FISV - Earnings call transcript Q2 2018

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Operator

Welcome to the Fiserv 2018 second 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. And 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 Chief Chief Financial are Bob Officer, today our Hau, Officer. me Yabuki, Executive our and With Please note Relations that for the our earnings release are on and available the Investor section fiserv.com. quarter of supplemental presentation

today operating financial from expected tax remarks other the initiatives, and will about, results, statements Our among forward-looking matters, reform. and strategic impact include

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

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

earnings turn and me Also, our Solutions let amounts business year, to Lending the split share over the per date, adjusted in for in of of interest stock With the supplemental call have that, this adjusted are share quarterly been adjusted per-share our full to sale of that amounts majority impact of in the for the X-for-X the March. Jeff. release, the completed of closed March materials, the All XXXX and year. press comments and year

Jeffery W. Yabuki

everyone. afternoon, and Thanks, Paul, good

commitments and basis XXXX. the line in second quarter momentum XX was positioning with time last quarter, for with us and margin as in year. very We quarters for basis points the in XX% the Sales was repurchase. up we performed the the of is and half expanded was on has of allocation, our growth first year. to is up second remain for the Internal operating expectations value points capital X% in first up meet through in Adjusted three X% XX the revenue the the business into Our financial providing and a our XX. for and June quarter look in in year the further XX% grew the half the quarter share EPS at Adjusted commitment focus increased to steadfast through consistent sequentially. X% shareholder in well XX% quarter

million During repurchases that including $XX over crossed XXXX, total quarter, the score, program this the of year. we about in And those for a threshold $XX in nearly just the so billion $XXX we an average outstanding second cost share. retired of initiating shares far the share since at XX% have period keeping

which revenue clients. will priorities with emphasis continue high-quality differentiated are: build meeting XXXX, you have second, and to on shareholder our key payment for value while and recall, three which enables innovation and client integration, third, earnings relationships an solutions; deliver digital commitments; for As our we first, enhance

XX up the card, second in XX strong quarter. date. revenue core revenue, our growth in Part license driven quarter. internal is businesses, revenue acceleration margin Revenue expanding year and by allocation. focus and as recording in of the in the half XX% first capital revenue, adjusted new with revenue. ramping as included of the We higher continued also and the the biller, comparison the benefit operating the X% processing was the high-quality to somewhat, a which points for costs our disciplined up on basis internal Adjusted primarily recent growth our account in quarter expanded for and an basis taxes, was margin of lower the operating acquisitions of Adjusted in up diluted year, of EPS by XX% was a easier expected, along stellar result quarter points quarter

achieve We will confident for our the highly year. we objectives financial are

largest with digital to on be client were In real-time the to priority is a enhance XX changing innovation second true further DNA XXXX, since relationships, continues and acquiring a deliver market We their an quarter a rapidly to with quarter, modern and to payments the bias Our differentiator. processing strong world. has in we in to emphasis quality which our architecture members sales $X.X second pleased infrastructure exited solutions. to and and pipeline the in legacy nearly with our assets institutions. larger federal billion. union platform the roughly DNA a to a over in to a legacy for with We solutions assets which family. live on and along live welcome half $X credit to of institutions A with Fiserv competitive billion go modernize over quarter of year, chose had expect process go the clients DNA suite XX its DNA's are

more as sustained digital Mobiliti adopt grow, XX% X.X We that growth consumers more over ASP users now be quarter, continue the million. to in to see to adding services. subscribers continued To end,

financial is years. based the more By than to of should in a have integrated the value on production, over grow time, information next As interaction digital models with clients of number security. Like believe sixfold meaningfully transaction digital solutions which events the ecosystem. end increases leverage roughly across along alerts solutions, We between and growing relationship Notifi, FIs this capability, changing uses, access platform, year. enabling experiences the will to and and anticipate digital client digital and which institutions grow our year, allows enterprise to channels three are our evolve this in hold, take increase many five customers. capability we the a we their XXX bolstering over provide to of real-time the for the

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

for through XX on of launch financial nearly and sales is becoming money. footprint for Just Zelle a assets. our after underlying We $XXX institutions turnkey remain solution in remains recording which billion high, growth. solution quarter, Demand implementations, its year focused sending to represented last Zelle quickly the building sales, go-to transaction June, our the

users in In payments cybersecurity and five to accelerate and security opportunity, an later clients. pleased solution NCR's the turnkey our the go we announced we had and live expand growth the were of Comerica addition, relationship credit BlueVoyant. through of this real-time live all June digital West, our remain times important further Zelle for more more the exclusive including Insight of firm in institutions their this clients We service. offer world. fully advance XX% up Digital top Cyber largest We and union to recently transactions Navy adopt the go quarter quarter, the XX with were to partnership sequentially, Bank Bancorporation, in than as Bank, the Federal, solution institutions Zelle with Zions risk than next-generation XX year's expect were up prior and to To mind sizes. types payments level. strategic more and

security managed this incremental into innovative has offering, unique pipeline both with and a leading-edge positive, reaction We have to capabilities clients integrated providing The comprehensive sales. offering early strong services their an platform. market a been very leaving

