GAAP revenue growth of 7% both in the quarter and year to date;
GAAP EPS decreased 37% in the quarter and increased 6% year to date;
Operating cash flow increased 24% to
Organic revenue growth of 15% in the quarter and 17% year to date;
Adjusted EPS increased 17% in the quarter and 18% year to date;
Free cash flow increased 23% to
Company raises 2024 organic revenue growth outlook to 16% to 17%
and adjusted EPS outlook to
Third Quarter 2024 GAAP Results
GAAP revenue for the company increased 7% to
GAAP earnings per share decreased 37% to
GAAP operating margin was 30.7% and 27.7% in the third quarter and first nine months of 2024 compared to 30.8% and 25.2% in the third quarter and first nine months of 2023. GAAP operating margin in the Merchant Solutions segment was 37.7% and 36.2% in the third quarter and first nine months of 2024 compared to 34.8% and 32.9% in the third quarter and first nine months of 2023. GAAP operating margin in the Financial Solutions segment was 47.4% and 45.8% in the third quarter and first nine months of 2024 compared to 46.9% and 45.1% in the third quarter and first nine months of 2023. Net cash provided by operating activities increased 24% to
“We are pleased with our third quarter performance, which showcases strength across both our Merchant and Financial Solutions segments and several significant new wins,” said
Third Quarter 2024 Non-GAAP Results and Additional Information
-
Adjusted revenue increased 7% to
$4.88 billion in the third quarter and 7% to$14.22 billion in the first nine months of 2024 compared to the prior year periods. - Organic revenue growth was 15% in the third quarter of 2024, led by 24% growth in the Merchant Solutions segment and 6% growth in the Financial Solutions segment.
- Organic revenue growth was 17% in the first nine months of 2024, led by 29% growth in the Merchant Solutions segment and 6% growth in the Financial Solutions segment.
-
Adjusted earnings per share increased 17% to
$2.30 in the third quarter and 18% to$6.29 in the first nine months of 2024 compared to the prior year periods. - Adjusted operating margin increased 170 basis points to 40.2% in the third quarter and 170 basis points to 38.2% in the first nine months of 2024 compared to the prior year periods.
- Adjusted operating margin increased 290 basis points to 37.7% in the Merchant Solutions segment and increased 40 basis points to 47.4% in the Financial Solutions segment in the third quarter of 2024, compared to the prior year period.
- Adjusted operating margin increased 330 basis points to 36.2% in the Merchant Solutions segment and 60 basis points to 45.8% in the Financial Solutions segment in the first nine months of 2024, compared to the prior year period.
-
Free cash flow increased 23% to
$3.34 billion in the first nine months of 2024 compared to$2.72 billion in the prior year period. -
The company repurchased 7.6 million shares of common stock for
$1.3 billion in the third quarter and 27.8 million shares of common stock for$4.3 billion in the first nine months of 2024. -
Fiserv was named as the #1 global financial technology provider on the 2024International Data Corporation (IDC) FinTech Top 100 Rankings for the second consecutive year.
Outlook for 2024
“Fiserv continues to demonstrate consistency and sustainability in our top-line growth and margin improvement, leading us to raise the outlook on our 2024 financial commitments,”said Bisignano. “Our unparalleled track record remains intact as we move closer to achieving our 39th consecutive year of double-digit adjusted earnings per share growth.”
