Q4 2023 Fiserv Inc Earnings Call

Operator: Welcome to the Pfizer fourth quarter 2023 earnings conference call. All participants will be in a listen only mode until the question and answer session begins following the presentation.

Welcome to the Pfizer fourth quarter 2023 earnings conference call all participants will be in a listen only mode until the question answer session begins following the presentation. As a reminder, today's call is being recorded at this time I will turn the call over to Julie share Yao Senior Vice President of Investor Relations at Fiserv.

Operator: As a reminder, today's call is being recorded. At this time, I will turn the call over to Julie Cheriel, Senior Vice President of Investor Relations at Pfizer. Thank you. Good morning.

Julie Yao: Thank you and good morning with me on the call today are Frank Bisignano, Our chairman, President and Chief Executive Officer, and Bob Hau, Our Chief Financial Officer.

Julie Cheriel: With me on the call today are Frank Bisignano, our Chairman, President, and Chief Executive Officer, and Bob Hau, our Chief Financial Officer. Our earnings release and supplemental materials for the quarter and full year are available in the Investor Relations section of Fiserv.com. Please refer to these materials for an explanation of the non-GAAP financial measures discussed on this call, along with the reconciliation of those measures to the nearest applicable GAAP measure. Unless otherwise stated, performance references are year-over-year comparisons.

Julie Yao: Our earnings release, and supplemental materials for the quarter and full year are available on the Investor Relations section of Fiserv Dot com.

Julie Yao: Please refer to these materials for an explanation of the non-GAAP financial measures discussed on this call along with a reconciliation of those measures to the nearest applicable GAAP measures unless otherwise stated performance references our year over year comparisons. Our remarks today will include forward looking statements.

Julie Cheriel: Our remarks today will include forward-looking statements about, among other things, expected operating and financial results and strategic initiatives. Forward-looking statements may differ materially from actual results and are subject to a number of risks and uncertainties. You should refer to our earnings release for a discussion of these risk factors. Now, over to Frank.

Julie Yao: About among other matters.

Julie Yao: That did operating and financial results and strategic initiatives forward looking statements may differ materially from actual results and are subject to a number of risks and uncertainties.

Julie Yao: You should refer to our earnings release for a discussion of these risk factors and now over to Frank.

Frank J. Bisignano: Thank you, Julie, and thank you all for joining us today to discuss another double-digit growth year for Fiserv in both organic revenue and adjusted earnings per share. In 2023, we will continue to demonstrate our leadership as proven by our financial performance. 12% organic revenue growth, more than 200 basis points of adjusted operating margin expansion, 16% growth in adjusted earnings per share, $4 billion of free cash flow, and $4.7 billion return to our shareholders through share repurchase. These results are possible because Fiserv possesses a set of assets that is unparalleled in our industry.

Frank J. Bisignano: Thank you Julie and thank you all for joining us today to discuss another double digit growth you have a bias here in both organic revenue and adjusted earnings per share in 'twenty. Two 'twenty three we continued to demonstrate our leadership as proven by our financial performance.

Frank J. Bisignano: As per said organic revenue growth more than 200 basis points of adjusted operating margin expansion.

Frank J. Bisignano: 16% and adjusted earnings per share $4 billion of free cash flow and $4.7 billion returned to our shareholders through share repurchase. These results are possible because pfizer possesses.

Frank J. Bisignano: A set of assets that's unparalleled in our industry from a vast and diverse client base product portfolio and distribution network.

Frank J. Bisignano: From our vast and diverse client base, product portfolio, and distribution network, to Technology and Capital Resources, to a deep bench empowered with strategic vision and operational excellence. This combination of assets is how we plan to sustain strong performance. A fundamental aspect of our culture is that we are not satisfied, and we continue to push for more.

Frank J. Bisignano: Technology and capital resources to a deep bench empowered with strategic vision and operational excellence. This combination of assets is how we plan to sustain strong performance of fundamental aspect of our culture.

Frank J. Bisignano: Is that we are not satisfied and we continue to push for more we know that great opportunity remains for continued revenue growth.

Frank J. Bisignano: We know that great opportunity remains for continued revenue growth and improved productivity. We laid out several growth strategies at our investor conference in November, and we are executing on those every day. At the same time, we continue to identify ways to drive further productivity. Five years ago, we announced the plan to merge First Data and Fiserv.

Frank J. Bisignano: And improve productivity, we laid out several growth strategies at our Investor Conference in November.

We are executing on those every day at the same time, we continue to identify ways to drive further productivity five years ago, We announced the plan to emerge first data and Pfizer today, we're a four and a half year old company with.

Frank J. Bisignano: Today, we are a four-and-a-half-year-old company with a 38-year track record of double-digit adjusted earnings per share growth. Under our new structure, half of our company, Merchant Solutions, is a leader in the high-growth payments market, where SMBs and enterprises are embracing the benefits of an operating system with seamless integration of value-added solutions. The other half, Financial Solutions, is a leader in the high-recurring revenue financial IT software and services market, helping small and medium-sized financial institutions level the playing field with larger banks and helping larger banks migrate to next-generation technology.

Frank J. Bisignano: The 38 year track record of double digit adjusted earnings per share growth under our new structure has no doubt company merchant solutions is a leader in the high growth payments market, where smbs and enterprises are embraced.

Frank J. Bisignano: Seeing the benefits of an operating system with seamless integration of value added solutions. The other half financial solutions is a leader in the high recurring revenue financial I teach software and services market helping.

Frank J. Bisignano: Small and medium sized financial institutions will level, the playing field with larger banks and helping larger banks migrate to next generation technology. This combination of growth and consistency has served us well and our business model is even more.

Frank J. Bisignano: This combination of growth and consistency has served us well, and our business model is even more compelling at the intersection of these two businesses. We continue to see strong opportunities to cross-sell and integrate merchant and financial solutions to help financial institutions better serve their merchant customers and enable merchants to retain customers with new financial services offerings. Fiserv is unique in its positioning at the center of these two important ecosystems.

Frank J. Bisignano: More compelling at the intersection of these two businesses, we continue to see strong opportunity to cross sell and integrate merchant and financial solutions to help financial institutions better serve their merchant customers.

Frank J. Bisignano: Yes.

Frank J. Bisignano: And enable merchants to retain customers with new financial services offerings Pfizer is unique in its positioning at the center of these two important ecosystems.

Frank J. Bisignano: Let's take a step back and review our 2023 results. They highlight another important aspect of our culture, delivering on our commitments. In late 2020, we set formidable financial and operational targets for the subsequent three years. We delivered on those and more.

Frank J. Bisignano: Take a step back and view our 'twenty 'twenty during results. They highlight another important aspect of our culture of delivering on our commitments in late 'twenty 'twenty, we set formula both financial and operational targets for the subsequent three years.

Frank J. Bisignano: Delivered on those and more where 2023 we started with organic revenue growth guidance of 7% to 9% and delivered 12%. We started with a goal of at least 125 basis points of adjusted operating margin improvement.

Frank J. Bisignano: For 2023, we started with organic revenue growth guidance of 7% to 9% and delivered 12%. We started with a goal of at least 125 basis points of adjusted operating margin improvement and delivered 220 basis points. And we started with adjusted EPS guidance of $7.25 to $7.40, or 12% to 14% growth. And we delivered $7.52, or 16% growth. In the fourth quarter, we achieved organic revenue growth of 12% and an adjusted operating margin of 40.7%, which was 150 basis points from the fourth quarter of 2022, which itself was an exceptionally strong quarter. Our adjusted earnings per share of $2.19 was ahead of expectations on the strength of our merchant revenue and payments margin. Free cash flow was also very strong at $1.3 billion, and we repurchased 8.6 million shares, ending the year with 5% fewer average diluted shares outstanding than last year.

Frank J. Bisignano: And delivered 220 basis points, and we started with adjusted EPS guidance of $7.25 to $7.40 or 12% to 14% growth and we delivered.

Frank J. Bisignano: $7.52 or 16% growth in the fourth quarter, we achieved organic revenue growth of 12% and adjusted operating margin of 47%.

Frank J. Bisignano: 150 basis points from fourth quarter 'twenty to 'twenty two.

Frank J. Bisignano: Chip itself was an exceptionally strong quarter.

Frank J. Bisignano: Our adjusted earnings per share of $2.19 was ahead of expectations on the strength of our merchant revenue and payments margin free cash flow was also very strong at $1.3 billion and we were.

Frank J. Bisignano: Repurchase.

Frank J. Bisignano: 8.6 million shares ending the year with 5% fewer average diluted shares outstanding than last year, our merchant acceptance segment generated organic revenue growth of 24% and 19% in there.

Frank J. Bisignano: Our merchant acceptance segment generated organic revenue growth of 24% and 19% in the quarter and full year, respectively, exceeding our expectations at the start of the year. Global revenue growth accelerated to 30% in the quarter as SMBs remained healthy and restaurants, in particular, continued to outperform. Our distribution partners globally continue to embrace our platform, and value-added solutions revenue grew more than 40% in 2023 to end the year at a 19% penetration rate. Carriage revenue growth rebounded to 11% in the quarter or 15% excluding the client that took processing in-house mid last year.

Frank J. Bisignano: Quarter and full year, respectively.

Frank J. Bisignano: Seating expectations at the start of the year.

Frank J. Bisignano: Oh over revenue growth accelerated to 30% in the quarter as Smbs remained healthy and restaurants in particular, continuing to outperform our distribution partners globally continue to embrace our platform value added solutions revenue grew more.

More than 40% in 2023 to end the year at a 19% penetration rate carriage revenue growth rebounded to 111% in the quarter or 15%. Excluding the client that took processing in house made last year growth was driven.

Frank J. Bisignano: Growth was driven by the accelerated pace of recent wins by key clients, which has continued into this year. We expanded our global acquiring capability by adding India's UPI and Japan's JCB as payment methods for clients in more than 35 markets. In the energy sector, we complemented our leadership position with a new deal to provide seamless unattended payment experiences for drivers using one of the country's largest networks of charging stations.

