Fiserv Stock

All right. We're going to get started on the next session. I am pleased to have a twofer here. We have Takis Georgakopoulos, Fiserv CEO and Paul Todd, Fiserv CFO. Thank you both for joining us.

Thank you.

All right, Takis. To open this up, you've been in the CEO seat for almost 3 months now. We've heard a lot from the team at Investor Day in May about the company's strategy. You since talked about bringing more urgency and focus to the execution. So could you talk about your top priorities and are there any areas where you've made tweaks to what was previously communicated at that Investor Day?

Yes. So first of all, thank you for having us. I would say, overall, in terms of the priorities of the company, as we communicated with the One Fiserv priority. These are pretty self-explanatory things. They're about improving customer service, focusing on clients, improving platform stability, capital allocation, Clover, et cetera, these are all obvious things that we need to continue working on. And that's why I focus so much on the continuity post the transition so that people continue to work on those things. And we continue to make progress for our customers.

If anything, there are kind of 2 areas in which I'm focused more on. And I spent a lot of time on the fixed side in the past 3 months talking to a lot of our banking clients to just validate that what we are doing and what we are talking about is consistent with their priorities and what they want from us. And the answer was that it was spot on the clients acknowledge and appreciate the change that we made around our core strategy. They appreciate the investments that we made in the stability of the platforms. They appreciate investments that we made both in terms of the coverage team and customer service, they just want to make sure that, that continues.

And then in terms of changes, I would say 2. The first one is around operating really as one company. The way we were structured as MS and FS, kind of, underutilized portions of the business that touch both sides or sit in one side of the business, but primarily benefit the other.

To give you an example, we have a great modern issuing platform. The clients of that platform are actually merchants and marketplace customers. We have a debit network. The value of that debit network is providing better auth rates and better fraud rates to merchants. We have StoneCastle that takes deposits from merchants and provides higher yield through banks that need those incremental deposits. So the way we were structured, we're kind of underutilizing or under leveraging those synergies so I just wanted to make sure that the product organization operates as one, and then we configure our products by customer segment so that we can deliver what they're looking for.

So that's kind of change, number one. Change number two is a sense of urgency around the execution of our technology road map. We have a lot of priorities and a lot of things that we need to do. All of them reasonable things that make sense, we just can't do all of them at the same time. And therefore, it's important to prioritize the things that are on the critical path, both for us and for our clients.

Okay. Great. You answered a lot there. I think part of that, you mentioned operating as one company. I want to ask a question just from the top here, a question I'm sure you've gotten a bunch which is just the synergies between the 2 segments, whether there's been any change or reevaluation of the reasons for the 2 businesses to exist under one roof, how you think about the cross-pollination across the foundational capabilities like ledgers, pay-ins, payouts, the debit networks, et cetera?

Yes. So we said at earnings that we're going to do a review of all aspects of the business, make sure that in everything that we do, we have a right to win, we have the strategy, we have the team, and we can compete against best-in-class competitors and that work is already ongoing. And if we can, that's great. And if we cannot, we find the right strategic answer for each component of the business. Right now, the things that we are doing are important and kind of, again, obvious things that we have to do irrespective of what that eventual answer is going to look like, things like platform stability, et cetera.

From my perspective, I see a lot of growth opportunities for the company beyond just Clover that we've all talked about from the intersection of the FS capabilities and the MS capabilities, like you mentioned, the ledger, every large platform client, every large marketplace that brings together millions of buyers and sellers needs a modern ledger. And in our view, there is no better modern ledger than Finxact. So yes, you can sell it as a banking core, but there are low-hanging fruit, and there is a very large TAM out there for a core ledger for enterprise clients, especially when you link that with CommerceHub, which is a modern gateway and with Vision Next, which is a modernization platform.

And that, together with our issuing business and our network business, I think are at the core of the synergies between the 2 sides of Fiserv and it's just very important to get those things to monetize those things, which historically, again, we have not done and the way we have set up the business, we were not set up for success around those.

Okay. I'm going to come back to the strategic review in a minute, but let's talk to another hot topic, which has been the turnaround of financial solutions, you mentioned the change in strategy on the core side. A big part of that turnaround involves improving service levels and the health of the relationship with the FI clients. And it sounds like you've spent a lot of work speaking to a lot of those clients. You've talked about a 70% reduction in client-facing incidents. How are you addressing some of those service issues? And what's the level of confidence that you've kind of seen the worst of some of the attrition in that business?

So these are long sales cycles, right? So a client that's leaving us today is a client that probably RFP'd a year ago, which means they were annoyed by us probably 2 or 3 years ago. And conversely, even though clients see and acknowledge the progress that we've made, they will want to see continuity of strategy and continuity of execution before we can declare victory. That said, what we see so far is that the actions that we have taken, which is platform stability, better coverage and better service are paying dividends year-to-date 2026 compared to 2025, both the number of clients that have left and the dollars associated with those clients are down quite significantly, and we see no reason why that trajectory will not continue.

At the same time, because we stopped talking to clients about cores, incidentally, no bank CEO wants to talk about core conversions. Core conversions are like heart surgery. They take a very long time and they disrupt everything that the bank is doing, not just their DDA, but the way their ATMs work and the way their branches work and the way digital banking work and everything else. So the only reason why someone would want to convert is if they see the core as kind of a constraint in the growth of the bank, maybe it's an old core, maybe they want to move more to real-time payments or digital assets or agentic or if the core does not work because it has incidents all the time.

And so we've addressed the second. And therefore, now the conversations with banks around cores are few and far between and much more strategic. And that means we can spend much more time talking about how we can add value to the banks, whether it is through our issuing business or whether it is through Clover and CashFlow Central or whether it is through agentic and AI. And at the same time, because we freed up that capacity, we are able, for the first time in a couple of years to be also much more proactive in prospecting clients and winning banks like Flagstar is a sign that we are moving in the right direction. More work to do, but we feel good about the trajectory, even though we are not where we want to be.

Got it. Okay. I want to come back to the strategic review. You talked about expanding the portfolio review beyond lower growth noncore assets, some of which you've already talked about divesting. How is the aperture of that process expanding? And could you help maybe frame the opportunity for investors between business simplification and value unlock?

Yes. So we've divested 2 businesses. We will continue to look for stand-alone businesses that don't have either the growth profile or margin profile that we like that are stand-alone, and we will try to find strategic solutions for those. There are a number of such products that we have that we are looking at. So we will be doing more of those as we see fit and obviously, we find the right answer for those. I would say a big part of the work that we still need to do is product simplification. This company has a lot of products, typically the result of acquisitions done over a large number of years, which were not integrated.

So when I look at our product portfolio, I see 2 things. I see number one duplication. And then number two, I see things that we call products with stand-alone technology stacks that really should be configuration of one thing. So for example, when a client wants to do payments with us, a bank wants to do payment with us, we shouldn't have a Zelle product and a wire product and an ACH product and an RTP product and a FedNow product. We should be able to have a payment product and then you should be able to add each and every one of those payment methods as simple configurations.

So a big part of the work and a big part of Project Elevate is around simplifying the infrastructure that we have and reducing the number of platforms and the number of back ends that we have. We've gone a long way on that in merchant, and we will do the same thing in FS. On the merchant side, we had, for example, 14 different gateways for no real reason except history. We've decided on the end-state architecture around the gateway called CommerceHub and the end-to-end solution around that. We've shifted 80% or more of our tech resources on delivering CommerceHub while putting the rest on maintenance with a view to eventually decommission those. So that's kind of the second part, which is big and quite significant in terms of our cost base, but also in terms of our ability to deliver a good solution for our clients.

And then the third one is there are several things that we do today, where we have monoline competitors that are really strong. These are products that are important to our clients. We just need to have an objective assessment of do we have the right team? Do we have a competitive product? Do we have a plan to get us there if we don't today and for which of our customer segments can we effectively compete. And we need to focus on those. And for the rest, say, you know what, we probably can use our investment dollars in a different place and then find different solutions for those areas. We know what these areas are, and we've been working on them. As I've said in many of my conversations this morning, it's very hard to talk about them because the moment you even hint at any one of those, you, kind of, create a death spiral because no client is going to buy a product that they know you are thinking about divesting. So we need to be very careful how we talk about them, but we will do the work.

Got it. Okay. So let's talk a little bit about Project Elevate. This is the program that you've referenced to transform Fiserv's operations or tech stacks coming with that is $500 million of identified savings and a 200 basis point contribution to margins over the next several years. You're in the identification -- you said the identification phase is complete and now you're moving to prioritizing. So talk about the visibility that you have now into those cost savings and how to think about the scope of some of those that are...

Yes, very high, I would say, because a lot of those are obvious things that we need to do. And they come in 2 flavors. Flavor #1 is overlapping projects, products, features and capabilities, both in the U.S. but also internationally. And then the second one is the benefits that we get from the deployment of AI, in particular, in technology and operations. So I would say we have very good line of sight on the $500 million. These are all things that we are already working on irrespective of what we are going to end up doing with the remaining platforms. This is all work in progress, and we feel very good about that number.

Got it, okay. All right. That kind of brings us to operating leverage. The company is targeting low to mid-single-digit revenue growth. That makes margin leverage a delicate balancing act. You're committed to about 50 basis points of margin expansion annually starting in 2027 on top of Elevate. So how are you thinking about the continued investment and balancing investment in the business with driving operating leverage?

And Will, I'll take that. I mean -- and Takis may want to add. But as we said on -- at Investor Day, if you look at our cost base being roughly 60% fixed. From a structural standpoint, it lends itself to natural operating leverage of roughly 50 basis points. And that allows us to also continue to invest in the business as we move forward. We've made the significant investments largely speaking, that we needed to make to put ourselves kind of on the right trajectory for the future. And so we'll continue to balance that on a go-forward basis to be able to both get the annual margin expansion that we talked about the 50 basis points, as Takis just talked about, we're very comfortable of the 200 basis points of cumulative margin expansion that we see from Project Elevate.

And I'd just remind on Project Elevate, we do expect that to be more back-loaded as we expect 2029 benefit on the operating leverage on the margin side to be almost 2x the benefit that we see in 2027. And we believe that we have the right structure to be able to deliver both the investments that we need and the margin deliverance.

Got it. All right. That takes us to the topic of investment. I think in the most recent quarter, you talked about an incremental $100 million of investments into technology infrastructure, primarily in financial solutions. Can you talk about what led to that decision, where are the dollars going? And then how to think about potential upside risk from the investment environment that we're in, you think about cyber and risk and things of that nature.

Yes, sure. So this investment was predominantly on the fixed side of the business, and it was predominantly the result of the work that we've been doing around Glasswing and Frontier AI models, right? So when you test that infrastructure against Frontier AI models, we did not find anything fundamentally different. Obviously, as you run these models, you find some lower-risk vulnerabilities that can be chained together to create a high risk one and so on.

But at the end of the day, we did not learn anything fundamentally new or any new things that we had to do that we did not know about. So our road map is exactly the same. The main thing that changed, though, is when you think about the power of those models being available to everyone in the world over the next, I don't know, pick your favorite number 6 or 12 months, the speed with which we need to remediate those things is just much faster. And that's why we decided that this is critical to do as quickly as possible because of our position in the financial solutions ecosystem. That was something that we had to do. Again, it's work that we knew we had to do. We just need to do it faster than if these models hadn't existed.

Yes. And Paul, we're talking about this before we got up, but we've gotten a lot of questions around the upside risk potential in investment spending. It sounds like a lot of this is timing. How do you think about the way this $100 million carries into next year?

Yes. I mean it kind of goes back to what I was saying before about the margin is we're going to manage the expense base to be able to absorb, obviously, this investment. And as it relates to 2027, we will still be able to deliver the margin targets that we've outlined on an annual basis, the 50 basis points. And then there is a piece of Elevate that will come in, in 2027. So we're managing that as we look at the total expense base.

Got it. Okay. This year has been a transition year. I think the cadence first half versus second half, the quarters have been a little tricky to get right, particularly on the nonrecurring revenue side. As you look into the fourth quarter, the guidance calls for an acceleration to roughly mid-single-digit adjusted revenue growth. And a big part of that comes from lapping a lot of these nonrecurring revenues. In the prior year, the Clover pricing changes as well as several other items. Can you talk about where in the segment should investors expect to see that acceleration. And when we think about the dependency on implementation pipelines after several deals that were pushed out of the second half, after the update you guys had last quarter. What's the level of visibility into those go-lives and then things occurring on schedule?

Yes. So a couple of things there. And as you said on our last call, we did give guidance both for the third quarter and the fourth quarter. The third quarter, we do still have some of the nonrecurring comparative dynamics playing through. So for the third quarter, we said we'd be down low single digits, down 1% to 3% or down 2% at the midpoint of that. And then for the fourth quarter, growth of mid-single digits, which that's important for several things. First of all, that's kind of the fundamental growth rate that we talked about at our Investor Day, the 4% to 6% target that we had at Investor Day.

So to be able to deliver the fourth quarter in line with that future growth rate is important. As it relates to the segments and where we would see that in the fourth quarter, it's broadly across all the segments that we would see a sequential improvement from the third quarter to the fourth quarter. And so that's our expectation right now as it relates to how that would sprinkle across the segments. And then the final piece to the question around the implementations is we feel very comfortable about where the implementations are. We have good line of sight into where those stand. And so there's no change as it relates to our expectations on the implementation side.

I agree. I would add that the fourth quarter will be the first quarter in a while in which there will be minimal noise in the numbers. And therefore, what you guys see in terms of volume and what you see in terms of revenue growth will kind of tie with each other. And we have a high level of confidence around the number that we talked about for the fourth quarter, which then we just need to take forward to 2027. But you will see that without all of that noise from the elevated nonrecurring, et cetera, et cetera, and the year-over-year comparisons, the fourth quarter will be the first clean quarter in a long time, and that will carry on to 2027 because there are not many large nonrecurring that we did in 2026. So it's going to be, hopefully, a much simpler story, right?

Okay. All right. Let's talk about agentOS. The Investor Day emphasized how difficult it is for financial institutions to deploy AI-enabled products in a regulatorily compliant way. So banks can't let agents into the core system. There's a lot of regulatory focus around PII. Can you talk about how agentOS addresses some of those challenges and what some of the early client interest looks like?

Yes. So obviously, there is a lot of client interest because every bank wants to try out agents, want to see how they work. And by the way, they all have a bunch of manual processes that they know are ripe for automation. Our approach there is very conservative, which means always human in the loop and always take a manual process that we know how to automate and then kind of do that gradual automation first almost like a model with a human approving everything and then as we get comfortable over time, allow more autonomous agents.

The most interesting thing about agentOS is the infrastructure that you need to deliver that. And that infrastructure is essentially an orchestration layer that looks at all of the functions that a bank has and links those to the core, which ties very nicely with where we want to take the FS business overall, which is what's important to us is to own the orchestration, the front end and the ledger, which is the back end because between the 2, you control the whole ecosystem, you control the data, and you are kind of the critical infrastructure provider to the bank.

Then the bank can choose our agents or their agents, ours around or someone else's around. But between those 2, you maintain the majority of the economics and you create something that's pretty unique in the market. Also to deliver on agentOS, you need to deliver on the interoperability of our products, which, again, is another big priority that we have. So I see agentOS not just as a great stand-alone solution for clients to play with, get comfortable, regulators, by the way, to get comfortable and over time, create real value with autonomous agents but also as a way to show to the banks what the future of working with us is going to look like.

And then how do you think about monetization for some of these products?

Modernization?

Monetization?

Yes. So the monetization will come in a variety of different ways, right? So the orchestration layer is a little bit like an app store, right? So you can use whatever agent you want. But the one who orchestrates that whole ecosystem keeps a portion of the economics the same way as on the merchant side, the company that controls the gateway captures a portion of the economics. The agents themselves, given that we have 3,500 banks, we understand the problem statements pretty well. And therefore, as we generate value and we generate automation and we eliminate manual processes and costs from the banks, we will keep a portion of that, and we will price for value.

But over time, at the end of the day, the biggest value will come from helping banks modernize and becoming a critical component of their infrastructure not just in the current world, but also in whatever the future world is going to look like.

Got it. All right. One product that has come up a lot as a growth driver on the financial solutions side is CashFlow Central. You talked about reducing the implementation time lines a lot now you're looking for banks to drive adoption on their end? And also maybe supercharge that by tacking it on to the go-to-market with Clover. Where are you in that process? And what's your kind of visibility to seeing results on the CashFlow Central side?

Yes. So CashFlow Central is a great product and its main difference from competitors because many other people have AP and AR. The main difference is it's embedded within the bank workflow, which, again, the same story as with Clover distribution through banks, most fintechs just do not know how to work with banks, and we are in this unique position that we grew up working with banks, and we actually know how to do that. They trust us. We know how to work with them. Banks are not -- no offense to banks, not naturally good at selling, acquiring or selling invoicing or bill payments.

And so the embedding that into their workflow into their digital front end, training their front office, et cetera, is a critical component for the success of this product. CashFlow Central today has, I think, a couple of hundred banks and about 100,000 SMBs, if I remember correctly. But the real value is this is a component of the end-to-end SMB suite that we have, which is Clover, right, hardware, processing, software and now invoicing and accounts payable. That end-to-end suite is pretty unique and what we still need to do is take all of the learnings and best practices from Clover and make sure we embed those on the CashFlow Central suite so that it really becomes a continuum.

Clients can still pick and choose. Some may want Clover or may not want Clover, may want CFC or not. But we just need to make it very easy for them to buy the whole suite. But I think the progress with CashFlow Central has been pretty good.

Okay. So let's go to Clover then. Clover has always been the cornerstone of that segment for many years now. Underlying growth, you cited at around 13% adjusting for several items. Reported growth was 2%. And so quite a bit of ways from the 15% to 20% revenue target. I know some of that will narrow in the back half of the year, you've already talked about. So talk about the achievability of those targets. What kind of puts you at the high end versus the low end and the path towards closing the gap between the reported results and the underlying numbers that you've been signing?

Yes. So as you kind of commented, we're already there from a volume standpoint. And if you look at where Clover volume growth is, we're already at the low side of that 10% to 15% from a volume standpoint. And obviously, as we get further down, we'll be able to continue. And you'll see that even more so in the next 2 quarters as it relates to the progress on the volume side. On the revenue side, as you highlighted, we're already at the low side, really of that 15% to 20% if you separate out the noise. And once again, going back to my earlier comment around seeing things in the fourth quarter, you're going to see a much tighter correlation between volume growth and revenue growth on a reported basis in the fourth quarter.

And as Takis talked about at Investor Day, the things that get us higher in that range are the Clover Capital deployment, Clover Cash, which is just going to be coming online here in the next quarter. And then further penetration of the other value added, whether it's Agent or a few other things that we're rolling out from a value-added standpoint. Those are the things that, obviously, as it relates to the migration of any of the back book that also adds us up in that higher end of the range. But the key takeaway is, fundamentally, we're already kind of performing at the low end of those ranges now, the things that we're rolling out and doing on a go-forward basis moves us up to the middle or the higher ends of those ranges depending on how successful we are there.

So I would say, just to add to what Paul said, by fourth quarter, we will no longer need to have the conversation because the reported number and kind of the normalized number that we are looking at will be the same, and it will be at the low end of those ranges. Now as Clover grows, and it's already north of $3 billion, achieving those revenue growth targets would require more and more absolute dollars. That's why it's very important to continue working on Clover across all dimensions. The competitive differentiation of Clover remains the broad distribution that we have. I talked about banks, but it's also ISVs and ISOs and our direct sales force as well as all of the work that we are doing to pivot Clover from a hardware for sale, first to a software for sale and then eventually to a data for sale because our sustainable competitive advantage as a company is that we do business with 4 million small businesses.

Clover is already bigger than our biggest competitors. Fiserv overall is more than twice as big as Clover. That information that we have and that knowledge that we have on SMBs means that we should be able to underwrite better, price better, help grow because we know who their clients are and we know what else they do and where else they shop. And this is a very kind of under-monetized asset that we have. In addition to that, we are able now to move Clover more up market compared to the past. Clover had 2 gaps when we were trying to move upmarket.

One was we were missing some of the specialized software that some of our competitors have. And instead of building that and spending the next 2 years trying to do that, we decided to partner with best-in-class ISVs and surround those with the rest of Clover capabilities in a Clover-branded solution. We've done that with high-end restaurants with Tabit and we've done that with health care with Rectangle, and you should expect us to see more of that. And the second constraint that we had is we could not support multi-location SMBs, which meant we were in this weird situation that when an SMB grew, we had to move them out of Clover and move them on to CommerceHub because Clover could not support clients with big locations, which limited the GPV growth of Clover.

That will be a thing of the past early next year, and that will also drive Clover growth. So we have a bunch of initiatives very consistent with what we talked about at Investor Day. We think those give us multiple paths to get to the 10%, 15% and 15% to 20% and back book conversion, which we are trying in a variety of ways, and we are going to do more deliberately in 2027 will hopefully get us to the upper end of that range.

Got it. I'm going to try to squeeze in a few more in here. First on distribution. Fiserv has always had a very large vast wide, diversified distribution channel, whatever adjective you want to use to describe it. If competitors have looked to replicate that success there's more competition in areas like the ISO channel, ISV channel, the bank channel. Have you seen any changes in the competitive dynamics for Clover so either on economics, partner exclusivity or share volume at your partners?

Yes. I mean it's obviously a highly competitive space with highly credible competitors, right? And it's always been like that. On the ISO space to take that part of your question first, we have not seen any fundamental change in the market share that we have with the ISOs that we work with. And keep in mind that we are embedded with those ISOs for decades, like the old first data was embedded with ISOs for the past 50 years. A lot of the ISOs started from old Fiserv people. People used to come in and out. They would go from an ISO to Fiserv out to an ISO. So that's a very, very embedded relationship. And it is very strong, and we have seen no change.

Obviously, large ISOs will look for options, and some of our competitors are better in some of those subsegments. And it's natural that you're going to see them there, but we have not seen any change in our market share. But fundamentally, I think even though we love ISOs and we will continue to invest in that segment, we see more of our growth in the other segments, which, by the way, also have more attractive economics to us. ISVs, as I said, in the new embedded way, we should be able to do more and capture a higher value of the economics. With banks, we work with 1,000 banks, actually more than 1,000 but only a minority of them have adopted the best practices that will lead to high adoption of Clover within their book, and we are working to expand that adoption to the rest of them.

And then on the direct side, we have a lot of work to do to optimize how we prospect and how we price. So we see a lot of upside in all of those things and we don't see any of our competitors as blocking any of that growth.

Great. We'll just close it out here on capital allocation. You have a targeted leverage level of approximately 3x by year-end. So how are you prioritizing deleveraging? And then once at those levels, how do you think about the ongoing level of capital return and use of free cash flow.

Yes. So -- well, nothing's changed from Investor Day when we talked about our first priority is to get our leverage level below 3x and we're targeting to be on that approach for the remaining part of this year and into next year. Our investment-grade rating is super important, not only to us but also to our Financial Solutions clients. So we're committed to that 2.5 to 3 range and targeting down over the cycle period from '27 to '29. I would say, as we said at Investor Day, our highest priority of extra free cash flow beyond deleveraging is for share repurchase.

And so what we need is to get some time of our EBITDA to be able to be back in a growth mode to provide for some natural deleveraging in addition to the debt paydown so we can get back to a much more meaningful share repurchase scenario certainly in the back half of 2027 and beyond.

If you look at our free cash flow compared to the market cap of the company, it's just a very, very attractive alternative. It's very hard to think of something that's more attractive than that. That said, once we get below 3, we look at where interest rates are and where our stock is and what are the other options that we have. But stock buyback is just where we are right now would be a very high priority.

Understood. Well, I think that takes us to time. Takis, Paul, thank you for joining us. Really appreciate the conversation.

Thank you very much.

Thank you.

Welcome to the Fiserv Second Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, today's call is being recorded. At this time, I would like to turn the call over to Walter Pritchard, Senior Vice President and Head of Investor Relations at Fiserv.

Thank you, and good morning. With me on the call today are Takis Georgakopoulos, our Chief Executive Officer; and Paul Todd, our Chief Financial Officer. Our earnings release and supplemental materials for the quarter are available on the Investor Relations section of fiserv.com. Please refer to these materials for an explanation of the non-GAAP financial measures discussed on this call, along with the reconciliation of those measures to the nearest applicable GAAP measures.

Unless otherwise noted, performance references are on a year-over-year basis.

Our remarks today will include forward-looking statements about, among other matters, expected operating and financial results and strategic initiatives. Forward-looking statements may differ materially from actual results and are subject to a number of risks and uncertainties. You should refer to our earnings release for a discussion of these risk factors.

And now I will turn the call over to Takis.

Thank you, Walter, and good morning, everyone. In stepping into the CEO role, I'm honored by the trust the Board has put in me, deeply committed to our customers and motivated by what this company can deliver to its clients and shareholders. For those who don't know me, I joined Fiserv in late 2024 and shortly after took on the Chief Operating Officer role before assuming leadership of the merchant business last fall.

Prior to Fiserv, I held a variety of roles at JPMorgan, including running its global payments and merchant businesses, which grew to become one of the largest in the industry during my tenure. And as an engineer by trade and training, I'm energized by solving complex problems and technology has always been central to my career. I have firsthand experience with the complexities of building, modernizing and running bank cores and payment systems. I also understand the responsibility that comes with operating as a critical infrastructure provider from stability and reliability to cybersecurity and customer experience.

With that context, I want to make a few comments. Our second quarter results are in line with our guidance. Our free cash flow generation was above $1 billion. And importantly, our Clover GPV grew at 9%, while Clover revenues grew at 13% adjusted for anticipation and nonrecurring revenue. Second, while maintaining the growth rates in our medium-term outlook, we are updating our guidance for the second half of the year, which results in full year guidance for organic revenue to a range of minus 1% to flat and adjusted operating margins to a range of 31% to 31.5%.

This is driven by 3 factors: First, weaker macro conditions in Argentina and a slower ramp of client-driven implementation time lines, which were both factors outside of our control. Paul will be providing additional information on Argentina given the volatility of that business.

Second, a slower pace of execution of some of our growth initiatives, highlighting the need to further focus our efforts and improve operational excellence. And third, our decision to make incremental investments in technology, infrastructure and cybersecurity that primarily supports our FS business. We expect these investments will accelerate our pace of progress in platform stability, resiliency and cybersecurity, which we know is critical for our customers and for our franchise.

With that, let me tell you why I'm excited about our prospects to drive sustainable shareholder value. Two months into my tenure as CEO, I'm more confident than ever that Fiserv is one of the most consequential businesses in our space. We process 1/3 of U.S. merchant GPV. We have the #1 share in U.S. issuer processing, and we serve 80% of U.S. banks and credit unions with at least one of our products. And as a result, across our company, we interact with virtually all U.S. big consumers and small businesses.

We also have a fundamentally simple business. We are a critical infrastructure provider to our clients. We have incredible staying power. Because our products are deeply embedded in complex, highly regulated and secure workflows, this is really hard to replicate. This business has a consistent history of strong profitable recurring revenue, and that remains intact. Recurring revenue makes up approximately 85% of our total adjusted revenue. The processing side of our business grows at around GPV, but the differentiated components with Clover first among them grow at multiples of that.

And on top of that, we continue to see a number of significant opportunities that can accelerate our performance beyond the baseline level of recurring revenue we see today. These include our state-of-the-art modern stack, including Commerce Hub, Vision Next and Finxact, the power of our data and creating solutions that bring our merchant, issuing and network platforms together. These are the types of opportunities that brought me to Fiserv to begin with, and AI is the great unlock to getting those to market in compressed time frames. We are energized about pursuing those opportunities to solve problems for our customers, but realized we must deliver the basics first.

This leads me to outlining where I'm focused and driving our teams to operate with increased urgency and accountability, namely capital allocation, focus and product simplification. To the first point, capital allocation, we are significantly expanding the process to review our mix of businesses and associated capital commitments. To date, the process has resulted in a near-term focus on lower growth noncore businesses and led to our decision to divest our student loan servicing and managed ATM businesses as well as exiting the unprofitable SMB and fuel segments within our merchant business in India.

These were the right decisions, but these alone do not move the needle. Fiserv provides a large number of products to our clients, and we know that they want best-in-class solutions. As part of our expanded review process, together with the Board, we will dispassionately assess how our products compare to best-in-class and whether we have the right to win in each. If we do, we will double down and make sure we execute. And if we don't, we'll evaluate the full range of actions to maximize shareholder value while making it imperative to ensure that we don't do anything that causes disruption for our clients.

While the Board and I fully endorse the One Fiserv strategy and the differentiated value we can deliver to clients through our independent integrated model, that does not mean we should be building everything that our clients are buying from us. This is a meaningful shift with defined time lines and goals that I expect will create additional opportunities to drive shareholder value. This is a top priority for me. We are acting with urgency, and we will report back on our progress as we advance this work.

Moving on to operational and technology excellence. We need to increase our pace of change and simplify in a number of respects. I started driving this as the leader of merchant, and now I'm driving it across the company as CEO. In Merchant, we completed the move to organize like most leading tech companies with a single integrated product and technology organization at the center. That helped us eliminate duplication and distractions while making swift progress modernizing our infrastructure around a single modern solution anchored on Commerce Hub, which is our gateway.

We are following the same approach in our FS business, recognizing, of course, the differences and complexities of our banks, credit unions and issuing clients.

Just as important, we need to improve coordination across merchants and financial solutions. Going forward, we will look to more consistently leverage foundational capabilities like ledgers, pay-ins and payouts across both businesses. By adopting a common structure, we can consistently improve the client experience, speed up delivery and lower costs. And as we drive simplification, we can move faster on the capabilities that are unique to Fiserv, including embedded finance, stablecoins, networks and settlement.

These operational improvements will put us in a position to drive significant cost savings over the medium term, in line with Project Elevate targets, and we will be very focused in speedy execution.

Finally, on technology, I'm confident that we are moving in the right direction. We have made significant progress with a stable and highly scalable platform in Merchant services and a 70% reduction in FS client-facing incidents. To continue to advance these priorities, we have chosen to invest over $100 million incrementally into our technology infrastructure in the second half of the year, especially in the financial solutions business. We believe this is the right move to position our clients and the company for 2027 and beyond, especially as frontier AI models reduce margins for error.

Now moving to some business highlights. First, in Merchant Solutions, we continue to see progress on a number of fronts, especially with Commerce Hub and Clover. The progress that we have made in modernizing our merchant tech stack in record time under the Commerce Hub Gateway is further reflected in the dramatic increase in our enterprise pipeline with both traditional and e-commerce businesses. We believe this positions us well in the global enterprise wallet against the best competitors in the space, and we look forward to announcing exciting new large deals in the coming quarters.

Just this week, Fiserv and Mastercard entered into a strategic partnership that integrates Mastercard's merchant cloud into Fiserv's Commerce Hub. This partnership adds value-added services together with global reach to our capabilities.

Moving to Clover. I want to highlight Western Alliance Bank going live on Clover, bringing nearly 40 of the top 100 banks in the country working with Clover and highlighting one of the key synergies between our FS and MS businesses. Internationally, our partnership with TD in Canada is continuing to scale, bringing Clover to TD clients across their more than 1,000 branches nationwide. Our efforts will now shift to converting the existing TD client portfolio to Fiserv in 2027, extending our capabilities to over 80,000 existing TD merchant clients.

We also rolled out digital activation to Restaurant Depot, our significant industry partner, reaching thousands of use and touch points with restaurants every month and continue to grow our business with this partner. Lastly, after launching Clover PracticePay, we continue to see success signing up new merchants and have about 20% higher average volumes than our average SMB merchant, and we are expanding this offering into new channels in the second half of the year.

In Financial Solutions, digital payments and issuing businesses fueled our recurring revenue growth. In banking, we are seeing progress with new core wins and related deal value from these wins versus the same period last year, while attrition remained stable. One notable example was the expansion of our relationship with the UW Credit Union, where they selected DNA as its future core platform, replacing their previous solution and incorporating additional Fiserv offerings. This significant win reflects the growing confidence customers have in our technology strategy and the progress we have made delivering key product milestones.

We expanded our relationship with Flagstar Bank through the addition of Finxact. Finxact will serve as the foundation of the bank's core modernization strategy, replacing both our legacy core and a competitor's core platform at least $88 billion in assets institution. We are excited about the accelerated time line of this conversion and the potential for this deal to drive further Finxact momentum with more banks.

Staying on with Finxact for a minute. We grew positions and accounts over 75% and were selected by a firm as their ledger provider. We also renewed and grew our business with our significant customer OnePay, one of the fastest-growing consumer fintechs in the country. Overall, these proof points are helping maintain our momentum in embedded finance, where we continue to see a strong pipeline.

Our issuing business had a significant win with a U.S.-based provider of investment and retirement services for their debit processing portfolio. We also onboarded new debit and credit portfolios for Huntington National Bank, and we further strengthened our strategic issuing partnership with Bread Financial through Advanced Defense, our AI-enhanced fraud prevention solution.

In FS, we also continue to focus on delivering innovation. Among other initiatives, we expect agentOS to lead the way in showing our FS customers the incremental value we can bring to the investments they made in our core banking platforms. We have seen interest from financial institutions grow significantly to over 100 since the initial announcement, and we look forward to providing further updates at Forum.

We continue to make progress signing new bank partners for CashFlow Central and the pipeline of opportunities is large. We have cut implementation time lines by about 50% for our financial institutions compared with a year ago and see room for further improvement. We are now focusing on helping our banking partners drive adoption and use all of the CFC power and its complementarity with Clover to address all the needs of small businesses.

Lastly, I want to thank our employees for their hard work and dedication and our clients for their continued trust. I look forward to spending time with the investment community.

With that, I will turn it over to Paul to cover the details of Q2 and our guidance. Thank you.

Thank you, Takis, and good morning, everyone. I will cover details on total company and segment performance in the second quarter and our guidance for 2026. Beginning on Slide 5.

Total company Q2 adjusted and organic revenue was $4.96 billion, a decrease of 4% and 5%, respectively, compared to the prior year period. As we have said previously, Q2 marks the trough in growth rate for the year and resulted in first half adjusted revenue decline of 3% within the range of our expectations for first half adjusted revenue guidance we discussed at our Investor Day.

As Takis mentioned, we saw stable underlying transaction, volume and account trends across the business, driving recurring revenue growth of 2% in the quarter with recurring revenue representing 84% of our total adjusted revenue. While our Q2 results were in line with our expectations, we had 2 incremental headwinds to revenue growth that negatively impact our back half revenue expectations. First, macro conditions in Argentina have continued to impact inflation and interest rates in the country that has weakened our anticipation revenue during the quarter. This impact was a 90 basis point year-over-year headwind to adjusted revenue in Q2 and a 60 basis point negative impact to adjusted operating margin.

At the total company level, our first half adjusted revenue was down 2.8%, excluding the impact from Argentina anticipation. The impact to pretax income and adjusted EPS is minimized as we carry the cost of the anticipation business and the interest expense line.

Second, we are experiencing incremental headwinds in our hardware revenue in merchant. This is partly due to the market impacts of higher level of hardware sales over the last 2 years. Q2 total company adjusted operating income was nearly $1.6 billion, resulting in adjusted operating margin of 31.8% and first half adjusted operating margin of 30.8%.

As I mentioned earlier, these results absorbed a 60 basis point headwind to adjusted operating margin from anticipation. Second quarter adjusted earnings per share was $1.84. It is worth pointing out that FX rates in Lat Am were unfavorable on a year-over-year basis with an impact to adjusted EPS of $0.07 in Q2. Our Q2 results reflect an adjusted effective tax rate of nearly 20%. For the year, we expect our adjusted effective tax rate to be approximately 19% with the tax rate higher in the second half of the year than what we saw in Q2.

Free cash flow for the quarter was strong at $1.1 billion with a free cash flow conversion of 112% driven by efficient management of our working capital and some favorable timing effects.

Now I will turn to the performance by segment for Q2, starting on Slide 6 for Merchant Solutions. Merchant Solutions, both organic and adjusted revenue declined 1% for the quarter. Small business revenue was flat on an organic basis in Q2 and declined 1% on an adjusted basis. Small business volume grew 2% in the quarter, which is lower than Q1, largely due to the anniversary of the CCV acquisition.

Clover revenue grew 2% in the quarter. Excluding higher nonrecurring revenue from the second quarter of 2025, Clover revenue growth would have been 11%. And if we exclude anticipation, Clover revenue would have grown by 13%. Clover GPV grew 9% on a reported basis and 11% excluding the previously discussed gateway conversion. We continue to expect Clover GPV growth of 10% to 15% ex the gateway conversion.

Given the headwinds related to anticipation and hardware, we now expect reported Clover revenue growth in the mid-single digits for 2026. We continue to expect medium-term Clover revenue growth in the range of 15% to 20% growth as trends underlying this view are stable. Value-added services revenue contributed 25% of Clover revenue in Q2, up from 24% and grew 10% from a year ago, driven by software attach and including Clover Capital and offset by anticipation. Our non-Clover SMB revenue was down 5% in Q2.

Moving on to Enterprise. Adjusted revenue declined 1%, while organic revenue was flat in the quarter. Enterprise transactions grew 8%. And finally, in Processing, organic revenue declined 8%, while adjusted revenue declined 6% in the quarter. Second quarter adjusted operating income for Merchant Solutions was $781 million, down 14% with adjusted operating margin of 30%.

Now I will cover Financial Solutions starting on Slide 7. For the quarter, both organic and adjusted revenue declined by 8% in Financial Solutions, driven by higher nonrecurring revenue a year ago. In Digital Payments, both organic and adjusted revenue declined by 6% in the quarter. Our underlying account and volume growth in Financial Solutions was in line with what we expected in our recent history. Within digital payments, payment platform transactions grew 5%, driven by stable debit processing and acceleration in debit network volumes. Our consumer payment platforms transactions were down 1% with accelerating growth in Zelle being offset by deceleration in bill pay.

In issuing, both adjusted and organic revenue declined by 10% in the quarter. The decline in year-over-year revenue growth was in line with our expectations and reflects lower nonrecurring revenue this year versus a year ago. On an underlying basis, global accounts on file continue to grow in the range we have seen recently, which is up 4%.

Finally, in banking, revenue decreased 10% on an organic basis and decreased 8% on an adjusted basis in the quarter as we continued to be impacted by attrition from actions taken over the last several years as well as higher nonrecurring revenue in the year ago period. We saw core counts declined 3% year-over-year, while overall accounts and positions, including Finxact grew 6%. Second quarter adjusted operating income for the Financial Solutions segment declined 27% to $912 million and adjusted operating margin was 38.7%.

From a leverage standpoint, we finished the quarter with a gross debt to adjusted EBITDA ratio below 3.2x. We completed a $1.4 billion tender offer and open market repurchase for $1.2 billion total consideration and issued $1 billion in eurobonds to take advantage of an opportunity to lower our cost of capital and strengthen our balance sheet. For the year, we continue to expect to finish the year at approximately 3x.

Turning to Slide 8. We repurchased 1.7 million shares during the quarter for approximately $100 million. As we noted during our Investor Day, we are focused on managing our leverage ratio and remain committed to returning any excess capital to shareholders.

Following up on the savings opportunity of at least $500 million we identified from our Project Elevate assessment, we have completed the identification phase and have a full inventory of these opportunities. We are currently prioritizing these and moving forward with the most significant initiatives at pace.

On August 5, we closed one of the 2 divestitures we announced around Investor Day and expect to close the other in the third quarter. We have accounted for these in our guidance for adjusted revenue growth, which I will review in a moment. There is no impact from these transactions on our organic revenue growth. We intend to use the proceeds for a combination of capital return and delevering. As Takis mentioned, we continue to be focused on divesting and pursuing alternative ownership structures for businesses that are not foundational to our strategy or where we believe we are not well positioned to execute.

Now with Slide 9, I'll move on to our 2026 guidance. First, from a revenue perspective, we expect adjusted revenue to grow approximately 2% year-over-year in the second half of the year with Q3 down low single digits and Q4 up approximately mid-single digits. Compared to our prior 6% to 8% second half adjusted revenue growth outlook, we currently expect 2 points of negative impact from delays in newly contracted revenue and enterprise client ramps, 1 point from lower key product and other revenue, 1 point from Argentina anticipation and 1 point from divestitures. To be clear, we still expect to recognize the vast majority of this revenue, but it has shifted out in terms of timing.

Considering these factors, on an organic basis, we expect 2026 revenue growth in a range of minus 1% to flat. On adjusted revenue, we expect about 1 point of impact from the reduction in revenue from the student loan servicing and ATM services business, offset by lower currency impact. This translates into a range for 2026 adjusted revenue of down 1.5% to down 0.5%.

As it relates to expenses, as Takis previously mentioned, we have chosen to incrementally invest in technology infrastructure, particularly in financial solutions. This higher expense level is consistent with the investments we have made since last fall and with the principles of One Fiserv. As you have heard throughout the year, we are laser-focused on positioning Fiserv to be able to deliver compelling revenue and adjusted EPS growth rates in 2027 and beyond, and we believe that these investments will best position us to deliver that as we move past this transition year.

We expect adjusted operating margin of approximately 31% to 31.5% for the year. There are 3 drivers of our lower adjusted operating margin. Approximately 50 basis points is related to our increased technology infrastructure investment, approximately 50 basis points relates to the impact of Argentina anticipation and the remaining 150 to 200 basis points is a result of the lower revenue I discussed earlier. We expect the divestitures to have negligible impact on our adjusted operating margin.

We expect that our updated view of annual adjusted revenue and operating margin to drive adjusted EPS to a range of $7.20 to $7.40. We continue to expect capital expenditures to remain in the high single digits as a percentage of adjusted revenue. We continue to expect free cash flow conversion of approximately 90% for the year, in line with historical levels.

I want to close with a few key points. First, we remain confident in the path ahead. The change in our second half growth rate is not structural. From here, we expect our adjusted revenue growth rate to improve in Q3 and a further step-up in Q4 to an exit rate consistent with our medium-term growth outlook.

Second, our increased technology spend reflects a deliberate choice to strengthen the business for the long term, not a change in our underlying cost discipline. Our ability to drive operating leverage is intact, and we remain committed to approximately 50 basis points of annual adjusted operating margin expansion starting in 2027 and greater than 200 basis points of total adjusted operating margin expansion for Project Elevate by 2029. This combination of durable revenue growth and margin expansion underpins our confidence in double-digit annual adjusted EPS growth from 2027 to 2029.

Finally, our cash generation remains a real strength. We generated over $1 billion in free cash flow this quarter, and we continue to target 90% free cash flow conversion for 2026 and beyond. Moving forward, we will continue to evaluate increased capital return to shareholders over time.

And with that, we will now start the Q&A session.

[Operator Instructions] Our first question comes from Tien-Tsin Huang from JPMorgan.

I know you went through a lot of the outlook there. Just maybe could you mind decomposing again what changed in the second half outlook after reaffirming on June 15 and why it's not structural. It sounds like a lot of it is the slower client ramps, for example. Was that driven by change in leadership and clients wanting to better understand the go forward? I'm just trying to understand why it's not structural.

Yes. Tien-Tsin, this is Paul, and I'll start, and then I'll turn it over to Takis for any additional comments. As I said in my prepared remarks, there are several things that changed. And after Takis became CEO, Takis and I went through our operating plan. We went through all the initiatives, all the client impacts and 4 things emerged from that, and that's what I called out in the prepared remarks that we've got about 2 points of incremental headwind from the contracted revenue and Enterprise ramps that I called out at Investor Day.

We have about 1 point of headwind from product and other things, specifically hardware. And then we have 1 point from Argentina anticipation, 1 point from divestitures. So if you think of a point from divestitures, that's just mechanical. The point roughly from Argentina anticipation is macro related to just Argentina. And then the first 2 buckets, those aren't structural changes. They are timing-related changes. So we expect to see the vast majority of that revenue. It is just moved out from a time standpoint, and that's reflected in the guidance that we provided this morning.

Yes. And thank you, Paul, and just to add on, Tien-Tsin, just a couple of thoughts from my side. This unfortunately is a transition year with noise, hopefully, will be behind us soon. As Paul said, he and I reviewed every initiative, every budget.

And in the case of some of these large deals, actually spoke to the clients to understand what changed in terms of the time line. And this is our most accurate assessment of what's going to happen. To give you an example, one of the clients, one of our largest deals, the clients going through an M&A. We were supposed to go live in September, October. They need more time because of that M&A. So there's nothing fundamentally changing in terms of the deal, in terms of the size of the deal, just the timing moves out by quarter. So we believe that these numbers that we have is an accurate assessment, derisked and does not impact the momentum that we see in 4Q and beyond.

Next, we'll go to the line of Timothy Chiodo from UBS.

I want to see if we could talk a little bit about some of the core banking efforts and outreach to some of the clients. I know that, that was something that we talked about a little bit at the Investor Day. I wanted to see how that's going, the approach, maybe how it might have changed with some of the leadership changes? And then a related topic, if you could just talk a little bit about some of the advantages that Fiserv has, whether it's product or relationships that would help Fiserv to compete with the potential greater entrance of Pismo into the core banking market and issuer processing in the U.S. I appreciate that this isn't really something very, very near term, but as we think about over maybe a [ 5 ] or maybe even longer-term time period than that.

Thank you. Maybe I can start. And I thought there was 2 questions. So on the first one, obviously, one of the things that I've done and spend most of my time over the past few weeks is talking to the clients, and this is not new. I've been doing that since I came here. And at the end of the day, what they say is, in my mind, both pretty simple, pretty straightforward and pretty reasonable. They want platforms that work. They want us to deliver what we promised. They want good customer service, and they want us to help them prepare for the future, but not force our priorities on that.

These are not new things. These are the things that this company has been working on and we've been making progress on. And by the way, these are customers that have been with us not for months or years, they've been with us for decades. So we are working on those things. I think we mentioned the 70% reduction in incidents. We mentioned the $100 million extra in infrastructure technology. These are all things that are indirect response to the things that they are looking for. We are also maintaining continuity.

We announced that Srini Krish and Andrew Gelb are going to be running the FX business. Both of them have been with those clients for more than a decade each. And then our Vice Chairman has been with those clients for multiple decades. So that will continue. It's BAU. It's no change in terms of what we are trying to do. But hopefully, it will be an acceleration of how quickly we deliver it. And coming from a bank, I know what those expectations look like.

On your question of Pismo, I think we have a very broad set of solutions in the market. Some solutions are geared towards credit unions, some are geared towards community banks, some are geared towards large banks and some are geared more towards fintechs, neobanks, et cetera. When we look side-by-side at Pismo versus our own capabilities, not just with Finxact, but how Finxact is complemented by everything else that we have, think of digital banking, think of payment, think of embedded finance, think of issuing, we believe that we have a very complete set and the size and growth of Finxact has been quite spectacular, especially over the past couple of quarters.

So I feel very good about our competitive position, both in the traditional space and in kind of the newer, more modern cloud-native space. And we've seen the momentum. Flagstar is a great example of that. So I'm actually very excited about what's coming ahead.

Our next question comes from Darrin Peller from Wolfe Research.

Just given the management changes, how you're ensuring that everyone is aligned properly. And then, Takis, when you think through this portfolio review and the potential for incremental changes or divestitures, maybe give a little bit more color into what you're looking at, what types of size businesses you might want to think about or if there are businesses of meaningful size that could potentially be carved out to keep the business more streamlined and what we should expect time line-wise around this?

Yes. So again, 2 questions. So let me start with the second one. So we did a very kind of detailed portfolio review of our business. And the lens that we took is are we in places that are not growing, that don't have the kind of profitability profile that we like, et cetera. And that's why we ended up with the 3 that we ended up. My approach is a little bit different, which is in addition to all of that, I want to look at what our clients need and what we make and take each one of those things that we make and say, do we have a best-in-class product. We know our clients want best-in-class. Can we deliver best-in-class.

And by the way, can we deliver them in an integrated and simple-to-use way. If the answer is yes, we have a best-in-class product, then we just keep on doing what we are doing, just try to do it better and fine. If we are not best-in-class, then we will look at what are the alternatives. And you can obviously understand what the alternatives may look like. And we're going to look at each and every one of them, focusing on areas where we have not been able to meet our expectations over time, where there are other solutions in the market that are actually really good because we know our clients want the best, they don't necessarily care who manufactures that best.

So that's what we are going to do. I don't want to get into details of the size because I've only been here for like -- I mean, I've been here longer, but I've only been doing the job for 5 weeks. So I want to give myself a little bit more time to work with the team and get to the bottom of those questions, but we are going to do that with a very high sense of urgency, and we will report back as we make progress. And there is no kind of preconceived notion as to whether these are going to be small or large.

They are going to be in every place where we can't effectively compete. And obviously, we're going to prioritize areas where we can't compete and where we are expanding a lot of technology resources to deliver those products. So I need to come back to you with more specifics. I think we are not ready yet. In terms of the continuity and the management team, we have continuity. The merchant business remains the merchant business. The priorities are the same. We have a new team that we hired over the past year or a largely new team that we've hired over the last year.

It's a very simple org structure. It's people that have decades of experience in doing what we need them to do, and they just continue to execute. And then on the FS side, Srini and Gelb have been here again more than a decade each. They know the business, they know the clients, they know the priorities, they will keep executing. There are a couple of areas where I'm going to be focusing on. One is obviously that portfolio review that I just talked about. The second one is the speed and focus of execution. And the third one is technology excellence. Again, these are not different things from before. I just want to bring more urgency into execution and more focus to make sure that we do those things as quickly as possible.

Next, we'll go to the line of Harshita Rawat from Bernstein.

So your implied OpEx guidance for second half has gone up. What changed versus the Investor Day and also the June reiteration of the guide? I know, Paul, you talked about $100 million in technology infrastructure. Can you give more color on what are the incremental areas you're investing in? It's a pretty steep ramp in second half expenses. And then also maybe talk about SMB volume growth, that's the weakest we have seen in a while in a strong U.S. spending environment. I know you talked about CCV lapping, but is the SMB ex Clover deteriorating.

Yes, Harshita, 2 things. As it relates to the total expense, if we just look at it on a quantum basis, the total expense now versus what we were expecting before is approximately $100 million, which we called out. And that is our technology infrastructure area, particularly in the areas of cyber and just overall infrastructure, which we believe are in the right interest of both our clients, particularly on the solutions side. We also believe are best to position us for the longer-term success certainly as we go into '27 and beyond.

Obviously, our expense base is largely fixed here. So when we have revenue that doesn't show up at a high incremental margin, that flow-through is what's impacting the margin most significantly. But that would be the biggest thing from an expense standpoint that I would call out. As it relates to the SMB side, yes, you're right, and I mentioned it in the prepared remarks, that the biggest thing on a sequential basis between the SMB volume in 1Q and 2Q is the anniversary of CCV.

So the level that we're at right now is roughly what we would expect to be for the remaining part of the year. And I would just highlight that as it relates to SMB, the thing that we're obviously most focused on is the Clover SMB volume and the growth that we have seen in Clover consistent with our expectations, certainly for the second quarter in that double-digit range and also consistent with the outlook that we have for the remaining part of the year as well as our longer-term outlook on GPV volume.

All right. We'll take the next question, but let's stick with one question, please.

Our next question comes from Dan Dolev from Mizuho Securities.

Lots of good things actually with Clover. So congrats here. Question, Takis, on some of the divestitures that you talked about. I think your debit network is a good example of something that some of the large banks could value a lot more, and it's probably not priced into your stock multiple. I mean there has been some news, I think, in the journal about this. Could one of these assets be something that you would consider making changes to?

Yes. So when I said we are going to do a holistic review of everything, obviously, the debit networks will be part of that review as well. We have 2 debit networks. They're critical to our clients. They're important to our business, but that will be part of the review. Again, I don't want to comment on anything specifically until I have a few more weeks in the job.

Next, we'll go to the line of Will Nance from Goldman Sachs.

Takis, I know a big part of your vision for the merchant business revolves around Commerce Hub and scaling an omnichannel offering to enterprise clients. I wondered if you could talk about the partnership with Mastercard and just how you see that unfolding and how you think about time lines there?

Sure. Thank you. I would say one thing first to clarify. When I'm thinking of Commerce Hub, I'm thinking of an end-to-end modern stack for all of the merchant business. It's a gateway, it's a back end, it's a set of value-added services, which, by the way, will include Clover, meaning it will all be one integrated technology stack. We've made record -- progress in record time on Commerce Hub. I've been very impressed with the team, which is a testament a little bit to what this company can do when all of the resources are focused without any distractions on a single and simple strategy that we are trying to execute.

That said, it's a big leap and it's a big effort to try to compete with the best-in-class on the enterprise side, and we still have gaps that we're working on. And conversely, Mastercard has a great merchant business, and they have a number of capabilities that we thought are very complementary to ours. When we look at, for example, the geographic coverage they have, when we look at the clients they have, et cetera and we compare that to ours, we also saw a lot of capabilities that are complementary, and we saw an opportunity to go to market together and win business together. So the teams are working now. There is an integration component, which is going to take a couple of quarters to bring those capabilities together, but I think that will incrementally improve our collective capability to win new business. So we are very excited. Mastercard has been a great partner of ours.

Next, we'll go to the line of Bryan Keane from Citi.

Paul, I was hoping you could help us bridge the gap from kind of where we are this quarter and the third quarter to getting back to more normalized growth in the fourth and then into 2027. I guess my question is the delays in client implementations, slower pace of growth initiatives, you got some hardware Argentina issues. It just doesn't seem like we're going to turn that quickly as we get into the fourth quarter. But obviously, you have some visibility there. Maybe you could highlight.

Yes, Bryan, a couple of things. So I would route you just to what we called out about our recurring revenue growing at 2% and that represents obviously the vast majority of the revenue of the company. So foundationally, that's kind of the right way to think about the growth rate there. And then as we had talked about at Investor Day, even the ramping of the bucket that I provided are the key drivers of the fourth quarter growth rate between where we sit today and where that fourth quarter is.

And we have -- as we move forward, that exit growth rate is exactly in line with the medium-term guidance that we provided as well. So the components are there, the structural growth rate of organic revenue, which will improve in the third quarter and continuing to improve in the fourth quarter with that vast majority of revenue kind of starts there and then the things that we've talked about are additive on top of that. And then obviously, as we move into next year, the noise around Argentina and the noise around the headwind of hardware begin to wean down.

Next, we'll go to Andrew Schmidt from KeyBanc Capital Markets.

Takis, I wanted to ask, I think one of the priorities you outlined was moving faster. Maybe you could just drill down on this, just given kind of the technology stack as it sits today in the culture, how do you enact change at scale? Obviously, we've seen product velocity picking up in the space, particularly in merchant, but across the board. Maybe just a little bit in terms of how you drive that change at Fiserv.

