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    Fiserv Reports First Quarter 2023 Results

    4/25/23 7:01:00 AM ET
    $FISV
    Business Services
    Consumer Discretionary
    Get the next $FISV alert in real time by email

    GAAP revenue growth of 10% and organic revenue growth of 13%;

    GAAP EPS decreased 13% and adjusted EPS increased 13%;

    Company raises 2023 organic revenue growth outlook to 8% to 9% and adjusted EPS outlook to $7.30 to $7.40

    Fiserv, Inc. (NASDAQ:FISV), a leading global provider of payments and financial services technology solutions, today reported financial results for the first quarter of 2023.

    First Quarter 2023 GAAP Results

    GAAP revenue for the company increased 10% to $4.55 billion in the first quarter of 2023 compared to the prior year period, with 12% growth in the Acceptance segment, 2% growth in the Fintech segment and 11% growth in the Payments segment.

    GAAP earnings per share was $0.89 in the first quarter of 2023, a decrease of 13% compared to the prior year period. The first quarter of 2022 included a $91 million pre-tax net gain related to certain equity investment transactions. GAAP operating margin was 20.5% in both the first quarter of 2023 and 2022. Net cash provided by operating activities was $1.13 billion in the first quarter of 2023 compared to $815 million in the prior year period.

    "Our strong first quarter results reflect our leadership position and focused execution in an uncertain economic environment," said Frank Bisignano, Chairman, President and Chief Executive Officer of Fiserv. "Our Merchant business continued to outperform, while our Payments and Fintech segments demonstrated the depth of our financial institution client partnerships, as we provided support and innovation through a volatile period."

    First Quarter 2023 Non-GAAP Results and Additional Information

    • Adjusted revenue increased 10% to $4.28 billion in the first quarter of 2023 compared to the prior year period.
    • Organic revenue growth was 13% in the first quarter of 2023, led by 18% growth in the Acceptance segment, 3% growth in the Fintech segment and 13% growth in the Payments segment.
    • Adjusted earnings per share increased 13% to $1.58 in the first quarter of 2023 compared to the prior year period.
    • Adjusted operating margin increased 160 basis points to 33.6% in the first quarter of 2023 compared to the prior year period.
    • Free cash flow was $861 million in the first quarter of 2023 compared to $603 million in the prior year period.
    • The company repurchased 13.3 million shares of common stock for $1.5 billion in the first quarter of 2023.
    • The company completed a public offering of $1.8 billion of 5-year and 10-year senior notes with a weighted average coupon rate of 5.525%.
    • Fiserv was named to Fortune® America's Most Innovative Companies and Forbes list of America's Best Large Employers. 

    Outlook for 2023

    Fiserv raises full year 2023 outlook and now expects organic revenue growth of 8% to 9% and adjusted earnings per share of $7.30 to $7.40, representing growth of 12% to 14%.

    "We raised our 2023 organic revenue and adjusted EPS guidance based on our strong first quarter results. Our guidance for the year is tempered only by the potential for a weaker, second-half economy," said Bisignano. "We are proud of the recognition we received as a leading innovator and employer in the first quarter, and remain focused on our clients, pursuing operational excellence, and continuing to innovate."

    Earnings Conference Call

    The company will discuss its first quarter 2023 results in a live webcast at 7 a.m. CT on Tuesday, April 25, 2023. The webcast, along with supplemental financial information, can be accessed on the investor relations section of the Fiserv website at investors.fiserv.com. A replay will be available approximately one hour after the conclusion of the live webcast.

    About Fiserv

    Fiserv, Inc. (NASDAQ:FISV) aspires to move money and information in a way that moves the world. As a global leader in payments and financial technology, the company helps clients achieve best-in-class results through a commitment to innovation and excellence in areas including account processing and digital banking solutions; card issuer processing and network services; payments; e-commerce; merchant acquiring and processing; and the Clover® cloud-based point-of-sale and business management platform. Fiserv is a member of the S&P 500® Index and one of Fortune® World's Most Admired Companies™. Visit fiserv.com and follow on social media for more information and the latest company news.

