Fiserv Shares Drop Again After Wednesday’s Cut in Full-Year Outlook

Fiserv shares fell 44% Wednesday (Oct. 29) and as much as 6.7% Thursday (Oct. 30) after the company cut its full-year earnings outlook and announced some strategic changes.

Wednesday’s plunge in the price of the company’s shares wiped out $30 billion of Fiserv’s market capitalization, Bloomberg reported Thursday.

The changes announced by the company came in response to customer complaints about fees charged for Fiserv’s point-of-sale system, Clover, and earlier forecasts that would have been hard to meet, according to the report.

The customer complaints followed the addition of fees for “value-added services” for merchants, the report said.

Fiserv CEO Mike Lyons, who assumed that role in May, said Wednesday that in addition to cutting the earnings outlook, the company would undo pricing changes introduced by Clover and adopt a new technology strategy, per the report.

Lyons became CEO after outgoing CEO Frank Bisignano’s nomination to lead the Social Security Administration was approved by the U.S. Senate.

“This wasn’t a reset I wanted or expected,” Lyons said on a conference call with analysts, per the report. “There were a whole bunch of embedded assumptions — away from the major projects — that even with strong execution would have been hard to do.”

PYMNTS reported Wednesday that company presentation materials indicated that in the third quarter, Fiserv’s organic growth slipped to 1% and margins declined. Sales in its Financial Solutions segment were down 3%. Overall organic revenue growth forecasts were chopped to 3.5% to 4.5%, where that rate had previously been around 10%. Within the Financial Solutions unit, digital payments revenues slid 5%, banking related revenues dipped 7%.

Fiserv also announced Wednesday that it was making management changes, with Takis Georgakopoulos and Dhivya Suryadevara named as co-presidents effective Dec. 1 and Paul Todd being the incoming chief financial officer.

During a conference call with analysts, Lyons said, “You’ve seen our results and revised guidance for the year. While disappointing, the actions we are taking are driven by a rigorous analysis of the company conducted during the third quarter and represent a critical and necessary reset and a revitalizing moment for the company.”