Fiserv Reports Fourth Quarter and Full Year 2021 Results

GAAP revenue increased 11% in the quarter and 9% for the full year;

GAAP EPS increased 14% in the quarter and 42% for the full year;

Organic revenue growth was 11% both in the quarter and for the full year;

Adjusted EPS increased 21% in the quarter and 26% for the full year;

Company expects 2022 organic revenue growth of 7% to 9%

and adjusted EPS of $6.40 to $6.55, or growth of 15% to 17%

Fiserv, Inc. (NASDAQ: FISV), a leading global provider of payments and financial services technology, today reported financial results for the fourth quarter and full year 2021.

Fourth Quarter and Full Year 2021 GAAP Results

GAAP revenue for the company increased 11% to $4.26 billion in the fourth quarter of 2021 compared to the prior year period, with 18% growth in the Acceptance segment, 4% growth in the Fintech segment and 9% growth in the Payments segment. GAAP revenue for the company increased 9% to $16.23 billion for the full year of 2021 compared to the prior year, with 17% growth in the Acceptance segment, 4% growth in the Fintech segment and 6% growth in the Payments segment.

GAAP earnings per share was $0.50 in the fourth quarter and $1.99 for the full year of 2021, an increase of 14% and 42%, respectively, compared to the prior year periods. GAAP operating margin was 12.5% and 14.1% in the fourth quarter and full year of 2021, respectively, compared to 13.5% and 12.5% in the fourth quarter and full year of 2020, respectively. Net cash provided by operating activities was $4.03 billion for the full year of 2021 compared to $4.15 billion in the prior year.

“We are pleased with our fourth quarter results as we delivered another quarter of strong organic revenue and adjusted EPS growth,” said Frank Bisignano, President and Chief Executive Officer of Fiserv. “For 2021, Fiserv had another successful year of delivering on our growth agenda - attaining the high end of our original organic revenue growth outlook and coming in well above our original adjusted EPS outlook, all while investing in the business to fuel further growth as we innovate to provide value for our clients.”

Fourth Quarter and Full Year 2021 Non-GAAP Results and Additional Information

  • Adjusted revenue increased 11% to $4.02 billion in the fourth quarter and increased 11% to $15.39 billion for the full year of 2021 compared to the prior year periods.
  • Organic revenue growth was 11% in the fourth quarter of 2021, led by 19% growth in the Acceptance segment, 4% growth in the Fintech segment and 8% growth in the Payments segment.
  • Organic revenue growth was 11% for the full year of 2021, led by 20% growth in the Acceptance segment, 4% growth in the Fintech segment and 6% growth in the Payments segment.
  • Adjusted earnings per share increased 21% to $1.57 in the fourth quarter and 26% to $5.58 for the full year of 2021 compared to the prior year periods.
  • Adjusted operating margin was flat in the fourth quarter at 35.6% and increased 250 basis points to 33.9% for the full year of 2021 compared to the prior year periods.
  • Free cash flow was $3.53 billion for the full year of 2021 compared to $3.65 billion in the prior year.
  • The company repurchased 9.9 million shares of common stock for $1.00 billion in the fourth quarter and 23.3 million shares of common stock for $2.57 billion in the full year of 2021.
  • The company commenced the issuance of Euro commercial paper during the fourth quarter of 2021, lowering its effective cost of debt.
  • In February 2022, the company entered into a definitive agreement to acquire Finxact, Inc., a leading developer of cloud-native digital banking solutions powering digital transformation throughout financial services. The company expects the transaction to close later this year, subject to customary approvals and closing conditions.
  • In January 2022, Fiserv was named to the 2022 Bloomberg Gender-Equality Index, marking the sixth consecutive year that the company has been recognized for its efforts to build and maintain an inclusive and equitable working environment.

Outlook for 2022

Fiserv expects organic revenue growth of 7% to 9% and adjusted earnings per share in a range of $6.40 to $6.55, representing growth of 15% to 17%, for 2022.

“We believe our agility and the strength of our assets continue to enhance our position as the operating system for commerce and money movement across our client base of banks, credit unions, fintechs, and businesses ranging from SMB's to mid-market to large enterprises,” said Bisignano. “We expect this operational strength and balance sheet flexibility to support high single digit organic revenue growth and double digit adjusted EPS growth in 2022.”

Earnings Conference Call

The company will discuss its results in a live webcast at 7 a.m. CT on Tuesday, February 8, 2022. The webcast, along with supplemental financial information, can be accessed on the investor relations section of the Fiserv website at investors.fiserv.com. A replay will be available approximately one hour after the conclusion of the live webcast.

