fisv-20230930

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from to

Commission File Number 1-38962

FISERV, INC.

(Exact Name of Registrant as Specified in Its Charter)


Wisconsin						39-1506125
(State or Other Jurisdiction of Incorporation or Organization)						(I. R. S. Employer Identification No.)

255 Fiserv Drive, Brookfield, WI 53045

(Address of Principal Executive Offices and zip code)

(262) 879-5000

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

The New York Stock Exchange

1.125% Senior Notes due 2027

FI27

The New York Stock Exchange

1.625% Senior Notes due 2030

FI30

The New York Stock Exchange

2.250% Senior Notes due 2025

FI25

The New York Stock Exchange

3.000% Senior Notes due 2031

FI31

The New York Stock Exchange

4.500% Senior Notes due 2031

FI31A

The New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 20, 2023, there were 600,185,716 shares of common stock, $.01 par value, of the registrant outstanding.

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INDEX


		Page
PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)
	Consolidated Statements of Income	1
	Consolidated Statements of Comprehensive Income (Loss)	2
	Consolidated Balance Sheets	3
	Consolidated Statements of Cash Flows	4
	Notes to Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	43

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	43

Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, a nd Issuer Purchases of Equity Securities	44
Item 5.	Other Information	44
Item 6.	Exhibits	44

	Exhibit Index
	Signatures

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Fiserv, Inc.

Consolidated Statements of Income

(In millions, except per share data)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenue:
Processing and services (1)	$	4,008	$	3,678	$	11,605	$	10,738
Product	865		840		2,571		2,368
Total revenue	4,873		4,518		14,176		13,106
Expenses:
Cost of processing and services	1,311		1,443		4,067		4,381
Cost of product	583		553		1,761		1,631
Selling, general and administrative	1,652		1,547		4,952		4,560
Net (gain) loss on sale of businesses and other assets	(176)		120		(172)		(27)
Total expenses	3,370		3,663		10,608		10,545
Operating income	1,503		855		3,568		2,561
Interest expense, net	(258)		(190)		(692)		(534)

Other expense, net	(35)		(13)		(81)		(83)
Income before income taxes and (loss) income from investments in unconsolidated affiliates	1,210		652		2,795		1,944
Income tax provision	(239)		(147)		(544)		(382)
(Loss) income from investments in unconsolidated affiliates	(2)		(12)		(11)		222
Net income	969		493		2,240		1,784
Less: net income attributable to noncontrolling interests and redeemable noncontrolling interests	17		12		42		36
Net income attributable to Fiserv, Inc.	$	952	$	481	$	2,198	$	1,748

Net income attributable to Fiserv, Inc. per share:
Basic	$	1.57	$	0.75	$	3.57	$	2.71
Diluted	$	1.56	$	0.75	$	3.54	$	2.68

Shares used in computing net income attributable to Fiserv, Inc. per share:
Basic	606.2		639.6		616.2		645.2
Diluted	610.3		645.0		620.3		651.0

(1)Includes processing and other fees charged to related party investments accounted for under the equity method of $45 million and $51 million for the three months ended September 30, 2023 and 2022, respectively, and $136 million and $151 million for the nine months ended September 30, 2023 and 2022, respectively (see Note 19).

See accompanying notes to consolidated financial statements.

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Fiserv, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(In millions)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net income	$	969	$	493	$	2,240	$	1,784
Other comprehensive income (loss):
Fair market value adjustment on derivatives	5		(6)		14		(15)
Reclassification adjustment for net realized losses on cash flow hedges included in cost of processing and services	4		1		4		—
Reclassification adjustment for net realized losses on cash flow hedges included in net interest expense	4		4		11		15
Tax impacts of derivatives	(3)		1		(7)		—
Unrealized gain (loss) on defined benefit pension plans	—		1		3		(3)
Tax impacts of defined benefit pension plans	—		—		(1)		1
Foreign currency translation	(261)		(550)		(11)		(765)
Reclassification adjustment for accumulated foreign currency translation impacts from the sale of foreign entities included in net (gain) loss on sale of businesses and other assets	10		56		10		56
Tax impacts of foreign currency translation	(42)		(89)		(2)		(172)
Total other comprehensive income (loss)	(283)		(582)		21		(883)
Comprehensive income (loss)	$	686	$	(89)	$	2,261	$	901
Less: net income attributable to noncontrolling interests and redeemable noncontrolling interests	17		12		42		36
Less: other comprehensive loss attributable to noncontrolling interests	(17)		(48)		(2)		(89)
Comprehensive income (loss) attributable to Fiserv, Inc.	$	686	$	(53)	$	2,221	$	954

See accompanying notes to consolidated financial statements.

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Fiserv, Inc.

Consolidated Balance Sheets

(In millions)

(Unaudited)


	September 30, 2023		December 31, 2022
Assets
Cash and cash equivalents	$	1,349	$	902
Trade accounts receivable, less allowance for doubtful accounts	3,461		3,585
Prepaid expenses and other current assets	1,986		1,575
Settlement assets	21,785		21,482

Total current assets	28,581		27,544
Property and equipment, net	2,122		1,958
Customer relationships, net	7,300		8,424
Other intangible assets, net	4,139		3,991
Goodwill	36,836		36,811
Contract costs, net	921		905
Investments in unconsolidated affiliates	2,259		2,403
Other long-term assets	1,996		1,833
Total assets	$	84,154	$	83,869
Liabilities and Equity
Accounts payable and accrued expenses	$	3,590	$	3,883
Short-term and current maturities of long-term debt	649		468
Contract liabilities	605		625
Settlement obligations	21,785		21,482

Total current liabilities	26,629		26,458
Long-term debt	22,657		20,950
Deferred income taxes	3,264		3,602
Long-term contract liabilities	247		235
Other long-term liabilities	971		936
Total liabilities	53,768		52,181
Commitments and Contingencies (see Note 18)
Redeemable Noncontrolling Interests	161		161
Fiserv, Inc. Shareholders’ Equity:
Preferred stock, no par value: 25 million shares authorized; none issued	—		—
Common stock, $0.01 par value: 1,800 million shares authorized; 784 million shares issued	8		8
Additional paid-in capital	23,056		23,011
Accumulated other comprehensive loss	(1,166)		(1,189)
Retained earnings	19,574		17,376
Treasury stock, at cost, 182 million and 154 million shares, respectively	(11,899)		(8,378)
Total Fiserv, Inc. shareholders’ equity	29,573		30,828
Noncontrolling interests	652		699
Total equity	30,225		31,527
Total liabilities and equity	$	84,154	$	83,869

See accompanying notes to consolidated financial statements.

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Fiserv, Inc.

