I have followed FISV the entire way down and every time i refresh it, struggle to get confidence given how opaque the industry is. At 6x earnings it's hard to ignore. Do you think Clover hits a point of diminishing growth as their cross sell runway into their legacy base runs out? Secondly, how do you think about the stability of their bank software business given how many different products there are?
The sales motion back into the base has not really started for Clover. Fiserv pretty much stopped selling other SMB solutions to sell Clover several years ago. The significant majority of growth for Clover has come from new merchants. Obviously, there’s a sizable base of non-Clover merchants that are stagnating b/c some leave and some go out of business each year and are not being backfilled by new sales. They do have a plan to move those merchants over to Clover in a non-disruptive way while boosting yield and improving retention. For me, Clover is the best part of Fiserv, and I do see path to mid-teens growth for it which would bring overall merchant revenue growth to the 6-8% range. They are very transparent with Clover as well, which to me is important. The bank business I’m more uncertain about. It sounds like they have a handle on the problem(s) but sometimes degrading service quality takes a long time to present itself and be solved. Jack Henry is their biggest competitor in the space and they are very bullish on their prospects over the next couple years due in part to the disruption at Fiserv.
I have followed FISV the entire way down and every time i refresh it, struggle to get confidence given how opaque the industry is. At 6x earnings it's hard to ignore. Do you think Clover hits a point of diminishing growth as their cross sell runway into their legacy base runs out? Secondly, how do you think about the stability of their bank software business given how many different products there are?
The sales motion back into the base has not really started for Clover. Fiserv pretty much stopped selling other SMB solutions to sell Clover several years ago. The significant majority of growth for Clover has come from new merchants. Obviously, there’s a sizable base of non-Clover merchants that are stagnating b/c some leave and some go out of business each year and are not being backfilled by new sales. They do have a plan to move those merchants over to Clover in a non-disruptive way while boosting yield and improving retention. For me, Clover is the best part of Fiserv, and I do see path to mid-teens growth for it which would bring overall merchant revenue growth to the 6-8% range. They are very transparent with Clover as well, which to me is important. The bank business I’m more uncertain about. It sounds like they have a handle on the problem(s) but sometimes degrading service quality takes a long time to present itself and be solved. Jack Henry is their biggest competitor in the space and they are very bullish on their prospects over the next couple years due in part to the disruption at Fiserv.