Segment Realignment
The company realigned its reportable segments during the first quarter of 2024 to correspond with changes in its business designed to further enhance operational performance in the delivery of its integrated portfolio of products and solutions to its financial institution clients (“Segment Realignment”). The company’s new reportable segments are Merchant Solutions and Financial Solutions. Segment results for the three and nine months ended
Earnings Conference Call
The company will discuss its third quarter 2024 results in a live webcast at
About
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
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; merger and integration costs; gains or losses from the sale of businesses, certain assets or investments; and certain discrete tax benefits and expenses. 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 and dispositions. 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
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,” “confident,” “likely,” “plan,” 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 in 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
|
|
|||||||||||||||
|
Condensed Consolidated Statements of Income |
|||||||||||||||
|
(In millions, except per share amounts, unaudited) |
|||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
Revenue |
|
|
|
|
|
|
|
||||||||
|
Processing and services |
$ |
4,237 |
|
|
$ |
4,008 |
|
|
$ |
12,377 |
|
|
$ |
11,605 |
|
|
Product |
|
978 |
|
|
|
865 |
|
|
|
2,828 |
|
|
|
2,571 |
|
|
Total revenue |
|
5,215 |
|
|
|
4,873 |
|
|
|
15,205 |
|
|
|
14,176 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Expenses |
|
|
|
|
|
|
|
||||||||
|
Cost of processing and services |
|
1,346 |
|
|
|
1,311 |
|
|
|
4,043 |
|
|
|
4,067 |
|
|
Cost of product |
|
661 |
|
|
|
583 |
|
|
|
1,951 |
|
|
|
1,761 |
|
|
Selling, general and administrative |
|
1,606 |
|
|
|
1,652 |
|
|
|
5,000 |
|
|
|
4,952 |
|
|
Net gain on sale of businesses and other assets |
|
— |
|
|
|
(176 |
) |
|
|
— |
|
|
|
(172 |
) |
|
Total expenses |
|
3,613 |
|
|
|
3,370 |
|
|
|
10,994 |
|
|
|
10,608 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Operating income |
|
1,602 |
|
|
|
1,503 |
|
|
|
4,211 |
|
|
|
3,568 |
|
|
Interest expense, net |
|
(326 |
) |
|
|
(258 |
) |
|
|
(872 |
) |
|
|
(692 |
) |
|
Other expense, net |
|
(5 |
) |
|
|
(35 |
) |
|
|
(17 |
) |
|
|
(81 |
) |
|
|
|
|
|
|
|
|
|
||||||||
|
Income before income taxes and loss from investments in unconsolidated affiliates |
|
1,271 |
|
|
|
1,210 |
|
|
|
3,322 |
|
|
|
2,795 |
|
|
Income tax provision |
|
(74 |
) |
|
|
(239 |
) |
|
|
(448 |
) |
|
|
(544 |
) |
|
Loss from investments in unconsolidated affiliates |
|
(626 |
) |
|
|
(2 |
) |
|
|
(642 |
) |
|
|
(11 |
) |
|
|
|
|
|
|
|
|
|
||||||||
|
Net income |
|
571 |
|
|
|
969 |
|
|
|
2,232 |
|
|
|
2,240 |
|
|
Less: net income attributable to noncontrolling interests |
|
7 |
|
|
|
17 |
|
|
|
39 |
|
|
|
42 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Net income attributable to |
$ |
564 |
|
|
$ |
952 |
|
|
$ |
2,193 |
|
|
$ |
2,198 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
GAAP earnings per share attributable to |
$ |
0.98 |
|
|
$ |
1.56 |
|
|
$ |
3.74 |
|
|
$ |
3.54 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Diluted shares used in computing earnings per share attributable to |
|
576.9 |
|
|
|
610.3 |
|
|
|
585.7 |
|
|
|
620.3 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Earnings per share is calculated using actual, unrounded amounts. |