Consolidated Statements of Cash Flows

(In millions)

(Unaudited)


	Nine Months Ended September 30,
	2023		2022
Cash flows from operating activities:
Net income	$	2,240	$	1,784
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and other amortization	1,093		982
Amortization of acquisition-related intangible assets	1,261		1,416
Amortization of financing costs and debt discounts	30		33

Share-based compensation	275		244

Deferred income taxes	(344)		(402)
Net gain on sale of businesses and other assets	(172)		(27)
Loss (income) from investments in unconsolidated affiliates	11		(222)
Distributions from unconsolidated affiliates	42		58


Other operating activities	(2)		(2)
Changes in assets and liabilities, net of effects from acquisitions and dispositions:
Trade accounts receivable	119		(521)
Prepaid expenses and other assets	(506)		(203)
Contract costs	(180)		(230)
Accounts payable and other liabilities	(303)		105
Contract liabilities	3		(30)
Net cash provided by operating activities	3,567		2,985
Cash flows from investing activities:
Capital expenditures, including capitalized software and other intangibles	(1,034)		(1,148)
Net proceeds from sale of businesses and other assets	232		218
Payments for acquisition of businesses, net of cash acquired	—		(682)
Distributions from unconsolidated affiliates	110		110
Purchases of investments	(15)		(45)
Proceeds from sale of investments	—		13
Other investing activities	(3)		—
Net cash used in investing activities	(710)		(1,534)
Cash flows from financing activities:
Debt proceeds	5,188		1,450
Debt repayments	(1,652)		(2,945)
Net (repayments of) proceeds from commercial paper and short-term borrowings	(2,032)		2,020
Payments of debt financing costs	(38)		—
Proceeds from issuance of treasury stock	68		96
Purchases of treasury stock, including employee shares withheld for tax obligations	(3,790)		(1,909)

Settlement activity, net	(630)		114
Distributions paid to noncontrolling interests and redeemable noncontrolling interests	(22)		(30)
Payment to acquire noncontrolling interest of consolidated subsidiary	(56)		—
Payments of acquisition-related contingent consideration	(33)		—
Other financing activities	(39)		7
Net cash used in financing activities	(3,036)		(1,197)
Effect of exchange rate changes on cash and cash equivalents	(8)		(84)
Net change in cash and cash equivalents	(187)		170

Cash and cash equivalents, beginning balance	3,192		3,205
Cash and cash equivalents, ending balance	$	3,005	$	3,375

See accompanying notes to consolidated financial statements.

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Fiserv, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

1. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements for the three and nine months ended September 30, 2023 and 2022 are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of the consolidated financial statements have been included. Such adjustments consisted of normal recurring items. Interim results are not necessarily indicative of results for a full year. The consolidated financial statements and accompanying notes are presented as permitted by Form 10-Q and do not contain certain information included in the annual consolidated financial statements and accompanying notes of Fiserv, Inc. (the “Company”). These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Principles of Consolidation

The consolidated financial statements include the accounts of Fiserv, Inc. and its subsidiaries in which the Company holds a majority controlling financial interest. All intercompany transactions and balances between the Company and its subsidiaries have been eliminated in consolidation. Control is typically established when ownership and voting interests in an entity are greater than 50%. Investments in which the Company has significant influence but not control are accounted for using the equity method of accounting, for which the Company’s share of net income or loss is reported within (loss) income from investments in unconsolidated affiliates and the related tax expense or benefit is reported within the income tax provision in the consolidated statements of income. Significant influence over an affiliate’s operations generally coincides with an ownership interest of between 20% and 50%; however, for partnerships and limited liability companies, an ownership interest of between 3% and 50% or board of director representation may also constitute significant influence.

The Company maintains a majority controlling financial interest in certain entities, mostly related to consolidated merchant alliances (see Note 19). Noncontrolling interests represent the minority shareholders’ share of the net income or loss and equity in consolidated subsidiaries. The Company’s noncontrolling interests presented in the consolidated statements of income include net income attributable to noncontrolling interests and redeemable noncontrolling interests. Noncontrolling interests are presented as a component of equity in the consolidated balance sheets. Noncontrolling interests that are redeemable upon the occurrence of an event that is not solely within the Company’s control are presented outside of equity and are carried at their estimated redemption value if it exceeds the initial carrying value of the redeemable interest (see Note 11).

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S.”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and investments with original maturities of 90 days or less and are stated at cost in the consolidated balance sheets, which approximates market value. Cash and cash equivalents that were restricted from use due to regulatory or other requirements are included in other long-term assets in the consolidated balance sheets. Cash and cash equivalents held on behalf of merchants and other payees are included in settlement assets in the consolidated balance sheets.

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The changes in settlement cash and cash equivalents are included in settlement activity, net within cash flows from financing activities in the consolidated statements of cash flows. The following table provides a reconciliation between cash and cash equivalents on the consolidated balance sheets and the consolidated statements of cash flows at:


(In millions)	September 30, 2023		December 31, 2022		September 30, 2022
Cash and cash equivalents on the consolidated balance sheets	$	1,349	$	902	$	893
Cash and cash equivalents included in settlement assets	1,653		2,283		2,475
Other restricted cash	3		7		7
Total cash and cash equivalents on the consolidated statements of cash flows	$	3,005	$	3,192	$	3,375

Allowance for Doubtful Accounts

The Company analyzes the collectability of trade accounts receivable by considering historical bad debts and issued client credits, client creditworthiness, current economic trends, changes in client payment terms and collection trends when evaluating the adequacy of the allowance for doubtful accounts. Any change in the assumptions used in analyzing a specific account receivable may result in an additional allowance for doubtful accounts being recognized in the period in which the change occurs. The allowance for doubtful accounts was $83 million and $52 million at September 30, 2023 and December 31, 2022, respectively.

Prepaid Expenses and Other Current Assets

Prepaid expenses represent advance payments for goods and services to be consumed in the future, such as maintenance, postage and insurance, and totaled $459 million and $431 million at September 30, 2023 and December 31, 2022, respectively. Other current assets, including Clover Capital cash advances and settlement advance cash payments, totaled $1,527 million and $1,144 million at September 30, 2023 and December 31, 2022, respectively.

The Company offers merchants advance access to capital through its Clover Capital cash advance program. Under this program, merchants sell fixed amounts of their future credit card receivables to the Company in exchange for an up-front purchase price payment. Future credit card receivables purchased by the Company under the Clover Capital program were $241 million and $164 million at September 30, 2023 and December 31, 2022, respectively. The Company maintained a reserve of $10 million and $7 million at September 30, 2023 and December 31, 2022, respectively, based on an estimate of uncollectible amounts.

The Company also offers merchants within its international operations advance access to capital by providing them the opportunity to receive settlement cash payments in advance in exchange for their receivables, including when the cardholders have elected to pay such merchants over time in installments. The Company maintains short-term lines of credit with foreign banks and alliance partners to fund such anticipated settlement activity (see Note 10). These local functional currency arrangements are primarily associated with the Company’s operations in Latin America, the most significant of which are denominated in Argentine peso and Brazilian real. The Company’s outstanding cash advances from card issuers related to this settlement funding activity were $508 million and $264 million at September 30, 2023 and December 31, 2022, respectively.

