FISERV INC
For the period ended Sep 30, 2024. Filed Oct 23, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Oct 23, 2024
FISV$62.88+0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-07-25.
0000798354-24-000156
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-23.
0000798354-24-000190
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 120 previous paragraphs and 128 current paragraphs.
82 unchanged; 37 reworded; 7 added; 0 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 9 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
In the third quarter of 2024, Wells Fargo Bank, National Association (“Wells Fargo”) provided us a notice of non-renewal for the Wells Fargo Merchant Services merchant alliance (“WFMS”), which is accounted for as an equity method investment. Upon expiration of the merchant alliance, effective April 1, 2025, we expect to receive a cash payment or assets equal to the fair value of our 40% ownership interest of WFMS, as determined in accordance with an agreed upon contractual valuation and separation process. We recorded a $570 million non-cash impairment as a result of an other-than-temporary decline in the carrying value of our equity method investment in WFMS during the three months ended September 30, 2024. The impairment was based on our estimate of the fair value of WFMS and is subject to further adjustments upon completion of the final valuation process. In connection with the expiration of WFMS, we entered into a multi-year agreement with Wells Fargo to provide processing for current and future merchant clients as well as other services to Wells Fargo’s merchant business.
Current report
In addition to the critical accounting policies and estimates included as Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission on February 22, 2024, the following additional critical accounting policy and estimate has become material to us since the filing of our Form 10-K.
Current report
Equity Method Investments
Current report
We review our investments in various affiliates that are accounted for as equity method investments for indications of an other- than-temporary decline in value whenever events or changes in circumstances may indicate that the carrying amount of the investment may not be recoverable. A series of operating losses of an investee or other factors, such as a shift in strategic initiatives or a significant change in a merchant alliance business relationship, may indicate that a decrease in value of the investment has occurred that is other-than-temporary. A decline in value of an equity method investment determined to be other-than-temporary is recorded as a current-period impairment charge. Measurement of an impairment loss is based upon a comparison of the carrying amount of the investment to its estimated fair value.
Current report
Determining the fair value of an equity method investment involves judgment and the use of significant estimates and assumptions, which include assumptions regarding customer growth and attrition rates and operating margins used to calculate estimated future cash flows; risk-adjusted discount rates; and other future economic and market conditions. During the third quarter of 2024, we determined that one of our equity method investments experienced an other-than-temporary decline in value and therefore recorded a pretax non-cash impairment charge of $570 million. Additional information regarding our equity method investments is included in Note 6 to the consolidated financial statements.
Current report
We repurchased $4.3 billion of our common stock during the first nine months of 2024. On August 8, 2023, we repurchased 4.1 million shares of our common stock for $121.98 per share in a privately negotiated transaction with ValueAct Capital Master Fund, L.P. for an aggregate purchase price of $500 million. Including this transaction, we repurchased $3.7 billion of our common stock during the first nine months of 2023.
Current report
We offer advanced funding of settlement activity associated with operations in Argentina by utilizing local operating cash and various short-term lines of credit to borrow in the Argentina overnight market. As we collect a portion of the corresponding receivables from card issuers over several months, in the event we are unable to continue to borrow in the Argentina overnight market, we may fund future advances with our consolidated cash and cash equivalents and available capacity under our revolving credit facility.
Reworded paragraphs (37)
Previous wording
•Results of operations. This section contains an analysis of our results of operations presented in the accompanying unaudited consolidated statements of income by comparing the results for the three and six months ended June 30, 2024 to the comparable periods in 2023.
Current wording
•Results of operations. This section contains an analysis of our results of operations presented in the accompanying unaudited consolidated statements of income by comparing the results for the three and nine months ended September 30, 2024 to the comparable periods in 2023.
Previous wording
Effective in the first quarter of 2024, we realigned our reportable segments to correspond with changes in our business designed to further enhance operational performance in the delivery of our integrated portfolio of products and solutions to our financial institution clients (the “Segment Realignment”). Our new reportable segments are the Merchant Solutions (“Merchant”) segment and the Financial Solutions (“Financial”) segment. Segment results for the three and six months ended June 30, 2023 have been recast to reflect the Segment Realignment.
Current wording
Effective in the first quarter of 2024, we realigned our reportable segments to correspond with changes in our business designed to further enhance operational performance in the delivery of our integrated portfolio of products and solutions to our financial institution clients (the “Segment Realignment”). Our new reportable segments are the Merchant Solutions (“Merchant”) segment and the Financial Solutions (“Financial”) segment. Segment results for the three and nine months ended September 30, 2023 have been recast to reflect the Segment Realignment.
Previous wording
We frequently review our businesses to ensure we have the necessary assets to execute our strategy. We expect to acquire businesses when we identify: a compelling strategic need, such as a product, service or technology that helps meet client demand; an opportunity to change industry dynamics; a way to achieve business scale that enables competition and operational efficiency; or similar considerations. We expect to divest businesses that are not in line with our market, product or financial strategies. The results of operations for the following acquired and divested businesses are included in our consolidated results from the respective dates of acquisition and through the respective dates of disposition.
