Investment Rating - The report assigns a 12-month rating of Neutral to Fiserv Inc (FISV) with a price target of US$75.00, while the current price is US$62.69 [5]. Core Insights - Fiserv is consolidating its 16 core offerings into 5 platforms, allowing clients to migrate at their own pace, with significant progress already made [2]. - Management is adjusting pricing strategies in digital payments and SMB segments to be more competitive, particularly in the Clover product line [3]. - The company anticipates a decline in total company margins by approximately 200 basis points for the full year, with specific segments experiencing varying levels of margin compression [8]. Summary by Sections Core Banking Consolidation - Fiserv is reducing its core offerings from 16 to 5 platforms, with a focus on migrating clients at their own pace. The company serves around 3,500 US financial institutions within an addressable market of approximately 8,000 [2]. Pricing Decisions - Management plans to adopt more competitive pricing in digital payments, particularly for debit networks, while maintaining premium pricing for Clover products. Some previously implemented fees have been eliminated based on partner feedback [3]. Non-Clover SMB Insights - The non-Clover SMB segment has seen revenue declines primarily due to issues in Argentina, but growth is expected to stabilize moving forward. Management is cautious about converting non-Clover clients to Clover, ensuring a clear value proposition [7]. Margin Expectations - Fiserv expects total company margins to decrease by about 200 basis points, with Q4 margins projected to decline by 750-800 basis points. Merchant Solutions is facing significant margin compression due to lower expected high-margin revenue [8]. Capital Allocation and Free Cash Flow - The company anticipates maintaining a free cash flow conversion percentage similar to historical levels, with capital expenditures expected to be around US$1.8 billion in 2025, representing about 9% of revenue [9]. Financial Projections - Revenue is projected to grow from US$16.613 billion in 2022 to US$22.201 billion by 2029, with net earnings expected to fluctuate around US$4.205 billion in 2022 to US$4.396 billion by 2029 [4][15]. Valuation Metrics - The report highlights various valuation metrics, including a P/E ratio of 15.4 in 2022, expected to decrease to 6.0 by 2029, indicating a potential undervaluation of the stock [16]. Additional Insights - Fiserv is expanding into new verticals, such as healthcare, and enhancing its distribution channels through increased sales personnel and partnerships with banks and ISOs [10][12].

Financial Data and Key Metrics Changes - Total adjusted revenue for Q3 2025 grew 1% to $4.9 billion, while adjusted operating income decreased 7% to $1.8 billion, resulting in an adjusted operating margin of 37%, a decrease of 320 basis points [36] - Year-to-date adjusted revenue grew 5% to $14.9 billion, and adjusted operating income grew 5% to $5.7 billion, maintaining an adjusted operating margin of 38.2% [36] - Adjusted EPS for Q3 was $2.04, down 11% from $2.30 in the prior year [36] Business Line Data and Key Metrics Changes - Merchant Solutions segment organic revenue growth was 5% for the quarter and 7% year-to-date, with adjusted revenue growth also at 5% [38] - Financial Solutions segment organic revenue declined 3% in the quarter but grew 3% year-to-date, negatively impacted by lower periodic license revenue [42] - Clover revenue grew 26% in Q3, with GPV growth of 8% reported, and 11% excluding the 2023-2024 gateway conversion [39][40] Market Data and Key Metrics Changes - Argentina contributed over 5 percentage points to the company's 12% organic growth rate in 2023 and roughly 10 percentage points to the 16% organic growth in 2024 [9] - Excluding Argentina, the overall organic revenue growth rate was in the mid-single digits for both 2023 and 2024 [9] Company Strategy and Development Direction - The company is shifting its strategic focus to prioritize sustainable, client-focused opportunities, which may negatively impact near-term results but is expected to position the company for predictable growth [4] - The "One Fiserv" action plan includes investments in client-first operations, enhancing Clover as a small business operating platform, and leveraging AI for operational excellence [22][24] - The company aims to return to consistent mid-single-digit revenue growth beyond 2026, with potential for acceleration over time [6][33] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that recent performance issues were largely self-inflicted and are being addressed through investment and operational focus [14] - The