Settlement Assets and Obligations

Settlement assets and obligations represent intermediary balances arising from the settlement process which involves the transferring of funds between card issuers, payment networks, processors, merchants and consumers, and collateral amounts held to manage merchant credit risk, primarily associated with the Company’s merchant acquiring services. As a processor, the Company facilitates the clearing and settlement activity for the merchant and records settlement assets and obligations upon processing a payment transaction. Settlement assets represent cash received or amounts receivable from agents, payment networks, bank partners, merchants or direct consumers. Settlement obligations represent amounts payable to merchants and payees.

Certain merchant settlement assets (included within settlement receivables) that relate to settlement obligations are held by partner banks to which the Company does not have legal ownership, but which the Company has the right to use, to satisfy the related settlement obligations. The Company records settlement obligations for amounts payable to merchants and for outstanding payment instruments issued to payees that have not yet been presented for settlement.

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Allowance for Merchant Credit Losses

With respect to the Company’s merchant acquiring business, the Company’s merchant customers have the legal obligation to refund any charges properly reversed by the cardholder. However, in the event the Company is not able to collect the refunded amounts from the merchants, the Company may be liable for the reversed charges. The Company’s risk in this area primarily relates to situations where a cardholder has purchased goods or services to be delivered in the future. The Company requires cash deposits, guarantees, letters of credit or other types of collateral from certain merchants to mitigate this risk. Collateral held by the Company, or held by partner banks for the Company’s benefit, is classified within settlement assets, and the obligation to repay the collateral is classified within settlement obligations in the consolidated balance sheets. The Company also utilizes a number of systems and procedures to manage merchant credit risk. Despite these efforts, the Company experiences losses due to merchant defaults. The aggregate merchant credit loss expense, recognized by the Company within cost of processing and services in the consolidated statements of income, was $25 million and $18 million for the three months ended September 30, 2023 and 2022, respectively, and $62 million and $46 million for the nine months ended September 30, 2023 and 2022, respectively.

The Company maintains an allowance for merchant credit losses that are expected to exceed the amount of merchant collateral. The amount of collateral available to the Company was $0.9 billion and $1.5 billion at September 30, 2023 and December 31, 2022, respectively. The allowance includes estimated losses from anticipated chargebacks and fraud events that have been incurred on merchants’ payment transactions that have been processed but not yet reported to the Company, which is recorded within accounts payable and accrued expenses in the consolidated balance sheets, as well as estimated losses on refunded amounts to cardholders that have not yet been collected from the merchants, which is recorded within prepaid expenses and other current assets in the consolidated balance sheets. The allowance is based primarily on the Company’s historical experience of credit losses and other factors such as changes in economic conditions or increases in merchant fraud. The aggregate merchant credit loss allowance was $35 million and $29 million at September 30, 2023 and December 31, 2022, respectively.

Goodwill

Goodwill represents the excess of purchase price over the fair value of identifiable assets acquired and liabilities assumed in a business combination. The Company evaluates goodwill for impairment on an annual basis, or more frequently if circumstances indicate possible impairment. Goodwill is tested for impairment at a reporting unit level, which is one level below the Company’s reportable segments. The Company’s most recent annual impairment assessment of its reporting units in the fourth quarter of 2022 determined that its goodwill was not impaired as the estimated fair values exceeded the carrying values. However, it is reasonably possible that future developments related to the interest or currency exchange rate environments; a shift in strategic initiatives; a deterioration in financial performance within a particular reporting unit; or significant changes in the composition of, or assumptions used in, the quantitative test on certain of the Company’s reporting units (such as an increase in risk-adjusted discount rates) could have a future material impact on one or more of the estimates and assumptions used to evaluate goodwill impairment. Additionally, a significant change in a merchant alliance business relationship or operating performance could result in a material goodwill impairment charge. There is no accumulated goodwill impairment for the Company through September 30, 2023.

Other Equity Investments

The Company maintains investments, over which it does not have significant influence, in various equity securities without a readily determinable fair value. Such investments totaled $138 million and $135 million at September 30, 2023 and December 31, 2022, respectively, and are included within other long-term assets in the consolidated balance sheets. The Company reviews these investments each reporting period to determine whether an impairment or observable price change for the investment has occurred. To the extent such events or changes occur, the Company evaluates the fair value compared to its cost basis in the investment. Gains or losses from a sale of these investments or a change in fair value are included within other expense, net in the consolidated statements of income for the period. Adjustments made to the values recorded for certain equity securities and gains and losses from sales of equity securities during the three and nine months ended September 30, 2023 and 2022, were not significant.

Foreign Currency

The U.S. dollar is the functional currency of the Company’s U.S.-based businesses and certain foreign-based businesses. Where the functional currency differs from the U.S. dollar, assets and liabilities are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. Revenue and expenses are translated at the average exchange rates during the reporting period. Gains and losses from foreign currency translation are recorded as a separate component of accumulated other comprehensive loss. Gains and losses from foreign currency transactions are included in determining net income for the reporting period.

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Financial statements of subsidiaries located in highly inflationary economies outside of the U.S. are remeasured into U.S. dollars, and the foreign currency gains and losses from the remeasurement of monetary assets and liabilities are reflected in the consolidated statements of income, rather than as foreign currency translation within accumulated other comprehensive loss in the consolidated balance sheets. The remeasurement of monetary assets and liabilities in highly inflationary economies, primarily Argentina, resulted in foreign currency exchange losses of $38 million and $14 million for the three months ended September 30, 2023 and 2022, respectively, and $88 million and $31 million for the nine months ended September 30, 2023 and 2022, respectively, which is included within other expense, net within the consolidated statements of income.

To reduce exposure to changes in the value of the Company’s net investments in certain of its foreign currency-denominated subsidiaries due to changes in foreign currency exchange rates, the Company uses fixed-to-fixed cross-currency rate swap contracts and foreign currency-denominated debt as economic hedges of its net investments in such foreign currency-denominated subsidiaries. Foreign currency transaction gains or losses on the qualifying net investment hedge instruments are recorded as foreign currency translation, net of tax, within other comprehensive income (loss) in the consolidated statements of comprehensive income (loss) and will remain in accumulated other comprehensive loss within the consolidated balance sheets until the sale or complete liquidation of the underlying foreign subsidiaries.

