Fiserv, Inc.

Welcome to the FISERV third quarter 2024 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. I would now like to turn the call over to Julie Cheriel, Senior Vice President of Investor Relations at FISERV.

Thank you, and good morning. With me on the call today are Frank Bisignano, our Chairman, 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 on this call, along with a reconciliation of those measures to the nearest applicable GAAP measures. Unless otherwise stated, 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 the earnings release for a discussion of these risk factors. And now I'll turn the call over to Frank.

Thank you, Julie, and thank you all for joining us today. As we share our third quarter results this morning, it is increasingly clear that our position at the intersection of merchant and financial solutions is a strategic advantage. Fiserv delivered another strong quarter with adjusted earnings per share of $2.30, up 17%, driven by strong revenue growth and further operating margin expansion across our businesses. Adjusted revenue growth was 7%, and adjusted operating margin rose 170 basis points to 40.2%. Organic revenue growth was 15%. Our free cash flow was $1.9 billion in the quarter and $3.3 billion year-to-date. And we returned $1.3 billion to shareholders via share repurchase. Businesses and financial institutions are increasingly interconnected, and Fiserv has a key role to play here, given our unmatched set of assets across software, data, technology, and, of course, scale and experience in moving money. Here are two examples in just the past month. First, we announced this morning with DoorDash we began implementing a comprehensive embedded finance application poised to be a best-in-class solution for a gig economy company. The solution enables DoorDash to offer its delivery contractors a full range of financial services. Within a single app, they can get instant access to wages and rewards, as well as deposit accounts, debit cards, and more. Our real-time ledger capability from Finzac manages the transactions and was a key reason why Fiserv was chosen. A Fiserv banking client rounded out the solution as a requisite sponsor. Second, we completed a proof of concept with Walmart, where we enabled a real-time pay-by-bank transaction at the point of sale over our proprietary Nile network. A growing number of merchants are adding pay-by-bank capability to maximize choice for consumers, and the emerging capacity for handling such payments in real time offers advantages for Fiserv, merchants, and consumers. This capability will be more widely available next year via our now network. Additionally, we teamed up with Walmart Business as a referral partner for Clover as a business management platform, helping Walmart fulfill its goal of helping small businesses and nonprofits to better run their businesses. In a separate but related testament to our product strength and position as a partner of choice, today, Inc. Magazine, named Clover, to its 2024 Power Partners List, which recognizes the best B2B providers for SMBs. Let me share some of the many highlights of the quarter. It was another strong quarter of growth in the merchant solutions segment, with organic revenue up 24%. At Clover, revenue grew 28%, and value-added services penetration reached 21%, upper percentage point from Q2. In Latin America, we expanded the friends and family Clover pilots in Brazil and Mexico as planned with a full-scale launch coming in December. In Asia Pacific, we went live with our first Clover pilots in Australia in September. We also enabled the Enterprise Commerce Control Center which allows merchants to monitor and analyze their business and transaction performance across locations, regions, and operating segments in a single view. In financial solutions, we posted another quarter of strong organic revenue growth at 6%. The build-out of Cashflow Central was completed in September and and we have our first clients gearing up to implement the solution in the next few months. And we continue to migrate clients to experience digital, or XD, our new digital banking solution. As we integrate additional solutions into this unique digital ecosystem, including Cashflow Central, real-time payments, Clover, and more, we expect to see a multiplying effect on the average revenue per XD user over time. It was another quarter of marquee wins that demonstrate the power of Pfizer's integrated and value-added offerings. We were chosen to provide merchant acceptance services for a major e-com marketplace and expanded our long-standing partnership with Costco to launch a stored-value digital wallet. The service enables new payment and reward redemption experiences, whether the retailer's customers are shopping online or in the warehouse. We continue to sign other enterprise merchants onto our value-added solutions. Another longtime enterprise client, Exxon, signed on for a data-as-a-service offering. This solution is used to extract insights from integrated vendor, payments, consumer loyalty, and wallet data. And because it runs in a cloud, we can reduce implementation time from months to days. Also, in Q3, Ahol Dehaz, a global retailer whose portfolio includes Stop and Shop in the U.S., selected Fiserv as the provider of pay-by-bank services. Alex Lee, a large privately owned operator of multiple food companies, shows how smart routing technology for debit cost efficiency. We accelerated our signings of financial institutions as merchant acquiring referral partners. These included banks of all sizes, as well as credit unions. Golden One Credit Union and America First Credit Union were two of the larger signings in Q3. In our three regions, we continue to see strong client momentum. We expanded our partnership with Netto, a major grocery chain in Europe. We'll provide several value-added services, including dynamic currency conversion, customer cashback, and encryption solutions. In addition to supplying thousands of new pinpads, to accelerate transaction speed across their 700 stores in Poland. In AsiaPAC, Fiserv was chosen by FoodPanda, a subsidiary of Delivery Hero and one of the world's leading local delivery companies, to provide payment services across multiple markets in Asia. This strategic partnership spans online, mobile, and digital wallets, positioning