Common-Size Income Statement
Quarterly Data
Fiserv Inc., common-size consolidated income statement (quarterly data)
Based on: 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
The common-size income statement reveals a significant structural transformation in the company's cost profile and profitability margins between March 2017 and March 2022. The period is characterized by an initial phase of stability, a period of sharp margin compression coinciding with increased operating expenses, and a subsequent recovery in profitability.
- Revenue Mix Trends
- The revenue composition shifted toward a higher proportion of product-based income. Processing and services revenue, while remaining the dominant stream, declined from a peak of 87.83% in June 2019 to 81.30% by March 2022. In contrast, product revenue increased from a range of 14-16% in 2017 to 18.70% by March 2022, indicating a gradual diversification of the revenue base.
- Gross Margin Performance
- Gross profit margins showed an overall improvement over the long term. Between 2017 and 2019, margins were relatively stable, fluctuating between 46.03% and 48.68%. Although a dip to 42.50% occurred in March 2020, the gross margin subsequently expanded, reaching a period high of 52.34% by March 2022. This was driven by a reduction in the cost of revenue, which fell from 57.50% in March 2020 to 47.66% in March 2022.
- Operating Expense and Income Volatility
- A pivotal shift in the operating structure is observed starting in September 2019. Selling, general, and administrative (SG&A) expenses increased abruptly from approximately 20-22% of revenue to a range of 35-39%. This increase led to a severe contraction in operating income, which dropped from historical levels of 25-28% to a low of 4.76% in June 2020. By March 2022, operating income recovered to 20.44%, suggesting that the company successfully scaled its operations or optimized the costs associated with the earlier expense surge.
- Net Profitability and Bottom Line
- Net income attributable to the company followed the volatility of the operating income. After reaching a peak of 36.02% in December 2017, the net margin entered a period of decline, hitting a trough of 0.06% in June 2020. The subsequent recovery aligned with the improvement in gross margins and the stabilization of SG&A, culminating in a net income margin of 16.17% by March 2022.
- Financial Costs and Other Items
- Interest expenses remained relatively consistent, generally fluctuating between 3.01% and 5.24% of revenue throughout the five-year period. Gains on the sale of assets provided sporadic boosts to the operating income, most notably in March 2018 (16.11%) and March 2020 (11.44%), which temporarily offset the pressure on core operating margins during those quarters.
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