Snapshot
Fiserv Inc reported $5.26B of revenue in Q3 2025, up 0.9% year over year, with diluted EPS of $1.46 and an operating margin of 27.3%.
- Revenue
- $5.26B
- YoY growth
- +0.9%
- Diluted EPS
- $1.46
- Operating margin
- 27.3%
What management said
- •Our earnings release and supplemental materials for the quarter are available on the Investor Relations section of fiserv.com.
- •You should refer to our earnings release for a discussion of these risk factors.
- •By now you've seen our results and revised guidance for the year.
- •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.
- •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.
- •Critical software solutions ignite our gateways and orchestration layers, facilitate embedded finance, and improve our operations.
- •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.
- •One of the key takeaways from our analysis is that Fiserv's growth and margin targets need to be reset.
- •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.
- •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%.
What went well
- •Merchant Solutions delivered solid organic revenue growth of 5% in the quarter and 7% year to date, with small business organic revenue up 6% and adjusted revenue up 7% on 8% volume growth.
- •Clover revenue grew 26% in the quarter on 8% reported GPV growth, with value-added services penetration reaching 26% driven by vertical software sales, Clover Capital, and anticipation.
- •The issuing business grew organic revenue 1% and adjusted revenue 2% with solid accounts-on-file growth, and management described it as a world-class business continuing to gain share.
- •Year to date adjusted revenue grew 5% to $14.9 billion and adjusted operating income grew 5% to $5.7 billion, with the year-to-date adjusted operating margin flat at 38.2%.
- •The company completed the mutual termination of a merchant alliance joint venture, recording an $89 million tax-free gain in Merchant Solutions operating income, while continuing to serve the partner through a processing relationship.
- •Management announced a new leadership team including new Co-Presidents, a new CFO, and three new Directors, and laid out the One Fiserv action plan to apply AI across software solutions and operations.
What went wrong
- •Management characterized the quarter as a disappointing but necessary reset, lowering revenue and earnings baselines and revising guidance.
- •Total company organic revenue grew only 1% in the quarter, and adjusted operating income decreased 7% to $1.8 billion with adjusted operating margin down 320 basis points to 37%.
- •Third quarter adjusted EPS fell 11% to $2.04, hurt by a $53 million foreign currency expense in Argentina ($0.10 headwind) and roughly $31 million higher Argentina interest expense ($0.04 headwind), partly offset by the $89 million JV gain ($0.16 tailwind).
- •Financial Solutions organic revenue declined 3% in the quarter, with digital payments down 5% and processing organic revenue down 8%, hurt by lower periodic license revenue (2-point segment impact) and difficult prior-year comparisons.
- •Management attributed weakness to slowing cyclical growth in Argentina, overly optimistic original growth assumptions, deferred investments, and deprioritization of short-term revenue and expense initiatives, and made leadership changes over the businesses.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Capital expenditures | FY2025 | — | ~$1.8 billion (~9% of revenue) | Higher, tied to One Fiserv |
| Free cash flow | FY2025 | — | ~$4.25 billion | Lowered on revised earnings and higher capex |
| Clover revenue growth | Q4 2025 | — | ~10% (reflecting pricing reversals; high teens excluding them) | — |
| Clover revenue growth | FY2026 | — | Low teens range (preliminary) | — |
| Adjusted operating margin | FY2026 | — | ~mid-30s, roughly 33%-35% range, troughing in Q1 | — |
| Financial Solutions organic growth | FY2026 | — | Higher end of low single digit range | — |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Total adjusted revenue (Q3) | +1% to $4.9 billion | Merchant strength offset by Financial Solutions decline and Argentina FX |
| Total organic revenue (Q3) | +1% | Slowing Argentina cyclical growth and Financial Solutions softness |
| Adjusted operating income (Q3) | -7% to $1.8 billion | Margin pressure of 320 basis points from cost and revenue mix |
| Adjusted EPS (Q3) | -11% to $2.04 | Argentina FX and interest headwinds partly offset by JV gain |
| Clover revenue (Q3) | +26% | Value-added solutions and GPV growth, with ~100 bps Argentina FX drag |
| Financial Solutions organic revenue (Q3) | -3% | Lower periodic license revenue and difficult comparisons in digital payments and processing |
| Merchant Solutions adjusted operating income (Q3) | +3% to $962 million | Higher sales, marketing, distribution, data processing, and D&A costs offset by JV gain |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Strategic reset / baseline | 9%-12% medium-term organic growth target (set 2023) | Reset to mid-single-digit structural growth, near low end, with a path to acceleration over time | Lowered |
| Argentina cyclical contribution | Sized excess interest/inflation impact previously | Disclosed Argentina added ~5 points to 2023 and ~10 points to 2024 organic growth; ex-Argentina growth was mid-single digits | Normalizing |
| One Fiserv / AI | — | New action plan applying generative and agentic AI across software, operations, and internal functions, including a project with IBM | New |
| Clover | Strong growth asset | Reversing certain short-term pricing changes; expanding verticals, partnerships (Homebase, ADP), and international (Brazil); focus on client experience and AI | Continued investment |
| Core banking consolidation | — | Consolidating cores from 16 to 5; execution was imperfect and course-corrected; expected to be low-single-digit growth long term | In progress |
| Margin trajectory | — | Trough in Q1 2026, building back to roughly 2025 run-rate levels by year-end with more normalized expansion thereafter | Rebuilding |
Q&A summary
How long was Fiserv over-earning, and how long and at what cost to return to double-digit EPS growth?
Mike Lyons said a rigorous Q3 analysis found four factors (Argentina noise, short-term initiative focus, deferred investment, optimistic guidance); ex-Argentina growth was 6%/6%/3% in 2023/2024/year-to-date 2025, making it a mid-single-digit company today, with investments providing a clear path back to double-digit EPS growth via operating leverage, free cash flow, and capital allocation.
What specifically changed in the Financial Solutions segment, which was viewed as stable?
Mike Lyons said the core banking business should grow low single digits long term (hurt by imperfect core consolidation), while issuing and Finxact are strong; Paul Todd added the quarter included a hefty license comparison and output services comparisons that did not repeat, but underlying volumes are holding.
Is ~10% Q4 Clover growth a good proxy for next year and what is the competitive positioning across Merchant?
Mike Lyons said Clover remains an exceptional asset with vertical, horizontal, and international expansion and a client-experience overhaul; Paul Todd guided Clover to a low-teens range in 2026 (with sales noise) accelerating to higher teens in 2027, and Lyons said long-term 10%+ GPV growth and mid-to-high-teens to ~20% revenue growth.
Is Q4 the peak investment quarter for margins and how does it progress into the first half of next year?
Paul Todd said margin troughs in the first half, especially Q1 2026 given the biggest comp challenge, then builds back to roughly 2025 run-rate levels by the end of next year, with normalized margin expansion thereafter; Lyons noted Q4 is a double hit from peak prior-year short-term initiatives and the pricing reversals.
How could the Financial Solutions outlook change so dramatically in two months in a recurring segment, and why wasn't there more visibility?
Mike Lyons said in July he re-underwrote the major projects (which stayed on track), but a broader Q3 review uncovered additional embedded assumptions (broad productivity gains, record sales, stretch revenue, short-term initiatives) that were difficult to achieve simultaneously, prompting leadership changes and the reset baseline.