Derivatives

Derivatives are entered into for periods consistent with related underlying exposures and are recorded in the consolidated balance sheets as either an asset or liability measured at fair value. If the derivative is designated as a cash flow hedge, changes in the fair value of the derivative are recorded as a component of accumulated other comprehensive loss and recognized in the consolidated statements of income when the hedged item affects earnings. If the derivative is designated as a net investment hedge, changes in the fair value of the derivative, net of tax, are recorded in the foreign currency translation component of other comprehensive income (loss) until the sale or complete liquidation of the underlying net investment. If the derivative is designated as a fair value hedge, changes in the fair value of the derivative are recorded in the same line item as the changes in the fair value of the hedged item and recognized in the consolidated statements of income. To the extent a derivative is not designated as a hedge, changes in fair value are recognized in the consolidated statements of income. The Company’s policy is to enter into derivatives with creditworthy institutions and not to enter into such derivatives for speculative purposes.

Interest Expense, Net

Interest expense, net consists of interest expense primarily associated with the Company’s outstanding borrowings and finance lease obligations, as well as interest income primarily associated with the Company’s investment securities. Interest expense, net consisted of the following:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2023		2022		2023		2022
Interest expense	$	(268)	$	(193)	$	(715)	$	(542)
Interest income	10		3		23		8
Interest expense, net	$	(258)	$	(190)	$	(692)	$	(534)

2. Recent Accounting Pronouncements

In 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”), which among other items, requires that entities disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases. For public entities, the provisions within ASU 2022-02 are to be applied prospectively and are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU 2022-02 effective January 1, 2023, and the adoption did not have a material impact on the Company’s financial statement disclosures for the nine months ended September 30, 2023.

In 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”), which clarifies the guidance in Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement (“Topic 820”), when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security and introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with ASC Topic 820. For public entities, ASU 2022-03 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The provisions within ASU 2022-03 are to be applied prospectively with any adjustments from the adoption

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recognized in earnings and disclosed on the date of adoption. The adoption of ASU 2022-03 is not expected to have a material impact on the Company’s consolidated financial statements or disclosures.

3. Revenue Recognition

The Company generates revenue from the delivery of processing, service and product solutions. Revenue is measured based on consideration specified in a contract with a customer, and excludes any amounts collected on behalf of third parties. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer which may be at a point in time or over time.

Disaggregation of Revenue

The Company’s operations are comprised of the Merchant Acceptance (“Acceptance”) segment, the Financial Technology (“Fintech”) segment and the Payments and Network (“Payments”) segment. Additional information regarding the Company’s business segments is included in Note 20. The tables below present the Company’s revenue disaggregated by type of revenue, including a reconciliation with its reportable segments. The majority of the Company’s revenue is earned domestically, with revenue generated outside the U.S. comprising approximately 15% and 14% of total revenue for the three months ended September 30, 2023 and 2022, respectively, and 14% of total revenue for each of the nine months ended September 30, 2023 and 2022.


(In millions)	Reportable Segments
Type of Revenue	Acceptance		Fintech		Payments		Corporate and Other		Total
Three Months Ended September 30, 2023
Processing	$	1,796	$	421	$	1,237	$	5	$	3,459
Hardware, print and card production	257		19		258		—		534
Professional services	6		119		76		—		201
Software maintenance	—		128		9		—		137
License and termination fees	10		46		72		—		128
Output Solutions postage	—		—		—		263		263
Other	37		62		52		—		151
Total Revenue	$	2,106	$	795	$	1,704	$	268	$	4,873

Three Months Ended September 30, 2022
Processing	$	1,586	$	407	$	1,218	$	6	$	3,217
Hardware, print and card production	254		9		271		—		534
Professional services	5		119		74		—		198
Software maintenance	—		138		7		—		145
License and termination fees	15		36		19		—		70
Output Solutions postage	—		—		—		251		251
Other	18		57		28		—		103
Total Revenue	$	1,878	$	766	$	1,617	$	257	$	4,518

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(In millions)	Reportable Segments
Type of Revenue	Acceptance		Fintech		Payments		Corporate and Other		Total
Nine Months Ended September 30, 2023
Processing	$	5,122	$	1,251	$	3,637	$	18	$	10,028
Hardware, print and card production	744		42		814		—		1,600
Professional services	16		348		224		—		588
Software maintenance	—		403		28		—		431
License and termination fees	31		145		145		—		321
Output Solutions postage	—		—		—		791		791
Other	105		182		130		—		417
Total Revenue	$	6,018	$	2,371	$	4,978	$	809	$	14,176

Nine Months Ended September 30, 2022
Processing	$	4,649	$	1,210	$	3,486	$	18	$	9,363
Hardware, print and card production	694		28		744		—		1,466
Professional services	15		366		203		—		584
Software maintenance	—		415		18		—		433
License and termination fees	43		152		79		—		274
Output Solutions postage	—		—		—		712		712
Other	31		176		67		—		274
Total Revenue	$	5,432	$	2,347	$	4,597	$	730	$	13,106

Contract Balances

The following table provides information about contract assets and contract liabilities from contracts with customers:


(In millions)	September 30, 2023		December 31, 2022
Contract assets	$	602	$	551
Contract liabilities	852		860

Contract assets, reported within other long-term assets in the consolidated balance sheets, primarily result from revenue being recognized where payment is contingent upon the transfer of services to a customer over the contractual period. Contract liabilities primarily relate to advance consideration received from customers (deferred revenue) for which transfer of control occurs, and therefore revenue is recognized, as services are provided. Contract balances are reported in a net contract asset or liability position on a contract-by-contract basis at the end of each reporting period. The Company recognized $539 million of revenue during the nine months ended September 30, 2023 that was included in the contract liabilities balance at the beginning of the period.

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Transaction Price Allocated to Remaining Performance Obligations

The following table includes estimated processing, services and product revenue expected to be recognized in the future related to performance obligations that were unsatisfied (or partially unsatisfied) at September 30, 2023:



(In millions)
Year Ending December 31,
Remainder of 2023	$	603
2024	2,226
2025	1,744
2026	1,206
Thereafter	1,643

The Company applies the optional exemption under ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), and does not disclose information about remaining performance obligations for account- and transaction-based processing fees that qualify for recognition under the as-invoiced practical expedient. These multi-year contracts contain variable consideration for stand-ready performance obligations for which the exact quantity and mix of transactions to be processed are contingent upon the customer’s request. The Company also applies the optional exemptions under ASC 606 and does not disclose information for variable consideration that is a sales- or usage-based royalty promised in exchange for a license of intellectual property or that is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service in a series. The amounts disclosed above as remaining performance obligations consist primarily of fixed or monthly minimum processing fees and maintenance fees under contracts with an original expected duration of greater than one year.

4. Acquisitions and Dispositions

Acquisitions were accounted for as business combinations using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. Purchase price was allocated to the respective identifiable assets acquired and liabilities assumed based on the estimated fair values at the date of acquisitions. The results of operations for the following acquired and divested businesses are included in the consolidated results of the Company from the respective dates of acquisition and through the respective dates of disposition. Pro forma information for these acquired businesses is not provided because they did not have a material effect, individually or in the aggregate, on the Company’s consolidated results of operations.

