Fiserv(FISV) - 2024 Q4 - Annual Report

FORM 10-K Cover Page Filing Information Fiserv, Inc. files its 2024 Annual Report on Form 10-K as a well-known seasoned issuer with securities on NYSE - Fiserv, Inc. files its Annual Report on Form 10-K for the fiscal year ended December 31, 2024[2] - The company is a well-known seasoned issuer and a large accelerated filer[3][4] Securities Registered on NYSE | Title of each class | Trading Symbol(s) | | :------------------------------ | :---------------- | | Common Stock, par value $0.01 | FI | | 1.125% Senior Notes due 2027 | FI27 | | 1.625% Senior Notes due 2030 | FI30 | | 2.250% Senior Notes due 2025 | FI25 | | 3.000% Senior Notes due 2031 | FI31 | | 4.500% Senior Notes due 2031 | FI31A | Market Value and Shares Outstanding Non-affiliate common stock market value was $85.5 billion as of June 28, 2024, with 561 million shares outstanding by February 14, 2025 Market Value and Shares Outstanding (as of June 28, 2024 / Feb 14, 2025) | Metric | Value | | :----------------------------------------- | :---------------- | | Aggregate market value (non-affiliates) | $85,486,940,134 | | Common stock shares outstanding (Feb 2025) | 561,288,944 | Documents Incorporated by Reference Part III incorporates information from the 2025 proxy statement, to be filed within 120 days post-fiscal year-end - Part III incorporates information from the 2025 annual meeting proxy statement, to be filed within 120 days after December 31, 2024[8] Forward-Looking Statements Nature of Forward-Looking Statements The report contains forward-looking statements, identified by specific keywords, qualifying for safe harbor under the Private Securities Litigation Reform Act of 1995 - The report contains forward-looking statements, identified by specific keywords, intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995[12] Risks and Uncertainties Forward-looking statements are subject to significant risks and uncertainties, including competition, technological changes, security breaches, economic conditions, and regulatory actions - Actual results may differ materially from forward-looking statements due to significant risks and uncertainties, including competition, technological changes, security breaches, economic conditions, and regulatory actions[13] PART I Item 1. Business Fiserv is a leading global provider of payments and financial services technology, reporting $20.5 billion revenue in 2024, with segments realigned to Merchant and Financial Solutions - Fiserv, Inc. is a leading global provider of payments and financial services technology solutions, serving merchants, banks, credit unions, and other financial institutions[17] Key Financial Highlights (2024) | Metric | Amount (in billions) | | :----------------------------------- | :------------------- | | Total Revenue | $20.5 | | Operating Income | $5.9 | | Net Cash Provided by Operating Activities | $6.6 | | Processing and Services Revenue | 81% of total revenue | - Effective in Q1 2024, Fiserv realigned its reportable segments into Merchant Solutions and Financial Solutions to enhance operational performance[19] Merchant Solutions The Merchant Solutions segment offers global commerce-enabling products, including acquiring, digital commerce, and POS devices, distributed via Small Business, Enterprise, and Processing lines - The Merchant segment offers commerce-enabling products and services globally, including merchant acquiring, digital commerce, mobile payments, and POS devices[20] - Key business lines are Small Business (including Clover POS), Enterprise (integrated omnichannel operating system), and Processing (for financial institutions and third-party resellers)[20][21] - Distribution channels include direct sales, strategic partnerships with agent sales forces, ISVs, ISOs, financial institutions, and other strategic partners[21] Financial Solutions The Financial Solutions segment serves global financial institutions and public sector clients, providing digital payments, issuing, and banking solutions for loan, deposit, and card transactions - The Financial segment provides products and services to financial institutions, corporate, and public sector clients globally, enabling processing of loan/deposit accounts, digital payments, and card transactions[27] - Digital Payments offers debit card processing, network services (Accel, STAR, MoneyPass), security/fraud protection, bill payment, and P2P services (Zelle)[27][29] - Issuing provides credit card processing, card production, prepaid card services (Money Network), government payment processing, and student loan processing[30][32][33][34] - Banking solutions include customer loan and deposit account processing (e.g., Cleartouch, DNA, Finxact), digital banking (Experience Digital), financial/risk management, and check processing[35][36][37] Our Strategy Fiserv's strategy focuses on enhancing client value, operational effectiveness, disciplined portfolio management, and prudent capital allocation for long-term growth - Strategic pillars include enhancing client relationship value, improving operational effectiveness, disciplined portfolio management (acquisitions/divestitures), and capital discipline[38][43] - The company aims to be an innovation leader, leveraging assets and capabilities to deliver best-in-class results for clients[38] Product Development and Resources Fiserv continuously develops products using modern software and AI for customer service and fraud mitigation, relying on human capital, networks, and equipment - Product development focuses on meeting evolving client needs through continuous enhancement, using modern software development principles, and responsibly applying AI for customer service, analytics, and fraud mitigation[40] - Key resources include human capital, financial and telecommunication