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    FISV
    Earnings call· Jun 2026(Q2 FY26)

    FISERV Q2 FY26 earnings call FISV

    Aug 6, 2026 Source

    Executive summary

    Fiserv Q2 FY26 — Guidance Cut Amid Macro Headwinds and Increased Tech Investment

    Fiserv reported Q2 FY26 results in line with expectations but revised full-year guidance downward due to macro headwinds in Argentina, slower client implementation timelines, and a strategic decision to increase technology investments. The company is undergoing a comprehensive portfolio review under new CEO Takis Georgakopoulos, aiming to streamline operations and focus on best-in-class solutions. Management remains confident in long-term growth and margin expansion from 2027 onwards, underpinned by strong free cash flow generation.

    Highlights

    5

    • Free cash flow was strong at $1.1 billion, with a free cash flow conversion of 112% for the quarter.

    • Clover GPV grew 9% on a reported basis and 11% excluding gateway conversion.

    • Clover revenue grew 13% excluding anticipation and nonrecurring revenue.

    • Global accounts on file grew 4% in issuing.

    • Overall accounts and positions, including Finxact, grew 6% in Financial Solutions.

    Concerns

    5

    • Full-year organic revenue guidance updated to a range of -1% to flat, down from previous expectations.

    • Full-year adjusted operating margin guidance updated to 31% to 31.5%, reflecting a 200-250 bps reduction.

    • Q2 adjusted and organic revenue decreased 4% and 5% respectively, compared to the prior year.

    • Merchant Solutions adjusted operating income was down 14% to $781 million.

    • Financial Solutions adjusted operating income declined 27% to $912 million.

    Guidance & targets

    14
    CategoryTargetConfidence
    Full-year 2026 Organic Revenue Growth
    -1% to flat
    high materiality
    Medium
    Full-year 2026 Adjusted Operating Margin
    31% to 31.5%
    high materiality
    Medium
    Full-year 2026 Adjusted Revenue Growth
    -1.5% to -0.5%
    high materiality
    Medium
    Full-year 2026 Adjusted EPS
    $7.20 to $7.40
    high materiality
    Medium
    Full-year 2026 Adjusted Effective Tax Rate
    approximately 19%
    medium materiality
    High
    Full-year 2026 Free Cash Flow Conversion
    approximately 90%
    medium materiality
    High
    Full-year 2026 Gross Debt to Adjusted EBITDA Ratio
    approximately 3x
    medium materiality
    High
    Medium-term Clover Revenue Growth
    15% to 20% growth
    medium materiality
    High
    Medium-term Clover GPV Growth (ex-gateway conversion)
    10% to 15%
    medium materiality
    High
    Full-year 2026 Clover Revenue Growth
    mid-single digits
    medium materiality
    Medium
    Annual Adjusted Operating Margin Expansion
    approximately 50 basis points
    high materiality
    High
    Total Adjusted Operating Margin Expansion from Project Elevate
    greater than 200 basis points
    high materiality
    High
    Annual Adjusted EPS Growth
    double-digit
    high materiality
    High
    Second Half 2026 Adjusted Revenue Growth
    approximately 2%
    high materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Merchant Solutions
    Segment revenue declined due to anticipation and hardware headwinds. Small business volume growth was lower due to the anniversary of the CCV acquisition. Clover continues to show strong underlying GPV and revenue growth when adjusted for specific factors. Value-added services are a growing component of Clover revenue.
    Adjusted Revenue Growth: -1%Organic Revenue Growth: -1%Adjusted Operating Margin: 30%Small Business Organic Revenue Growth: 0%Small Business Adjusted Revenue Growth: -1%Small Business Volume Growth: 2%Clover Revenue Growth: 2%Clover Revenue Growth (ex-nonrecurring 2025): 11%Clover Revenue Growth (ex-anticipation): 13%Clover GPV Growth: 9%Clover GPV Growth (ex-gateway conversion): 11%Value-added Services Revenue Contribution to Clover: 25%Value-added Services Revenue Growth: 10%Non-Clover SMB Revenue Growth: -5%Enterprise Adjusted Revenue Growth: -1%Enterprise Organic Revenue Growth: 0%Enterprise Transactions Growth: 8%Processing Organic Revenue Growth: -8%Processing Adjusted Revenue Growth: -6%
    		—-1%—$781 million
    Financial Solutions
    Revenue decline was primarily driven by higher nonrecurring revenue in the prior year period. Underlying account and volume growth was in line with expectations. Digital payments saw growth in payment platform transactions, while consumer payment platforms declined. Banking was impacted by attrition and prior-year nonrecurring revenue, but Finxact contributed to overall account growth.
    Adjusted Revenue Growth: -8%Organic Revenue Growth: -8%Adjusted Operating Margin: 38.7%Digital Payments Organic Revenue Growth: -6%Digital Payments Adjusted Revenue Growth: -6%Payment Platform Transactions Growth: 5%Consumer Payment Platforms Transactions Growth: -1%Issuing Adjusted Revenue Growth: -10%Issuing Organic Revenue Growth: -10%Global Accounts on File Growth: 4%Banking Organic Revenue Growth: -10%Banking Adjusted Revenue Growth: -8%Core Counts Decline: -3%Overall Accounts and Positions (including Finxact) Growth: 6%
    		—-8%—$912 million

