Fourth Quarter and Full Year 2017 GAAP Results

GAAP revenue for the company increased 6 percent to $1.52 billion in the fourth quarter of 2017 compared to the prior year period, with 7 percent growth in the Payments segment and 4 percent growth in the Financial segment. Full year 2017 GAAP revenue for the company increased 3 percent to $5.70 billion versus last year, with 5 percent growth in the Payments segment and 2 percent growth in the Financial segment. GAAP revenue growth in 2017 included the effects of acquisitions and the divestiture of the company's Australian item processing business in May 2017.

GAAP earnings per share from continuing operations was $2.50 in the fourth quarter of 2017 and $5.71 for the full year, increasing 155 percent and 38 percent, respectively, compared to the prior year periods. GAAP earnings per share from continuing operations in 2017 included discrete tax benefits from the December 2017 enactment of The Tax Cuts and Jobs Act of $1.30 per share and $1.28 per share in the fourth quarter and full year, respectively. GAAP earnings per share from continuing operations also included net investment gains of $0.09 per share and $0.39 per share in 2017 and 2016, respectively, driven by the disposition of a business and a business interest at StoneRiver Group, L.P. ("StoneRiver"), a joint venture in which the company owns a 49 percent interest.

GAAP operating margin was 28.1 percent in the fourth quarter of 2017 and 26.9 percent for the full year, increasing 200 basis points and 70 basis points, respectively, compared to the prior year periods.

Net cash provided by operating activities was $1.48 billion in 2017 compared with $1.43 billion in the prior year, an increase of 4 percent. Net cash provided by operating activities included cash distributions from StoneRiver of $45 million and $151 million in 2017 and 2016, respectively.

"We had an excellent finish to the year, allowing us to deliver on our financial commitments and achieve double-digit adjusted earnings per share growth for the 32nd consecutive year," said Jeffery Yabuki, President and Chief Executive Officer of Fiserv. "Our strong performance in closing the year provides momentum as we enter 2018."

Fourth Quarter and Full Year 2017 Non-GAAP Results and Additional Information

• Adjusted revenue increased 7 percent to $1.44 billion in the fourth quarter of 2017 and 4 percent to $5.42 billion for the full year compared to the prior year periods.
• Internal revenue growth for the company was 6 percent in the fourth quarter of 2017, with 7 percent growth in the Payments segment and 5 percent growth in the Financial segment.
• Internal revenue growth for the company was 4 percent for the full year, with 5 percent growth in the Payments segment and 3 percent growth in the Financial segment.
• Adjusted earnings per share increased 22 percent to $1.41 in the fourth quarter of 2017 and 16 percent to $5.12 for the full year compared to the prior year periods.
• Adjusted operating margin increased 190 basis points to 34.0 percent in the fourth quarter of 2017 and 60 basis points to 32.8 percent for the full year compared to the prior year periods.
• Free cash flow increased 13 percent to $1.22 billion for the full year compared to the prior year. Cash distributions from StoneRiver of $45 million were not included in the company's free cash flow results in 2017.
• The company repurchased 9.7 million shares of common stock for $1.17 billion in 2017, which included 1.5 million shares of common stock for $189 million in the fourth quarter. As of December 31, 2017, the company had 10.7 million remaining shares authorized for repurchase.
• In December 2017, we executed a definitive agreement to sell the retail voucher business acquired as part of the Monitise acquisition for £37 million. The sale was completed on January 10, 2018.
• In early 2018, we were named one of FORTUNE Magazine World's Most Admired Companies® for the fifth consecutive year. The company received high category marks in innovation, use of corporate assets and long-term investment value.

Sale of Majority Share of Lending Solutions Business

Today we announced a definitive agreement to sell the majority share of our Lending Solutions business to Warburg Pincus LLC ("Lending Transaction"). We will retain a 45 percent interest in the newly formed joint venture, which will include all of our automotive loan origination and servicing products, as well as our LoanServ platform.

Outlook for 2018

Fiserv expects internal revenue growth of at least 4.5 percent for the year. The company also expects adjusted earnings per share in a range of $6.05 to $6.30 which represents growth of 22 to 27 percent over 2017 as adjusted for the Lending Transaction which is targeted to close in the first quarter of 2018.

"We expect accelerated internal revenue growth in 2018 resulting primarily from continuing growth in high-value solutions," said Yabuki. "In addition, we intend to invest a portion of the tax rate benefit which we believe will enhance our future performance."