Current wording
We frequently review our businesses to ensure we have the necessary assets to execute our strategy. We expect to acquire businesses when we identify: a compelling strategic need, such as a product, service or technology that helps meet client demand; a way to achieve business scale that enables competition and operational efficiency; or similar considerations. We expect to divest businesses that are not in line with our market, product or financial strategies. The results of operations for the following acquired and divested businesses are included in our consolidated results from the respective dates of acquisition and through the respective dates of disposition.
Previous wording
On July 25, 2023, we sold our financial reconciliation business, which was reported within the Financial segment, for cash proceeds of $235 million, and recognized a pre-tax gain of $172 million on the sale in the third quarter of 2023.
Current wording
On July 25, 2023, we sold our financial reconciliation business, which was reported within the Financial segment, for cash proceeds of $232 million, subject to final net working capital adjustments. We recognized a pre-tax gain of $177 million on the sale during the three months ended September 30, 2023.
Previous wording
Global macroeconomic conditions, including rising interest rates, inflation, disruptions in the global supply chain, changes in consumer spending, the effects of international hostilities, political conditions, and regulations restricting trade or impacting our ability to offer products or services, could have a material adverse effect on our business, results of operations and financial condition. Personal consumption and consumer savings growth in the U.S. may also negatively impact our business and financial results. We actively monitor and manage our business in response to these unpredictable geopolitical and market conditions, as they may adversely impact our operations and financial results.
Current wording
Global macroeconomic conditions, including changing interest rates, inflation, disruptions in the global supply chain, changes in consumer spending, the effects of international hostilities, political conditions, and regulations restricting trade or impacting our ability to offer products or services, could have a material adverse effect on our business, results of operations and financial condition. Personal consumption and consumer savings growth in the U.S. may also negatively impact our business and financial results. We actively monitor and manage our business in response to these unpredictable geopolitical and market conditions, as they may adversely impact our operations and financial results.
Previous wording
Our unaudited consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the U.S., which require management to make estimates, judgments and assumptions that affect the reported amount of assets, liabilities, revenue and expenses. In our Annual Report on Form 10-K for the year ended December 31, 2023, we identified our critical accounting policies and estimates. We continually evaluate the accounting policies and estimates that we use to prepare our consolidated financial statements, including for recently adopted accounting pronouncements, and base our estimates on historical experience and assumptions that we believe are reasonable in light of current circumstances. Actual amounts and results could differ materially from these estimates. For example, we estimate the fair values of identifiable assets acquired and liabilities assumed in connection with acquisitions and may record purchase accounting adjustments during the measurement period, which may be up to one year from the acquisition date. Additionally, we review the carrying value of goodwill for impairment by comparing the estimated fair value of our reporting units to their carrying values. Determining the fair value of a reporting unit involves judgement and the use of significant estimates and assumptions, which include assumptions regarding the revenue growth rates and operating margins used to calculate estimated future cash flows, risk-adjusted discount rates, and future economic and market conditions. There have been no material changes to our critical accounting policies and estimates from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.
Current wording
Our unaudited consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the U.S., which require management to make estimates, judgments and assumptions that affect the reported amount of assets, liabilities, revenue and expenses. In our Annual Report on Form 10-K for the year ended December 31, 2023, we identified our critical accounting policies and estimates. We continually evaluate the accounting policies and estimates that we use to prepare our consolidated financial statements, including for recently adopted accounting pronouncements, and base our estimates on historical experience and assumptions that we believe are reasonable in light of current circumstances. Actual amounts and results could differ materially from these estimates. For example, we estimate the fair values of identifiable assets acquired and liabilities assumed in connection with acquisitions of businesses and may record purchase accounting adjustments during the measurement period, which may be up to one year from the acquisition date. Additionally, we review the carrying value of goodwill for impairment by comparing the estimated fair values of our reporting units to their carrying values. Determining the fair value of a reporting unit involves judgement and the use of significant estimates and assumptions, which include assumptions regarding the revenue growth rates and operating margins used to calculate estimated future cash flows, risk-adjusted discount rates, and future economic and market conditions.
Previous wording
The following table presents certain amounts included in our consolidated statements of income, the relative percentage that those amounts represent to revenue and the change in those amounts from year to year. This information should be read together with the unaudited consolidated financial statements and accompanying notes. The unaudited financial results presented below have been affected by acquisitions, dispositions, and foreign currency fluctuations. Segment results for the three and six months ended June 30, 2023 have been recast to reflect the Segment Realignment.
Current wording
The following table presents certain amounts included in our consolidated statements of income, the relative percentage that those amounts represent to revenue and the change in those amounts from year to year. This information should be read together with the unaudited consolidated financial statements and accompanying notes. The unaudited financial results presented below have been affected by acquisitions, dispositions, non-cash impairment charges, and foreign currency fluctuations. Segment results for the three and nine months ended September 30, 2023 have been recast to reflect the Segment Realignment.
