Fiserv's Q3 2025 Earnings Call: Contradictions Unveiled in Clover Revenue Growth, Financial Solutions Segment Trajectory, Strategic Focus, and Investment Timelines

Date of Call: October 29, 2025

Financials Results

• Revenue: $4.9B, up 1% YOY (Q3 adjusted revenue)
• EPS: $2.04 per adjusted share, down 11% YOY (Q3)
• Operating Margin: 37% adjusted operating margin, down 320 basis points YOY

Guidance:

• Full-year 2025 organic revenue now expected 3.5%–4%.
• Full-year 2025 adjusted EPS expected $8.50–$8.60.
• Clover full-year revenue expected ~$3.3B (was $3.5B prior guidance); Q4 Clover revenue growth ~10% (reflects deprioritized short-term initiatives; adjusted view would be high teens).
• Preliminary 2026: organic revenue expected in low single digits; adjusted EPS modestly down versus 2025.
• FY 2025 CapEx ~ $1.8B; full-year free cash flow expected ~ $4.25B.

Business Commentary:

• Revenue and Earnings Guidance Revision:
• Fiserv reported total organic revenue growth of 1% in Q3 and adjusted EPS of $2.04, impacted by various factors.

• The company revised its 2025 organic revenue growth guidance to 3.5% to 4% and adjusted EPS to $8.50 to $8.60, reflecting a recalibration of assumptions given slower growth in Argentina and other factors.

• Argentina's Impact on Growth:

• Argentina contributed over 5 percentage points to Fiserv's 12% organic growth rate in 2023 and approximately 10 percentage points to the 16% growth in 2024.

• The devaluation of the Argentine peso and decreased interest rates affected growth, leading to a significant adjustment in growth expectations.

• Investment and Strategic Shift:

• Fiserv announced its One Fiserv action plan, focusing on operational excellence and client service enhancements, with investments in AI and technology.

• The strategic shift aims to prioritize sustainable client-focused opportunities and long-term growth over short-term initiatives.

• Leadership and Governance Changes:

• New Co-Presidents and a new CFO were appointed to lead the company, with the addition of new Board members, including an Independent Chairman and Audit Committee Chair.
• These changes are part of a broader effort to enhance execution, accountability, and client service.

Sentiment Analysis:

Overall Tone: Neutral

• Management described results as "disappointing" but framed actions as a "critical and necessary reset," provided downgraded 2025 guidance (organic revenue 3.5%–4%, EPS $8.50–$8.60), and emphasized investments (Project Elevate, core consolidation, Clover) and confidence in a path back to mid-single-digit revenue growth and eventual double-digit adjusted EPS growth.

Q&A:

• Question from Tien-Tsin Huang (JPMorgan Chase & Co, Research Division): How long was Fiserv over-earning with deferred investments and short-term initiatives, and is double-digit EPS growth still the right medium-term target?
  Response: Management says the company today is a low-end mid-single-digit organic growth business (excluding Argentina), believes the issues are largely self-inflicted and fixable, and remains confident double-digit adjusted EPS is achievable over time via investments, operational fixes and disciplined capital allocation.

• Question from Darrin Peller (Wolfe Research, LLC): What specifically changed in Financial Solutions to cause the growth slowdown, and is the merchant review complete?
  Response: Management completed the review, explained Financial Solutions had license timing, output and industry dynamics causing short-term weakness but expects banking to grow low single digits and issuing/Finxact to be low- to mid-single-digit, producing a low-end mid-single-digit segment profile; merchant pricing reversals and other fixes are implemented.

• Question from Jason Kupferberg (Wells Fargo Securities, LLC, Research Division): Is Q4 Clover ~10% revenue growth a proxy for 2026, and how do you assess Clover/non-Clover competitive positioning?
  Response: Clover remains a strategic asset and competitively strong; Q4 ~10% reflects deliberate deprioritization/pricing reversals (a trough), with expectations to accelerate into low-teens in 2026 and reach high-teens+ revenue growth in 2027 as operational improvements and investments take effect.

