Fiserv outlines new strategic focus and leadership overhaul as it resets 2025 growth targets

Earnings Call Insights: Fiserv (FI) Q3 2025

MANAGEMENT VIEW

* CEO Michael Lyons stated that the company has undergone a comprehensive review leading to a critical reset of its revenue and earnings baseline, shifting strategic focus to sustainable, client-focused growth and away from short-term initiatives. Lyons emphasized, "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."
* Lyons announced the One Fiserv action plan, centered on leveraging emerging technology, including generative and agentic AI, and investing in operational excellence, product innovation, and enhanced client service. He detailed, "We are pursuing these opportunities and other performance-enhancing initiatives under a new action plan called One Fiserv."
* The company is implementing significant leadership changes, including appointing new Co-Presidents Takis Georgakopoulos and Dhivya Suryadevara, and naming Paul Todd as CFO effective October 31. Three new board directors—including new chairs for both the Board and Audit Committee—will join in January, bringing "tremendous experience and highly relevant skills to Fiserv."
* Strategic partnerships and product advancements were highlighted, such as the forthcoming launch of Clover in Japan, a new exclusive agreement with Nubank, a record healthcare deal, and a key U.S. Treasury Department prepaid card win.
* CFO Paul Todd said, "I have a better appreciation for the unique construct of the company, the quality and depth of the assets on this platform and the differentiated value of its unique distribution capabilities."

OUTLOOK

* Fiserv now expects 2025 organic revenue growth of 3.5% to 4% and full-year adjusted EPS of $8.50 to $8.60, noting this as a modest decline year-on-year.
* Preliminary 2026 guidance anticipates a critical investment and transition year, with organic revenue growth in the low single digits and adjusted EPS expected to be down modestly versus 2025.
* Lyons stated, "We expect 2026 will be a critical investment and transition year for us and will mark our new baseline for growth going forward."
* The company intends to provide formal 2026 guidance with Q4 results and more details at an Investor Day in the first half of next year.

FINANCIAL RESULTS

* Fiserv reported total organic revenue growth of 1% in Q3 and adjusted EPS of $2.04.
* Total company third quarter adjusted revenue was $4.9 billion, and adjusted operating income decreased 7% to $1.8 billion, with an adjusted operating margin of 37%.
* Free cash flow for the quarter was $1.3 billion; full-year free cash flow is now expected to be approximately $4.25 billion, with CapEx of about $1.8 billion.
* Organic revenue in Merchant Solutions grew 5% for the quarter, with small business organic revenue growth at 6% and Clover revenue up 26%. SaaS penetration in Clover reached 26%.
* Financial Solutions segment organic revenue declined 3% in Q3, with adjusted operating margin dropping 490 basis points to 42.5%.
* Significant one-time items included a $53 million foreign currency expense due to Argentinian peso devaluation and a $31 million increase in Argentina interest expense, partially offset by an $89 million gain from terminating a merchant alliance joint venture.

Q&A

* Tien-Tsin Huang, JPMorgan: Asked about the timeline and cost to reverse the impact of deferred investments and short-term initiatives, and the confidence in returning to double-digit EPS growth. Lyons replied, "There are 4 things that we found...if you take Argentina out...it's 6% growth, 6% growth, 3% growth...today, we have a mid-single-digit growth company as we are today, maybe at the low end of that mid-single-digit range."
* Darrin Peller, Wolfe Research: Sought clarity on the Financial Solutions segment’s growth trajectory. Lyons confirmed, "We've completed our review...the numbers and the baseline we're giving you today, we are highly confident, reflect where the company is today."
* Jason Kupferberg, Wells Fargo: Queried about Clover revenue growth and competitive position. Lyons responded, "Clover continues to be just an awesome asset and couldn't be more excited about what we can do with it for small businesses across the world."
* David Koning, Baird: Asked about margin progression through Q4 and into next year. Todd explained, "We do trough out on the margin in the first half, particularly in the first quarter...then we would continue to kind of build up to be back roughly at a run rate level by the end of next year."
* Harshita Rawat, Bernstein: Questioned the visibility into revenue weakness in Financial Solutions. Lyons detailed, "As more financial surprises emerged over the -- in the start of Q3, that prompted...this much more rigorous review into our financials, and that was also driven by some of the stuff we're hearing from our clients."

SENTIMENT ANALYSIS

* Analysts pressed for specifics around timing, long-term growth, the depth of the reset, and confidence in the new baseline, revealing a neutral to slightly negative sentiment as they sought clarity on guidance and business stability.
* Management maintained a confident tone in prepared remarks, emphasizing the fixable nature of operational shortfalls and a clear path to sustainable growth, but acknowledged execution gaps and the need for leadership changes. During Q&A, Lyons’ tone remained resolute but more defensive when addressing repeated concerns about forecasting and execution.
* Compared to the previous quarter, both management and analysts’ tone shifted from optimistic and growth-focused to more cautious and recalibrated, reflecting the impact of the strategic reset and lowered guidance.

QUARTER-OVER-QUARTER COMPARISON

* The company’s guidance for organic revenue growth was revised downward from approximately 10% in Q2 to 3.5% to 4% in Q3, with adjusted EPS guidance lowered to $8.50-$8.60 from a previously higher range.
* Q2 highlighted robust growth in both revenue and EPS, whereas Q3 featured a marked slowdown and a reset of financial baselines.
* Strategic focus has shifted from aggressive product rollout and expansion to operational discipline, investment in core platforms, and leadership overhaul.
* Analyst focus transitioned from product pipeline and growth drivers to questions around the sustainability and credibility of new guidance, with increased scrutiny of forecasting processes and leadership execution.
* Management’s confidence is now couched in a narrative of deliberate transition and remediation, contrasting with the more assertive growth posture of the prior quarter.

RISKS AND CONCERNS

* Major challenges cited include slowing cyclical growth in Argentina, recalibration of prior growth assumptions, the impact of deferred investments, and the shift away from short-term revenue initiatives.
* Management recognized internal execution issues and acknowledged that prior short-term focus and cost cuts constrained client service and product launches, emphasizing that these are "entirely fixable."
* Analyst concerns focused on visibility into recurring revenue, segment stability, and the credibility of the new financial baseline.

FINAL TAKEAWAY

Fiserv’s management underscored that the current quarter marks a pivotal reset, establishing a new foundation for sustainable, high-quality recurring revenue growth. With a revised outlook, significant new leadership appointments, and the launch of the One Fiserv transformation plan, the company is focused on operational excellence, disciplined investment, and long-term value creation. While near-term financial results reflect the transition, Fiserv affirms its conviction in returning to consistent mid-single-digit organic revenue growth and double-digit EPS growth beyond 2026, supported by enhanced execution and a renewed client-first culture.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/fi/earnings/transcripts]

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* Fiserv, Inc. 2025 Q3 - Results - Earnings Call Presentation [https://seekingalpha.com/article/4834575-fiserv-inc-2025-q3-results-earnings-call-presentation]
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