FISV - Earnings call transcript Q2 2019

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Operator

Welcome to the Fiserv 2019 Second Quarter Earnings Conference Call. All participants will be in 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 transaction. financial timing synergies including and expected will expected the anticipated of among initiatives and ability the results, benefits, strategic Our and matters, to and combination operating forward-looking remarks other financial with complete the First projections,

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

in those for nearest You call non-GAAP explanation measure. for this should measures applicable with GAAP an discussed the call, reconciliation a to refer also along our the of materials today's of measures to financial

that forecasting be indicators current as to are call and planning results measures to periods. made are performance throughout assumed prior this comparisons. references additional between a reported and non-GAAP management results and Unless stated for meaningful for comparisons otherwise, year-over-year uses These future basis provide

supplemental a reminder, and for Lending year-to-date the prior release, and are closed earnings earnings comments Solutions share majority in of interest a which amounts of the the business, press adjusted sale per adjusted in XXXX. As adjusted year's materials our March

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

Jeffery Yabuki

financial on second quarter better most our well in our afternoon, good delivered and the quarter results first our everyone. We're in pleased of against meet Tiffany, to the half the financial comparison Thanks, year. anticipated full-year our of with difficult way targets. than We the and and performance

results. about the before Now talk financial we

within regulatory to the a all our brief half original transaction. closing and the year. of Well on second update of close plan me approvals Data in July received First XX. the transaction provide expectations Let on We've the required

received any As conditions. without anticipated, all we of approvals our

planning organization ready integration and We've a are to new leadership entire day the number announced from kickoff focused senior We of on is moving prepare one to for the our actual continue to Fiserv. integration. and roles

prospects ways. see deliver excited incremental opportunities and working credit unique and a in and We've are merchant, Clients such the us as opportunities meaningful international. build been and biller for their differentiated new growth solutions, on services, bank to about businesses value they network,

We believe efficiently, create clients more our will to leading generate incremental serve customers, that the risk. integrating manage their solutions of better opportunities for companies revenue, better additional two operate and

us million should more for Our allow revenue translate exceed our client ultimately target. first to $XXX synergy revenue focus to and may Fiserv

synergy for We've progress focus made cost higher strong on on delivering planning quality. with and efficiently with a clients more

absolute pace the on opportunities Our teams and as dollar focused savings. are well of timing the the as those of value increasing

of we a $XXX exceeding target. outcome closing, deploy million with teams targeted will our Upon fully the

benefits the transaction over of billion right aware our competitive this of the advantages of increase next the unique acutely change. investments investment time One commitment making the years. market to potential $X.X is to by of organic in We're transformational five this solution

our At original approximately $XXX rate the the of ahead round first savings anticipated debt of investments, than to expectations. environment time a acquisition and will recently in this further to growth We're announced. interest ultimately favorable these accelerate funds we translates stages more the Data's annual We First early we the raised at scoping was refinance which rates, in of believe additional million today's profitability. of

rate. to more first months taken together the in synergy of and adjusted full XX% at the than will XX the All EPS combination accretion that more than belief this XX% our run reinforces produce accretion

deliver create moving of will precipice clients, returns this associates important even extend leadership value for to come. transformative closing be years for to forward and this We're and and many thrilled combination that for shareholders market transaction together. more above opportunities We're the for on convinced

per Internal was to quarter results. the X% revenue very for earnings adjusted and back the year financial X%, was growth difficult both prior share growth compare. Now against the

the adjusted XX%. internal first earnings revenue was year, was half X% up share and growth per For of the

the in strong sales it's as networking increased for thought showcases, remains up sessions to expect We addresses, and We solution at year. over client June events. numerous client the Momentum sales hosting X,XXX conference annual XX. XX% through achieve quarter Forum in and fully our keynote professionals XX% objectives leadership held XXXX May,

We the nearly was of double becoming year. attendance in and XXX contract event on to the generation the prospects nearly believe year. lead We had must-attend site is client also Forum compared last total value

our let's shareholder key With first, high which revenue are to XXXX that, earnings review meeting quality commitments. while performance priorities, against continue build our

Next an to on emphasis and clients. third, to with payment value relationships solutions, enhance enables digital and integration, innovation for deliver which client and differentiated our

in of our performance and strong half As internal growth the quarter's the mentioned, we're and in up phase of in segment, a the X% growth X%, second was in Payments the very Company difficult compare. quarter even with pleased including revenue position X% the year. segment the was exiting first Financial

in given Adjusted and year, grow per over. the was our than the operating the license for to earnings better was quarter share year-to-date. the which Adjusted margin prior expectations was quarter XX% flat up X% revenue

quarter was in Adjusted basis up sequentially. the XX points operating margin

abating, continued operational benefits our revenue to our recurring quality the reinvestments tax high program. impact began scale the early of positive see we of and of signs effectiveness As

was payment up million cash to conversion flow strong digital emphasis flow very relationships second cash and $XXX with on XX%, our priority XX and a to solutions. enhance client XX% was June through free an our Free

but Fiserv which strong, larger DNA, strong a for credit unions. wins on processing included six to quarter, selling be in continue the with The XX demand account solutions

billion support DNA item example, mortgage low complimentary Nautilus in with portfolios. processing assets by capture, Union $X.X and their solutions, Fiserv Credit growing For selecting and other commercial to expanded their including teller relationship and

assets. modern open million select platform in highway experiences. addition, to to our members' $XXX assets billion in their the with union DNA with enhance in In Both credit union technology credit and quarter velocity over $X over and utilize

continued the in solutions quarter. debit in & to Trust strong First signing assets billion Mid Card processing with sales solution their Bank our $X.X

