FISV - Earnings call transcript Q3 2017

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Operator

Welcome to Fiserv 2017 Third Quarter Earnings Conference Call. All participants will be in a listen-only mode until the question-and-answer session begins following the presentation.

As a reminder, today’s call is being recorded. At this time, I will turn the call over to Paul Seamon, Vice President of Investor Relations at Fiserv.

Paul Seamon

Thank you and good afternoon. Jeff Financial Chief our Officer; Officer. are Hau, Officer; Chief today Chief our and me Yabuki, Executive our Bob Operating With Mark Ernst, note of fiserv.com. presentation and available Please the earnings quarter on section the are supplemental Relations Investor our that for release

financial will our and strategic anticipated remarks initiatives. expected today among matters, to forward-looking include Our benefits about, related statements other operating results, and acquisitions

refer are to may Forward-looking earnings factors. and from subject and to materially results risks risk a differ a statements uncertainties. for actual Please our release these discussion of number the of

assumed prior You non-GAAP to for measures references between along those planning should also for stated are measures forecasting refer with a comparisons results measures to meaningful non-GAAP provide call, throughout turn our With management of These current materials the made results over reconciliation this be to otherwise, for and as indicators that to periods. call the basis an reported today’s of are Jeff. that, let discussed for to call Unless performance year-over-year a conference nearest explanation me in applicable uses future this comparisons. financial measures. and and the GAAP call

Jeff Yabuki

progress Thanks, set further everyone. made Paul digital in areas and acquisitions, enablement. the We and of several the fast-growing expanded important good through in strategic quarter solution afternoon, which our payments infrastructure

the enrich enhance deliver solutions, our transactions meaningful our of these revenue internal our further differentiation growth clients to expect and to profile. We value

revenue, last which versus to by QX the the tough impacted in to third internal XX% increased Although growth was decline revenue, quarter primarily up This quarter was of in revenue This a up expectations. our for EMV headwind quarter full the includes rate comparison stage third in comparison revenue also and in reduction prior card sequentially. point is in financial high was was production adjusted at for against to basis periodic a below quarter. rate in down was in higher year-to-date. shortfall growth Sales by we periodic year growth year the higher outlook, revenue operating XX% points per is the XXXX and earnings also of remain with year’s Adjusted year. operating margin basis on by share XX.X% quarter slightly revenue has from X% last XXX% quarter reverse the in quota versus we the to Internal at the coming watermark stepped in the XX revenue growth margin up was XX% year-to-date. pressured track a the periodic contributing quarter our of achieve million driven versus XX strong expect the majority margin timing in prior The for and year’s the growth and acquisitions. $XX adjusted XXXX. setting performance exit and attainment Even our now for

full sales remains track and pipeline we meet on Our year are objectives. to our strong

which are: enables XXXX and solutions; you and continue commitments; revenue deliver meeting earnings our three digital first, while for and finally, emphasis relationships an our integration, innovation client Now, value key payment enhance shareholder let build update me to our with priorities clients. for which on on high-quality next, differentiated

XX% the up of revenue quarterly the rate revenue share earnings impacted combination in decline recurring internal XX% revenue and of We lower per our even The growth. periodic year-to-date. anticipated the points. growth high-quality contribution lower in and face build quarter roughly to continue XXX basis growth quarter by comparative headline from Adjusted than in revenue in the was EMV a

XX% the bottom end to growth the and year. range now guidance EPS expect We results of in XX% of have raised adjusted for our the

to consecutive way adjusted our year on per of growth. XXnd our earnings We double-digit are share achieving well

operating XX from and XX of Our operating is another to up and cash flow we performance of XX% strong acquisitions. Free XX characteristics. are through flow margin year-to-date our pace key basis our free up recent all flow Adjusted points adjusted basis for is compression metrics. margin year points, cash business demonstrate across cash September continues which includes free on strong

Our enhance emphasis and relationships with second to digital priority is an solutions. client on payment

leading pleased transform relationship market the bank talked quarter. With to Prosperity and their processing across about Bank account and center digital with of $XX providing commercial in assets, our our we than end, expand the base. that processing debit at more of selected client have To length solutions our payments architect, strategic We the importance to were billion solutions experiences.

to tremendous seeing our solutions leading since market momentum are suite. market these adding digital We

renew We services of their sequentially to up X% quarter. multiyear increased payment X.X Mobility our pleased than as users important with the has reseller relationship extend are longstanding quarter a through NCR in with were in helps both year’s our doubling continued solutions. this parties more expand and their prior quarter enriches leadership. the bill ASP insights business payments agreement XX% digital subscribers to payment to partnership also nearly million. Mobility and This

priority third is clients. our which Our enables deliver value to differentiated integration, and innovation for

to continue money. an consumers the We Zelle way change believe catalyst to is important move

leading and Zelle financial in with movement to TransferNow money Fiserv North our the new strong likely provider to encouraged on you U.S. America of RXP, of have part we capabilities in client are additional Zelle platform Group, designed BMO their signs growth. diversified customers leader progress in FI-centric bring early the implementations solutions. a signings, services Harris based seen an and transaction very BMO and As Bank, as integrated market Financial by PXP, highly CheckFree using

