Fiserv Inc. (NASDAQ:FISV)

The financial data reveals significant shifts in various intangible asset categories over the analyzed periods. Most notably, the category "Customer relationships" experienced a remarkable increase from 2017 through 2019, surging from approximately $2.3 billion to $16.2 billion. This value then slightly decreased and stabilized around $15.1 billion by 2021.

Similarly, "Acquired software and technology" showed a strong upward trend until 2019, increasing from approximately $579 million in 2017 to $2.6 billion, followed by a marginal decline and stabilization slightly above $2.5 billion through 2021. The "Trade names" category mirrored this pattern, growing from around $117 million in 2017 to over $600 million by 2019, then remaining relatively steady around $610 million thereafter.

An exception to these trends was "Purchased software," which demonstrated consistent growth throughout the entire period. Starting at $241 million in 2017, this asset increased steadily each year, reaching approximately $1.1 billion by 2021. Correspondingly, the broader category "Capitalized software and other intangibles" exhibited continual growth without decline, expanding from $737 million in 2017 to nearly $1.9 billion in 2021.

The gross carrying amount of identifiable intangible assets displayed a striking increase between 2018 and 2019, jumping from about $4.4 billion to over $21 billion, where it subsequently remained relatively flat through 2021. This sharp rise coincides with the increases seen in several underlying asset categories during the same timeframe.

Accumulated amortization of these assets increased consistently over the period, reflecting ongoing amortization activities. It grew from negative $2.1 billion in 2017 to negative $7.2 billion in 2021, suggesting increasing recognition of amortization expense aligned with the growing asset base.

The net book value of identifiable intangible assets followed a different trajectory compared to the gross amounts, peaking in 2019 at over $17.6 billion and then decreasing steadily to approximately $14 billion by 2021. This decline despite stable gross amounts and increasing amortization indicates the amortization impact overtook any additions or revaluations.

Goodwill also saw a significant surge in 2019 to more than $36 billion from around $5.6 billion in 2017, with slight increases and stabilization thereafter. The combination of intangible assets and goodwill mirrored this overall pattern, increasing sharply in 2019 and then experiencing a moderate decline, settling around $50 billion by 2021.

Overall, the data points to a substantial expansion in intangible assets and goodwill primarily occurring between 2018 and 2019, followed by a period of stabilization and moderate decline through amortization and other adjustments. The continuous rise in purchased and capitalized software suggests increasing investment in internally developed software assets over the latter years.

The analysis of the financial data over the period from 2017 to 2021 reveals significant changes in both reported and goodwill adjusted figures for total assets and shareholders’ equity.

Total Assets

The reported total assets showed a steady increase from 2017 through 2018, rising from approximately 10.3 billion US dollars to 11.3 billion US dollars. However, there was a dramatic increase in 2019 to about 77.5 billion US dollars, followed by a slight decrease and stabilization around 74.6 billion and 76.2 billion US dollars in 2020 and 2021, respectively. In contrast, the adjusted total assets, which likely exclude goodwill or intangible assets, also exhibited significant growth from 4.7 billion US dollars in 2017 to 5.6 billion in 2018, then sharply increasing to 41.5 billion in 2019 before declining slightly and leveling off near 38.3 billion and 39.8 billion in 2020 and 2021. This pattern reflects the impact of acquisitions or asset revaluations that heavily influenced the reported asset totals.

Shareholders’ Equity

The reported total shareholders’ equity showed a declining trend from 2017 to 2018, dropping from 2.7 billion US dollars to 2.3 billion US dollars. This was followed by an exceptional jump in 2019 to nearly 33 billion US dollars, remaining relatively stable but slightly decreasing to 32.3 billion in 2020 and 31 billion in 2021. Conversely, the adjusted shareholders’ equity, which is negative throughout the period, decreased further from -2.9 billion in 2017 to -5.5 billion in 2021, indicating that when goodwill or intangible assets are excluded, the equity position worsens substantially. This negative adjusted equity could signal significant intangible asset impairments, or other adjustments impacting the net asset value negatively.

Overall, the data indicates that the company’s reported balance sheet size grew substantially due to intangibles or goodwill additions around 2019, which also inflated reported equity figures. However, when adjusting for these intangible assets, the company’s total assets and shareholders' equity are much lower and reflect a negative equity position that deteriorated over time. This disparity highlights the importance of considering both reported and adjusted figures for a more accurate assessment of financial health and underlying asset quality.

The data reveals a distinctive pattern in the financial performance ratios over the five-year period analyzed. There is a clear decline in all reported turnover and profitability metrics from 2017 through 2019, with some modest recovery afterward, while the adjusted metrics offer a perspective that incorporates goodwill adjustments and generally present higher performance levels.

