Last updated on July 3rd, 2019 at 07:11 pm
Brookfield-based Fiserv Inc. today held its first earnings call since it was announced as the naming rights sponsor of the new arena in downtown Milwaukee, during which chief executive officer Jeff Yabuki assured shareholders the company would deliver on the agreement in a “cost-effective fashion.”
Yabuki said the arena is expected to showcase the latest in technology and entertainment experiences, and the name Fiserv Forum is “an intentional nod to our annual client conference of same name.”
The arena sharing the name of the Fortune 500 company’s annual conference has led to some speculation that the national event, which was most recently held in May in Las Vegas, could be held at the arena in the future. The company did not address the conference further on today’s call with analysts.
The second quarter ended June 30, before Fiserv announced it would be a 25-year naming rights sponsor for the arena. The cost of the contract has not been revealed and was not included in today’s second quarter report. The $524 million arena is being financed in part by the Bucks’ current and former owners, which have agreed to pay $274 million, and in part by $250 million in public money, through the Wisconsin Center District, the state, Milwaukee County and the City of Milwaukee.
“We believe the step further strengthens our leadership position and reinforces the need to deliver on our brand promise in a time of rising expectations,” Yabuki said.
Fiserv in February sold its Lending Solutions business to private equity firm Warburg Pincus LLC for $395 million. The company has not traditionally been consumer-focused, since its customers are financial services institutions, but Yabuki has described the arena naming rights deal as a way to get its name out to a wider audience. Fiserv provides payments, processing services, risk and compliance, customer channel management, and insights and optimization for banks and credit unions.
Fiserv has also been in the midst of a search for a new corporate headquarters location and about a year ago had narrowed the search to three locations in the metro Milwaukee market, but had not ruled out other states. The state offered $10 million in tax credits for the company to keep its headquarters and at least 93 percent of its approximately 900 Wisconsin employees in the state, plus another $2.5 million in capital investment credits for the construction, as part of the special legislative session at which the Foxconn incentives were approved.
Fiserv again did not provide an update on the headquarters in today’s call. Yabuki last answered a question about it at the firm’s annual shareholders meeting in May with:
“We, as everyone knows in the community, we have been focused on what to do about our headquarters. We do believe that we need to have a more technologically savvy location and so we’re working on that. We are disappointed on how long it’s taken to make the decision, but we know this is a multi-decade decision. We want to make sure we make a good one. We are committed to Wisconsin, so we will continue to be engaged here, and we’re looking for what’s the right location given the demographics of the city and our need to be able to recruit. As soon as we have a decision, we’ll share it.”
Fiserv today reported second quarter net income of $251 million, or 60 cents per diluted share, up from $221 million, or 51 cents per share, in the second quarter of 2017. The provision for income taxes was just $72 million in the quarter, down from $109 million in the year-ago quarter.
Quarterly operating income totaled $358 million, down from $372 million in the prior year. Selling, general and administrative expenses increased to $320 million, up from $276 million in the year-ago quarter, but the company held costs down to come in flat on total expenses.
Total revenue was $1.4 billion in the second quarter, flat from 2017’s second quarter.