Fiserv, Inc. (NYSE:FI) Q4 2023 Earnings Call Transcript

Fiserv, Inc. (NYSE:FI) Q4 2023 Earnings Call Transcript February 6, 2024

Fiserv, Inc. beats earnings expectations. Reported EPS is $2.19, expectations were $2.15. Fiserv, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Welcome to the Fiserv Fourth Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode until the question-and-answer session begins following the presentation. As a reminder, today’s call is being recorded. At this time, I will turn the call over to Julie Chariell, Senior Vice President of Investor Relations at Fiserv.

Julie Chariell: Thank you, and good morning. With me on the call today are Frank Bisignano, our Chairman, President and Chief Executive Officer; and Bob Hau, our Chief Financial Officer. Our earnings release and supplemental materials for the quarter and full year are available on the Investor Relations section of fiserv.com. Please refer to these materials for an explanation of the non-GAAP financial measures discussed on this call, along with the reconciliation of those measures to the nearest applicable GAAP measures. Unless otherwise stated, performance references are year-over-year comparisons. Our remarks today will include forward-looking statements about, among other matters, expected operating and financial results and strategic initiatives.

Forward-looking statements may differ materially from actual results and are subject to a number of risks and uncertainties. You should refer to our earnings release for a discussion of these risk factors. And now over to Frank.

Frank Bisignano: Thank you, Julie, and thank you all for joining us today to discuss another double-digit growth year for Fiserv in both organic revenue and adjusted earnings per share. In 2023, we continue to demonstrate our leadership as proven by our financial performance. 12% organic revenue growth, more than 200 basis points of adjusted operating margin expansion, 16% growth in adjusted earnings per share, $4 billion of free cash flow and $4.7 billion return to our shareholders through share repurchase. These results are possible because Fiserv possesses a set of assets that’s unparalleled in our industry. From our vast and diverse client base, product portfolio and distribution network, to technology and capital resources, to a deep bench empowered with strategic vision and operational excellence.

This combination of assets is how we plan to sustain strong performance. A fundamental aspect of our culture is that we are not satisfied and we continue to push for more. We know that great opportunity remains for continued revenue growth and improved productivity. We laid out several growth strategies at our investor conference in November and we are executing on those every day. At the same time, we continue to identify ways to drive further productivity. Five years ago, we announced the plan to merge First Data in Fiserv. Today, we are a 4.5 year-old company with a 38-year track record of double digit adjusted earnings per share growth. Under our new structure, half of our company, Merchant Solutions, is a leader in the high growth payments market where SMBs and enterprises are embracing the benefits of an operating system with seamless integration of value-added solutions.

The other half, financial solutions is a leader in the high recurring revenue financial IT software and services market, helping small and medium sized financial institutions level the playing field with larger banks and helping larger banks migrate to next generation technology. This combination of growth and consistency has served us well. And our business model is even more compelling at the intersection of these two businesses. We continue to see strong opportunity to cross sell and integrate merchant and financial solutions to help financial institutions better serve their merchant customers and enable merchants to retain customers with new financial services offerings. Fiserv is unique in its positioning at the center of these two important ecosystems.

Let’s take a step back and review our 2023 results. They highlight another important aspect of our culture, delivering on our commitments. In late 2020, we set formidable financial and operational targets for the subsequent three years. We delivered on those and more. For 2023, we started with organic revenue growth guidance of 7% to 9% and delivered 12%. We started with a goal of at least 125 basis points of adjusted operating margin improvement and delivered 220 basis points. And we started with adjusted EPS guidance of $7.25 to $7.40 or 12 to 14% growth. And we delivered $7.52 or 16% growth. In the fourth quarter, we achieved organic revenue growth of 12% and adjusted operating margin of 40.7% up 150 basis points from fourth quarter 2022, which itself was an exceptionally strong quarter.

Our adjusted earnings per share of $2.19 was ahead of expectations on the strength of our merchant revenue and payments margin. Free cash flow was also very strong at $1.3 billion. And we repurchased 8.6 million shares, ending the year with 5% fewer average diluted shares outstanding than last year. Our Merchant Acceptance segment generated organic revenue growth of 24% and 19% in the quarter and full year, respectively, exceeding our expectations at the start of the year. Clover revenue growth accelerated 30% in the quarter as SMBs remained healthy and restaurants in particular continuing to outperform. Our distribution partners globally continued to embrace our platform. Value-added solutions revenue grew more than 40% in 2023 to end the year at a 19% penetration rate.

