Fiserv, Inc. /quotes/comstock/15*!fisv/quotes/nls/fisv (FISV 47.63, 0.00, 0.00%) , the leading global provider of financial services technology solutions, today reported financial results for the second quarter of 2010.
Total GAAP revenue in the second quarter of 2010 was $1.02 billion compared with $1.00 billion in the second quarter of 2009. Total adjusted revenue increased 2 percent to $970 million in the second quarter compared with $951 million in 2009. For the first six months of 2010, total GAAP revenue was $2.03 billion compared with $2.02 billion in 2009, and total adjusted revenue was $1.92 billion, flat compared to 2009.
GAAP earnings per share from continuing operations for the second quarter of 2010 was $0.85 compared with $0.74 in 2009. GAAP earnings per share from continuing operations for the first six months of 2010 was $1.65 compared with $1.42 for 2009.
Adjusted earnings per share from continuing operations in the second quarter of 2010 increased 11 percent to a record $1.00 compared with $0.90 in 2009. Adjusted earnings per share increased 8 percent to $1.95 for the first six months of 2010 compared to $1.80 in 2009.
"Our results in the quarter included an acceleration of organic revenue growth, strong sales performance and double-digit growth in earnings per share and free cash flow," said Jeffery Yabuki, President and Chief Executive Officer of Fiserv. "Pairing our high quality people with industry-leading solutions is producing superior client value."
Second Quarter 2010
-- Adjusted internal revenue grew by 2 percent in the quarter, reflecting 3 percent growth in the Payments segment and 1 percent growth in the Financial segment.
-- The company's adjusted operating margin of 29.6 percent in the quarter increased 70 basis points compared with the second quarter of 2009 and the first quarter of 2010.
-- Free cash flow increased 12 percent in the quarter to $128 million, and increased 14 percent to $353 million for the first six months of the year.
-- The company repurchased 2.8 million shares of common stock in the quarter for $135 million. The company has repurchased 4.2 million shares through June 30 for a total of $202 million.
-- ZashPay(SM)from Fiserv, a new person-to-person payments service, was launched in the quarter. As of June 30, 2010, more than 160 financial institutions have committed to offer the service to their customers.
-- The company announced the acquisition of AdviceAmerica, a best-in-class provider of integrated advisor desktop solutions. The acquisition enhances Fiserv's Investment Services strategy by extending the company's capabilities into front-office applications such as financial planning, CRM and proposal tools.
-- The company expanded its consumer payments footprint in the quarter by signing 157 electronic bill payment clients and 58 debit clients, the majority of which were competitive takeaways. The company has signed 250 electronic bill payment clients and 104 debit clients through the first six months of the year.
-- The company signed a number of new and expanded client relationships in the quarter including: -- Albemarle Bank & Trust, a Greenville, North Carolina-based de novo selected the Premier(R) bank platform from Fiserv, including solutions for Internet banking, branch source capture and merchant source capture. Albemarle anticipates opening its first branch in North Carolina by the end of 2010 as an independent division of West Town Savings Bank, an existing Fiserv client.
-- BankUnited, the largest bank headquartered in Florida, chose the Signature(TM) bank platform for account processing and Aperio(TM) for next-generation customer channel management. The multi-year agreement also includes BankUnited's utilization of EFT, bill payment, enterprise content management, item processing and loan origination solutions from Fiserv.
-- Complex Community Federal Credit Union of Odessa, Texas selected the Portico(TM) account processing platform from Fiserv as it moved its technology environment to a hosted, service bureau model. With more than $270 million in assets and 31,000 members, Complex Community will also implement card services, bill payment, Virtual Branch(R), Document IT, AML Manager, Converge IT(R):IVR, e-Statements, Access Advantage, Wisdom(TM) ALM and Mobile Money(TM) from Fiserv.
-- Consumers Credit Union, headquartered in Waukegan, Illinois with $550 million in assets, agreed to implement the Acumen(TM) account processing platform from Fiserv for in-house delivery.
-- First Federal Savings Bank, located in Ottawa, Illinois, chose the Cleartouch(R) bank platform to improve customer service and operational efficiencies while reducing the costs of back-office management and regulatory compliance. A $415 million organization with 13 locations, First Federal will deploy an array of integrated solutions from Fiserv including risk and compliance tools, source capture, electronic document management, e-Statements, item processing, business intelligence and bill payment.
