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Fiserv Inc (NYSE:FI) reported financial results for the third quarter of 2025 Wednesday before the market open. FI is at important technical levels. Track the latest developments here. The transcript of the from the company’s third-quarter earnings call has been provided below. This transcript is brought to you by Benzinga APIs. For real-time access to our entire catalog, please visit https://www.benzinga.com/apis/ for a consultation. OPERATOR Welcome to the Fiserv third quarter 2025 earnings conference call. All participants will be in a listen only mode until the question and answer session begins following the presentation. As a reminder, today’s call is being recorded at this time. I will turn the call over to Julie Sherriell, Senior Vice President of Investor Relations at fiserv. Thank you and good morning. With me on the call today are Mike Lyons, our Chief Executive Officer and Paul Todd, Senior Adviser and incoming Chief Financial Officer. Our earnings release and supplemental materials for the quarter are available on the Investor relations section of fiserv.com please refer to these materials for an explanation of the non GAAP financial measures discussed on this call along with a reconciliation of those measures to the nearest applicable GAAP measures. Unless otherwise stated, performance references are year over year comparisons. Our remarks today will include forward looking statements about, among other matters, expected operating and financial results and strategic initiatives. Forward looking statements may differ materially from actual results and are subject to a number of risks and uncertainties. You should refer to our earnings release for a discussion of these risk factors. And now I’ll turn the call over. Mike Lyons (Chief Executive Officer) To Mike thank you for joining us today. By now you’ve seen our results and revised guidance for the year. While disappointing, the actions we are taking are driven by a rigorous analysis of the company conducted during the third quarter and represent a critical and necessary reset and a revitalizing moment for the company. We are capitalizing on this opportunity to refocus on the pillars that have long distinguished fiserv including exceptional client service, world class execution, value added technology solutions and cutting edge innovation. Today I will share with you our plans to build a sustainable, high quality company that will make our shareholders, clients and employees proud. There are five key messages we want to deliver today. First, the results of our analysis highlighted Fiserv’s outstanding SaaS (Software as a Service) and payment platforms and our robust portfolio of value added services uniquely positioned at the intersection of finance and commerce, two large economically critical in rapidly evolving industries. At the same time, we also identified certain competitive and client service gaps which we are actively working to fill and are confident that with focused investment we can fully address. Second, we have established a new revenue and earnings baseline consisting of high quality, structural, largely recurring revenues driven by meeting our clients needs and aspirations. Going forward, we are shifting our strategic focus and our culture to prioritize sustainable client focused opportunities for short term initiatives. While this pivot will negatively impact near term results, our team has embraced this change and it will best position us for predictable and sustainable growth and margins. Third, we have a tremendous opportunity to use emerging technology including generative and agentic AI to enhance our mission. Critical software solutions ignite our gateways and orchestration layers, facilitate embedded finance and improve our operations. We are pursuing these opportunities and other performance enhancing initiatives under a new action plan called one fiserv. Fourth, we’re building a world class leadership team that is united in driving these efforts and establishing a culture that prioritizes integrity, fairness, execution, accountability and client service. Today I’m excited to announce new co presidents and a new cfo. We will also be welcoming three new Directors to our Board, including new Board and Audit Committee Chairs, all of whom bring tremendous experience and highly relevant skills to Fiserv. Fifth, as we move beyond 2026 with a supportable and transparent financial baseline and key investments in place, we are well positioned to return to fiserv’s roots of consistent mid single digit revenue growth with clear potential for further acceleration over time. When combined with operating leverage, significant free cash flow generation and highly disciplined capital allocation, this will ultimately support double digit adjusted EPS growth and present an attractive constant compounder investment case. I am personally energized and excited to demonstrate what we can accomplish as the world’s largest fintech in terms of the agenda, I’ll start with a summary of the analysis we have completed, which forms the basis for our one fiserv Action Plan and then Paul Todd, our incoming cfo, will cover the financial results in detail. During the third quarter, my first full quarter as CEO, I worked with a management team and several external advisors to conduct a rigorous analysis of the company’s operations, technology, financials and forecasting, including thousands of client and employee meetings and external benchmarking. As the new CEO, it was natural for me to push our team to think critically about our businesses and objectively assess long term value drivers, competitive strengths and weaknesses, and ultimately how we communicate with the investment community. The analysis was integrated into our annual strategic planning process which starts every August and continues into the fall with ongoing communication and interaction with our Board of Directors. One of the key takeaways from our analysis is that fiserv’s growth and margin targets need to be reset. This change is driven by a combination of four factors including slowing cyclical growth in Argentina, the recalibration of optimistic growth assumptions in the original guidance, the impacts of certain deferred investments, and the deprioritization of short term revenue and expense initiatives. I will touch on each of these factors starting with Argentina where we have built a highly successful payments business. Fiserv’s medium term organic revenue growth target of 9% to 12% was originally set in 2023amidst high interest rates and inflation in Argentina, which greatly benefits our anticipation business there and ultimately drove organic revenue growth in Argentina of 257% in 2023 and 329% in 2024. While we have previously sized the impact of excess Argentinian interest rates and inflation on our organic growth, today we’re providing a holistic view of how Argentina has impacted Fiserv’s performance. Specifically, Argentina contributed over 5 percentage points to our 12% organic growth rate in 2023 and roughly 10 percentage points to our 16% organic growth in 2024. This is highlighted on Slide 9. Therefore, excluding Argentina, the company’s overall organic revenue growth rate was in the mid single digits in both 2023 and 2024. Year to date, Argentina’s organic growth rate is 56%, adding roughly 2 percentage points to our overall organic growth rate of just over 5%. Notably, in addition to strong organic revenue growth, our Argentinian business comes with adjusted operating income margins that are roughly double overall FISERV levels. The second conclusion is that while the company’s original 2025 organic revenue growth guidance of 10 to 12% appropriately anticipated that Argentina’s growth would slow some, it also assumed that to compensate for this slowdown, our non Argentinian businesses would