GAAP revenue growth of 8% both in the quarter
and year to date;
GAAP EPS increased 108% in the quarter and 32%
year to date;
Operating cash flow increased 19% to
$3.57 billion year to date;
Organic revenue growth of 12% in the quarter
and 11% year to date;
Adjusted EPS increased 20% in the quarter and
16% year to date;
Free cash flow increased 29% to
$2.72 billion year to date;
Company raises 2023 organic revenue growth
outlook to 11%
and raises adjusted EPS outlook to $7.47 to
$7.52
Fiserv, Inc. (NYSE: FI), a leading global provider of payments
and financial services technology solutions, today reported
financial results for the third quarter of 2023.
Third Quarter 2023 GAAP Results
GAAP revenue for the company increased 8% to $4.87 billion in
the third quarter of 2023 compared to the prior year period, with
12% growth in the Acceptance segment, 4% growth in the Fintech
segment and 5% growth in the Payments segment. GAAP revenue for the
company increased 8% to $14.18 billion in the first nine months of
2023 compared to the prior year period, with 11% growth in the
Acceptance segment, 1% growth in the Fintech segment and 8% growth
in the Payments segment.
GAAP earnings per share was $1.56 in the third quarter and $3.54
in the first nine months of 2023, an increase of 108% and 32%,
respectively, compared to the prior year periods. GAAP operating
margin was 30.8% and 25.2% in the third quarter and first nine
months of 2023, respectively, compared to 18.9% and 19.5% in the
third quarter and first nine months of 2022, respectively. The
third quarter and first nine months of 2023 include a $177 million
pre-tax gain related to the sale of the company’s financial
reconciliation business. The first nine months of 2022 included a
$201 million pre-tax gain related to certain equity investment
transactions. Net cash provided by operating activities increased
19% to $3.57 billion in the first nine months of 2023 compared to
$2.99 billion in the prior year period.
“Fiserv again delivered very strong financial results across the
board, demonstrating our superior business model,” said Frank
Bisignano, Chairman, President and Chief Executive Officer of
Fiserv. “We continued our leadership in payments through a broad
portfolio of solutions, which is essential to the flow of commerce
and money movement for our diverse client base around the
world.”
Third Quarter 2023 Non-GAAP Results and Additional
Information
- Adjusted revenue increased 8% to $4.62 billion in the third
quarter and 8% to $13.40 billion in the first nine months of 2023
compared to the prior year periods.
- Organic revenue growth was 12% in the third quarter of 2023,
led by 20% growth in the Acceptance segment and 6% growth in both
the Payments and Fintech segments.
- Organic revenue growth was 11% in the first nine months of
2023, led by 17% growth in the Acceptance segment, 9% growth in the
Payments segment and 3% growth in the Fintech segment.
- Adjusted earnings per share increased 20% to $1.96 in the third
quarter and 16% to $5.34 in the first nine months of 2023 compared
to the prior year periods.
- Adjusted operating margin increased 290 basis points to 38.1%
in the third quarter and 250 basis points to 36.1% in the first
nine months of 2023 compared to the prior year periods.
- Free cash flow increased 29% to $2.72 billion in the first nine
months of 2023 compared to $2.11 billion in the prior year
period.
- The company repurchased 9.6 million shares of common stock for
$1.2 billion in the third quarter and 31.4 million shares of common
stock for $3.7 billion in the first nine months of 2023.
- The company completed a public offering of $2.0 billion of
5-year and 10-year senior notes with a weighted average coupon rate
of 5.538%.
- In September 2023, the company acquired the remaining 49%
ownership interest in European Merchant Services B.V., a
Netherlands-based merchant acceptance business.
- Fiserv was named as the #1 global financial technology provider
on the 2023 International Data Corporation (IDC) FinTech Top 100
Rankings, and was also named to the inaugural lists of CNBC’s
World’s Top FinTech Companies and TIME’s World’s Best
Companies.
