Fiserv adjusted its annual profit forecast upward on Tuesday, reflecting robust spending that has led to earnings surpassing expectations in every quarter this year.

SIGNIFICANCE

The company's performance serves as an indicator of consumer financial well-being. The revenue generated from banks, small businesses, merchants, and other clients for transaction and payment processing is closely linked to consumer spending patterns.

BACKGROUND

Despite high interest rates, U.S. consumers have maintained a stable financial footing, and the onset of a rate-cutting strategy could further alleviate financial pressures. Nonetheless, there are indications of a decline in discretionary spending.

In the third quarter, Fiserv recorded a non-cash impairment charge of $570 million, mainly associated with its investment in Wells Fargo Merchant Services, a joint venture with Wells Fargo set to conclude on April 1 next year.

FINANCIAL HIGHLIGHTS

For the quarter ending September 30, profit attributable to Fiserv fell 41% to $564 million. However, when excluding one-time expenses, the Milwaukee-based firm reported earnings of $2.30 per share, exceeding the anticipated $2.26 per share, based on estimates from LSEG.

Looking ahead, Fiserv projects 2024 earnings per share to range from $8.73 to $8.80 on an adjusted basis, an increase from the previous forecast of $8.65 to $8.80.

NOTABLE COMMENT

"This performance is anchored in the privileged position we hold at the crossroads of two ecosystems – merchants and financial institutions," stated CEO Frank Bisignano.

STOCK MARKET RESPONSE

Shares fell by 0.6% in pre-market trading. Year-to-date, the stock has risen by 48%, compared to a 25% increase in the S&P 500 financials index.