FISV - Earnings call transcript Q2 2022

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Operator

Welcome to the Fiserv 2022 Second Quarter Earnings Conference Call. All participants will be in a listen-only mode until the question-and-answer session begins following the presentation.

As a reminder, today's call is being recorded. At this time, I would like to turn the call over to Shub Mukherjee, Senior Vice President of Investor Relations at Fiserv.

Shub Mukherjee

Thank you, and good morning. call Executive Frank our Officer; Officer. the President our Chief on Chief and and me today Bisignano, are Chairman, Financial With Bob Hau,

otherwise earnings financial refer reconciliation to to quarter performance materials year-over-year for with for stated, Investor Our a of of section in these supplemental the the this comparisons. explanation GAAP on along non-GAAP Relations Please measures available measures. discussed are nearest the the fiserv.com. of an and release measures those Unless are references applicable materials call,

Our remarks forward-looking statements and other among and about, initiatives. operating financial today will strategic include matters, expected results

differ may uncertainties. statements to a results of materially Forward-looking and are subject from actual and risks number

now refer earnings You to over discussion release Frank. our of a factors. should for to And these risk

Frank Bisignano

for the our progress for as you Shub. share we thank results against highlight Thank you, the And and listening in quarter agenda. all growth our

system across grow credit services As and or money the our we new and SMBs to clients We operating as large banks, capture to platform of extending commerce and flows. base mid-market enterprises. movement you help serve unions, ranging client from our for money by businesses, know, new fintechs our

of Developer several for integrations. merchant Fiserv innovation Fiserv Award rich and also clients, Our platform, relentless far to API the by the as Webby providers one was expansive awarded a prestigious our of wave. Carat was our pursuit for which again, accolades named yet payment a for the among quarter. in Studio, leader provides operating system

of inflation range revenue growth. growth bringing in X% exceeding XX% to EPS top the XX% year-to-date terrific the performance end to at XX% XX% in adjusted of in years a attained quarter company continued the basis of resulted Now investment million $XXX exceeding adjusted commitment. on to impact the we second organic business year. strong year, revenue last commitment XX.X%, for the two guidance XX% provided our million to high high the line quarter, the in of original range merger We operating increased year. of $X.XX The EPS synergies the resulted and delivered growth again, ahead $XXX margin to provided quarter since down XX our actioned our million second full points the the moving adjusted X% We for guidance results. our from reaching the $XXX Once total of

across clients such continue We and our Finxact through opportunities Ondot, portfolio. our acquisitions investments as innovate to see recent as BentoBox to for organic as our well

revenue capital, Additionally, growth these the free resulted and and quarter flow capital accelerated $X.X $XXX higher in year-to-date. working for cash expenditures billion investments of and leading million to

Looking beat the the organic of year, for into outperformance prior very the year. puts full good of a our growth year-to-date in guidance organic us position XX% our to growth revenue remainder revenue

macro X% XX% adjusted Given representing the of range to end the revised full strength growth revenue new to X% are of year-to-date growth half the organic a XX% $X.XX in end from half are versus outlook raising of we revenue to of to in With up X% year. year, to of XX%, a low half first XXXX. XX% first full over the EPS outlook the our raising adjusted this outlook performance and about the growth, year growth $X.XX by year slowdown guidance $X.XX, higher lower range EPS a the range of to previously. this we assumes of the The organic second

to year expect least margin Given unfavorable clients, adjusted the our points. foreign and exchange, expansion be our elevated environment, now our innovation continue plans to to in XXX for inflation at invest full basis we

from our three to more our fintechs. and enterprises. business market and medium-sized approach addressable have the ways: of We create and valuable existing Starting more for small- and merchants services the second, selling merchants base. large point relationship including value and towards individual for and operating solutions merchants with from the in merchants merchants attracting expands systems, offering Clover are institutions, to financial customers. by to first, operating total the transforming benefiting operating software of our grow expanding geared to of are our more third, encouraging our makes This to customer Carat adoption system solutions we strategy. us Fiserv we turning systems; with Now modules; merchants, size growth

positive. areas: Finxact clients solution. the The financial key feedback sidecar on into market. of platform and our to as surrounds institution selling in existing innovation to our new addressable of and and banking been digital the have remain logo we Finxact, has Finxact an our cloud-native cores three new our Turning a We total clients. integrating our focused we fintech, clients developer solutions closed existing both sales early innovate acquisition very Since winning broaden been or for continuously on April, clients existing to committed leading from

dive let's segment. by quarter our Now the deeper in business performance into

with the and posted XX% grew and transactions strong Merchant of organic X%, respectively. quarter. merchant very growth acceptance. volume Let me start revenue We XX% for

start within by Our global strong particularly across America as in well merchant petro. North vertical the since restaurant as regions. strength and grew enterprise travel as second the led accounts strength of was SMBs, the continuing XXXX. quarter, Results verticals such the in positive all in active X% the trend were

strength by retail also strong local Spending the restaurant exchange. currency performance driven during part international basis, the on hospitality, offset across a EMEA had region accelerated in verticals. Our very unfavorable and foreign by regions in quarter,

to very throughout merchant Caixa. market we Brazil, in Latin as significant And the quarter in make exclusive progress onboarding in was in continue mandate acquiring merchants America Argentina from the strong Our merchant business

rapidly implementations. Mexico as in We activity APAC nearly by are across in Spending rebound also a the well expanding trends wins strong, all our presence and were in new driven Colombia. economic as markets and

