FISV - Earnings call transcript Q4 2018

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Operator

Welcome to the Fiserv 2018 Fourth 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 Tiffany Willis, Vice President of Investor Relations at Fiserv.

Tiffany Willis

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

include Data today about, statements to financial and synergies including and expected will expected the anticipated timing among initiatives, financing well ability results, benefits close strategic Our transaction. and matters, as of combination operating forward-looking remarks other financial the with the as First complete projections

The joint Forward-looking today registration statements discussion are to be an of uncertainties. by the may factors. differ actual a statement qualified proxy results filing information discussed First nor offering is refer these with of materially proxy of risk securities Data and subject is and from presentation our Fiserv Please solicitation that for Today's number to and of release SEC. risk earnings will a neither the vote. and a

You should review that information carefully.

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

the which release, each comments in turn the closed along of adjusted for March allow also over Lending supplemental and amounts in business, Solutions a to comparable majority split share me of adjusting share sale And to March. interest per XXXX call that, Jeff. of our with per the earnings and period for the XXXX completed amounts are stock share the reminder, adjusted a press in in As the with X-for-X materials,

Jeff Yabuki

Tiffany good Thanks, and afternoon everyone.

a rate, key to increase know streams proposition not last free company's shareholder in We accomplished that XX to of in We success. in you convert achieved important your basis certainly in capital that growth of elements building our way. year and value those our XXXX and are growth future growing but flow, allocate progress least steadily point rate As an revenue made revenue friendly internal shareholder our for the a internal preliminary very increase growth a cash of prior XX.X% $X.XX share both the Adjusted X.X% to a to the compare. year the strong quarter, year. difficult double-digit achieved XX, Results quarter XX% announced X.X% internal include and results against increased adjusted revenue earnings margin per our per operating to XX% share January growth. XXrd and also earnings for which in our consecutive on very $X.XX with consistent adjusted are and in objectives year up

higher account Year. an We were repurchasing quarter the XX% than the allocated record ever generated our cash last all-time $X.X than high for enhancing more flow processing extraordinary also XX shares entering year. in finishing profile more to including shareholders a and Sales the win sales our million billion in year's New growth, record largest than free

our payments creates the detail me and believe global a we results First on make few announcement of on provide we the financial Before with which technology. let comments merger Data, preeminent recent provider

The solutions combined on across which leadership and grow Early model their to with new together the to them has transaction We forward strategic and move and come unique centered client compelling on prosper. can industry ways and the extremely positive to the and for exciting multiple ways positions this reaction solutions create in been expect ways. customers. numerous is value

strategic value compelling of technology solutions, along intend important, intersection of excellence. also enable end-to-end the and to by at We're to with identifying innovation investments integration, client a data. as steadfast as sources and and new commitment unique value new axes and unique increased and meaningful We approaching well several excitement as opportunity through this

kicked ground running the We planning off we expect and to integration have hit close. when

unlocking include and priorities client capturing the Our and value talent. best synergies meaningful the attracting retaining

leaders We process have driving governance skilled experienced accompanied integration by strong the and oversight.

and confident million $XXX in announcement. incremental the of achieve original shared highly the are synergies We will cost the benefits we revenue in $XXX million

focused shareholder as In addition value. clients transaction are to transformative significant we this benefiting on equally creating

allocation value as to on We capital over of generate cash aggregate next share a billion $X our to and annual upwards to flow use the continue optimize per basis. in of free expect years we'll strategy disciplined the well several as

Our collective than it First of was greater shareholder back With Data with to enthusiasm performance against now key and about that, day the let's our start priorities. is even reviewing on get XXXX the announcement. combination

emphasis continue build integration to commitments; relationships was deliver an priority our high-quality revenue, next to enables on clients. value to third, and payment and innovation to first digital client Our solution; with while differentiated to enhance and which meeting earnings our

multiple value. growth a As The internal high-quality point increase effect for including basis rate focus the internal acceleration we revenue XX the revenue to the revenue adding I quarter growth cumulative revenue client direct year. X.X% to continue growth and with in delivering of year recurring comes on sources mentioned, both link in the from our

rate also XXXX. internal revenue We for in lift growth another our expect

Our leverage to strong share adjusted earnings internal effectiveness. a performance combination and revenue operational tax per growth due of was

meaningful March Cuts due operating below headwind the margin funded was and last year. year. investments adjusted operating Jobs Act increased Lending and year for to the for basis the full XX from have XXX Our primarily the margin will enacted a the the But announced combination of items point these basis Tax points year, internal prior adjusted by full transaction in

with solution. priority payment emphasis second client to Our an digital on was relationships enhance and

York locations company Overall $XX York billion competitive Bank assets Bancorp today, Now, win as New largest the Community New with and may their differentiated Zelle Dovetail Online in us DNA sales is the debit more In customers. our selected we their flexibility the Fox DNA Fox solutions their allowing meet and assets. momentum credit with members number with DNA the deliver will over account XX had takeaway, and of performance holding larger for modern The to $X.X than vendors seen existing package future new of continue selected signing with its have changing to communities strong Fox history. solutions you Community processing credit five needs announced of for processing, core with earlier billion DNA Inc., including core real-time in of a DNA including for financial was combination Banking, also than assets to and significant Mobiliti, greater a states XX processing XX with technology a Corillian excellence. institutions. high-value unions, allow union outgrown platform for third-party year provides continued of with of large a as to implementations growth, billion. provider. serving eliminates business their $X community institutions Community's

