filings.toolsFiserv 10-Q 2022-03-31
Filed 2022-04-28. 6 sections, 179K characters. Original on sec.gov · Markdown · JSON
Cover and table of contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the quarterly period ended March 31, 2022
OR
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the transition period from to
Commission File Number 1-38962
FISERV, INC.
(Exact Name of Registrant as Specified in Its Charter)
| Wisconsin | 39-1506125 | |||||||
| (State or Other Jurisdiction of Incorporation or Organization) | (I. R. S. Employer Identification No.) |
255 Fiserv Drive, Brookfield, WI 53045
(Address of Principal Executive Offices and zip code)
(262) 879-5000
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act**:**
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
| Common Stock, par value $0.01 per share | FISV | The NASDAQ Stock Market LLC | ||||||||||||
| 0.375% Senior Notes due 2023 | FISV23 | The NASDAQ Stock Market LLC | ||||||||||||
| 1.125% Senior Notes due 2027 | FISV27 | The NASDAQ Stock Market LLC | ||||||||||||
| 1.625% Senior Notes due 2030 | FISV30 | The NASDAQ Stock Market LLC | ||||||||||||
| 2.250% Senior Notes due 2025 | FISV25 | The NASDAQ Stock Market LLC | ||||||||||||
| 3.000% Senior Notes due 2031 | FISV31 | The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☒ | Accelerated filer | ☐ | |||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||||||||||
| Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of April 22, 2022, there were 646,394,065 shares of common stock, $.01 par value, of the registrant outstanding.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Fiserv, Inc.
Consolidated Statements of Income
(In millions, except per share data)
(Unaudited)
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2022 | 2021 | ||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Processing and services (1) | $ | 3,364 | $ | 3,054 | |||||||||||||||||||
| Product | 774 | 701 | |||||||||||||||||||||
| Total revenue | 4,138 | 3,755 | |||||||||||||||||||||
| Expenses: | |||||||||||||||||||||||
| Cost of processing and services | 1,436 | 1,397 | |||||||||||||||||||||
| Cost of product | 536 | 510 | |||||||||||||||||||||
| Selling, general and administrative | 1,467 | 1,373 | |||||||||||||||||||||
| Gain on sale of assets | (147) | — | |||||||||||||||||||||
| Total expenses | 3,292 | 3,280 | |||||||||||||||||||||
| Operating income | 846 | 475 | |||||||||||||||||||||
| Interest expense, net | (168) | (176) | |||||||||||||||||||||
| Other (expense) income | (4) | 21 | |||||||||||||||||||||
| Income before income taxes and income from investments in unconsolidated affiliates | 674 | 320 | |||||||||||||||||||||
| Income tax provision | (98) | (18) | |||||||||||||||||||||
| Income from investments in unconsolidated affiliates | 106 | 16 | |||||||||||||||||||||
| Net income | 682 | 318 | |||||||||||||||||||||
| Less: net income attributable to noncontrolling interests and redeemable noncontrolling interests | 13 | 14 | |||||||||||||||||||||
| Net income attributable to Fiserv, Inc. | $ | 669 | $ | 304 | |||||||||||||||||||
| Net income attributable to Fiserv, Inc. per share – basic | $ | 1.03 | $ | 0.45 | |||||||||||||||||||
| Net income attributable to Fiserv, Inc. per share – diluted | $ | 1.02 | $ | 0.45 | |||||||||||||||||||
| Shares used in computing net income attributable to Fiserv, Inc. per share: | |||||||||||||||||||||||
| Basic | 650.8 | 668.6 | |||||||||||||||||||||
| Diluted | 657.2 | 679.9 |
(1)Includes processing and other fees charged to related party investments accounted for under the equity method of $51 million and $58 million for the three months ended March 31, 2022 and 2021, respectively (see Note 18).
See accompanying notes to consolidated financial statements.
Fiserv, Inc.
Consolidated Statements of Comprehensive Income
(In millions)
(Unaudited)
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2022 | 2021 | ||||||||||||||||||||||
| Net income | $ | 682 | $ | 318 | |||||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Fair market value adjustment on cash flow hedges, net of income tax benefit (provision) of $0 million and ($0 million) | (1) | 1 | |||||||||||||||||||||
| Reclassification adjustment for net realized gains on cash flow hedges included in cost of processing and services, net of income tax provision of $0 million and $0 million | (1) | (2) | |||||||||||||||||||||
| Reclassification adjustment for net realized losses on cash flow hedges included in net interest expense, net of income tax benefit of $1 million and $1 million | 4 | 4 | |||||||||||||||||||||
| Unrealized (loss) gain on defined benefit pension plans, net of income tax benefit (provision) of $0 million and ($0 million) | (1) | 1 | |||||||||||||||||||||
| Foreign currency translation, net of income tax (see Note 12) | 87 | (162) | |||||||||||||||||||||
| Total other comprehensive income (loss) | 88 | (158) | |||||||||||||||||||||
| Comprehensive income | $ | 770 | $ | 160 | |||||||||||||||||||
| Less: net income attributable to noncontrolling interests and redeemable noncontrolling interests | 13 | 14 | |||||||||||||||||||||
| Plus: other comprehensive loss attributable to noncontrolling interests | (17) | (9) | |||||||||||||||||||||
| Comprehensive income attributable to Fiserv, Inc. | $ | 774 | $ | 155 |
See accompanying notes to consolidated financial statements.
Fiserv, Inc.
Consolidated Balance Sheets
(In millions)
(Unaudited)
| March 31, 2022 | December 31, 2021 | ||||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | 863 | $ | 835 | |||||||
| Trade accounts receivable, less allowance for doubtful accounts | 2,911 | 2,860 | |||||||||
| Prepaid expenses and other current assets | 1,429 | 1,523 | |||||||||
| Settlement assets | 13,240 | 13,652 | |||||||||
| Total current assets | 18,443 | 18,870 | |||||||||
| Property and equipment, net | 1,729 | 1,742 | |||||||||
| Customer relationships, net | 9,482 | 9,991 | |||||||||
| Other intangible assets, net | 3,960 | 4,018 | |||||||||
| Goodwill | 36,538 | 36,433 | |||||||||
| Contract costs, net | 840 | 811 | |||||||||
| Investments in unconsolidated affiliates | 2,579 | 2,561 | |||||||||
| Other long-term assets | 1,899 | 1,823 | |||||||||
| Total assets | $ | 75,470 | $ | 76,249 | |||||||
| Liabilities and Equity | |||||||||||
| Accounts payable and accrued expenses | $ | 3,327 | $ | 3,550 | |||||||
| Short-term and current maturities of long-term debt | 552 | 508 | |||||||||
| Contract liabilities | 611 | 585 | |||||||||
| Settlement obligations | 13,240 | 13,652 | |||||||||
| Total current liabilities | 17,730 | 18,295 | |||||||||
| L |
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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
This quarterly report contains “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those that express a plan, belief, expectation, estimation, anticipation, intent, contingency, future development or similar expression, and can generally be identified as forward-looking because they include words such as “believes,” “anticipates,” “expects,” “could,” “should,” or words of similar meaning. Statements that describe our future plans, objectives or goals are also forward-looking statements.