- Fiserv will hold an Investor Conference in New York City on
November 15, 2023 to share its strategic, operational and financial
plans with investors.
Outlook for 2023
Fiserv raises full year 2023 outlook and now expects organic
revenue growth of 11% and adjusted earnings per share growth of 15%
to 16%, a range of $7.47 to $7.52 per share.
“With third quarter outperformance and continued strength this
quarter, we are again raising our guidance for 2023,” said
Bisignano. “We remain confident in our ability to add new clients,
grow with our existing clients, and provide solutions that capture
greater share of wallet.”
Earnings Conference Call
The company will discuss its third quarter 2023 results in a
live webcast at 7 a.m. CT on Tuesday, October 24, 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. (NYSE: FI), a Fortune 500™ company, 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 pages 15-17 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, outlook, 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 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, bank failures, or intensified international hostilities,
and the impact they may have on the company and its employees,
clients, vendors, supply chain, operations and sales; 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
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Revenue
Processing and services
$
4,008
$
3,678
$
11,605
$
10,738
Product
865
840
2,571
2,368
Total revenue
4,873
4,518
14,176
13,106
Expenses
Cost of processing and services
1,311
1,443
4,067
4,381
Cost of product
583
553
1,761
1,631
Selling, general and administrative
1,652
1,547
4,952
4,560
Net (gain) loss on sale of businesses and
other assets
(176
)
120
(172
)
(27
)
Total expenses
3,370
3,663
10,608
10,545
Operating income
1,503
855
3,568
2,561
Interest expense, net
(258
)
(190
)
(692
)
(534
)
Other expense, net
(35
)
(13
)
(81
)
(83
)
Income before income taxes and (loss)
income from investments in unconsolidated affiliates
1,210
652
2,795
1,944
Income tax provision
(239
)
(147
)
(544
)
(382
)
(Loss) income from investments in
unconsolidated affiliates
(2
)
(12
)
(11
)
222
Net income
969
493
2,240
1,784
Less: net income attributable to
noncontrolling interests
17
12
42
36
Net income attributable to
Fiserv
$
952
$
481
$
2,198
$
1,748
GAAP earnings per share attributable to
Fiserv — diluted
$
1.56
$
0.75
$
3.54
$
2.68
Diluted shares used in computing
earnings per share attributable to Fiserv
610.3
645.0
620.3
651.0
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
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
GAAP net income attributable to
Fiserv
$
952
$
481
$
2,198
$
1,748
Adjustments:
Merger and integration costs 1
30
54
120
115
Severance costs
15
35
52
134
Amortization of acquisition-related
intangible assets 2
388
442
1,245
1,388
Non wholly-owned entity activities 3
31
51
102
(19
)
Net (gain) loss on sale of businesses and
other assets 4
(176
)
120
(172
)
(27
)
Canadian tax law change 5
—
—
27
—
Tax impact of adjustments 6
(44
)
(131
)
(261
)
(353
)
Adjusted net income
$
1,196
$
1,052
$
3,311
$
2,986
GAAP earnings per share attributable to
Fiserv - diluted
$
1.56
$
0.75
$
3.54
$
2.68
Adjustments - net of income taxes:
Merger and integration costs 1
0.04
0.07
0.15
0.14
Severance costs
0.02
0.04
0.07
0.16
Amortization of acquisition-related
intangible assets 2
0.51
0.54
1.60
1.68
Non wholly-owned entity activities 3
0.04
0.05
0.13
(0.06
)
Net (gain) loss on sale of businesses and
other assets 4
(0.21
)
0.19
(0.20
)
(0.03
)
Canadian tax law change 5
—
—
0.03
—
Adjusted earnings per share
$
1.96
$
1.63
$
5.34
$
4.59
GAAP earnings per share attributable to
Fiserv growth
108
%
32
%
Adjusted earnings per share growth
20
%
16
%
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
associated with integration activities primarily include $39
million and $56 million of share-based compensation and $52 million
and $25 million of third-party professional service fees in the
first nine months of 2023 and 2022, respectively.
