Fiserv(US:FI)2025-10-29 13:02Financial 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]