grow significantly faster than their historical mid single digit range. In July, as part of my transition as CEO, we revised down some of these elevated expectations with a specific focus on critical new product launches to better reflect what was achievable based on the work we had completed at the time. However, as we pursued a much broader and deeper full company analysis in Q3, it became clear that there were incremental assumptions embedded in our guidance, including outsized business volume growth, record sales activity and broad based productivity improvements, all of which would have been objectively difficult to achieve even with the right investment and strong execution. The third major factor impacting our results is that over the last few years, decisions to defer certain investments and cut certain costs, improve margins in the short term, but are now limiting our ability to serve clients in a world class way, execute product launches to our standards and grow revenue to our full potential. The good news on this front is that these circumstances are entirely fixable and with the actions we have taken over the last few months along with today’s announcements, we are making these investments and are on our way back to the highest standards. And the fourth and final factor is that fiserv’s recent results have increasingly relied on short term initiatives. These initiatives place too much emphasis on pursuing in quarter results as opposed to building long term relationships by prioritizing business that both meets our clients needs and comes with high recurring revenue. As a result, we have made the decision to deprioritize these short term revenue and expense initiatives which of course has some near term impact on our growth and profitability. Our Q3 results, updated 2025 guidance and preliminary outlook for 2026 now all reflect current conditions in Argentina, the recalibration of assumptions embedded in our original guidance, all necessary investments and the deprioritization of short term initiatives. Given the depth and rigor of our analysis, we believe we have addressed the most critical issues and have established an appropriate go forward baseline. Another important takeaway from our analysis is that nothing at fiserv is fundamentally broken. Our businesses are well positioned, the markets we serve are growing, we are expanding into new tams and our clients have a near insatiable appetite for innovative technology and payment solutions. This reset is about aligning structural versus cyclical growth and sustainable revenues and expenses versus short term results, particularly as it relates to the company’s original guidance. While there are certainly some areas where we are dissatisfied with our recent performance, we found that our challenges are largely driven by our own doing, not the result of a material change in our positioning. We know the issues and we are already addressing them through investment, more intense focus on operational performance and client service, and a significant cultural shift. Our confidence in addressing these issues was highlighted at the fiserv Forum, our annual client conference where we made specific delivery commitments to our customers. Our analysis also highlighted that we have some of the most innovative platforms in modern finance and payments, including Clover Commerce Hub, Finzak Star and Excel, Optus, VisionNext and our Independent Software Vendor (ISV) platform, which are all extremely well positioned, growing faster than market rates and continue to generate new client wins. For example, we recently agreed to bring the Clover solution to Japan through a partnership with a leading local financial institution. Together we will go to market next year with our platform to drive digital payments transformation for the Japanese SMB market. A formal announcement will come in the following months. Earlier this month we signed an exclusive long term partnership with Nubank, which is one of the world’s largest digital banks. We signed our largest health care deal ever in Q3, a key growth vertical for us with an agreement to provide value added services to one of our issuing clients. Our Money Network prepaid card business won a significant program with the U.S. treasury Department as a subcontractor to Fifth Third bank on the Direct Express program. And finally, we recently showcased many of our leading products, services and exciting new innovations at fiserv Forum where we received fantastic feedback from a record crowd. The final conclusion from our analysis is that we need to change the way we forecast and communicate about our business and engage with the analysts and investors. Going forward, we will more clearly explain our growth drivers, enhance the rigor in our forecasting which will allow us to provide high conviction guidance, be more active with the investor community and along these lines, we look forward to sharing more details on our action Plan and new Medium term Outlook at an Investor Day that we will host in the first half of next year. With this comprehensive analysis under our belt, we are now laser focused on execution before digging into our specific action plan. A couple of Comments on our Q3 results in the quarter we reported total organic revenue growth of 1% and adjusted EPS of $2.04, both measures impacted by the various factors mentioned earlier, which Paul will further elaborate on. Total Clover Q3 GPV grew 8% on a reported basis and 11% excluding the 2023-2024 gateway conversion. In the US, Clover GPV grew approximately 7.5% excluding the gateway conversion, which marked a slight acceleration from the first half of the year relative to the Clover GPV growth expectations provided in July. Our results were roughly in line absent the impact of FX and higher than expected runoff from the Gateway conversion. While we had assumed no material changes in FX when we made the projections, there was a significant deterioration of the argentina peso in Q3 which was only partially offset by appreciation of the Euro. Adjusted for these FX movements reported Clover GPV grew 9% and 12% after excluding the Gateway conversion for full year 2025, we expect Clover revenue to be $3.3 billion versus the original guidance of $3.5 billion Q4. Clover revenue growth is expected to be below recent levels at approximately 10% reflecting the deprioritization of certain short term revenue initiatives including the elimination of certain fees in Q4 that were initiated a year ago and are no longer consistent with our business strategy. Adjusting for these Q4 revenue growth would be in the high teens. The Clover story remains exciting as we pursue structural growth through six major areas including vertical expansion, where we have seen significant interest in our new Rectangle Health Partnership and we continue to invest in new areas. Horizontal expansion where we are building a full small business operating system with partners like ADP where we continue to progress well. International expansion like Brazil where we are tracking well against our forecast Operational excellence driven by a full redesign of our merchant and partner experience augmented by leveraging AI, expanding TAM by implementing Clover Invoicing and Clover Capital into embedded finance use cases, and ultimately integrating Clover into CommerceHub and finally, thoughtful back book conversion starting in 2026. Turning back to the full year 2025 for Fiserv, we now expect to achieve 3.5 to 4% organic revenue growth. Based on the revenue related impacts detailed earlier, we Expect Full Year 2025 adjusted EPS to be $8.50 to $8.60, representing a modest decline year on year. We will provide formal 2026 guidance with our Q4 results, but we felt it important to note that we expect 2026 will be a critical investment and transition year for us and will mark our new baseline