How did FI's Q4 earnings surprise investors?

Fiserv's (FI) Q4 earnings report exceeded investor expectations in several key aspects, leading to a positive market reaction:

1. **Earnings Per Share (EPS) and Revenue**: Fiserv reported an adjusted EPS of $2.51 for Q4, which surpassed the analyst consensus estimate of $2.49 by 1.2%. The company's revenue for the quarter was $5.25 billion, outpacing the consensus estimate of $4.96 billion by 5.3%. This marked a 7% year-over-year increase in GAAP revenue.
2. **Segmental Performance**: The Merchant Solutions segment experienced a substantial 11% year-over-year revenue increase, reaching $2.5 billion, and beat expectations with a 10.5% growth. The Financial Solutions segment also performed well, with a 3% increase in revenues and an improved operating margin. The Product segment saw a 5.8% increase in revenues, reaching $4.3 billion, and exceeded expectations with a 5.8% growth.
3. **Operating Margins**: Fiserv reported significant improvements in operating margins across segments. The Merchant Solutions segment saw an increase of 150 basis points year-over-year to 39.2%. The Financial Solutions segment reported an increase of 320 basis points year-over-year to 51.7%. The overall adjusted operating margin improved by 180 basis points year-over-year to 42.9%.
4. **Cash Flow and Shareholder Returns**: Fiserv's cash flow remained robust, with net cash provided by operating activities totaling $6.63 billion for the full year. The company also returned $5.5 billion to shareholders through share repurchases, leading to a nearly 5% decline in average shares outstanding.

Overall, Fiserv's Q4 performance demonstrated strong organic growth, driven by solid revenue increases across key segments and operational efficiency improvements. The company's positive earnings surprise can be attributed to effective cost management, strategic initiatives, and a strong market position in financial technology and services.