- First Data transaction expected to close on or about July 29;
- GAAP revenue growth of 6 percent in the quarter and 5 percent year to date;
- GAAP EPS decrease of 7 percent in the quarter and 30 percent year to date;
- Internal revenue growth of 4 percent in both the quarter and year to date;
- Adjusted EPS increase of 9 percent in the quarter and 11 percent year to date;
- Full year 2019 guidance affirmed
Fiserv, Inc. (NASDAQ: FISV), a leading global provider of financial services technology solutions, today reported financial results for the second quarter of 2019.
Second Quarter 2019 GAAP Results
GAAP revenue for the company increased 6 percent to $1.51 billion in the second quarter of 2019 compared to the prior year period, with 10 percent growth in the Payments segment and 2 percent growth in the Financial segment. For the first six months of 2019, GAAP revenue increased 5 percent to $3.01 billioncompared to the prior year period, with 9 percent growth in the Payments segment and Financial segment revenue relatively consistent with the prior year period.
GAAP earnings per share was $0.56 in the second quarter and $1.12 in the first six months of 2019, decreasing 7 percent and 30 percent, respectively, compared to the prior year periods. GAAP earnings per share included costs of $0.10 and $0.26 per share in the second quarter and first six months of 2019, respectively, related to the previously announced pending acquisition of First Data Corporation. GAAP earnings per share in the first six months of 2018 included a gain of $0.36 per share on the sale of a 55 percent interest of the company's Lending Solutions business (the "Lending Transaction").
GAAP operating margin was 25.4 percent in the second quarter and 25.1 percent in the first six months of 2019 compared to 25.2 percent in the second quarter and 33.8 percent in the first six months of 2018. GAAP operating margin in the first six months of 2018 included a $229 million gain resulting from the Lending Transaction.
Net cash provided by operating activities was $579 million in the first six months of 2019 compared to $613 million in the first six months of 2018.
"We delivered stronger than expected second quarter results across all financial measures including double-digit sales growth," said Jeffery Yabuki, President and Chief Executive Officer of Fiserv. "At the same time, we continue to advance our integration planning efforts for our pending First Data acquisition which we expect to close on July 29."
Second Quarter 2019 Non-GAAP Results and Additional Information
- Adjusted revenue increased 7 percent to $1.45 billion in the second quarter and 6 percent to $2.88 billion in the first six months of 2019 compared to the prior year periods.
- Internal revenue growth for the company was 4 percent in the second quarter, with 5 percent growth in the Payments segment and 2 percent growth in the Financial segment.
- Internal revenue growth for the company was 4 percent in the first six months of 2019, with 4 percent growth in both the Payments and Financial segments.
- Adjusted earnings per share increased 9 percent to $0.82in the second quarter and 11 percent to $1.66 in the first six months of 2019 compared to the prior year periods.
- Adjusted operating margin was 32.4 percent in both the second quarter of 2019 and 2018, and was 32.1 percent in the first six months of 2019 compared to 32.5 percent in the first six months of 2018.
- Free cash flow was $602 million in the first six months of 2019 compared to $491 million in the prior year period.
- Sales results were up 17 percent in the quarter and 14 percent in the first six months of 2019 compared to the prior year periods.
- The company repurchased 1.6 million shares of common stock for $120 million in 2019 prior to the announcement of the proposed First Data acquisition. The company has deferred additional share repurchases until the close of the acquisition. As of June 30, 2019, the company had 24.3 million remaining shares authorized for repurchase.
- In connection with the proposed acquisition, the company completed public offerings of $9.0 billion of senior notes in June 2019, and €1.5 billion and £1.1 billion of senior notes in July 2019.
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("First Data") in an all-stock transaction for an equity value of approximately $22 billion as of the announcement. Fiserv and First Data have received the final required regulatory approvals and non-objections needed to complete the proposed acquisition. Subject to the satisfaction or waiver of the remaining customary contractual conditions set forth in the merger agreement, the parties expect to close the transaction on or about July 29, 2019.
Outlook for 2019
Fiserv continues to expect internal revenue growth in a range of 4.5 to 5 percent for the year. 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 the year does not include any impact related to its pending acquisition of First Data Corporation.
"Our stronger than expected first-half performance positions us well to meet our financial commitments for the year," said Yabuki.
Earnings Conference Call
The company will discuss its second quarter 2019 results on a conference call and webcast at 4 p.m. CT on Thursday, July 25, 2019. To register for the event, go to fiserv.com and click on the Q2 Earnings webcast link. Supplemental materials will be available in the "Investor Relations" section of the website.
