Payments firm Fiserv lifts profit forecast, buoyed by strong spending
Technology
Payments firm Fiserv lifts profit forecast, buoyed by strong spending
(Reuters) - Fiserv raised the lower end of its annual profit forecast on Tuesday, encouraged by strong spending that has helped it post higher-than-expected earnings in each quarter this year.
WHY IT'S IMPORTANT
The company's results can be a barometer for consumers' financial health. The fees it collects from banks, small businesses, merchants, and other customers for processing transactions and payments, are closely tied to spending trends.
CONTEXT
US consumers have been on solid ground even amid elevated interest rates, and the beginning of a rate-cut campaign could ease pressure further. However, there have been some signs of a pullback from non-essential purchases.
Fiserv also took a $570 million non-cash impairment charge in the third quarter, primarily related to its investment in Wells Fargo Merchant Services, a joint venture with Wells Fargo that is expected to expire on April 1 next year.
BY THE NUMBERS
Profit attributable to Fiserv plunged 41% to $564 million for the three months ended Sept. 30.
However, excluding one-time costs, the Milwaukee, Wisconsin-based company earned $2.30 per share, higher than expectations of $2.26 per share, according to estimates compiled by LSEG.
Fiserv expects 2024 earnings per share between $8.73 and $8.80, on an adjusted basis, versus the $8.65 to $8.80 range it had forecast earlier.
KEY QUOTE
"This performance is anchored in the privileged position we hold at the crossroads of two ecosystems – merchants and financial institutions," CEO Frank Bisignano said.
MARKET REACTION
Shares dipped 0.6% before the open. So far this year, they have climbed 48% versus a 25% rise for the S&P 500 financials index.
