费哲 (FISV) 2026财年第三季度业绩电话会议：Elevate项目节省额升至10亿美元

核心要点

• 2026财年第三季度调整后营收为48.5亿美元，同比下降1%，有机营收持平。管理层表示，业绩符合预期，且第二季度的营收拖累效应已经过去。
• 调整后营业利润为15亿美元，调整后营业利润率为31.2%。调整后每股收益为1.75美元，自由现金流总计6.79亿美元。
• 在发卡业务7%的有机增长支撑下，金融解决方案业务有机营收增长2%。商家解决方案业务有机营收下降2%，主要受到上年同期非经常性营收、阿根廷业务及硬件比较基数的拖累。
• Fiserv将其“Elevate项目”的潜在成本节约目标从超过5亿美元提升至10亿美元。管理层表示，这支持了实现37%调整后营业利润率的长期路径，尽管大部分新增节约预计将在2027年之后实现。
• 公司重申了2026财年业绩指引，包括调整后营收下降1.5%至0.5%，有机营收下降1%至持平，调整后每股收益为7.20美元至7.40美元，调整后营业利润率为31%至31.5%。
• Fiserv计划在第四季度回购5亿美元股票，同时目标是将年末总杠杆率控制在约3倍。

关键财务数据

鉴于股价和市值持续下跌，Fiserv计提了每股12.04美元的非现金商誉减值准备。该费用影响了GAAP每股收益，但不影响调整后每股收益。

业务与运营表现

商家解决方案

商家解决方案调整后营收下降3%，有机营收下降2%。小型企业业务有机营收下降1%，反映出阿根廷相关营收及硬件销售减少。小型企业交易量增长2%。

Clover营收增长1%，其中处理业务营收增长12%。按列报口径，Clover支付总额（GPV）增长9%；若剔除此前讨论的网关转换影响，则增长11%。管理层继续以剔除该转换后的Clover GPV实现10%至15%的增长为目标。

增值服务占Clover营收的23%，低于去年的26%，同比下降3%。若剔除阿根廷业务，增值服务营收保持稳定。非Clover中小企业营收下降6%。

企业级业务调整后营收和有机营收均下降3%，因为第三季度受到了上年同期非经常性营收的最大影响。企业级交易量增长5%。随着客户继续迁移至该平台，CommerceHub交易量翻了一番。

管理层预计将通过“Clover for Enterprise”整合Clover与CommerceHub，打造一个兼具刷卡与线上电商支付受理能力的统一平台。该平台计划于2027年推出，旨在支持规模更大、业务更复杂且拥有多门店的商家。

金融解决方案

金融解决方案有机营收增长2%，达到公司中期目标区间的下限。调整后营收维持不变，因为资产剥离造成了200个基点的拖累。

发卡业务表现最为强劲。在现有客户增长及新项目落地的支撑下（包括加拿大的Desjardins和美国的Direct Express项目），调整后营收增长5%，有机营收增长7%。

数字支付业务有机营收持平。在借记卡处理和网络活动推动下，支付平台交易量增长4%。Zelle交易量增长超过20%，但由于账单支付（Bill Pay）持续承压，消费者支付平台交易量下降1%。

银行核心业务调整后营收下降3%，有机营收下降5%。核心账户数减少2%，但包括Finxact在内的总账户数和头寸数增长7%。管理层表示，当前营收仍反映了此前较高的客户流失率，但今年迄今按营收计的新增核心业务损失下降了17%，新签约客户增长超过50%。

AgentOS意向客户管线中包含近200家银行。Fiserv计划在2027年向更广泛的客户开放并提供额外的智能体功能。管理层将AgentOS描述为兼具客户留存工具与潜在独立增长产品双重属性的平台，其定价与为客户创造的价值挂钩。

管理层业绩指引

Fiserv重申了2026财年全年业绩展望：

对于2026财年第四季度，管理层预计商家解决方案调整后及有机营收增长率为6%至8%。金融解决方案有机营收增长率预计保持在第三季度报告的2%附近，而由于资产剥离，调整后营收预计将出现低单位数百分比的下降。

学生贷款服务业务剥离预计将使第四季度发卡业务增长率降低约400个基点。托管ATM业务剥离预计将使数字支付业务增长率降低约500个基点。

随着上年同期非经常性对比基数趋于正常，管理层预计Clover在第四季度将恢复两位数的营收增长。全年Clover营收增长率仍预计维持在中单位数水平。

风险与关注重点

• 银行核心业务营收继续反映历史高位的客户流失。管理层预计，留存率改善和新签约客户对营收的影响将有9到12个月的滞后期。
• 在第三季度，阿根廷业务仍是较大的同比拖累因素。管理层预计压力将有所缓和，但不预计该市场在短期内会带来增长顺风。
• 扩大后的“Elevate项目”成本节约效益偏重于后期，大部分新增收益预计将在2027年之后显现。转型支出将持续至2027年，第四季度的支出预计将与第三季度大致持平。
• Fiserv正在评估针对数项非核心业务的其他所有权安排。管理层表示讨论正在进行中，但强调最终结果和潜在收益仍存在不确定性。
• 产品整合与旧系统退役需要有序推进客户迁移。管理层表示，时间安排将在一定程度上取决于能否最大限度减少对客户的影响。

分析师问答环节亮点

管理层表示银行客户流失已见顶，理由是今年迄今损失的营收减少了17%，新签约客户数增长超过50%。财务影响预计将在未来9至12个月内显现，银行业务随着时间的推移将趋向低单位数增长。

关于“Elevate项目”，管理层将潜在节约目标提升至10亿美元归因于业务组合合理化、产品与平台整合、流程重塑以及更广泛的AI部署。公司继续预计相对于转型支出将获得至少1:1的回报。

Fiserv重点介绍了AI在风险管理、客户服务、迁移和软件开发中的应用场景。在其全球风险拦截流程中，决策时间缩短了三分之二，误报率下降了40%以上。其智能体呼叫中心部署实现了超过40%的自主拦截率，管理层称其成本回报率达5至10倍，且对客户净推荐值没有负面影响。

在商家解决方案方面，管理层表示Clover GPV、定价收益率和渠道表现均保持稳定。预计新的增值服务、Clover Capital、高收益储蓄、垂直解决方案以及Clover for Enterprise将支持未来增长，同时承认中小企业支付领域竞争依然激烈。

业绩电话会议完整文字记录

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完整财报电话会议逐字稿

管理层陈述

Operator

Welcome to the Fiserv Third 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.

