Q3 2025 Fiserv Inc Earnings Call

Mike Lyons: Sam.

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 Chariell, Senior Vice President of Investor Relations at Fiserv.

Julie Chariell: 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.

Welcome to the fighter serve 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 charriol senior vice president of investor relations at Fiserv

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 in supplemental materials for the quarter are available on the investor relations section of Fiserv do.

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 Gap 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.

So, we're looking statements, May differ materially from actual results and our subject to a number of risks and uncertainties.

You should refer to our earnings release for a discussion of these risk factors.

Mike Lyons: 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.

And 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.

In representing 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.

Mike Lyons: 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 over 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.

There are 5 key messages. We want to deliver today.

First, the results of our analysis, highlighted fee serves outstanding SAS and payment platforms.

And our robust portfolio of value-added services.

Uniquely positioned at the intersection of financing Commerce.

2, 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.

Mike Lyons: 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.

Third, we have a tremendous opportunity to use emerging technology including generative and agenda 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 15er.

Forth.

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.

Mike Lyons: 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.

Today, I'm excited to announce new co-presidents and a new CFO. We will also be welcoming 3, new directors to our board, including new board and audit committee, chairs. All of whom bring tremendous experience and highly relevant skills to fiser.

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 profitability, serving 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.

Mike Lyons: 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.

Built in detail.

During the third quarter, my first full quarter of CEO, I worked with a management team in 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. Ultimately, we needed to examine 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.

1 of the key takeaways from our analysis is that fee serves growth and margin targets need to be reset.

Mike Lyons: 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 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.

This change is driven by a combination of 4 factors including slowing, cyclical, growth in Argentina.

The recalibration of optimistic growth assumptions in the original guidance.

The impact 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.

Fee serves medium-term organic revenue. Growth target of 9% to 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.

Mike Lyons: 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.

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 performance.

Specifically, Argentina contributed over 5 percentage points to our 12%. Organic growth rate in 2023 in roughly, 10% each 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 the 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 the Slowdown, our non-urgent businesses would grow significantly faster than their historical mid single digit range.

Mike Lyons: 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.

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 outside business volume, growth record, sales, activity and broad-based productivity improvements.

Mike Lyons: The third major factor impacting our results is that over the last few years, decisions to defer certain investments and cut certain costs improved 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. 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.

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 have improved margins in the short term, but they 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 in our on our way back to the highest standards.

And the fourth and final factor is that fee serves recent results of increasingly relied on short-term initiatives.

Mike Lyons: 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.

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 reflect current conditions in Argentina and 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 fi service, 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.

Mike Lyons: 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.

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 fiser, Forum, our annual client conference, where we made specific delivery commitments to our customers.

Mike Lyons: Our analysis also highlighted that we have some of the most innovative platforms in modern finance and payments, including Clover, Commerce Hub, Finxact, Star and Excel, Optis, VisionNext, and our 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 month. 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 healthcare 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 analysis also highlighted that we have some of the most innovative platforms in modern finance and payments, including Clover Commerce Hub, Finsac Star, Excel Optus Vision, Next, and our 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 our partnership with the 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.

Formal announcement, will come in the following months.

Earlier this month, we signed an exclusive long-term partnership with a new bank, which is one of the world's largest digital banks.

We signed our largest Healthcare deal ever in Q3.

A key growth vertical for us with an agreement to provide value added services to 1 of our issuing clients.

Mike Lyons: 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. 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.

Our money network prepaid card business wants 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 fiser 4 where we received fantastic feedback from our 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.

Mike Lyons: 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 U.S., 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.

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 $24, both measures impacted by the various factors mentioned earlier, which Paul will further elaborate on.

Total Clover. Q3 gpv, grew 8% on a reporter basis and 11% excluding the 2023 2024 Gateway conversion.

In the US Clover. Gpv, grew approximately 7 and a half percent. 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 after the impact of FX and higher than expected runoff from the Gateway conversion.

Mike Lyons: 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.

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.

% after excluding the Gateway conversion.

Paul Todd: Q4.

For full year 2025, we expect Clover Revenue to be 3.3 billion versus the original guidance of 3.5 billion.

Mike Lyons: 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.

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 our no longer consistent with our business strategy.

Adjusting for these Q4 factors, revenue growth would be in the high teens.

The Clover story remains exciting as we pursue structural growth. Through 6 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 merchants and partner experience, augmented by leveraging AI.

Mike Lyons: Expanding TAM by implementing Clover Invoicing and Clover Capital into embedded finance use cases, and ultimately integrating Clover into Commerce Hub. 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. 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.

