Sign in

You're signed outSign in or to get full access.

FI

FISERV INC (FI)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered 8% GAAP revenue growth to $5.52B and 16% adjusted EPS growth to $2.47, with margins expanding (GAAP operating margin 30.7%; adjusted operating margin 39.6%) .
  • Merchant Solutions revenue rose 10% and Financial Solutions 7% YoY; Clover revenue grew 30% with VAS penetration at 24%, underscoring the operating‑system strategy .
  • Guidance refined: organic revenue growth to approximately 10% (low end), adjusted EPS raised to $10.15–$10.30; margin expansion revised to ~100 bps due to acquisitions and investment ramp; share repurchases increased to ~130% of FCF .
  • Strategic catalysts: launch of FIUSD stablecoin and continued international buildout (Brazil, Mexico, Australia, Singapore, Europe) plus TD Bank Canada processing alignment and AIB Merchant Services buy‑in .

What Went Well and What Went Wrong

What Went Well

  • Strong topline and EPS: GAAP revenue +8% to $5.52B; adjusted EPS +16% to $2.47; adjusted operating margin +120 bps to 39.6% .
  • Clover momentum: revenue +30% YoY; VAS penetration steady at 24%; expecting volume acceleration in 2H with international expansion and new verticals (Hospitality, healthcare) .
  • Capital returns and balance sheet discipline: $2.2B buybacks (12.2M shares) in Q2; debt/adjusted EBITDA at ~2.9x within target range, free cash flow trending higher in 2H seasonally .

Selected quotes:

  • “We refined our full‑year organic revenue growth guidance to approximately 10%… we are maintaining our guidance for $3.5 billion of Clover revenue this year.” — Mike Lyons .
  • “Adjusted operating margin… 39.6%, an increase of 120 basis points versus the prior year.” — Bob Hau .
  • “We now expect to return approximately 130% of free cash flow… aligning to the upper end of our targeted leverage range.” — Bob Hau .

What Went Wrong

  • Merchant margin compression: adjusted operating margin fell ~200 bps YoY to 34.6% on acquisition mix (CCV), increased investments in sales/marketing, software/hardware .
  • Timing slippage on initiatives: multiple launches/implementations taking longer, prompting organic revenue growth guide to the low end and margin expansion trimmed to ~100 bps .
  • Macro and regional headwinds: Canada discretionary spending softness impacting Clover volume; Argentina’s transitory inflation/interest benefit now fully gone, creating tougher optics vs prior year .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Billions)$5.107 $5.130 $5.516
GAAP EPS ($USD)$1.53 $1.51 $1.86
Adjusted EPS ($USD)$2.13 $2.14 $2.47
GAAP Operating Margin (%)28.0% 27.2% 30.7%
Adjusted Operating Margin (%)38.4% 37.8% 39.6%

Segment breakdown

Segment MetricQ2 2024Q1 2025Q2 2025
Merchant Revenue ($USD Billions)$2.410 $2.372 $2.644
Financial Revenue ($USD Billions)$2.379 $2.417 $2.552
Merchant Operating Margin (%)36.6% 34.2% 34.6%
Financial Operating Margin (%)45.9% 47.5% 48.7%

KPIs

KPIQ1 2025Q2 2025
Clover Revenue Growth YoY (%)27% 30%
Clover Payment Volume Growth (reported, YoY %)8% 8%
Clover Payment Volume Growth excl. gateway (%)—11%
Clover VAS Penetration (%)24% 24%
Enterprise Transactions Growth (%)13% 14%
Zelle Transactions Growth (%)22% 19%
Free Cash Flow ($USD Billions)$0.371 $1.2

Non‑GAAP adjustments (EPS impact, Q2 2025)

AdjustmentPer-Share Impact ($)
Amortization of acquisition-related intangibles$0.50
Severance costs$0.02
Merger & integration$0.01
Non wholly‑owned entity activities$0.01
Argentine Peso devaluation (April 2025)$0.07

