Dive Brief:

• For the first quarter of the year, Fiserv’s merchant acceptance segment saw 18% adjusted revenue growth over the same period a year earlier, with global revenue growth of its small and mid-size merchant operating system Clover up 39%, company executives shared during a Wednesday earnings call.
• Fiserv’s other business segments, fintech and payments, lagged merchant acceptance: They grew 6% and 4%, respectively, in the quarter. The company’s revenue totaled $4.1 billion in the first quarter, up 10% over the same quarter in 2021. Fourth quarter net income for Brookfield, Wisconsin-based Fiserv was $669 million.
• Clover and its enterprise merchant counterpart Carat “continue to gain significant traction with clients,” said Fiserv CEO Frank Bisignano. The integration of BentoBox’s restaurant technology into Clover is “well underway” at restaurants, he said. Carat revenue grew 20% in the quarter and saw growth across verticals including travel, government, technology and quick-service restaurants.

Dive Insight:

Clover, Fiserv’s operating system for small and medium sized businesses, continues to build on the strength of its product offering “to attract and retain more merchants and expand relationships with them,” said Fiserv CFO Bob Hau during Wednesday’s call. In the first quarter, Clover’s quarterly gross payment volume was $49 billion, Hau said.

Fiserv’s merchant acceptance segment is “poised to deliver full year revenue growth at the high end of its medium-term outlook” of 9% to 12% growth, with Clover expected to account for about 25% of the segment, Cowen Analyst George Mihalos wrote in a note to clients.

Merchant acceptance made up the biggest share – 42% – of Fiserv’s $15.4 billion adjusted revenue mix in 2021, the company shared during a March 8 presentation on that aspect of its business. Payments and network accounted for 38%, while its financial technology segment made up 20%.

The company expects merchant acceptance – which generated $6.5 billion in adjusted revenue in 2021 – to become a $10 billion business by 2025. Clover in particular, which counted 560,000 merchants last year, generated $1.3 billion in revenue, and that’s expected to reach $3.5 billion by 2025.

To further Clover’s growth, Bisignano said during that March presentation Fiserv has targeted restaurants “because of the size and scale of that vertical,” while pursuing retail and professional services, too. “We think that covers a large population, and that’s why those are the verticals that we’re investing in,” he said.

Independent software vendors and launches in Australia, Brazil and India also will aid growth, executives said in March.

Hau noted Wednesday the merchant acceptance growth seen was “a great first quarter out of a five-year projection,” and there’s “lots left to do.” Still, the company is “in very good shape” when it comes to executing on its growth plans for Clover and Carat, he said.

More broadly, Hau said the company feels it’s “prudent” to keep its 2022 outlook unchanged, given that it’s early in the year and the macro-economic factor remains uncertain. Analysts noted margins were lower for the quarter, and Hau said the company is focused on expanding those with improvement expected in the second half of the year.