Fiserv, Inc. Discusses Clover Growth and Strategic Initiatives at JPMorgan Global Technology Conference

Key Takeaways

TL;DR SUMMARY: Fiserv (FI) addressed intense investor focus on slower Clover volume growth (+8% YoY in Q1) but reaffirmed confidence in 2025 targets ($3.5B Clover rev., +27% Q1 growth). Key drivers include value-added services (24% penetration, +2%p QoQ), hardware sales, and accelerating intl. expansion (4 new countries in Q1). Mgmt expects Clover volume to remain similar in Q2 (+8% reported) but rise to low DD with easing headwinds (e.g., gateway conversion). New products (CashFlow Central, Clover Hospitality), partnerships (ADP), and split exposure to consumer spend (50-50 discretionary/nondiscretionary) support LT resiliency. FI sees a competitive moat via its multi-channel distribution (banks, ISOs, direct) and $1.4B+ annual CapEx into product development. Financial Solutions (+6% Q1 growth) remains on track for 6%-8% 2025 guidance.

1. Clover Volume & Revenue Drivers

• Q1 Clover volume grew +8% YoY (vs. +14% in Q4 2024), but adj. for 1%p leap year impact, 2%p gateway conversion headwind, and Easter timing, growth would have been ~11%.
• Q2 volume growth expected ~8% reported due to stronger gateway headwind (full-Q impact) but easing in H2.
• Clover rev. up +27% YoY in Q1 driven by:
  • Value-added services (24% penetration, +2%p QoQ, target 25% in 2025).
  • Hardware sales (accelerating post-strong Q4).
• Reiterated $3.5B 2025 Clover rev. target (LTM: $3B) and $4.5B+ 2026 goal, supported by product launches (e.g., Clover Hospitality for high-end restaurants launching May 17).

2. International Expansion & Product Launches

• Added 4 countries in Q1 (Brazil, Australia, Mexico, Singapore) and Belgium via CCV acquisition. In Brazil, leveraging partnerships with Caixa/Sicredi (tens of thousands of bank branches).
• CashFlow Central (small biz cash-mgmt): 54 clients in backlog after first client went live in Q1; $2B+ TAM, integrated with Clover, XD (digital banking), and bank partners.
• ADP RUN integration (payroll) into Clover live since early May; cross-selling momentum.

3. Competition & Distribution Strength

• No material share loss despite Square’s resurgence, Global/Worldpay merger. FI’s distribution “secret sauce” includes:
  • Bank channel (~1,000 FI partners).
  • ISO/ISV partnerships and a “growing” direct sales force.
  • New hardware (5 launches/upgrades in 2024) driving merchant stickiness.

4. Financial Solutions Segment & Macro Exposure

• Q1 rev. growth +6% (low end of 6%-8% 2025 guidance); key drivers:
  • Core banking/client processing implementations (e.g., Target live in March, Verizon H2 2025).
  • Stable backlog; no client-driven delays seen.
• Consumer spend trends:
  • Fiserv Small Business Index showed +3% YoY spend in April (vs. slower March).
  • Balanced 50-50 split discretionary/nondiscretionary (mitigates recession risk).

5. Leadership Transition