Q2 2023 FIS Earnings Call

August 2, 2023

And there will be a question and answer session to ask a question during the session. Please press star one one on your telephone you will then hear an automated message advising your hand is right to withdraw your question Press Star. One one again please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker.

Mr. George Melas head of Investor Relations.

Please go ahead.

Thank you Sharon good morning, everyone. Thank you for joining us today for the second quarter 2023 earnings Conference call. This call is being webcast at today's news release corresponding presentation updated investor facts and webcast are all available on our website at <unk> Global Dot com.

With me on the call. This morning are Stephanie Ferris, our CEO and President and Eric Hogarth CFO .

Stephanie will lead the call with a strategic and operational update call.

Road by Eric reviewing our financial results and providing forward guidance.

Good day and welcome to the F. I S second quarter 2023 earnings call. At this time all participants are in a listen only mode. After the speaker presentation. There will be a question and answer session to ask a question during the session. Please press star one one on your telephone.

Turning to slide three today's remarks will contain forward looking statements.

These statements are subject to risks and uncertainties as described in the press release and other filings with the SEC.

The company undertakes no obligation to update any forward looking statements, whether as a result of new information future events or otherwise except as required by law. Please refer to the safe Harbor language.

Yeah, well then here an automated message advising your hand is raised to withdraw your question Press Star. One one again please be advised that today's conference is being recorded I would now like to hand, the conference over to your Speaker Mister George Me Hillis head of Investor Relations.

Also throughout this conference call, we will be presenting non-GAAP information, including adjusted EBITDA adjusted net earnings.

Please go ahead.

Adjusted net earnings per share and free cash flow.

Good morning, everyone. Thank you for joining us today for the F. I S second quarter 20 twenty-three earnings conference call. This call is being webcast. It.

These are important financial performance measures for the company, but are not financial measures as defined by GAAP.

He was released corresponding presentation updated investor facts and webcast are all available on our website at F. I S Global Dot com.

Reconciliation of our non-GAAP information to the GAAP financial information is presented in our earnings release with that I will turn the call over to Stephanie.

With me on the call. This morning, or Stephanie fares are C E O and president and Eric Koger CFO Stephanie.

Thank you George and thank you everyone for joining us this morning.

We continue to move with speed and a sense of urgency accelerating our path forward and we're making strong progress delivering on our financial and strategic commitments to drive change across the enterprise for all of our stakeholders.

Stephanie will lead the call with a strategic and operational update.

Close by Eric reviewing our financial results and providing forward guidance.

Turning to slide three today's remarks will contain forward looking statements. These.

On July six we announced a landmark transaction with DTC are positioning both Fas and world pay for long term success and accelerating us on the path to unlock shareholder value from the planned separation.

These statements are subject to risks and uncertainties as described in the press release another filings with the SEC.

The company undertakes no obligation to update any forward looking statements, whether as a result of new information future events or otherwise except as required by law.

Our future forward initiatives are simplifying our business and driving increased client centricity, while improving efficiency and financial outcomes across the company and.

Please refer to the Safe Harbor language.

Also throughout this conference call, we will be presenting non-GAAP information, including adjusted EBITDA adjusted net earnings.

In our second quarter results show the impact of this effort exceeding expectations and our guidance.

While we have more work to do I'm very proud of our team and are more optimistic than ever as we bring the company future forward.

Adjusted net earnings per share and free cash flow.

These are important financial performance measures for the company, but are not financial measures as defined by yet.

Turning to slide six I am pleased to report <unk> delivered another quarter of solid financial results second quarter revenue adjusted EBITDA and adjusted EPS all exceeded the high end of our guidance range.

Conciliation of our non-GAAP information to the GAAP financial information is presented in our earnings release with that I'll turn the call over to Stephanie.

Thank you George and thank you everyone for joining us this morning.

Solid execution across all three of our business segments and a continued focus on expense discipline drove the outperformance relative to our outlook.

On a combined basis, the banking and capital markets businesses posted healthy recurring revenue growth of 4%.

This represents a more normalized rate of growth within our 3% to 5% cycle range.

On July six we announced a landmark transaction with GTC are positioning both F I S and where I'll pay for long term success and accelerating us on the path to unlock shareholder value from the plan to separation.

Building on the profitability improvements, we delivered in the second quarter.

We are confident in our ability to deliver sequential adjusted EBITDA margin improvement over the course of 2023 led by improvement in the banking solutions segment.

Our future forward initiatives are simplifying our business and driving increased clients interested <unk>, while improving efficiency and financial outcomes across the company and.

We are on track to deliver on our greater than 80% free cash flow conversion commitment for 2023 with year to date conversion an impressive 94%.

And our second quarter results show the impact of this effort exceeding expectations and our guidance.

While we have more work to do I am very proud of our team and a more optimistic than ever as we bring the company's future forward.

Post the closing of the World pay transaction, we would expect free cash flow to further align even more closely with net earnings.

Turning to slide six I'm pleased to report F. I asked delivered another quarter of solid financial results second quarter revenue adjusted EBITDA and adjusted EPS all exceeded the high end of our guidance range.

Reflecting the first half outperformance and current business trends today, we are again, raising our revenue and adjusted adjusted EBIT guidance for 2023.

Turning to slide seven.

Solid execution across all three of our business segments and a continued focus on expense discipline drove the outperformance relative to our outlook.

As we announced in early July we signed a definitive agreement to sell a 55% stake in the world <unk> merchant solutions business to <unk>, a leading private equity firm with deep expertise in the payment space.

On a combined basis, the banking and capital markets businesses posted healthy recurring revenue growth of 4%.

We believe the transaction represents a superior outcome for Fas shareholders relative to pursuing a spinoff of world pay into the public markets.

This represents a more normalised rate of growth within our three to five per cent cycle range.

Building on the profitability improvements we delivered in the second quarter, we are confident in our ability to deliver sequential adjusted EBITDA margin improvement over the course of 2023 led by improvement in the banking solutions segment.

It accelerates our path forward to create two highly focused and independent companies.

Infusing new capital quickly into world pay for investment.

While generating substantial upfront proceeds to transform <unk> balance sheet pay down debt and return capital to shareholders.

We are on track to deliver on or greater than 80 per cent free cash flow conversion commitment for 2000 twenty-three with year to date conversion an impressive 94%.

First the $18 $5 billion transaction immediately establishes an attractive market aligned value for the world pay business, representing over 10 times <unk> 2023 adjusted EBITDA.

Post the closing of the Worldpay transaction, we would expect free cash flow to further align even more closely with net earnings.

This represents a premium to <unk> trading multiple of approximately eight times prior to deal announcement.

Reflecting the first half outperformance and current business trends today, we are again, raising our revenue and adjusted it adjusted EBITDA guidance for 2023.

As we continue to execute on our strategy and deliver on our financial commitments. We believe <unk> is well positioned to expand our valuation multiple further.

Turning to slide seven.

As we announced in early July we signed a definitive agreement to sell a 55 per cent stake in the world payment merchant solutions business to G. T. C. R. A leading private equity firm with deep expertise and the payments space.

Second the upfront proceeds of at least $11 7 billion.

We will allow us to delever the balance sheet quickly, while simultaneously accelerating capital returns to shareholders at unique attractive valuation levels.

We believe that transaction represents a superior outcome for empire shareholders relative to pursuing a spin off of worldpay into the public markets.

Eric will elaborate on our capital allocation priorities during his discussion of our financial results.

It accelerates our path forward to create two highly focused in independent companies and.

However, we see significant value in the shares at current levels and are eager to rapidly capitalize on the valuation dislocation for the benefit of our shareholders.

Using new capital quickly into Worldpay for investment while.

While generating substantial upfront proceeds to transform F. I S as balance sheet pay down debt and returned capital to shareholders.

Lastly, we believe this transaction best positions Fas and world pay to better focus on their respective markets clients and colleagues while promoting our continued close relationship between the two companies crystallized by commercial partnership.

First the 18.5 billion dollar transaction immediately establishes an attractive market align value for the world pay business, representing over 10 times World pays 20 twenty-three adjusted EBITDA.

Going forward <unk> will remain an important partner and distribution channel for us.

This represents a premium to F. I S as trading multiple of approximately eight times prior to deal announcement.

While we're all pay will continue to benefit from access to <unk> array of bank Tech solutions and services.

As we continue to execute on our strategy and deliver on our financial commitments, we believe F. I S as well positioned to expand our valuation multiple further.

I look forward to working closely with Charles Drucker and the World pay management team for many years to come.

The partnership with DTC are also ensures that <unk> will have ample access to capital to pursue near term inorganic growth opportunities, while maintaining a healthy balance sheet.

Second the upfront proceeds up at least $11.7 billion will allow us to delever the balance sheet quickly, while simultaneously accelerating capital returns to shareholders at unique attractive valuation levels.

We're excited about the transaction and the prospect of generating meaningful returns for our shareholders and we will look forward to updating you on developments as we approach closing by first quarter 2024.

Aircrew elaborate on our capital allocation priorities during his discussion of our financial results. However.

Turning to slide eight for an update on trends, we're seeing across our banking capital markets businesses and the key drivers of growth within our existing base of clients.

However, we see significant value in the shares at current levels and are eager to rapidly capitalize on the valuation dislocation for the benefit of our shareholders.

In May we held our annual flagship industry conference Emerald with 4000 clients and Influencers in attendance.

Lastly, we believe this transaction best positions F I S and worldpay to better focus on their respective markets clients and colleagues while promoting a continued close relationship between the two companies crystallized by commercial partnerships.

The overarching takeaway from the conference was that clients are excited about our path forward and are looking for their trusted technology partners like us to better help them navigate the evolving landscape.

<unk> is well positioned to serve our clients on several market trends that are top of mind across their C suites.

Going forward Worldpay will remain an important partner and distribution channel for F. I S y.

While we're on pay will continue to benefit from access to F. I S. As array of bank Tech solutions and services.

First the secular shift towards digital that is permeated money movement broadly defined across banking and capital markets and supports our normalized rate of growth as more and more financial transactions take place across a variety of banking channels.