Carat’s revenue growth rebounded to 11% in the quarter or 15%, excluding the client that took processing in-house mid last year. Growth was driven by the ramp of recent wins by key clients, which has continued into this year. We expanded our global acquiring capability by adding India’s UPI and Japan’s JCB as payment methods for clients in more than 35 markets. In the energy sector, we complemented our leadership position with a new deal to provide seamless unattended payment experiences for drivers using one of the country’s largest networks of charging stations. Outside the U.S., we were pleased to have signed several new deals in EMEA during Q4 and into January. They included a major new merchant acquiring relationship with a leading apparel and equipment retailer and a renewal and extension of business with a leading QSR.

Additionally, our Vert joint venture with Deutsche Bank is now beginning to hit its stride with accelerated Clover merchant sign-ups. In Asia-Pac, we signed a new merchant acquiring deal with Vistara, a domestic airline in India and went live with more payout options for consumers in the region. In Latin America, we continue to ramp up merchant acquiring in Brazil for CaixaBank, along with payment acceptance at its BillPay outlets. We’ve laid the groundwork to support more fee-based PIX transactions for our merchant clients with the acquisition of SLED in Q4. SLED is a software solutions company that will allow Fiserv to operate as a direct payment service provider, expanding our reach into the full PIX instant payments universe. In April, we will be rolling out Clover, which we expect to further advance our leading position in Brazil.

In Argentina, we’re building on our 4-year Clover lead with acceleration in new merchant growth. With more Clover merchants engaging in more anticipation activity, our growth in Argentina continues beyond the macro factors of high inflation and interest rates. The payment segment achieved the top end of its medium-term guidance range with 4% organic revenue growth in the quarter and 8% for the year. We added nearly 20 large e-commerce merchants to our debit network, STAR and Accel, in the wake of Reg II, including eBay and HelloFresh in Q4 and Uber, Lyft and others earlier in the year. Several of these are new clients to Fiserv. In 2023, we signed well over 200 of our financial institution clients to our NOW Network to expand their payment routes to include FedNow for real-time payments.

In BillPay, the bill and directory behind our market-leading consumer BillPay business is proving valuable in the SMB space as we complete the build-out of our new small business accounts receivable and payable offering, cash flow essential. We won our first client in the fourth quarter, Washington Federal Bank, with $23 billion in assets. And just last week, Fiserv expanded its long-standing digital money movement relationship with U.S. Bank to now include cash flow essential. These two important wins came just a few months after formally announcing the product. The pipeline is growing rapidly with strong interest and demand from financial institutions, including many of the largest. At our investor conference, we talked about value-added solutions and new verticals in our issuing business.

We made significant progress on both during 2023 and early Q1. One of our value-added services, an AI-based fraud prevention tool called Advanced Defense, grew volume nearly 5x over 2022. Now, Synchrony is in the process of upgrading to Advanced Defense across its portfolio of more than 70 million accounts. We’re excited to be rolling out the California Employment Development Department plan for our Money Network prepaid cards. This largest-of-its-kind state program for unemployment and other benefits will go live later this month. We have a pipeline of other opportunities in the government sector to deliver on our strategy to grow in this vertical. This also extends to healthcare, where we converted a significant portion of Health Equity’s card portfolio onto our platform in the fourth quarter, with the remainder scheduled for later this year.

In EMEA, we signed our first global OpenFX issuer deal with Absa, one of Africa’s largest diversified financial services groups. This new currency solution enables issuers to take control of their FX, mitigate FX exposure and bring more value to their cardholders. With Truworths, one of the leading retailers in South Africa, we upgraded to a VisionPLUS license, attaching more value-added solutions. In Asia-Pac, we added a new India issuer processing client, Equitas Small Finance Bank. They will launch their retail and corporate card programs using our FirstVision India processing hub, with a full-stack offering that includes UPI, loyalty, offers, and real-time fraud management. The FinTech segment recorded a 1% decline in organic revenue for the quarter and a 2% increase for the full year.

