Fiserv characterized the quarter as a disappointing but necessary reset, with total organic revenue up just 1%, adjusted operating income down 7%, and adjusted EPS off 11% to $2.04, as Financial Solutions organic revenue fell 3% and Argentina FX and interest costs weighed on results. Merchant Solutions remained a bright spot, with Clover revenue up 26% and solid small-business growth, but management lowered revenue and earnings baselines, reset its medium-term growth target to mid-single digits, and revised guidance. The company also named new leadership, raised capital spending behind a new AI-focused One Fiserv plan, and lowered its free cash flow outlook.
Thank you and good morning. With me on the call today are Mike Lyons, our Chief Executive Officer, and Paul Todd, Senior Advisor and incoming Chief Financial Officer. Our earnings release and supplemental materials for the quarter are available on the Investor Relations section of fiserv.com. Please refer to these materials for an explanation of the non-GAAP financial measures discussed on this call along with a reconciliation of those measures to the nearest applicable GAAP measures. Unless otherwise stated, performance references are year over year comparisons.
Our remarks today will include forward looking statements about, among other matters, expected operating and financial results and strategic initiatives. Forward looking statements may differ materially from actual results and are subject to a number of risks and uncertainties. You should refer to our earnings release for a discussion of these risk factors. Now I'll turn the call over.
To Mike,
thank you for joining us today. By now you've seen our results and revised guidance for the year. While disappointing, the actions we are taking are driven by a rigorous analysis of the company conducted during the third quarter and represent a critical and necessary reset and a revitalizing moment for the company. We are capitalizing on this opportunity to refocus on the pillars that have long distinguished Fiserv, including exceptional client service, world-class execution, value-added technology solutions, and cutting-edge innovation. Today I will share with you our plans to build a sustainable, high-quality company that will make our shareholders, clients, and employees proud. There are five key messages we want to deliver today.
First, the results of our analysis highlighted Fiserv's outstanding SaaS and payment platforms and our robust portfolio of value-added services uniquely positioned at the intersection of finance and commerce, two large, economically critical, and rapidly evolving industries. At the same time, we also identified certain competitive and client service gaps which we are actively working to fill and are confident that with focused investment we can fully address. Second, we have established a new revenue and earnings baseline consisting of high-quality, structural, largely recurring revenues driven by meeting our clients' needs and aspirations. Going forward, we are shifting our strategic focus and our culture to prioritize sustainable, client-focused opportunities for short-term initiatives. While this pivot will negatively impact near-term results, our team has embraced this change and it will best position us for predictable and sustainable growth and margins.
Third, we have a tremendous opportunity to use emerging technology, including generative and agentic AI, to enhance our mission. Critical software solutions ignite our gateways and orchestration layers, facilitate embedded finance, and improve our operations. We are pursuing these opportunities and other performance-enhancing initiatives under a new action plan called One Fiserv. Fourth, we're building a world-class leadership team that is united in driving these efforts and establishing a culture that prioritizes integrity, fairness, execution, accountability, and client service. Today I'm excited to announce new Co-Presidents and a new CFO. We will also be welcoming three new Directors to our Board, including new Board and Audit Committee Chairs, all of whom bring tremendous experience and highly relevant skills to Fiserv.
Fifth, as we move beyond 2026 with a supportable and transparent financial baseline and key investments in place, we are well positioned to return to Fiserv's roots of consistent mid single digit revenue growth with clear potential for further acceleration over time. When combined with operating leverage, significant free cash flow generation, and highly disciplined capital allocation, this will ultimately support double digit adjusted EPS growth and present an attractive constant compounder investment case. I am personally energized and excited to demonstrate what we can accomplish as the world's largest fintech. In terms of the agenda, I'll start with a summary of the analysis we have completed, which forms the basis for our One Fiserv Action Plan, and then Paul Todd, our incoming CFO, will cover the financial results in detail.
