Not long ago, Fiserv (FISV 3.20%) seemed to have an unconquerable moat in the bank technology space, as one of the three main suppliers of bank core processing technology to community and regional banks. This is back-end technology that helps banks power most of their daily operations. Plus, Fiserv owned the fast-growing point-of-sale payment processing company Clover.
However, following a disastrous third-quarter earnings report, Fiserv's stock crashed and is still down about 48% since that report. Here are three things investors need to know about Fiserv in 2026.
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1. Coming off a disastrous third quarter
In the third quarter of 2025, Fiserv reported adjusted earnings per share (EPS) of $2.04, nearly 23% below Wall Street estimates. Revenue came in 8% below estimates.
Even worse, management significantly cut its full-year 2025 outlook. In the second quarter, management guided for roughly 10% revenue growth and adjusted EPS of $10.15 to $10.30. Following the third-quarter report, management lowered its guidance to 3.5% to 4% of organic revenue growth and adjusted EPS of $8.50 to $8.60. This caught most analysts and investors off guard and sent the stock down by over 50%.
2. Clover struggles and a decline in banking
The core issues behind the big miss appear to be lofty but misguided growth expectations at Clover and a declining banking business.
Fiserv's CEO, Mike Lyons, said fourth-quarter revenue growth is expected to drop by 10% from third-quarter levels because the company is no longer implementing "certain fees in Q4 that were initiated a year ago and are no longer consistent with our business strategy." Media reports indicate that Clover's clients were increasingly frustrated by the high fees Clover charged.
NASDAQ: FISV
Key Data Points
Furthermore, some investors believe that Fiserv's management inflated Clover's prior growth. A lawsuit filed by institutional shareholders alleges that the company misled investors by "forcibly" migrating legacy payment customers to Clover and then indicating these existing customers represented organic growth. Fiserv said it disagrees with the claims.
Another issue is that revenue in Fiserv's banking division fell 7% year over year. It has been well documented that banks and credit unions have been running on legacy core processing technology that is simply not nimble enough in today's environment, where having the most up-to-date technology is a must. This story has been unfolding for many years, but it may be approaching a tipping point.
3. Next steps
Fiserv seems to know it messed up and has begun taking steps to remedy the situation. The company recently launched the One Fiserv action plan to focus on its clients and build upon its current strengths. There have been major changes to the leadership team, including Lyons, who began as CEO just last year.
Fiserv will report its fourth-quarter 2025 earnings on Feb. 10 and also plans to host an investor day in the first half of this year.
Clover is certainly not a lost business, and Fiserv is still in a strong position in the core processing technology space. However, the company will have to address deficiencies in its business and new competition if it is to win back the confidence of its clients and shareholders, which may not be easy.