-- First Federal Savings and Loan Association, a $445 million institution based in Lorain, Ohio, selected the Cleartouch bank platform for outsourced processing. The multi-year agreement includes solutions for online banking, bill payment, source capture, EFT, business intelligence, telephone banking, item processing, regulatory compliance and fraud detection.
-- The Golden 1 Credit Union, the sixth largest credit union in the U.S. with nearly $7 billion in assets and 700,000 members, chose ZashPay from Fiserv, the person-to-person payments service, to enable its members to quickly and conveniently send money to anyone in the U.S. using their existing online account.
-- OneWest Bank, a $27 billion regional bank with 81 retail branches in Southern California, selected Corillian(R) Online and CheckFree(R) RXP(R) from Fiserv to enable the delivery of personalized, relationship-based banking to its retail and business customers through the online channel. The bank also agreed to implement item processing services and the Fiserv Clearing Network.
-- SunTrust Banks, Inc., one of the nation's largest banking organizations with $171 billion in assets, extended its electronic bill payment relationship with Fiserv. Under a multi-year renewal agreement, SunTrust will continue to use CheckFree RXP and FraudNet(TM) from Fiserv.
-- The Westpac Group, the second largest bank in Australia with $A601 billion in assets, chose Fiserv to transform its consumer and business online banking presence. The Westpac Group chose the Corillian Online and Voyager(R) banking solutions from Fiserv to serve its online base, including retail banking, small and medium-sized businesses and corporate customers.
Outlook for 2010
Fiserv continues to expect full year adjusted earnings per share from continuing operations to be in a range of $3.96 to $4.07, which represents growth of 8 to 11 percent compared with 2009. The company also expects 2010 adjusted internal revenue growth to be in a range of 1 to 3 percent. The adjusted earnings per share outlook excludes the impact of extraordinary items, merger and integration costs and the amortization of acquisition-related intangible assets.
"We are on track to achieve our 2010 guidance based on solid first half results and a strong sales pipeline," said Yabuki.
Earnings Conference Call
The company will discuss its second quarter 2010 results on a conference call and webcast at 4 p.m. CDT on Tuesday, July 27, 2010. To register for the event, go to www.fiserv.com and click on the Q2 Earnings Webcast icon. Supplemental materials and an accompanying presentation will be available in the "For Investors" section of the website.
Use of Non-GAAP Financial Measures
We supplement our reporting of revenue, operating income, income from continuing operations and earnings per share information determined in accordance with GAAP by using "adjusted revenue," "adjusted operating income," "adjusted income from continuing operations," "adjusted earnings per share from continuing operations," "adjusted operating margin," "free cash flow" and "adjusted internal revenue growth" in this earnings release. Management believes that adjustments for certain non-cash or unusual revenue or expense items and the exclusion of certain pass-through revenue and expenses enhance our shareholders' ability to evaluate our performance because such items do not reflect how we manage our operations. Therefore, we exclude these items from GAAP revenue, operating income, income from continuing operations and earnings per share to calculate these non-GAAP measures.
Examples of non-cash or unusual items may include, but are not limited to, non-cash intangible asset amortization expense associated with acquisitions, severance costs, merger and integration expenses and non-cash deferred revenue adjustments arising from acquisitions. We exclude these items to more clearly focus on the factors we believe are pertinent to the management of our operations. We regularly report our adjusted results to our chief executive officer, who uses this information to allocate resources to our various businesses.
Free cash flow and adjusted internal revenue growth are described on pages 10 and 12. Adjusted internal revenue growth percentage is a non-GAAP financial measure that we believe is useful to investors because it presents revenue growth excluding acquired revenue, postage reimbursements in our Output Solutions business and deferred revenue purchase accounting adjustments. We believe this supplemental information enhances our shareholders' ability to evaluate and understand our core business performance.
These non-GAAP measures should be considered in addition to, and not as a substitute for, revenue, operating income, income from continuing operations and earnings per share or any other amount determined in accordance with GAAP. These non-GAAP measures reflect management's judgment of particular items and may not be comparable to similarly titled measures reported by other companies.