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Fiserv (FISV) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Information Technology· Aug 6, 2026

Source: earnings call transcript

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

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

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

Product announcements

ProductTypeDetails
Clover Practice Payexpansion
Agent OSmilestone

Deals & partnerships

Mastercard Strategic 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 Bank Going 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 Depot Rolled 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 Union Expansion 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 Bank Expanded 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.

OnePay Renewed 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 services Significant 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 Bank Onboarded new debit and credit portfolios.

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

Brett Financial Strengthened 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

Weaker macro conditions in Argentina Q2 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 timelines H2 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 initiatives H2 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 merchant H2 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 period Q2 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 banking Q2 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

Second Half Adjusted Revenue Growth

Q3 FY26, Q4 FY26
Current approximately 2% expected
Target Improvement 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.

Find out whether FISV delivers this. Inve re-checks your case every morning.

Q&A highlights

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 read 6 chapters

Detailed narrative

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.

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.

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.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.