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Fiserv(FI) - 2023 Q2 - Quarterly Report

Acquisitions and Divestitures - The company acquired OrangeData S.A. for 994million,enhancingitsinstantpaymenttransactioncapabilities[20].Thecompanyaimstodivestbusinessesnotalignedwithitsmarketorfinancialstrategies,indicatingafocusonstrategicacquisitionsanddispositions[19].ThecompanyacquiredMerchantOnefor994 million, enhancing its instant payment transaction capabilities[20]. - The company aims to divest businesses not aligned with its market or financial strategies, indicating a focus on strategic acquisitions and dispositions[19]. - The company acquired Merchant One for 302 million, enhancing its merchant distribution and sales force channels[71]. - The acquisition of Finxact, completed on April 1, 2022, was for 645million,enhancingthecompanysdigitalbankingstrategy[164].ThecompanyacquiredOrangeDataS.A.foranaggregatepurchasepriceof645 million, enhancing the company's digital banking strategy[164]. - The company acquired OrangeData S.A. for an aggregate purchase price of 44 million, enhancing instant payment transaction capabilities[166]. Financial Performance - Total revenue for Q2 2023 was 4,756million,representinga74,756 million, representing a 7% increase from 4,450 million in Q2 2022[46]. - Operating income for Q2 2023 was 1,131million,a321,131 million, a 32% increase from 860 million in Q2 2022, resulting in an operating margin of 23.8%[46]. - Net income attributable to Fiserv, Inc. was 683million,reflectinga14683 million, reflecting a 14% increase from 598 million in Q2 2022[46]. - For the six months ended June 30, 2023, total revenue was 9,303million,an89,303 million, an 8% increase from 8,588 million in the same period of 2022[48]. - Total revenue for 2023 was 9,303million,anincreaseof9,303 million, an increase of 715 million or 8% compared to 2022[52]. Revenue Segmentation - Processing and services revenue was 3,924million,accountingfor82.53,924 million, accounting for 82.5% of total revenue, with a 6% increase from 3,696 million in the previous year[46]. - Product revenue reached 832million,whichis17.5832 million, which is 17.5% of total revenue, showing a 10% increase from 754 million in Q2 2022[46]. - Acceptance segment revenue increased by 358millionor10358 million or 10% in the first six months of 2023, driven by higher global merchant acquiring payment volumes[55]. - Payments segment revenue increased by 294 million or 10% in the first six months of 2023, supported by growth in debit and credit processing businesses[57]. - Fintech segment revenue decreased by 19millionor219 million or 2% in Q2 2023, primarily due to a decrease in termination fee revenue[56]. Expenses and Costs - The company experienced a decrease in the cost of processing and services to 2,756 million, down 6% from 2,938millioninthepreviousyear[48].Interestexpenseincreasedto2,938 million in the previous year[48]. - Interest expense increased to 434 million in the first half of 2023, up 26% from 344millioninthesameperiodof2022[48].Interestexpenseincreasedby344 million in the same period of 2022[48]. - Interest expense increased by 90 million or 26% in the first six months of 2023 due to higher interest rates and new debt issuances[69]. Cash Flow and Capital Management - Operating cash flow for the first six months of 2023 was 2.01billion,anincreaseof112.01 billion, an increase of 11% from 1.81 billion in the first six months of 2022[84]. - The company repurchased 2.5billionofcommonstockinthefirstsixmonthsof2023,comparedto2.5 billion of common stock in the first six months of 2023, compared to 1.0 billion in the same period of 2022[87]. - Capital expenditures were approximately 7% of total revenue for the first six months of 2023, down from 8% in the same period of 2022[86]. - The company reported a net income of 784millionforthethreemonthsendedJune30,2023[204].AssetsandLiabilitiesCashandcashequivalentstotaled784 million for the three months ended June 30, 2023[204]. Assets and Liabilities - Cash and cash equivalents totaled 1.1 billion as of June 30, 2023, with an additional 1.8billionavailableundertherevolvingcreditfacility[82].Totalcurrentassetsdecreasedto1.8 billion available under the revolving credit facility[82]. - Total current assets decreased to 21,444 million as of June 30, 2023, down from 27,544millionattheendof2022[149].Totalliabilitiesdecreasedto27,544 million at the end of 2022[149]. - Total liabilities decreased to 46,722 million as of June 30, 2023, compared to 52,181millionattheendof2022[149].Thecompanyslongtermdebtincreasedto52,181 million at the end of 2022[149]. - The company’s long-term debt increased to 22,595 million as of June 30, 2023, compared to 20,950millionattheendof2022[149].TaxandIncomeTheeffectiveincometaxrateforthefirstsixmonthsof2023was19.220,950 million at the end of 2022[149]. Tax and Income - The effective income tax rate for the first six months of 2023 was 19.2%, compared to 18.2% for the same period in 2022[78]. - Net income per share-diluted was 1.10 for Q2 2023, up from 0.92inQ22022,and0.92 in Q2 2022, and 1.99 for the first six months of 2023, compared to 1.94inthesameperiodof2022[81].NetincomeforthesixmonthsendedJune30,2023,was1.94 in the same period of 2022[81]. - Net income for the six months ended June 30, 2023, was 1,271 million, a decrease of 1.6% from 1,291millionin2022[153].MarketTrendsandStrategicInitiativesTheglobalpaymentslandscapeisevolvingwithincreaseddigitalpaymentsandecommerce,drivingcompetitionandtheneedformodernizedtechnologysolutions[26].Thecompanysstrategicinitiativesincludeenhancingcustomerexperienceandoperationalefficiencyinresponsetoevolvingmarketdemands[31].Thecompanyanticipatescontinueddemandforproductsthatenhancecustomerinteractionwithfinancialinstitutions,whichisexpectedtocreaterevenueopportunities[39].ForeignExchangeandRiskManagementThecompanysrevenueisprimarilydomestic,butitmonitorsforeignexchangerisksthatcouldimpactearningsduetocurrencyfluctuations[33].Thecompanyexperiencedforeigncurrencyexchangelossesof1,291 million in 2022[153]. Market Trends and Strategic Initiatives - The global payments landscape is evolving with increased digital payments and e-commerce, driving competition and the need for modernized technology solutions[26]. - The company’s strategic initiatives include enhancing customer experience and operational efficiency in response to evolving market demands[31]. - The company anticipates continued demand for products that enhance customer interaction with financial institutions, which is expected to create revenue opportunities[39]. Foreign Exchange and Risk Management - The company’s revenue is primarily domestic, but it monitors foreign exchange risks that could impact earnings due to currency fluctuations[33]. - The company experienced foreign currency exchange losses of 50 million for the first six months of 2023, compared to $17 million in the same period of 2022[100].