Fiserv Says ‘Just Scratching Surface’ for Clover, but Slowing Growth Slams Shares

Fiserv’s management said Wednesday (July 23) that its flagship point of sale offering, Clover, is still on track to hit $3.5 billion in annual sales this year.

But as the company trimmed guidance for 2025, and as Clover’s momentum appeared to slow in the second quarter, investors sent the shares down 20% in early trading.

Supplemental materials that accompanied the earnings announcement revealed that Clover volumes were up 8% roughly flat with the first quarter growth rate; VAS penetration was flat at about 24%.

The company guided to overall 2025 organic revenue growth rates of 10%, which is the low end of the 10% to 12% growth that had been previously targeted. To meet those targets, and to get to the annualized Clover milestone, the firm is looking for an acceleration in Clover volumes to 10% in the back half of the year.

Taking ‘Longer Than We Had Planned’

During the conference call with analysts, CEO Mike Lyons said that the growth “trajectory was based on the successful launch of a long and granular list of new products and strategic initiatives as well as a relatively strong macroeconomic outlook. Our updated guidance reflects the fact that some of those launches and initiatives are taking longer than we had planned.

“Some of that is on us and some is driven by other factors that we don’t fully control,” he added. “But we are confident that we will capture the full strategic and financial benefits and only the timing of realizing them has been extended.”

In the Merchant Solutions segment, which includes Clover, adjusted revenue growth was 10%. Clover revenue grew 30% in Q2, and the VAS penetration, he said, is targeted to be 25% at the end of the year.

“We expect our newer initiatives to support Clover revenue and volume growth in the second half of the year,” said Lyons, as “on the international build out, we are ramping Clover merchants in all the geographies we added this year — Brazil, Mexico, Australia, Singapore and various countries in Europe — as we work to integrate the CCV acquisition.”

In Canada, which is the largest Clover international market, Fiserv announced on Wednesday that it had struck a pact to become the merchant processing provider for TD Bank Canada.

“Going forward, we will jointly serve new TD merchant clients via the Clover platform, driving further processing, hardware and SaaS revenue,” Lyons said. There’s also potential yet to be realized in markets such as restaurants and healthcare, according to commentary from the call.

Clover as ‘Operating Platform’

In response to analyst questions on Clover, Lyons contended: “We are doing lots of things on the Clover platform across five or six major areas to drive a business operating platform, not a point of sale payments device … We’re just scratching the surface … There’s a whole bunch of work streams as you think about the next level of Clover and [also] the excitement around bringing more AI to Clover.”

In the Financial Solutions segment, digital payments revenues were up 6%, and issuing-related revenues gathered 14%. The company notched 19% in Zelle transactions.

“We are pleased with our continued momentum in the issuing business, with new clients and data initiatives offsetting a more moderate pace of growth in active accounts relative to the expectations we had built into our guidance,” Lyons told analysts.

Cash Flow Essential signed 23 new clients this quarter after 15 in Q1 or a total of 77 clients added since launch, “and we have nearly 500 more in the pipeline,” Lyons said.

In his own remarks, CFO Robert Hau stated that non-Clover SMB revenue grew a low single-digit pace. Year to date, processing organic and adjusted revenue are both down 1%, “similar to our guidance for roughly flat organic revenue over the medium term.”

Hau added that Zelle transaction growth was partially offset by lighter debit card spending.

Banking revenues were flat, Hau said, reflecting “slower than expected implementations … less activity in the market and … some greater pricing competition in particular areas, which has been heightened by slower activity.”

Looking ahead, said Hau, “we continue to expect an acceleration in organic revenue growth for the second half of the year, particularly in the Merchant Solutions segment. Based on this, we expect both segments to grow toward the low end of their guidance ranges for organic revenue growth with Merchant Solutions towards the low end of the 12% to 15% organic revenue growth outlook for the year and Financial Solutions organic revenue growth at the low end of the 6% to 8% range,” which will in turn impact operating margin growth.

Asked on the call about Clover penetration into new verticals, Lyon said: “We think the TAM there is significant, and we’re going to make a series of operational pricing and risk management decisions over the next coming months and quarters, and we think the progress will be good there.”

“We’re still confident we’ll get the full financial and strategic benefits of all those initiatives,” he added. “It’s just a matter of timing.”