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Fiserv set to close First Data blockbuster, reports solid Q2 earnings

| by David Jones
Fiserv set to close First Data blockbuster, reports solid Q2 earnings

Fiserv Inc. reported better-than-expected sales growth during the second quarter as it continued to sign new banking, credit union and card services clients and said it is making good progress on its $22 billion acquisition of First Data, which is set to close on Monday. 

Fiserv, a Brookfield, Wisconsin-based financial services and payments technology provider, announced the blockbuster acquisition in January, under which it would acquire the merchant services and payments processing firm. 

Fiserv CEO Jeffrey Yabuki told analysts Thursday that the companies have received all the necessary regulatory approvals without conditions. He said the companies are working on incremental growth opportunities in the bank merchant, credit solutions, biller services, network and international areas. 

He said the combined company may exceed its expected revenue synergy target of $500 million and the companies have made good progress on cost synergies. He said he merged companies should add 20% accretion to adjusted earnings per share over the first 12 months of the deal.

"We're thrilled to be on the precipice of closing this transaction and moving forward together,"  Yabuki told analysts. "We're even more convinced that this transformative combination will extend leadership and value for clients, create important opportunities for associates and deliver above market returns for shareholders for many years to come."

Regarding the earnings results, adjusted earnings per share rose 9% to 82 cents a share in the quarter, compared with 75 cents in the year-ago quarter. 

Revenue rose 6% to $1.51 billion during the second quarter, including a 10% gain in the payments segment and 2% gain in the financial segment. 

Fiserv said it still expects to report internal revenue growth in the range of 4.5% to 5% for the year and adjusted earnings-per-share of $3.39 to $3.52, which represents a growth rate of 10% to 14%. 

"We're pleased with our financial performance in the second quarter against our most difficult comparison of the year," Yabuki told analysts. "We delivered better than anticipated results in the quarter and the first half and are well on our way to meet our full year of financial targets."

Segment growth

The company said Mobiliti ASP subscribers rose 16% to about 9 million, as consumers continued to embrace digital banking. Mobility business clients rose 20% during the quarter. Mobility allows users to access digital banking across a range of platforms, including smartphones and tablets. 

The company said P2P transactions, including Popmoney and Zelle, were up 100% during the quarter. Zelle allows bank consumers to transfer funds and pay bills directly from their accounts. 

Following a question from analysts, Yabuki said the company is seeing an uptick in demand for contactless or dual-interface cards. He mentioned having contactless in places like the New York City subway is helpful and that the company, which issues about 100 million cards per year, expects to see an uptick in 2020 and 2021. He added that Fiserv works closely with prepaid and that a number of those providers are issuing EMV cards, and expects to see a number of them jump straight to contactless.

Cover photo: iStock

 


Topics: Contactless / NFC, Mobile Banking, Money Transfer / P2P, POS, Regulatory Issues, Technology Providers

Companies: First Data, FISERV



David Jones

David Jones is a veteran business and technology journalist, with three decades of experience writing about business travel, real estate and technology.

Since 2015 he covered a range of technology stories for the ECT News Network, which includes the E-Commerce Times, TechNewsWorld, LinuxInsider and CRM Buyer, writing about cybersecurity, artificial intelligence, machine learning, open source computing and privacy issues among others,. He recently covered FinTech issues for PYMNTS.com.

He worked as a staff writer for Bloomberg Business News and an online reporter for Crain’s New York Business. He has written for numerous media organizations, including Reuters, The New York Times, The Real Deal, Continental, City Limits and The Nation.

He was previously awarded the George Washington Williams Fellowship for Journalists of Color by the Independent Press Association.




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