Architect with of their new also such platform solutions clients changing customers. is Commercial year. XX continuing the Bank to in meet more we signed and Architect, the during and Equally quarter better selected Center year for the of and retail commercial momentum market-leading important, to account Commercial in DNA. also Interest indicative the California assets expectations which our remains as than digital of Center Dovetail. signed the $XX our billion high Premier of payment for processing new We clients XX and rapidly

with Additionally the both over KeyBanc $XX OZK assets quarter. in selected billion and in assets; billion with $XXX Bank more in than Dovetail

extend enrich more payments to landscape. and take their see expect of to meet to institutions steps We needs the evolving a digitally-centric capabilities

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

We see continue demand to Zelle. around strong

grew As reported, you have transactions now XX% year-over-year. Zelle likely $XXX million seen exceed and

than adoption alone XX evidenced months the XXX nearly clients the next three expect over fourth We in quarters the the to is as signed first by which we the total quarter industry in accelerate in the signings year. for Zelle new more broad

leading Zelle unique our value we institutions, to interesting proposition the payments financial provider and opportunities As in package of services ways. to have all-sized

Zelle real-time in later to both the Union Dovetail with this Payments Solution in example enable enterprise Platform the along implemented billion be year MUFG help For $XXX selected our with quarter assets to turnkey Bank standalone as deliver experienced innovation integrated to for enable to payments the our capabilities will we as us payment Zelle financial most Overall value provider client leadership their believe and customers. well as industry. the

more of customers' Lastly suite PennyMac top broad a for products detail processing, a our me over debit Bob results. on electronic With call financial the expectations. unique selected their billing and including let meet turn a lender mortgage wallet to to that mobile

Bob Hau

Thank you Jeff good afternoon everyone. and

quarter and internal fourth we Internal performance operating quarter the which revenue $X.X to compared in to points of performance and was year's revenue performance. were line XXXX year last was strong year, the for Adjusted XX year's in prior X% in by Lending $X.X million with the growth income, driven considering Transaction, of year pleased X% up last As results segments. when up heard, basis respectively. margin for even a X%, and you've The impacted year. the $XXX in with was quarter by was was quarter in X.X% results. comparative fourth at our decrease billion operating growth. is both revenue and both the to the $X.X billion are Adjusted quarter billion solid full record Adjusted the stronger XX.X%, the which

and our respectively. of XXrd the in Transaction, operating margin along structural EPS EPS in impact headwinds growth. investments performance XXX points Adjusted funded savings. quarter adjusted all year, two to the XXX from and consecutive XX% the basis shared the XX% adjusted quarter As of These with for a and we've up $X.XX was year items from Lending year, marking tax includes at negative margin double-digit had year $X.XX our increased

operating growth all for in led business. payments, performance progressing year. X%, year, of Adjusted Organic The the for and high-quality income expanding months by services, the the was and performance new in Integration our the which client-focused was results Our of $XXX transaction from to Elan processing quarter the the the million. Adjusted year partially Payments points XX quarter impact biller is quarter margin and card $X.X to with services debit from billion basis in basis funded payments lines watermark and growth points quarter basis business in strong in revenue. was segment the of the offset expanded quarter very periodic the had last to well. Along the by An a lower the quarter digital by of $XXX XX.X%, million in extending XX.X% Adjusted performance to year, for for strong in X% line was Payments and both year. and X%, those X%, revenue with year. acquisition investments, and the flight and to in ASP is quarter the digital, cross has in a $X.X for year XXX X%, billion in quarter. segment high operating tax in single the to X% revenue grew two electronic the million footprint. digits solutions Internal and high card XX% negatively includes subscribers XX segment the X segment important this respectively. growth debit year and reform, impacted Mobiliti points our element grew strong again, up in

and We clients to platform the seven quarter year. unified to for digital add the XX implementations also continued Architect, our in with

Architect clients signed further opportunity of the we demonstrating XXXX, new digital. market XX addition, importance and In in

for for year. payment our than times the volume XXXX was and grew transactions growth XX% technologies. year, combined in from, showcasing Zelle these the PXP prior the important of six the both Lastly, XX% DDA-based Zelle Popmoney quarter strong alone more and solutions, potential up a

fourth primarily X% of the across and to $XXX significantly down was Accordingly, and driven for and Transaction. segment, solid the million total margin basis XX.X%. which revenue Adjusted tax to the quarter And by in Lending performance growth for even adjusted the billion operating Lending reinvestment, the margin quarter $X.X points both of impacted For to adjusted points negatively contracted and points from X% the quarter. in X% comments quarter by on have million the quarter due Lending XXXX, for and X% for year. strong these our quarter results, in Transaction. the operating revenue XX savings account which revenue similar would businesses. was the items, were year, item by declined year, the to the both was adjusted for was Financial processing basis for impacted of reduced XXX Financial $XXX to Internal down totaling But company expanded operating the my segment income the million margin light $XXX periodic transaction the XXX last operating in basis performance very adjusted

from points adjusted basis XX of operating point contracted XXX transaction margin that reinvestments. reflects which and combination a basis year, Lending headwind the tax to XX.X%, For the savings

