Stephanie Ferris: Yes, so capital markets has been trending very strong recurring revenue growth all year. We would expect that to continue. The trends underpinning that are both sales increasing within existing wallet share, so selling more to existing clients, as well as being able to sell our products and services into non-traditional verticals that have a lot of faster growth, so think insurance, asset management, auto finance. There’s a lot of secular trends there that are driving growth and demand, including regulatory mandates, climate and ESG, so really expect capital markets recurring revenue growth to continue to trend very strong. Don’t see any change in those growth rates as we think about the recurring side of the business here in the fourth quarter or as we go into 2024.
I do think–you know, as you know, capital markets has historically had very lumpy non-recurring numbers when the licenses do come up for renewals. It is a timing related thing, so in the fourth quarter of last year, if you recall, there was one very large license that we signed in the fourth quarter, so that’s really what’s driving a total capital markets revenue number in the fourth quarter a little bit down, but the recurring revenue growth continues to be strong, driven by high demand.
James Faucette: Got it. Maybe just a more broad question, and Tien-Tsin once again kind of touched on one of the most recent metrics, but given the nature of RemainCo on a go-forward basis, how should we think about measuring performance in new bookings and signings in the banking segment, or maybe more generally? Is backlog growth the right number, and what are some of the nuances that we should keep in mind over the next six to 12 months, especially since some of these larger deals have been taking longer to close?
Stephanie Ferris: Yes, I think that’s a great question. I think as we look to come into investor day, we’ll attempt to give you some different key performance indicators around sales. We were feeling good about the backlog going up 2% year-over-year, but I’d give you a little bit more color. Market demand across the board for our solutions is strong, both in banking and capital markets. As you know, we started the year with a transformation of our sales force, really re-focusing them on selling higher margin technology-enabled solutions, so all the investments we’ve made in making sure that we sell more of those versus the lower margin, we’re seeing that really start to take root. Our sales pipeline has gone up 10% on a year-over-year basis as we’ve looked to rebuild that pipeline with a different mix.
We’ve seen increased sales productivity this quarter, think of that same store sales growth within sellers is up 12% year-over-year, and then overall our quality of sales has improved as the margin contribution from new sales has improved 50 BPs. We’re really starting to see some strong growth in sales, albeit remember the goal here is to sell more recurring, and so it will be a bit of time before those show up in the P&L. But the actual sales themselves are starting to take root, and we’re cautiously optimistic as we move into fourth quarter and 2024.
James Faucette: Thanks so much for the color there, Stephanie.
Stephanie Ferris: You bet.
Operator: One moment for our next question. Our next question comes from Dave Koning with Baird. Your line is open. Dave Koning with Baird – Dave, your line is open. One moment for our next question. Our next question comes from Jason Kupferberg with Bank of America. Your line is open.
Jason Kupferberg: Good morning guys. Thanks for taking the question. I just want to make sure we’re all on the same page with the Q4 organic growth numbers – I know you gave an update on the full year. I guess it looks like, just backing into it, banking could be down a little bit year-over-year and capital markets up a little bit year-over-year. Just want to verify if that’s right, and what would be driving the decel on the banking side in Q4, and are you assuming any material benefits continue from that federal pandemic relief program?
Stephanie Ferris: Yes, thanks for the clarification. Banking, I would say is more flattish fourth quarter. I think we talked about recurring continuing strong growth in the 3% range, and so that, as we expected, has been an issue all year, the non-recurring coming in and really being what’s driving the recurring from 3% down to flattish in the fourth quarter. Again, wouldn’t over-pivot on that as we think about 2024, would really encourage you to think about 2024 recurring and a lot of that non-recurring headwind to abate. Capital markets, slight up – yes, as we said. I think we talked about recurring in the fourth quarter of 7%. If you recall last year, Jason, we had a one-time capital markets license, I think it drove about five percentage points of growth last year, so we’re growing over that.
The fourth quarter numbers as well overall are softer, they’re driven by non-recurring items that we wanted to be transparent around, and the recurring continues to be strong and we would expect those headwinds to abate as we move into 2024.
Jason Kupferberg: Right, okay. No, that’s a good clarification. Then just coming back to the backlog, it’s been pretty stable since the end of the first quarter. How are you thinking about the Q4 backlog, whether you’re looking at it–I don’t know if you guys are focused more on it quarter-over-quarter or year-over-year, but just wanted to get a view on that into [indiscernible]. Thank you.
Stephanie Ferris: Yes, it’s a great question. I think we’ve seen broadly over the last seven quarters, and I would expect to see over the next three or four quarters backlog in the range of $22.5 billion to $23.5 billion, pretty steady as we bring new business on and then we work really hard to increase the level of implementations coming out of that backlog number. It is a wonky accounting number, so I think as we come into investor day, we’d hope to give you a better set of metrics. But I think broadly, we think that number sits in that stable range of $22.5 billion to $23.5 billion – it might go up and down per quarter, and we think we’ve proven pretty successfully at this point that that number will sustain a nice recurring revenue growth number for us.
If you remember in the sales transformation, we really are trying to focus on less of those really large whale deals and more of consistent sales of a lot of our platforms that we’ve invested heavily in, and driving the margin over the overall sales number up. While we may not from a dollar standpoint drive it up this year, we would expect it to come up next year as we look to see some of those sales come in. Hopefully that helps.
Jason Kupferberg: It does, good color. Thanks Stephanie.
Operator: One moment for our next question. Our next question comes from Darrin Peller with Wolfe Research. Your line is open.
Darrin Peller: Hey, thanks guys. First of all, James, congrats and welcome. Stephanie, when we think about the demand environment and what you’re seeing that’s giving us so much conviction in the sustainability of that recurring revenue growth rate into fourth quarter, again putting aside the one-time items everyone seems focused on, I think is probably a good idea. Just sustainable trends into Q4 and then Q1, you’re still seemingly confident that its 3%, 4%-type banking growth on the revenue side despite the noise on bookings, so can you just tell us what’s under the hood? What exactly is the demand? What are customers actually utilizing you for more today than they were a year ago? Then, is your employee base energized? Is the wheel turning properly again, I guess is the question? Thanks again.