Union with We nearly to who full experience. credit, also services suite a enhanced production Alabama a of added billion in more debit, member selected assets, facilitate integrated and $X card Credit and

more and but October. $XXX software the the assets, mandates forefront acquisition. update for customers. closed upcoming JD signed their Managed JD pipeline added capabilities and since to card to Fiserv XXX our institutions seven last enhanced ATM fleet of Elan by allow million We've to one newest have transaction in more relationship serve from better than will the their Managed than the Bank, ATM Bank ATM and Services clients selecting compliance their of Services, This service coming

clients. National innovation Our to payment hub decisions nearly assets. Payments billion Sterling in priority differentiated third including deliver of financial modernization is $XX integration, continues top for value be to quarter, institutions, which five progressive for the which our Bank mind of enables translated Dovetail and to for

oldest payments selected through in bank over and Massachusetts, We billion Dovetail also country large very signed their process to Eastern and $XX in globally. transactions Middle Bank, Island. serving with largest locations communities assets which mutual signed a is East, Hampshire, in platform which New capabilities the the to We banks eastern one single a Rhode the advance and of in

for customers nearly demand with to as our drive National overall and supporting their another of about real First We funds the both experience. the assets, end-to-end immediate Pennsylvania time deposit along remain strength and $XX into leadership to our complement way full access now with improving of the future. and bullish platform of capabilities our billion funds to value by in Bank payments payments solution Lastly, chose Dovetail

turn me provide over the let call on our Bob to financial more detail that, With to results.

Robert Hau

Jeff and you, good Thank afternoon.

result a and As year feel position Jeff goals. year to of new revenue billion quarter Adjusted quarterly X% quality achieve are our Elan results good prior from X% encouraging in was the $X.X our significant particularly first high about recurring $X.X a and revenue given revenue and billion half strong mentioned, to the These licensed in for revenue of we growth compare. year-to-date up acquisition. the the in to the were as performance full-year

in growth strong across and was quarter solutions, both led the revenue year-to-date, card our and payments, X% output account Internal businesses. services, electronic performance by processing

by internal periods. growth Foreign XX quarter currency both and in points year-to-date impacted the basis negatively revenue

income the million is XX. and quarter X% June to to up X% increased through $XXX in operating $XXX million Adjusted

QX Our better is year-to-date results last include year. quarter transaction in operating lending internal of which Adjusted was margin expectations. a in the closed headwind that from XX.X% our at than flat our

in revenue, and The quarter. and expected QX had continued that decline Elan operating lower operating on point XX basis in operating the points described adjusted on we collective headwind XX a improved stronger margin Sequentially, basis in license adjusted margin investments performance investments. the acquisition

it was the than was to margin operating XX.X% to internal compared last and points expectations XX period. Year-to-date basis adjusted year our down for better

and XX include the The headwinds points, basis than basis basis including from acquisitions than first more half investments of points XX net XX impact and divestitures. results from more of points

The we implementations the to year. half fourth call, second the this abate quarter anniversary tax moderate first reinvestment during in carryover investments will which of in and began described expense, The the in quarter. and client quarter will earnings our the acquisition further impact

the XXth share of per was $X.XX to adjusted quarter EPS XX% growth. year-to-date, well up double-digit and positioning us our to $X.XX X% earnings year in increased Adjusted consecutive achieve to

XXX billion our XX% in The to points basis by to electronic was $X.X X% X% the $XXX and segment output businesses. and adjusted sequentially million revenue services, year-to-date. solutions revenue quarter Payment and up is card primarily increased Internal led XX% year-to-date, the up payments growth quarter in to

XX% continued X% points points partially quarter high year. due increased from year-to-date. year-over-year million Adjusted point $XXX by in margin productivity, the a offset XX.X% and Payment the operating acquisitions. improvement XX to XXX was the to in prior growth income The up revenue XX in basis primarily to basis segment over the Adjusted quality sequentially grew negative and gains impact to $XXX for and quarter operating million basis was

XX Adjusted Debit the of the subside half grew in year. high-single the months of will down includes first operating the year-to-date. and for six transaction Elan digits half year basis investments and pressure was to points XX.X%, transactions second the the the which both impact which first in quarter from margin of

in Mobiliti X grew XX% ASP the banking services. embrace subscribers digital continued to to nearly as million quarter consumers

business to saw also as XX% digital We clients increased also customers commercial Mobiliti experiences. migrate

grew and in quarter and Zelle, nearly and than XX% sequentially. PXP transactions, quadrupled the again which sequentially. both transactions doubled live include in clients XXX% of the Zelle number up were more the quarter Popmoney

the signed in and the system. the about Zelle remain should it nearly quarter prospects for and impact on clients the have banking also We enthusiastic XX growth positive

growth revenue financial quarter includes the which billion, at year-to-date the year-to-date X% the revenue the consistent was adjusted anniversary processing X% to segment, was and generally transaction at and $XXX led lending businesses. the million QX. for was for by which our $X.X year the with end of up and For Internal in quarter X% item account last impact,

the was $XXX include strong X% quarter was results compare the prior quarter, in with to segment shows processing for XX.X% operating year very the Adjusted These was years basis the growth. revenue months difficult the benefits XX revenue the compare underlying consistent of first income and in primarily up at in points to operating down license due Adjusted million the prior financial $XXX to the margin license quarter, revenue. six million. tough from in which

operating revenue. million margin operating operational for revenue with investments in The difficult to points recurring year-to-date, and June was XX $XX the line and in corporate compare our XX.X% up basis growth through license product offset is quarter Partially execution. to expectations. the adjusted by was due $XX Adjusted million and which solid and loss the XX

