Fiserv, Inc. (FISV) on Q2 2021 Results - Earnings Call Transcript
Operator: Welcome to the Fiserv 2021 Second Quarter Earnings Conference Call. All participants will be in a listen-only mode until the question-and-answer session begins following the presentation. As a reminder, today's call is being recorded. At this time, I will turn the call over to Shub Mukherjee, Senior Vice President of Investor Relations at Fiserv. Shub Mukherjee: Thank you and good morning. With me on the call today are Frank Bisignano, our President and Chief Executive Officer, and Bob Hau, our Chief Financial Officer. Frank Bisignano: Thank you, Shub. Second quarter was a very strong quarter for us across the company. Total company adjusted revenue grew 20%. Adjusted operating margin grew 510 basis points, resulting in adjusted operating income growth of 41%. Adjusted EPS grew 47% to $1.37. Free cash flow in the quarter was in line with last year, just under $900 million, including the impact of a diminished NOL. Second quarter sales were up 31%, with growth across the business. Our strong second quarter was driven by a combination of continued economic recovery and strong execution of our business strategy. On the macroeconomic side, we saw continued recovery in the US, with uneven recovery in other parts of the world. The shift to digital commerce drove consumer demand for seamless experiences across channels. Amidst these trends, we executed on our strategies to continue to win business and grow share. We serve as the operating system for commerce across our client base, ranging from micro merchants to the world's largest corporations, financial institutions, banks and credit unions, fintechs and governments. This enables us to focus not only on growth , but also on new services, business models and adjacencies. Given the strong results to date and our solid pipeline, we are raising our outlook range for internal revenue growth and now expect 10% to 12% growth for 2021 from 9% to 12% previously. Additionally, we're raising our adjusted EPS full-year outlook, and now expect the range of $5.50 to $5.60, up from $5.35 to $5.50 previously. The increased adjusted EPS guidance outlook represents a 24% to 27% growth versus last year. Robert Hau : Thank you, Frank. And good morning, everyone. If you're following along on our slides, I will cover some detail on each of our segments starting with slide 4. We had a very strong second quarter, thanks to our broad portfolio of products and services, as well as the positioning of our assets and strong execution across the business. Total company internal revenue growth was 18% in the quarter, with growth across all segments and led by the Merchant Acceptance segment, which grew 41%. Year-to-date, total company internal revenue grew 11%, also led by the Merchant Acceptance segment, which grew 23%. Second quarter adjusted operating income was up a strong 41% to $1.3 billion and adjusted operating margin increased by a very strong 510 basis points to 33.9%. This margin improvement was driven by our outstanding revenue results and our continued and discipline costs energy execution, which produced $90 million of incremental cost synergies during the quarter, as well as strong operating performance. First half adjusted operating income increased 28% to $2.4 billion. Adjusted operating margin through the end of June expanded 440 basis points to 32.7%. Second quarter adjusted earnings per share increased 47% to $1.37 compared to $0.93 in the prior year. Through June 30, adjusted earnings per share increased 32% to $2.54, putting us on a pace to achieve our 36th consecutive year of double-digit adjusted earnings per share growth, a testament to the incredible resiliency of this company. Free cash flow in the quarter of $897 million was in line with last year, with free cash flow for the first six months of the year up 4% to $1.72 billion. Free cash flow conversion was 97% to adjusted net income, including a $172 million impact from reduced net operating loss carryforwards. Year-to-date free cash flow conversion came in at 100%. And we continue to expect at least 108% free cash flow conversion for 2021. Now looking at our segment results. Internal revenue growth in the Merchant Acceptance segment was a stellar 41% in the quarter and 23% year-to-date. Our results were driven by a strong performance of our SMB platform, Clover; our enterprise platform, Carat; and our ISV platform, Clover Connect. These results were driven by a strong global performance despite uneven economic recovery outside North America. The second quarter was a record quarter for Clover. In addition to a very strong 96% annualized GPV growth, this quarter was also the highest shipment volume for Clover Hardware, having recently shipped our 2 millionth Clover device. Moving to Carat, we won 52 new global enterprise e-commerce clients on the platform in the quarter. Including existing clients, Carat won or expanded business with brands such as Sporttrade, Aldi and Yapstone. In India, Carat won the business of a leading digital food delivery platform. Our ISV volume in the quarter through Clover