are this opportunity. quite bullish We on

example our plans payment We biller integrated quarter, our Shield Blue health biller in expanding multiple to our also BillMatrix one great of network largest is which strategy. Blue and the channels. the platforms California the and by variety had of adds platform This of the nation of launch a go a across momentum on of enables options live in

same an support believe naming for of the further rising this promise showcase with our need the our arrangement NBA's that, new designed to expectations. arena Bob reinforces let latest Fiserv recently client me a deliver value the Lastly, conference Bucks extremely for name, partner cost-effective We With Milwaukee Forum, results. on turn you, an unparalleled shareholders, our engage fashion. be long-term time our clients, and a our financial step annual to agreement consistently strengthens and deliver associates, detail We a position fully announced over more this brand, of on in the our to in intentional state-of-the-art incremental our leadership entertainment and the to which to to brand our call people. and is we technology to expect opportunity in an experiences. the to nod communities, elevate provides

Robert W. Hau

Thank you, everyone. good and Jeff, afternoon,

the of strong the billion Our revenue excellent quarter $X.X revenue growth the was quarter up grew to to adjusted XX. June half Internal in X% billion in through and a in year. $X.X X% and was the first at X% X%

was As Jeff mentioned, in part growth quarter license our by buoyed revenue. strong the in internal revenue

revenue As of our that expectations year. fees growth basis, half we've in internal we full-year the for periodic Overall, slightly for year on internal previously anticipate indicated, revenue accelerated be is a growth this first decrease the will ahead of driven X% in the QX. significant down termination by

in quarter, and earnings half was Adjusted to deploying reported. in of for began the rate from spend compared is impact XX and and tax first second date year. Adjusted we acquisitions points expected incremental respectively. points XX% $XXX with adjusted had XXXX year-to-date XX% Adjusted basis Lending would for to would operating million per As increased in adjusted six the with our to results the savings basis majority the quarter, half for and points up impact and basis the higher to in to $X.XX second the been than basis improved operating in date. XXX margin income for our points points X% we quarter results growth the year the have year transaction. restated $XXX a of quarter have internal the of increased Solutions margin the also under on up by plans, Normalizing reform our the the ASC $X.XX dispositions note, million operating XXX and year, the we basis of each to grew results, of investments our quarter the months. for Consistent XXX, case for first the our share XX revenue XX the

in solutions, continued Debit growth first X% in in of Strong card segment's majority services June half digital single to date. users year an growth revenue of in usage of very Adjusted years are and volume growth all through to quarter, quarter excellent, operating businesses million XX% streak Those to nearly to produce by X% $XXX our element to PXP basis biller increasing highlighted our million XX for important half Zelle, growth. points the remain is to considering digits. to XX million and are the this the was operating The headwind when Transactions future performance the extend The as the trend segment, model in XXX X% points steady and was XX% customer including adjusted contributing quarter Payments first up primarily across $XXX our and XX.X% stronger XX%, in X% basis XXXX. internal positioned and the and even to the ASP consecutive businesses the quarter high transactions, well of the share $X.X Payments and We per to our the revenue. Mobiliti for adjusted income grew XX% growth. of quarter XX. in business and are adjusted high-quality billion from that both grew $XXX increased earnings payments results solutions. to increased margin in double-digit segment. the year, to and acquisitions the of drove segment's

by in additional X% the increases revenue in the Moving to of our very the the Growth adjusted to divestitures boost was performance months growth the first decreased decreased year. million on license quarter across and from along solid in due much with revenue businesses and revenue in Financial X% driven $X.X an strong the to billion first X% Internal to in of a for quarter X% of in quarter. segment, $XXX the was half quarter impact segment the results. the the six

the by $XXX the year, segment's first for anticipated for quarter had which timing income up periods for in adjusted operating planned million due digits. the to includes quarter margin XX the decreased the negative exclusively in of to XXXX, have quarter, to operating transaction's the of basis revenue license decreased QX. to Lending high was Although been Adjusted on the adjusted The second in full there which half both and benefit impact X% in points. impact operating income transactions, for XX%, in would from margin single million XXX those some been basis divestitures. operating $XXX But Financial the points X%

in the segment points in XX loss operating line was margin headwinds the to quarter, up year-to-date up adjusted from XX.X%, operating $X our is expectations. the However, basis including divestiture. Corporate million with the in

quarter for adjusted was consistent Our effective for tax half of our rate outlook. the XX.X% was and the the first XX.X% with year,

lower the Solutions first to which XX% between full-year Free Lending $XXX the to of conversion flow flow the cash through period. of be both million do impact We the primarily of XX%, than include June quarter. XX% from continue and adjusted spending was timing $XXX that half to CapEx the divestiture. in Free tax the approximately was the expect working XX first down due and rate includes at our cash million, in for anticipated to the divestitures XX%. of results proceeds capital year not These closed

cash trailing mentioned end repurchased $XX year. the of a X.X for debt earlier. stronger lower bit adjusted XX-month quarter, half The at flow billion our expect XX conversion of June was the of We remains see repurchases We second contributing of up times million to $XXX the free the target to million range at to EBITDA. the X.X outstanding program Jeff $X.X billion shares as and in in

year, million the million we $XXX half Over repurchasing of the shares. shareholders, returned XX to first

end, remaining under million and current repurchase had of quarter's shares million shares share As XX.X XXX.X our authorization. we outstanding

turn with to let me Jeff. over Now back the that, call

Jeffery W. Yabuki

Thanks, Bob.