Expanding TAM by implementing Clover, invoicing and Clover Capital into embedded finance use cases, and ultimately integrating Clover into the Commerce Hub.

And finally, thoughtful, bakbuk 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 between $8.50 and $8.60.

Representing a modest decline year on year.

We will provide formal 2026 guidance with our Q4 results.

Mike Lyons: 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. 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.

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 15 serve 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 forces 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 1, Phi, serve action plan, which centers on investments, in 5 strategies, including operating with a client first, mindset to win new Enterprise clients, and grow average revenue per client or rpic.

Building the preeminent small business, operating platform through clover.

Creating differentiated Innovative platforms and financing Commerce, including embedded, finance and stablecoin.

Delivering operational excellence enabled by AI.

And finally employing disciplined Capital allocation for the long term.

Mike Lyons: 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.

First on arpic, we are fortunate to serve a diverse and highly attractive client base, including fees, merchants smbs, and increasingly digital Commerce platforms.

our ability to penetrate these clients, and grow our pick 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.

Mike Lyons: 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 Finxact, we're building out our key merchant orchestration layers and payment gateways, including Clover for SMBs, Cardpoint for ISVs, and Commerce Hub for enterprise clients and platforms. We're accelerating our investment in issuing with the Optis modernization and the launch of our modern card core, VisionNext. We're growing our stablecoin capabilities with the launch of FIUSD and the recent agreement to acquire a digital currency custody license through StoneCastle. 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.

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 finsac.

we're building out our key Merchant or orchestration layers and payment gateways including Clover for smbs, card point for isvs and commerce hub for Enterprise clients and platforms

The Optus modernization and the launch of our modern card core Vision. Next,

For growing, our stable coin capabilities with the launch of Phi USD and the recent agreement to to acquire a digital currency. Custody license through Stone Castle.

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.

Mike Lyons: 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.

We're executing this alongside our long-term partner, IBM.

Leveraging the same playbook in the same team that helped them successfully transformed their own business, and deliver significant value for their shareholders, through AI.

We launched the program in early September with a focus on 5 major processes, including sales client onboarding Clover, client service, HR and finance.

We'll expand the list of processes as we go, and we expect the program to last approximately 2 years.

The goal is simple: become a higher quality, more productive business.

By embedding AI in everything we do, including providing a better experience for 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.

Mike Lyons: Rounding out our One Fiserv action plan is a 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 1, with Takis Georgiakopoulos serving as the Head of Merchant Solutions and Technology and Divya Suryadevara joining the company as Head of Financial Solutions, Sales and Operations.

Rounding out our 15 Serve 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 McKenzie 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 1.

With Takis Georgia serving as the head of Merchant Solutions and Technology, and Divya Syria Deva joining the company as head of Financial Solutions, Sales and Operations.

Mike Lyons: Many of you have gotten to know Takis over the last few quarters. He joined Fiserv late last year after a successful career at JPMorgan, 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 1.

Many of you have gotten to know talkus over the last few quarters.

He joined fiser of late last year after a successful career at JP Morgan where he was most recently, Global head of payments,

Tacus recently took over the merchant business and has 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 Optimum Financial Services and Optimum 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.

Mike Lyons: 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 31, 2023. Many of you may know Paul from his time as the CFO of Global Payments. 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 Giarello, our Vice Chairman and former COO.

My expectation is with 2, High Caliber Executives in collaboration with our Central functions.

We will see strong execution and additional synergies between our merchants 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 adviser, 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 Entisys.

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.

Mike Lyons: Bob Hau, 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 Fiserv. 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.

Among other things, Paul will lead project Elevate alongside guide gelo, our vice chairman and former coo, Bob how our current CFO will move into a senior adviser role to support a smooth transition. And we'd like to thank Bob for his nearly 10 years with fiser.

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.

Mike Lyons: 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's 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.

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 Shedan, 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.

Mike Lyons: Finally, Celine Dufetel 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 1. 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.

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 Selene dufetel will join the Fiserv board and be a member of the audit committee.

The lean currently serves as CFO of Bridgewater Associates, 1 of the world's leading alternative asset managers.

She brings the unique investor perspective from her current role as well as financial and operational experience from her prior roles as the CFO of troe price and the CFO and COO of checkout.com.

We're excited for all 3, 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.

Mike Lyons: By leveraging our outstanding SaaS, 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 are exceptionally. Well positioned and know exactly what we need to do to reach our potential by leveraging. Our outstanding SAS platforms gateways, orchestration layers, and value added Services across our unique combination of merchants 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 Phi serves historical consistent, mid single digit Revenue, growth with a clear potential for acceleration over time.

Mike Lyons: 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.

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 have established 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.

