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Fiserv (FISV) Posts In-Line Q1 Earnings, Withdraws View

Zacks Equity Research
·5 mins read

Fiserv, Inc. FISV first-quarter 2020 earnings matched the Zacks Consensus Estimate while revenues surpassed the same.

Adjusted earnings per share of 99 cents increased on a year-over-year basis. Revenues of $3.77 billion outpaced the consensus estimate by 7.2% and improved more than 100% year over year.

Adjusted revenues of $3.48 billion increased 0.1% on a year-over-year basis. Internal revenue growth was 4% in the reported quarter, with 6% growth in the Merchant Acceptance segment, 1% growth in the Financial Technology segment and 3% growth in the Payments and Network segment.

In March 2020, Fiserv completed the acquisitions of MerchantPro Express and Bypass Mobile. In February 2020, the company completed the sale of a 60% interest of its Investment Services business and retained a 40% interest. It received net after-tax proceeds of $507 million from the deal.

The company also announced its CEO succession plan wherein its board of directors appointed Frank Bisignano as the new chief executive officer, effective Jul 1, 2020.

So far this year, shares of Fiserv have lost 7.2% compared with 7.9% decline of the industry it belongs to and 11.5% decrease of the Zacks S&P 500 composite.

 

Let’s check out the numbers in detail.

Revenues in Detail

Revenues at the Merchant Acceptance segment came in at $1.40 billion. Adjusted revenues of $1.34 billion grew 0.1% year over year.

Revenues at the Payments and Network segment increased more than 100% year over year to $1.39 billion. Adjusted revenues of $1.39 billion grew 2.3% year over year.

Revenues at the Financial Technology segment decreased 0.9% year over year to $718 million.

Revenues at Total processing and services segment increased more than 100% year over year to $3.08 billion while product revenues grew more than 100% year over year to $694 million.

Operating Results

Adjusted operating income of $968 million was up 0.5% from the year-ago quarter. Adjusted operating margin of 27.8% grew 10 basis points (bps) year over year.

Adjusted operating income at the Merchant Acceptance segment was $283 million, down 17% year over year. Adjusted operating margin declined 440 bps year over year to 21.2%.

Adjusted operating income at the Paymentsand Network segment was $575 million, up 9.9% year over year. Adjusted operating margin improved 280 bps year over year to 41.2%.

Operating income at the Financial Technology segment totaled $204 million, up 0.5% year over year. Operating margin of 28.3% improved 30 bps.

Fiserv Inc Price, Consensus and EPS Surprise

 

Fiserv Inc Price, Consensus and EPS Surprise
Fiserv Inc Price, Consensus and EPS Surprise

Fiserv Inc price-consensus-eps-surprise-chart | Fiserv Inc Quote

Balance Sheet and Cash Flow

Fiserv exited first-quarter 2020 with cash and cash equivalents of $896 million compared with $893 million at the end of the prior quarter. Long-term debt at the end of the reported quarter was $21.61 billion, flat sequentially.

The company generated $888 million of net cash from operating activities in the reported quarter. Free cash flow was $760 million. Capital expenditures were $246 million. Fiserv repurchased 8.6 million shares for $885 million in the reported quarter.

2020 Guidance

Considering the current uncertainty prevailing in the market due to the coronavirus outbreak, Fiserv has withdrawn its full-year 2020 guidance.

Currently, Fiserv carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Business Services Companies

S&P Global Inc.SPGI reported first-quarter 2020 adjusted earnings per share of $2.73, which beat the consensus mark by 15.7% and improved 29.4% year over year on the back of revenue growth, benefits of productivity initiatives and reduced business travel.

IQVIA Holdings Inc. IQV reported first-quarter 2020 adjusted earnings per share of $1.50, which beat the consensus mark by 1.4% but decreased 1.9% on a year-over-year basis. The reported figure was within the guided range of $1.46-$1.51

Insperity, Inc.NSP reported first-quarter 2020 adjusted earnings of $1.70 per share, which beat the consensus mark by 5.6% but decreased 14.1% year over year. The reported figure matched the higher end of the guided range of $1.61-$1.70.

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