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, outlook, 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, could cause actual results to differ materially from our current expectations. The factors that may affect our results include, among others, the following: 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; losses due to chargebacks, refunds or returns as a result of fraud or the failure of our vendors and merchants to satisfy their obligations; changes in local, regional, national and international economic or political conditions, including those resulting from heightened inflation, rising interest rates, a recession, bank failures, or intensified international hostilities, and the impact they may have on us and our employees, clients, vendors, supply chain, operations and sales; 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 identified in "Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, 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 products and services 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, 2022 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 and nine months ended September 30, 2023 to the comparable period in 2022.

• Liquidity and capital resources. This section provides an analysis of our cash flows and a discussion of our outstanding debt at September 30, 2023.

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. Our purpose is to deliver 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 and serve merchants of all sizes around the world. These solutions include merchant acquiring and digital commerce services; mobile payment services; security and fraud protection products; Clover, our cloud-based POS and integrated commerce operating system for small and mid-sized businesses (“SMBs”) and independent software vendors (“ISVs”); and CaratSM, our integrated operating system for large businesses. We distribute the products and services in the Acceptance segment businesses through a variety of channels, including direct sales teams, strategic partnerships with agent sales forces, ISVs, 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 Fintech segment businesses also provide digital banking, financial and risk management, professional services and consulting, check processing, 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 and public sector clients 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; and 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 Payments segment businesses reflect a wide range of industries around the world, 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 services revenue associated with various dispositions; and our Output Solutions postage reimbursements.

Acquisitions and Dispositions

We frequently review our businesses to ensure we have the necessary 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 that enables competition and operational efficiency; or similar considerations. We expect to divest businesses that are not in line with our market, product or financial strategies. The results of operations for the following acquired and divested businesses are included in our consolidated results from the respective dates of acquisition and through the respective dates of disposition.

Acquisitions of Businesses

On December 29, 2022, we acquired OrangeData S.A. (“Yacaré”), an Argentina-based payment service provider that enables customers to transact at merchant locations using QR codes. Yacaré is included within the Acceptance segment and enhances our instant payment transaction capabilities. On December 20, 2022, we acquired Merchant One, Inc. (“Merchant One”), an independent sales organization (“ISO”) focused on acquiring merchants in the restaurant, retail and e-commerce industries using an innovative mix of direct and digital marketing strategies. Merchant One is included within the Acceptance segment and enhances our merchant distribution and sales force channels. On September 1, 2022, we acquired NexTable, Inc.

(“NexTable”), a provider of cloud-based reservation and table management solutions for restaurants. NexTable is included within the Acceptance segment and expands our end-to-end restaurant solutions. On June 1, 2022, we acquired The LR2 Group, LLC (“City POS”), an ISO that promotes payment processing services and facilitates the sale of POS equipment for merchants. City POS is included within the Acceptance segment and expands our merchant services business. On April 1, 2022, we acquired the remaining majority controlling ownership interest in Finxact, Inc. (“Finxact”), a developer of cloud-native banking solutions powering digital transformation throughout the financial services sector. Finxact is included within the Fintech segment and advances our digital banking strategy, expanding our account processing, digital, and payments solutions. We acquired these businesses in 2022 for an aggregate purchase price of $994 million, net of $28 million of acquired cash, and including earn-out provisions estimated at a fair value of $6 million.

Dispositions of Businesses

On July 25, 2023, we sold our financial reconciliation business, which was reported within the Fintech segment, for cash proceeds of $232 million, subject to final net working capital adjustments. We recognized a pre-tax gain of $177 million on the sale during the three months ended September 30, 2023.

On October 17, 2022, we sold Fiserv Costa Rica, S.A. and our Systems Integration Services (“SIS”) operations, which provides information technology engineering services in the United States (“U.S.”) and India, to a single buyer. Fiserv Costa Rica, S.A. and SIS were reported primarily within the Fintech segment. On September 30, 2022, we sold our Korea operations, which were reported within the Acceptance segment. We sold these operations in 2022 for total consideration of $99 million and recognized an aggregate net pre-tax loss on the sales of $76 million. During the first nine months of 2023, we recognized a pre-tax loss of $3 million associated with final working capital adjustments related to the disposition of Fiserv Costa Rica, S.A.

Other Transactions

On September 25, 2023, we acquired the remaining 49% ownership interest in European Merchant Services B.V., a Netherlands-based merchant acceptance business, for $56 million. We previously held a majority controlling financial interest in this subsidiary, which continues to be consolidated and reported within the Acceptance segment.