Walter Pritchard

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 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 Takis.

Takis Georgakopoulos

Thank you, Walter, and good morning, everyone. Let me start with the headlines. First, we are executing our strategy with urgency and are seeing the revenue trajectory we described last quarter. We are past the Q2 revenue drag. In Q3, organic revenue stabilized and was flat year-over-year, in line with our expectations. Financial Solutions is already delivering organic revenue growth and we are on track for merchant and the overall company to return to growth in the fourth quarter, in line with our medium-term adjusted revenue growth targets as prior year nonrecurring revenue comparisons normalize. Each of our businesses is gaining momentum as we close 2026. Banking revenues still reflect the higher attrition of the past few years, but leading indicators are pointing to a recovery.

Fiserv, modern core, continues to see customer wins and has passed 50 million accounts. Issuing continues to perform well, supported by the ramp of deals already won and a very healthy pipeline. Our debit networks continue to be driven by both our merchant and issuer businesses, contributing to total debit transactions up a healthy mid-single digits. In merchant, Clover continues to grow steadily with a GPV growth of around 10%, and while CommerceHub is benefiting from momentum in e-commerce and platforms with new clients and transaction growth of 100% up year-over-year. Underpinning these progress are our investments in stability, interoperability and service. We are already seeing results from our infrastructure investments. Our core acquiring, issuing and network platforms continue to operate at [ Five9 ] uptime, and our banking infrastructure continues to improve with a 75% year-over-year reduction in client impacting incidents.

Our accelerated investments in cybersecurity provide capabilities to remediate vulnerabilities at AI speed as we uncover them with frontier models. As we enter 2027, we will now be well positioned to play offense in the market. And the core strengths of our company continue to provide a durable, differentiated advantage. These include a global merchant platform that processes more payments than Stripe, Advent and Toast combined, a banking business that supports approximately 40% of the U.S. market over 1.5 billion accounts on file in our issuing business, the third largest debit network in the U.S. This combination of assets is unique to Fiserv, and we believe we can monetize them better in the future. Our increased confidence enables us to make 3 decisions. First, we plan to resume share buybacks with $0.5 billion planned for the fourth quarter, while staying on track with our year-end leverage targets. Second, based on the review that I announced during the second quarter call, a series of deep dives in areas such as operations and technology, and strategic partnerships with a number of AI leaders we have now identified additional opportunities within Project Elevate, raising our savings targets to $1 billion. This gives us confidence that we can trend towards a 37% adjusted operating margin over the long term.

Third, through our portfolio review, we've identified a number of businesses and activities that are not core to our go-forward strategy and where we may pursue alternative ownership arrangements. We are in conversations with multiple parties with NDAs and process in place, but it is too early to estimate the proceeds to Fiserv from these efforts. We will, of course, proceed with long-term shareholder value and client impact in mind. We are pursuing all of these with urgency with focused execution overseen by our operating committee. As an example, since I took over as CEO, we have reduced contractors and employees by 3,000 people, including a more than 10% reduction of senior management, which we believe will accelerate execution.

I now will spend a few more minutes discussing highlights of our business in the third quarter. More context on Project Elevate, including our portfolio review and how we are quickly evolving how we run the company. And finally, my view on the unique drivers of our business model and what excites me about the future. Let's start with some financial solutions business highlights from the quarter. In core banking, we are seeing real stabilization and progress. That progress starts with how we engage our clients. From my first day in the job, whether at Fiserv Forum with more than 1,000 banking and credit union clients or in dozens of one-on-one meetings, I've reinforced 4 messages. First, we remain committed to all our clients. Second, we continue to invest in what we believe is a broader solution set for banks of all sizes. Third, we will continue to simplify our products and pricing and continue to improve the quality of our service. Fourth, we will bring clients intelligence and best practices from across the industry, including an open architecture environment, where clients can integrate third-party solutions and safely deploy AI agents.

Those messages have resonated and the majority of my conversations with bank clients and prospects have been positive. They have acknowledged the improvements we have made in customer service and technology stability. Conversations now focused on how distinctive assets such as Clover, Cash flow Central, StoneCastle, open APIs and AgentOS can help them grow. We also continue to gather feedback on opportunities to improve, which will, of course, inform our product road maps. That improved sentiment is now showing up in our core KPIs. We have lost fewer clients and won more new business. On a revenue basis, new core losses year-to-date are down by double digits. As a result, we believe elevated attrition has peaked and we are on track to meet our medium-term target of returning to historical attrition levels. Equally important, as we begin to shift to offense and get traction with prospects client wins are up by more than 50% from last year. DNA, Core Advance and Finxact lead the way, including the $20 billion Pinnacle Bancorp that went live on core Advance. And as we strengthen our business development team, we are becoming increasingly confident that the banking segment will return to the low single-digit adjusted revenue growth that we discussed at Investor Day.

