On February 5, Fiserv, a payments firm, surpassed expectations for fourth-quarter profit according to Reuters. This success was attributed to a strong performance in its banking and payments processing division, prompting a 3.2% increase in its shares during premarket trading.
The company, based in Wisconsin, generates revenue by collecting fees from merchants, banks, and credit unions for transaction processing, which is linked to consumer spending levels.
In the reported quarter, consumer spending remained strong due to the Federal Reserve's rate cuts and optimism for a favorable economic outcome, avoiding a recession or substantial job losses impacted by lowered inflation.
Fiserv's processing and services revenue, representing the majority of its earnings, grew by 5.8% to $4.26 billion in the quarter, contributing to a total revenue increase of 6.8% to $5.25 billion. This surpasses analysts' predictions of $4.96 billion, as per data from LSEG.
For the quarter ending December 31, Fiserv recorded an adjusted profit of $1.44 billion, equivalent to $2.51 per share, up from $1.32 billion or $2.19 per share in the same period the prior year, surpassing analysts' expectations of $2.48 per share.
Looking ahead, Fiserv anticipates an adjusted profit ranging from $10.10 to $10.30 per share in 2025, compared to analysts' projections of $10.21 per share. The company also forecasts organic revenue growth between 10% and 12% in 2025.
Fiserv's shares rose by 54.6% in 2024, outperforming its competitor FIS, which saw a 34.5% increase during the same period.