Connect grew 122% year-over-year, and we're winning both ISVs that are new to payments as well as competitive takeaways. Adjusted operating income in the Acceptance segment increased 135% to $524 million in the quarter and adjusted operating margin was up more than 12 full percentage points to 31.4%, driven by the strength in the top line. Through June 30, adjusted operating income improved 80% to $911 million and adjusted operating margin grew 950 basis points to 29.7%. The Payments and Network segment posted internal revenue growth of 7% in this quarter, resulting in year-to-date growth of 4%. Debit transactions grew a strong 31% in the quarter, and this was a low double-digit sequential grower versus last quarter. We continue to build upon the strong momentum of transaction growth and account-to-account transfers and P2P solutions. Versus prior year, Zelle transactions in the quarter were up 94% and the number of clients live on Zelle was up 88% in the quarter. Our bill pay business saw sequential improvement in growth from Q1 and is expected to continue to improve through the second half of this year. We continue to expect to see the full year internal revenue growth for the Payments and Network segment to be toward the upper end of the medium-term growth rate of 5% to 8%. Adjusted operating income for the segment was up 14% to $636 million. And adjusted operating margin was up 260 basis points to 44.6% in the quarter. Year-to-date adjusted operating income was up 8% to $1.2 billion and adjusted operating margin was up 140 basis points to 43%. The results were driven by positive momentum in our issuer business and the impact of revenue and cost synergies. The Financial Technology segment internal revenue grew in line with expectations at 5% in the second quarter as continued growth in high quality recurring revenue was partially offset by lower periodic revenue, which created an 80 basis points of headwind to internal revenue growth. For the first half of the year, internal revenue growth for the Financial Technology segment is now 4%, reaching the lower end of our medium term outlook for this segment of 4% to 6%. Demand for our digital banking capabilities and for our deep offering of digital solutions continues to build momentum. As Frank mentioned, we added 10 new core account processing clients in the quarter. Total mobile subscribers across our leading digital platforms, Mobiliti and Achitect, grew 9% in the quarter. Mobile deposits in Q2 grew 12% over the prior year, while self-service ATM deposits grew 70% over last year. Adjusted operating income was up a strong 8% in the quarter to $273 million and up 14% year-to-date to $519 million. Adjusted operating margin in this segment increased a robust 80 basis points in the quarter to 36.2% and 300 basis points to 34.9% through the end of June due to a combination of revenue growth, operational effectiveness benefits and cost synergies. The adjusted operating loss was $124 million in the quarter, in line with our expectations, up from last year, largely on higher variable compensation expenses. The adjusted effective tax rate in the quarter was 21.3%, increasing 80 basis points versus prior year. We'd also expect our full year adjusted effective tax rate will be fairly consistent with 2020 rate and at the lower end of our previously forecasted range of 21% to 22%. During the quarter, we continued our disciplined capital allocation strategy by repurchasing 5 million shares for $588 million, and we have more than 55 million shares remaining authorized for repurchase. We completed two acquisitions in the quarter, SpendLabs, a mobile native cloud-based commercial card payments and software company, and Pineapple Payments, a leading independent sales organization focused on integrated payments. Additionally, we divested our remaining interest in the investment services business and received pretax proceeds of $466 million from the transaction. Total debt outstanding was $20.8 billion on June 30. And the debt to adjusted EBITDA ratio decreased to 3.3 times, putting us well on track to achieve our target leverage of less than 3 times by the end of this year. We are fully committed to our longstanding capital allocation strategy, which includes maintaining a strong balance sheet, making organic investments in innovative solutions, and pursuing high value acquisitions. Importantly, share repurchase remains our benchmark for capital deployment. With that, let me turn the call back to Frank. Frank Bisignano : Thanks, Bob. I'm very proud of the results we delivered. The quality of our assets, our relentless focus on innovation, our agility, speed of new client implementation, with examples like Caixa, ADS, Atlanticus and Genesis, put us in a great spot to serve our clients. Our speed to market with the enhanced Fiserv digital capabilities for banking and card management announced yesterday, along with the integration of business expense management into the Clover platform, all of which leverage the full capabilities of recent acquisitions, Ondot and SpendLabs, add to our continued success. In addition to delivering on our