During the third quarter, my first full quarter as CEO, I worked with a management team and several external advisors to conduct a rigorous analysis of the company's operations, technology, financials, and forecasting, including thousands of client and employee meetings and external benchmarking. As the new CEO, it was natural for me to push our team to think critically about our businesses and objectively assess long term value drivers, competitive strengths and weaknesses, and ultimately how we communicate with the investment community. The analysis was integrated into our annual strategic planning process, which starts every August and continues into the fall with ongoing communication and interaction with our Board of Directors. One of the key takeaways from our analysis is that Fiserv's growth and margin targets need to be reset.
This change is driven by a combination of four factors, including slowing cyclical growth in Argentina, the recalibration of optimistic growth assumptions in the original guidance, the impacts of certain deferred investments, and the deprioritization of short term revenue and expense initiatives. I will touch on each of these factors, starting with Argentina, where we have built a highly successful payments business. Fiserv's medium term organic revenue growth target of 9%-12% was originally set in 2023 amidst high interest rates and inflation in Argentina, which greatly benefits our anticipation business there and ultimately drove organic revenue growth in Argentina of 257% in 2023 and 329% in 2024. While we have previously sized the impact of excess Argentinian interest rates and inflation on our organic growth, today we're providing a holistic view of how Argentina has impacted Fiserv's performance.
Specifically, Argentina contributed over 5 percentage points to our 12% organic growth rate in 2023 and roughly 10 percentage points to our 16% organic growth in 2024. This is highlighted on Slide 9. Therefore, excluding Argentina, the company's overall organic revenue growth rate was in the mid single digits in both 2023 and 2024. Year to date, Argentina's organic growth rate is 56%, adding roughly 2 percentage points to our overall organic growth rate of just over 5%. Notably, in addition to strong organic revenue growth, our Argentinian business comes with adjusted operating income margins that are roughly double overall Fiserv levels.
The second conclusion is that while the company's original 2025 organic revenue growth guidance of 10%-12% appropriately anticipated that Argentina's growth would slow some, it also assumed that to compensate for this slowdown, our non-Argentinian businesses would grow significantly faster than their historical mid single digit range. In July, as part of my transition to CEO, we revised down some of these elevated expectations with a specific focus on critical new product launches to better reflect what was achievable based on the work we had completed at the time. However, as we pursued a much broader and deeper full company analysis in Q3, it became clear that there were incremental assumptions embedded in our guidance, including outsized business volume growth, record sales activity, and broad based productivity improvements, all of which would have been objectively difficult to achieve even with the right investment and strong execution.
The third major factor impacting our results is that over the last few years, decisions to defer certain investments and cut certain costs improved margins in the short term, but are now limiting our ability to serve clients in a world class way, execute product launches to our standards, and grow revenue to our full potential. The good news on this front is that these circumstances are entirely fixable, and with the actions we have taken over the last few months along with today's announcements, we are making these investments and are on our way back to the highest standards. The fourth and final factor is that Fiserv's recent results have increasingly relied on short-term initiatives. These initiatives place too much emphasis on pursuing in-quarter results as opposed to building long-term relationships by prioritizing business that both meets our clients' needs and comes with high recurring revenue.
As a result, we have made the decision to deprioritize these short-term revenue and expense initiatives, which of course has some near-term impact on our growth and profitability. Our Q3 results, updated 2025 guidance, and preliminary outlook for 2026 now all reflect current conditions in Argentina, the recalibration of assumptions embedded in our original guidance, all necessary investments, and the deprioritization of short-term initiatives. Given the depth and rigor of our analysis, we believe we have addressed the most critical issues and have established an appropriate go-forward baseline. Another important takeaway from our analysis is that nothing at Fiserv is fundamentally broken. Our businesses are well positioned, the markets we serve are growing, we are expanding into new TAMs, and our clients have a near insatiable appetite for innovative technology and payment solutions.
This reset is about aligning structural versus cyclical growth and sustainable revenues and expenses versus short-term results, particularly as it relates to the company's original guidance. While there are certainly some areas where we are dissatisfied with our recent performance, we found that our challenges are largely driven by our own doing, not the result of a material change in our positioning. We know the issues, and we are already addressing them through investment, more intense focus on operational performance and client service, and a significant cultural shift. Our confidence in addressing these issues was highlighted at the Fiserv Forum, our annual client conference, where we made specific delivery commitments to our customers.
