10-QPeriod: Q1 FY2024

FISERV INC Quarterly Report for Q1 Ended Mar 31, 2024

Filed April 24, 2024For Securities:FISV

Summary

Fiserv, Inc. reported a strong first quarter for 2024, with total revenue increasing by 7% to $4.88 billion. This growth was primarily driven by a robust 13% increase in the Merchant segment, signaling positive momentum in their core business. Net income attributable to Fiserv, Inc. surged by 31% to $735 million, with diluted earnings per share rising to $1.24 from $0.89 in the prior year quarter. The company also demonstrated effective cost management, with total expenses growing at a slower rate than revenue, leading to a significant 26% increase in operating income and an expansion of the operating margin by 370 basis points. Financially, Fiserv maintained a solid liquidity position with $1.2 billion in cash and cash equivalents and significant capacity under its revolving credit facility. The company also actively managed its capital structure, issuing $2.0 billion in senior notes while continuing its share repurchase program. While the company faced higher interest expenses due to increased borrowings and variable rates, the overall financial performance indicates strong operational execution and a healthy trajectory.

Financial Highlights

49 data points
Beta

Revenue

$4.88B

Net Income

$735.00M

15.1% Net Margin

EPS (Diluted)

$1.24

Total Assets

$92.70B

Cash & Equivalents

$1.21B

Free Cash Flow

$411.00M

Financial Statements
Beta
Revenue$4.88B
SG&A Expenses$1.70B
Operating Expenses$3.70B
Operating Income$1.18B
Interest Expense$271.00M
Net Income$735.00M
EPS (Basic)$1.24
EPS (Diluted)$1.24
Shares Outstanding (Basic)590.90M
Shares Outstanding (Diluted)594.80M

Key Highlights

  • 1Total revenue grew 7% year-over-year to $4.88 billion.
  • 2Net income attributable to Fiserv, Inc. increased by 31% to $735 million.
  • 3Diluted earnings per share rose to $1.24 from $0.89 in the prior year period.
  • 4Merchant segment revenue saw a significant 13% increase.
  • 5Operating income increased by 26%, with operating margin expanding by 370 basis points.
  • 6The company repurchased $1.5 billion of its common stock during the quarter.
  • 7Fiserv ended the quarter with $1.2 billion in cash and cash equivalents.

Frequently Asked Questions

The primary driver of revenue growth was the Merchant segment, which increased by 13% year-over-year. Within this segment, the Small Business category showed strong growth due to increased payment and transaction volumes, Clover operating system contributions, and expanded merchant relationships. The Enterprise and Processing sub-segments also contributed positively.

Fiserv effectively managed its expenses, with total expenses growing by 2% year-over-year, a slower rate than the 7% revenue growth. This led to improved operating leverage. Key areas of expense management included a reduction in the cost of processing and services as a percentage of revenue and favorable trends in selling, general, and administrative expenses, partly due to a decrease in amortization of acquisition-related intangible assets.

Fiserv is actively managing its capital structure. In March 2024, the company issued $2.0 billion in senior notes to fund general corporate purposes, including share repurchases and debt repayment. They also continued their share repurchase program, buying back $1.5 billion of stock. Fiserv's policy is to use operating cash flow for capital expenditures, share repurchases, acquisitions, and debt repayment rather than dividends. The company maintained compliance with its debt covenants and has strong liquidity with $1.2 billion in cash and significant revolving credit facility capacity.

While the report indicates strong performance, forward-looking statements highlight potential risks including intense competition, evolving technology, changes in customer demand, macroeconomic conditions (inflation, interest rates, recession), and potential security breaches or operational failures. The company also notes exposure to foreign currency exchange rate fluctuations, particularly in Argentina. However, management believes that potential liabilities from legal proceedings are unlikely to have a material adverse effect.