|||||||||||||||
|
|
|||||||||||||||
|
Reconciliation of GAAP to |
|||||||||||||||
|
Adjusted Net Income and Adjusted Earnings Per Share |
|||||||||||||||
|
(In millions, except per share amounts, unaudited) |
|||||||||||||||
|
|
|
|
|
|
|
||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
GAAP net income attributable to |
$ |
564 |
|
|
$ |
952 |
|
|
$ |
2,193 |
|
|
$ |
2,198 |
|
|
Adjustments: |
|
|
|
|
|
|
|
||||||||
|
Merger and integration costs 1 |
|
— |
|
|
|
30 |
|
|
|
59 |
|
|
|
120 |
|
|
Severance costs |
|
14 |
|
|
|
15 |
|
|
|
77 |
|
|
|
52 |
|
|
Amortization of acquisition-related intangible assets 2 |
|
346 |
|
|
|
388 |
|
|
|
1,085 |
|
|
|
1,245 |
|
|
Non wholly-owned entity activities 3 |
|
24 |
|
|
|
31 |
|
|
|
78 |
|
|
|
102 |
|
|
Impairment of equity method investments 4 |
|
610 |
|
|
|
— |
|
|
|
610 |
|
|
|
— |
|
|
Net gain on sale of businesses and other assets 5 |
|
— |
|
|
|
(176 |
) |
|
|
— |
|
|
|
(172 |
) |
|
Canadian tax law change 6 |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
27 |
|
|
Tax impact of adjustments 7 |
|
(233 |
) |
|
|
(44 |
) |
|
|
(416 |
) |
|
|
(261 |
) |
|
Adjusted net income |
$ |
1,325 |
|
|
$ |
1,196 |
|
|
$ |
3,686 |
|
|
$ |
3,311 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
GAAP earnings per share attributable to |
$ |
0.98 |
|
|
$ |
1.56 |
|
|
$ |
3.74 |
|
|
$ |
3.54 |
|
|
Adjustments - net of income taxes: |
|
|
|
|
|
|
|
||||||||
|
Merger and integration costs 1 |
|
— |
|
|
|
0.04 |
|
|
|
0.08 |
|
|
|
0.15 |
|
|
Severance costs |
|
0.02 |
|
|
|
0.02 |
|
|
|
0.10 |
|
|
|
0.07 |
|
|
Amortization of acquisition-related intangible assets 2 |
|
0.48 |
|
|
|
0.51 |
|
|
|
1.48 |
|
|
|
1.60 |
|
|
Non wholly-owned entity activities 3 |
|
0.03 |
|
|
|
0.04 |
|
|
|
0.11 |
|
|
|
0.13 |
|
|
Impairment of equity method investments 4 |
|
0.79 |
|
|
|
— |
|
|
|
0.78 |
|
|
|
— |
|
|
Net gain on sale of businesses and other assets 5 |
|
— |
|
|
|
(0.21 |
) |
|
|
— |
|
|
|
(0.20 |
) |
|
Canadian tax law change 6 |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.03 |
|
|
Adjusted earnings per share |
$ |
2.30 |
|
|
$ |
1.96 |
|
|
$ |
6.29 |
|
|
$ |
5.34 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
GAAP earnings per share attributable to |
|
(37 |
)% |
|
|
|
|
6 |
% |
|
|
||||
|
Adjusted earnings per share growth |
|
17 |
% |
|
|
|
|
18 |
% |
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
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 acquisitions. Merger and integration costs associated with integration activities in the first nine months of 2024 primarily include |
|
| 2 |
Represents amortization of intangible assets acquired through acquisition, 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. |
|
| 4 |
Represents a non-cash impairment of certain equity method investments during the third quarter of 2024, primarily related to the company’s Wells Fargo Merchant Services joint venture, recorded within loss from investments in unconsolidated affiliates in the consolidated statement of income. |
|
| 5 |
Represents a net gain primarily associated with the sale of the company’s financial reconciliation business during the third quarter of 2023. |
|
| 6 |
Represents the impact of a multi-year retroactive Canadian tax law change, enacted in |
|
| 7 |
The tax impact of adjustments is calculated using a tax rate of 20% in both the first nine months of 2024 and 2023, which approximates the company’s anticipated annual effective tax rate, exclusive of actual tax impacts of a |
