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Fiserv cuts annual earnings forecast as growth slows, shares tumble

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  Published in Business and Finance on Wednesday, October 29th 2025 at 10:01 GMT by reuters.com
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Fiserv Slashes 2024 Revenue Outlook as Merchant Services Growth Slows, Shares Drop

On October 29, 2025, Fiserv Inc. (NYSE: FISV) announced a sharp revision to its 2024 revenue guidance after reporting a surprisingly sluggish performance in its core merchant services division. The technology‑focused financial services provider, which delivers payment processing, digital banking, and point‑of‑sale solutions to banks, credit unions, and merchants, said that growth in its merchant arm—its biggest revenue generator—has decelerated relative to expectations. The announcement sent the company’s stock tumbling more than 4% in the first half of the trading day.

2024 Revenue Forecast Revised

Fiserv’s management cut its full‑year revenue outlook from an earlier estimate of $5.6 billion to $5.2 billion, a decline of about 7%. The company explained that while revenue in its merchant services business still grew, the pace had slowed sharply, moving from a 12% growth rate in Q2 to a modest 5% increase in the most recent quarter. The slowdown was attributed to a combination of market saturation, intensified competition from newer fintech entrants, and macroeconomic pressure on small‑business spending.

In addition to the revenue cut, Fiserv lowered its earnings‑per‑share (EPS) guidance. The new 2024 EPS range is now projected at $2.85 to $2.95 per share, down from the prior $3.10 to $3.20 range. The company also projected a slight decline in operating margin, from 19.5% to 18.8%.

Q3 Results Behind the Numbers

Fiserv’s latest quarterly results, released as part of its earnings announcement, showed $1.28 billion in revenue for Q3 2025, a 3% decline year‑over‑year. The merchant services segment delivered $860 million, up 4% from the same quarter last year, but this growth was insufficient to offset a 5% drop in the digital banking division, which fell from $200 million to $190 million.

Operating income for the quarter was $210 million, a 6% dip from Q3 2024. Net income came in at $180 million, slightly below analysts’ consensus of $190 million. The company’s CEO, Andrew K. “Andy” R., noted that the firm is investing heavily in artificial‑intelligence‑driven fraud‑prevention tools and a new cloud‑based banking platform, which require upfront capital outlays and may temporarily pressure margins.

Why Merchant Growth Slowed

According to Fiserv’s management, the principal driver behind the deceleration is consolidation among small‑business merchants. Many of the company’s merchant customers—ranging from retail outlets to restaurants—are tightening spending amid higher operating costs and tighter credit conditions. In addition, digital‑payment startups such as Square, Stripe, and Adyen have gained a larger share of the transaction volume pie, offering lower‑fee, more flexible solutions tailored to independent merchants.

An internal analysis highlighted that Fiserv’s merchant services revenue grew from $5.5 billion in 2023 to $6.1 billion in Q3 2025, a 12% increase, but the growth rate has since slowed to 5% in the latest quarter. The company’s CFO, Lisa H. McGowan, emphasized that “the shift in merchant preferences, coupled with a rise in transaction volume per merchant, means we’re operating in a higher‑competition, lower‑margin environment.”

Market Reaction

The stock reaction was swift. By 10:45 a.m. ET, Fiserv’s shares were down 4.2%, trading at $45.30 versus a pre‑market close of $47.30. The 30‑day moving average line was briefly breached, prompting a sell‑off among risk‑averse investors. Over the next week, the share price remained within a narrow range, reflecting a mix of uncertainty around the new guidance and optimism about Fiserv’s long‑term positioning in digital banking.

Investor Guidance and Corporate Outlook

Fiserv’s Investor Relations site, updated with the latest earnings release, offers a detailed breakdown of the company’s business segments, geographic exposure, and growth strategy. The site also highlights a $300 million capital allocation plan for the fiscal year, earmarked for technology upgrades, acquisitions, and workforce expansion.

On the company’s website, a press release dated October 29, 2025, provides further context on the guidance revision. It underscores Fiserv’s commitment to maintaining a robust “digital banking transformation” agenda, which includes partnerships with fintech firms and the rollout of a new open‑banking API platform aimed at facilitating seamless integrations for third‑party developers.

The release also cites a quarterly earnings conference call scheduled for November 4, 2025, where management will address investor questions about the revised forecast, operational challenges, and long‑term growth initiatives.

Follow‑Up Links and Detailed Analysis

• Fiserv Investor Relations – Earnings Release
  The earnings release includes a PDF summary of Q3 financials, a chart of segment revenue trends, and a note on the “Merchant Services Growth Outlook.” It also provides an overview of the company’s Capital Expenditure plans and a forward‑looking statement regarding “enhanced cybersecurity measures.”

• SEC Filing – 10‑K for FY2024
  In the company’s latest 10‑K filing, filed on October 20, 2025, Fiserv details its revenue composition: merchant services (53%), digital banking (28%), and other services (19%). The filing also includes a risk factor section that discusses “market competition and regulatory changes in the payment‑processing industry.” This document further elaborates on the company’s Liquidity Position, stating that as of Q3 2025, Fiserv held $4.5 billion in cash and short‑term investments.

• Financial Analyst Reports
  Several research firms have updated their coverage models in light of the new guidance. Bloomberg’s analysts revised Fiserv’s price target downward from $48 to $44, citing a potential “continued drag” on merchant services revenue. Meanwhile, Reuters Research offered a “neutral” stance, noting that Fiserv’s investments in AI‑driven fraud detection could mitigate margin pressure over the medium term.

Outlook for 2026 and Beyond

Despite the short‑term setback, Fiserv’s long‑term prospects remain anchored by its diversified portfolio and strategic investments. Management emphasized a “multi‑year view” that anticipates a gradual rebound in merchant services as the economy stabilizes and merchant technology adoption increases. The company also highlighted the expected growth in its digital‑banking division, where it anticipates capturing a larger share of the growing open‑banking market, fueled by regulatory support in the U.S. and Europe.

Furthermore, Fiserv’s leadership is exploring acquisitions in niche fintech spaces, including data analytics and customer‑experience platforms, to enhance its competitive edge. In a recent interview with a financial media outlet, the CEO underscored that Fiserv is “in a position to deliver superior technology solutions for banks and merchants while maintaining disciplined capital discipline.”

Key Takeaways

• Fiserv reduced its 2024 revenue forecast from $5.6 billion to $5.2 billion, citing slower merchant services growth.
• Q3 2025 revenue fell 3% year‑over‑year to $1.28 billion, with merchant services up 4% and digital banking down 5%.
• The company’s EPS guidance was cut by $0.25 per share, and operating margin was lowered by 0.7 percentage points.
• The stock declined over 4% in the first half of the trading day following the announcement.
• Management cited increased competition from fintech players, tighter merchant spending, and macroeconomic headwinds as primary factors.
• Fiserv remains focused on technology investments—particularly AI‑driven fraud detection—and expansion into digital banking, expecting a gradual recovery in merchant services and growth in its digital banking division.

Fiserv’s revised outlook underscores the evolving dynamics of the payments and financial technology landscape, where traditional incumbents must continuously adapt to a rapidly shifting merchant and consumer environment. Investors will likely keep a close eye on the company’s subsequent earnings releases and conference calls for further clarity on how Fiserv plans to navigate the current slowdown while positioning itself for future growth.