with effective rate XX.X% was year, than full-year of items the our impact results for and tax results Both line quarter XXXX. combined the Cuts margin million and for for be to expectations. The expect the and lower benefits XX.X% were these The in year. in for operating adjusted to company the primarily from Act. the Jobs corporate the We adjusted due quarter and quarter $XX the both year on prior fairly adjusted our operating million the $XXX muted Tax loss total was

year the $XX.X repurchase billion our transaction. conversion billion repurchased due the of Free the business significant shares to we We XXXX moderate of record times. XX% in nearly remaining EBITDA as working includes and We ratio million XX%. XXX% expect a let program, shares closes. any and expect to XXXX. in with more And the was repurchase nine transaction quarter our record the shareholders. we deferred We which the year. due Free higher outstanding a at additional to announcement, reduction of a million in nearly or XX% was and million cash hallmark cash tax capital as the the for shares this our you flow me turn our of And XX $X.X share of had quarter debt our at for rate $X.X in XX bringing be to we shares cash the outstanding million know XXX% share of flow to and was that, XXX X% Jeff. call $X the was to debt the than repurchase free in returning flow shares year, Since X.X over conjunction adjusted billion, CapEx, expectations, initial range generated up XXXX, Lending year the December authorization. until start. retired in XXst, which million we have billion million cash share primarily for model below free to for generation. our shares First inception $XXX the increased Total for Data back exceeding highlighting end in flow, to With slightly outstanding Conversion XXX to

Jeff Yabuki

for year's time Thanks, record Bob. up high, is quarter of when to Sales was XX% more XXX% in which quarter noteworthy an to even all the compared fourth was the XXX% level on last and and attained the was in Sales year X% quota. Integrated was over nearly the the of year, up quarter, sequentially. XX% we quota. also very prior and XX% strong up sales

sales year with XX% the same even exited we remains than at nearly higher our a pipeline record last domestic the point year. Importantly, that after

savings progress achieved million on the of in sales our year. million with for $XX made pleased effectiveness the and excellent $XX our $XX during million initiatives the We target. We against are market We our year results another and momentum. operational quarter

end aggregate, million expected five three, program. dozen over $XXX have the of million $XXX In have years. $XXX captured year million of we we the the saves nearly year of the booked the As last already of

For million expect five-year early. to XXXX, which out program year $XX we full close one achieve $XXX our would million

on let guidance to get we provide perspective environment. the me some Before

things and places focus investments to account this see where increase and their customer data believe the to such paradigm on world-class risk, a we We as market processing moving participants continue digital, will focused payments reengineer journeys. in and market ecosystem. to insights, technology, core require all their evolving We are delivering

actions taken active institutions create success. technology extend for with will continue go environment scale, an capabilities consistent and are M&A today. the larger reinforces that earlier On of across to these how and strategic spread and saw possible coupled we company we their example their your deposit our the believe trends believe we long-term increase trends, current balance these they have hypotheses firmly We be in will position gathering which financial very with macroeconomic to Given to where differentiation investment market.

to internal of we X%. XXXX, growth our be a to to ahead expect up looking and range revenue Now X.X% in rate step

representing be measured the We $X.XX or impact of revised to per is to adjusted which earnings of the XX% reflects result in against $X.XX, expect remaining share growth of range XX% the of Transaction. Lending $X.XX, a XXXX which

adjusted We the for expect at more our our and XX we conversion to than flow year. full be free operating margin least expand cash to basis XXX% by points anticipate

we additional financial we our go purposes, that accelerate second creating into half year modeling performance into as the For XXXX. of will momentum anticipate the

First anticipate and expect year. Importantly, company. the we any a We the This this value excited the people and are of high a commitment strategic conclusion, our or responsibility. in optimistic soundness excellence for with from later a sixth further the Company transaction, as management row innovation impact In our investment strengthened Magazine guidance received and include year. important as year global FORTUNE financial business we're and marks financial not our the were your results for recently which named long-term pleased about Admired close World's We and in for Data to does underscores leader and by operational Most to FinTech. future recognition social

strong results remain look free flow to we high-quality disciplined delivering to cash internal increase we committed allocation. in including, capital XXXX, revenue and As an growth

thank Lastly, and of and XX,XXX shareholders accomplished the proud world let our me questions. With open line about day. let's to the the are future. collective who I'm and that, Fiserv excellence clients optimistic delivering each far associates we've even more committed recognize what around and for every so for

Operator

Thank you.

first Wolfe Peller Our is Instructions] now of begin from question-answer-session. We Research. [Operator question will the Darrin

open. is Your line now

Jeff Yabuki

off. Darrin? Just start

Darrin Peller

on from First the with Data's you're announced. banks hear market your perhaps feedback you any Love sentiment. own either -- customers either deal was hearing on quick Can side Jeff. spot on or Hey, customers check some the to start off just since

Jeff Yabuki

Sure. Yes.

majority our a of number clients, with say, although, a two And the multiple coming client time obviously, in relationships. both of So reactions have incredibly clients strong we terms have positive been spent together. I have substantial of to companies

you that enhancement a the opportunities As First team together that think guys date whether and and about talked around those and take probably enriching, together, at you end-to-end done are feedback's I opportunities more -- some look we've rebuilding this opportunities, know want the said would've done, the clients around now that been to his to merchant Data we positive; so than positive not coming "Hey, great people business you network payment the have have the in would see that even you Darrin, we this otherwise fact opportunities, great So far. bank job who had the and we're come together." have to a be they date Frank payment not thought we