Paul Todd: 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 over to you Paul.

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 5 serve for a long time. But after spending the last 2, 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.

Paul Todd: 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, down 11%. There are three unusual dynamics impacting the company's adjusted EPS of $2.04 for the quarter.

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 dollars and adjusted operating income decreased 7% to 1.8 billion dollars resulting in adjusted. Operating margin of 37% a decrease of 320 basis points,

Group 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 $24 compared to $2.30 in the prior year down 11%

There are 3, unusual Dynamics impacting, the company's adjusted EPS of $2.44, for the quarter.

Paul Todd: 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.

First.

The company experienced a 53 million, foreign currency expense, or a 10-cent headwind to adjusted eps.

Reevaluation 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's interest rates jumped meaningfully during the quarter, which drove interest expense up by about $31 million compared to 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 Merchants 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.

Paul Todd: 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 net of these 3 factors is a slight benefit to adjusted earnings per share in the quarter.

Year to date, adjusted earnings per share increased 6% to $6 compared to $6.29.

Flow for the quarter was 1.3 billion and 2.9 billion dollars for the first 9 months of the year.

For the full year, capital expenditures are now expected to be approximately $1.8 billion, or roughly 9% of revenue.

Given the revised outlook for earnings and 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 15er initiative, Mike mentioned earlier.

Now, turning to performance by segments, starting on slide 6.

Paul Todd: 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.

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 and the North America ISB 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. This resulted in a reported gross payment volume (GPV) growth of 8%, which was below expectations.

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.

Paul Todd: 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 PPAC 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.

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, the reported and X Gateway basis, leaving us in line with our expectations, excluding the Gateway conversion

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 Peak 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.

Paul Todd: 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%.

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 detractor to margins in Q3 were higher sales and marketing and distribution expenses. Along with higher data processing costs and appreciation 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 dollars with adjusted operating margin down, 90 basis, points, to 35.3%,

Paul Todd: 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.

Turning to slide 8 for the financial solution, segment or organic Revenue decline, 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 segments 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, we 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.

Paul Todd: 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 and 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%.

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 solution 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 and Professional Services and Technology spend

Year to date. Adjusted operating income. For the segment was up 4% to 3.4 billion dollars 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.

Paul Todd: Total debt outstanding was $30.2 billion on September 30, and Fiserv's debt to adjusted EBITDA ratio increased slightly to 3 times. Fiserv continues to target long term leverage at 2.5 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 adjusted effective tax rate in. Both the quarter and first 9 months was 18.4% and Fiserv continues to expect the full year rate to be approximately 19%.

Total debt outstanding. It was 30.2 billion on September 30th and Fiserv debt to adjusted. Ebit ratio increased slightly to 3 times by serve continues to Target long-term leverage at 2 and a half to 3 times.

During the quarter 5. Serve repurchased. 7 million shares for approximately. 1 billion dollars and had 49 million shares. Remaining authorized for repurchase at the end of the quarter.

In addition aligned with the priorities of the 15er action plan that might laid out by serve announced 3, acquire the quarter focused on client service, value added services and our stable coin growth opportunity.

Paul Todd: The agreement to acquire StoneCastle Cash Management, which is expected to close by Q1 2026, provides us with a digital currency custody license and unique investment and liquidity services for our merchants and financial institutions. Finally, we acquired CardFree, an all-in-one platform empowering merchants with customized order, pay, and loyalty solutions. With that, I'll turn the call back to the operator to start the Q&A session.

The acquisition of Smith Consulting Group, which closed in Q3, brings deep subject matter expertise in-house to better serve our clients.

Provides us with a digital currency, custody, license, and unique investment, and liquidity services, for our merchants and financial institutions.

And finally, we acquired card free, an all-in-1 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&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 Tien-Tsin Huang from JPMorgan. Please go ahead.

Thank you. We would now like to open the phone lines for questions.

As a reminder for today's call, please limit yourself to 1 question to ensure ample time to answer as many questions as possible. If you would like to ask a question, you may press star 1 on your phone. If you would like to withdraw your question at any time, please press star 2. Our first question comes from Tingen Wong from JP Morgan. Please go ahead.

[Analyst 1]: 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.

Hey, thanks a lot. Lots to uh,

Lots to ask here. So thanks for the opportunity, just maybe like I'll ask it this way. How long was Spicer?

Over earning with diverse investments and is focused 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? Um,

4 5 start to reverse this and and get back to what I call, its Hallmark of double digit EPS growth, you did call that out. Um, double digit, EPS growth, and, of course, I'm getting the question, too. You know, given your analysis and over the last few months is double digit, EPS growth the right Target and and why are you confident that that's the case.