Acquisitions

Acquisition of Merchant One

On December 20, 2022, the Company acquired Merchant One, Inc. (“Merchant One”), an independent sales organization focused on acquiring merchants in the restaurant, retail and e-commerce industries using an innovative mix of direct and digital marketing strategies, for $302 million, net of $1 million of acquired cash. Merchant One is included within the Acceptance segment and enhances the Company’s merchant distribution and sales force channels.

During the nine months ended September 30, 2023, the Company identified and recorded measurement period adjustments to the preliminary Merchant One purchase price allocation, including refinements to valuations of acquired intangible assets, which were the result of additional analysis performed and information identified based on facts and circumstances that existed as of the acquisition date. These measurement period adjustments resulted in an increase to goodwill of $61 million and a corresponding decrease in identifiable intangible assets, including customer relationships. Such measurement period adjustments did not have a material impact on the Company’s consolidated statement of income. The allocation of the purchase price was finalized in the second quarter of 2023 and resulted in the recognition of identifiable intangible assets of $118 million, goodwill of $179 million and other net assets of $6 million. Goodwill, which is deductible for tax purposes, is primarily attributed to the anticipated value created by expanding the reach of the Clover® cloud-based POS and business management platform, and select value-added services that enable the Company to deliver new and innovative capabilities to Merchant One’s clients.

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The amounts allocated to identifiable intangible assets are as follows:


(In millions)	Gross Carrying Amount		Weighted-Average Useful Life
Residual buyouts	$	83	9 years
Customer relationships	35		10 years
Total	$	118	9 years

Acquisition of Finxact

On April 1, 2022, the Company acquired a remaining ownership interest in Finxact, Inc. (“Finxact”), a developer of cloud-native banking solutions powering digital transformation throughout the financial services sector, for $645 million, net of $27 million of acquired cash. The Company previously held a noncontrolling equity interest in Finxact, which was accounted for under the equity method. The remeasurement of the Company’s previously held equity interest to its acquisition-date fair value resulted in the recognition of a pre-tax gain of $110 million, included within income from investments in unconsolidated affiliates in the consolidated statement of income during the nine months ended September 30, 2022. Finxact is included within the Fintech segment and advances the Company’s digital banking strategy, expanding its account processing, digital, and payments solutions.

The allocation of purchase price recorded for Finxact was finalized in the fourth quarter of 2022 as follows:


(In millions)
Cash	$	27
Other net assets	1
Intangible assets	105
Goodwill	670
Total consideration	$	803
Less: Fair value of previously held equity interest	(131)
Total purchase price	$	672

Goodwill, which is not deductible for tax purposes, is primarily attributed to the anticipated value created by the combined scale, core platform modernization, and accelerated delivery of enhanced digital banking solutions offered to financial institutions of all sizes. The amounts allocated to identifiable intangible assets were as follows:


(In millions)	Gross Carrying Amount		Weighted-Average Useful Life
Acquired software and technology	$	90	6 years
Trade name	9		5 years
Customer relationships	6		8 years
Total	$	105	6 years

Other Acquisitions

On December 29, 2022, the Company acquired OrangeData S.A. (“Yacaré”), an Argentina-based payment service provider that enables customers to transact at merchant locations using QR codes. Yacaré is included within the Acceptance segment and enhances the Company’s instant payment transaction capabilities. On September 1, 2022, the Company acquired NexTable, Inc. (“NexTable”), a provider of cloud-based reservation and table management solutions for restaurants. NexTable is included within the Acceptance segment and expands the Company’s end-to-end restaurant solutions. On June 1, 2022, the Company acquired The LR2 Group, LLC (“City POS”), an independent sales organization that promotes payment processing services and facilitates the sale of POS equipment for merchants. City POS is included within the Acceptance segment and expands the Company’s merchant services business. The Company acquired these businesses for an aggregate purchase price of $44 million, including earn-out provisions estimated at a fair value of $6 million (see Note 8). The allocation of purchase price for these acquisitions resulted in the recognition of identifiable intangible assets of $23 million, goodwill of $22 million and other net assumed liabilities of $1 million. The purchase price allocations for the CityPOS and NexTable acquisitions were finalized in the third and fourth quarters of 2022, respectively. The purchase price allocation for the Yacaré acquisition was finalized in the second quarter of 2023. Measurement period adjustments did not have a material impact on the Company’s consolidated statements of income. Goodwill for these acquisitions, of which $17 million is deductible for tax purposes, is

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primarily attributed to the value created by expanding the reach of the Company’s payment solutions and enhancing omnichannel capabilities.

The amounts allocated to identifiable intangible assets for other acquisitions acquired in 2022 were as follows:


(In millions)	Gross Carrying Amount		Weighted-Average Useful Life
Acquired software and technology	$	12	7 years
Customer relationships	11		10 years
Total	$	23	9 years

Dispositions

Disposition of Financial Reconciliation Business

On July 25, 2023, the Company sold its financial reconciliation business, which was reported within the Fintech segment, for cash proceeds of $232 million, subject to final net working capital adjustments. The Company recognized a pre-tax gain of $177 million on the sale, recorded within net (gain) loss on sale of businesses and other assets, with a related tax expense of $49 million recorded within the income tax provision, in the consolidated statement of income during the three months ended September 30, 2023. The pre-tax gain was comprised of the difference between the consideration received and the net carrying amount of the business, including $38 million of allocated goodwill and $13 million of other net assets, primarily consisting of trade accounts receivable and capitalized software.

Disposition of Fiserv Costa Rica and Systems Integration Services

On October 17, 2022, the Company sold Fiserv Costa Rica, S.A. and its Systems Integration Services (“SIS”) operations, which provides information technology engineering services in the U.S. and India, to a single buyer, for an aggregate sales price of $49 million. The Company recognized a pre-tax gain of $44 million on the sales, recorded within net (gain) loss on sale of businesses and other assets, with a related tax expense of $8 million recorded within the income tax provision, in the consolidated statement of income for the year ended December 31, 2022. The Company recognized a pre-tax loss of $3 million, recorded within net (gain) loss on sale of businesses and other assets during the nine months ended September 30, 2023, associated with final working capital adjustments related to the disposition of Fiserv Costa Rica, S.A. Fiserv Costa Rica, S.A. and SIS were reported primarily within the Fintech segment.

Disposition of Korea Operations

On September 30, 2022, the Company sold its Korea operations, which were reported within the Acceptance segment, for total consideration of $50 million, consisting of $43 million in net cash and an equity interest in the buyer of $7 million. The Company recognized a pre-tax loss of $120 million on the sale, recorded within net (gain) loss on sale of businesses and other assets in the consolidated statement of income during the three months ended September 30, 2022. The loss was comprised of the difference between the consideration received and the net carrying amount of the business, including $40 million of allocated goodwill, $48 million of customer relationship net intangible assets and $56 million of accumulated foreign currency translation losses, which were reclassified from accumulated other comprehensive loss.

