Fiserv Results Show Clover Revenue Surge of 22%

Fiserv’s organic revenue growth shows that despite slowing consumer spending and volatility within banking, the appetite for faster money movement and digital engagement remains undiminished.

The company’s earnings presentation shows that within the merchant acceptance segment, organic revenue growth was 18% to $1.6 billion. Within that segment, Clover’s revenue growth was up 22%, with annualized GPV up 17% to $231 billion. Carat revenue growth was 16%. Merchant transaction and volume growth were both up 5%.

Drilling down into the Payments and Network segment, there was organic revenue growth of 13% to $1.6 billion. The company logged 42% growth in Zelle transactions.

Organic revenue growth in the Financial Technology segment was 3%, to $792 million.

Multi-Dimensional Revenue Growth

During the conference call with analysts, CEO Frank Bisignano said that organic revenue growth “was multi-dimensional. It included elevated contributions from card processing, non card payments, and digital banking solutions.” With a nod toward FedNow, he said that the firm’s various software and platforms, particularly through the company’s NOW Network, will allow client firms to “participate in the new wave” of payments by connecting banks and all payment rails.

The company lifted the lower end of its revenue guidance to reflect anticipation of 8% to 9% revenue growth in 2023. As noted here, the previous forecast, presented in the most recent earnings call, was 7% to 9%.

Investors sent the stock up 2.4% in intraday trading, bucking overall markets, which plummeted on Tuesday.

Drilling down into Merchant Acceptance, Bisignano said that the company continues to see “good demand” in grocery verticals and in restaurants, including QSRs.

“We’ve started to see consumers rotate towards non-discretionary spending and reduced basket size. The decline in inflation is impacting volume growth, particularly in the petro vertical. This did not impact Fiserv revenue,” said Bisignano.

The company is on track to achieve its 2025 targets of $10 billion in merchant acceptance revenue, $3.5 billion in Clover revenue and Clover value-added services penetration of 25%.

The Payments and Network segment, said the CEO, saw double-digit gains in all three business lines:

Issuer solutions primarily representing credit card issuing and output services, current services, including debit processing and debit networks, star and Excel, and digital payment services, including bill pay.

Chief Financial Officer Bob Hau said that the revised guidance takes into account economists’ forecasts for slower consumer spending and bank lending in the second half of this year,

Software and services penetration reached 17% of total Clover revenue, an increase of 150 basis points from a year ago, said Hau.

During the quarter, the company added 37 ISV partners. North American credit active accounts on file grew 12%, driven by both new business onboarding and a favorable credit environment, he said.

During the question and answer session with analysts, management said that there was a solid backlog of demand from FIs amid the demand for digital solutions.