end adjusted XX.X% tax effective additional and We've now XX.X% for rate The quarter the bias guidance first effective rate and accordingly full-year tax tax tax the our year. the to our seen benefits the for half was XX% lower towards XX%. half adjusted the of year some of of to in expect range first the rate of

and million of cash $XXX was versus Free strong the prior through was in increase pressured was were conversion planned which payments which year. of the year, more than June capital Free bit cash the expenditures along flow the the quarter an in XX% by up tax million of was half XX% year. flow bit of XX, to $XXX timing heavier the half first a first the a for with

the XXX% continue our year. at We be free to conversion flow to for expect least cash

remaining First our and the As remains transaction. were repurchase in million at repurchase million of Data shares share XX. shares There you XXX with know, program outstanding conjunction for deferred XX authorized June

mentioned, we across June have $XX debt As refinance billion funds raised First the Jeff senior in notes with to currencies. and multiple Data's July in

impact a and notes combination U.S. notes the $X years. lower of interest billion rate time expected XX.X notes. debt loan $X.X public debt, hedges interest to First which of roughly leads the euro transaction These the in is have $X of along billion $XXX million at term average of the combined with a dollar billion costs raised Data Including billion $X.X of We in denominated an the of the sterling X.XXX% senior tenor denominated annual than announcement.

the which portion the had against our we debt X.Xx The in received adjusted billion total Total Upon proceeds to outstanding XX X. dollar of closing, June balance. was debt proceeds US$X until We of includes pro expect U.S. the debt not forma completed was to July $XX.X the of EBITDA be debt XX% after June of debt Europe as to fixed. our netting additional in raised billion, from raise.

that, turn Jeff. the With me to back call let

Jeffery Yabuki

strong XX% account the up a solid areas in including transaction. nine which solutions card saw the meaningful businesses, in XX% processing we in up We the over performance performance Data significantly was of has Sales been XX% of is performance Sales First light believe especially year-to-date. and Bob. last and Dovetail. is our up increasing quarter several Thanks months,

it's also pipeline integrated half Integrated sales up and proposition. X% the sequentially. compelling quarter in remains Fiserv up the value reflecting domestic was the year in first up The the XX% the and of XX% X% and in strong quarter

operational We driven benefits quarter continued labor our $XX year-to-date competency, in to savings $XX demonstrate by of million million procurement of and and initiatives. largely the effectiveness achieving

$XXX meet million full-year of close our to track early. program and on out $XX are five-year target million We our

for we're financial the track than a anticipated guidance, commitments first by stronger half achieve year. As to full-year our buoyed of on

to second half to the and will internal continue We revenue expect in X% to growth our X.X% moderately be range higher full-year growth rate that of be first. a than

for per of and increase the year bias to range with range. between $X.XX the and adjusted the a her earnings $X.XX XX% continue share expect We of at/or to above a midpoint XX% to

than expand to expect XX adjusted points conversion also more basis cash operating free We XXX%. for flow and least the year margin by be at that will

our as which of Lastly, First Data or impact Monday. we a expect will anticipate not XXXX reminder, any transaction from close include the guidance does

into company for combined along provide However, very when XXXX convene call. guidance will our we we a updated the quarter look with third preliminary

treatment We for forward information the to financial historical also expect mid-September in combined company. go provide using our accounting

First And we in and by stock earnings close, numbers suggest as the incorporate interest compensation last For First combine adjustments guidance of know, for include for today's synergy and as a modeling at five Data, months provided the the for our based such Fiserv you releases modest expense. both you Data year. estimate also in benefits which include we lower

XXXX impact P&L synergies next the expect of balance year. deliver through ramp We and to much larger a

amazing and of XXth chapter company. Fiserv next we historians, Fiserv even are to For an what know may we of XX excited on you the be believe our fortunate July celebrate been more will anniversary. have part that will proud We're for history the for

their work clients. partner each is success reason come to current the And for focused public thousands sounds, day, return good to we've contributed We to help the time, excellence is wait XX,XXX years XX at associates know XXXX. compelling clients to who Fiserv than on of to to serve than for start. we value the the the since a result with delivering a more more associates delivering along XX,XXX% who have opportunity with as created as over singularly in years next to of can't them customers And our meaningful same going our shareholders, that exist. The

With questions. that for the let's open operator, line

Operator

you. Thank

MoffettNathanson. Ellis the [Operator is question And coming begin We first Lisa our with question-and-answer from Instructions] will now session.

Your open. line is now

Lisa Ellis

six time. a XX Hi. I do your rollout like great in do comment business to contactless guys, you timeline looks, coming. how for and call to wanted then they the and first contactless you to contactless, what be your for joining of about about of customers you. the be evening, and the on Good months? thinking your I meaning rollout the guess ask question might specific just actually plans next that are that to expect the have tentatively Can over cards on Thank impact bank how It issuing U.S.

Jeffery Yabuki

Sure. have great Lisa, Thanks and to you.

that an for contactless New are to We having obviously see that. demand see in like actually much places would we XXXX in helping dual the that think in start to York planned that available thinking in had brands is tick starting for uptick up numbers focused interface. are And and XXXX. We the contactless and subway, on we very XXXX, in or not our that

or XXX million cards that year, produce So per actually we we so be or about could a XXX payment payments or so issue cards million think impactful.

impact in it XXXX, a the having that in but that see as we'll see we don't We certainly we're throughout that roll and XXXX see XXXX in significant optimistic move system.

seeing The we're a start fair EMV, to we're actually the that the issue straight around we as and prepaid contactless. providers that and number amount a we to seeing will just do prepaid interestingly other thing providers them is, also jump of believe

feeling So good monitor about We like continue to that. a and that. that we're as we'll tailwind

Lisa Ellis

terrific. you. right, Thank All

Jeffery Yabuki

Thank you.