I look forward to working closely with Charles Drucker in the World pay management team for many years to come.

The partnership with GTC are also ensures that worldpay will have ample access to capital to pursue near term and organic growth opportunities, while maintaining a healthy balance sheet.

The need to embrace next generation cloud native technology with modernized digital user interfaces has never been greater.

We're excited about the transaction and the prospect of generating meaningful returns for our shareholders and we look forward to updating you on developments as we approach closing by first quarter of 2024.

The competitive lines are blurring as upstart fin tax global technology companies and even retailers encroach on the traditional banking landscape with digital first offerings.

<unk> was early in embracing the promise of cloud technology with over 85% of current compute in the cloud and the launch of several digital native solutions, including digital one payments, one and modern banking platform, which was just recognized for several industry Awards.

Turning to fight eight for an update on trends, we're seeing across our banking capital markets businesses and the key drivers of growth within our existing base of clients and.

And may we hold our annual flagship industry conference Emerald with 4000 clients and Influencers in attendance.

The overarching take away from the conference with that clients are excited about our path forward and are looking for their trusted technology partners like F. I S to better help them navigate the evolving landscape.

While prior investments position us with an early mover advantage, we are not standing still and continue to prioritize spend to further leverage the cloud improve the end user experience and ensure we enable all types of digital money movement.

F I S as well positioned to serve our clients on several market trends that are top of mind across their C suites.

Second the rapidly rising interest rate environment is creating greater competition for deposits.

First the secular shift towards digital that has permeated money movement broadly defined across banking and capital markets and supports are normalized rate of growth as more and more financial transactions take place across a variety of banking channels.

<unk> institutions and asset managers are relying on digital only high yield savings accounts and online access to money market accounts ultimately increasing the number of total accounts across the banking system.

They need to embrace next generation cloud native technology with modernized digital user interfaces has never been greater.

Account growth, which continued sequentially from the first quarter and transaction growth across our platforms are the primary drivers of recurring organic revenue growth across both the banking and capital markets segments.

The competitive lines are blurring as upstart been tax global technology companies and even retailers encroach on the traditional banking landscape with digital first offerings.

<unk> has partnered with a number of blue chip banks and Fintech powering their digital only account offerings.

F. I S was early and embracing the promise of cloud technology with over 85% of current can compute in the cloud.

Also post the SBB fallout financial institutions are proactively preparing for increased regular regulatory oversight with a greater focus on managing interest rate risk and profitability.

And the launch of several digital native solutions, including <unk>.

The situation is fluid with new regulations still being discussed by regulators and legislators, but the need for best in class Reg Tech offerings as mission critical to bank's operations.

We're seeing consistent demand for balance sheet and Treasury management solutions.

That momentum to continue.

And lastly, we've recently seen increased consolidation across the financial industry.

In acquiring institutions, requiring the expertise of a trusted core provider to assist in quickly and seamlessly onboarding new accounts at scale.

We believe <unk> is a relative beneficiary of industry consolidation, given the companys skewed towards larger financial institutions.

Turning to slide nine.

<unk> offers a wide range of software led solutions that are resonating across a diverse range of end markets with our product reach increasingly extending beyond traditional financial institutions.

I am pleased to report we've closed several notable wins this quarter across the host of solutions beginning with enterprise core platforms, we saw solid momentum across our product set.

Notable wins include the sale of our digital one platform as well as an expansion of services provided to our large global Fintech provider next our payments and networks offerings underpinned by our loyalty solutions, including premium payback and our proprietary debit network nice continue to see tailwind.

We signed several new premium payback engagements in the second quarter, including a leading retailer and a major U S financial institution.

We continue to be excited about the prospects of our nice debit network going forward and expect the offering to be a beneficiary of the recently implemented Reg to rules.

And our capital markets business demand for our institutional solutions continues to be robust.

Sales of our Treasury and risk management solutions remain, particularly strong and we're seeing solid traction across the board with increased penetration across non traditional verticals, such as large corporates, including insurance and auto Finance company.

Finally, I am delighted with the progress, we're making across our amplify initiative.

Which was designed to accelerate cross sells across the enterprise, we had a solid quarter of amplify driven sales, particularly the selling of acquiring services into multiple banking and capital markets clients.

Amplify remains a core part of our sales strategy going forward post the world pay transaction.

Supported by commercial partnerships, we expect <unk> will remain a key distribution channel for banking and capital market services for years to come.

Turning to slide 10, we're making continued progress across our enterprise wide transformation program future forward.

Corridor, including a leading retailer and a major U S financial institution.

We continue to be excited about the prospects of our nice debit network going forward and expect the offering to be a beneficiary of the recently implemented Reg to rules.

We're well on our way to delivering on our previously communicated cash expense savings and shifting those savings into client centered outcomes.

We continue to prioritize investments focused on modernizing our technology stack leveraging the cloud simplifying our user interface and improving the digital experience for end users of our products.

And our capital markets business demand for our institutional solutions continues to be robust.

We recently welcomed a new chief Technology officer at Fas with an extensive background in the consumer digital technology space.

Our CTO has entrusted with ensuring Fas continues to embrace a developer focused innovation driven culture with the appropriate personnel in place to lead <unk> forward and stay ahead of the curve.

Finally, I am delighted with the progress, we're making across our amplify initiative.

We're excited about the prospects AI presents for our business and our clients AI holds the promise of improving employee client productivity accelerating development implementation timelines, reducing costs and improving product quality and customer care.

Amplify remains a core part of our sales strategy going forward post the world pay transaction.

Supported by commercial partnerships, we expect <unk> will remain a key distribution channel for banking and capital market services for years to come.

We have several ongoing AI driven initiatives across the company and we expect to materially increase the number of programs over the coming months.

Turning to slide 10, we're making continued progress across our enterprise wide transformation program future forward.

The early the early results from these initiatives are encouraging.

We're well on our way to delivering on our previously communicated cash expense savings and shifting those savings into client centered outcomes.

With that I will turn the call over to Eric Eric.

Thanks, Stephanie and thank you all for joining us this morning I'll.

I'll begin on slide 12, with an overview of our second quarter financial results.

Overall, we delivered effectively against our commitments exceeding the high end of our outlook for the quarter.

We recently welcomed a new chief Technology officer at Fas with an extensive background in the consumer digital technology space.

On a consolidated basis revenue increased 2% organically to $3 7 billion.

With adjusted EBITDA margin of 41, 4% and adjusted earnings per share of $1 55.

Our CTO has entrusted with ensuring Fas continues to embrace a developer focused innovation driven culture with the appropriate personnel in place to lead us forward and stay ahead of the curve.

Revenue outperformance in the quarter was driven by our capital markets segment exceeding the high end of our outlook with banking and merchant both in line with the high end.

We're excited about the prospects AI presents for our business and our clients AI holds the promise of improving employee and client productivity accelerating development implementation timelines, reducing costs and improving product quality and customer care.

As anticipated each of our three operating segments saw sequential improvement in our adjusted EBITDA margins with merchant returning to expansion in the quarter.

Adjusted EPS exceeded the high end of our outlook by <unk> <unk> driven by outperformance in EBITDA and some below the line favorability in the quarter.

We have several ongoing AI driven initiatives across the company and we expect to materially increase the number of programs over the coming months.

Moving to cash flow and our balance sheet, we continue to see improvements across multiple vectors.

The early the early results from these initiatives are encouraging.

Our capital expenditures decreased 13% year over year to $267 million were 7% of revenue, reflecting continued benefit from our future forward initiatives.

With that I will turn the call over to Eric Eric.

Thanks, Stephanie and thank you all for joining us this morning ill.

I'll begin on slide 12, with an overview of our second quarter financial results.

We generated free cash flow of $953 million in the second quarter, resulting in a year to date free cash flow conversion of 94% well above our full year commitment of greater than 80% conversion.

Overall, we delivered effectively against our commitments exceeding the high end of our outlook for the quarter.

On a consolidated basis revenue increased 2% organically to $3 7 billion.

Lastly, we reduced our total debt by approximately $500 million to $19 5 billion.

With adjusted EBITDA margin of 41, 4% and adjusted earnings per share of $1 55.

Revenue outperformance in the quarter was driven by our capital markets segment exceeding the high end of our outlook with banking and merchant both in line with the high end.

Yielding a leverage ratio of three two times at a weighted average interest rate of three 4% and we returned over $300 million to shareholders through dividends.

As anticipated each of our three operating segments saw sequential improvement in our adjusted EBITDA margins with merchant returning to expansion in the quarter.

The team continues to focus on both our operational strengths.

Flow fundamentals as long term drivers to sustainable shareholder value creation.

Adjusted EPS exceeded the high end of our outlook by <unk> <unk> driven by outperformance in EBITDA and some below the line favorability in the quarter.

Turning to our banking capital markets results on slide 13.

On a combined basis the segments delivered organic revenue growth of 3% in the quarter driven by 4% recurring revenue growth.

Moving to cash flow and our balance sheet, we continue to see improvements across multiple vectors.

Our capital expenditures decreased 13% year over year to $267 million were 7% of revenue, reflecting continued benefit from our future forward initiatives.

Our large and stable backlog held steady in line with our expectations exiting the quarter at $23 billion.

Reflecting flat year over year growth and sequential growth of 1% as we recognize revenue while replenishing with new sales.

We generated free cash flow of $953 million in the second quarter, resulting in a year to date free cash flow conversion of 94% well above our full year commitment of greater than 80% conversion.

This backlog metric includes contracted yet unrecognized sales with varian contract durations and times to implementation.

Making it one of many inputs to our underlying growth.

Lastly, we reduced our total debt by approximately $500 million to $19 5 billion.

Looking back outsized backlog growth over the past few years was largely driven by a handful of large and unique transactions.

Yielding a leverage ratio of three two times at a weighted average interest rate of three 4% and we returned over $300 million to shareholders through dividends.

Excluding these outsized transactions backlog growth has been stable while recurring revenue excluding these transactions posted growth within our cycle guidance.