Frank J. Bisignano: By the ramp of recent wins by key clients, which has continued into this year, we expanded our global workplace capability by adding India's Upi and Japan's JCB as payment methods for clients in more than 35.

Frank J. Bisignano: Markets.

Frank J. Bisignano: In the energy sector, we complemented our leadership position within new deal to provide seamless unattended payment experiences for drivers using one of the country's largest networks of charging stations outside the U S. We were pleased to have signed.

Frank J. Bisignano: Outside the U.S., we were pleased to have signed several new deals in EMEA during Q4 and into January. They included a major new merchant-acquire relationship with a leading apparel and equipment retailer and a renewal and extension of business with a leading QSR. Additionally, Albert, the joint venture with Deutsche Bank, is now beginning to hit its stride with accelerated Clover merchant signups. In Asia-Pac, we signed a new merchant-acquiring deal with Vistara, a domestic airline in India, and went live with more payout options for consumers in the region. In Latin America, we continue to ramp up merchant acquiring in Brazil for Casabank, along with payment acceptance at its Vilpay outlets. We've also laid the groundwork to support more fee-based PICS transactions for our merchant clients with the acquisition of SLED in Q4. SLED is a software solutions company that will allow Fiserv to operate as a direct payment service provider, expanding our reach into the full PICS instant payments universe.

Frank J. Bisignano: Several new deals in EMEA during Q4, and then into January.

Frank J. Bisignano: Included a major new merchant acquiring relationship with a leading apparel and equipment retailer.

Frank J. Bisignano: And a renewal and extension of business with a leading U S. R. Additionally, Albert joint venture with Deutsche Bank is now beginning to hit its stride with accelerated Clover merchant sign ups in Asia Pac we signed the new.

Frank J. Bisignano: Emerging and acquired deal with this there are a domestic airline in India and went live with more payout options for consumers in the region in Latin America, we continue to ramp up merchant acquiring in Brazil for cash or bank.

Frank J. Bisignano: Along with payment acceptance and its bill pay outlets, we've laid the groundwork to support more fee based picks transactions Brown merchant clients with the acquisition of sled in Q4. So that is a software solutions company that will allow.

Frank J. Bisignano: Pfizer to operate as a direct payment service provider.

Frank J. Bisignano: Expanding our reach into the bowl picks instant payments universe in April we will be rolling out Clover, which we expect to further advance our leading position in Brazil.

Frank J. Bisignano: In April, we will be rolling out Clover, which we expect to further advance our leading position in Brazil. In Argentina, we're building on a four-year Cloverleaf strategy with acceleration in new merchant growth. With more Clover merchants engaging in more anticipation activity, our growth in Argentina continues beyond the macro factors of high inflation and interest rates. The payment segment achieved the top end of its medium-term guidance range with 4% organic revenue growth in the quarter and 8% for the year. We added nearly 20 large e-commerce merchants to our debit network, Star and Excel, in the wake of Reg I.I., including eBay and HelloFresh in Q4 and Uber, Lyft, and others earlier in the year. Several of these are new clients' devices.

Frank J. Bisignano: In Argentina, we are building on a four year globally, where the acceleration in new merchant growth.

With more clover merchants engaging in more anticipation activity outgrowth in Argentina continues beyond the macro factors of high inflation and interest rates. The payments segment achieved the top end of its medium term guidance range with <unk>.

Frank J. Bisignano: 4% organic revenue growth in the quarter and 8% for the year. We added nearly 20 large e-commerce merchants to our debit network star in itself in the wake of Red II, including ebay.

Speaker Change: Hello, fresh and Q4, and Uber Lyft and others earlier in the year.

Speaker Change: Several of these are new clients to buy a shirt.

Frank J. Bisignano: In 2023, we signed well over 200 of our financial institution clients to our Now Network to expand their payment routes to include FedNow for real-time payment. In BillPay, the bill and directory behind a market-leading consumer BillPay business is proving valuable in the SMB space, as we complete the build-out of our new small business accounts receivable and payable offering. Cash Flow Central. We won our first client in the fourth quarter, Washington Federal Bank, with $23 billion in assets. And just last week, Fiserv expanded its longstanding digital money movement relationship with U.S. Bank to now include Cashflow Central. These two important wins came just a few months after formally announcing the product.

Speaker Change: In 2020, three we signed well over 200 of our financial institution clients to island now with network to expand their payment rails to include fed now for real time payments and bill pay the biller directory behind that market.

Speaker Change: Leading consumer Bill pay business is proving valuable in the SMB space as we complete the build out of our new small business accounts receivable and payable offering.

Speaker Change: Cash flow of central.

We won our first client in the fourth quarter, Washington, Federal Bank with $23 billion in assets.

Speaker Change: And just last week Pfizer expanded its long standing digital money movement relationship with U S Bank to now include cash was central.

Speaker Change: These two important wins came just a few months after formally announcing the product.

Frank J. Bisignano: The pipeline is growing rapidly with strong interest and demand from financial institutions, including many of the largest. At our investor conference, we talked about value-added solutions and new verticals in our issuing business. We made significant progress on both during 2023 and early Q1. In particular, one of our value-added services, an AI-based fraud prevention tool called Advanced Defense, grew volume nearly 5x over 2022. Now Synchrony is in the process of upgrading to Advanced Defense across its portfolio of more than 70 million accounts. We're excited to be rolling out the California Employment Development Department plan for our Money Network prepaid card. This largest-of-its-kind state program for unemployment and other benefits will go live later this month.

Speaker Change: The pipeline is growing rapidly with strong interest and demand from financial institutions, including many of the largest at our Investor Conference, we talked about value added solutions and new verticals in our issuing business we.

Speaker Change: We made significant progress on both during 'twenty two 'twenty three and early Q1, one of our value added services and AI based fraud prevention tool called advanced Defense grew volume nearly five X over 2022 now.

Speaker Change: Synchrony is in Nebraska as of upgrading to advance defense across its portfolio of more than 70 million accounts. We're excited to be rolling out the California employment development Department plan trial money network prepaid cards.

Speaker Change: This largest of its kind state program for unemployment and other benefits will go live later this month we.

Frank J. Bisignano: We have a pipeline of other opportunities in the government sector to deliver on our strategy to grow in this vertical. This also extends to healthcare, where we converted a significant portion of health equity's CARD portfolio onto our platform in the fourth quarter, with the remainder scheduled for later this year. In EMEA, we signed our first global open FX issuer deal with ABSA, one of Africa's largest diversified financial services groups.

Speaker Change: We have a pipeline of other opportunities in the government sector to deliver on our strategy to grow in this vertical. This also extends to health care, where we converted a significant portion of health equity card portfolio onto our platform.

Speaker Change: In the fourth quarter with the remainder scheduled for later this year in EMEA, We signed our first global open FX issuer deal with ads.

Speaker Change: One of Africa's largest diversified financial services group. This new currency solution enables issuers to take control of their FX mitigate FX exposure and bring more value to their cardholders with true where it's one of the.

Frank J. Bisignano: This new currency solution enables issuers to take control of their FX, mitigate FX exposure, and bring more value to their CARD holders. With TrueWorths, one of the leading retailers in South Africa, we upgraded to a Vision Plus license, adding more value-added solutions. In Asia Pac, we added a new India issuer processing client, Equitas Small Finance Bank. They will launch their retail and corporate card programs using our First Vision India Processing Hub with a full-stack offering that includes UPI, loyalty, offers, and real-time fraud management. The FinTech segment recorded a 1% decline in organic revenue for the quarter and a 2% increase for the full year.

Speaker Change: Leading retailers in South Africa, we upgraded two of vision bus license attaching more value added solutions in Asia Pac we added a new India issuer processing client equity as small finance bank they will launch.

Speaker Change: Their retail and corporate card programs using outburst vision, India processing hub with a full stack offering that includes Upi loyalty offers and real time fraud management.

Speaker Change: <unk> segment recorded a 1% decline in organic revenue for the quarter and a 2% increase for the full year organic growth excluding periodic revenue for the year was 4%, while we knew we had a very difficult comparison with high periodic revenue.

Frank J. Bisignano: Organic growth excluding periodic revenue for the year was 4%. While we knew we had a very difficult comparison with high periodic revenue in Q4-22, we had visibility to achieve our growth goal, in large part from the level of client engagement we saw at Forum, our client conference in June. And those discussions continued.

Speaker Change: In Q4, 'twenty, two we had visibility to achieve our growth goal in large part from the level of client engagement. We saw inform our client conference in June and those discussions continue separately the pace of new core wins remains held.

Frank J. Bisignano: Separately, the pace of new core wins remained healthy at 12 in Q4, and clients are demonstrating two important trends. First, they are migrating from one Fiserv core operating system to another. A positive sign that they are finding the answers to their changing needs right here within the Fiserv portfolio. Second, while M&A activity among financial institutions slowed in 2023, we believe that M&A activity is good for us, as we can compete at any level with any institution without platforms, and it creates an opportunity to provide more services to the combined institution. Prosperity Bank, a Texas-based regional bank with $38.5 billion in assets, decided in Q4 to migrate to our cloud-enabled DNA platform and signed up for our card hub value-added solution. Old National Bank, a $49 billion bank in Indiana, is a core system client that has been growing with us as it has been making acquisitions.

Speaker Change: The at 12 in Q4 and clients are demonstrating two important trends.

First they are migrating from one Pfizer core operating system to another.

Speaker Change: Positive sign that they are finding the answers to their changing needs right here within the Pfizer portfolio second while M&A activity among financial institutions slowed in 'twenty two 'twenty three we believe that M&A activity is good for us.

Speaker Change: As we can't compete at any level with any institution without platforms and it creates an opportunity to provide more services to the combined institution prosperity Bank of Texas based regional bank with 38 and a half billion.

Speaker Change: Ours assets decided in Q4 to migrate to our cloud enabled DNA platform and signed up around card and how are the value.