Operator

coming Our Baird. is next Dave with question Koning from

Your line now open. is

David Koning

job. Hey guys, thanks. Nice

Jeffery Yabuki

Thank Dave. you. Hi,

David Koning

the company I you And right and the now? that I'm First like specific, well. seems best wondering, putting a underlying is of as looking How are of both better at of and driving that getting years, lot signing back backdrop much core in last it's XX market, Data well just a So growth up you doing it seems both it you mean, the the what maybe are some historian, of have.

Jeffery Yabuki

and both morning. until or companies I we continue do are to continue we obviously, to to separately that do mean, run expect until Thanks morning Monday Yes. to that I continuing Dave. we'll Monday mean, been Data that a number a X% of both as making everyone just nice inside number. to as GBS has America see North First investments U.S. U.S. and the pleased post outside the we our know We're else

you rest world Frank doing it's seeing that had is talked the of a the team really between quite Dave, the there investors that. that of been work the we at team the matter of done. that work cumulative that things had of way that's was we looking the I strong. and a think And looking one thought the about that have And just And and been the as mismatch effect know, his

that together, into at believe that integrated and the least as that synergies single us clients, from coming and on you extent the will of perspective, focused see excellence of So innovation that put hopefully company we growth for so we and million to drive incremental them $XXX a and driving more.

on just aggregate continuing Mobiliti that so seeing then probably be to high for the the nice you're then side the And bringing Architect the revenue some digital about successes and ecosystem, will seeing excited of our do in six area, then quarters. in continue entire and quality whether about on sales that having it the for continues card DNA, next, eight Zelle. believe real Zelle to talked We We're and we're that next well. we momentum effect and

David Koning

like that the of I including kind are And $XX so in great. the or standalone Fiserv, is of not extra that financial one, of included $X.XX but in that a, just a is including guess to guidance $X.XX month you just guidance? or you're almost debt question, billion Okay, This for follow-up.

Robert Hau

related a that's transaction Yes. not including Dave, we're cost. that

out adjusted non-GAAP results. that the see you'll of So

David Koning

Great. Well, job. guys. thanks Nice

Robert Hau

Thank you.

Operator

The from Jim Goldman is with next Sachs. question Schneider

open. now is line Your

James Schneider

of – but the Good mean, if for I about synergy taking areas question. several strong articulated on and afternoon. most my I you you before, Congratulations side, guess Jeff, which the the talked you that incrementally maybe last really or revenue on thanks results, which you've over about had is two items anticipate excited for didn't synergy you six revenue the transaction before. most you are that in is one contemplating time months, or the

before. will helpful. one, color recall I I be and Any that mentioned is talking you think about international you don't which

Jeffery Yabuki

Jim. Thanks Sure.

have how as get in use way have how look, do faster, about done the We expanding everything terms work very synergies their a better will of the such point-of-sale make decisions the fraud, merchants the been lending large we technologies categories to around pleased teams of the at in identifying help on focus from like. data that of money thinking and

have First that take then – in we Fiserv larger, we and move the U.S. the not that through through able solutions but Data system move the the of or a number And distribution First outside move been do the them of look much network to them small things Data because is U.S., outside through, First we've outside we pretty U.S. one Data sorry, them the were how the the, and at

think we interesting. to So be that's going

trying larger at relationships. looking those some where kinds may not Data also we clients where And First have leverage to of

of I se, international we'll there So new invest creating do in the business. of don't interesting innovation terms us businesses per But that base putting see lot the in in see together a we future. ways the

James Schneider

That's then bank terms what And comment a you now. your in maybe helpful. sort telling of Thanks. of clients they're a right macro and

change in environment the change XXXX. is the, Just And/or if see any heading the the b, half you plans as a, back the spending impacting into and there. of and reversal environment their the interest year in this at wondering M&A rate

Jeffery Yabuki

about Fed rates. we has know changed not banks their question, Yes. the Jim. obviously the excited good I are that It's on fact interest a mean, stance

conclusion in demand it so. has both structure a the up was large any terms for quarter we're a at change been not institutions the showing serving or we we foregone or the and little back said, of that hosted May. think seeing That I it least for event in last that the of bit forum in are

that we're achieve to will fact we the course We we sales – believe and and – going can that full-year our our of in see objectives. it pipeline then in manifestation the

on is all spend to changing. to technology not need that's So the say money that

do experiences. call kinds or shifting the see from newer them legacy digital in to based talked their end calls and that large to it of front banks how the we and of try to we see supporting see can technologies some You money in continue

the on banks certainly the environment And a happening. down and continue now, looking right for to generally like activity good scale it can when that of as M&D continue so more in then the we little spending watching now. for feel see We're you what see, to shape. closely bit, know, consistent for remains amount obviously rates we looks So you that's come we same front, and that see

James Schneider

Thank you.

Jeffery Yabuki

Thank you.

Operator

The next is from Peller Research. with question Wolfe Darrin

Your line is now open.