Agent OS continues to garner significant interest with nearly 200 banks in the pipeline. The pilot banks we showcased at Investor Day are nearing production deployment and next year, we will open the program to a broader set of customers and launch new agent capabilities. Outside of core banking, we continue to see momentum in a number of areas, including Zelle where transactions grew over 20% and cash flow Central, which now has more than 60,000 active SMBs. In issuing, we continue to see healthy growth from existing customers and have had recent go-lives, including the Desjardin in Canada and the Direct Express program in the U.S. for the federal government. Our strong global pipeline gives us confidence that we can sustain our rising growth in 2027. Now let's move to Merchant Solutions. We continue to make progress against all initiatives we outlined at our Investor Day earlier this year. Our modern stack anchored on CommerceHub continues to scale, delivering better outcomes for our clients gaining market momentum and fundamentally simplifying the omnichannel customer experience.

Similarly, with Clover, we continue to bring new products to market that we expect will drive incremental growth next year. Staying with Clover, our broad distribution strategy supported consistent GPV growth. Our North America ISO business volume continues to deliver double-digit growth, and our ISV and direct channels also continue to grow. In our bank channel, we had important milestones with both new banks and existing partners adopting our new offerings and best practices such as digital merchant onboarding. The renewed partnership we announced with Truist Bank earlier this year is now live with Clover, enabled as a key component of Truist digital merchant platform designed to deepen penetration and enhance client experience end-to-end. We also added Clover Capital to the offerings of one of our largest bank distribution partners, which sees it as a complement to traditional bank loans. And we added Global Practice Pay with First Interstate Bank as part of their renewal. Other notable Clover developments include double-digit growth for Clover Capital as well as the launch of Clover high-yield savings through StoneCastle Clover Sport, which added a new professional football stadium, and we expanded our relationship with another.

Of course, we continue to serve American family Field, home of the world champion Milwaukee Brewers. Clover is now integrated with DoorDash's new DashOS growth platform, which we expect will improve the omnichannel experience for both diners and restaurants. Clover agent continues to expand and Clover e-commerce with website creation, checkout, shipping and business management is already enabled with 5,000 merchants. Lastly and perhaps most importantly, as Clover and Commerce Hub continue to converge, we will launch Clover for Enterprise, a full-stack platform that unifies card-present and e-commerce acceptance to power seamless omnichannel e-commerce experiences. This expansion enables Clover to go beyond small businesses to sell larger, more complex merchants with multiple locations, bridging a kick up in Clover's current offering. In enterprise, Commerce have transactions doubled as customers continue to move to the platform including Microsoft, the California Franchise Tax Board, a leading online sports betting company and a global fast food chain.

Dell also expanded its Commerce hub capabilities to include Pix in Brazil. And this is only the beginning. We are seeing a significant increase in our e-commerce and platform pipeline since we built our business development team a few months ago. We will have much more to say about our enterprise business in the coming quarters. Beyond the work we are doing to improve execution in our key businesses, we are also changing the way we run the company. We are increasingly operating as one company in 2 ways: First, horizontally as our merchant and FS businesses come together to deliver integrated end-to-end solutions to our clients as Clover Commerce Hub our modern course, payments and modern issuing are becoming configurable and interoperable. Second, vertically as sales, servicing, design, data, product engineering and operations increasingly act as integrated teams. This is obviously a journey, but I'm pleased with how the organization has embraced this vision.

I mentioned on the last earnings call that we will undertake a full portfolio review of the company. That review is now complete. We reassessed all the initiatives identified by Project Elevate, to reunderwrite the size of the opportunities, their interplay with our portfolio of businesses and the experience we gained working with best-in-class AI companies. That work is also now complete. As a result, we have increased our estimate of the savings we can generate from Elevate to $1 billion, up from $500 million we previously communicated. Our approach centers on 3 access. First, identify the end-state architecture for each product suite that we have and redirect the bulk of our focus and capital expenditure towards it. At the same time, create a concrete path to decommission all older and overlapping versions with a strong focus on avoiding any customer disruption.

Second, identify and exit smaller noncore products that don't have attractive performance, growth or margin characteristics. There are more than a dozen such products within the company, serving very few clients that we will work with to ensure an orderly transition to a better alternative. And third, focus on simplifying processes and embedding AI in all workflows. This has a particularly significant impact on operations and technology but it affects every aspect of our business from prospecting for SMBs to bank migrations. This comprehensive approach goes beyond the original scope of Elevate and captures everything the company does at a very granular level of detail. Importantly, Project Elevate is now geared to deliver greater efficiency, faster product development and an improved customer experience. I see these goals as reinforcing one another rather than requiring trade-offs. Redesigning processes eliminating manual steps, consolidating front and back ends and deploying AI at scale all help us achieve the same goal.

Let me give you a few examples to bring this concept to life. In the Merchant business, as we discussed at Investor Day, we are rapidly consolidating all our value-added services under our new global gateway commerce hub. This will allow us to remove the complexity of supporting more than a dozen legacy gateways and switches around the world. In Financial Solutions, we have a clear path forward and continue to advance our core modularity initiative. This will move us beyond the question of how many calls we have, as they will all rely on common componentry. We are making significant progress, and we will discuss it further in the next couple of quarters. We are also using AI to reduce buyers and complexity for clients migrating to Fiserv. We now have multiple agents across key offerings such as XD, Cash flow Central, [ DNA ] and Core Advance to dramatically shorten implementation and migration time lines.