for growth going forward as we take a series of actions which I’ll cover next as part of our one fiserv Action Plan. On a preliminary basis, we expect organic revenue growth to be in the low single digits and adjusted EPS to be down modestly versus 2025 and of course we’ll be going through the normal financial planning process over the next few months. To refine this outlook further, let me now turn to our one fiserv Action Plan which centers on investments in five strategic areas including operating with a client first mindset to win new enterprise clients and grow average revenue per client or arpic building the preeminent small business operating platform through clover creating differentiated innovative platforms in finance and commerce including embedded finance and stablecoin, delivering operational excellence enabled by AI and finally employing disciplined capital allocation for the long term. First, on ARPIC we are fortunate to serve a diverse and highly attractive client base including FIS merchants, SMBs and increasingly digital commerce platforms. Our ability to penetrate these clients and grow ARPIC begins with exceptional client coverage, outstanding service and the consistent delivery of innovative value added technology solutions. To support these objectives, we are expanding staff across sales, relationship management, technical expertise and service functions in some areas growing while in others building muscle that have been cut. Our recent acquisition of Smith Consulting Group exemplifies this commitment, bringing deep subject matter expertise to our clients as they look to deploy more technology to further drive operational excellence. We are accelerating our tech platform optimization through targeted initiatives and we are seeing strong results here so far. Second, as discussed earlier, we continue to invest heavily in Clover to make it the go to operating system for SMBs, a massive critical market where we have the clear right to win. Next, we’re investing in modern innovative platforms including streamlining our banking cores from 16 to 5 and embedding real time capabilities and AI led by Finzak. We’re building out our key merchant orchestration layers and payment gateways including Clover for SMBs, Cardpoint for Independent Software Vendor (ISV)s and Commerce Hub for enterprise clients and platforms. We’re accelerating our investment in issuing with the Optus modernization and the launch of our modern card core VisionNext. We’re growing our stablecoin capabilities with the launch of Fi USD and the recent agreement to acquire a digital currency custody license through StoneCastle, and we’re combining many of these capabilities to drive our fast growing embedded finance business. Moving to Operational excellence We are excited to announce Project Elevate, a new multi year transformation agenda powered by AI. We’re executing this alongside our long term partner IBM, leveraging the same playbook and the same team that helped them successfully transform their own business and deliver significant value for their shareholders through AI. We launched the program in early September with a focus on five major processes including sales, Client Onboarding, Clover Client Service, HR and finance. We’ll expand the list of processes as we go and expect the program to last approximately two years. The goal is simple become a higher quality, more productive business by embedding AI in everything we do, including providing a better experience to our clients. While our work is just beginning, early proof points demonstrate the program’s strong potential and we expect compelling returns on our investment. We will provide greater detail on Project Elevate, including associated costs and benefits with our Q4 results and our investor day. Rounding out our one Fiserv action plan is the commitment to highly disciplined capital allocation. While we look to fully leverage the unique construct of our company sitting at the intersection of commerce and finance, we are working with McKinsey to optimize our business mix and allocation of capital to maximize execution and performance. As part of this effort, we plan to monetize certain smaller businesses that are not critical for us to own. As we execute our Go Forward strategy to support our action plan today, we are making changes to our leadership team. First, I am incredibly excited to announce two absolutely outstanding leaders as our new co presidents effective December 1st, with Takis Georgiakopoulos serving as the Head of Merchant Solutions and Technology and Divya Surya Devarah joining the company as Head of Financial Solutions, Sales and Operations. Many of you have gotten to know Takis over the last few quarters. He joined fiserv late last year after a successful career at JP Morgan where he was most recently Global Head of Payments. Takis recently took over the merchant business and is already driving impactful change. We were thrilled to attract Divya to fiserv. She has deep experience in payments and financials and is one of the most talented leaders I’ve met. Divya was most recently CEO of Optum Financial Services and optum insight at UnitedHealth where she was a Fiserv client. Prior to that she was the CFO of Stripe and she started her career at General Motors eventually becoming their CFO. Divya will join us December 1st. My expectation is with two high caliber executives in collaboration across our central functions. We will see strong execution and additional synergies between our merchant and financial institution businesses further supporting our long term growth outlook. Second, we are excited to announce that Paul Todd, who recently joined as a Senior Advisor, will be stepping into the CFO role effective October 31st. Many of you may know Paul from his time as the CFO of Global Payments and Thesis. Most recently Paul was a Partner at TTV Capital where he pursued early stage investments across fintech. Paul brings tremendous industry knowledge and a track record of strong execution, integrity and accountability, among other things. Paul will lead Project Elevate alongside Guy Giorello, our Vice Chairman and former coo. Bob Howe, our current cfo will move into a Senior Advisor role to support a smooth transition and we’d like to thank Bob for his nearly 10 years with Pfizer. We have also made several exceptional hires at the SVP level, each bringing deep subject matter expertise, strong leadership capabilities and fresh perspectives and we are very encouraged by the strong interest from the outside to join our team as we enter our next chapter. Our Board is making several important changes ensuring we have the right skill sets and vision to position the company for long term success. We are thrilled that Gordon Nixon will be joining the Board and assume the Independent Chairman role. Gordon was President and CEO of RBC from 2001 to 2014. With 13 years at the helm of a leading global financial institution and significant experience as a public company Director, Gordon brings deep expertise, perspective and leadership to the fiserv Board and I look forward to working with him closely. I want to thank Doyle Simons, our current Chairman who has been a valuable Board member contributing significantly to the company’s growth and long term value creation. Also joining the Board as incoming Chair of the Audit Committee is Gary Shedlin who served as BlackRock CFO from 2013 to 2023 and is currently Vice Chair of BlackRock. Gary’s experiences and distinguished career will bring valuable knowledge and oversight capabilities to our Board and Audit Committee. Gary will succeed Kevin Warren as Audit Chair. Kevin has been an outstanding Director and we thank him for his contributions and guidance and finally Celine Dufatel will join the fiserv Board and be a member of the Audit Committee. Celine currently serves as CFO of Bridgewater