Q1 2021 Fidelity National Information Services Inc Earnings Call
[music].
Okay.
Good morning, ladies and gentlemen, and welcome to the <unk> first quarter 2021 earnings call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time it into one should require assistance during the conference. Please press star.
<unk> then zero on your Touchtone telephone.
A reminder, this conference call is being recorded I would now like to turn the conference over to your host Nate throws off corporate finance and Investor Relations.
Yeah.
Good morning, and thank you for joining us today for the <unk> first quarter 2021 earnings Conference call. This call is being webcast at today's news release corresponding presentation and webcast are all available on our website at Fas Global Dot com.
Thank you day, good morning, and thank you for joining US we achieved very strong start to the year exceeding our expectations across the board in the first quarter as shown on slide five we realized accelerating revenue growth exceptionally strong new sales and significantly expanded margins across all our operating segments our world pay.
Revenue synergies are also accelerating through increased cross selling as well as ramping volume on prior synergistic sales as a result, we are increasing our 2021 and 2022 revenue synergy targets to $600 million and $700 million respectively.
During the quarter, we leveraged are continually strong free cash flow to begin buying back stock fund, our increased dividend and make strategic investments and intriguing new companies that are accelerating new capabilities and pushing the boundaries of financial technology. I'm also pleased to share that we divested our remaining minority position in <unk> in April netting a very <unk>.
Positive return for shareholders in over $350 million and proceeds for our remaining stake.
These exceptional results demonstrate the strength of our business model the success of our clients central focus in our discipline capital allocation strategy given that focus we consistently invest in platform and solutions innovation in the areas of greatest demand as a result, <unk> is the most modern scale provider and market with a unique suite of solutions.
That enable our clients to transform their environments grow their businesses and engage with our customers and dynamic new ways. We are quickly becoming one of only eight companies and the SMP 500 revenues approaching $14 billion growing more than 7% with an already high and expanding mid forties EBITDA margins. We believe there is no one in our <unk>.
Free better positioned with our strong start to the year, we expect accelerating organic revenue growth and strong earnings throughout 2021, giving us the confidence to raise our full year guidance.
Turning to slide six and banking new sales grew 17% year over year, reflecting a 24% CAGR since the first quarter of 2019 is our investments and new solutions continue to yield impressive results not only in our traditional business, but in emerging areas as well for example, green dot.
Clients to seamlessly leverage multiple payment types to transact effortlessly around the world and across borders and real time real net is proof of our strategy to support the global movement of money across the entire financial ecosystem for our clients in banking merchant and capital markets. We've also launched an industry first crypto banking.
Solution, which we created in partnership with 90 day.
Traditionally consumers incorporations had to go outside of their existing banking relationships to acquire bitcoin once an FIS core banking client enables this capability their customers will be able to view and transact their bitcoin holdings alongside their traditional accounts and a single view.
Our new solutions taps into the advanced functionality of digital one to provide consumers with a user friendly and app experience.
It will also allow our banking clients to grow their businesses through a new source of income by providing bitcoin services through a seamless easy to use digital experience. Each of these new launches reflect the power of our technology innovation and deep domain expertise.
This quarter and expect leading companies like this to accelerate rapidly as the industry recovers as we think about newly formed high growth sectors. Fas is the leading acquire for crypto currency, where revenue from this vertical growing by five times over last year, Okay coin, leading crypto currency exchange selected Fas this quarter to Hell.
Let them grow their business, we serve five of the top 10 digital asset exchanges in brokerages globally, including innovators like Coinbase and that day. The results of our investment in new modernized merchant technology is certainly showing in our sales success throughout our various merchant verticals during the quarter, we successfully completed the final call.
Migrations to our next generation acquiring platform also known as Nap, which enables us to offer more agile experienced in modular offering while still providing tailored solutions for our clients. We processed over one 8 billion transactions on nap during the first quarter and continue to expect accelerating growth now.
Now that we are aggressively selling and market.
In addition to our new fully launched acquiring platform, we've seen tremendous success with the launch of our new gateway through your new simple API as merchants and go live on our platform faster, while still benefiting from our full global breath and sophisticated solutions are new api's provide a seamless easy to integrate single point of access for.
Clients and transactions or rep ramping exponentially ending the first quarter at more than 4 million transactions per day. This represents more scaled and all but two of our largest C. Com competitors in less than two years post launch all of this shows that fas's, increasing differentiated by our ability to bring innovation at scale.
That is enterprise ready from day, one in a way that few can claim or offered today. In addition to leveraging our innovative portfolio technology assets. Our clients are also relying on us to support their expansion into new geographic markets. This quarter, we expanded our services in the South Africa, Nigeria in Malaysia, and we plan.