Organic growth excluding periodic revenue for the year was 4%. While we knew we had a very difficult comparison with high periodic revenue in Q4 ’22, we had visibility to achieve our growth goal. In large part from the level of client engagement we saw at Forum, our client conference in June. And those discussions continued. Separately, the pace of new core wins remains healthy at 12 in Q4, and clients are demonstrating two important trends. First, they are migrating from one Fiserv core operating system to another. A positive sign that they are finding the answers to their changing needs right here within the Fiserv portfolio. Second, while M&A activity among financial institutions slowed in 2023, we believe that M&A activity is good for us, as we can compete at any level with any institution without platforms and it creates an opportunity to provide more services to the combined institution.

Prosperity Bank, a Texas-based regional bank with $38.5 billion in assets, decided in Q4 to migrate to our cloud-enabled DNA platform and signed up for our CardHub value-added solution. Old National Bank, a $49 billion bank in Indiana, is a core system client that has been growing with us as it has been making acquisitions. And we continue to grow our relationship with Old National in the fourth quarter with the addition of debit processing, Accel, CardHub, and other value-added solutions. These are also two examples of our financial technology segment clients buying our value-added solutions in the payment segment. This ongoing trend of clients buying services across these two segments is a key reason why we are creating a single new segment, Financial Solutions.

Turning to the outlook for 2024, we expect total company organic revenue growth of 15% to 17%, inclusive of an estimated 7 points of growth from excess revenue in Argentina, driven by significantly higher inflation and interest in the Argentina merchant business, following the government’s steep peso devaluation in mid-December. We expect continued margin improvement in 2024 with at least 100 basis points of adjusted operating margin expansion. And adjusted earnings per share should grow 14% to 16%, reaching $8.55 to $8.70. This adjusted EPS growth outlook is in the middle of the range we provided at our investor conference in November, and it’s meant to be a prudent reflection of the macroeconomic outlook. Economist consensus calls for U.S. personal consumption growth and consumer savings to be lower in 2024, creating a modest headwind to the merchant business.

Against a potentially softer backdrop, we remain confident in our ability to grow Clover and Carat as we add more merchants, sell more to existing clients and add to our portfolio and penetration of value-added solutions. Our discussions with banks and credit unions indicate that they remain poised to spend to retain and grow deposits. We are meeting their changing needs every day with our operating system approach that offers the most integrated platforms and broadest suite of value-added solutions in the business. We are encouraged by our newest financial solutions initiatives in SMB payments with Cashflow Central, our new integrated digital banking platform experience digital and the power of Finxact to win over larger banks and existing clients.

We expect all of these to ramp over the course of 2024 and set the stage for stronger growth in subsequent years. To summarize, our outlook for 2024 is positive as we anticipate another year of double-digit organic revenue growth and adjusted earnings per share as well as strong adjusted operating margin expansion. Our optimism for sustained growth level is tempered only by the economic backdrop of modestly slower GDP growth and geopolitical tensions. We remain confident in our ability to control our growth trajectory at the top and bottom lines through our strong positioning, innovation, good stewardship of capital and plain hard work. We rely on our resilient business model with its diverse client mix serving non-discretionary spending categories and our high recurring revenue to continue investing at a pace that supports our competitive strengths.

For more details on our financial results, I’ll pass the discussion on to Bob.

Robert Hau: Thank you, Frank, and good morning, everyone. If you’re following along on our slides, I’ll additional cover details on total company and segment performance, starting with our financial metrics and trends on Slide 4. Fourth quarter and full year results reflected our focus on delivering on our commitments with momentum across the business. Total company organic revenue growth was 12% in the quarter with ongoing strength in our Merchant Acceptance and payments and network segments, offset by a decline in the Fintech segment against a very difficult compare. For the full year, total company organic revenue also grew 12% ahead of the guidance we provided in October and November. This performance was led by the Merchant Acceptance segment, which grew 19%.

Fourth quarter total company adjusted revenue grew 6% to $4.6 billion and adjusted operating income grew 10% to $1.9 billion, resulting in an adjusted operating margin of 40.7%, an increase of 150 basis points versus the prior year and a sequential improvement of 260 basis points. The 40.7% represents a post-merger high for Fiserv. Our fourth quarter performance brought the full year adjusted operating margin to 37.3%, an increase of 220 basis points over 2022. Fourth quarter adjusted earnings per share increased 15% to $2.19 compared to $1.91 in the prior year. Full year adjusted earnings per share increased 16% to $7.52. Those adjusted EPS results do not include $0.12 per share in expense relating to the significant devaluation of the Argentine peso as part of the government reform package on December 12 last year.

