Fiserv(US:FI)2020-10-28 20:28Acquisitions - The company completed the acquisition of First Data for a total purchase price of $46.5 billion, enhancing its global payments and financial technology footprint [178]. - The company acquired MerchantPro Express LLC and Bypass Mobile, expanding its merchant services and omni-commerce capabilities for a total of $167 million [179]. - The acquisition of First Data was completed for a total purchase price of $46.5 billion, with First Data stockholders receiving 286 million shares of Fiserv, Inc. [240]. - The company acquired MerchantPro, Bypass, and Inlet for a total of $167 million, enhancing its merchant services and digital bill payment strategies [242]. - Employee termination costs related to the acquisition of First Data amounted to $28 million for the three months and $105 million for the nine months ended September 30, 2020 [258]. Financial Performance - Total revenue for Q3 2020 reached $3,786 million, a 21% increase from $3,128 million in Q3 2019 [200]. - Processing and services revenue was $3,153 million, accounting for 83.3% of total revenue, up from 83.4% in the previous year [200]. - Product revenue increased to $633 million, representing 16.7% of total revenue, a 22% increase from $520 million in Q3 2019 [200]. - Total revenue increased by $658 million, or 21%, in Q3 2020 and by $4,878 million, or 79%, in the first nine months of 2020 compared to 2019, primarily driven by the First Data acquisition [209]. - Net income attributable to Fiserv, Inc. for Q3 2020 was $264 million, a 33% increase from $198 million in Q3 2019 [200]. - For the nine months ended September 2020, total revenue was $11,020 million, a 79% increase from $6,142 million in the same period of 2019 [205]. - Net income attributable to Fiserv, Inc. for the nine months ended September 2020 was $658 million, a 2% increase from $646 million in the same period of 2019 [205]. - Net income for the first nine months of 2020 was $662 million, a decrease of $11 million compared to $673 million in the same period of 2019 [236]. Revenue Segments - Revenue in the Acceptance segment rose by $442 million, or 44%, in Q3 2020 and by $3,066 million, or 303%, in the first nine months of 2020, significantly influenced by the First Data acquisition [211]. - Revenue in the Payments segment increased by $234 million, or 20%, in Q3 2020 and by $1,627 million, or 66%, in the first nine months of 2020, with contributions from the First Data acquisition [213]. - The company’s Acceptance segment provides a wide range of services, including point-of-sale and e-commerce services, contributing to its global merchant services [173]. - The company’s Fintech segment offers technology solutions for financial institutions, including digital banking and risk management services [174]. - The company’s Payments segment processes digital payment transactions, including card and non-card services, catering to a diverse client base [174]. Expenses and Income - Total expenses for Q3 2020 were $3,244 million, an 18% increase from $2,754 million in Q3 2019 [200]. - Total expenses for the nine months ended September 2020 were $9,684 million, a 93% increase from $5,011 million in the same period of 2019 [205]. - Total operating income increased by $168 million, or 45%, in Q3 2020 and by $205 million, or 18%, in the first nine months of 2020 compared to 2019 [221]. - Operating income for Q3 2020 was $542 million, a 45% increase from $374 million in Q3 2019 [200]. - Operating loss in Corporate and Other increased by $124 million in Q3 2020 and by $1,232 million in the first nine months of 2020, primarily due to the First Data acquisition [225]. Debt and Interest - As of September 30, 2020, total long-term debt was $20.894 billion, a decrease from $21.612 billion at December 31, 2019 [247]. - The company had $2.5 billion in variable rate debt, including $1.8 billion in term loan borrowings and $500 million under accounts receivable securitization [252]. - Interest expense, net increased by $10 million, or 6%, in Q3 2020, and by $256 million, or 92%, in the first nine months of 2020 compared to 2019, primarily due to the issuance of $9.0 billion in fixed-rate senior notes [226]. - A 1% increase in variable interest rates would increase annual interest expense by approximately $26 million [262]. - The company maintained a $3.5 billion revolving credit facility, with $219 million of outstanding borrowings as of September 30, 2020 [252]. Cash Flow and Capital Expenditures - Operating cash flow was $2.96 billion in the first nine months of 2020, an increase of 83% compared to $1.6 billion in the same period of 2019, mainly attributed to the acquisition of First Data [236]. - Capital expenditures were approximately 6% of total revenue for both the first nine months of 2020 and 2019 [237]. - The company repurchased $1.4 billion of its common stock during the first nine months of 2020, compared to $156 million in the same period of 2019 [238]. Taxation - The income tax provision as a percentage of income before income from investments was 32.5% in Q3 2020, up from 20.7% in Q3 2019 [230]. - Net income attributable to Fiserv, Inc. per share-diluted was $0.39 in Q3 2020, compared to $0.33 in Q3 2019 [232]. Foreign Operations and Currency - Approximately 14% of total revenue was generated outside the U.S. during the three months ended September 30, 2020 [266]. - For the nine months ended September 30, 2020, 13% of total revenue was generated outside the U.S. [266]. - A 10% movement in foreign currency rates against the U.S. dollar would have resulted in a pre-tax income change of approximately $12 million [266]. - The notional amount of foreign currency forward exchange contracts designated as cash flow hedges was approximately $206 million as of September 30, 2020 [266]. - Foreign currency-denominated senior notes were designated as net investment hedges to mitigate exposure to foreign currency exchange rate changes [266].