    Use of Non-GAAP Financial Measures

    In this news release, the company supplements its reporting of information determined in accordance with generally accepted accounting principles ("GAAP"), such as revenue, operating income, operating margin, net income attributable to Fiserv, diluted earnings per share and net cash provided by operating activities, with "adjusted revenue," "adjusted revenue growth," "organic revenue," "organic revenue growth," "adjusted operating income," "adjusted operating margin," "adjusted net income," "adjusted earnings per share," "adjusted earnings per share growth," and "free cash flow." Management believes that adjustments for certain non-cash or other items and the exclusion of certain pass-through revenue and expenses should enhance shareholders' ability to evaluate the company's performance, as such measures provide additional insights into the factors and trends affecting its business. Therefore, the company excludes these items from its GAAP financial measures to calculate these unaudited non-GAAP measures. The corresponding reconciliations of these unaudited non-GAAP financial measures to the most comparable GAAP measures are included in this news release, except for forward-looking measures where a reconciliation to the corresponding GAAP measures is not available due to the variability, complexity and limited visibility of the non-cash and other items described below that are excluded from the non-GAAP outlook measures. See page 14 for additional information regarding the company's forward-looking non-GAAP financial measures.

    Examples of non-cash or other items may include, but are not limited to, non-cash intangible asset amortization expense associated with acquisitions; non-cash impairment charges; severance costs; net charges associated with debt financing activities; merger and integration costs; gains or losses from the sale of businesses, certain assets or investments; certain discrete tax benefits and expenses; and non-cash deferred revenue adjustments relating to the 2019 acquisition of First Data Corporation. The company excludes these items to more clearly focus on the factors management believes are pertinent to the company's operations, and management uses this information to make operating decisions, including the allocation of resources to the company's various businesses.

    The company adjusts its non-GAAP results to exclude amortization of acquisition-related intangible assets as such amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions. Management believes that the adjustment of acquisition-related intangible asset amortization supplements GAAP information with a measure that can be used to assess the comparability of operating performance. Although the company excludes amortization from acquisition-related intangible assets from its non-GAAP expenses, management believes that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation.

    Management believes organic revenue growth is useful because it presents adjusted revenue growth excluding the impact of foreign currency fluctuations, acquisitions, dispositions and the company's Output Solutions postage reimbursements and including deferred revenue purchase accounting adjustments. Management believes free cash flow is useful to measure the funds generated in a given period that are available for debt service requirements and strategic capital decisions. Management believes this supplemental information enhances shareholders' ability to evaluate and understand the company's core business performance.

    These unaudited non-GAAP measures may not be comparable to similarly titled measures reported by other companies and should be considered in addition to, and not as a substitute for, revenue, operating income, operating margin, net income attributable to Fiserv, diluted earnings per share and net cash provided by operating activities or any other amount determined in accordance with GAAP.

    Forward-Looking Statements

    This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding anticipated organic revenue growth, adjusted earnings per share, adjusted earnings per share growth and other statements regarding our future financial performance. Statements can generally be identified as forward-looking because they include words such as "believes," "anticipates," "expects," "could," "should," or words of similar meaning. Statements that describe the company's future plans, objectives or goals are also forward-looking statements.

    Forward-looking statements are subject to assumptions, risks and uncertainties that may cause actual results to differ materially from those contemplated by such forward-looking statements. The factors that could cause the company's actual results to differ materially include, among others, the following: the company's ability to compete effectively against new and existing competitors and to continue to introduce competitive new products and services on a timely, cost-effective basis; changes in customer demand for the company's products and services; the ability of the company's technology to keep pace with a rapidly evolving marketplace; the success of the company's merchant alliances, some of which are not controlled by the company; the continuing impact of the COVID-19 pandemic on the company's employees, clients, vendors, supply chain, operations and sales; the impact of a security breach or operational failure on the company's business, including disruptions caused by other participants in the global financial system; losses due to chargebacks, refunds or returns as a result of fraud or the failure of the company's vendors and merchants to satisfy their obligations; changes in local, regional, national and international economic or political conditions, including those resulting from heightened inflation, rising interest rates, a recession, or intensified international hostilities, and the impact they may have on the company and its customers; the effect of proposed and enacted legislative and regulatory actions affecting the company or the financial services industry as a whole; the company's ability to comply with government regulations and applicable card association and network rules; the protection and validity of intellectual property rights; the outcome of pending and future litigation and governmental proceedings; the company's ability to successfully identify, complete and integrate acquisitions, and to realize the anticipated benefits associated with the same; the impact of the company's strategic initiatives; the company's ability to attract and retain key personnel; volatility and disruptions in financial markets that may impact the company's ability to access preferred sources of financing and the terms on which the company is able to obtain financing or increase its costs of borrowing; adverse impacts from currency exchange rates or currency controls; changes in corporate tax and interest rates; and other factors included in "Risk Factors" in the company's Annual Report on Form 10-K for the year ended December 31, 2022, and in other documents that the company files with the Securities and Exchange Commission, which are available at http://www.sec.gov. You should consider these factors carefully in evaluating forward-looking statements and are cautioned not to place undue reliance on such statements. The company assumes no obligation to update any forward-looking statements, which speak only as of the date of this news release.

