Fiserv shares jumped about 8% Tuesday morning after the payments technology company topped third-quarter earnings and revenue estimates, doubled its cost-savings target to $1 billion and said it would resume buying back its stock with $500 million in repurchases planned this quarter.
The stock traded at $56.26, up $4.33, or 8.3%, as of 9:43 a.m. EST, after rising nearly 10% in premarket trading.
Fiserv said adjusted earnings were $1.75 a share for the quarter ended Sept. 30, above the roughly $1.72 analysts had expected, though down 14% from $2.04 a year earlier. Revenue slipped 1% to $5.20 billion. Adjusted revenue of $4.85 billion edged the roughly $4.847 billion analysts had expected. Organic revenue, which strips out currency moves and acquisitions, was flat – a 2% decline in its Merchant Solutions segment offset by a return to growth in Financial Solutions, up 2%.
The quarter included a $6.45 billion non-cash goodwill impairment charge following a sustained slide in the company’s share price, producing a GAAP loss of $11.17 a share. Adjusted operating margin narrowed to 31.2% from 37% a year earlier. Free cash flow for the first nine months was $2.04 billion, down from $2.88 billion.
“Our team is executing with urgency, and we are seeing meaningful progress,” Chief Executive Takis Georgakopoulos said in the release, pointing to banking-customer net attrition down more than 25% so far this year, major client wins now ramping and consistent underlying growth at Clover, the company’s small-business payments platform, where gross payment volume rose 11% and processing revenue increased 12%.
Fiserv raised the savings target under its Project Elevate efficiency program to $1 billion from $500 million after a portfolio review identified more efficiencies, and it reaffirmed its full-year outlook: organic revenue between a 1% decline and flat, and adjusted earnings of $7.20 to $7.40 a share – the midpoint above what analysts had forecast.
“Our second-half initiatives are on track to support the revenue acceleration we expect in the fourth quarter, and we are reaffirming our full-year guidance,” Chief Financial Officer Paul Todd said. “Our growing confidence also allows us to resume share repurchases earlier than anticipated, with $500 million planned in the fourth quarter.”
The company also completed the sale of its student-loan servicing business and formed MoneyPass Group, a joint venture around its ATM network businesses in which it keeps a minority stake.
What it means for you: Fiserv runs much of the plumbing behind everyday payments – its Clover terminals sit on the counters of millions of small businesses, and its software processes accounts for thousands of banks and credit unions. Tuesday’s announcement brings no price or fee changes for the merchants and consumers who use that plumbing. For investors, the message was that a company whose shares had been sliding is cutting costs harder and putting cash into buybacks, and the stock’s roughly 8% jump shows Wall Street welcomed it.
JBizNews Desk | Wall Street
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