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Organic Revenue GrowthFY 202510%–12% ~10% Lowered to low end
Adjusted EPSFY 2025$10.10–$10.30 $10.15–$10.30 Raised bottom end
Adjusted Operating Margin ExpansionFY 2025≥125 bps ~100 bps Lowered
Share Repurchases (% of FCF)FY 2025~110% ~130% Increased
Merchant Organic Revenue GrowthFY 202512%–15% Low end of 12%–15% To low end
Financial Solutions Organic GrowthFY 20256%–8% Low end of 6%–8% To low end
Adjusted Effective Tax RateFY 2025~19.5% ~19.5% Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
AI/optimization & data monetizationExpanded data monetization; strong organic growth and margin expansion in 2024 ; new authorization optimization pilot with large tech client AI/ML optimization within Commerce Hub; hosted checkout; continued data & analytics driving issuing growth Building capabilities; early revenue contribution, not linear
Clover strategy (VAS/verticals/geographies)International launches (Mexico, Brazil, Australia, Singapore); ADP partnership; Hospitality introduction Clover revenue +30%; VAS 24%; new verticals (Hospitality), healthcare via Rectangle Health; TD Bank Canada agreement; Brazil ramping Positive; expecting volume acceleration 2H
Merchant distribution (FI referrals, direct, ISVs)33 new FI partners; JV and referral momentum (PNC, ICBA, UniCredit AT) 49 new FI partners; TD Canada processing; US Foods distribution; AIBMS buy‑in Expanding channels
Commerce Hub enterprise scalingFanatics win; BNPL integrations; routing via STAR/EXCEL 12% organic growth in enterprise; hosted checkout; intelligent routing Ongoing traction
Core banking/XD executionCashFlow Central signings and first go‑live; XD pipeline with faster migrations XD implementations slower than plan; added merchant acquisition integration into XD Timing delays; still confident
Macro/tariffs/regionsTariffs manageable; Argentina contributed large transitory growth in 2024 Canada travel softness; Argentina transitory benefit gone in 2025 Mixed; cleaner comps ahead

Management Commentary

  • “We refined our full‑year organic revenue growth guidance to approximately 10%… Maintaining $3.5B Clover revenue this year.” — Mike Lyons .
  • “Adjusted operating margin was 39.6%… up 120 bps year over year.” — Bob Hau .
  • “We now expect… ~130% of free cash flow [to be returned] through share repurchases.” — Bob Hau .
  • “Clover revenue grew 30%… VAS penetration stayed constant sequentially at 24%.” — Bob Hau .
  • “FIUSD is a white‑labeled stablecoin integrated into our banking and payments infrastructure… pilot by end of 2025.” — Mike Lyons ; see launch PR .

Q&A Highlights

  • Clover Capital under-penetration: management is refining operational/pricing/risk practices to unlock TAM while maintaining prudent risk appetite; progress expected over coming months .
  • Merchant margins: ~200 bps decline driven by CCV acquisition mix, go‑to‑market investments, and software/hardware spend; margin expansion expected post-integration synergies .
  • 2H acceleration drivers: Clover growth (including international), Commerce Hub globalization, easier Argentina comps; Merchant organic growth to mid‑teens implied by full‑year math .
  • 2026 Clover trajectory: reaffirmed $3.5B for 2025; initiatives (Homebase, ADP, CashFlow Central, Hospitality, international expansion) support path to $4.5B in 2026 (not formally updated) .
  • VAS attach internationally: U.S. more mature; international VAS expected to build over time; working capital (Rapid Deposit/Clover Capital) is global opportunity .

Estimates Context

MetricQ1 2025 ConsensusQ1 2025 ActualQ2 2025 ConsensusQ2 2025 Actual
Primary EPS ($)2.076*2.14 2.434*2.47
Revenue ($USD Billions)4.839*5.130 5.199*5.516

FI beat consensus EPS and revenue in Q1 and Q2, supporting the narrative of durable growth despite initiative timing adjustments.*
*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Q2 fundamentals were solid: revenue +8%, adjusted EPS +16%, margins expanded; both segments contributed; Clover operating‑system strategy is working .
  • Guidance reset is mainly timing‑driven; EPS low end raised via buybacks; watch 2H execution on XD, Commerce Hub and Clover international to validate ~10% organic growth .
  • Margin optics: near‑term merchant margin headwinds from acquisitions/investments should abate as synergies flow; 2025 adjusted margin expansion revised to ~100 bps .
  • Catalysts: FIUSD stablecoin platform, TD Bank Canada processing alignment, AIBMS completion, Clover Hospitality and healthcare entry expand TAM and monetization vectors .
  • Regional mix matters: Argentina comp effects have normalized; Canada travel softness bears monitoring; distribution breadth and VAS help diversify .
  • Capital allocation remains shareholder‑friendly: ~130% of FCF repurchases with leverage in target range; supports per‑share metrics in 2H .
  • Near‑term trading: bias constructive on solid beat/raise EPS low end and buyback acceleration; monitor delivery on 2H acceleration and merchant margin trajectory .