About Fiserv

Fiserv, Inc. (NASDAQ: FISV) aspires to move money and information in a way that moves the world. As a global leader in payments and financial technology, the company helps clients achieve best-in-class results through a commitment to innovation and excellence in areas including account processing and digital banking solutions; card issuer processing and network services; payments; e-commerce; merchant acquiring and processing; and the Clover® cloud- based point-of-sale and business management platform. Fiserv is a member of the S&P 500® Index and the FORTUNE® 500, and has been recognized as one of the FORTUNE World's Most Admired Companies® for 11 of the past 14 years. Visit fiserv.com and follow on social media for more information and the latest company news.

Use of Non-GAAP Financial Measures

In this news release, the company supplements its reporting of information determined in accordance with generally accepted accounting principles ("GAAP"), such as revenue, operating income, operating margin, net income attributable to Fiserv, earnings per share and net cash provided by operating activities, with "adjusted revenue," "organic revenue," "organic revenue growth," "adjusted operating income," "adjusted operating margin," "adjusted net income," "adjusted earnings per share," "adjusted earnings per share growth," and "free cash flow." Management believes that adjustments for certain non-cash or other items and the exclusion of certain pass-through revenue and expenses should enhance shareholders' ability to evaluate the company's performance, as such measures provide additional insights into the factors and trends affecting its business. Therefore, the company excludes these items from its GAAP financial measures to calculate these unaudited non-GAAP measures. The corresponding reconciliations of these unaudited non-GAAP financial measures to the most comparable GAAP measures are included in this news release, except for forward-looking measures where a reconciliation to the corresponding GAAP measures is not available due to the variability, complexity and limited visibility of the non-cash and other items described below that are excluded from the non-GAAP outlook measures. See page 15 for additional information regarding the company's forward-looking non-GAAP financial measures.

Examples of non-cash or other items may include, but are not limited to, non-cash deferred revenue adjustments arising from acquisitions; non-cash intangible asset amortization expense associated with acquisitions; non-cash impairment charges; restructuring costs; severance costs; net charges associated with debt financing activities; merger and integration costs; gains or losses from the sale of businesses or investments; and certain discrete tax benefits and expenses. The company excludes these items to more clearly focus on the factors management believes are pertinent to the company's operations, and management uses this information to make operating decisions, including the allocation of resources to the company's various businesses.

The company adjusts its non-GAAP results to exclude amortization of acquisition-related intangible assets as such amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions. Management believes that the adjustment of acquisition-related intangible asset amortization supplements GAAP information with a measure that can be used to assess the comparability of operating performance. Although the company excludes amortization from acquisition-related intangible assets from its non-GAAP expenses, management believes that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation.

Management believes organic revenue growth, formerly referred to as internal revenue growth, is useful because it presents adjusted revenue growth including deferred revenue purchase accounting adjustments and excluding the impact of foreign currency fluctuations, acquisitions, dispositions and the company's Output Solutions postage reimbursements. Management believes free cash flow is useful to measure the funds generated in a given period that are available for debt service requirements and strategic capital decisions. Management believes this supplemental information enhances shareholders' ability to evaluate and understand the company's core business performance.

These unaudited non-GAAP measures may not be comparable to similarly titled measures reported by other companies and should be considered in addition to, and not as a substitute for, revenue, operating income, operating margin, net income attributable to Fiserv, earnings per share and net cash provided by operating activities or any other amount determined in accordance with GAAP.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding anticipated organic revenue growth, adjusted earnings per share, adjusted earnings per share growth and other statements regarding our future financial performance. Statements can generally be identified as forward-looking because they include words such as “believes,” “anticipates,” “expects,” “could,” “should,” or words of similar meaning. Statements that describe the company's future plans, objectives or goals are also forward-looking statements.

