Fiserv Inc. (FISV) on Tuesday reported a decline in first-quarter profit as the payment processor incurred costs related to its January acquisition of Open Solutions Inc., which offset growth in revenues amid an expanding client base. Both earnings and revenues for the quarter came in short Wall Street estimates.
The company slashed its adjusted earnings outlook for fiscal year 2013, but kept revenue expectations intact. Fiserv shares fell about 2.5 percent in after-hours trade on the Nasdaq, but later recovered to trade down 1.2 percent.
Results were mainly impacted by merger and integration expenses of $0.19 per share related to the purchase of Open Solutions Inc. - a provider of enterprise account processing technology, which Fiserv acquired in mid-January.
Further hurting profit was operating margin that slid to 18.3 percent from 21.8 percent a year earlier.
Brookfield, Wisconsin-based Fiserv posted first quarter net income of $117 million or $0.86 per share, compared to $132 million or $0.94 per share last year.
Excluding items, adjusted earnings for the quarter were $180 million or $1.33 per share, compared to $167 million or $1.18 per share a year ago.
On average, 19 analysts polled by Thomson Reuters expected earnings of $1.34 per share for the quarter. Analysts' estimates typically exclude special items.
The company reported quarterly revenues of $1.15 billion, compared to $1.1 billion in the prior year. On an adjusted basis, revenues rose 6 percent to $1.08 billion. Analysts on consensus estimated revenues of $1.20 billion.
The company signed 78 electronic bill payment clients and 36 debit processing clients in the quarter. Further, 89 clients committed to offer Mobiliti from Fiserv, and as of March, the company signed 1,500 clients to its mobile banking solutions.
For fiscal year 2013, Fiserv now expects adjusted earnings of $5.84 to $6.03 per share, down from the prior range of $5.88 to $6.07 per share.
Fiserv continues to expect adjusted revenue growth in 2013 to be in excess of 10 percent and adjusted internal revenue growth to be in a range of 3 to 4 percent.
Analysts currently estimate earnings of $5.97 per share on revenues of $4.94 billion for the year.
"We anticipate sequentially stronger performance this year as we benefit from the onboarding of new sales and the Open Solutions acquisition," said Fiserv CEO Jeffery Yabuki.
During the first quarter, Fiserv repurchased 0.8 million of its common shares for $67 million and, as of March 2013, had about 4.8 million shares remaining under its current authorization.
Fiserv stock closed Tuesday's regular trade at $91.11, up $0.27 or 0.30%, on a volume of about 0.66 million shares on the Nasdaq. In after hours, the stock fell $1.11 or 1.22%. In the past year, the stock traded in a range of $64.48 - $91.16, on a three-month average volume of 0.59 million shares.
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