Fiserv NASDAQ: FISV reported first-quarter 2026 results that management said were in line with the outlook provided in February, as the company continues executing its “One Fiserv” action plan amid what CEO Mike Lyons called an “extraordinary opportunity” driven by rapid change in banking and payments.
“Our Q1 results were in line with the expectations we shared with you in February,” Lyons said, adding that the company is “firmly in execution mode” and has been adding leadership talent across both Merchant Solutions and Financial Solutions.
First-quarter results and tax rate impact
CFO Paul Todd said total company adjusted revenue was $4.68 billion, down 2.4% year over year, reflecting comparisons against higher non-recurring revenue in the prior-year period. Adjusted operating income was $1.4 billion, with an adjusted operating margin of 29.7%. Total company organic revenue declined 3.6%.
Adjusted EPS was $1.79. Todd said the quarter included an adjusted effective tax rate of 11% due to the release of a tax valuation allowance, which provided a $0.17 benefit to adjusted EPS. He emphasized the impact was “strictly a timing-related” item and reiterated full-year adjusted tax rate guidance of 19% to 19.5%, implying higher quarterly rates for the remainder of the year.
Free cash flow was $259 million, which Todd said was in line with expectations and reflected typical seasonality that makes the first quarter the lowest free cash flow quarter of the year.
Merchant Solutions: Clover trends, Argentina headwind, and Commerce Hub growth
In Merchant Solutions, Todd said organic revenue declined 1% while adjusted revenue was flat, “largely in line with our expectations” as the company fully anniversaried the CCB transaction. Lyons noted lower inflation and interest rates in Argentina were a revenue headwind in the quarter, though he said the impact was “largely offset by lower interest expense below the line.”
Small business volume increased 7% in Q1, while small business revenue declined 1% organically and increased 1% on an adjusted basis. Clover revenue rose 6%. Todd said that excluding higher non-recurring revenue in Q1 2025, Clover revenue growth would have been in the “mid-teens,” with hardware identified as a major component of the non-recurring comparison. Clover payment processing revenue grew 10%, which Todd said was more consistent with volume trends.
Clover volume increased more than 9% on a reported basis; excluding a previously discussed gateway conversion, growth was 12%. Todd said the gateway conversion runoff continues and that reported and ex-gateway growth rates are expected to converge over time. Management reiterated expectations for 2026 Clover revenue growth in the low double digits and Clover GPV growth of 10% to 15% excluding the gateway conversion.
Value-Added Services (VaaS) revenue represented 27% of Clover revenue in the quarter and grew 18%, driven by software attach and lending, including Clover Capital. Lyons said Clover VaaS growth was supported by software and Clover Capital, and he added that April merchant volume growth was “solid around Q1 levels.”
Enterprise Merchant organic revenue grew 3% and transactions rose 8%. Lyons highlighted Commerce Hub as a key growth driver, saying transaction growth was up nearly 200% in Q1, supported by “broadening global releases and customer go-lives.” He also said the company went live with Commerce Hub omnichannel capability across a number of its largest petro customers, and added new Commerce Hub go-lives with Bilt Rewards and Viamericas.
On distribution, Lyons said Fiserv signed 27 new banks as merchant referral partners in Q1 and announced what he called its “largest agent bank partnership” with Western Alliance Bank. He also pointed to new Clover vertical initiatives, including PracticePay in healthcare and an offering for professional services.
Financial Solutions: volume growth offset by non-recurring headwinds and attrition
Financial Solutions adjusted revenue declined 5% in Q1 and organic revenue declined 6%. Todd said performance was consistent with expectations for an adjusted revenue decline at the “high end of mid-single digits.”
Within Financial Solutions:
- Digital payments revenue declined 5% on both an organic and adjusted basis. Todd cited low single-digit debit processing growth, low double-digit debit network volume growth, and Zelle transaction growth of 18%, while Bill Pay transactions declined high single-digits.
- Issuing revenue declined 6% organically and 5% on an adjusted basis, with year-over-year comparisons affected by non-recurring revenue in the prior year. Todd later pointed to “Output Solutions” as the “biggest single driver” of the issuing non-recurring headwind in the first half, with a more pronounced impact expected in Q2 given last year’s strong comps.
- Banking revenue fell 6% organically and 4% on an adjusted basis, reflecting prior-year non-recurring revenue, actions taken over the past several years, and attrition that remains above the company’s long-term target.
Todd said core accounts declined 2% year over year, while overall accounts and positions, including Finxact, grew 6%. Lyons said the company has seen “early signs” that client service initiatives are being well received, and he highlighted the decision to continue supporting all core platforms as an important move for client retention.
Responding to a question on attrition, Lyons said the company is focused on getting core attrition back to “historical levels” and described steps including increased client coverage, AI initiatives in call centers and the client portal, and a “client health index” that uses AI to measure client experience and enable proactive outreach.
Fiserv also cited acquisition-related progress. Lyons said results from StoneCastle and Smith Consulting were “in line with our business cases,” and he described StoneCastle as helping address client deposit growth needs.
Guidance and outlook: Q2 expected trough, Investor Day focus on AI and efficiency
Todd reiterated 2026 guidance, including organic and adjusted revenue growth of 1% to 3%, with Merchant Solutions expected to grow mid-single digits and Financial Solutions expected to be flat to slightly down. He said Q2 is expected to be the “trough” for year-over-year revenue decline, with Financial Solutions down at the “high end of mid-single digits” in Q2.
Fiserv maintained adjusted EPS guidance of $8.00 to $8.30, based on an expected weighted average share count of about 530 million, and reaffirmed a full-year adjusted operating margin of approximately 34%. Todd said first-half margin is expected to be around 31% to 32%, improving to 35% to 36% in the second half, with Q4 as the high point.
The company reported repurchasing 3.3 million shares for about $200 million in Q1. Todd said leverage ended the quarter below 3.2x debt to adjusted EBITDA on a gross basis, with a year-end expectation of about 3x.
Lyons also outlined operational initiatives tied to “Project Elevate,” which he said has identified “hundreds of opportunities” spanning revenue uplift, expense reduction, and productivity. He said the company took additional efficiency actions in Q1, including closing two subscale offices, exiting underperforming merchant businesses in India, and reducing management layers. Lyons said Fiserv is also evaluating potential dispositions as part of disciplined capital allocation.
On product and AI, Lyons said the company is “on track to launch” a previously announced stablecoin pilot this summer for interbank money movement and described a focus on agentic capabilities. He said an upcoming Investor Day will feature a “governed AI operating layer” for financial institutions and noted the company is already live with pilot agents at two financial institutions.
Management repeatedly pointed investors to the May 14 Investor Day for deeper detail on segment strategy, Clover and non-Clover merchant conversion efforts, Clover Capital plans, and Project Elevate targets.
About Fiserv NASDAQ: FISV
Fiserv, Inc, founded in 1984 and headquartered in Brookfield, Wisconsin, is a global provider of financial services technology. The company develops and delivers integrated solutions for payments, processing, risk and compliance, customer and channel management, and business insights and optimization. Serving thousands of clients, Fiserv supports banks, credit unions, securities broker-dealers, leasing and finance companies, and retailers.
Fiserv’s core offerings include account processing systems that automate deposit, lending and transaction processing for financial institutions, as well as digital banking platforms that enable mobile and online banking services.
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