Forward-looking statements are subject to assumptions, risks and uncertainties that may cause actual results to differ materially from those contemplated by such forward-looking statements. The factors that could cause the company’s actual results to differ materially include, among others, the following, many of which are, and may continue to be, amplified by the COVID-19 pandemic: the duration and intensity of the COVID-19 pandemic, including how quickly the global economy recovers from the impact of the pandemic; governmental and private sector responses to the COVID-19 pandemic and the impact of such responses on the company; the impact of the COVID-19 pandemic on the company's employees, clients, vendors, supply chain, operations and sales; the possibility that the company may be unable to achieve expected revenue synergies from the acquisition of First Data within the expected time frames; the company's ability to compete effectively against new and existing competitors and to continue to introduce competitive new products and services on a timely, cost-effective basis; changes in customer demand for the company's products and services; the ability of the company's technology to keep pace with a rapidly evolving marketplace; the success of the company's merchant alliances, some of which are not controlled by the company; the impact of a security breach or operational failure on the company's business including disruptions caused by other participants in the global financial system; the failure of the company's vendors and merchants to satisfy their obligations; the successful management of credit and fraud risks in the company's business and merchant alliances; changes in local, regional, national and international economic or political conditions and the impact they may have on the company and its customers; the effect of proposed and enacted legislative and regulatory actions affecting the company or the financial services industry as a whole; the company's ability to comply with government regulations and applicable card association and network rules; the protection and validity of intellectual property rights; the outcome of pending and future litigation and governmental proceedings; the company's ability to successfully identify, complete and integrate acquisitions, and to realize the anticipated benefits associated with the same; the impact of the company's strategic initiatives; the company's ability to attract and retain key personnel; volatility and disruptions in financial markets that may impact the company's ability to access preferred sources of financing and the terms on which the company is able to obtain financing or increase its costs of borrowing; adverse impacts from currency exchange rates or currency controls; changes in corporate tax and interest rates; and other factors included in “Risk Factors” in the company's Annual Report on Form 10-K for the year ended December 31, 2020, and in other documents that the company files with the Securities and Exchange Commission, which are available at http://www.sec.gov. You should consider these factors carefully in evaluating forward-looking statements and are cautioned not to place undue reliance on such statements. The company assumes no obligation to update any forward-looking statements, which speak only as of the date of this news release.

 

Fiserv, Inc.

Condensed Consolidated Statements of Income

(In millions, except per share amounts, unaudited)

 

Three Months Ended

December 31,

Year Ended

December 31,

 

2021

2020

2021

2020

Revenue

 

 

 

 

Processing and services

$

3,485

 

$

3,097

 

$

13,307

 

$

12,215

 

Product

 

772

 

 

735

 

 

2,919

 

 

2,637

 

Total revenue

 

4,257

 

 

3,832

 

 

16,226

 

 

14,852

 

 

Expenses

 

 

 

 

Cost of processing and services

 

1,659

 

 

1,353

 

 

6,084

 

 

5,841

 

Cost of product

 

544

 

 

504

 

 

2,044

 

 

1,971

 

Selling, general and administrative

 

1,521

 

 

1,459

 

 

5,810

 

 

5,652

 

Gain on sale of businesses

 

 

 

 

 

 

 

(464

)

Total expenses

 

3,724

 

 

3,316

 

 

13,938

 

 

13,000

 

Operating income

 

533

 

 

516

 

 

2,288

 

 

1,852

 

Interest expense, net

 

(170

)

 

(174

)

 

(693

)

 

(709

)

Other income (expense)

 

35

 

 

(6

)

 

71

 

 

28

 

 

Income before income taxes and income (loss) from investments in unconsolidated affiliates

398

 

336

 

1,666

 

1,171

  

Income tax provision

 

(63

)

 

(20

)

 

(363

)

 

(196

)

Income (loss) from investments in unconsolidated affiliates

 

20

 

 

(3

)

 

100

 

 

 

Net income

 

355

 

 

313

 

 

1,403

 

 

975

 

Less: net income attributable to noncontrolling interests

 

22

 

 

13

 

 

69

 

 

17

 

Net income attributable to Fiserv

$

333

 

$

300

 

$

1,334

 

$

958

 

 

GAAP earnings per share attributable to Fiserv - diluted

$

0.50

$

0.44

$

1.99

$

1.40

 

 

 

 

 

Diluted shares used in computing earnings per share attributable to Fiserv

 

663.9

 

 

681.2

 

 

671.6

 

 

683.4

 

 

Earnings per share is calculated using actual, unrounded amounts.

Fiserv, Inc.

Reconciliation of GAAP to

Adjusted Net Income and Adjusted Earnings Per Share

(In millions, except per share amounts, unaudited)

 

Three Months Ended

December 31,

Year Ended

December 31,

 

2021

2020

2021

2020

GAAP net income attributable to Fiserv

$

333

 

$

300

 

$

1,334

 

$

958

 

Adjustments:

 

Merger and integration costs 1

382

 

254

 

865

 

902

 

Severance costs 2

 

43

 

 

16

 

 

81

 

 

108

 

Amortization of acquisition-related intangible assets 3

 

473

 

 

501

 

 

1,982

 

 

2,024

 

Non wholly-owned entity activities 4

 

11

 

 

41

 