XX% and continues driven over to quarter, growth continue Clover's revenue XXX vertical in Clover now growth deliver by penetration services Carat, as both Xx into Global clients. Clover e-commerce to systems, in in Clover gain and user versus sold revenue the with operating volume an as traction merchant well Bento of to points. restaurant. our up average to integrated and XX%, focused for basis significant Moving grew software increase with all together, market XX% Clover over fully BentoBox are we payments. in When per strategy see a only Clover

the another Uber system Eats verticals, across integrated a for We second in XX%. quarter restaurant In broad-based partner grew strides omni-commerce positioning its gas several Petro within clients wins with in further the addition, In included convenience growth notable large restaurants. Carat, and delivery stations. contract saw vertical. Service operating launched a our revenue Carat chain made as merchants. Quick stores our strengthening for was of the Wawa, including the and Among Petro quarter, a enterprise

platform significant the client for plate in need Carat quarter with options prepaid to and In progress new enabling based introduce long-standing transactions Carat for crypto checks, to and dealer our capture card. continuously Pay Play, reporting its Carat's capabilities, by replacing XX%, in made retail Additionally, we locations relationship for include that flows customized recognition a expanded in a over North to has launch, growing America. cards clients, transactions innovate on license facilitate to our with and payment quarter, settlement the launched partners online supporting XX,XXX and new in Carat opt to a further respectively, XX% customers payout our EBT keeping the with mission across digital continues digital and payouts bolstering physical wallets. Petro

Walmart within to to our payouts notable We some had North won and during payouts. leading contract enterprise wins consumers with onetime also company facilitate Sodexo, a employee America consumer digital quarter. the We partnership business management digitize our to facilities with and in global a expanded

international Turning to merchant business. our

our leader real-time Fiserv's will with one billion $XXX benefit be automated and we a of We POS highlights our space merchant APAC, quarter. provider today. portal platform continue of service will went leading over onboarding enabled momentum online MYOB, the POS In sports also solution deployment. assets terminals a risk, the region Dhabi Sportsbet, solutions, corporate acquiring significant small digital services as solutions, across EMEA, in In soft the with in including deployed live from of betting the SMB omnichannel in market Fiserv businesses Australia a business Commercial to management banks sub-merchants the it's suite XX,XXX from in with with acceptance the accounting signed capabilities. with to and providing presence largest broad second show with over Bank, and strong deal Australia. enhanced Abu Fiserv reporting The following XX,XXX retail, across and and boarded bank a in

business our growth This the X% lines. to by in a variety Payments grew and Moving drivers segment. Organic of across quarter. Network was enabled revenue the

Our driven QX active business This last was by both on North environment. of American credit year. grew credit file and onboarding versus accounts new growth a favorable XX%

our in completed revenue of reminder, Bread wins ADS conference. investor second $XXX the the million at the wins a in we last formerly the credit of Bread we we XXXX. the third of three onboard, annual was issuing XX new three the As wins top announced largest to Financial, completing in the related quarter, announced onboarding to

current our and sales very implementation Looking remains pipeline forward, robust.

double as issuing well driven by of digits international strong new macroeconomic business as clients. Our grew onboarding improvement

following Accel. debit debit continues networks, transaction continues on solid in to post normalize our growth, debit industry-wide, driven growth new year. last stimulus-driven the high volumes debit business by to Our client and wins STAR Even

for Our business digital account more more fraud, market-leading our demonstrating opportunities serve have solutions, digital effect. in key attractive to debit processing to our and differentiators solutions, including pursuits new cards into SpendTrack, and and an offer flywheel become drive network, banking, risk, CardHub Fiserv