networks, computer equipment, and POS devices, with ongoing efforts to review resource requirements and vendor relationships[41] Intellectual Property Fiserv protects its proprietary hardware, software, and services through patent, copyright, trademark, trade secret laws, and confidentiality agreements - Fiserv protects its proprietary hardware, software, and services using patent, copyright, trademark, and trade secret laws, internal security, and confidentiality agreements[42] Competition The highly competitive financial technology market sees Fiserv competing against diverse players, with intensifying competition driven by new entrants and consolidations, focusing on quality, security, and innovation - The financial technology market is highly competitive, with Fiserv facing competition from large integrated providers, financial institutions, and emerging technology companies[44] - Competitive factors include quality, security, innovation, breadth of features, client satisfaction, and global reach[44] - Competition is expected to increase due to new market entrants, expansion, and consolidation of product lines and services[44] Government Regulation Fiserv's operations are subject to extensive U.S. and international regulations, including financial institution oversight, payment network rules, and stringent privacy and cybersecurity laws, with non-compliance risking significant penalties - Fiserv is subject to various U.S. federal, state, local, and international regulations, as well as non-government rules from payment networks like Visa and Mastercard[47][52] - Key regulatory areas include financial institution regulations (e.g., Bank Service Company Act, Dodd-Frank, CFPB), privacy and cybersecurity laws (e.g., GLBA, HIPAA, GDPR), money transmission licensing, credit reporting, anti-money laundering, and unfair trade practices[48][49][53][54][55][57][58][59][60][61] - Non-compliance can result in license suspension, service termination, civil/criminal penalties, and significant investments for compliance[47] Human Capital Fiserv employs over 38,000 globally, focusing on talent attraction, development, and retention through career programs, pay-for-performance, comprehensive benefits, and employee engagement - Fiserv had over 38,000 employees worldwide as of December 31, 2024[65] - The company focuses on talent development and retention through e-learning platforms, leadership programs, and internal mobility[67] - A pay-for-performance philosophy, fair pay audits, and comprehensive benefits (medical, dental, mental health, caregiver support) are key to employee compensation and well-being[68][73] - Employee engagement is fostered through regular communication, feedback surveys (94% participation in 2024), and a global safety program[69][70][71][72] Available Information Fiserv provides its annual, quarterly, and current SEC reports and amendments free on its website (www.fiserv.com) post-filing - Fiserv provides its SEC filings (10-K, 10-Q, 8-K) free of charge on its website (www.fiserv.com)[74](index=74&type=chunk) Item 1A. Risk Factors Fiserv faces significant risks from intense competition, rapid technological change, operational failures, global market conditions, extensive regulatory compliance, and organizational and financial challenges - The company operates in a highly competitive environment and faces risks from new and existing competitors, as well as potential in-house solutions by clients[76] - Failure to keep pace with rapid technological change, including the successful integration and responsible use of artificial intelligence, could lead to client loss and limit growth[77][78] - Security incidents, operational failures, and disruptions in the global financial system pose significant threats to business continuity, reputation, and financial stability[87][88][89] - Extensive government regulations (financial, privacy, cybersecurity, money transmission, antitrust) and payment network rules create compliance burdens and potential liabilities[98][99][100][104][106][109] - Financial risks include high leverage (approximately $25 billion debt at Dec 31, 2024), interest rate fluctuations, foreign currency exchange rate changes, and potential losses from chargebacks or acquisition integration challenges[118][120][125][126][127] Competitive and Business Risks Fiserv faces intense competition, risks from rapid technological change (especially AI), challenges in contract renewals, and impacts from card association fees and merchant relationship maintenance - The market is highly competitive, with new and existing competitors, including large technology companies and in-house client capabilities[76] - Failure to keep pace with technological change, including AI, could lead to client loss and limit growth[77][78] - Inability to renew contracts on favorable terms or premature terminations, especially with government clients, could adversely affect revenue and financial condition[79][81][82] - Changes in card association and debit network fees, or the inability to maintain merchant relationships and alliances, could increase costs or limit operations[83][84] Operational and Security Risks Fiserv's business relies on system security and reliability; security incidents, operational failures, and third-party disruptions could lead to significant financial liability, reputational damage, and service interruptions - Security incidents (e.g., unauthorized access, cyberattacks) involving Fiserv's or third-party systems could lead to liability, reputational damage, and loss of client confidence[86][87] - Operational failures (e.g., hardware/software defects, natural disasters, human error) could interrupt services, cause data loss, and incur substantial expenses, harming business and reputation[88] - Disruptions in the operations of other global financial