[Operator Instructions] Our first question comes from Tien-Tsin Huang from JPMorgan.

I know you went through a lot of the outlook there. Just maybe could you mind decomposing again what changed in the second half outlook after reaffirming on June 15 and why it's not structural. It sounds like a lot of it is the slower client ramps, for example. Was that driven by change in leadership and clients wanting to better understand the go forward? I'm just trying to understand why it's not structural.

Yes. Tien-Tsin, this is Paul, and I'll start, and then I'll turn it over to Takis for any additional comments. As I said in my prepared remarks, there are several things that changed. And after Takis became CEO, Takis and I went through our operating plan. We went through all the initiatives, all the client impacts and 4 things emerged from that, and that's what I called out in the prepared remarks that we've got about 2 points of incremental headwind from the contracted revenue and Enterprise ramps that I called out at Investor Day. We have about 1 point of headwind from product and other things, specifically hardware. And then we have 1 point from Argentina anticipation, 1 point from divestitures. So if you think of a point from divestitures, that's just mechanical. The point roughly from Argentina anticipation is macro related to just Argentina. And then the first 2 buckets, those aren't structural changes. They are timing-related changes. So we expect to see the vast majority of that revenue. It is just moved out from a time standpoint, and that's reflected in the guidance that we provided this morning.

Yes. And thank you, Paul, and just to add on, Tien-Tsin, just a couple of thoughts from my side. This unfortunately is a transition year with noise, hopefully, will be behind us soon. As Paul said, he and I reviewed every initiative, every budget. And in the case of some of these large deals, actually spoke to the clients to understand what changed in terms of the time line. And this is our most accurate assessment of what's going to happen. To give you an example, one of the clients, one of our largest deals, the clients going through an M&A. We were supposed to go live in September, October. They need more time because of that M&A. So there's nothing fundamentally changing in terms of the deal, in terms of the size of the deal, just the timing moves out by quarter. So we believe that these numbers that we have is an accurate assessment, derisked and does not impact the momentum that we see in 4Q and beyond.

Next, we'll go to the line of Timothy Chiodo from UBS.

I want to see if we could talk a little bit about some of the core banking efforts and outreach to some of the clients. I know that, that was something that we talked about a little bit at the Investor Day. I wanted to see how that's going, the approach, maybe how it might have changed with some of the leadership changes? And then a related topic, if you could just talk a little bit about some of the advantages that Fiserv has, whether it's product or relationships that would help Fiserv to compete with the potential greater entrance of Pismo into the core banking market and issuer processing in the U.S. I appreciate that this isn't really something very, very near term, but as we think about over maybe a [ 5 ] or maybe even longer-term time period than that.

Thank you. Maybe I can start. And I thought there was 2 questions. So on the first one, obviously, one of the things that I've done and spend most of my time over the past few weeks is talking to the clients, and this is not new. I've been doing that since I came here. And at the end of the day, what they say is, in my mind, both pretty simple, pretty straightforward and pretty reasonable. They want platforms that work. They want us to deliver what we promised. They want good customer service, and they want us to help them prepare for the future, but not force our priorities on that. These are not new things. These are the things that this company has been working on and we've been making progress on. And by the way, these are customers that have been with us not for months or years, they've been with us for decades. So we are working on those things. I think we mentioned the 70% reduction in incidents. We mentioned the $100 million extra in infrastructure technology. These are all things that are indirect response to the things that they are looking for. We are also maintaining continuity. We announced that Srini Krish and Andrew Gelb are going to be running the FX business. Both of them have been with those clients for more than a decade each. And then our Vice Chairman has been with those clients for multiple decades. So that will continue. It's BAU. It's no change in terms of what we are trying to do. But hopefully, it will be an acceleration of how quickly we deliver it. And coming from a bank, I know what those expectations look like. On your question of Pismo, I think we have a very broad set of solutions in the market. Some solutions are geared towards credit unions, some are geared towards community banks, some are geared towards large banks and some are geared more towards fintechs, neobanks, et cetera. When we look side-by-side at Pismo versus our own capabilities, not just with Finxact, but how Finxact is complemented by everything else that we have, think of digital banking, think of payment, think of embedded finance, think of issuing, we believe that we have a very complete set and the size and growth of Finxact has been quite spectacular, especially over the past couple of quarters. So I feel very good about our competitive position, both in the traditional space and in kind of the newer, more modern cloud-native space. And we've seen the momentum. Flagstar is a great example of that. So I'm actually very excited about what's coming ahead.

Our next question comes from Darrin Peller from Wolfe Research.

Just given the management changes, how you're ensuring that everyone is aligned properly. And then, Takis, when you think through this portfolio review and the potential for incremental changes or divestitures, maybe give a little bit more color into what you're looking at, what types of size businesses you might want to think about or if there are businesses of meaningful size that could potentially be carved out to keep the business more streamlined and what we should expect time line-wise around this?

Yes. So again, 2 questions. So let me start with the second one. So we did a very kind of detailed portfolio review of our business. And the lens that we took is are we in places that are not growing, that don't have the kind of profitability profile that we like, et cetera. And that's why we ended up with the 3 that we ended up. My approach is a little bit different, which is in addition to all of that, I want to look at what our clients need and what we make and take each one of those things that we make and say, do we have a best-in-class product. We know our clients want best-in-class. Can we deliver best-in-class. And by the way, can we deliver them in an integrated and simple-to-use way. If the answer is yes, we have a best-in-class product, then we just keep on doing what we are doing, just try to do it better and fine. If we are not best-in-class, then we will look at what are the alternatives. And you can obviously understand what the alternatives may look like. And we're going to look at each and every one of them, focusing on areas where we have not been able to meet our expectations over time, where there are other solutions in the market that are actually really good because we know our clients want the best, they don't necessarily care who manufactures that best. So that's what we are going to do. I don't want to get into details of the size because I've only been here for like -- I mean, I've been here longer, but I've only been doing the job for 5 weeks. So I want to give myself a little bit more time to work with the team and get to the bottom of those questions, but we are going to do that with a very high sense of urgency, and we will report back as we make progress. And there is no kind of preconceived notion as to whether these are going to be small or large. They are going to be in every place where we can't effectively compete. And obviously, we're going to prioritize areas where we can't compete and where we are expanding a lot of technology resources to deliver those products. So I need to come back to you with more specifics. I think we are not ready yet. In terms of the continuity and the management team, we have continuity. The merchant business remains the merchant business. The priorities are the same. We have a new team that we hired over the past year or a largely new team that we've hired over the last year. It's a very simple org structure. It's people that have decades of experience in doing what we need them to do, and they just continue to execute. And then on the FS side, Srini and Gelb have been here again more than a decade each. They know the business, they know the clients, they know the priorities, they will keep executing. There are a couple of areas where I'm going to be focusing on. One is obviously that portfolio review that I just talked about. The second one is the speed and focus of execution. And the third one is technology excellence. Again, these are not different things from before. I just want to bring more urgency into execution and more focus to make sure that we do those things as quickly as possible.

Next, we'll go to the line of Harshita Rawat from Bernstein.

So your implied OpEx guidance for second half has gone up. What changed versus the Investor Day and also the June reiteration of the guide? I know, Paul, you talked about $100 million in technology infrastructure. Can you give more color on what are the incremental areas you're investing in? It's a pretty steep ramp in second half expenses. And then also maybe talk about SMB volume growth, that's the weakest we have seen in a while in a strong U.S. spending environment. I know you talked about CCV lapping, but is the SMB ex Clover deteriorating.

Yes, Harshita, 2 things. As it relates to the total expense, if we just look at it on a quantum basis, the total expense now versus what we were expecting before is approximately $100 million, which we called out. And that is our technology infrastructure area, particularly in the areas of cyber and just overall infrastructure, which we believe are in the right interest of both our clients, particularly on the solutions side. We also believe are best to position us for the longer-term success certainly as we go into '27 and beyond. Obviously, our expense base is largely fixed here. So when we have revenue that doesn't show up at a high incremental margin, that flow-through is what's impacting the margin most significantly. But that would be the biggest thing from an expense standpoint that I would call out. As it relates to the SMB side, yes, you're right, and I mentioned it in the prepared remarks, that the biggest thing on a sequential basis between the SMB volume in 1Q and 2Q is the anniversary of CCV. So the level that we're at right now is roughly what we would expect to be for the remaining part of the year. And I would just highlight that as it relates to SMB, the thing that we're obviously most focused on is the Clover SMB volume and the growth that we have seen in Clover consistent with our expectations, certainly for the second quarter in that double-digit range and also consistent with the outlook that we have for the remaining part of the year as well as our longer-term outlook on GPV volume. All right. We'll take the next question, but let's stick with one question, please.

Our next question comes from Dan Dolev from Mizuho Securities.

Lots of good things actually with Clover. So congrats here. Question, Takis, on some of the divestitures that you talked about. I think your debit network is a good example of something that some of the large banks could value a lot more, and it's probably not priced into your stock multiple. I mean there has been some news, I think, in the journal about this. Could one of these assets be something that you would consider making changes to?

Yes. So when I said we are going to do a holistic review of everything, obviously, the debit networks will be part of that review as well. We have 2 debit networks. They're critical to our clients. They're important to our business, but that will be part of the review. Again, I don't want to comment on anything specifically until I have a few more weeks in the job.

Next, we'll go to the line of Will Nance from Goldman Sachs.

Takis, I know a big part of your vision for the merchant business revolves around Commerce Hub and scaling an omnichannel offering to enterprise clients. I wondered if you could talk about the partnership with Mastercard and just how you see that unfolding and how you think about time lines there?

Sure. Thank you. I would say one thing first to clarify. When I'm thinking of Commerce Hub, I'm thinking of an end-to-end modern stack for all of the merchant business. It's a gateway, it's a back end, it's a set of value-added services, which, by the way, will include Clover, meaning it will all be one integrated technology stack. We've made record -- progress in record time on Commerce Hub. I've been very impressed with the team, which is a testament a little bit to what this company can do when all of the resources are focused without any distractions on a single and simple strategy that we are trying to execute. That said, it's a big leap and it's a big effort to try to compete with the best-in-class on the enterprise side, and we still have gaps that we're working on. And conversely, Mastercard has a great merchant business, and they have a number of capabilities that we thought are very complementary to ours. When we look at, for example, the geographic coverage they have, when we look at the clients they have, et cetera and we compare that to ours, we also saw a lot of capabilities that are complementary, and we saw an opportunity to go to market together and win business together. So the teams are working now. There is an integration component, which is going to take a couple of quarters to bring those capabilities together, but I think that will incrementally improve our collective capability to win new business. So we are very excited. Mastercard has been a great partner of ours.

Next, we'll go to the line of Bryan Keane from Citi.

Paul, I was hoping you could help us bridge the gap from kind of where we are this quarter and the third quarter to getting back to more normalized growth in the fourth and then into 2027. I guess my question is the delays in client implementations, slower pace of growth initiatives, you got some hardware Argentina issues. It just doesn't seem like we're going to turn that quickly as we get into the fourth quarter. But obviously, you have some visibility there. Maybe you could highlight.

Yes, Bryan, a couple of things. So I would route you just to what we called out about our recurring revenue growing at 2% and that represents obviously the vast majority of the revenue of the company. So foundationally, that's kind of the right way to think about the growth rate there. And then as we had talked about at Investor Day, even the ramping of the bucket that I provided are the key drivers of the fourth quarter growth rate between where we sit today and where that fourth quarter is. And we have -- as we move forward, that exit growth rate is exactly in line with the medium-term guidance that we provided as well. So the components are there, the structural growth rate of organic revenue, which will improve in the third quarter and continuing to improve in the fourth quarter with that vast majority of revenue kind of starts there and then the things that we've talked about are additive on top of that. And then obviously, as we move into next year, the noise around Argentina and the noise around the headwind of hardware begin to wean down.

Next, we'll go to Andrew Schmidt from KeyBanc Capital Markets.

Takis, I wanted to ask, I think one of the priorities you outlined was moving faster. Maybe you could just drill down on this, just given kind of the technology stack as it sits today in the culture, how do you enact change at scale? Obviously, we've seen product velocity picking up in the space, particularly in merchant, but across the board. Maybe just a little bit in terms of how you drive that change at Fiserv.

Yes. Thank you. I think, first of all, this is not new. I've seen real progress in that space over the past couple of quarters. I think it started with hiring a strong product organization, which I think we've done on both BMS and DFS side. And then it comes from a clear and consistent view of where we are trying to go, from an agglomeration of products and capabilities to a coherent end-to-end strategy. This was relatively easy. It's not easy, but it is comparatively easy to do on the MS side. And that's why we've anchored on one platform, end-to-end, one set of capabilities globally, and we've diverted all of the resources that we're working on anything else onto that. And when you do that, you can make a lot of progress. And I think it's the same approach on the FS side, and that's why I'm talking about that portfolio review to make sure that there is nothing that we are spending time, resources, energy and tech dollars on that we don't have a very clear path to deliver in the near term. So I think that's one. The second one is around the collaboration across the 2 sides of the business. We have products that sit on one side or on the other side that actually have value to both. Our network is a prime example of that. Embedded finance is a prime example of that. StoneCastle is a prime example of that. Digital currency is a prime example of that. So I want to make sure in all of those, we work as one company, leveraging the impact to financial institutions as a benefit to financial institutions as well as the benefit to the merchant side. And I think there, we have -- we can do better, we can move faster and we can be more efficient. And then the last component is technology, a big driver of our expense base comes from technology infrastructure, maintaining multiple platforms, maintaining multiple versions, maintaining multiple data centers. And part of that acceleration that we are making now in terms of our investments is to move out of those things with an enhanced base, which does not only mean better customer experience and better stability and cybersecurity, but it also means a fundamentally different cost base going forward as we get rid of all of that legacy.