Value added solutions old National Bank of 49 billion dollar bank in Indiana is a core system client that has been growing with us.

Speaker Change: As it has been making acquisitions and we continue to grow our relationship with old national in the fourth quarter with the addition of debit processing Excel card hub and other value added solutions. These are.

Frank J. Bisignano: And we continue to grow our relationship with Old National in the fourth quarter with the addition of Debit Processing, Excel, CardHub, and other value-added solutions. These are also two examples of our financial technology segment clients buying our value-added solutions in the payment segment. This ongoing trend of clients buying services across these two segments is a key reason why we are creating a single new segment, financial solutions. Turning to the outlook for 2024, we expect total company organic revenue growth of 15 to 17%, inclusive of an estimated seven points of growth from excess revenue in Argentina, driven by significantly higher inflation and interest in the Argentinian merchant business following the government's steep peso devaluation in mid-December. We expect continued margin improvement in 2024, with at least 100 basis points of adjusted operating margin expansion.

Speaker Change: Also two examples of our financial technologies segment clients buying out value added solutions in the payments segment. This ongoing trend of clients buying services across these two segments is a key reason why weird.

Speaker Change: Creating a single news segment financial solutions, turning to the outlook for 'twenty 'twenty four we expect total company organic revenue growth of 15% to 17% inclusive of an estimated seven point.

Speaker Change: The growth from excess revenue in Argentina, driven by significantly higher inflation and interest in the Argentina merchant business.

Frank J. Bisignano: And adjusted earnings per share should grow 14 to 16%, reaching $8.55 to $8.70. This adjusted EPS growth outlook is in the middle of the range we provided at our investor conference in November, and it's meant to be a prudent reflection of the macroeconomic outlook. Economist consensus calls for U.S. personal consumption growth and consumer savings to be lower in 2024, creating a modest headwind for the merchant business.

Speaker Change: Following the government's steep peso devaluation in mid December we expect continued margin improvement in 'twenty 'twenty four with at least 100 basis points of adjusted operating margin expansion and adjusted earnings for sure.

Speaker Change: Sure shoot grow 14% to 16%, reaching $8.55 to $8 and 70 sets. This adjusted EPS growth outlook is in the middle of the range. We provided at our Investor Conference in November and it.

Frank J. Bisignano: Against a potentially softer backdrop, we remain confident in our ability to grow clover and carrot as we add more merchants, sell more to existing clients, and add to our portfolio and penetration of value-added solutions. Our discussions with banks and credit unions indicate that they remain poised to spend to retain and grow deposits. We are meeting their changing needs every day with our operating system approach that offers the most integrated platforms and broadest suite of value-added solutions in the business. We are encouraged by our latest financial solutions initiatives in SMB payments with Cash Flow Central, our new integrated digital banking platform, Experience Digital, and the power of FinZAC to win over larger banks and existing clients. We expect all of these to ramp up over the course of 2024 and set the stage for stronger growth in subsequent years. To summarize, our outlook for 2024 is positive, as we anticipate another year of double-digit organic revenue growth and adjusted earnings per share, as well as strong adjusted operating margin expansion. Our optimism for sustained growth is tempered only by the economic backdrop of modestly slower GDP growth and geopolitical tensions.

Speaker Change: It's meant to be a prudent reflection of the macro economic outlook economist consensus calls for U S personal consumption growth and consumer savings to be lower in 'twenty to 'twenty, four creating a modest headwind to the merchant.

Speaker Change: Business against a potentially softer backdrop, we remain confident in our ability to grow clover, a carrot as we add more merchants sell more to existing clients and add to our portfolio and penetration of value.

Speaker Change: And it solutions.

Speaker Change: All discussions with banks and credit unions indicate that they remain poised to spend to retain and grow deposits. We are meeting their changing needs every day without operating system approach that offers the most integrated platforms.

And broadest suite of value added solutions in the business. We are encouraged by our newest financial solutions initiatives.

Speaker Change: S M b payments with cash was ventral.

Our new integrated digital banking platform experienced digital and the power of thin Zach to win over a larger banks and existing clients. We expect all of these to ramp over the course of 'twenty 'twenty four and set the stage for showing good growth in subsequent years.

Robert W. Hau: We remain confident in our ability to control our growth trajectory at the top and bottom lines through our strong positioning, innovation, good stewardship of capital, and plain hard work. We rely on our resilient business model with its diverse client mix serving non-discretionary spending categories and our high recurring revenue to continue investing at a pace that supports our competitive strengths. For more details on our financial results, I'll pass the discussion on to Bob. Thank you, Frank, and good morning, everyone.

Speaker Change: There's this.

Speaker Change: To summarize our outlook for 'twenty 'twenty four is positive as we anticipate another year of double digit organic revenue growth and adjusted earnings per share as well as strong adjusted operating margin expansion.

Speaker Change: The optimism for sustained growth level is tempered only by the economic backdrop of modestly slower GDP growth and geopolitical tensions we remain confident in our ability to control our growth trajectory at the top.

Robert W. Hau: If you're following along on our slides, I'll cover additional detail on total company and segment performance, starting with our financial metrics and trends on slide four. Fourth quarter and full year results reflected our focus on delivering on our commitments with momentum across the business. Total company organic revenue growth was 12% in the quarter, with ongoing strength in our merchant acceptance and payments and network segments, offset by a decline in the fintech segment against a very difficult comparison. For the full year, total company organic revenue also grew 12% ahead of the guidance we provided in October and November. This performance was led by the merchant acceptance segment, which grew 19%. Fourth quarter total company adjusted revenue grew 6% to $4.6 billion, and adjusted operating income grew 10% to $1.9 billion, resulting in an adjusted operating margin of 40.7%, an increase of 150 basis points versus the prior year and a sequential improvement of 260 basis points.

Speaker Change: Top and bottom lines through our strong positioning innovation, good stewardship of capital and plain hard work already rely on our resilient business model with its diverse client mix, serving non discretionary spending categories.

Speaker Change: And al high recurring revenue to continue investing at a pace that supports our competitive strengths for more details on our financial results I'll pass the discussion onto Bob. Thank you Frank and good morning, everyone. If you're following along on our slides.

Robert W. Hau: I'll cover additional detail on total company and segment performance, starting with our financial metrics and trends on slide four fourth quarter and full year results reflected our focus on delivering on our commitments with momentum across the business total company organic revenue growth was 12% in the quarter with ongoing strength.

Robert W. Hau: And our merchant acceptance and payments and network segments offset by a decline in the Fintech segment against a very difficult compare for the full year total company organic revenue also grew 12% ahead of the guidance. We provided in October and November. This performance was led by the merchant acceptance segment, which grew 19%.

Robert W. Hau: The 40.7% represents a post-merger high for Fiserv. Our fourth quarter performance brought the full year adjusted operating margin to 37.3%, an increase of 220 basis points over 2022. Fourth quarter adjusted earnings per share increased 15% to $2.19 compared to $1.91 in the prior year. Full year adjusted earnings per share increased 16% to $7.52. Those adjusted EPS results do not include $0.12 per share in expenses relating to the significant devaluation of the Argentine peso as part of a government reform package on December 12th last year.

Robert W. Hau: Fourth quarter total company adjusted revenue grew 6% to $4 6 billion and adjusted operating income grew 10% to $1 $9 billion, resulting in an adjusted operating margin of 47% an increase of 150 basis points versus the prior year.

Robert W. Hau: And a sequential improvement of 260 basis points to 47% represents a post merger high for Fiserv, our fourth quarter performance brought the full year adjusted operating margin to 37, 3% an increase of 220 basis points over 2022 fourth quarter adjust.

Robert W. Hau: Earnings per share increased 15% to $2 19, compared to $1 91 in the prior year full year adjusted earnings per share increased 16% to $7.52. Those adjusted EPS results do not include 12 cents per share.

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

Robert W. Hau: That's relating to the significant devaluation of the Argentine peso as part of our government reform package on December 12 last year. This one day move led to a non operating non cash foreign exchange loss for the revaluation of our local balance sheet as required under GAAP rules for <unk>.

Robert W. Hau: Or inflation accounting.

Robert W. Hau: All other Argentine foreign exchange losses throughout 2023 are included in the adjusted EPS results free.

Robert W. Hau: Free cash flow came in at $1 $3 billion for the quarter and $4 billion for the full year, an increase of 14% over last year now looking to our segment results starting on slide six organic revenue growth in the merchant acceptance segment was 24% in the quarter.

And 19% for the full year well ahead of our previous medium term segment guidance of 9% to 12%. This includes an eight point benefit to the full year organic growth from the transitory revenue driven by above average interest and inflation in Argentina.

Robert W. Hau: Adjusted revenue growth was 14% in the quarter and 12% for the full year. You can see from the spread between organic and adjusted revenue growth that currency headwinds from the devaluation of the Argentine peso offset the benefit of the country's very high inflation and interest for the full year in adjusted revenue. Global merchant volume and transactions in the quarter grew 5% and 8%, respectively, excluding wholesale processing.

Robert W. Hau: Adjusted revenue growth was 14% in the quarter and 12% for the full year.

Robert W. Hau: You can see from the spread between organic and adjusted revenue growth the currency headwinds from the devaluation of the Argentine peso offset the benefit of the country's very high inflation and interest for the full year.

Robert W. Hau: Clover revenue grew 30% in the fourth quarter, an annualized payment volume growth of 17%. For the full year, Clover revenue was up 25%. The spread between revenue and volume growth comes from higher penetration of value-added solutions, channel makeshift, and some pricing. Vast penetration reached 19% in Q4, up from 16% in the year-ago period, and OnPace to meet our 27% target by 2026. Carrick also had a strong quarter, with revenue growing 11%. For the year, Carrick revenue grew 9%.

Robert W. Hau: Adjusted revenue.

Robert W. Hau: Global merchant volume and transactions in the quarter grew 5% and 8% excluding wholesale processing respectively.

Global revenue grew 30% in the fourth quarter and annualized payment volume growth of 17%.