Darrin Peller

coming Hey, Congrats to deal the merchant pro you deal But it? on they in your around on I'm and first the with just this how you of you on First around in anything there in is than – are growth rate? thanks there last And thought? First of guys. on the are And Bams? just approvals growth the closing at look market guys touched has update Data, noise strong forma alluded while run can topic the acquiring I better then the all. JV type the been the quarter, side. Data, these but relationship again, rates especially accretion Or anticipated given trends, in you Just of much

Jeffery Yabuki

Sure, sure.

that that giving show the that both organically our capital Data doing they First and should. So believe XXXX. allocation and were would say First that It up investors when Data things, all happening had know deeply I the original do didn't our would be belief focused been of that we through thought models it. about put and we that that on I was what would don't together were in we that

and focused seeing And right on making now and sure make that the hopeful that strategically we're we're manifest decisions. I we think

continue. So that will

say performance So the we I we as that to the guidance that feel feel the - for about remainder quite date we've of the good would as year. seen well

of reason we on to plan are America continuing we know to First that had sense. Data about the First JV Fiserv to the work of questions lots long-term expires to and have Bank going continue. that's with obviously relates lots JV, relationships believe it I have a Both that we've As which Bank of and mean, June. America. makes next and Data every And And multi-solution

I come What we're a expected during we we since outcomes all likely through at And make with diligence the into scenarios. that say on the that that understand put what's the going time can lot the JV. is the could least process, of quite all of sure the comfortable we're or different outcomes, that continued working of to bank and we've to with point understanding

And important, impact is is at outcome any for what can think negative say that really we a that the anticipate don't financial free earnings I Data’s I meaningful cash First and currently creates flow this and years. next that And the there to to three a be which least in past in future. you get some once could actually numbers, scenarios point the change the structural accretive that five were

from standpoint, feel about we So pretty that. good that

timing be do a expect we perspective, understood From the quarter. in issue to third this better

are the different we fully that that importantly are transaction to the of adjusted run think JV, you which we So year outcomes full very create say one scenarios in accretion also XX% rate. and as that know, the together Bank makes coming parties to into estimates, America the at XX% see, is the factored a our situation that sense. I can would EPS

work. think pluses that the and having it we the We we So done impact and meaningful a the we've negative minuses risks, understand post-closing. just the Darrin, think see we that don't

Darrin Peller

That's really helpful, Jeff. Thanks.

of even think second can half starts help, just terms if guys in soon pretty is follow-up distributed approach would quick be to And XXXX given where maybe the manage websites. be that just, that the near quickly, still parts curious banks one Just banks happen of we Clover sort synergies, think one the through banks you for I is term. cloud-based the the of cross-sold of hoping where manage in you were the exciting these Clover

Jeffery Yabuki

we our bullish pretty today working bullish well of on then, set – were bit are together even Darrin more merchant. the would but And bank are and a even we actually we and two planning we vectors. Yes. the bullish been really teams and more I have we're on at say today idea time it's

in and traditional doing on we're points we fully combination we market we enablement customers year of then interesting power first the the really is after things the July second see in Clover. one front half some the branch, in enablement banks. the providing will XX that and the And value The on the terms also merchant of close that proof of of the in to of come expect be about the digital

Darrin Peller

great. Thanks guys. That's Okay.

Jeffery Yabuki

Thanks, Darrin.

Robert Hau

Darrin. Thanks,

Operator

comes with Brett question Incorporated. from next The Stephens Huff

Your line open. now is

Brett Huff

on and guys on closer afternoon, Good getting deal. congrats the

Jeffery Yabuki

Thanks, Brett.

Robert Hau

Brett. Thanks,

Brett Huff

front trying not this shifting seen over you of months mix untangle front. certainly have frictionless the office the more definitely on to to and ignoring and heard on Question back last the tech we've spaghetti the folks, there, the then but kind spending, and towards XX office onboarding of back guys

you little Could a is perceiving changes onboarding about fast they on Are kind banks that how that more specifically? that now acceleration to mentioned and or digital any people the in are category better need You do are aluminate and side in any of evolving? there of bit more that. this how

Jeffery Yabuki

Brett. right. – question edge institutions There of the focused in really the of is the have all Yes, bank, at no at of majority kind the emphasis that sized been

that the institution. in the financial the be intersection of point digitization between customers institution that any it of and and or of financial with their onboarding digital variety the engage experiences at whether customers of So creating, kind

focus. piece So the that's been of a big

today in core enabling What really that's and leading had it payment was one quarter pieces of the think of We office. we of proof about points are seeing Dovetail, I our the market back in five we technology. is, the around announced the and hub signings our

that's as well So up keep real-time right think happening payments with the at what modernization to going it edge. the now world about

necessary end And of and into experiences commercial small ultimately so the business are those exploration seeing lot call bank. customers the the retail the to of that's that, the deliver and customers to we a to end it

seeing are that happening. we So

we need modern to on is front. it a kind the If where words say about of about together some to the systems. we what a serve, to solutions the at more or done. your time will of back get going its using RFPs more experience. end-to-end and you that's taking But about and need bring more And the long legacy It's the do into do see that take that's the turning is of way infrastructure you the that But look people see some more said, to spaghetti to more into making I that experience. into

Brett Huff

mega of relationship helpful. about on little seeing of a is, couple down funding And maybe others these road. you kind and some account fiction transactions the also but the excited big more product I maybe the point-of-sale, another side, the easy I follow-up, and companies interesting to of and if make deal question the having merchant then That's will, own, wins on more the a kind near-term are consumer the think frictionless, both science DDA,

for awhile, talk that studied you're you those can about you've Now evolve? combination opportunities this any more how seeing

Jeffery Yabuki

long And time. us Brett, know, known for you've a obviously, you

account, we've any one the it mean, we on this. of use, the XXXX a to PXP and CashEdge when that areas to our very a excited you back that's as in in to account different Popmoney, of very, that that's to we consumers variety the through bought You with And to think of Zelle. know, transactional us, way over to next way. really I the funding interact going opportunity I accelerate the called since we're in years. been make a we're frictionless obviously forms focused really manifest on for sure about And now focus several more their want providers just for

a institutions scale of see excited the optionality, better like corporates We there, the XX% that kind with footprint with can service. First Data the think accounts. financial to of We and liked of we're partners, deliver of with million roughly our and We out scale to XXX the the some ultimately Fiserv with what's work and transaction merchant that. with over

a is that. now, flags differentiators be able we're studying but for of around to we really think close, We'll to closer of the because once we very lot study we're it think that one continue Zelle going make we're like about plant to areas I to some that. excited and that

I fiction. it science think you called

actually that of Some happened.