    Fiserv, Inc.

    Condensed Consolidated Statements of Income

    (In millions, except per share amounts, unaudited)

     

     

     

     

     

    Three Months Ended

    March 31,

     

     

    2023

     

     

     

    2022

     

    Revenue

     

     

     

    Processing and services

    $

    3,673

     

     

    $

    3,364

     

    Product

     

    874

     

     

     

    774

     

    Total revenue

     

    4,547

     

     

     

    4,138

     

     

     

     

     

    Expenses

     

     

     

    Cost of processing and services

     

    1,405

     

     

     

    1,436

     

    Cost of product

     

    600

     

     

     

    536

     

    Selling, general and administrative

     

    1,604

     

     

     

    1,467

     

    Net loss (gain) on sale of businesses and other assets

     

    4

     

     

     

    (147

    )

    Total expenses

     

    3,613

     

     

     

    3,292

     

     

     

     

     

    Operating income

     

    934

     

     

     

    846

     

    Interest expense, net

     

    (202

    )

     

     

    (168

    )

    Other expense

     

    (20

    )

     

     

    (4

    )

     

     

     

     

    Income before income taxes and (loss) income from investments in unconsolidated affiliates

     

    712

     

     

     

    674

     

    Income tax provision

     

    (124

    )

     

     

    (98

    )

    (Loss) income from investments in unconsolidated affiliates

     

    (12

    )

     

     

    106

     

     

     

     

     

    Net income

     

    576

     

     

     

    682

     

    Less: net income attributable to noncontrolling interests

     

    13

     

     

     

    13

     

     

     

     

     

    Net income attributable to Fiserv

    $

    563

     

     

    $

    669

     

     

     

     

     

    GAAP earnings per share attributable to Fiserv — diluted

    $

    0.89

     

     

    $

    1.02

     

     

     

     

     

    Diluted shares used in computing earnings per share attributable to Fiserv

     

    631.3

     

     

     

    657.2

     

     

     

     

     

    Earnings per share is calculated using actual, unrounded amounts.

     

    Fiserv, Inc.

    Reconciliation of GAAP to

    Adjusted Net Income and Adjusted Earnings Per Share

    (In millions, except per share amounts, unaudited)

     

     

     

    Three Months Ended

    March 31,

     

     

    2023

     

     

     

    2022

     

     

     

     

     

    GAAP net income attributable to Fiserv

    $

    563

     

     

    $

    669

     

    Adjustments:

     

     

     

    Merger and integration costs 1

     

    48

     

     

     

    22

     

    Severance costs

     

    24

     

     

     

    52

     

    Amortization of acquisition-related intangible assets 2

     

    427

     

     

     

    475

     

    Non wholly-owned entity activities 3

     

    38

     

     

     

    (56

    )

    Net loss (gain) on sale of businesses and other assets 4

     

    4

     

     

     

    (147

    )

    Tax impact of adjustments 5

     

    (108

    )

     

     

    (94

    )

    Adjusted net income

    $

    996

     

     

    $

    921

     

     

     

     

     

    GAAP earnings per share attributable to Fiserv - diluted

    $

    0.89

     

     

    $

    1.02

     

    Adjustments - net of income taxes:

     

     

     

    Merger and integration costs 1

     

    0.06

     

     

     

    0.03

     

    Severance costs

     

    0.03

     

     

     

    0.06

     

    Amortization of acquisition-related intangible assets 2

     

    0.54

     

     

     

    0.57

     

    Non wholly-owned entity activities 3

     

    0.05

     

     

     

    (0.07

    )

    Net loss (gain) on sale of businesses and other assets 4

     

    —

     

     

     

    (0.21

    )

    Adjusted earnings per share

    $

    1.58

     

     

    $

    1.40

     

     

     

     

     

    GAAP earnings per share attributable to Fiserv decrease

     

    (13

    ) %

     

     

    Adjusted earnings per share growth

     

    13

    %

     

     

     

     

     

     

    See pages 3-4 for disclosures related to the use of non-GAAP financial measures.

    Earnings per share is calculated using actual, unrounded amounts. 