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 14 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 nine months of 2022 also includes pre-tax
gains totaling $201 million related to certain equity investment
transactions and other net expense of $57 million associated with
joint venture debt guarantees.
4
Represents a net gain primarily associated with the sale of the
company’s financial reconciliation business during the third
quarter of 2023. This adjustment also includes a loss on the sale
of the company’s Korea operations during the third quarter of 2022,
as well as a gain on the sale of certain merchant contracts during
the first nine months of 2022 in conjunction with the mutual
termination of one of the company's merchant alliance joint
ventures.
5
Represents the impact of a multi-year retroactive Canadian tax
law change, enacted in June 2023, related to the Goods and Services
Tax / Harmonized Sales Tax (GST/HST) treatment of payment card
services.
6
The tax impact of adjustments is calculated using a tax rate of
20% and 21% in the first nine months of 2023 and 2022,
respectively, which approximates the company's anticipated annual
effective tax rates, exclusive of actual tax impacts of $49 million
associated with the net gain on sale of businesses during the first
nine months of 2023 and $10 million associated with the net gain on
sales of business, other assets and certain equity investment
transactions during the first nine months of 2022.
Fiserv, Inc.
Financial Results by
Segment
(In millions, unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Total Company
Revenue
$
4,873
$
4,518
$
14,176
$
13,106
Adjustments:
Output Solutions postage
reimbursements
(263
)
(251
)
(791
)
(712
)
Deferred revenue purchase accounting
adjustments
5
6
16
19
Adjusted revenue
$
4,615
$
4,273
$
13,401
$
12,413
Operating income
$
1,503
$
855
$
3,568
$
2,561
Adjustments:
Merger and integration costs 1
30
54
120
115
Severance costs
15
35
52
134
Amortization of acquisition-related
intangible assets
388
442
1,245
1,388
Net (gain) loss on sale of businesses and
other assets
(176
)
120
(172
)
(27
)
Canadian tax law change
—
—
27
—
Adjusted operating income
$
1,760
$
1,506
$
4,840
$
4,171
Operating margin
30.8
%
18.9
%
25.2
%
19.5
%
Adjusted operating margin
38.1
%
35.2
%
36.1
%
33.6
%
Merchant Acceptance (“Acceptance”)
2
Revenue
$
2,106
$
1,878
$
6,018
$
5,432
Operating income
$
757
$
610
$
2,037
$
1,673
Operating margin
35.9
%
32.4
%
33.8
%
30.8
%
Financial Technology (“Fintech”)
2
Revenue
$
795
$
766
$
2,371
$
2,347
Operating income
$
291
$
261
$
856
$
817
Operating margin
36.7
%
34.1
%
36.1
%
34.8
%
Payments and Network
(“Payments”)
Revenue
$
1,704
$
1,617
$
4,978
$
4,597
Adjustments:
Deferred revenue purchase accounting
adjustments
5
6
16
19
Adjusted revenue
$
1,709
$
1,623
$
4,994
$
4,616
Operating income
$
827
$
738
$
2,315
$
2,018
Adjustments:
Deferred revenue purchase accounting
adjustments
5
6
16
19
Adjusted operating income
$
832
$
744
$
2,331
$
2,037
Operating margin
48.5
%
45.6
%
46.5
%
43.9
%
Adjusted operating margin
48.6
%
45.9
%
46.7
%
44.1
%
Fiserv, Inc.
Financial Results by Segment
(cont.)