|
|
|||||||||||||||
|
Financial Results by Segment |
|||||||||||||||
|
(In millions, unaudited) |
|||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
Revenue |
$ |
5,215 |
|
|
$ |
4,873 |
|
|
$ |
15,205 |
|
|
$ |
14,176 |
|
|
Adjustments: |
|
|
|
|
|
|
|
||||||||
|
Postage reimbursements |
|
(331 |
) |
|
|
(307 |
) |
|
|
(984 |
) |
|
|
(927 |
) |
|
Deferred revenue purchase accounting adjustments |
|
— |
|
|
|
5 |
|
|
|
— |
|
|
|
16 |
|
|
Adjusted revenue |
$ |
4,884 |
|
|
$ |
4,571 |
|
|
$ |
14,221 |
|
|
$ |
13,265 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Operating income |
$ |
1,602 |
|
|
$ |
1,503 |
|
|
$ |
4,211 |
|
|
$ |
3,568 |
|
|
Adjustments: |
|
|
|
|
|
|
|
||||||||
|
Merger and integration costs 1 |
|
— |
|
|
|
30 |
|
|
|
59 |
|
|
|
120 |
|
|
Severance costs |
|
14 |
|
|
|
15 |
|
|
|
77 |
|
|
|
52 |
|
|
Amortization of acquisition-related intangible assets |
|
346 |
|
|
|
388 |
|
|
|
1,085 |
|
|
|
1,245 |
|
|
Net gain on sale of businesses and other assets |
|
— |
|
|
|
(176 |
) |
|
|
— |
|
|
|
(172 |
) |
|
Canadian tax law change |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
27 |
|
|
Adjusted operating income |
$ |
1,962 |
|
|
$ |
1,760 |
|
|
$ |
5,432 |
|
|
$ |
4,840 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Operating margin |
|
30.7 |
% |
|
|
30.8 |
% |
|
|
27.7 |
% |
|
|
25.2 |
% |
|
Adjusted operating margin |
|
40.2 |
% |
|
|
38.5 |
% |
|
|
38.2 |
% |
|
|
36.5 |
% |
|
|
|
|
|
|
|
|
|
||||||||
|
Merchant Solutions (“Merchant”) 2 |
|
|
|
|
|
|
|
||||||||
|
Revenue |
$ |
2,469 |
|
|
$ |
2,259 |
|
|
$ |
7,132 |
|
|
$ |
6,461 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Operating income |
$ |
931 |
|
|
$ |
786 |
|
|
$ |
2,582 |
|
|
$ |
2,123 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Operating margin |
|
37.7 |
% |
|
|
34.8 |
% |
|
|
36.2 |
% |
|
|
32.9 |
% |
|
|
|
|
|
|
|
|
|
||||||||
|
Financial Solutions (“Financial”) |
|
|
|
|
|
|
|
||||||||
|
Revenue |
$ |
2,412 |
|
|
$ |
2,302 |
|
|
$ |
7,076 |
|
|
$ |
6,770 |
|
|
Adjustments: |
|
|
|
|
|
|
|
||||||||
|
Deferred revenue purchase accounting adjustments |
|
— |
|
|
|
5 |
|
|
|
— |
|
|
|
16 |
|
|
Adjusted revenue |
$ |
2,412 |
|
|
$ |
2,307 |
|
|
$ |
7,076 |
|
|
$ |
6,786 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Operating income |
$ |
1,143 |
|
|
$ |
1,079 |
|
|
$ |
3,244 |
|
|
$ |
3,050 |
|
|
Adjustments: |
|
|
|
|
|
|
|
||||||||
|
Deferred revenue purchase accounting adjustments |
|
— |
|
|
|
5 |
|
|
|
— |
|
|
|
16 |
|
|
Adjusted operating income |
$ |
1,143 |
|
|
$ |
1,084 |
|
|
$ |
3,244 |
|
|
$ |
3,066 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Operating margin |
|
47.4 |
% |
|
|
46.9 |
% |
|
|
45.8 |
% |
|
|
45.1 |
% |
|
Adjusted operating margin |
|
47.4 |
% |
|
|
47.0 |
% |
|
|
45.8 |
% |
|
|
45.2 |
% |
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
|||||||||||||||
|
Financial Results by Segment (cont.) |
|||||||||||||||
|
(In millions, unaudited) |
|||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
|
Corporate and Other |
|
|
|
|
|
|
|
||||||||
|
Revenue |
$ |
334 |
|
|
$ |
312 |
|
|
$ |
997 |
|
|
$ |
945 |
|
|
Adjustments: |
|
|
|
|
|
|
|
||||||||
|
Postage reimbursements |
|
(331 |
) |
|
|
(307 |
) |
|
|
(984 |
) |
|
|
(927 |
) |
|
Adjusted revenue |
$ |
3 |
|
|
$ |
5 |
|
|
$ |
13 |
|
|
$ |
18 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Operating loss |
$ |
(472 |
) |
|
$ |
(362 |
) |
|
$ |
(1,615 |
) |
|
$ |
(1,605 |
) |
|
Adjustments: |
|
|
|
|
|
|
|
||||||||
