Fiserv(FISV) - 2025 Q1 - Quarterly Results

Executive Summary & Highlights This section provides an overview of Fiserv's strong first-quarter 2025 financial performance, key growth metrics, and strategic commentary from both the current and incoming CEOs First Quarter 2025 Key Highlights Fiserv reported strong first-quarter 2025 results, with GAAP revenue increasing 5% and organic revenue growing 7% Q1 2025 Key Highlights | Metric | Q1 2025 Growth | 2025 Outlook Growth | | :----------------------- | :------------- | :------------------ | | GAAP Revenue | 5% | - | | Organic Revenue | 7% | 10% - 12% | | GAAP EPS | 22% | - | | Adjusted EPS | 14% | 15% - 17% | CEO Commentary Chairman and CEO Frank Bisignano highlighted that first-quarter adjusted EPS exceeded expectations, demonstrating the resilience, consistency, and sustainable growth of Fiserv - Frank Bisignano, Chairman and CEO, noted that adjusted EPS results exceeded expectations, showcasing the resilience, consistency, and sustainable growth of the Fiserv franchise He attributed the company's success to its differentiated structure with two market-leading segments, Merchant and Financial Solutions, which are well-positioned to serve interconnected business and financial institution clients[4] Incoming CEO Commentary Mike Lyons, President and incoming CEO, reported a strong start to 2025, marked by significant client wins, four strategic acquisitions, and a focus on execution and growth - Mike Lyons, President and incoming CEO, stated that Fiserv had a good start to 2025, characterized by a series of large client wins, four strategic acquisitions, and a strong focus on execution and growth[7] - The company is maintaining its guidance for 2025, with an anticipated acceleration in the back-half of the year, reflecting the timing of key strategic initiatives[7] First Quarter 2025 Financial Performance This section details Fiserv's financial results for the first quarter of 2025, presenting both GAAP and non-GAAP metrics, including revenue, EPS, operating margins, and cash flow performance GAAP Results Fiserv's GAAP revenue increased 5% to $5.13 billion in Q1 2025, driven by growth in both Merchant Solutions (5%) and Financial Solutions (6%) Q1 2025 GAAP Financial Highlights | Metric | Q1 2025 | Q1 2024 | Change (YoY) | | :-------------------------------- | :-------- | :-------- | :----------- | | Revenue | $5.13B | $4.88B | +5% | | EPS | $1.51 | $1.24 | +22% | | Operating Margin | 27.2% | 24.2% | +300 bps | | Net Cash from Operating Activities | $648M | $831M | -22.1% | Q1 2025 GAAP Segment Performance (Revenue & Operating Margin) | Segment | Q1 2025 Revenue Growth | Q1 2025 Operating Margin | Q1 2024 Operating Margin | | :------------------ | :--------------------- | :----------------------- | :----------------------- | | Merchant Solutions | 5% | 34.2% | 34.1% | | Financial Solutions | 6% | 47.5% | 44.1% | Non-GAAP Results In Q1 2025, adjusted revenue grew 5% to $4.79 billion, with organic revenue growth at 7%, led by Merchant Solutions (8%) and Financial Solutions (6%) Q1 2025 Non-GAAP Financial Highlights | Metric | Q1 2025 | Q1 2024 | Change (YoY) | | :------------------- | :-------- | :-------- | :----------- | | Adjusted Revenue | $4.79B | $4.54B | +5% | | Organic Revenue Growth | 7% | - | - | | Adjusted EPS | $2.14 | $1.88 | +14% | | Adjusted Operating Margin | 37.8% | 35.8% | +200 bps | | Free Cash Flow | $371M | $454M | -18.2% | Q1 2025 Non-GAAP Segment Performance (Organic Revenue Growth & Adjusted Operating Margin) | Segment | Organic Revenue Growth | Adjusted Operating Margin (Q1 2025) | Adjusted Operating Margin (Q1 2024) | | :------------------ | :--------------------- | :---------------------------------- | :---------------------------------- | | Merchant Solutions | 8% | 34.2% | 34.1% | | Financial Solutions | 6% | 47.5% | 44.1% | Segment Performance This section analyzes the financial performance of Fiserv's Merchant Solutions, Financial Solutions, and Corporate and Other segments, highlighting revenue growth and operating margin trends Merchant Solutions Segment The Merchant Solutions segment reported a 5% increase in GAAP revenue to $2.37 billion and an 8% organic revenue growth in Q1 2025 Merchant Solutions Segment Performance (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change (YoY) | | :---------------- | :-------- | :-------- | :----------- | | Revenue | $2,372M | $2,253M | +5% | | Operating Income | $810M | $769M | +5.3% | | Operating Margin | 34.2% | 34.1% | +10 bps | | Organic Revenue Growth | 8% | - | - | Financial Solutions Segment The Financial Solutions segment saw a 6% increase in GAAP revenue to $2.42 billion and a 6% organic revenue growth in Q1 2025 Financial Solutions Segment Performance (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change (YoY) | | :---------------- | :-------- | :-------- | :----------- | | Revenue | $2,417M | $2,285M | +6% | | Operating Income | $1,148M | $1,008M | +13.9% | | Operating Margin | 47.5% | 44.1% | +340 bps | | Organic Revenue Growth | 6% | - | - | Corporate and Other The Corporate and Other segment reported revenue of $341 million in Q1 2025, with an adjusted revenue of $0 million after accounting for postage reimbursements Corporate and Other Segment Performance (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change (YoY) | | :-------------------- | :-------- | :-------- | :----------- | | Revenue | $341M | $345M | -1.2% | | Adjusted Revenue | $0M | $5M | -100% | | Operating Loss | $(563)M | $(596)M | +5.5% | | Adjusted Operating Loss | $(150)M | $(148)M | -1.4% | Business Updates & Strategic Initiatives This section outlines Fiserv's recent strategic acquisitions and operational initiatives aimed at expanding its market presence and enhancing its fintech capabilities Strategic Acquisitions Fiserv completed four strategic acquisitions in Q1 2025, expanding its capabilities in instant earnings access, point-of-sale solutions, payment facilitation, and small business working capital - In March 2025, Fiserv acquired Payfare Inc., a Canada-based provider of program management solutions for instant access to earnings and banking solutions for workforces[8] - Also in March 2025, Fiserv acquired CCV Group B.V., a Netherlands-based supplier of point-of-sale payment solutions[8] - In April 2025, Fiserv reached agreements to acquire Pinch Payments NZ Limited, an Australia-based solutions provider for payment facilitators, and Money Money Serviços Financeiros S.A., a Brazil-based fintech that enables small businesses to access working capital[8] Operational Initiatives Fiserv announced plans to open a new 2,000-employee fintech hub in Overland Park, Kansas, as part of its ongoing operational expansion and strategic growth initiatives - In April 2025, Fiserv announced a plan to open a 2,000-employee fintech hub in Overland Park, Kansas[8] Financial Outlook for 2025 This section presents Fiserv's reaffirmed full-year 2025 financial guidance, including organic revenue growth and adjusted EPS targets, along with detailed reconciliations of non-GAAP measures Full Year 2025 Guidance Fiserv reaffirmed its full-year 2025 financial guidance, expecting organic revenue growth of 10% to 12% and adjusted earnings per share between $10.10 and $10.30, representing a growth of 15% to 17% Full Year 2025 Financial Outlook | Metric | 2025 Outlook | | :------------------- | :------------- | | Organic Revenue Growth | 10% to 12% | | Adjusted EPS | $10.10 to $10.30 | | Adjusted EPS Growth | 15% to 17% | Forward-Looking Non-GAAP Measures The company provided details on its forward-looking non-GAAP measures for 2025, including organic revenue growth and adjusted EPS 2025 Revenue Growth Components (Outlook) | Metric | Growth | | :-------------------- | :----- | | 2025 Revenue | 10% - 12% | | Postage reimbursements | (0.5)% | | 2025 Adjusted revenue | 9.5% - 11.5% | | Currency impact | 1.5% | | Acquisition adjustments | (1.0)% | | Divestiture adjustments | —% | | 2025 Organic revenue | 10% - 12% | 2024 GAAP to Adjusted EPS Reconciliation and 2025 Outlook | Metric | Amount (in millions, except per share) | | :------------------------------------------ | :----------------------------------- | | 2024 GAAP net income attributable to Fiserv | $3,131 | | Adjustments (net of income taxes): | | | Merger and integration costs | $0.11 | | Severance costs | $0.22 | | Amortization of acquisition-related intangibles | $1.95 | | Non wholly-owned entity activities | $0.14 | | Impairment of equity method investments | $0.85 | | Non-cash settlement charge for pension plans | $0.16 | | 2024 adjusted earnings per share | $8.80 | | 2025 adjusted earnings per share outlook | $10.10 - $10.30 | | 2025 adjusted earnings per share growth outlook | 15% - 17% | - The company estimates that amortization expense in 2025 with respect to acquired intangible assets will decrease approximately 5% compared to the amount incurred in 2024[45] Company Information This section provides essential company information, including its business overview, the rationale for non-GAAP financial measures, and a discussion of forward-looking statements and risk factors About Fiserv Fiserv, Inc. is a Fortune 500™ company and a global leader in payments and financial technology, providing solutions to help clients achieve best-in-class results through innovation and excellence - Fiserv, Inc. (NYSE: FI) is a Fortune 500™ company and a global leader in payments and financial technology, aspiring to move money and information to move the world[9] - The company helps clients achieve best-in-class results through innovation and excellence in areas such as account processing, digital banking, card issuer processing, payments, e-commerce, merchant acquiring, and the Clover cloud-based point-of-sale and business management platform[9] - Fiserv is a member of the S&P 500 Index and recognized as one of Fortune World's Most Admired Companies™[9] Use of Non-GAAP Financial Measures Fiserv supplements its GAAP reporting with non-GAAP measures like adjusted revenue, organic revenue, adjusted operating income/margin, adjusted net income/EPS, and free cash flow - Fiserv uses non-GAAP financial measures such as "adjusted revenue," "organic revenue," "adjusted operating income," "adjusted operating margin," "adjusted net income," "adjusted earnings per share," and "free cash flow" to supplement its GAAP reporting[10] - Management believes these adjustments enhance shareholders' ability to evaluate performance by providing insights into factors and trends affecting the business, excluding items like non-cash intangible asset amortization, impairment charges, severance, and merger and integration costs[10][11][12] - The company stresses that these unaudited non-GAAP measures are not comparable to similarly titled measures reported by other companies and should be considered in addition to, not as a substitute for, GAAP measures[14] Forward-Looking Statements & Risk Factors This news release contains forward-looking statements regarding future financial performance, which are subject to assumptions, risks, and uncertainties that could cause actual results to differ materially - The news release contains forward-looking statements, identifiable by words like "believes," "anticipates," "expects," and similar meanings, regarding future financial performance, including organic revenue growth and adjusted EPS[15] - These statements are subject to assumptions, risks, and uncertainties that may cause actual results to differ materially, including factors such as competition, customer demand, technology, security breaches, economic conditions (e.g., inflation, interest rates, recession), regulatory actions, intellectual property rights, litigation, successful acquisition integration, and personnel retention[16] - Investors are cautioned not to place undue reliance on forward-looking statements, and the company assumes no obligation to update them[18] Condensed Consolidated Financial Statements This section presents Fiserv's unaudited condensed consolidated financial statements for Q1 2025, including income, cash flow, and balance sheets, along with non-GAAP reconciliations Condensed Consolidated Statements of Income The condensed consolidated statements of income show Fiserv's GAAP financial performance for the three months ended March 31, 2025, compared to the prior year Condensed Consolidated Statements of Income (Three Months Ended March 31) | Metric | 2025 (in millions) | 2024 (in millions) | | :------------------------------------------------- | :----------------- | :----------------- | | Revenue: | | | | Processing and services | $4,045 | $4,000 | | Product | $1,085 | $883 | | Total revenue | $5,130 | $4,883 | | Expenses: | | | | Cost of processing and services | $1,389 | $1,354 | | Cost of product | $684 | $651 | | Selling, general and administrative | $1,682 | $1,697 | | Net gain on sale of other assets | $(20) | — | | Total