     

    1 

    Represents acquisition and related integration costs incurred in connection with various acquisitions. Merger and integration costs in the first quarter of 2023 include $20 million of share-based compensation and $14 million of third-party professional service fees associated with integration activities. Merger and integration costs in the first quarter of 2022 include $10 million of share-based compensation attributable to various acquisitions.

    2

    Represents amortization of intangible assets acquired through various acquisitions, including customer relationships, software/technology and trade names. This adjustment does not exclude the amortization of other intangible assets such as contract costs (sales commissions and deferred conversion costs), capitalized and purchased software, financing costs and debt discounts. See additional information on page 13 for an analysis of the company's amortization expense.

    3

    Represents the company's share of amortization of acquisition-related intangible assets at its unconsolidated affiliates, as well as the minority interest share of amortization of acquisition-related intangible assets at its subsidiaries in which the company holds a controlling financial interest. This adjustment for the first quarter of 2022 also includes a net gain totaling $91 million related to certain equity investment transactions.

    4

    Represents a net loss in the first quarter of 2023 primarily associated with final working capital adjustments related to the sale of Fiserv Costa Rica, S.A. during the fourth quarter of 2022 and a gain on the sale of certain merchant contracts during the first quarter of 2022 in conjunction with the mutual termination of one of the company's merchant alliance joint ventures.

    5

    The tax impact of adjustments is calculated using a tax rate of 20% and 21% in the first quarters of 2023 and 2022, respectively, which approximates the company's anticipated annual effective tax rates, exclusive of the $9 million actual tax impact on the sale of certain merchant contracts during the first quarter of 2022.

    Fiserv, Inc.

    Financial Results by Segment

    (In millions, unaudited)

     

     

     

     

     

    Three Months Ended

    March 31,

     

     

    2023

     

     

     

    2022

     

    Total Company

     

     

     

    Revenue

    $

    4,547

     

     

    $

    4,138

     

    Adjustments:

     

     

     

    Output Solutions postage reimbursements

     

    (273

    )

     

     

    (239

    )

    Deferred revenue purchase accounting adjustments

     

    6

     

     

     

    7

     

    Adjusted revenue

    $

    4,280

     

     

    $

    3,906

     

     

     

     

     

    Operating income

    $

    934

     

     

    $

    846

     

    Adjustments:

     

     

     

    Merger and integration costs 1

     

    48

     

     

     

    22

     

    Severance costs

     

    24

     

     

     

    52

     

    Amortization of acquisition-related intangible assets

     

    427

     

     

     

    475

     

    Net loss (gain) on sale of businesses and other assets

     

    4

     

     

     

    (147

    )

    Adjusted operating income

    $

    1,437

     

     

    $

    1,248

     

     

     

     

     

    Operating margin

     

    20.5

    %

     

     

    20.5

    %

    Adjusted operating margin

     

    33.6

    %

     

     

    32.0

    %

     

     

     

     

    Merchant Acceptance ("Acceptance") 2

     

     

     

    Revenue

    $

    1,847

     

     

    $

    1,653

     

     

     

     

     

    Operating income

    $

    562

     

     

    $

    470

     

     

     

     

     

    Operating margin

     

    30.5

    %

     

     

    28.4

    %

     

     

     

     

    Financial Technology ("Fintech") 2

     

     

     

    Revenue

    $

    792

     

     

    $

    778

     

     

     

     

     

    Operating income

    $

    280

     

     

    $

    275

     

     

     

     

     

    Operating margin

     

    35.4

    %

     

     

    35.4

    %

     

     

     

     

    Payments and Network ("Payments")

     

     

     

    Revenue

    $

    1,629

     

     

    $

    1,462

     

    Adjustments:

     

     

     

    Deferred revenue purchase accounting adjustments

     

    6

     

     

     

    7

     

    Adjusted revenue

    $

    1,635

     

     

    $

    1,469

     

     

     

     

     

    Operating income

    $

    711

     

     

    $

    618

     

    Adjustments:

     

     

     

    Deferred revenue purchase accounting adjustments

     

    6

     

     

     

    7

     

    Adjusted operating income

    $

    717

     

     

    $

    625

     

     

     

     

     

    Operating margin

     

    43.6

    %

     

     

    42.3

    %

    Adjusted operating margin

     

    43.8

    %

     

     

    42.5

    %

     

     

     

     

    Fiserv, Inc.

    Financial Results by Segment (cont.)