earlier, Integrated the mentioned sales and half X% in to Quota year. June and million XX% up and to is was up second the I attainment million quarter $XXX in XX. the the through the X% is quarter $XX increased in As for sequentially X% XX% of first quarter date. XX% has to sales grew was year

the their better institutions are top and considering Our increased investments grow in domestic to as quarter, serve line. XX% pipeline actively customers

the operational of to quarter continue first full-year million from We sales the for booked We in of effectiveness half $XX savings million initiative year the achieved to savings. achieve our and $XX have expect our targets. of another

to with that interest of savings institutions expect continued ahead. pace Financial $XX increases our We the for tax generally to performing rate on goal are meet and of million benefits year. and are we continue well,

both with of digital number which investments, and have are attestations a a of institutions experiences incremental public focus and dear made to on technology addition, transformation, In heart. near of payments our

institutions market a me and see acquired are leading and We longer-term look we our achieve deposits. and the front focused M&A position and financial solutions. that as technology these strong hold let center in our to for goals We reiterate about the the full larger trends for Overall, good gather year. very continue investments of to leverage feel the direction benefits to

at of year. our basis least We expect increase XX growth a continue to points for revenue internal X.X% minimum rate to the to

of a shareholders. to every who the We the growth the and We of at $X.XX financial midpoint year operating $X.XX contribute for to that understand XXX% our year. We equally of on of expect range adjusted conversion that It year. we that world delivering to our margin EPS clients EPS positions our daily to is for XX% XX% are product are that the are know be strategic the you, value will results XXX% anticipate with adjusted between to their progress our flow clients, for XXXX results over on will deliver and importance expand free cash our Fiserv unrelenting best. points us that people of enables focused representing closing, XX,XXX in and to the and our the $X.XX, of results and for adjusted full-year we pleased be associates, further period, range. will anticipate XX we that And are of full-year our dedication the achieve full above operational our Fiserv our and to our In in success. deliver a for commitments quarter XX basis while we track one to around long-term for any adjusted

for fortunate that, let's on questions. With have the open line our side. are them We to

Operator

Thank you.

question-and-answer the begin now will session. We

Our question of Dave from Koning Baird. is first

now is line open. Your

David J. Koning

congrats great Forum. growth guys, Hey, Fiserv the and on

Jeffery W. Yabuki

Thanks, Dave.

Robert W. Hau

Thanks, Dave.

David J. Koning

to But now guess happening I was what of first my going I that the be the years. there. best that's sequentially, Is in growth question, through So the talk the the new think in segment, was X%, dollars was normal down. revenue Maybe great just trajectory Financial the post-Lending? sequential many

Robert W. Hau

through that of when actually March We divestiture. That very Lending had of XXth closed. the of transaction Dave. ending is the impact nearly that Yes, the the business

revenue second away the see you in So quarter. go course, adjusted and of the for revenue then, materialize

dynamic see sequential you that So going won't same quarters. future into

David J. Koning

It mistake. in and QX I guess QX? And my then you. QX. my of makes of image tough is was QX-QX, you, sense. QX. I Got most mirror got it the That You mentioned follow-up in comp a

should more like was So a a that look a QX then look more little QX little like how and QX?

Robert W. Hau

growth. Dave, shape way in headwind point, closed our first that second difficult full-year roughly half comp about half expect on the pretty think think the in fees very out similar, then. in guidance. see to with the is to it, line half we you'll to good the the And first the the your quarter, of given relative I year term look we the Yeah, To materialize fourth

David J. Koning

Got job. you, great. good Thank you,

Jeffery W. Yabuki

you. Thank

Robert W. Hau

Thank you.

Operator

Our next question ISI. Evercore is from David Togut of

now is open. line Your

David Mark Togut

acceleration Thanks, the good on revenue organic afternoon growth. and congratulations in strong

Jeffery W. Yabuki

Thanks, Dave.

David Mark Togut

follow to think the growth the license in could which than of I and unpack revenue that you the was year-over-year Financial in let's of breaking in if changes segment, more growth, up it recurring growth, between term the contract fees. Just probably down decade, drivers internal the growth, X% drivers on software just then best say a

Jeffery W. Yabuki

and in, add David. Bob me will then let So start

You know business well. the

but not an license segment. revenue. quarter, indicated to that to year have quarter. ended better. we in that kind it prepared slightly license little strong driving would in very recurring And a movement we slightly bias the than was For growth year, so that was It up periodic had had a be us being increase better quarter, say the A bunched the in the in success revenue, in quarter. with revenue of that We of throughout we quarter, we bit in I definitely the it for Think continue would see the our the remarks. for up that full in thought to

DNA. with live progress the had full our tracking nearly as year. we XX such expect go in and been alone, You've XX for We solutions quarter the

to it and continues of the but it last revenue needle to moving more in right, couple So a of of that is for the segment had the the periodic revenue to sales we've the bias years. level complement recurring

David Mark Togut

QX XX XX DNA that How full and quarter in out break year. and QX? for down balance expected did the called the between DNA You went live in conversions expected the conversions

