Yield

Bottom line

On the framework's basis — free cash flow less stock-based compensation less the five-year average of acquisition spend — Fiserv earned $3,408 million of adjusted FCF in FY2025, an 11.2% yield on today's $30.6 billion market capitalisation. The company's own six-year baseline was 3.1–4.3%. Net debt of $28.2 billion against $9.0 billion of EBITDA puts the name at 3.1x, straddling the line that separates the 10% bar from the 25% bar.

The adjustment, line by line

Fiserv's reported free cash flow overstates what an owner keeps for two reasons the framework corrects: roughly $357 million a year of share-based compensation is added back as a non-cash item in operating cash flow [1], and acquisition spend is a recurring capital cost for this company rather than an exceptional one — $17.9 billion across the seven years below [2][3].

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Reported FCF = net cash from operating activities less capital expenditures; adjusted FCF = reported FCF − SBC − trailing five-fiscal-year average acquisition spend. Sources: FY2025 Form 10-K, Consolidated Statements of Cash Flows [4]; FY2024 [5]; FY2023 [6]; FY2022 [7]; FY2021 [8].

The FY2025 line reads: $6,062 million of operating cash flow less $1,763 million of capital expenditure gives $4,299 million reported; less $357 million of share-based compensation and less $534 million — the 2021–2025 average of $848m, $988m, $13m, nil and $820m — gives $3,408 million adjusted [9]. The adjustment removes $891 million, or 20.7% of the reported figure. Fiserv's own non-GAAP free cash flow for FY2025 was $4,435 million, $136 million above the operating-cash-flow-less-capex figure used here, the difference being severance, merger and integration payments added back, net of tax on those adjustments, distributions to non-controlling interests and other reconciling items [10]. This tab uses the unadjusted operating-cash-flow-less-capex definition throughout, which is the more conservative of the two.

Two features of the table carry more weight than the arithmetic itself.

The First Data merger dominates any window that contains 2019. Fiserv paid $15,083 million of cash for acquisitions that year [11], so the FY2023 five-year average is $3,414 million and adjusted FCF that year collapses to $18 million. Read literally, the framework's own formula says Fiserv generated no owner cash in 2023. Treated as the once-in-a-company-history transaction it was, the FY2023 average falls to $398 million and adjusted FCF to $3,034 million. Both readings appear below, labelled.

The FY2019–FY2022 rows carry no adjusted figure because their five-year acquisition windows reach into 2017 and 2018, which the corpus does not hold. Those four years therefore appear on the reported-FCF-less-SBC basis only, which is the basis used for the baseline series in the next section.

The yield, three ways

Derived from filed cash-flow statements [12] divided by market capitalisation per fit_features.market_cap; consensus per fit_features.consensus_forward_yield.

Current. $3,408 million of FY2025 adjusted FCF divided by $30,563 million of market capitalisation is 11.15%. On the market capitalisation implied by the 533,253,986 shares actually outstanding on 1 May 2026 [13] rather than the 549.0 million diluted weighted-average shares the feature file uses [14], the same numerator yields 11.48% — a 33 basis point understatement in the headline figure, in the conservative direction.

Three-year average. FY2023–FY2025 adjusted FCF of $18m, $4,297m and $3,408m averages $2,574 million, an 8.42% yield — 158 basis points below the 10% line. Substituting the ex-First-Data reading of FY2023 ($3,034 million) lifts the three-year average to $3,580 million and the yield to 11.71%. The entire gap between those two answers is the treatment of one 2019 transaction.

The company's own baseline. Measured on a consistent basis — reported FCF less SBC, divided by that fiscal year's own year-end market capitalisation — Fiserv's yield sat in a 3.05% to 4.30% band for six consecutive years before FY2025.

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Numerator from each year's filed Consolidated Statements of Cash Flows [15][16][17]; denominator is that year's diluted weighted-average share count [18] times the last close on or before 31 December, per the feature file's stated method.

The median of the six pre-2025 years is 3.85%. The FY2025 year-end reading is 10.69%, and at $55.67 the same numerator yields 12.90%. On the fully adjusted numerator the current level is 11.15%, or 2.9 times the baseline median — past the 2x threshold the feature file uses to flag a jump. The shape is the fortress signature the framework looks for: a name that traded at a stable 3.5–4% yield for six years now trading near three times that. The balance sheet underneath it is not a fortress, which is the subject of the next section.

Which bar applies

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Total debt is $1,239m short-term and current maturities plus $27,758m long-term [19]; cash of $798m from the balance sheet [20]; EBITDA is operating income of $5,818m [21] plus $3,207m of depreciation and amortisation — $1,857m of depreciation and other amortisation, $1,304m of acquisition-related intangible amortisation and $46m of financing-cost amortisation [22].