    (In millions, unaudited)

     

     

     

     

     

    Three Months Ended

    March 31,

     

     

    2023

     

     

     

    2022

     

    Corporate and Other

     

     

     

    Revenue

    $

              279

     

     

    $

              245

     

    Adjustments:

     

     

     

    Output Solutions postage reimbursements

     

               (273

    )  

     

     

               (239

    )  

    Adjusted revenue

    $

                  6

     

     

    $

                  6

     

     

     

     

     

    Operating loss

    $

             (619

    )  

     

    $

             (517

    )  

    Adjustments:

     

     

     

    Merger and integration costs

     

                  42

     

     

     

                  15

     

    Severance costs

     

                  24

     

     

     

                  52

     

    Amortization of acquisition-related intangible assets

     

                427

     

     

     

                475

     

    Net loss (gain) on sale of businesses and other assets

     

                    4

     

     

     

               (147

    )  

    Adjusted operating loss

    $

             (122

    )  

     

    $

             (122

    )  

     

     

     

     

    See pages 3-4 for disclosures related to the use of non-GAAP financial measures.

    Operating margin percentages are calculated using actual, unrounded amounts.

     

    1

    Includes the deferred revenue purchase accounting adjustments in the Payments segment related to the 2019 acquisition of First Data Corporation. Adjustments for this residual activity will conclude by December 31, 2023.

    2

    For all periods presented in the Acceptance and Fintech segments, there were no adjustments to GAAP measures presented and thus the adjusted measures are equal to the GAAP measures presented.

    Fiserv, Inc.

    Condensed Consolidated Statements of Cash Flows

    (In millions, unaudited)

     

    Three Months Ended

    March 31,

     

     

    2023

     

     

     

    2022

     

    Cash flows from operating activities

     

     

     

    Net income

    $

    576

     

     

    $

    682

     

    Adjustments to reconcile net income to net cash provided by operating activities:

     

     

     

    Depreciation and other amortization

     

    352

     

     

     

    313

     

    Amortization of acquisition-related intangible assets

     

    433

     

     

     

    486

     

    Amortization of financing costs and debt discounts

     

    10

     

     

     

    11

     

    Share-based compensation

     

    93

     

     

     

    61

     

    Deferred income taxes

     

    (87

    )

     

     

    (183

    )

    Net loss (gain) on sale of businesses and other assets

     

    4

     

     

     

    (147

    )

    Loss (income) from investments in unconsolidated affiliates

     

    12

     

     

     

    (106

    )

    Distributions from unconsolidated affiliates

     

    11

     

     

     

    19

     

    Other operating activities

     

    (1

    )

     

     

    3

     

    Changes in assets and liabilities, net of effects from acquisitions and dispositions:

     

     

     

    Trade accounts receivable

     

    255

     

     

     

    (60

    )

    Prepaid expenses and other assets

     

    (224

    )

     

     

    (130

    )

    Contract costs

     

    (66

    )

     

     

    (88

    )

    Accounts payable and other liabilities

     

    (336

    )

     

     

    (78

    )

    Contract liabilities

     

    98

     

     

     

    32

     

    Net cash provided by operating activities

     

    1,130

     

     

     

    815

     

     

     

     

     

    Cash flows from investing activities

     

     

     

    Capital expenditures, including capitalized software and other intangibles

     

    (339

    )

     

     

    (331

    )

    Net proceeds from sale of businesses and other assets

     

    —

     

     

     

    175

     

    Distributions from unconsolidated affiliates

     

    34

     

     

     

    61

     

    Purchases of investments

     

    (5

    )

     

     

    (8

    )

    Proceeds from sale of investments

     

    —

     

     

     

    3

     

    Other investing activities

     

    (4

    )

     

     

    —

     

    Net cash used in investing activities

     

    (314

    )

     

     

    (100

    )

     

     

     

     

    Cash flows from financing activities

     

     

     

    Debt proceeds

     

    2,071

     

     

     

    705

     

    Debt repayments

     

    (424

    )

     

     

    (1,086

    )

    Net (repayments of) proceeds from commercial paper and short-term borrowings

     

    (781

    )

     

     

    218

     

    Payments of debt financing costs

     

    (15

    )

     

     

    —

     

    Proceeds from issuance of treasury stock

     

    29

     

     

     

    43

     

    Purchases of treasury stock, including employee shares withheld for tax obligations

     

    (1,530

    )

     

     

    (544

    )

    Settlement activity, net

     

    (460

    )

     

     

    (400

    )

    Distributions paid to noncontrolling interests and redeemable noncontrolling interests

     

    (8

    )

     

     

    (13

    )

    Other financing activities

     

    (31

    )

     

     

    —

     

    Net cash used in financing activities

     

    (1,149

    )

     

     

    (1,077

    )

    Effect of exchange rate changes on cash and cash equivalents

     

    17

     

     

     

    (10

    )

    Net change in cash and cash equivalents

     

    (316

    )

     

     

    (372

    )

    Cash and cash equivalents, beginning balance

     

    3,192

     

     

     

    3,205

     

    Cash and cash equivalents, ending balance

    $

    2,876

     

     

    $

    2,833

     

     

     

     

     

    Fiserv, Inc.