Yes. Thank you. I think, first of all, this is not new. I've seen real progress in that space over the past couple of quarters. I think it started with hiring a strong product organization, which I think we've done on both BMS and DFS side. And then it comes from a clear and consistent view of where we are trying to go, from an agglomeration of products and capabilities to a coherent end-to-end strategy. This was relatively easy. It's not easy, but it is comparatively easy to do on the MS side. And that's why we've anchored on one platform, end-to-end, one set of capabilities globally, and we've diverted all of the resources that we're working on anything else onto that. And when you do that, you can make a lot of progress.

And I think it's the same approach on the FS side, and that's why I'm talking about that portfolio review to make sure that there is nothing that we are spending time, resources, energy and tech dollars on that we don't have a very clear path to deliver in the near term. So I think that's one. The second one is around the collaboration across the 2 sides of the business. We have products that sit on one side or on the other side that actually have value to both. Our network is a prime example of that. Embedded finance is a prime example of that. StoneCastle is a prime example of that. Digital currency is a prime example of that.

So I want to make sure in all of those, we work as one company, leveraging the impact to financial institutions as a benefit to financial institutions as well as the benefit to the merchant side. And I think there, we have -- we can do better, we can move faster and we can be more efficient.

And then the last component is technology, a big driver of our expense base comes from technology infrastructure, maintaining multiple platforms, maintaining multiple versions, maintaining multiple data centers. And part of that acceleration that we are making now in terms of our investments is to move out of those things with an enhanced base, which does not only mean better customer experience and better stability and cybersecurity, but it also means a fundamentally different cost base going forward as we get rid of all of that legacy.

Next, we'll go to the line of Jamie Friedman from Susquehanna.

Takis, Paul, a question on Financial Solutions. The organic revenue was down 8%. At the same time, looking at the slides, Finxact and core accounts grew pretty nicely, mid-single digits. Zelle was up 23%. So I'm just trying to understand what's driving the disconnect? And when do the comps get easier for Financial Solutions?

Yes, Jamie, the Financial Solutions volumes really across the board, we're very pleased with. In the digital space, whether it was what we saw on the debit network side of volumes, our debit processing volumes, our issuer accounts on file growth, the transaction growth in issuer was very strong. And then as we called out, the Finxact growth was strong as well.

We do have the preponderance of the nonrecurring revenue headwind is in Financial Solutions in the second quarter. And so if you kind of peel that back and look at the fundamental growth rate of the business in the second quarter and remove out the noise, we grew that segment in the low single digits in the first quarter. So fundamentally, going back to the comment I made earlier about recurring revenue growth, if you take out the noise, Financial Solutions grew, and we were very satisfied to see that the growth rate that we have seen in the underlying volumes of Financial Solutions that we had talked about in the first half of the year continued to strengthen or certainly stabilize in the third quarter.

Our next question comes from James Faucette from Morgan Stanley.

I wanted to ask about pricing. I know that there were some few rollbacks from Fiserv for particularly Clover customers last year. Just want to get a sense of just remind us, a, when do we fully lap those or take the full impact of those? And more importantly, what are you seeing in the pricing environment now? Do you feel like things are steady and customers are responsive to where you have pricing now? And are you seeing much in the way of price competition?

Yes. So just a couple of things there. I'll start off with and then Takis, you may want to add. So as it relates to the lapping, the fourth quarter is the lapping of those pricing moves that we talked about last year. So we will have that comparative dynamic outside of the fourth quarter on that front. On the yield front, things are stable. If we look at both our yield for the quarter as well as what we expect for the rest of the year, the yield environment is very stable, either overall from a merchant standpoint or Clover specifically. So we like what we see from an overall yield standpoint.

Yes. Thanks, Paul. The only thing I would add is, obviously, we are monitoring pricing changes that our competitors are announcing, et cetera. We are very focused on delivering value to our clients. We are very focused on improving customer satisfaction, customer service. You've also seen at Investor Day all of the new initiatives, the new features, the new capabilities that we are rolling out on Clover, which are coming out kind of now like Clover Agent is now in pilot, Clover PracticePay is out there. Each one of those things add incremental value to our clients in a differentiated way. So as we deliver those things, we improve customer service and customers are happy, we will have more ability to generate higher yield. But right now, we are focusing on those things.

We'll take our last question here. Go ahead, Ivy.

And for our final question, we'll go to the line of Jason Kupferberg from Wells Fargo.

I know you mentioned that the hardware part of the merchant business was one of the reasons for the second half revenue cut. So I wanted to see if you could size that impact and just clarify, is that because of slower new customer acquisition or other drivers? I know you mentioned comping against some higher hardware sales over the last couple of years, but it seems like that's something that we would have already known about before today. So any more color there would be great.

Yes. So maybe I'll start and then Takis may want to talk about the environment. The one thing that has changed on our hardware expectations is in the back half, we are seeing a tougher environment of just hitting our hardware sales targets that we had previously. And a lot of that, I think, has to do with the elevated amount of hardware sales that have been made in the past and just kind of the market dynamics related to that.

We certainly, on a go-forward basis, would expect that this comparative kind of headwind or market kind of headwind would change as we get further away from the period of elevated hardware just on a comparative basis if you just look at the numbers. So that's what's changed is the environment of future hardware sales has changed versus what we had expected. And it is a meaningful headwind to our expected growth. I called out about the Clover headwinds that we have there between both anticipation and hardware. Hardware makes up about half of that headwind and then the anticipation makes up roughly the other half. Takis, do you want to talk?

Yes. No, I see that as a temporary headwind driven, as Paul said, by previous sales. We have not seen any material change in the number of new merchants and things like that. Over time, as we shift the focus of Clover more towards software, more towards larger clients like we are doing -- we are seeing with Rectangle and hopefully, we'll see with Target, you will see probably a different shift of SMBs over time. But right now, what we are seeing is really just the headwind from the past.

We want to thank you for joining us on the call today. We look forward to following back up with all the investors on a go-forward basis. And thanks for your time this morning.

Thank you.

Thank you all for participating in the Fiserv Second Quarter 2026 Earnings Conference Call. That concludes today's call. Please disconnect at this time, and have a great rest of your day.

Good afternoon, everyone. My name is Dave Koning. I'm a senior research analyst at Baird covering payments and services. Thrilled to have Fiserv with us again. I think it's probably been 25, 30 years in a row that we've had Fiserv a great long-term growth story. We have CFO, Paul Todd, with us. Paul has a unique background. He's been at Global Payments at TSYS and now he's at Fiserv. So he's got the industry covered over time. I would maybe like to kick it off with just if you give us your impression of Fiserv. You've been around for 6 months now, what are the top attributes, how do you look at the company, and then we'll do Q&A.

Great well, thanks, Dave, and for having us, and we're glad to be here this morning. I'd say a couple of things. First, I knew based on my background that you just mentioned, I knew Fiserv really well, being a competitor against them for many years and have always had a lot of respect for the company, the track record of performance as well as the offerings. Since I've been there, I'd say a couple of things that have been some positive attributes that I don't think I fully appreciated. One, the strength of the product offering is strong. Whether it's Finxact on the financial solutions side or Clover, obviously, new Clover, but the extent of that offering and all the things that Takis is doing has definitely been a positive attribute that I didn't fully appreciate before I got there.

The scale that exists, and we talked about this at our Investor Day, but the scale that exists, the breadth of the offerings, it's just unmatched. And I've got a much better appreciation for that now being inside the company than I did before. And the data that we have is more extensive. And the things that we're going to do with the data we talked about at Investor Day is additive. And then the final thing I would say is the people. The management team that has assembled here is a nice mix of both new people like myself and also tenured Fiserv leaders, and we're all aligned with One Fiserv. We're aligned with getting the company to the constant compounder profile that we've talked about. And so those would be the things I'd highlight the most over the last 6 months.

Yes. No, that's great. And we'll talk about a couple of high-level things. I mean you just talked about data, we'll just kind of start talking about that. And then eventually, we'll talk about the merchant segment and financial. But you have a significant amount of bank data, merchant data, how do you use all this in coming years? Could you start charging even for data hits through AI or however you charge for that?

Yes. As I said, it was one of the underappreciated attributes of the company. I think the data that we have is really unmatched by being able to have, if you want to call it, both sides of the transaction from just a transactional standpoint, but then all of the account data and all from both businesses. And for the first time, we're beginning to melt that data from both sides, and we talked once again at Investor Day about having the leverageability of the data between financial solutions and merchant and some of the enhanced use cases that exist. Whether that's on the merchant side, around auth rates or additional intelligence around fraud that gives us unique differentiators of being able to use that data just on how we provide offerings for our customers on using that.

In the future, I do think there's some really accretive use cases. Takis talked a little bit about it on the merchant side of how to let data be used to help businesses grow their businesses faster based on some of the unique data insight that we have. And yes, I do see some potential revenue lifts in the future around data that may not have existed before or certainly didn't exist to the extent that they do now. And AI allows us to be able to leverage that data position in a more unique way.

Okay. And what about AI just in general, where do you see like -- is there any risk of AI replicating some of your products? Or maybe how can you use AI to become more profitable?

Yes. So we definitely see AI as an enabler to our business. Obviously, our business is focused on infrastructure, financial technology infrastructure, whether that's payment processing, clearing and settlement, authorization, just regulatory, core processing. That's what we do. And if you think about how AI can be a benefit to companies that have deep embedded processes with financial institutions, that have very high regulatory barriers, that have high data component where AI can be additive.

We did spend some time at Investor Day talking about several use cases of AI, whether it's agentOS on the financial solutions side or on the merchant side around our data agent allowing at the merchant level. And so on the customer-facing side, we have AI leverageability there. And then on kind of the back office side, we're seeing good improvements, and we even shared some of the data around whether it's on the development side, some of the efficiencies we're seeing there on our contact center, some of the efficiencies that we're leveraging AI. And so it's benefiting both kind of the front house and the back house. And so we definitely see it as a positive for our business going forward.

Yes. And maybe if we turn a little to the just high-level financials. Historically, you have a 4-year period, almost every year double-digit EPS growth. The last couple of years, you went into some one-offs. Maybe review that a little bit and now your midterm guidance, which is back to 10% plus EPS growth.

It was one of the hallmarks of the company of the 40 years of track record there. And clearly, one of the key things we're focused on is restoring the company back to that constant compounding profile. And everything we're doing from a financial standpoint is getting us back to that consistent, predictable double-digit earnings growth. We obviously have had the last couple of years, which is has had several different dynamics to it. But one of the key things that we laid out at Investor Day was the components around mid-single-digit revenue growth, operating leverage to allow us for annual margin expansion, obviously, additional margin expansion through Project Elevate, high free cash flow conversion and then allocating capital in the most efficient way to allow for that consistent double-digit earnings growth on a go-forward basis.

And so we feel very good about getting -- even though this is a transition year here this year, but we feel very good about from '27 and beyond, allowing that financial algorithm to play through. And as we said at the start of the effort that we're on, the economic engine in this company is still there. That long track record of growing and mid-single-digit revenue growth. And so what we're talking about doing in the future is very consistent with what's been done in the past.

Yes. And if we talk even a little bit about more of the near term, the first half had some tough comps, low single-digit declines. Second half, you actually expect to get above the normalized growth range, 6% to 8% in the second half. Maybe talk a little bit about that and then why it gets back to 4% to 6% longer term?

Yes. So Dave, we said at the beginning of the year that this was going to be a transition year for us. And we also said that we would expect a different first half to a different back half just due to some of the comparative dynamics between last year and this year. And so that's largely the dynamic at play. And this back half, one of the reasons we gave the building blocks for the back half was to provide additive insight into what we expect in the back half of the year. The biggest key thing I'd point out is we do have some contracted revenue that's coming on in the back half of this year, that puts us slightly above the normalized 4% to 6% guidance range that we talked about for the cycle guide.

So if you kind of took that out, you kind of get back to the more normalized 4% to 6% kind of growth that we would expect. And as we also said at Investor Day, that 4% to 6% is based on the volume growth that we see in the business. And we have -- even with these last 2 years where there's been more noise on the revenue side, the volume -- the underlying volumes across the business have been very stable, and we expect that stability to continue based on all the things that we're doing. And that's the single biggest driver that underpins the future revenue growth expectations for the company.

Yes. And by volumes, you mean deposit accounts, merchant volumes, enterprise volume, like just kind of everything?

That's exactly right. Accounts on file as it relates to our issuing business, core accounts and fintech accounts and banking, our transaction volumes in the debit side. And then on the merchant side, our GPV, particularly on the SMB side as well as our transactions, our enterprise transactions on the enterprise side. So those underlying volumes are the drivers for our revenue growth. And we've seen consistency and we're expecting, assuming a stable macro, we're expecting consistency on those underlying volume drivers.

Yes. And last high-level question. When would you expect to buy back stock again? I know you're around 3x leverage, I think even to the end of this year, you'll be around that. But when will you feel comfortable getting back to more normalized buybacks.

Yes. It's something we want to get back to a more normalized buyback picture. We talked about capital allocation being critical of getting more share repurchase in the mix. But we are spending this year to kind of get back to below 3x leverage that puts us in a position to be able to do more meaningful for buybacks. And so once we get past this year, let that leverage get below 3x and get to a more normalized environment next year and get the leverage down, then you would see us be back to a much more normalized more meaningful buyback paradigm.

Yes. That sounds good. All right. If we move to merchant, you expect 6% to 8% growth in merchant, which we think of it as above the kind of 5% retail growth type, I guess, retail growth in the U.S. and probably around the world. So how much of the above-market growth is just you gaining volume share? How much is just yield from pricing and software, et cetera?

Yes. So Dave, I think it'd be helpful to think about it in a couple of ways. One, if you just look at our segments, so our SMB segment, of which Clover is the key driver of growth. We're expecting high single-digit growth for SMB overall and that's driven by Clover primarily. And from a Clover standpoint, going back to the volume being the key driver, we're expecting 10% to 15% volume growth in Clover, and that's been at the 10% level, relatively consistent with what's been done over the past and that doesn't assume any kind of meaningful back book conversion in that -- at the lower side of the 10%. As you move up between 10% to 15%, it would have more meaningful back book conversion. But that's where the Clover growth starts is with the volume growth.

And then we expect about a 5 percentage point uplift between revenue growth of Clover and volume growth. And so 15% to 20% is the range that we're expecting for Clover from a revenue standpoint. So that's driving -- that's the main driver of that SMB growing at the high single-digit rate. If you move over to the next biggest segment, it's enterprise. And we expect roughly mid-single-digit growth for our enterprise segment, which we would also expect enterprise transactions to grow at roughly that mid-single digit. That would be the anchor for that mid-single-digit growth. There was -- obviously, we're very excited about Commerce Hub and the things that Takis talked about at Investor Day to help fuel enterprise and some of the things that we're doing there.

And then we expect processing to be roughly flat. And so those are the growth dynamics at play for the 6% to 8%. And we do expect a stable macro across that. But if we put those drivers together, we believe that, that 6% to 8% is the right growth range for our Merchant Solutions.

Yes. That makes sense. And with Clover, I mean, you basically said 10% to 15% volume, but 15% to 20% revenue, that 5% uplift. Maybe explain a little why you have that revenue uplift from Clover, is it pricing? Is it new product sales, some mix shift somewhere? What drives that?

Yes. So that delta is primarily driven by our value-added solutions, our VAS and think of Clover Capital as being both software and Clover Capital being the 2 biggest drivers of the VAS and that uplift that we see it would be a relatively flat yield perspective as it relates to Clover. And I think one of the things we're excited about is we continue to add from a VAS standpoint, we just rolled out a new product called Clover Savings, which is allowing our merchants now to have much better utilization of their cash.

So if you think of Clover Capital is helping our merchants from a capital standpoint, then we're now providing an alternative to allow them to get more yield from their capital that actually sits in their business. And then we just most recently talked about an agent now to be able to allow merchants to have an agent that is additive as well from a revenue standpoint. So those are the additional services that we wrap around or the ecosystem revenue that exists inside of Clover is what allows us to have a revenue growth rate that exceeds the volume growth rate.

Yes. That's great. Now why does Clover win, right? Clover has been winning in the market really for 5, 6 years. And before that, it was winning, it was just too small for people to really know about it. And -- but it's been winning consistently.

Yes. And Dave, I mentioned it at the start, it was, it's an asset that I didn't even fully appreciate being in the industry for a long time around the strength of the offering. And if you think about -- and this is in our One Fiserv plan, Pillar 2 is making Clover, the preeminent small business operating system, and that's exactly why it wins is it provides a complete suite of offerings for small businesses to grow their business. And everything we're doing as it relates to not only what exists in the environment today, but as I mentioned, Clover Savings as being an additive, everything we do is about helping small businesses grow. And we've made offerings unique to the verticals that we're in.

We've been primarily retail and restaurant specific in the past, but you've seen us now move into other verticals, health care being an example where we've partnered to make a very bespoke vertically specific offering inside of Clover to allow to make sure that we're keeping as we move into different verticals that we're keeping that superiority of operating system. And that's why it wins. We obviously have a very diversified distribution. We have the largest distribution network of anybody in the industry, and that helps us from a sales standpoint. But at the end of the day, it's the product and the technology that wins.

And if we look at non-Clover SMB, so like you kind of talked about Clover is about 1/3 of the segment. Non-Clover SMB is probably in that same ballpark, enterprise, 30% and the processing is smaller. Like if we just kind of subsegment it all, non-Clover SMB, how fast should that grow over time? And I know it depends on -- you said 10% to 15% volume growth in Clover, 10% with no back book conversion, 15% with back book. If you put that same -- like how would you arrange the non-Clover SMB to some of those same parameters?

Yes. Yes. I mean the way I think about the non-Clover SMB is it should likely grow at around GDP, right? So I mean, it's just kind of -- that's the starting point from a growth expectation. What changes that kind of going to your question around what are the dynamics, to the degree we're more successful of converting non-Clover SMB to Clover that becomes a headwind to that growth, which obviously is a tailwind to Clover growth because it moves us up from that 10% on the Clover side to the degree we're moving non-Clover SMB to Clover SMB. So it becomes additive there. But that's the way to kind of think about the growth as the non-Clover SMB book looks.

Yes. So GDP growth, maybe a little less if you're moving more to Clover?

That's right. That's right. And then -- and obviously, we want -- our focus is to move more customers from non-Clover to Clover. We have between a 15% to 30% revenue uplift when a customer moves from non-Clover to Clover because of the attach, because of all the solution sets that we offer on the Clover side. As we've said, we're being very mindful about the approach of moving customers from non-Clover to Clover. We want to make sure that we're meeting customers where they are. There's always going to be a solution set of customers that want to just stay with where they are. The -- we have good NPS scores on customers that are non-Clover, but we do think over time, it's obviously, we think it's additive for customers to be inside the Clover ecosystem.

Yes. And I was going to ask about that. Like why would anybody stay on a Clover system, I guess, just to not have to deal with the conversion would probably be one of the few reasons. But is there anything else why somebody stays non-Clover?

Yes. I mean I think it'd be more just they're happy with what they have. They have maybe a simpler solution set that they need. And so if they're happy on their hardware, they don't need any of the attach or the added solutions that Clover offers, then you could see customers saying, "I don't need to move over." But over time, just even think about Clover savings as an example, why not use a network that allows you to make higher returns on your capital sitting in your operating account as a small business. So we -- as we continue to expand the Clover ecosystem, we think the breadth of offering widens the use cases of the non-Clover SMBs being able to move into Clover.

Yes. That makes sense. The distribution network is second to none. I mean it's incredible at driving the growth for many, many years. Are they actively selling -- I mean, clearly, they're actively selling Clover. Do they also sell non-Clover? And how does that mix work?

Yes. I mean we do have some partners that sell non-Clover, and so given the breadth of distribution that we have, we do have some non-Clover sales that go on, but that's not the big focus area. The big focus for us, particularly with our partners is selling Clover. Our customers get the most used cases and the most breadth of service from Clover and that's what we push from a selling standpoint.

Yes. And One last question on merchant. Enterprise, close to 1/3 of the segment, 25%, 30%, maybe. You said it grows with transactions kind of mid-single digits or GDP growth. How often do those big merchants switch? And maybe of the top 500 or so, have you said like what percent share you think you have?

Yes. We haven't called out necessarily share as much as -- but we do have a significant share. I mean, we have very deep penetration in grocery, in petroleum in quick service. And so we have a very big franchise on enterprise. Probably another one I probably should have highlighted at the start of something I didn't fully appreciate on the enterprise side, there isn't a lot of change that occurs there. These are deep integrations into -- at the enterprise level. And so these are long-standing customer relationships built over a long period of time.

And so there isn't a lot of movement there. It's probably 2 things. One, obviously, it's very hard to move at the enterprise level just because of all the different technology involved. But I would say as well, a lot of those enterprise customers have multiple solutions. And so that's probably another factor. The one thing I would highlight, and we spent some time at this at Investor Day on the enterprise side is we -- Commerce Hub for us is a differentiator.

This is going to be a meaningful differentiator for us going forward. If you think about our enterprise business historically, we've been heavily focused on in present card-present solution sets. And with Commerce Hub, that's going to allow us to capture more omnichannel enterprise customers. And I think the key thing there is enterprise customers, particularly on that side are looking for the most intelligent transaction processing. And when I say that, I mean better auth rates, lower fraud. I mean, it's a very highly procured process that enterprise customers go through and having Commerce Hub, a global omnichannel gateway is a very unique attribute of the company. So you take this great installed base that we have and you layer on top of it this omnichannel gateway, I think it's a real differentiator for us going forward.

Yes. Thanks for that. If we move to the financial segment, about half of revenue in the banking part of that, you have about 3,000 or so core clients. About a year ago, you talked about moving platforms, really investing in 5 from 16, I believe. Lately, you've talked about, hey, we're not going to force any conversions, but maybe talk a little bit about that I guess that segment?

Yes. And obviously, we talked a good bit about this. The first thing I would say is, is we listen to our customers. The decision around the conversion from 16 to 5 was several years kind of in the making. And one of the things that we heard loud and clear was our customers want to move on their timing. And so we want to make sure that we match our customers' needs and desires. And so there are no forced conversions. We're going to operate the platforms as long as our customers want to operate on those platforms.

And so that's one of the key tenets of when we rolled out One Fiserv is that we're going to operate the company with a client-first mindset. And one of the things we are loud and clear is that clients don't want forced conversions. I would say that one of the things that we're doing most recently is looking at that whole conversion spectrum in a different light, particularly in light of AI where conversions because of the modularity with which we're looking at our financial solutions, technology set, it's not going to require the same heavy lift for a customer to make those conversions as it did in the past.

And then we are also offering many paths for a bank to upgrade their technology stack. So you won't necessarily have to do a conversion to be able to get some of the benefits that you had to do in the past. So there's -- and kind of at Investor Day, Dhivya was walking through the various paths banks can choose to make sure that they're getting the technology they want on their time frame that meets their needs and that we're providing that in a very ubiquitous sort of way to make sure that we're matching their needs with our solution set.

Yes. Yes. And then in issuing, you work with many of the very large credit issuers to keep track of credit transactions, et cetera, and you were very familiar with that business.

I know.

Yes. How sticky are these relationships? How hard is it for them to leave? And maybe talk a little bit about Visa's Pismo product that's getting a lot of air time. People are a little nervous about that.

Sure. Yes. So This is a business, Dave, that's got very sticky relationships. And the integrations that you make inside of a bank, it's obviously a critical infrastructure that a bank has that they want to make sure that the provider that they're using is one that they trust and that you have an offering set that meets their needs. And so it's a very sticky relationship, very high recurring revenue, long contracts. We talked about how long the contracts we have in place here at Fiserv.

And this is also an area that our offering set here is more robust than I thought it was coming in, both the solution set, the surrounds, the international capability, and so it's one of the strongest pieces of the Fiserv franchise. As it relates to Pismo directly, I don't think right now we haven't seen any meaningful impact to our issuing business here in the U.S. I think it's had a more Latin America on the issuing processing side, maybe in the past, but there wouldn't be anything unique I'd call out as it relates to our issuing business, where we're in a good position.

All the things we talked about at Investor Day around the transformation that we're doing to the platforms, whether it's Optus or Vision, of making sure that we're make -- the platforms are robust and have the feature functionality that the issuers need and we're on a good track there. We have a good business. The issuing business is very strong here.

Yes. Yes. And then in digital, your key products debit processing, bill pay, Zelle, the P2P payments, the debit network business, you do a lot of different things. Bill Pay has declined a little bit. But outside of that, it seems like these are very steady units. Why was revenue down this year? I think there were some pricing negotiations. Maybe talk about that. And then does this return back to more normal growth?

Yes. And so just specifically on the revenue side, yes, it's just more of the nonrecurring comparative dynamics that I would call out there. So there's just noise related to the revenue this year that is distinct from the volume growth that exists underneath that. And I've talked about that on the last couple of calls. And so nothing more than I would add there. I would say on a go-forward basis, we do expect the business to return back to a more normalized growth. It wouldn't be something I would incrementally call out as we look at next year and that the normal correlation you would see of revenue growth there versus volume growth would be much more intact on a go-forward basis. So there isn't anything else I'd call out.

Yes. Okay. And we have a couple of minutes left. Go a little off script here. But if you think about where are the business units that you feel the best that you could gain share? Like Clover, I would say, is probably the most obvious one to everybody. But where like when you step in and say, I've seen all the payments. I've worked in all these companies, I've seen the payments ecosystem, here's where Fiserv can take share.

Yes. I mean I would start with Clover just because it clearly wins share if you look at the FSBI, and you look at the growth rate there and the track record over a period of time of gaining share is nothing unique to the period now of gaining share. That's clearly one of the strength areas. I would probably next move to international issuing as being an area where I think that we're positioned to gain share or certainly grow the business in a more meaningful way, the opportunity set there. I think as you -- and this kind of goes back to Clover, but just merchant in general internationally is a greenfield area of growth that we're seeing additive growth there, particularly in Brazil.

Now in Canada, we have Japan coming online, which I'm very excited about just because that market has always been one that has great growth if you can crack into it. And so with the partner that we have, I think we have a very good entree into meaningful growth there. So those would be the areas that I'd highlight.

That's really interesting. Almost never do investors ask about international like being viewed as a relative advantage. But when I think about fintech, international is very hard to break into greenfield. Like if you're small and try to break into another market, your scale lends itself to being a huge advantage. Is that?

That's right. That's one of the key benefits of international. We want to make sure that when we enter markets that you have the right partner and you're in -- but the scale becomes a distinct advantage on international growth. And that's one thing that I think is -- positions us in a unique way to be successful there.

Yes. That's great to hear. Well, that's about all the time we have. So please join me in thanking Fiserv and Paul Todd.

Great. Thank you.

And we'll be hosting a short breakout session in the Astor Room 1A.

Great. Okay.

Thank you.

Good afternoon, everyone. Thanks for joining us today. I am Harshita Rawat, the senior analyst covering U.S. payments at Bernstein and I'm delighted to be here with me today Mike Lyons, Fiserv's President and CEO.

Thank you for having us.

Mike, you recently completed your 1-year anniversary as the CEO of Fiserv. Tell us both about your key learnings and also the key changes you've made in the organization.

Yes. It's great to be here. Thank you. And I know the last year -- I'll start by saying we know the last year has been difficult for our investors, and we don't take that lightly. And so take all of the context around this. Roughly a year ago and shortly after I started as organic growth was slowing, we launched the franchise review that we did last fall to understand what the drivers of that slowdown were. We learned a lot as part of that process. Most importantly, at the top of it is if you take out the cyclical factors that were behind the growth post-COVID, a lot of the growth post-COVID, the company looked a lot like it had pre-COVID with more in the mid-single-digit revenue growth range.

The review also identified some areas where we needed to address some specific actions, mostly around client service, product delivery stuff and I've talked about product delivery, tech resilience and capital allocation, and we put a plan in place to address those. And then we also -- but when you went through the whole thing, you take away the cyclical factors, you identify the areas you need to do some work. It also confirmed for us that the underlying strength of the core franchise was intact. Our strategy and purpose were sound, and we could operate from a position of strength as this infrastructure technology layer that banks and merchants rely on to run their businesses. And then every business we went through digital banking, core banking, issuer processing, payments, all #1 positions, the #1 and 2 positions in small business payments with non-Clover and then Clover and obviously, #1 in enterprise. We have this great franchise.

And to unlock that great franchise and to address the issues that we had identified, we launched what we call the One Fiserv Action Plan that's got 5 distinct pillars to it, but this underlying an overwhelming mantra to think and operate with a client-first mindset. And everything we're doing today is to execute on that, both to bring out and highlight the strength of the franchise and then to address these issues that we identified. And that means fully embracing AI. It meant some important cultural shifts within the company. It meant redoing parts of the leadership team. It meant increasing our execution-oriented focus and increasing accountability, meant revitalizing our employee base, which we've been happy about and we talked about at Investor Day.

And as I outlined at Investor Day, all these steps we're taking is to try to reclaim what Fiserv always had, which is a very predictable, visible mid-single-digit revenue growth profile and a constant compounder investment case, which we think ultimately will be good for both investors and our clients.

So let's talk about the inputs into that constant compounder profile. And I want to start with the leadership team that you've built. Tell us more about it. Given all the change that has occurred within the past year, how has also your ability been to attract talent and retain people with institutional knowledge as well? I know at the Investor Day, you had noted that the attrition of top talent is now at record low levels.

So -- and hopefully, if people didn't get a chance to see the Investor Day presentation, I encourage you to watch it. We love the team we've built led by Dhivya, leading Financial Services and Takis leading Merchant Services. I thought they did a terrific job. They've been -- I knew it, but it was good to get the chance to highlight and spotlight them at Investor Day. And naturally, they've been great leaders, operators, visionaries, innovators and naturally great people follow great leaders. So we've been able to attract a lot of talent into the company. I said at Investor Day, I've been shocked by the amount of talent that wants to join the company to help us execute on the plan. When it all shakes out, if you take our leadership team and expanded leadership team, call it, 40, 50 people, it's going to be about half new and half existing.

So we feel like it's a really good blend of bringing in some domain-specific talent around different areas, including AI and very established, unbelievable talent at the company. Our ability -- we've also spent time if you go into the base of the employees, I talked about revitalizing the base of employees, they're encouraged by a client-first focus. They want to lead with that. And if you look -- you're right, if you look at our best-performing people, not just the top talent, but the best-performing people, the exceeds and significantly exceeds people across all levels of the organization, that attrition is at a -- we can't find a measurable period back where it's been as low as it is now.

So that's a good sign and shows people are engaged and focused and believe in what we're trying to accomplish. And then we've been very deliberate either through acqui-hires, we call it, with Smiths Consulting or more directly trying to get some of the subject matter experts who left the company, particularly in the financial services business over the last couple of years to get them to come back to the company and rejoin it with this client-first mindset. And so I feel very good about where we are there. A lot of new faces, as you recognize, but it starts with outstanding leaders in Dhivya and Takis.

And another big theme coming out from your recent Investor Day was AI-driven modernization at Fiserv. Tell us more about that. We know that the models have gotten better, and we discussed how you built this new leadership team. What are you able to do in terms of accelerated product and modernization time lines with AI, which was not possible at Fiserv before?

Yes. And it's more and more positive. The pace of change is incredible even since the fall, but we've been very encouraged about how AI can help us develop. And as I talked about Investor Day, it's a 3-pronged approach, generate more revenues, reduce our own costs and then enhance the client experience. And obviously, those are somewhat interconnected if the experience is better, can generate more revenues.

On the revenue side, -- the biggest thing AI has done is, if you remember what we are, we are an infrastructure company, a technology infrastructure company that 2 massive TAMs use to run their businesses, protect their data, move money with a level of reliability that can't be approximate like. And that's all fed off a system of -- a series of systems of record. And those systems of record are sound, they're solid. They've been built over years of trust. But what AI is enabling us to do is turn those systems of record into systems of greater value, whether that's better data, which manifests itself in higher auth rates, lower fraud rates, better data products, more hyper-personalized offers, some of the stuff we profiled in the demos at Investor Day.

And it's also allowed us to go into completely new categories, whether it's Agentic or AgentOS, which is an operating system that Dhivya unveiled at Investor Day, where we've had incredible receptivity since Investor Day, which basically is connecting banks to agents and agents to banks, 2 sets of -- 2 constituents of ours that have a hard time totally meeting in the middle because the agents don't want PII. They don't want to be regulated. They don't want to be overseen by state or federal regulators. And the banks don't know how to let an agent into their core systems without it. They don't know how to manage or aren't prepared and ready to manage a kill switch to mass data to control where these agents go or not.

So all of those things have introduced new revenue TAMs for us. On the reduced cost side, it's servicing, operations and that's factored into the positive operating leverage we put forth in the plan, but we see significant opportunity to reduce costs there.

And on the client service side, getting products to market faster. We showed you some of the measures around certain products, but 40%, 50%, 60% faster just in the last couple of months, the ability to take self-service client capabilities and make those much higher quality as long as we can prevent -- we obviously run thousands of systems for millions of clients. If we can prevent a ticket from being created, it's got great efficiency attached to it and the efficacy they're showing in helping customers self-solve their needs. So that's an important piece. And then simply streamlining implementations, data mapping is a big part of a conversion, a merger conversion and cores just goes much faster with the technology out there today.

So we think there's great capabilities and great opportunity for us. We've been thrilled with the OpenAI partnership, which we announced at Investor Day and this morning, we made -- we thought it was an important announcement with Cognition where we'll use Devin, which is their software engineer agent to help modernize specifically on the cores and the financial services businesses. And they've been a great partner, and it was great to get a formal agreement out with them this morning.

And I want to follow up on AgentOS. I know it's not part of your medium-term guidance. But tell us more about it. There are so many agents being created these days. Why does Fiserv have the right to win here? How does this expand your market opportunity?

Yes. So AgentOS, which I was just referring to, we launched it at Investor Day, came directly from feedback we were getting from both sides of the equation, the banks came to us and said, yes, we have lots of areas for inefficiency, and we don't know how to address them, how do we engage with the agents? And we -- Dhivya and I have one meeting where I talked about Investor Day, but the bank said they had an agent who is going to help them in deposit reconciliation. So they put the agent through procurement. And the procurement department asked for 7 years of audited financials and the agent had been functional for 11 days.

So there's just a giant mismatch of -- so I'm going to let that agent into my core, into PII, into all the other stuff that comes with it, but how do I police it and the like. And so part one of what we created is an operating system that allows banks to access and deploy agents in a way that we step in the middle. What we do every day is interact with PII and highly regulated systems. So we allow that side of it to happen. And on the flip side, we've created an agent marketplace rather than just doing one LLM with one use case and trying to sell it to a bunch of banks. We've created an open marketplace that a third-party agent could come. The bank can create its own agent, we could create an agent. Our competitors could create an agent. It's just a matching area where if the bank has a use case, it can get to an agent and then goes through this operating system that we'll manage to get into the bank, and we'll manage the kill switch, where it goes, masking of data and all the other important compliance factors.

So we've simply responded to 2 requests -- we become the last mile for agents to get into a massive TAM for them in the banking sector, and we become the enabler for the banks to access lots of agents who can help them run their businesses more efficiently. We co-developed it with 6 banks. We have 2 betas live, both were on demo at Investor Day, and we've been flooded with calls since Investor Day about every agent has an idea and every bank has an idea how to get more efficient and putting that together, we think it's a tremendous opportunity. And for us, most importantly, we're listening to our clients' needs. And if you think about how do we reignite growth in that core banking business, part of it is better service, part of it is hitting our product deliveries, part of it stopping core conversion, but also part of it, a big part of it is becoming a value-added provider to the bank.

So now that we can enable AI for a lot of banks, does that change their opinion on whether they keep their core with us or not regardless of whatever the history may have been. So it's a body of work around that piece of it. So that was one advantage for us. And then the second advantage is it introduces us to some basic workflow automation TAMs that weren't part of the core offering of Fiserv and probably weren't going to be part of the core offering just acting as the middle person between the agents and the bank.

I want to come back to Financial Solutions, but let's spend some time on Merchant Solutions first. And the path to the 6% to 8% revenue growth and Clover is a critical input here. You laid out targets for 10% to 15% volume growth, 15% to 20% revenue growth at Clover. The addressable market here is big, but the competition is also quite intense, both on the product and now somewhat in distribution. What gives you the confidence around the Clover growth targets you laid out?

Yes. Hopefully, a lot at your request, we put a lot of incremental data out on Clover at Investor Day. So hopefully, you, in particular appreciate it. Hopefully, everyone appreciate it. But just as a reminder on the 10% to 15% volume that you mentioned, 10% is the organic growth that we targeted, and I'll tell you how we got to that number. And then going from 10% to 15%, assuming a stable macro, that would all come from some type of success in converting the non-Clover or what we call back book to Clover. So that's the upside from the 10%. On the 10% organic growth, that number is a number that you go back to '22, every quarter since '22, we've done somewhere between 8% and 12% and it's averaged 10%.

So it's what we're doing today and maybe the competitive -- you view the competitive market is different than it is today, but we've been chugging along at 10%, assuming a constant environment. And then when we look at Clover, and Takis and his team have gone through every aspect of it, we see upside in almost every part of what we do, and we've been talking about those 5 aspects of it, greater horizontal capabilities, and that's Clover Capital, Clover Savings, ADP, Homebase and all the other things we can push through it. It's vertical expansion, we just launched health care and professional services in March, 2 significant areas that we didn't have exposure to before.

It's international, Canada and Brazil, we've talked about growing very strongly, and we've got Japan coming online with a great partner and a massive GDP market that hasn't gone through the cash-to-card secular change that other developed markets have gone through. Then we've got the whole experience front. Our -- we're doing very well on the front door. We're unhappy with some of the early attrition. I've talked about it first 90-day attrition on Clover, and we put a whole experience effort in there, which we think can reduce runoff, again, next to positive GPV growth. And then continuing to build distribution channels some people are talking about that they've got a bank or an ISO. We -- we put the numbers out in detail for the first time in Investor Day, 3,000 ISOs, 1,000 banks. I mean the distribution is incredible. And we still have room to take there. And then digital sign-on, which has never been -- it's been a big aspect of one of our competitors' growth. It's never been an aspect of ours. It's now into 20 banks or so.

So in each aspect of Clover, we think there's room to take. So you can -- what we said to investors, you can take the 10% anyway you want. You can say 10%, I think it's not -- it's too competitive. You can't do 10% anymore, but you've got 5 different metrics to do it or you can say 10% is the base level, and here's 5 areas of upside to the 10%. And then above that, it would be some type of effective conversion of non-Clover to Clover for volume growth. And then we said 5 points difference between volume growth and revenue growth, which has been consistent with historical average, plus you have some new VAS coming online, but just continued progression of VAS penetration, which is in the mid- to upper 20s now gets you -- obviously adds to the volume growth to get to the revenue growth.

So let's talk more about the volume growth to revenue growth and that kind of higher revenue growth what drives your conviction in the revenue growth opportunity? And you talked about the value-added services penetration. There is a little bit of working capital in there. There is other opportunities. So let's talk more about that.

Yes. What I would say is that historically, if you take out some of the cyclical factors in some of the Argentina activity, there's been a consistent difference that you run basically 5, 10 points of -- 10 percentage points of GPV and 15 percentage points of revenue growth. VAS penetration has been increasing. We think there's still room to go there. And then there are significant new VAS categories. Clover Capital is one where our penetration, we said it's 4.5% in Clover on the non-Clover book is bigger than the Clover book. So you cut it more than in half. So in low single digits, hasn't been an organized focus for us. It is now. And then Clover Savings, which we came online through the acquisition of StoneCastle, where we can connect deposits that may be under-earning at our merchants into banks that are willing to pay for them.

These are big new VAS areas that are coming online that we think will continue to drive penetration. So you believe the 10% in historical growth plus some new online products, that's what drives that incremental.

And let's maybe also, Mike, zoom in on the new verticals point that you made earlier and also international markets because these are also big addressable markets for you to kind of go after. How do you feel about those opportunities? What drives the conviction here?

Yes. We showed -- we tried to give you the data at Investor Day that we think -- go back to the 10%, if 10% is reasonable growth or not, is it competitive or not. We still see prices rising in small SMB point of sale, and we see -- we said we have market share greater than 10% in retail and restaurant. Overall, it's mid- to high single digits in the U.S. Outside the U.S., it's virtually nothing. So there's tons of room to run still in the U.S. and opportunity there. Outside and a big opportunity we showed is low market share in health care and low market share in professional services, both areas that our -- especially our banking and ISO partners are saying that they want an offering and they think they can deliver on an offering there. So we launched both of those. PracticePay is the health care offering that we did with Rectangle Health as a -- think about it as an ISP partner.

And then professional services is largely on the heels of CashFlow Central, which is a pay-ins and payouts market, pay-ins and payouts product for that vertical that uses that a lot.

On the international side, we're most -- we had talked about being most excited about Brazil. Everything is on track there. We launched last year, getting significant growth. International is now over 20% of total Clover, obviously growing at a much faster rate off a lower base. Canada has performed incredibly well, and we're coming online. We've never had a big distribution partner there, and we come online with TD in the second half of this year. And then we found a great distribution partner with both Visa and SMCC to bring a modern point-of-sale product to the SMB base in Japan, which nobody has really done successfully before.

And that's -- of all the major developed markets, that's the most cash-dominated market still. So we see great secular growth opportunity and a great distribution partner there. From there, we -- I mean, we have joint ventures in Germany. We've got Ireland, we've got Lloyd's. We've got NatWest. We've got Deutsche, AIB, we've got Spain. So we just went into Austria with UniCredit. So all around the world, we've got great partnerships that we're excited about leveraging. So what we've learned through this great partner, significant market, and we'd like to still benefit from some cash to card conversion efforts. So we agree with you it's huge growth upside in all those markets, all those opportunities.

I also want to follow up on the SMB back book ex Clover. You talked about the opportunity for Clover conversion, but this is also an opportunity for your competitors. So how should we think about the back book and the stability from here?

Yes. We said -- and again, we put a lot of data out for you at Investor Day. So non-Clover back book is never a great term, but the non-Clover SMB base we have $4 billion of revenue. That's the largest SMB provider in the world. Clover is the second largest, and you get the competition. 1.8 million SMBs in there, $700 billion or so GPV. I think -- and we obviously see it as an important -- and we identified at Investor Day from the pie chart, a little over 50% would be eligible or could benefit from Clover's offerings in its VAS. A portion of that naturally isn't going to be ever eligible for a whole bunch of reasons. So the majority of it is eligible. It's great base. Obviously, if we can increase revenue yield by converting those non-Clover customers to Clover, that would be great.

At the same time, I think it's important to note and often misunderstood that this is a very stable base of merchants. There isn't large churn in this merchant base, and they're generally -- we get good feedback and they're generally happy with the services that they're using from us, which is mostly a payments type device. Obviously, generational change is there. Maybe they don't know what they can do with this stuff. So we want to do everything we can to increase the yield of that and make sure they have full access to our VAS. At the same time, there's no reason to force something because they're not an unhappy customer base that's looking for something different. If they are, we obviously address them very quickly. So Takis' team have tested very carefully and thoughtfully here, given they're happily paying Fiserv customers today.

And one of the things we talked about at Investor Day was a low friction nonphysical conversion of the box and offering VAS through the Clover dashboard being specifically Clover Capital and Clover Savings as a way to entice it. We spend -- we've run all the models and the like and have ongoing efforts. If you're a high-volume person that's obvious you should be on Clover, we do everything we can, and we've got great data on that to get them over. But overall, we want to take a base that's generally happy and stable, maximize revenue yield by presenting them with a mutually beneficial value proposition, and you've got to do that in a very thoughtful way. But it's not like they're calling us and saying, "Hey, I got 13 appointments today with point-of-sale providers, I haven't heard from you. So it's a great opportunity for us. You just have to be super thoughtful about it because it's very profitable, good customer base today.

I also want to ask about enterprise. So your strength has historically been on card-present and in-person commerce. You talked about it at the Investor Day. You have a very good market position, but these end markets are growing slower. What will make platforms and omnichannel, the higher-end growth markets or higher growth markets an achievable opportunity for you?

Yes. Your description of where we've been historically is spot on. We have been far and away the leader in card-present, gas, grocery, retail. And that's a great business and an important one for us to have a very attractive business overall. What we showed at Investor Day was highlighted, it's been out there, but highlighted Commerce Hub as a modern omnichannel global platform, single gateway, single switch, single modern ledger at the back end, modern BaaS, -- it's live today. We're doing $200 billion of volume on it annually, growing very rapidly. We're in 40 countries. We'll be fully live and full capabilities across the world by the middle of 2027. And point Takis has made and we feel great about is that gives us a platform that allows us to compete or -- and compete very effectively for significant new TAMs with platforms in e-com and puts us in a group of 2 or 3 modern platforms that can run omnichannel. And increasingly, the solution globally for large payment -- seekers of payment services is an omnichannel solution, single integration like.

So having point-of-sale as a VAS, if you want to call it that, along with the modern e-com platform, combine it with the data we have that's unmatched in the industry, which can drive higher auth rates, lower fraud rates, we see ourselves as being able to compete in the modern stack as well as anyone. We talked about e-com having the lowest barriers to entry. The major players in e-com want high auth rates and low fraud rates. And if you can do that, historical relationships don't matter as much as the data and the effectiveness of your algorithm.

And I guess the foot in the door there is becoming kind of the second processor and then scaling loss.

Yes, everybody -- everyone in e-com uses multiple processes, and they move volume to where the algorithm suits them best, higher a, lowest fraud, best price.

So Mike, let's switch gears and talk about financial services -- financial solutions, and we'll start with banking. So core stabilization has been a big focus area for you. We talked about it at the Investor Day. We discussed at the Investor Day, improved service levels and client choice for modernization journeys. Do you think you're at the stage where client conversation can evolve from stabilized to the attach and grow piece on value-added services of your banking strategy?

Yes. Obviously, we addressed it directly at Investor Day and answered even a lot of questions today is core attrition on the core banking side, which is a couple of billion of our revenue. Attrition there has been higher than we would want it to be as a result of really 3 major things that were in the past, which is a depletion of client service some -- we missed some key product deadlines, especially around our digital product going back in '23 and '24 and then an effort that drove a series of force conversions. All we've done has done the opposite over the last 6 months. So we're supporting all cores. So the force conversion is off the table. We've significantly invested in client-facing personnel, significant investments in modernizing our technology, significant investments in new technology around it, new value-added services, whether it's StoneCastle and now AgentOS.

We've revitalized our relationships with the consultant community or acquired them in like with Smith. And we've introduced what we talked about at Investor Day, a journey-based approach towards core modernization and core conversion, which puts the choice back into our 3,000 core customers' hands -- they can modernize in any path. We showed 5 paths, but you could make the match any of those, Dhivya went through them at Investor Day, take -- make it the client's choice and take the big bang approach out of core conversion modernization.

So what we've done is not only reverse some of the things that had caused outsized attrition, but we've added on new capabilities and new services on top of that. So we believe, based on our actions and based on feedback from clients that we're doing the right things that will lead to an outcome in future years that looks like a more normal attrition than the -- gross attrition than the attrition we've had. But today, our results reflect actions. These are long-dated contracts. So today's results reflect yesterday's actions and tomorrow's results will reflect today's actions, which we believe. And what we laid out at Investor Day is not a miraculous comeback that we stop all attrition this year is a gradual path from '26 to '29 to return to normalized attrition. We hope to do better than that, and we hope all the actions we're taking will lead to a better outcome from that. But we know, given the long-dated nature of this as well as we may be doing today, some of the seeds of today's attrition was planted years ago. So...

I also want to ask about digital payments. You have a number of money movement solutions for your clients. How healthy are these end markets in your view? And tell us about the growth opportunity, both with respect to a unified multiway solution, but also in terms of value-added services and I'm being cash flow centric.

Yes. Digital payments is a great business. Hopefully, you got a flavor for that at Investor Day. It's just under $4 billion in revenue. So it's a big part of our story. We serve 41 of the 50 largest banks for payments in the U.S. We have #1 market share positions from Zelle to treasury in all the key areas. So it's been a great business for us. It has very healthy end markets. Volumes are growing and there's strong secular change in payments, real-time digital embedded. All these things are transforming payments. And when you go to a bank meeting, all the #1 topic is payments. If you include stablecoin in that discussion, it is the dominant topic is payments, and we've got a great franchise.

The big investments we're making, as you've mentioned, is today, we have a whole bunch of point solutions to affect the payment, both for a retail customer of a bank and a corporate customer of a bank and putting those into a unified payment platforms on the individual side and the business side and then putting an intelligence layer on it. So I need to make a payment, what's the most intelligent way to make that payment on both ends of it. And so we've got every tool you need to compete there. In terms of VAS, CashFlow Central will be in digital payments. It's -- we think it's a transformative product for small businesses. And you saw the ramp. We showed you some of the ramp that's going on there, huge pipeline to go live, huge pipeline to get sold. And the efficacy of the offering is being shown through the small businesses of our clients who are using the pay-ins and payouts on it. So that's an important part of what we're doing in the business.

We've got great -- we think, great strategic optionality and client optionality with the 2 debit networks. And then finally, if there is a negative in digital payments, it's traditional bank bill pay, which is going through a secular change to a more direct to biller some of that goes over to the merchant side to our biller business there, and we pick it back up. Some of it goes to other forms, whether it's Zelle, bill pay through Zelle and the like. But that is a drag on our thing that the account-to-account, treasury management and Zelle are overpowering that such that you get good underlying growth. We've guided growth for that segment on the $4 billion to be at the high end of the overall financial services guide even with the bill pay where it is.

And you talked about the optionality with STAR. So in light of what has happened, right, like in the last couple of years, I guess, across the ecosystem, how do you view STAR optionality?

Yes. We own 2 debit networks, STAR and Accel, obviously, U.S. debit networks. We've got thousands of issuing banks on both of those. It's a classic synergy between our merchant and bank business allows us to optimize routing, and it's been a tremendous tool for us. They're great networks, as you know, are great businesses, wish we have more of them. And as payments modernize, the optionality we have with those -- their messaging networks, we can do more and more with them over time. And then obviously, the value -- if there's a value of a debit network to somebody else in the world, I'm sure they'll call us and tell us that. So...

So let's talk about issuer processing. It has been a steadily growing segment for you. You're modernizing your 2 key platforms here. What does this unlock for you?

Yes. Like digital, issuer has been a good business for a long time. It's $3.3 billion or so in revenue, long track record of growth at the high end of our overall guide for FS. And we -- again, we have -- as I went through at the beginning, if you -- whether it's banking, we have #1 positions, digital, #1 positions, issuing, you have #1 positions. Again, we've got 25 of the 50 largest issuers, 8 of the top 10 private label issuers, dominant card processor in India, dominant card processor in the U.K. So it's a long-established business, great base of VAS that we highlighted at Investor Day. And our big efforts in there, as you mentioned in the question, Optis, which has been the stalwart that most of the large issuers use. We're going through a big modernization process there, but not forcing our issuers to do a conversion to a new platform.

So it's modernized as you go. That's been a significant investment runs through next year and allows us to get product -- us and our customers to get products to market faster and deploy more modern tools in that increased resiliency, increased security. And then on the side of it, which -- aside of that, we've launched Vision Next. And Vision Next, think of that as the Finxact of the card business. If Finxact is the modern core to the core banking business, Vision Next is the modern card core, and we'll use that. That will be the primary engine for embedded finance. It will be the primary engine for international expansion.

And I think even here domestically, any greenfield issuing -- new issuing client would go to Vision Next versus going to Optis, cloud native, every -- all of the modern aspects to it. The pipeline there is significant. We talked about it at Investor Day, and it really gives us a value proposition for the international markets where we've had a number of issuing platforms over time.

So I want to also talk about some of the emerging growth opportunities for you. Tell us about the Fiserv deposit network. You launched that after you completed the StoneCastle acquisition. What is it? And why is Fiserv uniquely positioned here?

Yes. As I said earlier, we like networks. So when we saw -- StoneCastle has a -- we bought StoneCastle for 2 reasons, and they've been great partners. StoneCastle is one side of their business or there's sort of 3 aspects of it. One side of the StoneCastle business calls on anybody who has cash. And StoneCastle, what sits in the middle is a ledger, Finxact, single -- all the cash comes into a single account. And then they have 1,300 banks on the other side of the ledger designed to bid for those to give the highest return for that cash, all in $250,000 fully FDIC insured accounts. So now you go to anybody with cash who never thought of an FDIC insured deposit as a logical alternative investment vehicle for their cash, and there's a lot of idle cash, especially with our merchants where they're not getting paid anything for it.

We allow them through a simple, modern technology solution to route that cash to StoneCastle. StoneCastle breaks their cash up into fully destroy and get them a competitive rate on it. We love that network on our merchant side. We are now going to our merchants and enabling our Clover customers through a button on the Clover dashboard to sweep all of their idle cash to StoneCastle, get paid for it. It's liquid, it's FDIC guaranteed and you get a competitive rate on it. And then on the other side of it, this is what I say in the whole body of work of helping our -- helping fight off this core attrition is we are -- our banking customers other than the very biggest banks in the country, #1 priority for all of them is more deposits.

So here, we're now presenting them with FDIC insured qualified operating deposits. So we're fulfilling a big strategic priority of theirs, all with one network, so making the merchant clients happy and the bank clients happy.

The other aspect of -- so that's the Fiserv cash network, and we think we obviously capture a big in the middle of that, and it's a great business for us, very easy to administer, but built on a modern technology stack that StoneCastle created. In terms of other emerging opportunities, just one second on stablecoin, we -- the other aspect that StoneCastle came with was a stablecoin and cryptocurrency custody license. So we're now a custodian of crypto and stablecoin. Why is that important? Our banking customers' biggest worries around stablecoin is that deposits leave the system. In this case, we created FIUSD stablecoin so the banks can meet the regulations of the GENIUS Act and offer their customers both a stablecoin wallet and a fiat wallet in the single DDA account.

Now if a customer of a bank decides to take deposits from their fiat account and move it to the stablecoin account, they would get that stablecoin FIUSD from us, and we would custody those deposits. We then need to do something with the excess cash that we have like any custodian would, and we would deposit it back through StoneCastle and FDIC, the shared account to that bank, thereby protecting the deposit balance of the bank and taking a big worry up again, a value-added service to our banks addressing either a competitive threat or a strategic priority they have on both these. So both these emerging opportunities, the cash network and the stablecoin came from requests and discussions from our banks as to what they wanted and what was important to them.

And I guess you talked about stablecoins. I think it's been almost a year since you launched FIUSD. I guess like more broadly, what role can stablecoins play for your clients? And I know you talked about some of the services you can provide to your clients for stablecoins.