The team continues to focus on both our operational strengths cash flow fundamentals as long term drivers to sustainable shareholder value creation.

And more recently, while our year over year backlog growth has ranged between flat to 2% we've seen healthy recurring revenue growth in the first half of 2023 for banking and capital markets.

Turning to our banking and capital markets results on slide 13.

On a combined basis the segments delivered organic revenue growth of 3% in the quarter driven by 4% recurring revenue growth.

As we noted previously our sales teams continued to transition to higher quality, new sales, which will drive sustainable high margin long term growth.

Our large and stable backlog held steady in line with our expectations exiting the quarter at $23 billion.

This change in sales initiatives is incorporated into our outlook for the year and while still early in the transition. We're seeing some early indications of success with improvement in the contribution margin on new sales.

Reflecting flat year over year growth and sequential growth of 1% as we recognize revenue while replenishing with new sales.

At the segment level banking increased 2% organically in the quarter with recurring revenue growth of 3%.

This backlog metric includes contracted yet unrecognized sales with varian contract durations and times to implementation.

Adjusted EBITDA margin contracted 200 basis points to 42, 5% on.

At one of many inputs to our underlying growth.

An improvement from the down 250 basis points, we saw in the first quarter.

Looking back outsized backlog growth over the past few years was largely driven by a handful of large and unique transactions.

Margin contraction was primarily driven by revenue mix as we saw a 10% reduction in high margin onetime revenue.

Excluding these outsized transactions backlog growth has been stable while recurring revenue excluding these transactions posted growth within our cycle guidance.

We continue to anticipate margin expansion in the back half of the year for the banking segment as future forward continues to ramp.

And more recently, while our year over year backlog growth has ranged between flat to 2% we've seen healthy recurring revenue growth in the first half of 2023 for banking and capital markets.

Shifting to the capital market segment, which continues to perform exceptionally well.

Capital markets increased 7% organically in the quarter with recurring revenue growth of 10%.

Revenue growth was driven by the strength of our modernized solution suite strong sales execution and the multiyear shift from a license to SaaS based go to market strategy.

As we noted previously our sales teams continued to transition to higher quality, new sales, which will drive sustainable high margin long term growth.

Adjusted EBIT margins expanded 100 basis points to 52%.

Margin expansion in the quarter was driven by high contributions on recurring revenue growth and high margin license revenue and a reduction in low margin professional services.

At the segment level banking increased 2% organically in the quarter with recurring revenue growth of 3%.

Overall, we're pleased with the progress in the first half of the year as we continue to position us for sustainable growth in revenue profit and earnings for years to come.

Adjusted EBIT margin contracted 200 basis points to 42, 5%.

An improvement from the down 250 basis points, we saw in the first quarter.

Turning to slide 14.

Margin contraction was primarily driven by revenue mix as we saw a 10% reduction in high margin onetime revenue.

<unk> revenue increased 1% organically with similar sub segment trends as seen in the first quarter.

Adjusted EBIT margins expanded 120 basis points year over year or 480 basis points sequentially.

We continue to anticipate margin expansion in the back half of the year for the banking segment as future forward continues to ramp.

As we grew our high margin revenue streams across the operating segments and delivered on cost management.

Shifting to the capital market segment, which continues to perform exceptionally well.

Global volumes grew 6% in the quarter driven by both consumer spending and strong execution, while our revenue yield improved by two points compared to our first quarter results.

Capital markets increased 7% organically in the quarter with recurring revenue growth of 10%.

Revenue growth was driven by the strength of our modernized solution suite strong sales execution and the multiyear shift from a license to SaaS based go to market strategy.

Turning to slide 15 for a financial update on future forward.

Adjusted EBITDA margins expanded 100 basis points to 52%.

As previously messaged, we remain committed to right sizing our expense base, while ensuring an appropriate level of investment in the initiatives outlined in Stephanie's comments.

Margin expansion in the quarter was driven by high contributions on recurring revenue.

Our future forward program centers around this goal with a focus on improving the ways, we work and go to market as a company.

Both in high margin license revenue and a reduction in low margin professional services.

Overall, we're pleased with the progress in the first half of the year as we continue to position us for sustainable growth in revenue profit and earnings for years to come.

On a wholesale basis, we continue to make significant progress in our cash savings achievement.

Sitting in the quarter, we achieved over $175 million in annual run rate operational expense reduction.

Sure.

Turning to slide 14.

Resulting in over $35 million benefit to the quarter.

<unk> revenue increased 1% organically with similar sub segment trends as seen in the first quarter adjusted.

We also increased our capital expenditure achievement to over $140 million as we continue to trim to our $200 million commitment in 2023.

Adjusted EBIT margins expanded 120 basis points year over year or 480 basis points sequentially as.

As we grew our high margin revenue streams across the operating segments and delivered on cost management.

In summary, the future forward program continues to provide a tangible benefit to our financial P&L and operational health, while enhancing the ways we work.

Global volumes grew 6% in the quarter driven by both consumer spending and strong execution, while our revenue yield improved by two points compared to our first quarter results.

In a moment I'll provide some estimates on the operational expense target our targeted.

To us moving forward.

Turning to slide 16 for a recap of our capital allocation priorities for us.

Turning to.

<unk> 15 for a financial update on future forward.

Throughout 2023, and following the transaction close.

As previously Messaged, we remained committed to right sizing our expense base, while ensuring an appropriate level of investment in the initiatives outlined in Stephanie's comments.

We will remain focused on reducing debt.

Paying an appropriate dividend and using excess capital for share repurchase or tuck in M&A.

Our future forward program centers around this goal with a focus on improving the ways, we work and go to market as a company.

Our first priority remains a strong balance sheet and investment grade ratings.

On a holdco basis, we continue to make significant progress in our cash savings achievement.

Given our free cash flow generation and highly recurring revenue streams, we're comfortable with our long term gross leverage range of $2 5 million to three times adjusted EBITDA.

Exiting the quarter, we achieved over $175 million in annual run rate operational expense reduction, resulting in over $35 million benefit for the quarter.

Next we remain committed to paying our dividend and we are reiterating a 35% payout ratio based off fifths adjusted net earnings.

We also increased our capital expenditure achievement to over $140 million as we continue to trend to our $200 million commitment in 2023.

We intend to grow this dividend in line with adjusted net earnings going forward consistent with our historical practice.

In summary, the future forward program continues to provide a tangible benefit to our financial P&L and operational health, while enhancing the ways we work.

Lastly, our default use of excess capital will be share repurchases inclusive of at least $2 5 billion tied the transaction proceeds with potential upside to this number given the attractive valuation of our stock.

In a moment I'll provide some estimates on the operational expense target out targeted to us moving forward.

Longer term, we intend to consistently return excess capital to our shareholders through share repurchases.

Turning to slide 16 for a recap of our capital allocation priorities for us.

Leveraging our advantages of scale and distribution to supplement growth in strategic verticals with complementary tuck in M&A.

Throughout 2023, and following the transaction close FIS will remain focused on reducing debt.

Paying an appropriate dividend and using excess capital for share repurchase or tuck in M&A.

This capital allocation strategy provides a robust value proposition for long term shareholder value creation over a multiyear period.

Our first priority remains a strong balance sheet and investment grade ratings.

Yeah.

Given our free cash flow generation and highly recurring revenue streams, we're comfortable with our long term gross leverage range of two five to three times adjusted EBITDA.

Turning to slide 17 for an overview of our revised outlook.

On a holdco basis, our second quarter results lead us to confidently increase our guidance to 14, five to $14 $63 billion in revenue and 603 to $6 5 billion and adjusted EBITDA.

Next we remain committed to paying our dividend and we are reiterating a 35% payout ratio based on adjusted net earnings.

We intend to grow this dividend in line with adjusted net earnings going forward consistent with our historical practice.

Consistent with our first quarter revision this increase aligns with the high end of our guidance to our second quarter beat and.

In addition to a change in FX assumptions, while significantly increasing the low end of our ranges.

Lastly, our default use of excess capital will be share repurchases inclusive of at least $2 5 billion tied to transaction proceeds with potential upside to this number given the attractive valuation of our stock.

Beginning in the third quarter the world pay business will be transitioned to discontinued operations and we will be restating, our first half 2023 financials to reflect this.

Longer term, we intend to consistently return excess capital to our shareholders through share repurchases.

At that time, we will look to provide an updated outlook for <unk> continuing operations.

Leveraging our advantages of scale and distribution to supplement growth in strategic verticals with complementary tuck in M&A.

Our adjusted EPS metric will now be less meaningful given the impending transition of the world pay business into discontinued operations.

This capital allocation strategy provides a robust value proposition for long term shareholder value creation over a multiyear period.

And because of this we're focusing investors on revenue and adjusted EBITDA until we provide an updated outlook for <unk> continuing operations.

Sure.

Turning to slide 17 for an overview of our revised outlook.

On a consolidated basis, we now anticipate organic revenue growth of approximately 1%.

On a holdco basis, our second quarter results lead us to confidently increase our guidance to 14, five to $14 $63 billion in revenue and 6.03 to $6 5 billion and adjusted EBITDA.

This reflects an increase to the low end of both banking and capital markets organic growth outlook to 1% to 2% and 5% to 6% respectively.

Given the impending transition to discontinued operations, we are not updating our merchant segment outlook from our previously issued full year guidance at this time.

Consistent with our first quarter revision this increase aligns with the high end of our guidance to our second quarter beat and.

In addition to a change in FX assumptions, while significantly increasing the low end of our ranges.

That said, we're pleased with the segment's performance over the first half of 2023, and we remain confident in the underlying strength of the world pay business.

Beginning in the third quarter the world pay business will be transitioned to discontinued operations and we will be restating, our first half 2023 financials to reflect this.

We continue to anticipate margin improvement in banking and capital markets as we ramp the benefits associated with future forward.

At that time, we will look to provide an updated outlook for FIS as continuing operations.

And we are reiterating our outlook for free cash flow conversion of over 80%.

Our adjusted EPS metric will now be less meaningful given the impending transition of the world pay business into discontinued operations.