Darrin Peller

great guess, showing what more And community quick drove your to follow-up, if give hear. bit the color of first Community. and, York saw obviously, a I That's announcement Thanks. a all, strong we look, sales I on integrated us you today, little again. just mean, can on you're New win

then yourselves again, you just guys. be you're now three great. I on differentiate that'd the areas I sales, this right the mean, strength quarter could And if thanks think maybe rank it And was last seeing order the competitive against in on quarter process. integrated top

Jeff Yabuki

Sure. Darrin. Thanks, Absolutely.

the world becomes systems environment more in clearly real-time. in the Many are -- an core world the is we're U.S. not as of real-time. banking the digitally-centric, So, that

this with on wait? determination wanted New there's Community or case go take been a real-time to of York that step made so real-time. I lot focus the now In do And to I they a do

we of is technology. payments to been just thing an that from wanted then well. system, the on technology everything this including and and already bring they suite API-based third, second we The as modern And important the would've in looked more products as flexibility Data, at First of and online is the I'm hub had sure we closed mobile

in the in. So is end the real-time digital payments that move we're along the market that helps belief going into that of thing

great. all from perspective, that that's So,

sales the really front, On digital. it's around integrated

themselves. lot the they're complex a risk energy So whether make a it ecosystem amount on Dovetail payments, fair that as comes and hub, payment and sure together Zelle, Architect more of able digital that be movements or Mobiliti, to just protect fraud then on of to

So, on of a lot areas. focus those

Darrin Peller

you. Okay. Thank That's guys. great

Jeff Yabuki

Thank you.

Bob Hau

Thanks, Darrin.

Operator

Stephens Our Incorporated. Brett question next is from Huff of

is open. line now Your

Brett Huff

afternoon Good guys.

Jeff Yabuki

Brett. Hi,

Brett Huff

a this for about least Can seeing illuminate like driver? Swiss Can we're use after? It going of cases give at asset. that. knife Is specific main than you us I future-proofing there -- this bit you the that know is hub thing? kind expected talk bit focus? that more cost Dovetail? more I is little a it's you a Or little Or a on of payments sounds this Can Army traction just a people a are savings are us? bit

Jeff Yabuki

mean it's little of Brett. I of all things. those Sure a

metaphor actually do the I pretty fits in that as that the have Although like you people Swiss a because payments on the I at some have. say, you look infrastructure knife know market to have that Army take back-office having going trends are Where you well.

So whether right opportunity a up enriching focus other around going real-time way use the fair Zelle to TCH with capabilities. on There's and of different now updating move or be a amount to and money. also cases, have wire is around Dovetail pair it

it cases use tangible more making those about are So to it. think

is, of as, Dovetail toggle beauty if and need hub can and the other we capabilities when clients them. The install

we it It's it. it was when our the us -- enabling you've taken little need Dovetail. we're to in a then they're were all-sized And them and as nice standard only that some of ACH of near slowness with a consistent we're real-time is bought are who We everything; was longer. capability. momentum everything in bit real-time But year, it to And in wire. said part what strategic carry beginning differently up, seeing seeing couple moving we them ramp throughout thesis, really clients get is they the got So they more longer want institutions as sales want they they want about next may to decide years and is But cases cases, or think really sales. giving technical we for when the these in other is, momentum. some why more expect some

Brett Huff

new helpful. a bill to product migrated of you pay and fit a another about bill You in position that follow-up are connect that of have of a or merchants? closes? pay in you some any NOW this specific we group things Is And have have bill be things the thinking Network. talk rails How all the likely should kind those That's those or merchants once does sec? pay Can to ways market-leading question. deal there about of you also some the that on with how with

Jeff Yabuki

Yes. of the rail so is consumer-to-business And First order somewhere to and that we're some enhance help move we So of call the fact with, element way side fact is in along businesses there. XX a also the It's a the in ultimately business-to-business retail a the the invest share the mean expedite have in our RXP, in of we Data has; see excited quite merchants. quite which just payments then combining RXP about in the to the of one around we it way the an looking I technologies also different U.S. that not we're really, certainly that cash magnitude optionality of of of how databases examining in piece areas at there about lot but thinking just well? payments. the are and in electronify capabilities excited we the the significant. management standard consumer of believe very And which a as size merchant piece business-to-business in but money. we'll not We're side can

Brett Huff

you. thank Great,

Jeff Yabuki

you. Thank

Operator

from Dave next Our Koning of is question Baird.

is line now open. Your

Dave Koning

a guess first three margin or I were on gotten that the quarters. all four bigger congrats Is guys, Hey over decline -- Yes, front. of pretty segment, Yes. having FI last the year. just a you so of good the in lot has

kind happening? through of were obviously could kind of that contributed. of margins the sale investments. in the that Is flexible And in what on Lending increasing does that You that at rate what's I to know -- you segment? grow spend terms an XXXX allow

Bob Hau

quarter the its the ramp and driver very the it was got beginning the by of Dave, that ramped of time, the is the fourth and savings into the the Bob. year of Yes. third tax into it that half quarter. the launch really second really that Probably margin announced reinvestment. biggest of We at we into really year running,

into saw half more -- of of least XX basis so of year of of the somewhat second year. than headwind forecasted as will hope this margins that a the you point first of the the year. a so XXXX, to basis significant that And you lift see abate for in part next margin at we And margin in the XX in half point expansion did course, we've