Thanks. Yeah, sure. Thank you. And uh

[Analyst 1]: I don't know how much history I can go back and give you, but in the six months I've been here, obviously we 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 bringing 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 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.

[Analyst 1]: We're talking about clarifying our growth numbers for how good Argentina has been. 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. 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.

You know, I start, uh, I don't know if how much history I can go back and give you but uh, you know, in the 6 months I've been here, obviously we've made some recalibrations uh last quarter which were more focused on some of the big projects being relatively new in the sea. Some of the stuff we saw, uh, coming out of Q2 prompted, uh, the the analysis that we did, which was a much broader and more rigorous analysis included, a broader group of people here and external, uh, 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 a unbelievable engine. And, and we got to go do it. As I said, there are 4 things that we found obviously, uh, noise from Argentina, which by the way, is an outstanding business. Uh, we're talking about, you know, clarifying our growth numbers for how good Argentine has been and, but it's important to clarify that to understand the rest of the fee, sir. Uh, we talked about,

The short-term uh initiatives are just sort of a short-term Focus.

Versus, uh, doing uh, what our clients want helping them achieve, uh, uh, objectives and aspirations some deferred investment, uh, which we think is totally addressable. Uh, as I said in the earlier part, uh, and then just making sure that we're accurately reflecting, uh, what the businesses is capable of when, when we give guidance, uh, to you all. So,

I think, you know, we tried to give you a couple different approaches to understand this. Uh and and and we'll we'll we'll keep going through this with you if it's helpful. But uh the first is, if you take Argentina out which I, which we did in the slides,

[Analyst 1]: 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 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 could do a better job and we're attacking those already with investment. We went in front of 4,500 clients, advisor, made specific commitments around those things and we mostly found those to be self-inflicted type stuff and 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.

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 uh, puts and takes in each of those numbers because of uh 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.

At maybe at the low end of uh, that mid single digit range. There's some stuff we identified in the businesses

Where we think we could do a better job and, uh, we're attacking those already. With investment, we went in front of 4500 clients, that advisor form made specific commitments around those things. And we mostly found those to be self-inflicted, uh, type stuff and we're all over them. We know know what to do with it. But um, as I said you know, there were some areas and

[Analyst 1]: We made changes at the leadership level, 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.

[Analyst 1]: 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 we'll buy back. No change in our leverage guidance and you put that together, as you know, you follow the company for a long time, 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 with a long term approach, and produces results for our shareholders. I think that's how I'd address it at the highest level. That covers it. Thank you, Mike.

There 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, uh, very, very, uh, 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, uh, this quarter, We'll add those to the organic growth of the business and the rest will buy back. No, change in our leverage, uh, guidance. And you put that together, as you know, if all the company for a long time, engine that, uh, the recipe, there drives double digits, uh, EPS growth, and, um, that's what we're focused on. Uh, a company that, uh, year in year out guides efficiently, runs the heck out of the business high class, uh, execution, takes care of our clients, run with the long term approach and produces uh results uh, for our shareholders. Um, so, uh, you know, I think that's how I address this, the highest level

that covers the world. Thank you, Mike.

Operator: Next we'll go to the line of Darrin Peller from Wolfe Research. Please go ahead.

Next, we'll go to the line of Darren Peller. From Wolfe research, please go ahead.

[Analyst 2]: Yeah, thanks guys, and Paul, congrats and welcome. I just want to understand a little bit more in detail what changed specifically in the Financial Solutions segment from the 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 more, but when we see that growth rate drop to negative 1% 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. Just one quick add-on to Tien-Tsin's question around the overall algorithm long term, the Merchant side. I know, Mike, you just mentioned a mid single digit growth rate.

Yeah, thanks guys. Um,

And uh, and Paul congrats and welcome, I guess, I just want to understand a little bit more in detail. What changed, uh, specifically in the financial solution segment from last couple of quarters of of the growth trajectory, given that segment was 1 that we, we always thought of as more stable. Um, and I know the banking side, he talked about, consolidating, your cores a bit more, but when we see that growth rate drop to

Negative 1 without the periodic.

[Analyst 2]: Do you, are you confident that 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.

From what was a mid single digit algorithm? It just brings questions of what's really going on under the surface uh and what you think that segment truly can be, um and then just 1 quick add-on to Ting's question around the overall algorithm long term. The merchant side. I know Mike you just mentioned a mid single digit growth rate. Um, you know, do you are you confident that your you know your your experts and and you guys have 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?

[Analyst 1]: 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. 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, it's not, we're not saying everything's perfect, we're saying we have work to do. Structurally today, take away cyclical growth and certainly obviously we showed you with cyclical factors, certainly Argentina highlighting a fine degree.