 

51

 

 

94

 

Tax impact of adjustments 5

 

(209

)

 

(187

)

 

(685

)

 

(719

)

Gain on sale of businesses 6

 

 

 

 

 

 

 

(464

)

Tax impact of gain on sale of businesses 5

 

 

 

 

 

 

 

124

 

Discrete tax items 7

 

8

 

 

(39

)

 

118

 

 

(7

)

Adjusted net income

$

1,041

 

$

886

 

$

3,746

 

$

3,020

 

 

GAAP earnings per share attributable to Fiserv

$

0.50

 

$

0.44

 

$

1.99

 

$

1.40

 

Adjustments - net of income taxes:

 

Merger and integration costs 1

0.44

 

 

0.29

 

0.99

1.02

Severance costs 2

 

0.05

 

 

0.02

 

 

0.09

 

 

0.12

 

Amortization of acquisition-related intangible assets 3

 

0.55

 

 

0.57

 

 

2.27

 

 

2.28

 

Non wholly-owned entity activities 4

 

0.01

 

 

0.05

 

 

0.06

 

 

0.11

 

Gain on sale of businesses 6

 

 

 

 

 

 

 

(0.50

)

Discrete tax items 7

 

0.01

 

 

(0.06

)

 

0.18

 

 

(0.01

)

Adjusted earnings per share

$

1.57

 

$

1.30

 

$

5.58

 

$

4.42

 

 
See pages 3-4 for disclosures related to the use of non-GAAP financial measures.
 

Earnings per share is calculated using actual, unrounded amounts.

1

Represents acquisition and related integration costs incurred in connection with various acquisitions, primarily related to the First Data acquisition. First Data integration costs in the fourth quarter and full year of 2021 primarily include $160 million and $370 million, respectively, of third party professional service fees associated with integration activities; $3 million and $44 million, respectively, of incremental share-based compensation, including the fair value of stock awards assumed by Fiserv; and $124 million and $277 million, respectively, of other integration-related compensation costs. First Data integration costs in the fourth quarter and full year of 2020 primarily include $70 million and $224 million, respectively, of third party professional services fees associated with integration activities; $39 million and $165 million, respectively, of incremental share-based compensation, including the fair value of stock awards assumed by Fiserv; $32 million and $137 million, respectively, of other integration-related compensation costs; $3 million and $118 million, respectively, of accelerated depreciation and amortization associated with the termination of certain vendor contracts; and $80 million and $124 million, respectively, of non-cash impairment charges associated with the early exit of certain leased facilities. The company has completed the integration activities associated with the achievement of cost synergies related to the First Data acquisition as of December 31, 2021.

2

Represents severance costs associated with the achievement of expense management initiatives, including those related to the First Data acquisition.

3

Represents amortization of intangible assets acquired through various acquisitions, including customer relationships, software/ technology and trade names. This adjustment does not exclude the amortization of other intangible assets such as contract costs (sales commissions and deferred conversion costs), capitalized and purchased software, and financing costs and debt discounts. See additional information on page 14 for an analysis of the company's amortization expense.

4

Represents the company’s share of amortization of acquisition-related intangible assets at its unconsolidated affiliates, as well as the minority interest share of amortization of acquisition-related intangible assets at its subsidiaries in which the company holds a controlling financial interest. This adjustment during the fourth quarter and full year of 2021 also includes net gains totaling $23 million and $98 million, respectively, related to the fair value remeasurement and sale of certain equity investments.

5

The tax impact of adjustments is calculated using a tax rate of 23%, which approximates the company's annual effective tax rate, exclusive of the actual tax impacts associated with the gain on the sale of businesses.

6

Represents the gain associated with the sale of a 60% interest in the Investment Services business in February 2020 and the dissolution of the Banc of America Merchant Services joint venture in July 2020.

7

Represents certain discrete tax items, such as foreign derived intangible income tax benefits from a subsidiary restructuring and the revaluation of deferred taxes due to a change in the respective statutory tax rates in the United Kingdom and Argentina.

 

 

Fiserv, Inc.