Total Asset Turnover

The reported total asset turnover ratio started at 0.55 in 2017 and decreased slightly to 0.52 in 2018. There is a sharp drop in 2019 to 0.13, followed by a mild increase to 0.20 in 2020 and 0.21 in 2021. In contrast, the adjusted total asset turnover ratio starts from a higher base of 1.21 in 2017, declining parallel to the reported figures but maintaining a relatively higher level with a decrease to 1.05 in 2018, followed by a significant dip to 0.25 in 2019 and a gradual rise to 0.39 in 2020 and 0.41 in 2021. This indicates that goodwill adjustments have a substantial impact on the asset turnover ratios and that asset efficiency weakened significantly in 2019 before showing signs of recovery.

Financial Leverage

The reported financial leverage ratio increased from 3.77 in 2017 to 4.91 in 2018, indicating a rise in leverage during this period. This was followed by a marked reduction in leverage to 2.35 in 2019 and relatively stable values near 2.3 in 2020 and a slight increase to 2.46 in 2021. Adjusted financial leverage figures are not provided, limiting the ability to assess the leverage impact after goodwill adjustments.

Return on Equity (ROE)

The reported ROE shows a high level of profitability in 2017 and 2018 at 45.62% and 51.77%, respectively. However, a drastic decline occurred in 2019 to 2.71%, maintaining low levels at 2.96% in 2020 and only marginally improving to 4.31% in 2021. No adjusted ROE data is available, which restricts a comprehensive assessment of net profitability after goodwill adjustments.

Return on Assets (ROA)

The reported ROA follows a similar trend to ROE, starting from 12.11% in 2017 and decreasing to 10.54% in 2018. This was followed by a sharp drop to 1.15% in 2019, then a slow recovery to 1.28% in 2020 and 1.75% in 2021. The adjusted ROA is substantially higher than reported figures, starting at 26.52% in 2017 and falling to 21.35% in 2018. Despite a significant decline to 2.15% in 2019, it rises steadily to 2.5% in 2020 and reaches 3.35% in 2021. This stark difference between reported and adjusted ROA suggests that goodwill distortion significantly affects asset efficiency and profitability ratios, and that profitability despite reductions remains better than what reported figures suggest when adjusted for goodwill.

Overall, the data reflects a period of declining asset turnover, leverage, and profitability starting in 2019, possibly indicative of operational challenges or large goodwill impairments. Nevertheless, the adjusted metrics point towards better asset utilization and profitability than reported metrics alone would indicate, emphasizing the relevance of goodwill adjustments in the financial analysis of this entity.

The analysis of the reported and goodwill adjusted financial data over the period from 2017 to 2021 reveals several notable trends related to asset values and their turnover ratios.

Total Assets

The reported total assets demonstrate a general upward trend from 10,289 million USD in 2017 to 11,262 million USD in 2018, followed by a sharp increase to 77,539 million USD in 2019. Subsequent years show a slight contraction to 74,619 million USD in 2020 and a minor recovery to 76,249 million USD in 2021. This spike in 2019 suggests a significant acquisition or revaluation event affecting the asset base.

Adjusted total assets, which exclude goodwill, also show a consistent increase from 4,699 million USD in 2017 to 5,560 million USD in 2018, but experience a marked rise to 41,501 million USD in 2019. Thereafter, adjusted assets decline slightly to 38,297 million USD in 2020 before a modest increase to 39,816 million USD in 2021. This pattern mirrors the reported assets, confirming substantial asset revaluation or acquisition activity particularly in 2019, with the adjustment providing a clearer view excluding goodwill.

Total Asset Turnover

The reported total asset turnover ratio starts at 0.55 in 2017 and slightly decreases to 0.52 in 2018, before experiencing a steep decline to 0.13 in 2019. This decline corresponds with the dramatic increase in total assets, indicating that asset growth outpaced revenue generation or sales during this period. The ratio recovers marginally in 2020 to 0.20 and slightly further to 0.21 in 2021, suggesting gradual improvement in asset utilization over these years.

In contrast, the adjusted total asset turnover ratio, which excludes goodwill, starts higher at 1.21 in 2017 and decreases to 1.05 in 2018. It then falls sharply to 0.25 in 2019, reflecting the surge in adjusted assets and potential dilution of asset efficiency. The ratio improves to 0.39 in 2020 and 0.41 in 2021, indicating a progressive enhancement in operational efficiency excluding the impact of goodwill.

Overall, the data emphasizes a significant expansion in asset base, largely driven by acquisitions or revaluation in 2019, accompanied by a temporary reduction in asset turnover ratios. The subsequent years show signs of operational adjustment with improving asset utilization ratios both in reported and adjusted terms. The adjustment for goodwill reveals a more pronounced but similar trend, highlighting the importance of separating intangible asset effects to better assess true asset efficiency.

The data presents several notable trends and patterns over the five-year period examined.

Total Assets

The reported total assets show a significant increase from 2017 to 2019, jumping from approximately 10.3 billion USD to 77.5 billion USD. This substantial rise is followed by a slight decline in 2020 to around 74.6 billion USD and a moderate increase again in 2021 to approximately 76.2 billion USD. In contrast, the adjusted total assets, which exclude goodwill, reveal a different pattern: they almost doubled from 2017 to 2019 (4.7 billion to 41.5 billion USD) but then declined in 2020 to 38.3 billion USD and recovered slightly in 2021 to 39.8 billion USD. This suggests that goodwill had a significant impact on the reported asset figures, especially in 2019.