Zelle, growth digital see the We payments XX% in transaction continue growth of quarter. which posted a in strong by driven to

went four into client two refund position commencing distribute qualified provider as middle-class quarter, of years program. position programs the the extend win provider in reinforces of the debit Fiserv of competitive California's in to prepaid our this loan recently a live area program of our sight Our student recipients. under government servicers. Fiserv a of a cards with won a expect next to implementations. line a X,XXX the base in opportunity. we will client leading considerably manage we And notable program win state years. We expanding tax over This to support space, momentum will loan the and Zelle had to which continue accomplished of Zelle our processing choice Zelle bid during doubling feat as student

credit rewards a popular NewDay, credit globally. the quarter, with card, cards. services most In U.K.'s continue as relaunch John the processing and mandates we other they expanded the our processing of company, We second retail one relationship U.K.-based services provide financial to win Lewis Partnership to

revenue. well as with Moving quarter in growth We digital posted our of by strong to approach. timing quarter, wins of periodic X%, the We clip, of and three-pronged four continue surround as seven competitive grow organic at the the including Sales another segment. strength processing Financial a to takeaways. by digital in revenue driven driven had core benefit solutions activity account healthy our Technology

making solutions modern third-party choice digital goal by at finance banking micro as and embedded through with integrations. marketplace. Finxact proprietary banking serving and banking. merchant, card into the solutions least, our surround of banking our issuing clients, are the next-generation Our to core but APIs for core with and platform with experience for and Last, solutions In sourced including and online developer our cements solutions our leading community these our we making SpendTrack, users. via clients and CardHub, are studio of not approach, further destination in ecosystem, keeping service to digital the And Zelle a open becoming processing, app attractive clients to our pre-integrating developer such offer discoverable we integrated our also the our our exposing lead definitely

called product was digital-only Holdings core utilize modernization SMB-focused effort. selected their as to modern Bay initial Our National initiative part pursue Colorado of CUnify to Finxact Finxact's an Bank by greenfield

journey. Vineyard all products an including surrounds and example in for across Massachusetts-based, channels, offers combination market. competing size its As core Bank banking APIs Fiserv, new value and cross-selling over our The and other of experiences to and by utilize existing accelerating scale, technology is innovative Fiserv's personalized winning clients to customers. ecosystem highly Finxact of are will we open of knowledge into clients, modernization Finxact services digital of deliver their Martha's delivering Together, the Fins

to discussion the more results. on pass financial me for let Bob Now our detail

Bob Hau

good Frank, morning, Thank and you, everyone.

XX% performance, portfolio you're our starting slides, I broad business detail total a financial If metrics Slide company was cover to also X. quarter, in segment organic company grew of XX%, across additional Total will Acceptance our quarter and revenue Merchant strong the We along our on Acceptance total products which with the notably XX%. had second trends Merchant and on across led our and segment, following Year-to-date, organic on execution with thanks the revenue and company growth by segments, grew services. all which grew growth strong XX%. segment, the

total Second to billion, $X.X $X.X and operating to basis prior adjusted of X% company a an revenue quarter XX% the adjusted grew year. billion margin of adjusted XX.X%, grew resulting income operating versus decrease points in XX

including For half XX% to year, a combination of The revenue income adjusted including: Payments acquisitions, grew the segment; consistent terminals BentoBox of $X.X Acceptance Data was cost Finxact; for adjusted adjusted integration including investments our First and XX% projects. into margin resulting including in the and the and and first Merchant half with to continued our to the Plastic factors, third, $X.X and related operating of of Paper up inflation business, adjusted impacted billion, for Fiserv material first, new the year. wrapping of margin last first for second, reinvestment both segment billion, labor by increased operating point-of-sale XX.X% and

ramping quarter. and will This as As rate the a lead in indicated, the to particularly second year, complete we of to down these in previously half in the leading as margins those the benefits quarter late QX, we exit materialize of into second spending and the projects strong for XXXX. third improved the began

software end earnings cash to came XX% provided at per for flow $X.X increased cash of we increased Second conversion was XX% in and and share revenue $XXX in and growth, cash year. Free the acquired drive was areas growth in anticipation chain investment increased newly the a working year. flow first flow strong potential risk the high to to across by given of: our second, share revenue range, capabilities; investment, quarter and of quarter for higher conversion to by integration particularly the free XX, the first, June business. adjusted full inventory at Through the million months the six continued driven in increased innovation clients The compared growth Free in adjusted in the to XX% Latin and which $X.XX fourth, disruption; increased driven prior $X.XX year-to-date. income the for any combination the to America; capital expenditures, very application to this billion of of net earnings the quarter year. of including to minimize capital sustainably XX% guidance XX% $X.XX third, supply impact adjusted per development

flow to we the XX% As XX% cash to year which improve previous the expect look XX%, forward, our slightly below meaningfully outlook end to free is of we at XXX%. conversion to

better mid-single single our clients from up solutions even with focused Company are our levels on digits or growth innovative sustainably for rate We serving stepping to high and this the of year historic digits.