Well, I think certainly, on the banking side, they're going to have to comply by regulation. We want to be there for them to do that. And FIUSD, anyone who's on our core through a Finxact, but we're using Finxact again, just continued tools for Finxact to stand up FIUSD and it can interact with any of our cores. So all 3,000 banks will -- are able to use our wallet and use our coin and our custody capabilities. The revenue model isn't as much standing up the wallet for them. It's the pay-ins and payouts, the on-ramp and off-ramps -- but we'll stand that up for them. And any -- we're working through pilots with our customers. FIUSD goes live in July. The first use case is what we had publicly announced in North Dakota for bank-to-bank movement, the state mandated that has to be done -- any type of bank-to-bank movement of money has to be done through the rough rider coin, which is a white label of FIUSD.

And then there are cross-border pilots and bank-to-bank, account-to-account pilots going on. And whatever demand surfaces, we think that stablecoin has got a lasting place in the world. It's low friction, it's borderless. You've got great recordkeeping underneath of it. It's 24/7, it's instant. -- go to account to account. So we think there's a lot of attractiveness of product. There isn't massive demand for it today.

And if you go to the other side of our business, merchants want to reduce acceptance costs. And if stablecoin can do that, they'd be interested in it. And if customers ultimately want to buy and transact in stablecoin, which will probably first happen on e-com, they want to be able to keep moving products. So they want the ability to do it. And we talked a little bit in the emerging opportunities at Investor Day is maybe someday there can just be a stablecoin on a settlement if you got 300 million bank accounts and you got 6 million merchants and why do you have to go out into a multiparty system. And so all stuff for the future, but we think there's great optionality from it. But the development we put around FIUSD was to address an immediate need that came from our depository clients to meet the regulations of the GENIUS Act when it comes through and to protect their deposit basis.

Mike, at your scale, Fiserv has access to data across the life cycle of a transaction across a lot of portions of the economy. You alluded to this a little bit earlier, but what is your opportunity in further monetizing the data, especially with AI?

Yes. I go back to -- on the AI side, we have all this data, the ability of technology has accelerated -- we've been working on -- the company has been working on extracting that data, putting it in a single package across the customer and then using that to increase auth rates, reduce fraud rates, create better data products, but AI has just accelerated the pace at which we can do that. And we're also working with some outside partners who have some skills to help us come to that and put forth a much broader set of value-added either ideas, services, hyper-personalized offers, but the most obvious area that we'll get paid for it is higher auth rates, lower fraud rates because the data -- we talked -- we showed some of the data stats at Investor Day at the 1 billion transactions day and then 1.8 billion cards on file.

So it's -- that's just stunning amounts of data, but the amount of work and effort that's gone into partially encapsulating it and then to see what we've done in the last few months with the ability of technology, it's transformative. And if you have the most data, you should be able to monetize the most data, and that's -- obviously, we're focused on doing that in a way -- in a safe and responsible way that benefits our clients. But there's especially through AgentOS, there's sort of what's emerging an insatiable demand for AI to help people extract value-added ideas and offers from their -- what I talked about earlier, systems of record to systems of value.

You talked about Finxact earlier in our conversation. Visa has also recently talked about wins for Pismo. What are you seeing in terms of kind of modern versus kind of other core dynamics in the market?

Yes. So Finxact is -- was built as by Frank Sanchez, who is sort of the king of technology of cores, and Fiserv had an investment in it and then acquired it in '22 or '23, and Frank has been a great partner. Finxact has more accounts on it than all the other modern cores combined generally acting and it's a -- think of Finxact above anything else is the ultramodern ledger capable of handling any type of asset that you want. And I just randomly referred to it as being the base for stablecoin being the base for StoneCastle being the single back-end engine for CommerceHub as a ledger.

So the use cases of Finxact are far and wide, and you can see some of our biggest customers on it, but running 40 million accounts today is just far and above what anybody else is doing. There has been a revitalization among the large banks about starting the process of modernizing legacy cores mostly off of the Hogan platform. And Finxact and Pismo and other modern cores to the extent that they surface can play a role in helping big banks do that. So we're excited about that aspect of it, but that's just one aspect of what a modern core can do. Finxact can go across -- we can deliver Five9. We're cloud agnostic. So the capabilities and the power of Finxact will definitely leverage it in our depository base, but we see -- if you go back to the payments discussion, all the banks want to do is talk about building their place in payments and all the payments companies want to do is talk about how they can do more banking services. And Finxact has an incredible position to sit in the middle of that embedded finance trend. And the use cases of Finxact are almost unlimited as you think about the modernization of payments.

We have just a couple of minutes left, Mike. I was reflecting on some of our earlier discussion on AI and also some of the emerging opportunities for you. One thing that you had at one of the demos at the Investor Day was Clover agents. How do you think about, I guess, that opportunity over the long period of time because it's fascinating what you could do for your merchants.

Yes. And all of it is, again, body of work, whether it's helping them maximize return on their cash, whether it's helping them manage their finances with Clover Capital, whether it's helping them manage their employee base with Homebase, whether it's enabling them to accept stablecoin payments if they want to do that, crypto payments, if they want to do that and then providing all kinds of off of their system of record, providing value-added advice. You saw the cupcake maker and the croissant maker. That's all just obviously, to the extent that we can build. So everyone will try to build something the extent that it can drive growth and obviously can drive deep retention.

But the power of providing our merchants with horizontal vertical VAS value-added ideas is, again, proliferated by AI. And we thought the example that we showed of the Clover agent was a great use case. And that doesn't even touch upon what we -- one big effort that Takis and team are working on is the democratization of Agentic commerce for the 900,000 merchants in Clover is if you're a -- if you're a single location, we talked about an earlier meeting, a single location bootmaker in Wyoming and someone is on Gemini searching for cowboy boots, that merchant wants to be -- they want to be shown in that Agentic showroom. So there's a whole another side of the Clover agent, which is helping them deal with the modern world of shopping and increase their audience from people walking down the street in Wyoming to the broad Agentic world.

It was a good demo at the Investor Day. So Mike, we have under 2 minutes left. So my last question for you. Over the past several years, investors have been on somewhat of a journey as it relates to Fiserv. At the same time, we've talked about a number of initiatives put in place over the past year since you became CEO. As you reflect on your investor conversations, what are the 1 or 2 things about Fiserv you believe are currently misunderstood by the investment community?

Interesting. So probably first and foremost, I go back to the opening statement is there's a belief that something that we were doing double-digit growth and something happened that impaired the franchise and has led to mid-single-digit growth. When it's really the opposite, the last 4 years have been the anomaly driven mostly by cyclical factors post-COVID. And if you go back to the 42 years that Fiserv has been around for 41, 42 years, Fiserv has been around, it's been a mid-single-digit growth company with very visible growth. It produces a lot of cash and generates double-digit EPS growth. So as I said earlier, a big part of the strategic plan and a big part of what we're doing is trying to reclaim the historical Fiserv identity, not try to deal with some type of fallout that went from double-digit growth to here because we lost some competitive position in -- one things we just went through almost all of our businesses.

In each case, we've got a #1 market share position, and we're operating from a position of strength by continuing to be that intelligent technology infrastructure that powers these 2 big TAMs, 2 big TAMs that are going through massive structural change opportunity.

The second thing, obviously, and the market is going to wrestle with it for a while. We think AI brings us great opportunities. Others have different views. And hopefully, what we showed at Investor Day in terms of generating revenues, both through data and the like and value-add ideas AgentOS, reducing costs and streamlining customer service. It's a big part of what we can do.

And I think the third piece is more people ask us about why don't you break the company up and less about the synergies that can come from those. And we tried to put forth a case that at least we will always do the right thing by our shareholders. But at least today, as everyone in payments wants to do more banking and everyone in banking wants to do more payments, there's nobody sitting in the position we have today. And our mix of businesses has never been tried before. Everyone -- the popular line is, well, this has been tried and failed. No one's ever had issuing banking, large merchant, small merchant and no one certainly ever had the tailwinds of AI and the tailwinds of embedded. So sort of those are probably 3 areas that we talk most about.

Great. Mike, thank you so much for your time today.

Thank you for having us. And if you haven't seen the Investor Day, I encourage you to listen to it. We covered a lot there.

Fantastic.

All right. Thank you, everyone. For running a little bit late, my fault. My name is Tien-Tsin Huang. I follow the payments and IT services sector at JPMorgan. And I always enjoy talking to Mr. Mike Lyons, CEO at Fiserv. He spent a lot of time with us at Investor Day. Walter and team did a great job with that. We learned a ton. So it's for you to come back out and take questions means a lot. So thank you for being here.

Thanks for having us.

It wouldn't be -- I've been saying this a lot, but Fiserv has always been a good supporter of the conference, so grateful for that. So I thought maybe just to kick it off, I don't want to make you repeat everything you talked about at Investor Day. I want to be efficient. And I know you've done a lot of hard work, Mike, in terms of putting together the plan and dissecting some of the things that you talked about when you first joined. But what's the elevator pitch? Give us the elevator pitch of why and how Fiserv is going to get back to being a steady compounder, something that you and I thought about with Fiserv 15-plus years ago.

The elevator pitch, I feel like I'm given the post-game NBA interview in this format. But the elevator pitch...

[indiscernible].

Hopefully, people got a chance to listen to Investor Day. But I think at the highest level, start with the fact from a leadership position, we're providing mission-critical services to two massive TAMs, banking and commerce, that are undergoing what we think is exciting and structural change, think about digital, embedded, real-time, and AI-enabled. You do that from a leadership position, you've been doing it for a long time, a lot of institutional trust, and you have two sets of customers who want and need our help right now. So it's an incredible backdrop for us to deliver our services into that market.

So from a broad perspective, I think a really good environment for us to be operating in and exciting times for our customers and -- to navigate it, and successfully navigate it if they want and need help, and that's great to start with. Going to the financial model of the company on the elevator pitch for constant compounder, highly recurring revenue. We talked about the positive operating leverage, the majority of expenses fixed, and then strong free cash flow conversion, and what we believe is a sharpened and focused capital allocation model, both along how we manage the assets we own, but no major changes in how we return capital to shareholders, with the majority of it going to share buybacks while staying within that 2.5 to 3x leverage range. So good macro backdrop, good customer backdrop, lots of change that we can serve into, and a model that supports a constant compounder case.

I'd just add, we talked about last week sharpened capital intensity, not just how we allocate capital internally, but also how we either stay in businesses or separate businesses. And we talked about the ATM JV last week, which we're excited about, strategic business to us that we think we can better operate in a partnership with Bridgeport to serve our customers better and generate value for shareholders. Yesterday, we sold our education business. It's a student loan processing business, a little bit smaller than the ATM business, very good business, but not strategic to what we do overall. So that type of activity, we're going to continue to do to sharpen and make sure we get capital, both to the right products for our clients and obviously, back to our shareholders.

Good. And we were thinking about it. I mean, there's so many things to track, and you covered a lot there. Good elevator pitch, by the way.

Well, it'll have to be a long ride.

That's okay. We live in a big building in [ 270 ]. I think what's the one thing or deliverable, right? I'm always trying to think -- I hate to distill it down to one KPI or one outcome or one metric. What's personally most important to you? I mean there's a lot of ways to answer it, I'm sure, revenue growth, attrition, retention, cash flow. What's your #1 for you?

This is from Investor Day?

Yes.

I think -- just go back for a second, why did we hold the Investor Day now when we did the reset in the fall? We talked about coming back and giving our investors a view as to how the company is evolving, where we're investing, and how the actions we're taking will drive a more durable, sustainable, visible top line growth and return value as compounder. So hopefully, people had a chance to listen today. I thought one highlight was the quality of our team. I was proud listening to them. They're all over what they're doing. They're focused. They're great operators, great visionaries. If you had to be on -- if you had a chance to be on site and see some of their team deliver the demos and new product innovations, I think you would have been impressed, and I agree with that. So that was a highlight for us.

I think the -- hopefully, people saw similar to the question we just discussed, that the opportunities for us, if we sharpen our focus and get to where we're in a position to deliver value-added advice, whether it's in a totally new product set like agentOS or in all the day-to-day mission-critical services to settle, authorize and complete payments for our customers, that we're in a great position to do that. So hopefully, people got an appreciation for just how broad, strong the franchisees leadership position we're in, and then got to see a plan that we thought was realistic, driven by underlying volumes, and had some interesting upside in areas like embedded finance, stablecoin, and other new TAMs.

I mean the midterm outlook really did -- I think we wrote it this way, Mike. It landed well with us and, I think, with the market as well. But it is quite different than the prior targets that were set by the prior administration. So can you just -- because I was getting this question quite a bit. Can you unpack or deconstruct for us what the difference is between the current midterm outlook and what the prior outlook was?

I don't know if it makes a ton of sense trying to reconcile the two. I think at the time that the prior plan came out, which had higher top line growth, there was a significant amount of cyclical tailwind, whether post-COVID tailwind or outside the United States.

The plan we put forth, we tried to make it by business on FS side and MS side, very visible as to what the revenue growth would be, driven by the underlying volumes, and tried to highlight where we're in a very good position today and then where we had some specific challenges, namely in banking on the core side to overcome, but attach the revenue growth to the underlying volumes that dictate our business and introduce an attractive set of apps alongside that trade. So wherever we came from before, this plan was meant to be very visible, very clear, and very realistic as to how you can drive revenues off of volume-based businesses.

Yes. No, I thought it was thoughtful and it was refreshing actually to see it. So we'll get into more of the details later. But just on the maintaining of the current year guidance, you did do that. It does imply an acceleration in the second half. Can you give us the building blocks to support that faster growth in the second half?

Yes. I'll do my best imitation of Paul. If not, he spends a bunch of time in this...

Forgive me for all the model questions.

Yes. No, no, he spent a bunch of time son this at Investor Day and go through it. But I think at the highest level, we said we're down a little 2 or so in the first quarter. We said a little bit worse than that in the second quarter. So you have a first half down low single digits. We said if you take out and normalize first half of this year, first half of last year, accounting for a variety of nonrecurring events, you're into the low single digits from there. And then we talked about three different drivers of an accelerated back half growth.

One bucket was new signed contracts, significant signed contracts that we've talked about in the past or have been publicized in the last couple of days, coming online scheduled signed contracts. Second bucket is existing enterprise clients with existing planned client activity ramps of existing products. And the third piece was the ramping of three -- third bucket was the ramping of a variety of different products. We called out Clover Capital, Clover savings, Clover in general, especially on the international side, XD and CashFlow Central, which are products that we expected to be in market several years ago, they've been low.

But we -- since the fall, we've sharpened the focus, turned up the intensity on hitting product deliverables and have accomplished that up until now. If you put each of those pieces through, get you 6% to 8% for the back half, 1% to 3% for the year, common question we got today, is 6% to 8% for the back half, and then you go forward 4% to 6%? As much as we'd love to have 2 points of new -- brand-new client contracted ramps every half year, that isn't the norm. You take 6% to 8%, you take out the 2 points of that, you're at 4% to 6% It looks like sort of what the go-forward plan is. We'll obviously shoot for 2 points every time, but in a realistic run rate on that front.

And it sounds like -- you said it earlier, Mike, that the macro is generally supportive. You haven't seen anything. But you do have a great view of the macro across SMB spending and then enterprise with banks, not just here in the U.S., but globally. What signals are you watching? We get questions around energy prices and of course, the conflict. What signals are you watching here that might change the macro equation?

I think the two different -- you called out two different macros there. The one we talked about earlier is, I think, the backdrop for helping providing value-added advice, products, and services into banks and merchants is as good as it's been in a really long time. Banks are in very good shape. Credit is good. They're all very focused on building their technology capabilities, and we've been a long-term trusted partner in that. And then obviously, the modernization of payments, the use of capital, the use of embedded on the merchant side is accelerating rapidly. So we don't go to a -- I think I've told you before, we don't go into a meeting with an enterprise client on either side where there isn't -- where you walk out with a lot to do, and that's a great environment to be selling into.

As far as the consumer goes, we -- and Fiserv Small Business Index data for April recently came out, and we talked a little bit on our earnings call, we're calling it a cautiously optimistic consumer. They still have a job. They're still spending. What we saw in the Fiserv FSBI index for April is the nature of that spend is migrating to fuel up significantly year-over-year, where some discretionary categories came down year-over-year. And that's -- we called that out on our first quarter call. It's something we're watching for our business. But our -- then we went through and looked at -- and showed you the Clover data for April, which remains consistent with what it was in the first quarter, which was 12% ex the gateway, which is very -- that's a really strong constructive quarter for us. So watching, obviously, sustainability of some of the stuff is a big factor, too.

Okay. Good. So let's get to the segments, and I thought we'd lead with financial. You were a client on the financial side. And even thinking back to Fiserv Forum, you really emphasized the importance of client service. That was something that really stood out to me, Mike, when you stood up on stage and you spoke to your partners and your clients. What have you done to improve that? It feels like it's in a good place. I know you've invested quite a bit, right, to get it to a good place. What's left to do? And is there a higher cost to get to where you want to be?

Yes. We said, obviously, 4% to 6% for the company. We said FS is on the 2% to 4% side. Banking is on the low end of that. Issuing and payments are on the high end of that. So specifically, the issues around customer service are focused on that banking segment, which does have a nice surround attached to it. And when we look back and meet with our clients and take their feedback and understand where we are, is really three things that we've talked about. One, basic day-to-day service, they fell short of what their expectations were.

The second was product delivery, whether it be XD, XD especially, but some other products which were set to come to market, '23-ish, '24-ish, have been delayed. And the final piece was the decision to go from 16 to 5 cores, which caused an unexpected event for some of them, that they would have to think about switching their core. So if you go back in what we've done on the service side, and we talked about it last week, we've rebuilt a lot of the day-to-day service. That was a significant investment for us, not just people on the ground, but reembracing the consultant community, acquiring Smith Consulting, helping drive value-added services and products to our customers. I think we're getting -- we think that investment has been made. We run with it now. We have to execute on it. It's a relatively short period of time in our customer eyes after several years of where they are.

But the feedback they're giving us is you're doing the right stuff. And I said a strong challenge of sustainability around that, great. We like what you're saying. We like where Fiserv is going, keep it up. So that's on the customer service side. On the product delivery side, we stood up a forum in September and said we'd hit the deadlines. We reset the deadlines on an expedited basis. Proud of the team, what they've done against that. We've hit every major milestone since Forum, and XD is in implementation mode. CashFlow Central is in implementation mode. The enhancements to certain cores are being completed, core advances on time. So everything we said we'd do, and even since the fall, the power of what AI has done for us there in accelerating those developments to complete that has been tremendous, but a lot of credit to the team for appropriately resourcing the products and then driving execution the way it should be driven.

Then obviously, on the final piece, we stopped. There are no forced conversions. And we were happy last week and proud to introduce this journey approach to core conversions. It doesn't have to be a major event as it has been in the past. We can help clients modernize along the way by taking a more modular approach. So I would say a completely revamped approach to what it was before and happy with the progress we're making on all that, but recognize where we are and clear-eyed about what we have to do.

Yes. I think open architecture and modularizing seems like a reasonable sort of compromise to address some of the attrition. You talked about, in '27, an improvement or getting back to the attrition levels that you previously were at. How much line of sight do you have to that? Is what you've done enough to say, hey, we think we're going to get there based on the feedback you're getting, including this modularization piece?

Yes. What we said was gross attrition has roughly doubled, presenting 75 basis to 100 basis points of headwind to the FS business. And between today and the end of the medium-term plan in '29, we've returned to a more normalized level of gross attrition. I think the activities we just went through, plus a broader body of work, whether it's delivering our clients valuable deposits through the StoneCastle acquisition, whether it's helping them embrace AI through the agentOS product, just a general approach is matching all of what they are asking us for plus more.

And we ran the business a long -- the company ran the business for a long wave at that time in those numbers. So there's nothing we're not doing that the clients are saying we'd really like you to do, including building resilience in the products and continuing to modernize data centers like it wouldn't lead you to believe that we could get back to what we're doing, but it's -- these are long tails on these contracts. So we are suffering today from certain events that happened maybe 2, 3, 4 years ago as these contracts mature, and we'll have to play it through the cycle. But we are -- the very first pillar of One Fiserv is operate with a client-first mindset, and we're going right at this in the most direct way as you can on the core side. And you have to believe that the returns are behind it. And we're getting good -- as I said, we're getting good anecdotal feedback of keep doing what you're doing, we like what you're doing.

Good. No, I expect it. So the -- just to round out financial, like, the 2% to 4% segment growth, what gets you to land at the top versus bottom? And I know it's a very simple, probably lazy question, but it does feel important because, right, you're banking on the low end to perhaps below, you're attacking it with a clear plan to improve attrition. And it feels like the core modernization on the tech side for the rest of it, that could drive some upside as well. So what's the tipping point for you to say, hey, we're closer to 4 versus we're closer to 2. Is it that simple to think about it that way, service and tech between the 2 or the 3 segments within that?

Yes. We -- three major segments in FS. We put -- obviously, we're in the middle of an important transformation year for the company, and we put together a plan reflective of where we are currently as a company, not where we'd love the FS business to be in 10 years or something, so you have to live in the moment. We said banking on the low end of that, issuing and payments on the high end. And if you go through each of the segments, we said in banking, obviously, we just spent 10 minutes on it, you got to get -- address the core attrition issue and make that a great experience for our clients. And as part of that and highly tied to it, is complete the launch. We've accelerated the implementation of XD.

It's going well. We got hundreds of banks to finish on this year. That's an important part of it, and then continue to build out the VaaS there. On the payment side, lots of exciting things going on there, obviously, important secular changes in payments, and we're on the front end of almost every part of that. The one headwind in that business we talked about is traditional bank bill pay. It's going to the other side of our business with merchant and/or potentially through instant payments, Pay by Bank or via ACH or some other form. Everything else there is going great, account-to-account, our commercial payments businesses, all -- back to the start of the presentation, all ripe for opportunity with our clients who want to build in those areas, grow in those areas, and deliver products. So excited about what's going on in payments.

And then issuing is sort of the old standby with Optis, gross accounts on files at a nice rate year in, year out, good pipeline on the Optis front. And then we're excited about the launch of Vision Next, which think of that as the Finxact of card cores and something we can take internationally to be really competitive on that front. And we talked about a very healthy pipeline in that business and some exciting paths. If there's an upside to it, there's a bunch of stuff we talked about at Investor Day, embedded finance, which very much ties to both Finxact and our prepaid platform with Payfare and to the issuing business that we didn't really embed anything into the plan for that. Stablecoin, another straight tie into that. So if something develops there more quickly or those emerging areas emerge faster, then we could do better.

Good.

Of course, the plan -- any plan like as you would expect, involves a lot of execution on -- if you think about the ups and downs, you're going to execute, and then there's some stuff that we left out of the plan that would be interesting optionality.

Okay. good. No, look, you've given the pieces where we think there's things to track. So it seems very clear and, again, reasonable, which is the most important piece. Let's pivot to merchant. I know we're speeding along here. I like the chart that you guys showed with the Fiserv Commerce OS and how that's the interface layer to access Clover enterprise platform, right? And it got me thinking -- I didn't ask it on at the event, but I'm going to ask you now, if you don't mind. Just we've heard from specialized players like Toast, they're here at the conference, and you've got the full spectrum here. And so there's this breadth versus depth debate. And so the importance of scale and breadth as you see it, why is it important, right, for Fiserv to compete in all of these areas? Can you realistically win against very sharp competitors in each of these buckets?

Yes. I think Toast did a really good job outlining the future strategy. We talked about $4.6 trillion of processing volume. And going into what we're building from a series of different gateways today, and it's live with Commerce Hub, is a single unified gateway for enterprise clients, platform clients, and Clover. In each of these areas, we believe we have a very competitive platform. Enterprise clients, we talked about mostly, historically, has been point of sale and less e-com. And when you look against some of the modern players, that's the big difference. But we see a clear path, especially given our data and the like to go compete on the e-comm side once you have a single stack.

Clover, obviously, we've been competitive for a long time, and there are pockets of it where we know we need to build and want to build capabilities, whether it's health care, professional services, upper end restaurant. And then on the platforms, it's a totally emerging new TAM that -- where we think a lot of commerce will happen in the future, and it's the -- probably the best set of clients that embody the full synergies of our business because they were going to want banking services, they were going to want embedded. They're going to make pay-ins, pay-outs, massive money movement, and they need back-end processing, and it's a highly global business, point-of-sale and omnichannel.

So our view is we've got the hard piece of enterprise down, which is the point of sale, a very sophisticated long-standing point-of-sale system, building enterprise capabilities, single gateway. We own it, it's live. It's $200 billion of volume on it, 40 countries, modernized VaaS, a single switch, which we already have, single modern ledger, which we already have with Finxact, and then the largest back-end processing platform in the world. There's nothing in there we have to go get.

So if there's an advantage to our size and scale is we have everything you need to compete in a modern stack, and then we think we have some stuff primarily, an unmatched set of data. We showed 1.8 billion cards on file, and the capabilities to take that data and compete effectively e-comm, highest auth rates, lowest fraud rates, if you solve that piece of it, big piece. So super exciting to us to get this built. There's work to do to get there. But I think we said, count on a hand, who else can compete with that type of platform? So we're excited about it.

No doubt, the scale and the breadth is absolutely there. So a popular question I got from investors to ask you here was just to drill down on Clover, not to make this another Accel exercise on stage, but 10% to 15% GPV growth -- so when we -- Mastercard talks about global card growth being in that zone, that's about 2x faster than U.S. market growth.

So what needs to happen for Clover to grow at that global card level? Is it more international expansion? Is it channel penetration? There was a lot of talk about going after ISVs and, of course, ISOs, you have a lot of strength there. Is it white labeling the product because you are now detaching it from the hardware? What should we expect to get you to that 10% to 15%?

Okay. So what we said specifically was 10% is the organic growth of the business, 15% would reflect a lot of success in converting non-Clover to Clover. On the 10%, excluding the gateway conversion, if you go back '22, '23, '24, '25, almost by quarter, very, very consistently, 8%, 9%, 10%, 11%, 12%, and 10% is what we've been doing, doing it for a long time. So start from -- it's not an acceleration of any historical level. And then on top of the 10, we're doing -- there are sort of five things that we've been consistently focused on, which is expanding horizontal VaaS, vertical VaaS.

We talked about practice pay and health care, we talked about professional services, we talked about consolidating all of the restaurant offerings at the upper end to complement the traditional strength in restaurant. We talked about international. We said it's north of 20% of total volume now for Clover and seeing great growth in several countries there, with Japan coming online later this year and into '27. We talked about broadening and continuing to expand what is, I think, hard to argue, the best distribution platform, so 3,000 ISOs, the ISV channels, numbers of great partners, 1,000-plus banks, direct sales force.

And then we talked about enhancing the experience. This is all on the organic side, where we see a -- we've had a strong front door, but we haven't -- there's room for improvement we have on the attrition side and have a whole team and a whole series of efforts focused on the back end. All that would be to support a level of growth that we've already been doing, so you guys can do what you want with that. But we think each of those are additive to it and important to it.

And then the sixth thing or five asterisks, which as you think about the 10% to 15%, is can we put forth a compelling offer to greater than 50% of a $4 billion revenue base that would be compelling for them to move or adopt incremental VaaS or new VaaS from Clover, or come over fully as a non-Clover customer to a Clover customer? We talked there about starting very simply with Clover savings and Clover Capital, which can be pulled off the Clover dashboard and you don't have to do a big box and hardware shift and the like. And we'll be very careful around that because generally, those are happy Fiserv customers today. They've been Fiserv customers for a long time. if we can increase yields off processing volume by putting more VaaS, then we'll go do that. We're going to do it in a very measured, thoughtful pace.

Okay. Yes. So that's where the extra 5 points comes from. It's some of the...

If. Yes, if we're successful in doing that, but we think about 10% is the base, and some option on adding more value to the non-Clover book over to get between the 10% and 15%.

Okay. Good. So we're almost out of time. I want to make sure we hit a few of these things. So enterprise, you kind of alluded to. We talked about e-com already. So if we have time, I'll come back to it. The other 50% within merchant. There wasn't a lot of time spent on that unsurprisingly at the event. But the 50%, that's not growing. Is there a risk of a faster roll-off? Would you encourage that? I'm sure there's very high contribution margins in that book. How confident are you in that being stable?

Well, I'll start by stablish for a long time, and there's two pieces to that. It's the non-Clover book has the vast, vast majority of it, and then there's the processing book. Starting with the processing book, that includes all the JVs, the partnerships with the large banks. They control those customers. We provide processing services. So a little less control over the business, but it showed a very steady, predictable path for a long time.

Obviously, some customers shift in and out of there, and we'll make sure we call that out. On the non-Clover book, we just talked about it. They are generally happy customers. Sometimes there's a perception that there's like -- that they're locked in a room and they can't get out as a non-Clover SMB, but they're running their businesses. They have payment processing needs, and we think there's an opportunity in a very targeted approach to enhance their experience with Fiserv by introducing some value-added services, obviously, providing capital and enhanced yield on potentially idle cash or not fully yield returning cash. It's a great way to start that, and that's what the teams are focused on it.

But that customer base has been stable for a long time and starts to look -- if you don't move them out into Clover, it start -- it looks and feels like the U.S. economy. It's a low single digit -- low single-digit 0 type number.

Okay. I know there's a lot of history there, but I felt like it was still important to ask. So we -- skipping enterprise, I did want to ask about STAR, maybe just going into STAR. I think you and I have had conversations about this in the past, you own the third largest debit network. We call it, forgive the consulting speak, right, the connective tissue between the merchant and financial.

Why is STAR valuable to Fiserv relative to it being independent or being a part of a bank, right? We've seen some activity there. I think Discover and Capital One, PULSE is the most obvious case study. How do you view that asset? It feels like a hidden gem inside of a Fiserv, to me.

Yes, it is. And we're not trying to hide it. And it's a great example of the synergies between the merchant and the financial services business. We have two debit networks, STAR and Accel, combined third largest player, both top 5. And we sell that product as an issuing to our issuers on the debit side, which is thousands of banks.

And then we obviously go to the merchants to get it accepted. And as the acquirer, we can route payments. And it's a great example of synergies between the businesses, great returning asset. Our customers and merchants find value from it. And I think we -- it is a very good asset within Fiserv, that if there was ever something else to do with it that made it a better asset, we would do it. But today, it's a great asset for us and a great example of the synergies between the businesses.

Yes. And you talked about the on-us network.

On-us, strategic optionality. We've got some global optionality. Does it play something in the future of payments as you settle from a DDA account to a merchant? Could you do -- so it's great strategic optionality with it. So it's a good asset, I agree with you, and it's been a great returner for us for a long time, and we'll make sure it's not hidden.

So it sounds like more to come in terms of extracting value on the STAR side. So we'll keep asking questions around that. So back to the construction of the company, I know you talked about at Investor Day and the decision to keep the merchant and financial pieces together after your strategic review. The synergies, in terms of them being realized here in the short, medium, long term, is that something that we'll be able to measure, something that you'll be able to report back to us? You gave us nuggets here and there about where we'll see it, but it must be compelling enough for you to want to obviously keep it together.

Yes. There's synergies on the back end of the business, obviously, in consolidated platforms and technology and the like. And then on the front end of the business, we wake up every day and the businesses run with great synergies between them without anybody thinking about it, right? Clover's thousands -- 1,100 banks, small business bankers are out selling Clover today, huge distribution channel for us. The acquiring networks are going back and forth, the biller products go back and forth.

The fraud data goes back and forth, obviously, in a responsible way. So all of those exist today. And if you didn't put them together, it obviously would be dis-synergies or have to be realized in some other way. And then I think, hopefully, you got a sense as we went through the day, especially with Dhivya. He talked to us his joint presentation, whether it's stablecoin, especially embedded finance, on-us settlement, and four or five other areas, where the -- where our customers are talking about going, where the industry is going.

I think platforms is driving those businesses closer and closer together. Banks all want to do more in payments. All of our payments customers want to do more banking, and you bring them together, and we think we're in a unique position to solve that. So unless that didn't play out and we weren't able to execute and get those synergies on big secular changes, then you would do something different. But as long as that's heading in that direction, as I said in the review, and we'll keep reviewing it, it makes sense and greater upside through those synergies, and we'll try to call out as many as we can for you as we have them.

Okay. Good. It's an important subject. We have 20 seconds left. I didn't ask you about AI. Am I in trouble?

No, it's -- we were proud last week, and I think we've gotten tremendous reception over the last week to -- obviously, agentic commerce was more on the radar, and I think people are excited to see what Clover can do from an agent perspective and then what we can do on the enterprise side, but the tremendous receptivity to agentOS, which is the operating system.

Yes. The demo was great.

For banks, and we've gotten great outreach from everyone involved in the banking ecosystem or wants to be involved in the banking ecosystem. And I'll just finish with this, is the banks want to use AI, but they run highly regulated, highly compliant PII data, and it's really hard for them to figure out how to get agents into that in a safe and controlled way. And agents and LMs and others in the industry want to penetrate into the banking sector to provide solutions, but they don't really want to have PII be regulated, overseen, or be supervised.

So our operating system is simply to bridge two obvious needs, and we think it can create tremendous value for our customers and TAMs that were never on the Fiserv radar screen, helping people process a loan was one of the examples we showed about. So we're excited about it and got good feedback on it.

Yes. And Fiserv being the operating layer for banks on the AI front, I think, makes a lot of sense from a positioning standpoint. So we'll save that conversation for the next time, Mike. Thank you. We covered a lot. Forgive me for going through so much of it so quickly, but thanks for being here.

Thank you. Thank you.

Please welcome Head of Investor Relations, Walter Pritchard.

Thank you, everybody, for coming, both here in New York and on the webcast. Before we kick off, I wanted to review the agenda and provide some information on logistics. We'll start today with Mike reviewing our strategy and our plans to execute the strategy. Then Takis will follow with a deep dive into the merchant business, and at about 10:15, we'll take a short break. We have coffee and some light snacks out in the lobby area. At this time, those on the webcast, we'll hear the music.

We will return at 10:30 with Dhivya, taking us through the Financial Solutions business, and then we'll have Takis join Dhivya for discussion of the opportunities at the intersection of our merchant and financial businesses. We'll take another short break before Paul comes up cover the financials, including details of our medium-term outlook. We'll conclude with the presentations just afternoon and have Mike, Paul, Takis and Dhivya come back up on stage for Q&A. While we're setting up for Q&A, we'll give further instructions on how to participate for both those here in New York in the room as well as those online.

I wanted to point out that our Chairman, Gord Nixon, is here in attendance as well as many members of our management committee. Later, we'll be joined by some of our broader leadership team for you to interact with. For those here in New York, after Q&A, we'll conclude with a lunch, and we'll have some demos that you saw out in the foyer. A webcast replay of today's session will be available by early tomorrow morning and the slides will be available on the Investor Relations section of fiserv.com within an hour of the conclusion of the Q&A.

Please refer to these materials for an explanation of the non-GAAP financial measures discussed during these presentations, along with the reconciliation of those measures with the nearest applicable GAAP measures. Our remarks today will include forward-looking statements about among other things, expected operating and financial results and strategic initiatives. Forward-looking statements may differ materially from actual results, and those are subject to a number of risks and uncertainties. You should refer to our presentation materials for a discussion of these risk factors. And now I'll turn it over to Mike Lyons, Pfizer's CEO.

Walter, and good morning, everyone. It's great to see so many of you here, and we thank you for your interest in Fiserv and look forward to an informative and productive session today. Today is about giving you a clear and candid view of how Fiserv is evolving, where we're investing and how the changes that we're taking and affecting will lead to strong, sustainable financial performance and drive -- ultimately drive shareholder value as a constant compounder, essentially reclaiming Fiserv's historical identity from the past.

We recognize the last year has been challenging, and we don't take that lightly. In response, we've made meaningful change across our leadership, our culture and how we show up for our clients. These changes came directly from the comprehensive review that we completed last fall. A review that identified some real issues, fixable ones, but also confirmed that the underlying strength of our franchise was intact. Coming out of that review, we launched the One Fiserv action plan, to address those areas that we needed to address from the review, client service, product delivery, tech resilience and capital allocation.

Since the fall, there have been no major new surprises and our teams have been laser-focused on executing against this plan. While there's still a lot of work to do, we're seeing early progress across the business and tracking to our financial expectations which reaffirms our confidence that this quarter will mark the trough in revenue growth. And from there and throughout this plan, we expect revenue growth to accelerate into the mid-single digits. Paul will walk you through this bridge and give you some of the drivers as to how you can get there.

And we're certainly looking forward to the second half of this year and 2027 and into the plan when we expect our financial results to better reflect the changes we've made and the underlying strength of our franchise. We really do have an incredible platform that's been built over the last 40 years. Sustained investment, acquisitions, partnerships, regulatory expertise and trust have led to this franchise. And it would be hard, if not -- impossible for someone to recreate it. We also have a great opportunity in front of us as financial services and commerce, the two massive markets that we serve, undergo important and exciting structural shifts becoming more digital, real-time and embedded.

And for us, AI amplifies all of this, building on the mission-critical infrastructure we provide to move money and information at a scale and with a level of reliability that few companies can match. So we feel great about our position, but we know that's not enough. In today's dynamic and competitive environment, consistent and disciplined execution will ultimately determine the winners. And that's exactly the type of execution we've been focused on with the One Fiserv plan to transform what undeniably is a great platform today into an even greater company.

So with that as context, I'll spend my time highlighting the opportunity in front of us, what we're doing to capture it and how we believe this transformation back to Fiserv's constant compounder roots is a compelling proposition for you as shareholders, all of which will set the stage for Dhivya and Takis to go much deeper in the businesses and Paul to walk you through the financials. So while our culture and approach are evolving with One Fiserv, what has not changed is our business model, strategy and purpose.

We are and will remain the intelligent technology infrastructure that financial institutions and merchants rely on to run their businesses, which in turn drive the economy, moving money, authorizing payments, settling transactions and maintaining significant amounts of proprietary and critical data. That's what we do. And that's what we do everyday. And that's what we have been doing for decades at scale as the industry leader. And just to give you some perspective here, each day, we execute nearly 1 billion transactions on behalf of our clients, stunning number.

Our strategy is simple. Become the trusted technology partner of our clients, embed ourselves into their systems and operations, which allows you to see more and more and then deepen those relationships over time by providing value-added services and products once you're in there. When this is executed well, we grow with our existing clients and win new clients all along the way becoming an indispensable partner to their operations. And as technology advances and our clients' clients have an insatiable appetite for new developments and new technology the TAMs available to us and the revenue opportunities attached to them multiply.

For example, what started with check processing and remote check went to ATMs, went to online banking to mobile banking, the digital wallets, to Zelle, to Pay by Bank and now it's going into Buy Now Pay Later, into stablecoin. Each one of these developments offered us a new opportunity. And along the way, we've captured each of them, building many #1 share rankings for these relevant products and services. And now cumulatively, even checks, these businesses represent a massive amount of our revenue stream. So with our strategy, and you can see how this develops, everybody wins.

Our clients win, their clients win and Fiserv wins through greater ARPC and greater opportunities as it multiplies itself. So lots of numbers here, all of which will be put into context today by Dhivya and Takis. I won't go through them all, but three key takeaways. First, nobody else has our scale, leading market share positions and access to data. Second, the distribution network is unparalleled. The multiplying power of banks, credit unions, ISOs, ISVs, thousands of agents, great partners like ADP who market and sell our products every day give us incredible reach and power. And third, we have a compelling financial model, providing mission-critical services in long-dated contracts and generating strong free cash flow, all key attributes of a constant compounder.

So we believe our competitive position is unique and AI only makes it stronger. Our operational infrastructure supports critical workflows that must be correct and auditable every time. We're deeply embedded with our clients inside systems of record like core banking platforms, complex merchant infrastructure, ERP systems and the payment rails themselves globally. As AI comes to banking and commerce, the dislocation disruption is concentrating at the application or surface layer while routing, clearing, settlement and compliance require deep integration licensing, regulatory approval and institutional trust built over decades.

And that's the integration point where Fiserv blips. And as the industry test new settlement rails and new platforms, think stablecoin, tokenized deposits, real-time networks, we're actively building proprietary networks there, too. So while we're preserving what exists, we're also building new infrastructure and new regulatory compliance on the emerging platforms and layers. So in a world where AI benefits accrue to those with the best data, the deepest integrations and the most trusted infrastructure, we think we have a great position. And this position is validated by our work with the world's leading AI companies, including OpenAI with whom we were thrilled to announce a strategic collaboration process with this morning.

And specifically, our AI strategy is focused on growing revenues, cutting costs and enhancing client service. On the revenue side, we're intensely using AI to strengthen the infrastructure our clients already rely on us for taking systems of record to systems of greater value. Think about better auth rates, lower fraud rates and richer data products offering hyper personalization of offers. And then new products -- entirely new products like Agentic Commerce that Takis will cover an agent OS a new and transformative operating system that Dhivya will unveil we announced this morning, which brings agentic capabilities from everywhere safely to our banking clients.

You have -- it's a great demo outside if you get a chance to attend it. On the cost side, we see incredible opportunity to reduce expenses across servicing, active and operations, which is factored in and contributes to the margin expansion that goes through this plan. On the client service side, we're enhancing self-service functionality, streamlining implementations, enhancing testing and getting products to market faster. Our ability to leverage this competitive position is further strengthened by the fact that we operate in healthy growing end markets. The secular growth of our primary markets alone more than fully supports the mid-single-digit adjusted revenue growth that we put into the plan.

And beyond our core end markets, we're entering fast-growing TAMs like embedded finance and stablecoin where our combination of banking and commerce creates a structural entry position that others cannot match. And despite these leading market share positions we showed you earlier, across U.S. banking, payments and commerce, our TAM penetration still remains low, offering a significant opportunity for further growth. Outside the U.S. and in new areas like embedded finance, the share is even lower providing lots of runway for the future. And you can see here, we have an incredible set of clients from Wells Fargo to Robinhood to millions of small local businesses, we have an inevitable opportunity and perpetual opportunity to provide value-added products and services that help them run their businesses better.

And then as they grow, we grow with them back to the strategy. So take Manasquan Bank, a high-performing $3.5 billion community bank in New Jersey, for example. Our relationship with them started in 1991 with a single product deposit solutions. Since then, they have grown assets 100-fold and we've been fortunate to be with them for the full ride now providing 36 different products and services. This is the strategy in that virtuous cycle in action. Over last year, I spent a bunch of time with clients to understand what -- why they value Fiserv and what are they looking for us? And the answer is consistently more.

They want more help, more innovation, more solutions and more help competing against their competitors. And that demand is really at the foundation of our growth strategy. We're meeting that demand with an unmatched set of capabilities. While we have some very strong competitors across our businesses, no single peer covers the full stack of merchant and financial like Fiserv.

That creates a value proposition that our clients cannot replicate by stitching together a patchwork of point solutions. Leveraging that full stack capability, and realizing synergies between our businesses is a critical part of our strategy. In many areas, merchant Financial are already winning together and have been doing so for years. Bank distribution of merchant products like Clover. Our debit networks go to both sets of clients and fraud solutions, leveraging an unmatched amount of data and benefiting both sides are obvious examples.

On top of those success stories, we're building synergy momentum and potentially significant new revenue areas like embedded finance and cash management that Dhivya and Takis will talk about later. In each of these examples, we're doing something more than providing technology to a client. We're helping our clients grow. That deepens the relationship, creates additional cross-sell opportunities in this positive compounding loop that makes up our strategy. This slide shows the power of that model. These are our top 10 clients by revenue and you can see how they're actively engaging with us across both sets of businesses.

And if you start to look inside the boxes, go 3-dimension, we're just barely scratching the surface of fully penetrating each of the opportunities within the boxes. In this same pattern, these are the top 10, the same pattern can be seen as you go through thousands of enterprise clients, and you can even see our friends Manasquan there. Some investors have questioned the true utility and value of our structure, citing the mixed success others in the industry have had, trying to combine finance and commerce. We've taken that question seriously and applied that lens when we executed our franchise review last fall.

What we found and continue to find is that there is more value for our clients and our shareholders today with the businesses together. As responsible stewards of capital, we will obviously, of course, continue to challenge that conclusion. So that's the opportunity, deeply embedded financial infrastructure, providing mission-critical services in growing markets with unmatched scale, all amplified by AI. Now I'll go through the plan that we're executing on to capture the opportunity, and that starts with the team.

I love the team we've built at Fiserv and have been blown away by the proactive outreach we've received outside the company to come in and help -- to join us and help us execute the strategy we're going about. It's a great compliment. The most senior appointments we've made are Dhivya and Takis as Co-Presidents, and I'm excited to have them head binding the show for you today. They're both outstanding leaders and operators, and you'll see great focus in their presentations on what they're trying to accomplish.

And you'll have the opportunity to engage with some of their talented leaders, many existing Fiserv plus new that we've added who are outside running the demos. Alongside the leadership team, we have a great base of employees who are critical to how we show for our clients every day, and I thank them for their ongoing and continuous efforts. We're especially encouraged that top talent attrition at the company is running at record lows and that employee engagement is up year-over-year.

Importantly, I've heard from countless employees that they're energized by going back to our client-first strategy and following the One Fiserv plan. One Fiserv is anchored by five pillars that are driving everything we do at the company, and you'll be able to apply it to everything you hear today as you go through. I'll briefly touch on each of the five pillars, saying what we're trying to achieve, how we're measuring our success and any progress that we're seeing. The obvious and most prominent is pillar 1, start with the client in everything we do.

That means excellent service, resilient technology, innovation driven by our clients' needs and delivering value-added advice and solutions to help them run their businesses better. We measure our success here through new sales volume, enterprise ARPC, client satisfaction across the segments, key technology metrics, including system uptime and incidents. Recognizing that we still have a ton of work to do, we're seeing early improvement in the key metrics. An initial client feedback, especially on the banking side has been positive with a strong challenge from them around sustainability. We achieved new record sales in 2025 and 2026 is tracking ahead of that, which is encouraging to us and reinforces the continued relevance and value we provide. And you'll see those sales come through in our financials.

While our aggregate same-store ARPC is up over the last three years, which is a very good thing and a key measure of our strategy. Just over half of our clients are showing increases, driving the change, which isn't as great a thing, which points to us to a tremendous opportunity to the other half to increase the breadth of cross-sell, which from everything we've seen is driven directly from better service and more value-added solutions. Client-facing head count is up meeting an important client ask of ours, especially on the banking side, and coverage ratios are now close to their targeted levels.

On the tech side, systems uptime has improved materially, and client-impacting incidents are down significantly. Before moving to pillar 2, I want to level set on our core banking business. I know it's been an important topic for our investors and one where we've made some very intentional changes. I'll start with the fact that core account services have been at the heart of what Fiserv does since our founding. We're the #1 provider in the U.S., 25% market share, serve 3,000 customers across the 16 cores. It is a business that we're deeply committed to. We take our role in supporting community banks and credit unions very seriously.

As a result of certain client actions taken over the last couple of years, including a move to consolidate from 16 to 5 cores, we've suffered revenue attrition and lost some market share, which has been disappointing to us, obviously. Over the last six months, we moved aggressively to reverse these trends, carefully reviewing all aspects of the business. Our work and lots of feedback from our clients has identified a very addressable issues, predominantly on the service and product delivery side and less so on the technology side.

And this assessment has been validated externally. This chart shows the results of the American Bankers Association core survey. These were released in early '25 reflecting '24 backwards. So widely followed and widely respected survey. We had the unusual distinction of finishing both first and last. As that work, the top ranking went to a great partner of ours, who exclusively resells our largest core DNA. The bottom ranking went to us selling the exact same DNA technology, clearly indicating to us service issues, which we know how to address.

And we're addressing this in a very intentional and active way, more people, where our clients needed more investment, systems resources products, more modernization, more partnership with the consultant community, including the acquisition of Smith Consulting back in, they were DNA experts, in a markedly different approach to core conversion. Specifically, we're supporting all of our cores. Clients want to modernize. They do it how and when they want and Dhivya will walk you through a totally revamped thinking around this all along the lines of a client-first approach.

To put some numbers around core revenue attrition over the last few years, it has roughly doubled from 75 basis points to 150 basis points when measured as a percentage of total financial solutions revenue, roughly half our business. As we previously shared, core attrition, both the number of cores and revenue have remained relatively steady over this period, and that continued into the first quarter of 2026. Our plan assumes no material change in this in 2026 and then a gradual return to historical levels by 2029. All right. Pillar 2 is all about Clover, and making it the leading SMB operating system. I've talked about all these things with you, vertical, horizontal expansion, international distribution, operational excellence and building all the different distribution channels.

Takis will go deeper here very deep. So I'll simply say that even with Clover's strong performance to date, we see a significant runway for incremental and sustainable growth here. Third pillar is all about product delivery and innovation. Our priorities here include simplifying our portfolio of products, accelerating delivery speed times on our innovation and advancing key new platforms, including Commerce Hub, Vision Next and XD. KPIs here are clear, innovate fast based on what our clients want and achieve the milestones that we set.

Fourth pillar is Project Elevate, our AI-driven transformation program designed to make Fiserv a structurally more productive company that's easier for our employees and our clients to interact with and benefit from the natural synergies in the business. We're very encouraged by what we've seen here so far, and Paul will talk through the initial targets for cost savings that we put out this morning.

Fifth and final pillar is to take capital with discipline. Quite simply, this means deploying capital to our highest return opportunities and maintaining a strong investment-grade balance sheet. This process includes constantly reviewing our portfolio for businesses that are redundant, nonstrategic, not performing well financially or should be better owned by somebody else. And consistent with this approach, we just announced the sale of a majority stake in our ATM businesses to Bridgeport Partners, an operator-led private equity firm that's focused on financial technology and has deep roots in our business, and remaining -- we continue to maintain a significant ongoing state.

We're excited for this partnership and how it can enhance our ATM offerings. And as we've talked to you about, we'll continue to review all of our businesses going forward. So bringing it all together, mid-single-digit adjusted revenue growth, positive operating leverage, double-digit EPS growth, up to over $12 and cumulative free cash flow generation of roughly $13.5 billion in the plan. If you include free cash flow that we expect to generate in the remainder of 2026, the aggregate cash flow from now and through the plan would be over half of our equity market cap today.

This is a disciplined, achievable plan with realistic assumptions and clear execution in a clear execution path for each of the commitments we're making in it. Ultimately, our goal is to reclaim Fiserv's historical identity as one of the most predictable and consistent compounding stories and financial technology. We believe that successfully completing this journey will be great for our clients and, in turn, will deliver tremendous value for you as our shareholders. So thank you for your time and attention, and I'm proud to hand it off to Takis to take you deeper into the merchant business.

[Presentation]

Thank you, and hello, everyone. It turns out if you obsess who were helping your clients succeed, they tend to send -- say pretty nice things about you. And when you don't, they also let you know. My name is Takis Georgakopoulos, I'm the Co-President of Fiserv, responsible for our Merchant Solutions business. By way of background, I started -- I'm an engineer by training, started my career at McKinsey, where I stayed for 7 years, before joining JPMorgan in 2007. First, as Head of Strategy, then helping them grow their global corporate bank and then taking over their Global Payments business in 2017. I joined Fiserv 1.5 years ago before taking on this role a year ago.

We will spend the next 40 minutes or so discussing the merchant business, and we will cover 4 topics. First, how we truly have become one of the very few companies in our space that operate under one platform with a singular view of the underlying end customer, all under a single system of record. Second, how AI is the key to unlocking that transition as well as how it also powers new use cases and opportunities for our clients. We will spend the bulk of our time on Clover and talk about in detail that aspiration that Mike talked about, to make Clover the true operating system for small businesses.

And then we will finish with our approach with enterprise clients and marketplaces and our goal to be their financial infrastructure, both today and in the future. But first, let me start by summarizing for you the incredible scale of our merchant business, which Mike alluded to in his presentation. If you look on the left side of the page, we processed $4.6 trillion worth of transactions in 2025. This is more than our 2 modern competitors combined and represents more than 1/3 of U.S. payment volume. We process on a regular basis, 10,000 transactions per second. We've tested our platform for more than 3x that, and we operate with a 5.9 uptime for our critical U.S. applications.

We do business with 7,000 enterprise and middle market clients globally around almost 1 million locations. And we support 3.9 million small businesses, including 900,000 Clover merchants. And our distribution is the broadest in the industry with more than 1,000 bank partners globally and thousands of ISOs and ISVs that we've worked with for years and decades. The value of that scale was hidden in the past under a fragmented infrastructure where clients, enterprise platforms, small businesses, would connect to us through a variety of gateways and APIs, creating problems for them and for us.

For them, it meant that when they wanted to add a new product or a new feature or a new country, that was a new integration. And for us, it meant that we had to maintain multiple platforms and make the same changes and the same upgrades multiple times. So we focused quite aggressively on building a single cloud-native platform with a single multi-acquirer gateway called Commerce Hub, a single payment switch on the right side of the page, and a single ledger that serves as a unique entry point to everything that Fiserv Merchant Solutions has to offer. And that ledger is, of course, FINS Act, which is, we think, the best ledger in the industry and Dhivya will cover in much more detail.

And we are modernizing all of our value-added services at the center of the page, so they can be implemented as simple configuration changes on the same set of APIs. This, in turn, connects on the right side of the page to our processing engine that does open settle that is the one that processes the $4.6 trillion that I mentioned on the previous page. That platform has been built, as you would expect, multi-cloud deployment, minimal latency and every component is a configurable micro service.

And this is not slideware. This platform is live today with 200 billion in GPV in 40 markets. And this is our end-state platform and our go-to platform for new clients. Clover integration will follow in the next few quarters with no anticipated impact on our clients. I believe you can count on one hand the number of companies globally that can paint a similar picture. What allowed us to achieve this outcome is the rapid adoption of AI in our organization. If you look on the right side of the page, from a standing start, today, we have 40% of our engineers using AI daily and 25% of our code written by AI and we are going to take both of those numbers close to 100% by year-end.

But even at this modest level of adoption, the results have been nothing short of amazing. If you look on the left side of the page, you can see some real examples, real results that we have seen by deploying AI and some of them you can see on the demos outside. The first one is our new developer portal that was relaunched in record time with the help of an agent that took all of the client feedback that we received, compared it to best practices across the industry and allowed us to launch our new portal within weeks.

Our Clover consumer app was last updated probably a decade ago despite its millions of users and hundreds of thousands of daily active users. This work was also completed in a number of weeks. There are a number of other examples on the page that I'm not going to go through, except to say that these are all examples of modernizing our value-added services, eliminating or decommissioning legacy products.

And in each one of them, we see a 2x to 4x improvement in the speed of that work. But what excites me the most is the intersection of AI and data which allows us to move beyond moving money to understanding identity. We start with the incredible scale of Fiserv across all of our businesses, more than 100 billion transactions plus everything that we know about them from the FS side of the business that Dhivya will cover later. These are then aggregated to individual consumer and small business profiles which gives us a very deep understanding of the vast majority of U.S. consumers and businesses.

