Fidelity National Information Services, Inc. (NYSE:FIS) Q4 2022 Earnings Call Transcript

Fidelity National Information Services, Inc. (NYSE:FIS) Q4 2022 Earnings Call Transcript February 13, 2023

Operator: Good day and welcome to the FIS Fourth Quarter 2022 Earnings Conference Call. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker, Mr. George Mihalos, Head of Investor Relations. Please go ahead.

George Mihalos: Thank you, operator. Good morning, everyone. Thank you for joining us today for the FIS fourth quarter 2022 earnings conference call. This call is being webcasted. Today’s news release, corresponding presentation and webcast are all available on our website at fisglobal.com. With me on the call this morning are Stephanie Ferris, our CEO and President; and Erik Hoag, our CFO. Stephanie will lead the call with a strategic and operational update, followed by Erik reviewing our financial results and providing forward guidance. Turning to Slide 3, today’s remarks will contain forward-looking statements. These statements are subject to risks and uncertainties as described in the press release and other filings with the SEC.

The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise except as required by law. Please refer to the Safe Harbor language. Also, throughout this conference call, we will be presenting non-GAAP information, including adjusted EBITDA, adjusted net earnings, adjusted net earnings per share and free cash flow. These are important financial performance measures for the company, but are not financial measures as defined by GAAP. Reconciliation of our non-GAAP information to the GAAP financial information is presented in our earnings release. With that, I will turn the call over to Stephanie.

Stephanie Ferris: Thank you, George and thank you all for joining us this morning. Today marks my first earnings call as the CEO of FIS. Let me begin by saying I feel incredibly privileged by the opportunity to reflect on our past, restart our future and recommit to our clients, colleagues and investors. FIS is a tremendous company with world-class assets and a marquee set of clients. We are an industry leader with more than five decades of history, positioning where change, challenge and opportunity intersect. Today, I will present to you the next chapter. We have a lot of ground to cover, including our fourth quarter financial results, 2023 guidance and specific outcomes of our strategic review which includes the planned spin-off of our merchant business Worldpay.

Let me start by sharing that I am pleased to report that we met our financial goals for the fourth quarter. While this is a good first step, we recognize that we have a lot of work to do to meet our expectations going forward. Today, we will share a number of decisive actions we are taking to better align our business with the needs of our clients and the expectations of our shareholders. Let me take you through our path forward. Turning to Slide 5, we have set a new agenda to improve the operational performance of the business, sharpen our client focus, and improve both the free cash flow of the company as well as the earnings quality. We will do this by following three key principles that will underpin all of our go-forward actions to drive value.

First, we will ensure that clients are at the center of everything we do by creating a client-centric culture. Second, we will continue to innovate across our portfolio of solutions to ensure growth for our clients. And third, we will simplify and streamline our operations, decision-making and time to market to improve profitability. Combined, these principles form the foundation of our efforts to drive efficiency, effectiveness and profitable growth. Turning to Slide 6. Over the past 60 days, we have moved with the highest sense of urgency and focus to advance a number of strategically important initiatives. First, in December, we announced that we initiated with the Board of Directors a comprehensive assessment of the company’s strategy, operations and structure with the goal of positioning FIS to drive stronger results, increase shareholder value and enhance client experience.

As an outcome of this ongoing assessment, we announced today we are pursuing a spin-off of our merchant business, creating two world-class public companies, FIS and Worldpay. It is my pleasure to also announce that Charles Drucker, Worldpay’s former CEO, has agreed to return as a strategic adviser to me. Charles, who is my close friend and colleague, will lead the preparedness phase of the planned spin-off and is expected to become Worldpay’s CEO upon the closing of the transaction. Second, we announced in November that we are launching an enterprise transformation program. This program, which we have branded Future Forward, is moving ahead with speed to improve the operational performance of the company by driving efficiency, effectiveness and profitable growth across every facet of the enterprise.

When we launched Future Forward, we are targeting to deliver cash savings across the company of $500 million by year end 2024. I am happy to share that we now expect to exceed our $500 million original target by the end of this year and I am increasing our target to $1.25 billion in net savings prior to the effect of the spin-off exiting 2024. As I mentioned earlier, we are and will continue to be intensely focused on cost management, cash generation and earnings quality. Third, we are realigning our incentive programs to be tied to shareholder value creation, company performance and client satisfaction scores. In order for us to deliver on our commitments, this realignment is critical. And fourth, consistent with our December announcement, we have continued to reshape our Board of Directors for independent governance.