retain volume and the the in X. or basis, Now them. Organic on the on year-to-date. the and strong a XX%. to Slide the and system XX% starting Clover product strength expand Quarterly, volume an was half. revenue X% Clover on and quarter, X% through quarter grew build $XXX XX% medium-sized revenue grew billion strong year, annualized businesses growth for transactions relationships of client loss fully in respectively. merchants respectively. and in Clover, the the results, growth up operating segment GPV and the third continues to cycle quarter mid-last more revenue attract X%, billion, XX% When segment XX% a processing was and merchant with and year-to-date. transactions offering $XX Acceptance small XX% of XX% was first Merchant our and quarter, posted in excluding in a looking we our which for for to Merchant and the growth its Adjusted XX% quarter will

for omni-commerce Clover Connect quarter, income operating sign revenue XX% Adjusted our Our ISVs ISV XX% quarter. Carat, grew this operating system in clients, enterprise year-to-date. We second the volume in in the down our points signed XX% the growth. operating XX improved through increased margin XX.X%. adjusted segment to business driven quarter year-to-date. XX and XX Acceptance to XX% bringing grew basis in basis quarter, by million to income the XX.X%. operating continued the This investments Year-to-date was for to to XX% and adjusted inflation margin billion and grew $X.X in XX and $XXX adjusted points was total operating

productivity. lower We the in expect in and as inflation, in of revenue improve the see the adjusted margin Merchant benefit segment strength Acceptance of second to the half year we continued

to and in Turning accounts drivers our segment the Payments range. at clients posted Accel growth debit business, processing medium-term guidance in X. of high the credit end and American our solutions of number growth to Network the The Notable organic X% active growth. segment of transaction Slide the business, North the and networks, include X% quarter, this output revenue Zelle, by led in file an on in and increase STAR X%

adjusted We and expect quarter. combination versus XX.X%, come XX growth continue Adjusted up income for and the X% operating was full this our the resulting points and to through in was up at margin adjusted up organic driven within was in last year the XX X% year rest X% a of to of billion to year, the operating Year-to-date, to to income well in outlook adjusted medium-term of basis XX.X%. rate basis points $XXX $X.X segment margin momentum to operating the revenue X%. the million, inflation operating was investments down by segment

at X% high quarter, guidance growth our The first the segment X% of the in Financial revenue medium-term to second Technology organic Slide half X% for range. to end at X% X. grew resulting Moving in the

$XXX the in in X% XXX operating office. leading to The the digital income the up in investments winning Finxact, business. clients million as Adjusted year-to-date. competitive $XXX processing in modern core quarter, account is core decreased new which seven the up was margin to in and added surrounds Finxact's of the we as Adjusted quarter the in driven Fiserv's quarter, in combination the basis client's including segment investments points mentioned, takeaways. and operating quarter Frank four organic million by increased X% early XX% to acquired in we well As

adjusted quarter and points adjusted was half, The million the XX XX% corporate margin to The in half. XX% year-to-date. the loss $XXX first for grew rate was first in million XX.X%. the tax operating basis the For and effective was $XXX segment's adjusted quarter operating the

line expect XX% year. Total be tax extended XX, target and effective was billion In new outstanding was flexibility. June full We June, debt leverage. revolver XXXX. approximately billion to $X.X bank for continue with increased $X X.Xx debt the revolver XXXX June from rate to additional EBITDA our in we our the capacity and to to ratio maturity previously and billion to The adjusted $XX.X provides on adjusted

million. During remaining We the quarter, for shares repurchasing XX allocation authorized quarter. our we X.X had disciplined $XXX at for continued the end of million capital repurchase strategy, million the shares

Additionally, share we have had so nearly far $XXX in repurchases million of July.

our are that, With balance high-value capital sheet, Frank. and includes which a and allocation me acquisitions. shares maintaining repurchasing pursuing let innovative fully back to committed to strategy, long-standing We the strong call turn

Frank Bisignano

respond on of Thanks another report, standards we second with In results environmental impact quarter, accomplished, we've Bob. add reporting double-digit which number disclosures both a of revenue and XXXX growth to adjusted to our enhancements and very corporate CSR included governance. in key published and new adjusted EPS. of I'm proud the quarter the

optimize we in as We June, communities. the we business value generating Nebraska. our while expand shareholders to ESG to and our program continue to share back-to-business are proud In journey

innovative support business ongoing receive a business grant, community to to small management access addition In Clover, and businesses from technology $XX,XXX resources.

diverse to businesses. is grants for program million Nebraska in $X expected Our award small in

Ireland as of We building Downtown, second offices Berkeley toward Fiserv In completion are Heights, for location. design the received green lead Manhattan priority the working gold are and lead our a status hubs. our certification for we Jersey, New green incorporating quarter, principles and building facilities. Dublin, And at our

serve Shub to Q&A, and our work work taking is the for XX terrific hard-working pleased that, for of clients Finally, I on world shareholders. of with new Relations as today to months. working to the for of welcome Welcome, new Head operator to thank Head than turn look our Fiserv will our Relations. continuing to With her I'm I it Julie her. Investor last Chariell, our our Julie. Investor and over the Head Strategy, before as I'd XX,XXX please a more line our thanking close operator, us relentlessly I by with assignment as you, the associates Shub who open like for around forward is questions. for to

Operator

Thank you.

our the ahead. question, line lines Instructions] any go we'll of questions. will from Please for now Baird. open [Operator We first to For Dave go the phone Koning

