Frank Bisignano
Chairman, President & Chief Executive Officer at Fiserv
Thank you, Julie. And thank you all for joining us today to discuss the strong ending to a pivotal year at Fiserv. 2022 marked a year of great progress for us with better-than-expected growth against the challenging backdrop. The integration of First Data and Fiserv wrapped up in the first half and we are entering 2023 with a focus on growth and operational excellence to drive quality and productivity to the next level.
We laid out a plan for our merchant segment that includes extending Clover's leadership and are on pace to achieve our 2025 objectives. We won awards for our new enterprise omnichannel solution, Carat, and continue to roll out this unified commerce platform with a leading number of value-added services. In payments, we completed the three major credit issuer implementations and followed them up with two major new wins in the fourth quarter. And we advanced our core banking cloud roadmap for new and existing clients with the acquisition and integration of Finxact.
Through all of that, we navigated the return to office and are seeing a boost in productivity as our employees come back together many in new state-of-the-art facilities. We head into 2023 as a unified company that's better than the sum of its parts. One with faster growth and deeper investment that still holds a tradition of strong operating leverage, high recurring revenue, and value-accretive capital allocation.
Our progress over the last two years is undeniable after consecutive years of 11% organic revenue growth, 370 basis points of total adjusted operating margin improvement, and over $5 billion in share repurchases. We delivered on our guidance with a steep ramp in the fourth quarter with 12% organic revenue growth, 360 basis points of adjusted operating margin improvement and adjusted earnings per share of $1.91. This led to 2022 results within the guidance range, which we raised twice last year despite unexpected FX headwinds.
For the year, organic revenue growth was 11%. Adjusted operating margin expanded 120 basis points to 35.1%, and adjusted EPS was $6.49, up 16%. Free cash flow conversion was 84% as we continued to invest for growth. Each of our operating segments recorded strong performance, led by merchant acceptance, with organic revenue growth of 16% and 17% in the quarter and year, respectively.
Our Clover and Carat operating systems are driving segment growth well above pre-pandemic levels. Our newer products, such as Data-as-a-Service, Pay by Bank, disbursements and EBT online widen the value proposition to clients and bolster our strong positioning in card and non-card payments. Expanded ISV and direct sales channels extend outreach to merchants and help us capture more of the value in each transaction.
Payments and network revenue had a superb year of growth, up 10% organically in the fourth quarter and 9% for the year, above our medium-term guidance range. Performance was led by implementations of three top 25 credit issuing customers and continued growth with existing customers. We followed this up with two major new credit wins in the fourth quarter, with Target, one of the largest retailers in the world and with Desjardins, the largest credit union consortium in Canada and the fourth largest card issuer.
We are very excited to bring one of the world's largest retailers onto our platform, and we're pleased to expand our geographic reach in Canada with Desjardins. It is another example of a major in-house card issuer, partnering with us to achieve industry-leading capability and it's our first connection with a major Canadian issuer, giving us important scale in the key market. We've already begun working with both clients and anticipate revenue starting in 2024.
In fintech, we delivered 8% organic revenue growth in the quarter, rebounding from third quarter, as expected. For the full year, we generated 5% organic growth at the midpoint of our medium-term guidance. Core wins were robust over the last several quarters and continue to go live, adding to an already strong recurring revenue base in this segment.
Interest in Finxact is exceeding our expectations and we're excited to extend our leadership in cloud core banking by going live with digital bank Cello. We continue to believe we have the most clients in production in the cloud. We are carrying this positive momentum forward into 2023. This year, we expect organic revenue growth of 7% to 9%, adjusted operating margin expansion above 125 basis points and adjusted earnings per share of $7.25 to $7.40, which assumes a mild recession in the US.
Our guidance reflects internal confidence in the face of external uncertainty. This confidence is built on the strength of our unparalleled client base, our industry leading distribution, a broad and growing product portfolio and our best-in-class management team. We have the revenue base, the profit-driven cash flow and sturdy balance sheet that should sustain us through a tougher economy. It's times like these that make it good to be an industry leader that continues to invest in new and innovative products. Nowhere was this strong positioning more evident then in the many noteworthy contract extension and product additions signed with existing clients in the fourth quarter.
These wins are a reflection of four factors; first, our list of clients is vast, high quality and full of opportunity and our relationships with them are deep; second, we have the broadest portfolio of solutions supporting both growth and operating efficiency for our clients; third, our client-first relationship model is off to a strong start; and fourth, our vision for the cross-sell opportunity between Fiserv and First Data offerings has become reality.
The promise of the merger is being realized. Synergies are apparent, for example, between acquiring an core banking and embedded finance and card issuing services across multiple verticals. In merchant acceptance, for example, we expanded our global relationship with ExxonMobil. This energy giant will move to the Carat platform to support its retail utilizations in the US and Canada with gateway acquiring and fraud security services. We also renewed Carat's contract, were one of the largest beauty retailers in the US and added network tokens to their e-commerce system to help increase authorizations, reduce cost and limit fraud. And a major restaurant operator will extend our merchant acquiring and prepaid business to more of its brands in the Payments and Network segment in addition to the significant Target and Desjardin wins, we expanded our existing relationship with the State of California.
After a successful rollout of the middle-class tax refund program in the fourth quarter, we were awarded another prepaid mandate supporting California's unemployment and related insurance programs. This, along with disbursement support for the Comptroller's Office announced in October represents longer term recurring work for the state and marks our leadership in payments for the government vertical. We also signed a large e-commerce payments company for debit network services. This client will enable our Star and Excel networks for its millions of merchants as an alternative to the larger debit networks.