Associates, one of the world’s leading alternative asset managers. She brings a unique investor perspective from her current role as well as financial and operational experience from her prior roles as the CFO of T Rowe Price and the CFO and COO of checkout.com we’re excited for all three directors to join the board on January 1st. Steps we’ve taken today are representative of the culture with which we will operate the company, emphasizing integrity, fairness, execution, accountability and client service. I’ll close by reiterating my conviction in our assets, talent, strategy and ability to execute and innovate. We are exceptionally well positioned and know exactly what we need to do to reach our potential. By leveraging our outstanding SaaS (Software as a Service), platforms, gateways, orchestration layers and value added services across our unique combination of merchant and financial solutions businesses, we can deliver compelling innovative solutions to our clients addressing their most critical needs. We are only scratching the surface of our opportunity with low share of existing TAM today and new tams emerging. Against these opportunities, we are building a world class team and creating a customer centric execution oriented culture with a high level of accountability. We have reset our revenue and earnings baseline to a level with high quality, largely recurring revenues and a path to sustainable operating leverage. As we move beyond 2026, we are well positioned to return to Fiserv’s historical consistent mid single digit revenue growth with a clear potential for acceleration over time and as we execute on this model generate positive operating leverage and employ highly disciplined capital allocation. We aim to deliver double digit adjusted EPS growth starting in 2027 and establish a durable compounder value proposition company that year in and year out hits its numbers and generates compelling and predictable returns. Before turning it over to Paul, I want to recognize and thank our employees who have been so dedicated to serving our clients. With that, over to you Paul. Paul Todd (Senior Adviser and incoming Chief Financial Officer) Thank you Mike and good morning everyone. I want to first take a minute to say how excited I am to be part of the fiserv team. I have known fiserv for a long time but after spending the last two plus years in Fintech Venture capital, I have a better appreciation for the unique construct of the company and the quality and depth of the assets on this platform and the differentiated value of its unique distribution capabilities. I look forward to working alongside the fantastic leadership team that Mike has assembled and playing a role in leveraging the company’s unique strengths and market leadership positions to drive compelling long term shareholder value. While we have room for improvement, this is truly an exciting time to join an industry leading company serving large and important industries who are rapidly adopting new technologies. With that, I will now cover the financial results of the company, starting with financial metrics and Trends on slide 5 Total company third quarter adjusted revenue grew 1% to $4.9 billion and adjusted operating income decreased 7% to $1.8 billion resulting in adjusted operating margin of 37%, a decrease of 320 basis points. Year to date, adjusted revenue grew 5% to $14.9 billion and adjusted operating income grew 5% to $5.7 billion resulting in an adjusted operating margin of 38.2% flat versus the prior year. Organic revenue grew 1% in the quarter with 5% Merchant Solutions organic growth and a 3% decline in financial solutions. On a year to date basis, organic revenue for the company is up 5%. Third quarter adjusted earnings per share was $2.04 compared to $2.30 in the prior year and down 11%. There are three unusual dynamics impacting the company’s adjusted EPS of $2.04 for the quarter. First, the company experienced a $53 million foreign currency expense or a 10 cent headwind to adjusted EPS. Revaluation of certain assets in highly inflationary countries such as Argentina is recorded through the income statement. During the third quarter, the foreign currency exchange rate in Argentina devalued significantly resulting in this large expense. Second, Argentina interest rates jumped meaningfully during the quarter which drove interest expense up about $31 million above last year or a 4 cent headwind to adjusted EPS. Finally, during the third quarter, Fiserv completed the mutual termination of a merchant alliance joint venture. This resulted in a tax free gain of $89 million recorded in Merchant Solutions operating income resulting in a 16 cent tailwind to adjusted earnings per share. We continue to provide services to this partner through a processing relationship. The net of these three factors is a slight benefit to adjusted earnings per share. In the quarter year to date, adjusted earnings per share increased 6% to $6.65 compared to $6.29 in the prior year. Free cash flow for the quarter was $1.3 billion and $2.9 billion for the first nine months of the year. For the full year, capital expenditures (CAPEX) is now expected to be approximately $1.8 billion or roughly 9% of revenue. Given the revised outlook for earnings and a higher level of capital expenditures, free cash flow for the year is now expected to be approximately $4.25 billion. This higher level of CapEx is directly tied to the start of of the One Fiserv initiative Mike mentioned earlier. Now turning to performance by Segment starting on Slide 6, organic revenue growth in the Merchant Solutions segment was 5% for the quarter and 7% year to date. Adjusted revenue growth for Merchant Solutions was also 5% in the quarter and 7% year to date. The inorganic contribution from the CCB acquisition was was offset by steep foreign exchange (FX) headwinds in Argentina moving to the business lines Small business organic revenue growth in the quarter was 6% while adjusted revenue grew 7% on 8% volume growth. This performance was largely driven by strong growth in Clover in the North America ISV business and in anticipation revenue in Latin America. Clover revenue grew 26% in the third quarter and was impacted by approximately 100 basis points due to Argentinian foreign exchange (FX) headwinds versus expectations on reported gross payment volume or GPV growth of 8%. Revenue growth was driven by value added solutions and solid GPV growth. Fast penetration reached 26% due to strength in vertical software sales, Clover capital and anticipation. As you can See on Slide 7 Excluding the Gateway conversion, volume growth in Q3 was 11% similar to Q2 growth. Excluding the significant deterioration of the Argentine peso Clover GPV growth would have been 1 percentage point higher on both a reported and ex Gateway basis, leaving us in line with our expectations. Excluding the Gateway conversion in enterprise organic and adjusted revenue growth in the quarter was 9% and 4% respectively, driven by transaction growth of 12%. Organic and adjusted growth would have each been 6 percentage points higher excluding the transitory revenue from network fees associated with a large PFAT client that went live in Q3 2024. While this client continues to drive transaction growth for us, the timing of these network fees will continue to pose a grow over challenge to fourth quarter and first half. 2026 Enterprise Revenue and finally in processing organic and adjusted revenue in the quarter declined 8% and 6% respectively. Processing results this quarter were impacted by more difficult comparisons to last year which included professional services, revenues from a processing client and lower hardware sales. Year to date, processing organic and adjusted revenue are down 4% and 3% respectively. Third quarter adjusted operating income for the Merchant Solutions Segment was up 3% to $962 million