$28,199 million of net debt over $9,025 million of EBITDA is 3.12x. The framework's rule places a company in the levered class at 3.0x and above, and in the moderate class below it. Fiserv sits 12 basis points of ratio past the line, and the answer moves either side of it on ordinary definitional choices:

• Excluding finance lease and other financing obligations ($477m current, $1,635m long-term) from debt [23] gives net debt of $26,087 million and 2.89x.
• The consensus data set carries FY2025 net debt of $26,774 million against EBITDA of $9,255 million — 2.89x on the vendor's own definitions.
• Management's stated measure is gross debt to adjusted EBITDA: below 3.2x at 31 March 2026, with a stated expectation of approximately 3.0x at year-end 2026 and a standing long-term target of 2.5 to 3.0 times [24][25].

The company carries a Baa2 corporate credit rating from Moody's with a stable outlook and BBB from Standard and Poor's, whose outlook was revised from stable to negative on 5 November 2025 [26].

The read that follows from those figures: Fiserv belongs in the moderate class, against the 10% bar. Three of the four measures above land at 2.89–3.12x, clustered on the boundary rather than through it, and the capital structure is investment-grade with continuous access to the bond and commercial-paper markets — structurally unlike the framework's levered anchor, where a 25% bar was set against a company running well above 4x with no rating constraint. The counter-case is stated as plainly: on the filed balance sheet, taking all debt and all EBITDA as reported, the ratio is 3.12x and the rule says levered.

Both positions, in arithmetic:

• Against the 10% bar: 11.15% on FY2025 adjusted FCF is 115 basis points above. The three-year average as literally computed, 8.42%, is 158 basis points below; on the ex-First-Data reading, 11.71%, it is 171 basis points above.
• Against the 25% bar: 11.15% is 1,385 basis points short. No reading of the history or the forward estimates closes that gap.
• The 8–9% fortress line does not apply. Net debt of $28.2 billion is not a net-cash balance sheet.

At $30,563 million of market capitalisation and $3,408 million of adjusted FCF, retiring the entire equity would take 9.0 years of adjusted cash flow. Management's demonstrated repurchase habit and its current pace are the subject of Self-Help.

Normalized mid-cycle yield

Fiserv is not meaningfully cyclical. Revenue grew in every year of the seven shown and the drivers of the FY2025–FY2026 decline are company-specific — lower non-recurring data and analytics and licence revenue [27], higher payments to distribution partners, and higher personnel and data-processing costs [28]. There is no commodity or capacity cycle to normalise against.

There is, however, a conversion question worth normalising, because FY2024 and FY2025 sit at opposite ends of Fiserv's own cash-conversion range and the yield answer moves by 500 basis points across that range. The workings, stated so a skeptic can recompute under alternates:

Assumption 1 — the conversion band. Reported FCF as a percentage of GAAP revenue across FY2019–FY2025 was 20.4%, 21.9%, 17.7%, 17.7%, 19.8%, 24.7% and 20.3%. The seven-year mean is 20.4%; the low is 17.7% (FY2021 and FY2022, the post-merger integration years); the high is 24.7% (FY2024).

Assumption 2 — the revenue base. FY2025 GAAP revenue was $21,193 million [29]; management guides 1% to 3% adjusted revenue growth for 2026 [30]. The midpoint gives $21,617 million.

Assumption 3 — the deductions. SBC of $360 million (FY2025 was $357 million; Q1 2026 ran $118 million against $124 million a year earlier [31]) and a five-year average acquisition figure of $364 million, being the 2022–2026 window with 2026 assumed at nil — Q1 2026 acquisition spend was nil [32]. Total deduction $724 million.

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Derived: FY2026 revenue of $21,617m times the stated conversion rate, less $724m of SBC and averaged acquisition spend, over market capitalisation of $30,563m. Conversion band from filed cash-flow and income statements, FY2019–FY2025 [33][34][35].

The mid-cycle answer is 12.06%, and the worst point of Fiserv's own seven-year conversion range still produces 10.15%. Under an adjacent window — dropping FY2024's 24.7% as a high outlier and averaging only FY2019–FY2023 (19.5%) — the mid-cycle figure becomes $21,617m × 19.5% − $724m = $3,491m, or 11.42%.

The assumption most likely to be wrong is capital expenditure. It rose from $1,388 million in FY2023 to $1,569 million and then $1,763 million [36], and Q1 2026 capex of $458 million was 37% above the prior-year quarter [37]. Management guides capex approximately flat with 2025 [38]; each $200 million of overrun takes about 65 basis points off the yield.

The consensus check

The consensus set carries a direct free-cash-flow consensus — not a proxy metric — with a 31 July 2026 vintage, which post-dates both the February 2026 full-year results and the May 2026 first-quarter report.