Previous wording
Total revenue increased $351 million, or 7%, in the second quarter of 2024 and increased $687 million, or 7%, in the first six months of 2024 compared to 2023. The revenue increase was driven by higher global processing revenue in both our Merchant and Financial segments, partially offset by a 9% and 10% decrease due to foreign currency exchange rate fluctuations in the second quarter and first six months of 2024, respectively.
Current wording
Total revenue increased $342 million, or 7%, in the third quarter of 2024 and increased $1,029 million, or 7%, in the first nine months of 2024 compared to 2023. The revenue increase was driven by higher processing revenue in both our Merchant and Financial segments, partially offset by a 8% and 9% decrease due to foreign currency exchange rate fluctuations in the third quarter and first nine months of 2024, respectively.
Previous wording
Revenue in our Merchant segment increased $204 million, or 9%, in the second quarter of 2024 and increased $461 million, or 11%, in the first six months of 2024 compared to 2023. In the second quarter and first six months of 2024, Small Business contributed 8% and 9% to segment revenue growth, respectively, driven by an increase in payment and transaction volume, partially offset by foreign currency exchange rate fluctuations. Small Business revenue growth also includes contributions from our Clover operating system and the expansion of our merchant relationships through value-added services. Additionally, Enterprise contributed 2% in both the second quarter and first six months of 2024, primarily driven by transaction growth, while Processing negatively impacted Merchant segment revenue growth by 1% in the second quarter of 2024.
Current wording
Revenue in our Merchant segment increased $210 million, or 9%, in the third quarter of 2024 and increased $671 million, or 10%, in the first nine months of 2024 compared to 2023. In the third quarter and first nine months of 2024, Small Business contributed 6% and 8% to Merchant segment revenue growth, respectively, driven by an increase in payment volume, partially offset by foreign currency exchange rate fluctuations. Small Business revenue growth also includes contributions from our Clover operating system and the expansion of our merchant relationships through value-added services. Additionally, in the third quarter and first nine months of 2024, Enterprise contributed 4% and 2%, respectively, primarily driven by transaction growth.
Previous wording
Revenue in our Financial segment increased $134 million, or 6%, in the second quarter of 2024 and increased $196 million, or 4%, in the first six months of 2024 compared to 2023. Digital Payments contributed 3% to segment revenue growth in both the second quarter and first six months of 2024, primarily driven by an increase in transaction volume and new client wins. Issuing contributed 2% and 1% to segment growth in the second quarter and first six months of 2024, respectively, primarily driven by an increase in active accounts, primarily in our international regions, while Banking contributed 1% in the second quarter of 2024.
Current wording
Revenue in our Financial segment increased $110 million, or 5%, in the third quarter of 2024 and increased $306 million, or 5%, in the first nine months of 2024 compared to 2023. In the third quarter and first nine months of 2024, Digital Payments contributed 2% and 3% to Financial segment revenue growth, respectively, driven by an increase in transaction volume, including growth in Zelle® transactions. Issuing contributed 1% to Financial segment growth in both the third quarter and first nine months of 2024, primarily driven by an increase in active accounts due to strong demand across various verticals, including government and healthcare. Banking also contributed 1% in both the third quarter and first nine months of 2024.
Previous wording
Revenue at Corporate and Other increased $13 million, or 4%, in the second quarter of 2024 and increased $30 million, or 5%, in the first six months of 2024 compared to 2023, primarily due to increased postage revenue.
Current wording
Revenue at Corporate and Other increased $22 million, or 7%, in the third quarter of 2024 and increased $52 million, or 6%, in the first nine months of 2024 compared to 2023, due to increased postage revenue.
Previous wording
Total expenses increased $54 million, or 1%, in the second quarter of 2024 and $143 million, or 2%, in the first six months of 2024 compared to 2023. Total expenses as a percentage of total revenue decreased 420 basis points to 72.0% in the second quarter of 2024 and 390 basis points to 73.9% in the first six months of 2024 compared to 2023. Total expenses as a percentage of total revenue were favorably impacted by operating leverage across our various businesses, as well as a reduction in amortization of acquisition-related intangible assets of approximately 120 basis points in both the second quarter and first six months of 2024.
Current wording
Total expenses increased $243 million, or 7%, in the third quarter of 2024 and $386 million, or 4%, in the first nine months of 2024 compared to 2023. Total expenses as a percentage of total revenue were relatively flat at 69.3% in the third quarter of 2024 and decreased 250 basis points to 72.3% in the first nine months of 2024 compared to 2023. Total expenses as a percentage of total revenue were favorably impacted by operating leverage across our various businesses, as well as a reduction in amortization of acquisition-related intangible assets of approximately 80 basis points and 110 basis points and a reduction in acquisition and integration related expenses of approximately 60 basis points and 40 basis points in the third quarter and first nine months of 2024, respectively. The third quarter and first nine months of 2023 included a $177 million pre-tax gain on the sale of our financial reconciliation business.
