Fiserv Slashes Outlook, Promises Revamp to Close ‘Competitive Gaps'

Core Insights - Fiserv is undergoing a significant revamp due to slowing growth and margin pressures, aiming to address identified competitive gaps [1][5] - The company reported a drastic cut in growth guidance, with expected growth rates halved, leading to a stock drop of over 40% [2][3] Financial Performance - Organic growth has decreased to 1%, with margins also declining; sales in the Financial Solutions segment fell by 3% [3] - Overall organic revenue growth forecasts have been revised down to 3.5% to 4.5%, down from approximately 10% [3] - Digital payments revenues within the Financial Solutions unit decreased by 5%, while banking-related revenues dropped by 7% [3] Management Changes - Takis Georgakopoulos and Dhivya Suryadevara have been appointed as co-presidents effective December 1, with Paul Todd as the incoming chief financial officer [4] Strategic Analysis - CEO Mike Lyons emphasized that the company's actions are based on a thorough analysis, representing a necessary reset for Fiserv [5][6] - The internal analysis revealed competitive and client service gaps that the company is actively working to address [5] - Lyons stated that Fiserv's growth and margin targets need to be reset, acknowledging that previous assumptions were overly optimistic [6] Business Segment Insights - Clover's gross payment volume (GPV) grew by 8% in Q3, with U.S. Clover GPV increasing approximately 7.5% excluding Gateway conversion [6] - Clover revenues are now expected to reach $3.3 billion through 2025, down from a previous expectation of $3.5 billion [6] - Clover revenue grew by 26% in Q3, with volume growth at 11%, similar to Q2 [7] Industry Dynamics - In digital payments, organic and adjusted revenue declined by 5% due to industry dynamics, although there was growth in debit processing and Zelle transactions, with Zelle volumes up by 19% [8] - In banking, organic and adjusted revenue fell by 7%, primarily due to reduced periodic license activity, but there is potential for growth with banking clients [9]