I am proud of what we have been able to do in the first 60 days. This is just the beginning for us. Slide 7 describes our rationale for separating the two businesses. The pace of disruption in payments is rapidly accelerating, requiring increased investment for growth and a different capital allocation strategy for our merchant business. The separation of Worldpay from FIS will result in the creation of two standalone market leaders, each well-positioned to capitalize on the significant value-creation opportunities ahead in their respective markets. It is expected that FIS and Worldpay will maintain a close commercial partnership to deliver critical capabilities like embedded finance and loyalty through premium payback preserving a key value proposition for clients of both businesses and limiting potential dis-synergy.

It should also simplify our operations and give each management team additional flexibility to operate the business in the way that best delivers value for all clients and shareholders alike. Specifically, it will enable FIS to pursue a strong investment-grade credit rating while enabling Worldpay to invest more aggressively in growth. A separation also enables FIS and Worldpay to implement different capital allocation strategies which align to their growth targets and underlying market needs. Turning to Slide 8. Both companies serve a blue-chip set of clients. FIS serves the technology needs of global financial institutions, regional community banks and marquee set of asset managers across the spectrum. Worldpay serves the payment needs of the world’s global technology, internet and retail companies.

Both companies boast unrivaled global distribution and operating scale. By separate entities, FIS remains the number one global FinTech provider and Worldpay remains the number one global acquirer by transactions. Both companies will be market leaders in their own right and by forging a commercial relationship together, we can affect a superior outcome as compared to keeping them together. Let me provide some additional context for what this transaction means for the standalone FIS business on Slide 9. FIS is returning to its roots. This focus will allow the company to maintain its competitive advantage in delivering innovative next-generation technology solutions to the most complex financial institutions. Additionally, FIS will be in a better position to balance return of capital to shareholders with organic investment and complementary M&A.

We remain committed to our investment grade ratings, conservative capital structure and growing dividends. Putting it altogether, we are returning FIS to its historical quality compounder model which is more closely aligned with the way that FIS operated before the Worldpay acquisition. As a quality compounder, FIS will emphasize steady recurring revenue growth, consistent margin expansion and disciplined capital return to shareholders. Importantly, we will prioritize maximizing free cash flow and profitable revenue growth. Consequently, I would expect our free cash flow conversion to move permanently higher post the spend, reflecting less working capital volatility and lower capital expenditures. Lastly, we are committed to improving the quality of our reported earnings.

This includes narrowing the delta between adjusted earnings and GAAP earnings and presenting free cash flow measures that better align with the cash we have available to deploy. Erik will provide additional color during his discussion of our financials. Now I will touch on the Worldpay strategy to drive enhanced shareholder value. Worldpay operates in a more dynamic and disruptive end market relative to Heritage FIS with more of a growth focus. The separation from FIS will allow Worldpay to pursue a more growth-oriented strategy, which we believe the company is better suited for and aligns more closely with investor expectations. Central to the growth strategy is a return to more consistent M&A and a capital structure that does not require an investment grade rating.

Beyond an organic investment, the team is taking aggressive steps to repivot the business back towards growth. This includes the investment in the Worldpay for platform strategy to strengthen the company’s value proposition with ISVs and a continued push toward increasing its total percent of e-commerce revenue. While near-term investments are impacting profitability, we are confident the business can return to growth and deliver value for shareholders as an independent entity. Turning to Slide 11, I’d like to provide some additional insight into the durability of our banking and capital markets businesses. And why I am so confident that they are poised to deliver accelerating revenue growth and margin expansion. We are reorienting FIS toward a path of more sustainable, higher quality recurring revenue growth.

There are two challenges specific to 2023, which are masking the underlying performance of our business, particularly in the Banking segment. The first is our previously discussed elongation in sales cycles for very large transactions. To be clear, our pipeline of opportunities remains robust and our win rate on transactions is stable. We are confident as economic conditions stabilize, sales will accelerate. We also hired a Chief Revenue Officer to focus on driving highly profitable recurring revenue growth regardless of deal size. We believe this hire will help us cross-sell and up-sell with existing clients as well as better penetrate smaller sized financial institutions. The second challenge is a growth headwind tied to non-recurring revenue, largely one-time licenses and deconversion fees from bank consolidations.

