© Reuters.
Financial services technology provider Fiserv (NYSE:) reported robust financial results for Q3 2023, with a 12% organic revenue growth and a 290 basis point increase in adjusted operating margin. The company also raised its full-year guidance, expecting an 11% organic revenue growth and a 15% to 16% increase in adjusted earnings per share (EPS) over 2022.
Key takeaways from the call:
- Fiserv’s Merchant Acceptance and Fintech segments saw accelerated organic revenue growth of 20% and 6% respectively.
- The company generated strong cash flow, with $1.3 billion of free cash flow for the quarter and $2.7 billion year-to-date.
- The company repurchased 9.6 million shares for $1.2 billion during the quarter.
- Fiserv is focusing on five key opportunities including its Clover operating system, its unified commerce offering Carat, expansion in Latin America, open data initiatives, and partnership with B2B payments platform Melio.
- The company also highlighted its focus on minority depository institutions and its back-to-business program for small, diverse merchant businesses.
Total company adjusted revenue for the quarter reached $4.6 billion, a growth of 8% despite currency headwinds. Adjusted operating income grew by 17% to $1.8 billion, resulting in an adjusted operating margin of 38.1%, up by 290 basis points. Adjusted EPS for the quarter increased by 20% to $1.96. Free cash flow for the quarter was $1.3 billion, up 48% from the previous year.
The Merchant Acceptance segment experienced strong growth, with a 20% increase in organic revenue driven by growth in Clover, the ISV channel, and international businesses. The Payments and Network segment saw a 6% organic revenue growth, driven by North American credit active accounts and Zelle transactions. The Financial Technology segment also reported a 6% organic revenue growth.
Fiserv is raising its full-year organic revenue growth guidance to 11% and its adjusted EPS guidance range to $7.47 to $7.52. The company was ranked number one on IDC’s top 100 ranking of global financial technology providers and named a top Fintech company by CNBC and Time Magazine.
During the call, Fiserv discussed its focus on minority depository institutions and their plans to integrate Fiserv solutions at these banks. They also mentioned their back-to-business program, which has funded almost 200 grants worth nearly $2 million for small, diverse merchant businesses. The company expressed confidence in its long-term prospects and highlighted its strong performance in the fintech and payments sectors. It mentioned ongoing dialogues for big deals and stated that there has been no slowdown in banks’ appetite for its offerings.
Fiserv also discussed its Q4 guidance, mentioning that consumer spending has remained resilient and that it expects similar performance to Q3. The company emphasized its focus on providing a broad suite of software and services to financial institution clients. The partnership with Melio was mentioned, with the company stating that it solidifies its position in the small and medium-sized business (SMB) market and expects to launch the product in the summer of 2024.
Fiserv reported $1 billion in processing revenue, which accounted for approximately 13-14% of their overall revenue. They expect this percentage to decrease to 10% by 2025 as they focus on growing their merchant acquiring capability. The company anticipates good revenue growth in the Acceptance segment, driven by deeper penetration of value-added services in both small business and enterprise spaces. They expect the full year to show high teens growth in this segment.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
Read the full article here