Jeffery W. Yabuki

in have guess front I that QX. be going don't me, actually larger than meaningfully QX to will I'm that of but

David Mark Togut

then in Got strength spending appetite And upselling, you've the what upselling? it. specifically the solutions cross-selling what's given and and the IT called most and for out bank for trends, are cross-selling in-demand

Jeffery W. Yabuki

Sure.

sales quite on buying So we risk, integrated on solutions. a focus about existing our seeing clients up proxy of newer enthusiastic kinds around movement of about We're that lot that year, lot And about talked we're for over the a interesting X% then existing and deposit year transformation. those on on that's a are a fact payments, cyber, good digital, of we have offering authentication. products, add-on

we're very focus being rates and going up, on focused how assets more and seeing to fund gathering institutions go they on As optimization. and deposit are more driving deposit

a hopefully it's process. and and they you as they and look So as we buy, a know, And a David, we're People get seeing but that then interested appetite. as implement. then good eventually well, reminder, then

to expected step about a So that of and in beginning feel why this we visibility. good we said we year even the that to the part year up bullishness the at see is continue of XXXX,

David Mark Togut

I Quick final appreciate question on that. Zelle.

you development picture, for example, XX% of big out component be? dimension product? And added, more called sequential then You contribution main features be competitive a might where Zelle product? is Zelle what from the for the there social, which a its is in as revenue bigger to help growth. Are us Can

Jeffery W. Yabuki

Sure.

were that while become to So there quite of to growing a know we bulk the are network the into smallish are measurable to say you would indicated XX but mean. is get I Revenue alone. on demand contributions meaningful, We continue high. transactions, the quarter But if signings base. fast, what the in starting is not

and see its in we demand, And of ecosystem. of banks growth you way that a through the so move we significant and see rest will can the big in know lot the transactions,

goes, As in a experience, the far development and there's as new use on also product Zelle focus focus there's consumer cases. and innovative a more using on enhancing

participating so all we're in that. to be And of excited

David Mark Togut

Thanks for that, congratulations.

Jeffery W. Yabuki

you. Thank

Operator

is of Jeff Our next from Securities. question Cantwell Guggenheim

Your line is now open.

Jeffrey Cantwell

afternoon. Hi, good

Jeffery W. Yabuki

Jeff. Hi,

Jeffrey Cantwell

my taking for Thanks question.

I about on bit you slightly touched just in this Zelle little in ask looked to a way. but on specifically prepared different in results Payments just your and the revenue this like better were a talked remarks, You expected. quarter, one want this than

step banks in last big quarter the volume this as seeing have saying of a they're been up quarter significant and Some well.

this I'm So seeing is the you're could just along year. the now? And that back those more if Zelle-based perhaps meaningfully wondering revenue right half uptick lines, noticeable contribute in of

any as have that to there, very helpful. for you impact of would the be If color us size

Jeffery W. Yabuki

Sure.

at reiterate going expanding. it yet. So network effect, aggregate and about I But stage we this being would is being more live, measurable more the but my so comment transactions meaningful that seeing not institutions are created,

movement that believe in more One very high it going why real the little the to these where more I to closed growth reasons larger that's a banks is interbank of more of has do terms utilization are much network. intra-bank bit see we network the getting with on levels able are to dependent of show the

And that I institutions say general. really mean so when the be. in banks better unions, so will financial the the more network, credit I And banks banks, and in

of XXXX XXXX the was second of of we the XXXX. second will than half first So that second I first can of which bigger that right half half that. more see And on XXXX half more will have a than be of the be less very based XXXX, that of the path second than high XXXX and the the confidence the half degree now of than half

or this effect whether much the in continue going businesses, we've growth to BillPay other and business. seen we're transactional get so like this network And processing be card businesses to that happen the

growth our good And long footprint, and right fact see think an fairly given that will important proxy time become we in the period BillPay driver, can for business a a is this think on that this for everything of based solution. will we I quite now.

Jeffrey Cantwell

and a I appreciate one. then high-level that, just

your earlier in overall. it the rise unions. would credit as this frame The your on through then how of banks NIMs thoughts help question like open the et what what as half looks banks would is union health there. up cyber and in are about and the for the at as and ticking which heading FI's us might the spending own to you we remarks get state trajectory the towards quarter, unions cetera. look tenure on is touched into wanted terms results XXXX and well. you profitability more your of credit X%, should be You far this of on? been back type has of positive bank to talked year, You just think of It I have this back If

Jeffery W. Yabuki

Sure.

So, a few would categories. Jeff, there say different I are

apply commercial/business both and everything so say and should – retail to equally category these that digital first customers, experience. I around The

or is personal two create around can pocket more your being the of given the everything up device, on Number to cost transact would for ticking assets done the that funding deposit money. in holistically secure and I of safe in tenure that's say one. branch the number really be a device, fully your payments and more way So a and able to gathering,

the think vehicles different to and their So more all deposit customized but banks cognitive, starts reach. ways everything it's RPA, different robots experiences, of whatever really we're you separate really about third, and that and investments basically to efficiency, end of expand to the And use of at around risk And sizes lending, have different want size to we then the those about how hearing setting to meet things. But money gathering and you base, ways We're else. about around always more of origination and data former wrappers tend especially to amount can conversation. seeing asset more looking be the to so up kinds that work, putting to upper fair then a of on ways of discussion, think servicing. the more the where more say, automation, create

Jeffrey Cantwell

to when Fiserv thanks. Okay, on going you the Forum, looking for play okay? I'm Bucks at Jeff, TV And, and be Giannis

Jeffery W. Yabuki

Okay. Thanks, Jeff.