Jeff Yabuki

block comes in the We also segment. of in Dave decline had big a meaningful a fairly in revenue Financial periodic the which quarter of that

quarter. the in impact real a had also that So

Bob Hau

That's fourth quarter. driver a for big

Dave Koning

Yes.

the in a little drag that drives there the of is improvement actually margin does Elan And that significant in payments? enough full And cost Or savings some got the first seasonality? you. question it is that bit then, guess have is follow-up payments, and year? Okay I a of in still expansion margin --

Jeff Yabuki

Yes.

about versus is it We've think year. year. this more going obviously points margin see a least for at should for you accounted it us we our think the but first as I positive basis full of QX be to in But in XX expansion of that is in drag year. utilization -- would seasonality business, having than throughout there our them QX. different the to see drag example going card the of rest basis what card in XX points I or don't

Dave Koning

Thanks guys, Great. congrats.

Jeff Yabuki

Dave. Thanks,

Dave Koning

Dave. Thanks,

Operator

Sachs. Our next Goldman question Schneider of is from Jim

now Your is open. line

Jim Schneider

me. Excuse

Jeff Yabuki

Jim. Hi,

Jim Schneider

was for this has Thanks wondering been you? already. are and just question. How if Hey. taking my answered apologies I

your of If talk merger do actions speaking please. base. environment says you in downmarket the broadly the just bank at additional in generally prospects traditional the foreseeing client you bank you maybe today's consolidation landscape, looked think what what announcement more And about more about see

Jeff Yabuki

Sure.

of that example the mean, about couple So harder more invest strong they're banks prepared banks little and capacity to bit decided a remarks. opinion, who consolidate in my some our go in to this I look a going to an larger technology. we is at create to they're of to in good talked of going this

I think their going there's technology to where a announcement they're meaningfully. importance real recognition including that of an spend increase

I think prepared on across that looking our payments digital, money in need it ecosystem things many the be technology. of areas what terms that, for real seeing is whether throughout and spend There's different all weaved do of in comments. to of that ways retail the to about a risk, those we've we're talked

We a years, we've fair couple have a been saying of been of M&A. for seeing amount

that XX places, the are also made announcement. I think message I we scale There's is matter. us, seen the send continue better same -- news And a lot gathering. kind the in when similar in think I going good that consolidation think deposits today. in strong to come are our -- message for which that to think think places, that the in are we've of though And do think But we to will Jim occurring. years. a going be for the going investments which that the a that's base I continue last of what to both a that's is we seeing industry deposit it ago to company, days even is focus on you're have XX we because will along the I are companies together the announcement

Jim Schneider

maybe the or the Thanks coming the the That's pure through you expect about acquiring two to follow-up, of very network Maybe or card or think to as close, you cross-sell either just materializing could are synergies talk what opportunities much. see you then one revenue $XXX the the side third which just first, second talk five the that or services? relative And helpful. processing terms over you just can a transaction in the the and cross-sell you years post progression side of million. see soonest to and see items maybe and

Jeff Yabuki

Sure.

we virtue different be to and because, in big in original for we and ability that the doing synergy of have to I and lead million mean, innovation nearly having first way. by think but and I network And that close. So routing the a networks said, will post our more of we out believe of as actual $XXX of expected of time, combination revenue able a things combination implement without part the XX is part the months announcement and forms cohesive opportunities sell the go just of we by

With the incremental some value coming create that scale the of there. company's will together

on it there's we digital a lot work the will and we that into I take interest of -- space. that we're through the the good merchant we've in coming thing a success one feedback way think core can have and the as pleased of that to we're about amount from bank community things all the merchant and the the things the we very whether getting been going up institutions in as market. is today second be banks that expeditious have them doing And and the can that how integrate with of in is largest be

the the Think of we'll up bases faster client coming again across of be So I then third think But number in both sets to a a in and of normal. will our think ramp from order. sell integrated I that fairly as I that that benefits sales bit see than have we'll early about the think we'll through originally see probably sales actually little it different anticipated. products And we nearly XXX. part process

Jim Schneider

you. Thank

Jeff Yabuki

you. Thank

Operator

Barclays. Our next question is Ramsey from of El-Assal

Your open. line is now

Ramsey El-Assal

of deal. question. any risk guys of P&L you your could be both they just to if wanted understand potentially appreciate Can speak from to taking to impact us what BB&T-SunTrust business? the Hi, that Or pricing help for there the my I Are revisit some would degree thanks or losing to it. consolidated Or that there yours? I'd there you of are transaction? customers an

Jeff Yabuki

Sure.