expenses | $3,735 | $3,702 | | Operating income | $1,395 | $1,181 | | Interest expense, net | $(331) | $(261) | | Other expense, net | $(18) | $(7) | | Income before income taxes and loss from investments | $1,046 | $913 | | Income tax provision | $(190) | $(153) | | Loss from investments in unconsolidated affiliates | $(8) | $(8) | | Net income | $848 | $752 | | Less: net (loss) income attributable to noncontrolling interests | $(3) | $17 | | Net income attributable to Fiserv | $851 | $735 | | GAAP earnings per share attributable to Fiserv — diluted | $1.51 | $1.24 | | Diluted shares used in computing earnings per share | 564.7 | 594.8 | Reconciliation of GAAP to Adjusted Net Income and Adjusted Earnings Per Share This section provides a reconciliation of GAAP net income and EPS to their adjusted non-GAAP counterparts for Q1 2025 and Q1 2024 Reconciliation of GAAP to Adjusted Net Income and EPS (Three Months Ended March 31) | Metric | 2025 (in millions, except per share) | 2024 (in millions, except per share) | | :------------------------------------------ | :----------------------------------- | :----------------------------------- | | GAAP net income attributable to Fiserv | $851 | $735 | | Adjustments: | | | | Merger and integration costs | $15 | $37 | | Severance costs | $15 | $42 | | Amortization of acquisition-related intangibles | $331 | $369 | | Non wholly-owned entity activities | $20 | $28 | | Tax impact of adjustments | $(74) | $(95) | | Incremental executive compensation | $52 | — | | Adjusted net income | $1,210 | $1,116 | | GAAP earnings per share attributable to Fiserv - diluted | $1.51 | $1.24 | | Adjustments - net of income taxes: | | | | Merger and integration costs | $0.02 | $0.05 | | Severance costs | $0.02 | $0.06 | | Amortization of acquisition-related intangibles | $0.47 | $0.50 | | Non wholly-owned entity activities | $0.03 | $0.04 | | Incremental executive compensation | $0.09 | — | | Adjusted earnings per share | $2.14 | $1.88 | | GAAP earnings per share attributable to Fiserv growth | 22% | | | Adjusted earnings per share growth | 14% | | Financial Results by Segment This section details the financial results by segment for Q1 2025, including total company, Merchant Solutions, Financial Solutions, and Corporate and Other Financial Results by Segment (Three Months Ended March 31, in millions) | Metric | Total Company | Merchant Solutions | Financial Solutions | Corporate and Other | | :-------------------------------- | :------------ | :----------------- | :------------------ | :------------------ | | 2025 Revenue | $5,130 | $2,372 | $2,417 | $341 | | Postage reimbursements | $(341) | — | — | $(341) | | 2025 Adjusted revenue | $4,789 | $2,372 | $2,417 | $0 | | 2025 Operating income | $1,395 | $810 | $1,148 | $(563) | | Adjustments: | | | | | | Merger and integration costs | $15 | — | — | $15 | | Severance costs | $15 | — | — | $15 | | Amortization of acquisition-related intangibles | $331 | — | — | $331 | | Incremental executive compensation | $52 | — | — | $52 | | 2025 Adjusted operating income | $1,808 | $810 | $1,148 | $(150) | | 2025 Operating margin | 27.2% | 34.2% | 47.5% | - | | 2025 Adjusted operating margin | 37.8% | 34.2% | 47.5% | - | | 2024 Revenue | $4,883 | $2,253 | $2,285 | $345 | | Postage reimbursements | $(340) | — | — | $(340) | | 2024 Adjusted revenue | $4,543 | $2,253 | $2,285 | $5 | | 2024 Operating income | $1,181 | $769 | $1,008 | $(596) | | Adjustments: | | | | | | Merger and integration costs | $37 | — | — | $37 | | Severance costs | $42 | — | — | $42 | | Amortization of acquisition-related intangibles | $369 | — | — | $369 | | Incremental executive compensation | — | — | — | — | | 2024 Adjusted operating income | $1,629 | $769 | $1,008 | $(148) | | 2024 Operating margin | 24.2% | 34.1% | 44.1% | - | | 2024 Adjusted operating margin | 35.8% | 34.1% | 44.1% | - | Condensed Consolidated Statements of Cash Flows Fiserv's condensed consolidated statements of cash flows for Q1 2025 show a decrease in net cash provided by operating activities to $648 million from $831 million in the prior year Condensed Consolidated Statements of Cash Flows (Three Months Ended March 31, in millions) | Cash Flow Activity | 2025 | 2024 | | :------------------------------------------ | :--- | :--- | | Net cash provided by