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5. Intangible Assets

Identifiable intangible assets consisted of the following:


(In millions)	Gross Carrying Amount		Accumulated Amortization		Net Book Value
September 30, 2023
Customer relationships	$	14,607	$	7,307	$	7,300
Acquired software and technology	2,354		1,301		1,053
Trade names	634		339		295
Purchased software	1,113		505		608
Capitalized software and other intangibles	3,194		1,011		2,183
Total	$	21,902	$	10,463	$	11,439

December 31, 2022
Customer relationships	$	14,795	$	6,371	$	8,424
Acquired software and technology	2,510		1,234		1,276
Trade names	633		295		338
Purchased software	1,146		595		551
Capitalized software and other intangibles	2,601		775		1,826
Total	$	21,685	$	9,270	$	12,415

Amortization expense associated with the above identifiable intangible assets was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2023		2022		2023		2022
Amortization expense	$	579	$	608	$	1,788	$	1,854

6. Investments in Unconsolidated Affiliates

The Company maintains investments in various affiliates that are accounted for as equity method investments, the most significant of which are related to the Company’s merchant alliances. The Company’s share of net income or loss from these investments is reported within (loss) income from investments in unconsolidated affiliates and the related tax expense or benefit is reported within the income tax provision in the consolidated statements of income. The Company reviews its equity method investments each reporting period for indications of an other-than-temporary deterioration in value. A deterioration in value of an equity method investment determined to be other-than-temporary is recorded as a current-period impairment charge within (loss) income from investments in unconsolidated affiliates in the consolidated statements of income.

The Company maintains noncontrolling ownership interests in Sagent M&C, LLC (“Sagent”) and defi SOLUTIONS Group, LLC (collectively the “Lending Joint Ventures”), which are accounted for under the equity method. In March 2022, Sagent completed a transaction with a third party for the contribution from and the sale by such third party to Sagent of certain intangible and tangible personal property rights, resulting in a dilution of the Company’s ownership interest in Sagent. As a result of the transaction, the Company recognized a net pre-tax gain of $80 million within (loss) income from investments in unconsolidated affiliates, with related tax expense of $19 million recorded through the income tax provision, in the consolidated statement of income during the nine months ended September 30, 2022. The Company’s remaining noncontrolling ownership interest in Sagent continues to be accounted for as an equity method investment.

The Lending Joint Ventures maintain, as amended in April 2022, variable-rate term loan facilities with aggregate outstanding borrowings of $437 million in senior unsecured debt at September 30, 2023 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 $45 million of aggregate outstanding borrowings on the revolving credit facilities at September 30, 2023. The Company has guaranteed the debt of the Lending Joint Ventures and does not anticipate that the Lending Joint Ventures will fail to fulfill their debt obligations (see Note 8).

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7. Derivatives and Hedging Instruments

In order to limit exposure to risk, the Company maintains derivative instruments with creditworthy institutions to hedge against changing interest rates and foreign currency rate fluctuations. The Company utilizes forward exchange contracts, fixed-to-fixed cross-currency rate swap contracts and other non-derivative hedging instruments to manage such risk. The Company has designated these instruments as cash flow hedges, net investment hedges, or fair value hedges, as further described below. Derivative instruments maintained by the Company are measured on a recurring basis and are recorded at fair value either as an asset or liability in the consolidated balance sheets (see Note 8).

Cash Flow Hedges

The Company maintains forward exchange contracts, designated as cash flow hedges, to hedge foreign currency exposure to the Indian Rupee. The notional amount of these derivatives was $396 million and $346 million at September 30, 2023 and December 31, 2022, respectively. Based on the amounts recorded in accumulated other comprehensive loss at September 30, 2023, the Company estimates that it will recognize gains of approximately $1 million in cost of processing and services during the next twelve months as foreign exchange forward contracts settle.

The Company previously entered into treasury lock agreements (“Treasury Locks”), designated as cash flow hedges to manage exposure to fluctuations in benchmark interest rates in anticipation of the issuance of fixed rate debt in connection with the acquisition and refinancing of certain indebtedness of First Data Corporation (“First Data”) and its subsidiaries. In 2019, concurrent with the issuance of U.S dollar-denominated senior notes, the Treasury Locks were settled resulting in a loss, net of income taxes, and recorded in accumulated other comprehensive loss that is being amortized to earnings over the terms of the originally forecasted interest payments. The unamortized balance recorded in accumulated other comprehensive loss related to the Treasury Locks was $119 million and $130 million at September 30, 2023 and December 31, 2022, respectively. Based on the amounts recorded in accumulated other comprehensive loss at September 30, 2023, the Company estimates that it will recognize approximately $15 million in net interest expense during the next twelve months related to settled interest rate hedge contracts.

Net Investment Hedges

At September 30, 2023, aggregate notional fixed-to-fixed cross-currency rate swaps of 400 million Euros and 614 million Singapore Dollars have been designated as net investment hedges to hedge a portion of the Company’s net investment in certain subsidiaries whose functional currencies are the Euro and Singapore Dollar.

The Company has also designated certain of its Euro- and British Pound-denominated senior notes and Euro commercial paper notes as net investment hedges to hedge a portion of its net investment in certain subsidiaries whose functional currencies are the Euro and the British Pound. On May 24, 2023, in conjunction with the public offering and issuance of the 4.500% Euro-denominated senior notes due in May 2031 (see Note 10), the Company elected to designate such notes as a net investment hedge and simultaneously de-designated its existing net investment hedge election on its 0.375% Euro-denominated senior notes due in July 2023. To mitigate foreign currency exchange exposure on the 0.375% Euro-denominated senior notes, the Company entered into a forward exchange contract, not designated as a hedge, with matching critical terms which settled in July 2023 in conjunction with the maturity of the senior notes.

Foreign currency transaction gains or losses on the qualifying net investment hedge instruments are recorded as foreign currency translation within other comprehensive income (loss) in the consolidated statements of comprehensive income (loss)

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and will remain in accumulated other comprehensive loss in the consolidated balance sheets until the sale or complete liquidation of the underlying foreign subsidiaries.

Foreign currency transaction gains (losses), net of income tax, related to net investment hedges that were recorded in other comprehensive income (loss) in the consolidated statements of comprehensive income (loss) were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2023		2022		2023		2022
Cross-currency rate swap contracts	$	4	$	2	$	(3)	$	2
Foreign currency-denominated debt	123		265		9		513

The Company recorded income tax impacts of $(42) million and $(89) million during the three months ended September 30, 2023 and 2022, respectively, and $(2) million and $(172) million during the nine months ended September 30, 2023 and 2022, respectively, in other comprehensive income (loss) from the translation of foreign currency-denominated senior notes, commercial paper notes and cross-currency rate swap contracts.