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Consensus FCF and yields on reported basis per fit_features.consensus_forward_yield (CapIQ, vintage 31 July 2026); adjusted basis derived by deducting SBC ($360m in FY2026, $370m in FY2027) and the applicable five-year average acquisition spend.

Consensus expects $3,880 million of free cash flow in FY2026 — a 12.70% yield on the reported basis and, after deducting SBC and averaged acquisition spend, 10.33% on the framework's basis. FY2027 is $4,280 million, or 12.25% adjusted. Both clear the 10% bar without needing a recovery thesis.

That consensus is not a stretch relative to what management has told the market. FY2026 guidance is adjusted EPS of $8.00 to $8.30 on a weighted-average share count of approximately 530 million [39], with free cash flow conversion of approximately 90% of adjusted net income [40]. That arithmetic — 530m × $8.00–$8.30 × 90% — gives $3,816 to $3,959 million. Consensus of $3,880 million sits inside the guided range rather than above it. The sell side is underwriting the company's own plan, not a recovery beyond it.

The setup that follows from those two facts is fear rather than a forecast dispute: consensus already carries a forward adjusted yield above the bar, and the equity has still fallen 80% from its March 2025 peak (fit_features.capitulation_gauge), the anatomy of which is in Dislocation.

What consensus is assuming, and where it could break. The FY2026 plan is heavily second-half weighted. Q1 2026 GAAP operating income fell 34% to $918 million and operating margin fell 890 basis points to 18.3%; Merchant margin fell 780 basis points and Financial 940 [41]. Against that, the guided full-year adjusted operating margin is approximately 34%, composed of 31–32% in the first half and 35–36% in the second [42]. Roughly 400 basis points of second-half margin expansion has to arrive for the consensus FCF figure to land. Q1 free cash flow of $259 million on the company's own definition was in line with the seasonal pattern management set out in February [43], so the first data point is consistent with the plan; the margin inflection is not yet evidenced.

The path if the second half disappoints. Since consensus already sits above the bar, no mean-reversion underwrite is required for the base case. The relevant question is the downside: how far conversion has to fall before the 10% line breaks. Adjusted FCF of $3,056 million is the break-even — 10.0% of $30,563 million — which implies reported FCF of $3,780 million, or 17.5% of a $21,617 million revenue base. That is below every year in Fiserv's seven-year conversion history, whose floor was 17.7%. Put in guidance terms, at unchanged 90% conversion on approximately 530 million shares, adjusted EPS would have to come in near $7.90 — 1% below the bottom of the guided $8.00–$8.30 range and roughly 3% below its midpoint. Assigning a probability to that outcome: guidance has been reiterated once since February and the 37-analyst FY2026 adjusted-EPS mean has been unchanged at $8.12 over the past 90 days, so no part of that risk is currently in the estimates — I would put the chance that FY2026 adjusted FCF lands below the 10% threshold at roughly 20–25%, rising materially if the second-quarter margin fails to inflect toward the guided 31–32% first-half average. Conversely, the mechanisms that would push the yield higher are already in motion and named: the Project Elevate cost programme, the exit of underperforming Merchant businesses in India, two closed offices and reduced management layers [44]. Management describes 2027 as the first full year of visible growth [45].

FCF to revenue

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Reported FCF from each year's Consolidated Statements of Cash Flows [46][47][48]; revenue from the corresponding Consolidated Statements of Income [49][50][51].

Conversion is stable, not deteriorating. The seven-year range is 17.7% to 24.7% and FY2025's 20.3% is within 10 basis points of the seven-year mean of 20.4%. The trough years were 2021 and 2022, when First Data integration spending was heaviest, and the peak was 2024. FY2026 consensus implies about 18.0% on a $21.6 billion revenue base — inside the historical band, at the lower end.

The related stability test looks similar. Rolling five-year average reported FCF was $3,022 million for 2019–2023, $3,619 million for 2020–2024 and $3,830 million for 2021–2025 — rising in each window, with a coefficient of variation across the three of 9.8% and no negative free-cash-flow year in seven. The framework asks for a stable rolling five-year average rather than smooth annual figures, and Fiserv's record meets that description on reported FCF. On the adjusted basis the equivalent test cannot be run: only three consecutive adjusted years are computable, and one of them is distorted by the 2019 acquisition window.

The two facts that cut against the conversion picture, stated together: capital expenditure has risen 27% over two years while revenue rose 11%, and the FY2026 consensus implied conversion of 18.0% would be the third-lowest reading in the series. Neither is a break in trend yet; both are the specific things a falsifier would watch. The durability of the underlying revenue base over the eight-to-twenty-year horizon is examined in Durability.