X have our Zelle Zelle bringing number the institutions turnkey solution in quarter that We also the Bank top solution. signed banking to opted of full XX our Regents to for to-date

the and and in remain implementation for in still future. into to we by growth adoption market encouraged well enthusiasm expect While Zelle early measurable cycle, the the decision, and see XXXX

biller areas. across solution key year, earlier value introduced in strategy integrated we proposition a As our several new unique the offers

our more while processing a of Freedom points, Mortgage, reducing by to expanded overall lender early risk. its loan one relationship proof existing efficient leading mortgage enable adding LoanCmplete As faster,

new strategy further unique is Our around approach our value. increasing already to producing this conviction sales, integrated which client is

the mentioned, our three which of next-generation will closed we value, including of acquisitions September, PCLender, of digital platform. acquisition digital digital lending expect both technology. to portfolio and we our strengthens client banking drive the through in we mortgage and help quarter In a accelerate closed strategy I innovation the As origination Monitise, development which products next-generation

our expect the first this in acquired grown digital newly capability. sales of purchase of to to and Importantly, bank the the this first UK FINkit assets acquisition many cooperative we client be of Interest our has became since £XX billion with unique solution.

Dovetail’s results. market. provide as our let our the to call are solutions. meet their growing and platform, been acquired of global which us needs extending and payments over excellent has wholesale, client payments to help Limited, financial more also that, Dovetail to Dovetail turn one infrastructure payments Fiserv of in acquisitions the deliver solutions is Group infrastructure while profile. payments a in these the We further Bob financial the institutions Reaction leading leader and value differentiated liquidity growth about ability provider top of to With on the rapidly world, we commercial positions our me transform a payments management customers. detail to enables changing retail to optimistic

Bob Hau

Adjusted to afternoon. year-to-date. billion through XX. grew good in and Jeff to $X increased and the $X.X Internal growth for X% September revenue the X% was X% quarter and the quarter revenue is billion X% Thanks, for

The it we growth quarter’s While segment. was revenue internal year-over-year anticipated, of majority in million $XX the than periodic was rate the revenue. the was in lower which driven by third largely financial decline

addition, as overall in revenue a the quarter, the in as well large In headwind we growth payments comparative segment. had pressured growth which both internal EMV

through adjusted up XX XX XX and points year, the been September case XX.X%. of a much the XX.X% delayed is As internal revenue the accelerate year-to-date margin had operating we million to in would quarter operating XX the in growth negative was the and into periodic in to year. down up of basis the to results is quarter. operating for acquisitions up our X% of in to the basis the we to X% the quarter billion. Adjusted points impact as internal on Adjusted fourth income up still our year Absent quarter’s margin $X.X increased basis and have for points points is quarter revenue Current XX year. operating we half have quarter margin QX year-to-date. expect point to in shared basis adjusted growth the include the strongest acquisitions, throughout the This second expected be and revenue XX basis $XXX

the in an negative operating periodic third As revenue a impact point on footnote, XX basis in had adjusted margin the in quarter quarter. reduction the

operational results which Our our combination and of already has benefiting million. effectiveness recurring execution, $XX from are revenue year program full high-quality surpassed the target of exceptional

pace stage basis year-to-date. X% XX% months grew internal year X% the electronic quarter the the growth adjuster quarter partially is Segment card Adjusted by growth still EMV on in for at $X.XX results major was earnings for by in to share, a offset are in we was although XX level from expansion revenue second growth as adjusted and operating the Internal compare from respectively. EMV, discussed the third quarter. quarter normalized payments which EMV per up strong the revenue well up card acquisitions billion headwind quarter. revenue includes We as growth from year, in was Last margin step from EMV in and production. XX% the production points setting was we million and seeing X% adjusted segment for is for in up up year’s quarter revenue are and earnings in share led to double-digit to and least write-off services is X of for a and both the another year-to-date revenue anniversaries per of $X.X peak contribution more fourth Payments revenue $X.XX growth. period up $XXX at card the the build year, and first difficult the both of the

XX%. growth in up quarter XXX% payments. transactions in more mid quarter the in the transaction than was transactions Popmoney debit were by and instant the led growth PXP Our single-digits grew in Real-time

growth operating up and XX.X% earlier, albeit near to remain basis Jeff XX Adjusted in mid-term quarter revenue very flat and potential license was to of to the the and million PXP. to adjusted X% the operating is $XXX basis the September XXX in negative base we optimistic points segment segment was termination Internal X% Payments timing the points. billion in in the transaction segment $XXX more XX.X% Zelle strong through the quarter noted As revenue up is quarter about a year-to-date. growth due growth was XX quarter revenue impact had which margin and off on Adjusted fee year-to-date. million million of than small internal $XXX points to in up basis is Financial for income expanded $X.X to growth and primarily of XX. revenue,

of the the Financial up the to of margin X for million footprint. of X Adjusted was timing Financial the year, the margin For year-to-date. the operating account over XX.X% in year, last adjusted in driver the the months first for declined XX%. revenue margin revenue. $XXX was first was segment’s step An of the quarter segment success the our driven million months growth the XX flat the periodic segment quarter income operating And processing X% a basis at growth is and largely operating the points X%, year. by internal rate segment’s important for high Adjusted $XXX

including year DNA with and Corporate live went DNA was clients comparable the quarter, the assets XX the operating prior in the signed with to loss its billion. X adjusted other prior line quarter year-to-date and X in adding DNA as consistent compared than with in the momentum and clients clients Our for in to have X in we market $X net quarter X and greater continued expectations results. year