The forward-looking statements in this report involve significant risks and uncertainties, and a number of factors, both foreseen and unforeseen, that could cause actual results to differ materially from our current expectations. The factors that may affect our results include, among others, the following, many of which may continue to be amplified by the COVID-19 pandemic: the duration and intensity of the COVID-19 pandemic, including how quickly the global economy recovers from the impact of the pandemic; governmental and private sector responses to the COVID-19 pandemic and the impact of such responses on us; the impact of the COVID-19 pandemic on our employees, clients, vendors, supply chain, operations and sales; our ability to compete effectively against new and existing competitors and to continue to introduce competitive new products and services on a timely, cost-effective basis; changes in customer demand for our products and services; the ability of our technology to keep pace with a rapidly evolving marketplace; the success of our merchant alliances, some of which we do not control; the impact of a security breach or operational failure on our business including disruptions caused by other participants in the global financial system; the failure of our vendors and merchants to satisfy their obligations; the successful management of credit and fraud risks in our business and merchant alliances; changes in local, regional, national and international economic or political conditions and the impact they may have on us and our customers; the effect of proposed and enacted legislative and regulatory actions affecting us or the financial services industry as a whole; our ability to comply with government regulations and applicable card association and network rules; the protection and validity of intellectual property rights; the outcome of pending and future litigation and governmental proceedings; our ability to successfully identify, complete and integrate acquisitions, and to realize the anticipated benefits associated with the same; the impact of our strategic initiatives; our ability to attract and retain key personnel; volatility and disruptions in financial markets that may impact our ability to access preferred sources of financing and the terms on which we are able to obtain financing or increase our costs of borrowing; adverse impacts from currency exchange rates or currency controls; changes in corporate tax and interest rates; and other factors included in "Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021 and in other documents that we file with the Securities and Exchange Commission, which are available at http://www.sec.gov. You should consider these factors carefully in evaluating forward-looking statements and are cautioned not to place undue reliance on such statements, which speak only as of the date of this report. We undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this report.
Management’s discussion and analysis of financial condition and results of operations is provided as a supplement to our unaudited consolidated financial statements and accompanying notes to help provide an understanding of our financial condition, the changes in our financial condition and our results of operations. Our discussion is organized as follows:
-
Overview. This section contains background information on our company and the services and products that we provide, acquisitions and dispositions, and the trends affecting our industry in order to provide context for management’s discussion and analysis of our financial condition and results of operations.
-
Changes in critical accounting policies and estimates. This section contains a discussion of changes since our Annual Report on Form 10-K for the year ended December 31, 2021 in the accounting policies that we believe are important to our financial condition and results of operations and that require judgment and estimates on the part of management in their application.
-
Results of operations. This section contains an analysis of our results of operations presented in the accompanying unaudited consolidated statements of income by comparing the results for the three months ended March 31, 2022 to the comparable period in 2021.
-
Liquidity and capital resources. This section provides an analysis of our cash flows and a discussion of our outstanding debt at March 31, 2022.
Overview
Company Background
We are a leading global provider of payments and financial services technology solutions. We serve clients around the globe, including merchants, banks, credit unions, other financial institutions, and corporate clients. We provide account processing and digital banking solutions; card issuer processing and network services; payments; e-commerce; merchant acquiring and processing; and the Clover® cloud-based point-of-sale (“POS”) and business management platform.
We aspire to move money and information in a way that moves the world by delivering superior value for our clients through leading technology, targeted innovation and excellence in everything we do. We are focused on driving growth and creating value by assembling a high-performing and diverse team, integrating our solutions, delivering operational excellence, allocating capital in a disciplined manner, including share repurchase and merger and acquisition activity, and delivering breakthrough innovation.
Our operations are comprised of the Merchant Acceptance (“Acceptance”) segment, the Financial Technology (“Fintech”) segment and the Payments and Network (“Payments”) segment.
The businesses in our Acceptance segment provide a wide range of commerce-enabling solutions to merchants of all sizes and types around the world. These solutions include POS merchant acquiring and digital commerce services; mobile payment services; security and fraud protection products; CaratSM, our omnichannel commerce ecosystem; Clover, our cloud-based POS and business management platform, which includes a marketplace for proprietary and third-party business applications; and Clover Connect, our independent software vendor (“ISV”) platform. We distribute the products and services in the global Acceptance segment businesses through a variety of channels, including direct sales teams, strategic partnerships with agent sales forces, independent software vendors, financial institutions, and other strategic partners in the form of joint venture alliances, revenue sharing alliances, and referral agreements. Merchants, financial institutions and distribution partners in the Acceptance segment are frequently clients of our other segments.
The businesses in our Fintech segment provide financial institutions around the world with the technology solutions they need to run their operations, including products and services that enable financial institutions to process customer deposit and loan accounts and manage an institution's general ledger and central information files. As a complement to the core account processing functionality, the global Fintech segment businesses also provide digital banking, financial and risk management, professional services and consulting, item processing and source capture, and other products and services that support numerous types of financial transactions. Certain of the businesses in the Fintech segment provide products or services to corporate clients to facilitate the management of financial processes and transactions. Many of the products and services offered in the Fintech segment are integrated with products and services provided by our other segments.
The businesses in our Payments segment provide financial institutions and corporate clients around the world with the products and services required to process digital payment transactions. This includes card transactions such as debit, credit and prepaid card processing and services; a range of network services, security and fraud protection products; card production and print services. In addition, the Payments segment businesses offer non-card digital payment software and services, including bill payment, account-to-account transfers, person-to-person payments, electronic billing, and security and fraud protection products. Clients of the global Payments segment businesses reflect a wide range of industries, including merchants, distribution partners and financial institution customers in our other segments.