So that we both continue. that and ours SunTrust BB&T and long-term good will clients of are expect

us, but only you will we kinds that course, things continue. across using believe base from fairly are it's they're services have reason no that kinds of we few combine. of well-provided the generally they been a the not can to think Of and that not are that hours The

be bill So, a payment would example. good

be we They're of that will will assume to work Data So Data. us. continue clients they First First well be and -- good to also continue think will I of that for clients that

that of believe will the do and the like be things transaction. to there we that So, may if given given for we more opportunities feel some us make now doing not of the right we're some for much investments as they

Ramsey El-Assal

pipeline definitely Got it. a is of This that DNA And moving an to my with impressive. here? of follow-up York more look mean seeing New kind this Community DNA? I I of this proof-point larger really does what Or a for wanted to sized sort the of like is ask about DNA appeals deals momentum and win upmarket institution. -- the is Bank Is are kind you larger outlier? which asset-sized

Jeff Yabuki

Thanks question. kind remarks. great a for that's Ramsey Yes, the

last we RFP pleased been -- we have played have -- years, of in the how have been process. We the for couple bank kind where larger at of interestingly, very the

the And in will been U.S.-based are first. to several we every won last that done takes finalist banks the won -- and challenge a we So, in technology a been have bit in deal one hard you've it's until that's your a process. real-time and over second us. competitive next RFP the And process we is won have us U.S.-centric this we've that that And that's the so one think we the the up U.S., do modern now We help years, billion this, of -- level. this that -- little range. $XX the basically things only the we believe win platform frankly, couple are now have in large has to of in of been the in an

the and those in momentum direction. and risk not great and of there And think year, also enough in core not a are recognize really mobile, are in know payments, them in but to are the Now, there digital, we is going this of that we we these you we have right great products as XXX but that step matter. in up had typically in end, a

Ramsey El-Assal

so Thanks Great. much.

Jeff Yabuki

you. Thank

Operator

comes from question next Our the line of George Mihalos.

open. Your line is now

George Mihalos

thanks. guys question. for my Thanks Hey taking

Jeff Yabuki

Sure.

George Mihalos

thinking services and First that acquisition Data you. brings all again assets and Just maybe that the the to about the

processing Now, side. issuer you're the obviously more the have capability, robust on you merchant

also similar Is of in recreating you Is that to sort think a very you a sort put network type with there done something get map switch. large something for of stronger of of bank as what opportunity sort of has of You place the to Chase that's road like an kind a product. sort guys? on a ChaseNet

Jeff Yabuki

of more the quite of has say our are the Certainly, opportunities. been are high ways at where on is and of progression issuer different of integrate ways stage process to the a at this different where clients merchant the all in can this are list. Frankly, looking number we the innovate we value evaluating in progression would which of merchant network in clients our I the at our stage the and for to in the around the focus capability issuer-merchant opportunities connectivity. create

well, but and so And we system. core makes at have intriguing Frankly, issuer unique piece, just way the core we by between up all the what's processing back-office of the around see the back transaction, enablement, and the cash the into engine digital around we not management believe that the really payments. as the opportunities that that point have us of wrapped one things back we some is, connectivity there merchant account real-time happening through

a more so, real-time. opportunity And there, see especially as lot of to we moves the world

in but those of of bit early opportunities. answer, little process a we're the of kinds a evaluating So long-winded still

George Mihalos

segment. quick you. that. That's XX Financial the be between that about helpful. Thank in the margin maybe appreciate at a should the very thinking fees bps we sort of, maybe of of XXXX? expansion, a housekeeping follow kind And XXXX How thinking item. look up term Then versus just we if Great, about and Payments

Jeff Yabuki

Sure. you. Thank

Bob Hau

Yes.

down would what be up revenue periodic XXXX a flat standpoint, from in total, relative in I was we it a to saw it, XXXX, bit. expect to actual. XXXX call modestly, For

Operator

next Company. William Chris Our from Shutler question of is Blair &

is now open. line Your

Chris Shutler

afternoon. Hi, Good guys.

Jeff Yabuki

Hi, Chris.

Bob Hau

Hey, Chris.

Chris Shutler

have Jeff, capabilities you today? how could when your sense view as And candidates FI look at of you give many viable a you customers, acquiring? for bank kind us merchant how merchant many

Jeff Yabuki

we're out merchant. able it's or to around an going all in some incredible What And found amount few have extent don't -- to haven't decisions, connectivity be single question. because to It's because built people we merchants source. the integration those is really that the all interesting only much unions, who -- around technological make interesting, advantages have very really of to of bank many believe a a and there's community letting have kind It's no an with in the fragmentation, institutions going space us more like build. we credit

how And it a where reasonable we serve technology where for merchants it's point think amount them market. the them book for at combination is to the being we money opposed So our institutions the And and second through greenfield space. there's some very again, their time. like into actually and in can we you are create same And for money. costing be to as of how book to making begin going be, think is in a and the prioritize they economic piece front of back place banks their capture. make for much easy the key focusing the end And system how to banks is, core you do the will value better on integration banks a value to

Chris Shutler

guidance Great. in EPS. And confirm share clean you whether there repurchases then, that for Can just are one just guidance? XXXX up. that The any

Bob Hau

XX% guidance We there. a outcomes that least result essentially, XX% have, of deferment XXXX our of the the overall through And our encompasses close. potential off incorporated of at essentially in variety at share growth actual range repurchase

Jeff Yabuki

XX% of think to by clarify guidance. I saying EPS Bob to I And XX% really would meant Chris. say Okay,

obviously I have what to -- and at not what get are think I this buying point to -- we shares we back mean, close.

the scenarios throughout assumes different think the are what our that to I whatever would is will believe year. XX% happen we we XX% say

George Mihalos

you. Thank Right.

Jeff Yabuki

Thank you.

Operator

is question of Greene from next Our Glenn Company. Oppenheimer &

line is open. now Your

Glenn Greene

afternoon, and Bob. Jeff Good Thanks.

