David Koning: Yeah. Hey guys, thanks. Nice job. And I guess my first question, a little bit like Ramsey, on recurring. So, in the first half of ’23, I think you grew 3% recurring, second half about 7%, if I get that right. And now you’re calling for it to come back down, maybe a little better than the 3%-ish. What was happening in the second half that was so strong in recurring and then why does it decelerate in ’24?
James Kehoe: Yeah. I think if you look out, Capital Markets is generally in line. We expect almost every quarter to be in line with the full year guidance. And the recurring is just — it’s basically in line with the adjusted revenue target we provided. And then, if you look through the Banking, I think that you should look at the 7% that was in fourth quarter, and that’s probably well above the trend rate, which is closer to the 3% to 4%. And you’ll recall that during the course of all of 2023, Banking was in and around 3%, 3.5%. The 7% in Q4 did include an exceptionally strong payments business where it was probably 3 points ahead of the average that we were planning for the first quarter. So that gives you one delta, call it, I don’t know, 130 basis points.
And then, we’re lapping an item in the prior-year period, which artificially depressed the prior period, call it another, I don’t know, 130 basis points. So, you take the two of those out and we kind of get to — and couple of other adjustments, we get into kind of like a real — like a 4% if we were trying to equalize it into next year. And as I’ve said in the prepared comments, Banking recurring will outperform the adjusted targets. So, it was a choppy kind of 7% in the fourth quarter, not fully representative. What I will say though, the 7% does show that the business has substantial — Banking business has substantial power to get the numbers into the territory where they need to be. We’re very comfortable as we look forward to the goals on the full year.
David Koning: Great. Thank you. And just maybe a quick follow-up on — merger integration costs came down this year, which was nice to see, I think $156 million in Q4. What do you expect that to be in 2024? And how soon are those integration costs just going to be closer to zero?
James Kehoe: Yeah, I think it’s a little early to call. We’ve got a bunch of stuff in there. It’s not — the biggest single item is not integration costs. It’s actually the Future Forward program. So, remember, we’ve taken out a lot of costs in the base year of ’23 and more coming out in ’24. Worldpay has inflated the base year and that will reduce next year, but we will still have Worldpay separation costs in ’24. They will disappear in ’25. What we’re looking at right now is what is the long-term TAI and you’ve seen that we’ve had a fairly big dis-synergy impact. As we look forward into ’25 and ’26, we’re thinking through what kind of programs need to be implemented to gain — regain the efficiency that was lost post Worldpay. I think the explicit cash flow number impact of TAI next year in ’24 is around [$450 million] (ph).
Stephanie Ferris: I might also add, we did a lot this year. As you know, it’s showing up in the free cash flow conversion. The separation of Worldpay is pretty significant. So, there is pretty significant cost that we expect in ’24 and ’25 to keep that elevated. Everything else, though, we keep pulling down to deliver a higher free cash flow conversion, but not nothing to get Worldpay separated. And as we’ve discussed before, we expect that to take up to 24 months. So, we’ll spend some pretty significant dollars to get those guys out.
Operator: Thank you. One moment for our next question. And that will come from the line of Darrin Peller with Wolfe Research. Your line is open.
Darrin Peller: Hey guys. Congrats on the closing of the Worldpay.
Stephanie Ferris: Thank you.
Darrin Peller: I wanted to just start off with, first, just the margin side for a minute. Look, it looks like you raised your Future Forward savings a bit and transaction dis-synergies also were raised, and yet I think your margin, you said, is expecting 20 to 40 bps on a continuing operations basis. Maybe just talk a little bit about the underlying margin assumptions and the underlying trajectory of operating leverage that you see in this business going forward, if you don’t mind, for really both segments and the company overall.
Stephanie Ferris: Yeah. I think we were — I’ll start and then maybe James can add in. I think we — as you guys know, we’ve been really, really focused on driving and outperforming our Future Forward program. We’re extraordinarily pleased with how that’s been going and we — and really were expect — were pushing it in to be the culture of the company versus a program that ends. So, really pushed on that hard and [we’re able] (ph) to deliver an increased expectation for that both in ’23 and ’24, which as we said is going to offset any dis-synergy. I think as we think about go-forward margins, we would expect that there should be natural margin expansion in the business, especially as we shift the sales from less technology-enabled sales into the higher technology-enabled sales.
And so as we do that, specifically in the Banking Solutions business, you would expect to see Banking Solutions margins naturally expand with that mix expansion. I think we’ve talked about Capital Markets in terms of being pretty consistent. We really want to drive organic growth there, and I think squeezing anymore margin out of them will ultimately, over time, hurt their overall organic growth. So, I would expect that to be more flattish as we think about out in that — out past ’24. But I think we’d really probably punt on this question, Darrin, until Investor Day to give you a more clean view of how we think about margins going past 2024.