In operations, we estimate that we can reduce costs meaningfully while improving the customer experience. This is partly a result of the product simplification I mentioned above and partly a result of effectively deploying AI. For example, when we embedded agents into the global risk hold process, decision times fell by 2/3 and false positives dropped by more than 40%, meaning faster decisioning for clients and less work for our teams. And we are seeing a similar trajectory with our Agentic call center deployed in partnership with CRAI, a containment rate above 40% and a return on taken cost of 5 to 10x and no negative impact on customer NPS. And of course, no area is impacted more by AI than software development where we are in the midst of a generational transformation. Working with leading partners such as cognition, Anthropic and Open AI, we have seen a significant acceleration in the speed of new core deployment, including the modernization of legacy applications. Again, speed and cost improvements reinforce one another as we focus the efforts of our 14,000 engineers towards our combined targets of lower cost, greater speed and high platform availability and resiliency. And the rest is execution.

And as I mentioned, we are fundamentally transforming how the company operates day to day. Each Elevate work stream is owned by the senior most team in the company, our revamped operating committee, chaired by myself, Paul and our new Chief Business Officer. We track core KPIs weekly to sharpen our decision-making and follow-through. War rooms bring additional urgency to complex issues and a dedicated process reengineering team supports select initiatives. From a Board perspective, last week, we announced that Raj Seshadri will join the Board after a long career at Mastercard, BlackRock and City among others. Raj joined several new directors who joined in the last year, including Gord Nixon, our Chairman and former CEO of RBC; Gary Shedlin, Vice Chairman of BlackRock; and Celine Dufetel, CFO of Bridgewater. Together, these appointments strengthen the Board's industry expertise and stewardship.

Lastly, I want to comment on the company's sustainable competitive advantage, which I see in 2 dimensions. First, our scale and how AI unlocks its power and second, our broad interoperable product capabilities. The combination of these competitive advantages and our regulatory, operational and workflow expertise creates the potential to drive attractive and persistent growth over time. Let me start with scale and data. We are in the privileged position of being able to see more money addressed and more money in motion than any other company in our space. I mentioned our leading position across our businesses at the beginning of the call. That puts us in the enviable position of being on one or both sides of transactions, especially in the U.S. AI then becomes an accelerator for us. Digital identity, fraud on us low-cost, low latency efficiencies, KYC, underwriting and autonomous agents, all these are use cases that we can now address much more effectively. This gives us an inherent advantage over competitors in delivering value across our entire client base.

From small businesses who are thinking about how to market to their customers, to large merchants seeking to reduce fraud and payment acceptance costs to community banks and credit unions seeking a better understanding of their comparative performance or faster customer onboarding and underwriting. It also makes us a natural partner for AI fintechs that have a great product, but no distribution. And for AI hyperscalers that have the know-how, but like a detailed understanding of and data for merchant and bank payment workflows. Expect us to lean further into this area. Our second structural advantage is product breadth and interoperability. We face monoline competitors in each business. But Fiserv is a unique combination of businesses enables us to support clients in a way those competitors cannot. For small businesses, that includes integrating products like Clover and Cash Flow Central into their digital banking experience across more than 1,000 banks. Think of it as a one-stop shop for all of their needs.

For enterprise clients, all of Fiserv's capabilities come together to deliver a unique product offering, merchant acquiring a bank grade sub-ledger global payouts, KYC and embedded finance products for their buyers and sellers as well as a broad network of partner banks around the world. For financial institutions, it provides a full suite of products to monetize and grow their SMB book a modern core and digital banking solutions for consumers and companies, payments, debit and credit card issuance, low-cost operational deposits from merchant clients through StoneCastle and a whole host of others. It also helps future-proof them for AI and digital currencies through AgentOS and Finxact. This product breadth creates highly integrated multiproduct relationships with many more paths to monetization. And as part of our business become more commoditized and face price compression, these multiproduct relationships allows us to move up the value chain and capture opportunities by delivering unique solutions to our clients. That is an exciting conversation for future earnings call. For now, I will turn it over to Paul to cover the details of Q3 and our guidance. Thank you.

Paul Todd

Thank you, Takis, and good morning, everyone. I will cover details on total company and segment performance in the third quarter and our guidance for 2026. Beginning on Slide 5, a Total company Q3 adjusted revenue was $4.85 billion, a 1% decrease compared to the prior year and within our guidance range of low single-digit percent decline. On an organic basis, revenue was flat. The previously announced student loan servicing and managed ATM business divestitures were a roughly 100 basis point headwind to Q3 adjusted revenue.

Q3 total company adjusted operating income was $1.5 billion, resulting in adjusted operating margin of 31.2%. Third quarter adjusted earnings per share was $1.75. Our Q3 results reflect an adjusted effective tax rate of nearly 21%. We generated $679 million of free cash flow in 3Q. And year-to-date, our free cash flow conversion of approximately 71% is roughly in line with last -to-date levels. We continue to target approximately 90% of free cash flow conversion for the year. All of these results were in line with our expectations. Now I will turn to the performance by segment for Q3 starting on Slide 6 for Merchant Solutions. For the quarter, Merchant Solutions adjusted revenue declined 3% and organic revenue declined 2%. Small Business revenue declined 2% on an adjusted basis and 1% on an organic basis. As we highlighted in Q2, Small business revenue was impacted by both lower Argentina anticipation and hardware sales as compared to the prior year period. Small business volume grew 2% in the quarter.

Clover revenue grew 1%. Q3 was the last quarter of higher nonrecurring revenue from the year ago period. Clover processing revenue was stable and grew 12%, driven by our GPV. As the impact of prior year nonrecurring revenue abates, we expect Clover to return to double-digit revenue growth for the fourth quarter. For the year, we expect overall Clover revenue growth in the mid-single digits as we said last quarter. 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 with the low end of this where we are operating today with minimal impact from non-Clover conversion. Value-added services revenue contributed 23% of Clover revenue in Q3, down from 26% and declined 3% from a year ago. However, it remains stable ex Argentina. Our non-Clover SMB revenue was down 6%. Moving to enterprise. Both adjusted and organic revenue declined 3% as we faced the largest impact from prior year nonrecurring revenues during the quarter. Enterprise transactions remain in the range we expect growing 5%.

