth translated into a substantial 78% surge in operating income to $846 million and a 120% increase in net income attributable to Fiserv, Inc. to $669 million. The company also benefited from a significant $147 million pre-tax gain from the sale of certain merchant contracts related to a joint venture termination, which, along with reduced acquisition and integration expenses, contributed to improved profitability. Despite a decrease in operating cash flow primarily due to working capital fluctuations, Fiserv's financial position remains robust. The company continues to execute its growth strategy through strategic acquisitions, including the recent announcement of the Finxact acquisition. Management highlighted operational leverage, scalable revenue growth, and expense management as key drivers of improved profitability. Investors should note the company's continued investment in growth initiatives, alongside a disciplined approach to capital allocation, including share repurchases.

Financial Highlights

49 data points
Beta

Revenue

$4.14B

Net Income

$669.00M

16.2% Net Margin

EPS (Diluted)

$1.02

Total Assets

$75.47B

Cash & Equivalents

$2.83B

Free Cash Flow

$484.00M

Financial Statements
Beta
Revenue$4.14B
SG&A Expenses$1.47B
Operating Expenses$3.29B
Operating Income$846.00M
Interest Expense$171.00M
Net Income$669.00M
EPS (Basic)$1.03
EPS (Diluted)$1.02
Shares Outstanding (Basic)650.80M
Shares Outstanding (Diluted)657.20M

Key Highlights

  • 1Total revenue increased 10% year-over-year to $4.14 billion in Q1 2022.
  • 2Net income attributable to Fiserv, Inc. more than doubled, growing 120% to $669 million ($1.02 per diluted share).
  • 3Operating income saw a significant increase of 78% to $846 million, with operating margin expanding by 790 basis points to 20.5%.
  • 4The Acceptance segment showed robust growth, with revenue up 18% driven by higher merchant acquiring volumes.
  • 5A $147 million pre-tax gain from the sale of merchant contracts positively impacted results.
  • 6Operating cash flow decreased by 14% to $815 million, primarily due to working capital fluctuations.
  • 7Fiserv announced the acquisition of Finxact for approximately $650 million, expected to close in Q2 2022, further strengthening its Fintech segment.

Frequently Asked Questions

Fiserv's revenue growth of 10% to $4.14 billion was primarily driven by higher processing volumes and product sales across all business segments. The Acceptance segment saw an 18% increase due to higher global merchant acquiring payment and transaction volumes. The Fintech and Payments segments also contributed positively with growth in processing revenue and transaction volumes.

Fiserv recognized a $147 million pre-tax gain on the sale of certain merchant contracts related to the termination of a merchant alliance joint venture in the first quarter of 2022. This gain significantly contributed to the substantial increase in operating income and net income for the period.

Operating cash flow decreased by 14% to $815 million in the first three months of 2022 compared to the prior year. This decrease was primarily attributed to unfavorable fluctuations in net working capital, such as the timing of vendor payments. However, the company's overall liquidity remains strong, supported by cash on hand and available credit facilities.

Fiserv continues to pursue growth through acquisitions. In the first quarter of 2022, they announced the acquisition of Finxact for approximately $650 million, expected to close in the second quarter, to enhance their Fintech segment. Prior to that, in late 2021 and early 2021, they completed acquisitions such as BentoBox, Pineapple Payments, Ondot, and others, aimed at expanding their commerce-enabling solutions and digital capabilities.