Effective March 2022, we mutually agreed with a minority partner to terminate one of our merchant alliance joint ventures. In conjunction with such termination, the joint venture minority partner elected to exercise its option to purchase certain additional merchant contracts of the joint venture for $175 million, resulting in the recognition of a pre-tax gain of $147 million during the first nine months of 2022.

Industry Trends

The global payments landscape continues to evolve, with rapidly advancing technologies and a steady expansion of digital payments, e-commerce and real-time payments infrastructure. Because of this growth, competition also continues to intensify. Business and consumer expectations continue to rise, with a focus on speed, convenience, choice 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 nearly anywhere, through any device, which often requires a merchant acquiring provider to enable and optimize the acceptance of payments. Merchants are demanding simpler, integrated and flexible systems to accept payments and 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 systems to streamline the complexity. Furthermore, merchants can now search, discover, compare, purchase and even install a new system through direct, digital-only experiences. This direct, digital-only channel is a source of new merchant acquisition opportunities, especially with respect to smaller merchants.

Additionally, there are numerous software-as-a-service (“SaaS”) solution providers in the industry, many of which have chosen to integrate merchant acquiring into their software as a way to generate revenue from existing client relationships. Such providers are typically 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 financial and non-financial institutions of all sizes, gives us a solid foundation for growth.

Financial Institutions and Other Financial Technology Providers

Financial services 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 and other financial technology providers 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 revenue, comply with regulations and enhance operating efficiency. In addition, the focus on the customer experience, including through mobile and online engagement, 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 and other financial technology providers 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.

The number of financial institutions in the U.S. has declined at a relatively steady rate, 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 depending on the level of financial institution merger activity and whether our clients are involved. 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

Global macroeconomic conditions, including rising interest rates, inflation, bank failures, disruptions in the global supply chain, the effects of international hostilities and regulations restricting trade or impacting our ability to offer products or services, could have a material adverse effect on our business, results of operations and financial condition. While recent bank failures created uncertainty in the global financial markets, they did not have a material impact on our operating results. However, future bank failures could impact our receivable collections and cash flows or affect our ability to find merchant alliance partners. In addition, in recent years, we have observed increased 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. We continue to monitor and actively manage our business in response to these unpredictable geopolitical and market conditions, as they may adversely impact our operations and financial results.

In addition, our operating results in certain foreign countries in which we operate may be adversely impacted by fluctuations in exchange rates for currencies other than the U.S. dollar, including the Euro, British pound sterling and Argentine peso. The strengthening of the U.S. dollar against certain foreign currencies in countries in which we operate would negatively impact our revenue and earnings. We also have exposure to risks related to currency devaluation in certain countries, which may negatively impact our international operating results if there is a prolonged devaluation of local currencies relative to the U.S. dollar or if the economic conditions in these countries decline. While the majority of our revenue is earned domestically, we continually monitor the foreign exchange rate environment in an effort to manage these risks.

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 U.S., 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, 2022, 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. For example, we estimate the fair values of identifiable assets acquired and liabilities assumed in connection with acquisitions and may record purchase accounting adjustments during the measurement period, which may be up to one year from the acquisition date. Additionally, we review the carrying value of goodwill for impairment by comparing the estimated fair value of our reporting units to their carrying values. Determining the fair value of a reporting unit involves judgement and the use of significant estimates and assumptions, which include assumptions regarding the revenue growth rates and operating margins used to calculate estimated future cash flows, risk-adjusted discount rates and future economic and market conditions. 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, 2022.

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 September 30,
			2023						2022						Percentage of Revenue (1)												Increase (Decrease)
(In millions)						2023						2022						$						%
Revenue:
Processing and services			$	4,008					$	3,678					82.2		%				81.4		%				$	330					9		%
Product			865						840						17.8		%				18.6		%				25						3		%
Total revenue			4,873						4,518						100.0		%				100.0		%				355						8		%
Expenses:
Cost of processing and services			1,311						1,443						32.7		%				39.2		%				(132)						(9)		%
Cost of product			583						553						67.4		%				65.8		%				30						5		%
Sub-total			1,894						1,996						38.9		%				44.2		%				(102)						(5)		%
Selling, general and administrative			1,652						1,547						33.9		%				34.2		%				105						7		%
Net (gain) loss on sale of businesses and other assets			(176)						120						(3.6)		%				2.7		%				(296)						n/m
Total expenses			3,370						3,663						69.2		%				81.1		%				(293)						(8)		%
Operating income			1,503						855						30.8		%				18.9		%				648						76		%
Interest expense, net			(258)						(190)						(5.3)		%				(4.2)		%				68						36		%
Other expense, net			(35)						(13)						(0.7)		%				(0.3)		%				22						n/m
Income before income taxes and loss from investments in unconsolidated affiliates			1,210						652						24.8		%				14.4		%				558						86		%
Income tax provision			(239)						(147)						(4.9)		%				(3.3)		%				92						63		%
Loss from investments in unconsolidated affiliates			(2)						(12)						—		%				(0.3)		%				(10)						(83)		%
Net income			969						493						19.9		%				10.9		%				476						97		%
Less: net income attributable to noncontrolling interests and redeemable noncontrolling interests			17						12						0.3		%				0.3		%				5						42		%
Net income attributable to Fiserv, Inc.			$	952					$	481					19.5		%				10.6		%				$	471					98		%

(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.