To bring online several more countries later this year since the combination will world pain Fas's now brought acquiring to nine new countries.
Turning to slide eight and capital markets. We've made remarkable progress in acquiring some garden 2015, we completely change the revenue growth profile from persistent declines to accelerating top line growth and I'm pleased to say that we are now consistently growing faster than our peers, we simultaneously improve.
All through the strategic allocation of capital I will now turn the call over to Woody discuss our financial results and forward guidance Woody.
Thanks, Gary and thank you all for joining US today, starting on slide 11, I will begin with our first quarter results, which exceeded our expectations across all metrics to generate an adjusted EPS of $1 30 per share.
On a consolidated basis revenue increased five per cent in the quarter to $3.2 billion driven by better than expected performances and each of our operating segments. Adjusted EBITDA margins expanded by 10 basis points to 41% Star.
Strong contribution margins and synergy achievement within each of our saying that's more than offset increased corporate expenses from unwinding last year's COVID-19 related cost actions.
We continue to make excellent progress on synergies exiting the quarter at $300 million and run rate revenue synergies an increase of 50% over the fourth quarter is $200 million.
Accelerating revenue synergy attainment, and driven primarily by ongoing traction and ramping volumes within our bank referral, an ISP partner channels as well as cross sell wins relative to our new solutions and geographic expansion.
Giving our progress to day and robust pipeline, we're increasing our revenue synergy target for 2021 by 50% or $200 million to $600 million and for 2022 about $150 million to $700 million.
Our achievement of cost synergies has also been very successful we have doubled our initial cost synergy target of $400 million exiting the quarter $800 million in total cost synergies. This includes approximately $425 million and operating expense synergies our backlog increased mid single digits again this quarter, a strong new say.
<unk> more than offset our recognition of revenue in the quarter.
Turning to slide 12 to review our segment GAAP and organic results as a reminder, the only dentist when GAAP and organic revenue growth for our operating segments. This quarter's the impact of currency are banking segment accelerated to seven per cent on a GAAP basis or 6% organically from five per cent growth last quarter. The strong results were.
Moving primarily by ramping revenues from our recent large bank wins recurring revenue an issuer growth are issuing business grew 10% in the quarter driven primarily by revenue growth from payments, one increased network volumes and economic stimulus.
We expect both of these tailwind to continue driving accelerated growth into the second quarter in support of our outlook for mid to high single digit organic revenue growth for the full year cash.
Capital markets increased five per cent in the quarter or three per cent organically, reflecting strong sales execution and growing recurring revenue.
Capital markets team is driving a fast art program for the beginning of 2021, it appears to be trending toward the higher end of our low to mid single digit organic growth outlook for the year.
And merchant, we saw a nice rebound and growth of three per cent in the quarter or one per cent organically accelerating 10 points sequentially as compared to the fourth quarter.
Merchant first quarter performance was driven primarily by strength in North America, and e-commerce, including significantly ramping volumes on our new acquiring platform.
<unk> impact on travelling airlines as well as continued lockdowns in the UK drove a five point headwind in the first quarter.
Slide 13 shows a significant ramp and volumes and revenue that the merchant business generated throughout the quarter importantly, as volumes rebounded yields grew significantly we ultimately exited the quarter generating approximately 70 per cent revenue growth during the last week of March including five percentage points of positive yield contribution.
We expect this positive revenue yield tailwind to continue to expand in the second quarter and continued throughout the remainder of the year.
Based on March exit rates and second quarter comparisons, we expect merchant organic revenue growth of 30% to 35% in the second quarter.
The expanding investments, we're making an merchant technology platforms and global sales execution will Yo long term benefits for our clients and significant new wins for our business is Gary highlighted we are very pleased with the execution of our segments with accelerating revenue growth and strong new sales each of them are winning market share.
Turning to slide 14, we returned approximately $650 million to shareholders and the quarter through our increased dividend and share repurchases. Starting in March we bought back approximately 2.8 million shares at an average price of $143 per share.
Beyond this return of capital. We also successfully refinanced refinanced a portion of our higher interest rate bonds, which extended our average duration by a year and lowered expected interest expense for the year by about $60 million to approximately $230 million.
Total debt decreased in $19 $4 million million dollars for a leverage ratio of three six times exiting the quarter and we remain on track in the year below three times leverage.
Turning to slide 15.
I'm pleased to be able to raise our full year guidance. So early in the year based on our strong first quarter results and second quarter outlook for the second quarter, we expect organic revenue growth to continue to accelerate to arrange a 13% to 14% consistent with revenue of 336 $5 billion to $339 billion as a result of.
Hi contribution margins in our business, we expect adjusted EBITDA margin to expand by more than 400 basis points to approximately 44%.
This will result in adjusted EPS of $1.52 to $1.55 cents per share.
For the full year, we know anticipate revenue of $13 six five to 13 75 billion.
Or an increase of $100 million at the midpoint as compared to our prior guidance driven primarily by accelerating revenue synergies. We continue to expect to generate adjusted EBITDA margins of approximately 45% <unk>.
According to an EBITDA range of six point O seven five to 617 $5 billion with our improved outlook successful refinancing and share repurchase to date, we are increasing our adjusted EPS guidance to $6 35.
To $6.55 per share representing year over year growth of 16% to 20% and an increase of 15 at the mid point above our per our guidance by all measures. This was a great quarter for Fas the investments, we're making an driving strong new sales are driving strong new sales and accelerating our revenue growth profile as a.
Hult, we remain confident in meeting or exceeding our increased outlook for 2021.
I'd like to thank our colleagues for their ongoing effort to drive Fas forward and to empower our clients to succeed.
Operator would you please open the line for questions.
Ladies and gentlemen, if you have a question at this time. Please press the star and then the number one key on your Touchtone telephone.
And has been answered or you wish to remove yourself from the queue. Please price per pound key.
Yes. My first question is from the line of day counting with bird.
Yeah, Hey, guys, thanks, and not congrats on the momentum.
Thanks day.
I guess first of all the banking wins continued to be really really good and I'm. Just wondering how do we think about like the lag from the strong strong signings to hitting revenue you're already getting a lot of momentum from previous win but it seems like your pace is so much stronger now than before.
For even.
Does the current when really helped 22 and beyond or not ready in the back half or how do we think about that and then is this high single digits in a year from now revenue.
Yeah, I think we're I think we're really confident in what we're saying during the sales hi, Bruce and his team are doing a fantastic job driving sales you see a spring.
He's bringing a lot of new capabilities to the market modern banking platform has been very successful.
Why we're very confident that these onboarding are going to continue to accelerate our growth from here.
<unk> 2021 into 2022, I'll I'll remind you a lot of these sales in fact, almost all of them are just highly SaaS enabled solutions in our clouds. So the reality is as growth in demand grows his new capabilities rollout on all these winds.
You will continue to say our revenue growth accelerate here. So we can't made more pleased with where the banking segment is we made a huge investment in banking over the last several years with new product data center consolidation with cloud enablement et cetera, and seeing the results of that and market now as we speak.
Alright. Thank you and then I guess just as a follow up in the merchant segment Q1, I was just looking at the revenues about 103 per cent of Q1 of 19.
And I guess I'm wondering queue to when you say, 30% to 35% growth you mean X the tax shift last year, because if that's right then queue to theirs momentum to a higher percentage of revenue relative to Q2 of 19, I just wanted to make sure that 30% to 35%.
What the base revenue is for that.
Within the 30% to 35% day, you're right. The tax shift is probably three to four points a benefit in there.
Certainly we saw April volumes in excess of the 30% to 35%. So we're trending well there obviously, where we're at we feel like we're getting our hands around our ability to project into the future, but there's still a little bit of uncertainty. There. So we feel very confident in the guy that we gave for <unk> that we can meet her.
Or exceed debt guide.
And that's how we think about the 30 to 35 per cent.
So is it off that day.
30% to 35% growth off a Q2 last year, because because that puts you a little bit below the 103 per cent that.
Of the two year ago stack.
Is there a reason.
For that.
Yeah, it's off the <unk> number from last year as.
As we talked about we got about three to four points of benefit from that tax shift from last year and then we're seeing very good results into April and we wanted to make sure. We produced the guy that we could meet or exceed day.
Yeah, Okay that all makes sense not really appreciate it. Thank you.
Thank you.
Your next question is from the line of Oslin share by car what city.
Thank you.
I would be great.
Aspirin.
Thank you.
I also want to go back to the steady drumbeat of large bank name is that you had.
And ask sort of.
Is the sales cycle shrinking now as prospect realized that day must act urgency.
Can you give us some inside baseball.
What these daedalus questions look like maybe.
Ash when I will have respect that one good morning national.
When we think about the sales cycle I would say is the actual sales cycle that we have is relatively consistent.
On the days in the sales cycle to close what I would say has changed a little bit is the mindset in the view of where the market's moving towards and so you're seeing a lot more people free sales cycle kind of making those determinations on their own and that's really accelerating the whole process for us and so I think.
You'll continue to see this our pipeline is very robust around.
This area and look forward to continuing to see this accelerated as we move forward.
I think it was.
The second question is not much at solutions.
Obviously, you guys mentioned here some strength.
Incrementally going need to going to April.
Would that.
Also include D U K given to hide eight a free no explanation. So day is that market opening up and and sort of what day sequential benefit of snack, perhaps incrementally look like if you could get that down.
Yeah, we're certainly seeing volume growth coming back April's benefit.
It was about.
40 per cent or so in terms of total transaction volume growth that we saw which is in excess of the 30 to 35. The blend of that obviously is a little higher internationally actually so as you see some of the openings happening we believe international in the UK will actually be incremental benefit in queue to compared to the U S. But obviously is restrictions and reopened.
<unk> continued to move forward, we're seeing very strong growth across both U S and international operations and expectations.
Okay. Good to hear thank you.
The next question is from the lineup George and me help us with the Cowan.
Hey, guys good morning, and congrats on on from very solid results here.
Thanks, George on it.
Force just just wanted to delve in a little bit on the dynamic between the the revenue growth and and the and the volume growth gangl forgetting that that positive Nick shipped on on the yield just looking at that Delta exiting March.
If you had some obviously underperforming verticals that benefit in in in April is that is that really being driven by vertical like hospitality coming back and just just curious how much of a contribution or how much about unemployment or are you seeing in a vertical like like travel that has been under a lot of the rest in 2000.
<unk>.
Yes travel overall continues to be in the rest still down around 60%, but what we are seeing is retail and restaurants. For example, opening back up we're seeing the yield dynamics that we talked about being a tailwind force continuing ended the second quarter and believe it will be a tailwind for the full year, we anticipate.
<unk> for the full year to be roughly high single digit to low double digit and obviously, we're guided to revenue growth of mid to high teens, So you're seeing yield dynamics that will benefit the entire year the exit right plus 5% in the last week of March the April what we've seen so far in our expectations for Q2 would be higher.
Obviously, then that 5% positive yield and we think that trend will continue over the course of the year.
Okay, great. So it sounds again like that that travel benefit is still very much ahead of you can really haven't seen much of any.
In April.
Just as a as a as a quick follow up as it relates to to sort of the the blood.
Processing business, just just curious.
Doj suit against against visa has that sounds any other dynamics, where you guys as it relates too it's a nice and.
And and and those sort of products or is it sort of business as usual from a competitive standpoint.
Yeah for Us George it's been business as usual from a competitive standpoint at this point, you say, where they are issuing business did extremely well.
I think what he talked about it being up 10% are highlighted in my prepared remarks that take away on the new payments one platform we're seeing.
Great grow three are nice network, but I think the teams done a nice job of presenting our value proposition and so for US. We're just continuing to compete in the market and take care.
Thanks, guys congrats.
Thank you.
Your next question is from the line of Darren Keller with Wolf Research.
Thanks, guys nice job on the quarter when we look at that spread just to follow up on the revenue in volume spreading merchant.
Is there a way to give us a sense of what the normalized spread could be going forward longer term, especially with this new mix that we're seeing with more digital mortgage calm.
And I guess on that note I didn't see a data point on E. Com growth specifically this quarters were what it was in April even relative to that very strong rebound or maybe just comment on E. Com integrated somebody other specific channels and and merchant thanks guys.
Yeah, I think if you go back historically, you would see roughly about three points of benefit from revenue yield over volume historically I think once everything normalizes outlets call that 2022 2023, we would anticipate the continued to see some of that traditional yield over volume.
NAMIC continue as we continue to provide capabilities and market. If you look at E com itself.
E com growth in the first quarter X travel and airlines was about 45%.
And inclusive of traveling there was about 25% so very strong growth and he come very good sales on Gary mentioned about 80 wins and quarter, we're seeing a lot of momentum in that area right now.
Yeah, I mean that does that.
The pain is not a great job of just retooling the whole go to market. Obviously, we had some big programs that we had to get completed with the world pay integration a nap.
Completion and migrations completely behind us when you look at everything we're doing on the gateway and fully launch and you see how quickly our new gateway is ramping up.
With the changes Bruce Smith teams made in the go to market I mean, we had great sales not only an E com, but I mean, we had great sales across our integrate channels are banking channels are large enterprise and.
Really great about.
What that's going to do as far as accelerating revenue growth and that merchant Chow.
That's great to hear we've got a pretty good check finances will pay too on our side.
And we look at the banking with just a quick follow up is you've invested so much over the past couple of years in terms of engineering and skill set around implemented.
Large contracts. So now that you have new big ones like a BMO coming on.
What what are your expectations in terms of timing from boarding as it has it improved now versus what it was let's say last year and then the margin the incremental margin for these coming on it but a little bit easier to scale. Thanks again guys.
We've talked about this on a lot of calls, but it's really the complexity of day, one implementation that's going to drive timeline. So some of our customers that were signing are coming on with a new capability or our new product day, one obviously that launch can accelerate very very quickly the great news.
On that is then once you to launch that solution, you'll start bringing additional products on across across the deposits side of the retail bank and then you'll move into lending as we talk about in the past. So as you think about these large wins.
Not only what you're getting and revenue stream on the day, one launch man, how that revenue streams going to accelerate over the coming years, which is why we are so we're so excited about it but the implementation timeline still it still.
Is determined that a little bit by the overall complexity of the day, one launch and but the team has done a remarkable job of automating These new technologies.
Historically, where certain things might have taken weeks or months in the past are literally you've got them now days or hours with automation standing up new environments et cetera. So the investments figure point that we've made and these newer technology is a really put us on a differentiated.
Playing failed and the market is Bruce talked about earlier were now starting to see the demand get generated from within the client. So now they are realizing they've got to make a move I mean, the environments got to change they have embraced cloud they've got to embrace cloud native technology is in order to compete to get there.
Our cost structures in alignment to compete with the new disruptor. So we're in a really good position and especially in the large bank market.
Yeah, I could just add on to do Gary comment.
Darren to your question about the investment we have really modernized our infrastructure our technology infrastructure. We then focused on our applications and we've got a host of award winning platforms is Gary talked about MVP, certainly being one of them and now is our team kind of pivots and continues to really focus on accelerating everything.
We're doing on the business processes aspect. So when you talk about things of just code deployment. For example, now when we deploy code 95 per cent of that is automated versus what it was just a couple of years ago. So the team is really focused on getting faster and accelerating net revenue as we bring clients on.
Ward.
That's great makes sense thanks, guys.
Your next question is from the lineup David Togate Evercore ISI.
Thank you good to see the the guidance increase in the strong Buckings cough.
Thanks, David Yes.
Yeah.
Understood. Thank you very much.
Thank you of your day.
Your next question is from the line I'm, Jason Kupferberg with the Bank of America.
Hey, Thanks, Good morning, guys Uhm, what are you I just wanted to pick up on your comment that you guys are expecting high single day to low double digit volume growth in the merchant segment. This year and I guess, if I just look at the first four months of the year to trying to piece together the math from the slide in the in the deck as well as your comments on April it seems.
You're up maybe about 17% through the first four months of the year. So just the high single to low double, especially with some easy calm still still ahead of you.
Seems potentially conservative so I, just wanted to check that math and and and see if you're just simply taking a prudent approach you know early in the year in terms of the full your forecast.
I think that's right Jason it's it's difficult to forecast volumes for the full year in the first quarter, particularly in the backdrop that were working in the real comment was around we believe we will continue to see positive revenue yield over the course of the year and then the volumes will be what the volumes are ultimately, but we're certainly seeing that improvement.
The revenue yield trend that there was a headwind last year will be a tail when the entire year. This year and just gives us confidence in our mid to high teens revenue growth. Even this early in the year.
Okay. What are the metrics that really got my attention was the the E comm sales being up to ask year over year and I'm wondering if there was a material contribution to merchant revenue growth. This year from those sales or is that more of a 2022 event.
Yeah. This is Bruce that the the team has done a phenomenal job.
Really kind of accelerated in our sales process around that you can see that you come business as a whole continues to accelerate I think when we look at this year, we see growth from our historic CAGR of.
Our growth rate to where we're going to be this year. So we feel that that will contribute a little bit this year and into 22.
Okay. Thanks, Congrats on the results.
Thanks.
Your next question is from the line of Ramsey L US all with the Barclays.
Hi, Gary William Bruce Thanks for taking my question and Great to see day outperformance. This quarter I wanted to ask about the full year guidance raise it looks like you're raised full year revenue synergies and year by about $200 million, but you raised overall revenue guidance midnight by just about at the mid point by just about 100 million. So I was just curious how are you thinking about.
The contribution from core this year versus revenues and that guidance right. It feels like conservatism to me, but I just wanted to ask if there were any callouts in terms of the contribution from those two sources.
And you think about the incremental 200 million that we raise today I would tell you. It does ramp over the course of the year of the in your impact of that is probably our estimate is about $60 million to $75 million from revenue synergy specifically and then obviously, we're seeing in the operating performance, it's helping as well that's.
That's what allowed us to pull the bottom end of the range up a little higher than the top into the range up as well so that mid point of 100, you describe but it will ramp over the course of your in terms of revenue synergies and we call. It and your contribution of 60 75 finally towards the higher end of that.
Got it okay. So the ramped is is the differential there I I also wanted to ask about the crypto banking effort, which I think is really fascinating and could you comment a little bit on the demand environment. There in terms of your clients looking to offer those types of services and also maybe comment on whether you.