operating activities | $648 | $831 | | Net cash used in investing activities | $(925) | $(397) | | Net cash provided by (used in) financing activities | $627 | $(189) | | Effect of exchange rate changes on cash | $26 | $(17) | | Net change in cash and cash equivalents | $376 | $228 | | Cash and cash equivalents, beginning balance | $2,993 | $2,963 | | Cash and cash equivalents, ending balance | $3,369 | $3,191 | - Payments for acquisition of businesses, net of cash acquired, amounted to $316 million in Q1 2025, contributing to the increase in net cash used in investing activities[30] - Net borrowings from commercial paper and short-term borrowings were $2,696 million in Q1 2025, significantly impacting net cash provided by financing activities[30] Condensed Consolidated Balance Sheets Fiserv's condensed consolidated balance sheet as of March 31, 2025, shows total assets increased to $80.40 billion from $77.18 billion at December 31, 2024 Condensed Consolidated Balance Sheets (in millions) | Asset/Liability/Equity | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Assets: | | | | Cash and cash equivalents | $1,177 | $1,236 | | Total current assets | $25,591 | $23,477 | | Property and equipment – net | $2,427 | $2,374 | | Customer relationships – net | $5,737 | $5,868 | | Other intangible assets – net | $4,765 | $4,072 | | Goodwill | $36,983 | $36,584 | | Total assets | $80,402 | $77,176 | | Liabilities: | | | | Total current liabilities | $23,293 | $22,157 | | Long-term debt | $27,016 | $23,730 | | Deferred income taxes | $2,427 | $2,477 | | Total liabilities | $53,881 | $49,490 | | Total equity | $26,521 | $27,686 | Selected Non-GAAP Financial Measures and Additional Information This section provides detailed calculations for key non-GAAP financial measures, including organic revenue growth, free cash flow, and total amortization Organic Revenue Growth This subsection details the calculation of organic revenue growth for the total company and its segments, adjusting for currency impact and acquisition/divestiture effects Organic Revenue Growth (Three Months Ended March 31, in millions) | Metric | Total Company | Merchant | Financial | Corporate and Other | | :-------------------- | :------------ | :------- | :-------- | :------------------ | | 2025 Adjusted revenue | $4,789 | $2,372 | $2,417 | $0 | | Currency impact | $77 | $69 | $8 | — | | Acquisition adjustments | $(11) | $(8) | $(3) | — | | Divestiture adjustments | — | — | — | — | | 2025 Organic revenue | $4,855 | $2,433 | $2,422 | $0 | | 2024 Adjusted revenue | $4,543 | $2,253 | $2,285 | $5 | | Divestiture adjustments | $(5) | — | — | $(5) | | 2024 Organic revenue | $4,538 | $2,253 | $2,285 | $0 | | Organic Revenue Growth | 7% | 8% | 6% | — | Free Cash Flow This subsection reconciles net cash provided by operating activities to free cash flow, detailing adjustments for capital expenditures, distributions, and severance payments Free Cash Flow (Three Months Ended March 31, in millions) | Metric | 2025 | 2024 | | :------------------------------------------ | :--- | :--- | | Net cash provided by operating activities | $648 | $831 | | Capital expenditures | $(335) | $(420) | | Adjustments: | | | | Distributions paid to noncontrolling interests | — | $(34) | | Distributions from unconsolidated affiliates | — | $22 | | Severance, merger and integration payments | $69 | $68 | | Tax payments on adjustments | $(11) | $(13) | | Free cash flow | $371 | $454 | Total Amortization This subsection presents a breakdown of total amortization expenses, including acquisition-related intangibles, capitalized software, and financing costs Total Amortization (Three Months Ended March 31, in millions) | Amortization Type | 2025 | 2024 | | :-------------------------------- | :--- | :--- | | Acquisition-related intangible assets | $331 | $373 | | Capitalized software and other intangibles | $176 | $144 | | Purchased software | $52 | $59 | | Financing costs and debt discounts | $11 | $11 | | Sales commissions | $28 | $28 | | Deferred conversion costs | $27 | $24 | | Total amortization | $625 | $639 | - The company adjusts its non-GAAP results to exclude amortization of acquisition-related intangible assets due to their inconsistent amount and frequency, which are significantly impacted by the timing and size of acquisitions[40]