			Nine Months Ended September 30,
			2023						2022						Percentage of Revenue (1)												Increase (Decrease)
(In millions)			2023						2022						$						%
Revenue:
Processing and services			$	11,605					$	10,738					81.9		%				81.9		%				$	867					8		%
Product			2,571						2,368						18.1		%				18.1		%				203						9		%
Total revenue			14,176						13,106						100.0		%				100.0		%				1,070						8		%
Expenses:
Cost of processing and services			4,067						4,381						35.0		%				40.8		%				(314)						(7)		%
Cost of product			1,761						1,631						68.5		%				68.9		%				130						8		%
Sub-total			5,828						6,012						41.1		%				45.9		%				(184)						(3)		%
Selling, general and administrative			4,952						4,560						34.9		%				34.8		%				392						9		%
Net gain on sale of businesses and other assets			(172)						(27)						(1.2)		%				(0.2)		%				(145)						n/m
Total expenses			10,608						10,545						74.8		%				80.5		%				63						1		%
Operating income			3,568						2,561						25.2		%				19.5		%				1,007						39		%
Interest expense, net			(692)						(534)						(4.9)		%				(4.1)		%				158						30		%
Other expense, net			(81)						(83)						(0.6)		%				(0.6)		%				(2)						(2)		%
Income before income taxes and (loss) income from investments in unconsolidated affiliates			2,795						1,944						19.7		%				14.8		%				851						44		%
Income tax provision			(544)						(382)						(3.8)		%				(2.9)		%				162						42		%
(Loss) income from investments in unconsolidated affiliates			(11)						222						(0.1)		%				1.7		%				(233)						n/m
Net income			2,240						1,784						15.8		%				13.6		%				456						26		%
Less: net income attributable to noncontrolling interests and redeemable noncontrolling interests			42						36						0.3		%				0.3		%				6						17		%
Net income attributable to Fiserv, Inc.			$	2,198					$	1,748					15.5		%				13.3		%				$	450					26		%

(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 September 30,
(In millions)			Acceptance						Fintech						Payments						Corporate and Other						Total
Total revenue:
2023			$	2,106					$	795					$	1,704					$	268					$	4,873
2022			1,878						766						1,617						257						4,518
Revenue growth			$	228					$	29					$	87					$	11					$	355
Revenue growth percentage			12		%				4		%				5		%										8		%
Operating income (loss):
2023			$	757					$	291					$	827					$	(372)					$	1,503
2022			610						261						738						(754)						855
Operating income growth			$	147					$	30					$	89					$	382					$	648
Operating income growth percentage			24		%				11		%				12		%										76		%
Operating margin:
2023			35.9		%				36.7		%				48.5		%										30.8		%
2022			32.4		%				34.1		%				45.6		%										18.9		%
Operating margin growth (1)			350		bps				260		bps				290		bps										1,190		bps

(1)Represents the basis point growth in operating margin.

			Nine Months Ended September 30,
(In millions)			Acceptance						Fintech						Payments						Corporate and Other						Total
Total revenue:
2023			$	6,018					$	2,371					$	4,978					$	809					$	14,176
2022			5,432						2,347						4,597						730						13,106
Revenue growth			$	586					$	24					$	381					$	79					$	1,070
Revenue growth percentage			11		%				1		%				8		%										8		%
Operating income (loss):
2023			$	2,037					$	856					$	2,315					$	(1,640)					$	3,568
2022			1,673						817						2,018						(1,947)						2,561
Operating income growth			$	364					$	39					$	297					$	307					$	1,007
Operating income growth percentage			22		%				5		%				15		%										39		%
Operating margin:
2023			33.8		%				36.1		%				46.5		%										25.2		%
2022			30.8		%				34.8		%				43.9		%										19.5		%
Operating margin growth (1)			300		bps				130		bps				260		bps										570		bps

(1)Represents the basis point growth in operating margin.

Operating margin percentages are calculated using actual, unrounded amounts.