Operator

Our Andrew Humphrey. next question SunTrust Jeffrey is Robinson of from

Your open. line is now

Andrew Jeffrey

the Good I appreciate taking Hi, guys. question. afternoon. you

Jeffery W. Yabuki

Sure.

Andrew Jeffrey

that we Jeff, as you pipeline perhaps software? to pretty to similar is a saw skew wondering it to composition say and are a safe if aggregate more or see looks in toward starting start or your the this that drivers grows Mobiliti the opposed view. growth to inform solutions at growth a the an that, there's like solution as of just point I'm something some tipping of sort Zelle quarter, which point like to single newer these say

Jeffery W. Yabuki

I'm Andrew, it opposed solutions and transactions. sorry, say Architect based or via when tend to – as building deals. be to pipeline, transactions that those I more – seeing growth pipeline on drivers you be But those would Mobiliti larger tend we've other, to bifurcate kinds of solutions, of smaller be our actually we're transactions got plenty or those whether they are smaller

but And those the will sell time. so revenue to in, tend we mature over

well to growth the were the of sales has that now right that lot in a coming past. so in we're with And do seeing

being of think XX%. is talked things up subscribers about one we the Mobiliti I

years, back it's the go of that think pace. you If XX% I last quite that or at quickly and been, you've at XX XX is look the are got plus kind where when and compounds running three quarters that

right that Our hand, the some from solutions building these benefit complex seeing that than has will pipeline, of revenue more projects other of on transaction faster actually to convert now. we're kinds larger,

we're different actually to, of will to complementary feel results think assuming drive that layers recurring and pretty good currently. XXXX, seeing pipeline we I revenue what that our as about matures expect it So XXXX driving that our is the we way

Andrew Jeffrey

BillPay renaissance? it's a growth Okay. is good I thought folks would new use hear driver. has to into to breathe a see know lot that And Do of prevail longer perhaps guess having little model that years. feel that new over a bit that BillPay, bit cases Do as of a you when you I business with can term? consolidator Direct like Biller BillPay of yours little a the regard to perhaps acquired call-out the you CheckFree given way life

Jeffery W. Yabuki

We're years Andrew. to model. the do, We a do create the can what quite last spending powerful three been between in more bullish. linkage working the we on how We've consolidator Biller at Direct and experiences

one that's this importance side. interest taking And more capability experience So digital from seeing on on because experience. we're the the the institutions thing larger of of the

of within about the more experience, about like been they'll electronically payments we've And it sudden is real other killer transfer, app Zelle account-to-account the as we part, drive doing they're you little long will channels Zelle that think with sides. of a BillPay Zelle frankly a good it time the a mobile for that benefits things the will use something and of is each consumers energy on app, the I do there. Zelle bank complement the only both of originated quite that. of standpoint. So to predisposed think out long for feel has If than create they growth seen all killer consolidated out that's in if because, from one more the – most the exception the think do a I be a distribution as ancillary do more BillPay like of

Andrew Jeffrey

Thanks a lot.

Jeffery W. Yabuki

Thank you.

Operator

Wolfe question Research. next of Peller Darrin is Our from

Your line is now open.

Darrin Peller

guys, results, nice Thanks,

Jeffery W. Yabuki

Darrin. Thanks,

Darrin Peller

technology I more that with big an existing many IT digital either color like could is banks earlier just Let of I of mentioned, all the be. trending services are a you I me they're And get are wanted exception. these big it that your you the these wonder guess across more initiatives clients? referenced seems these by just how off, can clearly are Starting – just end little clients? clients on How actually new opportunity services, towards taking potentially start to the being of the this much that's whether XXX on versus on offerings. – digital I no spend clients how these to around where the me, of environment year guess adding are off. first? using How they Jeff,

Jeffery W. Yabuki

to of and or our allows Fiserv of that the more so Notifi some actionable have between today digital we we our interaction we that Notifi year, can that beauty alerts, platform, quality alerts the customers. in So we technology the and institutions using higher that platforms. the events solutions, is two-way so are clients referring end probably alongside which the the the solutions alerts, of That XXX have clarity, a out. production clients is the live financial by X,XXX their events, of of were are digital communicate or is for would that that The

data is mobile more we customer-by-customer data, valuable are and if using else. a only and bill the platform platform but a not transactional a around risk data and so And debit exponentially that platform wrapping service a platform everything a you're pay on basis, the a and

reviewed different data that's got customer. pools to being of the you've the So for information important

be platform the will we be because across that base expect eventually think entire consumers dealt So with. mobile the way to it will be

Notifi has processing time, over deal we so add will also sell I new package. And on. every to that core virtually continue that in the would account say