    Condensed Consolidated Balance Sheets

    (In millions, unaudited)

     

     

     

     

     

    March 31,

     

    December 31,

     

    2023

     

    2022

    Assets

     

     

     

    Cash and cash equivalents

    $

    1,046

     

    $

    902

    Trade accounts receivable – net

     

    3,340

     

     

    3,585

    Prepaid expenses and other current assets

     

    1,762

     

     

    1,575

    Settlement assets

     

    14,141

     

     

    21,482

    Total current assets

     

    20,289

     

     

    27,544

     

     

     

     

    Property and equipment – net

     

    2,002

     

     

    1,958

    Customer relationships – net

     

    7,973

     

     

    8,424

    Other intangible assets – net

     

    4,021

     

     

    3,991

    Goodwill

     

    37,017

     

     

    36,811

    Contract costs – net

     

    912

     

     

    905

    Investments in unconsolidated affiliates

     

    2,362

     

     

    2,403

    Other long-term assets

     

    1,972

     

     

    1,833

    Total assets

    $

    76,548

     

    $

    83,869

     

     

     

     

    Liabilities and Equity

     

     

     

    Accounts payable and accrued expenses

    $

    3,569

     

    $

    3,883

    Short-term and current maturities of long-term debt

     

    461

     

     

    468

    Contract liabilities

     

    692

     

     

    625

    Settlement obligations

     

    14,141

     

     

    21,482

    Total current liabilities

     

    18,863

     

     

    26,458

     

     

     

     

    Long-term debt

     

    21,943

     

     

    20,950

    Deferred income taxes

     

    3,520

     

     

    3,602

    Long-term contract liabilities

     

    273

     

     

    235

    Other long-term liabilities

     

    995

     

     

    936

    Total liabilities

     

    45,594

     

     

    52,181

     

     

     

     

    Redeemable noncontrolling interests

     

    160

     

     

    161

     

     

     

     

    Fiserv shareholders' equity

     

    30,077

     

     

    30,828

    Noncontrolling interests

     

    717

     

     

    699

    Total equity

     

    30,794

     

     

    31,527

    Total liabilities and equity

    $

    76,548

     

    $

    83,869

     

     

     

     

     

     

    Fiserv, Inc.

    Selected Non-GAAP Financial Measures and Additional Information

    (In millions, unaudited)

     

    Organic Revenue Growth 1

     

    Three Months Ended

    March 31,

     

     

    2023

     

     

     

    2022

     

     

    Growth

     

     

     

     

     

     

     

    Total Company

     

     

     

     

     

     

    Adjusted revenue

     

    $

    4,280

     

     

    $

    3,906

     

     

     

    Currency impact 2

     

     

    109

     

     

     

    —

     

     

     

    Acquisition adjustments

     

     

    (17

    )

     

     

    —

     

     

     

    Divestiture adjustments

     

     

    (6

    )

     

     

    (39

    )

     

     

    Organic revenue

     

    $

    4,366

     

     

    $

    3,867

     

     

    13

    %

     

     

     

     

     

     

     

    Acceptance

     

     

     

     

     

     

    Adjusted revenue

     

    $

    1,847

     

     

    $

    1,653

     

     

     

    Currency impact 2

     

     

    86

     

     

     

    —

     

     

     

    Acquisition adjustments

     

     

    (14

    )

     

     

    —

     

     

     

    Divestiture adjustments

     

     

    —

     

     

     

    (23

    )

     

     

    Organic revenue

     

    $

    1,919

     

     

    $

    1,630

     

     

    18

    %

     

     

     

     

     

     

     

    Fintech

     

     

     

     

     

     

    Adjusted revenue

     

    $

    792

     

     

    $

    778

     

     

     

    Currency impact 2

     

     

    2

     

     

     

    —

     

     

     

    Acquisition adjustments

     

     

    (3

    )

     

     