financial results, we continue to focus on our people and on our communities. Earlier this month, Fiserv was named by Forbes as the Best Employer for Diversity, recognizing our commitment to putting diversity at the forefront of our values and having implemented long-term initiatives to create a more inclusive environment. During the quarter, we published our first annual Corporate Social Responsibility report, which is available on the Corporate Social Responsibility section of our website. We also expanded our back to business grant program beyond the original locations that were selected in 2020. In May, we partnered with the New York Mets to recognize small businesses as part of our Asian American and Pacific Islander Heritage Month. And in June, we awarded grants to businesses in Tulsa, as part of the centennial observation of the Tulsa Race Massacre. None of these achievements would have been possible without our world class talent. I thank our 40,000 associates around the world for their commitment and courage as we stand together to deliver value for clients, our colleagues, and you, our shareholders. And finally, before I close, I want to congratulate the Milwaukee Bucks for winning the NBA championship at Fiserv Forum last week. The Bucks are terrific partners, and our partnership goes way beyond putting our name on their arena. Clover has been deployed throughout Fiserv forum for food and beverage concessions, providing attendees with seamless, quick and easy transactions. They also partnered with us for several back to business events earlier this year. Congratulations to the entire Milwaukee Bucks organization. With that, operator, let's open up the line for questions. Operator: . Our first question comes from Lisa Ellis from MoffettNathanson. Lisa Ellis: I wanted to follow up on the two-year CAGR call out for the Merchant Acceptance segments. I believe you said it's running now at a 13% internal revenue growth on a two-year CAGR basis. One, wanted to just confirm that number. And then two, I wanted to kind of just drill into it a little bit, given the fact above your medium-term outlook for that segment, which as per Investor Day was 9% to 12%. Can you just highlight like what you're seeing, say, in North America versus ex-US? And are there any unusual dynamics in this quarter or do you see that sustainable going forward? And kind of what's different about the business now than prior to the pandemic when I believe it was running close to about 10%? Frank Bisignano: The US has been the strong spot in the recovery right now. You heard us talk about unevenness outside the US. But I do think you saw a robust, even last July when it all began coming back. I do think you've got to focus on the three legs in the US and internationally. The three legs are Clover, Carat and Clover Connect, right? And all of those were continued investments, continued build out and we're seeing it show up in the clients' office. So, I would say, it's really driven by US. When you see that we say US and international for the quarter performed fundamentally evenly, that was a spotty evenness, meaning not every country was the same and you could kind of map to where recoveries happen or not. So, I think it's all about our platform strategy and our client strategy that's driving the outcomes. And I think our teams galvanize very well around it. Robert Hau: At least just to hit the first part of that question, that 13% is an average growth rate. If you look at Q2 of last year, it was actually down 15% over the prior year. We're now up 41% over 2020. So, the average 13% there. Operator: Next, we'll go to the line of David Koning from Baird. David Koning: Maybe my first question. Just on the Merchant segment momentum, I guess a little bit like what Lisa was asking about, I went back several years and the second half usually has quarters that look a lot like Q2. So, usually Q3 and Q4 look a lot like Q2. But the question, I guess, is the momentum building? You mentioned international still has room to improve. US momentum seems kind of off the charts, BAMS actually grew faster year-over-year than your core merchant business for the first time probably in many, many years. So, are we in a momentum situation that Q3 and Q4 could actually be better than Q2 this this year compared to when normally it's the same? Frank Bisignano: I think the answer to that is yes. There is concern in the world. Right? So, that's a little bit in how we think about it when we talk to about what we're doing. So, there is a degree of us saying, the world's not out of the woods yet, although I think they've learned how to grow with this. So, it's highly possible what you're saying could happen. We're driving the business to get the results we're getting. You see all the partnerships we're aligning to, to bring more. So, yeah, I'd say it's possible. But world has spottiness right now too. David Koning: Secondly, just as a follow-up, the past, I guess, handful of quarters, at different times KKR has sold – they're down to a much smaller position they were a year or two ago. But on the heels of now a really good