Fiserv Earnings Call Insights: Organic Revenue Growth and Harland Acquisition
Organic Revenue Growth
David Togut – Evercore Partners: Congratulations on the solid acceleration organic revenue growth; that’s very nice to see.
Jeffery W. Yabuki – President and CEO: Thank you.
David Togut – Evercore Partners: Is the composition of growth that we saw in the quarter high-single-digit Payments growth but low single-digit Financial, is that the sort of breakdown we should expect for the balance of the year?
Jeffery W. Yabuki – President and CEO: Yeah, I think that’s reasonable. We’re going to have some fluctuations, as you know, David, in the Financial segment. There’s license fees and other factors. But yeah, I think that’s reasonable from a range standpoint.
David Togut – Evercore Partners: Then secondarily, Jeff, you highlighted greater than expected revenue synergies from the Open deal. Can you drill down a little bit into where you’re seeing the incremental growth at least above your expectations?
Thomas J. Hirsch – EVP, CFO and Treasurer: Yeah, I mean we – I would say, the increased expectations are taking two forms. There is far faster engagement in the process. In other words, we have – the client base is quite excited to have the opportunity to basically shop within the financial services technology store that we have. And so, whether it’s on the debit or credit card side or online banking, mobile, bill payment, those kinds of things, when you have tremendous interest there, as well as in other products that we probably had not prioritized and that could be anywhere from our multichannel management solutions to our custom statement offerings and just lots and lots of interest there which we think is attributable not just to the fact that the services weren’t there, but also this whole notion of – specifically around the DNA platform they bring a more modern technology architecture to bear and these products in combination with DNA really go a long way in crafting this new financial services experience which we think will be quite important over the next five to 10 years…
Thomas J. Hirsch – EVP, CFO and Treasurer: I think to add to that David, I think the sales pipelines that we are seeing in regards to Open and the other value content around DNA have built a lot faster than we would have anticipated sitting here back at the start of the year. So, that’s a very positive sign.
David Togut – Evercore Partners: Just finally, Jeff, you’re probably aware, a number of your competitors are targeting some of the Open Solutions/DNA customers. What have you seen in terms of client retention with these customers particularly in this transition period?
Jeffery W. Yabuki – President and CEO: Yes. So, we are quite bullish about what we’re seeing going on in the existing Open Solutions base. Again, the lion’s share, a substantial majority of the synergy value is going to come from existing clients adding on current Fiserv solutions. So the reception has been quite warm, and that doesn’t mean that we won’t lose a client at some point. I mean that’s unfortunately part of how the business works. But I’m not currently aware of situations where we have been under attack by clients and have those responses going the wrong way. So, on balance within the DNA base and the Total Plus and the Open base overall, we’re feeling quite good about that.
Tien-tsin Huang – JPMorgan: Just a quick query. Just a follow-up on David’s question around retention, the same thing on Harland. I guess with the Harland acquisition and D+H taking it over, what’s the strategy for potentially going after that account base? What’s the implications for Fiserv? That kind of thing.
Jeffery W. Yabuki – President and CEO: So Tien-tsin, obviously we’ve been competing against that base for a long time. To some extent, any time you have a transition, especially a transition like this, it has clients kind of reconsider, is this the right path for us and what does it mean? Being that we’ve done so many acquisitions over the years, we know exactly what that feels like. We have a pretty good handle on how to compete against that. So on one hand, we think it’s good news but you continue to see validation that’s there’s going to be combinations and providers. On the other hand, we think this represents a good opportunity to go out and win some incremental business. Frankly, none of which has been factored into how we thought about the world given how new this announcement is…
Tien-tsin Huang – JPMorgan: Then, I think you said internal revenue growth accelerated a bit faster than expected. Can we attribute that primarily maybe to the license sales in the Financial segment or was it more than that?
Jeffery W. Yabuki – President and CEO: Yeah, I mean, I think I’ll give it a shot and let Tom correct or add where it should be. We did have a good quarter on license revenue in the Financial segment and probably a little bit more than we thought we would have, but as you know, license revenue tends to bounce around, but on the Payment side, the 7% Payments growth as you know that’s not license revenue, that’s kind of high-quality recurring revenue that we think is going to be pretty sticky, moving into the rest of this year and into ’14. So, from that standpoint, we feel good about the composition of the mix between Payments and in the Financial segment and expect to see the Financial segment continue to do quite well for the remainder of the year.
Tien-tsin Huang – JPMorgan: Last one from me, I promise. Just the backlog converting, it is still on time. It sounds like the onboarding of transactions you had talked is being – is going well I think is what you said. Is that still the case? Any change there?
Jeffery W. Yabuki – President and CEO: No. I mean, we’re in good shape. There were a couple of transactions that needed to go live in the month of July and we’re right there.
A Closer Look: Fiserv Earnings Cheat Sheet>>