Our analysis also highlighted that we have some of the most innovative platforms in modern finance and payments, including Clover, Commerce Hub, Finxact, Optis, VisionNext, and our ISV platform, which are all extremely well positioned, growing faster than market rates, and continue to generate new client wins. For example, we recently agreed to bring the Clover solution to Japan through a partnership with a leading local financial institution. Together, we will go to market next year with our platform to drive digital payments transformation for the Japanese SMB market. A formal announcement will come in the following months. Earlier this month, we signed an exclusive long-term partnership with Nubank, which is one of the world's largest digital banks. We signed our largest healthcare deal ever in Q3, a key growth vertical for us, with an agreement to provide value-added services to one of our issuing clients.
Thank you, Mike, and good morning, everyone. I want to first take a minute to say how excited I am to be part of the Fiserv team. I have known Fiserv for a long time, but after spending the last two plus years in Fintech Venture Capital, I have a better appreciation for the unique construct of the company, the quality and depth of the assets on this platform, and the differentiated value of its unique distribution capabilities. I look forward to working alongside the fantastic leadership team that Mike has assembled and playing a role in leveraging the company's unique strengths and market leadership positions to drive compelling long-term shareholder value. While we have room for improvement, this is truly an exciting time to join an industry-leading company serving large and important industries who are rapidly adopting new technologies.
With that, I will now cover the financial results of the company, starting with financial metrics and trends on Slide 5. Total Company third quarter adjusted revenue grew 1% to $4.9 billion, and adjusted operating income decreased 7% to $1.8 billion, resulting in adjusted operating margin of 37%, a decrease of 320 basis points. Year to date, adjusted revenue grew 5% to $14.9 billion, and adjusted operating income grew 5% to $5.7 billion, resulting in an adjusted operating margin of 38.2%, flat versus the prior year. Organic revenue grew 1% in the quarter, with 5% Merchant Solutions organic growth and a 3% decline in Financial Solutions on a year-to-date basis. Organic revenue for the company is up. Third quarter adjusted earnings per share was $2.04 compared to $2.30 in the prior year, down 11%. There are three unusual dynamics impacting the company's adjusted EPS of $2.04 for the quarter.
First, the company experienced a $53 million foreign currency expense, or a $0.10 headwind to adjusted EPS. Revaluation of certain assets in highly inflationary countries such as Argentina is recorded through the income statement. During the third quarter, the foreign currency exchange rate in Argentina devalued significantly, resulting in this large expense. Second, Argentina interest rates jumped meaningfully during the quarter, which drove interest expense up about $31 million above last year, or a $0.04 headwind to adjusted EPS. Finally, during the third quarter, Fiserv completed the mutual termination of a merchant alliance joint venture. This resulted in a tax-free gain of $89 million recorded in Merchant Solutions operating income, resulting in a $0.16 tailwind to adjusted EPS. We continue to provide services to this partner through a processing relationship. The net of these three factors is a slight benefit to adjusted EPS.
In the quarter year to date, adjusted EPS increased 6% to $6.65 compared to $6.29 in the prior year. Free cash flow for the quarter was $1.3 billion and $2.9 billion for the first nine months of the year. For the full year, CapEx is now expected to be approximately $1.8 billion or roughly 9% of revenue. Given the revised outlook for earnings and a higher level of capital expenditures, free cash flow for the year is now expected to be approximately $4.25 billion. This higher level of CapEx is directly tied to the start of the One Fiserv initiative Mike mentioned earlier. Now turning to performance by segment, starting on Slide 6, organic revenue growth in the Merchant Solutions segment was 5% for the quarter and 7% year to date. Adjusted revenue growth for Merchant Solutions was also 5% in the quarter and 7% year to date.
The inorganic contribution from the CCB acquisition was offset by steep FX headwinds in Argentina. Moving to the business lines, small business organic revenue growth in the quarter was 6% while adjusted revenue grew 7% on 8% volume growth. This performance was largely driven by strong growth in Clover, in the North America ISV business, and in anticipation revenue in Latin America. Clover revenue grew 26% in the third quarter and was impacted by approximately 100 basis points due to Argentinian FX headwinds versus expectations on reported gross payment volume, or GPV, growth of 8%. Revenue growth was driven by value-added solutions and solid GPV growth. Fast penetration reached 26% due to strength in vertical software sales, Clover Capital, and anticipation. As you can see on Slide 7, excluding the Gateway conversion, volume growth in Q3 was 11%, similar to Q2 growth.