Corporate and Other supports the reportable segments described above, and consists of amortization of acquisition-related intangible assets, unallocated corporate expenses and other activities that are not considered when we evaluate segment performance, such as gains or losses on sales of businesses, certain assets or investments, costs associated with acquisition and divestiture activity, certain transition services revenue associated with various dispositions, and our Output Solutions postage reimbursements.
Acquisitions
We frequently review our portfolio to ensure we have the necessary business assets to execute our strategy. We expect to acquire businesses when we identify: a compelling strategic need, such as a product, service or technology that helps meet client demand; an opportunity to change industry dynamics; a way to achieve business scale; or similar considerations. We expect to divest businesses that are not in line with our market, product or financial strategies.
On November 22, 2021, we acquired BentoBox CMS, Inc. (“BentoBox”), a digital marketing and commerce platform that helps restaurants connect with their guests. BentoBox is included within the Acceptance segment and further expands our Clover dining solutions and commerce and business management capabilities. On November 15, 2021, we acquired a remaining
ownership interest in NetPay Solutions Group (“NetPay”), a multi-channel payment service provider offering a range of capabilities around onboarding, customer lifecycle, risk management and settlement to businesses of all sizes. We previously held a noncontrolling equity interest in NetPay, which was accounted for under the equity method. NetPay is included within the Acceptance segment and further expands our merchant services business. On October 1, 2021, we acquired Integrity Payments, LLC (“AIP”), an independent sales organization (“ISO”) that promotes payment processing services for merchants and is included within the Acceptance segment. On June 14, 2021, we acquired Spend Labs Inc. (“SpendLabs”), a mobile-native, cloud-based software provider of commercial card payment solutions. SpendLabs is included within the Payments segment and further expands our digital capabilities across mobile and desktop devices for small and mid-sized businesses. On May 4, 2021, we acquired Pineapple Payments Holdings, LLC (“Pineapple Payments”), an ISO that provides payment processing, proprietary technology, and payment acceptance solutions for merchants. Pineapple Payments is included within the Acceptance segment and expands the reach of our payment solutions through its technology- and relationship-led distribution channels. On March 1, 2021, we acquired Radius8, Inc. (“Radius8”), a provider of a platform that uses consumer location and other information to drive incremental merchant transactions. Radius8 is included within the Acceptance segment and enhances our ability to help merchants increase sales, expand mobile application registration and improve one-to-one target marketing. On January 22, 2021, we acquired a remaining ownership interest in Ondot Systems, Inc. (“Ondot”), a digital experience platform provider for financial institutions. We previously held a noncontrolling equity interest in Ondot, which was accounted for at cost. Ondot is included within the Payments segment and further expands our digital capabilities, enhancing our suite of integrated payments, banking and merchant solutions. We acquired these businesses for an aggregate purchase price of approximately $882 million, net of $43 million of acquired cash and the fair value of our previously held equity interests of $36 million, and including earn-out provisions estimated at an aggregate fair value of $34 million. The results of operations for these acquired businesses are included in our consolidated results from the respective dates of acquisition.
On April 1, 2022, we acquired a remaining ownership interest in Finxact, Inc. (“Finxact”), a developer of cloud-native banking solutions powering digital transformation throughout the financial services sector, for approximately $650 million. This acquisition, to be included within our Fintech segment, is expected to advance our digital banking strategy, expanding our account processing, digital, and payments solutions, and position us as a partner for clients looking to scale, accelerate and expand the digital banking experiences they deliver to their customers.
Industry Trends
The global payments landscape continues to evolve, with rapidly advancing technologies and a steady expansion of digital payments, e-commerce, and innovation in real-time payments infrastructure. Because of this growth, competition also continues to evolve. Business and consumer expectations continue to rise, with a focus on convenience and security. To meet these expectations, payments companies are focused on modernizing their technology, expanding the use of data and enhancing the customer experience.
Merchants
The rapid growth in and globalization of mobile and e-commerce, driven by consumers’ desire for simpler, more efficient shopping experiences, has created an opportunity for merchants to reach consumers in high-growth online and mobile settings, which often requires a merchant acquiring provider to enable and optimize the acceptance of payments. Merchants are demanding simpler, integrated, and modern POS systems to help manage their everyday business operations. When combined with the ever-increasing ways a consumer can pay for goods and services, merchants have sought modern POS systems to streamline this complexity. Furthermore, merchants can now search, discover, compare, purchase and even install a new POS system through direct, digital-only experiences. This direct, digital-only channel is quickly becoming a source of new merchant acquisition opportunities, especially with respect to smaller merchants.
In addition, there are numerous software-as-a-service (“SaaS”) solutions in the industry, many of which have chosen to integrate merchant acquiring within their software as a way to further monetize their client relationships. SaaS solutions that integrate payments are often referred to as ISVs, and we believe there are thousands of these potential distribution partnership opportunities available to us.
We believe that our merchant acquiring products and solutions create compelling value propositions for merchant clients of all sizes, from small and mid-sized businesses to medium-sized regional businesses to global enterprise merchants, and across all verticals. Furthermore, we believe that our sizable and diverse client base, combined with valued partnerships with merchant acquiring businesses of small, medium and large financial institutions, and non-financial institutions, gives us a solid foundation for growth.
Financial Institutions
Financial service providers regularly introduce and implement new payment, deposit, risk management, lending and investment products, and the distinctions among the products and services traditionally offered by different types of financial institutions continue to narrow as they seek to serve the same customers. At the same time, the evolving global regulatory and cybersecurity landscape has continued to create a challenging operating environment for financial institutions. These conditions are driving heightened interest in solutions that help financial institutions win and retain customers, generate incremental revenue, comply with regulations and enhance operating efficiency. Examples of these solutions include electronic payments and delivery methods such as internet, mobile and tablet banking, sometimes referred to as “digital channels,” which enable financial institutions to offer their customers an industry-leading digital banking experience.
