Fiserv, Inc. CAPEX jumped on 25.4% and Revenue increased on 2.2%
02/07/2019 • About Fiserv, Inc. (
$FISV) • By InTwits
Fiserv, Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is expanding: 39.7% in 2018 vs. 34.5% in 2017 vs. 31.9% in 2014
- Fiserv, Inc. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.8%. At the same time it's a lot of higher than industry average of 7.6%.
- CAPEX is quite volatile: $546m in FY2018, $402m in FY2017, $433m in FY2016, $3,603m in FY2015, $3,853m in FY2014
- In the last 5 years the company invested considerably less than D&A: $1,588m vs. $2,221m. In 2018 this situation was still the same: CAPEX was 360 while D&A was 556
- The company has highly profitable business model: ROIC is 20.4%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.4x while industry average is 2.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased on 2.2%. Revenue growth showed acceleration in 18Q4 - it increased 2.3% YoY. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 1.9 pp from 32.3% to 34.2% in 2018. EBITDA Margin grew at 1.7 pp per annum in the last 5 years.
Gross Margin showed almost no change in 2018. Gross Margin grew at 1.1 pp per annum in the last 5 years. SG&A as a % of Revenue increased slightly on 0.90 pp from 20.2% to 21.1% in 2018. SG&A as a % of Revenue grew at 0.42 pp per annum in the last 5 years. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in 2018.
Net Income margin decreased slightly on 1.5 pp from 21.9% to 20.4% in 2018. The efficient tax rate was 24.2% in 2018 while the average for the last five years was 27.0%.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 6.2% in 2018. The company showed small CAPEX/Revenue decline of 0.65 pp from 6.8% in 2015 to 6.2% in 2018. For the last three years the average CAPEX/Revenue was 5.5%.
Accounts receivable as a % of Revenue increased slightly on 0.51 pp from 17.5% to 18.0% in 2018.
Fiserv, Inc. has spent
$712m on M&A in 2018 which accounts for 12.2% of revenue.
Return on investment
The company operates at high and attractive ROIC (20.4%) and ROE (47.3%). ROIC increased slightly on 1.3 pp from 19.1% to 20.4% in 2018. ROE showed almost no change in 2018. ROIC grew at 1.2 pp per annum in 2014-2018. ROE grew at 7.4 pp per annum in the last 5 years.
Leverage (Debt)
Debt level is 2.4x Net Debt / EBITDA and 2.6x Debt / EBITDA. Net Debt / EBITDA increased on 0.1x from 2.3x to 2.4x in 2018. Debt jumped on 21.6% while cash jumped on 27.7%. Net Debt/EBITDA followed a growing trend at 0.047x per annum in 2014-2018.
Fiserv, Inc. has good short term financial stability: Interest coverage ratio (ICR) is 9.1x. Fiserv, Inc. has no short term refinancing risk: cash is higher than short term debt (10,375.0%).
Average interest expence charged on company's debt was 3.2% in 2018.
Valuation and dividends
The company's trades at EV/EBITDA 16.9x and P/E 28.3x.
Management team
Jeffery W Yabuki is a the company's CEO. Jeffery W Yabuki is a founder and has spent 13 years with the company. CEO total compensation was
$12,410,769 in 2018 which included
$840,000 salary. The company's CFO is Robert W Hau "Bob". Robert W Hau "Bob" has 3 years tenure at the company.
Insider ownership is 0.36%. Insider ownership didn't change in 2018.
At the end of financial year the company had 24,000 employees. The number of employees didn't change in 2018. Average revenue per employee in 2018 was
$242,625 and it increased on 2.2%.