quarter, what do you think their thoughts are about selling now? Frank Bisignano: I'd start off with, first and foremost, I do not anticipate them conducting additional secondary offerings. Their holdings are just under 10% now. And they have told us they intend to sell shares on the open market over time in a routine and pragmatic way going forward. So, I don't think we're going to see another secondary. Operator: Next, we'll go to Timothy Chiodo from Credit Suisse. Timothy Chiodo: Over the last year or so, we've seen a few merchant acquirers become public. They have pretty fast growth in some more niche verticals. So online gambling, regulated financial services. Clearly, the First Data Fiserv merchant acquiring business is extremely well diversified and has a much, much larger scale, meaning that any one vertical can be overly meaningful, but maybe you could just touch on your approach to participation in those types of verticals, the extent to which you either are or will, how much it could help your business, what are the pros, cons, et cetera? Frank Bisignano: I think we're in every vertical. When we talk about grocer, QSR, retail, but we're in gaming, we're across the board. You don't have a business of this size and scale that isn't serving all markets. And when you look at our capability, we do a good job of bringing base capability, and then segmenting to what verticals specifically need. So, I think we are completely deployed against – and we're deployed against growth. We're deployed against growth. Where we invest is where we believe the growthier segments are. Robert Hau: Tim, I think one of the keys for our growth and, quite frankly, how we work through the pandemic and continue to grow the business meaningfully is we're very well diversified in terms of the way we go to market, whether that's our direct channel, through our bank partners, through our non-financial institution, partners, joint ventures, et cetera, but also extremely well diversified across verticals and participate essentially in all of them, and have offerings that get us revenue growth across a very wide spectrum. Timothy Chiodo: As a minor follow-up, was there any comment you could give on the assessments timing on the contra revenue, any impact in Q2 given the difference in quarter-over-quarter growth, Q1 to Q2, some of those impacts that we saw last year? Robert Hau: You recall, we had a pretty significant impact in Q2 last year, a negative impact in Q2 that rebounded in the second half of last year. We're seeing the opposite now as we saw a big rebound in second quarter of this year. We do have a tailwind that will be muted a bit in the second half of the year. We don't have quite the same snapback in the second half as we did in the second half of last year. So, call it, roughly, of the 12 full points of margin improvement we saw this year over Q2 of last year, about 4 points of that was the brand assessment fees. And then that will be a bit of a headwind for us in the second half of the year. But we certainly see margin expansion continuing into the second half. Operator: Next we'll go to the line of James Faucette from Morgan Stanley. James Faucette: I know Bob talked a little bit about capital allocation. But I'm wondering if you can just help us think about how priorities or at least the way that you allocate may be changing, if at all, especially given kind of what's happening from a perspective of – your stock is a little cheaper now, and so maybe that speaks to – wanting to do buybacks. On the other hand, we're kind of continuing to see massive flows of capital into competitors, both through the private and public markets, and the like. So, just wondering if there's any evolution there on your thinking of how to prioritize use of capital going forward? Frank Bisignano: I'd start with three on leverage that will be well behind us. And we did talk about Investor Day, $30 billion of free cash. And so, I think you also see us continuing the strategy of taking Silicon Valley digital expertise and capability, integrate it into our company, and fundamentally creating experiences that nobody in peer group can do. You saw it with Clover back in the day. And when I talked about Ondot, I did say that the acquisition of Ondot and then subsequently SpendLabs, but Ondot specifically, would bring a Clover-like effect to our company. And the fact that – so you'll see us deploy capital to those type of acquisitions. But I want to bring clarity to what I mean in a Clover type. We've created a single instance for consumers to be able to get every banking product they have and have card functionality that surpasses the industry by a lot. So, we have tremendous – everything from digital issuance to the ability to put it in the wallet. I think you've got to really think about what we're doing there. And then we will invest in these products quite heavily. Right? So, I think you'll see us continue to do those type of acquisitions that drive the digital presence, but we've done things unparalleled through those acquisitions. So, we talked about $30 billion. You see the properties we bought. You see