The focus on digital channels by both financial institutions and their customers, as well as the growing volume and types of payment transactions in the marketplace, continues to elevate the data and transaction processing needs of financial institutions. We expect that financial institutions will continue to invest significant capital and human resources to process transactions, manage information, maintain regulatory compliance and offer innovative new services to their customers in this rapidly evolving and competitive environment. We anticipate that we will benefit over the long term from the trend of financial institutions moving from in-house technology to outsourced solutions as they seek to remain current on technology changes in an evolving marketplace. We believe that economies of scale in developing and maintaining the infrastructure, technology, products, services and networks necessary to be competitive in such an environment are essential to justify these investments, and we anticipate that demand for products that facilitate customer interaction with financial institutions, including a unified, seamless customer experience across mobile and online channels, will continue to increase, which we expect to create revenue opportunities for us.
In addition to the trends described above, during the past 25 years, the number of financial institutions in the United States has declined at a relatively steady rate of approximately 3% per year, primarily as a result of voluntary mergers and acquisitions. Rather than reducing the overall market, these consolidations transfer accounts among financial institutions. If a client loss occurs due to merger or acquisition, we typically receive a contract termination fee based on the size of the client and how early in the contract term the contract is terminated. These fees can vary from period to period with the variance depending on the quantum of financial institution merger activity in a given period and whether or not our clients are involved in the activity. Our focus on long-term client relationships and recurring, transaction-oriented products and services has also reduced the impact that consolidation in the financial services industry has had on us. We believe that the integration of our products and services creates a compelling value proposition for our clients by providing, among other things, new sources of revenue and opportunities to reduce their costs. Furthermore, we believe that our sizable and diverse client base, combined with our position as a leading provider of non-discretionary, recurring revenue-based products and services, gives us a solid foundation for growth.
Recent Market Conditions
Since early 2020, the world has been, and continues to be, impacted by the coronavirus (“COVID-19”) pandemic. The COVID-19 pandemic, and various measures imposed by the governments of many countries, states, cities and other geographic regions to prevent its spread, have negatively impacted, and may continue to negatively impact, global economic and market conditions, including levels of consumer and business spending. The environment surrounding COVID-19 and countermeasures taken to reduce its spread may impact our future performance and remains difficult to predict.
Beginning in 2021, we began observing increasing shortages and delays in the global supply chain for components and inputs necessary to our businesses, such as semiconductors, paper and plastic, and may experience difficulty procuring those components and inputs in the future on a timely basis or at historical prices.
Changes in Critical Accounting Policies and Estimates
Our consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States, which require management to make estimates, judgments and assumptions that affect the reported amount of assets, liabilities, revenue and expenses. In our Annual Report on Form 10-K for the year ended December 31, 2021, we identified our critical accounting policies and estimates. We continually evaluate the accounting policies and estimates that we use to prepare our consolidated financial statements, including for recently adopted accounting pronouncements, and base our estimates on historical experience and assumptions that we believe are reasonable in light of current circumstances. Actual amounts and results could differ materially from these estimates. There have been no material changes to our critical accounting policies and estimates from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021.
Results of Operations
The following table presents certain amounts included in our consolidated statements of income, the relative percentage that those amounts represent to revenue and the change in those amounts from year to year. This information should be read together with the unaudited consolidated financial statements and accompanying notes. The unaudited financial results presented below have been affected by acquisitions, dispositions, and foreign currency fluctuations.
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||
| 2022 | 2021 | Percentage of Revenue (1) | Increase (Decrease) | ||||||||||||||||||||||||||||||||
| (In millions) | 2022 | 2021 | $ | % | |||||||||||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||||||||||||||
| Processing and services | $ | 3,364 | $ | 3,054 | 81.3 | % | 81.3 | % | $ | 310 | 10 | % | |||||||||||||||||||||||
| Product | 774 | 701 | 18.7 | % | 18.7 | % | 73 | 10 | % | ||||||||||||||||||||||||||
| Total revenue | 4,138 | 3,755 | 100.0 | % | 100.0 | % | 383 | 10 | % | ||||||||||||||||||||||||||
| Expenses: | |||||||||||||||||||||||||||||||||||
| Cost of processing and services | 1,436 | 1,397 | 42.7 | % | 45.7 | % | 39 | 3 | % | ||||||||||||||||||||||||||
| Cost of product | 536 | 510 | 69.3 | % | 72.8 | % | 26 | 5 | % | ||||||||||||||||||||||||||
| Sub-total | 1,972 | 1,907 | 47.7 | % | 50.8 | % | 65 | 3 | % | ||||||||||||||||||||||||||
| Selling, general and administrative | 1,467 | 1,373 | 35.5 | % | 36.6 | % | 94 | 7 | % | ||||||||||||||||||||||||||
| Gain on sale of assets | (147) | — | (3.6) | % | — | % | (147) | n/m | |||||||||||||||||||||||||||
| Total expenses | 3,292 | 3,280 | 79.6 | % | 87.4 | % | 12 | — | % | ||||||||||||||||||||||||||
| Operating income | 846 | 475 | 20.5 | % | 12.6 | % | 371 | 78 | % | ||||||||||||||||||||||||||
| Interest expense, net | (168) | (176) | (4.1) | % | (4.7) | % | (8) | (5) | % | ||||||||||||||||||||||||||
| Other (expense) income | (4) | 21 | (0.1) | % | 0.6 | % | (25) | n/m | |||||||||||||||||||||||||||
| Income before income taxes and income from investments in unconsolidated affiliates | 674 | 320 | 16.3 | % | 8.5 | % | 354 | 111 | % | ||||||||||||||||||||||||||
| Income tax provision | (98) | (18) | (2.4) | % | (0.5) | % | 80 | n/m | |||||||||||||||||||||||||||
| Income from investments in unconsolidated affiliates | 106 | 16 | 2.6 | % | 0.4 | % | 90 | n/m | |||||||||||||||||||||||||||
| Net income | 682 | 318 | 16.5 | % | 8.5 | % | 364 | 114 | % | ||||||||||||||||||||||||||
| Less: net income attributable to noncontrolling interests | 13 | 14 | 0.3 | % | 0.4 | % | (1) | (7) | % | ||||||||||||||||||||||||||
| Net income attributable to Fiserv, Inc. | $ | 669 | $ | 304 | 16.2 | % | 8.1 | % | $ | 365 | 120 | % | |||||||||||||||||||||||
(1)Percentage of revenue is calculated as the relevant revenue, expense or income amount divided by total revenue, except for cost of processing and services and cost of product amounts, which are divided by the related component of revenue.