As seen in our year to date results, we remain confident in delivering on our commitments.

I'll conclude with on slide number 18, with some considerations for us in 2024.

And because of this we're focusing investors on revenue and adjusted EBITDA until we provide an updated outlook for FIS as continuing operations.

Following the close of the transaction <unk> will retain a 45% equity stake in the world pay business in partnership with <unk>.

On a consolidated basis, we now anticipate organic revenue growth of approximately 1%.

This equity stake was valued at over $4 billion.

This reflects an increase to the low end of both banking and capital markets organic growth outlook to 1% to 2% and 5% to 6% respectively.

Accounting for approximately $7 per share at our current share count.

We anticipate an effective tax rate for <unk> of approximately 19% to 21%.

Sure.

Given the impending transition to discontinued operations, we are not updating our merchant segment outlook from our previously issued full year guidance at this time.

This increase from our current effective tax rate is primarily due to the reduction of the TRA benefit and accounts for increases in the corporate tax rate in certain regions.

That said, we're pleased with the segment's performance over the first half of 2023, and we remain confident in the underlying strength of the world pay business.

As previously stated we would anticipate $10 billion of total gross debt after the transaction close.

We continue to anticipate margin improvement in banking and capital markets as we ramp the benefits associated with future forward.

We expect this debt will carry a weighted average interest rate of approximately $3 two 5% to 375%.

And we are reiterating our outlook for free cash flow conversion of over 80%.

As noted in the announcement of the transaction, we would anticipate deleveraging to approximately two five times translating to an adjusted EBITDA of approximately $3 $9 billion to $4 billion.

As seen in our year to date results, we remain confident in delivering on our commitments.

I'll conclude with on slide number 18, with some considerations for us in 2024.

Inclusive of our estimated remain co corporate expense.

With regards to our future forward program, we expect substantial cost savings of approximately $1 billion for us post the world pay separation.

Following the close of the transaction <unk> will retain a 45% equity stake in the world pay business in partnership with GTR.

Retaining 80% of the original program.

This equity stake was valued at over $4 billion.

We previously anticipated a year over year benefit of approximately $300 million to adjusted EBITDA in 2024.

Accounting for approximately $7 per share at our current share count.

We anticipate an effective tax rate for <unk> of approximately 19% to 21%.

Following the close of the transaction this $300 million will become approximately $215 million with an annual run rate of approximately $425 million exiting 2024.

This increase from our current effective tax rate is primarily due to the reduction of the TRA benefit and accounts for increases in the corporate tax rate in certain regions.

We also anticipate adjusted EBIT dis synergies for us of approximately $200 million include.

As previously stated we would anticipate $10 billion of total gross debt after the transaction close.

Including $100 million of revenue dis synergies and $100 million of incremental operational expense dis synergies.

We expect this debt will carry a weighted average interest rate of approximately $3 two 5% to 375%.

As noted in the announcement of the transaction, we would anticipate deleveraging to approximately two five times translating to an adjusted EBITDA of approximately $3 $9 billion to $4 billion.

We will look to minimize these dis synergies with our future forward program.

While we've made significant progress we're still working diligently to disentangle, both allocated infrastructure expense and depreciation and amortization expense between the two entities.

Inclusive of our estimated remain co corporate expense.

When appropriate we will provide further commentary on both of these items.

With regards to our future forward program, we expect substantial cost savings of approximately $1 billion for FIS post the world pay separation.

I'll conclude by saying that the team and I are excited about the progress that we've made to continue to move us forward in the underlying fundamentals of the business for years to come.

Retaining 80% of the original program.

I'd like to thank everyone for their time. This morning, operator will you. Please open the line for questions.

We previously anticipated a year over year benefit of approximately $300 million to adjusted EBITDA in 2024.

Thank you as a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again due to time restraints. We ask that you. Please limit yourself to one question and one follow up question. Please standby, while we compile the Q&A.

Following the close of the transaction this $300 million will become approximately $215 million with an annual run rate of approximately $425 million exiting 2024.

We also anticipate adjusted EBIT dis synergies for fear of approximately $200 million, including $100 million of revenue dis synergies and $100 million of incremental operational expense dis synergies.

<unk> roster.

And our first question will come from the line of Reena Kumar with UBS. Your line is open.

We will look to minimize these dis synergies with our future forward program.

Good morning, Stephanie and Eric you. Both gave some helpful detail on changes, you're making to your banking sales force.

While we've made significant progress we're still working diligently to disentangle, both allocated infrastructure expense and depreciation and amortization expense between the two entities.

Can you talk a little bit about how some of your recent conversations have been with banking clients as they navigate the uncertain macro environment. Then are you starting to see any improvement in the sales cycle.

When appropriate we will provide further commentary on both of these items.

I'll conclude by saying that the team and I are excited about the progress that we've made to continue to move us forward in the underlying fundamentals of the business for years to come.

Sure <unk>. Thanks for the question so.

As I discussed in my prepared remarks banks are really focused as you would expect on deposits and so as part of those conversations they're looking in terms of how do they gather deposits can they continue to do it digitally through their branch network or would they like to set up digital banks that will enable them to further.

I'd like to thank everyone for their time. This morning, operator would you. Please open the line for questions.

Gathering deposits Thats, a big conversation, we're having with them.

And we think our D. One product and our MVP product are perfect product for those conversations and we're having those in.

Hey, Ross.

In addition to that as part of the deposit gathering and I mentioned this as well we're seeing a lot of accounts getting opened across the banking system.

And our first question will come from the line of Reena Kumar with UBS. Your line is open.

Good morning, Stephanie and RF you. Both gave some helpful detail on changes Youre, making care banking sales force Keith can you talk a little bit about how some of your recent conversations have been with banking clients as they navigate the uncertain macro environment.

And so I think I mentioned since the first quarter overall net new banking accounts are up.

Since March and continued to be up across the banking system and as we mentioned both deposit growth net new deposit growth as well as transactions is what drives the organic recurring revenue growth in both the banking capital market segments I'd say the final thing we're talking to them about is profitability as you might expect given <unk>.

Are you starting to see any improvement in the sales cycle.

Sure <unk>. Thanks for the question so.

As I discussed in my prepared remarks banks are really focused as you would expect on deposits and so as part of those conversations there.

<unk> and our focus.

On deposits as well as impending increase regulatory challenges, they're looking at their profitability across the board and having conversations with us around outsourcing more of their activities moving more products to digital which are all conversation starters for us as we look at our product set across the board.

Looking in terms of how do they gather deposits can they continue to do it digitally through their branch network or would they like to set up digital bank.

That will enable them to further gathering deposits, that's a big conversation, we're having with them.

And we think our D. One product and our MVP product are perfect product for those conversations and we're having those.

With respect to the sales piece.

Thank Eric mentioned, a couple of things in his.

In addition to that as part of the deposit gathering and I mentioned this as well we're seeing a lot of accounts getting opened across the banking system.

His prepared remarks, we continue to see backlog being flat we expected that.

We're seeing sales as the sales pipelines get re populated with higher margin products. We are seeing the closed sales having higher margin products across the board. So that's exactly the intent that we expected.

And so I think I mentioned since the first quarter overall net new banking accounts are up.

But as we had predicted we expected sales backlog to remain flat, it's a fairly complicated measure and we feel really confident about our guide even with a flat backlog. So seeing some green shoots in terms of the margin profile of the new sales that we're bringing on and feel pretty positively in terms of.

And our focus on deposits as well as impending increase regulatory challenges, they're looking at their profitability across the board and having conversations with us around outsourcing more of their activities moving more products to digital which are all conversation starters for us as we look at our product set.

<unk> populating the backlog with those types of products and product margins.

That's very helpful. And then I just wanted to touch on the transaction what feedback have you received from wealth clients.

The TCR announcements are you hearing of any concerns regarding the impact on the existing commercial relationships are the sale of the business to private equity.

Across the board.

With respect to the sales piece.

I think Eric mentioned, a couple of things in his.

Yeah, Great question and we're always we are always very focused on this every time, we do a transaction we absolutely go out and talk to all of our clients no.

His prepared remarks, we continue to see backlog being flat we expected that.

As you know we all pay has been owned by private equity before that experience for all of our clients that were with US then was positive there was no disruption and in fact typically lead to more investment more M&A activity more products being brought to bear for those clients to be able to utilize so we're not hearing any concern.

As we had predicted we expected sales backlog to remain flat, it's a fairly complicated measure and we feel really confident about our guide even with a flat backlog.

<unk>, primarily because of the couple of transactions we've done with this asset before we have a proven track record that we can do these types of transactions and have little to no impact on clients and actually have it be value enhancing.

So seeing some green shoots in terms of the margin profile of the new sales that we're bringing on and the all pretty positively in terms of repopulating the backlog with those types of products and product margins.

Thank you one moment for our next question.

That's very helpful. And then I just wanted to touch on the transaction what feedback have you received from wealth clients.

And that will come from the line of David <unk> with Evercore ISI. Your line is open.

D. TCR announcements are you hearing of any concerns regarding the impact on the existing commercial relationships are the sale of the business to private equity.

Thank you good morning, looking at slide eight what are your plans to introduce new cloud native component ties core bank solutions offerings.

Yeah, Great question and we're always we are always very focused on this every time, we do a transaction we absolutely go out and talk to all of our clients now. So as you know we all pay has been owned by private equity before that experience for all of our clients that were with US then was positive there was no disruption and in fact.

And BP.

There are specific rollout timeline for each of these new offerings.

Yeah. Thanks for your question, David So MVP as you know is.

Best in class and Nextgen component type architecture.

<unk> typically lead to more investment more M&A activity more products being brought to bear for those clients to be able to utilize so we're not hearing any concerns primarily because of the couple of transactions. We've done with this asset before we have a proven track record that we can do these types of transactions and have little to no impact on <unk>.

For core I think we were first to market and it did it did most recently when a couple of pretty unique awards. So we are up and live with consumer deposits. We have quite a few of our banks have fully rolled out consumer deposits. We went live in second quarter with consumer lending.