Brett Huff

time. what That's the Great. Thanks needed. I for

Jeffery Yabuki

you. Thank

Robert Hau

Brett. Thanks

Operator

question Ramsey El-Assal with is next from Barclays. the And

is line open. now Your

Ramsey El-Assal

timing. wanted Thanks revenue than context ask for about of taking my the synergies I question. to more

than Which realizable you've sort XXXX? of that understanding the look the rather near-term hood, in most or we'll the opportunities the bulk most you're specific had which opportunities the most of in to in see a kind dig that of quickly your XXXX and kind probably updated thinking time what realizable are readily benefit Now little achievable? on of feel of sort under is

Jeffery Yabuki

we it I over months. it we of next kind talked about the in opportunities to originally, network, and XX had when near-term, the mean XX is, innovation this about important Yes. talked the payments playing an call role

do we're and faster with able is and little be blocks selling. opportunity the the reality to providers in like good little of a we think chance acquiring have on we very, have out able us a Solutions Biller thought. bring I a get is, base in. having and to excited to very of to near-term mean we part the is these focused than Data going be to our First being merchant the very business in a are businesses where that them bit bring We We overall

like problem of, it value call lot then lot know, it move you can is we We That of until cross-sell to that and live. as and Ramsey, go have problem of the. a know We quickly. extent happen has have the things think we sell those to thank then to implement pretty we hit it We is some to won't see real quickly. merchant. to we have timing can high there but that a sales, we that it Again, a the integrated we

quickly. Some of opportunities happen and we the think payments can network

talk you'll and little faster about that And each we're so the others, than on going be to be focused hear that us bit every on those how we're doing we see to quarter. and a but

Ramsey El-Assal

Great.

sort larger, larger that just Universe think your up you and processing even kind with consummated about or this are Just just on achieved pull years? what's broader and you like Do these seems how having of It players to broadly. some think through the industry one follow-up of really your wanted the or continues kind I deals up, space recently? specific do is scale to ask five in with get there's so this M&A, the of we've dramatically view amassing, larger scaling more guys looks been you measure of that industry stability

Jeffery Yabuki

years of I a that many and referring we quickly, And I if five go Yes. thought no, you think if fully certainly won't the absolute, you're have really back say got would've fear changed, that the that time an I you it to question. people be would've later industry you've get asked the have say would would they that steps you asked that it had great participants suspect would industry that five It's forth. that to how all and taken would to me. I years kidding taken, ago,

it's on From for our really a to perspective, had of making capital shareholders. the the but that's day, drive we've to allocating focused see stay XX,XXX% as to And more to we're over deploy the company. important drivers key us XX return every single years we sure capital public last opportunities for one than value

So remain allocation focused that what capital used. we're going we've – strategy the to on

transactions. of But having consider do, And certainly lots to we if something we'll there to ways drive major it. value scale see without meaningful occasionally there's do to

years. that we deploy flow and capital as next to I think how really value few can shareholders that really, We're most sure do much the see drive together we build on the come cash just how we'll possible. we they for focused over to make have

Ramsey El-Assal

Very Thanks. helpful.

Jeffery Yabuki

Thank you.

Operator

RBC The next question is from Daniel Perlin Capital Markets. with

now is line open. Your

Daniel Perlin

afternoon. Good Thanks.

Jeffery Yabuki

Hi, Dan.

Daniel Perlin

you are doing? How

Jeffery Yabuki

Okay.

Daniel Perlin

to other thinking And the been process where these entities. question these with fintechs card they're kind of and a more it areas mode's cash the debit a I here clearly a increasingly kind about I'm trapping and be of gatherers. square's debit of where used straight like quasi and now had of they kind let becoming payments deposit really through

are your products your portfolio, come to help of you've created that And threats one kind – so I'm of just wondering, bank Jeff, the those services today? when the or competitive what you look for back at

Jeffery Yabuki

the –it's it's and Yes, trapped And as are banks, and in to whether whether of of interesting NXXs lots that hero Chimes, I to traditional really banks. or the are make course. banks being about happen PayPal what going sure talking an be Venmo that example balances deposit of has the they on, put the non-traditional you're other time or things

of think them. one I that's

other enabling think those I being places. sale that of at point of that credit be more commerce models can so things point make the point of consumers or happen don't kinds whether extent to that to we better right, at decisioning the to we thought, sure that through lending, available sale and of are of go

digital on whole decisions of experience, the better intersection think I based data.

us in very not we're that see put that thing can of around it make capsule it's around sure Venmo you make I'm to I for little sure the and and Venmo, financial think the as billion it a $X.X is institution part is that a Zelle, put of important. you you I sorry clients value invest. the that think other going become that driving and we'll do to that bit see what to what

are see of that winning you'll between intersection the to go banks I their of that fair and sure making amount commerce experience, financial a points think gathering. with deposit

Daniel Perlin

about savings – That's million had just $XXX interest great. financing. of the that is talked on the The follow-up question you I

letting are in you which about away pro Are the how forma into Thank that should integration? as or thinking you viewing in philosophically Just this that? that we model planning invest early quickly opportunity more on be to through you. transactions flow

Robert Hau

to as as back Yes, cost that's – model. revenue Dan. And fully It’s it our opportunity earnings of a I the baked Bob. standpoint. both would certainly as into to grow look company, to share. an get From the per the needed we're invest in the the synergies invest standpoint at at on and appropriately planning well

accretion us with allows share at also It pay XX% will into comfortable the XX% that at synergies. back down remarks, That As certainly of get flow, repurchase. to in $XXX Jeff generates one run and least interest that. out pointed rate full some debt the helps we earnings year in achieve and lower very prepared cash we're million faster

Daniel Perlin

Fantastic. Thank you.

