Fiserv Third Quarter 2011 Results (FISV)

Fiserv’s Q3 adjusted EPS was up 12% to $1.16, modestly beating consensus estimates of $1.14. GAAP revenue matched expectations of 1.06B, a 4% increase. The disparity between top and bottom line growth can be attributed to a diluted share count that was 5.5% smaller than a year ago. Management raised full year guidance to $4.54 – $4.60, surpassing current estimates of $4.53, on the belief that growth will accelerate into Q4 and the first half of 2012.

Of Fiserv’s two segments, Financial Institution Services’ operating income was exactly flat for the quarter and is up 1% on the year. Payments and Industry Products’ operating income was up 2% over the previous Q3, and 5% on the year. This trend is expected to continue, as banks and credit unions are more willing to spend on client facing technology (Payments) than internal account management (Services). In Q3 alone, Fiserv signed 114 new electronic bill pay and 48 debit clients, including Zions, a top 35 bank, which recently selected Fiserv to support its multichannel digital payment strategy for both retail and business customers.

While the trailing quarters have been difficult for businesses that depend on capital expenditures by financial institutions, Fiserv has used that time to develop or acquire leading solutions in online, mobile, and person-to-person platforms. As a result, management has become increasingly optimistic as they gain visibility into 2012. CEO Jeffery Yabuki commented, “Based on our sales results, which have been stellar, based on our pipeline, which is in fact up across all measures that are meaningful, we feel like we are in very good shape.”

-George
-Zach