Previous wording
Cost of processing and services as a percentage of processing and services revenue decreased to 32.4% in the second quarter of 2024 compared to 34.4% in the second quarter of 2023 and decreased to 33.1% in the first six months of 2024 compared to 36.3% in the first six months of 2023. Cost of processing and services as a percentage of processing and services revenue was favorably impacted by strong operating leverage accompanying scalable revenue growth in the second quarter and first six months of 2024.
Current wording
Cost of processing and services as a percentage of processing and services revenue decreased to 31.8% in the third quarter of 2024 compared to 32.7% in the third quarter of 2023 and decreased to 32.7% in the first nine months of 2024 compared to 35.0% in the first nine months of 2023. Cost of processing and services as a percentage of processing and services revenue was favorably impacted by strong operating leverage accompanying scalable revenue growth in the third quarter and first nine months of 2024.
Previous wording
Cost of product as a percentage of product revenue decreased to 66.1% in the second quarter of 2024 compared to 69.5% in the second quarter of 2023 and increased to 69.7% in the first six months of 2024 compared to 69.1% in the first six months of 2023. The cost of product as a percentage of product revenue in the second quarter and first six months of 2024 was impacted by revenue mix, including an increase in high margin license revenue in the second quarter of 2024 compared to 2023.
Current wording
Cost of product as a percentage of product revenue increased to 67.6% in the third quarter of 2024 compared to 67.4% in the third quarter of 2023 and increased to 69.0% in the first nine months of 2024 compared to 68.5% in the first nine months of 2023. The cost of product as a percentage of product revenue in the third quarter and first nine months of 2024 was impacted by revenue mix, including an increase in hardware revenue, in the third quarter of 2024 compared to 2023.
Previous wording
Selling, general and administrative expenses as a percentage of total revenue decreased to 33.2% in the second quarter of 2024 compared to 35.7% in the second quarter of 2023 and decreased to 34.0% in the first six months of 2024 compared to 35.5% in the first six months of 2023. Selling, general and administrative expenses as a percentage of total revenue was favorably impacted by a reduction in amortization of acquisition-related intangible assets of approximately 90 basis points in both the second quarter and first six months of 2024, as well as a reduction in acquisition and integration related expenses of approximately 20 basis points and 30 basis points in the second quarter and first six months of 2024, respectively.
Current wording
Selling, general and administrative expenses as a percentage of total revenue decreased to 30.8% in the third quarter of 2024 compared to 33.9% in the third quarter of 2023 and decreased to 32.9% in the first nine months of 2024 compared to 34.9% in the first nine months of 2023. Selling, general and administrative expenses as a percentage of total revenue was favorably impacted in both the third quarter and first nine months of 2024 by a reduction in amortization of acquisition-related intangible assets of approximately 80 basis points and a reduction in acquisition and integration related expenses of approximately 30 basis points, as well as expense management initiatives.
Previous wording
Total operating income increased $297 million, or 26%, in the second quarter of 2024 and increased $544 million, or 26%, in the first six months of 2024 compared to 2023. Total operating margin increased 420 basis points to 28.0% in the second quarter of 2024 and increased 390 basis points to 26.1% in the first six months of 2024 compared to 2023. Total operating income and total operating margin benefited from scalable revenue growth, along with a reduction in amortization of acquisition-related intangible assets.
Current wording
Total operating income increased $99 million, or 7%, in the third quarter of 2024 and increased $643 million, or 18%, in the first nine months of 2024 compared to 2023. Total operating margin decreased 10 basis points to 30.7% in the third quarter of 2024 and increased 250 basis points to 27.7% in the first nine months of 2024 compared to 2023. Total operating income and total operating margin benefited from scalable revenue growth, along with a $42 million and $160 million reduction in amortization of acquisition-related intangible assets and a $30 million and $61 million reduction in acquisition and integration related expenses in the third quarter and first nine months of 2024, respectively. Total operating income and total operating margin in the third quarter and first nine months of 2023 was favorably impacted by a $177 million pre-tax gain from the sale of our financial reconciliation business.
Previous wording
Operating income in our Merchant segment increased $137 million, or 18%, in the second quarter of 2024 and increased $314 million, or 23%, in the first six months of 2024 compared to 2023. Operating margin increased 290 basis points to 36.6% in the second quarter of 2024 and increased 360 basis points to 35.4% in the first six months of 2024 compared to 2023. Operating income and operating margin growth in our Merchant segment was primarily due to operating leverage and productivity.
Current wording
Operating income in our Merchant segment increased $145 million, or 18%, in the third quarter of 2024 and increased $459 million, or 22%, in the first nine months of 2024 compared to 2023. Operating margin increased 290 basis points to 37.7% in the third quarter of 2024 and increased 330 basis points to 36.2% in the first nine months of 2024 compared to 2023. Operating income and operating margin growth in our Merchant segment was primarily due to operating leverage and productivity.