benefit discrete of quarter successful anticipated tax adjusted the earlier rate Our anticipated with tax due the than of resolution the effective share-based to several excess compensation. XX.X%. This than was along items in primarily tax is better

adjusted year conversion tax our XX% expectations. to September XX is of of the $X.X XXX% through debt of EBITDA. in end, million increasing about billion September returned effective existing under the acquisitions repurchased quarter We authorization. to shares a to X.X XX. shareholders outstanding XX-month $X flow for million below XX%. we full Total first and XXX.X and year-to-date quarter and of and million $XXX trailing cash increased due nearly the the flow XX.X shares Free to rate expect shares there adjusted quarter’s At with XX% X cash We remaining or as just share billion Free rate were solid was in line repurchase was an our fourth million. X.Xx for year months

continue to with to for flow Jeff. excellent meaningful balance and that, call back combined create to the me turn will our We sheet, value strength shareholders. cash of let leverage the clients With free to

Jeff Yabuki

Thanks X% X% gaining but and quarter in year’s Bob. third without are versus acquisitions, year-to-date. the up nearly our strongest Sales of of quarter recent results and a down momentum domestic XX% still any up up enter the quota. last at quarter, year-over-year. at traditionally picked XXX% coming in in XX% were Comparatively, We record sales our XX% of the benefit pipeline sales of quota sequentially

in achieve the full confident we objectives. will $XX highly our sales year sales We quarter. million Integrated are were

billing solutions aided growing payments sales integrated contributions new focus. driven results digital our traditional by Our primarily from and payments and by were

add-on ability our and million important in strategy. million savings are an company’s relationships of $XX remains component Our Operational to were client the through effectiveness solutions $XX year-to-date. deepen quarter

As our full model mentioned, we operating in continuously how Bob our to long-term $XX focused make adjusted we million effective of with invest capacity procurement. service more of early have ensure on a consistent strategy. strength and have the on the eclipsed optimization while We year workforce goal margin quarter to expanding and growth to our

look in continue absolute remains focus and across rationalize services. providing on small We market optimism revenue a infrastructure. with business banking increasing priority experiences see remain with and Digital to the cost Acquisitions rate growth. industry towards an branch tailwinds as commercial eye and the driving participants in attention the high-value market to

technology pressure services to such believe to continue evolving digitocracy. will continue solutions growing payment in New invest of to to on institutions and as put needs the Zelle Over and consumer light meet time, will that meaningfully heat deliver expectations institutions standard. rising to a we

our have the year the said we financial at of achieve I full remain on objectives. As top call, track to

to least year, the narrowing our in internal quarter and XXXX at our implies to are we as solid which revenue a XXXX. earnings of of point X% to the fourth XX% raised share We by end growth year. where guidance Given $X.XX $X.XX, a guidance growth we for off now for range XX% per of are are expecting adjusted X%, low reflecting jumping $X.XX growth the of

performance expect adjusted conclusion, XX even And by acquisitions. in of importantly, result year margin range be we actual free be points. XXX% adjusted stronger this of cash through the to important the basis of will income. In and than continue expect to full both We that from organically operating we made acquisition. considering flow conversion progress year the net to expand at have impact least underlying XXX% This will in-year strategic

revenue double-digit We XXnd expect flow. share to financial our cash our leading meet of per to year expanded consecutive adjusted growth, high-quality commitments excellent earnings free and

thousands increase the for and an open see that clients committed to company let’s a our world its of to our our employees critical delivering the in of pleased for year success. are ensuring we fifth row, in the the that, line for the is remain element excellence operator, for long-term formula engagement questions. With associate Lastly, scores around

Operator

Thank Our David question Togut Evercore ISI. you. Instructions] first from [Operator of is

Your now line is open.

David Togut

you. Thank Good evening.

Jeff Yabuki

David. Hi,

David Togut

then and Jeff, term software components out called decline up QX could organic between you in that, that growth? and contract in periodic significantly conviction drive that why fees $XX year-over-year the improve you of revenue will million breakdown revenue, and a the

Jeff Yabuki

when of now have fees in will get know lot and come this a of in QX, as some fees pickup institution and that more difficult Sure. We they that to they in, and bit of that so because it’s we had they in in you bit – in, we we see got a visibility The we going like reasonable in. to license seasonality well in always is a substantial contract will judge termination come are industry we will come well. to don’t so come feel a exactly expect in, as come would they of And was majority we but it we a of that little termination where strong and in that thought QX institution them to number in. the basis, come if would are QX license by QX, on already have conviction

David Togut

it. customer Got base? highlighted And read then optimism your you in bank, your on growth some bank like among remarks what any XXXX around look budget will IT

Jeff Yabuki

about optimism technology think You you spend I the space? in talking broke were up bank bit, around overall a

David Togut

Correct. have IT XXXX outlook you bank And any budget growth? for

Jeff Yabuki

in over are do how a focus great terms of spend see the as their Architect a and not is in demand will about we daily be digital market the critical on in – such banks of that how Commercial energy their banks element that I what going. based seeing prognosticator whether all with to lot continue is solutions aggregate, of am I basis it’s will spend things on So, moving to and but we conversations know technology a will Zelle so Center where for our on a

one star account rising also focus the Premier the can back contingency see growth You keep we and our a of risk, have expectations. up reasons office DNA, of areas cyber that just lot the why in in with kind frankly good processing headline demands and other areas of It’s ensuring infrastructure of platform. like office of offices front the and back in of

overall that payments. lastly pick areas So, those continue will course to we have of then a of lot conviction and up

anticipated see of year that say ago Dovetail two Zelle, portfolio. faster it’s so to quarter world a important be our money to part our we moving the year because and acquisition we did is in or whether a the or really we than So movement real-time

of bulking going will spend. Frankly, investments will areas, we feel some there. are we see our and up spend increasing pretty that be more reductions we where to in other ride about offset have been by fortunate of of where it wave but So,