|
Merger and integration costs |
|
— |
|
|
|
25 |
|
|
|
59 |
|
|
|
104 |
|
|
Severance costs |
|
14 |
|
|
|
15 |
|
|
|
77 |
|
|
|
52 |
|
|
Amortization of acquisition-related intangible assets |
|
346 |
|
|
|
388 |
|
|
|
1,085 |
|
|
|
1,245 |
|
|
Net gain on sale of businesses and other assets |
|
— |
|
|
|
(176 |
) |
|
|
— |
|
|
|
(172 |
) |
|
Canadian tax law change |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
27 |
|
|
Adjusted operating loss |
$ |
(112 |
) |
|
$ |
(110 |
) |
|
$ |
(394 |
) |
|
$ |
(349 |
) |
|
|
|
|
|
|
|
|
|
||||||||
|
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 deferred revenue purchase accounting adjustments within the Financial segment related to the 2019 acquisition of |
|
| 2 |
For all periods presented in the Merchant segment, there were no adjustments to GAAP measures presented and thus the adjusted measures are equal to the GAAP measures presented. |
|
|
|||||||
|
Condensed Consolidated Statements of Cash Flows |
|||||||
|
(In millions, unaudited) |
|||||||
|
|
Nine Months Ended
|
||||||
|
|
|
2024 |
|
|
|
2023 |
|
|
Cash flows from operating activities |
|
|
|
||||
|
Net income |
$ |
2,232 |
|
|
$ |
2,240 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
||||
|
Depreciation and other amortization |
|
1,248 |
|
|
|
1,093 |
|
|
Amortization of acquisition-related intangible assets |
|
1,089 |
|
|
|
1,261 |
|
|
Amortization of financing costs and debt discounts |
|
33 |
|
|
|
30 |
|
|
Share-based compensation |
|
273 |
|
|
|
275 |
|
|
Deferred income taxes |
|
(539 |
) |
|
|
(344 |
) |
|
Net gain on sale of businesses and other assets |
|
— |
|
|
|
(172 |
) |
|
Loss from investments in unconsolidated affiliates |
|
642 |
|
|
|
11 |
|
|
Distributions from unconsolidated affiliates |
|
29 |
|
|
|
42 |
|
|
Non-cash impairment charges |
|
14 |
|
|
|
— |
|
|
Other operating activities |
|
79 |
|
|
|
(2 |
) |
|
Changes in assets and liabilities, net of effects from acquisitions and dispositions: |
|
|
|
||||
|
Trade accounts receivable |
|
(136 |
) |
|
|
119 |
|
|
Prepaid expenses and other assets |
|
(503 |
) |
|
|
(506 |
) |
|
Contract costs |
|
(189 |
) |
|
|
(180 |
) |
|
Accounts payable and other liabilities |
|
134 |
|
|
|
(303 |
) |
|
Contract liabilities |
|
4 |
|
|
|
3 |
|
|
Net cash provided by operating activities |
|
4,410 |
|
|
|
3,567 |
|
|
|
|
|
|
||||
|
Cash flows from investing activities |
|
|
|
||||
|
Capital expenditures, including capitalized software and other intangibles |
|
(1,170 |
) |
|
|
(1,034 |
) |
|
Net proceeds from sale of businesses and other assets |
|
— |
|
|
|
232 |
|
|
Merchant cash advances, net |
|
(645 |
) |
|
|
— |
|
|
Distributions from unconsolidated affiliates |
|
59 |
|
|
|
110 |
|
|
Purchases of investments |
|
(37 |
) |
|
|
(15 |
) |
|
Proceeds from sale of investments |
|
53 |
|
|
|
— |
|
|
Other investing activities |
|
— |
|
|
|
(3 |
) |
|
Net cash used in investing activities |
|
(1,740 |
) |
|
|
(710 |
) |
|
|
|
|
|
||||
|
Cash flows from financing activities |
|
|
|
||||
|
Debt proceeds |
|
6,141 |
|
|
|
5,188 |
|
|
Debt repayments |
|
(4,665 |
) |
|
|
(1,652 |
) |
|
Net borrowings from (repayments of) commercial paper and short-term borrowings |
|
345 |
|
|
|
(2,032 |
) |
|
Payments of debt financing costs |
|
(28 |
) |
|
|
(38 |
) |
|
Proceeds from issuance of treasury stock |
|
79 |
|
|
|
68 |
|
|
Purchases of treasury stock, including employee shares withheld for tax obligations |
|
(4,491 |
) |
|
|
(3,790 |
) |
|
Settlement activity, net |
|
487 |
|
|
|