    —

     

     

     

    Divestiture adjustments

     

     

    —

     

     

     

    (10

    )

     

     

    Organic revenue

     

    $

    791

     

     

    $

    768

     

     

    3

    %

     

     

     

     

     

     

     

    Payments

     

     

     

     

     

     

    Adjusted revenue

     

    $

    1,635

     

     

    $

    1,469

     

     

     

    Currency impact 2

     

     

    21

     

     

     

    —

     

     

     

    Organic revenue

     

    $

    1,656

     

     

    $

    1,469

     

     

    13

    %

     

     

     

     

     

     

     

    Corporate and Other

     

     

     

     

     

     

    Adjusted revenue

     

    $

    6

     

     

    $

    6

     

     

     

    Divestiture adjustments

     

     

    (6

    )

     

     

    (6

    )

     

     

    Organic revenue

     

    $

    —

     

     

    $

    —

     

     

     

     

    See pages 3-4 for disclosures related to the use of non-GAAP financial measures.

    Organic revenue growth is calculated using actual, unrounded amounts.

     

    1

    Organic revenue growth is measured as the change in adjusted revenue (see pages 8-9) for the current period excluding the impact of foreign currency fluctuations and revenue attributable to acquisitions and dispositions, divided by adjusted revenue from the prior period excluding revenue attributable to dispositions.

    2

    Currency impact is measured as the increase or decrease in adjusted revenue for the current period by applying prior period foreign currency exchange rates to present a constant currency comparison to prior periods.

     

    Fiserv, Inc.

    Selected Non-GAAP Financial Measures and Additional Information (cont.)

    (In millions, unaudited)

     

    Free Cash Flow

    Three Months Ended

    March 31,

     

    2023

     

     

     

    2022

     

     

     

     

     

    Net cash provided by operating activities

    $

    1,130

     

     

    $

    815

     

    Capital expenditures

     

    (339

    )

     

     

    (331

    )

    Adjustments:

     

     

     

    Distributions paid to noncontrolling interests and redeemable noncontrolling interests

     

    (8

    )

     

     

    (13

    )

    Distributions from unconsolidated affiliates included in cash flows from investing activities

     

    34

     

     

     

    61

     

    Severance, merger and integration payments

     

    55

     

     

     

    102

     

    Tax payments on adjustments

     

    (11

    )

     

     

    (21

    )

    Other

     

    —

     

     

     

    (10

    )

    Free cash flow

    $

    861

     

     

    $

    603

     

     

     

     

     

    Total Amortization 1

    Three Months Ended

    March 31,

     

    2023

     

     

    2022

     

     

     

     

    Acquisition-related intangible assets

    $

    433

     

    $

    486

    Capitalized software and other intangibles

     

    108

     

     

    80

    Purchased software

     

    54

     

     

    58

    Financing costs and debt discounts

     

    10

     

     

    11

    Sales commissions

     

    28

     

     

    25

    Deferred conversion costs

     

    20

     

     

    16

    Total amortization

    $

    653

     

    $

    676

     

     

     

     

    See pages 3-4 for disclosures related to the use of non-GAAP financial measures. 

     

    1 

    The company adjusts its non-GAAP results to exclude amortization of acquisition-related intangible assets as such amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions. Management believes that the adjustment of acquisition-related intangible asset amortization supplements the GAAP information with a measure that can be used to assess the comparability of operating performance. Although the company excludes amortization from acquisition-related intangible assets from its non-GAAP expenses, management believes that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Any future acquisitions may result in the amortization of additional intangible assets.

     Fiserv, Inc.

    Full Year Forward-Looking Non-GAAP Financial Measures

    Reconciliations of unaudited non-GAAP financial measures to the most comparable GAAP measures are included in this news release, except for forward-looking measures where a reconciliation to the corresponding GAAP measures is not available due to the variability, complexity and limited visibility of these items that are excluded from the non-GAAP outlook measures. The company's forward-looking non-GAAP financial measures for 2023, including organic revenue growth, adjusted earnings per share and adjusted earnings per share growth, are designed to enhance shareholders' ability to evaluate the company's performance by excluding certain items to focus on factors and trends affecting its business.

    Organic Revenue Growth - The company's organic revenue growth outlook for 2023 excludes the impact of foreign currency fluctuations, acquisitions, dispositions and the impact of the company's Output Solutions postage reimbursements. The currency impact is measured as the increase or decrease in the expected adjusted revenue for the period by applying prior period foreign currency exchange rates to present a constant currency comparison to prior periods.