Total Revenue

Total revenue increased $355 million, or 8%, in the third quarter of 2023 and $1,070 million, or 8%, in the first nine months of 2023 compared to 2022. The revenue increase was primarily driven by higher global processing revenue, partially offset by a 4% and 3% decrease due to foreign currency exchange rate fluctuations in the third quarter and first nine months of 2023, respectively.

Revenue in our Acceptance segment increased $228 million, or 12%, in the third quarter of 2023 and $586 million, or 11%, in the first nine months of 2023 compared to 2022. The revenue increase in both the third quarter and first nine months of 2023 was driven by higher global merchant acquiring payment volumes, primarily within our international operations. The revenue increase also includes contributions from our Clover and Carat operating systems and the expansion of our merchant relationships through value-added services. Acceptance segment revenue growth was partially offset by an 8% and 6% decrease due to foreign currency exchange rate fluctuations in the third quarter and first nine months of 2023, respectively.

Revenue in our Fintech segment increased $29 million, or 4%, in the third quarter of 2023 and $24 million, or 1%, in the first nine months of 2023 compared to 2022. The revenue increase was primarily driven by higher processing revenue of 2% in both the third quarter and first nine months of 2023. Additionally, an increase in license revenue contributed 2% to Fintech segment revenue growth in the third quarter of 2023, while a decrease in termination fee revenue slightly offset growth in the first nine months of 2023.

Revenue in our Payments segment increased $87 million, or 5%, in the third quarter of 2023 and $381 million, or 8%, in the first nine months of 2023 compared to 2022. In the third quarter and first nine months of 2023, our debit processing business contributed 1% and 2%, respectively, to Payments segment revenue growth, primarily driven by an increase in debit transactions. Our credit processing businesses contributed 1% to Payments segment revenue growth in both the third quarter and first nine months of 2023, primarily driven by an increase in active accounts. Our Zelle® business also contributed 1% to Payments segment revenue growth in both the third quarter and first nine months of 2023, driven by an increase in transactions. Additionally, Payments segment revenue growth includes an increase in termination fee revenue in the third quarter and first nine months of 2023.

Revenue at Corporate and Other increased $11 million, or 4%, in the third quarter of 2023 and $79 million, or 11%, in the first nine months of 2023 compared to 2022, primarily due to increased postage revenue.

Total Expenses

Total expenses decreased $293 million, or 8%, in the third quarter of 2023 and increased $63 million, or 1%, in the first nine months of 2023 compared to 2022. Total expenses as a percentage of total revenue decreased 1,190 basis points to 69.2% in the

third quarter of 2023 and decreased 570 basis points to 74.8% in the first nine months of 2023 compared to 2022. Total expenses as a percentage of total revenue were favorably impacted in the third quarter and first nine months of 2023 by a reduction in amortization of acquisition-related intangible assets of approximately 110 basis points and 100 basis points in the third quarter and first nine months of 2023, respectively. Total expenses as a percentage of total revenue were also favorably impacted by operating leverage and a reduction in severance costs of approximately 30 basis points and 50 basis points in the third quarter and first nine months of 2023, respectively. The third quarter of 2023 also includes a $177 million pre-tax gain on the sale of our financial reconciliation business.

Cost of processing and services as a percentage of processing and services revenue decreased to 32.7% in the third quarter of 2023 compared to 39.2% in the third quarter of 2022 and decreased to 35.0% in the first nine months of 2023 compared to 40.8% in the first nine months of 2022. Cost of processing and services as a percentage of processing and services revenue was favorably impacted by strong operating leverage accompanying scalable revenue growth and expense management initiatives.

Cost of product as a percentage of product revenue increased to 67.4% in the third quarter of 2023 compared to 65.8% in the third quarter of 2022 and decreased slightly to 68.5% in the first nine months of 2023 compared to 68.9% in the first nine months of 2022. The cost of product as a percentage of product revenue in the third quarter of 2023 was impacted by revenue mix, including license fee and hardware revenue.

Selling, general and administrative expenses as a percentage of total revenue decreased to 33.9% in the third quarter of 2023 compared to 34.2% in the third quarter of 2022 and increased slightly to 34.9% in the first nine months of 2023 compared to 34.8% in the first nine months of 2022. Selling, general and administrative expenses as a percentage of total revenue includes a reduction in amortization of acquisition-related intangible assets of approximately 90 basis points in both the third quarter and first nine months of 2023. Selling, general and administrative expenses as a percentage of total revenue also includes a reduction of acquisition and integration related expenses of approximately 50 basis points in the third quarter of 2023. This impact was offset by an increase in personnel costs, including share-based compensation in both the third quarter and first nine months of 2023.