Robert W. Hau: For the full year Clover revenue was up 25%.

Robert W. Hau: The spread between revenue and volume growth comes from higher penetration of value added solutions.

Robert W. Hau: Panel mix shifts and some pricing.

Robert W. Hau: That's penetration reached 19% in Q4 up from 16% in the year ago period.

Robert W. Hau: And on pace to meet our 27% target by 2026.

Robert W. Hau: <unk> also had a strong quarter with revenue growing 11%.

Robert W. Hau: For the year revenue grew 9%, excluding the loss of a Latin American processing clients that moved in house revenue growth was 15% for both the quarter and the year.

Robert W. Hau: Excluding the loss of a Latin American processing client that moved in-house, revenue growth was 15% for both the quarter and the year. Adjusted operating income in the merchant acceptance segment increased 26% to $819 million in the quarter, with margin up 400 basis points to 38.8%. Full-year adjusted operating income improved 23% to $2.9 billion, and margin grew 330 basis points to 35.1%. Over the last couple of quarters, some of you have noted that our revenue includes anticipation in LATAM, but the cost of that anticipation interest is not included in the operating margin, as it is reported as interest expense below the operating income line on the income statement. If we were to take that interest from anticipation and proforma it back to operating income, merchant margins would still have expanded a very strong 220 basis points for the quarter and 260 basis points for the year. Looking ahead to 2024, January's overall volume growth, excluding process, was similar to December's pace. Difficult weather throughout large portions of the US did slow volume growth for a two-week period in mid January.

Robert W. Hau: Adjusted operating income in the merchant acceptance segment increased 26% to eight.

$819 million in the quarter with margin up 400 basis points to 38, 8% full.

Robert W. Hau: Full year, adjusted operating income improved 23% to $2 $9 billion and margin grew 330 basis points to 35, 1%.

Robert W. Hau: Over the last couple of quarters. Some of you have noted that our revenue includes anticipation in Latam, but the cost of that anticipation interest is not included in the operating margin as it is reported as interest expense below the operating income line on the income statement.

Robert W. Hau: If we were to take that interest from anticipation and pro forma is back to operating income.

Robert W. Hau: Margins would still have expanded a very strong 220 basis points for the quarter and 260 basis points for the year looking at 2020 for January was overall volume growth, excluding processing with similar to december's pace.

Robert W. Hau: Gold weather throughout large portions of the U S did slow volume growth for a two week period in mid January but we've seen clear improvement in volume growth since then.

Robert W. Hau: But we've seen clear improvement in volume growth since. The Fiserv Small Business Index also points to steady spending in a healthy environment for small businesses in January. We reported the index on February 2nd at $138, representing year-over-year growth of 1.7 percent and one-tenth of one percent growth from December on a seasonally adjusted basis. The Fiserv Small Business Index measures U.S. small business activity and is not a direct indicator of Fiserv results but rather a measure of the general pace of activity and health of this key Fiserv client base.

Robert W. Hau: Finally serve small business index also points to steady spending in a healthy environment for small businesses in January.

Robert W. Hau: We reported the index on February 2nd with a value of $1 38, representing year over year growth of one 7% in.

Robert W. Hau: And 110th of 1% growth from December on a seasonally adjusted basis.

Robert W. Hau: I serve small business index measures U S small business activity and it's not a direct indicator of fiserv results, but rather a measure of general pace of activity and health of this key fiserv client base turning to slide seven on the payments and network segment organic revenue grew 4% in the quarter.

Robert W. Hau: Go to slide 7 in the Payments and Networks section. Organic revenue grew 4% in the quarter. This growth was enabled by a variety of drivers across our business lines. We have well over 200 financial institutions live or implementing FedNow and saw continued strength in Zelle, with transactions and number of clients growing at 44% and 23% respectively for the quarter. Full year organic revenue growth of 8% was at the upper end of our medium-term outlook range of 5% to 8%. For the quarter, adjusted operating income for the segment was up 8% to $877 million, and Margin was up 250 basis points to 51%, driven by operating leverage and some third-party productivity we had been working on throughout the year that came in through the fourth quarter. For the full year, Adjusted Operating Income was up 13% to $3.2 billion, and Margin expanded 250 basis points to 47.8%.

Robert W. Hau: This growth was enabled by a variety of drivers across our business lines, we have well over 200 financial institutions live or implementing fed now and saw continued strength in zelle with transactions and number of clients growing at 44% and 23% respectively for the <unk>.

Robert W. Hau: <unk> full year organic revenue growth of 8% was at the upper end of our medium term outlook range of 5% to 8% fourth quarter adjusted operating income for the segment was up 8% to $877 million in.

Robert W. Hau: And margin was up 250 basis points to 51% driven by operating leverage and some third party productivity. We had been working on throughout the year that came in through the fourth quarter for the full year adjusted operating income was up 13% to $3 $2 billion and margin expanded 250.

Robert W. Hau: Basis points to 47, 8% moving to slide eight and the financial Technology segment, we posted a 1% organic revenue decline for the quarter and 2% growth for the full year organic revenue excluding periodic revenue grew 4% for the full year in client momentum continued.

Robert W. Hau: Moving to slide 8 in the Financial Technology section, we posted a 1% organic revenue decline for the quarter and 2% growth for the full year. Organic revenue, excluding periodic revenue, grew 4% for the full year, and client momentum continued with 12 core wins in the quarter, reaching 42 wins for the year. We had expected some strong license sales in the quarter to reach the bottom end of our full year guidance, but in several cases, these did not materialize as clients instead chose our Application Service Provider or ASP model. This is where we host the software in our data centers instead of clients purchasing their own software license. This had the effect of lowering in-quarter revenue in Q4 and instead spreading it out as monthly payments over multiple years. Adjusted operating income was down 11% in the quarter to $303 million, and it was flat at $1.2 billion for the year.

Robert W. Hau: With 12 core wins in the quarter, reaching 42 wins for the year, we had expected some strong license sales in the quarter to reach the bottom end of our full year guidance, but in several cases. These did not materialize as clients instead chose our application service provider or a S. P model. This is where are we.

Robert W. Hau: Host the software in our data centers instead of clients purchasing their own software licenses. It had the effect of lowering in quarter revenue in Q4, and instead of spreading it out his monthly payments over multiple years adjusted operating income was down 11% in the quarter to 303 million.

Robert W. Hau: And flat at $1 $2 billion for the year.

Robert W. Hau: Adjusted operating margin in the segment decreased 340 basis points to 37.9% in the quarter. Full-year margin increased 10 basis points to 36.6% with the lower periodic revenue. The corporate adjusted operating loss was $110 million in the quarter and $494 million for the full year. The adjusted effective tax rate in the quarter was $18.7% and was $19.3% for the year.

Robert W. Hau: Adjusted operating margin in the segment decreased 340 basis points to 37, 9% in the quarter full year margin increased 10 basis points to 36, 6% with the lower periodic revenue the corporate adjusted operating loss was $110 million in the quarter and $494 million.

Robert W. Hau: For the full year, the adjusted effective tax rate in the quarter was 18, 7% and was 19, 3% for the year. We expect the 2024 adjusted effective tax rate will be approximately 20% for the full year total debt outstanding was $23 $1 billion on December 31, the debt.

Robert W. Hau: We expect the 2024 adjusted effective tax rate will be approximately 20% for the full year. Total debt outstanding was $23.1 billion on December 31st. The debt to adjusted EBITDA ratio dropped another tenth of a turn to 2.7 times within our target leverage range. We have approximately 10% of our debt in variable rate instruments. During the quarter, we repurchased 8.6 million shares for $1 billion, bringing our total 2023 share repurchase to $4.7 billion and nearly $10 billion in the last three years. The diluted average share count fell 5% from 2022 levels.

Robert W. Hau: To adjusted EBITDA ratio dropped another 10th of a turn to two seven times within our target leverage range, we have approximately 10% of our debt and variable rate instruments. During the quarter, we repurchased eight 6 million shares for $1 billion, bringing our total 2023 share repurchase.

Robert W. Hau: <unk> to $4 $7 billion and nearly $10 billion in the last three years, the diluted average share count fell 5% from 2022 levels. We had 52 million shares remaining authorized for share repurchase at the end of the quarter, our longstanding capital allocation strategy will continue.

Robert W. Hau: We have 52 million shares remaining authorized for share repurchase at the end of the quarter. Our longstanding allocation strategy will continue in 2024, defined by a strong balance sheet, share repurchases, and complementary and innovative acquisitions. Turning to slide nine, as Frank said earlier, we expect organic revenue growth of 15 to 17% with adjusted operating margin expansion of more than 100 basis points. This translates to adjusted earnings per share of $8.55 to $8.70, or 14-16% growth over 2023 and would represent our 39th consecutive year of double-digit adjusted EPS growth.

Robert W. Hau: In 2024 defined by a strong balance sheet share repurchases and complementary and innovative acquisitions.

Robert W. Hau: Turning to slide nine as Frank said earlier, we expect organic revenue growth of 15% to 17% with adjusted operating margin expansion of more than 100 basis points. This translates to adjusted earnings per share of $8 55 to.

Robert W. Hau: $8.70 or 14% to 16% growth over 2023 and would represent our 39th consecutive year of double digit adjusted EPS growth and merchant solutions, we anticipate organic revenue growth in the 25% to 28% range, including 14 percentage points.

Robert W. Hau: In merchant solutions, we anticipate organic revenue growth in the 25-28% range, including 14 percentage points of transitory revenue growth in Argentina. This is higher than the outlook given at our investor conference in November due to the effects of the steep devaluation of the Argentine peso in mid-December. For financial solutions, we continue to expect 5-7% organic revenue growth this year. Additionally, we continue to estimate approximately $4.5 billion of free cash flow for 2024. In the second half of 2023, we launched a new initiative to purchase green tax credits, where we buy tax credits at a discount from companies who earn but cannot use them. This reduces the net cash tax paid and, in many cases, defers the cash payment by a quarter or two.

