BROOKFIELD, WI (November 1, 2018) — Fiserv, Inc. (NASDAQ: FISV), a leading global provider of financial services technology solutions, today reported financial results for the third quarter of 2018.
Third Quarter 2018 GAAP Results
GAAP revenue for the company increased 1 percent to $1.41 billion in the third quarter of 2018 compared to the prior year period, with 6 percent growth in the Payments segment and 7 percent decline in the Financial segment. For the first nine months of 2018, GAAP revenue increased 2 percent to $4.27 billion compared to the prior year period, with 7 percent growth in the Payments segment and 4 percent decline in the Financial segment. The sale of 55 percent interest of the company’s Lending Solutions business (the “Lending Transaction”) in the first quarter of 2018 resulted in a decline in GAAP revenue in 2018 for the Financial segment.
GAAP earnings per share was $0.55 in the third quarter and $2.16 in the first nine months of 2018, increasing 2 percent and 33 percent, respectively, compared to the prior year periods. GAAP earnings per share in the first nine months of 2018 included a gain of $0.36 per share on the Lending Transaction. The company also completed a two-for-one stock split in the first quarter of 2018. Accordingly, all share data and per share amounts are presented on a split-adjusted basis.
GAAP operating margin was 25.2 percent in the third quarter and 31.0 percent in the first nine months of 2018, compared to 26.5 percent in both the third quarter and first nine months of 2017. GAAP operating margin in the first nine months of 2018 included a $227 million gain resulting from the Lending Transaction.
Net cash provided by operating activities was $981 million in the first nine months of 2018, which did not reflect $419 million of sale proceeds from the Lending Transaction. Net cash provided by operating activities was $1.02 billion in the first nine months of 2017, which included cash distributions of $44 million from StoneRiver Group, L.P. (“StoneRiver”), a joint venture in which the company owns a 49 percent interest.
“We delivered another quarter of strong financial results in line with our expectation for internal revenue growth acceleration and excellent bottom-line performance,” said Jeffery Yabuki, President and Chief Executive Officer of Fiserv. “We completed the acquisition of the debit payment assets of Elan Financial Services which expands our reach and further enhances our growth profile.”
Third Quarter 2018 Non-GAAP Results and Additional Information
Adjusted revenue increased 1 percent to $1.35 billion in the third quarter and 2 percent to $4.07 billion in the first nine months of 2018 compared to the prior year periods.
Internal revenue growth for the company was 5 percent in both the third quarter and first nine months of 2018 compared to the prior year periods, with 5 percent growth in the Payments segment and 4 percent growth in the Financial segment in each period.
Adjusted earnings per share increased 23 percent to $0.75 in the third quarter and 26 percent to $2.26 in the first nine months of 2018 compared to the prior year periods.
Adjusted operating margin was 31.6 percent in the third quarter of 2018 compared to 32.6 percent in the third quarter of 2017, and was 32.2 percent in the first nine months of 2018 compared to 32.4 percent in the first nine months of 2017.
Free cash flow was $813 million in the first nine months of 2018 compared to $819 million in the prior year period.
The company repurchased 5.6 million shares of common stock for $438 million in the third quarter, and 16.6 million shares of common stock for $1.23 billion in the first nine months of 2018.
The company announced a new 30 million share repurchase authorization in the quarter and had 34.9 million remaining shares authorized for repurchase as of September 30, 2018.
The company entered into an amended and restated credit facility that extended the maturity of its $2.0 billion revolving credit facility to September 2023.
The company refinanced $2.0 billion of its debt through a September 2018 public offering of 5-year and 10-year senior notes with a weighted average interest rate of 4.0 percent and term of 7.5 years.
Today, the company announced the completion of the acquisition of the debit card processing, ATM Managed Services and Money Pass® surcharge-free network of Elan Financial Services, a unit of U.S. Bancorp, for approximately $690 million.
Outlook for 2018
Fiserv continues to expect internal revenue growth of at least 4.5 percent. The company now expects its adjusted earnings per share will be in a range of $3.10 to $3.15, which represents growth of 25 to 27 percent over 2017, as adjusted for the Lending Transaction.
“We remain on track to achieve our key financial metrics for the year, including internal revenue growth acceleration and our 33rd consecutive year of double-digit adjusted earnings per share growth,” said Yabuki.
Earnings Conference Call
The company will discuss its third quarter 2018 results on a conference call and webcast at 4 p.m. CT on Wednesday, October 31, 2018. To register for the event, go to fiserv.com and click on the Q3 Earnings webcast link. Supplemental materials will be available in the “Investor Relations” section of the website.
Fiserv, Inc. (NASDAQ:FISV) enables clients worldwide to create and deliver financial services experiences in step with the way people live and work today. For 35 years, Fiserv has been a trusted leader in financial services technology, helping clients achieve best-in-class results by driving quality and innovation in payments, processing services, risk and compliance, customer and channel management, and insights and optimization. Fiservis a member of the FORTUNE® 500 and has been named among the FORTUNE Magazine World's Most Admired Companies® for five consecutive years, recognized for strength of business model and innovation leadership. Visit fiserv.com and follow on social media for more information and the latest company news.