The net gain on sale of businesses and other assets in the third quarter and first nine months of 2023 includes a $177 million pre-tax gain from the sale of our financial reconciliation business. The third quarter of 2022 included a $120 million pre-tax loss from the sale of our Korea operations, offset by a $147 million pre-tax gain from the sale of certain merchant contracts in conjunction with the mutual termination of one of our merchant alliance joint ventures in the first nine months of 2022.

Operating Income and Operating Margin

Total operating income increased $648 million, or 76%, in the third quarter of 2023 and increased $1,007 million, or 39%, in the first nine months of 2023 compared to 2022. Total operating margin increased 1,190 basis points to 30.8% in the third quarter of 2023 and increased 570 basis points to 25.2% in the first nine months of 2023 compared to 2022. Total operating income and total operating margin benefited from scalable revenue growth in the third quarter and first nine months of 2023, along with a reduction in amortization of acquisition related intangible assets and severance costs. Total operating margin in the third quarter and first nine months of 2023 was also favorably impacted by a $177 million pre-tax gain from the sale of our financial reconciliation business.

Operating income in our Acceptance segment increased $147 million, or 24%, in the third quarter of 2023 and increased $364 million, or 22%, in the first nine months of 2023 compared to 2022. Operating margin increased 350 basis points to 35.9% in the third quarter of 2023 and 300 basis points to 33.8% in the first nine months of 2023 compared to 2022. Operating income and operating margin growth in our Acceptance segment was primarily due to operating leverage.

Operating income in our Fintech segment increased $30 million, or 11%, in the third quarter of 2023 and increased $39 million, or 5%, in the first nine months of 2023 compared to 2022. Operating margin increased 260 basis points to 36.7% in the third quarter of 2023 and increased 130 basis points to 36.1% in the first nine months of 2023 compared to 2022. Operating income and operating margin growth in our Fintech segment was primarily due to operating leverage and expense management initiatives. Fintech segment operating income and operating margin were also favorably impacted from an increase in license fee revenue in the third quarter of 2023.

Operating income in our Payments segment increased $89 million, or 12%, in the third quarter of 2023 and increased $297 million, or 15%, in the first nine months of 2023 compared to 2022. Operating margin increased 290 basis points to 48.5% in the third quarter of 2023 and increased 260 basis points to 46.5% in the first nine months of 2023 compared to 2022. Payments segment operating income and operating margin growth in the third quarter and first nine months of 2023 was primarily due to scalable revenue growth from our debit and credit processing businesses. Operating income and operating margin growth in our Payments segment was also favorably impacted by an increase in termination fee revenue in the third quarter and first nine months of 2023.

The operating loss in Corporate and Other decreased $382 million in the third quarter of 2023 and decreased $307 million in the first nine months of 2023 compared to 2022. The operating loss in the third quarter and first nine months of 2023 included a $177 million pre-tax gain on the sale of our financial reconciliation business. The operating loss in the third quarter of 2022 included a $120 million pre-tax loss from the sale of our Korea operations, offset by a $147 million pre-tax gain from the sale of certain merchant contracts in conjunction with the mutual termination of one of our merchant alliance joint ventures in the first nine months of 2022. The operating loss in the third quarter and first nine months of 2023 was also favorably impacted by a reduction of $54 million and $143 million in amortization of acquisition related intangible assets, respectively. The operating loss was also favorably impacted by a reduction of $20 million and $82 million in severance costs in the third quarter and first nine months of 2023, respectively.

Interest Expense, Net

Interest expense, net increased $68 million, or 36%, in the third quarter of 2023 compared to 2022 and $158 million, or 30%, in the first nine months of 2023 compared to 2022 due to our public offering and issuance of $1.8 billion, 800 million Euros and $2.0 billion of higher fixed-rate senior notes in March 2023, May 2023 and August 2023, respectively, as well as increased variable rate borrowings associated with our settlement advance cash program in Latin America.

Other Expense, Net

Other expense, net increased $22 million in the third quarter of 2023 compared to 2022 and decreased $2 million in the first nine months of 2023 compared to 2022. Other expense, net includes 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 increased $23 million and $55 million in the third quarter and first nine months of 2023, respectively, primarily related to Argentina. Other expense, net in the first nine months of 2022 included net pre-tax expense of $57 million associated with joint venture debt guarantees.