David Togut

so Thanks for much insight. the

Just closed QX and rest a housekeeping contribute in the couple of in did acquisitions much How of QX three to revenue questions. year? quick

Jeff Yabuki

it but you I if on can So anything Bob supply don’t side, wouldn’t be the... the internal know

Bob Hau

three Yes, in so the throughout of the one of of them of mid-August, them speak quarter, third other beginning to closed meaningful the David, September. quarter the not

internal our included So, a Jeff’s to point little you metric. saw but bit, in growth revenue not

David Togut

of end just then And Great. share period count?

Bob Hau

XXX.X million shares.

David Togut

Thanks Understood. much. so

Jeff Yabuki

Thanks, David.

Operator

question Koning comes Dave next of from Baird. The

now is open. line Your

Dave Koning

guys. Yes. Hi, Thanks.

Jeff Yabuki

Dave. Hi

Dave Koning

a revenue guess, and quarter between last is up the $XX little granular, I this So but $XX five million QX’s million spend sequentially.

So, in another it’s in $XX the trying that acquisitions just we the tight grows. into strong how seasonal to normal rest just million It get rate maybe terms of million license from, movements sequentially, of actually it to like going QX where bridge much by going the you on top gap, very be helped $XX or are is that? kind to maybe how that is sounds some coming of but plus there get to do unnaturally back

Jeff Yabuki

– any would mean, so of be it is Yes, number I factors. there

be them So, shifting will we as talked the periodic revenue the one of obviously of about.

We as have organic about. that have inorganic from Architect as talked some we acquisitions gone to have such

in And drag QX a We in at have compare the of and so that of anniversary kinds aggregate up DNA, lighter the and meaningfully things have also as QX well. that’s those coming the terms of implementations, of going in. impact to will sales Zelle lighten just end the which from then EMV we are

So, we the things talking are those you of seasonality all Dave of about. on that have top

that talking seasonality QX a most QX-over-QX sequential the to and change. of am about is more the of are QX things I So,

Dave Koning

$XX what’s but of the little, coming And incremental fees has term and sequentially, is is to moved up guess numbers kind a even sometimes it. but thing of kind be been of down million, high historically a certainly has other like get your stuff but around, million maybe also margin, most I high up of one little, just a million very got EBIT sometimes on lot incremental? on pretty is has $XX that to $XX okay, Okay, then the to coming

Jeff Yabuki

in which termination that’s point, to going fee of year’s periodic we Well, are come was the the what have that margins. are periodic into plus expect based QX expect, QX of to relative to we will going again, revenue revenue last at pretty in your come high we revenue on the some majority

are So, very we quarter. a anticipating margin strong

Dave Koning

you that. for Got it. Alright, well, thank

Jeff Yabuki

Thanks, Dave.

Operator

comes Huang question from next Tien-tsin JPMorgan. of The

now line open. Your is

Tien-tsin Huang

afternoon. Good thanks. Hi,

there are media the any FIS production any seeing on well? understand, Just just but there as some think to because we had I the EMV growth change been are normal activity? you there is comps there get Has re-issuance tough, trying fatigue or

Jeff Yabuki

decide that bandwagon. to a activity, months reissue to last call would are bit we that kind banks for the I Tien-tsin, get accelerate seeing of XX but their it some Yes, the the financial say had institutions you fact normal EMV reissue to over or decide on

are And going so a of year there, sorting bit there little in institutions see this out to continuing we is but issue EMV.

also market, with unusual We there even breach nothing in has any at meaningful. I which driven big call all what would been least or not or noise has the reissue retail had haven’t off-cycle breach, the

Tien-tsin Huang

Right.

normal know down like replenishment, a I things Equifax result of nothing like? as it slow for like like breach sounds mentioned breach you sort that So

Jeff Yabuki

about what the Equifax Yes, out to are problem. the trying at this still stage, to institutions figure do

Tien-tsin Huang

Yes, me. like just

Okay.

off. jump will I and follow-up my Just

into the of little going better larger or the ‘XX? bunch on turning Is in of side, really what in engaging what just banks just trying about lot be understand Can after banks. meaningful a them give Just but would some it It you of is you banks you activity pipeline as we thinking a is mentioned bit mentioned bigger you a actually it little you backlog ‘XX. and are are us like smaller maybe Zelle, the seeing? bit detail go just there sounds on to with on a terms more

Jeff Yabuki

Tien-tsin. Sure,

fairly, growth have I said to measurable we period a expect in the growth that lengthy quarter, America in we of growth their growth some is Wells accelerate for quarter, would PayPal and ‘XX about think we fairly products. had So, in talk of I think growth see almost another we almost accelerate. time. talk had will That what over in growth about XX% the Bank XX% XX% We

moving like kind kind Zelle. across of towards it I initial about of they pretty And a advertising wave important launch a of U.S. yesterday a is So, stages talked early think campaign. the millions PXP feels just of double-digit the

a there the there. in X of comments in so other were energy lots signed far of banks lot we We mentioned is So, have our top XX of that having officially conversations.