system participants or failures of third-party product/service providers could prevent service delivery and adversely affect the business[89][90][91] - Software defects, development delays, or installation difficulties could harm business, reputation, and expose the company to liability claims[92] Global Market Risks Fiserv's global operations face geopolitical risks, U.S. and global economic conditions (inflation, interest rates, consumer spending), and potential tariffs, all impacting costs and competitiveness - Operations outside the U.S. are subject to geopolitical risks (e.g., natural disasters, political instability, war), which can increase costs and challenges[93] - Global economic conditions, including inflation, rising interest rates, and changes in consumer spending, can adversely affect revenue and financial performance[94][96] - Potential tariffs or trade wars could increase product costs, impacting competitiveness and financial results[97] Regulatory and Compliance Risks Fiserv navigates a complex regulatory landscape, including payment, cybersecurity, data privacy, and anti-money laundering laws, with non-compliance or payment network rule violations risking litigation, fines, and operational restrictions - Failure to comply with state, federal, and foreign laws and regulations (e.g., payment, cybersecurity, data privacy, anti-money laundering) could result in litigation, fines, and reputational harm[98][99] - Non-compliance with payment card network rules (Visa, Mastercard, Nacha) could lead to fines, suspension, or termination of registrations, limiting transaction processing capabilities[100][102][103] - A heightened regulatory environment, including new cybersecurity and data privacy laws (e.g., GDPR, DORA), increases compliance costs and may require significant changes to business practices[104][105][106][108] - Risks also include potential lawsuits for intellectual property infringement and the misappropriation of Fiserv's own intellectual property[110][111] Organizational and Financial Risks Fiserv faces organizational risks in talent retention and financial risks from chargebacks, acquisition integration, goodwill impairment, and substantial debt ($25 billion), exposing it to leverage and interest rate fluctuations - Failure to attract and retain key personnel with specialized industry and technical knowledge could materially harm the business[117] - The company is exposed to losses from chargebacks, refunds, or fraudulent transactions if merchants or other parties fail to satisfy their obligations[118][119] - Acquisitions, while a growth driver, subject Fiserv to risks like unforeseen liabilities, integration difficulties, and failure to realize expected benefits[120][121] - Goodwill and intangible assets represent 60% of total assets at December 31, 2024, and their impairment could negatively affect results of operations[123] - High leverage (approximately $25 billion of debt at December 31, 2024) and variable interest rates expose the company to financial condition and operating results risks[125][126] Item 1B. Unresolved Staff Comments There are no unresolved staff comments from the SEC - No unresolved staff comments[128] Item 1C. Cybersecurity Fiserv manages cybersecurity threats through a board-overseen ERM program and a dedicated global team, investing significantly in defenses and training, acknowledging material impact on business strategy - Fiserv maintains an Enterprise Risk Management (ERM) program to identify and manage cybersecurity threats, overseen by the board of directors' risk committee[129][131] - A global cybersecurity services team, led by the CISO, is responsible for assessing threats, implementing defenses, monitoring incidents, and providing mandatory employee training[132][133][135][136] - The board and risk committee receive regular updates and reports on cybersecurity risks and incidents[137][138][139] - Cybersecurity threats have not materially affected financial results to date, but the company continues to invest significant resources in security, acknowledging their material impact on business strategy and processes[140] Item 2. Properties As of December 31, 2024, Fiserv owned 17 and leased 108 properties globally, including strategic campus environments, with ongoing portfolio review - As of December 31, 2024, Fiserv owned 17 and leased 108 properties globally[142] - Properties are used for operational, data center, sales, management, and administrative purposes, with a strategy to develop centralized campus environments in strategic locations[142] Item 3. Legal Proceedings Fiserv is involved in routine lawsuits, but management expects no material adverse effect on consolidated financial statements - Fiserv is involved in lawsuits in the normal course of business, but management does not expect them to have a material adverse effect on consolidated financial statements[143] Item 4. Mine Safety Disclosures This item is not applicable to Fiserv, Inc - Item 4. Mine Safety Disclosures is not applicable[144] Information About Our Executive Officers This section lists Fiserv's executive officers as of February 20, 2025, including Michael P. Lyons as President and CEO-Elect, and Frank J. Bisignano's transition Executive Officers (as of Feb 20, 2025) | Name | Age | Title | | :---------------- | :-- | :------------------------------------- | | Frank J. Bisignano | 65 | Chairman and Chief Executive Officer | | Guy Chiarello | 65 | Chief Operating Officer | | John Gibbons | 65 | Head of Financial Institutions Group | | Robert W. Hau | 59 | Chief Financial Officer | | Jennifer LaClair | 53 | Head of Merchant Solutions | | Michael P. Lyons | 54 | President and CEO-Elect | | Adam L. Rosman | 59 | Chief Administrative Officer and Chief Legal Officer | - Michael P. Lyons was appointed President and CEO-Elect in