Fiserv Reports Fourth Quarter and Full Year 2023 Results
Fiserv, Inc. (NYSE: FI), a leading global provider of payments and financial services technology solutions, today reported financial results for the fourth quarter and full year 2023. Fourth Quarter a...
GAAP revenue growth of 6% in the quarter and 8% for the full year;
GAAP EPS increased 18% in the quarter and 27% for the full year;
Operating cash flow increased 12% to $5.16 billion for the full year;
Organic revenue growth of 12% both in the quarter and for the full year;
Adjusted EPS increased 15% in the quarter and 16% for the full year;
Free cash flow increased 14% to $4.02 billion for the full year;
Company expects 2024 organic revenue growth of 15% to 17%
and adjusted EPS of $8.55 to $8.70, or growth of 14% to 16%
BROOKFIELD, Wis.: Fiserv, Inc. (NYSE: FI), a leading global provider of payments and financial services technology solutions, today reported financial results for the fourth quarter and full year 2023.
Fourth Quarter and Full Year 2023 GAAP Results
GAAP revenue for the company increased 6% to $4.92 billion in the fourth quarter of 2023 compared to the prior year period, with 14% growth in the Acceptance segment, 3% growth in the Payments segment and 3% decline in the Fintech segment. GAAP revenue for the company increased 8% to $19.09 billion for the full year 2023 compared to the prior year, with 12% growth in the Acceptance segment and 7% growth in the Payments segment, while revenue was flat in the Fintech segment.
GAAP earnings per share was $1.45 in the fourth quarter and $4.98 for the full year 2023, an increase of 18% and 27%, respectively, compared to the prior year periods. GAAP operating margin was 29.4% and 26.3% in the fourth quarter and full year 2023, respectively, compared to 25.5% and 21.1% in the fourth quarter and full year 2022, respectively. The full year 2023 includes a $172 million pre-tax gain related to the sale of the company’s financial reconciliation business. Net cash provided by operating activities increased 12% to $5.16 billion for the full year 2023 compared to $4.62 billion in the prior year.
“Fiserv closed out 2023 with accelerated organic revenue growth of 12%, representing our third consecutive year of double-digit growth, as our momentum continued,” said Frank Bisignano, Chairman, President and Chief Executive Officer of Fiserv. “We are proud to have delivered on our commitments, with results that exceeded expectations across key measures of our financial performance – organic revenue growth, adjusted earnings per share, adjusted operating margin and free cash flow.”
Fourth Quarter and Full Year 2023 Non-GAAP Results and Additional Information
- Adjusted revenue increased 6% to $4.64 billion in the fourth quarter and 8% to $18.04 billion for the full year 2023 compared to the prior year periods.
- Organic revenue growth was 12% in the fourth quarter of 2023, led by 24% growth in the Acceptance segment and 4% growth in the Payments segment, partially offset by 1% decline in the Fintech segment.
- Organic revenue growth was 12% for the full year 2023, led by 19% growth in the Acceptance segment, 8% growth in the Payments segment and 2% growth in the Fintech segment.
- Adjusted earnings per share increased 15% to $2.19 in the fourth quarter and 16% to $7.52 for the full year 2023 compared to the prior year periods.
- Adjusted operating margin increased 150 basis points to 40.7% in the fourth quarter and 220 basis points to 37.3% for the full year 2023 compared to the prior year periods.
- Free cash flow increased 14% to $4.02 billion for the full year 2023 compared to $3.52 billion in the prior year.
- The company repurchased 8.6 million shares of common stock for $1.0 billion in the fourth quarter and 40.0 million shares of common stock for $4.7 billion in the full year 2023, reducing its diluted weighted average outstanding shares by 5% for the full year.
- The company launched the Fiserv Small Business Index™, a first-of-its-kind indicator for assessing monthly performance of small businesses in the United States at national, state and industry levels, which was most recently published on February 2, 2024.
- In January 2024, Fiserv was named one of Fortune® World’s Most Admired Companies™, a recognition received by the company for 9 of the past 10 years.
Outlook for 2024
Fiserv expects organic revenue growth of 15% to 17% and adjusted earnings per share of $8.55 to $8.70, representing growth of 14% to 16%, for 2024.
“We are confident in our ability to continue driving strong results and plan to extend our double-digit adjusted earnings per share growth to a 39th consecutive year,” said Bisignano. “Building a track record of sustained, high-level performance takes Fiserv’s unique combination of assets – our industry leading client base, distribution, technology and people. It also requires the financial strength to continue investing, as we do in our market-leading operating systems and hundreds of value-added solutions for small businesses, enterprises and financial institutions.”
