Fiserv Inc. reported sharp earnings gains, largely from its December acquisition of the bill-payment provider CheckFree Corp.
The financial technology company said Wednesday that its first-quarter earnings nearly tripled from a year earlier, to $329 million. Revenue grew 39%, to $1.31 billion, and adjusted earnings of 78 cents a share beat the average Wall Street estimate by 2 cents.
"We've transformed our company to have a much larger propensity for payments," Jeffery Yabuki, Fiserv's president and chief executive, said in an interview. Debit processing, expedited payments, and check imaging also contributed to the gains, he said.
Fiserv sold most of its health operations in January to UnitedHealth Group Inc. for $775 million. In February it sold part of its investment support services unit to TD Ameritrade Holding Corp. for $225 million. Fiserv said it expects regulatory approvals to sell the remaining businesses in its Investment Support Services by the end of the third quarter.
For the full year, Fiserv lowered its projection for earnings from continuing operations to a range of $3.28 to $3.40 a share, from a previous range of $3.33 to $3.47, because it renewed a bill-payment contract with Bank of America Corp., its largest customer for that service, at a reduced rate.
"We are optimistic that we can recover this reduction over the contract term through a combination of continued transaction growth and the provision of additional products and services," Mr. Yabuki said on a conference call with analysts.
Tien-Tsin Huang, an analyst at JPMorgan Securities Inc., wrote in a note to investors Thursday that the market would be disappointed with the lowered outlook, but he recommended they buy when the stock price falls.
"We are optimistic" that new bill pay customers will produce higher margins "to justify" the B of A discount, he wrote.