us integrating those properties, integrating for growth. And I think you'll see us using buyback as a benchmark. Robert Hau: I think this quarter is perhaps a prototypical example, this digital enhancement, this digital innovation that Frank talked about in his prepared remarks and just referenced is a combination of investing in our business organically, internal investment, advancing our digital banking capability with Mobiliti, bringing more feature function capability to our mobile capability, adding to that inorganic investment the acquisitions of SpendLabs and Ondot in a quarter that we also repurchased 5 million shares. So, the $30 billion of capital available we have this year and for the next four or five years allows us to buy back shares, making organic investment in M&A and develop internal products and internal innovation, and generate very high return. Operator: Next we'll go to Dan Dolev from Mizuho. Dan Dolev: Did I hear that correctly you said that this quarter was a record shipment quarter for Clover? Frank Bisignano: That's correct. Dan Dolev: It sounds like it's more idiosyncratic share gains than anything market or reopening related. Maybe can you comment a little bit on who you're gaining share from, maybe specific verticals? And then maybe kind of the trajectory, you went from 36% in Q1 to 96% in Q2. How should we think about the remainder of the year? Thank you. Frank Bisignano: I think Clover is a platform of choice and Clover is a partner platform of choice. And we did talk about that Clover would get other distribution channels, and that distribution could be our own outside of the US. It could be with our ISV partners. And then, just in our base core business, our own, your question of share, when you're as big as we are, we're competing with everybody and we feel that Clover is at the top of the list of what people want as a product. So, I think it is about the differentiated product and the capability that gets it the type of numbers you saw in this quarter. Robert Hau: Dan, just to add, the 96% growth year-over-year, remember, this is the quarter of comparing to the second quarter of last year, which was obviously a very difficult year across the board. But I think the pertinent number here is a 38% CAGR over the last two years. So, obviously, Clover growing incredibly well, continue to expect that to be a lift and a share gainer for us as we lead with Clover in the marketplace. We're seeing benefits of continued innovation, continued investments in Clover as new business formation kicks in post-pandemic, as merchants that were not transacting at all are very much come back, our investments in Clover Dining, et cetera, pay off when the economy recovers. People think of Clover and allow us to serve them with Clover devices, hitting our record shipment as well as giving us that nice lift in overall GPV. Operator: Next we have Darrin Peller from Wolfe Research. Darrin Peller: Let me just shift to the fintech segment for a minute, which for several quarters was really in the 3% to 4% range and did show deceleration to that 5%. You guys have talked about it being something that can do 4% to 6% growth. And we're seeing some signs of improvement now. You talked a lot about digital bank in your release also. So, I'm curious from a structural standpoint, given all the new competition out there, if you could touch on the assets you have and your capabilities and, in your view, confidence level around that segment actually being in that 4% to 6% or better versus low-single digit over time, that'd be great. Frank Bisignano: Well, you see a number of things going on our FinTech segment, but let me bring -- I want to bring complete clarity on the digital offering because I think it affects both core and our digital business. Ultimately, what we have a deep belief is that we're here to help our clients serve their clients. So, the ability to take 2,100 Mobiliti banks and bring them a fully integrated card experience at the highest level of card via the Ondot and bring that in a way that – maybe a simple way to think about it is everything you can imagine in one application that allows you to do everything from originate transactions to digital card issuance to digital card view to card free cash, all in the same place that you're doing your bill pay and you're doing your Zelle transactions. So, we're going to take 2,100 Mobiliti clients, 1,300 CardValet and bring that to them. And then that will be what we – and those are financial institutions. We believe that will also help our clients increase their digital adoption quotient with their clients. So, we see this as a game changer. So, it's early innings. We got banks up and running on it. And we will deploy. And then, you hear us talking about, on top of all that for financial institutions, we bring in Abiliti that sits on top of all of it. But the most important thing to think about is our cores are strategic. The front end, though, is where we believe the tip of the spear and where we win, to help our clients serve their clients. And you saw what we posted now, but I look forward to continuing to generate more revenue through better function we bring to clients that allow them to do more with their clients. And then, you've got an integration of SpendLabs into Clover, which allows – these are our digital platforms. We're talking about digital platforms, one-of-a-kind digital platform. I think what you should take away, there's an element of this company that's digitally agile and can deliver, and you saw it on those credit conversions. I think those are good track rated speeds for those size and scope. Caixa is unparalleled. 