Fiserv, Inc. Q3 FY2025 earnings call

Mike Lyons discussed key messages including resetting growth and margin targets, leveraging emerging technology like AI under One Fiserv action plan, building a world-class leadership team, and refocusing on client-focused opportunities. Paul Todd covered financial results, segment performance details, and acquisitions. One Fiserv action plan includes operating with client-first mindset, investing in Clover and modern platforms, Project Elevate for operational excellence via AI, and disciplined capital allocation

Merchant Solutions segment organic revenue growth was 5% in the quarter and 7% year-to-date. Adjusted revenue growth was also 5% in the quarter and 7% year-to-date. Small business organic revenue growth in the quarter was 6%, adjusted revenue grew 7% on 8% volume growth with Clover revenue growing 26% in Q3. Enterprise organic and adjusted revenue growth in the quarter was 9% and 4% respectively. Processing organic and adjusted revenue in the quarter declined 8% and 6% respectively. Financial Solutions segment organic revenue declined 3% in the quarter and grew 3% year-to-date. Digital payments organic and adjusted revenue each declined 5% in Q3. Issuing organic and adjusted revenue grew 1% and 2% respectively. Banking organic and adjusted revenue declined 7% in the quarter

Full year 2025 expected organic revenue growth 3.5% - 4%, adjusted EPS $8.50 - $8.60. 2026 preliminary outlook: organic revenue growth low single digits, adjusted EPS down modestly. Q4 Clover revenue growth expected below recent levels at ~10%, but adjusting for certain initiatives would be high teens. 2027 and beyond expected double-digit adjusted EPS growth

Q: How long was Fiserv over-earning with deferred investments and focus on short-term initiatives and how long to reverse?

A: Mike Lyons discussed recent recalibrations, analysis showed mid-single-digit growth now with plan to invest and get to solid mid-single digits and acceleration.

Q: What changed in Financial Solutions segment growth trajectory?

A: Michael Lyons and Paul Todd discussed factors like core banking consolidation, XD CashFlow Central execution, issuing business strength and challenges.

Q: Assessment of Clover competitive positioning and Q4 growth?

A: Michael Lyons and Paul Todd said Clover is strong asset with growth plans, Q4 Clover revenue growth ~10% with expectation of acceleration in 2027 and beyond.

Q: Margins and investment progression?

A: Paul Todd said trough in first quarter next year, major investment areas include core investment, Commerce Hub, Clover, issuing, stablecoin, and Project Elevate with IBM.

Q: Why lack of visibility into Q3 revenue weakness?

A: Michael Lyons and Paul Todd discussed financial surprises emerging in Q3 prompting rigorous review, embedded assumptions and short-term initiatives issues