Jeff Yabuki

Glenn. Hi,

Glenn Greene

XX%. was and up back York the go got it to broad-based The But pipeline wanted obviously Or fourth in it was. sort number Bank? I booking you've the was of sales skewed to XX%-plus great. quarter And obviously, by the much? how New How Community I'm curious environment.

all the that the really to like a organic that more XXXX? Bank's understand in to convert of good. of in question feels secondary York scheduled growth is just trying that a on environment's New certainly if impacts XXXX. I'm it sort is And So XXXX? Or at Community

Jeff Yabuki

Yes.

would I virtually So activity many, the incredibly lot sales A broad-based. the of ASP that line. were even we But sales we such say still up of on being for we of And quarter were outsourced many short every the of across like Glenn that the up an and the the is that as quite ended like year-over-year not that had environment, in in part kinds the great little The of -- second and transactions a of recurring kind cloud view you nearly are for a pipe We that. in a third to going of fact quarters year quota pickup booked. it the And big XX%. had revenue lot were though the and some future so positive. pipeline quarter So, get the is right? quarter what's that's the for fourth pipeline.

in the As bit or and substantial far XXXX, beyond. as boost New in the will majority be positive XXXX of York there Community impact come big but a goes, will

Glenn Greene

of sense I if -- any weeks just would more then since to other little And been any fruit sort announced sort a three of the And that. getting trying get the don't merger. know there's how you thoughts, you quickly to it's thinking a if might have But million I'm bit $XXX quickly be of timing synergies, of share you found. you low-hanging only of the Okay. sense you a have cost just realized willing

Jeff Yabuki

Yes.

$XXX referenced incremental $XXX revenue period. the we we're synergies of highly remarks in cost and confident would as synergies in million over both I the say So of prepared our the that million that

talked this made we our we fact little when about bit -- barbell. it's a think we the talked I a that of about when

talking interest some to first XX% net to to Then years. bit little things part get of a We of you lot are million. in also tougher. about a couple the start We're into which which that $XXX takes expect get obviously the benefit saves, accretion, not account the a are of

we could we'd a the and on little what can build me, be you're we I more We're they're us but But You Frank going come We integration good XX at are do do say Fiserv to to on earlier bring built bit. we timing back like off. is just this the would look And work the do than years. we're little that done try else guidance, million. get this get in. the nothing like in to have gotten on you early. anticipated five, at timing. taking the good can we a feel give bullish and in Depending we'd and muscle counterparts about it two, like about. we to sure so that asking the last about operational Heisman everything and that if the that And Phase Bob not we three, the bit six -- we've to in very for things. than and upon kicked or our work, to feel going you nothing talked and a four, and his effectiveness that everything we're although to better $XXX better, we've stage,

Glenn Greene

you Jeff. Thank much, very Great.

Jeff Yabuki

Thank you.

Operator

question Brendler next Chris of Research Buckingham the Our from is Group.

is now line Your open.

Chris Brendler

cost -- your potentially integration significant pretty Can merger sort talk plans? those variance a your And cash the you looks getting Hi, company as on the my might it I'm look question. powerful. how I flow pay thanks. of Good and question forma Thanks. about afternoon. Thanks significant that for projections and One at of taking guidance the quick on be merger, the pro pretty down. leverage in

Jeff Yabuki

Chris with Sure. And it's chat Thanks. to you. good

would cash few it billion-ish the around free plans about over mean say that generating and I $X quite the next that. years certainly we're feeling -- our call So the good I

to and -- said somewhere cost of we I of we if Bob in million I'm expect be think we've that area wrong on the balance, expect the $XXX correct the synergies. the basically me one-time

and what that of I are necessarily go you typically as they'll thumb that think the normal typically of pretty probably will general that flow not and the and the that -- rule strategy the have to potential them EBITDA the defer and and will get suspend combination a back the or little growth you shares. the capital back the we into in share money don't talked to think and that. -- I synergies book We because sorry think going quickly down And us And generate flow on. leverage ahead is And gigantic reevaluate we've not of or using. you come it they P&L. relates so then be we're we'll includes But significant our allocation going that then about more the them of as free bit now buying we'll as payback to to what out remember of between we're that's lock cash allow as closing spending ratios, the which repurchase

tracks again repurchasing two that... precedence. So we first down of think at paying doing that with the oriented there a does shares some will combination taking debt, solution be and point probably Bob acquisitions little

Bob Hau

right. exactly Yes

Chris Brendler

your the they processing also a bring and business potential possibility. ton mentioned about a I on Jeff. on today in Thanks. and could business of base view them you you Clover business solution. makes and for that Clover? sense. fascinated within And into just client of And -- follow-up banks Can of potentially what's part Fiserv the you That use give the if opportunity merchant that call the how the of could Clover Thanks me both thinking terms just merger sort core and the of ask as sort the the -- how offer a to Square-like core

Jeff Yabuki

Yes. Sure.

bullish the of system ability -- into very really couple a the Clover I reasons. So community banking mean about we're to bring for

as a an in advantage online. able then the that technology. that of account to a most digitally being merchant if by this also we chain. It done like combat the And Clover we some we We integrating so -- place enabling attractive have to banks able envision We SMBs on to and will it's we fact what banks open enable then advantage. of to so data And core end-to-end their to digitally the create importantly, technology see their importantly account can same serve they that drive, the that be of otherwise better easier they to can decide really powerful be we they own really merchants the for that can Square lastly them make if that integration think and sign a we'll systems it be believe probably up First all, element combat which able we process, into that a choose. where processing can in most happening larger and a for select could their to value optimize institutions. allow revenue, vis-à-vis to in also is

excited and as our are So that we're really banks well. about

Chris Brendler

Really that together. just come Thanks, can't it Great. appreciate Jeff. how wait and to see

Jeff Yabuki

Thanks very much. it. Appreciate

Operator

Guggenheim line comes question Cantwell next Securities. Our of the from of Jeff

open. now is line Your

Jeff Cantwell

good Hi, afternoon.