January 2025, with current CEO Frank J. Bisignano transitioning to Chairman and CEO until his potential departure by June 30, 2025[155] PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Fiserv's common stock trades on NYSE (FI), with 1,479 shareholders; no dividends are anticipated. In Q4 2024, 6.1 million shares were repurchased for $1.2 billion - Fiserv's common stock is traded on the New York Stock Exchange (NYSE) under the symbol 'FI'[157] - As of December 31, 2024, there were 1,479 shareholders of record[157] - The company has never paid dividends on its common stock and does not anticipate paying them in the foreseeable future[157] Issuer Purchases of Equity Securities (Q4 2024) | Period | Total Shares Purchased | Average Price Paid per Share | | :----------------- | :--------------------- | :--------------------------- | | October 1-31, 2024 | 2,155,547 | $192.86 | | November 1-30, 2024| 1,810,500 | $214.25 | | December 1-31, 2024| 2,156,806 | $206.95 | | Total | 6,122,853 | | - As of December 31, 2024, approximately 18.0 million shares remained under existing repurchase authorization[158] Stock Performance Graph The stock performance graph compares Fiserv's cumulative total shareholder return against the S&P 500 and S&P 500 Financials Indices for the five years ended December 31, 2024 - The graph compares Fiserv's cumulative total shareholder return against the S&P 500 Index and S&P 500 Financials Index for the five years ended December 31, 2024[160] Cumulative Total Shareholder Return (Indexed to $100 at Dec 31, 2019) | Index / Company | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | | :---------------------- | :--- | :--- | :--- | :--- | :--- | :--- | | Fiserv, Inc. | $100 | $98 | $90 | $87 | $115 | $178 | | S&P 500 Index | $100 | $118 | $152 | $125 | $158 | $197 | | S&P 500 Financials Index| $100 | $98 | $133 | $119 | $133 | $174 | Item 6. [Reserved] This item is reserved and contains no information Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes Fiserv's financial condition and results, including recast segment performance, strategic priorities, industry trends, critical accounting policies, and detailed financial performance for 2024 and 2023 - Fiserv realigned its reportable segments to Merchant Solutions and Financial Solutions in Q1 2024, with prior periods recast for comparability[163] - The company is a leading global provider of payments and financial services technology solutions, with most products being non-discretionary for clients[165] - Fiserv's enterprise priorities include driving growth, building high-quality revenue, deepening client relationships, delivering innovation, and disciplined capital allocation[176] - Industry trends show rapid growth in digital payments, e-commerce, and real-time payments, intensifying competition and increasing demand for modern, integrated solutions[177][178][181][183] Overview Fiserv, a global leader in payments and financial services technology, realigned its segments, manages its portfolio through M&A, and prioritizes client value, innovation, and operational effectiveness amid industry trends - Fiserv is a leading global provider of payments and financial services technology solutions, serving merchants, banks, credit unions, and public sector clients[165] - The company realigned its reportable segments to Merchant Solutions and Financial Solutions in Q1 2024[165][167] - Strategic acquisitions in 2023 included Skytef and Sled for $17 million, expanding distribution and instant payment capabilities; pending 2024 acquisitions (CCV and Payfare) are valued at approximately $360 million[171][172] - In 2023, Fiserv sold its financial reconciliation business for $235 million, recognizing a $172 million pre-tax gain[173] - The Wells Fargo Merchant Services (WFMS) joint venture is expected to expire on April 1, 2025, leading to a $595 million non-cash impairment in 2024[174] - Global macroeconomic conditions, including interest rates, inflation, and geopolitical events, continue to impact business operations and financial results[186] Critical Accounting Policies and Estimates Fiserv's financial statements rely on critical accounting policies and estimates for acquisitions, goodwill, intangible assets, revenue recognition, and income taxes, requiring significant judgment and impacting financial results - Acquisitions require significant judgment in allocating purchase price to assets and liabilities at fair value, including complex estimates for intangible assets and their useful lives[190] - Goodwill is tested for impairment annually at the reporting unit level, using discounted cash flow and market approaches, with the lowest reporting unit having a 29% excess fair value over carrying value in 2024[191][192][193] - Revenue recognition involves significant judgment in identifying distinct performance obligations, determining transaction prices (including variable consideration), and allocating prices in multi-element arrangements and contract modifications[199][200][201][202] - Income tax provision requires judgment in estimating deferred tax assets/liabilities and assessing the likelihood of realizing tax benefits, with potential significant impact on the effective income tax rate[203][204] Results of Operations Fiserv reported 7% revenue growth to $20.5 billion in 2024, with operating income up 17% to $5.9 billion and operating margin at 28.7%, leading to $3.13 billion net income and $5.38 diluted EPS Consolidated Statements of Income Highlights (2024 vs. 2023) | Metric | 2024 ($M) | 2023 ($M) | Change ($M) | Change (%) | | :----------------------------------------- | :-------- | :-------- | :---------- | :--------- | | Total revenue | 20,456 | 19,093 | 1,363 | 7% | | Processing and services revenue | 16,637 | 15,630 | 1,007 | 6% | | Product revenue | 3,819 | 3,463 | 356 | 10% | | Total expenses | 14,577 | 14,079 | 498 | 4% | | Operating income | 5,879 | 5,014 | 865 | 17% | | Operating margin | 28.7% | 26.3% | 240 bps | | | Net income attributable to Fiserv, Inc. | 3,131 | 3,068 | 63 | 2% | | Net income attributable to Fiserv, Inc. per share - Diluted | $5.38 | $4.98 | $0.40 | 8% | Segment Revenue and Operating Income Growth (2024 vs. 2023) | Segment | Revenue Growth ($M) | Revenue Growth (%) | Operating Income Growth ($M) | Operating Income Growth (%) | | :------------------ | :------------------ | :----------------- | :--------------------------- | :-------------------------- | | Merchant Solutions | 909 | 10% | 587 | 20% | | Financial Solutions | 376 | 4% | 307 | 7% | | Corporate and Other | 78 | 6% | (29) | | - Total revenue increased 7% in 2024, primarily due to higher global processing revenue, partially offset by foreign currency exchange rate fluctuations[213] - Merchant segment revenue grew 10% in 2024, driven by Small Business (8% contribution) and Enterprise (3% contribution) due to increased payment volumes and new client wins[214] - Financial segment revenue grew 4% in 2024, with Digital Payments contributing 2% (driven by Zelle transactions and network routing) and Issuing contributing 1% (due to active accounts)[215] - Total expenses as a percentage of total revenue decreased by 240 basis points to 71.3% in 2024, favorably impacted by operating leverage and reduced amortization of acquisition-related intangible assets[216][219] - Interest expense, net, increased by $219 million (22%) in 2024 due to higher fixed-rate outstanding borrowings from new senior note issuances[224] - Other expense, net, increased by $38 million in 2024, including a $147 million non-cash settlement charge for terminated pension plans, partially offset by gains on equity securities[225] - Loss from investments in unconsolidated affiliates was $685 million in 2024, primarily due to a $595 million non-cash impairment related to the Wells Fargo Merchant Services merchant alliance[228] Liquidity and Capital Resources Fiserv's liquidity is driven by operating cash flow ($6.6 billion, up 28% in 2024), cash, commercial paper, and a $6.0 billion credit facility, with $5.5 billion in share repurchases and $24.84 billion total debt - Primary liquidity needs are funded by operating cash flow, cash and cash equivalents ($1.2 billion at Dec 31, 2024), commercial paper, and a $2.8 billion available capacity under the revolving credit facility[231] Net Cash Provided by Operating Activities and Capital Expenditures | Metric | 2024 ($M) | 2023 ($M) | Change ($M) | Change (%) | | :------------------------------------------------------------------ | :-------- | :-------- | :---------- | :--------- | | Net cash provided by operating activities | 6,631 | 5,162 | 1,469 | 28% | | Capital expenditures, including capitalized software and other intangibles | 1,569 | 1,388 | 181 | 13% | - The company's policy is to use operating cash flow for capital expenditures, merchant cash advances, share repurchases, and debt repayment, rather than dividends[233] Future Cash Requirements (as of Dec 31, 2024) | Obligation | Total ($M) | Less than 1 year ($M) | 1-3 years ($M) | 3-5 years ($M) | More than 5 years ($M) | | :------------------------------ | :--------- | :-------------------- | :------------- | :------------- | :--------------------- | | Long-term debt, including interest | 30,812 | 2,025 | 9,165 | 6,738 | 12,884 | | Minimum finance lease payments | 699 | 238 | 339 | 101 | 21 | | Minimum operating lease payments| 933 | 133 | 265 | 167 | 368 | | Purchase obligations | 2,181 | 872 | 880 | 275 | 154 | | Unrecognized income tax obligations | 85 | 7 | 8 | 22 | 48 | | Total | 34,710 | 3,275 | 10,657 | 7,303 | 13,475 | - Fiserv repurchased $5.5 billion of common stock in 2024, with 18.0 million shares remaining under authorization[235][236] - In 2024, Fiserv issued $3.75 billion in senior notes to fund general corporate purposes, including commercial paper repayment and share repurchases[242][243] Total Debt (as of Dec 31, 2024) | Debt Type | Amount ($M) | | :-------------------------------------- | :---------- | | Fixed-rate senior notes | 21,600 | | Commercial paper programs (outstanding) | 1,500 | | Total Debt (carrying value) | 24,840 | - The company was in compliance with all financial debt covenants during 2024[253] Item 7A. Quantitative and Qualitative Disclosures About Market Risk Fiserv manages interest rate and foreign currency risks using derivatives; a 1% variable interest rate increase would raise annual interest expense by $24 million, largely mitigated, and foreign currency changes are not expected to materially impact pre-tax income - Fiserv manages market risks from interest rates and foreign currency exchange rates using derivative instruments[259] - A hypothetical 1% increase in variable interest rates would increase annual interest expense by approximately $24 million, largely mitigated by interest earned on subscriber funds and intermediary settlement cash[260][261][262] - Foreign currency risk arises from non-U.S. dollar-denominated investments and transactions, with 15% of total revenue generated internationally in 2024[263][264] - A 10% strengthening or weakening of the U.S. dollar is not expected to materially impact reported pre-tax income[265] - The company uses forward exchange contracts and fixed-to-fixed cross-currency rate swap contracts as cash flow and net investment hedges[266] Item 8. Financial Statements and Supplementary Data This section presents Fiserv's audited consolidated financial statements for 2024-2022, including income, comprehensive income, balance sheets, equity, and cash flows, with detailed notes and an unqualified auditor's opinion - The section includes the audited consolidated financial statements for the