Income Tax Provision

Income tax provision as a percentage of income before income taxes and (loss) income from investments in unconsolidated affiliates was 19.8% and 22.5% for the three months ended September 30, 2023 and 2022, respectively, and was 19.5% and 19.7% for the nine months ended September 30, 2023 and 2022, respectively. For the three months ended September 30, 2023, the effective income tax rate included tax benefits from subsidiary restructurings and the purchase of transferable renewable energy tax credits.

The effective income tax rate for both the nine months ended September 30, 2023 and 2022 included discrete tax benefits from subsidiary restructurings and equity compensation related tax benefits. The effective income tax rate for the nine months ended September 30, 2023 also included tax benefits from the purchase of transferable renewable energy tax credits.

(Loss) Income from Investments in Unconsolidated Affiliates

Our share of net (loss) income from unconsolidated affiliates accounted for using the equity method is reported as (loss) income from investments in unconsolidated affiliates, and the related tax expense is reported within the income tax provision in the consolidated statements of income. (Loss) income from investments in unconsolidated affiliates, including acquired intangible asset amortization from valuations in purchase accounting, was $(2) million and $(12) million in the third quarter of 2023 and 2022, respectively, and $(11) million and $222 million in the first nine months of 2023 and 2022, respectively*.* Loss from investments in unconsolidated affiliates in the third quarter of 2022 included our share of expenses associated with debt refinancing activities at our unconsolidated affiliates. Income from investments in unconsolidated affiliates in the first nine months of 2022 included pre-tax net gains totaling $209 million, primarily related to the acquisition-date fair value remeasurement of our previously held equity interest in Finxact of $110 million, as well as $80 million resulting from the dilution of our ownership interest in conjunction with the Sagent M&C, LLC transaction 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 $17 million and $12 million in the third quarter of 2023 and 2022, respectively, and $42 million and $36 million in the first nine months of 2023 and 2022, respectively.

Net Income Per Share – Diluted

Net income attributable to Fiserv, Inc. per share-diluted was $1.56 and $0.75 in the third quarter of 2023 and 2022, respectively, and was $3.54 and $2.68 in the first nine months of 2023 and 2022, respectively. Net income attributable to Fiserv, Inc. per

share-diluted in the third quarter and first nine months of 2023 includes a $177 million pre-tax gain related to the sale of our financial reconciliation business. Net income attributable to Fiserv, Inc. per share-diluted in the first nine months of 2022 included pre-tax net gains totaling $209 million related to certain equity investment 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 and long term using cash flow generated by our operations, along with our cash and cash equivalents of $1.3 billion, proceeds from the issuance of U.S. dollar and Euro commercial paper, and available capacity under our revolving credit facility of $1.7 billion (net of $4.3 billion of capacity designated for outstanding borrowings under our commercial paper programs, senior notes due in 2023 and 2024 and letters of credit) at September 30, 2023.

The following table summarizes our net cash provided by operating activities, or operating cash flow, and capital expenditure amounts for the nine months ended September 30, 2023 and 2022, respectively:

			Nine Months Ended September 30,												Increase (Decrease)
(In millions)			2023						2022						$						%
Net income			$	2,240					$	1,784					$	456
Depreciation and amortization			2,384						2,431						(47)
Share-based compensation			275						244						31
Deferred income taxes			(344)						(402)						58
Net gain on sale of businesses and other assets			(172)						(27)						(145)
Loss (income) from investments in unconsolidated affiliates			11						(222)						233
Distributions from unconsolidated affiliates			42						58						(16)
Net changes in working capital and other			(869)						(881)						12
Net cash provided by operating activities			$	3,567					$	2,985					$	582					19		%
Capital expenditures, including capitalized software and other intangibles			$	1,034					$	1,148					$	(114)					(10)		%

Our operating cash flow was $3.6 billion in the first nine months of 2023, an increase of 19% compared with $3.0 billion in the first nine months of 2022. This increase was attributable to improved profitability and corresponding cash flows.

We maintain investments in various unconsolidated affiliates that are accounted for as equity method investments. Total distributions from unconsolidated affiliates, including those classified as cash flows from investing activities, were $152 million and $168 million in the first nine months of 2023 and 2022, respectively.

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 7% and 9% of our total revenue for the first nine months of 2023 and 2022, respectively.

Share Repurchases

On August 8, 2023, we repurchased 4.1 million shares of our common stock for $121.98 per share in a privately negotiated transaction with ValueAct Capital Master Fund, L.P. for an aggregate purchase price of $500 million. Including this transaction, we repurchased $3.7 billion and $1.8 billion of our common stock during the first nine months of 2023 and 2022, respectively. On February 22, 2023, our board of directors approved an additional repurchase authorization for up to 75.0 million shares of our common stock. As of September 30, 2023, we had approximately 60.5 million shares remaining under our current repurchase authorizations. Shares repurchased are generally held for issuance in connection with our equity plans.

