Fiserv Reports Fourth Quarter and Full Year 2021 Results

GAAP revenue increased 11% in the quarter and 9% for the full year;

GAAP EPS increased 14% in the quarter and 42% for the full year;

Organic revenue growth was 11% both in the quarter and for the full year;

Adjusted EPS increased 21% in the quarter and 26% for the full year;

Company expects 2022 organic revenue growth of 7% to 9%

and adjusted EPS of $6.40 to $6.55, or growth of 15% to 17%

Fiserv, Inc. (NASDAQ: FISV), a leading global provider of payments and financial services technology, today reported financial results for the fourth quarter and full year 2021.

Fourth Quarter and Full Year 2021 GAAP Results

GAAP revenue for the company increased 11% to $4.26 billion in the fourth quarter of 2021 compared to the prior year period, with 18% growth in the Acceptance segment, 4% growth in the Fintech segment and 9% growth in the Payments segment. GAAP revenue for the company increased 9% to $16.23 billion for the full year of 2021 compared to the prior year, with 17% growth in the Acceptance segment, 4% growth in the Fintech segment and 6% growth in the Payments segment.

GAAP earnings per share was $0.50 in the fourth quarter and $1.99 for the full year of 2021, an increase of 14% and 42%, respectively, compared to the prior year periods. GAAP operating margin was 12.5% and 14.1% in the fourth quarter and full year of 2021, respectively, compared to 13.5% and 12.5% in the fourth quarter and full year of 2020, respectively. Net cash provided by operating activities was $4.03 billion for the full year of 2021 compared to $4.15 billion in the prior year.

“We are pleased with our fourth quarter results as we delivered another quarter of strong organic revenue and adjusted EPS growth,” said Frank Bisignano, President and Chief Executive Officer of Fiserv. “For 2021, Fiserv had another successful year of delivering on our growth agenda - attaining the high end of our original organic revenue growth outlook and coming in well above our original adjusted EPS outlook, all while investing in the business to fuel further growth as we innovate to provide value for our clients.”

Fourth Quarter and Full Year 2021 Non-GAAP Results and Additional Information

• Adjusted revenue increased 11% to $4.02 billion in the fourth quarter and increased 11% to $15.39 billion for the full year of 2021 compared to the prior year periods.
• Organic revenue growth was 11% in the fourth quarter of 2021, led by 19% growth in the Acceptance segment, 4% growth in the Fintech segment and 8% growth in the Payments segment.
• Organic revenue growth was 11% for the full year of 2021, led by 20% growth in the Acceptance segment, 4% growth in the Fintech segment and 6% growth in the Payments segment.
• Adjusted earnings per share increased 21% to $1.57 in the fourth quarter and 26% to $5.58 for the full year of 2021 compared to the prior year periods.
• Adjusted operating margin was flat in the fourth quarter at 35.6% and increased 250 basis points to 33.9% for the full year of 2021 compared to the prior year periods.
• Free cash flow was $3.53 billion for the full year of 2021 compared to $3.65 billion in the prior year.
• The company repurchased 9.9 million shares of common stock for $1.00 billion in the fourth quarter and 23.3 million shares of common stock for $2.57 billion in the full year of 2021.
• The company commenced the issuance of Euro commercial paper during the fourth quarter of 2021, lowering its effective cost of debt.
• In February 2022, the company entered into a definitive agreement to acquire Finxact, Inc., a leading developer of cloud-native digital banking solutions powering digital transformation throughout financial services. The company expects the transaction to close later this year, subject to customary approvals and closing conditions.
• In January 2022, Fiserv was named to the 2022 Bloomberg Gender-Equality Index, marking the sixth consecutive year that the company has been recognized for its efforts to build and maintain an inclusive and equitable working environment.

Outlook for 2022

Fiserv expects organic revenue growth of 7% to 9% and adjusted earnings per share in a range of $6.40 to $6.55, representing growth of 15% to 17%, for 2022.

