Fiserv shares jumped more than 12% Monday after the payments-technology company said it would nearly double its targeted cost savings from an ongoing overhaul, even as the same earnings report disclosed a $6.45 billion non-cash writedown and a steep quarterly loss under U.S. accounting rules.
The company's third-quarter earnings release showed GAAP revenue of $5.2 billion, down 1% from a year earlier, and a GAAP loss of $11.17 a share after the goodwill impairment tied to a review of its merchant-services portfolio. Stripped of one-time items, adjusted earnings came to $1.75 a share.
Savings Target Doubles
The headline that moved the stock was a revision to "Project Elevate," the cost-cutting program Fiserv's management launched earlier this year after a leadership shakeup and a broader strategic reset. The company said it now expects the program to generate $1 billion in annual savings, up from a previous target of $500 million, after completing a deeper portfolio review. Fiserv also said it plans to repurchase $500 million of its own stock in the fourth quarter.
Investors appeared willing to look past the quarter's revenue decline and the size of the writedown to focus on the savings commitment and the signal that management sees a credible path back to growth. The stock's gain stood out on a day when several other companies reporting results, including Shopify and data-research firm Gartner, fell sharply after disappointing investors, per Monday's market wrap.
Fiserv has struggled over the past year to reassure investors after a string of guidance cuts and a management overhaul, including a new finance chief, as the company works through problems in its merchant-acquiring business. Monday's goodwill impairment effectively acknowledged that part of that business is worth less than Fiserv had carried it on its books.
Whether Monday's rally holds will depend on execution. Analysts will be watching the company's next few quarters for evidence that revenue trends are stabilizing beyond the one-time accounting charge, rather than simply celebrating a lowered cost base.