(In millions, unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Corporate and Other
Revenue
$
268
$
257
$
809
$
730
Adjustments:
Output Solutions postage
reimbursements
(263
)
(251
)
(791
)
(712
)
Adjusted revenue
$
5
$
6
$
18
$
18
Operating loss
$
(372
)
$
(754
)
$
(1,640
)
$
(1,947
)
Adjustments:
Merger and integration costs
25
48
104
96
Severance costs
15
35
52
134
Amortization of acquisition-related
intangible assets
388
442
1,245
1,388
Net (gain) loss on sale of businesses and
other assets
(176
)
120
(172
)
(27
)
Canadian tax law change
—
—
27
—
Adjusted operating loss
$
(120
)
$
(109
)
$
(384
)
$
(356
)
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)
Nine Months Ended
September 30,
2023
2022
Cash flows from operating
activities
Net income
$
2,240
$
1,784
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and other amortization
1,093
982
Amortization of acquisition-related
intangible assets
1,261
1,416
Amortization of financing costs and debt
discounts
30
33
Share-based compensation
275
244
Deferred income taxes
(344
)
(402
)
Net gain on sale of businesses and other
assets
(172
)
(27
)
Loss (income) from investments in
unconsolidated affiliates
11
(222
)
Distributions from unconsolidated
affiliates
42
58
Other operating activities
(2
)
(2
)
Changes in assets and liabilities, net of
effects from acquisitions and dispositions:
Trade accounts receivable
119
(521
)
Prepaid expenses and other assets
(506
)
(203
)
Contract costs
(180
)
(230
)
Accounts payable and other liabilities
(303
)
105
Contract liabilities
3
(30
)
Net cash provided by operating
activities
3,567
2,985
Cash flows from investing
activities
Capital expenditures, including
capitalized software and other intangibles
(1,034
)
(1,148
)
Net proceeds from sale of businesses and
other assets
232
218
Payments for acquisition of businesses,
net of cash acquired
—
(682
)
Distributions from unconsolidated
affiliates
110
110
Purchases of investments
(15
)
(45
)
Proceeds from sale of investments
—
13
Other investing activities
(3
)
—
Net cash used in investing
activities
(710
)
(1,534
)
Cash flows from financing
activities
Debt proceeds
5,188
1,450
Debt repayments
(1,652
)
(2,945
)
Net (repayments of) proceeds from
commercial paper and short-term borrowings
(2,032
)
2,020
Payments of debt financing costs
(38
)
—
Proceeds from issuance of treasury
stock
68
96
Purchases of treasury stock, including
employee shares withheld for tax obligations
(3,790
)
(1,909
)
Settlement activity, net
(630
)
114
Distributions paid to noncontrolling
interests and redeemable noncontrolling interests
(22
)
(30
)
Payment to acquire noncontrolling interest
of consolidated subsidiary
(56
)
—
Payments of acquisition-related contingent
consideration
(33
)
—
Other financing activities
(39
)
7
Net cash used in financing
activities
(3,036
)
(1,197
)
Effect of exchange rate changes on cash
and cash equivalents
(8
)
(84
)
Net change in cash and cash
equivalents
(187
)
170
Cash and cash equivalents, beginning
balance
3,192
3,205
Cash and cash equivalents, ending
balance
$
3,005
$
3,375
Fiserv, Inc.
Condensed Consolidated Balance
Sheets
(In millions, unaudited)
September 30,
December 31,
2023
2022
Assets
Cash and cash equivalents
$
1,349
$
902
Trade accounts receivable – net
3,461
3,585
Prepaid expenses and other current
assets
1,986
1,575
Settlement assets
21,785
21,482
Total current assets
28,581
27,544
Property and equipment – net
2,122
1,958
Customer relationships – net
7,300
8,424
Other intangible assets – net
4,139
3,991
Goodwill
36,836
36,811
Contract costs – net
921
905
Investments in unconsolidated
affiliates
2,259
2,403
Other long-term assets
1,996
1,833
Total assets
$
84,154
$
83,869
Liabilities and Equity
Accounts payable and accrued expenses
$
3,590
$
3,883
Short-term and current maturities of
long-term debt
649
468
Contract liabilities
605
625
Settlement obligations
21,785
21,482
Total current liabilities
26,629
26,458
Long-term debt
22,657
20,950
Deferred income taxes
3,264
3,602
Long-term contract liabilities
247
235
Other long-term liabilities
971
936
Total liabilities
53,768
52,181
Redeemable noncontrolling interests
161
161
Fiserv shareholders' equity
29,573
30,828
Noncontrolling interests
652
699
Total equity
30,225
31,527
Total liabilities and equity
$
84,154
$
83,869
Fiserv, Inc.