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||||||||
| (In millions) | Acceptance | Fintech | Payments | Corporate and Other | Total | |||||||||||||||||||||||||||||||||||||||
| Total revenue: | ||||||||||||||||||||||||||||||||||||||||||||
| 2022 | $ | 1,653 | $ | 778 | $ | 1,462 | $ | 245 | $ | 4,138 | ||||||||||||||||||||||||||||||||||
| 2021 | 1,397 | 736 | 1,405 | 217 | 3,755 | |||||||||||||||||||||||||||||||||||||||
| Revenue growth | $ | 256 | $ | 42 | $ | 57 | $ | 28 | $ | 383 | ||||||||||||||||||||||||||||||||||
| Revenue growth percentage | 18 | % | 6 | % | 4 | % | 10 | % | ||||||||||||||||||||||||||||||||||||
| Operating income (loss): | ||||||||||||||||||||||||||||||||||||||||||||
| 2022 | $ | 470 | $ | 275 | $ | 618 | $ | (517) | $ | 846 | ||||||||||||||||||||||||||||||||||
| 2021 | 387 | 246 | 578 | (736) | 475 | |||||||||||||||||||||||||||||||||||||||
| Operating income growth | $ | 83 | $ | 29 | $ | 40 | $ | 219 | $ | 371 | ||||||||||||||||||||||||||||||||||
| Operating income growth percentage | 21 | % | 12 | % | 7 | % | 78 | % | ||||||||||||||||||||||||||||||||||||
| Operating margin: | ||||||||||||||||||||||||||||||||||||||||||||
| 2022 | 28.4 | % | 35.4 | % | 42.3 | % | 20.5 | % | ||||||||||||||||||||||||||||||||||||
| 2021 | 27.7 | % | 33.4 | % | 41.1 | % | 12.6 | % | ||||||||||||||||||||||||||||||||||||
| Operating margin growth (1) | 70 | bps | 200 | bps | 120 | bps | 790 | bps | ||||||||||||||||||||||||||||||||||||
(1)Represents the basis point growth or decline in operating margin.
Operating margin percentages are calculated using actual, unrounded amounts.
Total Revenue
Total revenue increased $383 million, or 10%, in the first quarter of 2022 compared to 2021. The revenue increase was driven by higher processing volumes and product sales across all of our business segments.
Revenue in our Acceptance segment increased $256 million, or 18%, in the first quarter of 2022 compared to 2021. The revenue increase was driven by higher global merchant acquiring payment and transaction volumes including an increase in global accounts and locations, from small and mid-sized businesses to enterprise merchants and independent software vendors.
Revenue in our Fintech segment increased $42 million, or 6%, in the first quarter of 2022 compared to 2021. The revenue increase was driven primarily by higher processing revenue across our Fintech businesses, while net license and termination fee revenue contributed 1% to segment revenue growth in the first quarter of 2022 compared to 2021.
Revenue in our Payments segment increased $57 million, or 4%, in the first quarter of 2022 compared to 2021. Payments segment revenue growth was driven by revenue contributions of 2% from our debit processing business and 1% from our credit processing business, primarily attributable to increased transaction volumes and accounts. Increased volumes also drove favorable revenue growth across our remaining Payments segment businesses, partially offset by a decrease in our prepaid business in the first quarter of 2022 compared to 2021.
Revenue at Corporate and Other increased $28 million, or 13%, in the first quarter of 2022 compared to 2021, primarily due to increased postage revenue.
Total Expenses
Total expenses in the first quarter of 2022 were relatively consistent with the comparable period in 2021. Total expenses as a percentage of total revenue decreased 780 basis points to 79.6% in the first quarter of 2022 compared to 2021. Total expenses as a percentage of total revenue were favorably impacted in the first quarter of 2022 by operating leverage accompanying scalable revenue growth, a $103 million reduction in acquisition and integration related expenses and a $147 million pre-tax gain associated with the sale of certain merchant contracts of a joint venture.
Cost of processing and services as a percentage of processing and services revenue decreased to 42.7% in the first quarter of 2022 compared to 45.7% in the first quarter of 2021. Cost of processing and services as a percentage of processing and services revenue was favorably impacted in the first quarter of 2022 by a reduction in acquisition and integration related expenses of approximately 200 basis points, as well as strong operating leverage across our businesses.
Cost of product as a percentage of product revenue decreased to 69.3% in the first quarter of 2022 compared to 72.8% in the first quarter of 2021. The cost of product as a percentage of product revenue improved in the first quarter of 2022 as a result of revenue mix, including increased hardware revenue.
Selling, general and administrative expenses as a percentage of total revenue decreased to 35.5% in the first quarter of 2022 compared to 36.6% in the first quarter of 2021. The decrease in selling, general and administrative expenses as a percentage of total revenue in the first quarter of 2022 was primarily due to a reduction in acquisition and integration related expenses.
The $147 million pre-tax gain on sale of assets in the first quarter of 2022 resulted from the sale of certain merchant contracts in conjunction with the mutual termination of one of our merchant alliance joint ventures.
Operating Income and Operating Margin
Total operating income increased $371 million, or 78%, in the first quarter of 2022 compared to 2021. Total operating margin increased 790 basis points to 20.5% in the first quarter of 2022 compared to 2021. Total operating income and total operating margin benefited from revenue growth in the first quarter of 2022, along with a reduction in acquisition and integration related expenses. Total operating income and total operating margin were also favorably impacted by a $147 million pre-tax gain on the sale of certain merchant contracts of a joint venture in the first quarter of 2022.
Operating income in our Acceptance segment increased $83 million, or 21%, in the first quarter of 2022 compared to 2021. Operating margin increased 70 basis points to 28.4% in the first quarter of 2022 compared to 2021. Acceptance segment operating income and margin growth in the first quarter of 2022 was primarily due to scalable revenue growth.
Operating income in our Fintech segment increased $29 million, or 12%, in the first quarter of 2022 compared to 2021. Operating margin increased 200 basis points to 35.4% in the first quarter of 2022 compared to 2021. Operating income and margin improvement in the first quarter of 2022 was favorably impacted by expense management initiatives along with approximately 100 basis points from a net increase in license and termination fee revenue.
Operating income in our Payments segment increased $40 million, or 7%, in the first quarter of 2022 compared to 2021. Operating margin increased 120 basis points to 42.3% in the first quarter of 2022 compared to 2021. Payments segment operating income and margin growth in the first quarter of 2022 was due to scalable revenue growth along with a reduction in lower margin revenue in our prepaid business.