Previous wording
Operating income in our Financial segment increased $65 million, or 6%, in the second quarter of 2024 and increased $130 million, or 7%, in the first six months of 2024 compared to 2023. Operating margin increased 10 basis points to 45.9% in the second quarter of 2024 and increased 90 basis points to 45.0% in the first six months of 2024 compared to 2023. Operating income and operating margin growth in our Financial segment was primarily due to operating leverage and scalable revenue growth.
Current wording
Operating income in our Financial segment increased $64 million, or 6%, in the third quarter of 2024 and increased $194 million, or 6%, in the first nine months of 2024 compared to 2023. Operating margin increased 50 basis points to 47.4% in the third quarter of 2024 and increased 70 basis points to 45.8% in the first nine months of 2024 compared to 2023. Operating income and operating margin growth in our Financial segment was primarily due to operating leverage and scalable revenue growth.
Previous wording
The operating loss in Corporate and Other decreased $95 million in the second quarter of 2024 and decreased $100 million in the first six months of 2024 compared to 2023. The operating losses in the second quarter and first six months of 2024 were favorably impacted by a reduction of $60 million and $118 million in amortization of acquisition-related intangible assets, respectively, partially offset by a $12 million facility impairment in the first six months of 2024.
Current wording
The operating loss in Corporate and Other increased $110 million in the third quarter of 2024 and increased $10 million in the first nine months of 2024 compared to 2023. The operating losses in the third quarter and first nine months of 2023 included a $177 million pre-tax gain on the sale of our financial reconciliation business. The operating losses in the third quarter and first nine months of 2024 were favorably impacted by a reduction of $42 million and $160 million, respectively, in amortization of acquisition-related intangible assets, as well as a reduction of $25 million and $45 million, respectively, in acquisition and integration related expenses.
Previous wording
Interest expense, net increased $53 million, or 23%, in the second quarter of 2024 compared to 2023 and increased $112 million, or 26%, in the first six months of 2024 compared to 2023 due to higher outstanding borrowings, including as a result of our public offering and issuance of $2.0 billion of senior notes in March 2024, as well as increased variable rate borrowings associated with our settlement advance cash program in Latin America compared to the prior year periods.
Current wording
Interest expense, net increased $68 million, or 26%, in the third quarter of 2024 compared to 2023 and increased $180 million, or 26%, in the first nine months of 2024 compared to 2023 due to higher outstanding borrowings, including as a result of our public offering and issuance of $2.0 billion and $1.75 billion of senior notes in March 2024 and August 2024, respectively, as well as increased variable rate borrowings with our settlement advance cash program in Latin America compared to the prior year periods.
Previous wording
Other expense, net decreased $21 million in the second quarter of 2024 and decreased $34 million in the first six months of 2024 compared to 2023. Other expense, net includes foreign currency transaction gains and losses, gains or losses from a sale or change in fair value of investments in certain equity securities, and amounts related to debt guarantee arrangements of certain joint ventures. Other expense, net in the second quarter and first six months of 2024 included $6 million and $27 million, respectively, related to gains on the sale and remeasurement of certain equity securities. Net foreign currency transaction losses decreased $10 million and $1 million in the second quarter and first six months of 2024 compared to the second quarter and first six months of 2023, respectively.
Current wording
Other expense, net decreased $30 million in the third quarter of 2024 and decreased $64 million in the first nine months of 2024 compared to 2023. Other expense, net includes foreign currency transaction gains and losses, gains or losses from a sale or change in fair value of investments in certain equity securities, and amounts related to debt guarantee arrangements of certain joint ventures. Other expense, net in the third quarter and first nine months of 2024 included $2 million and $29 million, respectively, related to gains on the sale and remeasurement of certain equity securities. Net foreign currency transaction losses decreased $11 million and $12 million in the third quarter and first nine months of 2024 compared to the third quarter and first nine months of 2023, respectively.
Previous wording
Income tax provision as a percentage of income before income taxes and income (loss) from investments in unconsolidated affiliates was 19.4% and 20.7% for the three months ended June 30, 2024 and 2023, respectively, and was 18.2% and 19.2% for the six months ended June 30, 2024 and 2023, respectively. The effective income tax rate for each of the six months ended June 30, 2024 and 2023 included discrete tax benefits from equity compensation.
Current wording
The income tax provision as a percentage of income before income taxes and loss from investments in unconsolidated affiliates was 5.8% and 19.8% for the three months ended September 30, 2024 and 2023, respectively, and 13.5% and 19.5% for the nine months ended September 30, 2024 and 2023, respectively. The effective income tax rate as a percentage of income before income taxes and loss from investments in unconsolidated affiliates for the three and nine months ended September 30, 2024 included a deferred tax benefit of $142 million recorded within the income tax provision associated with a non-cash impairment charge of $570 million recorded within loss from investments in unconsolidated affiliates, resulting in the lower effective income tax rate.