and adjusted operating margin was 37.2%, down 50 basis points from the prior year. The largest attractor to margins in Q3 were higher sales and marketing and distribution expenses along with higher data processing costs and depreciation and amortization expenses, partially offset by a gain on the merchant alliance joint venture change I mentioned earlier, year to date adjusted operating income for the Segment was up 4% to $2.7 billion with adjusted operating margin down 90 basis points to 35.3%. Turning to Slide 8 for the Financial Solutions segment, organic revenue declined 3% in the quarter and grew 3% year to date. Our third quarter revenue was negatively impacted by lower periodic license revenue which impacted the segment’s organic growth by 2 points. Looking at the business line level in digital payments, organic and adjusted revenue each declined 5% due to industry dynamics in the quarter. While the company experienced healthy debit processing, Debit Network and Zelle transaction growth in issuing organic and adjusted revenue grew 1% and 2% respectively in the quarter. Fiserv generated solid accounts on file growth. However, revenue growth was muted largely due to grow over challenges in the output business and in banking. Organic and adjusted revenue declined 7% in the quarter primarily due to lower periodic license activity. Third quarter adjusted operating income for the financial Solutions Segment was down 13% to $991 million and adjusted operating margin was 42.5%, down 490 basis points from the prior year. The adjusted operating margin decline results from lower higher margin periodic license revenue coupled with the ongoing investment in implementation in professional services and technology spend year to date, adjusted operating income for the segment was up 4% to $3.4 billion with adjusted operating margin up 50 basis points to 46.3%. Now let me wrap up with some remaining details. The corporate adjusted operating loss was $131 million in the quarter and $380 million year to date. The adjusted effective tax rate in both the quarter and first nine months was 18.4% and Fiserv continues to expect the full year rate to be approximately 19%. Total debt outstanding was $30.2 billion on September 30th and Fiserv’s debt to adjusted EBITDA ratio increased slightly to three times. Fiserv continues to target long term leverage at 2 1/2 to 3 times during the quarter. Fiserv repurchased 7 million shares for approximately $1 billion and had 49 million shares remaining authorized for repurchase at the end of the quarter. In addition, aligned with the priorities of the one fiserv action plan that Mike laid out, fiserv announced three acquisitions during the quarter focused on client service, value added services and our stablecoin growth opportunity. The acquisition of Smith Consulting Group, which closed in Q3, brings deep subject matter expertise in house to better serve our clients. The agreement to acquire Stone Castle Cash Management, which is expected to close by first. Q 2026 provides us with a digital currency custody license and unique investment and liquidity services for our merchants and financial institutions. And finally, we acquired cardfree, an all in one platform empowering merchants with customized order pay and loyalty solutions. And with that, I’ll turn the call back to the operator to start the Q and A session. OPERATOR Thank you. We would now like to open the phone lines for questions. As a reminder for today’s call, please limit yourself to one question to ensure ample time to answer as many questions as possible. If you would like to ask a question, you may press Star one on your phone. If you would like to withdraw your question at any time, please press star two. Our first question comes from Tinjin Wong from JPMorgan. Please go ahead. Equity Analyst at JPMorgan Hey, thanks a lot, lots to ask here, so thanks for the opportunity. Just maybe Mike, I’ll ask it this way. How long was Fiserv over earning with deferred investments and this focus on short term revenue and expense initiatives that you called out and of course it’s early, but how long will it take and at what cost for Fiserv to reverse this and get back to what I call its hallmark of double digit earnings per share (EPS) growth? You did call that out, double digit earnings per share (EPS) growth. And of course I’m getting the question too, given your analysis and over the last few months, is double digit earnings per share (EPS) growth the right target? And why are you confident that that’s the case? Thanks. Yeah, sure. Thank you. And you know, I’ll start. Mike Lyons (Chief Executive Officer) I don’t know how much history I. Can go back and give you, but you know, in the six months I’ve been here, obviously we’ve made some recalibrations last quarter which were more focused on some of the big projects being relatively new in the seat. Some of the stuff we saw coming out of Q2 prompted the analysis that we did, which was a much broader and more rigorous analysis, included a group of people here and external advisors and we looked at every part of the company and as I said in the remarks, we’ve got a great company with great assets and great growth opportunities and we want to run the heck out of it. It is an unbelievable engine and we got to go do it. As I said, there are four things that we found, obviously noise from Argentina, which by the way is an outstanding business. We’re talking about clarifying our growth numbers for how good Argentina has been. But it’s important to clarify that to understand the rest of Fiserv. We talked about the short term initiatives and just sort of A short term focus versus doing what our clients want, helping them achieve objectives and aspirations, some deferred investment which we think is totally addressable, as I said in the earlier part and then just making sure that we’re accurately reflecting what the business is capable of when we give guidance to you all. So I think we tried to give you a couple different approaches to understand this and we’ll keep going through this with you if it’s helpful. But the first is if you take Argentina out, which we did in the slides and you look at 23, 24 and year to date, 25, it’s 6% growth, 6% growth, 3% growth. Yes, there’s a little bit of puts and takes in each of those numbers because of short term initiatives and like. But I think it’s representative of where we came out of the analysis that today we have a mid single digit growth company as we are today, maybe at the low end of that mid single digit range. There’s some stuff we identified in the businesses where we think we can do a better job and we’re attacking those already with investment. We went in front of 4,500 clients advisor for made specific commitments around those things and we mostly found those to be self inflicted type stuff and we’re all over it, we don’t know what to do with it. But as I said there were some areas and we weren’t thrilled with how the businesses were being run. So we made changes at the leadership level, the businesses and now we have two unbelievable leaders over our businesses that will have both long great track records of execution, obviously subject matter expertise and the way we set up the structure. They will collaborate heavily to bring together the best of both of these businesses. So our view is low end of mid single digit growth today, clear path for the investments we’re making to get into the solid part mid single digits and then a clear path to acceleration from there. We’ll let you know what that new long term, medium term guidance is when we do the investor day and do it appropriately. But you can sort of see the class in there and then there’s no change in the free cash flow generation capabilities of the company. And if it’s run right for the long term, the conversion stays very, very attractive. There’s absolutely