10-QPeriod: Q1 FY2023

FISERV INC Quarterly Report for Q1 Ended Mar 31, 2023

Filed April 26, 2023For Securities:FISV

Summary

Fiserv, Inc. reported solid revenue growth in the first quarter of 2023, with total revenue increasing by 10% year-over-year to $4.55 billion. This growth was primarily driven by strong performance in the Acceptance and Payments segments, with contributions from increased merchant acquiring volumes and debit/credit processing. Despite rising interest expenses, the company demonstrated effective expense management, leading to a 10% increase in operating income. Diluted EPS saw a decrease from $1.02 to $0.89, largely due to the absence of significant one-time gains seen in the prior year's comparable period. The company continues to actively manage its capital structure, with substantial share repurchases and a new senior note issuance to fund general corporate purposes. Financially, Fiserv maintained a strong liquidity position, with significant cash flow generated from operations, which increased by 39% year-over-year. The company also continued its strategic acquisition activities, notably acquiring Merchant One and Finxact in the preceding year, integrating them to enhance its service offerings. Management remains focused on driving growth through innovation, operational excellence, and disciplined capital allocation.

Financial Highlights

48 data points
Beta

Revenue

$4.55B

Net Income

$563.00M

12.4% Net Margin

EPS (Diluted)

$0.89

Total Assets

$76.55B

Cash & Equivalents

$1.05B

Free Cash Flow

$791.00M

Financial Statements
Beta
Revenue$4.55B
SG&A Expenses$1.60B
Operating Expenses$3.61B
Operating Income$934.00M
Interest Expense$210.00M
Net Income$563.00M
EPS (Basic)$0.90
EPS (Diluted)$0.89
Shares Outstanding (Basic)626.90M
Shares Outstanding (Diluted)631.30M

Key Highlights

  • 1Total revenue increased by 10% to $4.55 billion, driven by strong performance across business segments, particularly Acceptance and Payments.
  • 2Operating income grew by 10% to $934 million, indicating effective operational management and revenue growth.
  • 3Net income attributable to Fiserv, Inc. decreased by 16% to $563 million, primarily due to the absence of significant one-time gains recognized in the prior year's comparable period.
  • 4Diluted earnings per share decreased to $0.89 from $1.02 in the prior year's quarter.
  • 5Operating cash flow saw a significant increase of 39% to $1.13 billion, demonstrating robust cash generation.
  • 6The company repurchased $1.5 billion of its common stock in the first quarter of 2023, highlighting a commitment to shareholder returns.
  • 7Fiserv issued $1.8 billion in senior notes in March 2023 to fund general corporate purposes, including debt repayment.

Frequently Asked Questions

The 10% increase in total revenue to $4.55 billion was primarily driven by higher merchant acquiring payment and transaction volumes across its Clover and Carat platforms, increased processing volumes in international regions, and expansion of merchant relationships within the Acceptance segment. The Payments segment also saw growth from its debit and credit processing businesses, along with increased volumes and new client acquisitions in its Output Solutions business. Product sales also contributed to the overall revenue growth.

Net income attributable to Fiserv, Inc. decreased by 16% to $563 million, and diluted EPS fell to $0.89 from $1.02. This was largely due to the prior year's comparable period benefiting from significant one-time gains, specifically a $147 million pre-tax gain from the termination of a merchant alliance joint venture and $91 million in net gains from equity investment transactions. The current quarter did not have similar non-recurring positive impacts.

Fiserv continues to actively manage its debt. In March 2023, the company issued $1.8 billion of senior notes to fund general corporate purposes, including repaying U.S. commercial paper. The company maintained compliance with all financial debt covenants during the quarter. It also repurchased $1.5 billion of its common stock, indicating a balanced approach to capital allocation, focusing on both strategic investments and shareholder returns.

The Acceptance segment showed strong revenue growth of 12%, driven by increased merchant acquiring volumes. The Payments segment also grew revenue by 11%, supported by debit and credit processing. The Fintech segment experienced more modest revenue growth of 2%, with management noting continued investments in Finxact impacting operating margins. Overall, the company appears to be executing well across its core segments, with significant growth in merchant-focused and payment processing areas.