This one-day move led to a non-operating, non-cash foreign exchange loss for the revaluation of our local balance sheet as required under GAAP rules for hyperinflation accounting. All other Argentine foreign exchange losses throughout 2023 are included in the adjusted EPS results. Free cash flow came in at $1.3 billion for the quarter and $4 billion for the full year, an increase of 14% over last year. Now looking to our segment results starting on Slide 6. Organic revenue growth in the Merchant Acceptance segment was 24% in the quarter and 19% for the full year, well ahead of our previous medium-term segment guidance of 9% to 12%. This includes an 8 point benefit to the full year organic growth from the transitory revenue driven by above-average interest and inflation in Argentina.

Adjusted revenue growth was 14% in the quarter and 12% for the full year. You can see from the spread between organic and adjusted revenue growth that currency headwinds from the devaluation of the Argentine peso offset the benefit of the country’s very high inflation and interest for the full year in adjusted revenue. Global merchant volume and transactions in the quarter grew 5% and 8%, excluding wholesale processing respectively. Clover revenue grew 30% in the fourth quarter, an annualized payment volume growth of 17%. For the full year, Clover revenue was up 25%. The spread between revenue and volume growth comes from higher penetration of value-added solutions, channel mix shifts and some pricing. VAS penetration reached 19% in Q4, up from 16% in the year-ago period and on pace to meet our 27% target by 2026.

Carat also had a strong quarter with revenue growing 11%. For the year, Carat revenue grew 9%, excluding the loss of a Latin American processing client that moved in-house. Revenue growth was 15% for both the quarter and the year. Adjusted operating income in the Merchant Acceptance segment increased 26% to $819 million in the quarter, with margin up 400 basis points to 38.8%. Full year adjusted operating income improved 23% to $2.9 billion and margin grew 330 basis points to 35.1%. Over the last couple of quarters, some of you have noted that our revenue includes anticipation in LatAm, but the cost of that anticipation interest is not included in operating margin, as it is reported as interest expense below the operating income line on the income statement.

If we were to take that interest from anticipation and pro forma it back to operating income, merchant margins would still have expanded a very strong 220 basis points for the quarter and 260 basis points for the year. Looking at 2024, January’s overall volume growth, excluding processing, was similar to December’s pace. Difficult weather throughout large portions of the U.S. did slow volume growth for a 2-week period in mid-January, but we’ve seen clear improvement in volume growth since then. The Fiserv Small Business Index also points to steady spending and a healthy environment for small businesses in January. We reported the index on February 2, with a value of 138, representing year-over-year growth of 1.7% and one-tenth of 1% growth from December on a seasonally adjusted basis.

The Fiserv Small Business Index measures U.S. small business activity and is not a direct indicator of Fiserv results, but rather a measure of general pace of activity and health of this key Fiserv client base. Turning to Slide 7, on the payments and network segment. Organic revenue grew 4% in the quarter. This growth was enabled by a variety of drivers across our business lines. We have well over 200 financial institutions live or implementing FedNow and saw continued strength in Zelle, with transactions and number of clients growing at 44% and 23%, respectively for the quarter. Full-year organic revenue growth of 8% was at the upper end of our medium-term outlook range of 5% to 8%. Fourth quarter adjusted operating income for the segment was up 8% to $877 million and margin was up 250 basis points to 51%, driven by operating leverage and some third-party productivity we had been working on throughout the year that came in through the fourth quarter.

For the full year, adjusted operating income was up 13% to $3.2 billion and margin expanded 250 basis points to 47.8%. Moving to Slide 8, in the financial technology segment. We posted a 1% organic revenue decline for the quarter and 2% growth for the full year. Organic revenue, excluding periodic revenue, grew 4% for the full year, and client momentum continued with 12 core wins in the quarter, reaching 42 wins for the year. We had expected some strong license sales in the quarter to reach the bottom end of our full-year guidance, but in several cases, these did not materialize as clients instead chose our application service provider, or ASP model. This is where we host the software in our data centers instead of clients purchasing their own software licenses.