no change in our capital management plan. We’re going to invest organically. If we see attractive acquisitions and Paul mentioned a couple that we did this quarter, we’ll add those to the organic growth of the business and the rest will buy back. No change in our leverage guidance and you put that together as you know, you follow the company for a long time, that the recipe there drives double digit earnings per share (EPS) growth and that’s what we’re focused on. A company that year in year out guides efficiently, runs the heck out of the business. High class execution, takes care of our clients, runs it with a long term approach and produces results for our shareholders. So I think that’s how I’d address it at the highest level that covers it. Well, thank you Mike. OPERATOR Next we’ll go to the line of Darrin Peller from Wolfe Research. Please go ahead. Equity Analyst at Wolfe Research Yeah, thanks guys and Paul, congrats and welcome. I guess I just want to understand a little bit more in detail what. Changed specifically in the financial solutions segment. From last couple of quarters of the growth trajectory given that segment was one that we always thought of as more stable. And I know the banking side you talked about consolidating your cores a bit. More but when we see that growth. Rate drop to negative one without the. Periodic from what was a mid single. Digit algorithm, it just brings questions of what’s really going on under the surface. And what you think that segment truly can be. And then just one quick add on. To Tinjin’s question around the overall algorithm. Long term the merchant side. I know Mike, you just mentioned a mid single digit growth rate. You know, do you, are you confident that your, you know, your experts and you guys have screened everything properly to ensure that any price actions or anything. Else that you needed to take is. Already done or is there more to go? Are you fully done with the review? Thanks guys. Mike Lyons (Chief Executive Officer) Yeah, I’ll go with the last part first, then work back and then let Paul give you some specific numbers. We’ve completed our review. Obviously you learn more every day but the rate of learning has plateaued some time ago. And the numbers and the baseline we’re giving you today, we are highly confident reflect where the company is today. We’re bringing in a leadership team to complement an existing leadership team where we feel we can execute on it. So I’m highly confident in the numbers we’re giving you today. We’ve taken a great look at the company. We’ve gotten outside an outside perspective on that part of it and it wasn’t all, you know, it’s not, we’re not saying everything’s perfect, we’re saying we have work to do. But structurally today we’re take away cyclical growth and certainly obviously we showed you with cyclical factors certainly Argentina highlighting a fine degree. We certainly can grow faster than mid single digits. But if you take out cyclical and focus on structural, long term sustainable growth. That’s where we are today. When you go into the two businesses, I think you have to look at different pieces of it. We have a world class within banking, we have a world class issuing business that continues to gain share and really has formed the basis when combined with merchant for how we go to market in the fast growing embedded finance world. And we’re incredibly excited about opportunities there. As you take the issuing platforms, the finzact platform, the Commerce Hub platform, the payfair acquisition with the orchestration layer and we think we can offer something to digital commerce and payment platforms that really reflects how the world is evolving in payments. So you have that business in there and then you go back to our core banking business. There are parts of our core banking business that are performing very, very well. And then there are parts which we talked about at the forum where we’ve not executed at the highest level. And in there I’d say that we have to consolidate our cores from 16 to 5. It’s the right thing to do for our customers in terms of modernizing technology and we haven’t executed that perfectly. We’ve course corrected that. We’re seeing some impacts of that in there now, but that should be a low single digit growth business for a long time and then we see a great opportunity with our surrounds. Both what we’re building with xd, Cash Flow Central, some of our payments business, I would facilitate Zell and the like to complement a core business that’s low single digits with additional growth on top of that. But we’ve been slow to get XD to market. We’ve been Cash Flow Central is proceeding well. But as I said last quarter, these aren’t products that don’t have a lot of interest for clients. We have to execute better and get them to market. Part of the investments that we are doing right now is, is much stronger on the implementation side and the customer service side on that front. So if you think about banking, you’ve got the core business which you know is going to grow and I would say our core core business is going to grow in the low single digits. Finzac, we couldn’t be more pleased with the progress we’re making. Finvack continues to win new customers in the ModSpace a little bit separate within the core world. The issuing business very strong, you know, in that low end to mid single digit range. And you put those together and you know, we think that’s over time. We’ll go through the details of it but that’s a mid single digit growth business maybe at the low end of it with the size of course. And you go on the merchant side, we’ve got a fabulous business obviously in terms of card present we were the leaders around the world in that business and we’re investing heavily in commerce hub to build the, you know, omnichannel global capabilities there. And then Clover we’ve got an incredible. Asset and we talked about to your other question, we talked about some of the pricing changes that we implemented and we don’t feel like they’re appropriate for our business model. Now we’re reversing those but there are not what we’ve taken in and around Clover today and what we’ve the other adjustments that we’ve made in both the fourth quarter guidance, the full year guidance and the 2026 preliminary outlook reflect all the changes we wanted to make to get us in a position to run a high quality, sustainable business built for and driven by the needs and aspirations of our customers. Paul Todd (Senior Adviser and incoming Chief Financial Officer) Yeah Darren, I would just add I’ve spent a good bit of time on this financial side obviously given my background, this is an area I know really well and I would just say in the quarter we had a lot of things happening across kind of the three businesses there. On the digital side obviously we had strong debit volume growth. We did take some actions to position us competitively for the longer term in that side. So that’s reflected in kind of the quarterly results on the issuing side, good account on file growth, fundamentally strong there we had some comparisons to last year in the output services area that didn’t repeat and you know how those can be somewhat kind of project related in the output services area and then on banking and we called this out, we had a license compare that was pretty hefty for this quarter but fundamentally it’s strong. We’re going to in the fourth quarter we expect kind of a similar it won’t be as dramatic because of the sequential kind of change but fundamentally we’ll kind of see a similar kind of result in the fourth quarter. On a nominal basis it will be about the same but you know, on a longer term outlook is it fundamentally strong? Yes, the answer is yes. The volumes are holding each one of those businesses. We’ve taken actions to make sure that we’re competitively strong and I know the sequential