Fiserv’s shares plummeted greater than 40% on Wednesday and were set for a record single-day drop after the payments software company reported results below estimates and cut its growth forecast for the second consecutive quarter, with analysts calling the earnings “shockingly bad.”
The disappointing earnings highlight growing pressure on the fintech’s core payments and merchant business, which has struggled to keep up momentum amid fierce competition and a slowdown in consumer spending.
Fiserv also announced an overhaul of its senior leadership, appointing a brand new finance chief and two co-presidents.
Management changes of this scale often point to internal challenges or a shift in strategy, deepening investor concerns in regards to the company’s near-term outlook.
“We are able to not recommend Fiserv given what we consider a shocking third-quarter revenue and EPS miss and abrupt management transition,” analysts at William Blair said, because the brokerage downgraded the stock to “market perform” from “outperform.”
“This performance suggests to us that management took its eye off the ball sooner or later earlier this yr.”
The broader economy faces multiple headwinds, with leading firms reporting slower consumer spending, particularly amongst lower-income households, as inflation and high rates of interest weigh on budgets.
“Investor sentiment was already very weak,” analysts at BTIG said, adding that the “abysmal” third-quarter results and outlook for the yr would only challenge investor appetite further.
Fiserv is primarily a business-to-business payments firm and provides critical back-end infrastructure for banks and financial institutions, underpinning key payment and merchant services that drive each day operations.
Fintech stocks also took a success after Fiserv’s results, with FIS down 8.8%, Global Payments falling 6.7%, while Block and Jack Henry were down 3% and 4%, respectively.
“The standard fintech group is selling off, but we predict Fiserv’s challenges are company specific,” William Blair said.
Questions mount
“We’d like to alter the best way we forecast and communicate about our business and interact with analysts and investors,” Fiserv CEO Mike Lyons said in a call with analysts.
Lyons said the forecast reset was taken after a “rigorous” evaluation through the third quarter because the firm shifts its strategic focus away from short-term revenue initiatives, while experiencing a slowdown in growth in its Argentina business.
“This reset is about aligning structural versus cyclical growth and sustainable revenues and expenses versus short-term results,” Lyons said.
Fiserv now expects annual revenue growth of three.5% to 4%, compared with its prior forecast of 10%. Annual adjusted profit per share is now expected between $8.50 and $8.60, down from its earlier forecast of $10.15 to $10.30.
“Our current performance is just not where we wish it to be nor where our stakeholders expect it to be,” Lyons said in a press release.
Slowing growth in Clover, Fiserv’s point-of-sale and business management platform, has been a key concern for investors this yr.
Fiserv reported third-quarter adjusted EPS of $2.04 per share, far below Wall Street estimates of $2.64 per share, in line with data compiled by LSEG.
The outcomes were impacted by significant deterioration of the Argentine peso and a jump in rates of interest in Argentina through the quarter, Fiserv said.
Adjusted revenue of $4.92 billion also got here in well below expectations of $5.36 billion, as its merchant solutions and financial solutions businesses lagged.
“The pressure the corporate is already seeing within the financial segment materialized much sooner than we anticipated, and the magnitude of headwinds in each segments is concerning,” brokerage JPMorgan said.
Payments firm PayPal flagged smaller basket sizes and cautious shoppers earlier this week.
Management overhaul
As a part of the leadership overhaul, Fiserv named Paul Todd its chief financial officer. He previously was the finance boss of Global Payments and succeeds Robert Hau, who is about to change into a senior adviser through the primary quarter of 2026.
The leadership reshuffle comes as Lyons, who took the helm at Fiserv only months ago, seeks to steer the corporate through mounting investor concerns and a difficult business environment.
Amid intense investor scrutiny around Clover, Lyons said earlier this yr he had walked right into a “little bit of a firestorm.”
Including session moves, the stock has lost nearly 64% of its value to date this yr. If current losses hold, they are going to erase roughly $29 billion from the corporate’s market cap, in line with Reuters’ calculation.
“Our view is that investor confidence can be shaken to the extent that Fiserv becomes a multi-quarter turnaround with significantly diminished visibility,” William Blair said.