Dave Koning

X%. things, I results yield great XX% Yes, across in most interesting must the guys, the thought one Hey, of be Board. up volume merchant; up

or the maybe biggest you is ever services two of one -- think of those mix Is that could but pricing merchants. to Is sustainable that's that's more seen. that? there how called there SMBs, be any that out just I or more in primarily prevalent and components we've the

Bob Hau

Yes, Dave, thanks.

last the we over say necessarily us yield. heard track you necessarily don't to like couple of As quarters,

as we're this fact, we're last for overall growth quarter, positive. quarter-to-quarter managing where quarter, two fluctuations yield for revenue margin. is not whole examples In and managing always There's yield

see we yield, in growth and believe see yes, we'll sustainable, growth value-added merchant. continue we see as overall business. the continue good revenue benefit we services and our Obviously, more As of sell the to more is that we we per to revenue see

will more be of that transactions. more Some that services, some of because will of "yield" value-added be

Dave Koning

quarters year-over-year. think as in QX like And two back But cadence you impacts. Is half, just I margins. has maybe QX and look Great. as be up XXX then bps I to the above just that, or below remaining? the out we just half, XXX the it investments in on or called follow-up, a of the bps know about inflation back

Bob Hau

Yes.

first subside combination and margin we I into QX. QX the year. to of half a the anticipate think high saw -- we the levels inflation expect so to The improve very in bit into the you should more of do from

earnings that well have We talked prepared Additionally, as we costs carryover dialed those quarter, as adjusted we we an from year, back January They'll about therefore, hit great. integration as last started work costs ease QX. this QX. them to QX, we part on of the to Last In this at that back in see have out. added X continue beginning standpoint. remarks ease you in in latter going of in dialing stopped year, to they we've out. And those the

So go those costs away.

the addition, you benefit that or In get of work. the productivity integration

a you'll quarter so, in you do in half. than improvement first fourth and the And third see bigger second half than stronger

Operator

to Next, from Please we'll go the Lisa line ahead. MoffettNathanson. go Ellis of

Lisa Ellis

to think you year-to-date, I actually in Can for remainder of cash start question just help question. you Bob, Conversion I'll confidence throughout for to now the with question in XX% follow-on year. the with in the half? second you, improvement the gives XX the XX% year. the Dave's on us bridge expecting Same you're what full flow running free conversion the

Bob Hau

in see definitely of One, improvement we in the so Lisa, couple inventory a half back think there. Yes. things the the year. I of

our of the buying actual that We we been clients hardware inventory, done the also second the segment, terms significant but devices, from year. Solutions our both our devices, easing We in business point-of-sale paper see and half year. have That half into only available, in easing the not components to some of and case but of was for protect second Payments of amounts having that in payments. of see Output the plastic point-of-sale

some Overall, And productivity in as see the see timing get into well CapEx there. improvement as as improved we improve improvement So, second capital half will I bring more standpoint. working cash we'll from finally, believe to flow. then, more margins an a

Frank Bisignano

increased at market opportunities very, had organic at greater add, much build-out, Yes, strength -- we for footprint will opportunity is by opportunity the we examples surprised I and speed now those. a at we're example, just look I where three industrial highlight would building I of pleasantly think items tremendous perfect one speed. of Finxact be I Ondot our look We larger the on faster opportunities. very think much Finxact as didn't into product and And we've execution. it have other a have to I are

does speed a if very operate, You see execution. it's the good at our which trajectory, also. number implement our numbers, very, CapEx in we scope look we of it But strong revenue the and at been size affect increased which fee you

Bob Hau

we've from I XXX think is to that XX why down heart opportunities taken XX those to see our the out want work full to last two those year and we, And continue XX outlook to at -- elements we pointed really the of Frank those opportunities.

Lisa Ellis

is size of Zelle how about Payments is of Zelle segment? and as outs think Okay. us Good. you that remind Networks, just I growth. model big XX% how transaction should like my contributor to the of because we more to guess, its number related quarter a monetization a then and Zelle and second of related growth contribution to both, strategic a Can question you this Zelle had call And XX% one growth, client

Bob Hau

Yes.

institutions payments, of more and financial of the number tool, driver i.e., overall, part the and, as ramp, the continues see it's, we of I We've that as there ubiquity not and And think payment growth so. users growth good piece, capability of segment. seen in We'll business. obviously roughly more growth consumers as more and call that relatively to see good the of of number only continue small therefore, a of making it, it's that to X% the more

Operator

Next, go Please Tien-Tsin we'll from go Huang to the ahead. line JPMorgan. of

Tien-Tsin Huang

to Congrats Excited on her. role. new Shub for the

side, you don't the I to on -- upfront mind. visibility ask just the want On if

now new July thing cost of better in as out interesting same expected? have And and you the growth? on ramping trends call on volumes any Just to side, sales visibility the cost