Shareholders’ Equity

Reported shareholders’ equity follows a pattern somewhat similar to total assets, increasing markedly from 2.7 billion USD in 2017 to nearly 33 billion USD in 2019, then stabilizing in 2020 and experiencing a mild decrease in 2021. Oppositely, the adjusted shareholders’ equity, excluding goodwill, remains negative throughout the period, ranging from -2.9 billion USD in 2017 and worsening to -5.5 billion USD in 2021. This persistent negativity signals that goodwill and perhaps other intangible assets are crucial in presenting positive equity figures on a reported basis.

Financial Leverage

Reported financial leverage declined sharply after 2018, moving from a high of 4.91 down to roughly 2.3 in 2019 and 2020, then slightly increased to 2.46 in 2021. This reduction corresponds with the spike in both total assets and equity in 2019, signaling a possible restructuring or acquisition that significantly altered the balance sheet composition. Adjusted financial leverage data is missing and therefore cannot be analyzed.

Overall, the data indicates a transformative event around 2019 that markedly increased the reported asset base and equity, likely due to acquisition or revaluation reflected by goodwill. The adjusted metrics, which remove goodwill, present a less robust and even negative equity position, suggesting reliance on intangible assets for the company's capital structure. Financial leverage improved significantly following 2018, indicating a lower proportion of debt relative to equity post-2018, although exact leverage excluding goodwill cannot be confirmed due to lack of data.

Reported Total Shareholders’ Equity

The reported total shareholders’ equity showed a decline from 2017 to 2018, decreasing from $2,731 million to $2,293 million. Subsequently, there was a substantial increase in 2019, reaching $32,979 million. This elevated level remained relatively stable in the following years, with a slight decrease to $32,330 million in 2020 and further to $30,952 million in 2021. The large increase in 2019 suggests a significant event or transaction impacting equity during that period, with stabilization observed thereafter.

Adjusted Total Shareholders’ Equity

The adjusted total shareholders’ equity figures are negative throughout the period and exhibit a decreasing trend. Starting at -$2,859 million in 2017, the negative adjustment deepened to -$3,409 million in 2018, then improved somewhat to -$3,059 million in 2019, before declining further to -$3,992 million in 2020 and reaching the lowest level of -$5,481 million in 2021. This suggests increasing negative adjustments potentially related to goodwill or intangible assets impairments, which grow more significant over time and offset the reported equity figures.

Reported Return on Equity (ROE)

The reported ROE was exceptionally high in 2017 and 2018, at 45.62% and 51.77% respectively, indicating strong profitability relative to equity during those years. However, this metric dropped sharply in 2019 to 2.71%, maintaining low levels in 2020 (2.96%) and rising slightly in 2021 to 4.31%. The substantial decrease in ROE from 2018 onward aligns with the large increase in reported shareholders’ equity, which dilutes the return calculation, and possibly with changes in net income performance.

Adjusted Return on Equity (ROE)

No data is available for the adjusted ROE across the periods presented, which limits analysis of profitability incorporating the goodwill adjustments or other accounting considerations represented in the adjusted equity figures.

Total Assets

Reported total assets demonstrated a significant increase from 2017 through 2019, rising sharply from 10,289 million US dollars to 77,539 million US dollars. Subsequently, there was a slight decline to 74,619 million US dollars in 2020 followed by a modest increase to 76,249 million US dollars in 2021. Adjusted total assets followed a similar trend, growing from 4,699 million US dollars in 2017 to a peak of 41,501 million US dollars in 2019, then decreasing to 38,297 million US dollars in 2020 before recovering slightly to 39,816 million US dollars in 2021.

Return on Assets (ROA)

Reported ROA showed a consistent decline from 12.11% in 2017 to 1.15% in 2019, indicating a reduction in asset efficiency or profitability during this period. This was followed by a mild recovery with ROA increasing to 1.28% in 2020 and further to 1.75% in 2021. Adjusted ROA, which accounts for goodwill adjustments, presented a more pronounced decline from 26.52% in 2017 to 2.15% in 2019. However, a similar pattern of recovery is observed with adjusted ROA rising to 2.5% in 2020 and further improving to 3.35% in 2021.

Insights

There is a clear pattern of rapid asset growth until 2019, followed by stabilization and slight fluctuations in subsequent years. The decline in both reported and adjusted ROA until 2019 suggests decreasing returns relative to asset base expansion, potentially reflecting asset acquisition not immediately translating into proportional earnings. The partial recovery in ROA from 2020 onwards indicates an improvement in asset utilization or profitability. The differences in magnitude between reported and adjusted ROA highlight the impact of goodwill adjustments on profitability measurements, with adjusted figures consistently higher, suggesting a material effect of goodwill on reported earnings metrics.