Fiserv Inc at UBS Global Technology and AI Conference Summary

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

Question: Timothy Chiodo - UBS Equities - Analyst : So with that, Bob, why don't we open it up with just a comment that -- coming out of last earnings, Visa, Mastercard, Fiserv, Global Payments, Square, all essentially said that October was a really strong month, and we've gotten some further updates here at the conference. Maybe you could start with what Fiserv is seeing.

Question: Timothy Chiodo - UBS Equities - Analyst : All right. Thank you, Bob. That's a great update. We're going to move on to some of the Clover vertical SaaS investments. So we were in Las Vegas together not too long ago, and I think was one of the highlights of the day, we got to see some of the new software that you're offering to small businesses. You already had plenty in restaurants, but that's been bolstered, but some of the newer additions were more for the retail vertical and for professional services. We tend to think of professional services, potentially businesses that have appointment booking, and that's one of the key areas of functionality. So given this is an important topic with competition relative to Square and Toast and Shopify, maybe you could just give us a little bit more on what this vertical SaaS build-out is and how Clover will monetize it?

Question: Timothy Chiodo - UBS Equities - Analyst : Excellent. Thank you, Bob. We're going to move on to non-Clover SMB. So in the model, it's roughly $3.7 billion or so of revenue last year. We understand about two-thirds of that or so is in the US. We generally think about that as a fast-growing international business with roughly one-third of it. And then a slower growth or possibly even ex-growth US non-Clover SMB. But that's okay, right? There is a plan to address that via back book conversion. That's more of a 2026 event. Can you just talk to us a little bit about what is the makeup of the US non-Clover SMB business?

Question: Timothy Chiodo - UBS Equities - Analyst : Excellent. Thank you, Bob. All right. We're going to move to the Clover $4.5 billion target by 2026. A question that we often get from investors is the CAGR implied to get there is in the high 20%s or so on the revenue growth. And you've had a large gap between the volume growth and the revenue growth because of the strength of the value-added services. So the question we often get is, implied in reaching that target, from here, call it, the mid-teens volume growth for Clover, is there an expectation of a mild acceleration in the volume growth to help support that target?

Question: Timothy Chiodo - UBS Equities - Analyst : Excellent. Thank you, Bob. Last one on the merchant segment before we bridge the gap to financial solutions by talking about the small business bundle. Let's just talk a little bit about merchant cash advance broadly speaking. So I believe it was roughly midway through Q2 that the company made a decision to lean in a little bit further to merchant cash advance, whether that be anticipation in Argentina or just the Clover Capital business in general. Can you just talk a little bit about the opportunity you saw or what was the catalyst to make that decision to lean in a little bit harder?

Question: Timothy Chiodo - UBS Equities - Analyst : Excellent. All right. Thank you. Bob, let's move on to the bridge between the 2 big segments. Let's talk about the SMB bundle, which was another one of the highlights of the time that we spent together at Fiserv Forum in Las Vegas. So maybe just talk about, sure, the offering, but I think the audience would also love to hear around what this means in terms of potential monetization and some of the addressable market associated with the SMB bundle.

Question: Timothy Chiodo - UBS Equities - Analyst : Right. Excellent. Thank you, Bob. Let's move on to the revenue guide for 2025 and 2026, which calls for an acceleration in the financial solutions segment. So Currently, revenue growth is in the 6%-ish range when you were making the point that you're already there for the 6% to 8% guidance, you're at the low end of that. But there's just a number of new business coming in, large new wins. We can list them off with Target, Desjardins, CashFlow Central, DoorDash, STAR, and Accel maybe doing better. It starts to become a pretty long list. Maybe you could just highlight a few of those and if possible, provide any relative or absolute sizing of some of those benefits.

Question: Timothy Chiodo - UBS Equities - Analyst : Excellent. All right, Bob. Well, let's touch briefly, if you don't mind. I think we have time to fit in this and a little bit on margins. So let's touch on STAR and Accel. So STAR and Accel, somewhat like CashFlow Central and the small business bundle, it's a product that, in some ways, goes across the two ecosystems. So STAR and Accel are -- they sit within financial solutions, but they can be bundled with the merchant acquiring offering. So maybe you could just talk a little bit about how that helps you win on the merchant side at times. You've announced a few partnerships and also the growth rates of STAR and Accel and how they've changed over the past few years.

Question: Timothy Chiodo - UBS Equities - Analyst : All right. Excellent. I think we can wrap with some comments on margin expansion. So at the Investor Day, you gave guidance calling for roughly, well, greater than 300 basis points of adjusted operating margin expansion across '24 to '26. The intention there was to reach roughly 40% by 2026. But it looks like you're tracking ahead of that target and recently raised your guidance for this year's margin. Maybe you could just talk a little bit about what's happening there, what's delivering the upside and how we should think about the margins over the next few years?

Question: Timothy Chiodo - UBS Equities - Analyst : All right. Bob, thank you. To Bob, to Julie, and to the Fiserv team, thank you for joining us here in Arizona. On behalf of everyone here at UBS, we're really glad that you came.