- Key insight: Fiserv earnings fell short of analyst expectations, and the company lowered its outlook.
- What's at stake: The bank technology company faces lots of competition, and analysts said Fiserv's troubles could hurt it competitively.
- Forward look: Fiserv plans to invest more in AI and has reorganized its business.
Fiserv's disappointing third-quarter earnings Wednesday came as a surprise to the analysts who cover the bank technology seller. Given Fiserv's management turnover, observers anticipated a transitional period, but the extent of the company's financial missteps was a shock to some.
"While a reset was expected, the magnitude of the miss and outlook is significantly worse than expected," analysts at KBW said in a research note.
For the quarter ending Sept. 30, Fiserv's earnings came in at $2.04 per share, below the analysts estimate of $2.64, according to the London Stock Exchange. Revenue was up 1% from the prior year to $4.92 billion, below the analyst estimate of $5.36 billion. Profit was $792 million, up from $564 million. For the full year, Fiserv expects EPS of $8.50 to $8.60, down from its previous forecast of $10.15 to $10.30. Revenue is expected to grow 3.5% to 4%, down from its prior projection of 10%.
"The magnitude of the 3Q miss and guidance cut for FY25 is difficult to comprehend," analysts at Jefferies said in a research note. Fiserv did not return a request for comment by deadline.
"Our current performance is not where we want it to be nor where our stakeholders expect it to be," wrote CEO Mike Lyons in a release. During the company's earnings call, Lyons said "the actions we are taking are driven by a vigorous analysis of the company."
New leadership
Lyons became CEO of Fiserv in February, taking over for
On Wednesday, Fiserv named Paul Todd chief financial officer, replacing Bob Hau, who was Fiserv's CFO since 2016. The bank technology company additionally named Chief Operating Officer Takis Georgakopoulos to be co-president with Dhivya Suryadevara, the former CEO of Optum Financial Services and Optum Insight at UnitedHealth Group.
Fiserv also named Gordon Nixon, Céline Dufétel and Gary Shedlin to its board. Nixon will replace Doyle Simons as independent chairman of the board, and Shedlin will become chair of Fiserv's audit committee.
"Clearly some competitors are taking core business away from Fiserv, suggesting that newer technology is needed," Aaron McPherson, principal at AFM Consulting, told American Banker. "The problem is that existing customers don't want to move, and forcing them to move opens up a competitive opportunity for newer competitors."
In terms of strategy, Fiserv on Wednesday announced One Fiserv, an action plan to restructure the company; and said it would transfer its stock listing to Nasdaq from the New York Stock Exchange effective Nov. 11.
Aaron Press, a research director at IDC, noted that growth in merchant payment processing has slowed, but Fiserv's bank technology business is getting hit much harder.
"Fiserv is working hard to modernize those platforms, but it's taking time," Press told American Banker. "That business is also getting more competitive, with new entrants making inroads, and I think it's the bigger risk to the business in the long term."
Fiserv has more than 10,000 financial-institution clients, processes more than 90 billion transactions each year and has more than 6 million merchant locations. Its recent moves include planning a stablecoin and a
"We have established a new revenue and earnings baseline, consisting of high-quality, structural, largely recurring revenues," Lyons said during the earnings call. Fiserv will also focus on developing
"We have a tremendous opportunity to use emerging technology, including generative and agentic AI to enhance our mission," Lyons said.
Not enough for the analysts
"We encourage investors to refocus long-term fintech investments on better-positioned names with greater financial visibility and management credibility," analysts at William Blair said in a research note, adding it could no longer recommend Fiserv's stock. "We find Fiserv's third-quarter results difficult to explain and harder to defend, particularly considering the recent CEO transition and today's announced CFO departure."
The language in Fiserv's analysts notes expressed an unusual amount of shock for Wall Street reports, which usually focus on small details within the company's financial reports.
"[Fiserv] has historically been an above-average organic revenue growth business with highly visible financials," William Blair analysts said, adding they were "perplexed" by a 4.5-point sequential merchant organic revenue growth deceleration and a roughly 10-point financial solutions segment revenue deceleration. "This performance suggests to us that management took its eye off the ball at some point earlier this year."
Jefferies said that among payment technology companies, it prefers Block, American Express, Shift4 and Corpay.
"Our view is that investor confidence will be shaken to the extent that Fiserv becomes a multi-quarter turnaround with significantly diminished visibility," William Blair analysts said, noting that while Fiserv's Clover point of sale system posted 26% third quarter revenue growth, the sharp revenue growth deceleration across other parts of Fiserv's business calls Clover's competitive positioning into question.
"Fiserv has put a lot of investment behind merchant technology, especially Clover, but it's too soon to say if it will pay off," Press said.
