Fiserv, Inc. (FI) 2024 Q2 Earnings Call Summary
July 24, 2024 
Fiserv, Inc. (FI)
| Market Cap | 0.21T |
|---|---|
| Beta | |
| P/E | 39.75452774136047 |
| EPS | 12.247158441111395 |
| Dividend | 0 |
| Dividend Yield | 0.00% |
Optimistic Highlights
- Strong Q2 Performance: Fiserv reported an 18% increase in adjusted earnings per share to $2.13, driven by healthy revenue growth and operating margin expansion. Adjusted revenue grew by 7%, and organic revenue growth was 18%.
- Clover Revenue Growth: Clover's revenue increased by 28%, showcasing accelerated growth in financial solutions and significant client wins, including Verizon and Apple.
- Free Cash Flow and Shareholder Returns: The company generated $1 billion in free cash flow for the quarter and returned $1.5 billion to shareholders through share repurchases.
- Strategic Client Wins and Product Launches: Fiserv announced multiple wins with marquee clients and is set to launch new products targeting various verticals, including restaurants, services, and retail.
- International Expansion: Fiserv is expanding internationally with pilots set to go live in Brazil, Mexico, and Australia, aiming for full ramp-up in 2025.
Pessimistic Highlights
- Merchant Processing Declines: Some large processing clients experienced declines in volumes and revenue in Q2, impacting the processing business line.
- Small Business and Enterprise Growth Slowdown: There was a noted slowdown in small business volume growth and enterprise transaction growth in Q2, attributed to various factors including macroeconomic conditions.
Company Outlook
- Raised EPS Outlook: Fiserv raised its adjusted earnings per share outlook to $8.65 to $8.80, an increase of $0.05 across the range, reflecting strong performance and confidence in future growth.
- Revenue Growth Expectation: The company maintains its revenue outlook at 15% to 17% organic growth for 2024, aiming for the 39th consecutive year of double-digit adjusted EPS growth.
Q & A Highlights
Q: Update on international expansion in Brazil and Mexico? (David Togut, from Evercore ISI)
A: Brazil and Mexico pilots in August, full ramp in 2025. Australia pilot in September. Growth projections for Brazil and Mexico are strong, with full effect expected in 2025. (Frank Bisignano)
Q: Sources of the upside in the margin outlook? (Tien-Tsin Huang, from JP Morgan)
A: Margin outlook raised due to strong organic growth and ongoing productivity. Merchant processing declines related to volume decline in processing contracts, mainly banks. (Bob Hau)
Q: Underlying metrics on small business volume and enterprise transaction growth? (Jason Kupferberg, from Bank of America)
A: Slowing in Q2 in line with expectations, with July showing growth in line with Q2 and slightly ahead of June. Focus on value-added services alongside volume. (Frank Bisignano)
Q: Monetization and revenue recognition of CashFlow Central? (Timothy Chiodo, from UBS)
A: Strong demand from financial institutions, with revenue generation through subscription and transaction fees. (Frank Bisignano, Bob Hau)
Q: Update on the financial solutions segment and growth drivers? (Darrin Peller, from Wolfe Research)
A: Financial solutions segment growth driven by CashFlow Central, Zelle, and other implementations. Expectation of acceleration into 2025 and 2026. (Bob Hau)
Q: Guidance maintenance despite muted tone at Visa? (Dan Dolev, from Mizuho)
A: Maintaining organic growth outlook due to strength across the business, including Clover and value-added solutions. (Bob Hau)
Q: Update on Clover growth and back book contribution? (James Faucette, from Morgan Stanley)
A: Strong strategy and refinement for Clover, with focus on front book activity and international expansion. (Frank Bisignano)
Q: M&A strategy given current valuations? (Ramsey El-Assal, from Barclays)
A: Focus on value creation and long-term growth, not specifically targeting public vs. private acquisitions. (Frank Bisignano)