Fiserv (NASDAQ:FISV), the leading global provider of financial services technology solutions, today reported financial results for the second quarter of 2011.
GAAP revenue in the second quarter of 2011 was $1.07 billion compared with $1.02 billion in the second quarter of 2010. Adjusted revenue increased 3 percent to $1.00 billion in the second quarter compared with $970 million in 2010. For the first six months of 2011, total GAAP revenue was $2.11 billion compared with $2.03 billion in 2010, and total adjusted revenue was $1.99 billion compared with $1.92 billion in 2010.
GAAP earnings per share from continuing operations for the second quarter of 2011 was $0.67, which included a loss from early debt extinguishment of $0.26 per share, compared with $0.85 in 2010. GAAP earnings per share from continuing operations for the first six months of 2011 was $1.45, which included a loss from early debt extinguishment and severance expenses of $0.34 per share, compared with $1.65 in 2010.
Adjusted earnings per share from continuing operations in the second quarter increased 13 percent to $1.13 compared with $1.00 in 2010. Adjusted earnings per share from continuing operations for the first six months of 2011 was up 10 percent to $2.15 compared with $1.95 in 2010.
"Our focused execution in the quarter, highlighted by another solid performance in the Payments segment, led to continued revenue growth and double-digit gains in adjusted EPS," said Jeffery Yabuki, President and Chief Executive Officer of Fiserv. "As important, our highly valued and differentiated solutions led us to record the largest quarterly sales attainment in the company's history."
Second Quarter 2011
Adjusted internal revenue growth was 3 percent in the quarter, consisting of 5 percent growth in the Payments segment and 2 percent growth in the Financial segment.
Adjusted operating margin was 29.3 percent in the quarter, up 100 basis points sequentially, and down 30 basis points compared with the prior year's second quarter.
Adjusted earnings per share increased 13 percent to $1.13 in the quarter compared with $1.00 in the prior year period.
Free cash flow was $335 million in the first six months of 2011 compared with $353 million in the first six months of 2010, a decrease of 5 percent.
Fiserv entered into a definitive agreement to acquire CashEdge Inc., a leading provider of consumer and business payments solutions such as account-to-account transfer, account opening and funding, data aggregation, small business payments, and person-to-person payments, for $465 million in cash. The acquisition is expected to close by the end of the third quarter and should advance Fiserv's digital payments and channel strategies.
The company repurchased 2.6 million shares of common stock in the quarter for $163 million and 6.9 million shares in the first six months of 2011 for a total of $424 million. The company also announced a new 7.5 million share repurchase authorization in the quarter and, as of June 30, 2011, had approximately 6.7 million shares remaining under the authorization.
The company raised $1.0 billion of proceeds in a public offering of 5-year and 10-year senior notes in the quarter with a weighted average interest rate and term of 3.8 percent and 7 years, respectively. The company used the proceeds to retire the remaining $1.0 billion of the company's 6.125 percent senior notes due in 2012; $700 million were repurchased in June and $300 million were redeemed in July.
The company expanded its payments footprint in the quarter by signing 107 electronic bill payment clients and 41 debit clients. The company has signed 207 electronic bill payment clients and 94 debit clients through the first six months of the year.
During the quarter, 135 clients committed to offer ZashPay, the person-to-person payments service launched by Fiserv in mid-2010. Through the first six months of the year, the company has signed 258 ZashPay clients and, as of June 30, 2011, nearly 870 financial institutions have agreed to offer the service.
The company's Financial Crime Risk Management platform received "Best-in-Class" recognition in Aite Group's "Global Anti-Money Laundering Vendor Evaluation."
A number of new and expanded client relationships occurred in the quarter including:
- City National Bank of Florida, a $4 billion institution based in Miami, selected the Premier® account processing platform as the foundation for a complete retail banking solution. The solution includes EnAct™ for enterprise sales management, Prologue™ Financial Accounting Services, Asset Liability Manager, Branch Source Capture and Card Services solutions including the ACCEL/Exchange® PIN debit network.
- Eclipse Bank, Inc., a $133 million institution located in Louisville, Ky., chose the Precision™ account processing platform from Fiserv. The integrated solution includes Mobile Money™ for mobile banking, CheckFree® RXP® for electronic bill payment, AML Manager, Branch and Merchant Source Capture™ and Card Services solutions including debit processing, UChoose Rewards® for customer loyalty programs and the ACCEL/Exchange PIN debit network.
