Fiserv Q3 2025: Rising Net Income Masks Core Profit Decline

Fiserv, a major force in financial technology and payments that powers everything from small business point-of-sale systems with its Clover platform to the core operations of large banks, recently released its financial results for the third quarter of 2025. Let's dive into their latest quarterly report filed with the SEC to see what the numbers tell us about the company's performance.

At first glance, the report presents a mixed bag. While total revenue saw a slight uptick, core profitability from operations took a hit, even as the final net income figure showed surprising strength.

Revenue Stays Afloat, but Costs Rise Faster

For the third quarter ending September 30, 2025, Fiserv reported total revenues of $5.26 billion, a modest 1% increase from the $5.22 billion generated in the same period last year. The growth was primarily driven by its Merchant Solutions segment, which includes the Clover platform, where revenue climbed 5% to $2.59 billion. However, this was offset by a 3% decline in the Financial Solutions segment, which serves banks and credit unions, with revenue falling to $2.33 billion.

While revenue growth was slow, expenses grew more rapidly. Total expenses jumped 6% to $3.83 billion, fueled by a 10% rise in both the "Cost of processing and services" and "Selling, general and administrative" costs. This cost pressure squeezed profitability from the company's main business activities, causing operating income to fall 10% from $1.60 billion to $1.44 billion. Consequently, Fiserv's operating margin tightened considerably, dropping from 30.7% to 27.3%.

The following flow diagram provides a visual breakdown of Fiserv's revenues and expenses for the quarter, illustrating how costs impacted its operating profit.

In the chart above, the unallocated "Corporate and Other" revenue of $344 million primarily consists of postage reimbursements, as disclosed in the filing's notes.

The Bottom-Line Surprise

Despite the decline in operating income, Fiserv's net income attributable to the company saw a substantial 40% increase, rising to $792 million from $564 million in the prior year's quarter. This translates to a diluted earnings per share (EPS) of $1.46, up from $0.98.

So, how did net income jump while operating profit fell? The answer lies below the operating line in an item called "Income (loss) from investments in unconsolidated affiliates." These are entities, like joint ventures, where Fiserv has a significant stake but not full control. In Q3 2024, Fiserv recorded a massive $626 million loss from these investments. In Q3 2025, this swung to a small gain of $8 million. This nearly $634 million positive swing was the single biggest factor in boosting net income, masking the weaker performance from core operations.

Capital Allocation and Outlook

Fiserv continues to be aggressive in returning capital to its shareholders. For the first nine months of 2025, the company spent nearly $5.7 billion on share repurchases. This reduces the number of shares outstanding, which in turn helps to lift the earnings per share figure. This shareholder return program appears to be partly funded by new debt, as total debt on the balance sheet increased by over $5 billion since the end of 2024, reaching $30.2 billion.

In conclusion, Fiserv's third-quarter results reveal a company navigating a challenging environment. While its Merchant segment shows resilience, the Financial segment is facing headwinds. More importantly, rising costs are putting pressure on core profitability. The impressive net income growth was largely due to a non-operating accounting item, a crucial detail for understanding the true health of the business. Moving forward, investors will be focused on whether Fiserv can control costs and reignite growth across all its segments in a competitive market that includes formidable players like Block (formerly Square) and Stripe.