Robert W. Hau: A transitory revenue growth in Argentina. This is higher than the outlook given at our Investor Conference in November due to the effects of the steep devaluation of the Argentine peso mid December for financial solutions, We continue to expect 5% to 7% organic revenue growth. This year, we continue to est.

Robert W. Hau: Approximately $4 $5 billion of free cash flow for 2024 in the second half of 2023, we launched a new initiative to purchase Green tax credits.

Robert W. Hau: Where we buy tax credits at a discount from companies, who earned but cannot use them. This reduces the net cash tax paid and in many cases defers the cash payment by a quarter or two.

Robert W. Hau: A recent new rule codified this practice for 10 years, so we expect to continue to benefit from it. However, this will bring more variability to our quarterly cash flow. In 2024, there'll be a headwind in the first quarter and first half when we pay for the credits, and a tailwind in the second half when some of the tax refunds are received. While we do anticipate some shifts in timing, we continue to expect full-year free cash flow of approximately $4.5 billion. With that, let me turn the call back to Frank for some closing remarks. Thanks, Bob.

Robert W. Hau: We sit new world codified this practice for 10 years. So we expect to continue to benefit from them.

Robert W. Hau: This will bring more variability to our quarterly cash flows in 2024 there'll be a headwind in the first quarter and first half when we paid for the credits and a tailwind in the second half when some of the tax refunds are received while we do anticipate some shifts in timing, we continue to expect full year free cash.

Robert W. Hau: <unk> flow of approximately $4 $5 billion with that let me turn the call back to Frank for some closing remarks, thanks, Bob I'd like to spend a few minutes highlighting pfizer's commitment to corporate social responsibility, which we aligned with business operations and employee engagement to maximize.

Frank J. Bisignano: I'd like to spend a few minutes highlighting Fiserv's commitment to corporate social responsibility, which we align with business operations and employee engagement to maximize impact. Our next CSR report will be published in the second quarter and will demonstrate the continued development of our employee resource group, the Fiserv CARES Foundation, and our Back to Business program that awards grants to small businesses. To better serve our Minority Depository Institution clients and their communities, we formed an MDI Advisory Council, which includes eight clients and other members.

Robert W. Hau: Impact.

Our next CSR report will be published in the second quarter and will demonstrate continued development of all employee resource groups.

Robert W. Hau: Is there a cares foundation and Outback to business program that awards grants to small businesses to better serve our minority depository institution clients and their communities, we formed and MDI Advisory Council, which includes eight climb.

Robert W. Hau: <unk> and other members of the council as part of our efforts to better collaborate and deliver value to our MDI clients and the communities they serve.

Frank J. Bisignano: The Council is part of our efforts to better collaborate and deliver value to our MDI clients and the communities they serve. Institutional investors recognized Biserv for its CSR efforts as a top ESG performer in the payments, processing, and IT services sector, a first for the company. Our programmatic efforts earned recognition from prestigious indices like Bloomberg's Gender Equality Index and the Human Rights Campaign's Equality Index.

Robert W. Hau: Institutional investor recognized by <unk> for its CSR efforts as the top ESG performer and the payments processing and I T services sector.

Robert W. Hau: First southern company.

Robert W. Hau: Our programmatic efforts earned recognition from prestigious indices.

Robert W. Hau: Nick Bloomberg's gender equality index, and the human rights campaigns or quality index. We also ranked number one on the military times best for Vets employers list.

Frank J. Bisignano: We also ranked number one on the Military Times Best for Vets Employers list. And just last week, we were named one of Fortune's world's most admired companies for 2024, marking the ninth time in 10 years that we received this honorable distinction. While we scored highly in many categories, among the highest was innovation. We are particularly proud of this category recognition, as well as other standouts for people leadership, product and service quality, global competitiveness, and long-term investment values. As we look ahead to what's coming in 2024, the ongoing advancement of AI is not driven solely by the expanding capabilities of technology but also by the underlying proliferation of data to feed that generative engine.

Robert W. Hau: And just last week, we were named one of Fortune's world's most admired companies for 'twenty 'twenty four marking the ninth time in 10 years that we received this honorable distinction well.

Robert W. Hau: While we scored highly in many categories among the highest towards innovation.

Robert W. Hau: We are particularly proud of this category recognition as well as other standouts for people leadership product and service quality global competitiveness and long term investment value as we look ahead towards coming in 2020 four.

Robert W. Hau: The ongoing advancement of AI is not driven solely by the expanding capabilities of the technology, but also by the underlying proliferation of data to feed that generative engine.

Frank J. Bisignano: For Fiserv, ALDATA, and AI Power Intelligence put us on a path to be an effective user and enabler of AI. We're in the early innings of using it to optimize our own operations and deliver actionable insights for our clients as well, with significant benefits to come in quality, productivity, and growth. Fiserv already manages one of the most valuable information stores in the industry, and we start from a position of strength based simply on the sheer amount of data that runs through our systems each year. Over $4 trillion in payment volume globally across more than 6 million merchant locations, plus 1.6 billion card accounts on file, 325 million deposit and loan accounts, and 20 million bill pay users across nearly 10,000 financial institutions.

Robert W. Hau: For Pfizer, our data and AI powered intelligence put us on a path to be an effective user and enabler of AI.

Robert W. Hau: We're in the early innings of use is to optimize our own operations.

And deliver actionable insights for our clients says well what significant benefits to come in quality productivity and growth.

Robert W. Hau: Pfizer have already manages one of the most valuable information stores any industry and we start from a position of strength based simply on the sheer amount of data that runs through our system each year.

Robert W. Hau: Over four trillion dollars of payment volume globally across more than 6 million merchant locations, plus 1.6 billion card accounts on file.

Robert W. Hau: 325 million deposit only accounts.

Robert W. Hau: 20 million Bill pay users across nearly 10000 financial institutions.

Frank J. Bisignano: The power of our data-fuelled AI applications is already helping us throughout our business in areas such as enhanced customer services, analytics on the Clover and Carrot dashboards, and fraud mitigation tools. Let me share with you three ways we are turning data into an increasingly potent AI asset. Berk, We're creating better service and insights for our clients by helping them harness data in actionable ways. As an example, 85% of technical service calls were resolved unassisted through the use of data and AI, with high client satisfaction rates. Additionally, over the last year, more than 2 million of the highest-level technical support inquiries were resolved online through AI-assisted learning.

Robert W. Hau: The power of that data the only AI applications is already helping us throughout our business in areas such as enhanced customer service.

Robert W. Hau: Analytics on the Clover, and Karen dashboards and fraud mitigation tools.

Robert W. Hau: Let me share with you three ways, where attorney data into an increasingly potent asset.

First we're creating better service and insights for our clients by helping them harness data and actionable ways.

Robert W. Hau: As an example, 85% of technical service calls were resolved unassisted through the use of data and AI with high client satisfaction rates.

Robert W. Hau: Additionally over.

Robert W. Hau: Over the last year more than 2 million of the highest level technical support enquiries, whereas all online through AI assistant learning.

Second.

Frank J. Bisignano: We're embedding our data and AI capabilities into value-added solutions, such as advanced defense being used to combat fraud and other security risks. And third, we're packaging our rich data assets to build next-gen products. Earlier this year, for instance, we launched the Fiserv Small Business Index, a real-time assessment of consumer spending at SMBs.

Robert W. Hau: We're embedding our data and AI capabilities into value added solutions.

Such as advanced events being used to combat fraud, and other security risks.

Robert W. Hau: And third.

Robert W. Hau: We are packaging, our rich data assets to build next gen products.

Robert W. Hau: Earlier this year for instance, we launched the five serve small business index, a real time assessment of consumers when the S. M Dias.

Frank J. Bisignano: Published monthly, enabling new valuable insights for financial institutions, policymakers, investors, and businesses of all sizes. Bob discussed the results of our January index, which we released on February 2, making it an extremely timely measure of the current environment. As Bob and I like to say, intellectual honesty with analytical rigor is how we run the company. Data is the enabler for us to apply this in all that we do, serving our clients, choosing our partners, assessing our competition, prioritizing our investments, understanding our performance, and communicating it to investors. With the many assets I discussed on this call, including our data, along with our dedicated associates worldwide adopting this fundamental practice of intellectual honesty with analytical rigor, I'm confident that Fiserv will continue to extend its reach and sustain our leadership through 2024 and beyond. With that, Operator.

Robert W. Hau: Just months away, enabling new valuable insights for financial institutions policymakers.

Robert W. Hau: Investors and businesses of all sizes.

Robert W. Hau: <unk> discussed the results of our January index, which released on February 2nd.

Robert W. Hau: Making it.

Robert W. Hau: STREAMWAY timely measure of the current environment as Bob and I like to say intellectual honesty with analytical rigor is how we run the company data is the enabler for us to apply this and all that we do survey our clients choose out.

Robert W. Hau: Partners.

Robert W. Hau: Hey, I'm competition prioritizing our investments understand the outperformance and communicated to investors.

Robert W. Hau: With the many assets I discuss on this call, including data along with our dedicated associates worldwide adopt dana's fundamental practice intellectual honesty, what analytical rigor I'm confident that Pfizer will continue to extend its reach.

Robert W. Hau: And sustain our leadership through 'twenty 'twenty four and beyond.

Speaker Change: With that operator.

Operator: Please open the line for questions. Thank you. We would now like to open the phone lines for questions. If you would like to ask a question, you may press star 1 on your phone.

Speaker Change: Please open the lines for questions.

Speaker Change: Thank you we would like now like to open the phone lines for questions.

Speaker Change: I would like to ask a question you May press star one on your phone if you would like to withdraw your question. Please press star two for our first question will go to the line of David <unk> from Evercore ISI. Please go ahead.

David Mark Togut: If you would like to withdraw your question, please press star 2. For our first question, we'll go to the line of David Togut from Evercore ISI. Please go ahead. Thank you. Good morning.

David: Thank you good morning, good to see the continued acceleration of Clover growth.

