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FI

FISERV INC (FI)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 was a reset quarter: GAAP revenue grew 1% to $5.26B while adjusted EPS fell 11% to $2.04; organic revenue growth was 1% as Financial Solutions declined and Merchant grew modestly .
  • Results missed S&P Global consensus: revenue $5.26B vs $5.35B*, and adjusted EPS $2.04 vs $2.65*; management cut FY25 guidance to 3.5–4% organic growth and $8.50–$8.60 adj. EPS from prior ~10% and $10.15–$10.30, citing Argentina FX/interest, deprioritized short‑term initiatives, and deferred investments .
  • “One Fiserv” action plan launched to refocus on client-first execution, Clover as SMB OS, platform modernization, and operational excellence via AI (Project Elevate with IBM) .
  • Management emphasized that current performance “is not where we want it to be,” set a lower baseline for 2026, and targets a return to mid‑single‑digit organic growth with potential acceleration and double‑digit adjusted EPS growth beginning in 2027 .

Values with asterisk (*) are from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Clover momentum: revenue +26% YoY in Q3; GPV growth 8% reported and 11% ex-gateway; small business volume +8%; enterprise transactions +12% . “The Clover story remains exciting … building a full small business operating system … international expansion like Brazil” (CEO) .
  • Strategic wins and expansion: TD Bank Canada merchant processing asset acquisition and managed services agreement to deploy Clover; U.S. Treasury Direct Express program (Money Network), FEMA FedNow disbursements, and an exclusive partnership with Nubank (Brazil) .
  • Balance sheet and liquidity: new $8.0B revolver (to 2030), $2.0B notes at 4.90% coupon; $1.0B Q3 buybacks (7.2M shares); Q3 free cash flow $1.33B and YTD FCF $2.88B .

What Went Wrong

  • Headline miss and margin compression: adjusted EPS $2.04 (-11% YoY) and adjusted operating margin 37.0% (-320 bps YoY); GAAP operating margin 27.3% (vs 30.7% LY) .
  • Financial Solutions down 3% organically in Q3, impacted by lower periodic license revenue; segment adjusted operating margin down 490 bps YoY to 42.5% .
  • Argentina headwinds and one-offs: $53M FX expense ($0.10) and $31M higher interest ($0.04), partly offset by an $89M gain ($0.16) from terminating a merchant JV; net slight EPS benefit, but FX/interest weighed on operations (CFO) .

Financial Results

Headline P&L and Margins

MetricQ3 2024Q1 2025Q2 2025Q3 2025
GAAP Revenue ($B)$5.22 $5.13 $5.52 $5.26
Adjusted Revenue ($B)$4.88 $4.79 $5.20 $4.92
GAAP EPS ($)$0.98 $1.51 $1.86 $1.46
Adjusted EPS ($)$2.30 $2.14 $2.47 $2.04
GAAP Operating Margin (%)30.7% 27.2% 30.7% 27.3%
Adjusted Operating Margin (%)40.2% 37.8% 39.6% 37.0%

Notes: Q3 2024 includes a prior-year impairment that affected YoY comparisons .

Segment Breakdown

SegmentMetricQ3 2024Q2 2025Q3 2025
Merchant SolutionsRevenue ($B)$2.47 $2.64 $2.59
Operating Margin (%)37.7% 34.6% 37.2%
Financial SolutionsRevenue ($B)$2.41 $2.55 $2.33
Operating Margin (%)47.4% 48.7% 42.5%

KPIs and Cash Flow

KPIQ1 2025Q2 2025Q3 2025Q4 2025 (est)
Clover GPV Growth (Reported)8% 8% 8% 8%
Clover GPV Growth (Ex-Gateway)10% 11% 11% 11%
Small Business Volume Growth——8% —
Enterprise Transaction Growth——12% —
Zelle Transaction Growth——19% —
Free Cash Flow ($B)$0.37 $1.17 $1.33 —
Free Cash Flow YTD ($B)——$2.88 —

Additional Q3 details: Clover revenue +26% YoY; Clover annualized GPV $337B (8% reported growth) .

Non‑GAAP Adjustments (Q3 EPS impact)

  • Amortization of acquisition-related intangibles $0.48; severance $0.04; merger & integration $0.03; transformation program $0.02; other items as detailed in release .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Organic Revenue GrowthFY 2025~10% 3.5%–4% Lowered
Adjusted EPS ($)FY 2025$10.15–$10.30 $8.50–$8.60 Lowered
Adjusted Operating Margin (YoY Δ)FY 2025—~(-200) bps Lowered
Clover Revenue GrowthQ4 2025High teens baseline (implied)~10% (reflects fee reversals) Lowered (temporary)
Outlook (preliminary)FY 2026—Low single-digit organic growth; adj. EPS down modestly YoY New baseline