It had the effect of lowering in-quarter revenue in Q4 and instead spreading it out as monthly payments over multiple years. Adjusted operating income was down 11% in the quarter to $303 million and flat at $1.2 billion for the year. Adjusted operating margin in the segment decreased 340 basis points to 37.9% in the quarter. Full-year margin increased 10 basis points to 36.6% with the lower periodic revenue. The corporate adjusted operating loss was $110 million in the quarter and $494 million for the full year. The adjusted effective tax rate in the quarter was 18.7% and was 19.3% for the year. We expect the 2024 adjusted effective tax rate will be approximately 20% for the full year. Total debt outstanding was $23.1 billion on December 31st.

The debt to adjusted EBITDA ratio dropped another tenth of a turn to 2.7 times within our target leverage range. We have approximately 10% of our debt in variable rate instruments. During the quarter, we repurchased 8.6 million shares for $1 billion, bringing our total 2023 share repurchase to $4.7 billion and nearly $10 billion in the last three years. The diluted average share count fell 5% from 2022 levels. We have 52 million shares remaining authorized for share repurchase at the end of the quarter. Our longstanding capital allocation strategy will continue in 2024, defined by a strong balance sheet, share repurchases and complementary and innovative acquisitions. Turning to Slide 9. As Frank said earlier, we expect organic revenue growth of 15% to 17%, with adjusted operating margin expansion of more than 100 basis points.

This translates to adjusted earnings per share of $8.55 to $8.70 or 14% to 16% growth over 2023 and would represent our 39th consecutive year of double-digit adjusted EPS growth. In Merchant Solutions, we anticipate organic revenue growth in the 25% to 28% range, including 14 percentage points of transitory revenue growth in Argentina. This is higher than the outlook given at our investor conference in November due to the effects of the steep devaluation of the Argentine peso mid-December. For Financial Solutions, we continue to expect 5% to 7% organic revenue growth this year. We continue to estimate approximately $4.5 billion of free cash flow for 2024. In the second half of 2023, we launched a new initiative to purchase green tax credits where we buy tax credits at a discount from companies who earned but cannot use them.

This reduces the net cash tax paid and in many cases defers the cash payment by a quarter or two. A recent new rule codified this practice for 10 years, so we expect to continue to benefit from it. This will bring more variability to our quarterly cash flows. In 2024, there will be a headwind in the first quarter and first half when we paid for the credits and a tailwind in the second half when some of the tax refunds are received. While we do anticipate some shifts in timing, we continue to expect full year free cash flow of approximately $4.5 billion. With that, let me turn the call back to Frank for some closing remarks.

Frank Bisignano: Thanks, Bob. I’d like to spend a few minutes highlighting Fiserv’s commitment to corporate social responsibility, which we align with business operations and employee engagement to maximize impact. Our next CSR report will be published in the second quarter and will demonstrate continued development of our employee resource groups, the Fiserv Cares Foundation, and our back-to-business program that awards grants to small businesses. To better serve our minority depository institution clients and their communities, we formed an MDI Advisory Council, which includes eight clients and other members. The council in part of our efforts to better collaborate and deliver value through our MDI clients and the communities they serve.

Institutional Investor recognized Fiserv for its CSR efforts as the top ESG performer in the payments, processing and IT services sector, a first for the company. Our programmatic efforts earned recognition from prestigious indices like Bloomberg’s Gender-Equality Index and the Human Rights Campaign’s Equality Index. We also ranked number 1 on the Military Times Best for Vets Employers list. And just last week, we were named one of Fortune’s World’s Most Admired Companies for 2024, marking the 9th time in 10 years that we received this honorable distinction. While we scored highly in many categories, among the highest was innovation. We are particularly proud of this category recognition as well as other standouts for people leadership, product and service quality, global competitiveness and long-term investment value.

As we look ahead to what’s coming in 2024, the ongoing advancement of AI is not driven solely by the expanding capabilities of technology but also by the underlying proliferation of data to feed that generative engine. For Fiserv, our data and AI-powered intelligence put us on a path to be an effective user and enabler of AI. We’re in the early innings of using it to optimize our own operations and deliver actionable insights for our clients as well with significant benefits to come in quality, productivity and growth. Fiserv already manages one of the most valuable information stores in the industry and we start from a position of strength based simply on the sheer amount of data that runs through our systems each year. Over $4 trillion of payment volume globally across more than six million merchant locations, plus 1.6 billion card accounts on file, 325 million deposit loan accounts and 20 million BillPay users across nearly 10,000 financial institutions.