Thanks guys. Yeah. Uh, uh

[Analyst 1]: 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.

We'll go with the last part first, then work back, and then, let's all, uh, give you some specific numbers. Uh, we can we we've completed our review. Obviously, you learn more every day, but the rate of learning has, uh, plateaued, uh, sometime ago. And we're, we're the numbers in the Baseline. We're giving you today. We are highly confident, uh, reflect where the company is today. We're bringing in, uh, leadership team to complement an existing leadership leadership team, uh, where we feel? We can execute on it. So I, I I highly confident the numbers we're giving you today. Uh, we've taken a great look at the company we've gotten, uh, outside and outside perspective on that part of it. And it wasn't all, uh, you know, it's not, we're not saying everything's perfect. We're saying we, we have work to do if it's structurally today. We're, uh, takeaways to Google growth and certainly we showed you with cyclical factors certain to Argentina, highlighting and finding great. We certainly do grow faster than mid-section, but if you take out

Cyclical and focus on structural long-term sustainable growth. That's where that's where we are today. When you go in to the 2 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, uh and really has formed the basis. Uh uh, you know, when combined with Merchant for how we go to market in the fast, growing embedded Finance, uh uh world and we're incredibly excited about opportunities uh there is to take the issuing platforms.

[Analyst 1]: 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 are seeing some impact in there now, but that should be a low single digit growth business for a long time and 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.

The finsac platform, uh the Commerce Hub platform, the paper acquisition, with the orchestration layer, and we think we can offer something to digital Commerce and payment platforms, uh, that that really reflects how the world is evolving and payments. So you have that business in there and then uh, you go back to our poor 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 uh, where we've uh not executed at the highest level. And in there, I'd say the consumer, we have to consolidate our forest 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 with course corrected that um, we're seeing some impacts that 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 uh, with with our surrounds. Uh,

[Analyst 1]: 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 mod 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.

Implementation side and and the customer service side and that front. So if you think about banking, you've got the Core Business which, you know, uh, is going to grow. And I would say, our core Core Business is going to grow in the low single digits finsac. Uh, we couldn't be more pleased with the progress we're making on on finsac continues to win, new customers in the Mazda, a little bit separate separate. Uh, within the core world, the issuing business, very strong.

[Analyst 1]: 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, 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.

[Analyst 1]: Now we're reversing those but they are not what we've taken in and around Clover today and 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.

Uh, you know, in that low end of mid single digit range and you put those together and, uh, you know, we think that over time we'll go through the details of it, but you're you. That's a mid single digit growth business, maybe at the low end of it, uh, with the size of course. And you go on the merchant side, we've got a fabulous business, obviously. Uh, in terms of car present, we were the leaders, uh, around the world in that business and we're investing heavily in Commerce of to build, uh, uh, the the, you know, Omni Channel Global, uh, capabilities there and then Clover. We've got an incredible asset. And uh, we we've we talked about uh to your other question. We talked about some of the pricing changes that we implemented. Uh, we don't feel like they're appropriate for our business model. Now we're reversing those but they're not what we've taken in and around Clover today. Uh, and what we've the other adjustments that we've made in both the fourth quarter Guidance, the full year Guidance, the 2026 preliminary Outlook reflect all the changes we wanted to make to get us in a position to run.

[Analyst 3]: 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 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, and that's reflected in 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 project related in the output services area. 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.

Run a high quality sustainable business built for and driven by uh the needs and aspirations of our customers.

[Analyst 3]: In the fourth quarter, we expect kind of a similar result. It won't be as dramatic because of the sequential change, but fundamentally we'll see a similar result in the fourth quarter. On a nominal basis, it will be about the same, but 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, and I know the sequential quarter move is bigger than you would have expected, but underneath that is a strong business.

Yeah, Darren I would just add, you know, I've spent a good bit of time on this, uh, financial side. Obviously, given my background, this is an area. I know really well, and I would just say in the quarter, you know, we had a lot of things happening across kind of the 3 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 um and 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, you know, compare that was pretty hefty for this, uh, 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, the sequential kind of change. But fundamentally what kind of see a similar kind of result in the fourth.

Quarter on a nominal basis. It will be, you know, about the same. But, you know, on a longer-term outlook? Is it fundamentally strong? Yes, the answer is yes. The volumes are holding. Um, each one of those businesses, we've taken actions to make sure that we're competitively strong. And, you know, I know the sequential quarter moved kind of is.

[Analyst 1]: I 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 from it.

Is bigger than you would have expected. But underneath that is a strong business.

