10-QPeriod: Q2 FY2024

FISERV INC Quarterly Report for Q2 Ended Jun 30, 2024

Filed July 25, 2024For Securities:FISV

Summary

Fiserv Inc. reported strong financial results for the second quarter and first half of 2024, demonstrating significant revenue and profit growth compared to the prior year. Total revenue increased by 7% year-over-year for both periods, driven by robust performance in both the Merchant and Financial segments. Operating income saw a substantial 26% increase, reflecting improved operating leverage and efficiency gains, with operating margins expanding notably across both segments. The company highlighted solid growth in its Small Business and Enterprise offerings within the Merchant segment, alongside continued strength in Digital Payments and Issuing services in the Financial segment. Diluted earnings per share (EPS) showed a significant improvement, rising to $1.53 in Q2 2024 from $1.10 in Q2 2023, and $2.76 for the year-to-date period compared to $1.99 in the prior year. Fiserv also maintained a strong liquidity position and continued its share repurchase program, underscoring a commitment to shareholder returns and financial flexibility.

Financial Highlights

49 data points
Beta

Revenue

$5.11B

Net Income

$894.00M

17.5% Net Margin

EPS (Diluted)

$1.53

Total Assets

$93.42B

Cash & Equivalents

$1.20B

Free Cash Flow

$993.00M

Financial Statements
Beta
Revenue$5.11B
SG&A Expenses$1.70B
Operating Expenses$3.68B
Operating Income$1.43B
Interest Expense$294.00M
Net Income$894.00M
EPS (Basic)$1.53
EPS (Diluted)$1.53
Shares Outstanding (Basic)582.70M
Shares Outstanding (Diluted)585.40M

Key Highlights

  • 1Total revenue grew 7% year-over-year to $5.11 billion in Q2 2024 and $9.99 billion for the first six months of 2024.
  • 2Operating income increased by a robust 26% to $1.43 billion in Q2 2024 and $2.61 billion for the first six months of 2024.
  • 3Diluted EPS rose to $1.53 in Q2 2024, up from $1.10 in Q2 2023; year-to-date diluted EPS was $2.76 compared to $1.99.
  • 4Merchant segment revenue grew 9% in Q2 2024, driven by Small Business and Enterprise, while Financial segment revenue increased 6% driven by Digital Payments and Issuing.
  • 5Operating margins expanded significantly, with total operating margin at 28.0% in Q2 2024 (up from 23.8% in Q2 2023) and 26.1% year-to-date (up from 22.2% in the prior year).
  • 6The company maintained a strong liquidity position, with $1.2 billion in cash and cash equivalents and $1.1 billion in available capacity under its revolving credit facility.
  • 7Fiserv continued its share repurchase program, buying back $3.0 billion in the first six months of 2024.

Frequently Asked Questions

Revenue growth was primarily driven by increased global processing revenue in both the Merchant and Financial segments. Specifically, the Merchant segment saw growth from its Small Business and Enterprise offerings, boosted by higher payment and transaction volumes and the Clover operating system. The Financial segment's growth was supported by strong performance in Digital Payments, driven by transaction volume and new client wins, and Issuing services, due to an increase in active accounts.

Profitability saw substantial improvement. Operating income grew by 26% year-over-year for both the second quarter and the first six months of 2024. This was driven by scalable revenue growth and operating leverage, leading to significant expansion in operating margins. Net income attributable to Fiserv, Inc. also increased by 31% for Q2 and 31% for the year-to-date period.

Fiserv maintains a strong financial position with $1.2 billion in cash and cash equivalents and substantial availability under its revolving credit facility. The company's capital allocation strategy prioritizes funding operating expenses, debt servicing, capital expenditures, and share repurchases, rather than dividends. Fiserv actively engaged in share repurchases, buying back $3.0 billion in the first half of 2024, demonstrating a commitment to returning value to shareholders.

The company reported an increase in interest expense, net, primarily due to higher outstanding borrowings, including a $2.0 billion senior notes issuance in March 2024. However, Fiserv confirmed compliance with all financial debt covenants. The total debt stands at $25.5 billion ($1.1 billion short-term and $24.4 billion long-term) as of June 30, 2024. The company's leverage ratio (debt to EBITDA) is managed within covenant limits, indicating no immediate concerns regarding its debt levels, though increased interest expenses are noted.