It’s been an eventful summer so far for Fiserv Inc., which was hammered by the recession caused by the Covid-19 pandemic but in July began to regain its footing, according to top executives who spoke Wednesday afternoon.
Revenue for the Brookfield, Wis.-based payments processor dipped 1% in June but began growing again last month, new chief executive Frank Bisignano told equity analysts during a call to discuss the June quarter results. The July uptick follows a quarter in which adjusted revenue slipped 12% year-over-year to $3.22 billion. “We navigated a very difficult macro environment in the second quarter,” he said.
But the pandemic, which kept consumers at home and closed or restricted many businesses, appeared to have little impact on Fiserv’s Clover point-of-sale technology business. Gross payment volume for Clover surged 24% in June and was up fully 32% in July, Bisignano reported. “Even in the pandemic, our merchant business has performed very well relative to the market,” he noted. All told, he added, Clover logged $23.4 billion in gross payment volume for the quarter and is on track to hit $94 billion for the year.
Bisignano credited the signing of more merchants, plus the deployment of virtual terminal technology and order-ahead capability for restaurants, for Clover’s ability to swim against the pandemic’s tide. “The acceptance levels for Clover are much higher,” he said.
Fiserv’s merchant-acceptance unit also gained approximately 120.000 merchant clients from the July 1 dissolution of Bank of America Merchant Services, a longstanding merchant-processing joint venture between the banking giant and First Data Corp., which Fiserv acquired last summer. Bisignano ran First Data before coming to Fiserv as part of the massive acquisition. The end of the BAMS agreement “moves significant scale” to Fiserv and “should lead to attractive expansion,” noted chief financial officer Robert Hau during the earnings call.
Clover’s surge was part of a digital payments strategy Bisignano credited with helping to buoy the company during the tough quarter. Indeed, he said, the virus pushed many businesses to adopt digital strategies, such as e-commerce and contactless acceptance, far sooner they might have otherwise. “What people thought would take place in five years will take place in two years,” he told the analysts. “Our clients are committed to being digital first.”
Still, Covid had a “tumultuous” impact on Fiserv, Hau conceded, a result the company began recovering from late in the quarter. Curiously, debit card transactions “were impacted much more than in previous recessionary periods,” he noted. Fiserv owns both the Accel and Star debit networks, with the latter coming to the company as part of the First Data deal. But peer-to-peer transactions, particularly on the Zelle network, have shown “strong growth,” he added, pointing to five-fold growth in number of accounts live on Zelle.
Fiserv reported $3.47 billion in revenue for the quarter, down from the $4 billion Fiserv and First Data separately generated a year ago. The merchant-acceptance unit logged $1.22 billion, compared to $1.58 billion a year ago for First Data alone. The financial-technology unit slipped slightly to $714 million from $731 a year ago. Fiserv’s third leg, payments and network, also contains some operations that came from First Data, such as debit networking. It posted $1.32 billion versus $1.39 in the same quarter a year ago. Revenue for the corporate and other category came to $208 million, down from the year-ago total of $296 million, which includes $177 million that was posted by First Data.