Fiserv, Inc. Earnings Call Nuggets: Bill Payment Biz, SG&A
Bill Payment Biz
Julio Quinteros – Goldman Sachs: I wanted to start with the Bill Payment business, because I think you are probably the third company in the last couple of days that has reported a pretty good trends on the Bill Payment side. Can you guys just characterize what might be happening on the Bill Payment businesses, what’s driving consumers back to Bill Payment has something changed in the proposition that seems to have sort of (spud) more Bill Payment related activities?
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Thomas J. Hirsch – EVP, CFO and Treasurer: I think one of the things that’s going on within financial institutions is for years the CheckFree folks and then subsequent dollar acquisition we have been touting the retention kind of the depth of relationship benefits of Bill Pay and we have seen several larger institutions putting real muscle behind that to try to gain larger shares of wallet. So, we think that’s one thing and that’s the continuation of trends that we had seen at Bank of America. I think Bank of America they really built their business in understanding that that’s one of the reasons why they’ve grown so large over the years. The second thing that frankly we are beginning to see but it is early is the growth in this in the Bill Payment business has it goes in (spuds) and now that we are seeing mobile take-off we are seeing both people use, people who were built a users begin to use mobile to supplement their online behavior, but more importantly as mobile is growing in its reach, we see new consumers coming on, we’re seeing very, very strong performance in bill pay in the mobile banking channel. In fact, what we can see right now is by far, bill payment is the technology that is getting the highest utilization in the mobile space, and because we have those two solutions together, we think that there’s a bit of an embedded advantage. Third, which I think it’s premature, so I’m starting to talk a little bit more about the future, but we do believe that bill payment, especially with the addition of P2P, will begin to rise faster as people get more and more used to paying their bills online. I mean even today, of the 20 billion or so bills that are in U.S., there’s less than 2 billion paid electronically through bank aggregators, and even if you add direct payment at website, you still have probably 60% to 70% of the bills still being made or payments being made using paper. So, there’s still a long runway there.
Julio Quinteros – Goldman Sachs: Then, just on the acquired revenue contribution from CashEdge, just relative to the estimates that we had, it looks like that one came in or acquired revenue contribution came in a little bit lower than expected. Do you guys have any color on CashEdge revenue contribution in the quarter, what is the way to think about how that’s supposed to or how that should ramp for the rest of this year?
Thomas J. Hirsch – EVP, CFO and Treasurer: We anticipate that that business is going to ramp rapidly as we go through the year. So, there’s a lot of new clients there, and clearly on the adoption side also, as that subscription revenue base continues to grow. So, we knew it was going to continue to have some pretty high growth rates on a quarter-over-quarter basis. So, it’s right within where our expectations thought it would be at this time.
Jeffery W. Yabuki – President and CEO: The only other thing I would say, Julio, is there was a little bit of a slowdown in the market as the market was waiting for us to make a more public decision on which of the networks we were going to move forward with. So, now that has been done we’ve seen the pipeline fill up when people start to take action again as we would have expected. So, we feel very good about where CashEdge is both in their core business as well as in P2P. We also are getting very good movement in the small business Pop Solution which is really business-to-business or consumer to business P2P, as well as on the aggregation front.
Julio Quinteros – Goldman Sachs: At the Analyst Day I think you guys have suggested that that would be about $80 million of revenues, is that the number you guys are still comfortable with?
Jeffery W. Yabuki – President and CEO: In that range, yes.
Brett Huff – Stephens: I wanted to dig in a little bit on SG&A at least versus our model it was a little higher than we expected. Was there anything going on there, were there some payments to sales folks, because we had a good sales quarter, anything like that that we should pay attention to?
Jeffery W. Yabuki – President and CEO: No, I don’t think there was anything unusual there. I think some of the SG&A associated with the acquisition of CashEdge was a little bit higher maybe than our normal businesses, but outside of that there really wasn’t anything to unusual in their from that standpoint.
Brett Huff – Stephens: My second question is you guys have talked about the investments that you’ve made or continue to make in the sort of top four of five technology initiatives you have. Is that spending still continuing at about the same level is it accelerating or decelerating and can you give us an update on you know the return on that and are you starting to see early positive signs are or we still too far out on some of those items.
Jeffery W. Yabuki – President and CEO: I would say that the spend is still accelerating as in line with what we would have expected before we were in the year. You’ll recall that when we laid that out last year, we expected that we would see — start to see a decline in that spend, but also see the benefit of the revenue ramp. It’s one of the reasons why we believe with a fair amount of conviction that the second half of the year is going to be better than the first half of the year. So, we are tracking in a manner that’s consistent with the way we laid that out. From a demand perspective, I would say that we are seeing the demand look again about what we thought it would be across each of the different solutions, I would say that demand in the CashEdge suite and specifically on the small business product has probably been a little bit better than we thought and again maybe there’s a small offset because we had a little bit of a slowdown in the sales pipe. But our implementation, as Tom mentioned our implementation, pipeline is strong and our sales pipeline is strong. So, on balance, that I feel good about where we are and how we’re tracking against the plan that we laid out in last October.
Brett Huff – Stephens: I just want to make sure I understood you right. The spending is still accelerating as you expected. You mentioned in the back half, do you think that back half benefit will — because the spending is starting to taper and/or because you’ll start to see some revenue from that or I just want to make sure I got that last…?
Jeffery W. Yabuki – President and CEO: Yeah, it will be flattening out, tapering relative so the slope of the spend – the slope will be spending but we won’t be increasing it at the rate we had been increasing it and then revenue will be coming on. Then as we get towards the end of the year, we absolutely should begin to see that taper.