Fiserv, Inc.

Welcome to the FISERV 2021 Fourth 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 Shubh Mukherjee, Senior Vice President of Investor Relations at FISERV.

Thank you, and good morning. With me on the call today are Frank Pizzignano, our President and Chief Executive Officer, and Bob Howe, our Chief Financial Officer. Our earnings release and supplemental materials for the quarter are available on the Investor Relations section of FISERV.com. Please refer to these materials for an explanation of the non-GAAP financial measures discussed in this call, along with reconciliation of those measures to the nearest applicable GAAP measure. Unless otherwise noted, Performance references are year-over-year comparisons. Our remarks today will include forward-looking statements about, among other matters, expected operating and financial results and strategic initiatives. Forward-looking statements may differ materially from actual results and are subject to a number of risks and uncertainties. You should refer to our earnings release for a discussion of these risk factors. As a reminder from our last earnings call, we will now be using the term organic revenue, which has replaced internal revenue and is still calculated on a constant currency basis. And now, over to Frank.

Thank you, Shu. And thank you all for joining us this morning. As you know, we serve as the operating system for commerce and money movement across our client base of banks, credit unions, fintechs, and businesses ranging from SMBs to mid-market to large enterprises. We help our clients grow by extending our platform to capture new services and new money flows. As we exit the second year of the pandemic, we had another successful year of delivering on our growth agenda. We delivered 11% organic revenue growth for both the fourth quarter and full year at the high end of our 7 to 12% outlook that we originally provided at our December 2020 investor day. We expanded full year adjusted operating margins by 250 basis points. We also achieved 26% growth year over year in adjusted earnings per share to $5.58 well above our original outlook of 525 to 545. Our merchant platforms, Clover and Clover Connect, for small and medium-sized businesses, and Carrot for enterprises, are showing very strong growth. We are winning in omnichannel and seeing strong growth in value-added services, such as Clover software, fraud, risk, lending, and payment flows, including disbursements and cross-border. Our acquisitions of BentoBox and NetPay give us the assets to enhance our service offerings in verticals like restaurants and allow us to power new flows via PayFax. We are successfully meeting our FI client's goal of driving digital engagement through our best-in-class online and mobile banking platform, Ability, as well as integrated mobile-first surround solutions such as CardHub, featuring OnDot for retail customers, and SpinLabs for small business customers. Recall that we bought OnDot and SpendLabs in 2021 and are already seeing great traction with them. We expect these solutions will have a positive effect, strengthening our client value proposition across core banking, payment processing, and the network business. We made outstanding progress on the integration of Fiserv and First Data. The fourth quarter marks the completion of our cost synergy program. We achieved our target of $1.2 billion, $300 million above our original commitment and two years ahead of schedule. We actioned $480 million of revenue synergies and are now at 80 percent of the increased commitment of $600 million. We anticipate obtaining the full $600 million of revenue strategies by the end of this year, 18 months ahead of schedule. Strengthening our leadership as our client's partner of choice, yesterday we announced a definitive agreement to acquire the remaining ownership interest in Finzec. We were an initial investor in FinTech, a leading developer of cloud-native banking solutions that is powering digital transformation across financial services. This is an investment in the next generation financial technology that supports our strategy to continuously innovate for our clients and broaden our total addressable market. Finzac will not only augment our ability to enrich and accelerate the delivery of digital solutions we offer to our existing clients, but also broaden our solutions to include large financial institutions, fintechs, banking as a service, and embedded finance opportunities. We've worked closely with the Finzac team and look forward to welcoming Frank Sanchez, his leadership team, and the entire PINZAC organization to FISERV when the deal closes later this year. Our business momentum and investments thus far position us very well for the future. Accordingly, we have good visibility into accelerating our organic growth to a rate of 7% to 9%. above our average for the last three years and in line with our medium-term outlook. We expect 2022 adjusted EPS to be $6.40 to $6.55, which is a growth of 15% to 17%. This, when combined with the 26% growth we delivered in 2021, will generate a two-year compounded annual growth of 21 percent, above the high end of our medium-term outlook range of 15 to 20 percent. Turning to the business segments, let me start with merchant acceptance. We continue to focus on investing in our leading merchant operating systems, Clover and Cary, to provide products and services that expand our addressable market and drive growth for our clients in the SMB and enterprise space. These operating systems continue to perform well and were key drivers of merchant acceptance organic revenue growth of 19 and 20% for the quarter and year respectively. Clover continues to be the commerce and business management platform of choice for SMBs in the U.S. and around the world. In 2021, as small business recovery took hold, merchants turned to Clover for leading in-store payment solutions, online commerce capabilities, and new vertical services