Previous wording
Our share of net income (loss) from unconsolidated affiliates accounted for using the equity method is reported as income (loss) from investments in unconsolidated affiliates, and the related tax benefit is reported within the income tax provision in the consolidated statements of income. Income (loss) from investments in unconsolidated affiliates, including acquired intangible asset amortization from valuations in purchase accounting, was $(8) million and $3 million in the second quarter of 2024 and 2023, respectively, and $(16) million and $(9) million in the first six months of 2024 and 2023, respectively.
Current wording
Our share of net loss from unconsolidated affiliates accounted for using the equity method is reported as loss from investments in unconsolidated affiliates, and the related tax (provision) benefit is reported within the income tax provision in the consolidated statements of income. Loss from investments in unconsolidated affiliates, including acquired intangible asset amortization from valuations in purchase accounting, was $(626) million and $(2) million in the third quarter of 2024 and 2023, respectively, and $(642) million and $(11) million in the first nine months of 2024 and 2023, respectively. The third quarter and first nine months of 2024 included a $570 million non-cash impairment related to the Wells Fargo Merchant Services merchant alliance.
Previous wording
Net income attributable to noncontrolling interests and redeemable noncontrolling interest relates to the minority partners’ share of the net income in our consolidated subsidiaries. Net income attributable to noncontrolling interests, including acquired intangible asset amortization from valuations in purchase accounting, was $15 million and $12 million in the second quarter of 2024 and 2023, respectively, and $32 million and $25 million in the first six months of 2024 and 2023, respectively.
Current wording
Net income attributable to noncontrolling interests and redeemable noncontrolling interest relates to the minority partners’ share of the net income in our consolidated subsidiaries. Net income attributable to noncontrolling interests, including acquired intangible asset amortization from valuations in purchase accounting, was $7 million and $17 million in the third quarter of 2024 and 2023, respectively, and $39 million and $42 million in the first nine months of 2024 and 2023, respectively.
Previous wording
Net income attributable to Fiserv, Inc. per share-diluted was $1.53 and $1.10 in the second quarter of 2024 and 2023, respectively, and was $2.76 and $1.99 in the first six months of 2024 and 2023, respectively. In addition to the favorable impacts to net income attributable to Fiserv, Inc. described above, our diluted weighted average outstanding shares were reduced by 5% and 6% in the second quarter and first six months of 2024, respectively, compared to 2023, due to our share repurchase program.
Current wording
Net income attributable to Fiserv, Inc. per share-diluted was $0.98 and $1.56 in the third quarter of 2024 and 2023, respectively, and $3.74 and $3.54 in the first nine months of 2024 and 2023, respectively. In addition to the impacts to net income attributable to Fiserv, Inc. described above, our diluted weighted average outstanding shares were reduced by 5% and 6% in the third quarter and first nine months of 2024, respectively, compared to 2023, due to our share repurchase program.
Previous wording
Our primary liquidity needs in the ordinary course of business are to: (i) fund normal operating expenses; (ii) meet the interest and principal requirements of our outstanding indebtedness, including finance leases; and (iii) fund capital expenditures and operating lease payments. We believe these needs will be satisfied in both the short and long term using cash flow generated by our operations, along with our cash and cash equivalents of $1.2 billion, proceeds from the issuance of U.S. dollar and Euro commercial paper, and available capacity under our revolving credit facility of $1.1 billion (net of $4.9 billion of capacity designated for outstanding borrowings under our commercial paper programs, senior notes due within the next twelve months and letters of credit) at June 30, 2024.
Current wording
Our primary liquidity needs in the ordinary course of business are to: (i) fund normal operating expenses; (ii) meet the interest and principal requirements of our outstanding indebtedness, including finance leases; and (iii) fund capital expenditures and operating lease payments. We believe these needs will be satisfied in both the short and long term using cash flow generated by our operations, along with our cash and cash equivalents of $1.2 billion, proceeds from the issuance of U.S. dollar and Euro commercial paper, and available capacity under our revolving credit facility of $2.7 billion (net of outstanding revolver borrowings and $3.3 billion of capacity designated for outstanding borrowings under our commercial paper programs, senior notes due within the next twelve months and letters of credit) at September 30, 2024.
Previous wording
Our operating cash flow was $2.2 billion in the first six months of 2024, an increase of 8% compared with $2.0 billion in the first six months of 2023. This increase was primarily attributable to increased profitability and corresponding cash flows, partially offset by higher working capital use compared to the first six months of 2023, including increased accounts receivable corresponding to revenue growth.
Current wording
Our operating cash flow was $4.4 billion in the first nine months of 2024, an increase of 24% compared with $3.6 billion in the first nine months of 2023. This increase was primarily attributable to increased profitability, excluding non-cash impairments included within loss from investments in unconsolidated affiliates, and corresponding cash flows, along with favorable fluctuations in working capital, including the timing of vendor payments.