Fair Value Hedge

The Company maintains a fixed-to-fixed cross-currency rate swap contract of 525 million notional British Pounds, designated as a fair value hedge, to mitigate the spot foreign exchange rate risk on the principal amount of its British Pound-denominated 2.250% senior notes due in July 2025. Changes in the fair value of the cross-currency rate swap, along with the offsetting changes in the fair value of the senior notes, attributable to fluctuations in the British Pound/U.S. dollar spot rates are recognized in other expense, net within the consolidated statements of income.

8. Fair Value Measurements

The fair values of cash equivalents, trade accounts receivable, other current assets, settlement assets and obligations, accounts payable, and client deposits approximate their respective carrying values due to the short period of time to maturity. Derivative instruments maintained by the Company (see Note 7) are measured on a recurring basis based on foreign currency spot rates and forwards quoted by banks and foreign currency dealers and are marked to market each period. Contingent consideration related to certain of the Company’s acquisitions (see Note 4) is estimated using the present value of a probability-weighted assessment approach based on the likelihood of achieving the earn-out criteria. The fair value of the Company’s contingent liability for current expected credit losses associated with its debt guarantees, as further described below, is estimated based on assumptions of future risk of default and the corresponding level of credit losses at the time of default.

Assets and liabilities measured at fair value on a recurring basis consisted of the following:

Fair Value

(In millions)

Classification

Fair Value Hierarchy

September 30,
2023

December 31,
2022

Assets

Forward exchange contracts designated as cash flow hedges

Prepaid expenses and other current assets

Level 2

—

Liabilities

Cross-currency rate swap contract designated as fair value hedge

Other long-term liabilities

Level 2

—

Forward exchange contracts designated as cash flow hedges

Accounts payable and accrued expenses

Level 2

—

Forward exchange contracts designated as cash flow hedges

Other long-term liabilities

Level 2

—

Cross-currency rate swap contracts designated as net investment hedges

Other long-term liabilities

Level 2

Contingent consideration

Accounts payable and accrued expenses

Level 3

Contingent consideration

Other long-term liabilities

Level 3

Contingent debt guarantee

Other long-term liabilities

Level 3

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Debt

The Company’s senior notes are recorded at amortized cost but measured at fair value for disclosure purposes. The estimated fair value of senior notes was based on matrix pricing which considers readily observable inputs of comparable securities (Level 2 of the fair value hierarchy). The carrying value of the Company’s foreign lines of credit, term loan credit agreement, commercial paper notes and revolving credit facility borrowings approximates fair value as these instruments have variable interest rates and the Company has not experienced any change to its credit ratings (Level 2 of the fair value hierarchy). The estimated fair value of total debt, excluding finance leases and other financing obligations, was $20.7 billion and $19.2 billion at September 30, 2023 and December 31, 2022, respectively, and the carrying value was $22.3 billion and $20.6 billion at September 30, 2023 and December 31, 2022, respectively.

Debt Guarantee Arrangements

The Company maintains liabilities for its obligations to perform over the term of its debt guarantee arrangements with the Lending Joint Ventures (see Note 6), which are reported within other long-term liabilities in the consolidated balance sheets. In April 2022, the Lending Joint Ventures amended their respective term loans and revolving credit facilities, increasing aggregate borrowing capacity by $75 million and extending the maturities to April 2027. The Company elected to guarantee this incremental indebtedness, resulting in aggregate guarantees of $520 million. The Company is entitled to receive a defined fee in exchange for its incremental guarantee of this indebtedness. The Company has not made any payments under the guarantees, nor has it been called upon to do so, and does not anticipate that the Lending Joint Ventures will fail to fulfill their debt obligations.

The non-contingent component of the Company’s debt guarantee arrangements is recorded at amortized cost, but measured at fair value for disclosure purposes. The carrying value of the Company’s non-contingent liability of $33 million and $40 million approximates the fair value at September 30, 2023 and December 31, 2022, respectively (Level 3 of the fair value hierarchy). Such guarantees will be amortized in future periods over the contractual term of the debt. The contingent component of the Company’s debt guarantee arrangements represents the current expected credit losses to which the Company is exposed. The amount of the 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. The Company recognized $2 million for each of the three months ended September 30, 2023 and 2022, and $7 million and $8 million during the nine months ended September 30, 2023 and 2022, respectively, within other expense, net in its consolidated statements of income related to its release from risk under the non-contingent guarantees as well as a change in the provision of estimated credit losses associated with the indebtedness of the joint ventures.

Other Non-Financial Assets

Certain of the Company’s non-financial assets are measured at fair value on a non-recurring basis, including property and equipment, lease right-of-use (“ROU”) assets, equity securities without a readily determinable fair value, goodwill and other intangible assets, and are subject to fair value adjustment in certain circumstances.

9. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following:


(In millions)	September 30, 2023		December 31, 2022
Trade accounts payable	$	441	$	652
Client deposits	894		871
Accrued compensation and benefits	287		279
Accrued taxes	241		432

Accrued interest	196		216

Accrued payment network fees	226		219
Operating lease liabilities	115		124
Accrued professional fees	103		108

Other accrued expenses	1,087		982
Total	$	3,590	$	3,883

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10. Debt

The Company’s debt consisted of the following:


(In millions)	September 30, 2023		December 31, 2022
Short-term and current maturities of long-term debt:
Foreign lines of credit	$	369	$	198
Finance lease and other financing obligations	280		270
Total short-term and current maturities of long-term debt	$	649	$	468

Long-term debt:
0.375% senior notes due July 2023 (Euro-denominated)	$	—	$	531
3.800% senior notes due October 2023	1,000		1,000
2.750% senior notes due July 2024	2,000		2,000
3.850% senior notes due June 2025	900		900
2.250% senior notes due July 2025 (British Pound-denominated)	637		632
3.200% senior notes due July 2026	2,000		2,000
2.250% senior notes due June 2027	1,000		1,000
1.125% senior notes due July 2027 (Euro-denominated)	525		531
5.450% senior notes due March 2028	900		—
5.375% senior notes due August 2028	700		—
4.200% senior notes due October 2028	1,000		1,000
3.500% senior notes due July 2029	3,000		3,000
2.650% senior notes due June 2030	1,000		1,000
1.625% senior notes due July 2030 (Euro-denominated)	525		531
4.500% senior notes due May 2031 (Euro-denominated)	840		—
3.000% senior notes due July 2031 (British Pound-denominated)	637		632
5.600% senior notes due March 2033	900		—
5.625% senior notes due August 2033	1,300		—
4.400% senior notes due July 2049	2,000		2,000
U.S. dollar commercial paper notes	—		2,329
Euro commercial paper notes	1,249		1,210
Revolving credit facility	—		35

Term loan facility	—		200
Unamortized discount and deferred financing costs	(151)		(120)
Finance lease and other financing obligations	695		539
Total long-term debt	$	22,657	$	20,950

The Company was in compliance with all financial debt covenants during the nine months ended September 30, 2023.