We anticipate this to be another 1% headwind in 2023. We do not expect one-time license and deconversion fee revenue to remain a similar headwind in 2024. While the above trends are creating a short-term headwind for us, we believe our normalized growth rate for these segments is approximately 3% to 5%, which demonstrates the underlying strength of our banking and capital markets businesses. With a refocus on high-quality recurring revenue growth and the benefit from our future forward initiative, we are expecting margin expansion in banking and capital markets for 2023. As a result of the timing around our actions, we are confident that these businesses have hit the low point of their margin contraction and will return to margin expansion in the back half of the year.

On the back of all the future forward actions we have taken are now planning to take. Tying it altogether, FIS is on a trajectory to create shareholder value as a quality compounder that generates consistent mid single-digit recurring revenue growth, margin expansion and robust free cash flow. Turning to Slide 12, we will provide you with regular updates on Future Forward. I have already described our progress toward achieving $500 million in net cash savings by the end of this year and prior to the effect of the spin-off, $1.25 billion by the end of 2024. I’d like to take a moment to describe how we will achieve these targets. Future Forward is a multifaceted initiative designed to permanently improve the performance of the company by delivering improved outcomes for clients while driving operational efficiencies internally, free cash flow generation and earnings quality.

We are focused on more effectively meeting the needs of our clients by continuing to accelerate the development of next-generation technology solutions and anticipating their future needs. Driving toward a more efficient operating structure by prioritizing human and capital resources that best align with the needs of our clients and the returns expected by our shareholders. And lastly, driving improved growth outcomes through sales productivity, reduced complexity and a continued focus on clients. These important initiatives will continue at FIS and Worldpay post-spin. I will cover our next steps on Slide 13 before turning the call over to Erik for his financial review. 2023 will be a year of recommitment for FIS as we work to reposition the business to return to sustainable growth, profitability and value creation in 2024 and beyond.

First, we are focused on executing the spin-off of Worldpay, which we expect to complete within the next 12 months. Second, we are sharpening our operational focus to continue to promote a client-centric culture and to deliver on our commitments to all of our stakeholders. Third, Future Forward initiatives will continue within both FIS and Worldpay to maximize our cash flow and earnings quality. And finally, we are laser-focused on creating shareholder value with action and improved performance. I am pleased with the progress we have made in such a short period of time. I am confident that we are on the right path forward. And with that, I will turn it over to Erik to discuss our fourth quarter results and 2023 outlook. Erik?

Erik Hoag: Thanks, Stephanie. I’d like to start today by outlining some of our priorities as a new management team before touching on our financial results. As I stated last call, a priority of ours is to be transparent about our future expectations and we delivered results in line with that revised outlook. Today, I’d like to lay out a few more priorities for 2023 and beyond. First, we will manage FIS as a high-quality compounder with predictable and consistent earnings growth. Our operational structure and long-term capital allocation strategy will prioritize delivering double-digit total shareholder return. This is the core tenet of a compounder investment thesis, which FIS is operationally and financially positioned to achieve.

Next, as Stephanie mentioned, we are focused on enhancing the cash flow characteristics of FIS. In 2023, despite an anticipated reduction in EBITDA and earnings, we are taking actionable steps to increase our cash flow on a year-over-year basis. This increase in cash will be primarily driven by decreasing our capital expenditures by approximately $200 million. We are also taking conscious actions to reduce one-time spend associated with transformation and integration programs. I am confident we are taking the correct actions to deliver strong shareholder returns over the longer term. With that as the backdrop, let’s quickly touch on our fourth quarter results. On a consolidated basis, revenue increased 4% organically to $3.7 billion, with an adjusted EBITDA margin of 43.2%, yielding an adjusted EPS of $1.71.

At the segment level, banking grew 4% organically in the quarter. Banking margins were pressured due to unfavorable revenue mix and inflationary cost pressures. We had an exceptionally strong quarter in capital markets with 10% organic revenue growth and 220 basis points of margin expansion. Fourth quarter revenue growth included a 4 point benefit associated with the timing of license renewals which drove a 22% increase in non-recurring revenue. As I look to proactively message any one-off tailwinds or headwinds, this license benefit in the quarter should be flagged as a potential headwind in the fourth quarter of 2023. Excluding this tailwind, capital markets increased 6% organically, well ahead of historical trends. Additionally, recurring revenue grew 11%, marking the fifth consecutive quarter of recurring revenue growth greater than 8%.