Financial Results by Segment

(In millions, unaudited)

 

Three Months Ended

December 31,

Year Ended

December 31,

 

2021

2020

2021

2020

Total Company

 

 

 

 

Revenue

$

4,257

 

$

3,832

 

$

16,226

 

$

14,852

 

Adjustments:

 

 

 

 

Output Solutions postage reimbursements

 

(244

)

 

(224

)

 

(860

)

 

(864

)

Deferred revenue purchase accounting adjustments

 

6

 

 

12

 

 

27

 

 

46

 

Merchant Services adjustment 1

 

 

 

 

 

 

 

(126

)

Adjusted revenue

$

4,019

 

$

3,620

 

$

15,393

 

$

13,908

 

Operating income

$

533

 

$

516

 

$

2,288

 

$

1,852

 

Adjustments:

 

 

 

 

Merger and integration costs

 

382

 

 

254

 

 

861

 

 

902

 

Severance costs

 

43

 

 

16

 

 

81

 

 

108

 

Amortization of acquisition-related intangible assets

 

473

 

 

501

 

 

1,982

 

 

2,024

 

Merchant Services adjustment 1

 

 

 

 

 

 

 

(59

)

Gain on sale of businesses

 

 

 

 

 

 

 

(464

)

Adjusted operating income

$

1,431

 

$

1,287

 

$

5,212

 

$

4,363

 

Operating margin

 

12.5

%

 

13.5

%

 

14.1

%

 

12.5

%

Adjusted operating margin

 

35.6

%

 

35.6

%

 

33.9

%

 

31.4

%

Merchant Acceptance ("Acceptance")

 

 

 

 

Revenue

$

1,700

 

$

1,444

 

$

6,479

 

$

5,522

 

Adjustments:

 

 

Deferred revenue purchase accounting adjustments

 

 

 

 

6

 

Merchant Services adjustment 1

 

 

 

 

 

(126

)

Adjusted revenue

$

1,700

 

$

1,444

 

$

6,479

 

$

5,402

 

Operating income

$

533

 

$

442

 

$

1,996

 

$

1,427

 

Adjustments:

 

 

 

 

Merger and integration costs

 

 

 

1

 

 

 

 

6

 

Merchant Services adjustment 1

 

 

 

 

 

 

 

(59

)

Adjusted operating income

$

533

 

$

443

 

$

1,996

 

$

1,374

 

Operating margin

 

31.3

%

 

30.7

%

 

30.8

%

 

25.9

%

Adjusted operating margin

 

31.3

%

 

30.7

%

 

30.8

%

 

25.4

%

Financial Technology ("Fintech") 2

 

 

 

 

Revenue

$

771

 

$

742

 

$

3,022

 

$

2,901

 

Operating income

$

287

 

$

271

 

$

1,081

 

$

992

 

Operating margin

 

37.3

%

 

36.5

%

 

35.8

%

 

34.2

%

Fiserv, Inc.

Financial Results by Segment (cont.)

(In millions, unaudited)

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

2021

 

2020

 

2021

 

2020

Payments and Network ("Payments")

Revenue

$

1,536

 

$

1,411

 

$

5,833

 

$

5,504

Adjustments:

 

Deferred revenue purchase accounting adjustments

 

6

12

 

  

27

 

 

40

 

Adjusted revenue

$

1,542

 

$

1,423

 

$

5,860

 

$

5,544

 

Operating income

$

707

 

$

649

 

$

2,557

 

$

2,361

 

Adjustments:

 

Merger and integration costs

 

6

 

 

11

27

 

40

Adjusted operating income

$

713

 

$

660

 

$

2,584

 

$

2,401

 

Operating margin

 

45.9

%

 

46.0

%

 

43.8

%

 

42.9

%

Adjusted operating margin

 

46.2

%

 

46.4

%

 

44.1

%

 

43.3

%

Corporate and Other

 

Revenue

$

250

 

$

235

$

892

$

925

Adjustments:

 

Output Solutions postage reimbursements

 

(244

)

(224

)

 

(860

)

(864

)

Adjusted revenue

$

6

 

$

11

 

$

32

 

$

61

 

Operating loss

$

(994

)

$

(846

)

$

(3,346

)

$

(2,928

)

Adjustments:

 

Merger and integration costs

 

376

242

 

834

 

856

Severance costs

 

43

 

 

16

 

 

81

 

 

108

 

Amortization of acquisition-related intangible assets

 

473

 

 

501

 

 

1,982

 

 

2,024

 

Gain on sale of businesses

 

 

 

 

 

 

 

(464

)

Adjusted operating loss

$

(102

)

$

(87

)

$

(449

)

$

(404

)

 
 
See pages 3-4 for disclosures related to the use of non-GAAP financial measures.
 

Operating margin percentages are calculated using actual, unrounded amounts.