years ended December 31, 2024, 2023, and 2022[268][270][272][275][277][279] - Key financial statements presented are Consolidated Statements of Income, Comprehensive Income, Balance Sheets, Equity, and Cash Flows[268] - Detailed Notes to Consolidated Financial Statements cover significant accounting policies, recent pronouncements, revenue recognition, acquisitions, and other financial details[268][281][282][286][333][353][366][368][370][372][381][390][397][410][420][423][424][436][440][448][452][455] - The Report of Independent Registered Public Accounting Firm provides an unqualified opinion on the financial statements and discusses critical audit matters related to revenue and goodwill impairment[468][472][475][476] Index to Consolidated Financial Statements This index lists all consolidated financial statements and accompanying notes included in the report, starting from page 46 - The index provides a list of all consolidated financial statements and notes, starting from page 46[268] Consolidated Statements of Income The Consolidated Statements of Income detail Fiserv's financial performance for 2024, 2023, and 2022, including revenue, expenses, operating income, net income, and diluted EPS Consolidated Statements of Income (in millions, except per share data) | Metric | 2024 | 2023 | 2022 | | :----------------------------------------- | :------ | :------ | :------ | | Processing and services revenue | $16,637 | $15,630 | $14,460 | | Product revenue | $3,819 | $3,463 | $3,277 | | Total revenue | $20,456 | $19,093 | $17,737 | | Cost of processing and services | $5,363 | $5,332 | $5,771 | | Cost of product | $2,650 | $2,338 | $2,221 | | Selling, general and administrative | $6,564 | $6,576 | $6,059 | | Net gain on sale of businesses and other assets | $— | $(167) | $(54) | | Total expenses | $14,577 | $14,079 | $13,997 | | Operating income | $5,879 | $5,014 | $3,740 | | Interest expense, net | $(1,195)| $(976) | $(733) | | Other expense, net | $(178) | $(140) | $(94) | | Income before income taxes and (loss) income from investments in unconsolidated affiliates | $4,506 | $3,898 | $2,913 | | Income tax provision | $(641) | $(754) | $(551) | | (Loss) income from investments in unconsolidated affiliates | $(685) | $(15) | $220 | | Net income | $3,180 | $3,129 | $2,582 | | Less: net income attributable to noncontrolling interests and redeemable noncontrolling interests | $49 | $61 | $52 | | Net income attributable to Fiserv, Inc.| $3,131 | $3,068 | $2,530 | | Net income attributable to Fiserv, Inc. per share: Basic | $5.41 | $5.02 | $3.94 | | Net income attributable to Fiserv, Inc. per share: Diluted | $5.38 | $4.98 | $3.91 | Consolidated Statements of Comprehensive Income The Consolidated Statements of Comprehensive Income present Fiserv's net income and other comprehensive income/loss components for 2024, 2023, and 2022, including derivatives, pension plans, and foreign currency impacts Consolidated Statements of Comprehensive Income (in millions) | Metric | 2024 | 2023 | 2022 | | :------------------------------------------------------------------------------------------------- | :------ | :------ | :------ | | Net income | $3,180 | $3,129 | $2,582 | | Other comprehensive (loss) income: | | | | | Fair market value adjustment on derivatives | $(13) | $14 | $(15) | | Reclassification adjustment for net realized (gains) losses on cash flow hedges included in cost of processing and services | $(3) | $4 | $2 | | Reclassification adjustment for net realized losses on cash flow hedges included in net interest expense | $14 | $15 | $19 | | Tax impacts of derivatives | $1 | $(8) | $(2) | | Unrealized (loss) gain on defined benefit pension plans | $(117) | $7 | $(78) | | Realized loss due to settlement of terminated defined benefit pension plans | $132 | $— | $— | | Tax impacts of defined benefit pension plans | $(5) | $(2) | $18 | | Foreign currency translation | $(607) | $288 | $(421) | | Reclassification adjustment for accumulated foreign currency translation impacts from the sale of foreign entities included in net gain on sale of businesses and other assets | $— | $10 | $56 | | Tax impacts of foreign currency translation | $(66) | $68 | $(73) | | Total other comprehensive (loss) income | $(664) | $396 | $(494) | | Comprehensive income | $2,516 | $3,525 | $2,088 | | Less: net income attributable to noncontrolling interests and redeemable noncontrolling interests | $49 | $61 | $52 | | Less: other comprehensive loss attributable to noncontrolling interests | $(34) | $(10) | $(50) | | Comprehensive income attributable to Fiserv, Inc. | $2,501 | $3,474 | $2,086 | Consolidated Balance Sheets The Consolidated Balance Sheets show Fiserv's financial position as of December 31, 2024, with $77.18 billion in total assets and $49.49 billion in total liabilities, including significant goodwill and intangibles Consolidated Balance Sheets (in millions) | Asset / Liability / Equity | Dec 31, 2024 | Dec 31, 2023 | | :----------------------------------------- | :----------- | :----------- | | Cash and cash equivalents | $1,236 | $1,204 | | Trade accounts receivable, net | $3,725 | $3,582 | | Prepaid expenses and other current assets | $3,087 | $2,344 | | Settlement assets | $15,429 | $27,681 | | Total current assets | $23,477 | $34,811 | | Property and equipment, net | $2,374 | $2,161 | | Customer relationships, net | $5,868 | $7,075 | | Other intangible assets, net | $4,072 | $4,135 | | Goodwill | $36,584 | $37,205 | | Investments in unconsolidated affiliates | $1,506 | $2,262 | | Total assets | $77,176 | $90,890 | | Accounts payable and other current liabilities | $4,799 | $4,355 | | Short-term and current maturities of long-term debt | $1,110 | $755 | | Settlement obligations | $15,429 | $27,681 | | Total current liabilities | $22,157 | $33,552 | | Long-term debt | $23,730 | $22,363 | | Deferred income taxes | $2,477 | $3,078 | | Total liabilities | $49,490 | $60,221 | | Total Fiserv, Inc. shareholders' equity | $27,068 | $29,857 | | Noncontrolling interests | $618 | $651 | | Total equity | $27,686 | $30,508 | Consolidated Statements of Equity The Consolidated Statements of Equity detail changes in Fiserv's shareholders' equity for 2024, 2023, and 2022, including net income, comprehensive loss, share-based compensation, and $5.55 billion in 2024 treasury stock repurchases Consolidated Statements of Equity Highlights (in millions) | Metric | 2024 | 2023 | 2022 | | :----------------------------------------- | :-------- | :-------- | :-------- | | Balance at January 1 | $30,508 | $31,527 | $31,672 | | Net income | $3,131 | $3,068 | $2,530 | | Other comprehensive (loss) income | $(630) | $406 | $(494) | | Share-based compensation | $367 | $342 | $323 | | Purchases of treasury stock | $(5,549) | $(4,744) | $(2,500) | | Balance at December 31 | $27,686 | $30,508 | $31,527 | Consolidated Statements of Cash Flows The Consolidated Statements of Cash Flows detail Fiserv's cash generation and usage for 2024, 2023, and 2022, with net cash from operating activities increasing to $6.63 billion in 2024 Consolidated Statements of Cash Flows (in millions) | Activity | 2024 | 2023 | 2022 | | :----------------------------------------- | :-------- | :-------- | :-------- | | Net cash provided by operating activities | $6,631 | $5,162 | $4,618 | | Net cash used in investing activities | $(2,404) | $(1,068) | $(2,112) | | Net cash used in financing activities | $(4,165) | $(4,356) | $(2,478) | | Effect of exchange rate changes | $(32) | $33 | $(41) | | Net change in cash and cash equivalents | $30 | $(229) | $(13) | | Cash and cash equivalents, ending balance | $2,993 | $2,963 | $3,192 | - Net cash provided by operating activities increased by 28% to $6.63 billion in 2024, primarily due to increased profitability and working capital improvements[232][280] - Capital expenditures, including capitalized software, increased by 13% to $1.57 billion in 2024[232][280] - Purchases of treasury stock, including employee shares withheld for tax obligations, amounted to $5.84 billion in 2024[280] Notes to Consolidated Financial Statements The Notes to Consolidated Financial Statements provide detailed disclosures on accounting policies, pronouncements, revenue, acquisitions, assets, debt, employee benefits, share-based compensation, income taxes, and business segments - Note 1 outlines significant accounting policies, including business description, principles of consolidation, use of estimates, revenue recognition, cash and cash equivalents, allowance for doubtful accounts, leases, settlement assets and obligations, allowance for merchant credit losses, property and equipment, intangible assets, and goodwill[281][282][283][285][286][287][289][290][295][297][299][302][303][304][305][306][307] - Note 2 details recently adopted accounting pronouncements (ASU 2023-07 on Segment Reporting, ASU 2022-03 on Fair Value Measurement) and recently issued pronouncements (ASU 2023-09 on Income Tax Disclosures, ASU 2024-03 on Expense Disaggregation Disclosures)[328][329][330][332] - Note 3 provides detailed information on revenue recognition policies, including identification of performance obligations, determination and allocation of transaction price, and contract modifications, with revenue disaggregated by business line and geographic region[333][334][335][336][338][341][342][343][344][345][346][347] - Note 4 covers acquisitions (Merchant One, Finxact, Skytef, Sled, Yacaré, NexTable, City POS) and dispositions (financial reconciliation business, Fiserv Costa Rica, Korea operations), including purchase prices, gains/losses, and goodwill allocation[353][354][356][359][360][362][363][364][365] - Note 7 details changes in goodwill, including a reallocation due to the Segment Realignment in Q1 2024, with a total goodwill balance of $36.58 billion at December 31, 2024[370][371] - Note 8 discusses investments in unconsolidated affiliates, including merchant alliances (e.g., WFMS, which incurred a $595 million non-cash impairment in 2024) and Lending Joint Ventures[372][373][374][375][376][377][378] - Note 12 provides a detailed breakdown of Fiserv's debt, including short-term and long-term debt, senior notes, commercial paper, revolving credit facility, and foreign lines of credit, totaling $24.84 billion at December 31, 2024[410][411][412][413][414][415][416][417][418] - Note 15 details employee benefit plans, including defined contribution plans and the termination of U.K. and U.S. defined benefit pension plans in 2023/2024, resulting in a $147 million non-cash settlement charge[424][425][426][428] - Note 16 outlines share-based compensation activity, including restricted stock units, performance share units, and stock options, with $367 million in expense recognized in 2024[436][437][438][439] - Note 17 provides income tax details, including the provision for income taxes, reconciliation of statutory to effective tax rates (14.2% in 2024), deferred tax assets/liabilities, and unrecognized tax benefits[440][441][442][443][445] - Note 20 provides detailed business segment information for Merchant and Financial segments, including revenues, personnel expenses, direct costs, depreciation, and operating income[455][456][457][458][459][460][461][462][463] Schedule II - Valuation and Qualifying Accounts This schedule details changes in Fiserv's deferred tax asset valuation allowance for 2024, 2023, and 2022, showing a decrease primarily due to subsidiary restructurings Deferred Tax Asset Valuation Allowance (in millions) | Year Ended December 31, | Balance at Beginning of Period | Additions Charged to Costs and Expenses | Additions Charged to Other Accounts | Deductions | Balance at End of Period | | :---------------------- | :----------------------------- | :-------------------------------------- | :---------------------------------- | :--------- | :----------------------- | | 2024 | $467 | $15 | $(20) | $(58) | $404 | | 2023 | $620 | $2 | $(125) | $(30) | $467 | | 2022 | $697 | $33 | $(41) | $(69) | $620 | - The decrease in the deferred tax asset valuation allowance is primarily due to subsidiary restructurings[466] Report of Independent Registered Public Accounting Firm Deloitte & Touche LLP issued an unqualified opinion on Fiserv's 2024 consolidated financial statements, highlighting critical audit matters in revenue recognition and goodwill impairment - Deloitte & Touche LLP issued an unqualified opinion on Fiserv's consolidated financial statements for the period ended December 31, 2024, confirming fair presentation in conformity with GAAP[468] - Critical audit matters include the complexity of revenue processing and recognition, particularly customer contract modifications, due to extensive IT systems and management judgment[473][475] - Another critical audit matter is the annual goodwill impairment test for a specific reporting unit with a 29% excess fair value over carrying value, due to significant estimates and sensitivity to macroeconomic conditions[476][477][478] Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There were no changes in or disagreements with accountants on accounting and financial disclosure - No changes in or disagreements with accountants on accounting and financial disclosure[482] Item 9A. Controls and Procedures Fiserv's management, with CEO and CFO, concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2024, with no material changes - Disclosure controls and procedures were effective as of December 31, 2024[483] - Management assessed and concluded that internal control over financial reporting was effective as of December 31, 2024, based on the COSO framework[484][486] - No material changes in internal control over financial reporting occurred during the three months ended December 31, 2024[487] - The independent registered public accounting firm issued an unqualified opinion on the effectiveness of internal control over financial reporting[490] Item 9B. Other Information Adam Rosman, CAO and CLO, adopted a Rule 10b5-1 Trading Plan on November 11, 2024, for the sale of up to 17,906 shares by February 27, 2027 - Adam Rosman, Chief Administrative Officer and Chief Legal Officer, adopted a Rule 10b5-1 Trading Plan on November 11, 2024[498] - The plan provides for the sale of up to 17,906 shares of common stock until February 27, 2027[498] Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to Fiserv, Inc - Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections is not applicable[499] PART III Item 10. Directors, Executive Officers and Corporate Governance Information on directors, executive officers, and corporate governance, including the Code of Conduct, is incorporated by reference from the 2025 proxy statement - Information on directors, executive officers (excluding Part I details), and corporate governance is incorporated by reference from the 2025 proxy statement[501] - Fiserv has a Code of Conduct and Business Ethics applicable to all directors and employees, available on its website[502] Item 11. Executive Compensation Information on executive compensation, including board compensation and pay ratio, is incorporated by reference from the 2025 proxy statement - Information on executive compensation is incorporated by reference from the 2025 proxy statement[503] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Security ownership information is incorporated from the 2025 proxy statement, with equity compensation plans showing 3.58 million shares issuable at $94.15 weighted-average exercise price and 18.01 million shares available - Security ownership information is incorporated by reference from the 2025 proxy statement[504] Equity Compensation Plan Information (as of Dec 31, 2024) | Plan Category | Number of shares to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of shares remaining available for future issuance | | :------------------------------------------ | :------------------------------------------------------------------------------------ | :---------------------------------------------------------- | :------------------------------------------------------- | | Equity compensation plans approved by shareholders | 3,583,029 | $94.15 | 18,013,195 | | Equity compensation plans not approved by shareholders | N/A | N/A | N/A | | Total | 3,583,029 | $94.15 | 18,013,195 | - The table excludes 4,540,827 unvested restricted stock units and 22,679,972 shares authorized under the Employee Stock Purchase Plan[507] Item 13. Certain Relationships and Related Transactions, and Director Independence Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2025 proxy statement - Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2025 proxy statement[508] Item 14. Principal Accounting Fees and Services Information on principal accounting fees and services and the audit committee pre-approval policy is incorporated by reference from the 2025 proxy statement - Information on principal accounting fees and services and the audit committee pre-approval policy is incorporated by reference from the 2025 proxy statement[509] PART IV Item 15. Exhibits, Financial Statement Schedules This section lists all exhibits filed with the Form 10-K, including corporate documents, debt instruments, and certifications; financial statement schedules are omitted - Financial statement schedules are omitted as the required information is presented in the consolidated financial statements or accompanying notes[512] - The exhibit index lists various documents, including **corporate governance doc