• Question from David Koning (Robert W. Baird & Co. Incorporated, Research Division): Is the ~$400M EBIT/Q4 margin impact the peak investment quarter and how will margins progress into H1 next year?
  Response: Margins will trough in Q1 2026 with full-year 2026 margins around the mid-30s (roughly 33%–35%), then recover through 2026 as investments (core consolidation, Project Elevate/AI, Commerce Hub/Clover investments) drive operational improvements toward restoring run-rate margins by year-end.

• Question from Harshita Rawat (Sanford C. Bernstein & Co., LLC., Research Division): Given prior re-underwriting, how did Financial Solutions deteriorate intra-quarter and why wasn't the weakness visible earlier?
  Response: A deeper Q3 financial review uncovered additional embedded assumptions, transitory items and short-term initiatives that were overstated in prior guidance; management re-underwrote, made leadership changes and provided a recalibrated baseline they believe is more accurate.

Contradiction Point 1

Clover Revenue Growth Expectations

It involves changes in expectations for Clover's revenue growth, which are crucial for investors to assess Fiserv's financial performance and strategic direction.

Can you elaborate on Clover's expected growth and confidence in its competitive positioning? - Jason Kupferberg (Wells Fargo Securities, LLC)

2025Q3: Clover is an outstanding asset with significant opportunities for vertical and horizontal expansion, particularly in Brazil. We're enhancing operational excellence and client experience, and project Elevate aims to embed AI for better performance. - [Michael Lyons](CEO)

What is the confidence in meeting Clover's 2025 and 2026 revenue targets? - Will Nance (Goldman Sachs)

2025Q2: We are on track to deliver $3.5 billion in Clover revenue this year and are confident in the strategies that will support growth into 2026. These include international expansion, new partnerships, and expanding the Clover platform as a business operating system. - [Michael Patrick Lyons](CEO)

Contradiction Point 2

Financial Solutions Segment Growth Trajectory

It involves changes in the expected growth trajectory of the Financial Solutions segment, which is a key part of Fiserv's business and impacts investor expectations.

What specific changes affected the Financial Solutions segment's growth compared to previous quarters? How confident are you in the thoroughness of expert screening for merchant growth? - Darrin Peller (Wolfe Research, LLC)

2025Q3: The analysis identified a decline in mid-single-digit growth due to short-term initiatives and underinvestment in modernizing core banking. Consolidation of cores and enhancing operational excellence are underway. - [Michael Lyons](CEO)

What caused the change in merchant growth rate expectations? Can you break down Clover’s revenue by hardware, VAS, and payments for the remainder of the year? - Darrin Peller (Wolfe Research)

2025Q2: The refined growth rate reflects a better understanding of product rollout timings and quality. The initiatives are strong, but some delays are due to market timing and macroeconomic factors. We are confident in our strategic initiatives and expect a growth acceleration in the second half. - [Michael Lyons](CEO)

Contradiction Point 3

Clover Growth and Strategic Focus

It highlights a shift in the company's strategic focus and growth expectations for Clover, which is a critical component of its business strategy and investor expectations.

What are your expectations for Clover's growth and how confident are you in its competitive positioning? - Jason Kupferberg (Wells Fargo Securities, LLC)

2025Q3: Clover is an outstanding asset with significant opportunities for vertical and horizontal expansion, particularly in Brazil. - [Michael Lyons](CEO)

Can you discuss Clover's growth in volume and revenue, including the impact of international expansion, and how acquisitions like Payfare contribute to this growth? - Darrin Peller (Wolfe Research)

2025Q1: We are confident in Clover's growth, with a 27% revenue increase this quarter. - [Bob Hau](CFO)

Contradiction Point 4

Investment Timeline and Impact

It involves differing expectations regarding the timeline and impact of investments, which are crucial for understanding future financial performance and strategic direction.

Was Q4 the peak investment quarter, and how will this carry over into the first half of next year? - David Koning (Robert W. Baird & Co. Inc.)

2025Q3: We expect Clover fourth-quarter revenue growth to be 10%. We believe we will see accelerating growth beyond '26. - [Paul Todd](CFO)

How do new acquisitions contribute to Merchant Solutions growth, and what is the impact of processing headwinds? - Jason Kupferberg (Bank of America)

2025Q1: We continue to expect that the investments we're making to drive future growth in Clover will start to materialize in the fourth quarter of 2025. - [Bob Hau](CFO)