And then to that, we have behavioral information through partners like [ Signified ] that capture pre- and post-sale signals, how people browse, how often do they return or dispute, for example. And then we embed those into a graph neural network that we developed in collaboration with NVIDIA, which resulted in a significant increase in the accuracy of our models and that we just deployed in production. Of course, all of that comes with robust data governance.

That gives us an incredibly detailed and real-time view of how consumers and businesses behave across the economy. This, we believe, will shift us over time from a bulk transaction processor that earns basis points on the dollar to an intelligent platform that earns percentage points on the dollar, unlocking entirely new revenue pools and making us true partners to our clients. You can see some of the examples on the right, and we are going to go through many of them later. This means more volume, new products and higher take rates for us as well as more revenues and better customer experience for our clients.

Another great example of us embracing AI is Agentic commerce, something we think will fundamentally transform payments. and how consumers and businesses interact. Our approach is very simple. We want to enable our customers to securely connect to all major LLM protocols through Commerce Hub's Agentic orchestrator, minimizing the work that they have to do while maintaining the security and integrity of their transactions. For small businesses, that includes surfacing and selling their inventory in agentic searches, agentic discovery. And for larger ones, it means that they can do that while maintaining control of their end customer data and experience.

We also think Agentic commerce will democratize merchant access to their audience, and we want our small business clients to be the beneficiaries of that. On the right side, autonomous agents or A2A interactions present a different set of complexities and opportunities, and we are very excited as we partner with our clients and LLM providers to power both B2B and B2C use cases. And our first SMB agents are going live soon through our partnerships with Google and Alibaba, and you can see some examples in the demos outside.

So now let's shift gears and talk about one of our fastest growing and most important businesses, Clover. I'll go through a lot of detail here, and I hope by the end, you will be as excited as I am about the opportunities in front of us. So let's start with the definition and the scale of Clover. As you can see on the left side of the page, our SMB reported segment was in 2025 $6.8 billion. Of that, $2.8 billion is Clover and $4 billion are non-Clover SMBs. But Clover goes beyond our SMB segment. There is an additional $300 million of Clover revenues that come from our processing segment and an additional $200 million that comes from our enterprise segment, and these are predominantly smaller middle market companies.

The sum of the 3 green bars is the $3.3 billion of the overall Clover revenues. If you go to the top right, you can see our total SMB franchise across Clover and non-Clover $0.9 million plus $1.8 million, a total of $2.7 million SMBs, adding up to $1 trillion of GPV. There are a lot of analysts in the room, so I assume you were paying attention on the first page, we showed $3.9 million. Here, we show $2.7 million. The delta, the $1.2 million are processing only relationships with SMBs where Fiserv typically has a more restricted access to the underlying small businesses.

That's why we don't show it on the page. So how does Clover stack up with the market? Well, in terms of GPV, we are larger than any one of our competitors. Anyone larger than Clover, our own non-Clover book, and we will talk later about how we will approach that. While Clover has been highly successful since its launch a little bit more than 10 years ago, we are still only in the single digits of the large global SMB TAM, as you saw in Mike's pages. The next phase of Clover growth will come from successfully executing against our key priorities.

First, enhancing our product suite across hardware, vertical VAS and horizontal VAS. Then maximizing the value of our distribution channels, in particular, our direct channel, our bank channel and our ISV channel. Fundamentally transforming our customer service experience will be key not just to growth but to customer satisfaction, word of mouth and retention. International growth is a significant component of Clover, and we have a very strong point of view on what it takes to succeed internationally. And then finally, the $4 billion that I mentioned of non-Clover clients and how we move them to Clover.

So let's take them one at a time, starting from hardware. On hardware, we are focusing on supporting four key use cases. Larger SMBs, enterprise clients, international and non-Clover conversion. So on the left side of the page, we are updating Clover for AI, including biometric checkout that you can see outside as well as multi-language voice recognition and a variety of other things. We are adding enterprise-grade multi-location support, which was a key gap for Clover. And then point number three, for resiliency, for cost and for capability augmentation, we will also complement our own manufacturing with select third parties.

And finally, point number four, we are making Clover completely hardware-agnostic. So we can power Clover value-added services even for clients that use different hardware or no hardware at all. And as a reminder, our hardware is still sold at an appropriate and stable operating margin. Moving on to vertical VAS. Vertical VAS remains at the core of our value proposition for our clients. Clover, as you can see here, has been equally successful in both retail and restaurants, which are the two biggest verticals in the U.S., collectively 42% of U.S. GPV. And in each one of those, Clover has a more than 10% market share.

By the way, you can also see the upside, right? Our market share is high. There is still almost 90% of the market that's not with Clover. Less intuitive perhaps is the 5% market share that we have in both healthcare and professional services despite the lack of a dedicated effort and product offering in those segments. So what are we doing going forward? First, we are addressing a key gap in our offering, which is the lack of a compelling omnichannel value proposition, especially for retail. Today, about $30 billion of the Clover GPV is online but with real opportunities to make web publishing and marketing very simple for our clients, even those clients that do not have an online presence at all.

In restaurants, the second one we are integrating three previously separate efforts to bring a continuum of solutions to clients of different sizes by merging Banco, Clover, and Clover Hospitality into the Clover restaurant stack. So we can support restaurants as the increase in size. Healthcare and Professional services are our two new vertical launches, which we took to the market in March after extensive testing. We are excited about both, but probably a little bit more about Clover practice pay, which addresses the needs of smaller medical offices.

And we are excited because this was the top request from our distribution partners. And what we've seen over the next first few weeks of the launch is that 50% of the demos convert to a sale. So we feel really good that for the first time, we have dedicated solutions for each of the four major vertical -- SMB verticals in the U.S. Moving on to horizontal VAS. We see significant upside across the Board. We continue to see traction with our employee management suite includes payroll, accounting, bill payments, et cetera. But where we see the biggest upside is helping small businesses manage their cash needs with Clover Capital and Clover savings.

Clover Capital grew by 30% in 2025, but our penetration is still only 4.5% in the U.S. and pretty close to 0 internationally. We believe that we can increase the size of that book by a factor of two or more without any change in our risk appetite or economics. Clover Capital helps businesses grow and as they grow, they have higher levels of operating cash. And that's where Clover savings comes into play by offering a very high-yield savings account into which they can deposit their cash.

Leveraging the recent acquisition of StoneCastle, we expect Clover savings to be available to small businesses through the Clover dashboard before the end of the second quarter. And of course, these deposits will go to the financial institutions on the FS side. But the most important question that our SMBs are asking us is how can I grow the business? Where else are my customers shopping, what should I offer them next. And that's where the Clover agent comes in.

So let's take a look.

[Presentation]

I am [ toned ] between the cupcakes and the croissants. But you can see in the demo stations outside how the agent looks like. So moving on now to our next topic, which is distribution. Lots of numbers here, so let me just take a minute to go through them. We have, as we said, we love our distribution. It's very broad, very deep. Five major distribution channels, Direct Bank, ISV, ISO and our wholesale processing clients. Starting with the first one, direct and bank and partner. They represent about 40% of new outlets that come to Clover and about 80% of what that channel sells is Clover. And the growth rate is more than 10%. If you look at the bottom, primarily ISOs and agents represent the majority of the remaining 60%. Clover penetration is much lower at 40% and the growth rate is a healthy 15% and with ISVs, as you can see, the growth rate is high, but our penetration is very low.

And we have a very clear approach on how to maximize the value of each one of those channels to increase the penetration of Clover and increase the growth rate. So let's start with the direct and bank channels, where Clover penetration is high, but the growth rate can be improved. And the economics are very attractive. So what are we doing? The first thing that we are doing is moving from what was historically reactive sales where merchants reach out to us to an AI-assisted lead sourcing effort.

For example, fastest-growing companies, new businesses launched, et cetera. Second, for smaller clients, digital, self-discovery and boarding codeveloped with Google's Gemini, which again, you can see outside. And of course, continuing to increase the size of our sales team has made sense. On the bank channel, we are eliminating onboarding friction by embedding Clover into the bank's digital experience and leveraging the bank data so that we can prospect underwrite and price. 20 of our top 100 banks have already signed up for this solution, and we expect to be north of 50% before year-end.

Collectively, we think these efforts can add 25% or more in the growth rate of that channel. The other area of focus for us is around our partner channels in particular, ISVs. ISVs are our fastest-growing segment. Both for Clover and overall, reflecting the secular shift in the industry towards more specialized software solutions and we are the beneficiary of that trend as we partner with thousands of ISVs, as you saw before. But historically, we did not make Clover widely available to ISVs, hence, are very small penetration.

By partnering more closely with ISVs, we can complement their vertical and specialized software with a full suite of Clover capabilities in payments, hardware, capital savings, processing, et cetera. This is a win-win-win. For the merchant, it means they can have the software they love together with everything that Clover has to offer. For the ISV, it gives them a source of differentiation against their competitors. And more importantly to them, it gives us access to our distribution. And for us, it allows us to retain a healthy portion of the economics. This is the structure that we use to launch Clover PracticePay with Rectangle Health. And as we announced a couple of days ago, this is what powers Global reserve through our partnership with Fabric which we consider one of the best-in-class players in high-end dining.

And we expect to do many more of these with leaders in their respective verticals. In the interest of time, I will not cover the ISO channel, except to say it's very large. It's growing fast, and it will be a large component of our non-Clover conversion efforts that I'm going to come to shortly. Improving client servicing is probably at the top of our priorities, and it's also at the top of the One Fiserv plan. Feedback from clients pointed to a number of opportunities to improve the customer experience including multiple handoffs, manual processes and lack of sufficient customer service tools.

So we have reimagined customer service, empowering each of our agents to fully resolve client issues, redesigning our workflows with AI and ML, so that models anticipate client issues and decisioning is accelerated and also dramatically simplifying end-to-end customer experience so that onboarding, setup, billing and servicing become intuitive and frictionless. But we also know that every day counts. So we tactically implemented many of those solutions to our highest value direct customers at the beginning of the year. Within a few months, the results are what you would expect when you treat your clients the right way.

First call resolution doubled. The duration to resolve risk calls went down by 1/3. Customer satisfaction went up and attrition was reduced by more than 20%. And we will continue rolling this out with a sense of urgency across all clients and all channels over the next few quarters. Moving on to international. International has been a success story for Clover with about 20% of our 2025 revenues coming from outside the U.S., even excluding Argentina anticipation.

Canada, Mexico and Brazil, for example, continue to experience rapid growth, and we almost doubled the overall number of international Clover clients over the past two years. And at this point, we have a pretty strong conviction around what works when you go to international markets. It starts with the underlying market. Underlying economics, size, growth, ongoing digitization of payments and Japan made the top of the list in all of those dimensions.

Second, the presence of a strong distribution partner that provides deep local expertise and embedded relationships like TD in Canada, Caixa Secreta in Brazil or SMCC in Japan. Third, you need a clear differentiator in the market. What is it that we bring that no one else has, Software Express in Brazil, anticipation in Argentina or the ability to cover all payment methods through a single device in Japan. And finally, when all of these things are in place, we bring to bear the full power of Clover hardware, software and processing.

So you should expect us to continue to thoughtfully add to our 12 international markets. Starting with Japan in early 2027. Finally, to close this section, Let's talk about our biggest and most unique opportunity than non-Clover back book. 1.8 million customers, generating $4 billion in annual revenue. No competitor has anything like this built-in conversion opportunity. We have segmented this book based on their profile and their needs. And the good news is that the majority of the book squarely fits within the Clover sweet spot.

And over the past few quarters, we have tried a variety of approaches to understand customer response and sensitivity to different offers. And we decided to follow a deliberately merchant-friendly approach. We will lead with a Clover dashboard and low friction, high value-added services products, Clover Capital, Clover Savings, Clover agent, No operational disruption to the SMB, no upfront investment and a 15% expected revenue lift for us. This will create an natural on ramp to the full Clover POS and software solutions over time, with no forced conversions and, of course, a further revenue uplift over time as clients embrace the full Clover value proposition.

Now let me wrap up the Clover section. First, and as a reminder, Clover GPV growth, excluding the previously discussed gateway conversion has been consistently within a very narrow range of 10% every quarter for the past many quarters. And as we look forward, we expect to see GPV growth rise above 10% with multiple parts on how to get there. More sales, we discussed our plans to accelerate growth in direct bank and ISV. We also discussed healthcare and professional services. We also talked about lowering the currently elevated level of attrition through the new service model that we are rolling out, by the way, to Clover clients and non-Clover clients.

And then on top of that, adding the conversion of non-Clover clients will take us to the upper end of that range of 10% to 15% in the medium term. Moving on to the rights to the revenues. We expect global value-added services penetration to continue to grow in our existing and new verticals, adding 3 points to that growth. And we expect the combination of acceleration of capital, savings, Clover agent and the ARPC uplift from conversions to add the remaining 2% that gets us to our guidance of 15% to 20% revenues.

Importantly, this does not include any assumptions on future growth that may come from higher penetration of e-comm embedded finance or new international markets. So now let's shift gears and spend a few minutes discussing the enterprise business and highlight both our strength of our existing playbook as well as our growth and transformation opportunities. We have a large existing business, mostly in the U.S. The majority of our book is in retail grocery, petro and QSR, where our expertise and history in card present with all of its complexity, has given us a long-standing and very stable group of clients.

And over the years, we have deepened that expertise, and we've delivered highly bespoke specialized solution for each of these industries and each of these clients. For Petro, for example, we are supporting pay at the pump, fleet card EMV in-store authorizations. And for grocers, through omnichannel across store online and mobile. This specialization makes these client relationships very, very sticky and creates very high barriers to entry to our more generalist competitors. Conversely, in the verticals that you see on the right, like e-comm, travel and gaming, we have a very low market share, and therefore, we see mostly upside in front of us.

So compared to the overall industry, we are overrepresented in card present, but the specialization of our offering makes this a very stable revenue stream. But unfortunately, as you can see on the right side of the page, it comes with structural low volume growth as the business and the industry has moved to e-comm and continues to move towards omnichannel and platform. And this is where our future growth opportunities lie. And again, we believe we have a lot of upside here.

To position ourselves against these trends, we have a 3-pronged approach, which is kind of very intuitive. First, go where the revenues are, which is e-commerce and omnichannel with a modern alternative to the limited global options that exist. Second, which is a big one, increase the adoption of our value-added services that are now being modernized and set all behind Commerce Hub as simple configurations. And third, deliver what we think is a highly distinctive end-to-end offer to marketplace clients with embedded finance as an integral part of that.

As I mentioned at the very beginning, none of that would have been possible if we hadn't done the hard work of modernizing and integrating our assets under Commerce Hub. The work is not finished. We still need to integrate Clover. And as you can see on the top right, we still need to add countries, payment methods, international, wallets, et cetera. But adoption is already strong. You can see GPV and transactions at the bottom of the page, up 100% year-over-year, many new clients getting onboarded via Commerce Hub and clients like AT&T, Exxon, Fanatics and Wawa already powered by this platform.

And moving beyond to e-commerce, we will also be delivering early next year our next generation of omnichannel experiences with a key differentiator that we will be able to identify the individual across all channels, enabling seamless interoperability across channels. I have one more important point to make here. The barriers to entry in e-commerce are comparatively low. E-commerce companies are highly sophisticated, and they are very used to a multi-acquirer model in which they choose providers and allocate their volume based on performance, price, resiliency, stability, et cetera, et cetera. So this is not about big RF fees and many years of waiting. This is about demonstrating to them that you can add value and perform as well as or better than their incumbents.

And we have built a new dedicated business development team with deep existing relationships so that we can effectively cover this space. And what gives me a lot of confidence that we can make quick progress here is that we do have a very compelling set of reasons for those companies to work with us. We just never previously packaged them into one coherent solution set. So what can we offer clients. First, we provide best-in-class authorization with an increase of anywhere between 5, 10 or even higher in terms of percentage points from where they are today.

I mentioned the depth and breadth of our data and the work that we have done to understand customer identity. The result is better outcomes for our clients and less friction for their customers. And you can see a demo outside of how we use the power of our data to support and resolve more complicated client checkout situations. Second, best-in-class fraud protection, same story, more data, better models, multiples of lower chargeback rates when we deploy our solutions. Third, routing optimization, more data is part of the answer. Having the third largest debit network in the U.S. is the other part. And the result is significant reduction in debit network costs.

Fourth, B2B payments. Our SmartPay platform is growing double digits or was growing double digits even before getting integrated into Commerce Hub because it provides broad ERP integrations for invoicing, settlement and reconciliation. Pay by Bank, where our differentiation is the thousands of banks that we support on the FS side. And while the overall penetration of Pay By Bank in the U.S. is still low, we did see a 3x increase in volume last year. Not on this page, ECR, earnings credit rate. This is the ability to offset acquiring or other fees with balances that they hold with the financial institutions on the FS side through StoneCastle again.

None of our nonbank competitors has anything like that. And on the right side of the page, all that means more volume and significantly higher take rates for us. Turning to Page 2. I promise this is the last topic, and it's a favorite of mine and it's one that Walter tells me is very complicated. So I'm just going to try to make it as simple as possible, and please bear with me. Multiparty commerce. This refers to any client platform, marketplace that brings together buyers and sellers. This can be an ISV that supports hair salons or restaurants, all the way to the largest B2B marketplace in the world, Alibaba, which we are pleased to announce will work with us through Commerce Hub.

All of these clients are looking for a similar set of capabilities. Number one, they want to onboard and KYC sellers globally. Number two, they want the ability to accept payments. Number three, make payouts to the sellers, drivers, hoses, et cetera, et cetera. And then number four, add value to their customers. So they come back, they can -- they will come back for more. And this is where embedded finance comes into play with card issuing, wallets, lending, et cetera, et cetera, and Dhivya and I will talk more about that in our joint session. And they want all of that top of the page, under one API and one developer portal so they can add products, features, partners, countries, payment methods, et cetera, without any new tech work.

And given that there are, for many of them, millions of buyers and millions of sellers, that means many, many billions of transactions. And therefore, you need to have the ability to track those in a bank-grade ledger, and that's why FINS Act is the single source of truth for everything we do in our MS business. And in turn, that ledger needs to be connected to a bank that holds the underlying assets, whether it is one of the network of sponsor banks that we have or our own limited purpose banking license. This platform is live today in the U.S., supporting hundreds of ISVs, processing over $65 billion of GPV and growing more than 50% year-over-year with a very high take rate for us.

It's fully omnichannel. It's configurable for regulatory compliance and it's going to go under Commerce Hub before the end of this year, so we can take the value proposition global and embed all our VAS in it. Up to this point, I believe there are probably a handful of competitors that can deliver a similar picture. But we don't stop here. We bring to the party the hundreds of thousands of global merchants, either as sellers to the platform, or as buyers to the platform, which means we bring new volume, new business to the platform and more value to our Clover merchants.

And since in many cases, we have to onboard sellers on the platform if the platform is not licensed, we have the opportunity to turn each and every one of those sellers into new Clover clients. For example, through Clover Capital or through Clover savings or through the rest of our horizontal VAS or we can help them sell in other platforms or in other regions. This creates an incredibly strong flywheel that helps our enterprise clients grow, adds value to our Clover merchants and we believe will serve as an important new customer acquisition channel for Clover itself.

We are super excited about this opportunity or at least I am, which also ties very nicely with our key initiatives on the FS side, and Dhivya and I will cover, as I said, more of that in our joint session. Before I wrap up, let me take one more minute to just tie it all together. Everything I talked about so far covers the left side of the page. They're a little bit more than 50% of merchant revenues that are either part of Clover or our enterprise franchise. We talked about Clover at 15% to 20%, and we expect enterprise to be at mid-single digits, which is an average of a low attrition and low growth base and a high-growth e-commerce and VAS business that will take some time to ramp.

The combination of those two drives the growth of our business. The other half on the right side of the page, are non-Clover SMBs and non-Clover processing. We expect non-Clover SMBs to grow at approximately GDP and to further benefit from some of our cross-cutting initiatives like, for example, improved servicing. On the other hand, that growth will be offset by the conversion of a portion of that book to Clover, which as we mentioned, comes with positive economics for our franchise. Processing is a combination of a variety of wholesale ISOs and bank JVs and partnerships where we don't directly own the relationship with the underlying merchant or business.

And we expect that business like in the past to remain flat or grow at low single digits. So left side, growing at double digits, right side, pretty much flat, weighted average 6% to 8%. Of course, as we go towards the medium term, the relative size of the two businesses is going to change with the left becoming bigger and the right becoming smaller which will be a structural tailwind to our business.

So back to where I started. One platform, AI improves the speed of modernization and the power of our data. Clover, tremendous upside to become the operating system of small businesses and then e-comm and platforms, a lot of upside with very limited downside from where we are today. Before I close, I want to highlight some of the partners, my partners in the business, that will be with us during lunch. Mike mentioned that we added many new people in the business, to bring experience and expertise in the places where we needed it. I want to thank you for this time. I know this was a lot, and I look forward to discussing more with you during lunch. And please take your time and have a look at the demos outside. Thank you very much.

We will now take a short break. Our program will resume in 15 minutes. Thank you.

[Break]

Please welcome Co-President, Dhivya Suryadevara.

That's one of the better pronunciations of my name that I've heard. Good morning. I am the Co-President responsible for Financial Solutions, and I've been here for about five months. Before I start, I wanted to share a little bit about my background. I spent my early career at General Motors, and I ran a number of operational and financial activities there. And my last job was the CFO of the company. After that, I spent 3 years at Stripe running finance and strategy, operations and a number of other roles.

And most recently, I was at United Health, where I ran the fintech and healthtech businesses. And one of my key initiatives there was to embed AI into healthcare. Interestingly, our HSA Bank at UnitedHealth is a Fiserv client as well. So I've seen Fiserv from the other side. So throughout my career, I've been at the intersection of large-scale transformations, financial services and technology.

And I came to Fiserv because I get to put all that together at a company that sits at the center of the financial ecosystem. And in the past five months, I've gone on a listening journey. I've talked to a number of our clients and obviously, to our team here at Fiserv. I'm incredibly excited that the clients really want us to succeed. And we have the team and the technology here to make that happen.

We have a lot of work to do, and we fully acknowledge that. But my priorities are incredibly clear. Focus on the client, deliver cutting-edge technology and sharpen execution because ultimately, it all comes down to execution. And that's going to produce stable and consistent growth as well. With that, let's dive in. Let me outline how I'm going to walk through financial solutions today. I'm going to introduce this segment overall and then walk you through the 3 businesses, banking, digital payments and issuing. I'll then step back and show you how data and AI accelerate all of those businesses. And finally, I'll connect that to our financial profile, so it's clear how this strategy leads to financial outcomes.

Let me give you an overview of the business more broadly. We serve more than 6,000 clients globally. The scale is just incredible. Community banks, credit unions, large FIs, fintechs and the public sector. More than 50% of our revenues today come from the large FIS enterprise and the fintech segment. Our client mix has continued to broaden. But in finance, you heard both Mike and Takis talk about that. It's a sector that's expanding, which means who we define as financial institutions is also expanding.

Even with this breadth of clients that we serve, we do it in a way that still feels very tailored regardless of the size or the operating model of the client. Geographically, our revenue skews towards North America today but we see a lot of opportunity abroad as well, and I'm going to talk about that. Financial Solutions has 3 main businesses, which is how we publicly report. Banking, which is deposit core and digital banking. Payments, which is network, debit and all of our payment rails, issuing, which is mostly credit processing and all the services that wrap around credit processing.

More broadly, with the macro picture the tech environment and the mix shifts that are happening in financial services, this is a great time to be in this business. So with that, here's what I would like you to take away today. As I've shown you, we have enormous scale, long-term relationships, and we are the client system of record. And that's why we're relentlessly driving a client-first operating model. We also have a lot of runway, not just from winning new logos, but also deepening attach and wallet share with fast. And how we're going to do that is by modernizing our platforms and we're embedding AI into our operating model, and that is going to help us improve capital efficiency and product velocity.

We're also excited about the new growth vectors, and you're going to hear a lot more from Takis and I later today. We're going to show you the compounding power of the 2 Fiserv segments together and that's going to allow us to serve both of our basis of clients even better than we do today. So what I want you to take away is that Financial Solutions is a business that's built to compound. And we have a clear line of sight to the 2% to 4% CAGR we're expecting in the medium term. With that context, let's start first with banking.

You heard from Mike, it's been a challenging couple of years in banking. driven by service and delivery issues. But let me reiterate, we have a service problem, not a technology problem. And it's very much solvable. And how we're solving it is by responding with a fundamentally different approach in service and delivery. And despite where we've been, one of the early observations I had coming in is that banking business is a very, very strong franchise for us. And in a way, it's like the anchor for our business with community banks and credit unions across the board.

And importantly, it drives attach through all the financial solutions. So let me give you an overview of the business. We think of it across 3 buckets: core processing, which is a system of record for deposits and loans, digital banking, which is the experience layer for SMBs and customers and VAS, which are all the services that wrap around the core. Banking delivers $2.4 billion of revenue today, and we serve more than 3,500 financial institutions, and we are #1 in core and digital in the United States.

This revenue is mostly North America and it's stable and it's predictable. And importantly, as I mentioned earlier, it drives attach. As you can see here, $1 of core revenue drives $2.70 of incremental financial solutions revenue. Core clients, on average, have an additional 10 Fiserv solutions in their portfolio. And I want to touch quickly on the competitive landscape as well. We believe our cores are on par or better than our competition, especially when you look at FINS Act which is our cloud-native core. It's widely seen as best-in-class and it's consistently ranked among the top cores in the industry.

So we believe we're positioned very well competitively. And then the next few slides, I'm going to talk you through the plan that we have for our business, which is: first, stabilize the business and then attach and grow. I talked about the positive macro backdrop, but a number of questions that we get asked is in -- on the consolidation side from a number of analysts. Is M&A going to hurt you business? And the answer is no. As you can see on the chart on the left side, the number of FIs in the last 20 years have roughly had.

But at the same time, our revenue has grown against that backdrop with a CAGR of low single digits. And you heard from Mike earlier today, we've seen elevated attrition in core banking, and we're actively working on fixing it. But to put it in context, you look at the chart on the right, the account base remains healthy and the attrition we've seen has been more than offset by growth in FINS Act. And you're going to hear more about FINS Act later from me and Takis as well because it's an important part of our embedded finance offering. The main point here is this is a business where we've seen account growth despite industry dynamics and the recent attrition.

All that said, I don't want to minimize the challenges that we have seen in banking, and we've taken a lot of steps, as I talked about. The first, as you've already heard, is our commitment to no core migrations. And it's an important topic, so I'm going to talk more about that in the next slide. In the past few months, we've also doubled down on AI to improve service across many areas. I'll give you a quick example. Two weeks ago, we re-architected our client service portal to drive more self-service and Agentic AI capabilities to resolve our tickets.

And this pilot, the early results we've seen are very promising, and we will expand that to the rest of the portfolio as well. We also created an AI-based client health index that helps us detect and proactively address client issues. We now have a 360-degree view of the client versus a more ad hoc view that we had in the past. And if you look on the right side, we've invested heavily in support and tech resiliency to the tune of about $140 million incrementally between 2025 and planned spend in 2026. With that, we've been able to expand our client coverage teams by 16%.

And we're starting to see tangible improvement in client service metrics, whether it's incidents that you see on the page or time to resolve tickets. So to summarize, we've made a lot of progress. We know we have a lot more work to do, but we have a clear strategy and an operational plan to make that happen. One of the most important conversations in banking today is core modernization. I'm going to spend a bit of time on this given the importance of the topic. Up until now, this has been approached far too narrowly as a binary conversion decision.

In the past few months, my team and I have taken a completely fresh look at what core modernization actually means. Instead of defining core as a monolithic concept, we're breaking it down into modular capabilities that can plug into any core. So think teller or CRM or new account opening, we're building them to be best-in-class, core agnostic, and adopted on the clients' terms. Clients no longer need to take on a large expensive core conversion to modernize. So instead of one path, we're offering tailored client journeys based on their size, their strategy and what their business really needs.

We're already starting to see this play out. Some clients choose to stay on their existing core and they don't want to move, like Mike talked about. We continue to support that journey, and we're investing in it so the banks thrive on those course like Manasquan, my favorite Bank that he talked about a couple of times. Others choose to modernize progressively, take the example of Primis Bank, they are on our premier core. And they signed up to implement the universal teller module within the next year.

Or if you look at Golden 1, they run multiple cores with us, data safe and DNA, side-by-side for their consumer and for their business segments. And of course, a bank can choose to convert to another Fiserv core if it suits their needs. And this happens all the time. Like in the case of John Hopkins Federal Credit Union, who converted from spectrum to DNA because it's better aligned with their business needs. And finally, we welcome any new client who chooses Fiserv as their partner. And we're aggressively in the market today to win new logos, and we're proud of the recent wins we've seen this year. Take Republic Bank, as an example, they selected Fiserv G&A core as a foundation for their transformation. You might wonder why the strategy and why now and how does it actually work?

First, and I'm going to stress this again, instead of building our cores as monolith 16x we're designing everything to be modular core agnostic capabilities. Second, AI is accelerating not just the build of these modules, but also how clients adopt them. To this point, we just announced an exciting collaboration with OpenAI to completely reimagine what client journeys are going to look like on an AI-native basis so that we can bring all these experiences to life faster and in a more capital efficient way as well. And we believe this is where the industry at large is going, which is giving our clients choice.

And finally, for the banking section, let me talk about VAS, starting with digital. This is an area where we have seen strong demand, but we had delays in bringing it to market a couple of years ago. And that showed up in declining engagement and user accounts. But now we've been laser-focused on fixing that and we've dramatically improved execution in this area, starting with rebuilding experience digital. We already have 250 clients live today and 600 that are in flight. And we're also leveraging AI here to accelerate those implementation time lines. And now that the gaps are closed, we're focused on differentiating this product. We're better connecting small business and commercial capabilities, which creates a unified experience for our clients.

And in Q4 of this year, with our partnership with Personetics, we're going to offer personalized AI-driven insights so the banks themselves can drive stronger engagement with their customers. Let me highlight our work with another fintech Zafran that you see in the middle of the page. Together, we're helping banks create AI-driven personalized offers for their deposit holders, so they can reduce attrition and grow their deposit base. And finally, StoneCastle. With StoneCastle, we can now offer a 2-sided institutional deposit network.

This will help banks access table, low-cost funding, and it will give merchants on [ Takis ] side a way to place their cash and earn interest across a broad network of clients as well. We're doing all this, again, in a way that's more open than ever before. So we're giving our clients choice. So to recap our strategy in banking, it's simple, as you see on this page, we've already taken meaningful steps to stabilize the business. We see a lot of opportunity to increase ARPC with attach and we're aggressively in the market to win new logos and to drive growth.

So we're not standing stagnant or just playing defense. We have a fresh perspective on this business, and we're strongly positioned to play offense as well. So we've covered banking, and let me move on to digital payments. This is a very strong business for us. We have a lot of scale, and there are very clear macro tailwinds as well. And as I talked about earlier on market shifts in the industry, this is a place where a lot of those shifts show up, and we're leaning into those shifts with more digital and faster embedded payments, which I'm going to talk about later today.

I'm going to start us with grounding the whole business on what do we actually mean when we talk about digital payments. It has 3 bits, payment platforms which is a core infrastructure for any money movement, think debit processing or networks or ACH or wires or real-time payments, that's all this platform. Second, consumer payments, rails like Bill Pay, Zelle account-to-account transfers. And third, VAS, which are all the solutions that wrap around payments like fraud and risk. And the scale here is very significant. Nearly $4 billion in 2025 revenues and a predictable revenue profile as well.

41 out of the top 50 U.S. banks use our consumer payment solutions, making us #1 in this business. I want to talk a little bit about competition. Clearly, payments is a diverse area and therefore, there are many players in the market. But we feel really good about our position in growth areas like Zelle, Network and debit processing. On top of that, with the modernization journey that we're on, we're also positioned well versus disruptors, and I'm going to talk more about that in our platform slide. Let me touch on growth. Payment volumes are growing mid-single digits, reaching $53 billion in transactions in 2025.

And if you look at the second chart, Bill Pay volumes have declined over the past couple of years, but at the same time, growth is strong in account-to-account in real time. So there's a mix shift happening. We expect that mix shift to continue, and we're well positioned for that. And finally, as it relates to VAS besides cash flow central down at the bottom, which I'll talk about more in a couple of slides. You see the strong growth trajectory in many of the other key VAS areas as well. Let me talk about platform modernization. Just for context, banks themselves are investing heavily in their own modernization journey.

So it's really important that we have the most modern real-time platforms to serve our banks as well. We're approaching this from 2 perspectives. First, payment platform strategy. Today, this is a single rail monolithic platform, which means adding a new rail, you'll have to replace the entire stack. Services are offered more like all or nothing. And so we decided to modernize this platform to be component test, multi-rail and fast and real time. So banks can plug whatever rails they need without having to replace everything that's underneath.

And this drives faster onboarding, which means higher ARPC for us. We expect to finish this build next year including embedding digital currencies, and then we'll move to global expansion as well. On the consumer side, as I mentioned, usage is moving towards instant payments. And we already participate in all these instant payment rails, which is great, but it shows up today as a fragmented experience. Sometimes you see 5 or more icons in a digital banking app, which is not how we want it to be. So our focus is to bring it all together into a single pay any one experience.

It's one entry point and the right rail is chosen invisibly behind the scenes. And we expect to start rolling that out this year as well, first with Bill Pay and Zelle and then expanding it to other use cases. And finally, conversational AI is going to become the next layer of obstruction. That's going to allow users to initiate payment in natural language without having to think about any rails at all.

So if you step back and think about it, when you remove complexity, more payments tend to flow through the platform, and that expands the overall business as well. Let me close this section with our vast strategy, and I want to call out a couple of these strategies here. First, we're launching Buy Now Pay Later on debit rails through our partnership with a firm and we're launching this in early 2027 across 3,000 debit issuers.

A firm is going to bring the underwriting and we bring the scale. So it's an exciting launch that's ahead of us. I also want to call out SMB card expense management and we're expanding that into debit in late 2026. This is important because most SMB spend happens on debit, not on credit. So if you step back and think about these offerings, these are offerings that our clients have told us that they're very excited about, which is what again is going to improve our stickiness and ARPC as well.

Finally, on this section, I want to talk about cash flow Central. For a long time, SMBs have been dealing with fragmented AR and AP, which I'm sure you're all familiar with. And there's very little cash visibility if you're an SMB. Financial institutions don't want to be just the place where the money is sitting. They want to be a part of these workflows. So we build cash flow Central to bridge that gap, and we're embedding AR and AP directly into FI relationships. This is another area in addition to digital, where there were delays in our build.

And so we've sharpened execution, and we've signed over 190 financial institutions, and we have 75 implementations in flight. And we've already compressed those implementation time lines using AI by more than half. So you're starting to see that show up in the numbers on the right side of the page. 115,000-plus SMBs onboarded and the transactions are also continuing to ramp. This is a great example of how the merchant side of the business and the financial solutions side come together so we can better serve our clients. To show this in action, here's a short video from U.S. Bank, highlighting how they're using cash flow Central.

[Presentation]

Great video. And it's always fun working with clients like U.S. Bank, where we launch new products. Okay. So on to the third business issuing. This is one of our strongest franchises, and we have long-standing client relationships in this area. And we power some of the most complex and high-volume card programs in the world. And this is an area where scale and deep operational expertise really, really matters to our clients.

We're also supporting a new generation of digital first issuers alongside of traditional clients. So let me start by giving you a snapshot of this business. I would think about this business in 2 buckets: issuer processing, which is slightly more than half. And VAS, that's slightly less than half and within VAS, you have print plastics, and all the other solutions that help power the cardholder journey. Cross-sell here for VAS is very high at 90%, and that shows just how embedded these relationships are. Issuing made up over $3.3 billion of revenue in 2025. We have 25 out of the top 50 U.S. credit issuers and 80% of the U.S. private label issuers as well.

So again, very strong scale. Revenue visibility is a great factor in this business. You can see here more than 60% of the revenue is contracted through and beyond 2030. And we expect that number to get to more than 70% by the end of the year. And the revenue skews more towards North America, 76%. But this is a business where we think there's a ton of international opportunity, especially with our Vision Next platform that I'm going to talk about shortly.

I'll touch on competition here as well. This is a traditionally very consolidated market, but we're the clear leader in North America. We have strong and growing positions internationally as well, and I'll particularly call out the U.K. and India in this context. So just the segue from there will be growth. So how has this business been growing? You can see that the macro trends are pretty consistent in North America and internationally at mid-single-digit growth and we think this trend will continue.

And on top of that macro growth, VAS like controls, tokenization, fraud, they are compounding even faster than the underlying processing base. And finally, when we think about growth in this segment, we don't just think about traditional issuers. More and more, we have nonfinancial institutions that are entering the space through embedded finance, and that's opening up the TAM a lot more. And we're going to talk about this in the next session. Here as well, platform modernization is foundational to the strategy.

And we have 2 platforms, Optus and Vision Next that I'll talk about after this. Optus is a platform that's purpose-built for large, highly tailored clients. And we're modernizing this platform from a monolithic check to a more open and modular platform. So what it practically means, though, is greater speed to market. Our clients ask us for a lot of features, and we're able to develop them in a much faster way. And we also -- it also means faster client implementations which translates to faster revenue.

We have major deliveries happening this year on this platform, and we plan to do this in a way that is progressively modernizing so there's minimal client impact. Vision Next is our cloud-native real-time platform that's designed more for the modern use cases. In a way, this is the FINS Act of the issuing business. Vision Next is highly configurable and can be deployed fast globally at scale. And you can see that in the demand here in the $251 million pipeline that we already have. And this platform is live this month, we have implementations underway, and the revenue is coming this year. Competitively speaking, Vision Next is positioned very well versus disruptors, both in the U.S. and abroad as well.

And you're going to see a demo of Vision Next outside, so please check that out. Before I move on, I'm going to make a point about the speed of modernization. Usually, when you see platform modernizations like this, it takes a long time and a lot of resources. But now, especially with AI, we've been able to meaningfully compress the time lines in rewriting code on the left side as well as in building new platforms on the right side.

So in a particular area of strength for AI. And finally, on the VAS side, I'll call out a couple of examples here as well. Commercial card, you may know, it's one of the most underpenetrated growth vectors in issuing. And we have seen a lot of client demand. So we're rebuilding the platform, and we're planning a major client launch later this year. And then I'll call out fraud and risk. We already have a product here, Advanced Defense in the market today with 70% penetration across our base, and we upsell with better and better models. And this product helps our issuers achieve better approval rates.

So later this year, we're launching merchant side data to make this product even better. That's going to drive higher approval rates and lower false declines. Another example of the 2 businesses working well together. So with all of these and other VAS offerings as well, we're excited about solidifying the leadership position that we have in the issuer space. Finally, I want to show you a short clip on Robinhood, which is a great example of how we're powering a new generation of digital first issuers. Let's watch.

[Presentation]

Another great partnership, and we're very excited for what comes next with this partnership. So we've covered all 3 of the businesses, but I now want to step back and talk about a topic that's incredibly important to us and it's foundational to how we operate, which is data and AI. Let me walk you through our strategy for each one. On data, we sit across banking, payments, issuing and merchant data. And what that gives us is end-to-end visibility across the entire transaction life cycle.

You see one example of that life cycle here. Others our competitors, see portions of that data, issuers, merchants, networks, but we see the full picture. So the obvious question is, what are you doing with that data? It starts with the foundation, which is the data layer, and we've built a unified data layer across our platforms. On top of that foundation, we've already brought a first wave of data products to market like transaction enrichment, external account aggregation. And we also have insights that are built into our existing products like Cash flow Central.

And as we look ahead, we're launching AI-enabled products with use cases like intelligent recommendations and better credit decisioning and fraud decisioning in real time. So the opportunity here is significant, and we've built the foundation already, one that's hard to replicate. And we're just scratching the value -- how much value we can unlock with this platform. So a very exciting opportunity here.

Let me talk about AI. We apply AI in 3 ways across financial solutions. First is embedding AI into our products, which I've touched on in banking, payments and issuing. Second is agent to us, which I'm going to talk about next. It's a solution that we're very excited about. I'll then cover the third, which is velocity and rigor, how we're changing, how we operate and how we build across Fiserv. We're not bolting AI onto our existing processes, and we're rewriting the workflows to make them AI first. So let me talk about agentOS first. AgentOS is our new operating platform that lets FIs deploy AI agents safely across their systems of record.

Importantly, it's already in beta today. Before I get into the specifics of what the platform is, I want to start with the why? Our clients are facing growing operating complexity and cost pressures and they're also facing talent gaps. They have staff retiring and hard to hire folks and so on. And at the same time, clients are also very excited about AI. They say they see its potential and how it's going to help their business. But in a regulated mission-critical environment like banking, the question isn't whether to use AI, it's how to do it in a way that's safe and at scale.

And the tools that we see in the market today live outside the systems of record. They don't understand banking workflows. They don't go across multiple platforms. And importantly, they don't meet the governance, security and audit requirements that our clients operate under, which is exactly what we built agentOS for. And here's how it works. At the top, FIs can deploy any agent, they could be Fiserv built or built by the banks themselves are offered by a third party. This is unique because we're specifically designing this to be a marketplace and again, goes back to theme of client choice that I talked about earlier.

These agents sit on top of agentOS which acts as the control plane, and it provides all the bank grade controls that clients and regulators care about like identity, policy, data masking, audit log, human in the loop, kill switch, token optimization, I could keep going on and on. To power this, we're using multiple LLMs from leading model providers. Importantly, all this sits on top of our systems of record across core payments issuing. And of course, clients can draw on their own data for additional context. So this is not about 1 or 2 use cases. What we're building is a safe, governed way to scaled AI adoption.

What this platform enables is the ability to deploy agents across a variety of use cases. And on this page, you see examples of workflows that cut across areas like risk and financial crimes and credit and growth and so on. And we're developing all of this with input from our clients on how they want to transform their front office, their middle office and their back office. And you see the highlighted ones up on top and those are already in beta and POC today. And with the collaboration we announced with OpenAI, we'll be able to further accelerate the development of these agents.

And to make this concrete, let me highlight 2 use cases that are embedded today with real pilot clients. The first one focuses on commercial loan onboarding with first interest rate bank. This is a workflow that typically is very manual with multiple hands off across a variety of different systems. So the agent we built pulls the data from all those systems. It validates the inputs and it makes the onboarding incredibly simple. And the early results that you see on this page, they're very promising.

Banks are telling us that they see reduced cycle time and a lot less manual effort with this pilot. Second use case is a reporting agent that we built with Boulder Dam Credit Union. They told us that generating reports takes a lot of analyst time that they don't have. And again, it straddles a lot of multiple systems so we work with them and we built an agent that automates this entire process, reducing the reporting time from 10 minutes per report to a matter of seconds. And again, you can see the results here from our pilot with them. You can see a demo of both of these agents and a few more after the event. So please check them out.

We have 6 banks that we are codeveloping agents with for this beta stage. And if you think about it, this opens up a brand-new TAM for us. Up until now, our TAM, we thought about as a bank's technology spend. And this opens up the TAM to their workflow spend as well, which we think is significant. You can also see we're already established 9 third-party agent partnerships that our clients can access through the marketplace.

With this third-party ecosystem, it also opens up a new revenue stream for us. Beyond the revenue streams, if you think about our current clients, we believe this strengthens the retention of clients as well and, of course, acquisition of new clients. We're going to keep sharing updates on this as we move from the pilots that we're running now to GA. I want to close this discussion on agentOS with why are we positioned to win, why is Fiserv doing this. We have decades of institutional knowledge on banking workflows.

We have the systems of record across core payments issuing. We know how to operate in a highly regulated environment, and we have thousands of FI relationships. We believe, as many of you I'm sure do, AI is going to fundamentally change financial services. And we're really excited about the interest that we've seen so far from our clients, and we continue to see. This is going to be a tremendous potential. Now moving to how AI is reshaping our internal workflows.

I want to specifically call out 2 areas, tech and operations and give you some examples. Refactoring legacy platforms I talked about in the Optus context, a very painful project in the past took a lot of time. It's changing a lot. It's much faster with AI. New development, whether it's a platform or feature build is much faster. Give you an example, you see Vision Next there. We built a transaction enrichment feature and went live with a client in 6 weeks using AI. That's typically a process that would take us more than 5 months. I'd also call out AI and other tech areas like testing, change management and observability Mike talked earlier about how tech resiliency is an important part and the embedding of AI is going to help us go even further.

And you can also see how we're using AI in operations, and I'm going to call out 2 areas there, call center. We're running a pilot today with our call center, where in addition to the traditional IVR, we're embedding voice AI. And what that's allowing us to do is to get to a containment rate of over 98% of calls. And Fiserv gets a lot of calls. So it's -- you can see what the impact is on efficiency here. And we have a road map now to move from IVR to full -- from pilot to full deployment. Second example is what I talked about on this client servicing side.

With a pilot we're running, our clients are seeing 95% self resolution rate, which is better than our expectations. And so we're moving from that to agentic AI resolution. So if you're a client and you're opening up a ticket, that ticket gets agentically resolved. And you're going to see all of that in our servicing demo outside so check those out as well. Again, here, we're proud to be partnering with a lot of capable AI companies in the world to bring that to life. So if you step back and think about this page, 2 things stand out, improve margins with the efficiency that we're seeing but importantly, also improve service levels.

So let me tie all that into our financial profile. Everything we're doing is anchored in the One Fiserv plan that Mike talked about, operating with client first mindset, supercharging delivery and innovation. And as we've discussed, we're managing through near-term headwinds like elevated attrition in banking and decline in Bill Pay. Even with those headwinds, we see a clear line of sight to 2% to 4% growth in Financial Solutions. Within that, banking will be at or slightly below the lower end of that range and payments in issuing towards the higher end. And to recap the components of growth we see in each business, on the banking side, stabilizing attrition to historical levels, roll out of our digital platform, executing our VAS road map.

On the payment side, organic growth, especially in debit and in network, mix shift towards real-time payments and expansion of VAS like cash flow Central. On the issuing side, we talked about volume growth in North America and internationally. And on top of that, we have the Vision Next revenue pipeline. And we're implementing existing revenue commitments in North America. We already have $200 million in flight this year. Beyond 2% to 4% growth, we also see additional growth vectors and these expand our opportunity set, like embedded finance, StoneCastle, data and new platforms like agentOS. From an execution perspective, my team and I manage all these components very closely with clear KPIs and operating cadence.

I started this discussion with why Financial Solutions is built to compound, durable foundations, focus on service and delivery, open modern platforms, strong attach, new growth vectors. But ultimately, we all know that delivering this will come down to execution. We've assembled a great leadership team to help us execute this plan. We broaden talent from financial services, technology to supplement the great talent we already have here at Fiserv. And you're going to meet a number of them in the room today presenting our demos. So as you can see, there's a lot to be excited about in financial solutions itself. But what makes it more exciting is the compounding that happens when we're able to bring merchant and financial solutions together. So to talk about that, I'm going to have my Co-President, Takis join me on stage.

Thank you, Dhivya. I thought I'll give you a break for a couple of minutes. So over the last 2 sessions, we have each walked you through what's happening inside our businesses, Financial Solutions and Merchant Solutions. For the next few minutes, we want to do something different. We want to step out of our 2 lanes and show you why we believe the combination of those 2 businesses under One Fiserv is genuinely unique in the industry. Mike already talked about our leading positions.

We go to the next page. Our leading positions in all aspects of money at rest and money in motion. But let me get into one example that brings that to life. Banking, Dhivya spent the last 40 minutes talking about it and everything that we do for our banks, whether it's core processing, digital banking or issuing. From the merchant side, we power their SMB franchise with Clover. And for the larger ones, we also partner with their corporate and investment banking side of their business to provide merchant acquiring and other services to support the growth and differentiation of those businesses. And as we mentioned before, we've already done that more than 1,000 times.

And this has brought 800,000 small businesses to Fiserv and contributes to the more than 10 products per client that Fiserv on average sells to RFIs.

Now let's flip the lens. And as Takis has talked about, we provide merchants with commerce capabilities. But more and more, they want to embed financial services directly into those experiences, whether it's customer wallets or payment capabilities or bank accounts or debit card issuance and so on. You can see that in the numbers. Today, we support more than 400 corporates that are purchasing financial solutions from us and more than 60% of them are using digital payments. And we've opened more than 25 million embedded finance accounts that generate new revenue streams for our merchants.

We talked about how financial institutions are integrating commerce capabilities and how merchants are layering in financial products. On top of that, fintechs are moving more to banking activities as they want to own the full stack, causing the lines between all of these 3 different client segments to blur and overlap. And that's why we are building the unifying infrastructure to support commerce and financial services end-to-end. We will discuss today 5 capabilities that we bring to bear to help our clients compete and grow in this environment. Embedded finance, stablecoin, our liquidity network, our onus network and Fiserv's data advantage. So let's take them one at a time.

Let's start with embedded finance. Embedded Finance is a structural shift. It moves financial services away from point solutions to a layer that's woven directly into commerce. And we're building a comprehensive suite that you see on this page from issuing to acquiring, to wallets, liquidity, cross-border flows and so on and all this through a single integration with a modern, globally scalable platform. And we already have millions of accounts opened and active in this space. If you take an example of one of the largest gig players out there, we've enabled embedded banking services, which allows their drivers cash back, access to credit, high-yield savings accounts and rewards and so on. So whether it's a retailer that's launching a wallet, or a marketplace that's handling seller payouts or an FI that wants to deliver merchant services to its SMB book, clients get a single integration and a platform that scales.

Moving on to digital currencies. There, we are taking on an approach which is fundamentally different from other players in the industry. Rather than trying to disintermediate our customers, we've built a bank and merchant-friendly stable core by USD, which our clients can easily integrate with. They can white label as we've done in the case of the Roughrider coin for the banks in North Dakota. We allow our clients to maintain full control of their end customer experience. And importantly, for RFIs, we allow them to largely retain the liquidity value of their deposits. And we've built it in a way that it's interoperable with all of the other major stablecoins and fiat and make it available as a payment method or as a loyalty currency. USD goes live this summer. And within this framework, we see 4 major use cases that you see on the right side of the page.

One, real-time settlement and cash management for both banks and for corporates. Two, cross-border remittances, including the on and off ramps. Number three, B2B payouts, especially in high inflation markets. And finally, at least for me, the biggest long-term benefit of digital money is programmability. It's the ability of money and information to move together, allowing instant if then health decisions and the ability to support transactions at 0 cost and latency. Think of agent to agent payments in our previous conversation. And 2 more things here. One, because our clients -- many of our clients are highly regulated, we maintain the same controls on digital currencies as we do with fiat.

And then second, this is a common stack. The stack that Dhivya showed in the previous page is exactly the same, whether you move fiat or whether you move digital currency.

Let me talk about our liquidity network with which both our merchants and our financial institutions are very excited about. Community banks and credit unions, they need deposits to optimize their balance sheet and deliver for their customers. Merchants want a better return on their capital. And today, these 2 pools of money sit separately. So we're uniquely positioned to bridge this gap and we could source liquidity from one side of our client base and place it directly with the other and everyone gets to benefit from that. The merchants earn a higher yield on idle balances, banks get stable, low-cost deposits, and we monetize across the network.

We're already seeing a lot of interest from our merchant clients and FI clients on this. And so we built a very healthy pipeline here ahead of us, and we're excited about what's to come.

Dhivya talked about our network. When a Fiserv issued card is presented at a Fiserv of acquired merchant settled across our debit network and ultimately deposited in a financial institution that's powered by us. This entire transaction never leaves our platform. We are at the center of that transaction, and that's what we mean by Onus. It's the ability to capture the economics of the full transaction life cycle from of, to routing, to settlement, to deposit all within a single network. It allows better approval rates, lower fraud, faster dispute resolution and ultimately, better economics for our clients on both sides of that equation.

Okay. Data is a fifth asset, and you've heard both Takis and I talk about data in our respective sessions, and it's an important one. And we have access to a broader and richer set of data than anyone else in the industry, as I talked about in my presentation. From the FI side, we see deposits, we see payments, credit performance across hundreds of millions of consumer accounts. From the network side, we see real-time art, we see fraud and clearing data across the entire transaction workflow. And from the merchant side, we see POS, we see e-commerce, SKU level and loyalty data across the entire consumer spend. .

When we bring that together, obviously, with the right governance, that data directly powers the use cases that you see here. For financial institutions, it's improved underwriting, it's risk management and cross-sell effectiveness. For merchants, it's faster onboarding and better targeting and higher conversion.

But importantly, for the entire ecosystem, it drives better approval rates, lower fraud and better experiences for the end customer.

I know we covered a lot of ground here in a short amount of time, but let us close by recapping the 5 things that we talked about. One, our embedded finance solution offers all the capabilities that our clients would need on a modern global platform. This is live today and scaling. Two, FI USD is the only bank and merchant-friendly stablecoin, fully configurable for what our clients are looking for. Three, our 2-sided deposit network places excess merchant operating cash with the financial institutions that needed the most.

Four, we are the only platform at the center of all sides of the transaction, issuer cardholder acquirer and merchant. And finally, our data advantage enables better insights and outcomes for our clients, more data, better outcomes.

Each of these is powerful on its own, but together, they allow us to capitalize on the assets across both of our businesses to serve our clients better. So with that, I think we're going to take a short break in the chart of the show, Paul Todd, our CFO, will be on after that.

We will now take a short break. Our program will resume in 15 minutes. Thank you.

[Break]

Please welcome Chief Financial Officer, Paul Todd.

Well, good morning, and welcome, everyone. I'm Paul Todd, the Chief Financial Officer here at Fiserv. It's great to be here and see a number of familiar faces in the audience here from my past.

I joined Fiserv last October with a deep background in the payments and fintech ecosystem. And this included leadership roles at Global Payments and TSYS, where I was the CFO.

Before I share our financial outlook and tie what you've heard this morning from Mike, Dhivya and Takis to the numbers, I wanted to start with this year. As you saw in this morning's press release, we reaffirmed our full year guidance.

And I want to make some comments on the expected cadence of our 2026 financial performance so that you have a clear view of our expected baseline as we exit this year.

As we've discussed, this is a transition year with first and second half growth profiles that look quite different. We've said that for the first half of the year, adjusted revenue would decline in the low single digits which implies that in the second half, our year-over-year growth is in the range of positive 6% to 8% to achieve our full year growth of 1% to 3%.

Our confidence in the second half is grounded in the momentum we are seeing across the business, supported by a number of favorable dynamics, and let me walk you through the drivers. As it relates to the 2026 bridge from the first half to the second half growth rate, normalizing for the higher nonrecurring revenue in the first half of 2025 results in a 1% to 2% growth rate as a starting point.