Senior Notes

On August 21, 2023, the Company completed the public offering and issuance of $2.0 billion of senior notes, comprised of $700 million aggregate principal amount of 5.375% senior notes due in August 2028 and $1.3 billion aggregate principal amount of 5.625% senior notes due in August 2033. Interest on these senior notes is paid semi-annually. The Company used the net proceeds from these senior notes offerings for general corporate purposes, including the repayment of U.S. dollar commercial paper notes, share repurchases and, in October 2023, the repayment of its 3.800% senior notes.

On May 24, 2023, the Company completed the public offering and issuance of 800 million Euros aggregate principal amount of 4.500% senior notes due in May 2031. Interest on these senior notes is paid annually. The Company used the net proceeds from this senior notes offering for general corporate purposes, including the repayment of U.S. dollar commercial paper notes and, in July 2023, the repayment of its 0.375% Euro-denominated senior notes.

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On March 2, 2023, the Company completed the public offering and issuance of $1.8 billion of senior notes, comprised of $900 million aggregate principal amount of 5.450% senior notes due in March 2028 and $900 million aggregate principal amount of 5.600% senior notes due in March 2033. Interest on these senior notes is paid semi-annually. The Company used the net proceeds from these senior notes offerings for general corporate purposes, including the repayment of U.S. dollar commercial paper notes.

At September 30, 2023, the 3.800% senior notes due in October 2023 and 2.750% senior notes due in July 2024 were classified in the consolidated balance sheet as long-term, as the Company has the intent to refinance or has subsequently refinanced this debt on a long-term basis and the ability to do so under its revolving credit facility.

The indentures governing each of these senior notes contain covenants that, among other matters, limit (i) the Company’s ability to consolidate or merge with or into, or convey, transfer or lease all or substantially all of its properties and assets to, another person, (ii) the Company’s and certain of its subsidiaries’ ability to create or assume liens, and (iii) the Company’s and certain of its subsidiaries’ ability to engage in sale and leaseback transactions. The Company may, at its option, redeem these senior notes, in whole or in part, at any time and from time to time at the applicable redemption price.

Commercial Paper

The Company maintains unsecured U.S. dollar and Euro commercial paper programs. From time to time, the Company may issue under these programs U.S. dollar commercial paper with maturities of up to 397 days from the date of issuance and Euro commercial paper with maturities of up to 183 days from the date of issuance. There were no outstanding borrowings under the U.S. dollar program at September 30, 2023. Outstanding borrowings under the U.S. dollar program were $2.3 billion at December 31, 2022, with a weighted average interest rate of 4.818%. Outstanding borrowings under the Euro program were $1.2 billion at both September 30, 2023 and December 31, 2022, with weighted average interest rates of 3.880% and 1.918%, respectively. The Company intends to maintain available capacity under its revolving credit facility in an amount at least equal to the aggregate outstanding borrowings under its commercial paper programs. Outstanding borrowings under the commercial paper programs are classified in the consolidated balance sheets as long-term as the Company has the intent to refinance this commercial paper on a long-term basis through the continued issuance of new commercial paper upon maturity, and the Company also has the ability to refinance such commercial paper under its revolving credit facility.

Revolving Credit Facility

The Company maintains 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 rate based on a Secured Overnight Financing Rate (SOFR), or a base rate in the case of U.S. dollar borrowings, in each case, plus a specified margin based on the Company’s long-term debt rating in effect from time to time (6.450% at September 30, 2023).

Foreign Lines of Credit

The Company maintains certain 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. The Company entered into an annually renewable term loan facility, which was fully funded in April 2023, to fund settlement advance cash payments in Brazil. This term loan has a notional value of 514 million Brazilian real ($102 million USD equivalent) at September 30, 2023 that matures in April 2024 and bears interest at a variable Certificado de Depósito Interbancário (CDI) Rate, plus a specified margin of 1.70% per annum.

The following table provides a summary of the outstanding borrowings and weighted average interest rates of the Company’s foreign lines of credit and other borrowing arrangements by country at September 30, 2023 and December 31, 2022:


	Outstanding Borrowings (in millions)				Weighted-Average Interest Rate
	September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022
Argentina	$	151	$	68	99.417	%	69.791	%
Brazil	119		61		14.978	%	16.254	%
Uruguay	88		34		11.896	%	12.188	%
Other	11		35		—	%	0.994	%
Total	$	369	$	198	48.428	%	30.578	%

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Term Loan Facility

In June 2023, the Company repaid all remaining outstanding borrowings on its existing term loan facility utilizing proceeds from the issuance of U.S. dollar commercial paper notes and operating cash on hand, thereby terminating such facility. Borrowings under the term loan facility accrued interest at a variable rate based on one-month LIBOR or on a base rate, plus, in each case, a specified margin based on the Company’s long-term debt rating in effect from time to time. The variable interest rate on the term loan facility borrowings was 5.639% at December 31, 2022.

11. Redeemable Noncontrolling Interests

The minority partner in one of the Company’s existing merchant alliance joint ventures maintains a redeemable noncontrolling 1% interest which is presented outside of equity and carried at its estimated redemption value. The minority partner is entitled to a contractually determined share of the entity’s income, and the joint venture agreement contains redemption features whereby the interest held by the minority partner is redeemable either (i) at the option of the holder or (ii) upon the occurrence of an event that is not solely within the Company’s control. The joint venture may be terminated by either party for convenience any time after December 31, 2024. In the event of termination for cause, as a result of a change in control, or for convenience after the predetermined date, the Company may be required to purchase the minority partner membership interest at a price equal to the fair market value of the minority interest through a distribution of cash, certain merchant contracts of the joint venture, or a combination thereof. In conjunction with the termination of the joint venture, the minority partner may also exercise an option to purchase certain additional merchant contracts at fair market value.

In 2021, the Company and a joint venture minority partner mutually agreed to terminate one of the Company’s merchant alliance joint ventures effective March 2022. In conjunction with the termination, the joint venture minority partner elected to exercise its option to purchase certain additional merchant contracts of the joint venture. The Company received proceeds of $175 million from the sale of such merchant contracts of the joint venture, resulting in the recognition of a pre-tax gain of $147 million within net (gain) loss on sale of businesses and other assets, with related tax expense of $9 million recorded through the income tax provision, in the consolidated statement of income during the nine months ended September 30, 2022.

The following table presents a summary of the redeemable noncontrolling interests activity during the nine months ended September 30:


(In millions)	2023		2022
Balance at beginning of period	$	161	$	278
Distributions paid to redeemable noncontrolling interests	(19)		(28)
Share of income	19		22


Derecognition of redeemable noncontrolling interest	—		(111)
Balance at end of period	$	161	$	161

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12. Equity

The following tables provide changes in equity during the three and nine months ended September 30, 2023 and 2022:

Fiserv, Inc. Shareholders’ Equity

Three Months Ended
September 30, 2023

Number of Shares

Amount