Frank Bisignano

QX. Yes, fundamentally look and The line in with also. of remains got Tsin, standpoint volume, in transaction it's volume first line all, resilient, July in at consumer

very, So over, is fashion. And this in on clear. although expense to continuing the the be months visibility very side seems month the are

made We to continue have bunch margin relative sight. we expenses put and level like how or opportunity, to -- that clear probably do very our opportunity a have in we us see take Obviously, to get line we a but productivities of front the basis down this it see grow we know productivity business, don't probably decisions to we it, a to where of is at rate to opportunity to on of that [indiscernible]. run

Bob Hau

And Tien-tsin, bit. to out, we as I pointed a subside inflation expect obviously,

those Those been second kind of as have projects. We the completing of of down of have the middle quarter. to productivity end ramping integration

continue now guidance You in X% continue on list to see of has sight those our a and to talked to but growing good give lower up margin execution to saw from X% to bit this up innovation see revenue the margin a previously much faster took year X% this growth. opportunities and that invest see impact flow, speed and Frank you though clear to about stronger to even than sustainably past, we at that And we business QX. XX%, it to opportunities drive cash EPS our of is focused taking an therefore, into increase

Tien-Tsin Huang

it. Overall, for Got sure. encouraging,

just seems curious to versus quick you are for doing lot appetite stock. Finxact continue like your my the Just buybacks the sounds with -- with like It properties there now, deals? follow-up payment you, there. sale of out target It leverage bought on a some

any there's if curious change just in So thinking?

Bob Hau

shares our strength and sheet acquisitions, do back no and cash in to us for opportunity buy continue I No. our of say to gives The accretive that. outlook both would thinking. the flow we'll change balance and value

a or billion what number it, call different back months, $X also $X.X you we last acquisitions acquisitions. of seven fact, also buying so July about completed yesterday far. over shares. while we're billion, And look, But we If XX, XX the through for through did in so about

we'll to So, continue both. do

market there's value our the opportunity in stock. clearly the regularly. we're believe know, real in you As of We

look acquisitions. also buy we back, value-accretive we'll but for So

Operator

go line Research. Please Darrin to go we'll Next, from Peller Wolfe ahead. the of

Darrin Peller

then term. in Is in in across either And revenue volume. this strength and something But we anything we in XX% mind the mean, again on two was really mean, the revisit to a growth the we hone saw, between in all definitely I above matter, that wouldn't of for what the to or we to growth come growth well -- medium revenue of of segments sign elevated when spread the this in Could growth first? segment I that, things there be of sustainable expected. at sustainability merchant anyone for look And kind that minute, just revisit maybe anomalistic terms segments. three your if quarter other again, this and a is

of talked think, well value-added again, But that is consistently you I You volume and kind now? do services, SMB. about expect revenue outperform a to spread

Frank Bisignano

merchant. had do purposely investor We obviously, rate talk haul. saw longer over in the we driving software penetration And of it we off our about up start how believe conference to services. I'd

points, talk basis moving over We XXX saw XX%. that go You about longer haul that at XX%. to the up

along focus capabilities continue So Mexico, strong Al of ARPU ability Argentina, is vertical very expand about our move hear a verticals. ours build the then vertical, in our to markets, you we're over Colombia, clearly to with restaurant going talk in into we about long the very, the to us also and feel out and services haul

in we we choice of do see bought Carat two couple made, that mean I in we're since see We that Obviously, you heavily. leverage total are of we partners capability and of of I feel in products the a continue really we to leading And you believe integration can. our from and get believe So, the a bank partner to of the grow. franchise. what But invest strong we course, the is Clover partnerships other our investments the in partners there. an industry of growth and inflation way we've that that only business points what business had there. the in continue we

sustainability minus And front long talked about have of time, you're so for and I is the the labor. I long of a been us. driving time right fruits seeing this the in we've a inflation and for think And

Darrin Peller

just Bob, yield, Okay. follow-up And don't quick again, mind. a on the you if

Bob Hau

Sure. Yes.

So always obviously, quarter-to-quarter. yield was quarter quarter. very There's last positive this variability

services within we'll to of think continue try continue get out we focused we myopically a that value-added We time kind so see as to improvements. not given too on And quarter. to provide evens calculation it over

on to revenue We that selling signing merchants. portfolio, very margins very the are focused Company. i.e., on those We're merchants ARPU to focused more up lifts and products merchants for and adding our more drives

Darrin Peller

the growing notably is very and just mean, business margin faster. quickly, the Guys, profile, obviously Okay. I cash free

the just back support maybe build around moderate So more to of XX% to a get term? free should conversion and that should we just guidance either restructuring growth? this margin inventory story cash or anomalous going expect way forward longer it is and kind you Or to

Bob Hau

end this we going up to revenue ready growth merchant not business, look I'm Obviously, this were from up we're of took In little in 'XX, the 'XX, a end where crystal the was to driving at been of XXXX. Yes. that outlook. outlook, actually update extended bit what focused in year, took medium-term at XX% our March 'XX, our or of days to day, and last medium-term like. Look, the the the said X% conference We sustainable full the long-term on 'XX it. ball investor We we've these in fuzzy is significantly our year. up is historically.

