FISERV INC Q3 2025 earnings call

Thank you and good morning. With me on the call today are Mike Lyons, our Chief Executive Officer, and Paul Todd, Senior Advisor 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. Now I'll turn the call over.

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 and payment platforms and our robust portfolio of value-added services uniquely positioned at the intersection of finance and commerce, two large, economically critical, and 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%-12% was originally set in 2023 amidst 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%-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 to 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.

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, 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. Third quarter adjusted earnings per share was $2.04 compared to $2.30 in the prior year, 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 $0.10 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 $0.04 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 $0.16 tailwind to adjusted EPS. We continue to provide services to this partner through a processing relationship. The net of these three factors is a slight benefit to adjusted EPS.

In the quarter year to date, adjusted EPS 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, 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 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 offset by steep 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 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. 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 detractor 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.

Hey, thanks a lot to ask here. Thanks for the opportunity. 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? 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 EPS growth? You did call that out, double digit EPS growth. I'm getting the question too, given your analysis and over the last few months, is double digit EPS growth the right target? Why are you confident that that's the case? Thanks.

Yeah, sure. Thank you. I'll start.

I don't know how much history I can go back and give you, but in the six months I've been here, 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. 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've 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, 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. 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. The first is if you take Argentina out, which we did in the slides, and you look at 2023, 2024, and year to date 2025, 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. I think it's representative 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 is some stuff we identified in the businesses where we think we could do a better job and we're attacking those already with investment. We went in front of 4,500 clients, advisor for specific commitments around those things, and we mostly found those to be self-inflicted type stuff. We're all over it, we know what to do with it. As I said, there were some areas and we weren't thrilled with how the businesses were being run.

We made changes at the leadership level of the businesses and now we have two unbelievable leaders over our businesses that both have 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. 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 of 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. 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.

If it's run right for the long term, the conversion stays very, very attractive. There is 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 we'll buy back. No change in our leverage guidance. You put that together, as you know, you follow the company for a long time, that the recipe there drives double digit 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. I think that's how I address it at the highest level,

that covers it. Thank you, Mike.

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. I know the banking side you.

Talked about consolidating your cores a bit.

When we see that growth.

Rate drop to negative one without the.

Periodic from what was a mid single.

Thanks guys. 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. 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. I'm highly confident in the numbers we're giving you today. We've taken a great look at the company, we've gotten an outside perspective on that part of it and it wasn't all, you know, we're not saying everything's perfect, we're saying we have work to do.

Structurally today, take away cyclical growth and obviously we showed you with cyclical factors, certainly Argentina highlighting a fine degree, we certainly can grow faster than mid single digits. 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. We're incredibly excited about opportunities there.

As you take the issuing platforms, the Finxact platform, the Commerce Hub platform, the Payfair acquisition with the orchestration layer, we think we can offer something to digital commerce and payment platforms that really reflects how the world is evolving in payments. 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. There are parts which we talked about at the forum where we've not executed at the highest level. In there I'd say 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, CashFlow Central, some of our payments business, I would facilitate Zelle and the like to complement a core business that's low single digits with additional growth on top of that. We've been slow to get XD to market. CashFlow 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 much stronger on the implementation side and the customer service side on that front.

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. Finxact, we couldn't be more pleased with the progress we're making on Finxact, continues to win new customers in the modern space. A little bit separate within the core world, the issuing business, very strong, you know, in that low end to mid single digit range. You put those together and 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, 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 omnichannel global capabilities there.

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.

Yes, Darrin, 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. 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. On banking, and we called this out, we had a license compare that was pretty hefty for this quarter.

Fundamentally it's strong. In the fourth quarter we expect kind of a similar result. It won't be as dramatic because of the sequential kind of change, but fundamentally we'll kind of see a similar result in the fourth quarter. On a nominal basis it will be about the same. On a longer term outlook, is it fundamentally strong? Yes. The answer is yes. The volumes are holding in each one of those businesses. We've taken actions to make sure that we're competitively strong. I know the sequential quarter move is bigger than you would have expected, but underneath that is a strong business.

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. Part of the analysis and the actions we've taken come from it.

All right, thank you both.

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. 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.