Then we expect 2 points of growth from newly contracted revenue where we have a clear line of sight with contracted start dates. These include wins we've mentioned on previous earnings calls. Next, we expect to generate 1 to 2 points of growth from large enterprise clients with planned ramps, including several of the names that we've cited throughout the presentation, a proof point of growing revenue per client.

And finally, we expect about 2 points of growth from key products that you've heard this morning from Takis and Dhivya, where we have high conviction based on strong early customer success, and these includes ramping of the implementations of products like CashFlow Central and XD and further expansion of Clover, including Clover Capital, Clover Savings and international growth.

Putting it all together, this 6% to 8% growth in the back half, assuming a stable macro, delivers the 1% to 3% range for the year. And this gives us solid footing as we head into 2027. We have talked about our goal of returning Fiserv to its long-standing roots as a constant compounder and introduced the One Fiserv action plan to enable this. Everything you've heard today are critical dynamics on this journey. And I now want to walk you through the 4 financial components of the constant compounder profile, starting with revenue.

The vast majority of our revenue in this company is driven by a diversified mix of accounts, transactions and other volumes, which is predictable and steady. This drives consistent revenue growth. And as a result, we expect to deliver a compounded adjusted revenue growth rate of 4% to 6% overall as a company from 2026 through 2029.

Now over to the second component, margins. With a largely fixed cost base on incremental volume, our scale supports roughly 50 basis points of underlying adjusted operating margin expansion per year or about 150 basis points of total adjusted operating margin expansion over 3 years.

On top of that, with Project Elevate, we have conviction in our expectation to deliver more than 200 basis points of incremental adjusted operating margin by 2029. And this fuels our third driver, cash flow. Our company generates stable and predictable cash flow. We have a track record of consistently converting approximately 90% of our adjusted net income into free cash flow annually. And with many of the investments we've already made as part of One Fiserv, we see a more stable CapEx profile going forward, giving us added conviction around free cash flow conversion.

And finally, capital allocation. We are committed to deploying capital effectively and running the business with discipline. Our focus with capital is to return excess cash to shareholders primarily through share repurchase while reducing our adjusted leverage ratio to the low end of our 2.5 to 3x target range. That strengthens our investment-grade balance sheet. And in my conversations with customers, they tell me that matters.

This results in an attractive double-digit adjusted EPS growth profile. This morning, Mike, Takis and Dhivya talked about the drivers of that constant compounder profile. And I won't go through each one of those, but I do want to highlight a few points to make sure that they're clear. On revenue, our end markets are very healthy. They're large and they're growing. What we provide sits across the core needs of merchants, financial institutions and other clients. They're navigating an evolving market, and they're investing in innovation, and that's exactly where Fiserv helps.

And second, we're deeply embedded with our clients. As you saw earlier, we have unmatched breadth, and we're innovating against the focused set of opportunities that capture that demand. Now moving over to margins. There's 2 key drivers I want to highlight here, and the first is scale. We operate with unmatched scale across both merchant and financial solutions, and this affords us high incremental margins. And second, we're leaning into AI in everything we do for margin efficiency while also driving our enterprise-wide transformation program, Project Elevate.

With these benefits, we've also aligned our spending efforts in 2026 to the most critical investment areas with a priority to provide for innovation funding to support our revenue opportunities. Now on to cash flow. Beyond our overall focus on efficiency, we've made choices to support healthy cash conversion. And an example of this is the simplification of our tech stack, both in Merchant Solutions and Financial Solutions. And finally, over to capital allocation. Beyond the deal we announced today, we continue to evaluate our portfolio to ensure our businesses and assets fit our strategy. Now I want to explain why I'm confident that we can deliver against this constant compound profile and sustained double-digit growth in adjusted earnings per share, and I'll start with revenue.

We have a long history of stable growth in accounts, transactions and volumes across both merchant and financial solutions. Those trends have been consistent even when our revenue has been a little more volatile in the last year. And this growth is the foundation of our adjusted revenue outlook going forward. In Merchant Solutions, enterprise transactions, small business volumes and Clover GPV have been stable.

And in Financial Solutions, we see a similar dynamic. Consumer payment transactions are growing more slowly, primarily due to bill pay. But overall account -- bank account growth, including Finxact, has been in the low single digits. And our payment platform transactions and issuer accounts on file globally are growing slightly faster. While this volume growth delivers stable, predictable revenue, it's the execution of One Fiserv plan that enables us to optimize volume growth into revenue growth. And the first 3 pillars of One Fiserv are the catalyst behind this.

First, we're committed to a one client-first mindset. We put measures in place to improve client retention, especially in financial solutions by strengthening coverage and client service. And in Clover, we're raising the bar in onboarding and ongoing support. With success here, we can see benefits to retention and clients are more likely to expand with us, including adopting more of our value-added services. That's how we grow average revenue per client. On the second pillar, Clover, our strategy is clear based on the 5 drivers that Takis talked about earlier, vertical and horizontal expansion, coupled with international growth and fueled by distribution and operational improvements.

Now with the third pillar on product delivery and innovation, you've heard this morning on the innovation progress that we are making and the importance of delivering milestones in products such as Commerce Hub, our banking cores, XD, CashFlow Central and Vision Next, just to name a few. And all of this works in tandem, supporting our revenue growth for the future and gives us confidence in our adjusted revenue growth targets.

So based on our volumes and One Fiserv, we are targeting 2% to 4% adjusted revenue growth in Financial Solutions over the medium term, with banking growing at the low end of this range or slightly below and digital payments and issuers toward the higher end of that range. In Merchant Solutions, we are targeting 6% to 8% growth medium term. And included in this is we expect Clover to grow 15% to 20% annually.

Looking at the subsegments within Merchant, we expect SMB to grow at the high single digits, while enterprise grows in the mid-single digits and processing is roughly flat. This drives our expectation of an overall total company compounded adjusted revenue growth rate of 4% to 6% from 2026 to 2029.

On top of that, we're investing in a few focused opportunities, but we have not assumed any meaningful impact from them in the medium term. This includes initiatives that you've heard about earlier, such as agentOS, Agentic Commerce and work across stablecoin and the broader embedded finance opportunity.

Now let's turn to margins. To ensure Fiserv was in the right position to capitalize on the revenue growth drivers, we made proactive investments for the future. We began those investments in the third quarter of 2025. And as we entered 2026, these investments were well underway and are fully included in our 2026 adjusted operating margin guidance of approximately 34%. These investments fall into 2 main areas that are aligned tightly to the One Fiserv action plan.

The first pillar of the One Fiserv action plan is in people, where we beefed up the ranks of our client-facing personnel, including relationship managers, client support and implementation resources. We have done this with an understanding where these investments are most needed, and we prudently moved forward, adding headcount in the second half of last year and going into the first quarter of this year.

As Mike mentioned earlier, some details here around increases in our client coverage ratios has generated some early progress that we're making and it's bending the curve positively on client service. We also hired people aligned to our third pillar to support critical innovations. Second, alongside people, we've increased technology investments as our clients' expectations continue to grow to support more and more of their critical operations. Now as we look at our cost base over the medium term, I want to highlight that along with the stable growth in accounts, transactions and volumes, we have about 40% of our costs that are directly tied to the growth in these underlying drivers.

These are direct costs such as POS hardware that we sell and distribution costs related to revenue growth. The other roughly 60% of our costs are fixed in the near term. These include employees and much of our tech infrastructure as the largest areas. But the takeaway here is that we can benefit from significant incremental margins as our business volume grows. And at our target 4% to 6% medium-term adjusted revenue growth, our cost base positions us to deliver approximately 50 basis points of annual adjusted margin expansion, and that's consistent with the legacy First Data and Fiserv businesses.

Now in addition to this underlying operating leverage, we are focused on driving efficiency in line with One Fiserv Pillar 4. And to drive these efforts, several months ago, we initiated Project Elevate, an enterprise-wide transformation effort. This is a highly structured enterprise-wide evaluation of all of our activities, looking at our cost structure as well as how we can generate revenue. Along with Elevate, we have ample room to simplify the business and execute faster and more efficiently, including AI operating at the core of everything that we do. We've made good progress with Project Elevate, and we expect to be in full implementation mode during 2027.

We have a complete inventory of revenue uplift and expense savings opportunities, and we are moving into the executional phase in the back half of this year to fully capture the benefits over the next 3 years. The Elevate opportunities falls into several categories, and I want to provide a few examples. First, on the technology modernization front that you've heard this morning, the Optus modernization is a significant opportunity for us that Dhivya outlined.

It enables us to not only bring a better experience to the customer through easier adoption of our innovations, but it also reduces our cost of implementation and our ongoing operational cost. And second, in the processing reengineering area, you heard both Dhivya and Takis talk about improving customer service. And as part of this effort is a significant project that we have underway to fully automate our contact centers using AI across all channels.

We expect that this will both reduce our reliance on expensive legacy technology and also improve customer service. And in both of these 2 examples, as I mentioned before, we've not assumed any revenue benefits that may come from either faster adoption of innovation in the core banking side or the benefits from a better customer experience.

And the third category related to our people, there's a number of opportunities for efficiency in both the direct and indirect personnel of the company. And we also see opportunities in vendor optimization in that category. When you put this all together, we have a clear line of sight to $500 million in net cost reduction by 2029 worth more than 200 basis points of added adjusted operating margin. Now we expect this 200 basis points to layer in over the next 3 years with the incremental benefit to 2029, approximately twice the benefit that we expect in 2027.

As it relates to Project Elevate, we expect to earn an attractive return on the capital that we're investing with an annual run rate savings of approximately equal to our onetime cost. We expect the cost of transformation will peak this year, and we will continue to break it out in our non-GAAP financial results. Now bringing those 2 components together on margins with the impact of the cumulative margin expansion of approximately 150 basis points annually from the baseline operating leverage and the greater than 200 basis points in incremental benefits from Project Elevate, we expect to achieve adjusted operating margin in excess of 37% by 2029.

Now I want to spend a few minutes on cash flow. As I said earlier, we had a strong and consistent track record of converting adjusted net income to free cash flow at Fiserv. We've been able to balance a slightly lower conversion rate in our Merchant Solutions business with a higher conversion rate in Financial Solutions. And we target maintaining this cash flow conversion at approximately 90% over the medium term. There's really nothing different in terms of prior drivers and what we expect going forward.

One of the largest drivers of free cash flow is CapEx. And we were able to deliver approximately 90% of free cash flow conversion in 2025 despite the incremental CapEx that we chose to invest in the business. We expect CapEx as a percent of adjusted revenue to be stable in 2026 as compared to what we invested in 2025. Then we expect some leverage on our CapEx with adjusted revenue growth resuming at higher levels beyond 2026 as well as from efficiencies that come from our transformation initiatives as well as technology modernization.

Finally, let's talk about capital allocation. There's 4 main areas I want to cover as it relates to capital allocation. First, on investments. With One Fiserv, we did step up and make some investments that we thought were necessary to position the company to execute on our strategy. And overall, we can fund the investments we need to make within our existing cost structure. Second, we are focused on deleveraging as we're committed to our investment-grade balance sheet as well as the investment-grade credit rating that we have. And as I said earlier, between now and 2029, we are focused on driving our gross leverage ratio to the lower end of our 2.5 to 3x target. Now on to M&A. We will selectively pursue bolt-on M&A. You can see examples in our history of this, such as Finxact and Ondot, which became our CardHub offering.

And you heard Takis talk earlier about our plans with Clover Savings, which is one area that we're leveraging our StoneCastle acquisition that we did last year. However, our bar on M&A is high. We have a rigorous process to evaluate these deals and to make sure that we can execute on the opportunity. And finally, on capital return, we do expect to continue to use the majority of our free cash flow on capital return with shareholder repurchase as our priority.

With this fifth pillar of One Fiserv, we already have achieved some success here that will help us operate the business with lower levels of capital that enable more of free cash flow to be returned to shareholders through share repurchase. We've optimized our real estate footprint where we don't need to own facilities on a go-forward basis.

On Clover Capital, you heard from Takis the significant demand that we see in this offering and the focus that his team is putting on driving this business. And we now have in place financing structures that will expand capital available to incrementally grow Clover Capital and similar offerings.

In effect, we can grow Clover Capital without having to grow our balance sheet, and this allows us to operate in a more capital-efficient way while also having strong returns in the business. We also mentioned back in October, we were evaluating businesses and assets to ensure they're consistent with our go-forward strategy. We want to make sure that the business is aligned with long-term growth and profitability, and this exercise is also critical as we focus our time and resources on the most important assets and activities in the company.

Next, I do want to provide a brief overview of the transaction that we announced this morning. As Mike said, we have announced plans to sell a majority stake in our ATM servicing and related businesses for approximately $300 million in after-tax proceeds while assuming a 49% equity stake in a new joint venture. We expect to use this cash for a combination of share repurchase and deleveraging. This business is reporting -- reported in our digital payments line and has a revenue run rate of approximately $200 million with a flat revenue trajectory, and it operates at a similar margin to Fiserv overall.

We will update our 2026 guidance upon close, but I do want to touch quickly on a few financial parameters. First, there's no impact to our organic revenue growth. However, depending on the timing of the closure, there will be some impact on adjusted revenue growth. For example, if we closed the deal at the end of the third quarter, we would expect about 30 basis point reduction to our annual adjusted revenue growth rate. We expect no meaningful impact on adjusted EPS in 2026. Now I want to bring it all together with our targets. You've heard from Mike about the overall strategy, the team we've assembled and how we're putting the strategy into action with the One Fiserv action plan.

Takis and Dhivya highlighted our plans across Merchant Solutions and Financial Solutions of what we're doing in innovation and ensuring that we're getting these capabilities into the hands of our customers, accompanied by a great client experience. And this is what it looks like from a financial profile perspective for the future when you put it all together. First, on revenue. A 4% to 6% compounded adjusted revenue growth from '26 to '29, we expect more than $23 billion of adjusted revenue in 2029.

Next, on margins, with baseline operating leverage and the benefits from Elevate, we expect adjusted operating margin in 2029 in excess of 37%. Third, on cash flow, at roughly 90% free cash flow conversion, we expect to generate more than $13.5 billion of free cash flow from '27 to '29.

And we expect to devote the majority of that to shareholder returns while still bringing our gross leverage ratio down to about 2.5x by 2029. And that supports our target of more than $12 in adjusted EPS in 2029. I would note that this $12 includes absorbing an adjusted effective tax rate that we expect to be approximately 21% to 22% over the medium term.

So in summary, we believe we have a strong business. We have a compelling investment case, and we have a team committed to industry-leading shareholder returns grounded in the constant compounder profile that I just laid out. And with that, I'll invite Mike back up to the stage for some closing comments before we take your questions. Thank you.

Walter wanted to come back up. Thanks, Paul, and thanks for all your attention and engagement today. We put a lot out there. Hopefully, it helps you understand what's going on.

Before we move to Q&A, I just want to leave you with a few final thoughts. As you've heard, we believe the platform is truly unique. There's no other company that we can find that operates at our scale and is deeply embedded in both the infrastructure of payments and the financial services space. And as financial services and commerce become more digital, real-time embedded and AI-enabled, we believe the value of our platforms only increase with that. And hopefully, you got a great sense of some of those examples today, whether it be what we can do with our data intelligence, Clover agent, helping -- sorry, helping the small business and obviously, AgentOS, which we're very excited about. Dhivya talked about this unbelievable backdrop we have. It's true on both the merchant and the commerce side.

Our clients are looking for trusted partners with the technology, scale, regulatory connectivity and breadth of capabilities to help them navigate an increasingly complex and shifting digital world. And we believe we're exceptionally well positioned for that environment. Obviously, to capitalize on that opportunity, we talked about it, we had to make a series of important changes and investments across the company, focused around client service, accelerating innovation, product delivery and driving greater accountability.

Hopefully, you saw as you went through the merchant FI sessions, clear strategies, disciplined execution plans, highly accountable. We scheduled this Investor Day, recognizing there's still a lot of important work ahead for us to do, but we wanted to give you a sense of how we're evolving, where we're investing and how these actions we're taking lead to the outcome that Paul is talking about of more steady, durable, visible expected growth in the low mid-single digits and then driving -- ultimately driving shareholder value creation over time. We're acting with urgency.

When you're out on the demos and the like, you'll see that we believe we have the right team, the assets, obviously, the cash flow to navigate this and the strategy to unlock the full value of this franchise. To this point, that we think our medium-term plan is realistic and reflective of where we are in this transformation. At the same time, it takes important steps to moving us down the path of regaining that constant compounder status and produces a significant amount of free cash flow that allows us both to repurchase shares and bring leverage around for -- to continue with a very strong investment-grade balance sheet.

Finally, and importantly, as we went through the joint session, there are a number of exciting opportunities that aren't just pie in the sky. They're real stuff. We're just scratching the surface on those, but they're not in this plan and successful execution there or a faster transformation to them would provide upside to what we have. So with that, I'll invite the team back up, and we'll take your questions. Thank...

Q&A here, hold on 1 second. Just going to set up the room here in the process. I'm eager, they're eager. Just explain the process here for in the room and online. [Operator Instructions] We've got Mike, Dhivya, Takis, and Paul up here. So we'll work the online questions into the discussion. And with that, we'll start with the Q&A.

It's James Friedman at Susquehanna. And thanks for a very thoughtful presentation today. I wanted to ask maybe to Dhivya, but also to get Paul's perspective. So Paul, you stood up a major independent issuer processor in your prior life. How do you feel about your hand here with a more integrated asset?

Yes. So Jamie, it's a really good question. I would say we have a great issuing business here, and Dhivya talked about it earlier around the breadth that we have and the coverage, particularly in the U.S. But I think what's underappreciated maybe is the international opportunity on issuing. And what Dhivya is doing from a technological standpoint with the Optus transformation, I think, just improves that even better. And then to get to your next question that I think is really critical, the ability to have more capability to cross-sell to customers is very important.

I think as we've talked about all morning around the convergence of all of the products and being able to offer the breadth that we do, I think, stands out as a differentiator for us.

The only thing I'd add to that is the conversations I have with our issuer clients, and these are great relationships, what Mike said, they want more. They're like help us build this or help us build that.

And what we've been limited by historically is just how quickly the platform moved. And that's where we came to let's modernize Optus and build Vision Next to be able to move quickly to offer our clients the features and the services they're asking for. So we're in that journey already. We're rolling that out this year, and we feel that that's going to improve our product velocity a lot more, which leads to see.

Great. Thanks. We'll take a question right here.

Andrew Schmidt, KeyBanc Capital Markets. Thanks so much for all the details today. This was a great presentation. The 2-part question on Banking Solutions. First one, just the attrition rate assumption in terms of the improvement there.

Maybe talk about drivers and cadence. And second, I want to make sure we work this in. I think the AgentOS is a really interesting development, establishing Fiserv at the control layer of the Agentic operations for a bank. Maybe talk about what that opportunity could look like over time. Obviously, it's very early, but I would love to talk about the revenue opportunity associated.

Do you want to start with...

I'll go first on -- why don't you do agentOS, and we'll come back to.

Sure. On the agentOS side, you're absolutely right. It's a great opportunity, and we're seeing very strong initial demand from our banking base as well. And what we're doing is taking the feedback from that and building it into the product and the platform.

And to your point, there's a couple of differentiating factors when you think about our offering. First is the marketplace. We want our clients to have choice because we want to build our own agents, and those agents will be great and they'll solve client problems, but clients should be offered choice. So we're building it as a marketplace with 9 different initial partners, and we're going to expand that over time.

The second differentiating factor is the ability to put all of that into our control panel with the bank rate controls that I talked about, where every feedback we've gotten from banks has been how do you build it in a way where we can have the auditability and we can talk to our regulators about what's happening, how the agents are behaving and so on and so forth.

So we started with the premise that this can't be a single use case here or a single use case there. It's got to be a governed platform on top of it. And to your question around how we're thinking about the opportunity here, obviously, early days, so we're going to have to see how this develops. But each of those layers, whether it's the platform layer, typically, the market has a recurring revenue coming from platforms.

On the agent side, it's going to be consumption-based similar to any SaaS offerings that might be out there. And thirdly, the third-party agents would be a rev share concept. So we're going to have to see how it evolves, but we are comfortable that the monetization will be commensurate and it will be the right amount of share based on the value that we're creating for our clients.

I think Dhivya made a really important point in her presentation in that our traditional conversations are around the products and services that we offer our customers. And now this allows our customers to invoke help from the entire world of agents to do stuff that we've never touched before.

And you see, if you go out to the demo, the booking of a loan -- commercial loan booking process, which I can assure you from my banking is a long and inefficient process that gets entered into the core, in our example, in a very quick period of time.

So it's a totally different conversation really enhances our ability to add value to the clients. And I think to the second part of the question, I'll let whomever wants to take it on the pace -- this is -- all of this goes back to how do we do a better job of taking care of our banking clients to stem the tide that we had in attrition on the lower side. And the #1 thing, Dhivya and I were at a big conference earlier this year, the #1 ask is help me figure out this agent world.

I want all these tools and stuff, but I don't know what to do. And one of us -- gave us a great example. It was a very powerful actually, I remember the use case and they wanted to use it and they put it through the procurement department.

The procurement department asked them for 7 years of financials and the agent was 11 days old. So it's -- and they want -- those needed to be audited financials. So they just don't know what to do with it. So this is a powerful extension of what that can do.

And to your first question on attrition, the steps we've taken, we've already talked about improving service, 16% increase in client-facing coverage teams. We're seeing the importance of tech resiliency and the investments that we made there. And generally, I put it into 3 buckets. One is get service right. Second is get delivery right, our products on time like CashFlow Central, XD. And the third is innovate, which is along the lines of what we're talking about with agent.

Back here on the left.

Karthik Mehta with Northcoast Research. Mike, you talked about the cores and that being a big issue and going from 16 to 5 and giving the financial institutions whatever time they needed to make that decision.

But does that get to a point where you have to force a conversion because it's costing too much to run kind of the secondary cores, maybe for lack of a better word?

So I'm smiling because I'm not going to let you drag me down this path. There are no core conversion. So I want to be super clear on that. And I think it's been -- for me, it's been unbelievably refreshing for Dhivya and her team of some really unbelievable thinkers and engineers and product people to come in and say, core conversion doesn't have to be this apocalyptic event.

There is a path where you can -- where we can help our clients achieve what they're trying to achieve on the modernization front without a full. So -- and the pace at which technology is changing that even since over the last couple of months, we are very comfortable supporting all of our clients on the cores.

And as they want to pursue in the journey page that Dhivya went through, if it's the teller experience they want to change.

Remember, core is just a series of modules providing services under it. You can do that over time. You can do it at once if you want, we'll even make that experience better. But core, at its core, no pun intended, our -- we want to support our clients as they're operating today and match their time line as when they want to go through processes and not go through processes. We've made that very clear, and there's nothing changing there.

Great. We'll take one over here on the right.

Vasu Govil from KBW. I guess the question I have is AI seems to be accelerating the pace of modernization of new product innovation at the company. As these tools become available more broadly, do you think it also lowers the barriers to competition? And in that backdrop, how do you guys maintain your competitive edge?

Why don't you...

So the way we see it is how Mike started his presentation. Because we're the systems of record at the end of the day, and we're responsible for maintaining that the clearing of the transactions underneath the data that flows through, we are the center of that ecosystem, and we find that AI actually enhances it and doesn't take that away.

A lot of the disruption is happening in other layers, which actually provide more opportunity for us as opposed to disrupting our business that we already have. So we're actually seeing that in our client conversations, it would be so much easier for us to use AI alongside of you guys as opposed to us doing it on our own are the kind of conversations that we're having.

On the merchant side, I would say, first of all, it's a highly competitive space with a lot of tech-forward companies. So at the first approximation, I see it as a big equalizer because it helps us modernize at a speed that previously would have been impossible.

And it helps us bring new products to market at a speed which previously would have been impossible. The second one is when we think about our core differentiators, which is customer relationships, data and distribution, all of those things become just more important in the age of AI than before because the product will start looking the same and the UI will start looking the same.

And the question is who has the trust and the relationships to get things done. And then the third one is as more company -- meaning AI and technology makes more companies go more global and have more sophisticated needs, and you need someone who is able to focus and go together with them all over the world.

And that creates different barriers to entry, including regulatory that we think play to our strength, not the other way around.

We'll take one right here.

Dan Dolev from Mizuho. Obviously, really strong targets, very strong here. I have a question for you, Mike. Like how do you think about the strategic rationale of keeping the company together from where we are today? I think it's a lot of people's minds given what's going on in the industry.

Yes. Made some comments -- obviously, made some comments earlier on this. And I think it's fair to say we've looked exhaustively at the company since we've all started.

And what we see today is more opportunities. Hopefully, you got an appreciation for that, more opportunities today for us to have a competitive advantage over peers by having the businesses together and leveraging that in important ways.

And then everything we're seeing from technology makes that connection easier, faster and more available. And what we're hearing from our customers, most of our FI customers want to do more in payments, more in merchant and a lot of our merchant customers want to do more banking. And so unless there's some major shift in those trends or the execution doesn't play out in a way, we believe we can generate more synergy and value for you all today as it is.

And again, we believe that the -- maybe the starting perspective of finance running a banking and commerce business together from prior industry examples can get ported over here. We think it's a totally different mix that we have. Nobody has ever put issuing, banking and acquiring together, hasn't been done.

And now we put it together with Takis favorite acronym, ECR, you put it together with a cash management network. That's never been tried before, and it's never been tried before when you've got the secular tailwinds we have and the AI tailwinds we have.

So I mean, you put it -- hopefully, as you listen today, you would get come to the same conclusion, a lot more opportunity than not. Obviously, as I said, we'll stay -- we'll continue to revisit that analysis.

I'm just going to pause a second. We do have one online that I wanted to take. So in similar vein, Mike, a question about anything that would cause you to consider or execute on a larger acquisition.

I think as Paul went through, that's not even remotely on our minds right now. If there's something really attractive like StoneCastle that comes along that can create another network for us through multiple businesses, we'll take a look at it.

But as you probably can get a sense today, we've got all the assets we need. We're not short assets. We have to go execute on the assets that we have, and that's 100% of our focus right now.

All right. We have a question right here, Tim?

Tim Chiodo at UBS. This question is actually for Takis. So you gave a really good slide that gave the non-Clover SMB broken down into some components that were addressable.

We're waiting for this forever.

Where do you get that from? So that slide was really helpful. And you talked about 2 ways to basically convert those merchants. There was a low friction and then there was a higher friction.

On the low friction, you talked about a 15% revenue uplift and on the higher friction, it was about 30%. For the low friction one, could you talk about that, bring it to life a little bit? Is that an auto? You can just turn people on, they get the dashboard, they start using Clover Capital, et cetera. Just bring that to life a little bit.

Yes. So it's not -- I mean, either/or, it really is a question of what will customers want. And some customers may have an end-of-life device and maybe the device is the right way to start.

Maybe they are already happy with their devices and the real question is they want a SaaS plan or a KBS for their kitchen. So we will focus on each customer with whatever makes sense for them. But generally speaking, our approach will be to start with something that lets them continue to run their business as they have and gives them something attractive on top of that.

And for us, the easiest and highest value things that merchants want right now is they may want a loan to invest and grow their business or they have excess cash and they want to deposit that or they want faster and simpler ways to reach their customers, whether it is online or whether it is with an agent.

So these for me are the 3 simplest conversations to have with our customer, keep on doing what you're doing and just add that. All of these 3 things will be part of the Clover dashboard. Capital is already. Savings will be ready by the end of this quarter, the same thing with the agent.

When these 3 things are ready, we are going to take them out of the market. And the combination like reasonable assumptions around people taking on 2 of those 3 things is what gets you that 15% immediate uplift of revenues because these are new revenues that we didn't have before.

Before, typically, we would have hardware and processing, not Clover hardware, some other hardware plus processing. Now to that, we add lending, savings and the agent. Now that habituates the client to Clover and those revenues should start ramping very quickly as soon as they accept the loan or they start depositing money.

And then over time, whenever it is the right time to talk to them about hardware or wherever is the right time based on their activity to talk to them about software, that's where the rest is going to come. So over time, when clients convert to the full Clover value proposition, we estimate the number to be around 30%, of which half can come very quickly in a nondisruptive way.

Great. In the middle here?

No one had any questions on Clover. Thank you.

So just sticking with merchants. Dominick Gabriel with Loop Capital. Thanks so much for all the detail today. So if you could just talk about the current systems you have today that can integrate to make the omnichannel platform needed to compete really against other omnichannel platforms in the merchant business. Do you have all the pieces you need? Do you need to go out and buy something to compete? Anything that you can extrapolate from that would be great.

So I would say all of the components are here. As I said in my presentation, the issue is not the components. The issue is the components were kind of completely end-to-end separate products. So the work we've been doing over the last year and will continue is to take all of these and make them micro services off of the back of the same platform.

So very quickly, when I started, we agreed on what's going to be the end state platform. And now we've started aggregating and integrating all of the components in that. When you look at -- I had this page with the 6 or 7 value-added services, these are all existing services.

When you think about the switches, you think about omnichannel in the Americas, it's already live. So all of the components are there. In some cases, we need to complete the swing of modernization, decommissioning and integration.

But there is nothing that we need to have that we don't have today. With the exception of a couple of things that I mentioned, like the ability to support enterprise-grade multi-location merchants, which is going to come probably closer to the end of the year. And the true omnichannel integration for all of these use cases where people start shopping on the app and finish online or start online and return at the store. We have a basic version of that today, pretty similar to our competitors. We will have a much better version of that in Q1 '27. We're actually going to leverage a lot of the capabilities from the CCV acquisition we did in Europe. But there is nothing I can think of right now that I see in any one of our competitors, and I'm saying, "Oh my God, I wish I had that."

Down here in front, Bryan.

So I wanted to ask on the On Us networks, Bryan Bergin, TD Cowen, by the way. So the On Us network, can you just dig into that opportunity further here? I'm trying to think about on the front end, the consumer, the merchant, how that engagement works. Walk us through kind of the use cases and what you need to develop as well as the opportunity you're thinking from that.

Yes. Let me start with a couple of things that we are doing today, right? So one is integrating the data between issuing network and merchant so that we can drive better outcomes.

Fraud is the obvious example. [indiscernible] is another great example of that, et cetera, right? So all of that -- and actually, the best one is routing optimization and the ability to reduce cost there.

All of that is already happening. I don't think we did a great job of commercializing it, which we will do going forward, but I think this is all live. I think the next question, which we are brainstorming as a team is what else can you do? Coming from where I was, there is a great example of ChaseNet, where you actually start creating true on us experiences and true beneficial outcomes between the issuer, which is going to be a client of ours and a merchant, which is going to be a client of ours as well.

These are all things that we are looking at right now. We have a joint working team between the 2 of us. And then the last example is we talked about the gig economy client or other e-commerce clients where you have buyers and sellers. And by the way, the sellers are often buyers and vice versa. And there are relatively straightforward ways to make that truly on us for the platform without ever having that transaction leave their ecosystem. So these are all things that we are thinking about, we are working on. And hopefully, in the next couple of quarters, we'll come out with interesting announcements.

And again interesting optionality as new platforms develop like stablecoin?

Great. We'll go over here on the left.

Harshita Rawat with Bernstein. So Takis, I want to go back to the merchant revenue growth, 6% to 8%. It's highly dependent on Clover revenue growth as well as kind of like ex Clover SMB. And I want to ask about each. So for Clover, the 15% to 20% revenue growth, it's a competitive market, as you know.

So what drives your conviction here? Is it international, health care, professional services, restaurant and retail is a little bit more competitive market. And then SMB ex Clover, this is clearly an opportunity for you, but it's also an opportunity for your competitors to gain share. So how confident are you with respect to managing the churn on that back book?

There were a lot of questions. So let's start with Clover.

About none.

Next question. So first of all, the 10% GPV, which is kind of the underpinning of all of that, is simply a continuation of what we've been doing so far. So all of these ideas and all of these initiatives and all we are saying is we want to keep the GPV growth to where it's been.

And yes, it's a competitive market. And yes, we have a high share, but our high share is still in the single digits. And there is still -- I think you had this great chart that shows how the top companies are gaining share, I think, in restaurants. Well, it's still a highly fragmented market.

Despite our share, we are still around 10%. So 90% of the market is not with us. I would say when I think about, therefore, the opportunities to grow, it's all of the above. If I had to rank them, which I don't think I can, but I would put ISV very close to the top of the list because these are existing distribution channels that we have.

We just never offered them the product. And what we've seen with rectangle and Target is a real appetite for the ISVs to partner with us. The main benefit for them is distribution.

So for me, that is a very clear opportunity. With banks, the opportunity is also very clear. We have 1,000 partnerships. Not all of them operate in all cylinders. Some are doing great, some are not. And I think by integrating Clover into the banking ecosystem, removing the friction, your provision to accept payments just with your valid KYC from the bank, I think that will remove a big barrier that we have right now where it's people referring to other people.

So that would be the second one in terms of distribution. And then direct, we can scale up as we see the opportunity and we do smarter prospecting. Moving on to the verticals. You saw in my chart, both retail and restaurants, we have not seen a slowdown. We continue to grow at multiples of the underlying market in terms of GPV.

And we see no sign that, that is slowing down. And in particular, in retail, we are not slowing down despite a very low market share in online, which through a combination of the platform work that we talked about, plus like basic improvements in our offering, we think there is still a ton of upside. And then internationally, Japan is not even launched and places like Brazil, Mexico and Canada continue to grow kind of in a nonlinear fashion.

So all of those things just to keep the growth rate that we've had. And that is before we talk about attrition, which in some respect, is the lower-hanging fruit. It is higher than we would like. We believe it's elevated compared to where it will be and what our pilots have shown, which in some respects is probably the easiest way to grow GPV. So that's on the GPV side. And then on the delta between GPV and revenues, we pretty much are saying 5 percentage points, which is not very different from when you adjust for a bunch of stuff is what we've done historically between SaaS, between horizontal VAS, vertical VAS and a little bit of more -- or not a little bit and more capital and more savings.

So that is the basic math. The $4 billion is indeed an opportunity for us. And obviously, if we do nothing, it's going to be a threat for us if we ignore those clients. And that's why we're going to be very proactive about adding value to them. When I compare NPS and attrition between Clover and non-Clover clients, these clients are fine. They're happy.

They just may have simpler needs or they may be habituated with their old FD device, but there is nothing particularly wrong or urgent to make us believe that if we don't talk to them tomorrow, they're going to leave. That said, we now have a great product to give them, and we're going to be very proactive about it.

All right. We're going to go over here to the right, Darrin, as long as it's not another MS question.

It's Darrin Peller from Morgan. I actually have a question for Dhivya and then one for Mike. And first for Dhivya. We heard a lot about merchants.

So focusing now for a moment on financial, what do you think are the key products? We understand Clover is a differentiated asset. But on the financial solutions side, what is the key product that's winning in the market you're most excited about taking share with, whether it's in core or it's other areas? And then, Mike, I want to go back to your investment levels because you came in and you obviously -- you really stepped up investments, reset margins.

And now we're saying we're going to grow with operating leverage. We're going to see 50 bps, which implies that you're still growing your investment levels. So where do you still need to reinvest or continue to invest in the business to ensure that you're going to keep winning in the market?

So let me start with the growth areas in the financial solutions, starting with maybe the 3 main businesses and then go into the new areas. On the banking side, I talked about our digital platform, which we have rebuilt with Experience Digital, which is live in the market today. We've got clients, 250 clients on the platform already, and we have other implementations happening.

Great product. We're getting positive feedback, a lot of traction. And when you think about the vast story that I outlined in the presentation, we see that the continued rollout of this product is going to create tailwinds. So that's one that I'd call out on the banking side. Finxact, as you know, is our cloud-native core rated extremely well. We keep getting inbounds on a variety of interest, not just from traditional banks who want to go into new use cases, but also embedded finance type use cases that come up for Finxact.

So I'd call that out on the banking side as well. Moving to payments. The world is going towards instant payments and account-to-account and Zelle. We feel great about our position there. And the platforms that we're building are going to allow us to go even more into where the segments are, which are growing the most.

So that's an area where we feel really good about. Issuing, it's 2 great stories in one. Optus continues to win new logos. We're going to keep pushing that with the monetization we have. And the other thing in Optus is, again, the revenue backlog that we have historically not been able to capitalize on because of the platform, we're now able to go back -- go a lot faster than that.

So I'd point that out. And Vision Next, we're getting very strong early feedback. It's our new cloud native, the real-time, it's the Finxact for issuing. And we're seeing a lot of progress there as well. So that's by segment, but zooming out and thinking about it, you heard us talk about stablecoin. You heard us talk about embedded finance use cases and clearly, agentOS as well, we feel really good about our position in all of those areas.

On the capital piece, I think a couple of thoughts there. One, it's a -- there's we step -- we increased in capital. And then more -- I think more importantly, we reallocated capital to our priorities, I tried to take some of the socialization of capital away to lots of products, some that didn't return and some that weren't strategic and made sure critical products like XD like CashFlow Central, why were they delayed getting to the market? You have to appropriately resource them, appropriately staff them and then manage the heck out of the process to get them to market.

That was an important reallocation of capital, which leaves some businesses without capital that are either -- you heard us talk about some that we stop doing business in, in certain areas. There'll be more that we do that or some that we don't believe, even if we put the capital into it, we're the best fit to run it or they have no attachment to us strategically, and that's the exercise we're going through.

So the reallocation is important part of it. What Paul said going forward was we will come down as a percentage of revenues. But I think, hopefully, you captured today that there's enormous demand for new growth and new products. So to the extent that we can reallocate away from not that important, not that strategic or not that high growing and fund what is not going to be cheap in terms of the build here. We talk about all these amazing things about AI, it's expensive, and you're going to have to fund that from a capital perspective and a tech perspective on the other side of it.

So the reallocation, I think my CFO would agree with me is as important as the step up. We had to fix some stuff right off, and Paul walked you through that. And now from here, it's making sure we get capital to the right areas.

We'll go over here.

Jason Kupferberg from Wells Fargo. I had a 2-part question. Mike, maybe just to start with you, where do you see the most potential risk among the various vectors of this revenue plan looking out to 2029? And then maybe just for both Dhivya and Takis, how should we be thinking about quantifying potentially average revenue per client growth that you're envisioning over the next 3 years in pursuit of your respective segment level growth rates?

I think what we put out in the plan is very realistic based on -- driven by the underlying volumes of the business. That's the first important piece to drive the realism.

And then it looks a lot like Fiserv has looked for 40 years. I mean this is what Fiserv has grown at 3%, 4%, 5%, 6% forever. So of course, every plan out there, especially a 3-year plan has -- you have to go execute and do all the stuff we're talking about.

And I think it goes back to Darrin's question is you have capital in the right areas and do you have the right people to run it. And part of the purpose today was to make sure you understood where we're investing and get exposed to the team that's executed upon it.

So it's nothing outsized. We're not making up a new TAM. We're not shifting what our business model strategy and purpose stay the same approach, how we're coming at it from a cultural perspective, the execution delivering the accountability and the client first mindset do change, and we'll execute along those parameters.

On the ARPC side, so I would think about it as we clearly showed vast areas in each of the businesses that I covered, like in banking, payments as well as issuing. So that's a constant pipeline of vast that we have coming. And the ones that I highlighted specifically in each of those pages, we already have client traction demand. We're in the market rolling them out this year, early next year.

So we feel really good about that. In terms of quantifying, obviously, I would say, I'd encourage you to zoom out and think about how much are banks spending themselves where our TAM is the technology spend of the banks that are out there. And what are their workflow spends as well as we start going into new areas. And then on top of that, the nonfinancial institutions who are increasingly becoming financial institutions because of embedded finance, that adds to that as well. So I would frame it in that context.

And on the merchant side, I would say the equation for Clover is very, very simple, right? You've seen the GPV and how it goes to revenues with a few percentage points related to the VAS that they buy. As the penetration of that VAS goes up, as those VAS become more valuable, et cetera, you will see some increase there.

I think on the enterprise side, it's a little bit more interesting because you have kind of 2 things happening at the same time. One is you have, generally speaking, in the industry, the gradual reduction of processing revenues. And we've seen in countries like India go overnight to 0 and the same thing happened in China and the same thing kind of happened in Brazil.

So obviously, the U.S. is always different, but you will see some gradual erosion of the basic processing economics. But for us, all of the upside is going to be the higher volume that we can get in e-com plus the adoption of all of those value-added services, including the platform wallets, meaning the TAM, the platform TAM plus the embedded finance TAM that -- of which we have 0 today or close to 0 today and which comes at a much higher revenue per client, per account, per transaction, et cetera, than traditional processing.

So these things take a little bit of time, but I would expect the average revenue per client or our take rate to go up significantly over time and more than compensate for any reduction in processing.

I think just to finish on ARPC, there's 2 things. First is you got to get service right. It's not a long tolerance for a conversation about ARPC unless you get service right.

And then the second is some of the cultural change we're trying to bring, and we've got some of our team here that spends all day with their clients is when we solve client solutions, solve -- help clients achieve aspirations or solve problems rather than sell product, we're unstoppable.

And that's an important cultural shift we're trying to make in the company. In the places where we have an ongoing dialogue of providing solutions and solving problems, the relationships are wildly robust and it's some of the biggest clients we have.

And if we can multiply that across 6,000 FIs and hundreds, if not thousands, of large enterprise merchants, then the outcome is going to be much stronger.

We'll go down here in the front and then in the middle.

Yes. It's Bryan Keane at Citi. To push up the organic growth, you talked a little bit about key product growth, in particular, cash flow Central.

That was talked about a lot in the old regime that, that was going to push up organic growth and it was delayed. It never really happened. Can you talk a little bit about why the delay and why it will hit the numbers? And then secondly, for you, Paul, on capital return and shareholder buyback in particular, is there any -- talk a little bit about the cadence of that in the midterm outlook, given where the stock price is today, will there be any accelerated repurchase?

I'll go first on cash flow center and Dhivya can join. It was a great product, no matter who was talking about it, Cash flow Essential is an unbelievable product that's unique in the market and finally brings down to small businesses, a true treasury management solution, AR, AP.

You combine it with Clover, you put it behind, you natively embed it in the bank's systems and let them sell it. It's unbelievable powerful, and it has a multiplying effect. Obviously, more banks go on, more SMBs, and you saw the chart Dhivya was getting to.

I think we have great partners in building it with [indiscernible], getting a multiparty integration completed and then appropriately resourcing, directing and driving it.

We have some work to do on those. And we've done a great job, as Dhivya talked about, selling it to lots of banks out there. Now we're in the process of efficiently getting them onboarded, and then they have to get it onboarded with their clients. And then there's further upside as they retrain their clients instead of using wire and ACH to pay with card or other things.

And so there's this multiple building upon the fact that while the product design in the theory we're spot on, completely unique in the market, and it's going to be great, maybe the realization of how fast and the complex that was. I think what's positive today is you're starting to see that inflection point go up, and we're starting to see that the efficacy of the product is being supported by [indiscernible] at U.S. Bank and others.

So we're optimistic about the outcome from here. But it is not a simple integration, take on the product, start generating revenue.

It's the operational focus and cadence that we're driving now that is allowing us to start implementing those at pace. It was a slow start. And now with the actions that we took, we've cut implementation times in half and that we expect that trend to continue.

And to my point, as I think about the opportunity, we keep winning more banks that are on it. And then those banks onboard the number of SMBs that they do, they start using it and the average revenue per each of those SMBs goes up as well with the products that we keep adding to the portfolio. So it's like a number of different vectors of growth, and we're seeing all of them start to inflect now.

Bryan, and on the capital allocation front, I said earlier that the majority of our excess cash would be allocated to share repurchase. We do need the EBITDA to catch up to get our leverage ratio down to be able to more index on the share repurchase side than where we are right now.

And just like we did this year, for our guidance for next year, we'll give you an outlook as to what we expect for share repurchase on a go-forward basis. But we want to be able to do both, have the majority of our free cash -- excess free cash go to share repurchase, but also get our leverage down over the planning period.

Tien-Tsin from the front here.

Great. Tien-Tsin Huang from JPMorgan. Just thinking about I mean, we learned a lot, this was great. Thinking about what we heard at Fiserv Forum to today and the identity of the company maybe is the question and incremental margins, if you don't mind.

Just I struggle a little bit, and I'd love to hear what you think about the mix or the right mix of service versus technology for Fiserv because Mike, you came in and talked about client service being really important as a customer. Now you're emphasizing client service. You put in a lot more headcount and resources, right, to fix the business.

And so are you in a good place with that? And I ask because if it's more of a services company, then it's tough to break that linearity of employees with revenue growth and expenses. But if you're shifting more towards AI and technology, then you're going to get a different outcome.

So how do you think about that proper mix of service versus technology because that does have consequence for incremental margin beyond Elevate and everything -- do you follow my question?

Totally I'll go and Dhivya can add on. I think service and technology is sort of inextricably linked in our model. So the primary drivers of great service is making sure their stuff works and is achieving their objectives that they set out for it to work.

And if it doesn't, how fast are we in responding to that? Because when you -- I talked about we're just under 1 billion transactions a day when you take merchant and FS. So you are going to -- median time to recovery is super important.

So we think of them as one. So no difference in evolution of the company from where we were at Fiserv forum to today. Other than the fact, and I'll pass it off to Dhivya here, is the pace of technology has changed so much from September 1 to where it is today, you can start to solve major parts of service with technology that we would have never imagined before.

And I think what we create in tickets, Dhivya alluded to some of the numbers, we create high hundreds of thousands of tickets a year, and we think that can come down to less than 100,000 with a relatively simple integration.

We have all of the systems of record to answer every question that anyone could ever open a ticket for across all of our products, but it's hard for the client to find those. When they can't find it, they pop out, create a ticket, and it's like the cost of service multiplies once the ticket is created.

The ticket is never created because you have the agentic aid to answer the question and you've seen the stats coming down. Service is up, margins are up and the potential for ARPC is up. It's highly correlated.

I think you said it really well. The only thing I'd highlight is in order to go to a client and talk to them about our technology and innovation, the right to be able to do that in the first place comes with having the right service. It's hard -- if you're -- if the client feels like they're not getting what they need, it's hard to even go and have a second layer of conversation on technology and innovation.

So we're addressing, putting the right client folks in front of clients, being responsive, delivering products that have the right resiliency characteristics. And then as Mike talked about, investing in across our product base, across service, across call center across every area to say, how can we leverage AI to do -- make it go a lot faster than Fiserv has ever built any products before and do it in a way where clients are actually beginning to feel the impact of, oh, I had an issue and it got solved like pretty much right away.

So we're starting to see anecdotal evidence of that. So it's got to be both and balancing that at the end of the day, and we're doing that.

And it's still -- where we are, we're still early. As I said, great -- the message we hear is good focus, like what we're hearing, big challenge around sustainability. And we've been at it since the fall. So it's -- you have to be realistic. And these are long-dated contracts that shift at meteor pace.

If I can just add a minute on the merchant side. I think your question was more FI. But on the merchant side, there is a similar set of issues because we do have 4 million SMBs. And the equation that I think about in my mind is 90, 90, 90, like 90% of the questions should never come in because the combination of your UI, the simplicity of your bill, the simplicity of your setup should eliminate them.

The second 90 is then 90% of the questions that do come in should be solved by AI. And then you go back to the 10 of the 10%, the 1%, and that's where you need high-quality people that are able to resolve what by definition, will be more complex questions. That's not where we are today, but that is where we want to go, which is going to mean more AI, much fewer people, higher quality people for faster resolution.

Great. We're just last question right here.

And now I'm making an executive decision. We're going to take one more question.

Sitting in front of us all the whole time.

I've been looking out -- go ahead, David, and then we'll take Will's question.

Dave Koning at Baird. And I guess a guidance cadence question. So back half, it sounds like a lot of acceleration, new products, new clients coming on. Should that stronger-than-normal growth go into the first half of '27 as well? And then the second question, guidance included '26 through '29. If that included '26 of 1% to 3%, does that mean the rest...

Yes. So on the second part there, Dave, just to be clear, the 4% to 6% was from '26 is the base from '27 to '29.

So the reason that we had that on there was just to make it clear that the base was '26 if you're growing off of that, so on that piece.

As it relates to the cadence question, yes, we are exiting at a higher rate. There is some beneficial impact to the first half just because particularly on some of that contracted revenue that's coming in on the second half that's not in the first half.

But I would wait and give '27 guidance when we get to '27, we'll be clear about it when we do that on the cycle.

I think Paul hit on the base piece is to get a few points of growth from newly contracted onboarding stuff. We'd love that to happen every half. But if you take that out, you sort of you think about the 4% to 6% range, and it looks more similar.

All right. We'll close it out for us.

Mike, I wanted to ask you a question about just broader core modernization throughout the industry. One of the largest banks in the country made the decision to move to an outsourced solution after managing an in-house solution for a really long time.

And they're going with a more modern core platform. You have one of the most modern core platforms in the industry. So I guess, how do you think about that decision and what it entails about the pace of true core modernization in the industry? How do you feel you're positioned for that? And then can you just talk about what's going on among the largest institutions? Could we see a greenfield opportunity? Is that an opportunity for Fiserv to participate?

Dhivya, you can help me here. I think what you're going to see is, if I remember the graphic right, journey # 2, which is run a core and then start to concurrently run certain functions or certain businesses on a modern core. For the largest banks in the country, and I don't know if this is the biggest opportunity for modern cores, so I'll start with that.

But the large banks in the country mostly run on older Hogan technology base. And that's a significant process to extract yourself from that onto a modern core. I think ultimately, what they're trying to do is build a modern ledgering solution, which is Finxact, which is Pismo has built and others in the market.

And I think most large institutions for my old institution will -- are going through some type of process to look at how you modernize that core in a measured process way. So we see a great opportunity there.

I think the bigger opportunity for Finxact is all the other ledgering you need in the world, and that's really where the 2 businesses come together. Finxact today has more -- ignore the modern commerce clients from Takis world that has more banks live on its solution than any other modern core.

So it's holding its own here. Do we wish we win. We would win every large bank's effort to modernize? Of course, we would. And I think when it's all said and done, if you take the top 10 biggest banks in the world that are on Hogan to go to something, there'll be a relative split among the most important modern cores, a couple of them out the prominent out there, which Finxact in. And those in and of themselves to do 1 or 2 of those will be significant multiyear efforts. Anything to add?

No, just that our componentization strategy is going to be incredibly important in what Mike talked about.

If you build the best modules underneath the course and they are truly core agnostic, it just gives our clients so much more flexibility to do what they need to do. And that's what we're trying to get to. And so the build is one part. Implementation as well as an area that my team and I have been spending a ton of time on understanding why is this process as long and drawn out and painful as it is?

And how are you embedding AI into like data mapping or data configuration. There's areas where you can bring in the technology to collapse the time lines, test easier and make it less painful.

Pretty shocked over the next 4 or 5 years, if you take $100 billion institutions around the world, if they're not running some type of co-modernization structure with a Finxact or another modern core sitting next to it.

All right. Well, thanks, everybody. We're going to conclude the program here in the room. Again, thanks for attending our 2026 Investor Day. We're going to disconnect the webcast. And for those here in New York, as I mentioned earlier, we do have lunch set up outside, and we have members of our broader management team here as well as demo stations. We'll run that until about 2:15. So again, thanks, everybody, for joining. We'll see you out in the foyer.

Welcome to the Fiserv First Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, today's call is being recorded. At this time, I will turn the call over into Walter Pritchard, Senior Vice President and Head of Investor Relations at Fiserv.

Thank you, and good morning. With me on the call today are Mike Lyons, our Chief Executive Officer; and Paul Todd, our Chief Financial Officer. Our earnings release and supplemental materials for the quarter are available on the Investor Relations section of fiserv.com. Please refer to these materials for an explanation of the non-GAAP financial measures discussed in this call, along with the reconciliation of those measures to the nearest applicable GAAP measures. Unless otherwise noted, performance references are year-over-year comparisons.

Our remarks today will include forward-looking statements about, among other matters, expected operating and financial results and strategic initiatives. Forward-looking statements may differ materially from actual results and are subject to a number of risks and uncertainties. You should refer to our earnings release for a discussion of these risk factors.

And now I'll turn the call over to Mike.

Thank you, Walter, and good morning, everyone. As we began the year, we were firmly in execution mode, and our first quarter results were in line with the expectations we shared with you in February. Our teams continued to be laser-focused on executing against the One Fiserv Action Plan, and while there is still significant work to do, we are taking the right actions, with the right sense of urgency and feel really good about the progress to date. We are confident in our strategy and the unprecedented pace of change in banking and payments is creating an extraordinary opportunity for us. As our clients and prospects want a trusted partner to deliver sophisticated technology and value-added solutions, we are uniquely positioned to do exactly that.

To drive these efforts, we continue to add outstanding talent across the organization, including new heads of operations for both Merchant Solutions and Financial Solutions, new Chief Revenue Officers for Clover and Enterprise Merchant and a new Head of Product for Financial Solutions.

With respect to business performance, I'll start with Merchant Solutions, where we saw solid growth in Clover GPV supported by good execution against our strategic initiatives and a stable macro. Clover VAS revenue represented 27% of Clover revenue in Q1, growing 18% from a year ago, driven by software in Clover Capital. We also saw steady growth in Enterprise transactions. While anticipation lending volumes in Argentina remain strong, lower inflation and interest rates in Argentina were a revenue headwind to Merchant in Q1. I would note that this revenue softness was largely offset by lower interest expense below the line.

Our preliminary April Merchant volume growth, including Clover GPV remained solid around Q1 levels. Going forward in Merchant, we're watching the impact of various environmental factors, including higher gas prices from the conflict in the Middle East, which, if sustained, can impact the mix of consumer spending. We saw some of this dynamic in the most recent Fiserv Small Business Index data.

In Q1, we signed 27 new banks as Merchant Referral Partners. We also announced our largest agent bank partnership in our history with Western Alliance Bank, which has more than $90 billion in assets and expands our reach with merchants across the Western U.S. We also hit important milestones in the quarter, going live with CommerceHub omnichannel capability across a number of our largest petro customers. We also went live on CommerceHub with Bilt Rewards in neighborhood hospitality and via Americas in cross-border remittance. Our broadening global releases and customer go lives are driving CommerceHub transaction growth, which was up nearly 200% in Q1. Other key Enterprise Merchant wins in Q1 included a retail energy provider, Blue Shield of California, a leading tax compliance platform and a large telecom provider who added on fraud capabilities.

In Financial Solutions, we saw solid underlying business volume growth, particularly in Finxact and our Payments businesses, excluding Bill Pay. New business sales showed continued momentum. We hit important product delivery milestones, and we saw an improvement in key client service metrics. While core bank account and revenue attrition remain above our long-term trend, we've seen early signs that our client service initiatives have been well received. We're also getting positive client feedback on our decision to continue supporting all of our cores, and we are signing and renewing customers across all core.

