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Fiserv Reports Third Quarter 2012 Results

Stocks in this article: FISV

Fiserv, Inc. (NASDAQ: FISV), a leading global provider of financial services technology solutions, today reported financial results for the third quarter of 2012.

GAAP revenue in the third quarter was $1.12 billion compared with $1.06 billion in the third quarter of 2011. Adjusted revenue was $1.05 billion in the third quarter compared with $1.00 billion in 2011, an increase of 5 percent. For the first nine months of 2012, GAAP revenue was $3.33 billion compared with $3.18 billion in 2011, and adjusted revenue was $3.11 billion compared with $2.99 billion in 2011, an increase of 4 percent.

GAAP earnings per share from continuing operations for the third quarter was $1.03 compared with $0.89 in 2011, which included a loss from early debt extinguishment of $0.11 per share. GAAP earnings per share from continuing operations for the first nine months of 2012 was $3.16 compared with $2.33 in 2011, which included a loss from early debt extinguishment of $0.37 per share.

Adjusted earnings per share from continuing operations increased 9 percent in the third quarter to $1.27 compared with $1.16 in 2011. Adjusted earnings per share from continuing operations for the first nine months of 2012 was up 13 percent to $3.75 compared with $3.31 in 2011.

“Internal revenue growth accelerated in the quarter as anticipated, and is in-line with our expectations for the full year,” said Jeffery Yabuki, President and Chief Executive Officer of Fiserv. “Our strong sales momentum is clear evidence that the market continues to value our leading solutions.”

Third Quarter 2012

  • Adjusted revenue grew 5 percent in the quarter to $1.05 billion and increased 4 percent in the first nine months of 2012 to $3.11 billion, compared to the respective prior year periods.
  • Adjusted internal revenue growth was 4 percent in the quarter, consisting of 2 percent growth in the Payments segment and 5 percent growth in the Financial segment. Adjusted internal revenue growth for the first nine months of 2012 was 3 percent, including 2 percent growth in the Payments segment and 3 percent growth in the Financial segment.
  • Adjusted operating margin was 29.8 percent in the quarter, an increase of 80 basis points compared to the prior year’s quarter, and was up 40 basis points to 29.3 percent for the first nine months of 2012 compared to the prior year.
  • Adjusted earnings per share in the quarter increased 9 percent to $1.27 and increased 13 percent in the first nine months of 2012 to $3.75, compared to the respective prior year periods.
  • Free cash flow was up 18 percent in the quarter and was $501 million for the first nine months of 2012 compared with $507 million in the prior year period.
  • The company repurchased 2.7 million shares of common stock in the third quarter for $189 million and, through the end of the third quarter, has repurchased 8.5 million shares for $577 million. As of September 30, 2012, the company had approximately 6 million shares remaining under its existing share repurchase authorization.
  • The company signed 141 Mobiliti clients in the quarter and has added nearly 1,300 mobile banking clients to date.
  • The company signed 113 Popmoney ® clients in the quarter and the network now includes more than 1,700 financial institutions.
  • The company signed 104 electronic bill payment clients and 32 debit clients in the quarter.
  • The company entered into an amended and restated five-year, $2 billion revolving credit agreement and also completed the sale of $700 million of 3.5% Senior Notes due in 2022. The company used the net proceeds from the offering to repay the majority of its term loan facility which matures in November 2012.
  • Fiserv generated a number of new and expanded client relationships in the quarter including:
    • AnchorBank, headquartered in Madison, Wis. with $2.8 billion in assets, extended its relationship with Fiserv to continue using the Cleartouch ® account processing platform and Prologue for financial performance management. The bank also utilizes Consumer and Commercial Debit Processing Services and EasyLender ® Mortgage from Fiserv.
    • AT&T Inc., the largest communications holding company in the world by revenue, extended its existing relationship with Fiserv. The parties entered into a multi-year, sole provider agreement for CheckFreePay ® from Fiserv to enable walk-in bill payment services for AT&T Wireline customers in more than 20 states, and to continue to enable the service for AT&T Long Distance, Mobility and U-verse ® customers in 48 states.
    • BB&T Corporation, one of the largest financial holding companies in the U.S. with $182 billion in assets and headquartered in Winston-Salem, N.C., selected Popmoney from Fiserv. BB&T also renewed its bill payment relationship and continues to utilize PEP+ ®, Mobile Source Capture , Branch Source Capture , Merchant Source Capture and a variety of other Fiserv solutions for remittance, lending and financial controls.
    • Bank of the West, a $62.7 billion financial institution headquartered in San Francisco, Calif., agreed to implement Mobiliti from Fiserv, including tablet banking application functionality. The bank also uses Corillian Online ®, CheckFree ® RXP ®, Popmoney, Popmoney Small Business and TransferNow ® from Fiserv.
    • Bremer Financial Corporation, an $8.1 billion regional financial services firm headquartered in St. Paul, Minn., and a long-term client of Fiserv, selected Mobiliti for triple-play mobile banking. Mobiliti will be integrated with the bank’s existing Fiserv digital channel and payment solutions, Corillian Online for online banking and CheckFree RXP for bill payment.
    • Caja Morelia Valladolid, a financial institution based in Michoacán, Mexico with assets of $235 million, 70 branches and more than 335,000 members, selected the Signature ® account processing platform from Fiserv. The organization will also implement Teller ® for transaction management, Aperio Online Account Opening, AML Manager for financial crime risk management and Frontier™ for financial controls.
    • First Federal Savings Bank, of Rochester, Ind., with $357 million in assets, selected an integrated banking solution centered on the Cleartouch account processing platform. The bank will also implement Mobiliti, CheckFree RXP, Teller Source Capture , Mobile Source Capture and the Fiserv Clearing Network for item processing, and AML Manager and Fraud Risk Manager . A full suite of card services will also be integrated into the solution, including the ACCEL/Exchange ® PIN-debit network, Debit Processing, ATM Solutions and Risk Office SM.
    • Higher One, a leader in providing financial services and data analytics to over 1,250 college and university campuses across the U.S., renewed its agreement to use the Signature account processing platform. Higher One will continue to utilize several other Fiserv solutions, including Frontier for financial controls, Consumer Source Capture , Mobile Source Capture, and ACCEL/Exchange Member Advantage and ATM Solutions for card services.

Outlook for 2012

Fiserv continues to expect 2012 adjusted revenue growth to be in a range of 4 to 6 percent, adjusted internal revenue growth to be in a range of 3.0 to 4.5 percent, and adjusted earnings per share to be in a range of $5.08 to $5.20, which represents growth of 11 to 14 percent over $4.58 in 2011.

"We expect to achieve our full-year objectives and further extend our high-quality recurring revenue going into 2013,” said Yabuki.

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