1

Represents an adjustment primarily related to the company's joint venture with Bank of America. The Banc of America Merchant Services joint venture (BAMS) was dissolved effective July 1, 2020. The company owned 51% of BAMS and, through June 30, 2020, BAMS' financial results were 100% consolidated into the company's financial statements for GAAP reporting purposes. In connection with the dissolution of the joint venture, the company received a 51% share of the joint venture's value via an agreed upon contractual separation. In addition, the company will continue providing merchant processing and related services to Bank of America for its merchant clients. The non-GAAP adjustment reduces adjusted revenue and adjusted operating income by the joint venture revenue and expense that was not expected to be retained by the company upon dissolution and is partially offset by an increase to processing and services revenue.

2

For all periods presented in the Fintech segment, there were no adjustments to GAAP measures presented and thus the adjusted measures are equal to the GAAP measures presented.

 

Fiserv, Inc.

Condensed Consolidated Statements of Cash Flows 1

(In millions, unaudited)

Year Ended

December 31,

 

2021

 

2020

Cash flows from operating activities

 

 

 

Net income

$

1,403

 

 

$

975

 

Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and other amortization

 

 

 

1,158

 

 

 

 

 

 

1,077

 

 

Amortization of acquisition-related intangible assets

 

2,038

 

 

 

2,133

 

Amortization of financing costs and debt discounts

 

52

 

 

 

47

 

Share-based compensation

 

239

 

 

 

369

 

Deferred income taxes

 

(262

)

 

 

71

 

Gain on sale of businesses

 

 

 

 

(464

)

Income from investments in unconsolidated affiliates

 

(100

)

 

 

 

Distributions from unconsolidated affiliates

 

34

 

 

 

42

 

Non-cash impairment charges

 

15

 

 

 

124

 

Other operating activities

 

(48

)

 

 

(16

)

Changes in assets and liabilities, net of effects from acquisitions and dispositions:

 

 

 

Trade accounts receivable

 

(358

)

 

 

320

 

Prepaid expenses and other assets

 

(248

)

 

 

(167

)

Contract costs

 

(269

)

 

 

(289

)

Accounts payable and other liabilities

 

303

 

 

 

(146

)

Contract liabilities

 

77

 

 

 

71

 

Net cash provided by operating activities

 

4,034

 

 

 

4,147

 

Cash flows from investing activities

 

 

 

Capital expenditures, including capitalized software and other intangibles

 

(1,160

)

 

 

(900

)

Proceeds from sale of businesses

 

 

 

 

579

 

Payments for acquisitions of businesses, net of cash acquired

 

(848

)

 

 

(139

)

Distributions from unconsolidated affiliates

 

115

 

 

 

109

 

Purchases of investments

 

(256

)

 

 

(1

)

Proceeds from sale of investments

 

519

 

 

 

11

 

Net cash used in investing activities

 

(1,630

)

 

 

(341

)

Cash flows from financing activities

 

 

 

Debt proceeds

 

6,435

 

 

 

8,897

 

Debt repayments

 

(7,881

)

 

 

(10,918

)

Net proceeds from (repayments of) commercial paper and short-term borrowings

 

1,741

 

 

 

(6

)

Payments of debt financing costs

 

 

 

 

(16

)

Proceeds from issuance of treasury stock

 

140

 

 

 

133

 

Purchases of treasury stock, including employee shares withheld for tax obligations

 

(2,786

)

 

 

(1,826

)

Settlement activity, net

 

1,691

 

 

 

169

 

Distributions paid to noncontrolling interests and redeemable noncontrolling interests

 

(62

)

 

 

(104

)

Payments of acquisition-related contingent consideration

 

(37

)

 

 

(18

)

Other financing activities

 

(2

)

 

 

22

 

Net cash used in financing activities

 

(761

)

 

 

(3,667

)

Effect of exchange rate changes on cash and cash equivalents

 

(27

)

 

 

16

 

Net change in cash and cash equivalents

 

1,616

 

 

 

155

 

Cash and cash equivalents, beginning balance

 

2,744

 

 

 

2,589

 

Cash and cash equivalents, ending balance

$

4,360

 

 

$

2,744

 

 
1

The company revised the consolidated statements of cash flows presentation to include cash and cash equivalents within settlement assets as a component of total cash and cash equivalents. The company revised the 2020 presentation for comparable purposes.

Fiserv, Inc.