Robert W. Hau: Good to see the continued acceleration of clover growth. I'll ask my question in the follow-up, both up front. So first, in the for PPT increase in the Organic Revenue Growth Guide for 2024, it looks like about three points of that relate specifically to an increase. Argentina inflation. So if that's correct, could you walk through how your operating organic revenue growth assumptions have changed by segment versus the initial guide at November Investor Day? Yeah, David, good morning.

My question is a follow up both upfront. So first is that a four ppt increase in the organic revenue growth guide for 2024.

David: It looks like about three points of that relates specifically to an increase in.

David: Argentina inflation, so if that's correct.

David: Could you walk through how you're operating organic revenue growth assumptions have changed by segment versus initial guide in AR at the November Investor day. Thanks.

David: Yeah, David Good morning in your assessment is right on the Mark the total company organic revenue growth.

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

David: Went up from back in November we said, 11% to 13%, we now expect 15% to 17% we previously indicated.

David: The impact of favorable impact of higher than normal interest and inflation in Argentina would drive about six points of growth to the merchant segment or about three points to the total company.

David: We now expect that that excess inflation and interest is about seven points of growth to the total company. So essentially the growth or the increase in organic revenue growth is really attributed to higher inflation and interest expense out of Argentina, the underlying quote more.

David: More normal organic growth of the merchant segment and the company remain consistent with what we expected and saw back in November.

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

David: The other element of course as we talked about in November is there is that natural counter balance in our adjusted revenue and in our income statement.

David: Higher excess inflation and interest rate.

David: So it drives a higher currency variation or FX headwind and that also increased about four points from the November so net our adjusted revenue or EPS or operating margins very consistent isolating out just that Argentina impact.

Robert W. Hau: And then just a quick follow up. What are your expectations for Clover revenue growth in 2024? Would you expect continued acceleration? And then, if so, any call outs?

Speaker Change: Okay. Thanks for that and then just a quick follow up what are your expectations for Clover revenue growth in 2024 would you expect a continued acceleration and then if so any any call outs I know Frank you mentioned, Brazil, a rollout in.

Robert W. Hau: I know, Frank, you mentioned the Brazil rollout in April. Yeah, from a Clover standpoint, you saw the acceleration of revenue in the fourth quarter to 30%. We've talked quite a bit about the Clover growth rate accelerating into, you know, our Investor Day commitment, actually pulled back in our March 2022 call out where we really focused in on Clover overall, where we gave an outlook for 2025. We updated that back in November to 2026, so adding another year.

Speaker Change: April.

Speaker Change: Yeah from a corporate standpoint, you saw the acceleration of revenue in the fourth quarter to 30%, we've talked quite a bit about.

Speaker Change: The kovar growth rate accelerating into our Investor day commitment.

Speaker Change: Actually bought back.

Speaker Change: March of 2020 to call out where we really focused in on Cobra overall, where we gave an outlook.

Speaker Change: 2025, we updated that back in November.

Speaker Change: For 2026.

Speaker Change: So adding another year of our outlook. We continue to believe obviously that we'll deliver against that $10 billion for the total company.

Robert W. Hau: Of our outlook, we continue to believe, obviously, that we'll deliver against that $10 billion for the total company and $3.5 billion for Clover in 2025 and then $4.5 billion for Clover in 2026. We feel good about the trajectory. I wouldn't suggest that, you know, we're going to get 30% every single quarter, but there are a lot of elements that are driving that growth, and we feel good about it overall. I would just say we talked about Brazil.

Speaker Change: And $3 $5 billion for Clover in 2025.

Speaker Change: And then for $5 billion for quote work in 2026, we feel good about the trajectory I wouldn't suggest that we're going to get 30% every single quarter, but theres a lot of elements that are driving that growth and we feel good about the overall trajectory.

Speaker Change: I would just say are we talking about Brazil, we worked on that for a long time.

Frank J. Bisignano: We've worked on that for a long time, and you should expect us to have further country rollouts. You heard us talk about the Deutsche Bank JV bird, which has begun to hit some stride and is getting traction. You've always heard us talk about beginning to proliferate the ISV, and that fundamentally there was nothing about albacore in that set of numbers either. Of course, www.fiservincorporation.com. I hope you guys enjoyed it. I'll see you guys next time.

Speaker Change: You should expect us.

Speaker Change: As far as our country Rollouts you heard us talk about the.

Speaker Change: Deutsche Bank JV for which.

Speaker Change: Yes, it is some strides and getting.

Speaker Change: Faction.

Speaker Change: You've always heard us talk about beginning to proliferate T. I S E channel.

Speaker Change: And that fundamentally there was nothing about our back book is that set of numbers of course, we have a natural 90%.

Speaker Change: You had some back book that just converse naturally I'd also like to highlight the pen rate that I've really talked about what we do.

Frank J. Bisignano: I also want to highlight, you know, the pen rate is the number we talked about. We definitely were about growing our poo, and you see that pen rate up at 19%, which kind of tracks exactly what we've laid out to date. So Clover continues to do its job. The distribution networks we have are unparalleled.

Speaker Change: Definitely we're about a growing ARP.

Speaker Change: And you see that pen rate at 19%, which kind of tracks exactly.

Speaker Change: Yes.

Speaker Change: Uh huh.

Speaker Change: So <unk> continues to do its job distribution networks, we have right how else and Walgreens.

Operator: And we're bringing you, http://TheBusinessProfessor.com. Thanks so much. Next, we'll go to the line with Tenjin Wong from J.P. Morgan. Please go ahead.

Speaker Change: It.

Speaker Change: Yeah.

Speaker Change: Thanks, David.

Thanks, so much.

Speaker Change: Next we'll go to the line of Tien Tsin Huang from JP Morgan. Please go ahead.

Operator: Hey, thanks. Also wanted to follow on with David's question, just on the merchant side with volume and transaction growth, the spread there is really still quite favorable, both total and with Clover. So looking out, should we expect some kind of cyclical mean reversion with that tightening, plus under this value-added services, promotions, and you mentioned pricing as well, so what can we assume there since we're all trying to do the benchmarking? At Tingen, I think certainly we've continued to see that spread between volume and revenue. And it's something that is actually part of our strategic plan to grow to that three and a half and four and a half billion dollars in Clover and 10 to 12 for merchants by 25 and 26.

Speaker Change: Hey, Thanks also one of the following with David's question, just on the merchant side with volume and transaction growth the spread there is really still.

Speaker Change: Quite favorable both total and with Clover, So looking out.

Speaker Change: Should we expect some kind of cyclical mean reversion with with that tightening plus under this value added services promotions and pricing as well so what can we assume there since world trade.

Speaker Change: <unk> tried to do the benchmarking exercise.

Speaker Change: Yes, Tien Tsin, I think certainly we've continued to see that that spread.

Tien Tsin: Between volume and revenue and it's something that is actually part of our strategic plan to grow to that three and a half from $45 billion and clover and intend to 12.

Tien Tsin: For merchant by 25, and 26 I think ultimately what it comes down to is as we continue to sell more software more value added services more additional capabilities to our merchants you're going to see revenue grow faster than volume of this spread will ebb and flow across.

Operator: I think ultimately, what it comes down to is that as we continue to sell more software, more value-added services, and more additional capabilities to our merchants, you're gonna see revenue grow faster than volume. Now, the spread will ebb and flow across different quarters, but we continue to see a good opportunity to sell value-added services. That penetration reached 19% in the quarter, up about three full points from a year ago.

Tien Tsin: And quarters, but we continue to see good opportunity to sell value added services that penetration reached 19% in the quarter up about three four points from a year ago.

Robert W. Hau: As we march towards 27%, by 2026, you'll continue to see great revenue growth overall. And certainly, there's the channel mix, more direct NISV relative to where we are today, that'll continue to benefit. Right, right, more retail stuff.

Tien Tsin: March towards the 27% by 2020 secs, you'll continue to see great revenue growth overall, and certainly there's a channel mix more direct.

Tien Tsin: I S b relative to where we are today that will continue to benefit that.

Tien Tsin: Right.

Frank J. Bisignano: Good, glad to hear revenue faster than volume. Just my quick follow-up and just to clarify. I mean, Frank and Bobby both talked about a lot of good wins across all the lines here.

Tien Tsin: So it's good glad to hear the revenue, especially in volume just my quick follow up then just.

Tien Tsin: Bobby both talked about a lot of good wins across all the lines here just thinking about the outlook for new deal activity in 2020 for two weeks back or do you see a lot of large deals or is it more cross selling wins with with some of the new products. What do you see for this coming year.

Frank J. Bisignano: Just thinking about the outlook for new deal activity in 2024, should we expect or do you see a lot of large deals, or is it more of a cross-selling win with some of the new products? What do you see for this coming year? Well, I mean, I think it's all of the above.

Speaker Change: Well I mean.

Frank J. Bisignano: I mean, I suppose you might also be referring to those cash flow central ones we talked about, new product rollout, tremendous opportunity there. It's another area where we're helping out banks generate revenue, deliver better technology products to their clients, Uh, you know, and then, you know, we also believe that we have a lot of cross-sell opportunities, but we have a very large pipeline of just plain old new wins. And you should expect us to continue doing what we've been doing, and our expectation is that we'll always do more. And the term cross cell is obviously something we use internally quite a bit.

Speaker Change: I think it's all of the above I mean.

Speaker Change: But it might be also referring to the cash flow central lines. When you talk about a new product rollout tremendous opportunity there. It's another area, where we're helping our banks generate revenue delivering better technology product to their client base.

Speaker Change: And then you know we also believe that.

Speaker Change: And when you have a lot of cross sell opportunity, but we have a very large pipeline of just play on new wins.

Speaker Change: And you should expect us to continue doing what we've been doing and you know Alex vacation is always do more.

Speaker Change: And in terms of the term cross sell obviously, something we use internally quite a bit we talked to you folks about.