Lastly, in processing, adjusted and organic revenue declined 7%. Third quarter adjusted operating income for the Merchant Solutions segment was $724 million, with adjusted operating margin of 28.7%. Now I will cover Financial Solutions, starting on Slide 7. For the quarter, adjusted revenue was unchanged versus the prior year, inclusive of a 200 basis point impact from divestitures. Organic revenue grew by 2%, in line with the low end of our medium-term target range for adjusted revenue growth. Our underlying account and transaction growth in Financial Solutions was in line with our expectation and recent performance. In digital payments, adjusted revenue declined 3% and including a 300 basis point headwind from the managed ATM divestiture, which closed on August 5. Organic revenue was flat versus the prior year period. Payment platforms transactions grew 4%, driven by continued debit processing and network transaction growth. Our consumer payment platforms transactions were down 1% and with stable growth in Zelle being offset by continued headwinds in Bill Pay.

Moving to issuing. Adjusted revenue grew 5%, while organic revenue grew 7% and reflecting the student loan servicing divestiture, which closed September 2. Issuing revenue growth was driven by continued growth in the business and successful implementations during the quarter. Finally, in banking, revenue declined 3% on an adjusted basis and declined 5% on an organic basis. We saw core accounts declined 2% year-over-year, while overall accounts and positions, including Finxact grew 7%. As Takis highlighted, we believe we are seeing sustainable improvement in customer attrition and customer wins. We expect these improvements to positively impact revenue in 9 to 12 months. Meanwhile, current financial trends reflect the higher attrition levels we saw in prior periods. Third quarter adjusted operating income for the Financial Solutions segment was $887 million, resulting in an adjusted operating margin of 38.1%.

Turning to leverage and capital allocation on Slide 8. From a leverage standpoint, we finished the quarter with a gross debt to adjusted EBITDA ratio of 3.1x and an improvement from last quarter with over $800 million of debt paydown during the quarter. For the year, we expect to end the year with a gross leverage ratio of approximately 3x. Our GAAP EPS was impacted by a $12.04 per share noncash goodwill impairment charge as a result of the sustained decline in our share price and market capitalization. I wanted to give more details on the updated Project Elevate savings target Takis covered. We have identified a total of $1 billion in savings opportunities up from the prior $500 million plus that we highlighted at Investor Day. As we move forward, we will strike a balance between margin attainment and investing for sustainable growth

However, this gives us confidence in our ability to drive adjusted operating margin towards 37% over the longer term. As we said at Investor Day, we continue to expect at least a 1:1 return on Elevate savings versus the transformation expense. Furthermore, we expect the significant benefits from system decommissioning and expansion of operational improvements to be back-end weighted. As such, we expect the incremental savings opportunities we have identified will largely come beyond the 2027 time frame. As Takis also mentioned, we are in conversations with multiple parties related to alternative ownership arrangements for multiple noncore businesses. While there is no certainty of the outcome here, we would expect to devote any after-tax proceeds we generate to a combination of share repurchase and debt paydown.

Now with Slide 9, I'll move on to our guidance. As mentioned earlier, Q3 business drivers and revenue came in as we expected. The initiatives we discussed also remain on track to drive our expected acceleration in Q4 revenue. Our guidance for the year is unchanged and reaffirmed from what we provided 3 months ago. We continue to expect adjusted revenue for the year of down 1.5% to down 0.5% and after factoring in a full quarter impact of the student loan servicing and managed ATM divestitures. Our organic revenue guidance for the year is also unchanged at minus 1% to flat. For the fourth quarter, we expect both Merchant and Financial Solutions organic revenue growth in line with the range of our medium-term targets. We expect adjusted revenue for our Financial Solutions to decline in the low single digits due to the divestitures with organic revenue growth roughly consistent with the 2% we reported in Q3.

We expect the student loan servicing divestiture to have an approximate 400 basis point impact to issuing while we expect the ATM services business will have an approximate 500 basis point impact to digital payments. In merchant, we expect adjusted and organic revenue growth in the 6% to 8% range. Moving on to adjusted operating margin for the year. We continue to expect adjusted operating margin of approximately 31% to 31.5%, and adjusted EPS of between $7.20 and $7.40. Our adjusted EPS assumes a 19% adjusted tax rate for the year, implying an approximate 23% adjusted tax rate for Q4. With this, we are tracking to the midpoint of our guidance range for adjusted earnings per share. We expect capital expenditures to be high single-digit percent of adjusted revenues and an approximately 90% free cash flow conversion ratio, both unchanged from our prior guidance.

I want to wrap up with 4 key takeaways. Our Q3 results were in line, notably adjusted revenue down in the low single digits, as we said in August. We expect fourth quarter organic revenue growth across both segments to be in line with our medium-term adjusted revenue targets. On Project Elevate, we have identified a total of $1 billion in savings opportunities up from the far $500 million. This gives us confidence we can trend towards 37% adjusted operating margins over the longer term. Based on the underlying trends in the business, the progress we have made on Project Elevate and our portfolio review, we plan to repurchase $500 million of our stock in the fourth quarter. And with that, we will now start the Q&A session.

Operator

[Operator Instructions]

Our first question comes from Andrew Schmidt from KeyBanc Capital Markets.

