8-K: Fiserv Reports Strong 2023 Results, Projects Double-Digit Growth for 2024

Fiserv announced robust financial results for the fourth quarter and full year 2023, with significant growth in revenue, earnings per share, and cash flow, and provided an optimistic outlook for 2024.

Summary

• Fiserv reported a 6% increase in GAAP revenue for the fourth quarter of 2023, reaching $4.92 billion, and an 8% increase for the full year, totaling $19.09 billion.
• The company's GAAP earnings per share rose by 18% in the fourth quarter to $1.45 and by 27% for the full year to $4.98.
• Operating cash flow for the full year increased by 12% to $5.16 billion, while free cash flow grew by 14% to $4.02 billion.
• Organic revenue growth was strong at 12% for both the quarter and the full year, driven by the Acceptance segment.
• Adjusted earnings per share increased by 15% in the fourth quarter to $2.19 and by 16% for the full year to $7.52.
• Fiserv expects organic revenue growth of 15% to 17% and adjusted EPS of $8.55 to $8.70 for 2024, representing growth of 14% to 16%.

Sentiment

Score: 9

Explanation: The document conveys a very positive sentiment due to strong financial results, exceeding expectations, and optimistic future guidance. The company's performance across key metrics and its strategic initiatives are presented favorably.

Positives

• Fiserv achieved double-digit organic revenue growth for the third consecutive year.
• The company exceeded expectations across key financial performance measures.
• The Acceptance segment showed particularly strong growth, with 24% organic revenue growth in the fourth quarter.
• Fiserv's operating margin improved significantly, both on a GAAP and adjusted basis.
• The company's share repurchase program reduced diluted weighted average outstanding shares by 5% for the full year.
• Fiserv was named one of Fortune's World's Most Admired Companies for the 9th time in the past 10 years.
• The company launched the Fiserv Small Business Index, a new indicator for assessing small business performance.

Negatives

• The Fintech segment experienced a decline in GAAP revenue of 3% in the fourth quarter and flat revenue for the full year.
• There was a net loss on the sale of businesses and other assets of $167 million for the full year 2023.

Risks

• The company faces competition from new and existing competitors.
• Changes in customer demand for Fiserv's products and services could impact results.
• The company's technology must keep pace with a rapidly evolving marketplace.
• Security breaches or operational failures could disrupt the business.
• Economic or political conditions, including inflation and recession, could affect the company.
• Legislative and regulatory actions could impact the company or the financial services industry.
• The company's ability to successfully integrate acquisitions is a risk.
• Volatility in financial markets could impact the company's ability to access financing.
• Adverse impacts from currency exchange rates or currency controls could affect results.

Future Outlook

Fiserv anticipates strong growth in 2024, projecting organic revenue growth of 15% to 17% and adjusted earnings per share of $8.55 to $8.70, representing growth of 14% to 16%.

Management Comments

• 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.
• 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 Fiservs 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.

Industry Context

Fiserv's strong performance reflects the ongoing demand for digital payment and financial technology solutions. The company's focus on innovation and its diverse range of services positions it well within the competitive landscape of the financial technology industry.

Comparison to Industry Standards

• Fiserv's 12% organic revenue growth for the full year 2023 is strong compared to industry peers such as Global Payments (GPN) and Fidelity National Information Services (FIS), which have seen more modest growth in recent periods.
• The 16% adjusted EPS growth for the full year 2023 is also impressive, outperforming many competitors in the financial technology sector.
• The company's focus on the Acceptance segment, with 19% organic revenue growth for the full year, is a key differentiator compared to competitors that may be more focused on other areas.
• Fiserv's free cash flow of $4.02 billion for the full year 2023 demonstrates strong financial health and the ability to invest in future growth, which is a positive sign compared to some competitors with lower cash generation.

Stakeholder Impact

• Shareholders will benefit from the strong financial performance and share repurchase program.
• Employees may benefit from the company's continued growth and success.
• Customers will benefit from the company's ongoing investment in innovative solutions.
• Suppliers and creditors will benefit from the company's strong financial position.

Next Steps

• The company will continue to focus on driving strong results and extending its double-digit adjusted earnings per share growth.
• Fiserv plans to continue investing in its market-leading operating systems and value-added solutions.
• The company will discuss its fourth quarter and full year 2023 results in a live webcast on February 6, 2024.

Key Dates

Keywords

Fiserv, financial technology, payments, revenue growth, earnings per share, organic growth, cash flow, adjusted EPS, operating margin, share repurchase, financial results, Fintech, Acceptance, Small Business Index