Excluding the significant deterioration of the Argentine peso, Clover GPV growth would have been 1 percentage point higher on both a reported and ex-Gateway basis, leaving us in line with our expectations. Excluding the Gateway conversion in enterprise, organic and adjusted revenue growth in the quarter was 9% and 4%, respectively, driven by transaction growth of 12%. Organic and adjusted growth would have each been 6 percentage points higher excluding the transitory revenue from network fees associated with a large PFAT client that went live in Q3 2024. While this client continues to drive transaction growth for us, the timing of these network fees will continue to pose a grow over challenge to fourth quarter and first half 2026 Enterprise Revenue. Finally, in processing, organic and adjusted revenue in the quarter declined 8% and 6% respectively.
Processing results this quarter were impacted by more difficult comparisons to last year, which included professional services revenues from a processing client and lower hardware sales. Year to date, processing organic and adjusted revenue are down 4% and 3% respectively. Third quarter adjusted operating income for the Merchant Solutions segment was up 3% to $962 million and adjusted operating margin was 37.2%, down 50 basis points from the prior year. The largest detractor to margins in Q3 were higher sales and marketing and distribution expenses along with higher data processing costs and depreciation and amortization expenses, partially offset by a gain on the merchant alliance joint venture change I mentioned earlier. Year to date, adjusted operating income for the segment was up 4% to $2.7 billion with adjusted operating margin down 90 basis points to 35.3%.
Turning to Slide 8 for the Financial Solutions segment, organic revenue declined 3% in the quarter and grew 3% year to date. Our third quarter revenue was negatively impacted by lower periodic license revenue, which impacted the segment's organic growth by 2 points. Looking at the business line level, in digital payments, organic and adjusted revenue each declined 5% due to industry dynamics in the quarter, while the company experienced healthy debit processing, Debit Network, and Zelle transaction growth. In issuing, organic and adjusted revenue grew 1% and 2% respectively in the quarter. Fiserv generated solid accounts on file growth.
However, revenue growth was muted largely due.
To grow over challenges in the output business and in banking. Organic and adjusted revenue declined 7% in the quarter, primarily due to lower periodic license activity. Third quarter adjusted operating income for the Financial Solutions segment was down 13% to $991 million, and adjusted operating margin was 42.5%, down 490 basis points from the prior year. The adjusted operating margin decline results from lower higher margin periodic license revenue, coupled with the ongoing investment in implementation and professional services and technology spend year to date. Adjusted operating income for the segment was up 4% to $3.4 billion, with adjusted operating margin up 50 basis points to 46.3%. Now let me wrap up with some remaining details. The corporate adjusted operating loss was $131 million in the quarter and $380 million year to date.
The adjusted effective tax rate in both the quarter and first nine months was 18.4%, and Fiserv continues to expect the full year rate to be approximately 19%. Total debt outstanding was $30.2 billion on September 30, and Fiserv's debt to adjusted EBITDA ratio increased slightly to three times. Fiserv continues to target long-term leverage at 2.5 to 3 times. During the quarter, Fiserv repurchased 7 million shares for approximately $1 billion and had 49 million shares remaining authorized for repurchase at the end of the quarter. In addition, aligned with the priorities of the One Fiserv Action Plan that Mike laid out, Fiserv announced three acquisitions during the quarter focused on client service, value-added services, and our stablecoin growth opportunity. The acquisition of Smith Consulting Group, which closed in Q3, brings deep subject matter expertise in-house to better serve our clients.
The agreement to acquire StoneCastle Cash Management, which is expected to close by Q1 2026, provides us with a digital currency custody license and unique investment and liquidity services for our merchants and financial institutions. Finally, we acquired CardFree, an all-in-one platform empowering merchants with customized order, pay, and loyalty solutions. With that, I'll turn the call back to the operator to start the Q&A session.