Also contributing to an enhanced client experience is the value we are delivering from our recent acquisitions of StoneCastle and Smith Consulting, where both our strategic and financial results are in line with our business cases. Key new business wins in Financial Solutions included OceanFirst Bank, which is a $14.5 billion Northeast regional bank that is growing rapidly through its announced acquisition of Flushing Bank. It extended its Premier core and surrounds agreement with us, adding Digital Payments and committing to deploy CoreAdvance.

Nicolet National Bank, a $16 billion Wisconsin-based bank, is adopting our Premier core with its MidwestOne acquisition. Truliant Federal Credit Union, a $5 billion-plus North Carolina-based institution chose to move to our debit processing platform. We expanded our long-standing digital money movement relationship with PNC Bank to include CashFlow Central AP and AR Services for their small businesses. And we had embedded finance wins with a large payroll provider and a large retailer to bring new capabilities to their payroll members and customers.

In these wins, we will leverage new integrated capabilities across Fiserv, including Finxact for ledger, Payfare for banking applications and program management and Vision Next as a cardholder platform. Finxact was named Best SaaS for FinTech at the 2026 FinTech Awards, recognizing the combination of its market-leading innovation and scaled customer deployments. Finxact continued to grow strongly in Q1 with accounts and positions up over 70% as clients find value in its ability to provide financial infrastructure to enable any asset class in any domain at scale under a common platform and business model.

So our execution is improving across both businesses, but as expected, that progress is not yet visible in our reported financial results as we are still lapping a higher mix of nonrecurring revenue, fueling the lingering impacts from prior client service challenges and absorbing the incremental expense from investments that will drive long-term client-focused growth, all necessary and important elements of our transition year in 2026. We look forward to the second half of the year and 2027 and when we expect our operating performance will be more fully visible in our financial results.

I'll now provide an update on our execution against the One Fiserv Action Plan. Of course, we will cover all aspects of the plan in greater detail at the May 14 Investor Day. Under our client-first pillar, we continue to make targeted investments to raise the bar for client coverage, relationship management, service delivery and product resilience. The number of client-facing personnel we have is up significantly, meeting a key demand from clients, and importantly, we are seeing better day-to-day execution. Our time to resolve client inquiries is down 27% year-on-year. While we still have significant work to do, high-impact client incidents are down nearly 60% year-on-year, and we launched important AI initiatives to enhance the performance of our primary client portal and call centers in Financial Solutions.

Turning to Clover, our second pillar. We continue to make progress towards establishing it as the preeminent small business operating platform. We launched 2 new verticals in March with PracticePay in the Healthcare space and our Professional Services offering. We are seeing promising early results with annualized GPV per health care outlet running at double-digit levels above our existing Clover Healthcare merchants, and a 20% plus increase in new Professional Services outlets that attached our paid SaaS offering in the month.

Internationally, our momentum continued with Brazil Clover outlets up over 30% sequentially, and we had another strong Clover quarter in Canada, where we remain on track to enable TD Merchant Solutions to provide Clover's product offering, processing and servicing to its clients in second half of the year.

After launching in Q4, we continued to expand our Digital Merchant Activation capability, and now have 22 of our top bank partners signed. We will also add this capability to our clover.com online Merchant Referral Partners. Through integration with StoneCastle, we remain on track to launch Clover Savings, our Merchant Cash Management program, before the end of Q2. Through a number of important partnerships, we continue to build agentic capabilities for our Clover Merchants and we'll showcase some of these at Investor Day.

And finally, we are excited to share that Clover is slated to support 30 World Cup games this summer in the U.S. and Mexico.

Next, on the innovation front, we continue to hit critical milestones on key strategic products including Experience Digital, CashFlow Central, Vision Next, Optis and CommerceHub, as I mentioned earlier. In our Enterprise Merchant business, we delivered a new developer portal supporting agentic commerce. Our teams have further ramped up their usage of AI tooling in the software development process with early results showing a significant reduction across key steps in new feature development and delivery time with mainframe modernization. And finally, we are on track to launch our previously announced stablecoin pilot this summer to facilitate interbank money movement.

Fourth, we are in full swing with Project Elevate. With AI at the center of this program, we are very encouraged by the early results. The teams have identified hundreds of opportunities to drive revenue uplift, reduce expenses, increase simplicity and improve productivity, and we're moving with urgency to operationalize them. Paul will outline our financial targets for Elevate at Investor Day.

Beyond Elevate, we took several important actions in Q1 to drive efficiency, including closing 2 subscale offices, exiting underperforming Merchant businesses in India, reducing management layers, and implementing more aggressive performance management. And just last week, we completed the migration of all customer activities from a significant data center as we continue our modernization activity.

Last, but certainly not least on One Fiserv is our commitment to highly disciplined capital allocation. We continue to sharpen our focus on the businesses and assets that best align to our go-forward strategy, including evaluating potential dispositions.

I'll conclude by saying we look forward to seeing you at Investor Day where among other topics, we will further highlight our strategic priorities, describe how our businesses are converging further to unlock more synergies and share how we're using AI to transform systems of record into systems of collaboration, create new TAMs and increase efficiency. Together, these actions will support the mid-single-digit adjusted revenue and double-digit EPS growth that we've discussed since last fall. This will position Fiserv to return to its roots and create significant shareholder value as a constant compounder.

I want to thank our employees for their hard work and dedication and our clients for their continued trust. With that, I'll turn it over to Paul to cover the details of Q1 and our guidance.

Thank you, Mike, and good morning, everyone. I will cover details on total company and segment performance in the first quarter and reiterate our guidance for 2026.

Beginning on Slide 6, total company Q1 adjusted revenue was $4.68 billion, a decrease of 2.4% compared to the prior year period and was in line with our guidance as we lapped higher nonrecurring revenue from a year ago. Q1 adjusted operating income was $1.4 billion, resulting in adjusted operating margin of 29.7%, also in line with the just below 30% view, I provided on our last call. Total company organic revenue was down 3.6% in Q1 with a differential in organic-to-adjusted revenue of just over 1%, in line with the approximately 1% delta we communicated in February.

First quarter adjusted earnings per share was $1.79. Our Q1 results reflect an adjusted effective tax rate of 11% driven by the release of a tax valuation allowance in the first quarter. Relative to our expected annual adjusted tax rate of between 19% and 19.5%, this lower tax rate resulted in a $0.17 positive impact to adjusted earnings per share in Q1. This 11% rate in Q1 is strictly a timing-related impact. Our full year adjusted tax rate guidance of 19% to 19.5% remains unchanged, and we expect higher quarterly effective tax rates through the balance of the year as an offset. Free cash flow for the quarter was $259 million and in line with our expectations we noted in February, and reflects typical seasonality where Q1 is our lowest free cash flow quarter of the year.

Now I will turn to the performance by segment for Q1, starting on Slide 7 for Merchant Solutions. Merchant Solutions organic revenue declined 1% for the quarter, while adjusted revenue was flat, which is largely in line with our expectations as we fully anniversary the CCV transaction. As Mike mentioned, lower inflation and interest rates in Argentina did have a negative impact on adjusted revenue in our Merchant business. Small Business revenue declined 1% on an organic basis in Q1 and grew 1% on an adjusted basis. Small Business volume grew 7% in the quarter. Clover revenue grew 6% in Q1. However, excluding higher nonrecurring revenue from the first quarter of 2025, Clover revenue growth would have been in the mid-teens. Clover revenue from Payment Processing grew 10%, more in line with volume trends.

As we noted in February, we expect similar trends for Clover in Q2 with this period representing the peak in nonrecurring impacts and also expect that Clover Processing revenue will grow in line with Clover GPV. Clover volume grew over 9% on a reported basis and was in line with our expectations as we saw stable growth, both in the U.S. and in key international markets. Clover volume, excluding the previously discussed gateway conversion, grew 12%. As the previously discussed gateway conversion continues to run off, the delta between Clover reported and ex gateway growth will converge. We continue to expect Clover revenue growth in the low double-digits for 2026 and GPV growth of 10% to 15% ex the gateway conversion. The lower end represents the core growth rate, while the higher end assumes more significant conversion of non-Clover Merchants.

Value-Added Services revenue contributed 27% of Clover revenue in Q1, growing 18% from a year ago, driven by software attach and lending, including Clover Capital.

Moving on to Enterprise. Our revenue grew 3% on an organic basis in Q1 and grew 2% on an adjusted basis. Enterprise transactions grew 8%. And finally, in Processing, organic revenue declined 14%, while adjusted revenue declined 9%. First quarter adjusted operating income for Merchant Solutions segment was $626 million, down 23% with adjusted operating margin of 26.4%.

Now I will cover Financial Solutions starting on Slide 8. For the quarter, organic revenue declined by 6% in Financial Solutions, while adjusted revenue declined by 5% relative to our expectations of adjusted revenue decline at the high end of mid-single digits that I mentioned on our last call. In Digital Payments, both organic and adjusted revenue declined by 5%. Our underlying account and volume growth in Financial Solutions was in line with what we expected and our recent history. This included low single-digit growth in debit processing and low double-digit debit network volume growth.

Zelle transactions grew 18% in the quarter in line with recent trends we have seen while we saw Bill Pay transactions down high single digits. Also, we saw a further ramp in CashFlow Central revenue in the quarter. In Issuing, revenue declined by 6% on an organic basis and 5% on an adjusted basis. While global accounts on file grew in the low single digits, revenue comparables were impacted by nonrecurring revenue in Q1 last year, a trend we expect to be more pronounced in Q2.

Finally, in Banking, revenue decreased 6% on an organic basis and was down 4% on an adjusted basis as we continue to be impacted by certain actions taken over the last several years as well as higher nonrecurring revenue in the year ago period as well as attrition that remains above our long-term target. We saw core counts declined 2% year-over-year while overall accounts and positions, including Finxact grew 6%.

First quarter adjusted operating income for the Financial Solutions segment declined 24% to $877 million and adjusted operating margin was 38.1% versus 47.5% in the prior year period. From a leverage standpoint, we finished the quarter with a debt to adjusted EBITDA ratio below 3.2x measured on a gross basis. We expect to finish the year at approximately 3x.

Turning to Slide 9. We repurchased 3.3 million shares during the quarter for approximately $200 million. As we noted in February, we are focused on managing our leverage ratio and remain committed to returning capital to shareholders. Now with Slide 10, I'll move on to our 2026 guidance.

First, on revenue, we continue to expect 2026 organic revenue growth in the range of 1% to 3% with Merchant Solutions revenue growth in the mid-single digits and Financial Solutions flat to slightly down. Consistent with February, we expect adjusted revenue growth in the range of 1% to 3%. All of this continues to assume a stable macro environment.

As we told you in February, we expect the second quarter to be the trough in terms of our year-on-year revenue decline and we expect our Financial Solutions business to decline at the high end of mid-single digits in Q2. We expect our weighted average share count to be approximately 530 million resulting in adjusted EPS of $8 to $8.30, consistent with our prior guidance. We continue to expect adjusted operating margin of approximately 34% for the year.

In line with our commentary in February, we expect first half adjusted operating margin of approximately 31% to 32%. In the second half of the year, we continue to expect adjusted operating margin of 35% to 36%, with Q4 representing the high point in the year. We continue to expect capital expenditures to remain approximately flat with 2025 levels. We continue to expect free cash flow conversion of approximately 90% of adjusted net income for the year, in line with historical levels and our February guidance.

And with that, I will turn the call back to the operator to start the Q&A session.

[Operator Instructions]

Our first question comes from Tien-Tsin Huang from JPMorgan.

I wanted to ask just on, maybe visibility on the Banking side and retention given some of the bank conversions that you're doing. Just any surprise there? I know the trough comments were made, but I'd love to hear a little bit more detail on attrition and retention, that kind of thing?

I think broadly on Banking, we continue to be obviously very proud of the leading market share position we have in the business and all the support across almost 3,000 banks and credit unions on the core side. As we've said and we said again today, core attrition has been above where we want it to be and getting that back to normal is a significant focus for us.

That attrition, as you know, is the result of actions taken over the last several years, especially around the client service front. And we're confident we have the right fixes and addresses -- and the way we're addressing it is the right thing to do. And while there's significant work to do, as I said today, we feel like we're bending that curve in a positive way. And contributing to that is we've significantly increased our client coverage efforts, which was an ask of our -- that came directly from the clients. From that has come better service, and we're seeing that show up in both our surveys and anecdotal evidence.

And then we've really leveraged a number of different forms of AI to help in call centers, enhancing our client portal experience, accelerating our tech modernization and reducing the books of work we have. And then obviously, the decision to support all of our cores was an important one for our clients and has taken a significant amount of pressure -- perceived pressure that they had on themselves to switch and obviously, pressure on us.

So little things or less highlighted things. The StoneCastle acquisition has been a great value-added positive, supporting our clients and -- depository clients and one of their biggest needs, which is continued deposit growth and then our approach to embracing the consultant community and even acquiring Smith Consulting to really drive value-added services to our depository partners, again, is another piece.

Finally, we've taken an advanced approach, again, using AI to measure our -- what we call a client health index across all their experiences with us in terms of pace of change, resolution, inquiries, client touch and the like, and it's given us a much better view and perspective of where these clients stand, which allows us to play much more on the offensive side to getting to them.

So a lot of stuff listed, but it's a complete package of behavioral changes, technology changes, service changes, alignment changes and then enhancements. We talked about continued enhancement in the quality of our leadership team, bringing in new executives to combine with executives here. So I wish it was more visible in the results. But when you go through the underlying KPIs that we have, we feel really good about the progress we're making and our ability to get core revenue-related attrition back down to more normal levels.

Ideally, we'd like to have none, but of course, you've got M&A and stuff, and we've had some over history, but getting it back to those historical levels, we feel like we're doing all the right stuff and are on the path to do it. It just takes time and work.

Next, we'll go to the line of Andrew Schmidt from KeyBanc Capital Markets.

I wanted to ask just on SMB back book, if you could talk about the performance there ex Clover. And then I know there's a swing factor in terms of conversion of non-Clover merchants. If you did any testing there, it would be interesting to just understand how that testing has performed and how that might influence just the go-forward emphasis on converting those non-Clover merchants to Clover?

Yes, Andrew, thanks for the question. And yes, first of all, I wouldn't call out anything unique as it relates to the back book conversion in the first quarter. And certainly, for the year, we don't have any different expectations around what that back book conversion looks like. We've commented for some time now. We're being very mindful about how we approach any of the non-Clover to Clover transition to make sure that we're doing it in a very mindful customer-centric way. And we've had some good tests around that, around the receptivity of those moves when there's a good product fit.

But there isn't anything incremental. We've talked about in the overall Clover GPV guide for the year, the low side of the guide assumes very minimal back book conversion and the higher side assumes a more meaningful back book conversion. But right now, everything is on plan as it relates to how we're looking at that. And we're going to talk a lot about this at Investor Day. Takis is going to be going through just the overall Clover strategy, the overall merchant strategy. You'll see all the pieces kind of fit together related to this topic at Investor Day. But right now, nothing has changed. Mike, do you have anything to add?

I'd just add that we've said in the past that our ability and willingness to pursue conversions of Fiserv customers from One platform onto Clover. We obviously very much like to do that given the robust set of VAS we have on the Clover side. But that depends on us doing certain actions, and we were proud this quarter to launch 2 new verticals, as I mentioned in the prepared comments, in Healthcare and Professional Services.

And each time we build unique capabilities to address a certain vertical, that allows us a greater opportunity to go in and address the back book with compelling offers. We don't want to just go in and try to move that to Clover without a strong rationale and mutual benefit for the customer. And as Paul said, our efforts to date have been very modest. Takis will talk you through that study, learn, test and then when we have the right capabilities and the right understanding of it, you can pick up the pace of it.

Next, we'll go to Dan Dolev from Mizuho.

Great progress here. Quick question on AI. I think your competitor made an announcement yesterday on AI with regards to bank processing. Can you maybe, Mike, elaborate on some of the initiatives and how you add value with AI to your Banking clients?

Yes. Thanks for the question. And as we keep progressing with it for our businesses, we get more and more excited about what AI is allowing us to do, and we've seen incredible results to date, recognizing it's still early in the development of it. But we're really intensely focused on 4 areas, which is: taking those great systems of record we have into systems of greater value and systems of collaboration; generating new revenue sources and TAMs, which goes a little bit to your question; enhancing client service I just mentioned; and then increasing our own productivity and efficiency across the company.

With respect specifically to leveraging AI on the revenue side and for the benefit of our clients, agentic is clearly the next important phase on both the Merchant side and the Banking side. And we have a number of extremely exciting developments going on there, including new agentic commerce capabilities, which we've been talking about in Merchant and rolling out through important partnerships, and Takis will go through that in detail next week, but we see a great opportunity, especially with the Clover customer base and enabling them to access an agentic world without building all of the back-end systems needed.

And on the banking side, at IR Day, Dhivya will introduce a new governed AI operating layer that will importantly allow FIs to access and fully capture the power and benefit of all agents across many functions, including front, middle and back office and using any LLM. So we're already live with pilot agents with 2 financial institutions around this today and then have a number of others lined up with different use cases, think about loan originations, compliance and call centers. So not to steal too much thunder for next week, but Dhivya will formally introduce the product, and you'll be able to actually see some demos of it.

So again, whether it's internally or externally, Merchant or Financial, we're seeing great opportunities both to drive value for ourselves and help our clients access the agentic capabilities available to them.

Next, we'll go to Vasu Govil from KBW.

I just had a couple of quick ones on Clover. I guess the first one, just on the nonrecurring revenue that you called out, Paul, from last year. Was that mostly hardware revenue or something else? And then more broadly, Mike, on Clover Capital, you've highlighted in prior calls how the penetration is still relatively low in your installed base. So maybe if you could just talk a little bit about what has constrained adoption so far? And as you look to scale that business, how should we think about the long-term penetration potential and sort of the mix between on-balance sheet, off-balance sheet to support that growth?

Yes. So Vasu, maybe I'll take 2 parts of those. And then, Mike, if you want to add anything. As it relates to the nonrecurring revenue on the Clover side, yes, hardware is a big piece of that. There are some other things from a nonrecurring standpoint in that comparative, and we highlighted that out. That's why the Clover revenue growth in the mid-teens, the reported growth of 6%. But if you take the comparative dynamics of the nonrecurring not repeating in the first quarter of this year, that puts you to the mid-teens or roughly 15% and hardware is the biggest -- or one of the biggest pieces there.

On the Clover Capital side, we will talk more about this at Investor Day and just our strategy around Clover Capital. You're right, we are underpenetrated relative to the opportunity set, and we're going to kind of lay out a much broader strategy around how we're going to be approaching the marketplace, both from a balance sheet standpoint as well as just an overall growth standpoint at Investor Day. So I'd rather kind of give a more wholesome view of that on a go-forward basis. But we did see good Clover Capital growth in the quarter. So I'm very pleased with the underlying volume growth that we saw, and we don't see any change in that growth trajectory as we look at the forecast for the remaining part of the year. But we'll give you more color at Investor Day. Mike, anything else?

No, I think you highlighted perfectly that the opportunity is significant in front of us. We're a couple of quarters into building our -- enhancing what we had as core capabilities and going after that, and it's domestic and international opportunity.

Next, we'll go to Bryan Bergin from TD Cowen.

I wanted to ask on Financial Solutions. Can you just give us a sense on the nonrecurring revenue headwinds where relevant across the subsegments? And I'm thinking particularly in Issuing and Banking and then the relative potential size of those headwinds in 2Q, just so we could unpack the recurring performance within overall performance?

Yes. So specifically in the issuing area, the biggest single driver I'd point out to is the Output Solutions area, where we had some significantly sized Output Solutions business that is not recurring this year that is in the first half. And specifically in the second quarter, you'll recall we had that teens growth rate on the Issuing business in the first half or in the second quarter of last year. And so that's providing a meaningful comparative headwind on the Issuing side.

There are other nonrecurring across the Digital channel as well as in Banking. But as it relates to a general sizing, we kind of gave you when we talked about the high mid-single digit and the second quarter being the trough, relative sizing of what we expect the impact to be. I would say we are pleased with the fundamental growth in the -- across the Financial Solutions segment of each of the underlying growth across Digital, our Issuing business, Mike commented on the Banking. So we're seeing consistent.

So the volume picture that we see in the first quarter and the second quarter and really for the back half of the year is very stable. It's just these comparative dynamics that we have in the first half and more acutely in the second quarter of the first half is what we're needing to grow through and then we're going to be to a much more visible normalized growth picture in the back half of the year.

We do have some natural tailwinds in the back half of the year as it relates to growth. We have a comparative tailwind in the back half on Financial Solutions due to some of the strategic things we did in the Digital space in the third quarter of last year. So that's a natural tailwind. And then we have some contracted revenue from some of the client wins that we've talked about that also will be additive in the back half of the year. Mike, anything else to add?

No, I think it's the same comments we made last quarter. It's hard to go through every single recurring revenue item. And broadly, we think, and we'll talk about at Investor Day that we're a mid-single-digit growth company with FS being a low single-digit growth company probably operating flattish today on a clean basis and Merchant being a mid- to high single-digit company today operating in a mid-single-digit basis. And our plan is to obviously make -- we're anxious to get it, so it's more visible in the financial results. But to Paul's point, if you look at the underlying volumes, they track very much against what we're talking about from a high level and maintaining and growing that volume stuff, the revenue will come behind it and start to match.

Next, we'll go to William Nance from Goldman Sachs.

Mike, if I could just follow up on the comment you made. I think you've been pretty clear in sort of telegraphing what you think the right growth rate is for this business and the message you expect to deliver at the Investor Day coming up. I'm wondering, to the comment that maybe the underlying growth in FS is more or less flat right now and obviously, the investments that you're making that are weighing on margins right now. As you look out into next year, you've talked about seeing the benefits of some of the improved execution coming through the numbers. So is it your expectation that the company can actually get to that level of performance sort of exiting the year and into 2027? Or are there lingering kind of performance and attrition issues in FS or investments you want to make on the margin front that could delay that?

I'd say that go back to the One Fiserv comments, we are confident we're taking the right actions. We obviously have to execute against those and complete them. And we are -- the team has rallied around those. We're laser-focused on them. We know the fundamentals that we have to get in the right place to be a mid-single-digit grower. And those -- the efforts we need to get there are fully funded and fully resourced. And I believe that we've brought in some great talent to complement the talent we have here.

So I feel good about all the execution. We have to go do it. And we've said as you exit '26, you start to look -- there's still comparables, obviously, with some of the actions we did across the business in Q3 and Q4, some going the other way being beneficial comps to us as you get into Q4. And then '27, we sort of see as the first full year where you can see really this clear visible growth. But again, we're trying to give you and we'll give you more at Investor Day, the underlying volume drivers that we're seeing that support our belief that we've got a great business. We've got 2 great TAMs in Merchant and Banking, both in a very strong position today, both in an investment mode, probably the best meetings we've had in a long time here whether it's an enterprise merchant or an FI, you leave with a lot of stuff to work on.

So the environmental support is there. The fundamentals underlying our volumes are there, and we got to put ourselves in a position where the execution, resilience and service is much crisper than it's been, and that's the path we're on. But I'm very confident we're taking the right actions to get to where we need to get to, to put the business in a position to do it. We have to execute.

Next, we'll go to the line of Jason Kupferberg from Wells Fargo.

This is Melissa Chen, on for Jason. I wanted to ask about the launch of Clover PracticePay. It sounds like the initial reception there has been good. But can you talk a little bit about how big the addressable market is in Healthcare POS and who you're mainly competing with in that space?

Yes. we were thrilled. This has been in -- we've been previewing this for some time now. We're thrilled to get it launched this quarter, very optimistic about our growth in that area, the massive TAM. And it was -- this was the #1 area from our bank partners, which is a major distribution channel for us where they need help, and we heard it loudly from our ISO partners. Also the specific TAM, as you know, is massive. We're going -- think about more of the local doctor practice and our penetration there is low and our growth rate relative to the FSBI over time, if you measure us against using the FSBI as a proxy for the industry, we've been below that.

So this is the key component that we're missing, and it's a key component that will allow us to go after some of the back book conversion. We've got a great partner in developing with Rectangle, and we're pleased. We launched this month, so it's still early, but we're very pleased with the progress we're making, and we'll continue to remain very focused on execution here.

Next, we'll go to Jamie Friedman from Susquehanna.

I was wondering at a high level, if you could share your perspective on the competitive dynamic in Financial Solutions, specifically in Issuing and Banking because it does seem like the landscape is changing somewhat. Investors are potentially anxious about it?

Yes. I think, Mike (sic) [ Jamie ], I made a lot of comments on core banking earlier specifically. Obviously, we've got great competitors across Banking, Digital and Issuing. I think -- and all of them are -- we enjoy competing against every day and innovation and competition fuels growth for the industry. As I said, the backdrop for the industry is very, very supportive of solutions from all of us. And we're focused -- all the stuff we're doing in One Fiserv is to put us in a position to compete very, very effectively against any of the competitors.

I think a lot of the questions we hear is around the modern core space, change in competitive dynamics. We are thrilled, as we said in the prepared comments, with Finxact, which is far and away the largest, with the most accounts being served on the modern core platform, cloud agnostic, asset agnostic through modern core -- truly modern core digital ledger. So we're thrilled with our competitive position there. We continue to -- that continues to be the hallmark and both Dhivya and Takis will address that at Investor Day around our embedded -- the growing embedded finance space.

So I think no major changes in the competitive landscape as we see it. We've got great competitors. They're innovating and competing as always. And our focus is to make sure that our underlying fundamentals around service, product delivery, value-added solutions and speed to market are at the highest level to allow us to compete and maintain all the leadership positions we have across the FI businesses.

Next, we'll go to the line of Timothy Chiodo from UBS.

I was hoping we could spend a few minutes on non-Clover SMB. So it's roughly 20% of total company revenue, roughly 40% of the Merchant segment. I know there's a lot of moving parts there in terms of some of the Argentina changes, some of the Clover migration. But I was hoping you could talk about the organic growth on an adjusted basis for that business this past quarter, but also over the past few, and then what is implied in the guidance?

And maybe a little bit bigger picture. I understand this might be more of an Investor Day topic. But to the extent that you could decompose some of the portions that are U.S., that are international, how large the ISV or Partner business might be in there, et cetera? Any additional color? And again, I appreciate that last part might be more suited for the Investor Day.

Yes, Tim. So yes, that's exactly what I'd say on that last piece is we are going to go over this in good detail at Investor Day. So you'll get a lot of that clarity around some of the componentry there. We're going to provide additive disclosure of Clover, just in general of the components of Clover as well as the non-Clover and you'll also understand maybe some of the strategic things around the non-Clover side, particularly in ISV and some of the international expansion there.

As it relates to the organic growth, and we do have comparative dynamics here. We have the Argentinian kind of noise. But as I said on our last call, we're expecting our non-Clover SMB business to have slight growth this year. We were down low single digits in the first quarter. So organically, we were down in the low single digits for the first quarter. And we would expect similar kind of performance if everything kind of holds in the second quarter.

As it relates to the back half, kind of what changes there is we do have incremental ISV growth that's coming in there. And specifically, some of the international growth is -- we're seeing good ramping, particularly in Brazil. And so there's a few international dynamics that are playing through throughout the year that help that. But generally speaking, we've talked about that non-Clover SMB not being a growth business for us, but relative to the overall picture, we're managing it in a more systemic way than we have in the past.

And we're being very mindful about how we approach that of moving over that business to Clover over time in the right sort of way. That's the -- the end goal is to move as much of that business to Clover where the product and the feature functionality of Clover fits with those merchants. And Takis and team will cover that in more detail. Mike, anything to add?

No, I think all great topics for next week and all in our materials to be addressed.

Next, we'll go to James Faucette from Morgan Stanley.

I appreciate all the commentary and apologies if I missed something because it's been bouncing between calls. But I would like to ask quickly, when you talk about like moving volumes and taking advantage of Clover's strength, how are you thinking about kind of the moving targets and competitive environment, especially as we see more companies looking to add incremental functionality for omnichannel, et cetera, even for SMB? And how do we think about that and its implications for Clover's product road map?

Yes. Again, we'll do a deep dive next week on Clover. But high level, we think we've got the best small business operating system in the business. We're continuing to invest heavily across horizontal features -- vertical features we talked about PracticePay and Professional Services coming in this quarter, seeing great growth and opportunities on the international side. Takis and his team are digging deep on the experience piece of Clover, where, as well as we've done, we have room for improvement there. And then we think we've got the best distribution channel by a significant margin, combining not only a direct sales force, but 1,000-plus banking partners, thousands of ISOs, as Paul mentioned and it was in the previous question, an unbelievable ISV business that's growing at a very attractive rate and then other great partners, whether it's an ADP or some of the big food distribution businesses.

So the opportunities there, the focus, the investment around the product is strong. And when you look across retail and restaurant, which we always characterized, even that, we have small market share and then you go into some of these other verticals and Clover market share is still single digits. So we see a ton of room for growth. There's always a great competitive landscape, as I said to the earlier question on the banking side, that's part of -- a natural part of any business with great growth opportunities. But we think we've got a great platform here, and it's -- everything is about investing, focusing and driving Clover growth here and abroad.

Next, we'll go to Ramsey El-Assal from Cantor Fitzgerald.

This is Ryan, on for Ramsey. You called out some senior hires in Merchant Solutions. Could you comment more broadly on [Technical Difficulty] in terms of whether you have all the pieces to execute on the plan and also...

Ramsey (sic) [ Ryan ], we're having a hard time hearing you. Yes, we picked up that. There were maybe some senior hires. Could you maybe repeat the question? Maybe we'll be able to hear it clear.

Can you hear me now?

Yes, much better.

Sorry about that. This is [ Ryan ], on for Ramsey. You called out some senior hires on Merchant Solutions. I was hoping you could comment more broadly on the org chart in terms of whether you have all the pieces in place to execute on the plan and also if there's more opportunities to streamline headcount by way of AI?

Yes. First part of the question, we mentioned in the prepared comments that we've been thrilled actually blown away by the interest of talented senior people from outside of Fiserv wanting to come join Fiserv, and we've added a number of incredibly talented people on both the merchant side and the FS side who are additive to an already strong team here. So we feel very, very good about where we are in terms of critical hires remaining to have the go-forward team. It's down to a very few.

So yes, we've got the right team in place. It's an outstanding team. I look forward to -- we'll have a series of demos at the IR Day next week. So in addition to Dhivya, Paul and Takis, you'll have a chance to meet a lot of these leaders and see some of the products they're working on. But we love the team, and we love the combination of some external talent we brought in along with the great institutional knowledge that's been built here at Fiserv.

On AI, allowing for efficiencies, a couple of thoughts there. First of all, we're going Pillar 4 of the One Fiserv plan, Project Elevate. We are deep into the process of Project Elevate. We're very pleased with the portions we've gone through so far, which is really the origination of ideas and sourcing of ideas. As part of that, there are no sacred cows. Everything is on the table. All people from around the company are involved. There's a couple of hundred people very focused, almost fully dedicated to this. We put all of them around.

Paul on the CFO floor is very formal and dedicated effort, and we think there's great opportunities that are going to come out of that. I think -- if you look at our headcount over the last 4 or 5 years, we're down double digits in headcounts. We've already -- and largely by leveraging early stages of automation, we've already taken significant gains there. So maybe we're a little bit different from where other peers have come from over the last several years.

But from here, we continue to see whether in Project Elevate or outside of Project Elevate, significant opportunity to become more productive and more efficient through AI and it's even incremental generations of AI. For example, we've streamlined our call center services over the last 4 or 5 years using sort of "old AI" and now modern solutions show a significant opportunity to make that experience even better for the customers and more efficient for us. So yes, we see great opportunities, especially in and around the areas you expect in operations and call center services, app development and the like. So as I said earlier, very excited about the potential for AI across all aspects of the business, and we're leaning in hard to it.

And our final question comes from Dave Koning from Baird.

In the Acceptance segment, it seems like you're implying high single-digit growth in the back half, and it seems like the first half is probably close to mid-single digits. And I'm just wondering, source of acceleration, you answered Tim's question, there's going to be some in SMB non-Clover. But will Clover accelerate from the normalized 15%? And will Enterprise accelerate to the high single digits? And maybe how will those things happen?

Yes, Dave. So we do obviously expect that Clover on a certainly reported basis will accelerate from the 6% because we're expecting low double-digit revenue growth for Clover for the year. So if you just kind of do the math, you're going to see acceleration there.

I would point to 2, kind of favorable dynamics in the back half of the year for the Clover acceleration. One is, you'll recall in the fourth quarter, we had some pricing rollbacks on Clover specifically that provide a nice tailwind in the fourth quarter from a comparative standpoint, that fuels just some of the additional growth on a reported basis from the fundamental growth that you would otherwise expect just relative to static volume growth. And then the other nice comparative tailwind that we get on the Clover side is, in the fourth quarter, we did have some weakness, particularly in November on the volume side. So we actually have a volume positive compare as well in addition to all the other things of Clover Capital and all the other growth that you would otherwise see as we progress along the year.

So from a Clover standpoint, if you look right now, fundamentally, we're in a mid-teens growth rate from the Clover side and would expect to see a fundamental growth rate in line with being able to deliver the low double-digit Clover revenue growth. On the non-Clover side, you heard me comment earlier, we are right now at a decline of low single digit overall, and there's comparative dynamics in there as well. But given some of the growth that I talked about on the ISV side, given some of the international expansion that will come through there, as I said, we expect that to improve and largely expect that to be a very small contributor to growth, but net positive for the overall year.

So that's the way it is shaping. Nothing's changed in our volume assumptions. Obviously, we are very pleased with the volume growth we saw in the first quarter. The shaping of the year, we still expect to be intact. And so that gives you kind of from a Clover standpoint, the more moving parts. But overall, we're still expecting the same kind of growth rates for Clover and non-Clover that we did at the start of the year.

Thanks, everyone, for joining today. We look forward to seeing you next week at the IR Day.

Thank you all for participating in the Fiserv First Quarter 2026 Earnings Conference Call. That concludes today's call. Please disconnect at this time, and have a great rest of your day.

All right. Good afternoon, everybody. I'm Jason Kupferberg, the payments processors and IT services analyst here at Wells Fargo. This is our last session of the day in the main room here at our Payments and Fintech Symposium. We're super excited to have Mike Lyons here, of course, CEO of Fiserv. A lot of ground to cover, and we're going to make the best use of our 35 minutes as we can. So thank you very much, Mike, for being here.

It feels to us like there's definitely been a general degree of, I'll call it, stabilization in your business. You took some time when you first took the seat almost a year ago, right. It's hard to believe, but almost a year ago. And then you did a reset in October, but it does feel like there's been some stabilization since then.

Day-to-day blocking and tackling, I assume is kind of like the key every day. That's what everyone is focused on as you execute the turnaround. So you've got the refreshed senior leadership team as well. Talk about how you guys are just managing and monitoring progress against the pillars of the one Fiserv plan.

Yes. Well, first of all, thank you for having us.

Yes, sure.

My hometown, and we have a great partnership with Wells Fargo from not just on the client side, merchant and financial solutions side, but you are a big bank and big adviser to us. So it's good to be here and good to be with your people.

Yes. So we took over in May. We did the -- what we talked about as a rigorous and comprehensive review of the company in the latter part of summer and throughout the fall, made the announcement in October that there really -- we learned a lot of different things, but we always summarize it to the four of -- we had some competitive and client service gaps that we needed to fill. But you put that aside, we had two great platforms, two great businesses in FS, Financial and the merchant that we see lots of ways to leverage both individually and together, that's the first thing.

Second thing is we saw that we had to shift our focus and priorities towards client-driven recurring long-term sustainable revenues.

The third piece, as you mentioned, we had to bolster the management team and make some changes to the Board, and we've completed both of those.

And then the fourth is, obviously, we had to reset the long-term growth expectations of the company and be very clear about what the secular drivers of our business are versus cyclical drivers. And obviously, we've got a business that's got cyclical elements to it, and you can grow double digits for -- at a sustainable rate for 4 years. And that's there, and that hasn't changed, but the secular drivers, when you took away some of those cyclical factors, indicated that the business had been growing over the last 4 years at the same general rate range, which has been a very consistent narrow range for the last 30, 40 years since the company has been founded. So really, we found nothing changed. It had two great businesses, but we had some significant cyclical factors and some episodic revenues we had to address.

Since then, we haven't learned a whole lot new.

Which I guess is a good thing.

It's a very good thing. And we understand our business fully, and we understand what the priorities are, and 100% of the focus is on executing against our plan. We call that the One Fiserv plan. It's got 5 pillars against it and an important element of executing well against the 5 pillars, just having a great management team to it. And I think if there's been a surprise we haven't blown away by how much talent wants to come and join the team. And we've been super pleased about, one, the desire to come join and then the quality of the team we put together. And by Investor Day and a big part of the Investor Day, we'll be able to showcase certainly Takis and Dhivya. And Paul, you obviously know Paul well, but the -- but below them is an unbelievable team. We had a strong team already, and we've complemented what was there with some incredible outside hires that we're still bringing in.

How do you prioritize your time on a just a day-to-day basis as you're trying to make sure that the organization performs the plan?

We're trying to -- literally, we're trying to -- if you're not working on 1 of the 5 pillars, the action plan, you're doing something that we don't want you to do. And obviously, we're really close to the 5 pillars, but run the company with a client-first mindset that goes to service, goes to resiliency and quality of our products, quality of implementations, quality of conversions. Second is really everything Clover, 5 sort of vectors to the Clover growth and experience story that we're working on there.

The third is a broad bucket, but it's -- we've identified a series of modernization pieces of technology and some existing technology that we had discovered, implemented, started building the head and finish it. So this is experience digital. It's cash flow central. It's the modernization of our card -- the legacy card platform called Optus and the creation of a new modern API-based cloud-based program, sort of the Finxact for cards which is called Vision Next. It's our stablecoin platform. It's the embedded finance platform.

We've identified 10 or 12 things that are fully funded. They're fully resourced. We're clear in how we're running towards the date. We made -- for a number of them we made very specific dates at the forum. They will hit, and we're managing the heck out of those projects. And if you're not in that, we're deep prioritizing capital to you because these are the most important things in the company.

Fourth thing was Project Elevate, which is in full swing coming up on our first checkpoint there that is an inside look at our -- examining ourselves for opportunities to be simpler, more efficient and obviously, leverage modern technology and doing that.

And the fifth piece is -- it ties into the third, but making sure we optimally manage every dollar of capital that you all have entrusted us with, and that goes where are we putting incremental capital in terms of $1.8 billion of CapEx, where are we not? What assets are we going to hold? What assets are we not? And then importantly, maintaining the investment-grade rating of the balance sheet.

So if it's not 1 of those 5 things, which I'm not saying some of -- a lot to cover there. But if you're not in those 5, you -- we're not -- that's how we're keeping ourselves organized and focused.

So when you think about the 5 pillars of the One Fiserv plan, I mean this is late October is when you laid them out, right? Do you feel like any of them has become a shorter put or a longer put since then?

No. I think back to the earlier question, we were fully aware of what we needed to deal with coming out of it. Some of them are -- have more -- some of them have a finite life to them. Some of them, the Clover stuff we could be working on, maybe there's perpetual aspects of that. The Part 3 with all the modernization products and completion products, those will finish and they'll be recycled by a new set. So none of it is -- it's exactly what we thought it was. There are pieces of it that are harder than others, and that -- but it's not different today than what we thought in October.

Yes. I feel like people are kind of like waiting to hear like, oh, this -- but it's kind of steady as she goes, so far, no surprises.

No surprises. And I think Q4 sort of demonstrated that there was...

Yes. It was kind of down the middle, really.

I think back to the 4 big takeaways from the review we did, it's a very easy business to understand. We often get, "Oh, it's a big business, you get [indiscernible]. It's a very simple business to understand what we do. I mean we're a transaction and account-based processing company, that's what we do. So we have to understand that. And what -- going forward, the algorithms of underlying -- we get paid accounts on file, payments volume and transactions. And there should be a logical algorithm between the revenues and the activity levels, and you should be able to demonstrate that, and it's our responsibility, Walter and Paul's responsibility to point out anomalies as to what's -- what may cause the difference in those. Obviously, we've got a -- works through some noise to get to where that algorithm is clear.

But the part of -- back to the execution part, we know exactly what we have. We have to know exactly what we have to do, and we're working on it.

Yes. And I mean the 2026 guidance that you provided last month, I mean, was very consistent with what you would kind of previewed on the third quarter call. So I don't think there was really surprises there. Maybe it's a little bit more back half loaded than people had understood it to be or had envisioned. So maybe just touch on kind of visibility on the second half acceleration. I mean clearly, especially by the time you get to Q4, you've got some easy compares, right, which we can see. But would love to get your perspective there.

And then maybe just as part of that, we're asking every company at the conference just any Middle East exposure, we need to be cognizant of.

Yes. Couldn't get two more different questions backed in there.

Exactly. I wouldn't do this on an earnings call.

The path of -- the trajectory of how growth will play out in the year is largely related to the reset we did in the fall, which create comparable issue for the first half of this year versus the first half of last year. And what we've said is down low single digits, which we say is [ 1 to 3 ] in the first half on the top line. And there's just a lot of noise. And what we're trying to get you to is give you the underlying factors driving the growth algorithms while we work through comparability noise. And as you get in the back half of the year, there should -- those two should make a lot more sense. And the back half of the year will look a lot more what the go-forward company will look like. And between getting to those numbers and you being able to see them and then we'll talk through, we've said we're excited to present a constant compound or investment case. And you start to see the attributes of that are certainly in our business, and you start to see the manifestation of the numbers of that in the second half of the year. So a lot of the noise is just on that comparability. Nothing material in the Middle East side.

Okay. Good. I'm going to ahead to just check that box. So going back to the last earnings call, I think you've made some comments about attrition in the core banking business still somewhat higher than you'd like to see it, right? I think there's a perception in the investment community that Fiserv could be vulnerable to churn, depending how some of these platform updates or migrations progress. But what sort of counterargument should we be considering, right? Given that you've been very clear, you're not forcing any customers to convert.

It's -- say this, -- we love the core banking business. It's been the heart of the company since the founding of the company. It's a great business, and we're super proud to support a little over 3,000 credit unions and banks, we're the mitochondria of their operations every day, and it's a great business for us.

Under the prior strategy, which really started in 2022, there was a deliberate effort to consolidate core starting with the credit union cores. And that decision to migrate the cores and move people off of one quarter to another happened in a period where our technology wasn't as resilient as it should have been. And our service isn't at a level that we would be -- that we'd want to run the service at.

So if you take the aggregation of those 3 and not surprisingly, people were -- our clients were frustrated by that. So if you're in a hole and you want to get out, the first you do is stop digging. And what we said at the forum in September was that there is no core consolidation story, it's our customers, we respect our customers. And if they ever want to make a change off of their core technology, it's on their time line, not ours, and we will -- and we adjust our numbers and adjust our guidance to reflect that we would continue to keep all of our cores at a modern level. And there's some interesting developments around the technology front around that, that we can talk about today, and we'll talk about more at Investor Day.

So there is no core consolidation story. What hasn't changed is there is a core modernization strategy. And again, there's -- technology gives us different ways to look at what's always been "Oh, you got to modernize one and move another to the modern one." There's different aspects and different approaches we're going to take to that from here. So we're excited about that. And obviously, time gives you a different perspective on everything. There's no core consolidation story. There's 100% of core modernization strategy. Back to the 5 pillars is a clear focus on improving service, and we've spent the money to do that, and we're focused on driving that experience change and helping our customers get the best out of the technology they've acquired from us. And there's clear introduction of new functionality, new capabilities that match exactly what our customers tell us they want.

The feedback we're getting in the market is the technology is good. It's been good and they're super excited about the developments coming, but they want better service and want better resilience. So the latter two are addressable, fixable, and we've done it. We've taken the steps do that, and we've got to go through it. As you said, we've not been happy with the results in the banking business, and we projected, as a result of some of the activities from the past that, that pain would continue. We said it into the fourth quarter when we talked in October and you saw the results then. It's a better business than our numbers are showing right now, and we're making all the investments, great sense of urgency, great sense of focus to get it where it is. But it isn't a core consolidation story.

Okay. So when should investors be thinking that the banking -- call it the banking subsegment right, because it sits under Financial Solutions, when do we get back to positive growth there?

Yes. We've been low single digits, the wrong way, it should be low single digits the right way. There isn't -- I have the conversation all the time with investors, there's no magical demarcation line like after 6 months of great service. So we're working through that with the customers that anecdotal feedback we're getting is great progress, don't change what you're doing. We want to see sustainability and then as we continue to roll out and we have some exciting project announcements as we come through the first half of the year, more and more technology advances for our customers, more and more features for our customers. We believe that the shift is to that.

So at the most important time, the backdrop for bank spend on technology is as good as we've seen in a long time. And that's driven by the fastest pace of change in bank technology we've seen in a really long time. And we want to make sure our customers don't make a service decision when they should be making a technology decision. And we stand behind and believe we have great technology. So we're fixing the part we can fix and focused on bending that curve. But there isn't some magical line you jump over in everything.

Right. Okay. So we'll continue to monitor that. So let's talk about the perception of all this AI risk out there, right, for some of the software-centric fintechs and obviously, Fiserv is in that category. I mean that's kind of your core competency, right? You build great software products for your clients. So I would love to get your perspective on kind of the moat there?

And then on the flip side, I mean, talk about how Fiserv is actually embracing AI and where there are both revenue and cost opportunities actually.

Yes. I'd push back on the first part. As we talked about earlier, we're a transaction and account based company.

Yes, you're not -- right. You're not seat-based, right, but. Yes.

Yes. Right. We get paid on transactions, payment volume, accounts on file, and we operate mission-critical core architecture. Underlying that architecture is millions, if not billions of pieces of highly sensitive PII, proprietary data, deep regulatory requirements, accounting standards. Lots of embedded relationships between us and our partners and then highly interconnected networks.

And so if you think about what we actually do, we settle transactions, authorized transactions, settle transactions, move funds, create auditable reports and maintain billions of business and financial records. So this is not on the surface of business that is logically susceptible to probabilistic model. So this has to be bank-grade high.

Yes. Got it. It's got to be perfect.

So what does that mean for us? It means we think we have a huge opportunity and need to capitalize on it and we're going after it to capitalize on AI, to make all of those processes easier, but we see ourselves much more as the last mile for AI to a really important and massive TAM for that industry. And that's the way we're thinking about it. How can we help our customers, either merchants or banks benefit from all of the capabilities that will come in various agents. But say, an agent wants to come to a bank and help them process data, you're just not going to let them into the core or let them into your payments network or let -- so how can we sit as an orchestration layer in between that and be the last mile to the customer. So we see that as a great opportunity to help our customers benefit from a credit financing world, but we got to bring that to our customers. It's going to be digestible, manageable and with a clear benefit and still bank-grade regulatory -- I say bank-grade, whether it's merchants or banks as a term bank, right? High-quality protection.

So that's what we're doing. That is a commercial opportunity for us. We think in addition to providing a agentic commerce, letting Clover customers expose their goods into agentic showrooms and the like. And the other obvious commercial-less from the top line side is how do we use somewhat related to topline, is how do we more effectively get implementations done faster, reduce product development time, reduce fraud. We have agents watching our data centers for susceptibility and where there may be a weakness. So it just makes every part of the business better and there's a big focus on it and a big opportunity. We're not doing it just because it's new, we're doing it because it is actually really helpful. And then what we're just scratching the surface of what we can now potentially do with all the data we have. It's hard to argue anyone has better data in the world than us between the merchants and the -- what can we do with that and exploring opportunities around that, too.

So if you sit it out, it's going to be a problem for any company in the world. We see it as -- we see ourselves as a great enabler of the technology.

So on agentic Commerce specifically, everyone's talking about it, but it hasn't really taken off yet, right, at least in terms of its kind of more fulsome form, right? Yes, we're using ChatGPT or other tools to do discovery, right, but to actually transact, we haven't really gotten there yet. I mean you guys have laid the groundwork with a number of partnerships, namely Google, Visa, MasterCard. So I'm just curious what -- when you talk to merchants, particularly enterprise merchants, I mean what's their appetite to kind of participate in agentic commerce? Does it feel like they're kind of being dragged in? Or are they running in on their own? Because it feels like it could be a mixed bag for them.

Yes. I mean what's being done agentically in commerce is amazing. Today, it's largely agentic shopping and planning and the like. And then obviously, at the end, it's still -- the vast, vast majority is still a just individually-decisioned payment merchant transaction. But just think about what technology has done to how you do it and I think our enterprise clients obviously want to be in a position to just support agentic commerce, and we're helping support them.

I think the bigger opportunity is for the millions of small businesses we have when you say I want to buy a pair of cowboy boots, I don't know if you might be in the market. But how does a small business on Clover in whatever state, how do they -- and they're selling boots, how do their boots get exposed on an agentic shop floor. So they're asking as much as anybody else's. So I think what the end user, the consumer or the whatever -- whomever is a agentic shopping is going to get a way better experience with way better pricing, instantaneous, seamless benefit from massive thoughts instead of reading every review on a website. Just think of what you can do in planning.

So it's amazing. And obviously, there's a ton of embedded value for the consumer or the end user, and it's going to survive and if we are able to you bring that all down to the actual payment experience and charge back policies and all that, there's a lot -- there's work to do there, but it's no different than the experience we had when [ e-comm ]. So we bridge these things. We know how to do it, but you got to build rules that work through and a lot of people are working on that. So it will be a thing. Today, it's not a big thing, but agentic is a super important part of the merchant world. And then the value that agents can bring to retailers. So small businesses now we're testing out agentic inventory management. So you're out of X in a restaurant, let us go shop for you the best, fastest, quickest stuff to get there. So the value is immense of the agentic world to the retailers, and they want to access it and understand it.

I wanted to switch over to Clover specifically for a minute. I would just like to get your latest view on Clover's competitive position really. And the two main verticals, obviously continue to be restaurant and retail. I mean I think some other players in the space have made some strides in terms of product and/or distribution. So what are you seeing on the ground? Has there been any intensification of competitive intensity in pricing, win rate, anything like that, that's been observable?

No major changes. It's always been a competitive space. We've got great competitors people come in, people come out, but there's a great base of competitors. And we continue to -- relative to FSBI or other small business metrics, we continue to gain share overall. And we have very -- as you said, we have a very solid share in the two core verticals we've always operated in and we continue to look for growth opportunities by expanding to new verticals, health care and professional services are the two that we talked about and expanding some of our restaurant products further up market and then -- so overall competitive story, not a material change. We think there's great white space out there. I encourage you when you go to a restaurant or some other place you look at how people are actually managing tables, seating, billing and stuff. There's still great opportunities out there.

So I think sometimes when we talk to investors, it's a belief that it's only one in for one out. Any new win in Clover can only come from a competitor when there's all kinds of opportunities still to go after to help. And what we hear from small businesses, which we're trying to go from POS to OS. And that's a really important distinction because we hear from small businesses constantly both through our bank partners and directly to us is they're over-apped, right? They really have to do payroll, payment processing, accounting, employee management right, but they don't -- they prefer not to have [indiscernible] so we're trying to create an intuitive, easy-to-use application through Clover with an anchor on payment processing and great builds to partners like ADP, Homebase and others.

Like a one-stop shop, basically right?

Yes. An operating system versus a point of sale operating system. So that's not perfect for everybody as evidenced by the fact that we have $3.5 billion of Clover small business revenue, $4 billion of revenue that some people just want to use a box to pay for payments, and there's nothing wrong with that. It's just -- but we think over time, there's a great opportunity and a lot of white space for operating systems. And I think some of our competitors have shown that in very specific verticals that you can just run your businesses a lot better. And then what agentic does on top of that just explodes the opportunity to help them run their businesses better. Even simple aids like, "Can you tell me about February's results?" and it will go through.

So that's our hope. We're pursuing growth in Clover through vertical expansion, horizontal expansion, both we just talked to. International expansion, which is a ton of white space a better user experience. We have an incredible user experience at the front end and the front door of Clover is very strong. And then we would like a better experience, especially around the first 90 days or so where -- and we're working on -- we have an entire team working on that, and that's part of the 5 pillars where we think we can deliver an even better experience around that front and then continue to build out. You mentioned that we continue to build out our distribution channels, which are diverse, incredibly broad-based and have taken years upon years to build the embeddedness and the nature of it.

Can you just elaborate on that improving the experience in the first 90 days, what was lacking, what's getting better?

It's around digital acquisition, digital set out -- self-starting, better from box to first payment, first billing experience. It's like -- it feels a little bit like the conversation we have earlier on with the bank experience it's like totally fixable stuff. You just got to do it and so we have a great team focused on that. They're making terrific progress, and we're seeing some really very favorable results in some of the pilots we're doing around the experience side.

So we have some medium-term targets for Clover, right, 10% to 15% volume growth, 15% to 20% revenue growth. So just thinking about the volume piece. And again, you talked about these 3 vectors of verticals, horizontals, right, your new geographies. Are each of those kind of starting to move the needle on the volume front this year? And are some of them a little further ahead than others?

Yes. We haven't broken it down in any type of analytical sense but -- and just to go back to 10% to 15%, where we stay at 10%, which is sort of our -- what we think of as our core number that doesn't have any success in terms of penetrating the $4 billion non-Clover SMB book. That's really where we've been running if you take out the gateway conversion that we've over discussed that if you go back over time, it's -- we run at about 10%, and we think that's a sustainable level. If you get above that and you go to the -- up towards the upper end of the 15%, that means that we've found real ways to penetrate and migrate in a way -- we don't want to migrate with customer attrition, we want to migrate in a way. And the only way you can do that is if you have a value-added solution for that non-Clover customer to bring them over. So we're not going to force that as we talked about. But if you're very successful [indiscernible]. But in terms of overall Fiserv, 10% is the number to look at and then it would just be a move over.

And then fact at logical algorithms, we think there's 5 points of VAS and non-VAS related revenue that would take the 10% to 15%. And obviously, all those are sustainable. We're going to have -- as we've talked about earlier, there will be comparability issues in the first half of this year. So we'll call it like we did in the fourth quarter. We called out with the specifics of that, and we'll call it out and then as you get into next year, you see a more natural clean algorithm.

Right. You kind of lap everything. How do you go about deciding which of the back book clients the...

Non-clover SMB.

Yes. New nomenclature, non-Clover SMB. How do you kind of go through that process to prioritize to maybe push to move over...

The basic -- we're not pushing anybody. We're not in the consolidated -- forced conversion in any of our segments. There has to be a value proposition. The clients who want a POS system, we're happy to service them. They're with us for a long time. They're great customers. It's a great business. You would never push them to do something extraordinary unless you had a value proposition for them to go over.