“We believe our agility and the strength of our assets continue to enhance our position as the operating system for commerce and money movement across our client base of banks, credit unions, fintechs, and businesses ranging from SMB's to mid-market to large enterprises,” said Bisignano. “We expect this operational strength and balance sheet flexibility to support high single digit organic revenue growth and double digit adjusted EPS growth in 2022.”

Earnings Conference Call

The company will discuss its results in a live webcast at 7 a.m. CT on Tuesday, February 8, 2022. The webcast, along with supplemental financial information, can be accessed on the investor relations section of the Fiserv website at investors.fiserv.com. A replay will be available approximately one hour after the conclusion of the live webcast.

About Fiserv

Fiserv, Inc. (NASDAQ: FISV) aspires to move money and information in a way that moves the world. As a global leader in payments and financial technology, the company helps clients achieve best-in-class results through a commitment to innovation and excellence in areas including 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 and business management platform. Fiserv is a member of the S&P 500^® Index and the FORTUNE^® 500, and has been recognized as one of the FORTUNE World's Most Admired Companies^® for 11 of the past 14 years. Visit fiserv.com and follow on social media for more information and the latest company news.

Use of Non-GAAP Financial Measures

In this news release, the company supplements its reporting of information determined in accordance with generally accepted accounting principles ("GAAP"), such as revenue, operating income, operating margin, net income attributable to Fiserv, earnings per share and net cash provided by operating activities, with "adjusted revenue," "organic revenue," "organic revenue growth," "adjusted operating income," "adjusted operating margin," "adjusted net income," "adjusted earnings per share," "adjusted earnings per share growth," and "free cash flow." Management believes that adjustments for certain non-cash or other items and the exclusion of certain pass-through revenue and expenses should enhance shareholders' ability to evaluate the company's performance, as such measures provide additional insights into the factors and trends affecting its business. Therefore, the company excludes these items from its GAAP financial measures to calculate these unaudited non-GAAP measures. The corresponding reconciliations of these unaudited non-GAAP financial measures to the most comparable GAAP measures are included in this news release, except for forward-looking measures where a reconciliation to the corresponding GAAP measures is not available due to the variability, complexity and limited visibility of the non-cash and other items described below that are excluded from the non-GAAP outlook measures. See page 15 for additional information regarding the company's forward-looking non-GAAP financial measures.

Examples of non-cash or other items may include, but are not limited to, non-cash deferred revenue adjustments arising from acquisitions; non-cash intangible asset amortization expense associated with acquisitions; non-cash impairment charges; restructuring costs; severance costs; net charges associated with debt financing activities; merger and integration costs; gains or losses from the sale of businesses or investments; and certain discrete tax benefits and expenses. The company excludes these items to more clearly focus on the factors management believes are pertinent to the company's operations, and management uses this information to make operating decisions, including the allocation of resources to the company's various businesses.

The company adjusts its non-GAAP results to exclude amortization of acquisition-related intangible assets as such amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions. Management believes that the adjustment of acquisition-related intangible asset amortization supplements GAAP information with a measure that can be used to assess the comparability of operating performance. Although the company excludes amortization from acquisition-related intangible assets from its non-GAAP expenses, management believes that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation.

Management believes organic revenue growth, formerly referred to as internal revenue growth, is useful because it presents adjusted revenue growth including deferred revenue purchase accounting adjustments and excluding the impact of foreign currency fluctuations, acquisitions, dispositions and the company's Output Solutions postage reimbursements. Management believes free cash flow is useful to measure the funds generated in a given period that are available for debt service requirements and strategic capital decisions. Management believes this supplemental information enhances shareholders' ability to evaluate and understand the company's core business performance.

