Fiserv(FI) - 2025 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements for Fiserv, Inc. for the quarterly period ended March 31, 2025. It includes the Consolidated Statements of Income, Comprehensive Income, Balance Sheets, and Cash Flows, along with detailed Notes to the Financial Statements. Management affirms that all necessary adjustments for a fair presentation have been included. - The financial statements are unaudited and include all normal recurring adjustments deemed necessary by management for a fair presentation. They should be read in conjunction with the 2024 Annual Report on Form 10-K[20] Consolidated Statements of Income For the three months ended March 31, 2025, Fiserv reported total revenues of $5.13 billion, an increase from $4.88 billion in the prior year period. Net income attributable to Fiserv, Inc. rose to $851 million, or $1.51 per diluted share, compared to $735 million, or $1.24 per diluted share, in the same period of 2024. Consolidated Statements of Income Highlights (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (in millions) | Q1 2024 (in millions) | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $5,130 | $4,883 | +5.1% | | Processing and services | $4,045 | $4,000 | +1.1% | | Product | $1,085 | $883 | +22.9% | | Operating Income | $1,395 | $1,181 | +18.1% | | Net Income Attributable to Fiserv, Inc. | $851 | $735 | +15.8% | | Diluted EPS | $1.51 | $1.24 | +21.8% | Consolidated Balance Sheets As of March 31, 2025, Fiserv's total assets were $80.4 billion, up from $77.2 billion at year-end 2024. The increase was driven by growth in settlement assets and other intangible assets. Total liabilities also increased to $53.9 billion from $49.5 billion, primarily due to a rise in long-term debt. Total Fiserv, Inc. shareholders' equity decreased slightly to $25.9 billion. Consolidated Balance Sheet Highlights | Metric | March 31, 2025 (in millions) | Dec 31, 2024 (in millions) | | :--- | :--- | :--- | | Total Assets | $80,402 | $77,176 | | Goodwill | $36,983 | $36,584 | | Total Liabilities | $53,881 | $49,490 | | Long-term debt | $27,016 | $23,730 | | Total Fiserv, Inc. Shareholders' Equity | $25,884 | $27,068 | Consolidated Statements of Cash Flows For the first three months of 2025, net cash provided by operating activities was $648 million, a decrease from $831 million in the prior-year period. Net cash used in investing activities was $925 million, mainly for capital expenditures and acquisitions. Net cash provided by financing activities was $627 million, reflecting debt proceeds and share repurchases. Cash Flow Summary (Three Months Ended March 31) | Activity | 2025 (in millions) | 2024 (in millions) | | :--- | :--- | :--- | | 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) | Notes to Consolidated Financial Statements The notes provide detailed explanations of accounting policies and financial statement items. Key disclosures include information on revenue recognition, recent acquisitions of Payfare and CCV, intangible assets, debt structure, and segment performance. The company adopted ASU 2023-07 for segment reporting, enhancing disclosures. - In March 2025, the company acquired Payfare, Inc. for $95 million and CCV Group B.V. for $229 million, expanding its embedded finance and POS payment solutions capabilities, respectively[52][54] - Upon the expiration of the Wells Fargo Merchant Services (WFMS) joint venture on April 1, 2025, Fiserv received a cash payment of $453 million[59] - Total debt increased to $28.3 billion at March 31, 2025, from $24.8 billion at year-end 2024, primarily due to increased commercial paper borrowings[79] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance for Q1 2025, highlighting a 5% increase in total revenue and an 18% rise in operating income year-over-year. The growth was driven by strong performance in both the Merchant and Financial segments. The discussion also covers liquidity, capital resources, including significant share repurchases and debt management, and recent acquisitions. Results of Operations Total revenue grew 5% to $5.13 billion in Q1 2025, driven by higher processing revenue. The Merchant segment revenue increased 5% to $2.37 billion, and the Financial segment revenue grew 6% to $2.42 billion. Operating income increased 18% to $1.40 billion, with operating margin expanding by 300 basis points to 27.2%, benefiting from scalable revenue growth, expense management, and favorable revenue mix. Q1 2025 vs Q1 2024 Performance Summary | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $5,130M | $4,883M | +5% | | Merchant Revenue | $2,372M | $2,253M | +5% | | Financial Revenue | $2,417M | $2,285M | +6% | | Operating Income | $1,395M | $1,181M | +18% | | Operating Margin | 27.2% | 24.2% | +300 bps | - Merchant