The operating loss in Corporate and Other decreased $219 million in the first quarter of 2022 compared to 2021. Corporate and Other was favorably impacted by a reduction in acquisition and integration related expenses and a $147 million pre-tax gain associated with the sale of certain merchant contracts of a joint venture.
Interest Expense, Net
Interest expense, net decreased $8 million, or 5%, in the first quarter of 2022 compared to 2021 primarily due to lower-rate commercial paper borrowings.
Other (Expense) Income
Other (expense) income decreased $25 million in the first quarter of 2022 compared to 2021. Other (expense) income includes net foreign currency transaction gains and losses, gains or losses from a change in fair value of investments in certain equity securities, and amounts related to debt guarantee arrangements of certain joint ventures. Net foreign currency transaction (losses) gains were ($9) million and $6 million in the first quarter of 2022 and 2021, respectively. Other (expense) income in the first quarter of 2021 also included $12 million related to a pre-tax gain on the remeasurement of a previously held investment in Ondot to fair value upon acquiring the remaining ownership interest in the entity.
Income Tax Provision
Income tax provision as a percentage of income before income taxes and income from investments in unconsolidated affiliates was 14.5% and 5.6% in the first quarter of 2022 and 2021, respectively. The effective income tax rates for the three months ended March 31, 2022 and 2021 include discrete tax benefits from subsidiary restructurings and equity compensation related tax benefits.
Income from Investments in Unconsolidated Affiliates
Our share of net income from affiliates accounted for using the equity method of accounting is reported as income from investments in unconsolidated affiliates and the related tax expense is reported within the income tax provision in the consolidated statements of income. Income from investments in unconsolidated affiliates, including acquired intangible asset
amortization from valuations in purchase accounting, was $106 million and $16 million in the first quarter of 2022 and 2021, respectively*.* Income from investments in unconsolidated affiliates in the first quarter of 2022 includes pre-tax gains totaling $91 million related to certain unconsolidated affiliate transactions. Income from investments in unconsolidated affiliates in the first quarter of 2021 included a $28 million pre-tax gain resulting from the dilution of our ownership interest in connection with the Tegra118 merger with a third party.
Net Income Attributable to Noncontrolling Interests
Net income attributable to noncontrolling interests and redeemable noncontrolling interests relates to the minority partners’ share of the net income in our consolidated subsidiaries. Net income attributable to noncontrolling interests, including acquired intangible asset amortization from valuations in purchase accounting, was $13 million and $14 million in the first quarter of 2022 and 2021, respectively.
Net Income Per Share – Diluted
Net income attributable to Fiserv, Inc. per share-diluted was $1.02 and $0.45 in the first quarter of 2022 and 2021, respectively. Net income attributable to Fiserv, Inc. per share-diluted increased in the first quarter of 2022 primarily due to improved operating results, a gain on the sale of certain merchant contracts of a joint venture and gains on certain unconsolidated affiliate transactions.
Liquidity and Capital Resources
General
Our primary liquidity needs in the ordinary course of business are to: (i) fund normal operating expenses; (ii) meet the interest and principal requirements of our outstanding indebtedness, including finance leases; and (iii) fund capital expenditures and operating lease payments. We believe these needs will be satisfied in both the short term and the long term using cash flow generated by our operations, along with our cash and cash equivalents of $863 million, proceeds from the issuance of U.S. and Euro commercial paper, and available capacity under our revolving credit facility of $1.6 billion (net of $1.9 billion of capacity designated for outstanding borrowings under our commercial paper programs and letters of credit) at March 31, 2022.
The following table summarizes our operating cash flow and capital expenditure amounts for the three months ended March 31, 2022 and 2021, respectively:
| Three Months Ended March 31, | Increase (Decrease) | ||||||||||||||||||||||
| (In millions) | 2022 | 2021 | $ | % | |||||||||||||||||||
| Net income | $ | 682 | $ | 318 | $ | 364 | |||||||||||||||||
| Depreciation and amortization | 810 | 810 | — | ||||||||||||||||||||
| Share-based compensation | 61 | 66 | (5) | ||||||||||||||||||||
| Deferred income taxes | (183) | (70) | (113) | ||||||||||||||||||||
| Gain on sale of assets | (147) | — | (147) | ||||||||||||||||||||
| Income from investments in unconsolidated affiliates | (106) | (16) | (90) | ||||||||||||||||||||
| Distributions from unconsolidated affiliates | 19 | 3 | 16 | ||||||||||||||||||||
| Non-cash impairment charges | — | 6 | (6) | ||||||||||||||||||||
| Net changes in working capital and other | (321) | (165) | (156) | ||||||||||||||||||||
| Operating cash flow | $ | 815 | $ | 952 | $ | (137) | (14) | % | |||||||||||||||
| Capital expenditures, including capitalized software and other intangibles | $ | 331 | $ | 234 | $ | 97 | 41 | % | |||||||||||||||
Our net cash provided by operating activities, or operating cash flow, was $815 million in the first three months of 2022, a decrease of 14% compared with $952 million in the first three months of 2021. This decrease was primarily attributable to unfavorable fluctuations in net working capital, including timing of vendor payments, partially offset by improved operating results, exclusive of the gain on the sale of certain assets.
Our current policy is to use our operating cash flow primarily to fund capital expenditures, share repurchases, acquisitions and to repay debt rather than to pay dividends. Our capital expenditures were approximately 8% and 6% of our total revenue for the first three months of 2022 and 2021, respectively.
Share Repurchases
We repurchased $500 million and $612 million of our common stock during the first three months of 2022 and 2021, respectively. As of March 31, 2022, we had approximately 37.2 million shares remaining under our current repurchase authorization. Shares repurchased are generally held for issuance in connection with our equity plans.
Acquisitions and Dispositions
Acquisitions
On April 1, 2022, we acquired a remaining ownership interest in Finxact for approximately $650 million. We funded this acquisition by utilizing a combination of available cash, commercial paper notes and existing availability under our revolving credit facility.