(630 |
) |
|
Distributions paid to noncontrolling interests and redeemable noncontrolling interest |
|
(48 |
) |
|
|
(22 |
) |
|
Payment to acquire noncontrolling interest of consolidated subsidiary |
|
— |
|
|
|
(56 |
) |
|
Payments of acquisition-related contingent consideration |
|
(3 |
) |
|
|
(33 |
) |
|
Other financing activities |
|
(2 |
) |
|
|
(39 |
) |
|
Net cash used in financing activities |
|
(2,185 |
) |
|
|
(3,036 |
) |
|
Effect of exchange rate changes on cash and cash equivalents |
|
25 |
|
|
|
(8 |
) |
|
Net change in cash and cash equivalents |
|
510 |
|
|
|
(187 |
) |
|
Cash and cash equivalents, beginning balance |
|
2,963 |
|
|
|
3,192 |
|
|
Cash and cash equivalents, ending balance |
$ |
3,473 |
|
|
$ |
3,005 |
|
|
|
|
|
|
||||
|
|
|||||
|
Condensed Consolidated Balance Sheets |
|||||
|
(In millions, unaudited) |
|||||
|
|
|
|
|
||
|
|
|
|
|
||
|
|
2024 |
|
2023 |
||
|
Assets |
|
|
|
||
|
Cash and cash equivalents |
$ |
1,228 |
|
$ |
1,204 |
|
Trade accounts receivable – net |
|
3,714 |
|
|
3,582 |
|
Prepaid expenses and other current assets |
|
2,749 |
|
|
2,344 |
|
Settlement assets |
|
17,434 |
|
|
27,681 |
|
Total current assets |
|
25,125 |
|
|
34,811 |
|
|
|
|
|
||
|
Property and equipment – net |
|
2,377 |
|
|
2,161 |
|
Customer relationships – net |
|
6,218 |
|
|
7,075 |
|
Other intangible assets – net |
|
4,104 |
|
|
4,135 |
|
|
|
37,133 |
|
|
37,205 |
|
Contract costs – net |
|
985 |
|
|
968 |
|
Investments in unconsolidated affiliates |
|
1,585 |
|
|
2,262 |
|
Other long-term assets |
|
2,265 |
|
|
2,273 |
|
Total assets |
$ |
79,792 |
|
$ |
90,890 |
|
|
|
|
|
||
|
Liabilities and Equity |
|
|
|
||
|
Accounts payable and other current liabilities |
$ |
4,161 |
|
$ |
4,355 |
|
Short-term and current maturities of long-term debt |
|
1,200 |
|
|
755 |
|
Contract liabilities |
|
770 |
|
|
761 |
|
Settlement obligations |
|
17,434 |
|
|
27,681 |
|
Total current liabilities |
|
23,565 |
|
|
33,552 |
|
|
|
|
|
||
|
Long-term debt |
|
24,085 |
|
|
22,363 |
|
Deferred income taxes |
|
2,526 |
|
|
3,078 |
|
Long-term contract liabilities |
|
255 |
|
|
250 |
|
Other long-term liabilities |
|
958 |
|
|
978 |
|
Total liabilities |
|
51,389 |
|
|
60,221 |
|
|
|
|
|
||
|
Redeemable noncontrolling interest |
|
— |
|
|
161 |
|
|
|
|
|
||
|
|
|
27,751 |
|
|
29,857 |
|
Noncontrolling interests |
|
652 |
|
|
651 |
|
Total equity |
|
28,403 |
|
|
30,508 |
|
Total liabilities and equity |
$ |
79,792 |
|
$ |
90,890 |
|
|
|
|
|
||
|
Selected Non-GAAP Financial Measures and Additional Information (In millions, unaudited) |
||||||||||||||||||||
|
Organic Revenue Growth 1 |
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||
|
|
|
2024 |
|
|
|
2023 |
|
|
Growth |
|
|
2024 |
|
|
|
2023 |
|
|
Growth |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Adjusted revenue |
|
$ |
4,884 |
|
|
$ |
4,571 |
|
|
|
|
$ |
14,221 |
|
|
$ |
13,265 |
|
|
|
|
Currency impact 2 |
|
|
371 |
|
|
|
— |
|
|
|
|
|
1,327 |
|
|
|
— |
|
|
|
|
Acquisition adjustments |
|
|
(3 |
) |
|
|
— |
|
|
|
|
|
(9 |
) |
|
|
— |
|
|
|
|
Divestiture adjustments |
|
|
(3 |
) |
|
|
(7 |
) |
|
|
|
|
(13 |
) |
|
|
(41 |
) |
|
|
|
Organic revenue |
|
$ |
5,249 |
|
|
$ |
4,564 |
|
|
15% |
|
$ |
15,526 |
|
|
$ |
13,224 |
|
|
17% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Merchant |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Adjusted revenue |
|
$ |
2,469 |
|
|
$ |
2,259 |
|
|
|
|
$ |
7,132 |
|
|
$ |
6,461 |
|
|
|
|
Currency impact 2 |
|
|
344 |
|
|
|
— |
|
|
|
|
|
1,225 |