So we have to -- so there's a variety of ways to do that. You can build more verticals that apply to companies inside the $4 billion. You can develop more -- a broader set of VAS to offer them for potential services. Two, you can think about your hardware strategy, is it the cost of hardware that's holding them back? Is it how they process payments? Or is it an educational aspect that they could run their business more effectively? Well, as we said, we're going to be super, super careful and cautious because these are Fiserv customers who are happy and paying us they're being satisfied as to their needs. If there's something more for them to do, and we could -- and that would convert into more business with us, like any other cross-sell revenue yield opportunity, we take a very deliberate thoughtful approach to do it. But we are going to be very, very methodical and smart and studied and tested as we do this.

Yes, that makes sense. Yes, you'll see -- I mean, who can get the most bang for the buck from the operating system with Clover.

And when we say One Fiserv, it's an action plan, but it's also a mental state of the company. This is -- whether it's non-Clover SMB or Clover SMB, it's SMB for Fiserv.

Exactly. Okay. So I wanted to touch on VAS a minute. You mentioned it. So 27% of revenue in Q4, would just love to think about what sort of headroom you see there over time? I think you've called out Clover Capital as being kind of underpenetrated. So maybe talk about strategies you're using to kind of bring that penetration up to rates that you think might be more commensurate with peers?

Yes. I think as you go POS to OS, obviously, VAS the more services you can lay on to a VAS platform that help a small business, run their business better. That's a good thing and VAS can increase. We have talked about specifically about Clover Capital where we're less penetrated than our peers. And as part of the Clover growth efforts, Takis and his team are hiring greater expertise in that business, one, so it's an advanced lending type capital business. It's how we deliver -- so it's a broader understanding of the business, a commitment to do what we're doing. Thoughtful risk management policies around it and then a really great delivery system on all of it. And in each piece of that, we had room for improvement. And we also -- we dealt with some legacy stuff where was this interfering with our bank's partners business or not.

And I think over time, that's become much less of an issue because, I mean, I came from one of the bank partners. Those aren't loans that we would do and it makes the small business stickier. So the small business become stickier to the bank partner and us, and we share revenues with our bank partners. So it's -- so it's a series of developments there and focus areas. But Takis and his team are all over it. And we want to do it the right way, and it will build over time and we think it's a great opportunity. Yes.

Yes. Okay. Good. I wanted to talk about the issuing business as well, just pipeline of new wins, pending implementations, how are you feeling about that? I mean your biggest competitor now has a new parent, if you will. So any shifts in competitive dynamics you might anticipate in that corner of your business?

Yes, nothing major. I mean, as you know, the major customers take the top 50 or so. It's a good split. There's a couple in-house, a good split between us and our competitors and -- we continue -- our focus continues to be deliver great experience. We have a significant investment going on, the Optum and Optus transformation. And then we're excited about Vision Next, which is think of it as I said earlier, think of it as Finxact for card cores and so significant investment going on in the business, both U.S. focused and outside the U.S., we continue to enhance and refine our VAS around that print, plastics and the like. And to deliver a great solution to our clients. We've had some nice wins and nice renewals lately. And it's also an area where a lot of our embedded finance opportunities run through. That's where the DoorDash relationship goes through. And then the DEX relationship, which will launch later this year, we'll run through there, leveraging our prepaid card platform and the Payfare acquisition, the orchestration layer that we bought last year. So we see a significant opportunity on the embedded finance piece, leveraging the issuing business.

Okay. And I'll ask you about stablecoins. I think you've been running some pilots. How have those gone? Use cases that you've seen. Emerge anything surprising on that front or where are we?

No. I think our journey with stablecoin started with our bank customers as the Genius Act, and now the Clarity Act progresses through D.C. and after a period where this wasn't allowed in the banking sector, really any parts of it were allowed in the banking sector, our customers came to us and said, "How are we going to be ready for this? How do we create a wallet?" So what we announced last year with the creation of FIUSD and the wallet product is if you're on a Fiserv core when the Clarity Act passes, obviously, we get all the final rules in place. that you'll have wallet capabilities in every DDA account and a customer of our banks or a member of our credit unions could carry money in fiat in account or they could carry money in their stablecoin account and obviously transact out of that.

The next -- obviously, the merchant side of the business expressed interest into that. And we spent a lot of time working with them and educating them as to the payment capabilities around stablecoin. I thought that was a great transaction that Mastercard did yesterday where there is payment capabilities. We want to be ready for that, too. The next stage of our development and the next set of actions we did came out of the banks saying, "Well, what if deposits leave the system and go into the stablecoin system?" and that led us to the acquisition of StoneCastle.

StoneCastle is two businesses, which is a deposit network and central omnibus accounts sits on Finxact with thousands of banks on the other side of it. You can take a large deposit, break it into FDIC $250,000 and under guaranteed deposits among our banking partners, so it satisfies that. And it also came with a stablecoin custody license.

So now picture a customer of the bank, a customer of one of our customers wants to move some of their DDA to stablecoin. We mint the stablecoin for them at our custody business and then we back it dollar for dollar. We have to -- we then have to deposit those dollars somewhere, we can deposit back into the bank to create a closed loop of deposits for the bank. Now it won't be in the same customer's account, but the balance of deposits at the bank.

So a lot of specifics, but our journey has been driven by the interest of our customers, both merchants and banks in making sure they understand the product or prepared to meet regulatory requirements. And then if there's threats to the business or [indiscernible] business, then we're helping them address those. And if there are opportunities, which we see many, it's fast, it's borderless, it's cheap. The custody and recordkeeping is unbelievable around it. So once we get into a world like -- we talked about agentic, once you get into a world where we start to do this, we think that there's -- stablecoin obviously has -- makes a lot of sense in a lot of ways because it has a lot of good to it. Our goal is to make sure we're there to deliver it for our clients. And we think we have a great central role to play for that.

Last question. Any broad strokes on what we should expect at Investor Day and maybe just share with us your general philosophy around providing medium-term financial targets?

Yes. Investor Day, May 14, first of all, we hope you'll come. We're excited [indiscernible]. So I think no major -- we're not setting the stage for some major change something. We laid out our findings in October, obviously, it was a volatile period and a difficult period for a lot of people. So we said -- we knew when we laid all that out, there's a lot of news there for people to digest and people to understand the business. So we set a target for the first half of the year to give a day where we can both expose our new leaders and help investors underwrite the same constant compounder thesis that we're underwriting and see the attributes of our business that detail against that and understand where we're placing our capital in terms of investments and where we're choosing not to. So I didn't expect anybody to absorb everything we observed in October 29, and this is a period -- a chance for us to spend some time and make sure you all understand all the great things we see about the business.

Great. Well, we'll look forward to that. Thank you so much for your time. I really appreciate it, Mike.

Yes. Thanks for having me.

Thank you.

Why don't we get the ball rolling here in the first session of the afternoon. First of all, again, thank you all for joining us on day 2 of the Wolfe FinTech Forum. Really happy to have everybody here. It's been a really intense -- an interesting couple of days so far, a lot of thematic discussions around not just idiosyncratic company dynamics, but obviously, a lot of top-down topics around banks and consolidation, obviously, AI and geopolitics. But we have a company here with Fiserv, and we're really happy to have you guys here that really covers almost all of fintech in many ways. And so we have a lot to talk about here. We have both the CEO, Mike Lyons; and the CFO, Paul Todd. Guys, I'm really happy to have you here. Thank you for joining us.

No, thank you for having us. First time for me.

Yes. So why don't we just take a step back, I mean, the company has gone through a meaningful reset over the past year. If you could just talk about, first, the confidence that the company has that you've really reviewed everything you feel you needed to review and you're on good footing structurally as far as the story goes long term?

Yes. I think if you go back, when we talked about it, what we did last -- late last summer and through the fall leading up to the announcement in the third quarter, which is a pretty extensive, rigorous review of the company. We covered everything, ops, tech, business strategy, business mix, risk management, talent, all parts of the company. We included a series of outside advisers to help us, and we brought our Board of Directors along for that full ride and the conclusions that came out of it.

We learned a lot, obviously, about the company, especially being new. And then the conclusions that came out of it. First, while we identified some competitive and customer service gaps that we're now addressing. We found 2 incredible businesses, incredible platforms, leadership positions, incredible data, incredible scale, breadth, relationships that those are great businesses with incredible tech being developed around them, that was great at the core. And by and large, the strategy the company was in good shape, but we had some gaps to address there.

Second big thing we found was we had to shift some of our priorities and focus to go to long-term sustainable client-driven revenues. Third, we saw an opportunity to enhance talent as we think about modern payments and modern financial solutions and redo our Board. Both of those are done.

And then the final piece, obviously, is we saw that we had to reset our growth expectations taking into account the stuff I talked about and what was going on cyclically, we had a couple of years where we benefited from outside cyclical growth in some of our markets. And so we had to reset expectations there relative to where we were and make a clear commitment to explain when growth drivers come through in our business. We'll tell you what's cyclical and what's structural.

And you get through that, 100% of our focus is now on execution against the One Fiserv action plan, which we call it, which has 5 pillars against it. We're making good progress on those. We haven't -- as we've progressed since late last fall, we haven't found any new surprises. Q4 was no new surprises and no new surprises so far in the first quarter.

We know where the gaps are. We have a bunch of effort focused against the gaps, and there aren't any unknowns that we've identified so far. It doesn't mean our problems are behind us and the fact that you know them and address them, put capital against them and they're just gone, it means that we're putting capital resources, focus and a big sense of urgency around filling those.

I think Paul always reminds me in true health of the business and whether it's not structural growth or not the underlying volumes remain the underlying volumes. All that's moved is the revenues against to weaker than we hoped in the core banking space, which I'm sure we'll talk about. But otherwise, volumes are healthy across the company.

It's a good sign of it. And so the large part of it, I think I guess -- I get asked this question a lot of how do you know this is right and I remind the team and our clients a lot that you look back at the history of the 2 companies, you go back, First Data and Fiserv as independent companies, they grew for 20 years between 1% and 6% never higher than 6%, never below 1%. You get to 2020, the company grows 0, obviously, pretty impressive in light of where COVID is, 2021, company is 11%. The world takes the COVID average, if you will, of 2020 and 2021, you're at 5.5%, that fits in the range. We get some lingering U.S. inflation benefit in '22, and then you get -- we get this significant outsized growth from our business in Argentina, all good in '23 and '24.

That dissipates in '25, mixing some episodic revenues in '25, we do 4%, which is in the 1% to 6% range. We guide to 1% to 3% for this year, and we said there's some comparability, especially in the first half of the year. So if you look at what we are today, it's the same thing that we were for a really long time, and we have all the elements still of being a constant compounder, and that's the investment case that we've presented to investors. So yes, do we have work to do? Of course, but there's a -- what's here is here and it's always been here.

So what do you -- what is your focus right now? And what do you want investors to measure you on from a milestone standpoint over the next 12 months, let's call it?

100% the focus on executing against the One Fiserv action plan. Not everybody knows that I do it every day, and we don't do anything in the company unless you can indicate which pillar of the 5 that you're doing something under. Just as a reminder, the first is to reset the company around the client-first mindset. That means great service. It means resilient, strong technology, means great value-added services to our customers. We've got tons of efforts going on around that.

Second major thing is continued build-out of what we think is the best small business operating platform in Clover, which has tremendous potential. It's got a series of investments underlying. The third piece is to continue with the great innovation that the company has. There are a number of products that we had massive pipelines for that needed to be appropriately resourced and managed to get to market. We're on track with those plus a bunch of new technology innovations, whether it be our stablecoin platform, our Vision Next card platform or the acquisition that we just did in December with StoneCastle to create a cash optimization network that can bind 2 businesses.

Fourth is Project Elevate. It's an efficiency plan, a simplicity plan. We're going after it aggressively right now. We're coming up on our first milestone. Paul's running that effort and we think there will be an easier company to do business -- with an easier company to do business inside of and we'll be more productive as a result.

And the final piece is just around what we talked about with capital allocation. And in there, it's -- are we -- a big part of capital allocation for us isn't just, do you buy back stock or do what you do? It's do we appropriately allocate our free cash flow, which remains very strong in the budgeting process to what's most important to the company and some other stuff didn't get it, take some of the socialism aspects of spreading it out aspects out of there.

Second is are we getting the right focus, pulling out stuff from our capital planning that's distracting and we've got some work ongoing there. And then the final piece is maintaining a very strong balance sheet, which we judge by the investment grade. We're going to highlight some of the -- on the metric front, that [indiscernible], we're going to highlight some key metrics when we do the Investor Day in May. But I wouldn't -- there's nothing that's going to be not intuitive, right? Are you -- are we resetting around the client. Is client satisfaction good? Is retention good? Are we doing the development on Clover? Is the front door wide open and the back door is closed? And so it would be very intuitive, are we hitting our milestones that we're supposed to hit on delivering the key projects we're delivering, are we more productive. So it will be very intuitive, no major surprises.

It sounds like you've reviewed the business. You feel pretty good about what you have found and really you've decided to invest in at this point?

With unbelievable franchise. Just we are going to -- we are focused on executing against and we've got to fill these gaps, but it's unbelievable franchise.

When we -- speaking of that, I mean, are there assets here that you don't think are necessary to be as part of the -- any divestitures we should think about potentially?

We've talked about on the last -- we talked about in October and we talked about it on the last call, there was a series of businesses. They're not significant. It's in the hundreds of millions. We talked about in revenue that when you take a really hard look at where you should allocate capital, they don't get allocated capital either because customers don't want them or they're not competitive and they don't fit within our franchise. So we are selling those assets, and we said we keep you updated as that goes. But it's not a major, it's a couple of hundred million in revenue.

So look, that's -- so those are relatively, like you said, a couple of hundred million in revenues. And I imagine some of those are throughout the financial side more than the payment side of the market.

So it's the mix, yes. Not biased one or the other.

Okay. Okay. But it begs the question on a bigger picture then of just keeping the business together. I mean it's incredible when you look back at some of the largest payments and fintech deals in the last 7, 8 years, really, Fiserv was the only 1 left that maintained First Data and Fiserv together, whereas obviously, GPN and TSYS are no longer back to the FIS and Worldpay. So just help me understand the thought process of whether it makes sense. Does it still make sense to keep them? Is there really synergies between the 2 assets? And it's more than 2 assets, but between 2 businesses, I guess?

Yes. I think back to your earlier question, we took a hard -- when we did the review in the fall, we took a hard look at every part of the company, including the structure of the company and the strategy of the company. And we've re-underwritten at many times since, and we answered this question a lot. But everything -- from everything that we can see, there's far more synergies, some real today and some where we have tremendous option value in both strategic and financial synergies of having the 2 businesses together than having them apart.

And again, some of these synergies are absolutely real today. You think about distribution by natively embedding our Clover products and merchant products and small business payment products, CashFlow Central into bank -- into the bank's platforms, we gain a massive distribution partner that's unmatched in the industry. We help them position themselves and we deepen the relationship. And that's what the company had always talked about this virtuous cycle of -- by adding value to them.

There's opportunities to go back to us so distribution's a huge one. Data is a huge one, and it's getting even more powerful with what the tools around AI can do and the agents are available to us. But forming a 360-view of an individual increases off rates, reduces fraud rates, allows CRM to come through better, cross-sell that comes through better for the banks. It's -- we can do new things we've never done before. But that data, having all that data from both the merchant and financial side, a huge asset to us.

Pay by Bank, we think is a great opportunity going forward. The networks we sell to both merchants and banks, stablecoin, we think, is super interesting on that front. And then we love what we've done on the StoneCastle front, which is create a cash network, if you will, we have a whole bunch of merchants with [ idle ] Cash. We bought the technology and formed the technology that they can deposit that into our banks and an FDIC product seamlessly. These are all things that immediately come together through the businesses. All that said, we're not the architects of this. Everybody -- most of the leadership team is new. And if the synergies don't materialize, we'll obviously do the -- [ we'll figure out ].

Yes. I mean, it definitely sounds like there's a real cross-sell opportunity. We've always talked about go-to-market and distribution and your bank partnerships as a huge opportunity for SMB from the merchant or from the payment side. So where are -- I mean, in terms of actually maximizing that and cross-selling and delivering on that, are we still moving forward in that direction in the pace that you want to?

Yes. And just one final thought on the prior question was we talked about this in one of our meetings earlier. We don't -- we're not letting ourselves say that our business model has been tried and failed because no one has ever put banking, issuing large merchant and SMB merchant together. One peer tried banking and large merchant and another peer tried issuing a large merchant, but nobody's ever put it all together. So we're going to do a lot more work and a lot more testing and a lot more interaction with our clients before we say, okay, somebody else tried it and doesn't work for us.

And amidst all those opportunities -- so I think all the things I talked about are real synergies today. They're working -- we have 1,000 bank partnerships. They're not all producing at the same level, our best ones are.

So there's lots of opportunity to deepen further synergies around those. And then there are things that we're barely scratching the service of -- I think the single biggest synergy opportunity in our business, and the company has had this view for a long time is the embedded finance space, where we have a couple of customers today. But if more merchants, which we think is -- will play out, decide to provide more financial services products, people are defining this TAM in the $100 billion to $200 billion range with double digit -- strong double-digit growth. And nobody else has the assets in the world that we have to execute on it.

And so why would you give up that option value at this page? And you see the pace and the change of how payments is evolving, and we've got a great position there. So we're going to run this out. We're going to do it. But again, if it doesn't work, these assets or -- if the answers is these assets are individually great and not greater together, then we'll address that as appropriate.

You guys have probably among the largest views of the consumer in the country and even more. Just we saw the index, the SMB, the Fiserv SMB and Next come out. I think it was up 1.2%. So it accelerated a bit from the 0.7% in January even despite weather actually. Just help us understand what you're seeing in terms of overall spend across retail, restaurant, enterprise. You see daily data, I believe, or at least weekly?

Yes and we give it to you monthly in the second day of the month and think of that gives a leading indicator to lots of other lagging data that you get out there, so we're proud of the index. Not all that different from what you're hearing about what we talk about -- some people talk about the K-economy, we talk about cautious but still strong consumer. They have a job. They're still spending, but we're seeing real changes in the spending habits, particularly if you exclude inflation and look at real discretionary spend has been down for 12 months in a row.

And that's in -- you can get it all in the FSBI index and watch that inflation. It bounces around and you got to -- a central spend has been much more durable, much more reliable. And you continue to see behaviors in there where higher income customers appreciating assets, benefit a little bit on the inflation side versus less assets hurt by inflation on the K side of the -- on the lower side of the K-economy. So we call it a cautiously strong consumer. Obviously, employment is a big key to it.

All right. And again, from a subsegment standpoint, any variances in terms of what you're seeing from a sector?

No. I mean think discretionary weaker, essentials stronger, and you can bucket that appropriately in there.

With your 10% to 15% Clover volume guide, and this goes a little more specific to you guys now, what assumptions are embedded around macro and same-store sales when we think about coming off what we're seeing right now on the macro front?

Yes, you want to go?

Yes. Well, we said on the call that we expected a stable macro just to start off with. And so that embeds the macro picture that we assumed and then as it relates to same-store sales and what that looks like, we talked about on the call, both December and January and what we saw there from a growth standpoint. And the return to growth that we saw in that period. And that gives us a good launching point as it relates to where that double digit then looks because we're basically run rating at that coming into the year. And then obviously, we look at the book and go through all the analytics around what we anticipate and our run rate supports that basically growth outlook. So that's how we approached it.

No major changes, and the 10% to 15% excludes the gateway conversion we talked about and 10% is the number we said -- it's obviously been the number we've been growing at ex the gateway -- is the base, no major changes. And then the upper end of it is only if you could get -- we gave as a long-term view. That's only if you're able to start converting on Clover into Clover. It's not an organic growth rate at the top.

Okay. All right. That's helpful. When we think about guidance for a moment, Paul, 1% to 3% was where you guys called for the year in terms of overall growth. And from what you've explained, I know the low end is really just honestly, easier comps to some degree, right, that should get you there. So it's not a very high bar to reach the low end, but to achieve the higher end, I think you need a lot of -- some of the newer initiatives to really kick in, if I'm not mistaken, right? Commerce Hub, CashFlow Central which we've been excited about for some time to take hold in a bigger way. Maybe just touch on, again, the assumptions on your full year for a moment, the range of outcomes and then also the cadence because I know you talked a little more about the first half and the second half having some differences the way the trajectory works out for the year.

Yes. So a couple of things there. First, as we said on the call that we do expect the 1% to 3% for the full year. And that basically does assume on the lower side, that it's more business as usual or more run rate. I mean there's clearly execution to deliver that, but we certainly have that as a much more achievable goal. And on the top -- and as you said, Darrin, it requires us to have some good execution on the initiatives, many of which are already underway, but to have those deliver in a robust way. And I would just say, we set our guidance, the midpoint of the guidance, we expect to be for the full year. The cadence is more dramatic this year than it would be in normal years. We -- because of the comparative challenges that we have in the first half, we expect to be down in the low single digits, which we define as down 1% to 3% for the first half. And we have also said that we expect more pressure on the growth rate on the FS side versus the MS side just due to those comparative challenges. As Mike said earlier, it's not a volume picture difference.

It's just really more of a math kind of comparative challenge there. And so that would be the differential between the bottom end and the top end and the cadence between the first half and the back half.

I would just make one other comment as it relates to margin because we also have a first half, second half dynamic as it relates to margin because of our investments that we're making in the business, which are largely baked in, we still have a step change to make in the first quarter. The marginal change in the business is first quarter, which we called out on the call was we expect to be below 30%, right below 30% margin. First half, 31% to 32% is our expectation. And then the 35% to 36% being a much more run rate margin for us, which is what we expect in the back half, which blends to roughly the 34% that we talked about on the call.

Okay. That's really helpful.

So there's a lot of detail. And the story is we reset the strategy in the third quarter. So the third quarter will be the first comparable quarter, strategy to strategy. And in the midst of that, we're doing a lot of work on the franchise that we think makes sense to do for the long term. And I think did -- I want to get here this way, but this opportunity has given us, especially at the pace of change we're seeing and the level of client demand we're seeing around new technology and the like. It is a great opportunity for us to -- as we -- there was a bad reset, but revital -- where we try to use it in a revitalizing way. And first half of the year is a bit of a mess. And then we -- with a lot of noise...

Right, all those comps and dynamics there, yes.

Yes. But I think if you go back to the -- point I made is, and we hope to talk about this in the Investor Day and show the path to it is we still have all the underlying characteristics of a constant compounder that the companies have forever. It just -- you got to get rid of the noise to be able to see that come through in the back half of the year, but all those elements are there, cash flow conversion, natural organic leverage, ability to buy back stock and grow revenues in the mid-single digits and just Paul is telling you a path of how to get there.

Didn't you also back out those some of that noise -- speaking of backing of the noise, you guided to a level that you know is absolutely sustainable because you took out a lot of that noise. But realistically, whether it's...

Comping against the noise, it's the noise...

Right. But I'm saying you still have -- there's going to be data sales. There's going to be hardware sales, there's going to be data licensing -- or licensing sales at times. Some of that potential upside to the 1% to 3%? Or is that actually just in there and it's maybe counted on less?

Yes, I wouldn't count it as upside. I mean that is, as you say, Darrin, there's a part of our business that encompasses those things. But we factor that in when we build our guidance. And so I wouldn't call it necessarily upside.

Okay. Can we talk about the investments you're making because it was a $675 million number that was implied at least of incremental OpEx. It's a fairly sizable impact on margins, obviously, as you reset the margin and I think a lot of questions we get is, is this the new norm that you have to invest in to keep the story going or is this just more of a rebase or reset to get -- to invigorate the business?

Yes, it's a really good question there, and we do get this a lot is, is this just the beginning of more kind of incremental steps of investment. And the answer to that is no. We've made largely the investments that we need to make. And they're on the people side and they're on the technology side. It goes back to what Mike talked about on One Fiserv to support the initiatives of One Fiserv. We needed to make some additional OpEx expenses and -- with the exception of, as I said, this one more step that we need to make in the first quarter, as we get to the back half of the year, we're in a much more normalized expense growth picture in the back half of the year, certainly as the baseline to move forward into 2027. So there is another wave of additional OpEx that we'd be layering into the business to do what we need to do or CapEx for that matter.

Okay. When we shift back to Clover for a minute, obviously, it's such an important asset for you guys. And we think about the algorithm for growth for it, you're talking about this 10% to 15% range. How do we think about the components of it, whether it's same-store sales versus new merchants versus international? And then I also want to bring in the back book conversion. So just walk us through the bridge to get there.

Yes. The -- we haven't specifically gone into the front book -- not front book, but front door, back door numbers, we'll give some more color around that at Investor Day. I think it's -- we've talked about the growth vectors along horizontal investments. Those are -- are we helping our businesses do certain parts of inventory management, employee management, home-based partnership, vertical investments, we launched the health care vertical in the first quarter, launched professional services in the first quarter to complement retail and restaurants, international investments and launches, and we talked about Japan, we've got the TD partnership in Canada. You got [ stuff going ] on in Brazil.

We've talked about a whole reimagination of the experience of Clover on the backside of it, and I'll come back to that in a second. And the final piece is continuing to invest across the distribution channels, build more banks, build more ISOs, build more direct sales. And all that is tracking well. As Paul said, there's a significant investment around that to get to the place where we get to. On some -- on the metrics you specifically mentioned, we obviously track them.

We feel very good about the front door, and we think we have some opportunities to enhance net growth, GPV growth, by improving the experience, and that's that fourth part of that investment there. So we'll give you a same-store's fine, front door is good, and then we can do a better job. It's nothing bad on the back door, but it's -- by fixing certain parts of the experience, we think we can raise overall growth and support the numbers that we gave you.

So that's the way to think about. Obviously, more U.S. than is international, but international is starting to be a real meaningful part of the story.

That's some great success in Canada.

Great success in Canada. We're just get going on TD and Brazil has been great. Australia has been fine. We're missing a great partner there. And then yes, we're excited about the partner we have -- 2 partners we have in Japan with Visa and SMCC, and that will go out later this year. So more U.S. than international, but one is growing much faster rate than the other, and we're getting good -- and we still have -- it was quieter, but we launched a partnership with UniCredit. It was a tremendous bank in Europe in Austria last year. We have a potential to expand that. And then we're taking a hard look at some of the partner -- AIB has always been a great partnership, but we think we have good upside in our partnerships with Deutsche and Lloyds. And so it's -- the international pieces feel good.

Okay. So our trends year-to-date, what you hope to see so far in terms of Clover's traction?

Yes. We have no -- nothing new to say on any of the trends from the fourth quarter, everything is exactly as we presented it.

Okay. Core banking, obviously, is an area that you've shown relatively flattish type results on the fintech banking side for a couple of quarters for a few quarters, right? And it's an area that we'd like to see grow a few percent, but I know you're going through a consolidation in cores to some degree, but help understand the strategy there, what you're really aiming to achieve and the timeline around it.

Yes. We are not going through a consolidation of cores. There was a consolidation of cores that began a number of years ago, that -- I'll step back broadly, we love our core business. We love the banking business broadly. Core is just a part of it. Banks do a lot of stuff with us and they're looking to do more and more stuff in the market. We're proud of the long tail of banks and credit unions that we support in the U.S. We're not happy with recent performance. How do we get here? We got here, we had a strategy to consolidate cores, which got mixed with a declining service experience that our customers reported back to us now and some mixed performance around resilience in some of our tools. Those are all known knowns and we're addressing all of them, if you go to Pillar 1 of the One Fiserv action plan and you go to some of the investments Paul talked about, we know exactly what these are. They're not related to the quality of our core technology. We only hear good things about that, where we have lost and -- suffered losses has been on the service side, on the smaller end.

So we're fixing service hard and that some of that is just more day-to-day people on site with our banks and supporting them. It's better value-added services from the tools they bought us, so they're fully utilizing them. And then it's developing things like stablecoin and stablecoin closed-loop network that relieves the banks of the stress that the cash would leave the system with acquisitions like that. It's new products that we're launching like CashFlow Central.

It's obviously getting merchant products to their customers. We're continuing all that, but that's all part of this delivery great service. We have as part of that and the experience they went through when that service was there and they were facing a potential consolidation that triggered a period where they said, "Well, I might as well go -- I don't love my service and I have this so I might as well go check what the market has to offer." We are addressing the service part hard. We'll get there. We're building on the technology piece to continue our position relative to that. And we stopped the core consolidation process.

There is no core consolidation process. And we have not stopped the core modernization process including building out products like CoreAdvance and the continued proliferation of Finxact, which is doing great.

So the customers, that was an experience that they wanted where they had it. So we -- our customers can stay on their core as long as they want to do it. We factor that into our financial position. And we're looking for the technology opportunities available to us around management of the cores are expanding at such a fast pace that there are ways to get to core modernization that may not force people to actually even go through a conversion.

Yes. I wanted to touch on that. So that's a key message. I mean you're not really consolidating?

We're not consolidating cores. We fight it every day because everybody else in the ecosystem prefers the other message. So it's good for everybody else for that message...

Even at competitive standpoint, that's important.

An important message to our clients is we're not consolidating cores.

So they could stay on as long as they want, whatever they want.

On cores they want. And we are going after them with a sense of urgency to fix the service issues and make it a great experience to be with us. And that includes stuff like buying back Smith Consulting, which is a bunch of SMEs that on our cores that were out there. It doesn't mean we bend the curve, and we've said the first half of the year, there's a long tail of this stuff. So pain that was laid, we'll realize now. We're trying to bend the curve going forward. And what we're not hearing, which is good, is that they don't like the technology. And they like the technology, they want to switch off of it. So we'll continue to invest in the technology and look for opportunities to modernize.

There's been obviously advancements from Anthropic around COBOL coding. And so lot of your systems still are at, do have the foundation on COBOL. And I'm curious, I mean, it's just going to help you with upgrading your systems faster? Or can it be a risk, could someone else utilize it to make a transition away from -- what it used to be. It's a very sticky business typically 99% retention.

Yes. No, I think the opportunities, and we'll talk more about it in May to the extent that we have full picture there. But what we see is the potential to do either a simultaneous operation and modernization without major conversions either through orchestration layers or build once modularity on the different cores. So people choose their cores because they like their cores, and we want them to stay with enjoy their cores, but can we modernize all the modulars below it while they're still operating on the core, either through -- so those are things that weren't possible and maybe the core consolidation was the exact right path a number of years ago, but now you have new technology and new opportunities. So we're going -- looking hard at that.

As far as what the new technology is doing on our day-to-day stuff, everything we do, if we have to do a conversion, whether it's related to a win or to a merger or something, it's faster, implementations are smoother. The data is better and AI is making everything more adaptable, faster, it's shrinking the body of work and we think it's great.

The actual core of the core, as you know, is a highly trusted complex system of record that's got tons of proprietary data, lots of regulatory expertise. We get paid off transaction volume, payments volume accounts on file.

We think we're in the best position either on behalf of the world of agents or with our own agents to bring the agents to the point of the data. But the concept of opening up your core to agents is a very difficult one to imagine given PII, regulatory, you just can't let people.

So we think about the opportunity for us is -- can we be the last mile for large language models, AI agents to deliver real benefits based on our clients' data and information and business, but to do that in a safe, responsible way that's still auditable, regulatable, legal and verifiable. So where every part of -- in addition to how we can be more efficient as a company, every part of what the new technology is offering us is exciting, and we'll keep building that out and tell you about it more in May.

Okay. We're almost out of time. So I want to ask a couple of more quick ones and maybe leave time for one from the audience. But just from a product standpoint and what you're most excited about, product acceleration, you have quite a bit on the agenda, whether it's digital banking or Commerce Hub, you mentioned CashFlow Central. Mike, what are you most excited about to see come into the company's run rate?

Well, I'd just say broadly, it's a great environment to work with right now. The banks -- I've been in and around banks and payments my whole life. They're more forward-looking right now than we've seen in a long time. They're in a good capital position. Profitability is good. Regulation's a tailwind. So it's a really good market to plan to. What they're telling us the long tail of -- other than 4 or 5 banks, the long tail of banks are saying, we want deposits. We want help winning the small business market, and we want help in further penetrating payments and we want to be more productive.

So if you go through that. For us, obviously, Clover is a big part of what we do. The CashFlow Central huge value basis, if we could put those natively in the bank's platforms, a huge penetration and gets that cycle going for us. Vision Next is going to be a great card issuing platform, think of Finxact for the card core. We're excited about that.

Obviously, Commerce Hub will be the enterprise -- our enterprise or really an omnichannel global gateway. So 3 or 4 products in their experience digital -- we're excited about it because 1,000 banks are in the pipeline and they've wanted it, and we haven't gotten it to them. So we're excited to finish that and get to them. So it's good. There hasn't been any slowdown on the innovation front, the new product development front. In fact, we've used some of the reinvestment we did in the business to try to address what the customers want to do in the market right now, which is a lot.

What do you want us to look forward to around the Investor Day in May? I mean -- and what would you hope to see as an outcome and investors walk away from it from?

Well, hopefully, all come. We look forward to having you there. I think it's been -- I recognize it's been a -- there's a lot that has gone on in the last 6 to 8 months, and we're looking forward. There's going to be -- there's no major strategy shifts or any. We're just looking for the opportunity to introduce what we think is a great management team, you've seen a lot of Paul and me, behind us are 2 great leaders of our businesses. We'd love you to understand that what we talked about early on that it's safe for you to underwrite a constant compound or investment thesis for us, and we'd love to give you some insight into how the business is running.

We're afraid based on questions we get that there's a perception of disarray and confusion. The company is in great position. The balance sheet is in great shape. We've got a great leadership team. We have endless amounts of talent asking to come work with us, and we just want half of a day to show you what these businesses are about, but it's not -- I shouldn't go into it the expectation that there's going to be some dramatic show or something we laid out in October where we are.

We identified the action plan, we're going to do on it. We're going to tell you a lot about our businesses, the progress we're making upon that actual plan to introduce our people and hopefully let you leave with some confidence and understanding of the business.

Thanks, Mike. Guys, maybe one question and then we'll wrap it up.

What are you seeing as kind of -- you kind of mentioned it earlier, but maybe digging deep into what are you seeing is like the biggest focus is for banks right now?

Yes. I would say just at a high level, both sides of the business are in a growth mode and both sides of the businesses. merchants and finance are at these major inflection points in both payments trends that impacts both of them and major inflection trends. And obviously, the technology world. And we go into these meetings, we don't leave a meeting without a long list of stuff to work on. So that's why I was saying it by its exciting time.

On the bank side, we hear small business. We hear deposits, we hear payments. We hear integrated, embedded pieces in it, and we hear how do we take a full advantage, recognizing we have highly trusted high PII systems and lots of regulation, how do we take full advantage of the open technology world and how can we help them do that. So these are very constructive meetings as advanced thinking I've seen. I think it's the background, the sector is very bullish, and that's the sense of urgency in getting our service there, so we can get to the really fun stuff to do.

And I think there is a big difference with what the long tail of banks want and what the top banks want. And we feel like we got the product mix to hit both of those. On the merchant side, it's just how things are being paid for the embedded nature of how payments are changing. They want to move product and they want to expose their product to agentic forums and shop rooms. So it's great opportunities, great conversations, the fun part of what we do every day.

Definitely, it sounds like there's demand out there.

Yes.

All right, guys, thank you very much. Appreciate it.

Welcome to Fiserv's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, today's call is being recorded. At this time, I will turn the call over to Walter Pritchard, Senior Vice President and Head of Investor Relations at Fiserv.

Thank you, and good morning. With me on the call today are Mike Lyons, our Chief Executive Officer; and Paul Todd, our Chief Financial Officer. Our earnings release and supplemental materials for the quarter are available on the Investor Relations section of fiserv.com. Please refer to these materials for an explanation of the non-GAAP financial measures discussed on this call along with the reconciliation of those measures to the nearest applicable GAAP measures. Unless otherwise stated, performance references are year-over-year comparisons. Our remarks today will include forward-looking statements about, among other matters, expected operating and financial results and strategic initiatives. Forward-looking statements may differ materially from actual results and are subject to a number of risks and uncertainties. You should refer to our earnings release for a discussion of these risk factors.

And now I will turn the call over to Mike.

Thank you, Walter, and welcome aboard. Good morning, everyone, and thank you for joining us. This quarter marked a decisive and positive step for building the foundation to consistently deliver on the pillars that have long distinguished Fiserv. These include exceptional client service, world-class execution, value-added technology and cutting-edge innovation. While there remains significant work ahead of us, we are clear on our strategy, laser-focused on our priorities, and are optimistic about our multi-quarter path towards delivering strong, sustainable operating performance and ultimately realizing Fiserv's full potential.

While Paul will review our financial performance in detail, I would note that our Q4 results demonstrated stable broad-based business activity trends, and there were no major surprises relative to the outlook that we provided in October, and that our 2026 guidance is in line with the preliminary view from Q3.

As we told you in October, our headline results are below our go-forward expectations, and they will remain that way for the first half of 2026 as we invest in the franchise and lap a higher mix of nonrecurring revenue. Importantly, we continue to add senior talent, complementing the high-quality team that was in place when I came aboard. In addition to Paul, Walter and Dhivya, we have added leaders in technology, Clover, and merchant product and sales, among other areas. Overall, I'm encouraged by the team's energy and pleased that our overall employee retention is up with retention of our top talent reaching a multiyear high in 2025.

With the team in place and focused, we were firmly in execution mode in Q4, taking decisive actions across the One Fiserv plan. One Fiserv is at the foundation of our strategy and firmly integrated into our 2026 plan. With this in mind, I want to provide a brief update on the progress we have made across each of the 5 strategic areas of the plan. Operating with a client-first mindset; building the preeminent small business operating platform through Clover; creating differentiated, innovative platforms in finance and commerce; delivering operational excellence and efficiency enabled by AI; and finally, employing disciplined capital allocation for the long term.

Under our client-first pillar, we made targeted investments to better align around client needs, especially in our Financial Solutions business. Over time, we expect this shift to enhance client satisfaction and ultimately drive sustainable growth in average revenue per customer, which has been a hallmark of Fiserv. The actions we took this quarter included broadly increasing client-facing resources; revamping and improving our approach to working with consultants, including closing the Smith transaction; delivering against the first phase of product development-related commitments we made at our Fiserv Form client event; leveraging innovation, including AI trained on our DNA core to streamline product upgrades and implementations; and accelerating our investment to modernize our technology platforms, including additional multisite resiliency measures across most of our consumer-facing payment platforms. We remain on track to complete this effort by mid-2026.

We are encouraged by the early positive client response to these efforts and will be steadfast in our focus on delivering great service and value-added solutions to our clients. And to this point, corporate sales were up solidly in Q4 versus last year and the prior quarter, with positive contributions from both the Merchant and Financial Solutions segments.

Some of the more meaningful wins included new and expansion Commerce Hub agreements with a leading medical device company, a large specialty retail company and AT&T, among others. An expansion of our relationship with California-based Mechanics Bancorp now with over $22 billion in assets, which selected Fiserv's core and added our XD digital platform following their merger with HomeStreet Bank.

On Optis, we signed a multiyear extension with our client, Atlanticus, a leading issuer, which includes converting the accounts they recently added with their Mercury acquisition to Fiserv. A new core deal with Republic Bank & Trust Company, a Kentucky-based $7 billion bank moving to DNA, enabling the bank to give their clients faster access to deposited funds through real-time continuous processing and enabling real-time account alerts, and an expansion of our credit card relationship with Robinhood to add debit processing.

Turning to our second pillar. Q4 saw continued momentum toward establishing Clover as the preeminent small business operating platform. In vertical markets, we remain on track to launch our PracticePay health care initiative and our professional services offering this quarter.

In restaurant, we continue to see market share gains as we consolidate a number of strong assets to expand our offering under the Clover Hospitality brand, and achieve economies of scale. As part of this, we are rolling out new capabilities, including multi-location support, AI-generated menus, streamlined delivery enrollment, checklist dining and new diner engagement tools.

Horizontally, we are seeing strong early success in our workforce management partnership with Homebase, and we continued our build-out with ADP, a partnership that is already producing strong sales collaboration and that has significant potential over time. In December, we integrated CashFlow Central, our transformative AR/AP product directly into ADP's RUN platform, allowing small businesses to manage their cash flow more effectively.

And finally, on the horizontal front. Clover Capital grew 30% in 2025 in North America as we continue to see significant upside with this high-value client offering where we only have mid-single-digit penetration of our eligible client base today. Internationally, our launch in Brazil continues to be highly successful with results tracking ahead of plan and reflecting the importance of partnering with market-leading financial institutions like Caixa, Canada grew strongly in 2025 and should further accelerate as we ramp up our new strategic relationship with TD.

And we introduced our flagship partnership with SMCC to offer Clover to SMBs in Japan starting later this year. This is a focused market for us given its size and low card penetration. Additionally, we are excited about the special support Visa is providing in this partnership. We grew and further diversified Clover distribution channels across the board in Q4, including adding 47 banks to the Clover referral ecosystem, refreshing our merchant relationship with Truist, which will now support businesses of all sizes across the bank's large footprint including 1,900 branches, expanding our industry-leading ISO and agent platforms; continuing to add direct salespeople in North America, where we have over 600 today; launching a new digital tool for our bank partners, which integrates Clover merchant onboarding into the bank's digital banking experience; introducing AI prospecting tools to assist with the identification and conversion of high-value merchants. And finally, building on the takeaways from prior pilots, we began targeting select non-Clover SMB merchants in the U.S. with a Clover offering.

While these efforts have been narrow in scope and it's still early, we have seen some promising results with benefits for our clients and higher revenue yield for us. Our efforts here will remain deliberate, ensuring we prioritize the right experience and fit for the client. To finish on Clover, we are driving a number of merchant experience improvements, including digital feature enrollment and setup, AI-driven end-to-end merchant life cycle orchestration, a range of automated and high-touch service capabilities and simplification to pricing and billing statements.

Next, on the innovation front, we have prioritized appropriately resourcing and completing a focused set of deliverables that are driven by strong demand from our customers. In the quarter, we made significant progress on these strategic priorities. Commerce Hub is progressing well towards a fully integrated cloud-native global omnichannel gateway, supporting a best-in-class enterprise value proposition. In Q4, we launched this capability across the Americas and are ramping a leading video streaming service provider client. The platform continues to scale in North America, processing over $200 billion in 2025, a greater than 200% increase year-over-year.

In Financial Solutions, we continued to invest in modernizing our core banking and card issuer processing platforms. In banking, we are building cloud-based, real-time secure, API-enabled and more open capabilities, a modernization effort that began in 2022. At our Client Forum in September, we made it clear that there will be no forced upgrades or conversions as part of this effort, reflecting feedback we receive from our customers.

With respect to our newest cores, we went live with our first clients on CoreAdvance and Finxact continues to perform exceptionally well and gained broad recognition for innovation. The Finxact platform surpassed 30 million total accounts and positions, representing over 80% growth in 2025 and is becoming the ledger of choice for fintechs and digital banks.

In card issuer processing, we continue to modernize Optis and build out Vision Next, our next-gen card issuing platform. On Optis, we signed a multiyear extension with PNC and a new mandate with Fidem Financial, a fast-growing credit card asset manager that has acquired over $15 billion in assets. Fiserv will power Fidem's new co-branded credit card programs. We are now live with 5 FI clients on CashFlow Central with over 100,000 of their SMBs using our transformative all-in-one AR/AP payments platform and seeing real value. With over 155 FI signed since launch and a pipeline of over 400 prospects, we are excited about CashFlow Central's long-term potential. We advanced our efforts in stablecoin through the exploration of pilots with Huntington and several other banks, including use cases in cross-border payments, digital escrow and interbank money movement.

With the closing of the StoneCastle acquisition, we introduced stablecoin custody capabilities, allowing us to recycle reserves back to financial institutions, a unique capability in the space. We're also excited about StoneCastle's ability to introduce next-gen cash management capabilities to our merchants, including Clover clients.

Lastly, on innovation, we continue to develop agentic commerce capabilities for our merchants and are particularly excited about our unique position with Clover to bring turnkey agentic capabilities to small businesses. We see agentic fundamentally changing the payments landscape and are working with Google, Mastercard and Visa to bring agentic to mainstream commerce. Additionally, we're exploring arrangements to enable agentic commerce across the landscape of conversational AI platforms.

Fourth, we are in full swing with Project Elevate, which is a highly structured enterprise-wide evaluation of all of our activities. We are encouraged by the potential here, given we have identified ample room to simplify the business and execute faster and more efficiently, and we are attacking these opportunities with urgency. This includes a comprehensive review of how we can further deploy AI across Fiserv. We look forward to providing a more fulsome update on Elevate at our Investor Day.

Rounding out our One Fiserv plan is our commitment to highly disciplined capital allocation. As we mentioned on our last call, we continue to evaluate businesses and assets to ensure that they are consistent with our go-forward strategy. This exercise is critical in focusing our time and resources on our most important assets and activities.

In summary, we made good progress in Q4. We are focused and confident in our strategy and ability to execute. No other company has the assets, breadth and scale to connect all parts of the financial ecosystem. Our unique position at the center of Commerce and Finance, 2 massive TAMs, strengthens the market position of both our Merchant and Financial Solutions businesses and creates opportunities in areas like embedded finance, stablecoins, networks and merchant liquidity optimization, all expanding the boundaries of how our market is defined today.

New technologies, especially AI, further accelerate our ability to capitalize on and scale these opportunities. We have scheduled an Investor Day for May 14 and look forward to sharing additional details on our strategy and financial outlook and introducing you to the leadership team responsible for executing on our plan.

I'll finish by thanking our employees for their hard work and dedication, and our clients for the continued trust they place in us. I will now pass it off to Paul to go into more detail on Q4 and 2026.

Thank you, Mike, and good morning, everyone. I will cover details on total company and segment performance in the fourth quarter and full year and then review our guidance for 2026.

Beginning on Slide 6, total company Q4 adjusted revenue of $4.9 billion was flat and adjusted operating income was $1.7 billion, resulting in adjusted operating margin of 34.9%. This results in full year total company adjusted revenue of $19.8 billion, up 4%, with adjusted operating income of $7.4 billion, resulting in an adjusted operating margin of 37.4%, a decrease of 200 basis points, right in line with our guidance. Total company organic revenue was roughly flat, down approximately 40 basis points in Q4, resulting in annual organic revenue growth of 3.8% in the upper half of the 3.5% to 4% guidance range we gave on our last call.

Turning to Slide 7. Merchant Solutions grew 6% organically for the year, while Financial Solutions grew 2%. Fourth quarter adjusted earnings per share was $1.99, resulting in annual adjusted earnings per share of $8.64, above our guidance range of $8.50 to $8.60. Free cash flow for the quarter was $1.6 billion and $4.44 billion for the year, ahead of our guidance of $4.25 billion, representing approximately 93% conversion.

Now I will turn to the performance by segment for Q4, starting on Slide 8 on Merchant Solutions. Merchant Solutions organic revenue growth was 1% for the quarter, while adjusted revenue grew 2%. Small Business revenue grew 2% on an organic basis in Q4 and 3% on an adjusted basis, with the impact of the CCV acquisition slightly greater than the FX headwind. In addition, the Clover fee eliminations we discussed last quarter were a 2-point headwind to small business growth in Q4. Small business volume grew 7% in the quarter, inclusive of CCV.

Clover revenue grew 12% in Q4, 2 percentage points higher than our guidance. There was a 6-point growth headwind to Q4 Clover revenue from the fee eliminations we called out on our last call. Clover volume grew 6% on a reported basis and 9% excluding the previously discussed gateway conversion. Clover volume growth was below our expectations for the quarter, driven largely by softness we experienced in the month of November in the U.S., particularly in the restaurant and retail sectors where we have a large presence. This softness in the U.S. was consistent with broader industry trends and Clover volumes reaccelerated on a combined basis in December and January to approximately 11% ex the gateway conversion.

Value-added services contributed 27% of Clover revenue in Q4, up 5 points from a year ago, driven by anticipation, software attach and Clover Capital. Clover revenue finished the year at $3.3 billion, up 23%, while non-Clover small business revenue ex Argentina was flat in Q4 and up 3% for the year. Consistent with our preliminary view in October and assuming stable macroeconomic conditions, we expect Clover GPV growth of 10% to 15% in 2026 ex the gateway conversion. The lower end represents the core growth rate, while the higher end assumes more significant conversion of non-Clover merchants. Based on these volume expectations, the impact of Clover fee eliminations and more moderate growth from Argentina, we expect Clover revenue to grow in the low double digits for 2026. On a structural basis, our medium-term revenue growth rate target for Clover remains in the 15% to 20% range.

Moving on to enterprise. Our business grew 1% on an organic basis in Q4, while declining 2% on an adjusted basis. Excluding the revenue from network fee timing associated with a large PayFac client that went live in Q3 2024, adjusted revenue for enterprise would have been 6% higher in the quarter and more in line with the 6% transaction growth. Transaction growth slowed sequentially from Q3 due to lapping the ramp of the large PayFac client mentioned earlier.

And finally, in processing, organic revenue declined 1%, while adjusted revenue grew 1%, driven by FX tailwinds. Fourth quarter adjusted operating income for the Merchant Solutions segment was $816 million, down 17%, with adjusted operating margin of 32.1%. For the full year, Merchant Solutions' adjusted operating income was down 2% to $3.5 billion with adjusted operating margin of 34.5%.

Now I will cover Financial Solutions starting on Slide 9. For the quarter, both organic and adjusted revenue in Financial Solutions declined by 2%. In Digital Payments, organic and adjusted revenue declined by 1%. We saw good volume growth in debit processing and network volumes, consistent with the growth levels from last quarter. Zelle transactions grew 15% in the quarter as we continue to see a slowing of the growth curve for Zelle as the product matures. Also, we started to ramp revenue from CashFlow Central in the quarter.

Finally, ATM Managed Services was an approximate 1-point headwind to revenue growth in digital payments. In issuing, revenue declined 1% on both an organic and adjusted basis, as global active accounts on file grew in the low single digits. Finally, in banking, revenue decreased 4% on an organic basis and was down 3% on an adjusted basis as we continue to be impacted by certain actions taken over the last several years. While an improvement sequentially, we are still facing comparative headwinds, and we'll continue to face these throughout the first half of next year, after which we expect a return to stability. As Mike mentioned earlier, this is a significant area of investment and focus for us.

Fourth quarter adjusted operating income for the Financial Solutions segment declined 20% to $997 million, and adjusted operating margin was 42.2% versus 51.7% in the prior year. The most significant impact on margins in Q4 was related to incremental vendor spend and headcount investments to improve client experience. For the year, adjusted operating income for the segment was down 2% to $4.4 billion with adjusted operating margin of 45.3%. At the corporate level, our adjusted effective tax rate was 19.3% for the quarter and 18.6% for the year. From a leverage standpoint, we finished the year with a debt-to-adjusted EBITDA ratio of 3x, in line with our expectations. We continue to target long-term leverage at 2.5 to 3x.

Turning to Slide 10. We also repurchased 3 million shares during the quarter for approximately $200 million and paid down over $1 billion in debt after funding the acquisitions of StoneCastle and a portfolio of TD merchant contracts. With respect to Project Elevate in Q4, we incurred $73 million of expenses related to this program, and we will continue to have related onetime costs in 2026.

Now with Slide 11, I'll move on to 2026 guidance, which is in line with the preliminary view we gave on our last call. First, on revenue. We are continuing to provide guidance regarding our organic revenue growth for 2026, and we plan to supplement this with additional information about our assumptions to help investors and analysts arrive at adjusted revenue. Also, to provide further insight, we are giving growth expectations for the Merchant and Financial Solutions segments.

We expect 2026 organic revenue growth in the range of 1% to 3% with Merchant Solutions revenue growth in the mid-single digits and Financial Solutions flat to slightly down. Reflecting higher nonrecurring revenue a year ago, we expect adjusted revenue growth in both quarters of the first half of 2026 to decline to the low single digits, with Q2 representing the trough in terms of the rate of decline. In our Financial Solutions business, we expect a more pronounced grow-over trend in the first half, resulting in a decline at the high end of mid-single digits. As we get to the second half of the year, we expect our adjusted revenue growth to be more tightly correlated to underlying drivers such as volume, transaction and account growth.

We expect offsetting FX and M&A impacts for 2026, driving our expectation for adjusted revenue growth that is also in the range of 1% to 3%. As a reminder, Q1 is the last quarter of impact from the CCV acquisition and thus, we expect an approximate 1-point difference between organic and adjusted revenue in this period. We expect Argentina will have a modest positive impact to organic revenue growth in 2026, while having a slightly larger negative impact to adjusted revenue growth. As compared to prior years, based on our current expectations, this is a much more modest contribution from Argentina. We expect our effective tax rate to be in the range of approximately 19% to 19.5% for the full year, and weighted average share count to be approximately 530 million. Putting it all together, we expect adjusted EPS of $8 to $8.30.

Similar to our expectations around revenue, we expect a different level of operating margins in the first and second halves of the year. In the first half, we expect adjusted operating margin of 31% to 32%, with Q1 representing the low point just below 30%. In the second half of the year, we expect adjusted operating margin of 35% to 36% with Q4 representing the high point in the year. For the year, this translates into approximately 34% adjusted operating margin.

To complete our strategic investments, we expect capital expenditures to remain approximately flat with 2025 levels and end the year with a leverage ratio of approximately 3x. We expect free cash flow conversion of approximately 90% of adjusted net income for the year, in line with historical levels. As always, Q1 will be our trough for free cash flow conversion. Finally, to the extent we generate any excess cash from business and asset optimization activities, we intend to deploy this additional cash to share repurchase.

And with that, I will turn the call back to the operator to start the Q&A session.

[Operator Instructions] Our first question comes from Darrin Peller from Wolfe Research.

Mike, can you just touch on whether you believe the review you've taken of the business has really accomplished everything you need and you fully see what you needed to see, that you feel confident on the numbers going forward?

Yes. Thank you for the question. We feel great as we went through in the prepared comments. We feel great about the progress we're making and the pace that we're moving at. And relative to the conclusions that we outlined from the analysis we did in Q3, there's nothing new, and that's fully reflected in hitting up what we thought we'd do for Q4 and introducing guidance for '26 in line with the preliminary view we provided back in October.

So as I said, it's a multi-quarter path. We feel great about the progress. We're fully aware of what we need to do to position our business as this constant compounder goal that we have. And 100% of our focus is on executing against the pillars we put forth in the One Fiserv plan, and I went through it. And as you saw, and Paul talked about in his comments, we just have to -- there's a difficult compare in the first half of the year as we pivoted the strategy in the third quarter to focus on more recurring revenue. So overall, we feel good. The quarter was about execution, and that's where we go from here.