Condensed Consolidated Balance Sheets

(In millions, unaudited)

December 31,

 

2021

2020

Assets

 

Cash and cash equivalents

$

835

$

906

Trade accounts receivable – net

 

2,860

 

2,482

Prepaid expenses and other current assets

 

1,523

 

1,310

Settlement assets

 

13,652

 

11,521

Total current assets

 

18,870

 

16,219

Property and equipment – net

 

1,742

 

1,628

Customer relationships – net

 

9,991

 

11,603

Other intangible assets – net

 

4,018

 

3,755

Goodwill

 

36,433

 

36,322

Contract costs – net

 

811

 

692

Investments in unconsolidated affiliates

 

2,561

 

2,756

Other long-term assets

 

1,823

 

1,644

Total assets

$

76,249

$

74,619

Liabilities and Equity

 

Accounts payable and accrued expenses

$

3,550

$

3,186

Short-term and current maturities of long-term debt

 

508

 

384

Contract liabilities

 

585

 

546

Settlement obligations

 

13,652

 

11,521

Total current liabilities

 

18,295

 

15,637

Long-term debt

 

20,729

 

20,300

Deferred income taxes

 

4,172

 

4,389

Long-term contract liabilities

 

225

 

187

Other long-term liabilities

 

878

 

777

Total liabilities

 

44,299

 

41,290

Redeemable noncontrolling interests

 

278

 

259

Fiserv shareholders' equity

 

30,952

 

32,330

Noncontrolling interests

 

720

 

740

Total equity

 

31,672

 

33,070

Total liabilities and equity

$

76,249

$

74,619

 

Fiserv, Inc.

Selected Non-GAAP Financial Measures and Additional Information

($ in millions, unaudited)

Organic Revenue Growth 1

Three Months Ended

December 31,

Year Ended

December 31,

 

2021

 

2020

Growth

2021

 

2020

Growth

Total Company

 

 

 

 

 

 

Adjusted revenue

$

4,019

 

$

3,620

 

 

$

15,393

 

$

13,908

 

 

Currency impact 2

 

24

 

 

 

 

 

6

 

 

 

 

Acquisition adjustments

 

(13

)

 

 

 

 

(39

)

 

 

 

Divestiture adjustments

 

(6

)

 

(11

)

 

 

(278

)

 

(298

)

 

Organic revenue

$

4,024

 

$

3,609

 

11

%

$

15,082

 

$

13,610

 

11

%

Acceptance

 

 

 

 

 

 

Adjusted revenue

$

1,700

 

$

1,444

 

 

$

6,479

 

$

5,402

 

 

Currency impact 2

 

21

 

 

 

 

 

25

 

 

 

 

Acquisition adjustments

 

(7

)

 

 

 

 

(18

)

 

 

 

Divestiture adjustments

 

 

 

 

 

 

(246

)

 

(217

)

 

Organic revenue

$

1,714

 

$

1,444

 

19

%

$

6,240

 

$

5,185

 

20

%

Fintech

 

 

 

 

 

 

Adjusted revenue

$

771

 

$

742

 

 

$

3,022

 

$

2,901

 

 

Currency impact 2

 

 

 

 

 

 

(9

)

 

 

 

Organic revenue

$

771

 

$

742

 

4

%

$

3,013

 

$

2,901

 

4

%

Payments

 

 

 

 

 

 

Adjusted revenue

$

1,542

 

$

1,423

 

 

$

5,860

 

$

5,544

 

 

Currency impact 2

 

3

 

 

 

 

 

(10

)

 

 

 

Acquisition adjustments

 

(6

)

 

 

 

 

(21

)

 

 

 

Divestiture adjustments

 

 

 

 

 

 

 

 

(20

)

 

Organic revenue

$

1,539

 

$

1,423

 

8

%

$

5,829

 

$

5,524

 

6

%

Corporate and Other

 

 

 

 

 

 

Adjusted revenue

$

6

 

$

11

 

 

$

32

 

$

61

 

 

Divestiture adjustments

 

(6

)

 

(11

)

 

 

(32

)

 

(61

)

 

Organic revenue

$

 

$

 

 

$

 

$

 

 

 
See pages 3-4 for disclosures related to the use of non-GAAP financial measures.
 

Organic revenue growth is calculated using actual, unrounded amounts.

1

Organic revenue growth is measured as the change in adjusted revenue (see pages 9-10) for the current period excluding the impact of foreign currency fluctuations and revenue attributable to acquisitions and dispositions, divided by adjusted revenue from the prior period excluding revenue attributable to dispositions. Revenue attributable to dispositions also includes current and prior period revenue associated with merchants retained by the company from the Banc of America Merchant Services joint venture through the one year period following the joint venture's July 1, 2020 dissolution date, and transition services revenue within Corporate and Other.

2

Currency impact is measured as the increase or decrease in adjusted revenue for the current period by applying prior period foreign currency exchange rates to present a constant currency comparison to prior periods.

Fiserv, Inc.

