Friday , March 29, 2024

Fiserv Lays out a $10-Billion 2025 Revenue Goal for Its Merchant-Acquiring Business

When Fiserv Inc. acquired First Data Corp. three years ago, the Brookfield, Wis.-based fintech took on an enormous commitment to the merchant-acquiring business. Late Tuesday, Fiserv’s top management made clear just how big that commitment is, how fast it’s growing, and how big it will get.

“We see a clear path to accelerate growth to $10 billion by 2025,” said Frank Bisignano, Fiserv’s chief executive, referring to the unit’s revenue goal. Bisignano and chief financial officer Robert Hau spent nearly an hour spotlighting Fiserv’s merchant-processing business in a special online presentation.

The company’s merchant-acceptance unit, one of three that constitute Fiserv’s business, already accounts for 42% of revenue, underscoring its crucial role since the absorption of First Data, long one of the country’s biggest merchant-acquiring companies. (The Payments and Network unit and the Financial Technology division are the other two units making up Fiserv). Now, Fiserv will have to grow the unit at an 11.5% compound annual growth rate to reach that 2025 revenue goal, according to data presented Tuesday. Revenue for the unit last year totaled $6.5 billion, having grown at a 7.5% CAGR since the end of 2019. 

Bisignano: “We see a clear path to accelerate growth to $10 billion by 2025.”

The key to the projected growth, said Bisignano, lies with a couple of critical technologies—Clover and Carat, point-of-sale systems aimed at small merchants and enterprises, respectively. The technologies “attract more merchants, and then [allow us] to expand relationships with them,” Bisignano said. Clover alone accounted for $1.3 billion in revenue last year, representing a 27% CAGR from $800 million in 2019. Hardware sales are decreasing in importance, accounting for 16% of that revenue last year, down from 19% two years earlier. Payments services and software delivered the remaining revenue share. The merchant base for Clover now stands at 560,000, with the fastest growth coming among restaurants. Almost 90% of the Clover clients are new to Fiserv. 

Now Fiserv is focused on integrating BentoBox, a recent acquisition, into Clover, Bisignano said. BentoBox specializes in restaurant technology, serving some 14,000 locations. “We’re furthest along in our initial focus on restaurants,” Bisignano said. To help meet the ambitious growth goal, Fiserv is also relying on independent software vendors and a planned launch in India, Brazil, and Australia. “We expect international to be a meaningful accelerant to growth,” said Bisignano.

Carat, an operating system for enterprise merchants, represents the other leg of this growth plan, having contributed $1.1 billion in revenue last year, up from $900 million in 2019. Growth here will stem from new clients and a resulting rise in transactions, according to Fiserv’s presentation.

One thing Fiserv will not rely on to meet the $10-billion revenue goal is acquisitions. “No M&A, no [foreign exchange]. It’s essentially an organic number,” said Hau. Nor is the company looking to reach its goals by marketing to existing clients. “When it’s time to convert the back book, we’ll convert the back book,” Hau said. 

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