Jeffery Yabuki

you. Thank

Operator

Matthew The next with O'Neill from Research is Company. Autonomous question

line Your now open. is

Matthew O'Neill

that the and My One still it. Jeff hoping three that be question. guys. there'd going? five is Darrin's this said about talk Yes. to thing, just more Thanks for is Hi, that guys process you only at taking follow-up, I it's question I know, JV to question for color though think BAMS point how for from was that you glean to I that a my premature I earlier really around some years. just impact little no could was a

of might ownership, is Is that how view deal future on that maybe five – exclusivity how ending the now expire update to or the was that can rolling and the of hear for kind might we just discussion of far there a any is percentage that that down off? progresses? over certain year more the to you merchants this some see sort contracts there's three be Is and come so kind read there through we'll confidently we phase of into sort and

Jeffery Yabuki

thanks and Matt the asking for Yes, follow-up.

next what saying, to investors scenario end that fully was that. into is there's of It's not it's is to about cliff we So of, at give for matter that confidence should I of that three a look five stage. no worry the baked. that just at in there's this it think really a the But trying nothing hard say least to years and a matter to far really the at is, future

doing. lose playing matter driven the scenario. outcomes are that no direct arrangement, a win the to but And And cooperatively been We'll been that come It's be not to and unique in everyone the It's – light. here is, make they're being one not this up we scenario it the of haven't sure Obviously, that really what I how And ultimate a with is no like think matter facts conversations, out. ends that optimized things scenario. to as the do – sides being what this both here. that's is work feels going that that's case. very are the in win-win

Matthew O'Neill

with America and regarding follow-up the discussion been much. not, very too? CheckFree Has you as if of of up then final next can. I sort on just Thank XXXX, but that it. Got which cross Bank And a figured maybe is I suspect relationship, think any I there

Jeffery Yabuki

we to blunt. even be more just and Yes,

with had bank. not direct have the conversations We any

any on specific operating are pointing discussion there venture hasn't been for out We hasn't companies the conversation there separate and joint on as Fiserv, that.

to front helping that the digital of and U.S. with We have to that's relationship bank that it important in the the make strategy. good of sure bank we're on a always one continue to and Bank part looking we're number America be very an

Matthew O'Neill

a it it. I'll leave I appreciate there. lot. Thanks

Operator

The is next with SunTrust Humphrey. Andrew question from Jeffrey Robinson

now line open. is Your

Andrew Jeffrey

the Hi. real to whether platform? across pay to and service talk you of infrastructure helps or the in some maybe is your merger think and or you news that can how not that evolving, more bill Good market's offerings and that you Good drive share to the these time consolidator what back you. from volume direct is biller maybe efforts. if on elaborate extent as model can adds accelerate shift value, any, mentioned if just afternoon. Dovetail clawbacks that or wonder and Jeff, Fiserv's part highlighted product days. payments, pay a a And you Bill I

Jeffery Yabuki

well, is all are Yes. bit you interesting That's it into of do to trying in Thanks for a an interesting wonder, terms a so kind point my view rear in bit, of of favorite It people that? it's of why the because the talking little topics. your get one thing the about you little of question. because and business to trying is people they see kinds actually

small a this all to a for business, I do understand convenient model, we website the that And payments through than happen. consumer ability make trying because hopping that is for that think they're to facilitate to more way consolidated or especially

is to that bring biller notch. top experience The in merchant and information key merchant make do the biller how in is, you the –

payment ultimately across that you piece movement, it point and twist value use can think to the the next is is big having of that big real all going I time, constantly and next billers, other consistently change that's money, time real of The proposition. kinds

the consumer longer people do the of think going lot things but than number to And payment be to a with We I think with our about the got one working of front we're again, see connectivity of happen. so understand, payments. that that that very at may Data. a they've you're And take interesting we're bill it make First It's excited of real work partners. time

you're to engage in a a time. wallet in in make or real payment your time, make whether commerce so hypothetical illustrative time, to And real in bill or to payment real using PXP

I important why in U.S. as technologies clearings going it's come of And online such so are new think that Dovetail coming together. see see you to you're as here reasons the one the especially

Andrew Jeffrey

as to that. insight a the on And appreciate follow-up always your subject. I

specific or is a to you see verticals direct in playing sort ACH role even bill do follow-up, is of – of payment? be of ubiquitous? debit cards going to the sort still Or As in do going more you pay think bill be a generally,

Robert Hau

I bit clear that. to this that is make to about I'm little a want and the Again, of according sure world Jeff

number, securely. If and you you card an having number think about to a pan-based And pluses about think the model. I account implies the transactional as safety XX-digit them the both I account minuses. matters. and that real the as then see space, card connectivity think space debit The right, speed, time, and

them an figuring is way out to look it. so interesting And to at how bring I think together,

Andrew Jeffrey

lot. a Thanks

Robert Hau

Thank you.