quarter move kind of is bigger than you would have expected but underneath that is a strong business. And I mentioned what we mentioned earlier that there are some businesses in there that aren’t as well positioned, they’re relatively small in terms of revenues that we’re not going to be in any longer and there’s others in the market who want to be in those businesses. So again part of the analysis and the actions taken from it. OPERATOR All right, thank you both. Next we’ll go to the line of Jason Kupferberg from Wells Fargo. Please go ahead. Equity Analyst at Wells Fargo Good morning guys. Thanks for all the candor here. I did want to ask a little bit about Clover. I know you mentioned 10% revenue growth there for the fourth quarter. Wondering if that’s a decent proxy for next year until you anniversary some of these actions to deprioritize some of the short term revenue initiatives. And then just as part of that. If you can give us your latest. Assessment just of your competitive positioning across merchant, both from a Clover and non Clover perspective. Thank you. Mike Lyons (Chief Executive Officer) I’ll start with the second part. Paul can go into numbers I think certainly and I just mentioned it in the prior answer, but if you. Clover is an unbelievable asset. We continue to feel great about our competitive positioning. There are great competitors in the market, but we continue to see significant opportunities to bring an all in one business operating platform to small businesses. There’s a desire for that, there’s a need for that. And so we continue to build Clover in the areas that talked about vertical expansion traditionally very, very strong in core restaurants and retail. Build that out to healthcare, professional services, higher end restaurants, the horizontal expansion. Super excited about our partnerships home base and ADP and we’ll bring on others there. International expansion is going well. Brazil is obviously the highlight of that. I think if there’s a place that we’re most focused on Clover and where Takis and his team are doing the most amount of work is really a full overhaul of the client experience as they engage with us operationally we can be more excellent and especially we see just a tremendous opportunity across Clover and really across our platforms and gateways and organization layers to apply AI in an effective way. And that’s really what the project with IBM is about. But that’s probably the greatest area that we’re doing work there. The opportunity to expand TAM we continue to see and then you know, as we talked about for a long time now, we’ll introduce a very thoughtful and paced back book conversion going into next year on the enterprise side and I guess the other small business platform we’re very, very happy with within our merchant business is our ISV business which continues to grow rapidly. Think we’re very, very well positioned there and our customers need both A and many times need both online and a physical presence. So the ability to introduce Clover into that world or other of our assets. Super excited about that business on the enterprise side, again, awesome. Core business continue to build out a global omnichannel integration platform with Commerce Hub and there’s a lot of ongoing work on that front. So overall feel very good about the merchant business in terms of where we can grow at Clover. Obviously the growth highlight in there along with the ISV business. I’ll let Paul go through the numbers on Q4 and next year and then some indication of longer term. Yeah. Paul Todd (Senior Adviser and incoming Chief Financial Officer) So Jason. Yeah, you know, obviously we highlighted what we expected in the fourth quarter and you know, we would see a tick up into kind of a low teens roughly range is our expectation is we’re in the early stages of planning for 2026. So there is a little bit of kind of comparative dynamic, you know, that exists there. And then we would expect that to get better, you know, on the 2027 and beyond to kind of move up into the more higher teens kind of level as we get into the 27 time frame. So there’s sales noise as a 2026 comp, you know, but it is a pickup, an acceleration from the fourth quarter growth rate. And we do see once we get past that, compare in 2026 for an additional pickup going in 27 and beyond. Mike Lyons (Chief Executive Officer) And as I said in remarks, 10% in Q4 reflects the pricing reversals. That’s high teens. Without it, fair amount of noise. As Paul said, still going into 2026 as we right size the baseline and going from there we continue to see similar to what we’ve seen excluding the gateway conversion, 10% plus GPB growth and mid to high teens, close to 20% long term revenue growth. And again that can go back to the opening that reflects the normalization of Argentina, a normalization of short term initiatives and the appropriate levels of investment into the business, especially around the operational excellence thing. But Clover continues to be just an awesome asset. Couldn’t be more excited about what we can do with it for small businesses across the world. Equity Analyst at Wells Fargo Sounds like Q4 is the trough. Got it. Thank you. OPERATOR Next we’ll go to the line of Dave Koning from Baird. Please go ahead. Equity Analyst at Baird Yeah. Hey guys, thanks for all the detail. I guess my question is on margins and how that works into the first half. When we look at Q4 looks like margins will be down about 800bps or $400 million of lower EBIT. Is that the peak investment quarter that $400 million down and maybe how does that progress through the first half of next year and what’s invested in like what are you doing in Q4 and then maybe how does that dissipate into the first half of next year? Paul Todd (Senior Adviser and incoming Chief Financial Officer) Yeah, so you know Dave, I’ll start and Mike may want to add but you know, obviously we, you can you know, kind of impute by our guidance what the fourth quarter looks like. And then we do trough out on the margin in the first half, particularly in the first quarter where we’ve got, you know, the biggest kind of comp challenge there. And so you know, we kind of, if you’re kind of saying the mid-30s is where we would expect to be roughly next year, right around that kind of call it 33 to 35 kind of percent range for next year. The trough would be the first quarter and then we would continue to kind of build up to be back roughly at a run rate level by the end of next year, kind of back to just roughly where we would end up this year. So we clearly have a plan to restore kind of the margin back to the levels that we would expect here in 2025 and then build beyond that in kind of a more kind of consistent way on a go forward basis. So trough kind of in first quarter it will kind of continue to then build as the comps get more kind of normalized as we progress through 2026 and then you know, obviously from there on we would expect margin expansion to kind of more normalize. Mike Lyons (Chief Executive Officer) Yeah, you’re getting a double whack in Q4 because Q4 of last year was sort of peak in terms of short term initiatives. And then we’ve reversed a lot of that taking the pricing changes. So again I think it’s, we’re trying to get you forward to a baseline rather than take the noise out of every single item for every single period in historical numbers. And you know, I think the guidance we’ve given you sort of sets that baseline and again it’s baseline we’re confident in, in terms of where we’re going to invest. The really two things, the core investment in the company which we talked about some which is streamlining the cores, modernizing and getting to market our surrounds again which are getting unbelievable client interest and receptivity. We have hundreds in the pipeline for XD and approaching that on Cash Flow Central. So we’ve