The news: Fiserv’s organic revenues grew 8% in Q2, per its earnings release.

• Merchant solutions organic revenues increased 9% QoQ and 10% YoY.
• Financial solutions adjusted revenue grew 7% QoQ and YoY.

Not good enough: Fiserv’s stock plummeted 20% after the earnings miss, its sharpest drop since 2008. 

• Merchant solutions organic revenues missed analysts’ target of 12%, per Barron’s.
• Analysts held additional misgivings about the 19-percentage-point gap between Clover’s revenue growth and volume growth, a widening from Q1, per a note from William Blair analyst Andrew Jeffry cited by MarketWatch.

Fiserv also acknowledged that projects designed to accelerate growth have taken longer than expected to roll out. 

Fiserv’s ongoing strategy: Fiserv has leaned into partnerships and acquisitions to broaden merchant adoption of Clover and other financial services.

• Fiserv just bought TD Bank’s merchant processing business in Canada and agreed to manage the bank’s strategic managed services.
• It also debuted its own stablecoin, FIUSD, in partnership with Mastercard and PayPal. Fiserv expects to launch its first pilot with FIUSD by the end of the year.
• In June, the payment provider acquired the remaining stake in AIB Merchant Services, gaining a major foothold in European ecommerce.
• In March, Fiserv acquired CVV, a Dutch payment solutions provider.
• In January, Fiserv acquired Payfare, a Canadian earned wage access (EWA) provider.

Our take: Fiserv’s Clover faces a stacked market with Shift4, Square, and Toast all offering competitive POS solutions for SMBs. 

Fiserv needs to gain ground through its investments abroad to compete: Economic conditions could make life harder for small and medium-sized businesses, so Fiserv needs to get its many projects to market to help both them and its bottom line.

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