    Operational metrics

    27
    Adjusted Revenue
    $4.96 billion-4% YoY
    Q2 FY26

    Total company adjusted revenue.

    Organic Revenue
    $4.96 billion-5% YoY
    Q2 FY26

    Total company organic revenue.

    Recurring Revenue Growth
    2%
    Q2 FY26

    Driven by stable underlying transaction volume and account trends.

    Recurring Revenue as % of Total Adjusted Revenue
    84%
    Q2 FY26

    Represents the fundamental stability of the business.

    Argentina Anticipation Headwind to Adjusted Revenue
    90 basis points
    Q2 FY26

    Due to weaker macro conditions, inflation, and interest rates in Argentina.

    Argentina Anticipation Headwind to Adjusted Operating Margin
    60 basis points
    Q2 FY26

    Impact on total company level.

    Adjusted Operating Income
    $1.6 billion
    Q2 FY26

    Total company adjusted operating income.

    Adjusted Operating Margin
    31.8%
    Q2 FY26

    Total company adjusted operating margin, absorbing 60 bps headwind from anticipation.

    First Half Adjusted Operating Margin
    30.8%
    H1 FY26

    Total company first half adjusted operating margin.

    Adjusted EPS
    $1.84
    Q2 FY26

    Total company adjusted earnings per share.

    FX Impact to Adjusted EPS (LatAm)
    $0.07
    Q2 FY26

    Unfavorable FX rates in LatAm on a year-over-year basis.

    Adjusted Effective Tax Rate
    nearly 20%
    Q2 FY26

    Total company adjusted effective tax rate.

    Free Cash Flow Conversion
    112%
    Q2 FY26

    Driven by efficient working capital management and favorable timing effects.

    Gross Debt to Adjusted EBITDA Ratio
    below 3.2x
    Q2 FY26

    Leverage ratio at quarter end.

    Incremental Technology Infrastructure Investment
    over $100 million
    H2 FY26

    Primarily in the Financial Solutions business, to accelerate platform stability, resiliency, and cybersecurity.

    Second Half Revenue Impact from Client Delays
    2 points
    H2 FY26

    Negative impact from delays in newly contracted revenue and enterprise client ramps.

    Second Half Revenue Impact from Lower Product/Other Revenue
    1 point
    H2 FY26

    Negative impact from lower key product and other revenue, specifically hardware.

    Second Half Revenue Impact from Argentina Anticipation
    1 point
    H2 FY26

    Negative impact from Argentina anticipation.

    Second Half Revenue Impact from Divestitures
    1 point
    H2 FY26

    Negative impact from divestitures, which is mechanical.

    Adjusted Operating Margin Impact from Increased Tech Investment
    approximately 50 basis points
    FY26

    Driver of lower adjusted operating margin guidance.

    Adjusted Operating Margin Impact from Argentina Anticipation
    approximately 50 basis points
    FY26

    Driver of lower adjusted operating margin guidance.

    Adjusted Operating Margin Impact from Lower Revenue
    150 to 200 basis points
    FY26

    Driver of lower adjusted operating margin guidance, resulting from lower revenue expectations.

    Divestitures Impact on Adjusted Operating Margin
    negligible
    FY26

    Expected impact on adjusted operating margin.

    Capital Expenditures as % of Adjusted Revenue
    high single digits
    FY26

    Expected to remain consistent.

    Finxact Positions and Accounts Growth
    over 75%
    Q2 FY26

    Growth in Finxact's positions and accounts.

    FS Client-Facing Incidents Reduction
    70%
    Q2 FY26

    Reduction in client-facing incidents in Financial Solutions.