- Fulton Financial Corporation, a $16 billion financial institution based in Lancaster, Pa., selected the Signature™ account processing platform from Fiserv, together with Aperio™ and EnAct for enterprise sales and customer relationship management. In addition, the company selected Prologue Financial Accounting Services, Construction Loan Manager and Bank Intelligence Solutions®, plus debit processing and other integrated products and services. Fulton Financial has also implemented CheckFree RXP, ZashPay and Mobile Money.
- Jeff Davis Bank & Trust Company, headquartered in Jennings, La. with $535 million in assets, selected debit card processing, turn-key ATM Device Driving and Monitoring, and a full suite of debit risk solutions including Risk Office. A long-time Fiserv client, Jeff Davis Bank & Trust Company also uses account processing, source capture and mobile banking solutions from Fiserv.
- Norway Savings Bank, a $945 million institution located in Norway, Maine, selected Fiserv for debit processing and its ACCEL/Exchange PIN debit network. Norway also uses Premier account processing, licensed AML Manager for fraud risk management, CheckFree RXP for bill payment, EasyLender® for loan origination, Mobile Money and ConvergeIT®: IVR.
- Randolph-Brooks Federal Credit Union (RBFCU) of Live Oak, Tex. with $4.3 billion in assets selected the Acumen® account processing solution from Fiserv. The sixteenth-largest U.S. credit union cited the open platform's member-centric view, modern architecture and customization capabilities as key decision factors. In addition to Acumen, RBFCU will implement other Fiserv products, including CheckFree RXP for bill payment, LynxGate® for ATM management and Next Multi-Channel Marketing for cross-selling to its 350,000 members.
- Regions Bank, a subsidiary of the $132 billion Regions Financial Corporation, one of the nation's largest full-service providers of consumer and commercial banking, implemented a person-to-person payment service powered by ZashPay from Fiserv. The new service allows checking and money market customers who use Regions Online Banking to send money to or receive money from anyone who has a U.S. bank account.
- San Diego County Credit Union (SDCCU), a $5 billion financial institution, selected Mobile Money for mobile banking. The credit union also expanded its use of the CheckFree RXP platform to include same day bill payment capabilities. In addition to utilizing CheckFree RXP for consumer bill payment, SDCCU has an existing relationship with Fiserv for online banking and the ZashPay personal payment service.
- The State Bank, based in Fenton, Mich. with $300 million in assets, engaged Fiserv for its Revenue Expansion program to help drive non-interest income, enhance customer relationships, and provide significant value to its customers with Relationship Profitability Manager for Premier®, Customer View™, Relationship Rewards and Relationship Advance™.
- TruStone Financial Credit Union, a $665 million institution based in Plymouth, Minn. signed an agreement to implement Acumen from Fiserv to support its growth goals as well as a comprehensive suite of integrated technology solutions to drive efficiency and better serve its nearly 57,000 members. In addition to Acumen, the credit union will implement more than 20 Fiserv solutions including AML Manager for managing risk, ConvergeIT: IVR for audio response, Item Processing for check processing, Corillian Online® for online banking, CheckFree RXP for bill payment, AccountCreateSM for online account opening and Mobile Money for mobile banking.
- USAA, headquartered in San Antonio, Texas, with $49.7 billion in mutual fund assets and $10.2 billion in managed money assets, implemented the Unified Managed Account (UMA) platform from Fiserv. USAA will move its Mutual Fund Advisory program onto the UMA platform in late 2011. This is part of USAA's new strategy to converge all managed account programs onto the Fiserv UMA platform, which will operate as a product-agnostic solution for all advisory programs. USAA also uses Financial Advice Solutions from Fiserv to provide its members with financial planning services and on-line goals-based financial planning tools.
Outlook for 2011
Fiserv continues to expect 2011 adjusted internal revenue growth to be in a range of 2 to 4 percent. The company also expects 2011 adjusted earnings per share to be in a range of $4.42 to $4.54, which represents growth of 9 to 12 percent over $4.05 in 2010.
"We have taken several important strategic steps this year that should further strengthen the profile of the company, and are on track to achieve our 2011 outlook," said Yabuki.
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