|
|
|
— |
|
|
|
|
Acquisition adjustments |
|
|
(3 |
) |
|
|
— |
|
|
|
|
|
(9 |
) |
|
|
— |
|
|
|
|
Organic revenue |
|
$ |
2,810 |
|
|
$ |
2,259 |
|
|
24% |
|
$ |
8,348 |
|
|
$ |
6,461 |
|
|
29% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Financial |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Adjusted revenue |
|
$ |
2,412 |
|
|
$ |
2,307 |
|
|
|
|
$ |
7,076 |
|
|
$ |
6,786 |
|
|
|
|
Currency impact 2 |
|
|
27 |
|
|
|
— |
|
|
|
|
|
102 |
|
|
|
— |
|
|
|
|
Divestiture adjustments |
|
|
— |
|
|
|
(2 |
) |
|
|
|
|
— |
|
|
|
(23 |
) |
|
|
|
Organic revenue |
|
$ |
2,439 |
|
|
$ |
2,305 |
|
|
6% |
|
$ |
7,178 |
|
|
$ |
6,763 |
|
|
6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Corporate and Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Adjusted revenue |
|
$ |
3 |
|
|
$ |
5 |
|
|
|
|
$ |
13 |
|
|
$ |
18 |
|
|
|
|
Divestiture adjustments |
|
|
(3 |
) |
|
|
(5 |
) |
|
|
|
|
(13 |
) |
|
|
(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. |
|
Selected Non-GAAP Financial Measures and Additional Information (cont.) (In millions, unaudited) |
|||||||
|
Free Cash Flow |
Nine Months Ended
|
||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
|
|
|
|
||||
|
Net cash provided by operating activities |
$ |
4,410 |
|
|
$ |
3,567 |
|
|
Capital expenditures |
|
(1,170 |
) |
|
|
(1,034 |
) |
|
Adjustments: |
|
|
|
||||
|
Distributions paid to noncontrolling interests and redeemable noncontrolling interest |
|
(48 |
) |
|
|
(22 |
) |
|
Distributions from unconsolidated affiliates included in cash flows from investing activities |
|
59 |
|
|
|
110 |
|
|
Severance, merger and integration payments |
|
116 |
|
|
|
121 |
|
|
Tax payments on adjustments |
|
(23 |
) |
|
|
(24 |
) |
|
Other |
|
— |
|
|
|
5 |
|
|
Free cash flow |
$ |
3,344 |
|
|
$ |
2,723 |
|
|
|
|
|
|
||||
|
Total Amortization 1 |
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|||||
|
|
|
|
|
|
|
|
|
||||
|
Acquisition-related intangible assets |
$ |
345 |
|
$ |
393 |
|
$ |
1,089 |
|
$ |
1,261 |
|
Capitalized software and other intangibles |
|
164 |
|
|
133 |
|
|
464 |
|
|
360 |
|
Purchased software |
|
57 |
|
|
53 |
|
|
175 |
|
|
167 |
|
Financing costs and debt discounts |
|
11 |
|
|
10 |
|
|
33 |
|
|
30 |
|
Sales commissions |
|
29 |
|
|
28 |
|
|
84 |
|
|
83 |
|
Deferred conversion costs |
|
33 |
|
|
21 |
|
|
82 |
|
|
61 |
|
Total amortization |
$ |
639 |
|
$ |
638 |
|
$ |
1,927 |
|
$ |
1,962 |
|
|
|
|
|
|
|
|
|
||||
|
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. |
|
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 2024, 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 2024 excludes the impact of foreign currency fluctuations, acquisitions, dispositions and the impact of the company's 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 |
|
|
|
|
|
2024 Revenue |
|
7.5% - 8.5% |
|
Postage reimbursements |
|
(0.5)% |
|
2024 Adjusted revenue |
|
7% - 8% |
|
|
|
|
|
Currency impact |
|
8.5% |
|
Acquisition adjustments |
|
0.0% |
|
Divestiture adjustments |
|
0.5% |
|
2024 Organic revenue |
|
16% - 17% |
|
Adjusted Earnings Per Share - The company's adjusted earnings per share outlook for 2024 excludes certain non-cash or other items such as non-cash intangible asset amortization expense associated with acquisitions; non-cash impairment charges; non-cash pension plan termination 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 2024 with respect to acquired intangible assets will decrease approximately 15% compared to the amount incurred in 2023.