The power of our data fueling AI applications is already helping us throughout our business in areas such as enhanced customer service, analytics on the Clover and Carat dashboards and fraud mitigation tools. Let me share with you three ways we are turning data into an increasingly potent AI asset. First, we’re creating better service and insights for our clients by helping them harness data in actionable ways. As an example, 85% of technical service calls were resolved unassisted through the use of data and AI with high client satisfaction rates. Additionally, over the last year, more than two million of the highest-level technical support inquiries resolved online through AI assisted learning. Second, we’re embedding our data and AI capabilities into value-added solutions such as Advance Defense being used to combat fraud and other security risks.

And third, we’re packaging our rich data assets to build next-gen products. Earlier this year, for instance, we launched the Fiserv Small Business Index, a real-time assessment of consumer spending at SMBs published monthly, enabling new valuable insights for financial institutions, policymakers, investors and businesses of all sizes. Bob discussed, the results of our January index, which we released on February 2, making it an extremely timely measure of the current environment. As Bob and I like to say, intellectual honesty with analytical rigor is, how we run the company. Data is the enabler for us to apply this in all that we do, serving our clients, choosing our partners, assessing our competition, prioritizing our investments, understanding our performance, and communicating it to investors.

With the many assets, I discussed on this call, including our data, along with our dedicated associates worldwide, adopting as fundamental practice of intellectual honesty with analytical rigor, I’m confident that Fiserv will continue to extend its reach, and sustain our leadership through 2024 and beyond. With that, operator, please open the line for questions.

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Q&A Session

Operator: Thank you. [Operator Instructions] For our first question, we’ll go to the line of David Togut from Evercore ISI. Please go ahead.

David Togut: Thank you. Good morning. Good to see the continued acceleration of Clover growth. I’ll ask my question in the follow-up, both upfront. So first is a 4 PPT increase in the organic revenue growth guide for 2024, it looks like about three points of that relate specifically to an increase in Argentina inflation. So if that’s correct, could you walk through how your operating organic revenue growth assumptions, have changed by segment versus the initial guide – at the November Investor Day? Thanks.

Robert Hau: Yes, David, good morning. And your assessment is right on the mark. The total company organic revenue growth went up from back in November. We said 11% to 13%. We now expect 15% to 17%. We previously indicated the impact, the favorable impact of higher than normal interest and inflation in Argentina, would drive about six points of growth, to the Merchant segment, or about three points to the total company. We now expect that excess inflation and interest, is about seven points of growth, to the total company. So essentially, the growth – the increase in organic revenue growth, is really attributed, to higher inflation and interest expense, out of Argentina. The underlying, “more normal organic growth” of the Merchant segment and of the company remain consistent with what we expected and saw back in November.

The other element, of course, as we talked about in November is, there is a natural counterbalance in our adjusted revenue, and in our income statement that higher excess inflation and interest rate, also drives a higher currency variation, or FX headwind. And that also increased about four points from the November. So net, our adjusted revenue, our EPS, our operating margins, very consistent, isolating out just that Argentina impact.

David Togut: Thanks for that. And then just a quick follow-up. What are your expectations for Clover revenue growth in 2024? Would you expect continued acceleration? And then if so, any call-outs? I know, Frank, you mentioned Brazil rollout in April?

Robert Hau: Yes. From a Clover standpoint, you saw the acceleration of revenue in the fourth quarter to 30%. We’ve talked quite a bit about the Clover growth rate, accelerating into our Investor Day commitment. Actually, both back in our March of 2022 call-out where we really focused in on Clover overall, where we gave an outlook to 2025. We updated that back in November to 2026. So adding another year of our outlook, we continue to believe, obviously, that we’ll deliver against that $10 billion for the total company and $3.5 billion for Clover in 2025. And then $4.5 billion for Clover in 2026. We feel good about the trajectory. I wouldn’t suggest that we’re going to get 30% every single quarter, but there’s a lot of elements that are driving that growth, and we feel good about the overall trajectory.

Frank Bisignano: I would just say, we talked about Brazil. We’ve worked on that for a long time. You should expect us, to have further country rollouts. You heard us talk about – the Deutsche Bank JV Vert, which has begun to hit some strides and getting traction. You’ve always heard us talk about beginning to proliferate the ISV channel, and that fundamentally, there was nothing about our back book in that set of numbers, either of course we have done natural 90% new ad and some back book that just converts centrally. And I also would highlight the pen rate, is the number we talked about. We definitely were about growing ARPU, and you see that pen rate up at 19%, which kind of tracks exactly we’ll be laying out to the path we believe we’re on. So Clover continues to do its job. The distribution networks we have are unparalleled, and we’re bringing more function into it, and more geography into it so David.

David Togut: Thanks so much.

Operator: Next, we’ll go to the line of Tien-Tsin Huang from JPMorgan. Please go ahead.

Tien-Tsin Huang: Hi, thanks. Wanted to follow-on with David’s question just on the merchant side with volume and transaction growth. The spread there is really still quite favorable, both total and with Clover. So looking out, should we expect some kind of cyclical mean reversion with that, tightening plus under this value-added services promotions, and you mentioned pricing as well. So, what can we assume there since we’re all trying to do the benchmarking exercise? Thanks.

Robert Hau: Yes, Tien-Tsin. I think certainly, we’ve continued to see that spread, between volume and revenue, and it’s something that is actually part of our strategic plan to grow to that $3.5 billion and $4.5 billion in Clover and $10 billion to $12 billion for merchant by ’25 and ’26. I think ultimately what it comes down to is, as we continue to sell more software, more value-added services more additional capabilities, to our merchants. You’re going to see revenue grow faster than volume. The spread will ebb and flow across different quarters, but we continue to see good opportunity to sell value-added services. That penetration reached 19% in the quarter, up about three, four points from a year ago, as we march towards the 27% by 2026. You’ll continue to see great revenue growth overall. And certainly, there’s the channel mix, more direct and ISV relative to where we are today, and that will continue to benefit that.

Tien-Tsin Huang: Right, right more retail stuff, that’s good. Glad to hear revenue faster than volume. Just my quick follow-up, then just I mean Frank and Bob you both talked about a lot of good wins, across all the lines here. Just thinking about the outlook for new deal activity in 2024, should we expect, or do you see a lot of large deals, or is it more of a cross-selling wins with some of the new products? What do you see for this coming year here? Thank you.

Frank Bisignano: Well I mean, I think it’s all of the above. I mean, I suppose you might be also referring to those CashFlow Central wins we talked about, new product rollout, tremendous opportunity there. It’s another area where we’re helping out banks generate revenue, deliver better technology products, to their client base. And then we also believe that we have a lot of cross-sell opportunity, but we have a very large pipeline of just play on new wins. And you should expect us, to continue doing what we’ve been doing. And our expectation is we’ll always do more.

Robert Hau: And Tien-Tsin, the term cross-sell, is obviously something we use internally quite a bit. We talked to you folks about, ultimately, we have a very wide swath of clients. The U.S. bank deal that we announced this morning on CashFlow Central, that’s a big transaction with a large bank, but it’s a cross-sell. They are a large client of ours. They currently use CheckFree for their consumers. They’ll now expand to CashFlow Central, for their businesses and merchants. And so, we’ll continue to see lots of opportunities. It’ll sometimes be, “new logos”, but also selling additional capabilities to our existing client base.

Tien-Tsin Huang: Good, good, Thank you.

Operator: Next, we’ll go to the line of Darrin Peller from Wolfe Research. Please go ahead.

Darrin Peller: Guys, thanks. It’s great to see the merchant strength. I do want to touch on a couple of the other segments real quickly. And on the Fintech side, just to start, I know you expected tough comps, and you obviously called out the software license sales, to the ASP side impacting revenues. When we think about, what that means in terms of spreading out revenues, across a period of time now, in terms of more recurring revenues, maybe just help us understand your anticipation, for that segment again. I know you had initially raised the combined Payments in Fintech outlook a little bit when you had your Investor Day. So is that still on track? And if you could just revisit the drivers giving you confidence, really in both segments.