have And call they solution because position have it top or have that used nearly we come XX, So, us but of Popmoney of in many the will either solutions a years, our will X,XXX, really Zelle. the the of of institutions I over XXX couple substantial staked larger their the X,XXX day. who over, will most out, over we to we top suspect will own over move benefit frankly, next the the them them is majority near-term, through that create think I in of the institutions. move institutions

good us pretty right standard linking grow if our platforms. of position early were back that the may in we our just than feel allow we faster into So, and days to will have about processing account now we

feeling to will sort out is can tell, where but are we we wave are time obviously be it. So, ride now, best we we well-positioned starting today, it’s about should the and right good

Tien-tsin Huang

much. so Thanks it. Got

Jeff Yabuki

Thank you.

Operator

The next Securities. Jeff comes Guggenheim of question Cantwell from

open. Your line is now

Jeff Cantwell

Hi evening. good

Jeff Yabuki

Jeff. Hi

Bob Hau

Hi, Jeff.

Jeff Cantwell

taking for question. thanks Hi my

understanding bit better a to in a their revenue little in forward just those want of expectations acquisitions get talk size On about the acquisition, terms earlier you their the back go of XXXX? about and impact potential of three can that for question the

Jeff Yabuki

impact our right not up, we we For would since the practice to fairly up pick current that might be is get our now expect under muted current practice.

get a year. we think next would only I quarter

to expect company much impact revenue the wouldn’t was public in public. UK. was we have it Monitise small there. a So, The

very there. So, small PCLender it’s pretty small. pretty It’s was out and was Dovetail large. not

of being much to base. able our are around deliver adding more set our to all So, client and these them across solution

benefiting, that we inherited the organic we but the across have a to starts of we where the the to that to we this was So, it muscle our growth layer the organic right our benefit are base, time. the businesses say is to but the that will not by lot it, – really of frankly which see optimistic way in growth frankly to and time our we opportunity over only what’s our sell have inherited been acquired, MO continue

Jeff Cantwell

I that. back up, context And back those lot. acquisitions and appreciate just etcetera? international in high us then step to trying thinking the just could take just areas you terms help overall in a to it strategy, of if how just could Thanks am I explain your think level, did a expansion like you of

Jeff Yabuki

Not sure.

important So, Monitise of primarily a very for That’s smallish had us. both U.S. U.S. priority around smallish a and a business banking. a both digital – kind business, EMEA-based

that we capabilities feature, we adding believe generation and center is banking using have larger very unique technology which So, much FINkit is kind to using a are where opportunities we is allows what institutions are also serving a they the we the moving of digital at next looking – are always platform for looking of micro think called of to a the of create what also it at but scale, world. wave to the a next function new faster digital architecture, the creating services and center we around very,

the So, real-time based Around one. critical payments makes as platform, U.S. which Dovetail, its Dovetail is to move that’s is number a real-time.

serves of strong was strong very world top reason the enable Dovetail and larger institutions benefit and primary globally rankings frankly they financial to are business as for the capability. have is a U.S. around at that some very the to us of payments ranked the institutions based buying a serve this better They So, globally.

digital have PCLender, mortgage to are the again and in-branch business additional adding that’s previously that. to to well a U.S. in out an And into we best-in-class we our and in-bank digital as services that technology Commercial institutions lastly, origination to serve then the technology enable our so as clients our Center that outside platform retail is that experiences and commercial excited And rationale banks digital then small to the both have about as well again that both U.S. to And Architect capability customers. opportunity acquired as to sell origination enable was these banking for or building digital

it So, has our all had if I guess, to several been would would it acquisition and of I payments majority say, where the digital really fits that’s years and continue. in the last over focus

Jeff Cantwell

Great. I appreciate that. Thank you.

Jeff Yabuki

you. Thank

Operator

Ramsey from comes Jefferies. question next The of El-Assal

Your line open. is now

Damian Wille

Hi, evening. Wille for Ramsey. is on This good Damian

So the about ask here. kind of just rates growth I to wanted segment

rates have more seen growth recently. we segment some So, moderating

for First, kind is the growth accretive? maturation transformative growth there might industry, M&A of more Fiserv? that in secondly any And then change you of be given in potential long-term the would terms contemplate

Bob Hau

Damian, it’s Bob.

the lift quarter. segment very bit last of XXXX talked growth about drivers. rate, provided We was quarter a growth and has comments. growth really some On our peak in in EMV Payments that them a growth compare opening key of a we will little so been there the couple anniversary year. drivers The revenue fourth QX XXXX, in of nice difficult the for a

and from up and also nice lift the provide about that the year the the year programs will is growth that us certainly complexity lift like activities year just sales we into of because And timing and the we continuing It’s early that Zelle of was year. to the this size of of opportunity. launched last implementations into we those We ramped things also advertising into going them last talked won give the course, next to our a transactions. mature a larger QX have into client yesterday like base of getting very benefit some those of see of with had those

expanded. relationship that talked about insights we XXXX see lifting digital so we the into and beyond and we And also

see we our going the in revenue we into see to company. provide overall It to past segment internal So, growth that the to the lift payment has relative future. and continue will strong continuing out