You are contemplating offering acceptance of crypto on the merchant side of your business at some point.
Yeah, So ah.
Great question on the Crypto I think.
We look at it. This is something that has built a lot of demand in the marketplace and there's a lot of interest in our institutions or acquiring Nevada, and how do they meet the needs of their customers and so we feel this is a great offering.
In an emerging space and emerging asset class.
And we feel very good to kind of lead the market in offering this to them.
Leave isn't Gary comments, we've talked a little bit about on the acquiring space in our reposition there as well and around crypto, we have really have gotten off to a great start there.
And driving a lot of acceptance.
In crypto and we we would expect that that will continue to drive water growth force as we move through the year.
Yeah Ramsey just to build on that I made to be real clear, we've seen crypto really move into an asset class right, which is really really a lot around investment et cetera, and so the teams done a great job I think of positioning it and to offer it to our financial institutions and we've had we as Bruce just mentioned a lot of demand there and then whether it moves truly.
Too.
Point of a presentment currency that remains to be seen but to Bruce's point and it's just been a home run with these exchanges and we're we're we're acquiring and converting.
All other currencies into crypto and it's really really been a nice.
Job by the team of identifying an emerging market taken advantage of it and as we highlighted today finding hyper growth because of it.
That's great it sounds like it might be a growth driver in capital markets as well at some point. So I appreciate it. Thanks, so much yeah absolutely.
Your next question is from the line of Lisa Ellis, what the market Nathan.
Hey, good morning, guys. Thanks for taking my question I wanted.
I wanted to follow up on the continent on international expansion the nine new countries since it closed.
World pay exposition that it's going to take a synergies originally from the deal can you just don't liberate a little bit more on.
Progress, they're kind of what's involved in what's going while less well than you expected, let's say it are involved and what type of revenue growth a contribution you are anticipating.
How meaningful it's likely to be non within the next day or two thank you.
Yeah at least algae.
I'll jump in here first and let the guys add in but as.
As we articulated at the time of the deal now going back a couple of years geographic expansion force was really part of our strategy.
It was part of it has always been part of the strategy for us to accelerated growth rate follow our clients around the globe and we continue to do that and continue to accelerate our expansion into these geo markets I think one of the great things. The team has done is really across our organization working with our risk team.
Our legal teams they've they've really put a playbook together of getting into these markets and so I would expect to see us continue to move.
Through the geographic expansion and that will absolutely contribute to the acceleration of our growth.
As I kind of just mentioned when we look at the merchant business and we look at the the organic growth from a from a historical CAGR perspective, we absolutely C. R organic growth accelerating as we look into 21, and then going into 2002, yeah, just built on a little bit Lisa I mean, when you look at our race on.
Revenue synergies with the World pay integration you see the significant contribution that all of our strategies are producing and as you mentioned at the start of this we really felt confidently that with the combination of world pay <unk> expertise and these global countries allow us to expand quite rapid.
Lee and I think you're seeing that and and when you look at where we are just even on the E com business in our new sales our ability to launch in these new countries bring ecommerce capabilities as a day, one stepping point and think about our global nature of our clients in a calm we talked about a multiple calls the enterprise nature of those cussed.
<unk>, they're saying that as an opportunity because now we're opening up new markets for them and then as they open up those new markets as well we capture that volume. So it's really a win win combination of us absolutely penetrating into those markets, but also taking our global companies on an ecommerce basis end of that and as I grew.
We grow so it certainly contributor to our to our revenue synergies and as you say, we're raising that again.
On this call so feel really good about how all this is coming together.
Okay. Yeah. Good. Thank you then click follow up from me, it's just unreal net.
The network of networks for realtime payments.
Exciting can you and I know this and your age you guys have always been in the forefront could you just described in more detail like what real net will enable you to do that you haven't been able to do before or that's differentiated from what others can do around.
Been around the world.
Yeah at least and thank you I was hoping someone was going to ask so.
Ah network network, how can even debt.
So really excited about this is.
We look at kind of new opportunities and kind of adjacent markets things that we really want to expand and grow on when I look at real net I think of it more in the construct of kind of payments orchestration. So it allows us to really connect.
Different networks different payment rails on a global basis and I think this is something that we are going to be very excited so whether it's connecting to central banks real time payment infrastructures from country to country too.
Cartoon networks too.
Different delivery mechanisms for payments, we feel there's really a need there and an opportunity for us to step in and orchestrate payments and the most optimal way for our clients and so we're very excited about this we think that they use cases.
Are going to be really substantial as we move forward and.
I think our team as you know has been involved in kind of real time payments certainly over the last decade, and we have a lot of expertise in here, but bringing really that concept of payments orchestration to a network of networks is really unique and exciting opportunity for the company.