分析师问答

Andrew Schmidt

Good to see the improvement in the banking core attrition trends here. Maybe we could dig into that a little bit. Takis, I know you mentioned 4 items. Maybe talk about where you're at with those 4 items that you're talking to clients about. And then Paul, I think you mentioned a 9- to 12-month time frame for improvement. Is that the right time frame we should think about in terms of getting back to that low single-digit threshold? Any details there would be helpful.

Takis Georgakopoulos

Thank you, Andrew. I mean it's pretty much what I said, right? So clients want to know that you give a damn. As my old boss used to say, that you are not going to embarass them in front of your clients, in front of their clients with outages and other issues and that we are really committed to helping them run and grow their business effectively because we are a critical infrastructure provider to our banks. This is something that the team has started working on from the beginning of this year with better customer service and investments in technology. And I think they're seeing the continuity of that. And that's what gives them confidence that they can stick with us and we will continue to make progress.

So when you look at the actual numbers of what we've seen so far this year, attrition is down 17%. It's down by number of clients and it's down by revenues, the 17% is the revenue number. And everything that we see in front of us points to the fact that peak attrition is behind us. And at the same time, because we have that unique set of products, whether it is feedback, whether it's plus all of these around and agent and everything else we can offer. We also see client wins up by more than 50%. And the base is much lower than I would have liked, but it's the right trajectory. So what we see in front of us has been really positive conversation, an acknowledgment of the progress that we are making and people seeing the change in the trajectory and the change in how we engage with them.

Paul Todd

Yes, Andrew, I would just -- on the second part of your question around the timing, yes, you're right. That's the right framework to think about it in that 9 to 12 months or if you think about from a calendar standpoint. Once we get to the back half of next year, that's where we would start seeing the banking kind of trending to how we talked about it at Investor Day at that lower side of the 2% to 4% growth range that we talked about from FS overall. So that is the right time frame to be thinking about seeing this result flowing through on the back half.

Operator

Next, we'll go to the line of Tien-tsin Huang from JPMorgan.

Tien-Tsin Huang

I appreciate how quickly you all are working here. It's great to hear. Just a clarification, if you don't mind, and then a question. Just on the new core banking wins. Is it larger deals? Are these broad-based? And how would you characterize pricing? Just trying to understand how the new volume is coming in?

And then just my broader question maybe for Paul, just thinking about the additional $500 million in savings. I heard you it will come beyond 2027, but is there a line of sight into what types of reinvestment you anticipate versus the savings potential that you see? I just want to better understand the logic there.

Takis Georgakopoulos

So on the first one, I would say it's across the board, but a little bit more geared towards larger banks because this is where some of our -- the breadth of our capabilities is a little bit more relevant and a lot of the investments on fintech, agentic, et cetera, are a bit more relevant. So I would say, we are seeing progress across the board, but more on the larger end of the market. To go back to the question around Elevate, right? So what we've done just to repeat a little bit is we've analyzed every noncore assets that we have.

We look for assets that have either economic challenges or technology challenges or overlaps with other things that we do or are not consistent with our own term vision. And we said, okay, these things attract expenses, attract CapEx, attract resources from the company. And therefore, we need to kind of rationalize consistent with where we want to take the company in the longer term. And that together with the early results that we are seeing from deploying AI is what drove the delta between $0.5 billion and $1 billion. And it's only been 3 months since last time we spoke. So I would say we need a little bit more time to be much more concrete around what benefit we are going to see by year leading to that kind of long-term 37%. So we need a little bit more time and will come in the fourth quarter, and we'll be much more specific about at least the 2027 impact.

Paul Todd

Yes. And Tien-Tsin, I would just add on as it relates to any potential investments that we would make. I mean we always look at if there are investments to be made that enhance long-term value creation for the company. And so as we go over a 3-year timing horizon, those may arise if they do, obviously, we will evaluate them just like we would any time. But the target is 37%. This gives us higher conviction around a clear path of annual margin expansion. And as Takis said, anything as it relates to incremental '27 that we'll talk about on our next call.

Operator

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

William Nance

I wanted to maybe focus a little bit on the merchant segment. And I had to ask this, but can you talk a little bit about the trends that you're seeing in Argentina what's your level of visibility in Argentina going forward and sort of the range of outcomes for this to remain a headwind or stabilize? I think particularly on the anticipation I think you noted it the Clover [ SaaS ] penetration. We've been in a lower inflation environment for a while there. So I was wondering if you could comment on whether that activity specifically has sort of normalized. And then how much of a role do you think that will play going forward to the overall results.

Paul Todd

Yes. So Will, as it relates to Argentina, you saw in our disclosures that it was an increased headwind for us this quarter. I would say that we expect this to be kind of the peak of the headwind as it relates to that dynamic of just the revenue flow through there. And I would say, overall, I mean, the situation down there economically is one that's still from just an overall volume standpoint is challenged. But this becomes much more of an abating headwind as we move forward, albeit we don't expect this to turn into any type of a growth tailwind for us in the near term.

I would just reiterate that this is a great business. We've said that for a long time, there's not a loss component down there. We continue to make a good return. It's just from where it's been, to where it is now, it's providing negative comparative that is more enhance this quarter, but we'll get better on the go forward.

Operator

Our next question comes from Harshita Rawat from Bernstein.

Harshita Rawat

I want to follow up on Project Elevate savings guidance increased to $1 billion. Takis, how do you get to manage customer and revenue churn and disruption as you kind of decommission certain projects and divest certain assets. And then, Paul, you have almost $750 million of add-backs year-to-date on price of transformation, M&A and other costs. When can we expect those add-backs to start moderating?

