Fiserv Earnings: Off to a Fast Start in 2023

Fiserv FISV reported a strong start to the year, with organic revenue growth of 13% year over year in the first quarter running ahead of expectations. The company also saw solid margin improvement. Management pulled the lower end of its guidance range up as a result but appears to be remaining somewhat cautious, given the uncertain macroeconomic situation. We will maintain our $135 fair value estimate for the narrow-moat company and see the shares as modestly undervalued.

The acceptance segment turned in a good quarter and largely mirrored the trends we saw in the fourth quarter. Year-over-year organic growth of 18% was a strong result, particularly considering that volume growth continued to slow, at only 5% year over year. The ability to maintain strong revenue growth despite slowing volume growth would suggest that Fiserv can maintain solid growth even if the economy turns. To that end, management said it saw some signs that consumers shifted toward nondiscretionary spending in the March quarter.

Clover remains a bright spot for the firm, with revenue up 22% and volume up 17% year over year in the first quarter. These levels were roughly in line with last quarter. We continue to see Clover as the leading example of Fiserv’s ability to adjust to industry changes and maintain its competitive position.

The company’s financial technology and payments segments saw year-over-year organic growth of 3% and 13%, respectively. Fintech growth was a bit below our long-term expectations but faced a difficult comparison. Payments, meanwhile, is seeing growth well ahead of our long-term expectations; management pointed to good momentum on client wins as a driver, although some one-time factors also aided growth.