Earnings Announcement: Fiserv Boosts Guidance Following Robust Q3 Performance
Fiserv, Inc., a leading global provider of payment and financial services technology solutions, reported strong financial performance during its 2024 Third Quarter Earnings Conference Call. CEO Frank Bisignano highlighted significant growth, noting that adjusted earnings per share (EPS) reached $2.30, representing a 17% increase compared to the previous year. Adjusted revenue rose by 7% to $4.9 billion, and the adjusted operating margin increased to 40.2%.
The Merchant Solutions segment experienced a remarkable 24% organic revenue growth, prompting the company to raise its full-year organic revenue growth guidance to 16%-17% and adjusted EPS to $8.73-$8.80. Fiserv also announced extended Clover offerings, including new collaborations with DoorDash, a proof of concept with Walmart, and new Clover Sport innovations.
Key Highlights:
- Adjusted EPS increased 17% year-over-year to $2.30; adjusted revenue rose 7% to $4.9 billion.
- Organic revenue growth reached 15%, driven by a 24% increase in the Merchant Solutions segment.
- Free cash flow for the quarter was $1.9 billion, accumulating $3.3 billion year-to-date.
- Fiserv returned $1.3 billion to shareholders through stock repurchases and authorized the buyback of an additional 24 million shares.
- Full-year organic revenue growth and adjusted EPS guidance were raised.
- Significant partnerships and product launches announced, including collaborations with DoorDash, Walmart, and new Clover products.
Company Outlook:
- Fiserv raised its 2024 full-year guidance, expecting organic revenue growth between 16%-17%.
- Adjusted EPS guidance was raised to the range of $8.73 to $8.80.
- The company anticipates continued strong performance, leveraging strategic partnerships and new ventures.
Declining Areas:
- The SMB segment experienced a 9% growth slowdown due to decreased benefits from Argentina and currency exchange challenges.
Growth Areas:
- Merchant Solutions segment saw strong organic revenue growth of 24%.
- Financial Solutions segment's organic revenue grew by 6%, with positive trends in digital payments and issuing.
Missed Targets:
- No specific missed targets were noted in the provided summary.
Q&A Highlights:
- Discussions included the integration of talent from recent acquisitions such as Ondot and Spendlabs.
- Clover's international expansion, particularly in Brazil, was a focal point.
- The company addressed potential merchant attrition due to device upgrades, noting it aligned with natural rates.
Fiserv’s third-quarter results demonstrate its ability to deliver strong financial performance and shareholder value. The company's strategic focus on expanding product offerings and entering new markets, such as the anticipated launch in Brazil, positions Fiserv for continued growth. The successful execution of its initiatives and a positive outlook for the remainder of the year reflect Fiserv's commitment to maintaining its leadership in the financial technology industry.
InvestingPro Insights: Fiserv’s strong financial performance in the 2024 third quarter is further supported by real-time data from InvestingPro. The company’s market capitalization stands impressively at $114.91 billion, reflecting its significant position in the financial services technology sector.
InvestingPro data reveals that as of the second quarter of 2024, Fiserv’s trailing twelve-month revenue was $19.78 billion, exhibiting a healthy 7.2% revenue growth over the period. This aligns well with the 7% adjusted revenue growth reported in the recent earnings call. Additionally, the trailing twelve-month operating income margin was 27.23%, indicating Fiserv's ability to maintain profitability while expanding operations.
Two InvestingPro Tips particularly relevant for Fiserv are:
- Fiserv is trading at a low P/E ratio relative to near-term earnings growth, with a PEG ratio of 0.72 for the trailing twelve months as of the second quarter of 2024. This suggests that the stock may be undervalued given its growth prospects.
- The company has shown strong returns over the past three months, consistent with the positive financial results and upgraded guidance announced during the earnings call.
These insights from InvestingPro complement the earnings report, providing investors with additional context on Fiserv’s financial health and market performance. For those seeking deeper analysis, InvestingPro offers 10 additional tips that can further inform investment decisions related to Fiserv.