Fiserv reports Q3 2016, operating cash flow increased 9%, adjusted EPS is up 11%


The global provider of financial services technology solutions Fiserv, Inc. (NASDAQ: FISV) has reported financial results for the third quarter of 2016.

Third Quarter 2016 GAAP Results

GAAP revenue for the company increased 5% in the third quarter to $1.38 billion, with 8% growth in the Payments segment and 2% growth in the Financial segment, compared to the third quarter of 2015. GAAP revenue for the company increased 5% in the first nine months of 2016 to $4.07 billion, with 8% growth in the Payments segment and 1% growth in the Financial segment, compared to the prior year period.

GAAP earnings per share was $0.96 in the third quarter and $3.18 in the first nine months of 2016, increasing 4% and 46%, respectively, compared to the prior year periods. GAAP earnings per share in the third quarter of 2015 included an $0.08 per share gain on the sale of a subsidiary business at StoneRiver Group, L.P. (StoneRiver), a joint venture in which the company owns a 49% interest. During the first nine months, GAAP earnings per share also included a net investment gain of $0.39 per share in 2016 driven by the sale of a business interest at StoneRiver and debt extinguishment and refinancing costs of $0.25 per share in 2015.

GAAP operating margin was 26.8% in the third quarter and 26.3% in the first nine months of 2016, increasing 80 basis points and 100 basis points, respectively, compared to the prior year periods.

Net cash provided by operating activities was $1.04 billion in the first nine months of 2016 compared with $955 million in the prior year period, an increase of 9%.

Jeffery Yabuki
Jeffery Yabuki

Strong operating performance in the quarter drove double-digit adjusted earnings per share growth and excellent free cash flow,” said Jeffery Yabuki, President and Chief Executive Officer of Fiserv. “Outstanding sales results in the quarter should provide additional market momentum and growth.

Third Quarter 2016 Non-GAAP Results and Additional Information

  • Adjusted revenue increased 5% in both the third quarter and first nine months to $1.31 billion and $3.86 billion, respectively, compared to the prior year periods.
  • Internal revenue growth for the company was 4% in the third quarter, driven by 5% growth in the Payments segment and 2% growth in the Financial segment.
  • Internal revenue growth for the company was 4% in the first nine months of 2016, led by 6% growth in the Payments segment and 1% growth in the Financial segment.
  • Adjusted earnings per share increased 11% in the third quarter to $1.14 and 15% in the first nine months of 2016 to $3.28 compared to the prior year periods.
  • Adjusted operating margin decreased 30 basis points to 32.8% in the quarter and increased 20 basis points to 32.2% in the first nine months compared to the prior year periods.
  • Free cash flow increased 12% to $747 million in the first nine months of 2016 compared to the prior year period.
  • Sales performance increased 34% in the quarter and 21% in the first nine months of 2016 compared to the prior year periods.
  • The company repurchased 3.1 million shares of common stock for $329 million in the third quarter and 9.3 million shares of common stock for $933 million in the first nine months of 2016. As of September 30, 2016, the company had 8.1 million remaining shares authorized for repurchase.

Outlook for 2016

Fiserv expects 2016 internal revenue growth of 4 percent and adjusted earnings per share in a range of $4.43 to $4.46, which represents 14 to 15% growth over 2015.

We continue to expect strong operating results despite a slight shortfall in revenue growth for the year. We anticipate revenue growth to accelerate in the fourth quarter and into 2017, said Yabuki.

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Fiserv reports Q3 2016, operating cash flow increased 9%, adjusted EPS is up 11%

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