Next, we'll go to the line of Jamie Friedman from Susquehanna.

Takis, Paul, a question on Financial Solutions. The organic revenue was down 8%. At the same time, looking at the slides, Finxact and core accounts grew pretty nicely, mid-single digits. Zelle was up 23%. So I'm just trying to understand what's driving the disconnect? And when do the comps get easier for Financial Solutions?

Yes, Jamie, the Financial Solutions volumes really across the board, we're very pleased with. In the digital space, whether it was what we saw on the debit network side of volumes, our debit processing volumes, our issuer accounts on file growth, the transaction growth in issuer was very strong. And then as we called out, the Finxact growth was strong as well. We do have the preponderance of the nonrecurring revenue headwind is in Financial Solutions in the second quarter. And so if you kind of peel that back and look at the fundamental growth rate of the business in the second quarter and remove out the noise, we grew that segment in the low single digits in the first quarter. So fundamentally, going back to the comment I made earlier about recurring revenue growth, if you take out the noise, Financial Solutions grew, and we were very satisfied to see that the growth rate that we have seen in the underlying volumes of Financial Solutions that we had talked about in the first half of the year continued to strengthen or certainly stabilize in the third quarter.

Our next question comes from James Faucette from Morgan Stanley.

I wanted to ask about pricing. I know that there were some few rollbacks from Fiserv for particularly Clover customers last year. Just want to get a sense of just remind us, a, when do we fully lap those or take the full impact of those? And more importantly, what are you seeing in the pricing environment now? Do you feel like things are steady and customers are responsive to where you have pricing now? And are you seeing much in the way of price competition?

Yes. So just a couple of things there. I'll start off with and then Takis, you may want to add. So as it relates to the lapping, the fourth quarter is the lapping of those pricing moves that we talked about last year. So we will have that comparative dynamic outside of the fourth quarter on that front. On the yield front, things are stable. If we look at both our yield for the quarter as well as what we expect for the rest of the year, the yield environment is very stable, either overall from a merchant standpoint or Clover specifically. So we like what we see from an overall yield standpoint.

Yes. Thanks, Paul. The only thing I would add is, obviously, we are monitoring pricing changes that our competitors are announcing, et cetera. We are very focused on delivering value to our clients. We are very focused on improving customer satisfaction, customer service. You've also seen at Investor Day all of the new initiatives, the new features, the new capabilities that we are rolling out on Clover, which are coming out kind of now like Clover Agent is now in pilot, Clover PracticePay is out there. Each one of those things add incremental value to our clients in a differentiated way. So as we deliver those things, we improve customer service and customers are happy, we will have more ability to generate higher yield. But right now, we are focusing on those things.

We'll take our last question here. Go ahead, Ivy.

And for our final question, we'll go to the line of Jason Kupferberg from Wells Fargo.

I know you mentioned that the hardware part of the merchant business was one of the reasons for the second half revenue cut. So I wanted to see if you could size that impact and just clarify, is that because of slower new customer acquisition or other drivers? I know you mentioned comping against some higher hardware sales over the last couple of years, but it seems like that's something that we would have already known about before today. So any more color there would be great.

Yes. So maybe I'll start and then Takis may want to talk about the environment. The one thing that has changed on our hardware expectations is in the back half, we are seeing a tougher environment of just hitting our hardware sales targets that we had previously. And a lot of that, I think, has to do with the elevated amount of hardware sales that have been made in the past and just kind of the market dynamics related to that. We certainly, on a go-forward basis, would expect that this comparative kind of headwind or market kind of headwind would change as we get further away from the period of elevated hardware just on a comparative basis if you just look at the numbers. So that's what's changed is the environment of future hardware sales has changed versus what we had expected. And it is a meaningful headwind to our expected growth. I called out about the Clover headwinds that we have there between both anticipation and hardware. Hardware makes up about half of that headwind and then the anticipation makes up roughly the other half. Takis, do you want to talk?

Yes. No, I see that as a temporary headwind driven, as Paul said, by previous sales. We have not seen any material change in the number of new merchants and things like that. Over time, as we shift the focus of Clover more towards software, more towards larger clients like we are doing -- we are seeing with Rectangle and hopefully, we'll see with Target, you will see probably a different shift of SMBs over time. But right now, what we are seeing is really just the headwind from the past.

We want to thank you for joining us on the call today. We look forward to following back up with all the investors on a go-forward basis. And thanks for your time this morning.

Thank you.

Thank you all for participating in the Fiserv Second Quarter 2026 Earnings Conference Call. That concludes today's call. Please disconnect at this time, and have a great rest of your day.