Our strategy to transition to durable SaaS deployments continues to resonate in the market. Merchant grew 2% on a constant currency basis in the fourth quarter, including a point of headwind associated with Russia and Ukraine. E-commerce revenue growth remained strong, increasing 16% on a constant currency basis. Our card present channel and SMB experienced softness as lower sales did not outpace attrition and compression trends. These trends in SMB reflect a lack of new product investment, which we believe the spin will best enable us to remedy. And in enterprise, we saw economic weakness in the UK and anticipate further deterioration this year. Touching quickly on cash flow and balance sheet, we generated roughly $3 billion of free cash flow in 2022, which was lower than originally expected, primarily due to negative working capital more specifically the timing of receivables within the Merchant segment.

Total debt as of 12/31 was approximately $20 billion with a weighted average interest rate of 2.6% and leverage was approximately 3.2x. Turning to Slide 16 for our 2023 guidance. Our philosophy remains conservative in our forward projections as we look to build credibility and deliver on our commitments. With that in mind, for the year, we anticipate consolidated organic revenue growth of negative 1% to positive 1% or $14.2 billion to $14.45 billion of revenue, adjusted EBITDA of $5.9 billion to $6.1 billion or margins of 41.5% to 42.2% and adjusted earnings per share of $5.70 to $6. This outlook assumes further macro deterioration, including a global recession impacting our Merchant segment. To be clear, our guidance assumes macroeconomic trends continue to deteriorate throughout the year.

We expect total company margins to improve over the course of 2023 as we ramp the benefits associated with Future Forward. At the segment level, we expect banking organic revenue growth of 0% to 2%, which includes lapping difficult compares associated with non-recurring revenue cycles, non-recurring revenues as well as the near-term impact of elongated sales cycles. Banking margins will improve throughout the year, with a return to margin expansion in the second half. In Capital Markets, we expect 4% to 6% organic revenue growth coupled with continued margin expansion. This segment continues to benefit over our multi-year shift of sustainable SaaS deployment over license revenue. In merchant, we’re anticipating organic revenue decline of 2% to 4%.

This guide reflects a 300 basis point headwind associated with attrition and compression in the SMB sub-segment, and further macro deterioration impacting growth by an additional 500 basis points. We expect Worldpay to reaccelerate post spin as it leverages its scale with both organic and inorganic investments to once again differentiate itself in the market. Lastly, we’re focused on our cash flow fundamentals and anticipate expanding our free cash flow conversion to over 80% in 2023. Turning to Slide 17. As Stephanie mentioned, we have two temporary headwinds impacting these segments this year and empirically believe the underlying growth rate is 3% to 5%. We’re undertaking various strategic priorities for these segments, which we believe will improve our fundamentals moving forward.

First, we’ve hired a new Chief Revenue Officer to focus on higher quality and sustainable sales growth. Specifically, while we still pursue large transactions where FIS is clearly differentiated, we want to ensure that our cross-selling to existing clients remains a priority. The breadth of solutions we have between banking and capital markets will continue to take market share as we expand our lasting relationships with our valued clients. We also see the benefits of Future Forward ramping through 2023 and 2024 to support an already expanding margin profile. Lastly, as Stephanie mentioned, we believe the spin of our Merchant segment will help simplify our operating model and focus our investments on the most pressing needs of our clients. With that, I’ll turn to an overview of the merchant growth profile on Slide #18.

Accounting for two known headwinds, we believe Merchant normalized growth is 4% to 6%. The first of these headwinds has been a lack of new product investment, driving compression and attrition in our SMB sub-segment, accounting for approximately 3 points of headwind in our merchant guide. We’re confident this is near-term in nature and will be directly addressed with the successful spin of Worldpay as it transitions to a growth-oriented capital structure and investment philosophy. Second is the macroeconomic impact we anticipate this year. Our guidance assumes further macro deterioration in the UK and a recession in the U.S. This recessionary assumption accounts for approximately 5 points of headwind in our merchant guide. Similar to our strategic priorities in banking and capital markets, we’re taking actions to accelerate off this 4% to 6% normalized growth rate.

The merchant segment will benefit from new product investments to enhance its competitive profile and growth profile. Additionally, Future Forward will help support increasing profitability later in 2023 and beyond. I’ll finish by noting that as revenue accelerates in the segment, it carries a very high contribution margin, which will drive underlying margin expansion beyond the Future Forward benefit. All in, we view the segment as accelerating off the 4% to 6% normalized revenue growth in 2023 with margin expansion incorporated in the model. Moving to a breakdown of EBITDA expectations on Slide #20. Both our Banking and Capital Markets businesses are expected to increase adjusted EBITDA and expand margins in 2023. In Banking, we would anticipate margin expansion of over 50 basis points and Capital Markets to expand margins by 50 to 100 basis.

