Fiserv (NASDAQ:FISV), a leading global provider of financial services technology solutions, today reported financial results for the third quarter of 2011.
GAAP revenue in the third quarter was $1.06 billion compared with $1.03 billion in the third quarter of 2010. Adjusted revenue increased 2 percent to $1.00 billion in the third quarter compared with $978 million in 2010. For the first nine months of 2011, total GAAP revenue was $3.18 billion compared with $3.06 billion in 2010, and total adjusted revenue increased 3 percent to $2.99 billion compared with $2.90 billion in 2010.
GAAP earnings per share from continuing operations for the quarter was $0.89, which included a loss from early debt extinguishment of $0.11 per share, compared with $0.89 in the third quarter of 2010. GAAP earnings per share from continuing operations for the first nine months of 2011 was $2.33, which included a loss from early debt extinguishment and severance expenses of $0.45 per share, compared with $2.54 in 2010.
Adjusted earnings per share from continuing operations in the quarter increased 12 percent to $1.16 compared with $1.04 in the comparable quarter of 2010. Adjusted earnings per share from continuing operations for the first nine months of 2011 grew 11 percent to $3.31 compared with $2.99 in 2010.
"Revenue, earnings and sales results in the quarter were in line with our expectations and the stage is set for a strong finish to the year," said Jeffery Yabuki, President and Chief Executive Officer of Fiserv. "Continuing traction with our new solutions should provide increased momentum entering 2012."
Third Quarter 2011
Adjusted internal revenue growth for the quarter was 2 percent driven by Payments segment growth of 4 percent compared to the prior year.
Adjusted operating margin was 29.0 percent in the quarter, down 40 basis points compared with the prior year.
Adjusted earnings per share increased 12 percent to $1.16 in the quarter compared with $1.04 in the prior year period.
Net cash provided by operating activities increased to $681 million in the first nine months of 2011 compared with $654 million in the first nine months of 2010.
Free cash flow was $507 million in the first nine months of 2011 compared with $532 million in the first nine months of 2010, a decrease of 5 percent.
The company received a $54 million cash dividend in the quarter from StoneRiver Group, L.P., a company in which Fiserv owns a 49% interest.
On September 13, 2011, the company completed the acquisition of 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 invoicing and payments, and person-to-person payments.
The company has repurchased 7.8 million shares for a total of $475 million through September 30. The company had approximately 5.7 million shares remaining under its existing authorization at quarter-end.
The company expanded its payments footprint in the quarter by signing 114 electronic bill payment clients and 48 debit clients. The company has signed 321 bill payment clients and 142 debit clients through the first nine months of the year.
During the quarter, 105 clients committed to offer ZashPay®, the person-to-person payments service launched by Fiserv in mid-2010. Nearly 1,000 financial institutions have agreed to offer the service since inception.
On October 11, 2011, Rahul Gupta was named Group President leading the Digital Payment Solutions area. Formerly President of the Card Services Division, Gupta now will provide oversight for several of the company's strategic payment platforms including electronic bill payment and presentment, biller solutions and card services.
Javelin Strategy & Research has named Fiserv the "Best in Class" mobile banking provider for the second year in a row in its "2011-2012 Mobile Banking Vendor Scorecard."
A number of new and expanded client relationships occurred in the quarter including:
- Anchor Bank, headquartered in Aberdeen, Wash., with $489 million in assets, selected the Premier® account processing platform from Fiserv. The bank also selected CheckFree® RXP® and CheckFree Small Business for bill payment, Business Online™ and Retail Online™ for online banking, WireXchange®, and solutions for card services including the ACCEL/Exchange® PIN-debit network. The bank already utilizes Branch Source Capture™ and Merchant Source Capture™ for remote deposits, Prologue™ for financial management, EasyLender® and item processing services.
- BMO Harris Bank, a Chicago-based financial institution that is a member of the BMO Financial Group and that has a retail deposit base of approximately $180 billion, selected Fiserv for ACH outsourcing solutions.
- Bremer Financial Corporation, a privately held $7.9 billion regional financial services company headquartered in St. Paul, Minn., will upgrade its current Fiserv online banking platform to Corillian Online® and add CheckFree RXP from Fiserv for electronic bill delivery and payments. Bremer will leverage adoption marketing services from Fiserv to boost customer adoption and utilization of the new services. The company will also deploy Campaign Manager from Fiserv to enable targeted marketing campaigns via its online banking site.
- Community Bank of Tri-County, located in Waldorf, Md. with $902 million in assets, selected Fiserv for a full banking solution based on the Precision® account processing platform. In addition, the bank selected a variety of other solutions to help streamline business processes and enhance productivity.
- First Citizens Bank, a $21 billion wholly owned subsidiary of First Citizens BancShares, Inc. headquartered in Raleigh, N.C., will expand its use of the CheckFree RXP payment suite with the addition of same day payment capabilities along with account-to-account transfers and person-to-person payments. First Citizens will also add Financial Crime Risk Management capabilities from Fiserv for multi-payment type, cross-channel anti-money laundering detection and fraud mitigation.
- FirstMerit Bank, a subsidiary of FirstMerit Corporation, a $14.7 billion diversified financial services company headquartered in Akron, Ohio, selected and implemented MobilitiTM from Fiserv. FirstMerit customers can access the new mobile banking service via an AndroidTM, iPhone® or BlackBerry® application, or via SMS (text messaging).
- Opus Bank selected the Premier account processing platform from Fiserv. Headquartered in Irvine, Calif., with $2.1 billion in assets, the bank also selected CheckFree RXP for bill payment, Prologue for financial management, item processing, and solutions for card services including Financial Crime Risk Management, debit processing and the ACCEL/Exchange PIN-debit network.
- Zions Bancorporation, a $51.9 billion financial services company that operates banking businesses in 10 western and southwestern states, selected Fiserv to support multi-channel digital payments for retail and business customers. The bank will add the CheckFree RXP suite for electronic bill delivery, payments and account-to-account transfers, and ZashPay for person-to-person payments. The bank will also add CheckFree Small Business for integrated electronic bill payment and invoicing, and will utilize FraudNet™ from Fiserv, an automated fraud detection system, to mitigate the risk of fraudulent transactions across these solutions. A former CheckFree RXP client, Zions is returning to the service after using a competing platform.
Outlook for 2011
Fiserv continues to expect 2011 adjusted internal revenue growth to be in a range of 2 to 4 percent. The company has raised its expectation for 2011 adjusted earnings per share from a range of $4.42 to $4.54 to a range of $4.54 to $4.60, which represents growth of 12 to 14 percent over $4.05 in 2010.