And I mentioned to set aside briefly mentioned uh earlier that there are some businesses in there that aren't as well physician. They're relatively small in terms of revenues that uh we're not going to be in any longer and there's others in the market who want to be in those businesses. So uh Again part of the analysis, uh, and the actions taken from it.

[Analyst 2]: All right, thank you both.

All right, thank you both.

Operator: Next, we'll go to the line of Jason Kupferberg from Wells Fargo. Please go ahead.

Next, we'll go to the line of Jason cup. Forberg from Wells Fargo. Please go ahead.

[Analyst 3]: Good morning, guys. Thanks for all the candor here. I did want to ask a little bit about Clover.

[Analyst 1]: I know you mentioned 10% revenue growth.

[Analyst 3]: There for the fourth quarter.

[Analyst 1]: 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.

[Analyst 3]: Just as part of that.

[Analyst 1]: If you can give us your latest.

[Analyst 3]: Assessment just of your competitive positioning across.

Uh, good morning, guys. Thanks for all the kandare here. Um, 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 to be prioritized, some of the short term Revenue initiatives and then just as part of that, if you can give us your latest assessment just of

[Analyst 1]: Merchant, both from a Clover and non-Clover perspective. Thank you. 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. 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, Homebase and ADP, and we'll bring on others there. International expansion is going well. Brazil is obviously the highlight of that.

Your competitive positioning across Merchant, both from Clover and non-local.

start with the second part Paul, and go to the numbers that I think, uh,

Uh, certainly and I, I just mentioned it and, uh, the the, the prior answer, but if you Clover is an unbelievable asset, we continue to feel great about our, uh, competitive positioning. There are great competitors in the, in the market. But, uh, you know, we continue to see significant opportunities to bring in all-in-1 business operating platform to small businesses, uh,

There's a desire for that, there's a need for that. And and so we continue to build, uh,

[Analyst 1]: 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.

[Analyst 1]: 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 highlighted 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.

Those focused on Clover and we're talking and his team are doing. The most amount of work, is really a full overhaul of the client experience. Uh, as they engage with us with operationally, we can be more excellent. Uh, and especially we see just a tremendous opportunity across Clover and and really across our platforms and gateways and orchestration layers to apply Ai and an effective way. And that's really what the, the project with IBM's about, but that's probably the greatest area that we're doing work there, the opportunity to expand T, we continue to see. And then, um, you, you know, as we talked about for a long time now, we'll introduce a uh, very thoughtful and uh, paced bakbuk conversion, uh, going into to next year on the Enterprise, uh, side. And I, I guess the other small business platform, we're very, very happy with within our merchant business. Is our ISD business which continues to grow rapidly. I think we're very, very well positioned there. And, uh,

Our customers, uh, you know, need both a at, in many times, the both the online and a physical presence to to the ability to introduce Clover into that world or or, or other of our assets. Uh, super excited about that business. So, the Enterprise side again, uh, awesome for business continue to build out a global Omni Channel, integration platform, with Commerce of and there's a lot of ongoing work on that front. So overall feel very good about the merchant business and in terms of where we can grow our clover. Obviously, the growth highlight in there along with, along with the is,

[Analyst 3]: 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. There is a little bit of kind of comparative dynamic that exists there. We would expect that to get better on the 2027 and beyond to kind of move up into the more higher teens kind of level as we get into the 2027 time frame. There's 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 for an additional pickup going in 2027 and beyond.

[Analyst 1]: 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 closing, 20% long term revenue growth. You 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. 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.

Business. Um I'll let Paul go through the numbers on Q4 and uh next year and then long, so some indication of longer term. Yeah, 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 teams, roughly range. Well, 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, you know, move up into the more higher teams kind of level, you know, as as we get into the 27 time frame. So you know the sales noise as a 2026 comp. Um, you know, but it is a pickup and 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.

And and it sounds very remarks to 10% in Q4 reflects the pricing reversals. That's High Teens. Without it fair amount of noise is Paul said, still going into 2026 as we write beside the Baseline. And going from there, we continued to see similar to what we've seen excluding the Gateway conversion, 10% plus GPB growth uh and mid to high teens, uh uh closing, 20%, long-term Revenue growth, and again that you can go back to the opening that reflects the normalization of Argentina.

A normalization of short-term initiatives uh and and the appropriate levels of uh investment into the business, especially around the operational. Excellent thing. But Clover continues to be just an awesome asset. It couldn't be more excited about what we could do with it for small businesses across the world.

Yep. All right. 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.

Mike Lyons: Yeah.

Next, we'll go to the line of Dave coning from beard. Please go ahead.

[Analyst 1]: Hey guys, thanks for all the detail.

