Fiserv Loses Nearly Half Its Market Cap After ‘Abysmal’ Quarter

“Abysmal.” “Difficult to comprehend.” “Impossible to sugarcoat.”

These are not the words of film critics directed at a tedious new box office bomb. They’re how analysts at BTIG, Jefferies and William Blair described the third-quarter results of fintech Fiserv. It may not be Steven Spielberg’s idea of cinema, but on Wall Street, it was a Halloween horror show. Shares in the company fell 43% Wednesday; Fiserv’s worst one-day drop on record had been 19.5%.

Cry for Me, Because Argentina

Milwaukee-based Fiserv processes card transactions, loyalty programs, loans and other electronic payments. It does this for banks, credit unions and other financial institutions, which make up the bulk of its clientele. We’re talking basic financial plumbing here rather than crypto, energy or other tech more commonly associated with roller-coaster stock price volatility.

That’s why, when Fiserv executives said Wednesday that they now expect 3.5% to 4.5% in organic revenue growth this year, even the most clued-in analysts were left scratching their heads. Only three months ago, the company said that figure was on track for 10%. Something very dramatic clearly happened, pushing growth trends suddenly downward, especially since the previous outlook came with half the year already over. So what gives?

The obvious answer is slowing business. Fiserv now expects adjusted earnings to come in at $8.50 to $8.60 per share this year, radically lower than its July forecast of $10.15 to $10.30 or the $10.15 that analysts polled by FactSet expected. Its $5.2 billion in third-quarter revenue, up just 1% year over year compared with an 8% gain in the second quarter, also missed Wall Street’s $5.5 billion estimate. More interesting was Fiserv’s explanations:

• CEO Mike Lyons said on an earnings call that Argentina’s floundering economy, which he said “contributed 10 percentage points to our 16% organic growth rate [in 2024],” was the major culprit. From sky-high inflation to piles of dollar-indexed debt to vanishingly thin foreign reserves to declining industrial output, there are 40 billion reasons why the South American country recently took a $40 billion bailout from the US.
• Lyons explained that the previously rosy growth forecast was based on the company’s assumption that growth in other markets would offset Argentina (spoiler: it did not). He said Fiserv will now put in place an “action plan” that includes improving operations with artificial intelligence and doubling down on its small-business payments platform, Clover.

Not Buying It: “Management responses weren’t convincing on what drove the steep change in revenue assessment” and don’t “inspire confidence that there will be no more surprises,” wrote Diksha Gera, a fintech analyst at Bloomberg Intelligence.