Fiserv Payments Revs Up 6 Pct, While eComm Gains Double Digits

Fiserv reported results for the third quarter that, in the wake of its acquisition of First Data, showed progress on realizing revenue synergies and growth in sales of its Clover offering.

The company posted adjusted earnings of $1.02, which topped consensus of 99 cents.  The consolidated top line was $3.9 billion, better than the $3.8 billion expected.

Drilling down into results, CEO Jeff Yabuki said that the first quarter of the combined company showed that “our integration activities are progressing well.”

Internal revenue growth was 6 percent, led by 10 percent growth in the firm’s Global Business Solutions merchant business.  He said that account processing saw 14 new clients in the quarter.

The cloud-based point of sale (POS) platform Clover crossed the $100 billion threshold in annualized payment volume in the quarter, a more than 40 percent gain year over year.

“Payment devices shipped were up 25 percent,” said the executive, in the quarter.

The eCommerce merchant business grew transactions by more than 30 percent in the quarter.
Integrated ISV partners expanded by more than 20 percent in the quarter.

The combined company’s scale encompasses more than one billion payment cards in force, according to merchants, across debit and credit.

Chief Operating Officer Frank Bisignano said that revenue synergies are on track to meet “at a minimum” the $500 million target, and that tally includes about $100 million in synergies next year.

He said that one initiative is to better serve the account processing base of the original Fiserv, through merchant acquiring solutions. Enabling Clover to be distributed digitally, and through the physical branch network of original Fiserv clients represents a significant opportunity.

“We have already signed more than 20 core account processing clients with about half of them competitive wins,” he told analysts.  Of the competitive wins, half had asset bases of between $1 billion to $6 billion and he said there are more than 200 financial institutions in the pipeline.

He said the company is likely to exceed the $200 million revenue synergy opportunity it had originally envisioned with this opportunity.

The firm also is making progress on its routing and card issuing revenue opportunities.

Chief Financial Officer Robert Hau said that all three business segments showed growth, and supplemental materials released by the company showed that internal revenue across First Data grew by 7 percent in the quarter to $2.1 billion, payments grew by 6 percent to $861 million, and the financial segment grew by 4 percent to $596 million.

He said that First Data showed growth amid 7 percent growth in GBS North America and were driven by digital commerce, ISV solutions  (with 18,000 new ISVs added year-to-date) and Clover, along with global merchant acquiring. Global card accounts on file grew mid-single digits in the quarter, he said.