Fiserv Q3 Earnings Show Strength In Digital-First Economy

After a tough second quarter, payment processor Fiserv bounced back in a big way for Q3, reporting Tuesday (Oct. 27) that it rode strong new-account performance for double-digit percentage gains in revenues.

Fiserv said Q3 revenue increased 21 percent quarter over quarter to $3.79 billion. That included 44 percent quarter-over-quarter growth in the acceptance segment and 20 percent growth in the payments segment, offsetting a 1 percent decline in the FinTech segment.

The company said revenue also increased 79 percent to $11.02 billion for 2020’s first nine months versus the same 2019 period. That consisted of 303 percent growth in acceptance, 66 percent growth in the payments segment and another 1 percent decline in FinTech. (Revenue within the Acceptance and Payments segments included revenue from the First Data acquisition in July 2019.)

The company also raised its full-year 2020 outlook, now expecting adjusted earnings per share to grow at least 11 percent over 2019.

“The strength of our business has allowed us to deliver outstanding results in uncertain times,” Fiserv President and CEO Frank Bisignano said. “We are including raising our earnings outlook in anticipation of achieving our 35th consecutive year of double-digit adjusted earnings per share growth while continuing to invest in the future.”

Several factors drove the Q3 performance improvements, including some big account wins to follow up on a recent announcement that Fiserv has signed Alliance Data. The company also had a strong performance from its ResTech order and payment platform Clover. And it profited from the digital-first economy, signing 42 eCommerce clients during the quarter.

Bisignano said on an analyst call following the earnings announcement that Clover was one of its key focus areas. “While the growth rate [for restaurants] has not fully recovered to pre-COVID levels, it is impressive given the economic environment,” he said. “And considering that COVID tends to [affect] small- and medium-sized merchants which are later in the recovery cycle, we continue to expand the breadth of services to cover merchants with innovative solutions that enhance convenience like scan to order, which was launched recently to allow consumers to scan a QR code to order and pay directly from their table, or integrated payments.”

He also teased new-product introductions that will come at the company’s Investor Day, which has been moved from March to sometime this fall. Bisignano said Fiserv continues to have an increased interest in all things digital, whether around eCommerce, card usage, point of sale, touchless payments including digital wallets, or accelerating peer-to-peer (P2P) payments.

Expect contactless payments to be the subject of several new announcements from Fiserv. After all, PYMNTS recent “How We Shop” report surveyed more than 2,000 U.S. consumers and found that many want contactless-commerce solutions.

For instance, 26 percent of respondents said they’d only feel comfortable shopping in stores where merchants accept contactless cards, while 23 percent said shops must offer curbside pick-up. And overall, 57 percent of consumers said merchants’ digital-payment offerings would impact their willingness to shop in given stores.

Alain Barbet, Fiserv’s head of payments risk solutions, said in a statement that such shifts in consumer behavior “have driven rapid adoption of digital purchasing types that limit physical interactions. As businesses begin shaping new eCommerce strategies to bring additional digital consumers in, it’s equally critical that businesses maintain consumer trust by securing the customer data they acquire through digital channels.”

Bisignano said on the earnings call that “we still are building technology — we’ll be building it forever. We’re always iterating on it and we’re using the power around data and information and all the other assets we have inside the house.”