So that product is up and running and then I would say as we look at the road map over 2024, we obviously next up would be commercial deposits. So we're feeling really good about where we are with MVP. We have as you know signed over the last 24 months a significant amount of our large financial institutions. They are in the <unk>.

And actually have it be value enhancing.

Thank you one moment for our next question.

And that will come from the line of David <unk> with Evercore ISI. Your line is open.

Thank you good morning, looking at slide eight what are your plans to introduce new cloud native component ties core bank solutions offerings within MVP is there a specific rollout timeline for each of these new offerings.

<unk> timeline here, we would expect to see several of them become live in the first or second quarter of next year with some of these big key products and are really excited about it feel good about launching those guys and then getting the rest of the pipeline live as we move throughout 2024.

Yeah. Thanks for the question, David So MVP as you know is a.

Got it and just a quick follow up you referenced nice networks preparation for Reg too can you talk about the pipeline of opportunity youre seeing to pick up online processing away from visa and Mastercard.

Best in class Nextgen component type architecture for core I think we were first to market and it did it did most recently when a couple of pretty unique awards. So we are up in line with consumer deposits. We have quite a few of our banks have fully rolled out consumer deposits. We went live in second quarter with consume.

Yes, no. So as you know <unk> is a great asset for our FIA assets one of there's only so many networks out there we continue to see Reg too is obviously an opportunity for all of us in the network space.

Our lending.

So that product is up and running and then I would say as we look at the road map over 2024, we obviously next step would be commercial deposits. So we're feeling really good about where we are with MVP. We have as you know signed over the last 24 months a significant amount of our large financial institutions. They are in the <unk>.

And we haven't we have a very significant pipeline. There. There is a lot of interest as <unk> comes online. It's obviously very competitive, but we're feeling really good about it.

Thank you one moment our next question.

Inversion timeline here, we would expect to see <unk>.

That will come from the line of Jason Kupferberg with Bank of America. Your line is open.

All of them become live in the first or second quarter of next year with some of these big key products and are really excited about it feel good about launching those guys and then getting the rest of the pipeline lives as we move throughout 2024.

Good morning, guys just wanted to start on the.

On the backlog.

When do you think we get back to positive year over year backlog growth sounds like maybe youre still thinking flattish for Q3, specifically and then will we get a medium term organic revenue growth target specifically for the banking segment next quarter when merchant moved into discontinued.

Yes, no. So as you know <unk> is a <unk>.

<unk>.

Yes, I think so on backlog.

Great asset for our FIA assets, one of there's only so many networks out there we continue to see Reg too is obviously an opportunity for all of us in the network space.

Eric gave some remarks that he can repeat for you but.

Tough to predict but our guidance right now assumes backlog room night remained flat to slightly down over the next three to four quarters and I'll remind that was the plan as we thought about coming into 2024 and trying to change the margin profile of the product set there.

And we haven't we have a very significant pipeline there theres a lot of interest as <unk> comes online.

Obviously very competitive, but we're feeling really good about it.

I think the thing to understand about the new sales in the backlog and that's why we keep talking about.

Thank you one moment our next question.

That will come from the line of Jason Kupferberg with Bank of America. Your line is open.

Recurring revenue growth is really odd.

Obviously, there is a new sales component to it but there's also the <unk>.

Good morning, guys just wanted to start on the.

Net new deposit or net new account growth plus transaction activity going across the platform.

On the backlog when do you think we get back to positive year over year backlog growth. It sounds like maybe youre still thinking flattish.

That gives us some organic growth, while we remixed the banking backlog I think with respect to the cycle guidance little bit soon to be giving cycle guidance I think what we've said around our cycle guide for Fas.

Q3, specifically and then will we get a medium term organic revenue growth target specifically for the banking segment next quarter when merchant moves into discontinued ops.

Is a mid term cycle guide of three to five I wouldn't expect us to be giving segment cycle guidance or overall cycle guidance for 2024 until we get closer to the guide for 2024, we're.

Yes, I think so on backlog.

I think Eric gave some remarks that he can repeat for you but.

<unk> to predict but our guidance right now assumes backlog room night remained flat to slightly down over the next three to four quarters and I'll remind that was the plan as we thought about coming into 2024 and trying to change the margin profile of the product set there.

We're just not ready yet.

Understood and just as a follow up.

<unk> 4 billion of pro forma adjusted EBITDA for remain co next year is that inclusive of the $200 million of dis synergies that you mentioned.

I think the thing to understand about the new sales in the backlog and that's why we keep talking about.

Hey, Jason good morning.

Eric Let me let.

Let me try to do a quick summary of the material callouts from a from a column I'm just going to work the whole thing.

Recurring revenue growth is really odd.

Obviously, there is a new sales component to it but there's also the <unk>.

So in the prepared remarks.

I referenced an adjusted EBITDA range of $3 94 post transaction. This includes the revised corporate expense estimate for Fas moving forward. It also includes the disclosed $200 million of adjusted EBIT of Dis synergies split $100 million of revenue dis synergies and $100 million of incremental operating expense.

Net new deposit or net new account growth plus transaction activity going across the platform.

The future forward program admittedly.

We will offset a lot of these dis synergies keep in mind that we've reduced the future forward in year.

Is a mid term cycle guide of three to five I wouldn't expect us to be giving segment cycle guidance or overall cycle guidance for 2024 until we get closer to the guide for 2024 or.

24 impact from $300 million to $215 million.

And then beyond that.

I talked about an effective tax rate of 19% to 21% and a weighted average interest rate of 325 to 375 basis points.

We're just not ready yet.

Understood and just as a follow up so the $4 billion of pro forma adjusted EBITDA for remain co next year is that inclusive of the $200 million of dis synergies that you mentioned.

One bit of clarification, there the reduction of the future forward is just aligning how much is related to world pay with respect to future forward versus remain co. Fas, we thought that was an important clarification.

Hey, Jason good morning.

Eric Let me.

We try to do a quick summary of the material callouts from the from the call I'm just going to work the whole thing.

Thank you and one moment for our next question.

So in the prepared remarks.

And that will come from the line of Tien Tsin Huang with Jpmorgan. Your line is open.

Hey, Thanks, some some casualty results, especially in capital markets. I was just curious this double digit recurring growth in capital markets that we've seen in the first half.

Any callouts for the second half just curious your sustainability, maybe if it's possible can you just review the outlook for recurring versus nonrecurring for both the banking and capital markets segments. Thanks.

The future forward program admittedly.

We will offset a lot of these dis synergies keep in mind that we have reduced the future forward in year.

<unk> 24 impact from $300 million to $215 million.

Yes, so from a from a banking perspective, I would think about recurring revenue growth is steady through the balance of the year.

And then beyond that.

I talked about an effective tax rate of 19% to 21% and a weighted average interest rate of 325 to 375 basis points.

Capital markets have seen some elevated recurring revenue through the first half of the year, we specifically called out.

Some anomalous transaction growth in the first quarter associated with some of the bank.

Many bank crisis. However, we feel good about the raise of the capital market's guide from 4% to 6%.

5% to 6% on a full year basis.

Thank you and one moment for our next question.

Tien tsin, the other thing I would add and thank you for pointing it out is how strong the product set there is on the capital markets business and the demand being really high.

And that will come from the line of Tien Tsin Huang with Jpmorgan. Your line is open.

Okay. Thanks, so much.

And we continue to be really excited about it as we think about us moving into post the Royal pay transaction you would look to see us expect to continue to grow this business very significantly the demand is very high the products are resonating really well the transition from nonrecurring to recurring is going extremely well.

Casualty results, especially in capital markets I was just curious this double digit recurring growth in capital markets that we've seen in the first half.

Callouts for the second half just curious youre on sustainability and maybe if it's possible can you just review the outlook for recurring versus nonrecurring for both the banking and capital markets.

Margins look good. So you can expect as we look at capital broadly across the board and investments will continue to make significant investments in this space given the strength of the product set and how well it resonates with clients.

Thanks.

So from a from a banking perspective, I would think about recurring revenue growth is steady through the balance of the year.

Capital markets have seen some elevated recurring revenue through the first half of the year, we specifically called out.

Okay, Perfect and then a quick follow up and thanks for the time just on the.

Some anomalous transaction growth in the first quarter associated with some of the bank.

On the backlog I heard loud and clear pretty consistent flat to slightly down next two or three quarters, how about the conversion any update and what youre hearing from from clients are looking to convert or get projects started or finished with cross IP services and outsourcing were hearing a little bit of delay.

Many bank crisis. However, we feel good about the raise of the capital market's guide from 4% to 6% to.

5% to 6% on a full year basis.

Tien tsin, the other thing I would add and you. Thank you for pointing it out is how strong the product set there is on the capital markets business and the demand being really high.

Delays or push outs, what are you guys seeing.

Yeah.

I saw that too interesting. So we have it's a robust backlog. So what we hear from our clients is can you get us alive faster, we're actually not hearing anything about slowing while we have in the backlog in fact part of the reason, we're really focused on future forward one of the big component pieces of it.

Is how do we drive implementations faster, it's one of the things that I've asked the team to look at AI can we use AI can we get our product in development machine there along with our implementations team to move faster and it's one of the upsides I think we can have as Kelly Beatty, who drives our future forward program.

Margins look good. So you can expect as we look at capital broadly across the board in investments will continue to make significant investments in this space given the strength of the product set and how well it resonates with clients.

Okay, Perfect and then a quick follow up and thanks for the time just on the.

He pushes that flywheel faster, so I'm not hearing anything from clients in terms of wanting to slow actually what they want to do is get their products out faster for them, because they have either savings or growth.

On the backlog I heard loud and clear pretty consistent flat to slightly down next two or three quarters, how about the conversion any update and what youre hearing from.

Clients are looking to convert or get projects started or finished with cross IP services and outsourcing were hearing a little bit of delay.

Banked on the back of that.

Delays or push outs, what are you guys seeing.

Thank you one moment our next question.

Yeah.

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

Hey, guys. Thanks, so much great job.