XX%. we'll So XXXX to be out we said, went believe and at we

for growing line. bottom we're flow. EPS our great line the continue top and line. full We for opportunities look we'll bottom the the overall to those line, growth and for driving So generating up free to sustainable growth growing by cash obviously took It's top year, value helps this that drive the quarter

Operator

to Next, we'll Ramsey from Please El-Assal ahead. go of Barclays. line go the

Ramsey El-Assal

profitless to by competitive maybe or you competition. driven you the the see the with seen along fintechs, you to sort about with? expect have seeing years, compete lot irrational raising any haven't a you capital improvement the a I harder guess, to in few competitive environment, wanted primarily hard past of over time do of I And of environment. lines it's to argue Are ask we

Frank Bisignano

enterprise. it I large think a we mean the I way about is run

competition have every in country. We

in We every have competition business.

are our our think clients a this enterprise. world-class and about business, or And bank is leading. how whether think provide small businesses, I community we to I ultimately, a it's their grow solutions opportunity an

other a out So, at from there, at best. And going look and competition standpoint, a you the at I we're market than provide you as there's be share. is numbers to really job look we look what's anything best the gaining our and on, it feel competitors when don't that lot but our of great

Bob Hau

We'll to maybe is, time. continue continue of profitable businesses believe add perform scale the we day, I'd at clients, goes. Ramsey, to competition end punctuate will perform continue to our And the we'll for and And to We'll thing execute. over comes the and win.

Ramsey El-Assal

Got it.

could that versus mean Okay. occur if the well online, off-line from think in point? stabilized of of an question that readjustments do to And both as order is, your mix your to I back how Follow-up you for segment. still is in broader is, has acceptance there this as the I stabilized you guess mix wondering sort get Or post-pandemic sort me And I give an need to on that is debit? credit business at place? update trending us in was some

Frank Bisignano

stabilized. I it's from credit, a debit, think

two that but I driving that think up, it's very to keep and been maybe I credit But And we have percentage footprint at driving stabilized, in large trends now a from pre-pandemic there's when Carat, keep point obviously, there. we're rate a we normalized mix. we started globally. we debit delta do think e-com, a

increments small our in size the of relative to merchant move those So, business.

Ramsey El-Assal

same online, story? And offline, Great.

Frank Bisignano

Yes.

Operator

go Jason of ahead. line of from Bank Please America. the to go Kupferberg we'll Next,

Jason Kupferberg

I the on raise for the us payments the wanted I the the be for to little detail within that Obviously, to start in nice how just level there comfortably see the to Can you'd a outlook about year? heard give X% revenue and more side. segment think Just on X%. to you say upside think you outlook. the

a there be color board great. across little more Just would the bit

Bob Hau

Yes, thank you. Jason,

company If previous X% the lifted we've the you segments, look X% XX%. full at to to X% outlook three obviously, to from

point, medium-term in you So the said remarks, during segment, range In payment volumes Merchant, the the an At off we're guided continue past. in medium-term above to in outlook above of -- is to a X%. the July the we above as had it's the previously pointed with we're we're X% be prepared the excuse given well we within think XX% the start a outlook the year in we're out, of line. that me, of midpoint we X% -- XX%, our to that we've in this line year-to-date, or third with good given outlook. quarter provided which to obviously,

three above to X% to range our previous the X% range year-to-date revenue. growth be or we I with segments than about to our year be X% in that X%, that to But So the basis. overall, we And of flows guidance would outlook. be outlook. are There expect obviously feel full some and to expect good periodic all for we're ebbs the fintech of the better rate that at at above XX%

Jason Kupferberg

seems Can with costs. material on these items Okay. And on the you the of side, outlook the in that's year. a some the customers, probably sort of It for to your of on XX some ability follow-up comment basis margin reduction to perhaps point inflationary labor lag? on just your just biggest like pass driver the

Bob Hau

Yes.