Earnings Conference Call
The company will discuss its fourth quarter and full year 2023 results in a live webcast at 7 a.m. CT on Tuesday, February 6, 2024. The webcast, along with supplemental financial information, can be accessed on the investor relations section of the Fiserv website at investors.fiserv.com. A replay will be available approximately one hour after the conclusion of the live webcast.
About Fiserv
Fiserv, Inc. (NYSE: FI), a Fortune 500™ company, aspires to move money and information in a way that moves the world. As a global leader in payments and financial technology, the company helps clients achieve best-in-class results through a commitment to innovation and excellence in areas including account processing and digital banking solutions; card issuer processing and network services; payments; e-commerce; merchant acquiring and processing; and the Clover® cloud-based point-of-sale and business management platform. Fiserv is a member of the S&P 500® Index and has been recognized as one of Fortune® World’s Most Admired Companies™ for 9 of the last 10 years. Visit fiserv.com and follow on social media for more information and the latest company news.
Use of Non-GAAP Financial Measures
In this news release, the company supplements its reporting of information determined in accordance with generally accepted accounting principles (“GAAP”), such as revenue, operating income, operating margin, net income attributable to Fiserv, diluted earnings per share and net cash provided by operating activities, with “adjusted revenue,” “adjusted revenue growth,” “organic revenue,” “organic revenue growth,” “adjusted operating income,” “adjusted operating margin,” “adjusted net income,” “adjusted earnings per share,” “adjusted earnings per share growth,” and “free cash flow.” Management believes that adjustments for certain non-cash or other items and the exclusion of certain pass-through revenue and expenses should enhance shareholders' ability to evaluate the company’s performance, as such measures provide additional insights into the factors and trends affecting its business. Therefore, the company excludes these items from its GAAP financial measures to calculate these unaudited non-GAAP measures. The corresponding reconciliations of these unaudited non-GAAP financial measures to the most comparable GAAP measures are included in this news release, except for forward-looking measures where a reconciliation to the corresponding GAAP measures is not available due to the variability, complexity and limited visibility of the non-cash and other items described below that are excluded from the non-GAAP outlook measures. See page 15 for additional information regarding the company’s forward-looking non-GAAP financial measures.
Examples of non-cash or other items may include, but are not limited to, non-cash intangible asset amortization expense associated with acquisitions; non-cash impairment charges; severance costs; net charges associated with debt financing activities; merger and integration costs; gains or losses from the sale of businesses, certain assets or investments; certain discrete tax benefits and expenses; and non-cash deferred revenue adjustments relating to the 2019 acquisition of First Data Corporation. The company excludes these items to more clearly focus on the factors management believes are pertinent to the company’s operations, and management uses this information to make operating decisions, including the allocation of resources to the company’s various businesses.
The company adjusts its non-GAAP results to exclude amortization of acquisition-related intangible assets as such amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions. Management believes that the adjustment of acquisition-related intangible asset amortization supplements GAAP information with a measure that can be used to assess the comparability of operating performance. Although the company excludes amortization from acquisition-related intangible assets from its non-GAAP expenses, management believes that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation.
Management believes organic revenue growth is useful because it presents adjusted revenue growth excluding the impact of foreign currency fluctuations, acquisitions, dispositions and the company’s Output Solutions postage reimbursements and including deferred revenue purchase accounting adjustments. Management believes free cash flow is useful to measure the funds generated in a given period that are available for debt service requirements and strategic capital decisions. Management believes this supplemental information enhances shareholders’ ability to evaluate and understand the company’s core business performance.
These unaudited non-GAAP measures may not be comparable to similarly titled measures reported by other companies and should be considered in addition to, and not as a substitute for, revenue, operating income, operating margin, net income attributable to Fiserv, diluted earnings per share and net cash provided by operating activities or any other amount determined in accordance with GAAP.
Forward-Looking Statements
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding anticipated organic revenue growth, adjusted earnings per share, adjusted earnings per share growth and other statements regarding our future financial performance. Statements can generally be identified as forward-looking because they include words such as “believes,” “anticipates,” “expects,” “could,” “should,” “confident,” “likely,” “plan,” or words of similar meaning. Statements that describe the company’s future plans, outlook, objectives or goals are also forward-looking statements.