Thank you, yes, and I guess first of all free cash flow conversion was really good this quarter and I guess I'm wondering is the rest of the year supposed to remain strong and then post the spin would it actually convert better than it has the last couple of years simply because world pay was probably a drag on cash flow conversion.

Hey, David good to hear from your cash flow conversion was strong so.

First quarter conversion was 84% second quarter conversion of 104% year to date, 94%, we've guided to 80.

We feel good about the rest of year forecast free cash flow conversion.

And number one and then question number two yes, we would expect it to.

Further improve post separation in regarding free cash flow conversion. We've had a couple of notable drivers here and they generally align with some of the success that we've had with future forward, we're collecting faster we're spending slower.

Banked on the back of that.

Thank you one moment our next question.

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

We've introduced some spend governor processes.

As I mentioned in my prepared remarks, Capex is down materially year over year of deferred contract costs are down materially year over year.

Hey, guys. Thanks, so much great job.

Thank you and I guess first of all free cash flow conversion was really good this quarter and I guess I'm wondering is the rest of the year supposed to remain strong and then post the spin would it actually convert better than it has the last couple of years simply because world pay was probably a drag on cash flow conversion.

We're sitting in a very nice spot.

With free cash flow conversion through six months of the year.

Great. Thanks, and I guess as a follow up just on a post spin basis, a couple of little things the equities, they're the minority interest stake will you recognize that on a non-GAAP basis, and then what would a dis synergy of the $100 million of revenue dis synergies like what would that be.

Hey, David good to hear from your cash flow conversion was strong so.

First quarter conversion was 84% second quarter conversion of 104% year to date, 94%, we've guided to 80.

Hey, Dave It's Stephanie so, yes, I would think so yes, our minority interest stake, we would probably expect to non-GAAP that but we're working through that obviously with our chief accounting officer, because that one would be a tough one to actually predict given that it becomes a private company.

We feel good about the rest of year forecast free cash flow conversion.

And number one and then question number two yes, we would expect it to.

And then with respect to the revenue dis synergies the way we thought about that is broadly across the board as we think about ecosystem agreements in terms of untangling those as well as we think about potential we feel good about keeping the majority of them. When we have the commercial partnerships set up to do that but we do.

We've introduced some spend governor processes.

As I mentioned in my prepared remarks, Capex is down materially year over year of deferred contract costs are down materially year over year.

Anticipate some.

Of those partnerships, having to be renegotiated across the board and anticipate some of that to get to.

We're sitting in a very nice spot.

With free cash flow conversion through six months of the year.

To come away from what we had booked originally.

And one moment for our next question.

And that will come from the line of Darrin Peller with Wolfe Research. Your line is open.

Yeah.

Hey, Thanks, guys.

If we look at the banking segment recurring revenue growth rate I think as I recall, there were other let's call them, one time or just tough comps.

So above and beyond just the.

The nonrecurring items you called out here like license fees term fees can you just remind us of maybe when you start to see the anniversary of for example, the T Rowe grow over other other factors.

<unk>.

And then with respect to the revenue dis synergies the way we thought about that is broadly across the board as we think about ecosystem agreements in terms of untangling those as.

And then more importantly, Stephanie this is more of a cultural question just.

As well as we think about potential we feel good about keeping the majority of them. When we have the commercial partnerships set up to do that but we do anticipate some.

The company was very focused on the larger banks for some time and so the transition back to the mid size can.

Can you just talk about how that transition's going, especially culturally and.

Of those partnerships to be renegotiated across the board and anticipate some of that to get.

Do you have the right people for that if you lost or gained anyone that you need.

And the transition on the banking segment. Thanks.

To come away from what we had booked originally.

Sure maybe I'll start with the second and then Eric can lean into that to the first one I think as we think about banking, it's really our flagship.

And one moment our next question.

And that will come from the line of Darrin Peller with Wolfe Research. Your line is open.

<unk> business and we serve both the largest financial institutions in the world as well as our through the regionals down into the community banks standpoint, So I think that we.

Sure.

Hey, Thanks, guys.

If we look at the banking segment recurring revenue growth rate I think as I recall, there were other let's call them, one time or just tough comps.

They'll have all the people in place that serve those clients well, obviously those clients have different focus areas priorities product that.

So above and beyond just the.

The nonrecurring items you called out here like license fees term fees can you just remind us of maybe when you start to see the anniversary of for example, Thats euro grow over other other factors.

So if you are a large <unk> bank you obviously have a different.

Set of products you are trying to consume for US you have a very large tech tech stack. So you.

And then more importantly, Stephanie this is more of a cultural question just.

You consume those products and then you run your own middleware and your own core deposit system. As you think about you go down market and regional space.

The company was very focused on the larger banks for some time and so the transition back to the mid size can.

Can you just talk about how that transition's going, especially culturally and.

The regionals are we serve all of those those are a lot of that.

Do you have the right people for that if you lost or gained anyone that you need.

The modern banking platform business from us and are really focused on transforming their businesses not only with nucor's, but are really looking at global money movement across the board as they think about their franchises and making sure that they they take share there and we have a lot of products out there and then as you move down into the community Bank.

And the transition on the banking segment. Thanks.

Sure maybe I'll start with the second and then Eric can lean into that to the first one I think as we think about banking, it's really our flagship.

<unk> business and we serve both the largest financial institutions in the world as well as our through the regionals down into the community banks standpoint, So I think that we.

Base as you know, we primarily are the it and ops shop for those folks we run everything soup to nuts, and what I've heard from them is look we want and need us to provide the best in class products and services because if not if we're forced to go out it just becomes very challenging for them in terms of both price.

They'll have all the people in place that serve those clients well, obviously those clients have different focus areas priorities product that so if you are a large citibank you obviously have a different set.

But also adding more vendors in their back office given that the tech teams. They have so I would say.

Set of products you are trying to consume for US you have a very large tech tech stack. So you consume those products and then you run your own middleware and your own core deposit system. As you think about you go down market and regional space.

We serve all three of those segments very well they had much different needs and product sets.

We feel really good about the new talent, we brought in John <unk>, leading our banking solutions segment.

The regionals are we serve all of those those are a lot of them.

And the team that he's putting around hand are complemented with a lot of the key leaders that we already have here today and I would also say for our capital markets business those are causing our president there. Those are also serving the largest financial institutions globally. So I think we said, we sit really nice spot and term.

The modern banking platform business from us and are really focused on transforming their business is not.

Not only with nucor's, but are really looking at global money movement across the board as they think about their franchises and making sure that they they take share there and we have a lot of product sets there.

<unk> of having a nice book of business across the board as you know, we don't serve the smallest community banks or credit unions. We never have so I think that's a space that you wouldn't look to see us enter in a significant way, but I think we feel really good about where we are.

Move down into the community Bank space as you know, we primarily are the it and ops shop for those folks we run everything soup to nuts, and what I've heard from them is look we want and need us to provide the best in class products and services because if not if we're forced to go out it just becomes very challenging.

And making sure that our product set continues to be best in class for those for those banks, depending upon what they need Eric alternatives.

For them in terms of both price, but also adding more vendors in their back office given that the tech teams. They have so I would say.

Erin banking from a recurring revenue perspective, I would think about the back half of steady.

Recurring revenue in the first was 4% second quarter, 3% I would think about the back half of steady.

We serve all three of those segments very well they had much different needs and product sets I think we feel really good about.

Got T Rowe T Rowe Price's implementation behind us. So we don't have any customer specific volatility that we'd expect in the back half.

The new talent, we brought in John <unk>, leading our banking solutions segment.

And the team that he's putting around hand complemented with a lot of the key leaders that we already have here today and I would also say for our capital markets business.

Okay. I was just wondering if there is a grow over I guess, where the headwind that was there may not recur but.

They're causing our president there those are also serving the largest financial institutions globally.

Alright, I mean at the end of the day than the recurring steady at 4% or 3% to 4% is it sounds like that's kind of the new norm assuming.

I think we said we sit really.

What youre doing right now is already delivering what you need unless theres more to go on that front.

Really nice spot in terms of having a nice book of business across the board as you know we don't serve the smallest community banks or credit unions. We never have so I think that's a space that you wouldn't look to see us enter in a significant way, but I think we feel really good about where we are.

I think that's fair I think it's steady for recurring I think to grow overs, we're largely through those big transactions that grow overs now sit in nonrecurring.

For us in the back half of this year.

Which is what's keeping the overall revenue growth guide down we saw some lumpiness to go but it's not in recurring.

And making sure that our product set continues to be best in class for those for those banks, depending upon what they need Eric alternatives.

One moment for our next question.

Erin banking from a recurring revenue perspective, I would think about the back half of steady.

And that will come from the line of Ashwin <unk> with Citi. Your line is open.

Recurring revenue in the first was 4% second quarter, 3% I would think about the back half of steady.

Got T Rowe T Rowe Price's implementation behind us. So we don't have any customer specific volatility that we'd expect in the back half.

Hi, Thanks.

I just wanted to go back to the improvement in sequential growth in EBITDA margins.

Okay. I was just wondering if there is a grow over I guess, where the headwind that was there may not recur but.

That you mentioned.

In your early prepared.

Prepared remarks.

Alright, I mean at the end of the day than the recurring steady at 4% or 3% to 4% is it sounds like that's kind of the new norm assuming what.

Could you maybe break down what goes into.

The.

Into that in terms of.

What youre doing right now is already delivering what you need unless theres more to go on that front.

In terms of future forward benefit.

I think that's fair I think it's steady for recurring I think to grow overs, we're largely through those big transactions that grow overs now sit in nonrecurring.

<unk>.

The improved mix already flowing too if you could just break down.

For us in the back half of this year.

What goes into that.

Which is what's keeping the overall revenue growth guide down we saw some lumpiness to go but it's not in recurring.

Hey, Ashwin, it's it's good to hear from you.

Maybe just I'll start with taking a step back on some of the margin improvements that we've made.

One moment for our next question.

In the fourth quarter of 'twenty, two margins were down 320 basis points year over year. The first quarter. They were down 190, the second quarter they are down.

And that will come from the line of Ashwin <unk> with Citi. Your line is open.