70 days from signing, we're boarding merchants for them every day. And then, you look at us taking SpendLabs and Ondot and I think we're going to have that same effect that Clover had when we look years out from now. Robert Hau: I was just going to bring it back to the 5% growth. Obviously, we had a good quarter, hitting 5%. We indicated that periodic revenue headwind would abate. I think it was 150 basis points. Last quarter, we said we expected this quarter to be half that. We saw 80 basis points into the second half of the year. We see that no longer being a headwind. And through the first half of the year, we're now at 4%. So, we reached the bottom end of that medium-term guidance and continue to be quite comfortable that we will be in that 4% to 6% range this year. And the things that Frank's talked about, the investments we're making in digital banking gives us an opportunity to continue to see that good mid-single digit growth going forward. Darrin Peller: Just quick follow-up on M&A. What are your thoughts on doing more tuck-ins that keep improving the tech stack and really thinking about maybe even just accretive to revenue growth, maybe even dilutive to EPS just type deals, just really add to the long-term growth strategy? Robert Hau: Obviously, you've watched over time the type of properties we buy. Our ISV strategy was borne out of acquisition. Now, it's a winning strategy. Clover was borne out of acquisition. And I think you'd have to argue that's a bigger than winning strategy. You'll watch these assets, Ondot and SpendLabs, so I think you're just going to continue. I don't think it needs to be dilutive to EPS. I think we know how to make it accretive pretty darn quick. And what I just talked about was kind of the dream of the acquisition when we put the companies together, that we could take an asset like an Ondot and spread it all the way through because of what a great bank partner we were, in that we could bring it all the way from merchant to our fintech. So, I think you should expect us to continue to do more like that. And I think we have a skill at it that we keep the talent, we grow the talent, and we build a bigger digital gene pool in the process. Operator: Our next question comes from Jason Kupferberg from Bank of America. Jason Kupferberg: Can you comment just on any July trends in the Acceptance segment and the impacts from the Delta variant? And then also, just on the revenue yield dynamics, I know those were positive in the second quarter in Acceptance, how should we think about that for Q3? Will volumes and revenues be a little bit more in sync? Robert Hau: In terms of July trends in our Merchant segment, I'd say, obviously, through what 26 days or so, we have information yesterday, day before, slightly better than June. So, continued improvement in growth. And I'm talking about versus 2019. When you do a 2020 compare, you get some real odd variations on the comparison points. So, we're looking at versus prior year, as well as versus 2019. But slight improvement in July versus what we saw in June, consistent with what we've got loaded in our full-year outlook with that growth rate and EPS growth. Call it mid 20% – 25%, 26% merchant growth, volume growth over 2019. In terms of yield, you saw a recovery, so to speak, in Q2 versus what we saw in Q1 as our SMB portfolio continues to grow nicely. I think that's going to be consistent in the second half of the year. Jason Kupferberg: So, we should expect those positive yield dynamics to continue. I just wanted to switch over to the Payments segment for a minute. I know you're reiterating the higher end of the 5% to 8% target range. And I think you probably have to do 10%, 11% in the second half to get there. I know you've got some new portfolios ramping up, but just talking about the visibility on that acceleration relative to where you were in the first half. Frank Bisignano: I think you see the credit momentum and you see us talking about that we'll have good second half revenue from that. In general – that's on the wins. And then, you see general credit momentum beginning in our portfolio. Debit networks, I talked about the strength of them and we feel very, very strongly about what's going on there in debit transaction growth. So, when you put all those in the calculation, go from 2% to 7%, and you should expect us to continue our trajectory north. Operator: Our last question comes from Ramsey El-Assal from Barclays. Ramsey El-Assal: I wanted to ask about your payment mix in the Acceptance segment sort of in a post pandemic environment. I know we're not – maybe