     

     

    Growth

     

     

     

    2023 Revenue

     

    6% - 7%

    Output Solutions postage reimbursements

     

    (1.0)%

    2023 Adjusted revenue

     

    5% - 6%

     

     

     

    Currency impact

     

    2.5%

    Acquisition adjustments

     

    (0.5)%

    Divestiture adjustments

     

    1.0%

    2023 Organic revenue

     

    8% - 9%

    Adjusted Earnings Per Share - The company's adjusted earnings per share outlook for 2023 excludes certain non-cash or other items such as non-cash intangible asset amortization expense associated with acquisitions; non-cash impairment charges; merger and integration costs; severance costs; gains or losses from the sale of businesses, certain assets and investments; and certain discrete tax benefits and expenses. The company estimates that amortization expense in 2023 with respect to acquired intangible assets will decrease approximately 10% compared to the amount incurred in 2022.

    Other adjustments to the company's financial measures that were incurred in 2022 and for the three months ended March 31, 2023 are presented in this news release; however, they are not necessarily indicative of adjustments that may be incurred in the remainder of 2023 or beyond. Estimates of these impacts and adjustments on a forward-looking basis are not available due to the variability, complexity and limited visibility of these items.

    Fiserv, Inc.

    Full Year Forward-Looking Non-GAAP Financial Measures (cont.)

     

    The company's adjusted earnings per share growth outlook for 2023 is based on 2022 adjusted earnings per share performance.

     

    2022 GAAP net income attributable to Fiserv

    $

    2,530

     

    Adjustments:

     

    Merger and integration costs 1

     

    173

     

    Severance costs

     

    209

     

    Amortization of acquisition-related intangible assets 2

     

    1,814

     

    Non wholly-owned entity activities 3

     

    9

     

    Net gain on sale of businesses and other assets 4

     

    (54

    )

    Tax impact of adjustments 5

     

    (476

    )

    2022 adjusted net income

    $

    4,205

     

     

     

    Weighted average common shares outstanding - diluted

     

    647.9

     

     

     

    2022 GAAP earnings per share attributable to Fiserv - diluted

    $

    3.91

     

    Adjustments - net of income taxes:

     

    Merger and integration costs 1

     

    0.21

     

    Severance costs

     

    0.25

     

    Amortization of acquisition-related intangible assets 2

     

    2.21

     

    Non wholly-owned entity activities 3

     

    (0.02

    )

    Net gain on sale of businesses and other assets 4

     

    (0.06

    )

    2022 adjusted earnings per share

    $

    6.49

     

     

     

    2023 adjusted earnings per share outlook

    $7.30 - $7.40

    2023 adjusted earnings per share growth outlook

    12% - 14%

     

     

    In millions, except per share amounts, unaudited. Earnings per share is calculated using actual, unrounded amounts.

    See pages 3-4 for disclosures related to the use of non-GAAP financial measures.

    Fiserv, Inc.

    Full Year Forward-Looking Non-GAAP Financial Measures (cont.)

    1

    Represents acquisition and related integration costs incurred in connection with various acquisitions. Merger and integration costs primarily includes share-based compensation and third-party professional service fees attributable to various acquisitions.

     

    2 

    Represents amortization of intangible assets acquired through various acquisitions, including customer relationships, software/technology and trade names. This adjustment does not exclude the amortization of other intangible assets such as contract costs (sales commissions and deferred conversion costs), capitalized and purchased software, financing costs and debt discounts.

     

    3 

    Represents the company's share of amortization of acquisition-related intangible assets and expenses associated with debt refinancing activities at its unconsolidated affiliates, as well as the minority interest share of amortization of acquisition-related intangible assets at its subsidiaries in which the company holds a controlling financial interest. This adjustment also includes gains totaling $201 million related to certain equity investment transactions and other net expense of $43 million associated with joint venture debt guarantees.

    4

    Represents an aggregate net gain on the sale of Fiserv Costa Rica, S.A., the company's Systems Integration Services operations, the company's Korea operations and certain merchant contracts in conjunction with the mutual termination of one of the company's merchant alliance joint ventures.

    5

    The tax impact of adjustments is calculated using a tax rate of 21%, which approximates the company's annual effective tax rate, exclusive of the $16 million actual tax impacts associated with the net gain on sale of businesses, other assets and certain equity investment transactions.

    FISV-E

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      $FISV
      $FLT
      $MITK
      Business Services
      Consumer Discretionary
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      $DLX
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