Acquisitions and Dispositions

Acquisitions of Businesses

We acquired Yacaré and Merchant One in December 2022, NexTable in September 2022 and City POS in June 2022. Additionally, we acquired the remaining majority controlling ownership interest in Finxact in April 2022. NexTable, City POS and the remaining ownership interest in Finxact were acquired during the first nine months of 2022 for an aggregate purchase price of $686 million, net of $27 million of acquired cash, and including earn-out provisions with an estimated fair value of $6 million. Merchant One and Yacaré were acquired in the fourth quarter of 2022 for an aggregate purchase price of $308 million, net of $1 million of acquired cash.

We funded these acquisitions by utilizing a combination of available cash and proceeds from the issuance of commercial paper. The results of operations for these acquired businesses are included in our consolidated results from the respective dates of acquisition.

Dispositions of Businesses

We sold our financial reconciliation business in July 2023 for cash proceeds of $232 million, subject to final net working capital adjustments. Net proceeds from the sale were primarily used to pay down indebtedness and repurchase shares of our common stock.

We sold Fiserv Costa Rica, S.A and our SIS operations in October 2022 for net cash proceeds of $34 million and our Korea operations in September 2022 for net cash proceeds of $43 million, along with a minority noncontrolling equity interest in the buyer of the Korea operations. The net proceeds from these dispositions were primarily used to pay down indebtedness and repurchase shares of our common stock.

Other Transactions

In September 2023, we acquired the remaining 49% ownership interest in European Merchant Services B.V., in which we previously held a majority controlling financial interest in this consolidated subsidiary, for $56 million. We funded this transaction by utilizing a combination of available cash and proceeds from the issuance of commercial paper.

Effective March 2022, we mutually agreed to terminate a merchant alliance joint venture with a minority partner. In conjunction with such termination, the joint venture minority partner elected to exercise its option to purchase certain additional merchant contracts of the joint venture for cash proceeds of $175 million. The net proceeds from this transaction were primarily used to pay down indebtedness and repurchase shares of our common stock.

Indebtedness

(In millions)			September 30, 2023						December 31, 2022
Short-term and current maturities of long-term debt:
Foreign lines of credit			$	369					$	198
Finance lease and other financing obligations			280						270
Total short-term and current maturities of long-term debt			$	649					$	468
Long-term debt:
0.375% senior notes due July 2023 (Euro-denominated)			$	—					$	531
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)			637						632
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)			525						531
5.450% senior notes due March 2028			900						—
5.375% senior notes due August 2028			700						—
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)			525						531
4.500% senior notes due May 2031 (Euro-denominated)			840						—
3.000% senior notes due July 2031 (British Pound-denominated)			637						632
5.600% senior notes due March 2033			900						—
5.625% senior notes due August 2033			1,300						—
4.400% senior notes due July 2049			2,000						2,000
U.S. dollar commercial paper notes			—						2,329
Euro commercial paper notes			1,249						1,210
Revolving credit facility			—						35
Term loan facility			—						200
Unamortized discount and deferred financing costs			(151)						(120)
Finance lease and other financing obligations			695						539
Total long-term debt			$	22,657					$	20,950

In August 2023, we completed the public offering and issuance of $2.0 billion of senior notes, comprised of $700 million aggregate principal amount of 5.375% senior notes due in August 2028 and $1.3 billion aggregate principal amount of 5.625% senior notes due in August 2033. In May 2023, we completed the public offering and issuance of 800 million Euros aggregate principal amount of 4.500% senior notes due in May 2031. In March 2023, we completed the public offering and issuance of $1.8 billion of senior notes, comprised of $900 million aggregate principal amount of 5.450% senior notes due in March 2028 and $900 million aggregate principal amount of 5.600% senior notes due in March 2033. We used the net proceeds from these senior notes offerings for general corporate purposes, including the repayment of U.S. dollar commercial paper notes, share repurchases, the repayment of the 0.375% Euro-denominated senior notes in July 2023 and the repayment of the 3.800% senior notes in October 2023.

At September 30, 2023, our debt consisted primarily of $20.9 billion of fixed-rate senior notes and $1.2 billion of outstanding borrowings under our Euro commercial paper program. 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 was paid monthly.

At September 30, 2023, the 3.800% senior notes due in October 2023 and 2.750% senior notes due in July 2024 were classified in the consolidated balance sheet as long-term, as we have the intent to refinance or have subsequently refinanced this debt on a long-term basis and the ability to do so under our revolving credit facility. Outstanding borrowings under the commercial paper programs are also classified in the consolidated balance sheet as long-term, as we have the intent to refinance this commercial paper on a long-term basis through the continued issuance of new commercial paper upon maturity, and also have the ability to refinance such commercial paper under our revolving credit facility.

Variable Rate Debt

Our variable rate debt consisted of the following at September 30, 2023:

(In millions)			Maturity						Weighted-Average Interest Rate						Outstanding Borrowings
Foreign lines of credit			n/a						48.428%						$	369
Euro commercial paper notes			various						3.880%						1,249
Total variable rate debt									14.041%						$	1,618

We maintain certain short-term lines of credit and other borrowing arrangements with foreign banks and alliance partners primarily to fund settlement activity associated with operations in Latin America. We entered into an annually renewable term loan facility, which was fully funded in April 2023, to fund settlement advance cash payments in Brazil. This term loan has a notional value of 514 million Brazilian real ($102 million USD equivalent) at September 30, 2023 that matures in April 2024 and bears interest at a variable Certificado de Depósito Interbancário (CDI) Rate, plus a specified margin of 1.70% per annum.

The following table provides a summary of the outstanding borrowings and weighted average interest rates of our foreign lines of credit and other borrowing arrangements by country at September 30, 2023:

			Outstanding Borrowings (in millions)						Weighted-Average Interest Rate
Argentina			$	151											99.417		%
Brazil			119												14.978		%
Uruguay			88												11.896		%
Other			11												—		%
Total			$	369											48.428		%

We maintain U.S. dollar 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 also maintain a revolving credit facility with aggregate commitments available for $6.0 billion of total capacity. Borrowings under the credit facility bear interest at a variable rate based on a Secured Overnight Financing Rate (SOFR) or a base rate in the case of U.S. dollar borrowings, in each case plus a specified margin based on our long-term debt rating in effect from time to time. We are required to pay a facility fee based on the aggregate commitments in effect under the credit agreement from time to time.

In June 2023, we repaid all remaining outstanding borrowings on our term loan facility utilizing proceeds from the issuance of U.S. dollar commercial paper notes and operating cash on hand, thereby terminating such facility. Borrowings under the term loan facility accrued interest at a variable rate based on one-month LIBOR or on a base rate, plus, in each case, a specified margin based on the Company’s long-term debt rating in effect from time to time.

Debt Covenants and Compliance

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 contains various restrictions and covenants that require us to, among other things, limit our consolidated indebtedness as of the end of each fiscal quarter to no more than 3.75 times our consolidated net income before interest, taxes, depreciation, amortization, non-cash charges and expenses and certain other adjustments during the period of four fiscal quarters then ended, subject to certain exceptions.

During the first nine months of 2023, 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.

Debt Guarantees

We maintain noncontrolling ownership interests in Sagent M&C, LLC and defi SOLUTIONS Group, LLC (collectively, the “Lending Joint Ventures”). The Lending Joint Ventures maintain, as amended in April 2022, variable-rate term loan facilities with aggregate outstanding borrowings of $437 million in senior unsecured debt at September 30, 2023 and variable-rate revolving credit facilities with an aggregate borrowing capacity of $83 million with a syndicate of banks, which mature in April 2027. There were $45 million of outstanding borrowings on the revolving credit facilities at September 30, 2023. We have guaranteed the debt of the Lending Joint Ventures and do not anticipate that the Lending Joint Ventures will fail to fulfill their debt obligations. We maintained a liability of $33 million at September 30, 2023 for the estimated fair value of our non-contingent obligations to stand ready to perform over the term of the guarantee arrangements. Such guarantees will be amortized in future periods over the contractual term of the debt. In addition, we maintained a contingent liability of $21 million at September 30, 2023, representing the current expected credit losses to which we are exposed. This contingent liability is estimated based on certain financial metrics of the Lending Joint Ventures and historical industry data, which is used to develop assumptions of the likelihood the guaranteed parties will default and the level of credit losses in the event a default occurs. We have not made any payments under the guarantees, nor have we been called upon to do so.

Cash and Cash Equivalents

Investments, exclusive of settlement assets, with original maturities of 90 days or less that are readily convertible to cash are considered to be cash equivalents as reflected within our consolidated balance sheets. The table below details our cash and cash equivalents held at September 30, 2023 and December 31, 2022:

			September 30, 2023																		December 31, 2022
(In millions)			Domestic						International						Total						Domestic						International						Total
Available			$	376					$	344					$	720					$	135					$	153					$	288
Unavailable (1)			193						436						629						178						436						614
Total			$	569					$	780					$	1,349					$	313					$	589					$	902

(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.