segment growth was driven by a 5% contribution from Small Business, primarily from increased payment volumes on the Clover platform, and a 2% contribution from Enterprise transaction growth[150] - Financial segment growth was led by a 3% contribution from Digital Payments (including Zelle transaction growth and data sales) and a 2% contribution from Issuing due to more active accounts[151] Liquidity and Capital Resources Operating cash flow for Q1 2025 was $648 million, a 22% decrease from Q1 2024, mainly due to higher working capital use. The company repurchased $2.2 billion of its common stock. Total debt stood at $28.3 billion, with primary liquidity sources being cash from operations, commercial paper programs, and a $6.0 billion revolving credit facility. The company remains in compliance with all debt covenants. - Net cash from operating activities decreased by 22% to $648 million in Q1 2025 from $831 million in Q1 2024, primarily due to higher working capital use[168] - The company repurchased $2.2 billion of its common stock in the first three months of 2025. As of March 31, 2025, approximately 68.3 million shares remained under existing repurchase authorizations[170] Debt Summary (March 31, 2025) | Debt Category | Outstanding Borrowings (in millions) | | :--- | :--- | | Fixed-rate senior notes | $21,800 | | Commercial paper programs | $4,124 | | Foreign lines of credit | $856 | | Revolving credit facility | $72 | | Total Variable Rate Debt | $5,052 | Item 3. Quantitative and Qualitative Disclosures About Market Risk Fiserv's primary market risks stem from fluctuations in interest rates and foreign currency exchange rates. The company actively monitors these risks and uses derivative instruments like forward exchange contracts and cross-currency swaps for hedging. Key foreign currency exposures include the Argentine Peso, Brazilian Real, British Pound, Euro, and Indian Rupee. There were no significant changes to market risk exposure in Q1 2025. - The company is primarily exposed to market risks from interest rate and foreign currency fluctuations[187] - Major foreign currency exposures are to the Argentine Peso, Brazilian Real, British Pound, Euro, and Indian Rupee. The company faces risks from currency devaluation, particularly in highly inflationary economies like Argentina[188] - No significant changes to the company's quantitative and qualitative analyses about market risk occurred during the first quarter of 2025[189] Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2025. There were no material changes to the company's internal control over financial reporting during the quarter. - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[190] - No changes in internal control over financial reporting occurred during Q1 2025 that materially affected, or are reasonably likely to materially affect, internal controls[191] PART II – OTHER INFORMATION Item 1. Legal Proceedings The company is involved in various lawsuits in the normal course of business. Management does not expect the outcomes of these proceedings to have a material adverse effect on its consolidated financial statements. An accrual of $32 million was maintained for these matters as of March 31, 2025. - Management believes that liabilities from ongoing legal proceedings are not expected to have a material adverse effect on the company's financial statements[192] - The company maintained a legal accrual of $32 million as of March 31, 2025, with a possible range of exposure up to approximately $120 million in excess of amounts accrued[103] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's common stock repurchases during the first quarter of 2025. Fiserv repurchased a total of 9.72 million shares. The board of directors authorized the purchase of up to 60.0 million additional shares on February 19, 2025. Share Repurchases (Q1 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 2025 | 2,166,917 | $207.67 | | Feb 2025 | 3,230,000 | $232.02 | | Mar 2025 | 4,324,451 | $219.00 | | Total | 9,721,368 | N/A | - On February 19, 2025, the board of directors authorized the repurchase of up to an additional 60.0 million shares of common stock[194] Item 5. Other Information During the first quarter of 2025, none of the company's directors or Section 16 officers adopted or terminated a Rule 10b5-1 trading plan or a non-Rule 10b5-1 trading arrangement. - No directors or Section 16 officers adopted or terminated a Rule 10b5-1 Trading Plan or similar arrangement in Q1 2025[195] Item 6. Exhibits This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including CEO and CFO certifications and Inline XBRL data files. - The exhibits filed with the report include CEO/CFO certifications under Sarbanes-Oxley Sections 302 and 906, and various Inline XBRL documents[198]