got great things, want to get those to market, continue to invest heavily in Commerce Hub. We talked about Clover and building the platform there and enhancing operational excellence. We’re super excited on the issuing side. Both in the modernization of Optis, our current platform and the introduction of Vision Next which will be the platform for embedded finance alongside Finzak. And also the platform will go to market with internationally totally modernized cloud based, API driven issuing core. Excited about what we’re doing on the stablecoin front including the acquisition pending, pending acquisition of Stone Castle. And then you know, the modernization and the enhancement and excellence of our core technology has been a huge focus this year and a bulk of where the incremental capital spend this year has gone. You take the project we’re going to. Do with IBM that will also dictate based on the returns and investments that we’ll get there. You know, that also dictates the nature of our spend next year. Again we’re early in that project but are very, very optimistic about what we could do not only from what we’ve learned in the first five or six weeks, but working with the IBM team who did the same exercise to themselves in a very successful way which you go through. Almost every one of our business applications are primed for the use of we’re already using it but for the even greater use of AI and then taking a hard look at all of our internal functions and applying AI and modernization to structurally change the cost base and how we do business internally in both employee and client enhancing way. So those are the major areas. Most of what we’ve done this year it’s not like we’ve been just doing the analysis. We’ve been going after some of the footfall we’ve seen. Most of the stuff we’ve done this year we covered at Fiserv Forum to address our clients needs. Thanks guys. OPERATOR And for our final question we’ll go to the line of Harshita Rawat from Bernstein. Please go ahead. Hi, good morning Mike. I want to follow up on the financial solutions business and I understand kind of the forward looking explanations we set and kind of the deprioritization you talked about but I want to ask about the third quarter. You trimmed the full year guide three months ago when you were one month into the quarter at the time I think we heard that the team kind of re underwrote everything. So trying to figure out and I know you talked about many of the drivers here, how could things change so dramatically in two months in a segment which is by definition somewhat of a recurring segments. So also trying to figure out the kind of the. Why wasn’t there like that much visibility into this level of revenue weakness intra quarter. Thank you. Equity Analyst at Bernstein It’s an appreciative question and understand it. Obviously this wasn’t the reset I wanted or expected. But in July, you know, roughly 10 weeks into the job, no excuses, but I focused on underwriting some of the major projects. We talked about those that were driving growth in the company’s original 10 to 12% guidance. You know, some of the bigger projects we talked about, we successfully re underwrote those and their performance since then has largely remained on track. As more financial surprises emerged, you know, over the in the start of Q3 that prompted not just the annual strategic planning process, but this much more rigorous review into our financials. And that was also driven by some of the stuff we’re hearing from our clients. That analysis not only uncovered some additional assumptions that needed to be revisited, either stuff that was either out of our control, macro stuff, industry stuff that we had assumed in the company’s original guidance to go one way in a pretty deliberate manner, then there were a whole bunch of embedded assumptions away from the major projects that even with strong execution would have been hard to do. All of them simultaneously and successfully. Broad based productivity initiatives, significant record, embedded record sales activities and then stretch revenue numbers on top of it. And then there were a series of initiatives. Again we’ve gone through it, but there were a series of initiatives that were client customers. Businesses always have these that were more short term driven in nature, that were a big part of the back half of the year to get to the guidance. And as I got a more fulsome understanding of those, that obviously prompted some dissatisfaction with the way we do the process. And we’ve made leadership changes around that. Mike Lyons (Chief Executive Officer) And giving you today what we believe. Is a solid tangible baseline to grow from. So I, you know, what was in the original 10 to 12% guidance? You know, I’ve worked through it. It took me five or six months, you know, but I’m confident today the numbers you have represent who we are structurally as a company. And we’ve given you the outlook from which we can grow at and put together a team that’s going to execute the hell out of the business. And it’s a great business to run. Paul Todd (Senior Adviser and incoming Chief Financial Officer) And I’ll just add to that as it relates to just financial specifically. If you look at that business and. You look at kind of the first half at the 7 and kind of 8% growth rates, those are a higher level of growth rate for the collection of businesses here than you kind of typically see given kind of the underlying fundamentals around some of the TAM growth rates for those business areas. And so I think when you kind of look at it on a full year basis. When you look at our expectations on a full year basis next year for this business, you know, it’s kind of in that more lower single digit range, at that kind of higher level maybe of that lower single digit range. But that’s more of the normal kind of growth if you look at what accounts on file grow, what debit transactions kind of growing at the mid single digit if you look at kind of what banking does. And so that’s kind of a more normalized way of looking at the business. We just have some variability because of all the things Mike just described that’s presenting this kind of sequential move or first half versus back half move. We’ll have the similar dynamic in the first half of next year as we kind of normalize everything. And then you’ll start seeing that more normalized stable growth that you would expect out of this line of business starting in the back half of next year and continuing throughout 2027. Mike Lyons (Chief Executive Officer) And then from there we’ll take, we’ve got these incredible assets. VisionNext, Finzec, a core ledger system, deep systems of records for banks that we can expand to new sectors that grow much faster than that, whether it’s embedded finance or something else. But you got to go execute on that, you got to invest in it, you got to be deliberate about how you operate on it. And that’s the part we can’t wait to get to. And today that sets the baseline and sets the starting point for that. So we’re excited about the. And that’s the long term structural growth rate we can drive. OPERATOR Thank you. And that was our final question for this call. Thanks everyone for joining. I appreciate talking with you more this quarter. Thank you all for participating in the Fiserv third quarter 2025 earnings conference call. That concludes today’s call. Please disconnect at this time and have a great rest of your day. This transcript is to be used for informational purposes only. Though Benzinga believes the content to be substantially and directionally correct, Benzinga cannot and does not guarantee 100% accuracy of the content herein. Audio quality, accents and technical issues could impact the exactness and we advise you to refer to source audio files before making any decisions based upon the above. Image: Shutterstock.com
