FISERV INC Q4 FY2024 earnings call

• Wrapped up a successful year with adjusted earnings per share of $8.80, up 17%, adjusted revenue growth 7%, adjusted operating margin rose 170 basis points to 39.4%, total company organic revenue growth 16%, free cash flow $5.2 billion and $5.5 billion returned to shareholders via share repurchase in 2024. • Advanced multiple strategies and product offerings, added large enterprise clients, released new Clover software, services, and hardware offerings and expanded to three new countries. • Completed development of Cash Flow Central, a full small business suite integrating with XD digital banking platform and available on Clover late in the year. • Partnered with DoorDash for embedded finance, signed strategic partnership with ADP, had key wins in Merchant Solutions like CloverSport at TD Garden and Milwaukee Brewers, and in financial solutions like large core banking wins. • Continued to be a partner of choice in real-time payments enablement and core modernization strategies.

In the Merchant Solutions segment, organic revenue growth was 23% in the quarter and 27% for the full year. Excluding transitory effects, organic growth would have been 17% in the quarter and 16% for the year. Small business organic and adjusted revenue growth in the quarter was 24% and 12% respectively. Clover revenue reached $2.7 billion in 2024 with nearly 90% in the small business line, growing 29% in both the quarter and full year. Enterprise organic and adjusted revenue growth in the quarter was 31% driven by transactions growth of 17%. For the financial Solutions segment, organic revenue grew 4% in the quarter and 6% for the full year, at the midpoint of the full-year outlook of 5% to 7%. Digital payments organic and adjusted revenue each grew by 5% and 6% for the year. Zelle revenue grew 28% for the year. Issuing organic revenue grew 3% in the quarter and 7% for the year. Banking organic and adjusted revenue each grew 4% in the quarter and 3% for the year.

• For 2025, guiding 10% to 12% organic revenue growth, greater than 125 basis points of adjusted operating margin expansion, 15% to 17% adjusted EPS growth and roughly $5.5 billion of free cash flow. • Organic revenue growth guidance of 10% to 12% at the high end of medium-term target range. • Assuming no contribution from transitory factors in Argentina in 2025, forecasted impact from foreign currency exchange 1.5% in 2025 compared to 9% in 2024. • For Merchant Solutions, organic revenue growth of 12% to 15% in 2025 driven by Clover growth. • For financial solutions, anticipate organic revenue growth of 6% to 8% with new revenue from various initiatives.

Q: Tien-Tsin Huang from JPMorgan asked Mike Lyons what surprised him about Fiserv as he joined.

A: Mike Lyons said the unparalleled opportunity, potential on international, and the talent and innovation especially the number of engineers were surprising.

Q: Darrin Peller from Wolfe Research asked about Clover's growth sustainability.

A: Frank Bisignano mentioned partnerships like with ADP, new product rollouts, and the strong team as building blocks.

Q: Timothy Chiodo from UBS asked about the Payfair acquisition and its impact.

A: Bob Hau said Payfair brings additional program management capability and is a good add to serving embedded finance clients.

Q: Harshita Rawat from Bernstein asked about January trends.

A: Bob Hau said January is off to a good start with consumer spending resilient and FX easing.

Q: Dave Koning from Baird asked about Financial Solutions' issuing slowdown.

A: Bob Hau said it was tied to credit environment and will pick up with targets like Verizon and Desjardins.

Q: Dan Dolev from Mizuho asked about Walmart partnership.

A: Frank Bisignano said it's a long-standing great relationship with deep technical integration.

Q: Jason Kupferberg from Bank of America asked about Clover's spread between revenue and volume growth.

A: Bob Hau said it was due to VAS penetration, pricing, and hardware sales.

Q: James Faucette from Morgan Stanley asked about go-to-market for new offerings.

A: Frank Bisignano said they're adding salesforce, have worldwide distribution, and deep technical integration.

Q: Ramsey El-Assal from Barclays asked about Cash Flow Central's material contribution.

A: Frank Bisignano said it will be meaningful in the second half of 2025 with long-term sustainability.