Previous wording
We maintain investments in various affiliates that are accounted for as equity method investments. Total distributions from unconsolidated affiliates, including those classified as cash flows from investing activities, were $58 million and $109 million in the first six months of 2024 and 2023, respectively.
Current wording
We maintain investments in various affiliates that are accounted for as equity method investments. Total distributions from unconsolidated affiliates, including those classified as cash flows from investing activities, were $88 million and $152 million in the first nine months of 2024 and 2023, respectively.
Previous wording
Our current policy is to use our operating cash flow primarily to fund capital expenditures, share repurchases, acquisitions and to repay debt rather than to pay dividends. Our capital expenditures were approximately 8% and 7% of our total revenue for the first six months of 2024 and 2023, respectively.
Current wording
Our current policy is to use our operating cash flow primarily to fund capital expenditures, merchant cash advances, share repurchases, acquisitions and to repay debt rather than to pay dividends. Our capital expenditures were approximately 8% and 7% of our total revenue for the first nine months of 2024 and 2023, respectively.
Previous wording
We repurchased $3.0 billion and $2.5 billion of our common stock during the first six months of 2024 and 2023, respectively. On February 22, 2023, our board of directors approved a repurchase authorization for up to 75.0 million shares of our common stock. As of June 30, 2024, we had approximately 31.8 million shares remaining under our existing repurchase authorization. Shares repurchased are generally held for issuance in connection with our equity plans.
Current wording
On February 22, 2023, our board of directors approved a repurchase authorization for up to 75.0 million shares of our common stock. As of September 30, 2024, we had approximately 24.2 million shares remaining under our existing repurchase authorization. Shares repurchased are generally held for issuance in connection with our equity plans.
Previous wording
We sold our financial reconciliation business in July 2023 for cash proceeds of $235 million. Net proceeds from the sale were primarily used to pay down indebtedness and repurchase shares of our common stock.
Current wording
We sold our financial reconciliation business in July 2023 for cash proceeds of $232 million, subject to final net working capital adjustments. Net proceeds from the sale were primarily used to pay down indebtedness and repurchase shares of our common stock.
Previous wording
At June 30, 2024, our debt consisted primarily of $22.0 billion of fixed-rate senior notes and $1.9 billion of outstanding borrowings under our commercial paper programs. Interest on our U.S. dollar-denominated senior notes is paid semi-annually, while interest on our Euro and British Pound-denominated senior notes is paid annually. Interest on our revolving credit facility and commercial paper notes is generally paid weekly, or more frequently on occasion.
Current wording
At September 30, 2024, our debt consisted primarily of $21.9 billion of fixed-rate senior notes and $1.6 billion of outstanding borrowings under our commercial paper programs. Interest on our U.S. dollar-denominated senior notes is paid semi-annually, while interest on our Euro and British Pound-denominated senior notes is paid annually. Interest on our revolving credit facility and commercial paper notes is generally paid weekly, or more frequently on occasion.
Previous wording
At June 30, 2024, the 2.750% senior notes due in July 2024 and 3.850% senior notes due in June 2025 were classified in the consolidated balance sheet as long-term, as we have either subsequently refinanced or have the intent to refinance this debt on a long-term basis, and the ability to do so under our revolving credit facility. Outstanding borrowings under the commercial paper programs are also classified in the consolidated balance sheet as long-term, as we have the intent to refinance this commercial paper on a long-term basis through the continued issuance of new commercial paper upon maturity, and also have the ability to refinance such commercial paper under our revolving credit facility.
Current wording
At September 30, 2024, the 3.850% senior notes due in June 2025 and 2.250% senior notes due in July 2025 were classified in the consolidated balance sheet as long-term, as we have the intent to refinance this debt on a long-term basis, and the ability to do so under our revolving credit facility. Outstanding borrowings under the commercial paper programs are also classified in the consolidated balance sheet as long-term, as we have the intent to refinance this commercial paper on a long-term basis through the continued issuance of new commercial paper upon maturity, and also have the ability to refinance such commercial paper under our revolving credit facility.
Previous wording
We maintain various short-term lines of credit and other borrowing arrangements with foreign banks and alliance partners primarily to fund settlement activity associated with operations in Latin America, including an annually renewable term loan facility to fund settlement advance cash payments in Brazil. This term loan has a notional value of 514 million Brazilian real ($93 million USD equivalent) at June 30, 2024 and bears interest at a variable Certificado de Depósito Interbancário (CDI) Rate, plus a specified margin per annum. In February 2024, this term loan facility was amended, which amendment extended its maturity date to April 2025 and decreased the specified margin to 1.25% per annum.