Takis Georgakopoulos

Yes. Thanks, Harshita. Let me start maybe. So as I said in my prepared remarks, I really don't see those things as adding against it is working against each other. I see them as working synergistically like the example that I gave is a real one. Risk holds, the way we were managing that on Clover was through a very manual process. That meant it took a long time to decision whether that was an actual fraudulent activity or it was fine. And that's created actually friction for clients. You embed AI and machine learning, you automate the process, you make everything run faster and you need many fewer people to actually touch that transaction than you did in the past. So a lot of the work that we are doing on Project Elevate is around identifying the end state. I gave the example last time of what we are doing with Commerce Hub.

You build CommerceHub so that it replicates the functionality of all of the legacy gateways. And then you migrate clients with very little work on their side. because they go to a new gateway that does everything that one did. But by the way, there's also a bunch of other stuff much better, including better APIs and better documentation and faster onboarding and better configurability. So I don't see those things as either or for the majority of the work that is part of Elevate. As I did mention, there are a bunch of smaller products that we have, and there is a ton of them. Not a ton of them, but there are quite a few of them. And on those, we are going to be thoughtful, we are going to have very few clients each. We're going to work with the clients. We are going to find the right solution for them so that they can continue to get what they have today. But just get it in a better way. So -- and that's part of the reason why I'm not ready to tell you exactly the timing of how the savings are going to materialize because we need to do that work at a higher level at.

Paul Todd

Yes. And Harshita, on the second part of your question around the transformation spend. This will continue into 2027. We do expect Q4 transformation spend to be roughly in line with what we saw in Q3. I would just highlight, and I said this in the prepared remarks, and I said this at Investor Day as well, we still expect to have a roughly one-for-one kind of return or payback as it relates to the transformation spend. And obviously, that's reflected in the $1 billion Elevate target that we now have and the spend trending toward that $1 billion in size.

Operator

Our next question comes from Timothy Chiodo from UBS.

Timothy Chiodo

Great. And on the incremental Elevate savings. Thanks for clarifying that it sounds like that's going to be more 2028 and 2029. So with that context, I was hoping we could just talk a little bit about first half versus second half margins in 2027, appreciating that there's there'll be more detail to follow. But when we think about the year next year in the first half, we'll still have the impact from some of the investment made in the second half this year, but also balanced by some of the ramping revenue, whether it's Desjardin or Direct Express or others. I was hoping you could just give a little bit around the cadence of how we should think about margin expansion in 2027 on a first half versus second half basis.

Paul Todd

Yes, Tim. It's early for us to give that kind of clarity. We'll obviously give that clarity on our next call when we give the full year guide. I would say some of the dynamics you're talking about are accurate in some of the flow-through dynamics. But as it relates to what we specifically will guide to first half and second half, we'll talk about that on the next call.

Operator

Next, we'll go to the line of Darrin Peller from Wolfe Research.

Darrin Peller

It's good to see the expected acceleration in merchant in the fourth quarter to the medium-term targets. Maybe help us understand, #1, what was the recurring revenue growth rate had you not had these tough comps from the changes you made still lingering into the third quarter of last year in the merchant segment in particular versus what we saw the negative 3%. So what would have been positive what just thinking about the bridge from third quarter to fourth quarter?

And then maybe just while you're on the topic, Takis, maybe you can touch on the competitive landscape in merchant just because, obviously, there's been a lot of push by a lot of competitors around incremental POS solutions. And there's been a push for reduced attrition across the industry, obviously. And so I'm curious the conviction that you have in terms of sustaining that medium-term guide for merchant, where is it coming from? What are you seeing from an attrition standpoint in the merchant segment in particular with Clover?

Takis Georgakopoulos

Yes. Maybe I can start with the second one and then Paul with the first one. So thinking about our 2 major segments, SMB and enterprise, starting with the enterprise, which is very simple, right? So our existing customer base remains very, very stable with very low attrition. What we have seen, which I talked about a little bit last quarter, since we built our business development team and with commerce have ready to go, we are seeing a tremendous increase in our pipeline. Obviously, the same type stake, the sales cycles are a little bit lower, so it's going to take some time to show up in our revenues. But everything that we see in the enterprise with e-commerce platforms points to a real opportunity there. And we mentioned a couple of the names that we've started winning.

On the SMB side, obviously, it's a highly, highly competitive market. What we are seeing is pretty much stability in terms of GPV growth yields and everything else in our business. [indiscernible] it's growing double digit. ISV is growing. Direct is growing and bank is growing. So we are seeing a continuation of the trends that we experienced in the last few quarters. And then what we are counting on is all of the things that we spoke about at Investor Day, which are all of the investments related to higher added services. Continued growth of Global Capital, launching a differentiated high-yield savings account, enhancing our vertical solutions, especially in retail e-com, the Clover agents and so on and so forth. These are the things that are going to drive the incremental growth on the value-added services where I feel like we have a ton of upside.

And the last thing, which is really important, which is part of the constraint that Clover had in the past, is it could not scale up when clients were becoming large, sophisticated, multi-location and so on and so forth, that would ever leave us to a competitor or we would have to migrate them to one of our other platforms. Now as we integrate Clover with CommerceHub, that will no longer be a constraint which means that Clover can continue to grow in upmarket, which I believe will be a significant unlock. So highly competitive environment, I see stability, and I'm hoping that all the investments we did this year will drive bus growth next year.

Paul Todd

And Darrin, on the part of the question around the fundamental performance in Q2, I'd say the fundamental performance of Q3 for merchant was in line with 2Q slightly better if you kind of remove the variables, and we would expect that to be consistent from a Q4 standpoint. The key for Q4 versus Q3 is the underlying business strength is so muted by all of the variables, the comparative dynamics that once we get to a clean Q4, you'll see that fundamental performance reflected in our overall reported results.