Frank J. Bisignano: We talk to you folks above. Ultimately, we have a very wide swath of clients. The U.S. bank deal that we announced this morning on Cashflow Central, that's a big transaction with a large bank, but it's a cross out. They are a large client of ours. They currently use check-free for their consumers.

Speaker Change: Ultimately, we have a very wide swath of clients are the U S Bank deal that we announced this morning.

Speaker Change: Cash flow central that's a big transaction with a large bank, but it's a cross sell they are a large client of ours. They currently use check free further consumers, though now expand the cash flow central for there.

Robert W. Hau: They'll now expand to Cashflow Central for their businesses and merchants. And so we'll continue to see a lack of opportunities. It'll sometimes be, quote, new logos, but also selling additional capabilities to our existing clients. Good, good. Thank you. Next, we'll go to the line with Darren Peller from Wolf Research. Please go ahead. Guys, thanks. It's great to see a person's strength.

Speaker Change: Businesses and merchants and so we'll continue to see lots of opportunities it'll sometimes be quote new logos, but also selling additional capabilities towards existing client base.

Speaker Change: Good good thank you.

Speaker Change: Next we'll go to the line of Darrin Peller from Wolfe Research. Please go ahead.

Darrin Peller: Guys say, it's great to see the or constraint I do want to touch on a couple of the other segments real quickly on the Fintech side just to start.

Operator: I do want to touch on a couple of the other segments real quickly. And on the FinTech side, just to start... I know you expected Tough Comps, and you obviously called out the software license sales to the ASP side impacting revenues. When we think about what that means in terms of spreading out revenues across a period of time now, in terms of more recurring revenues, Maybe just help us understand your anticipation for that segment again. I know you initially raised the combined payments and fintech outlook a little bit when you had your investor day. So is that still on track? And if you could just revisit the drivers giving you confidence in really both segments. Yeah, Darren, good morning.

Darrin Peller: I know you expected tough comps when you obviously called out the software license sales to Asp's side impacting revenues. When we think about what that means in terms of spreading out our revenues across a period of time now in terms of more recurring revenues.

Darrin Peller: Maybe just help us understand your anticipation for that segment again very good initially raised the combined payments and Fintech outlook, a little bit when you had your investor day. So is that still on track and if you could just revisit the drivers, giving you cut off but its really in both segments.

Speaker Change: Yeah Darrin good morning, So a couple of things one when we sign a license deal typically that's a three or five year license you get a large license transaction December is always a pretty high month for license activity and you get ongoing maintenance, but license is certainly the big.

Robert W. Hau: So a couple of things. One, when we sign a license deal, typically that's a three or five year license, you get a large license transaction. December is always a pretty high month for license activity. And you get ongoing maintenance, but the license is certainly the big chunk.

Robert W. Hau: When you convert or when a client instead goes to an ASP contract, you book that over the five-year period every single month on a per account basis or per transaction per user, depending on the product and depending on the client contracting, we feel good. Ultimately, that's actually a better economic transaction for us, so we like that transition. If you look at 2023's results and you combine the two bank and credit union facing segments, fintech, payments, and network, we did about 6% organic growth on a combined basis. If you look at our outlook for 2024, we reiterated what we said back in November. We expect that combined segment, or the new segment, financial solutions, which is largely a combination of the existing FinTech and payment, to be in that 5-7% range. And they will actually accelerate into 2025 and beyond, up to 6-8%.

Speaker Change: Hunk, when you convert or when a client instead goes to an ISP contract you book that over the five year period every single month on a per account basis.

Speaker Change: <unk> per user basis, depending on the product and depending on that.

Speaker Change: And contracting.

Darrin Peller: Good ultimately that's actually a better economic transaction for us so we like that transition if.

Darrin Peller: If you look at 2020 threes results, you've combined the two banking credit union facing segments, Fintech and payments and network, we did about 6% organic growth on a combined basis.

Darrin Peller: You look at our outlook for 2024.

Darrin Peller: We reiterated what we said back in November we expect that combined segment or the new segment financial solutions, which is largely a combination of the existing fintech and payment to be in that 5% to 7% range and they actually accelerate into 2025 and beyond up to six to eight per site. So feel good about.

Robert W. Hau: So feel good about the overall growth of that business, the product portfolio, adding things like cash flow central, selling more payment solutions, and benefits of FinTech as that goes live and gets deeper into the marketplace. We feel good about our ability to continue to grow our capability selling into, That's helpful. And then just a quick follow up on the merchant side again, Frank. You talked a lot about the VAS side having a big penetration opportunity up to the mid 20% plus range. I think you had a nice jump this quarter.

Darrin Peller: The overall growth of that business the product portfolio.

Darrin Peller: Adding things like cash flow central selling more payment solutions, a benefits of Fintech as that goes live and gets deeper into the marketplace. We feel good about overall our ability to.

Darrin Peller: To continue to grow our capabilities selling into the banks and credit unions.

Speaker Change: Okay. That's helpful. And then just quick follow up on the merchant side again Frank.

Speaker Change: You talked a lot about the bad side, having a big penetration opportunity up to the mid 20% plus range I think you had a nice jump this quarter. So maybe just.

Frank J. Bisignano: So maybe just touch on what drove that combined with if you think you have the right assets now, or you know, there's a lot more chatter over potential for Tuckins and M&A again this year as rates may change. So anything on the horizon for you guys. Thanks.

Touch on what drove that combined with if you think you have the right assets now or you know, there's a lot more chatter over potential for tuck ins that M&A again this year as rates may change so.

Speaker Change: On the horizon for you guys. Thanks, guys.

Frank J. Bisignano: Yeah, I mean, we really do like our hands across the board in the company. You've seen us add things like FinZac, which I think really compliments our ability to compete anywhere, anyway, along with DNA, which has really proved itself. If you go to the merchant business, we're still, you know, largely focused on building out more verticals, that would be retail and services, and continuing to complement what we're doing in Bento. I think, you know, our software is tactically strong, and we're continuing to add functionality to it. We think our pin rate will continue to do what we've forecasted. Obviously, we're always...

Speaker Change: Yeah, I mean, we really do like our hand across the board and the company you've seen us add things like fit exactly which I think really complements out our ability to compete anywhere anyhow, along with DNA, which is really cause itself. If you go to a merchant business or so.

Speaker Change: You know orange like focused on building.

Speaker Change: Building out more vertical that would be retail and services and continuing to complement what we're doing in Bento I think I think you know our software stack and strong and we're continuing to add functionality to it we payout Henry will continue to do what we've forecasted.

Speaker Change: Obviously, we're always looking at opportunities to invest.

Operator: Looking at opportunities to invest as a minority investor, and you've seen us do that, and things like Bento and FinTech and others on DOT, which ended up, you know, being in more than a thousand institutions, tagged to our mobility product to give an unbelievable experience to a thousand banks. So I think we feel good about our hand. We're always looking at ways to add software functionality, and you know you should expect us to continue to be great stewards of capital deployment as I hope you all feel we have. Thanks, guys. Next, we'll go to the line from Timothy Chiodo from UBS. Please go ahead.

Speaker Change: I'm in a minority investor and you've seen us do that and things like that so and and things that others aren't.

Speaker Change: Oh, My God, which ended up being.

Speaker Change: Being more than a thousand institutions.

Speaker Change: Child mobility.

Speaker Change: Product.

Speaker Change: Boy experienced 1000 banks.

Speaker Change: So I think we feel good about our hand, we're always looking at can we add software functionality and you know you should expect us to continue to be great stewards of capital deployment as I Hope you all feel we have it.

Speaker Change: Thanks, guys.

Speaker Change: Next we'll go to the line from Timothy Cheeto from UBS. Please go ahead.

Operator: Thanks a lot for taking the time to answer the question. You mentioned in the prepared remarks a little bit of channel mix shift for Clover. I was hoping you could provide some directional color broad strokes across the 2023 cohort of new merchants or volume that came on to Clover, whether it be just a kind of order of magnitude across direct sales, bank partners, whether they be JV or non-JV, and then, of course, wholesale and retail ISO. And I ask partially because, clearly, the differentiation is partially due to the distribution here, but also so that we could get a better sense of the portion of revenues that are hitting adjusted revenue versus maybe being netted out or coming below the line in the equity income line.

Timothy Cheeto: Thanks, a lot for taking the question you mentioned in the prepared remarks, a little bit of channel mix shift for Clover I was hoping you could provide some directional color broad strokes across the 2023 cohort of new merchants or volume that came onto clover, whether it be just kind of order of magnitude across direct sales bank partners.

Timothy Cheeto: Whether they be JV or non JV, and then of course wholesale and retail I, So and I ask partially because clearly the differentiation is partially due to the the distribution here, but also so that we could get a better sense on the portion of revenues that are hitting adjusted revenue versus maybe.

Timothy Cheeto: Being netted out or coming below the line in the equity income line.

Timothy Cheeto: Yeah.

Operator: Yeah, I think we tried to give pretty significant transparency around the last part of that question with quote unquote excessive inflation. Interest rates done in Argentina. On a side note, our LATAM business and our... Great. Obviously, we've got this variation going on, on the quote, excess, but that's a tremendous business. LATAM Overall, growth in Clover as we bring Clover down to Brazil, and we'll add Mexico later in the year, so we feel very good about our overall growth.

Speaker Change: Yeah, I think we've tried to give some pretty significant transparency around the last part of that question would quote unquote excess inflation in <unk>.

Speaker Change: Interest on in Argentina, just as a side note our last time.

Speaker Change: Latam business in Argentina business is a great business.

Speaker Change: Obviously, we've got this variation going on on the quote excess.

Speaker Change: But that's a tremendous business Latam overall growth in Clover as we bring <unk> down in Brazil will add Mexico later in the year. So we feel very good about our overall capabilities there.

Robert W. Hau: To the first part of the question, I would say broadly we continue to expand our distribution capabilities. We have a long track record of ISO and ISV partners, and bank channel partners. We have traditionally not had a big direct business.