And in Fintech, as a proof point of our deep relationships, ability to cross-sell products and seize synergy from our merger, we continue to add solutions for Webster Bank since its merger with Sterling National Bank earlier this year. In addition to the account processing win we announced in the third quarter, we've now added the Optus platform and ATM services to the growing list of solutions we provide. Similarly, Bethpage Federal Credit Union has also added several of our payments products to its existing core banking platform.
In keeping with the emerging trend of core modernization, Innovation Credit Union of Canada will be the latest client to move from a licensed solution of DNA to a hosted version in the Microsoft Azure cloud. This is one of a couple of dozen DNA customers migrating to the cloud for more flexibility and resilience in their infrastructure. It highlights the modern architecture of DNA, Fiserv's experience in the cloud, and further migration from license to ASP revenue.
Outside the US, we made important progress in EMEA, adding Absa Bank in Mauritius as a client of our Internet gateway. This will allow Absa clients to tap into the fast-growing e-commerce segment in Africa and grow with key corporate clients that are active in this well-known tourist destination. It also opens the door for us to enter eight other countries in Sub-Sahara Africa, where Absa operates today.
In Latin America, we extended a large bank acquiring relationship to include several more countries. And in APAC, we in India's Tata Motors for loan processing and attained a major payment institution license in Singapore. This will allow us to expand beyond merchant acquiring into domestic and cross-border money transfer services, a market that has $180 billion of payment flow. A key to our new and follow-on wins is the significant investment we have made to bring new product to market, increase our value to existing customers, open the door to new customers, and grow our TAM.
Let me recap just a few of our innovation and advancements this year, starting with merchants. In the SMB space, we serve small businesses wherever they want to conduct business. Through cloud-based operating systems like Clover, through our channel partners, including ISVs, banks and ISOs and on platforms that act as payment facilitators or PayFac. At Clover, we integrated the BentoBox acquisition into the Clover platform to add more e-commerce and digital capability to our offerings in the restaurant vertical. Catering services and hotel restaurants are emerging sub-verticals for us now, and we know that when Bento and Clover are sold together, we see an over three times increase in average revenue per user.
We also rolled out lower course hardware and partnered with major providers of retail technology to offer web and point-of-sale inventory solutions to this large SMB vertical. We've begun migrating merchants from our existing Internet gateway to a new Clover gateway, where they can more easily access our full suite of value-added services. This positions Clover to compete more for card-not-present business this year from a position of strength. Value-added services penetration, an important driver of Clover growth and ARPU, reached 16% in the quarter from 13% a year earlier. One example is Clover Capital, a product we continue to invest in, is growing rapidly and favorably impacting customer attrition in the SMB segment.
In the ISV channel, we've added 174 ISV partners this year and continue to benefit from the high growth and lower customer acquisition costs of this go-to-market approach. Since our acquisition of NetPay, we continue to build PayFac, marketplace and software platform solutions, including real-time boarding, underwriting and split pay services. In the quarter, Fiserv continued to expand and deepen our platform integrations with partners that include PayPal, offering our customers more flexibility in their service offerings. We look forward to exploring other integrations with current and future partners while expanding our capabilities across this market.
Carat, our leading enterprise omnichannel solution, continues to expand its capabilities, including payout choice and flexibility. With the introduction of several products this year, including digital checks, prepaid cards and crypto wallets, followed by our multi-purse wallet, a white-label solution that holds multiple sources of value, including loyalty and prepaid. We continue to onboard large merchants for Pay by Bank, which lowers the cost of acceptance for merchants and is an easy way for consumers to earn rewards. And we have seen a strong early uptake in our new Data-as-a-Service offering, partnering with Snowflake. It enables our merchant customers to access their payments data in near real time to better informed business decisions. We also have a growing number of financial institutions lined up to pilot our Open Data solution offered in partnership with Snowflake. Open Data enables near real-time access to data across customers, accounts and activities, bringing relevant insights to support strategic decisions.
In Payments and Network, our strong growth in issuer solutions can be traced directly to the investments we've made in our operating platform, Optis. This includes a robust set of APIs, AI-based fraud management, cardholder experience technology via the Ondot acquisition, integrated output solutions plus ongoing cloud enablement of key features. We have multiple payment innovations underway to take advantage of emerging trends such as real-time payments. The clearinghouse RTP network, Zelle and Fednav, all work differently than legacy networks, creating demand for an end-to-end solutions provider. We are leveraging the Fiserv NOW network to be just that this year.
In fintech, we've been taking an open-source approach to serving our clients. We've pre-integrated third-party digital solutions into many of our cores and made these solutions discoverable to clients via our app marketplace. We've also made our platform attractive to the developer community by exposing our micro-service APIs through our developer studio. Building on its Webby Award last year, this product won a DEVIE award from DeveloperWeek in January for best innovation and financial services.
With these advancements, we are driving Fiserv to become the destination of choice for embedded finance, integrating card issuing and processing, merchant and core banking capabilities for a variety of nontraditional providers, including retailers, QSRs, payback and government entities. Another highlight of 2022 was the Finxact acquisition, our new cloud-native banking solution, which we've been integrating with our existing digital surrounds selling to our existing clients as an innovation platform or a side car core and winning new logo sales.
Our pipeline is particularly active with pioneering digital banks and big issuers entering the banking market via embedded finance. Finxact offers them faster time to market, greater flexibility and scalability and the largest product portfolio available, making it an ideal way to conceptualize, create and launch new banking products. With all of this new product development and the client wins that validate, I hope you'll see why we remain enthusiastic for 2023.
So let me pass the discussion to Bob for more detail on our financial results.