Darrin Peller

I to how at probably ought ancillary offer And the to on, yet? the on have platforms how guess All helpful. all day, new accomplished that you're you much how signing actually I bigger the clients that capture your existing core the the of technology guess much question much be couple when DNA with you cross-sell on guess ever of payments a that's have now offerings end as you the you've I from side well. disclosed you other right,

Jeffery W. Yabuki

what billions look strategy on pay you that's XX average technology. would basis we're new years exact last starting tend in to if sorry, mentioned top on doing that they've our each terms XX – they as if at be we that dividends, the of rates, I is prepared of that to over And we've a been and products incremental strategy you so It's solution. doubled client, that last than is, look same we But the Investor or this. that And remarks. introduced Day, the at But integrated say a the the revenue. number XX account processing biller in annual attach the at the in of is to more that see taking in model,

Darrin Peller

but benefit quantify the you a that just may it, did not quarter license quick Bob, I have meant out? the really heard Thanks. revenue helped follow-up,

Robert W. Hau

actually not. I did

gets single million is year. mid-teens, year million high – was benefit periodic quarter, us total. revenue over the year That which date it For $X to digits, in $X

Darrin Peller

Great, you. all helpful, right. Very guys, thank

Jeffery W. Yabuki

Darrin. Thanks,

Operator

coming will Research. Our Autonomous question be next from O'Neill from Matt

now Your open. line is

Matthew O'Neill

business. out $XX million adjustment if for taking hi. any base guess Thanks I been product a answered versus seems $XX wondering the trying around shifted Lending there's just Yes, have my initiatives. in year just was from the million the from question. business into like corporate $XX to of some I'm figure Most seasonality to was Lending them QX. housekeeping line. It maybe Zelle million and the I perspective the if of

with If there. you confusion just help could the

Robert W. Hau

growth. is seasonality. some see a of There bit did we Yes,

would little of because right But our the quarter. going numbers that of second forward first transaction out closed be The half at course, end larger. typically of a that's now

Matthew O'Neill

Got it.

thank Okay, you.

Robert W. Hau

you. Thank

Operator

Next Incorporated. is Stephens, Huff of Brett

Your line is now open.

Brett Huff

taking Good my afternoon, guys. for Thanks question.

Jeffery W. Yabuki

Brett. Thanks, Sure.

Brett Huff

housekeeping a question. is One

would you think I us a believe. you impact I mentioned again? the give XXX It can XXX, this. better, ASC have little ASC been bit The

Robert W. Hau

For year, six points been higher. the first XX months of about it have would basis the

Paul Seamon

Right.

Brett Huff

Okay. And to did make I you I that for want didn't it. quarter? the miss sure just disclose

Robert W. Hau

it's quarter. excuse didn't. about disclose we is Order We of quarter. first we same. of about second No, in magnitude it me, Order disclosed did the – magnitude the

Brett Huff

and you thank Okay, that, picture question. for a then bigger just

reaction banks some asking at saying front really a and offensive numbers on banks all reaction? spend smaller they're use for, what like the that's or a it in digital and reaction? is the dollars. big you of that billions starting Have in tax what thing on what big spend typically? you are the your that seen folks that So in sounds the medium-sized least a of is to are And the to their push that starting to is the focus billions then response benefit, effectively Given up money particularly if they're to large, and the

Jeffery W. Yabuki

Sure.

answer I would question ways. say – your So, would two I Brett,

all, a the of First the banks, serve we we are as banks, number fortunate but serve small enough also of larger medium you only to and know. not

as conversations But to high around we're institutions obviously through prepared I that security, wealth larger what you things and say think a dollars move around been from we've and conversations need setting very management. about, conversations in spending want that the digital – digitally help with ecosystem, bar. start so some as them compete of gathering. talking they real the would significant us to some are And be is I loan deposit the payments, well. those to cyber There some it's are origination, actually the

looking with so for And they're the Joneses. proverbial we're sure to make that us up keeping

Brett Huff

that enhanced and have think helpful, what they and that we on? around Thank transactions? do That's new And integrated is over taken there any behavior do that? Are Is see you. payments that then Zelle are customers bank BillPay about to have choosing for us? insight enough and any about product me. there the you system there and the last Zelle that, you you Investor consumer certain data really like things Day last a for of talked question When BillPay your incorporating for

Jeffery W. Yabuki

now, have It's right we're little quite and learning. a of so a high. Brett. we is would that clients Sure, are I out there Demand couple early. say

to develop. it's pleased there. moderating very out as be So we going and we're learn the once that pleasantly now we're right results But with

Brett Huff

Thank you.