These unaudited non-GAAP measures may not be comparable to similarly titled measures reported by other companies and should be considered in addition to, and not as a substitute for, revenue, operating income, operating margin, net income attributable to Fiserv, earnings per share and net cash provided by operating activities or any other amount determined in accordance with GAAP.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding anticipated organic revenue growth, adjusted earnings per share, adjusted earnings per share growth and other statements regarding our future financial performance. Statements 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 the company's future plans, objectives or goals are also forward-looking statements.

Forward-looking statements are subject to assumptions, risks and uncertainties that may cause actual results to differ materially from those contemplated by such forward-looking statements. The factors that could cause the company’s actual results to differ materially include, among others, the following, many of which are, and 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 the company; the impact of the COVID-19 pandemic on the company's employees, clients, vendors, supply chain, operations and sales; the possibility that the company may be unable to achieve expected revenue synergies from the acquisition of First Data within the expected time frames; the company's 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 the company's products and services; the ability of the company's technology to keep pace with a rapidly evolving marketplace; the success of the company's merchant alliances, some of which are not controlled by the company; the impact of a security breach or operational failure on the company's business including disruptions caused by other participants in the global financial system; the failure of the company's vendors and merchants to satisfy their obligations; the successful management of credit and fraud risks in the company's business and merchant alliances; changes in local, regional, national and international economic or political conditions and the impact they may have on the company and its customers; the effect of proposed and enacted legislative and regulatory actions affecting the company or the financial services industry as a whole; the company's 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; the company's ability to successfully identify, complete and integrate acquisitions, and to realize the anticipated benefits associated with the same; the impact of the company's strategic initiatives; the company's ability to attract and retain key personnel; volatility and disruptions in financial markets that may impact the company's ability to access preferred sources of financing and the terms on which the company is able to obtain financing or increase its 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 the company's Annual Report on Form 10-K for the year ended December 31, 2020, and in other documents that the company files 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. The company assumes no obligation to update any forward-looking statements, which speak only as of the date of this news release.

Fiserv, Inc.

Full Year Forward-Looking Non-GAAP Financial Measures

Reconciliations of unaudited non-GAAP financial measures to the most comparable GAAP measures are included in this news release, except for forward-looking measures where a reconciliation to the corresponding GAAP measures is not available due to the variability, complexity and limited visibility of these items that are excluded from the non-GAAP outlook measures. The company’s forward-looking non-GAAP financial measures for 2022, including organic revenue growth, adjusted earnings per share and adjusted earnings per share growth, are designed to enhance shareholders’ ability to evaluate the company’s performance by excluding certain items to focus on factors and trends affecting its business.

Organic Revenue Growth - The company's organic revenue growth outlook for 2022 includes deferred revenue purchase accounting adjustments and excludes the impact of foreign currency fluctuations, acquisitions, dispositions and the impact of the company's Output Solutions postage reimbursements. The currency impact is measured as the increase or decrease in the expected adjusted revenue for the period by applying prior period foreign currency exchange rates to present a constant currency comparison to prior periods. The expected impact of acquisitions is attributable to 2021 acquisitions.

Adjusted Earnings Per Share - The company's adjusted earnings per share outlook for 2022 excludes certain non-cash or other items such as non-cash intangible asset amortization expense associated with acquisitions; non-cash impairment charges; restructuring costs; merger and integration costs; severance costs; gains or losses from the sale of businesses and investments; and certain discrete tax benefits and expenses, and includes non-cash deferred revenue purchase accounting adjustments. The company has completed First Data acquisition integration activities as of December 31, 2021 and does not expect to incur additional costs associated with the achievement of cost synergies related to the First Data acquisition, resulting in lower merger and integration costs in 2022. The company estimates that amortization expense in 2022 with respect to acquired intangible assets will approximate the amount incurred in 2021.

Other adjustments to the company’s financial measures that were incurred in 2021 are presented in this news release; however, they are not necessarily indicative of adjustments that may be incurred throughout 2022 or beyond. Estimates of these impacts and adjustments on a forward-looking basis are not available due to the variability, complexity and limited visibility of these items.

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