Other adjustments to the company’s financial measures that were incurred in 2023 and for the three and nine months ended |
||
|
Full Year Forward-Looking Non-GAAP Financial Measures (cont.) |
|||
|
The company's adjusted earnings per share growth outlook for 2024 is based on 2023 adjusted earnings per share performance. |
|||
|
2023 GAAP net income attributable to |
$ |
3,068 |
|
|
Adjustments: |
|
||
|
Merger and integration costs 1 |
|
158 |
|
|
Severance costs |
|
74 |
|
|
Amortization of acquisition-related intangible assets 2 |
|
1,623 |
|
|
Non wholly-owned entity activities 3 |
|
133 |
|
|
Net gain on sale of businesses and other assets 4 |
|
(167 |
) |
|
Canadian tax law change 5 |
|
27 |
|
|
Tax impact of adjustments 6 |
|
(355 |
) |
|
Argentine Peso devaluation 7 |
|
71 |
|
|
2023 adjusted net income |
$ |
4,632 |
|
|
|
|
||
|
Weighted average common shares outstanding - diluted |
|
615.9 |
|
|
|
|
||
|
2023 GAAP earnings per share attributable to |
$ |
4.98 |
|
|
Adjustments - net of income taxes: |
|
||
|
Merger and integration costs 1 |
|
0.21 |
|
|
Severance costs |
|
0.10 |
|
|
Amortization of acquisition-related intangible assets 2 |
|
2.11 |
|
|
Non wholly-owned entity activities 3 |
|
0.17 |
|
|
Net gain on sale of businesses and other assets 4 |
|
(0.19 |
) |
|
Canadian tax law change 5 |
|
0.04 |
|
|
Argentine Peso devaluation 7 |
|
0.12 |
|
|
2023 adjusted earnings per share |
$ |
7.52 |
|
|
|
|
||
|
2024 adjusted earnings per share outlook |
|
||
|
2024 adjusted earnings per share growth outlook |
16% - 17% |
||
|
|
|
||
|
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. |
|||
|
Full Year Forward-Looking Non-GAAP Financial Measures (cont.) |
||
| 1 |
Represents acquisition and related integration costs incurred in connection with acquisitions. Merger and integration costs associated with integration activities primarily include |
|
| 2 |
Represents amortization of intangible assets acquired through acquisition, 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. |
|
| 4 |
Represents a net gain primarily associated with the sale of the company’s financial reconciliation business. |
|
| 5 |
Represents the impact of a multi-year retroactive Canadian tax law change, enacted in |
|
| 6 |
The tax impact of adjustments is calculated using a tax rate of 20%, which approximates the company's annual effective tax rate, exclusive of actual tax impacts of |
|
| 7 |
On |
|
FI-G
View source version on businesswire.com: https://www.businesswire.com/news/home/20241022343630/en/
Media Relations:
Head of Communications
470-351-9908
sophia.marshall@fiserv.com
Investor Relations:
Julie Chariell
Head of Investor Relations
212-515-0278
julie.chariell@fiserv.com
Source:
