Fiserv(US:FI)2022-04-27 16:00Acquisitions and Strategic Initiatives - The company acquired BentoBox CMS, Inc. for approximately $882 million, enhancing its Clover dining solutions and business management capabilities[136]. - On April 1, 2022, the company acquired Finxact, Inc. for approximately $650 million, aimed at advancing its digital banking strategy[138]. - The company has identified a compelling strategic need for acquisitions to meet client demand and achieve business scale[135]. Financial Performance - Total revenue increased by $383 million, or 10%, in Q1 2022 compared to Q1 2021, driven by higher processing volumes and product sales across all business segments[158]. - Revenue in the Acceptance segment rose by $256 million, or 18%, in Q1 2022, attributed to increased global merchant acquiring payment and transaction volumes[159]. - Revenue in the Fintech segment grew by $42 million, or 6%, in Q1 2022, primarily due to higher processing revenue[160]. - Revenue in the Payments segment increased by $57 million, or 4%, in Q1 2022, supported by increased transaction volumes[161]. - Total operating income surged by $371 million, or 78%, in Q1 2022, with an operating margin increase of 790 basis points to 20.5%[169]. - Net income attributable to Fiserv, Inc. was $682 million in Q1 2022, an increase of 114% compared to $318 million in Q1 2021[184]. - Diluted net income per share increased to $1.02 in Q1 2022 from $0.45 in Q1 2021, driven by improved operating results and gains from asset sales[180]. Operational Efficiency - Total expenses as a percentage of total revenue decreased by 780 basis points to 79.6% in Q1 2022, positively impacted by operating leverage and a reduction in acquisition-related expenses[163]. - Cost of processing and services as a percentage of revenue decreased to 42.7% in Q1 2022 from 45.7% in Q1 2021, benefiting from strong operating leverage[164]. - Operating income in the Acceptance segment increased by $83 million, or 21%, with an operating margin of 28.4%[170]. Cash Flow and Capital Management - Operating cash flow decreased by 14% to $815 million in Q1 2022 from $952 million in Q1 2021, primarily due to unfavorable fluctuations in net working capital[182]. - Capital expenditures were approximately 8% of total revenue in Q1 2022, up from 6% in Q1 2021, totaling $331 million compared to $234 million[183]. - The company repurchased $500 million of common stock in Q1 2022, down from $612 million in Q1 2021, with approximately 37.2 million shares remaining under repurchase authorization[186]. Debt and Liquidity - Total long-term debt was $20.5 billion as of March 31, 2022, a decrease from $20.7 billion at the end of 2021[192]. - The company maintained $863 million in cash and cash equivalents and had a revolving credit facility capacity of $1.6 billion as of March 31, 2022[181]. - The total outstanding borrowings amounted to $2,794 million, with variable rate debt including foreign lines of credit at 24.16% and U.S. commercial paper notes at 0.75%[203]. - The company has adequate capital resources and access to external financing to meet operational needs amid uncertainties caused by the COVID-19 pandemic[206]. Market Trends and Industry Insights - The company reported a significant focus on integrating technology solutions for financial institutions, anticipating increased demand for digital banking experiences[145]. - The global payments landscape is evolving with a steady expansion of digital payments and e-commerce, driving competition and innovation in real-time payments infrastructure[139]. - The company expects to benefit from the trend of financial institutions moving from in-house technology to outsourced solutions, creating revenue opportunities[145]. - The company has observed a steady decline of approximately 3% per year in the number of financial institutions in the U.S., primarily due to mergers and acquisitions[146]. Tax and Interest Expenses - Interest expense, net decreased by $8 million, or 5%, in Q1 2022 due to lower-rate commercial paper borrowings[174]. - Income tax provision as a percentage of income before income taxes was 14.5% in Q1 2022, compared to 5.6% in Q1 2021[176]. Investment Income - The company reported a decrease in income from investments in unconsolidated affiliates to $106 million in Q1 2022 from $16 million in Q1 2021[182]. Compliance and Risk Management - The company was in compliance with all financial debt covenants during the first three months of 2022, expecting to maintain compliance moving forward[196]. - There were no significant changes in the company's market risk assessments during the three months ended March 31, 2022[208].