Fiserv Inc at Robert W Baird Global Consumer, Technology & Services Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Dave Koning - Robert W. Baird & Co. Incorporated - Analyst : Maybe we'll just kick it off here. You've had 38 years in a row double digit EPS growth, get close to middle age here and you guys are aging very well. So congrats on that. Maybe if you just want to kick off with some comments, what gives you confidence, you can keep that double-digit and maybe even mid-teens EPS growth kind of consistent the next five, ten years?

Question: Dave Koning - Robert W. Baird & Co. Incorporated - Analyst : 3%, 4% [or more than that]?

Question: Dave Koning - Robert W. Baird & Co. Incorporated - Analyst : Not me.

Question: Dave Koning - Robert W. Baird & Co. Incorporated - Analyst : Yes. Well, thank you. And maybe we can start out with the merchant segment. It's about half of your revenue -- the First Data segment, really. I guess, first of all, what trends in kind of April and May -- are they pretty similar to Q1? You don't have the leap day benefit, but what are you seeing so far?

Question: Dave Koning - Robert W. Baird & Co. Incorporated - Analyst : Yeah. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 04, 2024 / 11:55AM, FI.N - Fiserv Inc at Robert W Baird Global Consumer, Technology & Services Conference

Question: Dave Koning - Robert W. Baird & Co. Incorporated - Analyst : Yeah. Okay. You have a lot of pieces of merchant, but we'll ask a little bit about Clover and stuff in a minute. But when we look in aggregate, when we look at volume growth and revenue growth, it seems like you're disconnecting in a positive way, where if volumes grow mid-single digits, maybe a little better in the US. But for their overall Visa, MasterCard, you have been growing a little faster than that, but then revenue is well above volumes. And maybe talk a little bit about is that the expectation going forward that whatever volume growth is, revenue be much better? And why?

Question: Dave Koning - Robert W. Baird & Co. Incorporated - Analyst : Yeah. Okay. In SMB, it's about two-thirds of the merchant segment now and Clover's becoming a much, much bigger part of SMB. A lot of people ask us, you did about $2.1 billion of revenue in Clover in '23, so last year, and you're expecting $4.5 billion in '26. I think it's over 25% CAGR. How do you get there?

Question: Dave Koning - Robert W. Baird & Co. Incorporated - Analyst : And when we think about Clover is still a little smaller part. So the SMB is about two-thirds of merchant, right? And Clover still a smaller than the rest of SMB. Is a lot of this just moving the rest of SMB into Clover and doubling the yield because you have more software and stuff or can that part grow too?

Question: Dave Koning - Robert W. Baird & Co. Incorporated - Analyst : Okay. And you mentioned the processing that you've now split out, it's only 13% of merchant. You do (multiple speakers) --

Question: Dave Koning - Robert W. Baird & Co. Incorporated - Analyst : Oh, yeah. So in total, 6.5% of total, I mean it's tiny, right.

Question: Dave Koning - Robert W. Baird & Co. Incorporated - Analyst : Yeah.

Question: Dave Koning - Robert W. Baird & Co. Incorporated - Analyst : So -- but what's interesting to me about that breakout, right, you process for BofA, for Wells, for Citi. And there's this thought among I think the investor community, like how is everybody growing well? And my thought as I was -- and maybe you could tell me for right or wrong here. Those banks aren't as good at selling. So there's a huge pot of, I guess, volumes to go after for Clover and even for some of your competitors like that pot, you don't make -- you make just a little thin spread, but there's a big chunk that you guys can go after that, right?

Question: Dave Koning - Robert W. Baird & Co. Incorporated - Analyst : Yeah. That's helpful.

Question: Dave Koning - Robert W. Baird & Co. Incorporated - Analyst : It's all good. Yeah. In I guess last question on merchant, so we've already talked SMB, the biggest part, growing really well with Clover, way above market. We've talked about processing. Enterprise is the last quarter of the merchant segment. You're doing really well, you compete with IBM and some other really big companies. But how are you competing there? Why are you gaining share here?

Question: Dave Koning - Robert W. Baird & Co. Incorporated - Analyst : Great. And one thing I forgot for merchant, Argentina, we cannot forget about Argentina. It's about, I think, 10% of the merchant segment that's kind of within SMB and enterprise. How fast is that just growing by itself without -- like if we take out inflation, we take out currency because there's so many movements.

Question: Dave Koning - Robert W. Baird & Co. Incorporated - Analyst : Yeah, but it's still growing while it's just [decelerates]? Is that a fair way to say?

Question: Dave Koning - Robert W. Baird & Co. Incorporated - Analyst : Yeah, good. And then the finance.

Question: Dave Koning - Robert W. Baird & Co. Incorporated - Analyst : Yeah, by [lot]. The financial business is the other half of revenue. This is kind of Fiserv's legacy business that grew well for decades and decades. It used to grow [3% to 4%], you found a way to now make it grow [5% to 7%]. And so, what has been the catalyst? Has First Data has come in and the synergies there been just help to grow faster? What do you think about --?

Question: Dave Koning - Robert W. Baird & Co. Incorporated - Analyst : Yeah. And you have you have one of the biggest, maybe the biggest debit processing platform and credit processing platform. You do both. One investor fear is MasterCard and Visa volumes in the US have started to decelerate to being pretty close to retail. So that's been a little bit of a bear thesis on those stocks for some people. But for you guys, while you have that -- you might still have some of that pressure, you can sell value added solutions and a lot of other things. Do you think can that business actually grow just as fast or faster, even if volumes come in towards retail?