Operator

JPMorgan. is question Tien-Tsin next Huang The from of

Your line now open. is

Tien-Tsin Huang

Thanks, quarter. afternoon, good good

commentary demand that a says. just in was trying I quarter? Just counter curious, little and the not. on licensed reconcile was in second in I maybe product what's high what to what's specific was anything side, to demand the is guess I FIS that

Jeffery W. Yabuki

Tien-Tsin, or three different would it's I say across parameters. two

see the risk processing in have say. we products movement we're would and some where You've and movement got in of in, you I normal, that deposit areas, of cash see account up. seeing license of the the I On licenses that products smaller the many think into may don't you get bundled us, morning. the dealing And heard that with have things fit this that for we're many, some top category,

think And of earlier is I environment so it less this that of changes in than implications the it's a the year. some went sales

Tien-Tsin Huang

to Understood, where then the margin spectrum at if you of changed front, XX% that's days all XX% fall wanted XX to there? terms say, ask I has change in on helpful. ago; versus, maybe view the might your of on margin just And any

Jeffery W. Yabuki

no. is answer simple the think I

Tien-Tsin Huang

Okay, okay. digital strategy movement, to anyway. I'd fill group in them direct Fiserv whole just ask that your if a activity of pipeline, Are after from you – you, the will, challenger, the, last Jeff, I'll quick Thought into one, more This just the specifically after and together. ask I wanted go bank this bundle to terms Then to seeing market? starting to up are trying you go market? they have on does

Jeffery W. Yabuki

in would more have think and solution I there's But that created to real solutions other a focus deposit to gathering. create have on set. think say going know a of We strong exploration. we that is So do early out conversations how and using on turn that quite end except our say digitally the there's DNA product we to several market that too the advantaged for right it's a to I actually market going it's now

Tien-Tsin Huang

Thanks for your insight.

Jeffery W. Yabuki

you. Thank

Operator

Cantor Joseph of Fitzgerald. question is Foresi from Next

Your line now open. is

Joseph Foresi

competition wondering. those Within your you what feel after or at was your change I brings? edge you your company set all And go dollars? comp does Hi. when digital, do

Jeffery W. Yabuki

Joe. Sure,

segments quasi-startup the providers with probably say competitive digital dealing is the one the are number of would way the that biggest world from of I the of providing a space some up solutions. world, providers all the can that because digital most competitors market you technology So a in to of the in range

is it So space. more competitive a

the I been a And think years. digital are we have advantaged we banking for of understanding significant leader XX market. where a on is we've in going

experts technologies, of field. modern the and best in new have we and have We some the

ability feel and I up to we So quite think pretty rates, in in space, our show are that our good our attractive. perspective, compete from our which advantages about win

Joseph Foresi

to on we wanted we can the and in update about where I overall maybe stood future, et take-out the program? just then And see an cetera. renewals get it. Got cost thoughts

Jeffery W. Yabuki

correct So and me when will this. I wrong on Bob I'm think,

$XX I roughly or think million so... we're

Robert W. Hau

half. first the through correct That's

Jeffery W. Yabuki

the our years. the year. first had five the that previous I of of would ...for half in we at think And program mentioned setting be Bob end the a renewing

Robert W. Hau

and half two five-year program, now exactly in. years through now the actually right we're So halfway

five-year in or halfway And million. of are Day where couple is someday what expect type we've complete this was a whether years through Phase call, midst forums Phase that few of another $XXX Phase of other X. the goal we're launch X like times, and We a fully then in we'll better X perhaps it we that than indicated our Investor now and

So into year opportunity we continue. the about to and results good feel program the future the to feel date. date to about good We

Joseph Foresi

looking you imagine Got it, particular in allocation me side. you're on arena? capital I the for What's Thanks. assets that for particularly and last to digital. one attractive within

Jeffery W. Yabuki

because our we our to share say Sure. acquisitions the about think as capital commercial benchmark. of we in allocation side. bias would allocation, go quickly capital minds do repurchase to especially digital, When when payments, I our it's part talk you about strategy, areas,

change. years interest. I become we the we think continue more But on as balance an an several that's will the area which is important ecosystem the to plumbing next have payments starts important think of to very and over

anyone would that models then data be critical areas. think you financial will next area underestimate we're future. so about five, decision is XX the will how I don't the the those of years. other importance just the And can new is institutions embrace that over focused And when say in into I of interest think data, three, around that seven,

Joseph Foresi

you. Thank

Jeffery W. Yabuki

you. Thank

Operator

Schneider of Jim from is question next Sachs. Goldman The

Your line open. is now

James Schneider

you bit for thanks bank of the prospects thoughts Jeff, could spot a maybe afternoon, in on activity. the renew taking I terms M&A the my your for at least, if there little in side set bank seems was size. on of been your sweet wondering has It question. like more larger Good customer

have something actually conversations else? sideways? directionally then share versus on willingness go that announced, on on So thoughts terms us your been might like so up, of keep platform those where maybe in have specifically go with And your what can their ones far your down, more been to you or transactions with

Jeffery W. Yabuki

Sure.

have they been exactly a would larger transactions say, money bit interest emboldened understanding taxes, larger, and this really technologies rates feeling into get that lower – a I and also So of rising of institutions need think I point, by your cost more as combination have institutions creating have that that indicative and the put some institutions to leverage. And to there announced larger is all been year.