Mike Lyons: I guess my question is on margins.

[Analyst 1]: 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 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?

Yeah. Hey guys, thanks for all the detail. Um, 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 basis points 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?

[Analyst 3]: Yeah, you know Dave, I'll start and Mike may want to add, but obviously, 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-30s is where we would expect to be roughly next year, right around that, call it 33% to 35% 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.

Yeah. So, you know, Dave, I'll, I'll start, and, and might want to may want to add, but, you know, obviously we uh, if 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, um, in the first half, particularly in the first quarter, um, where we've got, you know, um, the biggest kind of comp comp challenge, uh, there. And so, you know, we, we kind of, if you're kind of saying the mid-30s is, is, uh, where we would expect to be, uh, roughly next year, right around that kind of

Um, you know, call It 33 to 35 kind of percent range for next year. You know, the, the trough would be the first quarter. Um, 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, um, you know, kind of back to

[Analyst 3]: 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 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.

[Analyst 1]: Yes, you're getting a double whack in Q4 because Q4 of last year was sort of peak in terms of short-term initiatives. We've reversed a lot of that, taking the pricing changes. I think 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 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.

Margin back to, you know, the levels that we would expect here in 2025 and then build beyond that and kind of a, a more kind of consistent way on a go forward basis. So drop kind of in first quarter, it will kind of continue to then build as the as the, uh, 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. Yeah, you're getting a double whack in Q4 because Q4 of last year, was sort of peak, uh, in terms of short-term initiatives. Uh, 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, uh, in the historical numbers. And, um, you know, I think the guidance of giving you set Source sets that Baseline and they again, it's based on a lot more confident in, in terms of, um, where we're going to invest in the

[Analyst 1]: 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 VisionNext, which will be the platform for embedded finance alongside Synzac. Also, the platform will go to market 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. 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.

Um, really 2 things, the core investment in the company, uh, which we talked about, uh, some which is, uh, streamlining The Corrs, uh, modernizing and getting to Market, uh, our surrounds again, which are getting unbelievable client. Uh, interest in receptivity. We have hundreds in the pipeline for for uh, XD and uh, approaching that on cash flow Central. Uh, so we've got great things. We want to get those uh, to Market continue to invest heavily in Commerce sub.

We talked about, uh, Clover and building the platform platform there in in enhancing operational excellence. Uh, we're super excited on the issuing side, both in the modernization of office our current platform and the introduction introduction of vision next which will be the platform for embedded Finance, alongside finsac. And also the platform. We'll go to market with uh internationally, totally modernized.

[Analyst 1]: 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, the nature of our spend next year. 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 similar, 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 way. Those are the major areas.

Cloud base API driven issuing, uh, core, uh, excited about what we're doing on the stable Point front, including the acquisition, uh, pending, uh, uh, uh, Penny acquisition of Stone Castle. Uh, and then you, you know, uh, the modernization and and uh, the enhancement Excellence of our core technology. Uh, has been a huge Focus this year and a bulk of uh, where the incremental Capital spend this year has gone.

You take the project we're going to do with IBM. That'll also dictate based on the returns and Investments, uh, that we'll get there. Uh, you know that also dictates the nature of our spend next year. Again, we're early in that project, uh, but are very, very optimistic about what we can do. Uh, not only from what we've learned in the first 5 or 6 weeks. But uh, working with the IBM team, who who did, who did the same exercise to themselves in a very successful way, which, uh, you go through on almost every 1 of our business applications are primed for, for the uh, 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 it,

[Analyst 1]: 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 football we've seen. Most of the stuff we've done this year we covered at Fiserv Forum to address our clients' needs. Thanks, guys.

Ai and and modernization to structurally change the cost base. And, and how we do business internally in a, uh, both employee and client enhancing way. So those are the, those are the major areas. Uh, most of what we've done this year. It's not like, we've been just doing the analysis. We've been in going after some of the football, we've seen most of the stuff we've done this year, we covered at fiser Forum, uh, to address our clients needs,

Thanks guys.

Operator: For our final question, we'll go to the line of Harshita Rawat from Bernstein. Please go ahead.

And for our final question, we'll go to the line of Harsha. Raat from Bernstein. Please go ahead.

Julie Chariell: Hi, good morning Mike. I want to follow up on the Financial Solutions business and I understand kind of the forward-looking expectations reset and kind of the deprioritization you talked about. 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. 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.