company is confident in its ability to generate double-digit adjusted EPS growth starting in 2027, supported by disciplined capital allocation and strong free cash flow generation [33][54] Other Important Information - The company announced several leadership changes, including new Co-Presidents and a new CFO, to enhance execution and collaboration across business units [27][28] - Three acquisitions were announced during the quarter, focusing on client service and stablecoin growth opportunities [46] Q&A Session Summary Question: How long was Fiserv over earning with deferred investments and short-term initiatives? - Management indicated that the analysis revealed a need for recalibration and that the company is focused on addressing self-inflicted issues to return to double-digit EPS growth [48][50] Question: What changed in the Financial Solutions segment's growth trajectory? - Management noted that while the segment faced challenges, it remains fundamentally strong, with actions taken to ensure competitive positioning [57][68] Question: Is Clover's expected revenue growth a proxy for next year? - Management expressed confidence in Clover's growth trajectory and competitive positioning, indicating that adjustments have been made to align with long-term business needs [73]

Financial Data and Key Metrics Changes - Total adjusted revenue for Q3 grew 1% to $4.9 billion, while adjusted operating income decreased 7% to $1.8 billion, resulting in an adjusted operating margin of 37%, a decrease of 320 basis points [36] - Year-to-date adjusted revenue grew 5% to $14.9 billion, and adjusted operating income grew 5% to $5.7 billion, maintaining an adjusted operating margin of 38.2% [36] - Adjusted EPS for Q3 was $2.04, down 11% from $2.30 in the prior year [36] Business Line Data and Key Metrics Changes - Merchant Solutions segment organic revenue growth was 5% for the quarter and 7% year-to-date, with adjusted revenue growth also at 5% [38] - Financial Solutions segment organic revenue declined 3% in Q3 but grew 3% year-to-date, impacted by lower periodic license revenue [42][44] - Clover revenue grew 26% in Q3, with GPV growth of 8% reported, and 11% excluding the 2023-2024 gateway conversion [39][17] Market Data and Key Metrics Changes - Argentina contributed over 5 percentage points to the company's 12% organic growth rate in 2023 and roughly 10 percentage points to the 16% organic growth in 2024 [9] - The organic growth rate in Argentina was 56% year-to-date, adding approximately 2 percentage points to the overall organic growth rate of just over 5% [9] Company Strategy and Development Direction - The company is shifting its strategic focus to prioritize sustainable, client-focused opportunities, which may negatively impact near-term results but is expected to position the company for predictable growth [4][6] - The "One Fiserv" action plan includes investments in client-first operations, enhancing Clover as a small business operating platform, and leveraging AI for operational excellence [22][24] - The company aims to return to consistent mid-single-digit revenue growth with potential for acceleration over time, targeting double-digit adjusted EPS growth starting in 2027 [33] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that recent performance issues were largely self-inflicted and are being addressed through investment and operational improvements [14][53] - The company is confident in its ability to generate free cash flow and maintain a disciplined capital allocation strategy, which supports long-term growth [54] - Management emphasized the importance of aligning structural growth with sustainable revenues and expenses, moving away from short-term initiatives [14][13] Other Important Information - The company announced several leadership changes, including new Co-Presidents and a new CFO, to drive the strategic initiatives forward [27][28] - Three acquisitions were made during the quarter to enhance client service and expand into new markets, including the acquisition of Smith Consulting Group [46] Q&A Session Summary Question: How long was Fiserv over earning with deferred investments and short-term initiatives? - Management indicated that the analysis revealed a need for recalibration and that the company is focused on addressing self-inflicted issues to return to double-digit EPS growth [50][52] Question: What changed specifically in the Financial Solutions segment? - Management noted that the segment experienced a decline due to lower periodic license revenue and emphasized the strength of the issuing business and ongoing investments to improve performance [57][68] Question: Is Clover's 10% revenue growth a decent proxy for next year? - Management expressed confidence in Clover's growth trajectory and highlighted ongoing investments to enhance competitive positioning across Merchant Solutions [73]