160 basis points, our third quarter sort of remain co at the midpoint.

Hi, Thanks.

I just wanted to go back to the improvement in sequential growth in EBITDA margins.

Down 50, so we continue to make progress in margin improvement through the course of the year.

I would say predominantly on the back of future forward success I think some of the green shoots that we're seeing on the sales side.

That you that you mentioned.

In your early prepared.

Prepared remarks.

Could you maybe break down what goes into.

We will take a little bit of time for us to get those customers installed.

The.

Understood.

Into that in terms of.

And then.

In terms of future forward benefit.

Yes.

Wanted to go back one more time Im sorry, if I can to sort of the backlog being flat to down.

<unk>.

The improved mix already flowing too if you could just break down.

I get it you've been.

Mid single or better future profitability.

What goes into that.

But does the same principles apply.

Hey, Ashwin, it's it's good to hear from you.

Two existing revenue that youre, taking a look at.

Maybe just start with taking a step back on some of the margin improvements that we've made.

No.

And in that context that existence trying to figure out how to remix that and what's the process for that.

In the fourth quarter of 'twenty, two margins were down 320 basis points year over year. The first quarter. They were down 190, the second quarter they are down.

If.

If thats a consideration how should we think incremental CCAR modeling perspective about the impact of that.

160 basis points, our third quarter sort of remain co at the midpoint.

Yeah Ashwin great question I think the way to think about that is we've looked at the products and the mix and really took an approach around can we improve the either variable cost or fixed cost to make those product margins better.

Down 50, so we continue to make progress in margin improvement through the course of the year.

I would say predominantly on the back of future forward success I think some of the green shoots that we're seeing on the sales side.

We will take a little bit of time for us to get those customers installed.

You know we have long term client contracts. So it's a little tough to go in and renegotiate those until they're up for their natural renewal.

Understood.

And then.

And we have them the revenue covers the base. So I think about it more in terms of.

Yes.

Wanted to go back one more time, if I can to sort of the backlog being flat to down.

Through future forward, how do we continue to improve either the variable cost or the overall fixed cost of the product to improve the margin mix.

I get it you've been.

Mid single or better future profitability.

But does the same principles apply.

Broadly.

Two existing revenue that you are taking a look at.

One moment for our next question.

No.

And in that context that existence trying to figure out how to remix that and what's the process for that.

Okay.

And that will come from the line of James Fawcett with Morgan Stanley . Your line is open.

If.

If thats a consideration how should we think incremental PK modeling perspective about the impact of that.

Thanks, very much I wanted to just quickly go back to backlog.

Its development and how that may overlap with <unk>.

Yeah Ashwin great question I think the way to think about that is we've looked at products in the mix and really took an approach around can we improve the either variable cost or fixed cost to make those product margins better.

Is that you've made in salesforce and their focus I'm just wondering if as the sales force focuses on.

More profitable potential business and their banking segment etcetera is there a change in the mix of products at all that could affect how we should think about the evolution of backlog and how that flows through ultimately to revenue or not really.

You know we have long term client contracts. So it's a little tough to go in and renegotiate those until theyre up for their natural renewal.

And we have them the revenue covers the base. So I think about it more in terms of.

Great question, I think not really because what you are seeing in the challenge with the mix was really around the large strategic transformative deals that we signed in and by the way it's not that we wouldn't be interested in those deals.

Through future forward, how do we continue to improve either the variable cost or the overall fixed cost of the product to improve the margin mix.

Broadly.

We're just not relying on them in terms of how to drive kind of core organic recurring revenue growth. So when we have those we will let you know I wouldn't necessarily think that there'd be a material impact.

One moment for our next question.

Okay.

And that will come from the line of James Fawcett with Morgan Stanley . Your line is open.

To the change in the backlog through the modeling I just think it will take too long given the tenure of the contracts.

Thank you very much I wanted to just quickly go back to backlog.

Got it got it okay. That's helpful. Thank you and then.

Its development and how that may overlap with <unk>.

I guess just related to the change in outlook.

Changes that you've made in Salesforce and their focus I'm just wondering if as the sales force focuses on.

More generally, especially that youre looking at have there been any changes in the macro assumptions that youre looking at and how are you feeling about what youre seeing in the environment more generally just thinking about how that maybe impacting the formulation of your comments if at all.

So.

Good to hear from me James So taking a step taken a step further back we feel good about the consolidated guide Thats gone up.

Great question, I think not really because what youre seeing in <unk>.

Challenge with the mix was really around the large strategic transformative deals that we signed in and by the way it's not that we wouldn't be interested in those deals.

Broadly.

With the results that we have.

Year to date in both banking and capital markets, we feel confident in pulling up the low end of the guide.

We're just not relying on them in terms of how to drive kind of core organic recurring revenue growth and when we have those we will let you know I wouldn't necessarily think that there'd be a material impact to the change in the backlog through the modeling I just think it will take too long given the tenure of the contracts.

And taken into consideration that we feel the macro is steady.

Yes.

And one moment for our next question.

That will come from the line of Lisa Ellis with Moffett Nathanson. Your line is open.

Got it got it okay. That's helpful. Thank you and then.

Hey, good morning, Thanks for taking my question.

I guess just related to the change in outlook more generally, especially that youre looking at have there been any changes in the macro assumptions that youre looking at and how are you feeling about what youre seeing in the environment more generally just thinking about how that may be impacting the form.

I was hoping to dig in and understand a little bit better the ongoing commercial arrangements beats.

Between.

<unk> remain co Fas and we'll pay after the partial sale to GTC.

You commented on this a couple of times Stephanie can you just maybe walk through in a little bit more detail, what how we should think about what commercial arrangements are either.

Relation of your comments if at all.

So.

Already negotiated in the process of being negotiated like what will that arrangement look like on an ongoing basis between the two entities.

Good to hear from you James So taking a step taken a step further back we feel good about the consolidated guide Thats gone up.

Yeah sure so happy too so.

Broadly.

With the results that we have.

Don't think about amplify which is our cross sell initiative, where we're trying.

Year to date in both banking and capital markets, we feel confident in pulling up the low end of the guide.

Selling acquiring.

Into banking capital markets clients, and then on the flip side, where we're selling either issuing nice.

And taken into consideration that we feel the macro is steady.

And one moment for our next question.

Loyalty a lot of those products into our world pay clients to think about the corporate clients. There to date that has been very successful since the acquisition.

That will come from the line of Lisa Ellis with Moffett Nathanson. Your line is open.

Hey, good morning, Thanks for taking my question.

However, there hasnt been any revenue share between the segments because we're one company. So I think as we.

I was hoping to dig in and understand a little bit better the ongoing commercial arrangements.

Between.

<unk> remain co Fas and will pay after the partial sale to GTR.

Go into two companies the way to think about it as a very normal commercial agreement, where whichever distribution channel is selling the other's product you would expect to get a revenue share to compensate that channel for that product sale on a go forward basis, we're not going to go back and look at what's been said.

You commented on this a couple of times Stephanie can you just maybe walk through in a little bit more detail.

But how we should think about what commercial arrangements are either.

Alrighty negotiated in the process of being negotiated like what will that arrangement look like on an ongoing basis between the two entities.

Old and create a revenue share on the historical it would be a pro forma go forward only and we think that's really required for two reasons. One it will preserve the go forward synergies between the two companies and partnerships, but also really fair in terms of making sure that we are compensating just like you.

Yeah sure. So happy to so I think think about amplify which is our cross sell initiative, where we're trying we're selling acquiring.

Into banking capital markets clients, and then on the flip side, where we're selling either issuing nice.

Would in a normal arm's length arrangement that distribution channel for the product and the product for the distribution channel. So that's that's how we think about it most simplistically.

Loyalty a lot of those products into our world pay clients to think about the corporate clients. There to date that has been very successful since the acquisition.

Got it Okay and then.

Just maybe as a follow up.

However, there hasnt been any revenue share between the segments because we're one company. So I think as we.

Related to.

No. So FIS has been really active in account to account networks broadly globally as well as here in the U S. Can you just talk a little bit about what youre seeing.

Go into two companies the way to think about it as a very normal commercial agreement where we.

Whichever distribution channel is selling the other's product you would expect to get a revenue share to compensate that channel for that product sale on a go forward basis, we're not going to go back and look at what's been sold and create a revenue share on the historical it would be a pro forma go forward only.

In terms of opportunities for us either from fed now or just more broadly across the account to account landscape. Thank you sure sure. Yes, it's absolutely a trend as you know we're there we've been there for a long time, we have a significant amount of banks currently testing and certifying for fed now we have over 115 banks in the pipeline.

And we think that's really required for two reasons one it will preserve the go forward synergies between the two companies and partnerships, but also really fair in terms of making sure that we are compensating just like you would in a normal arm's length arrangement that distribution channel for the product and the product.

We have we have the ability to ramp hundreds more in the coming quarters, depending upon demand.

We're seeing some early momentum.

<unk>.

Probably a bit more than when the clearinghouse launched RTP.

As you know the certification is just the first step and then it continues on from there I'd say, it's early with these things Lisa as you know, there's always a lot of hype and promise.

For the distribution channel. So that's that's how we think about it most simplistically.

Got it Okay and then.

I think we're right there in terms of enablement TBD in terms of how fast it ramps what the the overall financial impacts are but I do think it's a really important trend in the market and <unk> is there to enable whomever would like to wood.

Just maybe as a follow up.

Related to.

Fed know FIS has been really active in account to account networks broadly globally as well as here in the U S. Can you just talk a little bit about what youre seeing.

I would like to use that.

One moment for our next question.

And that will come from the line of John Davis with Raymond James Your line is open.

Hey, Good morning, guys, Hey, Eric just a quick clarification, the $3 $9 billion to $4 billion does that include the synergies and future forward savings.

A significant amount of banks currently testing and certifying for fed now we have over 115 banks in the pipeline we have.

It does not.

We have the ability to ramp hundreds more in the coming quarters, depending upon demand.

So let me let me let me just walk it again, John Thank you for thank you for the clarifying question.

We're seeing some early momentum.