Selected Non-GAAP Financial
Measures and Additional Information
(In millions, unaudited)
Organic Revenue Growth 1
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
Growth
2023
2022
Growth
Total Company
Adjusted revenue
$
4,615
$
4,273
$
13,401
$
12,413
Currency impact 2
160
—
393
—
Acquisition adjustments
(17
)
—
(49
)
—
Divestiture adjustments
(5
)
(34
)
(18
)
(102
)
Organic revenue
$
4,753
$
4,239
12%
$
13,727
$
12,311
11%
Acceptance
Adjusted revenue
$
2,106
$
1,878
$
6,018
$
5,432
Currency impact 2
152
—
347
—
Acquisition adjustments
(17
)
—
(46
)
—
Divestiture adjustments
—
(12
)
—
(47
)
Organic revenue
$
2,241
$
1,866
20%
$
6,319
$
5,385
17%
Fintech
Adjusted revenue
$
795
$
766
$
2,371
$
2,347
Currency impact 2
(2
)
—
2
—
Acquisition adjustments
—
—
(3
)
—
Divestiture adjustments
—
(16
)
—
(37
)
Organic revenue
$
793
$
750
6%
$
2,370
$
2,310
3%
Payments
Adjusted revenue
$
1,709
$
1,623
$
4,994
$
4,616
Currency impact 2
10
—
44
—
Organic revenue
$
1,719
$
1,623
6%
$
5,038
$
4,616
9%
Corporate and Other
Adjusted revenue
$
5
$
6
$
18
$
18
Divestiture adjustments
(5
)
(6
)
(18
)
(18
)
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 9-10) 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
Nine Months Ended
September 30,
2023
2022
Net cash provided by operating
activities
$
3,567
$
2,985
Capital expenditures
(1,034
)
(1,148
)
Adjustments:
Distributions paid to noncontrolling
interests and redeemable noncontrolling interests
(22
)
(30
)
Distributions from unconsolidated
affiliates included in cash flows from investing activities
110
110
Severance, merger and integration
payments
121
211
Tax payments on adjustments
(24
)
(44
)
Tax payments on gain on sale of assets and
investments in unconsolidated affiliates
—
37
Other
5
(11
)
Free cash flow
$
2,723
$
2,110
Total Amortization 1
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Acquisition-related intangible assets
$
393
$
450
$
1,261
$
1,416
Capitalized software and other
intangibles
133
91
360
258
Purchased software
53
67
167
180
Financing costs and debt discounts
10
11
30
33
Sales commissions
28
27
83
79
Deferred conversion costs
21
16
61
49
Total amortization
$
638
$
662
$
1,962
$
2,015
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
7.5%
Output Solutions postage
reimbursements
(0.5)%
2023 Adjusted revenue
7%
Currency impact
3.5%
Acquisition adjustments
(0.5)%
Divestiture adjustments
1%
2023 Organic revenue
11%
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 and nine months ended September
30, 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
$7.47 - $7.52
2023 adjusted earnings per share growth
outlook
15% - 16%
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
associated with integration activities primarily include
share-based compensation and third-party professional service
fees.
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 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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version on businesswire.com: https://www.businesswire.com/news/home/20231024567931/en/
Media Relations: Britt Zarling Corporate Communications
Fiserv, Inc. 414-526-3107 britt.zarling@fiserv.com
Investor Relations: Julie Chariell Investor Relations
Fiserv, Inc. 212-515-0278 julie.chariell@fiserv.com
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