Fiserv(FI) - 2024 Q2 - Quarterly Results

Q2 2024 Performance Highlights Fiserv reported strong Q2 2024 financial results with significant GAAP and non-GAAP growth, raising full-year adjusted EPS outlook Q2 2024 Key Performance Indicators | Metric | Q2 2024 Growth | Year-to-Date Growth | | :--- | :--- | :--- | | GAAP Revenue | 7% | 7% | | GAAP EPS | 39% | 39% | | Organic Revenue | 18% | 19% | | Adjusted EPS | 18% | 18% | - The company affirmed its full-year 2024 organic revenue growth outlook of 15% to 17% and raised its adjusted EPS outlook to a range of $8.65 to $8.80[1][5] - CEO Frank Bisignano attributed the strong performance to Fiserv's integrated solutions, deep client relationships, and strategic market positioning[26] Detailed Financial Results This section details Fiserv's Q2 and YTD 2024 GAAP and non-GAAP financial performance, highlighting significant improvements GAAP Financial Results Fiserv's Q2 2024 GAAP results show revenue growth to $5.11 billion, 39% EPS increase, and expanded operating margin GAAP Financial Performance (Q2 & YTD 2024 vs 2023) | Metric (in millions) | Q2 2024 | Q2 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $5,110 | $4,760 | $9,990 | $9,300 | | Operating Income | $1,430 | $1,130 | $2,610 | $2,070 | | Operating Margin | 28.0% | 23.8% | 26.1% | 22.2% | | Net Income | $894 | $683 | $1,630 | $1,250 | | Diluted EPS | $1.53 | $1.10 | $2.76 | $1.99 | - Net cash provided by operating activities for the first six months of 2024 increased by 8% to $2.17 billion, up from $2.01 billion in the same period of 2023[2][40] Non-GAAP Financial Results Fiserv's Q2 2024 non-GAAP results show 18% organic revenue growth, 18% adjusted EPS increase, and 160 basis points margin expansion Non-GAAP Financial Performance (Q2 & YTD 2024 vs 2023) | Metric (in millions) | Q2 2024 | Q2 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | Adjusted Revenue | $4,790 | $4,460 | $9,340 | $8,690 | | Organic Revenue Growth | 18% | - | 19% | - | | Adjusted Operating Margin | 38.4% | 36.8% | 37.2% | 35.4% | | Adjusted EPS | $2.13 | $1.81 | $4.00 | $3.38 | - Free cash flow for the first six months of 2024 was $1.48 billion, roughly flat compared to $1.47 billion in the prior year period[4][64] Segment Performance Fiserv's Q2 2024 segment performance was driven by strong Merchant Solutions growth and steady Financial Solutions contributions - The company realigned its reportable segments in Q1 2024 into two new segments: Merchant Solutions and Financial Solutions. Prior period results have been recast for comparability[8][26] Merchant Solutions Merchant Solutions segment led growth with 28% organic revenue increase and 290 basis points GAAP operating margin expansion Merchant Solutions Performance (Q2 & YTD 2024) | Metric | Q2 2024 | YTD 2024 | | :--- | :--- | :--- | | GAAP Revenue Growth | 9% | 11% | | Organic Revenue Growth | 28% | 32% | | GAAP Operating Margin | 36.6% | 35.4% | Financial Solutions Financial Solutions segment achieved 8% organic revenue growth in Q2 and maintained a strong 45.9% adjusted operating margin Financial Solutions Performance (Q2 & YTD 2024) | Metric | Q2 2024 | YTD 2024 | | :--- | :--- | :--- | | GAAP Revenue Growth | 6% | 4% | | Organic Revenue Growth | 8% | 6% | | GAAP Operating Margin | 45.9% | 45.0% | | Adjusted Operating Margin | 45.9% | 45.0% | 2024 Full-Year Outlook Fiserv updated its 2024 full-year guidance, reaffirming organic revenue growth and raising adjusted EPS outlook - The company continues to expect full-year organic revenue growth of 15% to 17%[5][47] Updated 2024 Adjusted EPS Outlook | Metric | Previous Outlook | Updated Outlook | Implied Growth | | :--- | :--- | :--- | :--- | | Adjusted EPS | Not specified in doc | $8.65 - $8.80 | 15% - 17% | Capital Allocation Fiserv actively returned capital to shareholders through its share repurchase program in Q2 and H1 2024 - Fiserv repurchased 10.0 million shares of common stock for $1.5 billion in the second quarter of 2024[4] - In the first six months of 2024, the company repurchased a total of 20.2 million shares for $3.0 billion[4] Consolidated Financial Statements This section presents Fiserv's condensed consolidated financial statements, including income statements, balance sheets, and cash flow statements Condensed Consolidated Statements of Income The income statement for Q2 and H1 2024 shows year-over-year growth in revenue, operating income, and net income, with 39% diluted GAAP EPS increase Six Months Ended June 30 (in millions) | Line Item | 2024 | 2023 | | :--- | :--- | :--- | | Total Revenue | $9,990 | $9,303 | | Operating Income | $2,609 | $2,065 | | Net Income Attributable to Fiserv | $1,629 | $1,246 | | Diluted EPS | $2.76 | $1.99 | Condensed Consolidated Balance Sheets The balance sheet as of June 30, 2024, shows total assets increased to $93.4 billion, accompanied by a rise in total liabilities Balance Sheet Highlights (in millions) | Line Item | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $38,327 | $34,811 | | Goodwill | $36,867 | $37,205 | | Total Assets | $93,417 | $90,890 | | Long-term Debt | $24,401 | $22,363 | | Total Liabilities | $64,639 | $60,221 | | Total Fiserv Shareholders' Equity | $28,154 | $29,857 | Condensed Consolidated Statements of Cash Flows Net cash from operating activities increased to $2.17 billion in H1 2024, with major cash uses including treasury stock purchases Cash Flow Summary - Six Months Ended June 30 (in millions) | Line Item | 2024 | 2023 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $2,172 | $2,008 | | Capital Expenditures | ($768) | ($679) | | Net Cash Used in Investing Activities | ($1,207) | ($613) | | Purchases of Treasury Stock | ($3,230) | ($2,603) | | Net Cash Used in Financing Activities | ($1,114) | ($1,750) | Non-GAAP Financial Measures & Other Information This section details Fiserv's non-GAAP financial measures, including reconciliations to GAAP, and provides important forward-looking statements Reconciliation of GAAP to Non-GAAP Measures This section reconciles GAAP to non-GAAP measures, detailing adjustments for a clearer view of core operational performance - Management believes non-GAAP measures enhance shareholders' ability to evaluate performance by providing additional insights into factors and trends affecting the business[10] - Common adjustments include amortization of acquisition-related intangible assets, merger/integration costs, severance costs, and certain tax items[29][55] Reconciliation of Net Income to Adjusted Net Income (Q2 2024, in millions) | Description | Amount | | :--- | :--- | | GAAP Net Income Attributable to Fiserv | $894 | | Amortization of acquisition-related intangible assets | $370 | | Merger and integration costs | $22 | | Severance costs | $21 | | Other adjustments | $26 | | Tax impact of adjustments | ($88) | | Adjusted Net Income | $1,245 | Forward-Looking Statements The report includes forward-looking statements on future financial performance, cautioning that actual results may differ due to various risks - Key risks include the ability to compete effectively, changes in customer demand, the impact of a security breach, economic conditions like inflation and interest rates, regulatory changes, and the ability to integrate acquisitions[14][15] - The company assumes no obligation to update any forward-looking statements[15]