Fiserv as Food Panda's primary acquirer in Singapore and Hong Kong, processing over $1 billion in annual spend. We watch Clover Sport at Bombanera in Argentina. This is one of the country's largest soccer stadiums and home to one of the top teams in the league. Clover's presence there can add to awareness in the region. To optimize the fan experience for fast and easy concession services, the stadium, through our ISV partner, chose the Clover platform to accept payments in three ways, through QR codes, self-service kiosks, and mobile handheld devices. Moving to the financial solutions segments, four banks signed on for Cashflow Central in the past three months. including our first credit union, for a total of 10 since we announced the initiative a year ago. Abbott Exchange will be using the check-free biller directory to support faster bill payment on its mid-market B2B exchange. In September, we want a competitive bid with Farm Credit MidAmerica, a cooperative that reaches across six states. We'll be converting their loan portfolio to DNA and integrating several other value-added solutions. PNC signed up for our AI-enabled advanced defense product for enhanced fraud detection in their card issuing business. Equitas Small Finance Bank was the latest India issuer to go live on our India processing hub, successfully launching a new retail and corporate card product. with a full-stack offering including loyalty, offers, and real-time fraud management, as well as credit on UPI, India's real-time account-to-account payment system. And we continue to build our capability here as a market leader with seven of the ten largest credit card issuers in India on our platform. In September, we hosted 3,000 Fiserv clients and prospects at our annual client conference forum. This group of attendees represented nearly 50% of our North American institutional revenue across the merchant and financial solution segments and nearly 60% of our new business pipeline through 2025. After three days of demos across 75 booths in our experience center, over 100 well-attended product and technology information sessions. In thousands of client meetings, we strengthened our relationships and partnerships, expanded our pipeline of opportunities, and generated enthusiasm for our offerings, setting the stage for continued strong growth in the future. One of the many highlights at Forum this year was our SMB bundle. The premise behind this suite of products is that small and medium-sized businesses have a complex landscape to navigate for managing their businesses, and they prefer a single, easy-to-use system. With our own products and partnerships, Fiserv is the only financial technology expert with solutions that cut across the entire SMB value chain. Since the products and the clients for our SMB bundle span our merchant and financial solutions segments, we have the unique opportunity to win business through the integration of solutions across both of our ecosystems. From our merchant ecosystem, we provide acceptance and processing, the Clover POS platform, Clover BAS, including vertical and horizontal business process software. capital, loyalty, and gift solutions, and the Small Business Index for localized insights. From our financial ecosystem, we provide Cashflow Central because cash management is a fundamental requirement for business success at SMBs. We also provide Optus for business card issuance, SpendTrack for expense management, Zelle for small business and core banking account management and digital banking. While we sell each of these separately now, next year they will be integrated on our leading platforms. For FIs, the SMB bundle will integrate into the digital banking environment, such as Fiserv's Experience Digital or XD platform. For small businesses, the SMB Bundle will integrate into the Clover dashboard and be sold through all Clover channels. Lastly, I want to come back to something I said last quarter. Merchant-related services from Fiserv are back as an opportunity for financial institutions to compete and win. What's old is new again, based on our innovations across the SMB Bundle. It gives FIs a deeper view into an SMB's full financial position. With this knowledge and breadth of product, they can better grow and retain SMB clients and generate deposit and non-interest fees. We couple this capability with tools to help FIs readily find merchant customer leads and onboard them digitally. Showcasing our integrated SMB capabilities generate a lot of interest and ongoing engagement, and we expect the SMB bundle to start contributing to growth next year. Turning to our guidance for the rest of the year, we are raising organic revenue growth from 15% to 17% to 16% to 17%, and raising our guidance for adjusted earnings per share to $8.73 to $8.80. As I look across all the new initiatives we're rolling out, I am pleased with how the vision and investment we put into motion five years ago has brought Fiserv to a strong position today, one that's clearly hard to replicate. The results show that we're executing on mandates for each of our two ecosystems, merchants and financial institutions. This will continue in many ways as we add to our Clover portfolio, extend services to enterprise merchants, expand issuing to new verticals and geographies, enable more real-time payments, modernize core banking systems, add partners, grow internationally, and continue to use distribution data, and more. With this foundation of leadership and steady growth firmly established, we are moving to the next generation of solutions that answers the needs across both ecosystems. As the only provider serving both merchants and financial institutions with product breadth and technological scale, we serve at the intersection between merchants and FinTech, issuers and FinTechs, acquiring and cash management, digital wallets and card services, spending and banking data, and many other combinations. This is not a vision. It is here today in our initiatives with DoorDash, Apple, Walmart, U.S. Bank, Palantir, and others. Of course, these integrated opportunities are in their early stages. As excited as we are about them today, our measure of success will be strong, sustainable growth for Fiserv over the medium and longer term. And now, I'll turn it over to Bob for more detail on our financial performance.