Hi, good morning. Um Mike I want to follow up on the Financial Solutions business and I understand kind of the forward-looking explanations we've had and kind of the deep relativization uh you talked about. But I want to ask about the toward quarter. Um, you know, you trim the folio guide 3 months ago when you were 1 month into the quarter at the time. Um I think you know we heard that uh the team kind of underloaded re-enter the load everything so trying to kind of figure out and I know you talked about many of the drivers here like how could things change? So dramatically

In 2 months any segment, which is by definition somewhat of a coding, uh, segment. So also trying to figure out the kind of the, why wasn't there like that much visibility into this level of, uh, Revenue weakness intra quarter, thank you.

[Analyst 1]: 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% to 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 in 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.

[Analyst 1]: 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 record, embedded record sales activities, and then stretch revenue numbers on top of it. There were a series of initiatives. We've gone through it, but there were a series of initiatives that were, you know, 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.

Their performance since then has largely remained on track as they as more financial surprises emerged. Uh, you know, over the, in the start of Q3 that prompted not just a annual strategic planning process. But this much more rigorous review, uh, in into our financials. And and that was also driven by some of the stuff we're hearing from our our clients that analysis, not only, uh, uncovered, you know, some additional assumptions uh, that needed to be re Revisited either stuff. That was either, you know, out of our control is macro stuff industry stuff, uh, that we had assumed in the guy in the company's, original guidance to go 1 way in a pretty deliberate manner. Uh then there are a whole bunch of embedded assumptions away from the major projects uh that even with strong execution would have been hard to do all of them simultaneously. Uh and and and uh and successfully broad-based productivity initiatives significant.

[Analyst 1]: As I got a more fulsome understanding of those, that obviously prompted some dissatisfaction with the way we do the process. We've made leadership changes around that and giving you today what we believe is a solid tangible baseline to grow from. What was in the original 10% to 12% guidance? I worked through it. It took me five or six months. I'm confident today the numbers you have referred to represent who we are structurally as a company. 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. It's a great business to run.

Records, uh, embedded record sales activities, and then stretched revenue numbers on top of it. Uh, and then there were, uh, a series of initiatives. Again, we've gone through it, but there are a series of initiatives that were, uh, you know, in client customers—all businesses always have these—that were more short-term driven in nature, and that were a big part of uh, the back half of the year to get to the guidance. And as I got a more wholesome understanding of those, uh, that obviously prompted some.

[Analyst 3]: I'll just add to that, as it relates to just financial specifically. If you look at that business and you look at the first half, at the 7% and 8% growth rate, those are a higher level of growth rate for the collection of businesses here than you typically see given the underlying fundamentals around some of the TAM growth rates for those business areas. I think when you look at it on a full year basis, when you look at our expectations on a full year basis next year for this business, it's in that more lower single digit range, at that 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 growing at the mid single digit, if you look at what banking does.

I'm dissatisfaction with the way we do the process and we've made leadership changes around that. And giving you today, what we believe is a, uh, solid tangible Baseline, uh, to to grow from. So, I you, you know, um, what was in the original 10 to 12% guidance, you know? Uh, I've worked through it. It took me 5 or 6 months, uh, 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, but together a team, uh, that's going to execute the hell out of the business and it's a great business to run.

[Analyst 3]: That's 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 sequential move or first half versus back half move. We'll have the similar dynamic in the first half of next year as we normalize everything. 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.

And I'll just add to that, you know, as it relates to just Financial um specifically, you know, if you if you look at that business and you look at kind of the first half, you know, at the at the 7 and kind of 80% growth rates, even those are a higher level of growth rate for the collection of businesses here than you'd kind of typically see, you know, 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, uh, when you look at our expectations off for your basis, next year, for this business, you know, it's kind of in that more lower single digit, uh, range of 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 at 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.

[Analyst 1]: 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 it and that's the long term structural growth rate we can drive.

Normalized way of looking at the business. We just have some variability because of all the things might just described. That's, you know, presenting this kind of sequential move or first half first, back half move, we'll have the similar dynamic in the first half of next year, as we kind of, uh, 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. And then from there, we'll take what, we've got these incredible assets Vision, next spins back, uh or uh Ledger system. Uh uh 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 on it and that's the part we can't wait to get to. And with today we that that's that's the Baseline and and since it's a starting point for that. So we're excited about the the um, and and that's the long term structural growth rate we can.

Address.

Julie Chariell: Thank you.

Thank you.

Operator: That was our final question for this call.

And that was our final question for this call.

[Analyst 1]: Thanks everyone for joining. Appreciate talking with you more this quarter.

Thanks everyone for joining, I appreciate, uh, talking with you more, this quarter.

Operator: 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.

Thank you all for participating in the FISERV, Inc. third quarter 2025 earnings conference call. That concludes today's call. Please disconnect at this time and have a great rest of your day.