Jeff Yabuki

because had I Yes. rates a year’s it to we to more creates this, of year where seen or movement don’t $XX I right, at the we get down acquisition some that we have the things have say but so quarter having odd would last expect like quarter, an we than growth largely And dialogue revenue, couple reasons, jumpiness question. add this periodic and we before of million revenue. periodic that, one more around the above our growth in in level. this have that love is would are we

consistent our end X% our we see we low acceleration as targeting are and the albeit to we said with in is at So, expect guidance today. which comments

So year the largely this on as actually is strong up as far as much of not the financial is Payments segment EMV back so year-over-year. quite

all allows is able are diversity the think so comp build continuing to out revenue, to puts business. one recurring margin. of continue portfolio Underlying we reasons we of and day-to-day of our And out the takes our out which why that, to build to us be the we

as will we over growth enhance that rates our We acquisitions adding are think we time. go

the from we the years. We are contributions of things have some some last getting done already of over couple

which initiative will strategy, earnest we integrated value just our our So, next that have new in about about quite Day, to biller is of off talked and brand begin added model new clients begun that’s really to feel Investor And have year. we we good selling our and portfolio. in delivering a a corner we as then

this So, and we and in feel reasonable some is quarters in shape like our been growth higher year downs there year. portfolio again this expect to do growth have higher ups and has year, the we while next

least the growth on question how think I moderation. and is about at that the rates would So,

acquisition deploy clients deliver always the transformative labeled quotes it the to, we shareholders to use how the as on our are open payout acquisition, XXX%. an can and total principle we your otherwise, will ways As in we year we capital relates the the value is do and for at transformative kind And be I the this is do that. of so value what will answer path as if looking to for we that of far most our then go to ratio most Damian, is we happens and think are to best that about think continue guiding down

will we our that several so much that we continue to balance well $XXX focus to make using sure are can. million So, for shareholders as as acquisitions, value we spent creating on we have sheet on as as

Damian Wille

the Happy Makes will Halloween. hop appreciate sense. back I I queue. it. into

Jeff Yabuki

you. Thank

Operator

Schneider Goldman from The James next question of Sachs. comes

open. now is line Your

James Schneider

up how us little growth sense think and to bit for in Good taking for XXXX give to of square you the around us revenue help last Maybe acceleration much accelerated pipeline in us convert start give around of Jeff, then can year? to color which kind that could on were sales will year from, with X% question. XXXX your about will next XXXX to afternoon. Thanks XXXX XXXX we XX% of that how a level with the if maybe my of into and how year-to-date results comments sales convert example, conference outlook, and revenue, a

Jeff Yabuki

Sure.

we we So, we have see an QX performed had than an we unusually expect better do QX see. base sorry, believe but – we of last the than shorter little year, a typically one have some might not we year were a compare QX or than will little transactions and in what a bit had we unusually, the anticipated implementation did this we we of unusually strong saw as very an quite large is actually a would have you have those really to and QX XXX%, solid challenges we expect pipeline QX windows not actually large to today in

will up the in some and other transactions Jim, that still end live coin, so are side we on into QX they year that Now that of the ‘XX. larger had last bleeding of not

next of in have into half will revenue that So, is perspective, of confidence the feeding our a a ‘XX which multiplied numbers. little bit little bit benefit also there that our year from the second we into of a of by to sales get mismatch that time a is

James Schneider

get you you us the And up what you kind of see bank also in see point? you do maybe the for see M&A M&A helpful. clearly cyclical That’s and so of at update rates bank from bank medium strategic whenever lot then as sized tend space go a outlook your can consolidation you from a to the view your dramatically, you on perspective perspective kind of the this partners, with talk give small the as it,

Jeff Yabuki

But kind ball. little that the the valuations fortunately So, of breather or saw this of crystal has have been several I X, strong as for into last M&A I unfortunately year. say coming a last either months the X would years. popped towards in and up activity a don’t We last year

seeing in activity get point our and valuation and and to need back up comfortable your prepared as now the invest office more the I infrastructure. going people the bit rates so we’re with with We’re level little and of seeing mentioned remarks of there a kind to digital in more some

healthy in acquisitions I to think a at you’re going fairly clip. go to continue see

James Schneider

Thank you.

Operator

The comes Ribeiro Capital next BMO from Paulo question Markets. of

now open. Your line is

Paulo Ribeiro

you. Thank

guys? some First acquisitions. is XX the you question you the at First headwinds on are mentioned basis least question – you points hi that from how margin, and had

And So could how sense us money? you of around bit you much it how how also could Thank a Zelle more economics cost-save that that’s you normal specifically, help know it. money that little get get headwind yes, try to not just if that of if is us pop initiatives you about remind the to you. was to of due pricing similar point was the or around flavor leverage? but Second and much operating out make expansion

BobHau

me, Bob. is Paulo, I’ll question. the answer Yes, this excuse margin

margin that point basis. a XXXX a in quarter off was basis about completed from basis the impact for second and M&A, headwind about on XX first So, the we the quarter point acquisitions for year-to-date so the headwind XX

about that an headwind. talked us periodic of third point fourth basis was quarter and comments certainly prepared also quarter impact of in some the in the in revenue that QX the an We to the impact back our comes to XX was

expansion periodic will course us quarter operational year as into is to margin than high revenue back the the benefit basis as XXXX greater comes achieve on or basis. that as a third suppressed point driven certainly So, least recurring really fourth full continuing confidence that at of back the That the on throughout of quarter well provide gives revenue that quality that results growth of and XX effectiveness.