Financial Data and Key Metrics Changes - Total adjusted revenue for Q3 2025 grew 1% to $4.9 billion, while adjusted operating income decreased 7% to $1.8 billion, resulting in an adjusted operating margin of 37%, a decrease of 320 basis points [36][37] - Year-to-date adjusted revenue grew 5% to $14.9 billion, and adjusted operating income grew 5% to $5.7 billion, maintaining an adjusted operating margin of 38.2% [36][37] - Adjusted EPS for Q3 was $2.04, down 11% from $2.30 in the prior year [37] Business Line Data and Key Metrics Changes - Merchant Solutions segment organic revenue growth was 5% for the quarter and 7% year-to-date, with adjusted revenue growth also at 5% [39] - Financial Solutions segment organic revenue declined 3% in Q3 but grew 3% year-to-date, negatively impacted by lower periodic license revenue [43][44] - Clover revenue grew 26% in Q3, with GPV growth of 8% reported, and 11% excluding the 2023-2024 gateway conversion [40][18] Market Data and Key Metrics Changes - Argentina contributed significantly to organic growth, with a 257% growth in 2023 and 329% in 2024, impacting overall organic growth rates [9][10] - Excluding Argentina, the company's overall organic revenue growth rate was in the mid-single digits for both 2023 and 2024 [10][12] Company Strategy and Development Direction - The company is shifting its strategic focus to prioritize sustainable, client-focused opportunities, which may negatively impact near-term results but is expected to position the company for predictable growth [4][6] - The "One Fiserv" action plan includes investments in client-first operations, Clover platform enhancements, and operational excellence through AI [22][24] - The company aims to return to consistent mid-single-digit revenue growth and double-digit adjusted EPS growth starting in 2027 [33][21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the need to reset growth and margin targets due to various factors, including slowing growth in Argentina and the impacts of deferred investments [9][12] - The company remains confident in its assets and growth opportunities, emphasizing that challenges are largely self-inflicted and addressable [14][15] - Future guidance for 2026 is expected to reflect a critical investment and transition year, with organic revenue growth anticipated in the low single digits [21][22] Other Important Information - The company announced several leadership changes, including new Co-Presidents and a new CFO, to drive the strategic initiatives forward [26][30] - Three acquisitions were made during the quarter to enhance client service and expand capabilities in stablecoin and digital currency [46][47] Q&A Session Summary Question: How long was Fiserv over earning with deferred investments and short-term initiatives? - Management indicated that a rigorous analysis was conducted over the past six months, revealing that the company has a solid foundation and growth opportunities, with a clear path to mid-single-digit growth [50][54] Question: What changed in the Financial Solutions segment's growth trajectory? - Management noted that while the segment faced challenges, it remains fundamentally strong, with ongoing investments aimed at improving execution and customer service [68][75] Question: Is Clover's 10% revenue growth for Q4 a decent proxy for next year? - Management expressed confidence in Clover's competitive positioning and highlighted ongoing investments in vertical and horizontal expansion, indicating strong growth potential [79][78]

Core Banking Platform Selection - Thread Bank has selected Fiserv's Finxact as its core banking platform to enhance its deposit and payments infrastructure [1][2] - The decision is driven by the need for a modern, real-time core that supports scalability and compliance [2][3] Partnership and Technology Integration - Thread is collaborating with Infinant to utilize its Interlace Platform, which will provide an embedded banking layer for Finxact's API core [2] - This integration will enable Thread and its customers to access and manage both embedded and core banking capabilities, including payment processing [2] Industry Challenges and Opportunities - Community banks, like Thread, face significant challenges from digital-first demands and competition from fintech platforms and larger financial institutions [3][4] - The modernization of banking technology is complicated by outdated core systems that limit data portability and integration capabilities [5]