I think.

by segments segment. by varies within it that varies So business and

but think less the you by of for the the both expense We but on that got on year, bit driven growth we've balance about revenue so inflation, of bigger see little that do a line or inflation, expense impact the down growth benefit flowing less overall some If obviously, side. hit impact standpoint. little revenue from the a an top

the is the improvement are into some driving growth second driver that, of large with investments That the the in So, combined basis at XXX margin seeing that points the those we'll see those XXX our year. points and some reduced of half prior that. investments but margin still are the certainly basis -- prior inflation year, up of over over driving least we're

Operator

Thank you.

from from Stanley. ahead. Please Our go next Morgan James Faucette question comes

James Faucette

and all the much. for color detail. very you Thanks Thank

you the in for of how of of of a just bit of give macro you year? now. are You influencing right outlook rest are seeing mentioned you about and kind insight that's terms cloudy the what assumptions are this ball those, us how thinking crystal little now you right formulating Can maybe

Frank Bisignano

Well, would you if had the low you think. go really back end, to have guided, to how it

comment would the that basis had slow down, XXX in half. heard be and second that a the You that, macro second assumes points I a acceleration in made

going the what's to that just really on, is isn't dynamics, obviously, I relative workforce gave Now, interest in yet. exactly But inflation, end. what's look low both a rates, in caution in where the of happening showing see that's which net-net we quarter-to-date, July look month-to-date,

go continuing you that, continuing right of it's now. we to high way end the are If a

much out go put the for We we opportunity And us, M&A with anything fact having getting behind benefits in back where a productivity in think. that do better you that believe coming the in. and are we not looking improved we merger go have of the to great

inside assumptions you here the from really add? to Bob, a would standpoint. are like those macro So anything

Bob Hau

Street and The remarkably sheet inflation, is Journal report is The read you headwind pick low, resilient. with news obviously, consumer or unemployment balance strong. quite a that's rates James, if Wall obviously, quite interest up any

feel one budgeting just So term, about about kicking visibility XX%, We're overall, At to near company this the is in it's pretty the of demonstrated cycle. every the the of XX%. I the day, resilience think keys end off we the good a cycle. think XXXX of

incredibly What's long how So last? people overall input? deep that does go? if job throughout the we full a we But end day, proven believe of creates to does recession? murkiness. were now. We've in cycles. levers I got can think to some pull the hit resilient have a right those recession, How at now, that that Is be technically right we we're the it of some recession All it of

near the raising go leverage to to But midterm a line, a lower top ability make invest for that the little continued we the and We are decision got innovation soft, think, suddenly bit but we'll of decision. sure right in if drive are productivity EPS, will margin, were actually is term, we very and long-term deliver. our given providing making we've the all strength and continue to things clients

James Faucette

with is in rising impact call And Or impact that. potential appropriately? out that are cost would the that keep you on your rates, just for you, recapturing anything that interest should Appreciate -- interest mind we there? quickly Bob,

Bob Hau

Yes.

XX% and chunk Absolutely, about One, than up, a debt. in is there. and that's by look, but a The the euro. going variable. far, fixed fixed think I both is quite rate paper, dollar bit paper we're lower things debt, of XX% commercial two commercial U.S. there's of that that biggest balance

rate of natural a bit shape good And a in have debt, revenue. have So have but float we we're also course, interest hedge we there. as with of variable we a company,

cash that interest sheet So, rate. roughly we balance have that variable the that offsets generates actually on

So higher clients that financial interest net-net, rates, us. naturally for we're a for the are overall, and institution reason given and within interest rising good our right us hedged actually good rates therefore, for are opportunity

Operator

from Vasu And Govil from ahead. KBW. question final go comes Please our

Vasu Govil

a answered. about is most little I get macro and color think of we wanted it think the concerns. Bob, my you more obviously to bit but questions were worried alluded I just market to just last in answer, as

in you would maybe see recession into So pressure, And most a where kind cost help of the recession? you behave expect have more feel would could your potential remind us of you a each going to segments front, where you what margin on how then levers resiliency? also

Bob Hau

Yes.

in order you of fintech downturn, well we the revenue Obviously, in which share very to up payments managed year digits, quite XX%. difficult was if we followed overall, by proved XXXX, double kind by a think first, we accounts, per segments resilient. all in followed grow flat think meaningful merchant by earnings even what three might look a see of I though at impact

I And have comment made, levers to earlier the so we to pull.

fully different which is and of obviously we have mitigate of manage year our We expect double-digit line. overall do. cycles, lots can for assuming bad. both year, to the through the good earnings, investments XXth and guidance This the bottom That's on deliver we we

obviously, that quite broadly do go believe If at everybody of back to we overall. XXXX, we a we pandemic, took and height the quite of sustained see we'll well ahead sudden so well. QX shock, And

feel weather to we about our storms. good opportunities So,

Vasu Govil

Excellent. And is for headwinds on little FX expectation are on FX, you a Can on year? bit just one obviously, trending the what quick that modeling update one us worse. the

Bob Hau

XXX in headwind America, expecting facing. from been conversion. had on by peso euro points to about certainly LatAm, previously largely headwind we've Yes, that everybody revenue points now But driven FX Latin and a that's basis clearly general, Argentine up basis is XXX

Frank Bisignano

forward talking it. a everyone and great like to for day. time, look thank we I'd Have their to to Appreciate you.

Operator

this conference a earnings of and participating all the XXXX for great call. quarter call. have day. you today's disconnect at Please Thank in second concludes Fiserv time, your rest That

Fiserv (FI) 26 Jul 222022 Q2 Earnings call transcript