In November 2021 we acquired BentoBox, in October 2021 we acquired AIP, in June 2021 we acquired SpendLabs, in May 2021 we acquired Pineapple Payments, and in March 2021 we acquired Radius8. Additionally, in November 2021, we acquired a remaining ownership interest in NetPay, and in January 2021, we acquired a remaining ownership interest in Ondot, in which we previously held noncontrolling equity interests. We acquired these businesses for an aggregate purchase price of approximately $882 million, net of $43 million of acquired cash and the fair value of our previously held equity interests of $36 million, and including earn-out provisions estimated at an aggregate fair value of $34 million. We funded these acquisitions by utilizing a combination of available cash, commercial paper notes and existing availability under our revolving credit facility. The results of operations for these acquired businesses are included in our consolidated results from the respective dates of acquisition.
Dispositions
In March 2022, we mutually agreed to terminate a merchant alliance joint venture with a minority partner. Upon termination of the joint venture, we received proceeds of $175 million from the sale of certain merchant contracts.
We previously maintained a noncontrolling interest in Tegra118, LLC (“Tegra118”) which was accounted for using the equity method of accounting. In February 2021, Tegra118 completed a merger with a third party, resulting in a dilution of our ownership interest in the combined new entity, Wealthtech Holdings, LLC, which was subsequently renamed as InvestCloud. In connection with the transaction, we made an additional capital contribution, funded under our revolving credit facility, of $200 million into the combined entity and, in June 2021, we sold our entire ownership interest in InvestCloud for $466 million. The net proceeds from the sale were primarily used to pay down outstanding borrowings on our term loan facility.
Indebtedness
| (In millions) | March 31, 2022 | December 31, 2021 | |||||||||
| Short-term and current maturities of long-term debt: | |||||||||||
| Foreign lines of credit | $ | 261 | $ | 240 | |||||||
| Finance lease and other financing obligations | 291 | 268 | |||||||||
| Total short-term and current maturities of long-term debt | $ | 552 | $ | 508 | |||||||
| Long-term debt: | |||||||||||
| 3.500% senior notes due October 2022 | $ | 700 | $ | 700 | |||||||
| 0.375% senior notes due July 2023 (Euro-denominated) | 555 | 566 | |||||||||
| 3.800% senior notes due October 2023 | 1,000 | 1,000 | |||||||||
| 2.750% senior notes due July 2024 | 2,000 | 2,000 | |||||||||
| 3.850% senior notes due June 2025 | 900 | 900 | |||||||||
| 2.250% senior notes due July 2025 (British Pound-denominated) | 687 | 705 | |||||||||
| 3.200% senior notes due July 2026 | 2,000 | 2,000 | |||||||||
| 2.250% senior notes due June 2027 | 1,000 | 1,000 | |||||||||
| 1.125% senior notes due July 2027 (Euro-denominated) | 555 | 566 | |||||||||
| 4.200% senior notes due October 2028 | 1,000 | 1,000 | |||||||||
| 3.500% senior notes due July 2029 | 3,000 | 3,000 | |||||||||
| 2.650% senior notes due June 2030 | 1,000 | 1,000 | |||||||||
| 1.625% senior notes due July 2030 (Euro-denominated) | 555 | 566 | |||||||||
| 3.000% senior notes due July 2031 (British Pound-denominated) | 687 | 705 | |||||||||
| 4.400% senior notes due July 2049 | 2,000 | 2,000 | |||||||||
| U.S. commercial paper notes | 685 | 916 | |||||||||
| Euro commercial paper notes | 1,165 | 905 | |||||||||
| Revolving credit facility | — | 97 | |||||||||
| Receivable securitized loan | 483 | 500 | |||||||||
| Term loan facility | 200 | 200 | |||||||||
| Unamortized discount and deferred financing costs | (119) | (125) | |||||||||
| Finance lease and other financing obligations | 465 | 528 | |||||||||
| Total long-term debt | $ | 20,518 | $ | 20,729 | |||||||
At March 31, 2022, our debt consisted primarily of $17.6 billion of fixed-rate senior notes and $1.8 billion of outstanding borrowings under our commercial paper programs. Interest on our U.S. dollar-denominated senior notes is paid semi-annually, while interest on our Euro and British Pound-denominated senior notes is paid annually. Interest on our revolving credit facility and commercial paper notes is generally paid weekly, or more frequently on occasion, and interest on our term loan is paid monthly. Outstanding borrowings under our 3.50% senior notes due in October 2022, the receivable securitized loan, which matures in July 2022, and U.S and Euro commercial paper programs are classified in the consolidated balance sheet as long-term, as we have the intent to refinance these borrowings on a long-term basis through the continued issuance of new commercial paper notes upon maturity, and we also have the ability to refinance such borrowings under our revolving credit facility.
The indentures governing our senior notes contain covenants that, among other matters, limit (i) our ability to consolidate or merge with or into, or convey, transfer or lease all or substantially all of our properties and assets to, another person, (ii) our and certain of our subsidiaries’ ability to create or assume liens, and (iii) our and certain of our subsidiaries’ ability to engage in sale and leaseback transactions. We may, at our option, redeem the senior notes, in whole or in part, at any time prior to the applicable maturity date.
The revolving credit facility and term loan facility contain various restrictions and covenants that require us, among other things, to (i) limit our consolidated indebtedness as of the end of each fiscal quarter to no more than three and one-half times our consolidated net earnings before interest, taxes, depreciation, amortization, non-cash charges and expenses and certain other
adjustments (“EBITDA”) during the period of four fiscal quarters then ended, subject to certain exceptions, and (ii) maintain EBITDA of at least three times our consolidated interest expense as of the end of each fiscal quarter for the period of four fiscal quarters then ended.
During the first three months of 2022, we were in compliance with all financial debt covenants. Our ability to meet future debt covenant requirements will depend on our continued ability to generate earnings and cash flows. We expect to remain in compliance with all terms and conditions associated with our outstanding debt, including financial debt covenants.
Variable Rate Debt
Our variable rate debt consisted of the following at March 31, 2022:
| (In millions) | Maturity | Weighted-Average Interest Rate | Outstanding Borrowings | ||||||||||||||
| Foreign lines of credit | n/a | 24.16% | $ | 261 | |||||||||||||
| U.S. commercial paper notes | various | 0.75% | 685 | ||||||||||||||
| Euro commercial paper notes | various | (0.30%) | 1,165 | ||||||||||||||
| Receivable securitized loan | July 2022 | 1.30% | 483 | ||||||||||||||
| Term loan facility | July 2024 | 1.70% | 200 | ||||||||||||||
| Total variable rate debt | $ | 2,794 | |||||||||||||||
We maintain short-term lines of credit with foreign banks and alliance partners primarily to fund settlement activity. These arrangements are primarily associated with our international operations and are in various functional currencies, the most significant of which is the Argentine peso.