Fiserv’s shares plummeted greater than 40% on Wednesday and were set for a record single-day drop after the payments software company reported results below estimates and cut its growth forecast for the second consecutive quarter, with analysts calling the earnings “shockingly bad.”
The disappointing earnings highlight growing pressure on the fintech’s core payments and merchant business, which has struggled to keep up momentum amid fierce competition and a slowdown in consumer spending.
Fiserv also announced an overhaul of its senior leadership, appointing a brand new finance chief and two co-presidents.
Management changes of this scale often point to internal challenges or a shift in strategy, deepening investor concerns in regards to the company’s near-term outlook.
“We are able to not recommend Fiserv given what we consider a shocking third-quarter revenue and EPS miss and abrupt management transition,” analysts at William Blair said, because the brokerage downgraded the stock to “market perform” from “outperform.”
“This performance suggests to us that management took its eye off the ball sooner or later earlier this yr.”
The broader economy faces multiple headwinds, with leading firms reporting slower consumer spending, particularly amongst lower-income households, as inflation and high rates of interest weigh on budgets.
“Investor sentiment was already very weak,” analysts at BTIG said, adding that the “abysmal” third-quarter results and outlook for the yr would only challenge investor appetite further.
Fiserv is primarily a business-to-business payments firm and provides critical back-end infrastructure for banks and financial institutions, underpinning key payment and merchant services that drive each day operations.
Fintech stocks also took a success after Fiserv’s results, with FIS down 8.8%, Global Payments falling 6.7%, while Block and Jack Henry were down 3% and 4%, respectively.
“The standard fintech group is selling off, but we predict Fiserv’s challenges are company specific,” William Blair said.
Questions mount
“We’d like to alter the best way we forecast and communicate about our business and interact with analysts and investors,” Fiserv CEO Mike Lyons said in a call with analysts.
Lyons said the forecast reset was taken after a “rigorous” evaluation through the third quarter because the firm shifts its strategic focus away from short-term revenue initiatives, while experiencing a slowdown in growth in its Argentina business.
“This reset is about aligning structural versus cyclical growth and sustainable revenues and expenses versus short-term results,” Lyons said.
Fiserv now expects annual revenue growth of three.5% to 4%, compared with its prior forecast of 10%. Annual adjusted profit per share is now expected between $8.50 and $8.60, down from its earlier forecast of $10.15 to $10.30.
“Our current performance is just not where we wish it to be nor where our stakeholders expect it to be,” Lyons said in a press release.
Slowing growth in Clover, Fiserv’s point-of-sale and business management platform, has been a key concern for investors this yr.
Fiserv reported third-quarter adjusted EPS of $2.04 per share, far below Wall Street estimates of $2.64 per share, in line with data compiled by LSEG.
The outcomes were impacted by significant deterioration of the Argentine peso and a jump in rates of interest in Argentina through the quarter, Fiserv said.
Adjusted revenue of $4.92 billion also got here in well below expectations of $5.36 billion, as its merchant solutions and financial solutions businesses lagged.
“The pressure the corporate is already seeing within the financial segment materialized much sooner than we anticipated, and the magnitude of headwinds in each segments is concerning,” brokerage JPMorgan said.
Payments firm PayPal flagged smaller basket sizes and cautious shoppers earlier this week.
Management overhaul
As a part of the leadership overhaul, Fiserv named Paul Todd its chief financial officer. He previously was the finance boss of Global Payments and succeeds Robert Hau, who is about to change into a senior adviser through the primary quarter of 2026.
The leadership reshuffle comes as Lyons, who took the helm at Fiserv only months ago, seeks to steer the corporate through mounting investor concerns and a difficult business environment.
Amid intense investor scrutiny around Clover, Lyons said earlier this yr he had walked right into a “little bit of a firestorm.”
Including session moves, the stock has lost nearly 64% of its value to date this yr. If current losses hold, they are going to erase roughly $29 billion from the corporate’s market cap, in line with Reuters’ calculation.
“Our view is that investor confidence can be shaken to the extent that Fiserv becomes a multi-quarter turnaround with significantly diminished visibility,” William Blair said.
