Fiserv(FI)2023-07-28 01:57Financial Data and Key Metrics Changes - The company raised its full-year organic revenue growth outlook to 9% to 11%, up from 8% to 9% previously [4] - Adjusted operating margin is now forecast to improve by at least 150 basis points, an increase from the prior expectation of greater than 125 basis points [4] - Adjusted earnings per share increased by 16% to 1.56 in the prior year [72] - Year-to-date adjusted earnings per share increased by 14% to 4.5 billion, and adjusted operating income grew 16% to $1.6 billion, resulting in an adjusted operating margin of 36.5%, an increase of 300 basis points year-over-year [95] Business Line Data and Key Metrics Changes - Merchant Acceptance segment organic revenue growth was strong at 14% in the quarter and 16% year-to-date [97] - Clover, the cloud-based operating system for small and medium-sized businesses, posted a strong 23% revenue growth for the quarter and 22% year-to-date [10] - Carat, the omni-commerce operating system for enterprise clients, grew revenue by 6% in the second quarter, and 14% excluding the loss of a processing client [99] - The Payments and Network segment posted organic revenue growth of 9% in the quarter, driven by active accounts in North American credit processing and Zelle [123] Market Data and Key Metrics Changes - The international regions grew 31% organically in the second quarter, with strong growth in issuer solutions revenue across all regions [94] - Latin America has been a standout region, contributing about 6% of total company adjusted revenue, largely driven by Argentina and Brazil [89] - Anticipation revenue, reflecting a newer business in Merchant prepayments, has been a significant growth driver in Latin America [94] Company Strategy and Development Direction - The company is focused on sustaining momentum through investments in innovation and enhancing its ISV partner program [74][75] - The integration of CardHub and Mobiliti is seen as a unique investment opportunity that spans two operating segments, Payments and Fintech [77] - The company aims to expand its relationship with Caixa Econômica Federal in Brazil, enhancing card payment options across their bill payment agencies [78] - The company is committed to a disciplined capital allocation strategy, including share repurchases and pursuing high-value acquisitions [108] Management Comments on Operating Environment and Future Outlook - Management noted that spending intentions among financial institution customers remain healthy despite a narrowing of net interest margins [73] - There is an expectation of a modest macro slowdown due to higher anticipated unemployment and the reinstatement of student loan repayments [84] - The company expressed confidence in delivering strong results despite potential economic challenges, with a focus on value-added services and software penetration [98] Other Important Information - The company has repurchased nearly 6% of its shares outstanding over the last 12 months [85] - The upcoming Investor Day is scheduled for November 15, where the company will elaborate on growth strategies and medium-term guidance [109] Q&A Session Summary Question: Acceleration in Clover revenue growth and future expectations - Management indicated that they are in early innings and expect continued growth, emphasizing the need for enablement and merchant demand [18] Question: Demand from banks and consumer trends - Management highlighted strong demand from clients for innovation and technology solutions, with a focus on embedded strategies to help clients grow [19][25] Question: Competitive landscape in Latin America - Management acknowledged recent M&A activity in the region but expressed confidence in their strategic positioning and growth opportunities [28] Question: Merchant revenue growth expectations - Management raised the full-year organic growth outlook for the Merchant business to 14% to 17%, citing strong performance and value-added services [65] Question: Insights on Carat's growth and competitive differentiation - Management views Carat as a double-digit growth engine and expects it to scale over time, focusing on both new client sales and migrating existing clients [44][41]