Fiserv’s latest third-quarter financial results demonstrate the growth of its core POS solutions and the long-term potential of embedded finance amid recently signed new partnerships.
CEO Frank Bisignano said in a conference call: [as] Businesses and financial institutions are becoming increasingly interconnected when it comes to moving money. ”
The company’s earnings supplement said its Merchant Solutions segment’s adjusted revenue increased 9% to $2.5 billion, and its small business revenue increased 9% year-over-year to $1.6 billion.
The company’s POS solution, Clover, saw a 28% increase in revenue and a 15% increase in total annual payments to $311 billion.
Financial Solutions’ adjusted revenue increased 5% to $2.4 billion, digital payments increased 5% to $987 million, and banking sales increased 5% to $636 million.
DoorDash and Walmart partnership
As an example of its connectivity and embedded options, Mr. Bisignano pointed to this morning’s announcement that DoorDash is offering Fiserv, an embedded financial application that works with DoorDash, to delivery contractors. It offered what he called “a full range of financial services.”
“Within a single app, you can instantly access your payroll and compensation, savings accounts, debit cards, and more. Finxact’s real-time ledger capabilities manage your transactions, which is a key reason why we chose Fiserv.” He added, “Fiserv Bank customers completed the solution with the necessary sponsorship.”
He also mentioned last month’s announcement that the company is participating in a proof of concept with Walmart, “where real-time bank payment transactions will be possible. [A] More merchants are adding bank payment capabilities to maximize consumer choice, and the new ability to process such payments in real time will benefit Fiserv, merchants, and consumers. This feature will become more widely available next year. ”
Further work is being done with Walmart Business as a referral partner for Clover as a business management platform, Bisignano said, “to help meet Walmart’s goals of improving business operations for small businesses and nonprofits.” .
In the financial sector, Mr. Bisignano said, “We are migrating our customers digitally or to our new digital banking solution, XD, while integrating additional solutions such as Cash Flow Central, Real-time Payments, and Clover into this unique digital ecosystem. It continues,” he said.
Chief Financial Officer Robert Howe said on a conference call that the payments were “on par with second quarter levels.” According to various external macro indicators, overall consumer spending growth is slower than last year, but appears to be stabilizing at a comfortable pace. ”
Internally, Clover saw software-as-a-service (SaaS) penetration increase one point to 21% in the third quarter, driven by growth in Clover Capital and Clover SaaS packages.
“In the fourth quarter, we plan to roll out new vertical software plans for retail and services,” the company continued, “on track to reach Clover’s annual revenue target of $4.5 billion in 2026.”
Zelle’s transaction growth was 35%, and the CFO said, “We continue to see demand from customers for digital payment products such as FedNow and RTP integration.”
Management raised its 2024 revenue forecast to 16% to 17% organically. Previously, that range was 15% to 17%.
Investors pushed the stock up 1% in intraday trading on Tuesday.
During the call, management also noted that the state of Georgia approved Fiserv’s application to form a merchant acquirer limited purpose bank.
“This is a special purpose charter that allows for sponsorship options for merchant acquisition. It is important to be clear that Fiserv does not become a bank. “We have no intention of opening a branch, taking deposits or making loans,” Howe said.