not 100% there yet. But when you think about digital versus offline, debit versus credit, SMB versus enterprise, do you expect kind of a different mix in your business after the pandemic and how does that feed into your kind of longer-term growth algorithm? Frank Bisignano: Ramsey, I think we certainly have seen a broad movement to digital everything. That's why you hear his talk about the investments we're making in mobile capability and integrating our digital banking and card management experience. More and more digital transactions, e-commerce, et cetera, is certainly – I believe the pandemic brought forward multiple periods of transition into that space. And I do think it was not transitory. Those changes are here to stay. And we'll see, as people return to whatever normal is going to be, what that continued transition growth rate happens, but, obviously, we're seeing great growth in Zelle. We're seeing more and more transactions on account to account transfers and good e-com volume here to talk about in our merchant space, up 21%. So, getting mobile-first capability and digital experiences was a focus of ours over the last several quarters, and we're bringing a number of that into a single instance right now and continue to see that integration going forward. Ramsey El-Assal: Let me squeeze one quick last one in here, which is, do you see the Feds revisiting the Durbin routing rule as kind of opening up a market opportunity for STAR and Accel? Robert Hau: Yes. Ramsey El-Assal: Short and sweet. Frank Bisignano: Obviously, Ramsey, it remains to be seen the timing and when that will happen, but does look to be a real opportunity for us. Frank Bisignano: Yeah. I think the thing is, our capabilities around fraud and chargeback management and our capabilities to serve the biggest issuers is very deep. And I think that, many times, having a third network is very valuable to everybody, both merchants and issuers, and so – and STAR and Accel, we've invested heavily in them. And that's why we get the type of transaction growth you're seeing there. So, we really, really love . Frank Bisignano: Thank you for joining us this morning. We appreciate your support. If you have further questions, please don't hesitate to contact our Investor Relations team. Stay safe and have a great day. Operator: Thank you all for participating in today's conference. You may disconnect your line and enjoy the rest of your day.FISV Ratings Summary
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Fiserv Shares Surge 8% Following Q4 Results
Fiserv Inc (NASDAQ:FISV) shares gained more than 8% yesterday after the company reported its Q4 results, with EPS of $1.91, in-line with expectations, and revenue of $4.36 billion, slightly better than the consensus estimate of $4.35 billion.
The company provided its fiscal 2023 outlook, expecting EPS to be in the range of $7.25-$7.40, compared to the consensus estimate of $7.28.
According to the analysts at Deutsche Bank, much of the credit for the robust quarter, past 18-month results and solid 2023 guidance needs to be given to CEO Frank Bisignano for changing the organic revenue growth of the company to sustainable higher levels.
Given solid continued execution and the expectation for a 38th consecutive year of double-digit EPS growth, the analysts believe the company is deserving of the premium it trades at vs peers. Based on the updated outlook, the analysts raised their 2023/2024 EPS by $0.16/$0.24 to $7.29/$8.10 and introduced a 2025 EPS of $8.99.
Fiserv’s CEO Meeting Takeaways
Deutsche Bank analysts provided their views on Fiserv, Inc. (NASDAQ:FISV) following their one-on-one meeting with the company’s Chairman, President and CEO Frank Bisignano to discuss the economic landscape and the company’s solid fundamentals.
To this point, the CEO sees consumer spending remaining stable or “hanging in there”, but would not be surprised to see a weakening environment take hold in the near future. However, he seems confident that the company will weather any economic storm well and still be able to solidly grow EPS even if the economy falters.
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Fiserv Shares Up 4% on Q2 Beat & Raise
Fiserv, Inc. (NASDAQ:FISV) shares rose more than 4% on Tuesday following the company’s reported Q2 results, with EPS of $1.56 coming in line with the Street estimate and revenue of $4.25 billion beating the Street estimate of $4.07 billion.
The results were driven by outperformance in Merchant Acceptance, where the Clover and Carat platforms continue to drive growth. However, inflation and continued investments across the business resulted in adjusted operating margins coming in below expectations and the company lowered its expectations for 2022 margin expansion.
However, despite mounting macro concerns, the company raised its 2022 revenue growth guidance to approximately 9-11% organic (vs. 7-9% prior) and EPS growth to approximately 16-17% (vs. 15-17% prior) with the low end of guidance assuming a macro slowdown in H2/22. The company expects 2022 EPS to be in the range of $6.45-$6.55, compared to the Street estimate of $6.47.