Current wording
We maintain various short-term lines of credit and other borrowing arrangements with foreign banks and alliance partners primarily to fund merchant settlement advances associated with operations in Latin America, including an annually renewable term loan facility to fund settlement advance cash payments in Brazil. This term loan has a notional value of 514 million Brazilian real ($95 million USD equivalent) at September 30, 2024 and bears interest at a variable Certificado de Depósito Interbancário (CDI) Rate, plus a specified margin per annum. In February 2024, this term loan facility was amended, which amendment extended its maturity date to April 2025 and decreased the specified margin to 1.25% per annum.
Previous wording
We also maintain a senior unsecured multicurrency revolving credit facility, which matures in June 2027 and provides for a maximum aggregate principal amount of availability of $6.0 billion. Borrowings under the credit facility bear interest at a variable base rate, determined by the term and currency of the borrowing, plus a specified margin based on our long-term debt rating. There were no outstanding borrowings under the revolving credit facility at June 30, 2024. We are required to pay a facility fee based on the aggregate commitments in effect under the credit agreement from time to time.
Current wording
We also maintain a senior unsecured multicurrency revolving credit facility, which matures in June 2027 and provides for a maximum aggregate principal amount of availability of $6.0 billion. Borrowings under the credit facility bear interest at a variable base rate, determined by the term and currency of the borrowing, plus a specified margin based on our long-term debt rating. Outstanding borrowings under the revolving credit facility were $70 million at September 30, 2024. We are required to pay a facility fee based on the aggregate commitments in effect under the credit agreement from time to time.
Previous wording
During the first six months of 2024, we were in compliance with all financial debt covenants. Our ability to meet future debt covenant requirements will depend on our continued ability to generate earnings and cash flows. We expect to remain in compliance with all terms and conditions associated with our outstanding debt, including financial debt covenants.
Current wording
During the first nine months of 2024, we were in compliance with all financial debt covenants. Our ability to meet future debt covenant requirements will depend on our continued ability to generate earnings and cash flows. We expect to remain in compliance with all terms and conditions associated with our outstanding debt, including financial debt covenants.
Previous wording
We maintain noncontrolling ownership interests in Sagent M&C, LLC and defi SOLUTIONS Group, LLC (collectively, the “Lending Joint Ventures”). The Lending Joint Ventures maintain variable-rate term loan facilities with aggregate outstanding borrowings of $432 million in senior unsecured debt at June 30, 2024 and variable-rate revolving credit facilities with an aggregate borrowing capacity of $83 million with a syndicate of banks, which mature in April 2027. There were $19 million of aggregate outstanding borrowings on the revolving credit facilities at June 30, 2024. We have guaranteed the debt of the Lending Joint Ventures. We maintained a liability of $26 million at June 30, 2024 for the estimated fair value of our non-contingent obligations to stand ready to perform over the term of the guarantee arrangements. Such guarantees will be amortized in future periods over the contractual term of the debt. In addition, we maintained a contingent liability of $19 million at June 30, 2024, representing the current expected credit losses to which we are exposed. This contingent liability is estimated based on certain financial metrics of the Lending Joint Ventures and historical industry data, which is used to develop assumptions of the likelihood the guaranteed parties will default and the level of credit losses in the event a default occurs. We have not made any payments under the guarantees, nor have we been called upon to do so, and do not anticipate that the Lending Joint Ventures will fail to fulfill their debt obligations.
Current wording
We maintain noncontrolling ownership interests in Sagent M&C, LLC and defi SOLUTIONS Group, LLC (collectively, the “Lending Joint Ventures”). The Lending Joint Ventures maintain variable-rate term loan facilities with aggregate outstanding borrowings of $426 million in senior unsecured debt at September 30, 2024 and variable-rate revolving credit facilities with an aggregate borrowing capacity of $83 million with a syndicate of banks, which mature in April 2027. There were $20 million of aggregate outstanding borrowings on the revolving credit facilities at September 30, 2024. We have guaranteed the debt of the Lending Joint Ventures. We maintained a liability of $24 million at September 30, 2024 for the estimated fair value of our non-contingent obligations to stand ready to perform over the term of the guarantee arrangements. Such guarantees will be amortized in future periods over the contractual term of the debt. In addition, we maintained a contingent liability of $17 million at September 30, 2024, representing the current expected credit losses to which we are exposed. This contingent liability is estimated based on certain financial metrics of the Lending Joint Ventures and historical industry data, which is used to develop assumptions of the likelihood the guaranteed parties will default and the level of credit losses in the event a default occurs. We have not made any payments under the guarantees, nor have we been called upon to do so, and do not anticipate that the Lending Joint Ventures will fail to fulfill their debt obligations.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Loss from Investments in Unconsolidated Affiliates
Current report — wording carried from elsewhere
In August 2024, we completed the public offering and issuance of $1.75 billion of senior notes, comprised of $850 million aggregate principal amount of 4.750% senior notes due in March 2030 and $900 million aggregate principal amount of 5.150% senior notes due in August 2034. We used the net proceeds from this senior notes offering for general corporate purposes, including the repayment of a portion of our commercial paper notes and for share repurchases.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Income (Loss) from Investments in Unconsolidated Affiliates