We'll go to Timothy Chiodo from UBS.

I want to touch on digital payments, so that subsegment within the Financial Solutions segment. That is the largest bucket there. I believe it's about $4 billion or so in annual revenues. And correct me if I'm wrong, but I think STAR and Accel, the debit networks make up about maybe 1/4 of that, so say $1 billion or so of that $4 billion of revenue within digital payments.

Last quarter, you called out some pricing actions within that subsegment, and I believe some of them related to the debit networks as well and maybe some other portions of that subsegment. Maybe you could just add some more detail on those price changes and maybe an update or a response to what you saw in the market, whether it brought on additional volume, it protected volume that might have been lost. And anything else you can provide around really STAR and Accel as the focus. I know you mentioned that things are pretty consistent, but anything else you could add would be appreciated.

Sure, Tim. Thanks for the question. And yes, we did make comments on the last quarter call in regard to that. I wouldn't add anything new to that. There wasn't any new development in Q4 related to any of those actions. I would say we're very pleased not only with the sequential improvement in digital payments, but also what we saw on the volume side, particularly on the network side. We did see growth on the network volumes. And in that overall digital space, we also saw good transactions in our debit processing area as well. And I think that's what was the underpinning of the performance there. Just like with all the segments, we do have comparative headwinds that will continue in digital payments for the first half of next year, but there wouldn't be anything else I would add on the network side.

I would just add, strategically, we continue to be very pleased with both STAR and Accel and the value we add on both sides of our business, classic synergy play between FS and MS sides of the business, and we continue to try to look for all ways that we can fully leverage those networks.

We'll go to the line of Tien-Tsin Huang from JPMorgan.

It seems like you got some good line of sight into the business, which is great. I want to better understand the expenses required to execute on Fiserv, specifically how much is structural versus onetime, like consulting or IT staff augmentation, that kind of thing. It looks like you're going to exit the year at 36% margin. How clean is that 36%?

Yes. So Tien-Tsin, thanks. I would speak to the overall margin first and the expense. We don't see any material kind of expense ramp-up. As we kind of said on our last call, we have largely baked in the expenses related to One Fiserv and particularly around the infrastructure and some of the resiliency investments and such. So just as an operating margin standpoint, there is an increase year-over-year on expenses from an operating standpoint, but it's in line with exactly what we were expecting when we gave the guide and hence, the margin guide is in line.

As it relates to the transformation Project Elevate expenses, particularly, we did call out the size of those. There was start-up-related expenses, particularly around professional services in there. We did have some infrastructure expenses as well. And that is about the right kind of cadence of what we expect quarterly expenses related to Project Elevate to be. They will increase some as we move forward and broaden the project as we focus now on process efficiencies and other efficiencies that we expect to get out of the business. And those will then be more kind of technological-related expenses as opposed to more professional services related.

We'll go to Dave Koning from Baird.

And I guess my question is on the SMB portion of the acceptance segment. You mentioned the Clover part will probably grow revenue low double digits. But I'm also wondering what do you expect from the non-Clover part of SMB that's been declining, maybe flattish ex Argentina? But then as a corollary to it, Argentina, the merchant cash advances look like they were down dramatically, like there's a lot less. So is that creating a little bit of a headwind in that non-Clover part? So I guess kind of multiple layer question just on how SMB is going to do in '26.

Yes. So overall, we did comment on the Clover part of SMB. We do expect slight growth in the non-Clover SMB for next year. Just we kind of talked about that as being kind of flat to maybe just a little bit of growth on the non-Clover SMB. You're right, Dave, as it relates to Argentina in general, it's now really not a growth factor at all relative to the go-forward expectations in 2026. And so we do -- we had an impact in 2025 that we called out that if you took out Argentina, we actually did grow the non-Clover piece. But as you look forward in 2026, we expect roughly a flat to a slightly growth non-Clover SMB picture that's embedded in our guidance.

We'll go to the line of Andrew Jeffrey from William Blair.

Mike, I'd like to dig in a little bit on your outlook for Clover yield. The medium-term revenue guidance in Clover obviously implies some nice share gains relative to at least the U.S. market. And yield growth, obviously, given the fee changes has slowed quite a bit. But can you talk about the areas where you think you have the ability to add sort of durable value with value-added services and what the yield progression in that business looks like over time? Just trying to get a little more clarity on the outlook for accelerating Clover revenue growth.

So the -- I'd just start at the highest level is we were very pleased with the underlying trends we saw in Clover in Q4. We talked about some of the macro factors. And then more importantly, with the progress we made against the Clover business priorities that we highlighted as part of the One Fiserv action plan and pillar two. And those are critical to reaching this goal of -- creating, I think, a little bit to where you're going is what we believe will be the preeminent small business operating platform. That's obviously our goal, not just be a payments box, but help small businesses run their full operations from there, and that goes to the partnerships on the horizontal side with Homebase, with ADP, with CashFlow Central, obviously, embedded into ADP, Clover Capital.

And then really to get after and drive higher yield for the overall SMB book, not just focusing on Clover, our entire SMB book is to continue to build out our vertical expertise, and we mentioned in the opening comments that we'll launch this quarter on the health care side and the professional services side. And the more custom solutions and value-added solutions we can embed inside the platform of Clover, obviously, yield will grow with that. And we're optimistic on that over the long term. There's hard work being done to create a value proposition to the $4 billion or so of revenue we have sitting in non-Clover SMB. But more specifically in the guidance stuff, I'll let Paul comment on yield.

Yes. So Andrew, I think it would be fair to say we're very pleased with yield maintenance for 2025 overall, and we don't expect any change really on the yield side in 2026. And you can kind of see that based on our volume growth being in line with our revenue growth on a kind of overall high level. And I think as it relates to go forward, like Mike commented, as we look at like vertical expansions, you would see 15% to 20% kind of growth on the revenue side in the longer term against that 10% to 15% growth, which speaks to a higher yield on a go-forward basis as we penetrate more in Clover Capital, as we do more on the software side. As Mike said, as we do more on the platform side, you'd see kind of that yield maintenance or even slight yield improvement on a go-forward basis that's consistent with our strategy. And certainly, we'll give more color on that at our upcoming IR day.

We'll go to the line of Andrew Schmidt from KeyBanc Capital Markets.

Just a quick 2-parter on the banking segment. Mike, I hear your comments on the sort of the core client retention. Maybe just a little bit more color on what you're seeing there. It sounds like you've been very proactive in being high touch with clients. And then just beyond the core, can you talk about how you view the portfolio today? Do you need additional capabilities, thinking digital, et cetera, or do you feel good about where you're at from a capability perspective?

Thanks for the question. First, on the core part, as I said in the opening comments, we're going down the path of core modernization. We're -- first of all, we're proud of our leading market share position broadly in core banking, and we support a lot of banks and credit unions across the country on our various platforms, and we're proud of that. We began that core modernization process in 2022, building cloud-based real-time secure API and really more open capabilities from our perspective. That plan remains in place and is a good thing for everyone.

As we rolled out back at our Client Forum in September and talked about on the last call, based on some feedback we got from clients, we were explicitly clear that there are no forced conversions as part of this modernization. So if a client wants to make a change, it's totally on their time line. All that said, as a result of some actions taken over the last couple of years, including the prior core conversion approach, we have lost some market share, especially you see it on the smaller credit union side of our business, and have been disappointed, obviously, in the results that have come through in the banking segment from those actions.

Our view is given the pivot we made at Forum on the conversion approach as well as a series of other client commitments we made at Forum and a whole series of investments that I talked about earlier, both on the technology side and on the people side, day-to-day people side, we think we're on the right path to having banking return to positive growth, which we've talked about in the low single digits. And I think most importantly, what we feel good about is the fixes are really 100% in our control, and we're investing directly against them. These aren't things we can't solve. These are things that we need to do and are the right things for our clients to do.

Specifically on core client attrition in 2025, it was above where we wanted to be, but stable with where it was in 2024 and 2023. We didn't see any change on that front. In the very near term and how we went into the planning for next year, we are realistic about the impact of past decisions and how fast we can bend the curve, and that's all included in our plan. But we look -- our goal is to serve all our great clients appropriately and compete strongly every day in the market.

And on top of the cores, to the second part of your question, we feel really good about the portfolio solutions we're adding. And we continue to listen to what banks and credit unions are focused on, which includes generating core deposits, which the StoneCastle capability helped us with, how do you address the emerging value or threat of stablecoin and feel great about what we've done there, launching our own stablecoin on behalf of the banks, FIUSD, and then creating what we think is the first closed-loop stablecoin deposit network by acquiring the custody capabilities through StoneCastle this year.

And we think out more and more around AI in a box and other types of solutions around that. CashFlow Central goes directly to the desire to build small businesses. So we feel great about the portfolio of solutions around it. If we have to add small capabilities, you've seen us do it with stuff like StoneCastle. But we're anxious to get our day-to-day service commitment levels and our clients back to one of that pillar of great client service and then focus on this great portfolio of value-added capabilities we have.

We'll go to the line of Jason Kupferberg from Wells Fargo.

I wanted to come back to Clover for a second. If you can talk about what drove some of the improvement in December, January, you said to 11%. And then the midpoint of your guide for '26 would suggest maybe a little bit more acceleration off those December, January levels. So what drove the improvement in December, January? And then what are the drivers of some of the potential further improvement as you go through 2026? And if you can just remind us also when you think we lap the gateway conversion, that would be really helpful.

Yes. A couple of parts there. First, I'd start is December and January went back to where we thought we'd be for the quarter. We had said 11% in Q3. Came in under that, obviously. We cited November as being macro weakness. We saw that in other people who participate in our industry. And part of our vertical build is to drive yield higher to the prior point, but it's also to reduce some of our concentration in the restaurant and retail areas, especially restaurants, and that had a weaker November. So macro anomaly in the month and then we saw volumes reaccelerate back to where we thought they'd be for the quarter. So we feel good about that.

I think just longer term, if you exclude the gateway conversion over the last couple of years, we've been -- we bounce around quarter-to-quarter from the high single digits to the low double digits. The 4 quarters of '25 were between 9% and 11%, and that's sort of where we see the core growth rate of the business sometimes, independent of macro factors. So I think that's a good view to lead -- a good area to lead around that.

Just to be careful on the gateway conversion, remember that there's not a technical lapping of the gateway conversion. You stop converting over a gateway and then there's continuous runoff over time. So it's not a traditional anniversarying thing that will -- as long as there are gateway converted clients on the system, if one of those runs off, it will impact growth going forward. But obviously, the magnitude of that will go down and we have it going. It was 3 points for most of -- 3-point differential for most of this year, and it will go down in '26 and going forward. So hopefully, that's helpful. Anything to add, Paul?

Yes. The only thing I would add is, Jason, we feel good about where we sit. When we saw what December did, when we see what January did as it relates to that overall guide that we gave. And the things that we talked about in the prepared remarks around business development, expansion some of the verticals expansion, those are all just kind of tailwinds that help us get very confident about the overall guide of GPV. And as Mike said earlier, the overall macro, we're assuming kind of a normalized macro. We also commented in the prepared remarks that the lower side of that guide is reflective of less kind of non-Clover transition and the higher side reflects kind of more on non-Clover transition.

We'll go to the line of Dan Dolev from Mizuho.

Lots of good things, improvements across the board. Great job here. Mike, it's been a few months now. I mean, is anything that surprised you most? Any new surprises here? Anything you're seeing that hasn't been appreciated that you would like to highlight, that would be great?

Yes. As as I mentioned earlier, with respect to new developments or surprises with the negative connotation from what we said in the third quarter, there are none and our focus is all on execution. I think all the things -- the surprises on the positive side are the capability and potential for this company to not only deliver on the pillars that we've delivered on historically to serve 2 massive TAMs who are eager and have a high appetite for advice and advanced technology from us. That just continues to grow. And so we're anxious to get these investments made and be able to focus on exciting things similar to what I talked about in the banking core space.

Our cores are great. They meet a lot of different needs of a lot of different institutions. We want to make sure the service is great on that. So then we can talk to the banks about how do you grow small business customers? How do you deal with modern forms of payments? How do you bring -- how can we, as an execution and orchestration layer on behalf of them, bring AI into their businesses? And the same thing on the merchant side, where agentic capabilities, our ability to democratize that for small businesses across the country and allow them to participate in a similar way is right in front of us. So lots of positive surprises. It's the things that people have known about, Fiserv, for a long time. But as modern technology accelerates, our ability to capitalize on those just gets greater and greater.

We'll go to the line of Will Nance from Goldman Sachs.

I just had a little [indiscernible] here on the enterprise side. You've been calling out the PayFac grow-over issues for a bit now. Just remind us again when those lap and if there's any way of quantifying the magnitude on both revenue and transactions, that would be helpful as well.

Yes. So Will, we did -- in the prepared remarks, I made a couple of comments, particularly around enterprise. As I talked about, this will be the last quarter that we talk about enterprise transition of this PayFac client, and we had about 6 points of differential that existed in the fourth quarter related to this. If you kind of add that to the revenue side, the minus 2% goes to kind of more of a plus 4%. If you look at the transactions of 6%, which is kind of a clean number on the transaction side, that 4% revenue growth is very in line with the 6%. And then that kind of 4% or kind of mid-single-digit growth is consistent with what we've had in the third quarter and also consistent with roughly what we expect as we look forward to next year. And that mid-single-digit transaction growth would also be the right way to think about the business on a go-forward basis without the PayFac noise in that line.

Got it. Okay. So converging in the first quarter. Appreciate it.

We'll go to Bryan Keane from Citi.

Just a follow-up on that, Paul. How do we think about the mid-single-digit growth for the -- organic growth for the year in Merchant? You just went through enterprise small business, though, with Clover, it looks like it will be about the same growth rate we saw in the fourth quarter. So going from 1% organic growth in the fourth quarter to mid-single digits, we get a lift from enterprise, but do we also get any lift from SMB and processing?

Yes, Bryan. So I gave some comments on that in my prepared remarks around the overall mid-single-digit growth expectations we have for Merchant next year. I would say, I think, your comment related to Clover specifically is accurate when we gave the overall Clover growth -- revenue growth guidance of the low double digits. And so I think that kind of holds. And if you try to add back kind of the headwinds that we had in the fourth quarter, you get back to that mid-single-digit growth rate for Merchant in the fourth quarter.

So if you looked at it from a third quarter and a fourth quarter how Merchant has performed overall, that gives you line of sight into roughly how we will perform in that range roughly for next year. I would just highlight that we do have the comparative dynamics in the first half of the year in Merchant like we do in Financial Solutions. It's not as dramatic. And so we obviously called out the more dramatic FX headwinds, comparative headwinds in the first half. But I think the third quarter, fourth quarter adjusted run rate, if you want to call it that, gives confidence of what the overall Merchant Solutions looks like for next year.

Next, we'll go to the line of James Faucette from Morgan Stanley.

I wanted to follow up on some of the fee changes that you've made and any color you can give there in terms of merchant response. I'm sure they're happy about it, but things that you can measure, like changes in churn or retention? And how long do you think you'll see some of those impacts for?

Thanks for the question. The changes we talked about last quarter with respect to the specific Clover fees, they were implemented and we received positive feedback from our partners. I don't know if you can directly attribute it to in-quarter or any specific in-quarter movements. We just thought it was the right thing to do on behalf of our customers, partners and the business, and that's the way we'll continue to run the business.

Next, we'll go to James Friedman from Susquehanna.

A more general question on the Financial Solutions segment. Obviously, posted negative organic growth in the quarter. I'm just wondering what from your perspective needs to change for that segment to reaccelerate and grow. What indicators are you looking at? And what should investors watch in terms of the opportunity overall for Financial Solutions?

Yes. Overall, again, we think we have a great platform. We talked about some of the investments in and around the client service and specifically around the core customer service platform that we have to make. We're making those. We're closely monitoring the progress of those. Obviously, there's easy KPIs for those in terms of client satisfaction and the like and average revenue per client. So we continue to watch those. I would say broadly, the impact of comparable periods is you have to continue to monitor that.

If we look at the underlying volume growth across almost all aspects of the financial service business, it remains in trend areas that it's been in for a long time, and we feel good about. It's not just purely translating to period-on-period revenue growth as you go over the comparables from a prior period. So one of the most important things we watch, and Paul mentioned in his comments, is what are those underlying volume growth rates? And again, we feel good about those. We told you in the banking space that we're not happy with where we are in performance last quarter. We remain there, but we know what we have to do to fix it, and we're addressing it.

Yes. And the only thing I would add on to that, Jamie, would be that we do expect to see in the back half of next year growth in all 3 of these areas of Financial Solutions based on those volume underpinnings that Mike just mentioned. These are very volume-driven businesses. We like the volumes as they're growing across those businesses. For 2026, we have these comparative -- nonrecurring kind of comparative headwinds, and so we will see expected growth across the board in the back half of the year. And we've talked about Financial Solutions being a low single-digit kind of growth business, and that's what we expect on a go-forward basis after we get past this year.

We'll go to Kenneth Suchoski from Autonomous Research.

Just one on the non-Clover SMB part. I think you mentioned you're assuming slight growth in that business in 2026. We estimated it was down slightly in 2025 and maybe a little bit more of a decline in the second half. So maybe just talk about the drivers of the acceleration and how you get to that slight growth in that business in '26?

Yes. And I would start off by saying you're right in that rough estimation of slightly down overall and as we said, up ex Argentina. I would say we've got a very strategic approach as it relates, and I think Mike made some comments on this earlier around testing the non-Clover merchants as they move over to Clover, and just a greater attention on just this book in general and how we go about that book. We are very focused on growing the Clover business, but we are also very focused on the transition of non-Clover merchants and the retention of non-Clover merchants as well. So I'd say all of the things that we're doing across the board are collaborative in nature. They're more Clover focused, but we're also focused on this side of the business as well.

For the next question, we'll go to the line of Harshita Rawat from Bernstein.

Just two quick ones. On the Clover 10% to 15% volume growth for the year, Paul, what drives the pace of back book conversion that could land you at the high end of the range in volumes? And then Mike, I just want to follow up on your conversation with your banking customers. You -- there's been some dissatisfaction with the service and product levels that you talked about and also addressed at the Forum. You talked about the elevated churn. My question is as you go on and change the organizational mindset and make these investments, what are you hearing currently from your customers?

Yes. On the 10% to 15% GPV, as I said earlier, the business on a core basis excluding any non-Clover to Clover transitions has been growing in high single digits, low double digits. That's the formation of 10%. You should think of that as the organic growth rate, assuming economic conditions stay in relatively constant form. Over time, and we also mentioned that, we're taking a very deliberate and thoughtful approach to any back book conversion, making sure that there's a right value proposition for the merchant because today, it's -- again, it's all Fiserv revenue, and we want to make sure if we do anything, it's very thoughtful and with a clear value proposition. That would have to be working in a very significant way, more than we contemplate in the near term to get to the high end of the range.

And if we have some success in that, again, we're being very deliberate and very thoughtful as we do it, making sure we have the right vertical capabilities, the right VAS to add value to those clients. So anything we do and we're successful there would bring it above that core line of growth. On the banking side, I think it's reflective of, what I said, where the first quarter of a multi-quarter effort. We are out doing the right things, making the right investments and the anecdotal feedback we're getting from clients is they like what they see, but they want to see it sustained and delivering on the commitments we made, and that's 100% what we're focused on.

Thank you all for joining us today, and we look forward to seeing you at the various conferences and different meetings over the course of the quarter.

Thank you all for participating in the Fiserv Fourth Quarter 2025 Earnings Conference Call. That concludes today's call. Please disconnect at this time, and have a great rest of your day.

Welcome, everyone. I'm Tim Chiodo, I'm the lead payments processors and fintech analyst here at UBS. Getting started a little bit earlier this year. So the Monday session and kicking us off here for the conference is the management team from Fiserv. We have the CEO, Mike Lyons; and the new CFO, Paul Todd.

We're going to go through a series of questions. We're going to start off a little bit of recapping some of the things that Mike found at the company this year and some of the things he's changing. We'll talk about some of the revenue decisions made. We'll talk about the new targets. We'll talk a little bit specifically on each of the 2 segments, Financial Solutions and Merchant Solutions. And then we'll get into a little bit more on the financial side in terms of CapEx with the One Fiserv initiative, divestitures and CapEx and a little bit on capital allocation.

So with that, I'm going to turn it over to Mike and Todd, and I want to thank you and the full team for making the trip here to Arizona. Thank you, Mike and Paul.

No, thank you for having us. And also welcome Walter Pritchard, who's our -- as of this morning, is our new Head of Investor Relations, formerly with Palo Alto Networks and I'm sure he'll look forward to meeting all of you. But thank you for having us.

All right. Excellent. Yes, Walter, welcome. Glad to be working with you. All right. Let's start off with recapping some of the items that you described as things that you found, whether it was a culture of short-termism, some of the things you found around underinvestment. Let's keep it more to the behaviors and some of the things that you discovered and what you're changing at the company?

Sure. I think as I described, most people noticed it on our Q3 earnings call, we talked about a review of the company that had started in the third quarter and went into the fourth quarter, looked at all aspects of the company, tech, operations, competitive position of our businesses, financials, major trends in the industry. And as part of that, we use both internal -- obviously, our internal staff, but use a series of external advisers to make sure we got subject matter experts and an objective view of where our strengths, opportunities, gaps sit. And obviously, we did that as -- it started out initially as part of our annual strategic planning and budgeting process, but went much deeper, more broad and more expansive than that normal process would.

And ultimately, while we don't like the outcome of what we had to say, we thought the process provided a very clear understanding of the company and what our structural growth rates and our margins are. And as part of that, which we said on the Q3 call is we adjusted our guidance to reflect really 4 things. First was Argentina, where we have a very strong business there that provides a very needed service to our Merchant clients and there's no change in what we're doing there, but very favorable cyclical patterns and developments in that country from '22, '23 and '24 gave us -- had a significant impact on our overall reported organic growth. And you peel that away and the company was sort of growing in the mid-single digits like it always was, not in the double-digit range that has been reported for those 3 or 4 years.

Second big thing was just the performance of our businesses relative to expectations in the third quarter and then when we looked out for the rest of the year. Third major area was there were based on client feedback and most of our business, we have about $20 billion in revenues, $7 billion is small business driven and the remainder is enterprise-driven. Based on feedback from those enterprise clients that there were more things that they wanted around the client experience, the speed to market with certain of our products. They like the quality of products. I just wanted to get the speed to market faster and the quality of implementation and resiliency. So we introduced a series of both capital expenditures and operating expenditures to address that.

And the final thing that we observed was that while any company has the ability to pursue short-term initiatives or long-term initiatives, we think striking a balance between those two is the right way to run our company, and we have been -- we had gotten overweight on short-term initiatives as part of that. And if you put those factors through, we announced what we think our long-term structural growth rate is and long-term structural margins. Obviously, that was different from the last couple of years, but it's a very clear understanding of what we're dealt with, and it is the direct impact and direct driver of where we're putting our incremental investments and directing our strategic plan.

Excellent. Thank you, Mike. All right. We're going to get into the next topic, which is around revenue. So one of the things I've noticed from discussions with investors is maybe lack of appreciation on what exactly happened in the second half of the year. Some look at it and say, man, it's really hard for a company to have trends fall off like that. When in reality, at least we can pinpoint 3 pretty specific revenue decisions that the company made, maybe there are more, but I'll outline them as some of the price reductions within Digital Payments, specifically around STAR and Accel.

The second one was maybe not selling as many licenses on purpose to shift more towards recurring revenue. And the third was some of the pricing rollbacks within Clover. Maybe there are others, but those are 3 that stood out to us. Maybe you could talk a little bit about those revenue decisions and what specifically changed within each of those 3 items?

Yes. I think it goes -- if you go back to the 4 areas observed, the fourth, which was balancing -- the right balance between short-term initiatives and long-term initiatives. We didn't forgo any revenues. We're not pursuing short-term revenues. We made a series of decisions that we think best optimize the experience for the client and long-term value for our shareholders. And when we got out of balance, there were a series of decisions made to drive earnings in certain prior periods that we reversed in this period or took a different approach to STAR and Accel, we had priced -- we had gone above market in pricing on our debit. Those are 2 -- we own 2 debit networks STAR and Accel. We have gone above market pricing on those, which obviously helped earnings in a period but impacted our long-term ability to attract new clients to the networks if your pricing is high. So we made that adjustment.

Second one, you talked about was license sales sort of falls into the camp of short -- you can pursue short-term initiatives, but they're not perpetual, so you can't sell an infinite number of licenses, and we made a decision there. And then on the Clover fees, very specifically, we believe we have a great product in Clover. It's a long-term part of our growth story. Our clients love the product, and we price for value in it. We have a premium price product, and we price for value. When there is an opportunity where we're either adding software capabilities or vertical expertise or horizontal expertise, you can price for it. These fees that were put in a year ago, there were a couple of fees put in a year ago that we decided weren't priced for value. And that was largely based on our conversations.

We have a great distribution channel with the ISOs and a great distribution with the bank partners plus our own direct distribution channel. But based on feedback really from our partners, we thought it was the right decision not to carry on with those fees. So I think it just all falls into that initiative of what's right for the long term, what's right for the short term and striking the right balance between those.

All right. And on that Clover point, you kind of hit it there, Mike, but maybe a brief follow-up. So it sounded like maybe it was more of the end-of-life fees. It wasn't as much the buy rates. It was a little bit more on the end-of-life side. Can you just talk a little bit more about that? And I think part of the goal was to improve relationships with the broader ISO community. And if you could just talk about what you're seeing early days on that.

Yes. Just broadly on -- Fiserv has been specifically around merchant and small business has been always distributed largely through partnerships and we have 1,000 banks and growing signed up as distribution partners. We work through their small business sales teams. And then the other major distribution channel, as you mentioned, is independent sales organizations or ISOs, which are a major part of the merchant community. And we have hundreds and hundreds of long-standing relationships there, unmatched distribution network through the ISO.

So when they give us feedback, either positive or negative, we obviously incorporate that into our thinking and our strategic planning. And as you said, these were very specific fees around storage and end-of-life that we didn't think based on conversations with them and obviously, then with their clients that we didn't think it struck the right balance of pricing for value. But over time, as we continue, we're investing in lots of different vectors in Clover, especially vertical expertise and horizontal expertise that if we introduce a value proposition that we'll be able to push through the ISO partners have always been there right with us to do that, but that's a partnership and a collaborative relationship to do it.

Great. Thank you. I think this next one, we can probably -- we can go to Paul. So I'm going to attempt to combine two of the questions that we had here in the interest of time. But you had mentioned certain deferred investments, right? And we should expect a little bit higher CapEx going forward as part of the One Fiserv program. Maybe you could talk a little bit around those investments. But also, what is the quarterly CapEx number directionally that you could help us and investors should be thinking about in the models for 2026?

Yes. So we talked on the last call about ramping up our CapEx from roughly the $1.5 billion range to roughly the $1.8 billion range and that's primarily due to the efforts around resiliency and some of the technology spend that we felt like we needed to do to kind of serve the customers in the way the One Fiserv and customer-first mindset that we have. And so we did absorb that step-up in CapEx to that high single-digit kind of revenue level. And we expect that as we move into 2026 to kind of continue at that high single-digit kind of revenue of CapEx stepping up from the $1.8 billion but we don't expect any kind of meaningful step-up beyond that. So that high single digit of revenue, we feel is the right level of CapEx and is consistent with kind of prior practice of the business and is the level of investment that we need to support the growth on the business going forward.

All right. Excellent. Thank you, Paul. All right. We're going to move into the -- sorry, Mike, did you want to comment or...

No. Unless you want me to.

Moving on. Moving on. All right. Let's go into the Financial Solutions segment. So this has been a big topic. We were just joking about it before. We hopped on stage here. But the core migration. So a lot of investor questions around what's been happening with the credit unions? Has that already been in progress for some time? And then we go to the banking side, is it 1,400? Is it 1,600? How many of those are an easy software updates? How many of those are migration? What are some of the processes and kind of pricing tools that you're putting in place to retain those clients? If we could clear up some of the core migration topic, I think that would be appreciated.

Sure. As a company that we provide, we are the core -- this is on the financial service side business, about half of our revenues fall into this broadly. One of the services we provide in there, we're the core banking platform for about 3,500 institutions in the U.S. We have the long tail of banks, some of our competitors, the very biggest banks are on -- tend to be on legacy systems with a lot of customization. And then there's a tier, the next tier banks or the super regional banks are on a couple of competitive platforms and then we pick up sort of $100 billion, $150 billion down. And obviously, between credit unions and banks is 8,000. So we have a significant share of the market there. It's been a great business for us for a long time.

Historically, Fiserv bought cores and kept them independent, and that's how you get 16 different core platforms. A couple of things that have happened in there. We started this -- the initiative to create and invest in 5 truly modern cores really started in 2022. It was the first time I was talking about the market. So there's nothing new here. Obviously, it's gotten some attention. Split up between credit unions and banks to try to help you through this -- help you through the process, there were 11 credit union cores, and the goal is eventually to get that to 2 modern cores. We will be at 6 credit union cores next year, early next year. So 5 where -- there were 5 cores of the 11 that for some reason or another, weren't going to be supported going further, either compliance levels or the level of -- the number of credit unions on the cores, various reasons contribute to each one. So we'll be at 6 to 2 going forward next year. That process has been more of a strongly encouraged process to get down to the 6 cores. On the -- from here, from 6 to 2 and then on the banking side from 5 to 3, there is no forced conversion. We will continue to support all 11 of those cores as long as customers want to be on them.

We are obviously investing to create 5 great ones, Finxact, which is the modern core. There's no conversions on or off that, just new customers coming in. Signature, which is our large bank core, no conversions on or off that coming in. Portico and DNA, Portico for small credit unions, DNA for larger credit unions and the only core in the market that really serves credit unions and banks. And then the final one is CoreAdvance. CoreAdvance, as you mentioned, will incorporate 3 existing cores, Premier, Precision and Cleartouch. Again, nobody is forced to go in there. Premier, which is 70% of the customers in that group. CoreAdvance is just an upgrade of Premier. There is no conversion.

So the clear messages from here are 5 great cores going forward, very competitive -- leave us very competitive in the market. No forced conversions will support. No forced time lines. We went -- we had 4,500 clients out at our client forum in September, and we said no forced conversion time lines. If you give us a time line that you'd like to upgrade to 1 of the 5, we'll hit it. And if we don't hit it, then they financially benefit from us. And the job is on us and we're taking it very seriously. And we -- and in some parts of our practice in getting here, we didn't do as good a job as we could have done, but it's to handhold the customers that there's no forced conversion to deliver them a great experience. So there's no desire to leave outside of the core. Three, show them the value what's -- of how the new cores can enhance resiliency, enhance performance, drive new customers, allow for customized pricing, incorporate new apps and all that. And then obviously work closely with the consultant community to show them the values of it.

So it's a good thing for the customer. It's a good thing for us from the 2022 period up until now, we didn't manage. In my opinion, we didn't manage the message and that conversion of the 5 as well as we could have. And for a number of months now, we're on the other side of that and aggressively working with our customers to get them the right thing. I think one of the things I pointed out on the Q3 call, and I've talked about since then is we are not in the market where the customers are saying, someone is just really beating you with -- on your cores. Your cores aren't the right technology, your cores aren't that. They're saying, we want a great experience. We want the products that you've developed to get to market faster. We want value-added solutions from you all. We want to work closely with you in terms of how we compete in a modern -- in a rapidly changing technology environment for banks. It's been an experience thing, not a product thing. And that's on us, it's just execution.

Excellent. Thank you for clearing that up. We really appreciate it. I know that investors appreciate those numbers. Another topic that comes up a lot, let's move on to the Merchant Solutions segment. So when we break down the revenue buckets within Merchant Solutions, within SMB, of course, there's Clover, and we get to just the SMB portion of Clover, backing out some of the enterprise and some of the processing. And then we get to the core non-Clover SMB. On our estimates, at least, last year, that was kind of looking flattish to slightly up. And this year, Q1, Q3, it's been negative and increasingly so, especially in Q3. There are some reasons that can kind of explain this around some of the Argentina dynamics, maybe a little bit of back book conversion coming out of this, but it's roughly a $4 billion revenue stream within Merchant and the question from the investment community is, should we expect that to continue to decline at this sort of rate? Should there be some improvement? And really, how much of that decline has been driven by any back book conversion that's been done thus far?

Do you want to comment on the numbers first?

Yes. So I mean, we wouldn't necessarily expect kind of the similar kind of movement there. I would say a couple of things. One, Argentina, obviously, is an impact there. Two, we've said as it relates to the non-Clover SMB that we're not going to force kind of people to move away from the non-Clover to the Clover. And so that would help that dynamic as that kind of plays through. So yes, we actually see on a non-Argentinian basis that actually -- to actually be positive. If you take out Argentina, that there's actually a roughly flat to slightly positive kind of piece there. And we would -- on a go-forward basis, we put all of the efforts, particularly around sales and investment on the Clover side. And so you wouldn't see the similar kind of growth rates because of that emphasis. But we don't see that as a [ thriving ] a negative growth kind of book as we look at it on a go-forward basis. And we're being very strategic about how we look at that back book and when it makes sense for customers to migrate over to Clover.

And I think your numbers, I think, tied to Paul is basically if you strip out Argentina, low single-digit growth bounces around quarter-to-quarter, a little over $3 billion in the Clover SMB book, a little over $4 billion in the non-Clover SMB book. Clover is obviously our platform of choice to go forward in for small business, but all of those revenues roll up to Fiserv today. And anything to drive any form of movement from the non-Clover SMB to Clover has to be driven by a value proposition attached to it. And whether that's continuing to build out more verticals, continuing to build out the quality of the software, continuing to refine the types of hardware we produce. But we're not just going to jam. Again, we're taking a same thing I said earlier, on short-term, long-term initiative and thinking only about the shareholder and client experience in the end, you could juice all the Clover growth you want by forcing conversion, but that's probably not good for Fiserv over time.

So it's a tremendous option we have over a long period of time to be smart, thoughtful conversion where this value proposition is attached to it. Flip side to Paul raises a good point is we probably got too overweight and too focused on driving the great experience of Clover, and we think we can do some work on the non-Clover side until there's the value proposition to try to better improve the growth there.

All right. Excellent. Let's keep going with the Merchant Solutions segment, and we'll talk a little bit about Clover. So you talked about the new way that investors should think about the growth for Clover, which is volumes in the 10% to 15% range and revenues in, call it, the 15% to 20% range. So roughly 5-ish point gap. Can you -- and the question we get from investors is, well, how can we be confident that there will continue to be faster revenue growth, whether it's the SaaS packages or Clover Capital, which on our estimates is way underpenetrated versus some of the competitors? And then also some of the anticipation revenue from Argentina that could be coming into Clover.

I think you did a great job answering it. We said structurally -- important point is structurally, we said volume in the 10% to 15% range with the high end of that being driven by some form of back book conversion of non-Clover SMB and then 5 -- basically 5 percentage points of growth differential. The only differential between volume growth and revenue growth is hardware and VAS. Obviously, pricing is in both hardware and VAS. So the investments we're making, vertical expertise, which comes into the software, horizontal expertise, which comes into changing a small business instead of just running a payments box, you're running a small business box, whether that's ADP, Homebase for employee management or other services, Clover Capital over time. Certainly relative to peers, a very small penetration, both of the non-Clover base and the Clover base on Clover Capital, we've already started some work around that and continued development on the hardware side. We see that as a sustainable delta between the two, but it comes with and requires investment, and those are all the investments that, one, we factor into the numbers we gave you and that we're working on in the business.

I think on the vertical side, I'd add that we're heavy where we've got this big market share, as you've outlined in -- or big, meaning greater than 10%, still a lot of white space in restaurant and retail. So we'd like to better reflect the U.S. economy to reduce cyclical either ups or downs. And that's why Clover Hospitality is coming in. Health care, we made the big investment -- doing the big partnership with Rectangle. And then [indiscernible] has talked about building out professional services.

Excellent. Okay. Let's try and squeeze in 2 final questions here if we can. It's on Merchant margins. And really, this starts out with more of a Q3, Q4 question, but it bleeds into a fiscal '26 question in terms of segment level margins. So when we look at Q3, the merchant margins were down about 50 bps year-over-year, but benefiting that margin was the $89 million gain. So if you back that out, it would have been more in the kind of down 400-ish basis points year-over-year. So with that context, how should investors be thinking about the implied margins across the 2 segments in Q4? And maybe more importantly, what's implied in the guidance for fiscal '26 on a segment level?

Yes. So we don't typically give a guide as it relates to kind of the segment margins. I would say a couple of things. So, one, you are right, as it relates to just the math, as it relates to 3Q, in the full year guide, you can kind of impute what the overall margin looks like for Q4 relative to the roughly down 200 basis points on the full year. And we've also kind of said that we're not expecting any kind of meaningful change as it relates to the financial solutions side from a 3Q to 4Q standpoint. So that kind of gives you some framing as it relates to the overall margin.

And then as we look to next year, we kind of said on the last call, what we expect the overall margin to be in that 33% to 35% kind of roughly range for next year as we sit here today. And so that kind of gives you a high-level indication of where we see the margin picture for next year.

All right. If we can get another -- so another one, we talked a little bit about this before coming on stage, but the question we get from investors is around the buyback plans for next year. So I believe the commentary has been that your free cash flow number will be what it will be, and we'll use x percent of that to buy back stock. If you could talk about how investors should be thinking about that relative to some other years where you've spent more than 100% of free cash flow.

So a couple of things. I mean, one, obviously, for next year, the cash flow picture does look different. We still believe roughly the cash flow conversion percentage is roughly where it's been. So that's kind of the starting point. We -- our capital allocation principles haven't changed, and so we're very committed to our overall debt leverage and maintaining that debt leverage in the 2.5 to 3x. And then any excess cash beyond the debt leverage ratio kind of -- and as well as any other kind of cash needs as it relates to CapEx are deployed into share repurchase. It would not be the same as what it was this year, obviously, where it was more front-end loaded and that, so it wouldn't look that same. But we obviously are going to use free cash flow to buy back our shares.

Excellent. Well, we have another minute left. So given we have the time, I'm going to circle back to one that we skipped and see if we could talk about the sales hiring. So this has been a big topic in the industry, right? Square is hiring a few hundred salespeople over the next few years. Global Payments on their earnings call talked about adding 500 salespeople in North America. You recently mentioned you have roughly 600 in the U.S. that I believe are supporting specifically SMB and Clover. If you could talk a little bit about that number where it could be going and more specifically of that 600, how much of those are quota-carrying salespeople?

Yes. It goes back -- we talked about a little bit earlier is our primary distribution methods, and we think we're completely differentiated. We know we're completely differentiated, both through the bank channel where we have 1,000 banks signed up, and there's about 50% of those where we're actively penetrated. So it's -- we've signed up a lot and then you're continuing to mature our presence within those institutions. We love the operating leverage that comes with that. We have the ISO partners, which are continuing to grow long, long-standing relationships, deeply embedded into their operations and their sales practices. And then on top of that, we've always had a combined inside, outside sales force. The 600 we gave you in the second quarter call, I think, yes, they're all quota-bearing, those are traditional salespeople. There's obviously support behind those. That number has continued to grow. It will finish up 20% to 25% in the year. But that's what we're not -- I don't read into that word that we've shifted our distribution is we have a partner channel and then we're filling in, especially around specific verticals and specific products with direct salespeople or specific markets around it.

We think it's a nice complement to these 2 massive channels that we have. But the -- if we continue with the investments we have around both Clover and non-Clover, Merchant, SMB and enterprise, distribution is our #1 competitive advantage, right? Nobody has what we have and it would take years and years to create that. So we don't want to ever change what we have. We just want to continue to build all the channels of it and further support it.

Perfect. Very clear in that the bank channel and the ISO channel remain the focus and the bolus of the gross adds as well.

So we love to build the direct channel alongside this. It's not a change in philosophy. It's just adding to more distribution.

Extremely clear. Well, on behalf of our team and everyone at UBS, I really want to thank both Mike and Paul and the IR team, including Walter and Nico for joining us here in Arizona. Thank you so much for being a part of our conference.

Thanks for having us.

All right. I think we're going to get started here. Next, I would like to welcome Fiserv's CEO, Mike Lyons; and CFO, Paul Todd. Mike stepped into the CEO role in May, bringing a strong track record from PNC, where he served as President and previously led the Corporate and Institutional Banking business. Paul is Fiserv's newly appointed CFO, joining just a few weeks ago, and many of you may know him from his CFO roles at Global Payments and TSYS. So thank you both for joining us today.

So Mike, I know a lot has happened in the past few months. I know the market is very focused on the guidance reset and the change in strategic direction that you've laid out. So maybe can you just walk us through the discovery process that led you to conclude that the prior guidance was probably built on overly optimistic assumptions and unsustainable short-term initiatives?

Yes. And thank you, obviously, for having us here. We've got a great long-term relationship with KBW on the banking side and then with Stifel as we serve as the core for Stifel Bank. So it's great to be here and great to be part of your conference, and we appreciate it.

I obviously went through a lot of the details on the changes or the basis for our changes to guidance as part of the call. So I'll keep it at a relatively high level today. But in Q3 and into Q4, we did a thorough, extensive and rigorous analysis of the company, operations, technology, financials, business, competitive landscape. We used inside and outside resources to do that, and we did it in conjunction -- it started in conjunction with our annual strategic planning and budgeting processes, but it was an analysis that went much more expansive and extensive than that would normally go. And ultimately, as we got to the conclusion that there were 4 things we pointed out that were drivers for the adjustments to guidance.

Argentina, which had gone through a very strong cyclical growth period that had added, obviously, to our organic growth revenue numbers. Second big one was the performance of our businesses relative to expectations, both in the third quarter and then over the course of the rest of the year. The third we talked about was some necessary and we thought really compelling high ROI capital and OpEx investments into the business to run the business in a way that we think maximizes long-term value and creates net promoters for our customers. And then the final one was the adjustment, just striking a greater balance between pursuing short-term initiatives and long-term initiatives, which every company over the course faces that challenge.

So in the end, we felt like the -- obviously, the result was the result, which we're not happy with, but we felt like it was a thorough, complete rigorous analysis, gave us a great understanding of our gaps, our opportunities, strengths of the companies. And obviously, that's gone directly into where we've set our strategic priorities and where we will allocate our capital going forward. And we feel like that we've given investors and the sell-side community our best view today of the structural growth capabilities and margin capabilities for the company and the path forward for growth from there.

Last thing I'd add, I just -- I think one of the most important observations as we went through the analysis is if you lift up some of the cyclical factors over the last 4 or 5 years where we've had double-digit organic growth, you take out some of the COVID -- post-COVID rebound in inflation and spending, which then sort of flowed into very strong cyclical growth in Argentina and then you take out some of the nonrecurring items and you lift that up, the Fiserv of today looks a lot like the Fiserv and First Data predecessor companies, 5, 10, 15 -- over the past years.

And within that is you have great platforms, great software, mission-critical -- delivering mission-critical services and solutions and software to 2 massive groups of customers who are incredibly important to the U.S. economy. And we're capable of mid-single-digit growth, mid-30% margin, and it's an incredible company to go through and run that. And so we -- we put out that structural growth rate, and that's what we're working from.

Great. I've gotten this question a few times, I'm sure you have as well. So I want to get this out of the way first. Just given the changes in CFO and Audit Committee roles, along with your comments around the short-term initiatives, is there any reason to be concerned about potential accounting irregularities coming to life?

No, nothing at all. We did a rigorous analysis of the company and had the 4 observations that I talked about, but nothing had anything to do with accounting. The change in the CFO and the change in the Board members, obviously happening at different times. We announced it at the same time. That's all about getting a fresh perspective on the company. We've got new leadership and the Board was going through its own exercise of making sure they were best positioned in their governance position. And we announced it all at once because we had a lot to say, and we didn't want to drip it out over a long period of time.

I think we've gotten the questions on short-term initiatives, I want to be clear on this. Every company has -- you have the option to go after short-term initiatives and long-term initiatives and striking the right balance between those is critically important to long-term success of the company, both how you treat your customers and how you treat and reward your shareholders. And it's not a choice of one thing or the other. If you do all in one, that's not sustainable. If you do all in the other, that's not sustainable. But there's nothing fundamentally wrong with either one of those.

It's just you're making business decisions and business decisions may be really great for one period of time, and they may have ramifications that you have to deal with in another period of time, but it's got nothing to do with accounting. It's just how do you make business decisions.

Got it. So I know you highlighted the 3 or 4 different factors that are driving the growth reset. Maybe if you could just give us a bridge on -- we were running at approximately 8% organic growth in the first half, rough numbers. And now we're sort of looking towards maybe flattish growth over the next 4 quarters. So if you could just give us a bridge to what are the different factors that are driving that?

Yes. We said organic growth for the year is now going to be 3.5% to 4%, originally 10% to 12%. The bridge from second -- we haven't done the bridge intra-quarter bridges and the like. I think the clearest way to talk about it or think about it is the biggest factor in changing from organic growth of double digits the last couple of years back to more traditional areas of organic growth for Fiserv was Argentina. We showed in the materials that it was about half the growth -- double-digit growth 2 years ago. It was 10 percentage points of the 16 percentage points of growth last year, and that's obviously down to -- or not obviously, but we said it's down to 2 percentage points of the growth this year and it will be less in the pieces there.

There -- nothing is bad in Argentina. I think it's -- some people have written articles about something happening in Argentina. Everything is good in Argentina, all that really changed. We have a business that's core to our customers, they are merchant customers there where for various reasons, that's long been the case in how banks interact with merchants in Argentina, there's a long settlement date between spend and cash settlement with the banks. We anticipate that in an anticipation business. and provide the merchant the cash today. It's a great piece of software we do it. We have a great market position. It's a core part of the use of Clover and our payment devices in Argentina and our merchants really want it.

So it checks all the boxes. It creates value for shareholders. It creates value for our merchants. It's simply in how that business got reported in organic growth versus adjusted growth and adjusted growth took a lot of that noise out, organic growth, which the guidance was off of, obviously brought in the full influence of that. So all that really fundamentally happened in Argentina is there's a structural move down in rates because they've taken a different approach to managing the deficit and the budget. So we are going to continue our business in Argentina. It's a great business. We're super proud of it. Our team does a great job of running it, but obviously had the biggest influence.

The other -- the rest of the bridge is completed by the things I talked about. It's hard to quantify each one of them and I won't go into it, but it's we made the necessary capital expenditures and operating expenditures to set up a client relationship model. If you take away small business from our platform, right, we have institutional clients, banks and merchants, and our business is built on effectively penetrating them. This is this ARPC concept, average revenue per client with value-added products and services. And to do that, you need to be -- you need to provide great coverage, great coverage when things don't go as they're supposed to grow -- go, you're supposed to deliver great value-added ideas, be on top of their business.

And if you do that, there's a long -- there's ability to sell more and more products into them and deepen and embed those relationships. We made the investments needed both in the quarter and into next year to put ourselves in a position to execute on that part of the business model, which we think is a great -- again, a great long-term trade on that front. Obviously, we made the decision to deprioritize some of the things that would have -- could have driven growth higher around short-term versus long-term initiatives we talked about. And then we recalibrated the performance against business expectations in the back half of the year.

So you bridge those 4, but by far, the biggest -- I mean, you go 16% minus Argentina, you're at 6% and you're at 3.5% to 4%, and then you're -- it's a much smaller exercise to solve.

Right. May I ask just on the Argentina business. I know anticipation revenues was probably the biggest piece. Were there any other big revenue drivers in Argentina outside of that?

We got a great -- we have great businesses on both the FS side and the merchant side. We're heavily merchant, and we gave you all the stats in our disclosure on Argentina. We're heavily merchant -- and a chunk of merchant -- the biggest chunk of merchant is anticipation. So by far, the biggest factor, especially related to the translation of organic growth because it's based off of interest rates.

Got it. And I think -- I know you alluded to this a little bit before, Mike, but just maybe to double-click on that a little bit. I think one of the things you said on the call was that nothing is fundamentally broken at Fiserv, right? So can you just recap for investors what's giving you the confidence that most of these issues are transitory and fixable and there's no evidence of anything more deeply challenging.

Yes. And I mean, just take Argentina off the top to start with. It's just -- it's a reporting number. And if you look at adjusted, most of that gets cleaned up. When we did our analysis, both on the financial services side and on the merchant side, we heard feedback from clients that was around the experience, not around the products. They love our products. They actually want them to get to market faster. It's cash flow central, which is we think one of the more exciting projects around receivables and payables in a long time.

They want Experience Digital, which is our digital surround and a consolidation of all the prior surrounds to one. They want the modernization of the cores. They want Commerce Hub and a single global integration. We didn't hear anything in our review from customers and feedback from customers that said, your product is just not as good as the next person's product or are you getting beat by this or you getting beat by that. They said, we want more coverage. We want more value-added ideas. We want stuff to market faster. We want great resilience, great reliability and those are things.

So when you go through same thing, Paul and I go through, there's nothing out there on the acquisition side where we need that. We have everything we need. We just have to execute it around it. And if we execute around it well, we're on the low side today of what Fiserv and First Data have historically grown, and we want to get to the high side of what -- and if we execute on what's in front of us, there's a clear path to doing this.

Most of the other stuff we talked about, there was a lot of noise around -- we talked about Argentina, we talked about. Our issue isn't quality of products, quality of technology and quality of platforms. It's getting the service right and getting products to market in a timely way and delivering them to our customers.

And I think one thing, we talked about this on the call, actually to your question on the call around we had good volume growth. We've got good sustainable volume growth in these businesses. And that's the fundamental kind of underlying of when we say the fundamental strength is we had good growth on the merchant side. We had good account on file growth on the issuing side. We had good debit transaction volume growth. So when we talk about fundamental strength, when you see that kind of good volume growth, that's the underlying fundamental strength that we're referencing.

That's definitely helpful. So maybe then we just go into each of the 2 segments and starting with Merchant. On Clover, you lowered the expectation to $3.3 billion. Is that purely tied to reversing the short-term pricing initiatives? Or are you also seeing any change in the competitive backdrop that's causing some of the difference in the growth outlook?

Yes. Again, Clover, as we just said, what we found in the market is people really like Clover. They want more on the Clover platform and they want more Clovers and they want to -- and we want to price Clover fairly for value in the market. The adjustment -- so we're excited about Clover. I'll go more into the investment side, but it's a super important product for us going forward and one that is well received by our clients. The adjustment from $3.5 billion original target to $3.3 billion had a number of different factors in it, including the fee adjustment, but also just the effect of -- again, the effect of Argentina and our view around certain OpEx and CapEx and our view around some certain short-term initiatives that we didn't think was the right ones that we could have gotten through in the end of the year to make it $3.5 billion, but it wasn't the right decision long term for the product.

So we made the adjustment on it, and we identified a structural growth story on GPV and a structural growth story on revenues. It's got a logical algorithm between the 2, a SaaS package, Clover Capital hardware being the difference in making up the VAS plus hardware. The Clover story, at least from all of our review and analysis remains really, really good. We have a significant -- we're making a significant investment, and we'll continue to make a significant investment in it that comes around a couple of different areas. One is continuing to build out the vertical expertise there. We're very strong in restaurant and retail, obviously, built out Clover Hospitality to compete on the higher end of restaurant where we weren't as historically as strong.

We formed the partnership with Rectangle Health, which is on the health care provider side, especially through our bank partners, that was one of the biggest demands for vertical help on that, continue to look at professional services areas and other associated verticals. On the horizontal, that's obviously in the verticals on the horizontal side, we're hearing from our customers and the ISOs, our partners is that small businesses increasingly want a single platform to do their major initiatives, whether that's build, pay, paying workers, managing employees, obviously, processing payments. So whether that's ADP or Homebase on the employee management side, we continue to build out a horizontal stack.

Third big area is the international expansion, and we're happy to go into that in any more detail, but good traction there. The fourth is we are pursuing a full experience redo on Clover because we think we can deliver our clients a better end-to-end experience, especially in the early stages of receiving Clover, where we get very, very high NPS scores and then the experience out of the box and setup initiation and first billing, there's room that we think we can drive further growth there by creating a better post-launch client experience. So we're working on that, putting Clover capabilities through other of our product delivery vehicles, whether that's Commerce Hub or expanding Clover Capital and other VAS into our non-Clover SMB products.

And then the final is back book conversion, which sort of depends, especially on the vertical expertise is. We have a back book today that's slightly bigger than the -- on the SMB side, slightly bigger than the Clover SMB base. Clover is clearly the platform to go forward with an effective conversion of the back book to the front book, but that needs. If you're going to convert someone into Clover, it needs to be a value proposition to do it. Otherwise, you're just going through a conversion. So as you build out more and more vertical expertise or horizontal expertise, it makes it easier to bring those clients in.

So there's other areas, but those are the highlights on where we're going with Clover, and we're excited about it. Again, it's a significant TAM out there, low penetration here in the U.S., even in our main verticals and very low penetration outside the U.S.

So maybe just double-clicking on that U.S. versus international. I think you talked about once we're through this sort of transitory headwind, you see it as a mid- to high teens revenue growth opportunity within Clover. How should we think about the U.S. versus the international driving that?

Yes. So Internet, the majority of our business today is U.S., but all the foreign markets off a lower base, obviously, growing very quickly, and I can touch on each of those. But we disclosed in the U.S. this year, 7.5% GPV growth year-over-year in the Q3, which is the first time we've shown that, which fell -- ended up falling right between Visa and MasterCard. We feel good about that, and that was an acceleration -- slight acceleration from the first half of the year. So we continue to feel good about our position in the U.S. and all of the elements other than grow internationally, which I think was the third or fourth concept I raised to you will drive further and support further growth in the U.S.

On the international side, again, obviously, growing faster. Canada and Brazil have been real highlight markets for us. Canada, we would have been at it for several years through direct and ISO channels, and we're super excited to do the partnership and back book transaction -- partial back book transaction with TD, which again plays into our strength of bank partnerships to complement an already well-growing market. Did the launch earlier this year in Brazil with great partners, Sicredi and Caixa announced incremental new partnerships this quarter and massive TAM, obviously, massive SMB base growing very, very nicely there. We did UniCredit in Austria. We did the CCB acquisition. We got JVs in the U.K. with NatWest and Lloyd's. We got Deutsche through Vert in Germany. We did the transaction on the AIB side with -- in Ireland with AIB.

And then we've got -- we launched in Australia where continue -- the growth has been a little bit slower there. We're going direct initially, and we'll continue to build partnerships as we go. And then obviously, although we didn't go into the specifics of it, we will in the coming weeks, next couple of months as we announced the decision to go into Japan with a major partner and a major association. Japan to us, super interesting, obviously, a significant market and still cash dominated, and there hasn't been a major point-of-sale digital platform to go in there with. So we're excited to bring Clover there.