This significant margin expansion in Banking and Capital Markets reflects both underlying strength in the contribution margins as well as Future Forward. These segments are positioned for durable and profitable growth over the longer term, leveraging a one-to-many operating model with high concentrations of recurring revenue. Conversely, we anticipate a weaker performance in our Merchant segment, coupled with higher corporate costs. In Merchant, we anticipate a reduction in EBITDA associated with lower revenue and increased expense associated with residual payments. In our Corporate segment, we’re seeing the impact from divested businesses in 2022 and a temporary headwind associated with a tough comparable on incentive compensation. Looking beyond 2023, we’re confident that we’re moving the company to the appropriate path of margin expansion.

There are two key tenants underpinning this confidence. First, we expect to benefit from our Future Forward initiatives to continue to ramp with incremental benefit in 2024. Second, we will continue to benefit from our newly implemented sales and commission structure, which emphasizes higher margin revenue growth. Both of these initiatives will support consistent and ongoing margin expansion at FIS moving forward. Turning to Slide 21 for an overview of how Future Forward will continue to rightsize our expense base and further support profitability and cash. We expect to generate approximately $150 million of in-year operating expense reduction. These savings will ramp to approximately $600 million on a run rate basis exiting 2024. In addition to these OpEx savings, Future Forward will support our priority to improve our cash flow through a reduction in capital expenditures and one-time program spend.

We’re targeting a $200 million reduction in CapEx during 2023, and we intend to reduce CapEx by another $100 million in 2024. We’re also aggressively ramping down spend associated with transformation and integration projects, such as platform consolidation resulting in a benefit to cash. Taking all of this into account, we’re pleased to increase our expected net cash savings associated with future forward to approximately $1.25 billion exiting 2024. We will continue to provide quarterly updates on achievement of those targets throughout the life of the program. These initiatives are the bedrock for improving the operational performance of FIS and aligned directly with our priorities outlined today. I’ll conclude with our current capital allocation priorities on Slide 22.

In 2022 €“ in 2023, we’re focused on paying down debt, increasing our dividend and decreasing CapEx. First, we utilize excess free cash flow to reduce debt in support of our investment-grade credit ratings, which is a key pillar to FIS’ long-term capital and operating strategy. Next, we recently announced an increase to our core quarterly dividend of more than 10%, and we anticipate to exit the year approximating our 35% target payout ratio. Moving forward, we intend to continue increasing our dividend roughly in line with earnings growth. As mentioned throughout my prepared remarks, Stephanie and I are also prioritizing a reduction in capital expenditures this year. We’re putting a heightened focus on ROIC to ensure an appropriate return on investment and are making targeted investments aligned to client needs.

Finally, in conjunction with the spin, we will conduct a comprehensive review of our capital structure to reduce future volatility in our net interest expense. We’re moving with a high sense of urgency to drive these outcomes. While we face challenges, we remain confident that this is the right path forward to improve the company’s performance, free cash flow and earnings. I’d like to thank everyone for their time this morning. Please note additional guidance, assumptions and next steps on the spin in our appendix. Operator, would you please open the line for questions.

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Q&A Session

Operator: Thank you. Today’s first question will come from Tien-Tsin Huang with JP Morgan. Your line is open.

Tien-Tsin Huang: Hi, thanks so much. Stephanie, a lot of thought and hard work went into the spin decision. So I wanted to ask on that. And what changed to move away from project Amplify, which I know we’ve talked about as well and the promise of cross-selling, etcetera, versus fluctuating here the spin and simplifying and management focus, that kind of thing? And then I have a follow-up.

Stephanie Ferris: Yes, Tien-Tsin, thank you. So yes, as you might imagine, very excited about what we’ve been able to accomplish in a very short time period. It really came down to capital allocation and our ability to allocate capital, both M&A and organic to what is looking like to be two separate end markets. So the payments market, as you know, needs a lot more M&A associated with it, that the Banking and the Capital Markets piece. So as we came in and we looked at that really need to set those two separately from each other. And so that was the primary driver. I think secondly and thirdly, obviously, operational simplification and management focus is always important as you think about simplifying operating models and breaking things apart.

