Fiserv: First Data Merger On Track; 1Q Payments Grow 4 Pct


Fiserv reported results Tuesday (April 30) that topped expectations on the bottom line, and were very slightly below analyst expectations on the top line. But beyond March quarter numbers, management said the acquisition of First Data remains on track — and that growth it its core payments and financial businesses remains intact.

Overall, adjusted revenues were up 5 percent to $1.5 billion, which was roughly $10 million below consensus. Drilling down a bit, the internal growth of the payments segment, while the financial segment logged 6 percent growth.

The company said that adjusted earnings growth was 12 percent, to 84 cents a share, and better than the Street by 2 pennies.

During the conference call with analysts, Fiserv CEO Jeff Yabuki and CFO Robert Hau took note that despite the fact that the Justice Department had followed up with requests for more documentation related to Fiserv’s $22 billion pact to acquire First Data, the timeframe is still in place for a second-half closing. In addition, said management, there is no anticipation that divestitures would be in the offing to satisfy any closing requirements. Said Yabuki, the financial targets are still in place too, where there will be synergies of $500 million in annual recurring revenues, and a cumulative $900 million in operating synergies. There are teams of employees, he said, that are working on as many as 40 separate business areas that may be opportunities for the consolidated entity.

Yabuki noted that First Data (which also reported results Tuesday) has had a footprint in almost all “payments conversations” seen across the landscape in the past few decades, and repeated earlier sentiment that First Data’s growth trajectory remains unappreciated. “This is a good solid … business with strong market share,” he told analysts.

In commentary on the call, Yabuki said, “increasing digital engagement is a priority for us,” and noted that Mobiliti, the mobile banking platform, saw greater than 20 percent growth year over year to 8.5 million subscribers.

Yabuki also pointed to P2P payments as a growth area, where Zelle transactions “quadrupled” from the same quarter last year, and where Popmoney was up 100 percent from a year ago. The company also sees opportunity in commercial digital solutions (First Data’s Clover was mentioned), and, overall, debit transactions are strong, in the high single digits.