Fiserv expects measured recovery from pandemic’s economic impact

The Fiserv headquarters in Brookfield.
The Fiserv headquarters in Brookfield.

Brookfield-based payments giant Fiserv reported early signs of recovery from the economic impact of the coronavirus pandemic after enduring a decline in business due to shelter-in-place orders, the company recently announced in an earnings call.

Throughout the COVID-19 pandemic, most of the business showed resilience with the largest negative impact occurring in Fiserv’s merchant business, Fiserv chief executive officer and chairman Jeffery Yabuki said in a first quarter earnings call.

Fiserv also saw pressure in its debit-oriented transaction business not seen in previous economic downtownturns. However, the circumstances of the pandemic also spurred incremental growth across several areas, including Fiserv’s payments and digital products, Yabuki said.

The company reported that global merchant transactions are generally on the upswing with some variability by country, but still meaningful improvements from the lows seen in late March and early April.

“In the U.S., we’ve seen early signs of recovery in later April and May to date with comparative transactions down in the low double digits after declining nearly 30% in the last week of March,” Yabuki said.

Fiserv’s revenue was $3.77 billion, up from $1.5 billion in 2019 which includes $1.4 billion in additional revenue from the acquisition of New York-based First Data Corp. in July of 2019. Fiserv’s net income increased from $225 million in 2019 to $392 million in 2020. First Data had $169 million net income in the first quarter last year prior to the acquisition.

Fiserv expected to generate more than $300 million in synergy savings in 2020 following the acquisition. However, the company now expects $500 million of full year synergy savings with an annualized exit rate of more than $700 million entering 2021, said Frank Bisignano, Fiserv president and chief operating officer.

“We are moving more quickly to accelerate cost synergy timing as a way to offset some of the coronavirus revenue pressure,” said Bisignano, who will become Fiserv’s CEO in July.

Because of the uncertainty around COVID-19, Fiserv withdrew its 2020 financial outlook. However, the fintech company, based on trends, expects “meaningful pressure” in quarter 2 results with improvements ahead during the second half of the year, Yabuki said in the call.

“Overall, we are quite optimistic about the improvement we are seeing in the current trends and believe we will see further acceleration as shelter-in-place restrictions are eased in the U.S. and around the world,” Yabuki said.

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