I would say, finally, on the Amplify piece, we’re actually full speed ahead on that in terms of cross-selling across all three of our divisions, and it will become very important. We will establish commercial partnerships between us both Worldpay and FIS to facilitate that cross-sell. So we still view that as a big opportunity. We will just set those up as commercial partnerships with the respective revenue shares to make sure that we don’t lose the dis-synergy and opportunity there.

Tien-Tsin Huang: Right. Okay. And that’s perfect. So I understand the M&A piece. I guess that will happen post spin between now and the actual spin. Are we going to learn a little bit more about the commercial agreement between reminder co-FIS and Worldpay? And is there going to be a cross-selling component built into that? That’s my final question. Thank you.

Stephanie Ferris: Yes, yes, yes. So we are working at high speed. You can see from a high sense of urgency. So we will be €“ Charles and I will be working out the commercial partnership specifically. And as soon as we have those worked out, we will get them back out to you. You can expect us to give an update on the spin every quarter. But you would expect to see those relationships work out specifically. And so that we have incentives on both sides to continue to cross-sell each other’s products and mitigate the dis-synergy.

Operator: Thank you. Come from the line of Rayna Kumar with UBS. Your line is open.

Rayna Kumar: Good morning, guys. Thanks for taking my question. As you mentioned, your guidance assumes a recession in the U.S. and the UK. I’m just curious how your overall growth would look at economic conditions persist as they are today?

Erik Hoag: So the existing guide does include a recession. There is a couple of underlying drivers to that. First, as you said, we’ve got the UK macro. The second piece is in the U.S., we’re seeing a shift from goods to services predominantly in our enterprise sub-segment. We are seeing some elongation in the sales cycle that we’ve spoken about for the last several quarters in our banking business. And as we €“ as you saw in the deck, roughly, we’ve incorporated roughly 500 basis points of headwind in our merchant guide associated with macro.

Rayna Kumar: Got it. Thank you.

Operator: Thank you. From the line of Lisa Ellis with MoffettNathanson. Your line is open.

Lisa Ellis: Hi, there. Thanks for taking my question. A lot of good stuff, good detail here, guys. Thank you. I wanted to talk €“ I know it’s early days. I know we will get more detail, but just any commentary you can give on your expected €“ how you’re going to handle, I guess, the unwinding of the cost synergies that you saw from the FIS Worldpay acquisition, that merger together? Like how are you thinking about kind of managing through the separation or the re-separation of the businesses? Should we be assuming that a lot of those costs have to come back in? Or are there ways to mitigate that? Thank you.

Stephanie Ferris: Yes. Thanks, Lisa. So we €“ so Charles and I feel very confident, given this will be the third time we will have spun it out, sold it and spun it back out. So we’re really familiar with the cost structures and the benefits that come with putting it in and taking it out. I think the way to think about it is we did realize a lot of cost synergies bringing it in. I think we know what those are, we would enter into as many commercial relationships as we can to not have as many dis-synergies. We think the dis-synergies are fairly manageable. So we think through the combination of commercial partnerships as well as continuing to lean in to Future Forward. Future Forward will continue for both Worldpay and FIS. So, to the extent that we continue to push that lever forward, we think that as well will offset the dis-synergies.

But look, we’re not going to stop at that. They are there, and we had the benefit of them coming in, but we will tightly manage them on both sides as we come out.

Lisa Ellis: Got it. Okay. Okay. And then just as my follow-up, can you just elaborate a little bit on the capital allocation point that you made? You said that ultimately, it really €“ it came down to that. So what’s €“ I guess what have you been unable to do as a combined entity on the capital allocation side that would change being separated?

Stephanie Ferris: Yes, great question, Lisa. So from an FIS standpoint, as you know, we’re very committed to our investment-grade rating which underpins our ability to drive growth, we haven’t been able to allocate any capital historically or as we move forward into M&A. And that’s really been a big weakness for us in the payments business. I think if you look at our peers, they have been doing M&A over the last couple of years. Unfortunately, for us, we just haven’t been able to do that historically, allocating towards share repurchase which is fine. But the payments business itself, given that it is a scale platform with global distribution and the end market moved so quickly. We do believe having a different capital allocation for that business will enable M&A that we just cannot give it inside the parent.

Operator: Thank you. And that will come from the line of Dave Koning with Baird. Your line is open.