Selected Non-GAAP Financial Measures and Additional Information (cont.)

($ in millions, unaudited)

Year Ended

December 31,

Free Cash Flow

2021

 

2020

Net cash provided by operating activities

 

$

4,034

 

 

$

4,147

 

Capital expenditures

 

 

(1,160

)

 

 

(900

)

Adjustments:

Distributions paid to noncontrolling interests and redeemable noncontrolling

interest

 

(62

)

 

 

(104

)

Distributions from unconsolidated affiliates included in cash flows from investing activities

 

115

 

109

Severance, merger and integration payments

 

712

 

505

Tax payments on adjustments

(161

)

(109

)
Tax payments on gain on sale of investments in unconsolidated affiliates

54

 

 

Free cash flow $

3,532

 

3,648

 

 

Three Months Ended

December 31,

 

Year Ended

December 31,

Total Amortization1

2021

 

2020

 

2021

 

2020

Acquisition-related intangible assets

 

$

484

 

$

530

 

$

2,038

 

$

2,133

Capitalized software and other intangibles

 

 

66

 

 

42

 

 

268

 

 

161

Purchased software

 

 

60

 

 

57

 

 

241

 

 

269

Financing costs and debt discounts

 

 

11

 

 

11

 

 

52

 

 

47

Sales commissions

 

 

25

 

 

23

 

 

97

 

 

90

Deferred conversion costs

 

 

14

 

 

12

 

 

51

 

 

34

Total amortization

 

$

660

 

$

675

 

$

2,747

 

$

2,734

 
 
See pages 3-4 for disclosures related to the use of non-GAAP financial measures.
1

The company adjusts its non-GAAP results to exclude amortization of acquisition-related intangible assets as such amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions (see corresponding adjustment on page 7). The adjustment for acquired First Data software/technology excludes only the incremental amortization related to the fair value purchase accounting allocation. Management believes that the adjustment of acquisition-related intangible asset amortization supplements the GAAP information with a measure that can be used to assess the comparability of operating performance. Although the company excludes amortization from acquisition-related intangible assets from its non-GAAP expenses, management believes that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Any future acquisitions may result in the amortization of additional intangible assets.

Fiserv, Inc.

Full Year Forward-Looking Non-GAAP Financial Measures

Reconciliations of unaudited non-GAAP financial measures to the most comparable GAAP measures are included in this news release, except for forward-looking measures where a reconciliation to the corresponding GAAP measures is not available due to the variability, complexity and limited visibility of these items that are excluded from the non-GAAP outlook measures. The company’s forward-looking non-GAAP financial measures for 2022, including organic revenue growth, adjusted earnings per share and adjusted earnings per share growth, are designed to enhance shareholders’ ability to evaluate the company’s performance by excluding certain items to focus on factors and trends affecting its business.

Organic Revenue Growth - The company's organic revenue growth outlook for 2022 includes deferred revenue purchase accounting adjustments and excludes the impact of foreign currency fluctuations, acquisitions, dispositions and the impact of the company's Output Solutions postage reimbursements. The currency impact is measured as the increase or decrease in the expected adjusted revenue for the period by applying prior period foreign currency exchange rates to present a constant currency comparison to prior periods. The expected impact of acquisitions is attributable to 2021 acquisitions.

 

Growth

2022 Revenue

7% - 9%

Output Solutions postage reimbursements

(1.0)%

2022 Adjusted revenue

6% - 8%

Currency impact

1.0%

Acquisition adjustments

(0.5)%

Divestiture adjustments

0.5%

2022 Organic revenue

7% - 9%

Adjusted Earnings Per Share - The company's adjusted earnings per share outlook for 2022 excludes certain non-cash or other items such as non-cash intangible asset amortization expense associated with acquisitions; non-cash impairment charges; restructuring costs; merger and integration costs; severance costs; gains or losses from the sale of businesses and investments; and certain discrete tax benefits and expenses, and includes non-cash deferred revenue purchase accounting adjustments. The company has completed First Data acquisition integration activities as of December 31, 2021 and does not expect to incur additional costs associated with the achievement of cost synergies related to the First Data acquisition, resulting in lower merger and integration costs in 2022. The company estimates that amortization expense in 2022 with respect to acquired intangible assets will approximate the amount incurred in 2021.

Other adjustments to the company’s financial measures that were incurred in 2021 are presented in this news release; however, they are not necessarily indicative of adjustments that may be incurred throughout 2022 or beyond. Estimates of these impacts and adjustments on a forward-looking basis are not available due to the variability, complexity and limited visibility of these items.

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