Financial and operational results
FY ended 12/31/2018
Fiserv, Inc. ($FISV) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 5,066 | 5,254 | 5,505 | 5,696 | 5,823 | 2.2% |
| Gross Profit | 2,185 | 2,345 | 2,546 | 2,672 | 2,754 | 3.1% |
| SG&A | 975 | 1,034 | 1,101 | 1,150 | 1,228 | 6.8% |
| EBITDA | 1,614 | 1,728 | 1,856 | 1,965 | 2,309 | 17.5% |
| EBIT | 1,210 | 1,311 | 1,445 | 1,532 | 1,753 | 14.4% |
| Interest expence | 163 | 170 | 163 | 176 | 193 | 9.7% |
| Tax | 384 | 377 | 492 | 158 | 378 | 139.2% |
| Net Income | 754 | 712 | 930 | 1,246 | 1,187 | -4.7% |
| Stock Based Compensation | 49 | 65 | 68 | 63 | 73 | 15.9% |
Balance Sheet
|
|---|
| Cash | 294 | 275 | 300 | 325 | 415 | 27.7% |
| Accounts Receivable | 798 | 802 | 902 | 997 | 1,049 | 5.2% |
| Short Term Debt | 92 | 5 | 95 | 3 | 4 | 33.3% |
| Long Term Debt | 3,698 | 4,288 | 4,467 | 4,897 | 5,955 | 21.6% |
Cash flow
|
|---|
| Capex | 292 | 359 | 290 | 287 | 360 | 25.4% |
| Acquisitions | | | 265 | 384 | 712 | 85.4% |
Ratios
|
|---|
| Revenue growth | 5.2% | 3.7% | 4.8% | 3.5% | 2.2% | |
| EBITDA growth | 10.2% | 7.1% | 7.4% | 5.9% | 17.5% | |
|
|---|
| Gross Margin | 43.1% | 44.6% | 46.2% | 46.9% | 47.3% | 0.4% |
| EBITDA Margin | 31.9% | 32.9% | 33.7% | 34.5% | 39.7% | 5.2% |
| EBIT Margin | 23.9% | 25.0% | 26.2% | 26.9% | 30.1% | 3.2% |
| SG&A, % of revenue | 19.2% | 19.7% | 20.0% | 20.2% | 21.1% | 0.9% |
| SBC, % of revenue | 1.0% | 1.2% | 1.2% | 1.1% | 1.3% | 0.1% |
| Net Income Margin | 14.9% | 13.6% | 16.9% | 21.9% | 20.4% | -1.5% |
| CAPEX, % of revenue | 5.8% | 6.8% | 5.3% | 5.0% | 6.2% | 1.1% |
|
|---|
| ROIC | 15.4% | 17.0% | 18.6% | 19.1% | 20.4% | 1.3% |
| ROE | 21.9% | 23.9% | 35.8% | 47.3% | 47.3% | -0.0% |
| Net Debt/EBITDA | 2.2x | 2.3x | 2.3x | 2.3x | 2.4x | 0.1x |
| Interest coverage ratio (ICR) | 7.4x | 7.7x | 8.9x | 8.7x | 9.1x | 0.4x |
| Interest expence / Average debt | 4.3% | 4.2% | 3.7% | 3.7% | 3.2% | -0.5% |
People
|
|---|
| Insider ownership | 0.4% | 0.4% | 0.4% | 0.4% | 0.4% | 0.0% |
| Employees | 21,000 | 22,000 | 23,000 | 24,000 | 24,000 | 0.0% |
| Revenue/Employee, th. $ | 241 | 239 | 239 | 237 | 243 | 2.2% |
Fiserv, Inc. ($FISV) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 1,440 | 1,420 | 1,412 | 1,551 | | 3.3% | 2.5% | 0.9% | 2.3% |
| EBITDA | 742 | 494 | 492 | 581 | | 56.9% | 2.3% | 2.3% | 9.2% |
| Net Income | 423 | 251 | 227 | 286 | | 71.3% | 13.6% | -2.2% | -47.6% |
Balance Sheet
|
|---|
| Cash | 382 | 348 | 673 | 415 | | 24.0% | 16.4% | 107.1% | 27.7% |
| Short Term Debt | 1 | 1 | 452 | 4 | | -98.9% | -98.9% | 386.0% | 33.3% |
| Long Term Debt | 4,603 | 4,805 | 4,823 | 5,955 | | 1.2% | 3.4% | -3.9% | 21.6% |
Ratios
|
|---|
| Gross Margin | 47.3% | 48.0% | 47.0% | 47.0% | | 1.2% | 1.9% | 0.2% | -1.7% |
| EBITDA Margin | 51.5% | 34.8% | 34.8% | 37.5% | | 17.6% | -0.1% | 0.5% | 2.4% |
| Net Income Margin | 29.4% | 17.7% | 16.1% | 18.4% | | 11.7% | 1.7% | -0.5% | -17.6% |
Peers in Data Processing & Outsourced S
