Fiserv Inc. (FISV) recently reported third-quarter revenues of $992 million, down 4.4% sequentially. Adjusted internal revenues (on a constant currency basis) declined 1% year over year to $945 million. Management added that top-line growth remains challenged in the current environment.
During the quarter, the company sold its Loan Fulfillment Services (LFS) and the results of the same have been treated as discontinued operations.
The company continued to expand its payments footprint and signed 85 electronic bill payment clients in the quarter thereby expanding the total to 294 clients in 2009.
The company reports results in two segments – The Financial Institution Services and the Payments and Industry products. The Financial Institution reported revenues of $475 million, down 2% year over year as revenues continues to be impacted by lower discretionary spending by our clients leading to decreased license fees and fewer add-on product sales. The Payments and Industry Products reported revenues of $522 million, down 1.3% year over year.
Operating margin came in at 28.9%, up from 27.8% in the year-ago quarter primarily due to growth in higher-margin revenues, favorable changes in the company’s business mix and operating efficiency. Earnings per share of 92 cents were in line with the Zacks Consensus Estimate. During the quarter, Fiserv repurchased 1.3 million shares. Free cash flow came in at $196 million in the quarter.
Going forward, management expects revenues to grow in the range of 0% – 2% for full year 2009. EPS is presently being projected between $3.63 and $3.68 compared to the previously provided range of $3.61 – $3.75.
Management had earlier stated that 2009 would be a challenging year for the company, as the economy will take time to recover and then grow. Technology spending across the community banking space is estimated to be weak in 2009. The Financial Institutions have been the hardest hit in this economic crisis being the originators of the same. We would like to wait for a while before turning positive on the shares of Fiserv given the challenging times the company is facing due to the economic turmoil.
Fiserv assists financial institutions and health plan administrators in managing their information systems so that they can efficiently deliver services to their customers.
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