Okay perfect. Thank you.
Okay. Our next question is from the line of Dando live with Mizuno.
Hey, guys.
Great results. Thanks for taking my question.
Thanks day, Thanks Man.
So really quickly you mentioned April volumes, I think 40% can you maybe give us some sense of the revenue trends in April.
And then I have a follow up.
We haven't closed at April from a revenue perspective here. It is the first of May.
But I would think they were going to continue to flow higher obviously then the.
The volume profile, we're seeing in good yield dynamics over the course of April.
It'll it'll flow all the way through into the second quarter, where we think yield dynamics will significantly outpaced volumes.
For the second quarter for sure.
That's how we've been thinking about it the yield dynamics continue to flow in excess.
And the overall volume dynamics continue to be robust through April.
Great and then maybe just to touch on that what does kind of the yield assumption.
Embedded in the second quarter guidance I appreciate it.
Yeah, I think we're looking at a double digit.
Yield assumption in the second quarter guide compared to volume.
As a positive yield Avenue.
Of course.
Awesome. Thanks, guys really appreciate it.
Thanks, Dan.
Your next question is from the line of Craig Mara with Autonomous research.
Yes, hi, thanks for taking the question.
Wanted to ask about the gaming space from the U S.
Seeing a significant ramp and approvals states legalizing it I know Vantiv digital entertainment historically has had a very strong position.
In that market so was curious.
How you see growth evolving and the domestic market there and how you see the.
The the legacy product or what might be a new product comping against what seemed to be at least two notable new entrants entered the domestic space.
Yeah. So the gaming spaces as you said, it's one we've played in historically and done very well and we continue to see.
That opportunity in front of us is a very good opportunity.
When we look at.
The things that we're doing around our platform.
Other it be the access will pay.
We feel that we're positioned very well what I would say is the the gaming market as everyone knows and you alluded to in your question has come along slower than it is finally, starting to kind of accelerate here domestically, we have a great gaming business internationally.
Have a lot of assets to bear there and so I think we're prepared well to compete and compete very well here domestically as it starts to unfold.
Thank you.
Your next question is from the line of Jamie Friedman Susquehanna.
Hi, Great results here, Gary I was wondering if you might share any view on bank I T budgets for 2021 is that how you look at it you see rising and demanded kind of making your own weather.
No I think it's a combination of both I think were catching a tailwind on with customer is from rising demand, especially in digital enablement itself service and.
A modernization and so we're in a really good spot in the upper upper bank market.
And the lower and we continue to see some consolidation, but we tend to be the benefactor there as well, but we are seeing growing it spanned as people are coming out of the pandemic and and but that I could spend disposition on where we've made investment which is cloud native technology. So whether it's you know we highlighted payments one in the success about three.
Hundred new financial institutions Onboarding that platform in the last year you look at what we're doing in digital one in the in the.
And the movement of customers there in law entering the night Big arrangement, there or you go to monitor in 19 platform and look at the success and the size and scale of those so I think we're well positioned and an increasing spend but guess spanned is focused where we where we've made investments over the last three to four years. So we've.
Really good timing on the market and feel really good about it.
Great exciting time, so I'll drop back in the queue.
Thanks.
Your next question is from a Kartik netter, what the North Dakota to research.
Hey, good morning, Gary and witty I just wanted to get your perspective on the merchant business in FY assets helpful. You've obviously made a lot of inroads in 2020 and I'm wondering if you look at the margin profile for the companies we come out of the pandemic does that has it changed from when you're rich.
Really thought what it was going to be considering all the changes you've been able to make.
No I'd say no.
Not directly we anticipated to be able to drive really good margins all the way back to the world pay combination.
Inclusive of synergies an operating leverage within the business I think thats proving al it's really around getting our volumes back and continuing to execute from that long term strategy.
So we feel really good about the margin profile and our ability to continue to.
Drive margins on a go forward basis through operating leverage and new capabilities have I wouldn't say, it's significant change yeah, that's where I was going to go I mean, not only were going to hit exactly what we thought or even exceed that were with regards with the combination of it contains doing a very nice job from now moving into the next round Bruce talk to Earl.
Later about how how much faster, we're moving and it's really all through automation. So as you think about the next chapter of where were taken technology, where now taken advantage of all of those historical investment so our ability to expand margins even further in the coming years were very.
We're very comfortable with and we talked about that on the last call about pushing our margins, even higher and 2022 and beyond just due to all these other automation Nai type utilizations of new technology, So feel really good about positioning and the outcomes yes.
Yeah. It seems like the company is really well positioned to drive margins higher it didn't just one last question have.
Have you seen a change at all on the competitive nature on the merchant side.
I didn't know if the pandemic head.