to grow their business. We completed our acquisition of BentoBox, a leading digital ordering and delivery management platform to help our close to 200,000 restaurant owners on our platform reach more customers. In addition to BentoBox, we signed a variety of strategic partnerships to enhance the tools restaurants need to be successful. One such example is our new partnership with Google to enable customers to more easily find and order from Clover restaurant locations. As we roll out these holistic SaaS-based solutions, we see notable increases in the average revenue per merchant. We are very excited about continuing this success and replicating it across other verticals. Closing out 2021, Clover is in a better position than ever. as the leading operating system for SMBs. Carrot, our omni-channel ecosystem serving enterprise clients, continued to grow across the board. We saw particular strength in omni-channel transactions, which were up 51% in 2021. As the demand for omni-channel solutions persisted through 2021, demand for our integrated solutions such as disbursements, payback enablement, EBT, and other digital capabilities rose to an all-time high. Disbursements have become an important part of the consumer experience in many verticals through the pandemic. Consumers and businesses want simple, fast access to their money digitally. Carrot is well positioned to drive growth in disbursements as evidenced in its expanded relationships with a number of companies within the insurance and ride-sharing sectors, as well as digital wallet companies, including marquee brands such as Coinbase. Turning to our cross-border capabilities, we continue to see strength from the recovery with double-digit cross-border transaction growth in 2021. Looking forward into 2022, we will continue to push deeper into key priority areas, including omnichannel, disbursements, and cross-border to expand the breadth and depth of services for our enterprise clients. Moving to the payments and network segment, organic revenue grew 8% in the quarter and 6% for the full year. Within the issuer business, we saw notable strength in general purpose active accounts, now ahead of pre-pandemic levels. Our card business continued to provide growth above the segment average from strength in digital and risk solutions, debit network volumes, and debit transaction growth. Market-leading innovative solutions like CardHub and SpendLabs are both enhancing revenue and reducing churn. In fact, SpendLabs product market fit is stronger than we originally anticipated, and this offering, along with CardHub, are notably contributing to expanded presence with mid-market FIs for card processing solutions. These surrounds not only greatly enhance the competitiveness of our credit and debit card processing offerings, but also serve to drive more cards into our debit network and more opportunities for Fiserv to offer risk and fraud, digital banking, and account processing solutions, yet again demonstrating our ability to harness the power of our unmatched distribution platform. Looking to 2022, we expect to see continued momentum from the ramp of our large credit issuer wins in 2020 and 2021, including Alliance Data, Atlanticus, and Genesis, three top 25 issuers. strengthened out digital offerings with Cardhub and Spendlabs, and strengthened Zelle. Moving to the financial technology segment, the fourth quarter was in line with our expectations, posting organic revenue growth of 4%, closing out the year up 4%. We finished 2021 strong on sales with 48 new core wins, including competitive takeaways with key names such as Valley Bank and Dollar Bank. Not only are we winning in core account processing, but also seeing success in cross-selling Pan-Pfizer capabilities to clients. This is demonstrated in our competitive takeaway of Great Southern Bank, an institution with more than $5 billion in assets. With this agreement, Great Southern Bank will be moving to a complete suite of Fiserv offerings across core account processing, digital banking surrounds, card processing, and output solutions. We are continuing to win in the higher growth 1 to 50 billion asset segment. Clients continue to choose Fiserv as their strategic technology partner to power combined entities into the future. Key wins in 2021 include NYCB's merger with Flagstar and First Interstate Bank's merger with Great Western. Sales of digital surround solutions grew strong double digits in 2021, driven by the increased digital focus of our financial institution clients, and the success of Mobility, our modern online mobile banking platform. We finished the year with 434 sales to existing and new logos. Sales to existing clients helped deepen the penetration of our fully integrated digital surrounds, such as Cardhub, Zelle, and SpendLab. it is clear that our solutions are already winning in the market. We will accelerate this momentum through our announced agreement to acquire Finzac, which will enable clients to quickly deploy modular banking services, including deposits, loans, cards, as well as launch new banking solutions, including a digital bank, bank as a service, and embedded finance. We have already made strides in the category of API development, and the market is recognizing our leadership. In 2021, we are proud to accept an award for the best finance APIs for our communicator-advantaged API platform at the API World Awards. And for All Data Connect, our data aggregation portal at the Business Intelligent Group's 2022 Big Innovation Awards. Looking into 2022 and beyond, the powerful combination of our market-leading banking cores, along with Finzec, which enables clients to launch modern, flexible, and highly personalized digital banking experience is an ability our industry-leading online and mobile banking platform will position us to better serve our existing clients and a broader array of customers. Now, let me pass the discussion to Bob for more detail on our financial results.