I'll start with the second part, Paul, and 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. We continue to build Clover in the areas that talked about vertical expansion. We're 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, Homebase and ADP, and we'll bring on others there. International expansion's 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 orchestration layers to apply AI in an effective way. That's really what the project with IBM is about. That's probably the greatest area that we're doing work there. The opportunity to expand TAM we continue to see. 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. The other small business platform we're very, very happy with within our merchant business is our ISV business, which continues to grow rapidly.

I think we're very, very well positioned there, and our customers need both a, and many times need both online and a physical presence. 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. 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. Jason, you know, obviously we highlighted what we expected in the fourth quarter, and we would see a tick up into kind of a low teens roughly range, is our expectation as we're in the early stages of planning for 2026.

So.

There is a little bit of kind of comparative dynamic that exists there, and then we would expect that to get better in 2027 and beyond, to kind of move up into the more higher teens kind of level as we get into the 2027 timeframe. There is sales noise as a 2026 comp, but it is a pickup, an acceleration from the fourth quarter growth rate. We do see once we get past that compare in 2026, there is an additional pickup going into 2027 and beyond.

As I prepared 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%+ GPB growth and mid to high teens closing, 20% long term revenue growth. 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. 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.

Sounds like Q4 is the trough. Got it, thank you.

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, it looks like margins will be down about 800 bps or $400 million of lower EBIT. Is that the peak investment quarter, that $400 million down? Maybe how does that progress through the first half of next year and invested in, like what are you doing in Q4, and then maybe how does that dissipate into the first half of next year?

Yeah, so you know Dave, I'll start and Mike may want to add, but obviously we, you can kind of impute by our guidance what the fourth quarter looks like. We do trough out on the margin in the first half, particularly in the first quarter where we've got the biggest kind of comp challenge there. If you're kind of saying the mid-30% is where we would expect to be roughly next year, right around that, call it 33%-45% range for next year. The trough would be the first quarter and then we would continue to 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.

We clearly have a plan to restore the margin back to the levels that we would expect here in 2025 and then build beyond that in a more consistent way on a go forward basis. Trough in the first quarter, it will continue to then build as the comps get more normalized as we progress through 2026, and from there on we would expect margin expansion to more normalize.

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 reversed a lot of that, taking the pricing changes. 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. I think the guidance we've given you sort of sets that baseline, and again it's a 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 CashFlow Central.

We've got great things, want to get those to market, continue to invest heavily. 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 VisionNext, which will be the platform for embedded finance alongside Finxact, 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 pending acquisition of StoneCastle Cash Management, 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.

we do with IBM also dictates, based on the returns and investments that we'll get there, 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 can 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. You go through, and 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 ways. 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.

Hi, good morning, Micah. I want to follow up on the Financial Solutions business, and I understand kind of the forward-looking explanations, reset, 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 underwrote—underwrote everything. I'm 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 segment? I'm also trying to figure out why there wasn't that much visibility into this level of revenue weakness intra-quarter. Thank you.

Appreciate the question and understand it. Obviously this wasn't the reset I wanted or expected. In July, 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%-12% guidance. 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 at the start of Q3, that prompted not just the annual strategic planning process, but this much more rigorous review into our financials. 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 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. 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 embedded record sales activities, and then stretch revenue numbers on top of it. There were a series of initiatives. We have 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.

As I got a more fulsome understanding of those, that obviously prompted some dissatisfaction with the way we do the process. We have made leadership changes around that and are giving you today what we believe is a solid tangible baseline to grow from. Within the original 10%-12% guidance, I've worked through it. It took me five or six months, but I'm confident today the numbers you have represent who we are structurally as a company. We have 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. It's a great business to run.

I'll just add to that as it relates to Financial Solutions specifically.

If you look at that business.

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. 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. That's more of the normal kind of growth if you look at what accounts on file grow at, what debit transactions kind of growing at the mid single digit, if you look at kind of what banking does.

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. 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.

From there we'll take, we've got these incredible assets. VisionNext, Finxact, 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. You got to go execute on that, you got to invest in it, you got to be deliberate about how you operate on it. That's the part we can't wait to get to. Today that sets the baseline and sets the starting point for that. We're excited about the long term structural growth rate we can drive.

Thank you.

Thanks, everyone, for joining.

Appreciate talking with you more this quarter.

Thank you.