Operator

Our next question comes from Jamie Friedman from Susquehanna.

James Friedman

A question about Clover for Enterprise. Takis, back at Analyst Day, you had decomposed the Clover distribution. You remember this between direct and bank partner and ISV. And how should we be thinking about the distribution strategy for Cover for enterprise as you roll that out?

Takis Georgakopoulos

Yes, it's 2 parts to the answer, right? So one part -- and this is 2027, it's not a fourth quarter. It's something that will roll out next year. So there are 2 ways to think about it. One is in our book of business. Clients continue to grow. They continue to open new stores, et cetera. So we will be able to support them as they continue to expand. And that's kind of use case #1. Use case #2 is if you think about some of our larger, for example, retailers, today, those retailers come into commerce, and they take hardware from a third-party provider. From 2027, that will no longer be the case because that hardware can be now Clover hardware.

So there are 2 -- obviously, the Clover value-added services will be less relevant for an enterprise client. But from a hardware standpoint, we will be able to support them in an integrated way with CommerceHub. So I think there's 2 ways to generate value. The larger end of the Clover segment and continuing to support that. and then opportunities to do more revenues and higher margin with enterprise clients.

Operator

Our next question comes from Dan Dolev from Mizuho.

Dan Dolev

Really nice to see the stock reaction, well deserved. A lot of times we're getting questions from investors as they get to know you a little better, like who's really -- who's Takis? Are you over the long term? Are you more focused on growth over the long term? Really strong savings margin expansion. So maybe you can give us a little bit of a glimpse into your, let's call it, like long-term philosophy and vision for Fiserv. I think a lot of people would appreciate that.

Takis Georgakopoulos

That's an unexpected question. We I've done both in my career, I've done the cost cutting and have done the growth. And I think you will be hard pleased to find someone who doesn't enjoy growth and innovation and going now and amazing things for our clients. In our case, we actually have to do both and we have to do both at the same time. We need to do the basics right, which means we need to get the company to focus on the few things that are going to drive long-term growth. But in order to do that, you need to eliminate all of the things that are extraction. There are things that kind of made sense maybe a few years ago, but don't make sense anymore. Things that, at some point, we thought would grow but actually have not grown things that we don't know how to do well. So we need to do those things at the same time.

I think Project Elevate simply says that on a static basis, we can run our business, $1 billion more efficiently than we've done in the past. But as we do that, that will generate opportunities to come up with new and interesting things about our clients. I think it's very clear in my mind that in the operating committee's mine, what are the 2 major drivers of sustainable growth for the company, which is our scale and data, and our multiproduct capabilities. But we need to be able to deliver those to the market in a way that's effective and in a way that allows us to monetize our core assets. So unfortunately, right now, we have to do both of those things at the same time.

Operator

Our next question comes from Vasu Govil from KBW.

Vasundhara Govil

It looks like a lot of good progress in the banking business. And I think, Takis, you mentioned agent OS has nearly 200 banks now in the pipeline. I'm just curious if these banks are actively budgeting and planning deployments or sort of still more in the experimentation or evaluation phase? And should we think about agent OS as more of a retention tool for clients at this point? Or do you think it's going to be a meaningful contributor to revenue growth over the medium term?

Takis Georgakopoulos

Yes. Right now our clients are in the phase of Rapid regimentation towards deploying an adoption. It's hard to know exactly how agents are going to play out and how they're going to scale and how quickly. But the way I look at agent OS is in a couple of different ways. First, it's an overall orchestration layer that banks can use, not just for agents. But in the old days, we used to talk about RPA than about machine learning. So think of it as any -- sorry, any process that you use to automate and streamline and create efficiency in manual processes that you have today. It's going to start with relatively simple use cases that are going to get more complex and more autonomous over time as both we and our clients and regulators get more comfortable with those use cases.

But in the interest of being conservative, we start with always human in the loop before we can continue to expand that. So that's one component. The second component is the way we are pricing for agent OS is based on actual value that we generate for clients. And therefore, think of it as a version of tokens, meaning the more you use our platform and the more savings you generate for your bank, the higher the revenues for Fiserv as well. So we are building it in a way where our interests are aligned and the more they use it and the more benefits they see, the higher the revenues that we are going to get. So it's both a stand-alone revenue product. It is partly a retention component. But in my view, it's also a very big offensive move because it is a differentiated product. It ties very nicely not just with what we do, but with whatever processes and platforms the banks may be using beyond just Fiserv. So I also see it as an offensive growth initiative for our business.

Operator

And our final question comes from Jason Kupferberg from Wells Fargo.

Jason Kupferberg

Thanks for detail today. I'm just wondering, given the current trajectory of the business, would it be fair to assume that 2027 top line growth should be pretty consistent with your medium-term targets at the segment level? Obviously, that's the case with your Q4 '26 guide. And then just underneath that, I know you mentioned new Clover products that could move the needle next year. Does that imply you expect Clover revenue to get into that medium-term target range of 15% to 20% next year?

Paul Todd

Yes, Jason. So a couple of things. One, obviously, as it relates to 2027, we'll give guidance on that on our next call as it relates to overall by the segments, by lower all of those dynamics. I would say this, nothing has changed as it relates to our medium-term growth targets. Obviously, the margin, it's now got a higher threshold to it. But all of those medium-term growth targets are the anchor far as we look at 2027 and beyond of what we expect the business to do. And we said Q4 is going to mirror those growth targets. And as we look forward, nothing kind of has changed as it relates to how we view the business and the growth targets related to that.

Operator

And that was the final question

Paul Todd

And with that, we'll wrap up for today. We thank for all the questions, and we look forward to all the engagement over the coming days and weeks. Thanks again. Thank you.

Operator

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