Created and maybe a more competitive environment or if if the environment is about the same.
Yes, if I can jump in there what I would say is the merchant space over the course of history has been always been a very very competitive space just like our banking space like capital markets. So what I would say that is kind of emerged has been that pandemic is created a catalyst if you will and accelerant.
To the marketplace and as we look at it we look at theirs sub segments that are kind of emerged within the merchant vertical and there's people that have emerged in those sub segments and are competitive and those sub segments, we play exceptionally well in.
And the enterprise Commerce space.
The large scale complex stuff that Gary talked about just a moment ago that as of multi country type of transactions were.
Playing exceptionally well and very very competitive in those spaces. There are some of these sub segments that historically, we hadn't played in that are emerging and now we're looking at them and we view those as Tam expansion opportunities for us and so we're very excited about moving into some of these and and being competitive and playing playing in these markets.
Thank you very much I really appreciate it.
Your final question is from the lineup Tenjin long with J P. Morgan.
Hey, Thanks, so much I know you've covered a lot already I wanted to ask with on the merchant side now that you have the new acquiring platform and you finish up the the net migration I'm. Just just curious if that allows you to change your sales motion and maybe be a little bit more aggressive or go to market a little bit differently.
Here I am assuming or at least we're here hang that there's quite a lot of merchant activity or interest in consolidating vendors. So love to get your perspective on that.
Yeah, No I think I'll, let Bruce spilled on that day, and I think it absolutely allows us.
To get lean forward on the balls of her feet more I mean, those were major programs that we had to get complete when we did the world in a combination we knew that quite a finished building out the nape acquiring platform. We had migrate all of the clients Bruce talk about the success and I did as well have access world pain.
Now you are starting to see it in the sales engendered in fact, given the demand that we're seeing in our prepared remarks, we talked about adding 300 more sales people just to the merchant business and so back to give you the indication or the demand we're seeing in the confidence that we have on our capabilities to compete when share and you have seen a great <unk>.
Fault of that over the last not only in Q1 in our sales success going back to Q1 hundred 19.
But we also saw it ramping in queue for so I do think more more large enterprise merchant Sarah consolidating down the single providers and when you get to our capabilities our ability for the ease of access the multi currency the multi country all on a unified most modern platform and market we felt Greg.
About where we are at.
The point I would just kind of underscore there that Gary brought out as as the market continues to mature around commerce and having a broad solutions set we played very well in that space and it's really a strength for us so the market's really moving towards us and so we think there is going to be an acceleration.
In the sales motion there.
Great No. It's encouraging thanks for the just just to have to ask also just lastly, Gary for you on the M&A Fund we've seen in some seems like bank JV activity is picking up seeing some some consolidation as well and then capital of racing on the private side too so.
Is your appetite here, a little bit differently different than say 90 days ago, just what you're thinking here on undoing acquisition.
Yeah, It's always a great question, we always look at it very hard as you guys know M&A is always going to be an important part of our strategy to help drive scale and new capabilities and we've gone through that on every call. Our appetites really not changed from where we were last quarter, we still think.
Properties are really pricey and market, we are having great success organically with our sales engine Woody highlighted the amount of stock buybacks. We did in Q1, we still see the they are stock prices undervalued. So we think the best company, obviously, there by right now is ourselves so.
But we will continue to watch the market and we will continue to look for opportunities.
That can bring us new capabilities or that makes sense financially and the timing works from cultural lines, but and as long. If we can find that we would still be willing to do some some M&A, but I don't think our viewpoint on it has really changed since Q1 at all and you are going to continue sales lean heavily and paying down debt.
Increasing our dominated buying back shares at all while investing in transformation and as we drive into our growth curve.
No you've been doing that <unk> makes a lot of sense. So if we appreciate me asking.
Thank you. Thank you thank.
Thank you guys.
The engine.
Okay. At this time that is all for our questions Alfond non turn the conference back to Gary Norcross.
Thank you and I want to provide some closing thoughts as we end the call. We are emerging from the pandemic with an even stronger competitive position then when we entered at our ongoing commitment to growth and innovation is unwavering and we will continue to enhance our value proposition by continuous modernization of our platforms and delivering new capabilities.
These to the market.
Our achievements and success are built on the dedication and hard work with our colleagues clients and communities. We rely on these key stakeholders to continue advancing commerce in the financial World together, we will win as one team and deliver on our commitments in closing I'd like to thank you for your investment in Fas and our colleagues are delivering value to our clients each and every.
We appreciate your support if you have any further questions that were not addressed on this call and please contact our investor relations pain. Thank you stay safe and goodbye.
Ladies and gentlemen. This concludes today's conference. Thank you for your participation you may I'll disconnect.
[music].
[music].
[music].