Operator

The next question is from Northcoast Mehta with Kartik Research.

open. now is line Your

Kartik Mehta

done, in point what return shareholders? for you've market economy decision to that so a What's the Fiserv has certain back Jeff, look Is back achieved it of the strictly you When little there you're of Jeff. Hey you in, ratio share companies a wanted it amount the doing? and of capital invested which that you much repurchase. cost the money? what is combined, looking issue? it benchmarks are at I Is a about as savings? is a it after that Is ton go bit you've is leverage to to kind ask always do

Jeffery Yabuki

for were know unable buyback think tenure for first we that's asking question, don't not I me, people do. primarily to my Fiserv entire aspire who we Thanks know the Kartik that where quarter, I what of And share Yes. – this a stock. to and was because in

is in leverage objective we're flow going paydown capital grow or our ratios, a to the we're free EBITDA or our have way the of that to and debt building XX billion to we to $X the at last consistent the that that at So last, so that look to sure so or out, over make years deploy with we going XX value we're years. we to cash few least create how that a shareholder have can have

use it'll that obviously depend everything historically. continue our valuation we'll we have same to And and also the on and methodology else

And it as so the do we answer real can. quickly is, as we'll

know, not and that it, of as you program. efficiently market did we as level As into comfort we've would consistently. to build get I right the and deferred suspend the the us expect value We soon so and have and commitments effectively our rating shareholder we that we can our met agencies to

Kartik Mehta

And one Jeff. last one, just

As of you to rid they're dealing digital regional margin as know, squeeze solutions, possibly, dealing and the with all at the customers, investing but but with will that your look be able in some net do bank you also interest they're other unable get community legacy of them to continuing to see increase in they solutions cost them. anticipate the make managing will that the you they're How that so investment and – future? do you continued for that do to these

Jeffery Yabuki

to and effective one which interact, build space I think solutions squeeze that mean Yes. a of for community or institutions advantage unions mentioning. whether build credit these there the And the but to of a financial is take bank a the they for opportunities way us revenue. of also in will I to or you're that banks bit is in more institutions cost to community is products that space digital, the reasons be allow

we're revenue It's of institutions create. they lot because do about space excited the revenue. our can how to where opportunity one not even we why the white we we systemically of amount can optimizing using financial out at optimize there, more think reasons are technology help today the looking And bank merchant better that merchant we're see of a community-based

certainly think – on. be years So to least as about combination efficient? Trifecta use XX we're digital more really going of be you have it it's that's a revenue, entire for do at of how always there our I existence. this lastly, we the on are ecosystem costs there create to how that is And pressure going the more do focused to be been then there's

Kartik Mehta

Thank it. you. Appreciate

Jeffery Yabuki

Thanks, Kartik.

Operator

& Greene is with question Glenn next The Company. Oppenheimer from

now is line Your open.

Glenn Greene

have questions close. My Thanks. answered, congrats been thanks so on the actually and

Jeffery Yabuki

Thanks, Glenn.

Robert Hau

Thanks, Glenn.

Operator

is Timothy The Wells with Fargo. next question from Willi

is now open. line Your

Timothy Willi

and Thanks good afternoon.

around around question housekeeping a balance discussion and sheet debt of sort and Just the a interest.

of billion currencies. you did of So across $XX I variety said think you notes

priority will $X down First that you of in first possibly where if the some roughly that that happen $X we that Data gap pay of sort think had that's other any about? insights billion activity should terms just billion. there's Could around to or that regarding

Jeffery Yabuki

Tim. for Yes, Thanks question. the

term bank have loan that out billion we billion We round need $XX arranged to will a refinance. the $X

So the term billion July combination and of cover billion of the $XX billion late in we that raised needed. that a notes early $XX $X loan the June, will full

Timothy Willi

Okay, awesome. for Thanks so much clarifying.

Jeffery Yabuki

Yep.

Robert Hau

Tim. Thanks,

Operator

from Our Woods. Keefe, last question Bruyette be Vasundhara Govil will with &

is line open. now Your

Vasundhara Govil

extend I in my I approvals. appreciate guys thanks. the last me Hi, for getting minute. to all congratulations you squeezing wanted

Jeffery Yabuki

Okay.

Vasundhara Govil

acquired products you thinking more what before. could I on international regarding synergies investments Are be products wanted or of talk a distribution that? then we banking to focused the on the Jeff, follow-up you might elaborate you potentially type side? about on in setting And to of also outside kind what discussion there? bit just about enable Did capital core on little as are deforested if payment

Jeffery Yabuki

Sure.

So Signature outside say the – called have I right U.S. that banking we sell one core we would now platform

the we also a inside sell – We have U.S. that also

But which products, about to our world. focus some excited to that. to continue existing we we're of the around on the we'll have with footprint digital most try good so go-to-market Data a And leveraging First really footprint

so ecosystem the excited Dovetail, more a U.S. example. a acquired Dovetail we the is modernization when payments Dovetail the us, outside of inside The of about great is presence and the company, for UK actually with outside happening hubs. we're payment U.S. U.S. and and gaining their most rapidly was very it distribution more

being different products, some oriented or We we relationships just those that see and fraud the a hopefully onto significant on don't some strong warehousing, investments. products, have we products can number data products, cash also we that add have of risk add

us The other U.S. ability centers to thing outside that a nice and deliver revenue centers to to of a and build hosted have We of them deliver not allow a products we on quality on really the revenue, but just basis, licensed the we footprint don't take strive high just will have some them not our that the is the basis, data but First outside has recurring out Data data U.S. deliver.

Vasundhara Govil

helpful. you. That's Thank very

Jeffery Yabuki

you. Thank

Jeffery Yabuki

and appreciate come really excited to transaction and with today. And for support First we're to Monday We Data, your joining close everyone the you start thank the Fiserv. us always new

everyone. Have thanks evening. good So a

Operator

And the that conference. concludes Thank for you participation. your

You disconnect. may now

Fiserv (FI) 25 Jul 192019 Q2 Earnings call transcript