Earnings

Fiserv’s 1Q Results Marked By Internal Revenue Growth, 25 Percent Growth In Mobiliti

Financial services technology firm Fiserv posted results on Tuesday (May 1) that met on the top line, beat on the bottom and showed continued traction in internal revenue growth and digital efforts.

The company reported revenues of $1.4 billion, with an earnings per share beat of three pennies at $0.76 a share.

CEO Jeff Yabuki noted on the conference call that Fiserv received $470 million in proceeds at the end of the quarter from the sale of 55 percent of its lending solutions business and the retail voucher business acquired with Monitise.

The company, he said, continues to gain traction in each leg of its growth strategy, across account processing, digital, payments and biller solutions.

Said the CEO during the call, “We believe the 3 percent internal revenue growth in the quarter will be the low watermark for the year. Internal revenue growth led by 5 percent growth in the payments segment was pressured by the expected reduction in periodic revenue across both segments versus the comparable quarter.”

Later, in the question and answer session with analysts, Yabuki said periodic revenue should see rebounds even as “we also have significant implementations going on with Architect, DNA, Biller, Zelle — those kinds of programs on top of everything else that we have going on a regular basis, which we’ll be adding in. We would expect to see some recovery in periodic revenue as well over the next couple of quarters as we get back to a more normative level from where we started in the year.”

In reference to individual segment efforts, Yabuki noted that in the latest quarter, the company continued to add new clients across account processing solutions. The DNA platform had what he termed “a great start,” signing seven new clients in the quarter.

“We also expect nearly 30 clients to go live this year, which is a significant increase in the number of implementations. And of that, more than half the institutions have assets greater than $1 billion,” he said.

Speaking specifically to digital-focused business, Fiserv’s Mobiliti for ASP subscribers grew 25 percent in the quarter and 7 percent sequentially to more than 7 million users. Mobiliti business users grew by over 50 percent as commercial capabilities, according to Yabuki, “continue to move up the digital value chain.”

Zelle continued to grow, with transactions up 80 percent sequentially in the quarter, according to the company.

In his own remarks on the call, CFO Robert Hau said that within the payments segments, internal revenue growth was 5 percent, while adjusted revenues gained 7 percent to $770 million.

That growth came on the heels of gains in card services and biller solutions. Debit transaction growth was in the mid-single digits, with peer-to-peer transactions up more than 20 percent.

Larger trends remain intact, said Yabuki: “We would expect to see technology spend continue to increase as institutions look for ways to update their back office, bring enhanced capabilities to customers and, equally important, invest in risk, fraud and cybersecurity to further ensure safety and security in an ever-complex financial system … The number and depth of conversations around payments modernization continues to be significant. I’m quite bullish that this trend will lead to more opportunities, including the delivery of new solutions to address the emerging real-time payments ecosystem over the mid- to long-term.”

Yabuki was asked on the call about contactless cards. In response, he stated that “we’re quite focused and ready for contactless. The market continues to move. The U.S. market continues to move slowly … It’s really a matter of, in the U.S., getting it started. I suspect it’s still at least a year or two years away, but it would surprise me if, by the end of 2019, we weren’t seeing a lot more movement on that front.”

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