Fiserv(FISV) - 2024 Q4 - Annual Results

Executive Summary Fourth Quarter and Full Year 2024 Highlights Fiserv achieved strong Q4 and full-year 2024 financial results, with consistent GAAP revenue and double-digit adjusted EPS growth Fourth Quarter and Full Year 2024 Key Financial Highlights | Metric | Q4 2024 | Full Year 2024 | | :-------------------------------- | :------ | :------------- | | GAAP Revenue Growth | 7% | 7% | | GAAP EPS Growth | 13% | 8% | | Operating Cash Flow | N/A | $6.63 billion | | Organic Revenue Growth | 13% | 16% | | Adjusted EPS Growth | 15% | 17% | | Free Cash Flow | N/A | $5.23 billion | - Fiserv achieved its fourth consecutive year of double-digit organic revenue growth and 39th consecutive year of double-digit adjusted earnings per share growth[7] - The company repurchased 6.1 million shares of common stock for $1.3 billion in Q4 2024 and 33.9 million shares for $5.5 billion in full year 2024[10] 2025 Outlook Fiserv projects strong organic revenue and adjusted EPS growth for 2025, driven by ongoing initiatives in its key segments 2025 Financial Outlook | Metric | Range | | :-------------------- | :---------- | | Organic Revenue Growth | 10% to 12% | | Adjusted EPS | $10.10 to $10.30 | | Adjusted EPS Growth | 15% to 17% | - The 2025 guidance reflects a continuation of product, client, and distribution strategies, along with a commitment to operational excellence[10] GAAP Financial Results Consolidated GAAP Performance Fiserv's consolidated GAAP results for Q4 and full year 2024 show consistent revenue growth, improved operating margins, and increased net income Consolidated GAAP Financial Performance (Q4 & Full Year 2024 vs. 2023) | Metric | Q4 2024 | Q4 2023 | YoY Change (Q4) | FY 2024 | FY 2023 | YoY Change (FY) | | :-------------------------------- | :------ | :------ | :-------------- | :-------- | :-------- | :-------------- | | Revenue | $5.25B | $4.92B | 7% | $20.46B | $19.09B | 7% | | GAAP EPS | $1.64 | $1.45 | 13% | $5.38 | $4.98 | 8% | | GAAP Operating Margin | 31.8% | 29.4% | +2.4 pp | 28.7% | 26.3% | +2.4 pp | | Net Income Attributable to Fiserv | $938M | $870M | 7.8% | $3,131M | $3,068M | 2.1% | - Full year 2024 GAAP EPS included a $595 million non-cash impairment charge related to an equity method investment and a $147 million non-cash settlement charge for terminated pension plans[3] Segment GAAP Performance Both Merchant Solutions and Financial Solutions segments contributed to GAAP revenue growth and saw improvements in GAAP operating margins for both the fourth quarter and full year 2024 Merchant Solutions Segment The Merchant Solutions segment achieved strong GAAP revenue growth and significant operating margin expansion in Q4 and full year 2024 Merchant Solutions Segment GAAP Performance (Q4 & Full Year 2024 vs. 2023) | Metric | Q4 2024 | Q4 2023 | YoY Change (Q4) | FY 2024 | FY 2023 | YoY Change (FY) | | :-------------------- | :------ | :------ | :-------------- | :-------- | :-------- | :-------------- | | Revenue Growth | 11% | N/A | N/A | 10% | N/A | N/A | | Operating Margin | 39.2% | 37.7% | +1.5 pp | 37.0% | 34.1% | +2.9 pp | Financial Solutions Segment The Financial Solutions segment experienced GAAP revenue growth and improved GAAP operating margins in Q4 and full year 2024 Financial Solutions Segment GAAP Performance (Q4 & Full Year 2024 vs. 2023) | Metric | Q4 2024 | Q4 2023 | YoY Change (Q4) | FY 2024 | FY 2023 | YoY Change (FY) | | :-------------------- | :------ | :------ | :-------------- | :-------- | :-------- | :-------------- | | Revenue Growth | 3% | N/A | N/A | 4% | N/A | N/A | | Operating Margin | 51.7% | 48.4% | +3.3 pp | 47.3% | 45.9% | +1.4 pp | Non-GAAP Financial Results and Reconciliations Adjusted Net Income and Earnings Per Share Fiserv's adjusted net income and EPS demonstrated robust growth, reflecting core operational performance after non-GAAP adjustments Adjusted Net Income and EPS (Q4 & Full Year 2024 vs. 2023) | Metric | Q4 2024 | Q4 2023 | YoY Change (Q4) | FY 2024 | FY 2023 | YoY Change (FY) | | :-------------------- | :------ | :------ | :-------------- | :-------- | :-------- | :-------------- | | Adjusted Net Income | $1,437M | $1,321M | 8.8% | $5,123M | $4,632M | 10.6% | | Adjusted EPS | $2.51 | $2.19 | 15% | $8.80 | $7.52 | 17% | - Key adjustments include merger and integration costs, severance costs, amortization of acquisition-related intangible assets, impairment of equity method investments, and non-cash settlement charges for terminated pension plans[27][29][32] Adjusted Operating Margins Adjusted operating margins significantly improved across the company and key segments, indicating enhanced operational efficiency Adjusted Operating Margins (Q4 & Full Year 2024 vs. 2023) | Metric | Q4 2024 | Q4 2023 | Change (Q4) | FY 2024 | FY 2023 | Change (FY) | | :-------------------------------- | :------ | :------ | :---------- | :-------- | :-------- | :---------- | | Total Company Adjusted Operating Margin | 42.9% | 41.1% | +180 bps | 39.4% | 37.7% | +170 bps | | Merchant Solutions Adjusted Operating Margin | 39.2% | 37.7% | +150 bps | 37.0% | 34.1% | +290 bps | | Financial Solutions Adjusted Operating Margin | 51.7% | 48.5% | +320 bps | 47.3% | 46.0% | +130 bps | Organic Revenue Growth Fiserv achieved strong organic revenue growth, especially in Merchant Solutions, reflecting robust underlying business performance Organic Revenue Growth (Q4 & Full Year 2024) | Segment | Q4 2024 Growth | FY 2024 Growth | | :-------------------- | :------------- | :------------- | | Total Company | 13% | 16% | | Merchant Solutions | 23% | 27% | | Financial Solutions | 4% | 6% | - Organic revenue growth excludes the impact of foreign currency fluctuations, acquisitions, dispositions, and postage reimbursements, providing a clearer view of core business expansion[18][46] Free Cash Flow Fiserv generated substantial free cash flow in 2024, significantly increasing from prior year, available for strategic capital decisions Free Cash Flow (Full Year 2024 vs. 2023) | Metric | FY 2024 | FY 2023 | | :-------------- | :-------- | :-------- | | Free Cash Flow | $5,233M | $4,016M | | Net Cash Provided by Operating Activities | $6,631M | $5,162M | - Free cash flow is calculated by adjusting net cash provided by operating activities for capital expenditures and other items like distributions to noncontrolling interests, severance, and merger/integration payments[18][50] Total Amortization Total amortization expenses for 2024 remained substantial, primarily from acquisition-related intangibles and software Total Amortization (Full Year 2024 vs. 2023) | Category | FY 2024 | FY 2023 | | :-------------------------------- | :-------- | :-------- | | Acquisition-related intangible assets | $1,423M | $1,642M | | Capitalized software and other intangibles | $631M | $493M | | Purchased software | $232M | $225M | | Financing costs and debt discounts | $43M | $41M | | Sales commissions | $113M | $110M | | Deferred conversion costs | $108M | $85M | | Total Amortization | $2,550M | $2,596M | - Amortization of acquisition-related intangible assets is excluded from non-GAAP results to provide a comparable measure of operating performance, though these assets contribute to revenue generation[17][51] Consolidated Financial Statements Condensed Consolidated Statements of Income The statements of income detail Fiserv's Q4 and full-year 2024 revenue, expenses, and net income, showing growth in total revenue and operating income Condensed Consolidated Statements of Income (Selected Data, FY 2024 vs. 2023) | Metric | FY 2024 | FY 2023 | | :-------------------------------- | :-------- | :-------- | | Total Revenue | $20,456M | $19,093M | | Operating Income | $5,879M | $5,014M | | Net Income Attributable to Fiserv | $3,131M | $3,068M | | GAAP Diluted EPS | $5.38 | $4.98 | - Loss from investments in unconsolidated affiliates significantly increased in 2024 to $685 million from $15 million in 2023, primarily due to an impairment charge[24] Condensed Consolidated Statements of Cash Flows The cash flow statement highlights increased net cash from operating activities, increased investing, and decreased financing activities in 2024 Condensed Consolidated Statements of Cash Flows (Selected Data, FY 2024 vs. 2023) | Activity | FY 2024 | FY 2023 | | :-------------------------------- | :-------- | :-------- | | Net cash provided by operating activities | $6,631M | $5,162M | | Net cash used in investing activities | $(2,404)M | $(1,068)M | | Net cash used in financing activities | $(4,165)M | $(4,356)M | | Net change in cash and cash equivalents | $30M | $(229)M | - Capital expenditures, including capitalized software and other intangibles, increased to $1,569 million in 2024 from $1,388 million in 2023[41] - Purchases of treasury stock, including employee shares withheld for tax obligations, amounted to $5,837 million in 2024[41] Condensed Consolidated Balance Sheets The balance sheet shows decreased total assets and liabilities from 2023 to 2024, driven by reduced settlement assets and obligations Condensed Consolidated Balance Sheets (Selected Data, as of Dec 31, 2024 vs. 2023) | Metric | Dec 31, 2024 | Dec 31, 2023 | | :-------------------------------- | :----------- | :----------- | | Total Assets | $77,176M | $90,890M | | Total Liabilities | $49,490M | $60,221M | | Fiserv Shareholders' Equity | $27,068M | $29,857M | | Settlement Assets | $15,429M | $27,681M | | Settlement Obligations | $15,429M | $27,681M | - Goodwill remained the largest asset at $36,584 million, while customer relationships decreased to $5,868 million[43] Company Information and Disclosures Segment Realignment Fiserv realigned segments in Q1 2024 into Merchant and Financial Solutions to enhance operational performance, with prior periods recast - The realignment aims to further enhance operational performance in delivering integrated products and solutions to financial institution clients[11] - Segment results for the three months and full year ended December 31, 2023, have been recast to reflect the new structure[11] About Fiserv Fiserv is a global leader in payments and financial technology, a Fortune 500 and S&P 500 company, recognized for innovation - Fiserv is a global leader in payments and financial technology, helping clients achieve best-in-class results through innovation and excellence[13] - The company's offerings include account processing, digital banking, card issuer processing, payments, e-commerce, merchant acquiring, and the Clover cloud-based platform[13] - Fiserv was named one of Fortune World's Most Admired Companies for 10 of the last 11 years[10][13] Use of Non-GAAP Financial Measures Fiserv uses non-GAAP measures to supplement GAAP reporting, enhancing performance evaluation by excluding certain non-cash or other items - Non-GAAP measures like adjusted revenue, organic revenue, adjusted EPS, and free cash flow are used to provide additional insights into business performance[14] - Adjustments typically exclude non-cash intangible asset amortization, impairment charges, severance, merger/integration costs, gains/losses from asset sales, and certain tax benefits/expenses[16] - These non-GAAP measures are not comparable to similarly titled measures from other companies and should not be considered substitutes for GAAP measures[19] Forward-Looking Statements This release contains forward-looking statements about future financial performance, subject to risks and uncertainties that may cause actual results to differ - Forward-looking statements are identified by words such as 'believes,' 'anticipates,' 'expects,' and describe future plans, outlook, objectives, or goals[20] - Key risk factors include competition, changes in customer demand, technology evolution, security breaches, economic conditions, regulatory actions, and the ability to integrate acquisitions[21] - The company assumes no obligation to update any forward-looking statements[21] Full Year Forward-Looking Non-GAAP Financial Measures Fiserv's 2025 outlook for organic revenue growth and adjusted EPS uses non-GAAP measures, with specific exclusions and no GAAP reconciliation due to variability 2025 Organic Revenue Growth Components | Component | Growth Impact | | :-------------------- | :------------ | | 2025 Revenue | 9% - 11% | | Postage reimbursements | (0.5)% | | 2025 Adjusted revenue | 8.5% - 10.5% | | Currency impact | 1.5% | | Acquisition adjustments | —% | | Divestiture adjustments | —% | | 2025 Organic revenue | 10% - 12% | - The adjusted EPS outlook for 2025 excludes non-cash intangible asset amortization, impairment charges, merger and integration costs, severance costs, and gains/losses from asset sales[55] - Amortization expense for acquired intangible assets is estimated to decrease by approximately 10% in 2025 compared to 2024[55]