guidance fourth some we’ll to continue our already original outlook So year benefit our into quarter. that quarter, see we for through and third benefit operational effectiveness full achieved year the full

Jeff Yabuki

Paulo. Yes,

capability the shorter we the in of As it the of in it market. the fees services for longer clients we this. is solution – same next of that as on the ready the professional in first kind fees this and form realized are the in transaction the year relates get from our the to economics probably builds term economics the I to term to us really would revenues into half Popmoney built that sure is as of coming Zelle, of more much year and helping do are for setup that that in say as

list So happen a game in the it’s effects. near-term, a is that and waiting with going then we really of kind network are to waiting for think transactional preparation the the

BobHau

way a services larger an be of Yes, is unfortunately we very a I least done. likely years is clients couple of is implementation point will other guess way think get the when my going of it’ll to to have there Mark’s implementation that for – significant the take that Paulo to clients the thing and smaller at

you’re to going And you’re have going period going so there’s have growth of implementations long a conversion for to ramping. fees be while to is actual transaction going the time, – on or

Paulo Ribeiro

solution? MasterCard the networks is to should about Perfect. versus Quick the VocaLink competing Zelle, debit on primarily guys when if it Zelle the TCH, follow-up from you I’m it if solution? Zelle How TCH does right. anything Visa, because Because involved now how would TCH think correct with it work that with correctly I and offering leverage

Jeff Yabuki

Yes.

There on networks transactions ways not the in it are Zelle those today know those, being institutions. delivering about fact a that this are is of but the of they debit rails a a but point-to-point transaction of one as only I think of several through the real-time, fact, other And going those. I you it’s a are one real-time really transaction. of rails, for the suspect, kind through between know would market suspect don’t financial in exist a would that more number I going You

installing. is we delivery different we Network actually of enabled The can the the that time various urgent ride that that situations NOW different most or the used a real-time as cases to Network the different of transaction. delivery is and are that apply what of kind number beauty endpoints is are going in kind of NOW it depending effective connects that any using are – cost the network for enables rails We different on

ways, So, be just online, comes clearinghouse option. a of option the delivery be it another of will capability in in sort many but another as the transaction, it will

Paulo Ribeiro

you. Thank Great Perfect. color.

Jeff Yabuki

Thank you.

Operator

The Brett comes from next Stephens of Inc. Huff question

open. now line Your is

Blake Anderson

for Thanks Blake is for questions. Brett. this on Hi, taking my

Jeff Yabuki

Sure.

Blake Anderson

the at Zelle it noted biller existing that interest client and killer sounds the think new like is see as what you your wins call use and of your a us internet app well in product products case You in this really high. sort Can banking tell you is early the different this product this is combined of then and from Analyst there and Day product?

Jeff Yabuki

Sure.

So, Blake, let me clarify.

we network different the range biller road unique actually to payment of to be and banking up some enabling doing about integrating that – very basically electronic LoanComplete, a the se, lender client space. that position from interesting for the down down solution all create $XXX think we have, now, to see to to print, that it’s because our about So, being products which around are which revenue exchange, but cross-selling doing we with bank in are strategy we our annual think is enabling the about is existing biller solution the our billers strategy. some products. will biller be per payment just a from digital over extent to is digital of today we banking that’s that’s use capabilities biller will communications, what talked a risk base. office bank is and – today acquiring integrated electronic RXP within strategy have able $XXX the we and unique, the biller a creating Mark’s back bank Investor solution the which digital point we just talked to bank delivery to through are the or payments network we we very a billers, have of The as biller distinctive able it’s this Over and that about the e-bill not lighting doing, to well. that be we There E-bill, some to together statements, over, from so we cross-selling at think million I time, nearly road integrated it it being opportunity products Day million strategy have solutions

of that real Unfortunately, or another will example of and it we will growth ‘XX, said good other has of that won’t of So, legs. and that wins an we historically. several had very strategy about conviction when another Mortgage have have the ‘XX on Freedom call, facts be a the I solution, haven’t that frankly begin revenue I on opportunity lever lots this had who demand, come until which we excited the but our layer gave to propensity acquired after is but are LoanComplete we our increasing

Blake Anderson

the And Okay, just are into existing your the my clear is, then integrations follow-up products Dovetail there Thanks. up near-term? of Pfizer payments in great.

Jeff Yabuki

into would integrated mean, where into either we are some say I is way. of products There of running Dovetail already account processing where a examples number our Well, are banks the and I opportunities. other a it different PEP+ or

into has just and as but have products we used with it, which is ACH product, our solutions, most the and the our well but way of some in PEP+ Center we very the network processing our to hub could exciting capabilities, liquidity to that management of today opportunities that a by and is number lack we the proprietary largest that the that think intriguing one the for exciting about base. of linking solutions Commercial be say what frankly a thinking better One payment payments done to being U.S. risk cash in the a have of banks what create as management not Dovetail network linking account

fact there customers. banks very now commercial to sure a provide making can a into see lot to are valuable synergy customers, integrated serve they of that linking wholesale are most the which we earning again, attention solutions So their nice and real-time digitally

Blake Anderson

helpful. Very Thanks. Great.

Jeff Yabuki

you. Thank

Operator

of from Andrew The comes SunTrust. next question Jeffrey

line open. Your now is

Andrew Jeffrey

Good afternoon. guys. Hi,

Jeff Yabuki

Hi, Andrew.