in So the much anticipated. – activity that seeing, things to so continue valuation smaller as more the space, we we're about we're for same we the and there's seeing bit. and not a much levels, that you're of lower expect seeing In a of kinds concern as

we're saying acquisition expect In really And meaningfully year a fact, actually we've the down. merger or be that's front fee seeing front. we been all our what termination product of – and the revenue to on acquisition on

the exception for that the foreseeable last X% shrinkage years we more every client where would number continue the And win to seeing once then So their much your it's have But acquiring always are bank of opportunity to is and going we've the to in norm. for been an XX leg because in last the I that. X% from one the perspective, that buying future. suspect a the for units, acquirer. us, the And with that about the up same is say next typically piece wasn't a that I will you technology. And is while, dealing than find

a just what on it's of we to deal with part So basis. have regular

James Schneider

implementations. on terms Helpful ask color, of thank in you. to the questions Zelle, I follow a to there asked And but lot know I maybe then up, were just wanted of

quarter. Zelle XX about talked you've think I sales this

because some is prior which plan points you there have online onto a math some can talked the actually getting not you talk in the data physically we've about to of those the think But new XX FIs to maybe about what heard I not. suggest this, over or delays bring if sure so been network? correct XX timeframe I'm you lot

Jeffery W. Yabuki

being delays. Jim, as of that the fact on the record have to we The them I constraint of in network. people able point the think about we're is log have talked who being are on the real members one this at there only

much Now of course, than difficult that. it's more

and live, in Zelle, XX around communicated we're about we've process. pretty at far, of so our think or so early so we're sales I XX

to optimistic we will with increase the happen be think quite that closely is we're quarters, fantastic continue the that's sales industry. for will over the to Zelle, capacity, going of the think I we're next to who working EWS, which several increase. and management then And

James Schneider

Thank you.

Jeffery W. Yabuki

you. Thank

Operator

Our next question is from Ashwin Shirvaikar Citigroup. of

line Your open. is now

Ashwin Shirvaikar

Hi, Bob. Jeff and

Jeffery W. Yabuki

Ashwin. Hi,

Robert W. Hau

Hi, Ashwin.

Ashwin Shirvaikar

Hey.

So you the the impact really demand curve, nature of speak, more to the cost big the transformation, cost to in can also And a is your of delivery as there? over sales can to But and I or digital flatten and organization? changing. you affect multiple can of any your obviously of your data more about in any ask wanted put solutions, of terms give because way years, driver question digital to delivery, size so help changes you you

Jeffery W. Yabuki

at breaking So, But in of little a say up flattening think our Ashwin, that so I number would we've any cost were curves over bit ways or years. pretty last I job there. in dozen the you reasonable a done

million in more think $XXX costs to I taken in we're of we've look out somewhere that ways area the or to of do that. area, at and continuing

to more As them to clients for to the faster. and there throughput increase is more be to need move think on take solutions, we able because are going need a clients

it content more And other of robotics be into pull live systems in so so automation, the their and or market. automate ways whether clients changing faster more, at that can to to the go looking meet we're demands

larger to think those frankly efficiency larger. some we that working create are we get us So on will the which and fronts, pipes allow for

Ashwin Shirvaikar

year. the year-to-date year closer to wanted XXX%. well time about ask as bit you'd as and cash Got flows the free to flow the flow seems side, it, I a whether and the you The on It percent the takes and done on as be go free through conversion. a then low cash question puts conversion is by normally the through

Robert W. Hau

it half that more as year. seen than the as really timing we XX% Yes, one, lighter first And in doesn't expect conversion is at cash stronger conversion impact the working but Ashwin, XX% in are up we half of to. see second mentioned through opening again, of actually than would have three capital the the we dollars rate. not does And of we first to that a we things see the directly, rate reverse But conversion indicated XXX front ASC would we've impact we to the well comments, prepared to cash ASC There some we XX% point impacts remarks or about the have half second had in impact. much in as the this XXX CapEx of half had Number ratio year. expected. we point that had the been

Jeffery W. Yabuki

conspiracy there's the a up working things many little and happen end model just never CapEx it's to but believe that breather the once We quite basis. building then strong be about on that you does the above that talked or to breather, Ashwin, regular But of that one and in above a convergence all we'll for every XXX%, of we're of bit remains in while. can capital we and that. earnings is a And the when about a years. is to know with cash you and only be XXX% comfortable flow And XXX% so going be. conversion sometimes

Ashwin Shirvaikar

couple guys, complexity, I if one want for you to particularly more Expected has of And in, ask Credit specificity change that? any Loss] it's likely always banks, small and years [Current helping. whether a midsized easing whether And squeeze to CECL it. Got looking could friend. regulatory meaningful I around if the be is out a just been of

Robert W. Hau

say the in been the so ends quite well smaller would the parts welcomed as of the regulatory on Sure, that I market relief the upper has as of market.

momentum the products, is threshold and of positive. those think about that's lowering some created And so quite in that's people as continuing so where investment to invest kinds

relates I And it feel quite good CECL, that. that's another would do builder. that about overall, so say just we momentum as to

that But XXXX until thousands using early the late account the number of handfuls need XXXX, Now opposed core smaller just in systems. processing of we'll of to clients proximity banks as the to because to the the because really the and measure the would be technology. the I have guess that for in

Ashwin Shirvaikar

Got Thank guys. it. you,

Jeffery W. Yabuki

us joining this thanks, Thank everyone, afternoon. for you and

Relations don't any support If questions, Thanks and evening. a have to for team. you contact please the our further hesitate Investor great have

Operator

much. Thank very Thank all today's you you conference. for participating. That concludes

may You disconnect. now

Fiserv (FI) 31 Jul 182018 Q2 Earnings call transcript