Management indicated Q4 will reflect pricing reversals and deprioritized short-term initiatives; underlying Clover growth would be high teens absent these actions .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q1 2025)Current (Q3 2025)Trend
Forecasting/Guidance RigorAffirmed/raised outlooks in H1; Q2 refined to ~10% organic and $10.15–$10.30 EPS .Comprehensive reset; enhanced rigor; investor day planned 1H26 .Rigor ↑
Argentina FX/Rate ImpactNot a major headwind cited in H1 releases .$53M FX expense and ~$31M higher interest; Argentina materially boosted 2023–24 growth; normalization now .Headwind ↑
Clover StrategyH1 highlighted Clover growth and stable outlook .Q4 growth ~10% due to fee reversals; long-term mid/high-teens to ~20% potential; international expansion (Brazil/Japan) .Near-term deceleration; LT positive
AI/Operational ExcellenceLimited prior disclosure (non-GAAP mentions only) .“Project Elevate” with IBM; 2-year AI-driven process overhaul .Focus ↑
Digital Assets/StablecoinAnnounced FIUSD platform in Q2 .State-backed “Roughrider Coin” with Bank of North Dakota; StoneCastle acquisition for custody license .Execution ↑
Government/Enterprise WinsClient wins and acquisitions cited .Treasury Direct Express (Money Network), FEMA FedNow, Nubank partnership, TD Canada merchant processing .Wins ↑

Management Commentary

  • “Our current performance is not where we want it to be nor where our stakeholders expect it to be… With the actions being announced today, Fiserv will be better positioned to drive sustainable, high‑quality growth and reach our full potential.” — CEO Mike Lyons .
  • “We expect 2026 will be a critical investment and transition year… preliminary: low single-digit organic revenue growth and adjusted EPS down modestly vs 2025.” — CEO .
  • “We are excited to announce Project Elevate, a new multi‑year transformation agenda powered by AI… alongside our long-term partner IBM.” — CEO .
  • “There are three unusual dynamics impacting adjusted EPS… $53M FX expense ($0.10), $31M higher interest ($0.04), and an $89M tax-free JV gain ($0.16).” — CFO Paul Todd .
  • “Q4 Clover revenue growth is ~10% reflecting the deprioritization of short‑term revenue initiatives… Adjusting for these, Q4 would be high teens.” — CEO .

Q&A Highlights

  • Path back to double‑digit EPS growth: Management sees mid‑single‑digit structural revenue growth (ex‑Argentina) improving with investments and operational excellence; targets double‑digit adjusted EPS growth starting in 2027 driven by operating leverage and capital allocation .
  • Financial Solutions slowdown: Q3 decline tied to lower periodic license revenue and compares in output; view normalized lower‑single‑digit growth near term with volumes healthy; margin pressure from mix and investments .
  • Clover trajectory: Q4 trough due to pricing reversals; expect acceleration into 2026–27 as compares ease and operational changes take hold; long‑term mid to high‑teens revenue growth potential .
  • Margin cadence: Trough in Q1 2026, rebuilding through 2026 as comps normalize; aim to restore and expand margins thereafter (CFO) .

Estimates Context

MetricQ3 2025 ActualQ3 2025 S&P Global Consensus*Surprise
Revenue ($B)$5.26 $5.35*Miss
Adjusted EPS ($)$2.04 $2.65*Miss
MetricFY 2025 GuidanceFY 2025 S&P Global Consensus*Notes
Adjusted EPS ($)$8.50–$8.60 $8.60*New guide roughly in line with consensus midpoint

Values retrieved from S&P Global.

Implications: The magnitude of the Q3 miss on EPS and revenue, plus the full‑year guidance cut, likely drive estimate reductions for FY25 and FY26, particularly in Financial Solutions’ margin trajectory and Clover near‑term revenue growth given fee reversals .

Key Takeaways for Investors

  • Large guidance reset establishes a lower, more “structural” baseline; near‑term growth and margins step down, but management aims for a steadier algorithm and double‑digit adj. EPS growth from 2027 .
  • Argentina normalization is a material driver of the deceleration; FX/interest volatility remains a risk factor into 2026 (watch peso and local rates) .
  • Clover remains a strategic asset; pricing reversals pressure Q4, but underlying ex‑gateway GPV growth and VAS penetration support a re‑acceleration path into 2027 .
  • Financial Solutions needs improved execution and mix shift; periodic license volatility and investment spend weigh near term; monitor progress on core consolidation (Finxact, VisionNext) and “surrounds” (CashFlow Central, XD) .
  • Project Elevate (AI with IBM) is a key medium‑term margin lever; expect further detail on costs/benefits at Q4 and Investor Day; track adjusted opex, D&A, and service metrics in 2026 .
  • Capital allocation remains active: buybacks, targeted M&A (CardFree, Smith Consulting, StoneCastle) and liquidity enhancements (notes, revolver) underpin FCF deployment despite higher capex (~$1.8B FY25) .
  • Trading setup: Into Q4, narrative hinges on Clover growth trough dynamics, Argentina FX path, and clarity on 2026 investments/margin trough; Investor Day (1H26) a likely catalyst .

Appendix: Additional Data Points

  • Cash from operations YTD $4.12B; Capex YTD $1.32B; Q3 capex $507M .
  • Debt and leverage: total debt $30.2B; net leverage ~3.0x; target 2.5–3.0x (CFO) .
  • Share repurchases: Q3 7.2M shares for $1.0B; YTD 29.1M shares for $5.4B .
  • Selected acquisitions and partnerships: CardFree (merchant VAS), Smith Consulting Group (advisory), pending StoneCastle Cash Management (digital asset custody); TD Canada merchant processing and managed services .
  • Roughrider Coin (ND state stablecoin) to launch on Fiserv digital asset platform; leverages FIUSD; availability to ND banks/credit unions in 2026 .

All non‑GAAP metrics and reconciliations are provided in the company’s filings and slides –.