    Cash Flow Central Implementation Timeline Reduction
    50%vs a year ago
    Q2 FY26

    Reduction in implementation timelines for financial institutions using Cash Flow Central.

    Industry KPIs

    5
    MetricValueDetails
    Capital returns$100 millionUSD
    Payments volume gdv9%%
    Net revenue yield take ratestable
    Value added services revenue10%%
    Switched processed transactions5%%

    Product announcements

    2
    ProductTypeDetails
    Clover Practice Payexpansion
    Agent OSmilestone

    Deals & partnerships

    10
    MastercardStrategic partnership integrating Mastercard's merchant cloud into Fiserv's Commerce Hub.

    The partnership aims to combine Mastercard's merchant cloud with Fiserv's Commerce Hub, leveraging complementary capabilities and geographic coverage to win new business. Integration is expected to take a couple of quarters.

    Western Alliance BankGoing live with Clover.

    Western Alliance Bank's adoption of Clover demonstrates the synergy between Fiserv's financial solutions and merchant solutions, expanding Clover's reach among top banks.

    TD (Canada)Scaling partnership to bring Clover to TD clients.

    The partnership with TD in Canada is scaling, bringing Clover to TD clients across over 1,000 branches. Efforts will shift to converting existing TD client portfolios to Fiserv in 2027.

    Restaurant DepotRolled out digital activation.

    Digital activation was rolled out to Restaurant Depot, a significant industry partner, to grow business and reach thousands of restaurant touch points.

    UW Credit UnionExpansion of relationship, selected DNA as future core platform.

    UW Credit Union expanded its relationship with Fiserv, choosing DNA to replace its previous core solution and incorporating additional Fiserv offerings.

    Flagstar BankExpanded relationship through the addition of Finxact.

    Flagstar Bank, an institution with at least $88 billion in assets, selected Finxact to replace both its legacy core and a competitor's core platform, accelerating its core modernization strategy.

    OnePayRenewed and grew business.

    Fiserv renewed and grew its business with OnePay, one of the fastest-growing consumer fintechs in the country.

    U.S.-based provider of investment and retirement servicesSignificant win for their debit processing portfolio.

    Fiserv's issuing business secured a significant win with a U.S.-based provider of investment and retirement services for their debit processing portfolio.

    Huntington National BankOnboarded new debit and credit portfolios.

    Fiserv onboarded new debit and credit portfolios for Huntington National Bank.

    Brett FinancialStrengthened strategic issuing partnership through Advanced Defense.

    Fiserv strengthened its strategic issuing partnership with Brett Financial by integrating Advanced Defense, an AI-enhanced fraud prevention solution.

    Risks & headwinds

    6
    Weaker macro conditions in ArgentinaQ2 FY26, H2 FY26

    90 basis point year-over-year headwind to adjusted revenue in Q2; 60 basis point negative impact to adjusted operating margin in Q2; 1 point negative impact to H2 revenue guidance.

    Mitigation: Impact to pretax income and adjusted EPS is minimized as cost of anticipation business and interest expense are carried on the interest expense line.

    Slower ramp of client-driven implementation timelinesH2 FY26

    2 points negative impact to H2 revenue guidance.

    Mitigation: Management believes these are timing-related changes and expects to recognize the vast majority of this revenue, just shifted out in terms of timing. One example cited was a client's M&A activity delaying go-live by a quarter.

    Slower pace of execution of growth initiativesH2 FY26

    Contributed to lower full-year guidance.

    Mitigation: Increased focus on operational excellence and urgency in execution under new CEO leadership.

    Incremental headwinds in hardware revenue in merchantH2 FY26

    1 point negative impact to H2 revenue guidance; approximately half of the Clover headwinds.

    Mitigation: Attributed partly to market impacts of higher hardware sales over the last 2 years. Expected to be a temporary headwind that will change as the company gets further away from the period of elevated hardware sales.

    Higher nonrecurring revenue in prior year periodQ2 FY26

    Drove Q2 FY26 organic and adjusted revenue decline of 8% in Financial Solutions; declined 10% in issuing.

    Mitigation: This is a comparative dynamic, not an ongoing operational issue. Underlying volumes are strong.

    Attrition from actions taken over the last several years in bankingQ2 FY26

    Banking revenue decreased 10% on an organic basis and 8% on an adjusted basis; core counts declined 3% YoY.

    Mitigation: Offset by growth in overall accounts and positions, including Finxact (up 6%).

