Fiserv Reports Fourth Quarter and Full Year 2018 Results

GAAP revenue growth of 2 percent in the quarter and for the year;

GAAP EPS from continuing operations decrease of 43 percent in the quarter and up slightly for the year;

Internal revenue growth of 4.5 percent in the quarter and for the year;

Adjusted EPS increase of 24 percent in the quarter and 25 percent for the year;

Company expects 2019 internal revenue growth of 4.5 to 5 percent and adjusted EPS growth of 10 to 14 percent

Fiserv, Inc., a leading global provider of financial services technology solutions, has reported financial results for the fourth quarter and full year 2018. These final results are in line with the preliminary results included in the press release from January 16, 2019.

Fourth Quarter and Full Year 2018 GAAP Results

GAAP revenue for the company increased 2 percent to $1.55 billion in the fourth quarter of 2018 compared to the prior year period, with 9 percent growth in the Payments segment and 8 percent decline in the Financial segment. Full year 2018 GAAP revenue for the company increased 2 percent to $5.82 billion versus last year, with 7 percent growth in the Payments segment and 5 percent decline in the Financial segment. The sale of a 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 from continuing operations was $0.71 in the fourth quarter of 2018 and $2.87 for the full year, a decrease of 43 percent and up slightly, respectively, compared to the prior year periods. GAAP earnings per share from continuing operations in 2018 included a gain of $0.37 per share on the Lending Transaction. GAAP earnings per share from continuing operations in 2017 included discrete tax benefits from the December 2017 enactment of The Tax Cuts and Jobs Act of $0.65 per share and $0.64 per share in the fourth quarter and full year, respectively. 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 27.8 percent in the fourth quarter of 2018 and 30.1 percent for the full year, decreasing 30 basis points and increasing 320 basis points, respectively, compared to the prior year periods. GAAP operating margin in 2018 included a $227 million gain resulting from the Lending Transaction.

Net cash provided by operating activities was $1.55 billion in 2018, which did not include $419 million of proceeds from the Lending Transaction. Net cash provided by operating activities was $1.48 billion in 2017, which included cash distributions of $45 million from StoneRiver Group, L.P. (“StoneRiver”), a joint venture in which the company owns a 49 percent interest.

“We are pleased with our 2018 results, which include acceleration of our internal revenue growth rate along with our 33rd consecutive year of double-digit adjusted earnings per share growth,” said Jeffery Yabuki, President and Chief Executive Officer of Fiserv. “Sales results in the quarter were our strongest in history setting us up for continuing growth expansion.”

Fourth Quarter and Full Year 2018 Non-GAAP Results and Additional Information

  • Adjusted revenue was $1.47 billion in the fourth quarter of 2018 and $5.54 billion for the full year, increasing 2 percent in each period compared to the prior year periods.
  • Internal revenue growth for the company was 4.5 percent in the fourth quarter of 2018, with 6 percent growth in the Payments segment and 3 percent growth in the Financial segment.
  • Internal revenue growth for the company was 4.5 percent for the full year, with 5 percent growth in the Payments segment and 4 percent growth in the Financial segment.
  • Adjusted earnings per share increased 24 percent to $0.84 in the fourth quarter of 2018 and 25 percent to $3.10 for the full year compared to the prior year periods.
  • Adjusted operating margin was 33.4 percent in the fourth quarter of 2018 compared to 34.0 percent in the fourth quarter of 2017, and was 32.5 percent for the full year compared to 32.8 percent in 2017.
  • Free cash flow for 2018 increased 7 percent to $1.31 billion compared to the prior year.
  • Sales results were up 31 percent in the quarter and 5 percent for the year compared to the prior year periods.
  • The company repurchased 25.5 million shares of common stock for $1.91 billion in 2018, which included 8.9 million shares of common stock for $689 million in the fourth quarter.
  • In January 2019, Fiserv was named one of FORTUNE Magazine World’s Most Admired Companies® for the sixth consecutive year. The company received high marks for its long-term investment value, financial soundness, people management and social responsibility, and was also noted for its use of corporate assets, quality of management and innovation.

Agreement to Merge with First Data Corporation

On January 16, 2019, Fiserv announced that it had entered into a definitive merger agreement to acquire First Data Corporation in an all-stock transaction for an equity value of approximately $22 billion as of the announcement. The transaction is expected to close during the second half of 2019 subject to customary closing conditions, regulatory approvals and shareholder approval for both companies. The corresponding press release and additional materials are available in the “Investor Relations” section of fiserv.com.

Outlook for 2019

Fiserv expects internal revenue growth in a range of 4.5 to 5 percent for 2019. The company also expects adjusted earnings per share in a range of $3.39 to $3.52, which represents growth of 10 to 14 percent, as adjusted for the Lending Transaction. The company’s outlook for 2019 does not include any impact related to its proposed transaction with First Data Corporation.

“We enter 2019 with strong momentum and a continuing focus on providing differentiated value for clients, associates and shareholders,” said Yabuki.

Earnings Conference Call

The company will discuss its results on a conference call and webcast at 4 p.m. CT on Thursday, February 7, 2019. To register for the event, go to fiserv.com and click on the Q4 Earnings webcast link. Supplemental materials will be available in the “Investor Relations” section of the website.