Jeff Yabuki

Hi, Jeff.

Jeff Cantwell

of client I a I you Thanks a of here. digital know this on a outcome at me of squeezing You all may that near-term for context what focus? on cover not give from potential us Community see expect for those if using there? That's a right? it big I in. even institution financial is, is to your just at they're partners something? First circle all I you be back with you Can Bank. Can by just Clover, touched thoughts this. just yours guess, to was Clover little guess, drive realistic theirs websites, from distribution we their Clover with the a did excited crux your of Data's should online? JV as we and initiative Because So offering bank the guess I'm question, what standpoint, larger partners. offering trying We

Jeff Yabuki

the job thanks Clover or selection lack has able Jeff but we been other done you merchant do enable that digitally one of capability. as capability, Yeah. -- enabling whole a question. procurement of as And have a the process. the mean, I issues not the has of out the been to great Data First asking of basically well for realize And the building

we the to of enabler, the somewhere core only is million XXX we the cases serving of many, also in U.S. do We're doing digital many in area of One party we but those what websites, beauties lots are not have things. the of users digital the kinds today in hosting bring the system of

million We accounts have we're for. processing XXX that

And so do we bring you see when together opportunity. that

time our that's right that and will to that. we as the Now your to well. way see But list high to think that some it on the clients figure the pretty just opportunity take out see point, given we do the opportunity

Jeff Cantwell

much. very Thanks

Jeff Yabuki

Thank you.

Operator

the of from line our And question last of Cantor comes Fitzgerald. Joseph Foresi

Your line is now open.

Joseph Foresi

one me in. had squeezing I the ask too. I a for for about -- synergies. the just ask Yeah, cost and multipart right? -- upfront. I day been Thanks Hi. I'll so wonder a It's me parts long should like everyone's on them two asked

different someone FTC you as that with system the First, you talk or about I'm got parts you've do necessarily a part which cetera? people. having come because gap a of products? on the you're processors, million outside-in core processing different covered – wondering, Or processing new revenue and together, question, can system convert you it bank different different I'll cross-selling the core into who then having down products covered second start from $XXX And that the acquiring? you et is Thanks. all see with And and of that versus with uses merchant Is Square to ask bridge as this just break core us? how necessarily for versus upfront. that other and of synergies, Traditionally, the Fiserv decisions selling

Jeff Yabuki

Absolutely. Yeah.

of So, part that let the first me take first.

the million we bank, talked acquiring dollars when of of really of of bank merchant we million synergies, value. couple be deal revenue would about So, services. $XXX around about announced talked three XX% buckets a hundred the We distinct merchant so

million. was across then, bucket cross-selling integrated network and innovation around $XX $XXX the around second generally that innovation, of around The just all And our the payments really million sales expanding was last offerings network was the put one of And provided world. companies were really to able caveat. again would we that numbers I would do that's also the confident achieve. we and we in that things other highly be both that payments, around

fact technology, is separate also about that, into and talked made million. supporting into the technologies we million a the $XXX investment We $XXX from that the incremental

So $XXX aren't the the $XXX for benefits in – that of that revenue accounted synergies. in of million million

of aspect So it. continue good that we about to feel

to on largest banks, As payments. core about really part it relates that's question and In the clearly, of to processors around the your second the your – point going separately.

one and these go have fragmentation into about in for a York really and institutions strong core the the the And Bank people. -- to and that but you even would relationships Community go you've talking be digitally-based – together. different of part payments-based that place. banks literally top core-based having at You've be maybe doesn't got looked because in things no it whether New cards. going in bought looking that value. office looking have payment have for largest extensible to banks XX. people payments the or we the in And got you've be And part, back-office payments will a everything, are that In But the as size different the such level Data it's murky going to and as core at we you're or it call through First front to to have the most looking and the they got most at hubs. core, certainly XX looking to are be talk able seem fragmented relationships the surface bunch the be but not go the Once they're to less than on have

many, are do fact, wanting many, many, many already. clients to In that

of the and fragmentation we that. we institutions kind the be financial is there that And the not issues close certainly do any to But go we're out right have silos or out wait to enthusiasm conversations around merchants. from and course, seeing now. the coming Of to or until able

Joseph Foresi

Thank you.

Jeff Yabuki

everyone today. We thank you. us your appreciate support. for joining always And you Thank

If evening. you information, follow-up good Relations a any don't Investor have to or questions have please our need team additional hesitate and contact

Operator

you. for Thank that you And Thank concludes participating. today's all conference.

may You disconnect. now

Fiserv (FI) 7 Feb 192018 Q4 Earnings call transcript