    What to watch in Q3 FY26

    5

    Second Half Adjusted Revenue Growth

    Q3 FY26, Q4 FY26
    Currentapproximately 2% expected
    TargetImprovement in Q3, further step up in Q4 to mid-single digits

    Why it matters

    This will indicate whether the revenue headwinds are indeed timing-related📎 and if the company is on track to exit the year consistent with its medium-term growth outlook.

    From here, we expect our adjusted revenue growth rate to improve in Q3 and a further step up in Q4 to an exit rate consistent with our medium-term growth outlook.

    Q&A highlights

    5

    Could you decompose the changes in the second half outlook after reaffirming guidance on June 15, and explain why these changes are not structural, particularly regarding slower client ramps?

    Paul Todd explained that the changes include 2 points of headwind from contracted revenue and enterprise ramps, 1 point from product/hardware, 1 point from Argentina anticipation, and 1 point from divestitures. He emphasized that the divestitures are mechanical, Argentina is macro-related, and the client ramp/product issues are timing-related, with the vast majority of revenue expected to materialize later. Takis Georgakopoulos added that a major client's M&A activity caused a delay, confirming it's a timing shift, not a fundamental change in deal size or momentum.

    “So if you think of a point from divestitures, that's just mechanical. The point roughly from Argentina, anticipation is macro related to just Argentina. And then the first two buckets, those aren't structural changes, they are timing-related changes that we expect to see the vast majority of that revenue, it is just moved out from a time standpoint, and that's reflected in the guidance that we provided at this point.”

    asked by Tien-Tsin Huang · answered by Paul Todd

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Portfolio Review and Capital Allocation

    New CEO Takis Georgakopoulos is leading an expanded process to review Fiserv's business mix and capital commitments. This involves assessing product competitiveness against best-in-class solutions. If a product is not best-in-class and Fiserv lacks a clear 'right to win,' the company will evaluate actions to maximize shareholder value, including potential divestitures or alternative ownership structures. This is a meaningful shift with defined timelines and goals, aiming to create additional shareholder value and is a top priority for the CEO.

    02

    Operational and Technology Excellence Initiatives

    Fiserv is focused on increasing its pace of change and simplification across the company. This includes organizing like leading tech companies with integrated product and technology organizations, leveraging foundational capabilities across Merchant and Financial Solutions businesses, and improving coordination. These operational improvements are expected to drive significant cost savings over the medium term⏳, aligning with Project Elevate targets. The company has already seen a 70% reduction in FS client-facing incidents.

    03

    Increased Technology Infrastructure Investment

    Fiserv plans to invest over $100 million incrementally in technology infrastructure in the second half of 2026, primarily in the Financial Solutions business. These investments are aimed at accelerating progress in platform stability, resiliency, and cybersecurity, which are critical for clients and the company's franchise. Management believes this is the right move to position clients and the company for 2027 and beyond, especially as frontier AI models reduce margins for error.

    04

    Merchant Solutions Progress and Partnerships

    In Merchant Solutions, Fiserv is seeing progress with Commerce Hub and Clover. The modernization of the merchant tech stack under Commerce Hub has led to a dramatic increase in the enterprise pipeline. A strategic partnership with Mastercard integrates Mastercard's merchant cloud into Fiserv's Commerce Hub, adding value-added services and global reach. Clover continues to expand, with Western Alliance Bank going live and a partnership with TD in Canada scaling to convert 80,000 existing TD merchant clients in 2027.

    05

    Financial Solutions Core Modernization and Innovation

    Financial Solutions saw recurring revenue growth fueled by digital payments and issuing businesses. The company is making progress with new core wins, including UW Credit Union selecting DNA, and Flagstar Bank expanding its relationship with Finxact for core modernization. Finxact grew positions and accounts over 75%. Fiserv also secured a significant win with a U.S.-based provider for debit processing and strengthened its partnership with Brett Financial through Advanced Defense, an AI-enhanced fraud prevention solution.

    06

    Project Elevate and Capital Return

    Fiserv has completed the identification phase for Project Elevate, which aims for at least $500 million in savings, and is prioritizing significant initiatives. The company repurchased 1.7 million shares for approximately $100 million during the quarter. Management remains committed to returning any excess capital to shareholders and will continue to evaluate increased capital return over time⏳, alongside deleveraging efforts to reach approximately 3x gross debt to adjusted EBITDA by year-end.

    AI-generated summary of the company’s earnings call. Not investment advice.