We maintain U.S. and Euro unsecured commercial paper programs with various maturities generally ranging from one day to four months. Outstanding borrowings under our commercial paper programs bear interest based on the prevailing rates at the time of issuance.
We maintain an amended and restated revolving credit facility with aggregate commitments available for $3.5 billion of total capacity. U.S. dollar borrowings under the amended and restated revolving credit facility bear interest at a variable rate based on LIBOR, typically at the overnight or 1-month rates, or a base rate, plus, in each case, a specified margin based on our long-term debt rating in effect from time to time. Foreign currency borrowings under the amended and restated revolving credit facility bear interest at a variable rate based on a benchmark applicable to the relevant currency, plus, in each case, a specified margin based on our long-term debt rating in effect from time to time. There are no significant commitment fees and no compensating balance requirements on the revolving credit facility.
First Data Receivables, LLC (“FDR”), a consolidated wholly-owned subsidiary, is a party to certain receivables financing arrangements, including an agreement (“Receivables Financing Agreement”) with certain financial institutions and other persons from time to time party thereto as lenders and group agents. Pursuant to the Receivables Financing Agreement, certain of our wholly-owned subsidiaries have agreed to transfer and contribute receivables to FDR, and FDR may borrow funds secured by liens on those receivables. FDR’s assets are not available to satisfy the obligations of any other of our entities or affiliates, and FDR’s creditors would be entitled, upon its liquidation, to be satisfied out of FDR’s assets prior to any assets or value in FDR becoming available to us. FDR held $1.0 billion in receivables as part of the securitization program, and utilized the receivables as collateral in borrowings of $483 million at March 31, 2022. Outstanding borrowings bear interest at a variable rate based on one-month LIBOR plus a specified margin. At March 31, 2022, the collateral capacity under the Receivables Financing Agreement was $770 million, and the maximum borrowing capacity was $500 million.
We maintain a term loan credit agreement with a syndicate of financial institutions. Outstanding borrowings under the term loan bear interest at a variable rate based on one-month LIBOR or a base rate, plus, in each case, a specified margin based on our long-term debt rating in effect from time to time.
Cash and Cash Equivalents
Investments, exclusive of settlement assets, with original maturities of three months or less that are readily convertible to cash are considered to be cash equivalents as reflected within our consolidated balance sheets. At March 31, 2022 and December 31, 2021, we held $863 million and $835 million in cash and cash equivalents, respectively.
The table below details the cash and cash equivalents at:
| March 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
| (In millions) | Domestic | International | Total | Domestic | International | Total | |||||||||||||||||||||||||||||
| Available | $ | 141 | $ | 219 | $ | 360 | $ | 180 | $ | 221 | $ | 401 | |||||||||||||||||||||||
| Unavailable (1) | 179 | 324 | 503 | 138 | 296 | 434 | |||||||||||||||||||||||||||||
| Total | $ | 320 | $ | 543 | $ | 863 | $ | 318 | $ | 517 | $ | 835 |
(1)Represents cash held by our joint ventures that is not available to fund operations outside of those entities unless the board of directors of the relevant entity declares a dividend, as well as cash held by other entities that are subject to foreign exchange controls in certain countries or regulatory capital requirements.
Impact of COVID-19 Pandemic
The COVID-19 pandemic has created significant uncertainty as to general global economic and market conditions. We believe we have adequate capital resources and sufficient access to external financing sources to satisfy our current and reasonably anticipated requirements for funds to conduct our operations and meet other needs in the ordinary course of our business. However, as the impact of the pandemic on the economy and our operations further evolves, we will continue to assess our liquidity needs.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk refers to the risk that a change in the level of one or more market prices, interest rates, currency exchange rates, indices, correlations or other market factors, such as liquidity, will result in losses for a certain financial instrument or group of financial instruments. We are exposed to certain market risks, primarily from fluctuations in interest rates and foreign currency exchange rates. Our senior management actively monitors these risks.
Additional information about market risks to which we are exposed, including discussion of risks and potential risks of the COVID-19 pandemic on our business, is included within Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2021. There were no significant changes to our quantitative and qualitative analyses about market risk during the three months ended March 31, 2022.
Item 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”), our management, with the participation of our chief executive officer and chief financial officer, evaluated the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of March 31, 2022.
Changes in Internal Control Over Financial Reporting
There was no change in internal control over financial reporting that occurred during the three months ended March 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the normal course of business, we or our subsidiaries are named as defendants in lawsuits in which claims are asserted against us. In the opinion of management, the liabilities, if any, which may ultimately result from such lawsuits are not expected to have a material adverse effect on our consolidated financial statements.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The table below sets forth information with respect to purchases made by or on behalf of us or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Exchange Act) of shares of our common stock during the three months ended March 31, 2022:
| Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1) | |||||||||||||||||||
| January 1-31, 2022 | — | $ | — | — | 42,343,900 | ||||||||||||||||||
| February 1-28, 2022 | 738,000 | 96.02 | 738,000 | 41,605,900 | |||||||||||||||||||
| March 1-31, 2022 | 4,400,800 | 97.59 | 4,400,800 | 37,205,100 | |||||||||||||||||||
| Total | 5,138,800 | 5,138,800 |
(1)On November 19, 2020, our board of directors authorized the purchase of up to 60.0 million shares of our common stock. This authorization does not expire.
Item 6. EXHIBITS
The exhibits listed in the accompanying exhibit index are filed as part of this Quarterly Report on Form 10-Q.
Exhibit Index
- Filed with this quarterly report on Form 10-Q are the following documents formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Consolidated Statements of Income for the three months ended March 31, 2022 and 2021, (ii) the Consolidated Statements of Comprehensive Income for the three months ended March 31, 2022 and 2021, (iii) the Consolidated Balance Sheets at March 31, 2022 and December 31, 2021, (iv) the Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021, and (v) Notes to Consolidated Financial Statements.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| FISERV, INC. | ||||||||||||||
| Date: | April 28, 2022 | By: | /s/ Robert W. Hau | |||||||||||
| Robert W. Hau | ||||||||||||||
| Chief Financial Officer | ||||||||||||||
| Date: | April 28, 2022 | By: | /s/ Kenneth F. Best | |||||||||||
| Kenneth F. Best | ||||||||||||||
| Chief Accounting Officer |