Forward-looking statements are subject to assumptions, risks and uncertainties that may cause actual results to differ materially from those contemplated by such forward-looking statements. The factors that could cause the company’s actual results to differ materially include, among others, the following: the company’s ability to compete effectively against new and existing competitors and to continue to introduce competitive new products and services on a timely, cost-effective basis; changes in customer demand for the company’s products and services; the ability of the company’s technology to keep pace with a rapidly evolving marketplace; the success of the company’s merchant alliances, some of which are not controlled by the company; the impact of a security breach or operational failure on the company’s business, including disruptions caused by other participants in the global financial system; losses due to chargebacks, refunds or returns as a result of fraud or the failure of the company’s vendors and merchants to satisfy their obligations; changes in local, regional, national and international economic or political conditions, including those resulting from heightened inflation, rising interest rates, a recession, bank failures, or intensified international hostilities, and the impact they may have on the company and its employees, clients, vendors, supply chain, operations and sales; the effect of proposed and enacted legislative and regulatory actions affecting the company or the financial services industry as a whole; the company’s ability to comply with government regulations and applicable card association and network rules; the protection and validity of intellectual property rights; the outcome of pending and future litigation and governmental proceedings; the company’s ability to successfully identify, complete and integrate acquisitions, and to realize the anticipated benefits associated with the same; the impact of the company’s strategic initiatives; the company’s ability to attract and retain key personnel; volatility and disruptions in financial markets that may impact the company’s ability to access preferred sources of financing and the terms on which the company is able to obtain financing or increase its costs of borrowing; adverse impacts from currency exchange rates or currency controls; changes in corporate tax and interest rates; and other factors included in “Risk Factors” in the company’s Annual Report on Form 10-K for the year ended December 31, 2022, and in other documents that the company files with the Securities and Exchange Commission, which are available at http://www.sec.gov. You should consider these factors carefully in evaluating forward-looking statements and are cautioned not to place undue reliance on such statements. The company assumes no obligation to update any forward-looking statements, which speak only as of the date of this news release.
Fiserv, Inc. | |||||||||||||||
Condensed Consolidated Statements of Income | |||||||||||||||
(In millions, except per share amounts, unaudited) | |||||||||||||||
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| Three Months Ended December 31, |
| Year Ended December 31, | ||||||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 | ||||||||
Revenue |
|
|
|
|
|
|
| ||||||||
Processing and services | $ | 4,025 |
|
| $ | 3,722 |
|
| $ | 15,630 |
|
| $ | 14,460 |
|
Product |
| 892 |
|
|
| 909 |
|
|
| 3,463 |
|
|
| 3,277 |
|
Total revenue |
| 4,917 |
|
|
| 4,631 |
|
|
| 19,093 |
|
|
| 17,737 |
|
|
|
|
|
|
|
|
| ||||||||
Expenses |
|
|
|
|
|
|
| ||||||||
Cost of processing and services |
| 1,265 |
|
|
| 1,390 |
|
|
| 5,332 |
|
|
| 5,771 |
|
Cost of product |
| 577 |
|
|
| 590 |
|
|
| 2,338 |
|
|
| 2,221 |
|
Selling, general and administrative |
| 1,624 |
|
|
| 1,499 |
|
|
| 6,576 |
|
|
| 6,059 |
|
Net (gain) loss on sale of businesses and other assets |
| 5 |
|
|
| (27 | ) |
|
| (167 | ) |
|
| (54 | ) |
Total expenses |
| 3,471 |
|
|
| 3,452 |
|
|
| 14,079 |
|
|
| 13,997 |
|
|
|
|
|
|
|
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Operating income |
| 1,446 |
|
|
| 1,179 |
|
|
| 5,014 |
|
|
| 3,740 |
|
Interest expense, net |
| (284 | ) |
|
| (199 | ) |
|
| (976 | ) |
|
| (733 | ) |
Other expense, net |
| (59 | ) |
|
| (11 | ) |
|
| (140 | ) |
|
| (94 | ) |
|
|
|
|
|
|
|
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Income before income taxes and (loss) income from investments in unconsolidated affiliates |
| 1,103 |
|
|
| 969 |
|
|
| 3,898 |
|
|
| 2,913 |
|
Income tax provision |
| (210 | ) |
|
| (169 | ) |
|
| (754 | ) |
|
| (551 | ) |
(Loss) income from investments in unconsolidated affiliates |
| (4 | ) |
|
| (2 | ) |
|
| (15 | ) |
|
| 220 |
|
|
|
|
|
|
|
|
| ||||||||
Net income |
| 889 |
|
|
| 798 |
|
|
| 3,129 |
|
|
| 2,582 |
|
Less: net income attributable to noncontrolling interests |
| 19 |
|
|
| 16 |
|
|
| 61 |
|
|
| 52 |
|
|
|
|
|
|
|
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Net income attributable to Fiserv | $ | 870 |
|
| $ | 782 |
|
| $ | 3,068 |
|
| $ | 2,530 |
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GAAP earnings per share attributable to Fiserv – diluted | $ | 1.45 |
|
| $ | 1.23 |
|
| $ | 4.98 |
|
| $ | 3.91 |
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Diluted shares used in computing earnings per share attributable to Fiserv |
| 602.7 |
|
|
| 638.6 |
|
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