Below you can find Fiserv, Inc. benchmarking vs. other companies in Data Processing & Outsourced S industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Verra Mobility Corp ($VRRM) | | | | | 167.8% |
| StoneCo Ltd ($STNE) | | | | 74.3% | 106.0% |
| PagSeguro Digital Ltd. ($PAGS) | | 107.1% | 68.7% | 121.7% | 71.8% |
| Payment Data Systems, Inc. ($PYDS) | | 7.4% | -16.0% | 20.7% | 71.7% |
| StarTek, Inc. ($SRT) | | 12.8% | 8.9% | -4.8% | 66.4% |
| |
|---|
| Median (55 companies) | | 7.1% | 7.7% | 11.8% | 7.5% |
|---|
| Fiserv, Inc. ($FISV) | | 3.7% | 4.8% | 3.5% | 2.2% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Verra Mobility Corp ($VRRM) | | | | 97.4% | 97.5% |
| Everi Holdings Inc. ($EVRI) | 25.8% | 38.3% | 36.1% | 34.5% | 79.9% |
| StoneCo Ltd ($STNE) | | | 69.7% | 70.8% | 79.5% |
| Paychex, Inc. ($PAYX) | 70.9% | 70.5% | 71.0% | 70.8% | 69.9% |
| Global Payments Inc. ($GPN) | 62.7% | 63.2% | 60.4% | 51.5% | 67.5% |
| |
|---|
| Median (44 companies) | 38.4% | 39.5% | 39.2% | 38.9% | 40.9% |
|---|
| Fiserv, Inc. ($FISV) | 43.1% | 44.6% | 46.2% | 46.9% | 47.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Visa Inc. ($V) | 64.0% | 68.9% | 55.6% | 69.2% | 65.8% |
| FleetCor Technologies, Inc. ($FLT) | 56.1% | 50.4% | 52.0% | 50.8% | 55.9% |
| StoneCo Ltd ($STNE) | | | 31.4% | 26.0% | 53.0% |
| Mastercard Incorporated ($MA) | 57.5% | 56.3% | 56.9% | 56.5% | 51.8% |
| Everi Holdings Inc. ($EVRI) | 9.6% | 14.7% | 3.0% | 20.4% | 45.2% |
| |
|---|
| Median (56 companies) | 20.4% | 21.0% | 21.2% | 20.6% | 19.2% |
|---|
| Fiserv, Inc. ($FISV) | 31.9% | 32.9% | 33.7% | 34.5% | 39.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Crypto Co/The ($CRCW) | 0.0% | 0.0% | | 1,216.6% | 853.5% |
| Steel Connect, Inc. ($STCN) | 0.6% | 1.5% | 1.7% | 1.1% | 75.6% |
| Everi Holdings Inc. ($EVRI) | 3.0% | 9.3% | 9.4% | 9.9% | 21.9% |
| StoneCo Ltd ($STNE) | | | 7.2% | 18.4% | 8.9% |
| Cardtronics plc ($CATM) | 10.2% | 11.9% | 9.9% | 9.6% | 8.0% |
| |
|---|
| Median (56 companies) | 3.1% | 3.0% | 3.2% | 2.9% | 3.0% |
|---|
| Fiserv, Inc. ($FISV) | 5.8% | 6.8% | 5.3% | 5.0% | 6.2% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| GreenSky, Inc. ($GSKY) | | | | 156.4% | 93.7% |
| Mastercard Incorporated ($MA) | 63.5% | 57.5% | 57.5% | 60.6% | 64.7% |
| Paychex, Inc. ($PAYX) | 54.5% | 58.7% | 61.9% | 63.9% | 64.5% |
| NIC Inc. ($EGOV) | 64.6% | 61.2% | 63.1% | 52.1% | 39.3% |
| Automatic Data Processing, Inc. ($ADP) | 23.9% | 28.9% | 37.9% | 36.6% | 37.5% |
| |
|---|
| Median (62 companies) | 13.3% | 12.8% | 11.1% | 10.6% | 10.2% |
|---|
| Fiserv, Inc. ($FISV) | 15.4% | 17.0% | 18.6% | 19.1% | 20.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| StarTek, Inc. ($SRT) | -0.1x | | 2.2x | 2.3x | 18.4x |
| Square, Inc. ($SQ) | | | | | 13.3x |
| Steel Connect, Inc. ($STCN) | -12.5x | | | | 12.6x |
| Exela Technologies Inc ($XELAU) | | | 8.1x | | 9.7x |
| Alliance Data Systems Corporation ($ADS) | 9.3x | 9.1x | 10.7x | 10.1x | 9.0x |
| |
|---|
| Median (54 companies) | 0.4x | 0.5x | 1.3x | 2.3x | 2.0x |
|---|
| Fiserv, Inc. ($FISV) | 2.2x | 2.3x | 2.3x | 2.3x | 2.4x |