Three $9 billion to $4 billion for <unk> post transaction and that is inclusive of the corporate expense estimate for us moving forward.

<unk>.

Probably a bit more than when the clearinghouse launched RTP.

As you know the certification is just the first step and then it continues on from there I'd say, it's early with these things Lisa as you know, there's always a lot of hype and promise.

From there.

We disclosed $200 million of total adjusted EBIT of Dis synergies split.

$100 million of revenue of $100 million in incremental operating expense.

Think we're right there in terms of enablement TBD in terms of how fast it ramps what the the overall financial impacts are but I do think it's a really important trend in the market and <unk> is there to enable whomever would like to wed.

And then we've also got future forward benefit, which is down from $300 million to $215 million.

As we as we break future forward between.

I have some world pay.

Yes.

Okay. Thanks. So this is a quick follow up on banking margins I think on the <unk> call. You said about 50 basis points of expansion for the full year, which would imply second half margins are kind of up 3% to 400 basis points is that still the right way to think about any color on the <unk> cadence would be helpful.

I would like to use that.

One moment for our next question.

And that will come from the line of John Davis with Raymond James Your line is open.

Hey, Good morning, guys, Hey, Eric just a quick clarification, the three 9% to $4 billion does that include the synergies and future forward savings.

Well the sequencing through the year for banking margins would continue to improve.

It does not.

So let me let me let me just walk it again, John Thank you for thank you for the clarifying question.

I think we get to flat full year banking margins under the current forecast based on some of the mix shift that we've seen of high margin.

Three $9 billion to $4 billion for FIM post transaction and that is inclusive of the corporate expense estimate for us moving forward.

One time revenues coming down.

From there.

Thank you and we do have time for one final question.

We disclosed $200 million of total adjusted EBIT of Dis synergies split.

And that will come from the line of <unk> <unk> with <unk>. Your line is open.

$100 million of revenue of $100 million in incremental operating expense.

And then we've also got future forward benefit, which is down from $300 million to $215 million.

Hi, Thank you for taking my question.

First one for you Stephanie on the banking side understanding that youre not relying on for the larger end of the market anymore, just sort of get back to your normalized 3% to 5% revenue growth, but what do you think needs to happen to get that going again.

As we as we break future forward between.

I have some world pay.

Yes.

Is it more macro issue at this point or is there something else that can be done to get.

Signing those deals again.

Okay. So let me make sure I clarify because I've gotten two questions and I want to make sure. We are not stepping away from the large financial institution market.

Well the sequencing through the year for banking margins would continue to improve.

I think what we've called out historically as there have been some large strategic transactions.

I think we get to flat full year banking margins under the current forecast based on some of the mix shift that we've seen of high margin.

T Rowe price for example, where that is a transformative type deal for the institution those are not normal backlog type sales. So we're not stepping away from large financial institutions, but I think we've been trying to say is we're not going to rely on those large strategic transactions as a driver for us.

One time revenues coming down.

Thank you and we do have time for one final question.

And that will come from the line of <unk> <unk> with <unk>. Your line is open.

The underlying medium term cycle guidance for the company of 3% to 5%.

Hi, Thank you for taking my question.

We're still absolutely interested in those.

First one for you Stephanie on the banking side understanding that you're not relying on for the larger end of the market anymore, just sort of get back to your normalized <unk> to 5% revenue growth, but what do you think needs to happen to get that going again.

And pipelining, those we would call them out more specifically, but.

Those are our contributors if you look back at the last couple of years to a couple percentage points of growth overall in banking and so as you think about those normalizing out.

Is it more macro issue at this point or is there something else that can be done to get.

Signing those deals again.

And youre coming down from a mid to upper single digit number we would think about like we said for Fas remain co.

Okay. So let me make sure I clarify because I've gotten two questions and I want to make sure. We are not stepping away from the large financial institution market.

The $3 to 5% cycle guide on more of a more normalized backlog that doesn't include those now to.

I think what we've called out historically as there have been some large strategic transactions.

The extent, we continue to absolutely participate in those in terms of sales processes and as we think about those in those opportunities and should we win one of those.

Which does come with a different margin profile most of the time, we'd be very transparent in terms of that and wouldnt expect to have it as part of our normal recurring backlog activity. So hopefully that clarifies I apologize if I created any confusion with that.

The underlying medium term cycle guidance for the company of $3 to 5%.

We're still absolutely interested in those.

No that's absolutely clear I guess I was just wondering like what do you think it takes.

And pipelining, those we would call them out more specifically, but.

For you to start winning some of those deals again, because we just haven't because I think end of last year, you started to call out an elongation in sales cycle for those large types of deals and I was just wondering if that's more of a macro issue at that point.

Those are our contributors if you look back at the last couple of years to a couple percentage points of growth overall in banking and so as you think about those normalizing out.

Just making those decisions or theres something can be done.

And youre coming down from a mid to upper single digit number we would think about like we said for Fas remain co.

No.

Yeah, sorry, sorry, thanks for clarifying those are macro.

Those large transformative deals where banks are making strategic decisions, whether they want to be in businesses.

The $3 to 5% cycle guide on more of a more normalized backlog that doesn't include those now to.

Whether they want to use an outsource partner or whether they want to be in a hybrid part of that partnership we saw those slowdown at the end of last year, they're all still looking at them. Those cycles are still elongated as you can imagine.

The extent, we continue to absolutely participate in those in terms of sales processes and as we think about those in those opportunities and should we win one of those.

With the with the focus on deposits the.

The banks have really refocused a lot in terms of deposit gathering although they still have a very keen eye towards profitability. So those types of transactions typically do drive profitability.

But broadly I would say the banks are really focused on deposits and deposit gathering as their primary activity and are moving into profitability. So I think.

No that's absolutely clear I guess I was just wondering like what do you think it takes.

For you to start winning some of those deals again, because we just haven't because I think end of last year, you started to call out an elongation in sales cycles for those large types of deals and I was just wondering if that's more of a macro issue at that point.

Again, I think it's more macro.

And I think Tien Tsin mentioned, if youre hearing from outsource providers.

Lot of those big transformative deals are slowing down from a macro standpoint.

Just making those decisions or theres something could be done.

That's super helpful. Thank you and just a quick if I may ask a quick follow up.

No.

Yeah, sorry, sorry, thanks for clarifying those are macro.

You've laid out the 200 million of dis synergies on the <unk> side I just wanted to make sure that we were backing into the right number on the royalty side as well as we sort of think about the minority interest that will flow back to work and we were backing into something like $250 million on the royalty side is that sort of in the ballpark and how would you split that between revenues and costs.

Those large transformative deals where banks are making strategic decisions, whether they want to be in businesses.

Yes. Good question the the world pay side, it would be $200 million of Opex synergies in roughly $100 million of revenue dis synergies for a total EBIT impact of $300 million.

With the with the focus on deposits.

The banks have really refocused a lot in terms of deposit gathering although they still have a very keen eye towards profitability. So those types of transactions typically do drive profitability.

Thank you all for participating in today's question and answer session I would now like to turn the call back over to Mr. George <unk> for any closing remarks.

But broadly I would say the banks are really focused on deposits and deposit gathering as their primary activity and are moving into profitability. So I think.

Thank you everyone for joining us please feel free to reach out with any questions to Investor Relations and we will speak with you soon.

Again, I think it's more macro and.

Tien Tsin mentioned, if youre hearing from outsource providers a lot of those big transformative deals are slowing down from a macro standpoint.

Thank you all for participating. This concludes today's program you may now disconnect.

That's super helpful. Thank you and just a quick if I may ask a quick follow up.

<unk>.

You've laid out the 200 million of dis synergies on the <unk> side I just wanted to make sure that we were backing into the right number on the royalty side as well as we sort of think about the minority interest that will flow back to royalty and we were backing into something like $250 million on the royalty side is that sort of in the ballpark and how would you split that between revenues and costs.

Yes, good question.

<unk> side, it would be $200 million of Opex synergies in roughly a $100 million of revenue dis synergies for a total EBIT impact of $300 million.

Thank you all for participating in today's question and answer session I would now like to turn the call back over to Mr. George <unk> for any closing remarks.

Thank you everyone for joining us please feel free to reach out with any questions to Investor Relations and we'll speak with you soon.

Thank you all for participating. This concludes today's program you may now disconnect.

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Good day and welcome to the Fas second quarter 2023 earnings call. At this time all participants are in a listen only mode. After the speaker presentation. There will be a question and answer session to ask a question. During this session. Please press star one one on your telephone you will then hear an automated messy.

Advising your hand is right to withdraw your question Press Star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker, Mr. George <unk> head of Investor Relations.

Please go ahead.

Thank you Sharon good morning, everyone. Thank you for joining us today for the FIS second quarter 2023 earnings Conference call. This call is being webcast at today's news release corresponding presentation updated investor facts and webcast are all available on our website at FIS Global Dot com.

With me on the call. This morning are Stephanie Ferris, our CEO , and President and Eric Hogarth CFO Stefan.

Stephanie will lead the call with a strategic and operational update.

Claude by Eric reviewing our financial results and providing forward guidance.

Turning to slide three today's remarks will contain forward looking statements. These statements are subject to risks and uncertainties as described in the press release and other filings with the SEC.

Also throughout this conference call, we will be presenting non-GAAP information, including adjusted EBITDA adjusted net earnings.

Adjusted net earnings per share and free cash flow.

These are important financial performance measures for the company, but are not financial measures as defined by GAAP.

Reconciliation of our non-GAAP information to the GAAP financial information is presented in our earnings release with that I will turn the call over to Stephanie.

Thank you George and thank you everyone for joining us this morning.

On July six we announced a landmark transaction with GTR positioning both Fas and world pay for long term success and accelerating us on the path to unlock shareholder value from the planned separation.

Our future forward initiatives are simplifying our business and driving increased client centricity, while improving efficiency and financial outcomes across the company and.

In our second quarter results show the impact of this effort exceeding expectations and our guidance.

While we have more work to do I'm very proud of our team and are more optimistic than ever as we bring the company's future forward.