Andrew Jeffrey

Thanks you thinking some in just I’m where it comment the on for both success. if product, Jeff, like taking environment competitive question. generally wondering for DNA nice seems the unions the credit

change a there if out some in of just whether there’s are how hearing So at often RFPs solutions. cloud-based about we’re I’m there you all these the pricing generally, and conversation of all? sort at and mid in call wondering the competitive Wonder for next-gen see

Jeff Yabuki

great a It’s question. Sure.

we pretty the have have larger want to a And that in space. space the of a credit bank that clients of DNA savvy, momentum the other for large put have good So any also fantastic we and our in but a a side. continue of that is lot rising continue some are to fit, interesting is in dynamics lot on There large we prospects the of modern platform optionality DNA we in with the we’re we DNA amongst themselves success union success good seeing a so going that top feel lot fortunate solutions, the that’s news. database we technology and to number with on – there

now digital we’ve architect to enabled. is that of to architect run there say the able going be architect As in or I so to fair banking we moved a it cloud, architect, architect, cloud – engineered space, engineered relates was amount quarter imagine to to cloud move might it’s we think – a I in we cloud last architect

of on I’m then this claim delivering an is ASP to to branch other kind being would of noise there, virtual time. any of that’s real lay Architect the discussion online piece so that want plethora will clearing over through so movement digital very that it time, retail FinTechs and at of little like. lots the but mobility, other, are important of And over and through Corillian really be of our call a And there solutions, houses there point. mobility optionality others or that And institutions see through cloud-based or us or I them capability, or and solutions

a large cloud there infrastructure is would there enablement made any we decisions way move really don’t for side there around to clarification that be as continuing see and movement will – be run So, cloud will move that, last the and the of most here on point here there the in or part but of kind I any solution make guess is a I period. to there

be so way about solutions happy for more the that’s own a for because way And that quite a good we’re the perspective to about cloud we long and efficiency applications think see long perspective that cloud to haul. in is talk over and outsource will And be from moving we’re and modernized run a business time. the been our an think that our pricing and will

Andrew Jeffrey

Okay, thank you.

Jeff Yabuki

you. Thank

Operator

The of Ashwin Citigroup. next from is question Shirvaikar

Your line is now open.

AshwinShirvaikar

Yes. Hi, Bob.

Bob Hau

are Hi, you? How Ashwin.

AshwinShirvaikar

brought if transformations, example, ask bigger Thanks. terminations generate I in times associated with this Is good. at comes industry regards termination? made this a start this are Or when for up. brought mean because background, off revenues in wanted like is with few you I the digital to what’s deeper are FIS wanted Hey, on milestone fees your something fees in contact they the term guys going the clients when pushing it background to in the looking going Good, to on being there the solutions to bank just and there? with not comment term things this periodic quarter if I up

Jeff Yabuki

No, actually as seeing From opposed contract our a terms to shorter. we Ashwin, isn’t. there bit are perspective, longer get

isn’t rate us in take transactions putting approvals of don’t and for – regulatory time see being there a fees and we down for lack there these are they take the termination So, for and it’s quarter together. that complexity to the termination is fees that

And sorry – I to takes so time, getting the them am close. that’s what

covers last time. frankly there not and is taking fees the no indication years not that, have that’s continue. the nothing under in grown – termination what’s is going the on fact It’s there that’s to going So, there and over several

AshwinShirvaikar

Okay.

thought Now, would I just that. I on check

or these forms regards size with digital have have I strategic clearly put of – types in you obviously you. piece, the at platform, it. partnership are help of the kinds solutions look the is question Monitise you banks was and banking markets, potentially about the the the if you Could three to mean I different talked targeted already at you of banking altogether different – What’s get When other of other and to with clients different with have different regards you this to sort I this impact digital on The strategy what NCR. and next-gen in call having or market? had

Jeff Yabuki

Sure.

which So, Corillian is great as kind U.S. solution of of top in Bank the in and Australia. our Ashwin. large runs here number it’s We, runs a of a the institutions market as question, something Westpac

solution. platform a the in a lower robust it’s So, meaningfully clients as online It’s has microservices will think in fit between looking primarily using again What do capabilities in into the the XX for market. it Corillian I the and a together the quite although the that it single mobile about this do space banking targeted two Westpac. at being things, to mobile which the is and our architecture, capabilities will that bringing capability we our are is not kind of mobile top TCO doing solution banking space, at space we deliver

so solution very a that next them to XX So, the it looking sophisticated a trying and everything architecting bring structure largest feature in when are to. and are call want for below bite gives really with to XXX, players, robust control we they function institutions the market which very, to the XX at to that

fits economic all don’t is they want better more they pressure that – on a efficiency that model. but So, their also they TCO solution, say the ratio, an ASP want with let’s

is acquiring so to at going the being technology. will more looking be saw sophisticated and far but we meaningfully and allow already it doing FINkit had we to ‘XX market in FINkit will doing in end a that had and cloud-enabled us And Monitise bringing up that capability, faster actually technology the started actually that, been go

that. So, very, we excited very are about

AshwinShirvaikar

Great, thanks.

Jeff Yabuki

you us and this for afternoon. thank talking Great, to thanks everyone

contact our evening. Relations hesitate don’t If team. please further have you questions, afternoon Investor great to a and Have

Operator

That Thank you concludes participation. today’s for conference.

You may now disconnect.

Fiserv (FI) 1 Nov 172017 Q3 Earnings call transcript