Speaker Change: To the first part of the question no I would say broadly we continue to expand our distribution capabilities. We have a long track record of ISO and ISP partners. Our bank channel partners, we have traditionally not had a big direct business that.

Robert W. Hau: That continues to grow, but we also continue to grow pretty meaningfully in the ISV channels with the expansion of ISV capability into Clover. And having that Clover asset makes us a pretty significant partner of choice, not only for ISVs, but also for bank channels. So we see growth there. As a percent of growth, our direct business is probably growing the fastest, but a little bit of, you know; it's the smallest piece. It's the newest piece of the organization, but we're seeing good growth across the board. Excellent. Thank you for that. Next, we'll go to the line for the Andola from Mizzou Host Securities. Please go ahead.

Speaker Change: And that is that continues to grow but we also continued to grow pretty meaningfully in the ISP channels.

Speaker Change: With expansion of ISP capability to cover.

Speaker Change: And how big that Culver asset.

Speaker Change: It makes us a pretty significant partner of choice not only for Ais fees, but also the bank channel. So we see growth there as a percent of growth our direct business is probably growing the fastest but a little bit of you know, it's a smaller smallest piece. It's the newest piece of it of the organization, but we're seeing good growth.

Speaker Change: Cross the board.

Speaker Change: Excellent. Thank you for that.

Speaker Change: Next we'll go to the line of Dan <unk> from Mizuho Securities. Please go ahead.

Operator: Hey guys, great results here. My quick first question is on, again, back to the value-added services, really impressive 40% growth. Can you maybe talk a little bit about the split in 23 between software and capital? You're asking about 2023? Yeah, the 40% growth that you, in 23. So I wouldn't necessarily have a split for you at my fingertips.

Dan: Hey, guys great results here.

Dan: My quick first question is on again back to the value added services really impressive 40% growth can you maybe talk a little bit about the split in 'twenty three between software and capital.

Dan: Oh, you're asking about 2023.

Dan: Yes, the 40% growth that you mentioned.

Speaker Change: In 'twenty three.

Speaker Change: So I wouldn't necessarily have a split for you at my fingertips, we can look to get that for you.

Robert W. Hau: We can look to get that for you. But I think I would tell you that it's been pretty consistent. Obviously, we always have a relatively large software capital, software spending, given the nature of our business. And I think that remains relatively consistent. Dan, were you asking what the 40% component was largely software and what the component was... Clover Capital? Was that the question you were asking? Yeah, exactly. On the value of... It's software.

Speaker Change: I think I would tell you that it's been pretty consistent obviously, we always have a relatively large software capital.

Speaker Change: Software spending given the nature of our business.

Speaker Change: And I think that remains relatively consistent.

Speaker Change: And what are you asking if you looked at the 40%.

Speaker Change: What component was largely software.

Speaker Change: Calling it was clover exactly answer your question, you're asking yes, exactly on the value of that software.

Speaker Change: Right right.

Speaker Change: Software.

Robert W. Hau: It's software-dominated. I mean, you know, it would be, I'd call it large-majority software. Sorry, did I hear CapEx spending? Oh, I'm sorry, yeah. This is my Israeli accent. That's why we've got four ears here. commented that this was a drag.

Speaker Change: Software dominated.

Speaker Change: You know it would be I'd call. It large majority software.

Speaker Change: Oh, sorry did I hear anything about your Capex spending Oh, I'm sorry, yeah.

Okay.

Speaker Change: My Israeli asking for and that's why we got four years here.

Speaker Change: And then just my quick follow up really quick.

Speaker Change: The opportunities in Red Guy I mean, one of the networks.

Frank J. Bisignano: I would imagine this is a big benefit for Fiserv. Can you maybe, you know, talk about or cite the opportunity here for Starr and Excel? Well, you know, as I've continued to say, we've been committed to our debit network, Star and Excel, their strategic assets within the company. As REG-II turns into reality, you've heard us talk about nearly 20 wins. Obviously, you know... We compete at every level

Speaker Change: Commented that this was a drag I would imagine this is a big benefit when Pfizer can you maybe.

Talk about the size of the opportunity here for doing so.

Speaker Change: Yeah.

Speaker Change: Well as I've continued to say, we've been committed to a debit network star in excel.

Speaker Change: Our strategic assets within the company.

Speaker Change: I turns into reality.

Speaker Change: You heard us talk about nearly 20 wins, obviously you.

Speaker Change: You know we compete at every level Theres Fabulous competition out there for these transactions.

Frank J. Bisignano: There's fabulous competition out there for these transactions, but, you know, embedded in what we're looking at is obviously more opportunity than we had before AII, and the fact that some of those household names that you've heard, like HelloFresh or Lyft or others, give us that opportunity. So, I think, you know, it's off to a decent start. It remains to be determined over the longer haul, but we feel good about the Ray-Guy-I-App. Amazing. Thank you so much.

Speaker Change: No embedded in what we're looking at is obviously more opportunity than we've had before.

Speaker Change: And the fact that some of those household names that you heard like Hello, fresh or west or others are you know give us that opportunity. So I think it I think you know, it's it's off to a decent start it remains to be determined over the longer haul.

Speaker Change: But we feel good about the the rig.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Amazing Thank you so much.

Operator: Thank you. Next, we'll go to the line of Jason Kupferberg from Bank of America. Please go ahead.

Speaker Change: Thank you.

Speaker Change: Next we'll go to the line of Jason Kupferberg from Bank of America. Please go ahead.

Jason Alan Kupferberg: Good morning, guys. I just wanted to follow up on the FinTech segment and the dynamic you saw there where you switched kind of from the, or the clients wanted to switch kind of from the license model to more of the recurring ASP model. You know, do you see this as kind of a one-off development with a handful of clients? Or is this a broader trend?

Jason Alan Kupferberg: Good morning, guys I just wanted to follow up on the Fintech segment and the dynamic you saw there where are you switched kind of from the or the clients wanted to switch kind of from the license model to more of the recurring ASP model.

Jason Alan Kupferberg: Do you see this as kind of a one off development with a handful of clients is this a broader trend I'm just anything you can give us maybe around where that segment sits now in terms of percentage of revenue that that's kind of more periodic versus recurring and and what you are projecting you know on that front going forward.

Robert W. Hau: You know, just anything you can give us maybe around where that segment sits now in terms of the percentage of revenue that's kind of more periodic versus recurring and what you're projecting, you know, on that front going forward. Yeah, I think there's a series of factors. I'd go back, you know, on the full year, 4% with non-periodic revenue. And, you know, clearly, we ultimately signed a number of transactions, but they became ASP instead of licenses, which we thought we had visibility on. We also like to remind everybody that, you know, the fourth quarter historically is where fourth quarters are in the last month, and that's where these things happen going down to the wire. Like it wouldn't in any software fail, as I know, having been an orange buyer of software for years and jobs I've done.

Jason Alan Kupferberg: Yeah, I think there's a series of factors you know I'd go back you know on the on the full year.

Jason Alan Kupferberg: 4%, but not periodic revenue.

Jason Alan Kupferberg: And you know clearly we ultimately.

Jason Alan Kupferberg: A number of transactions, but they became a S E. Instead of license, which we thought we had visibility license. We also like to remind everybody that you know fourth quarter, historically is where fourth quarter was worse.

Jason Alan Kupferberg: In the last month is where these things have been going down to the wire well it wouldnt in any software sale and I know having.

Jason Alan Kupferberg: Orange buyer of software for years and jobs I've done.

Frank J. Bisignano: So I think that... It's not necessarily a trend, but, you know, it does have clients, and we saw it last year, too, in different ways, clients who believe that given regulatory, given cyber, given a series of factors, the ASP model will help their P&L and their ability to perform better than the license. I think it's an institution-by-institution choice. It's not the first time we've seen this, and, you know, I think a lot remains to be done.

Jason Alan Kupferberg: So I think that.

Speaker Change: It's not necessarily true.

Speaker Change: But you know it does have a clients and we saw it last year to a different way is clients, who believe that given regulatory given cyber or giving a series of factors.

Speaker Change: That's P model or help their P&L and their ability to perform better than our license with us.

Speaker Change: I think it's an institution by institution choice its not the first time, we've seen it.

Speaker Change: And you know I think a lot remains to be determined.

Frank J. Bisignano: Okay, good caller. Just on a separate note, we saw last month that Fiserv applied for a bank charter in Georgia. Can you just talk about the steps, the potential timeline to get that application approved, and what the benefit to Fiserv would potentially be, whether that's on the cost side or the ability to provide additional solutions to merchants? Thanks.

Speaker Change: Okay. Good color just on a separate note we saw last month five separate flight for a bank charter in Georgia can you just talk about the steps potential timeline to get that application approved what the benefit to fiserv would potentially be a whether that's on the cost side, our ability to provide additional solutions to merchants.

Frank J. Bisignano: Well, yeah, um, you know, let me bring pure clarity to what that is because there's clearly, you know, lots of questions about why Fiserv is applying for a bank license. And obviously, before we did that, we talked to the ABA, and we communicated with our clients. It's a very specific purpose that allows for sponsorship of Merchant Acquired. Historically, you needed a bank, and that's within the Visa and MasterCard rules, and our ability to be able to have an institution for that sole purpose, who will allow us to be a sponsor for our own Merchant Acquiring Insert will be valuable as we can control more of the outcome than we can...

Speaker Change: Well, Yeah, you know, let me bring sure clarity to what that is because there's clearly you know a lots of questions about why Pfizer is applying for a bank license.

And obviously before you did that we talk to EMEA, we communicated to our clients.

Speaker Change: It's a very specific purpose.

Speaker Change: I sense that allows for sponsorship of merchant acquiring.

Speaker Change: Historically, you needed a bank and that's what ended up being a mastercard rules.

Speaker Change: And our ability to be able to have a institution for that sole purpose, but will allow us to be a sponsor for our own merchant acquiring in certain instances will be valuable as we can control more.

Speaker Change: The outcome than we could before very specific purpose.

Frank J. Bisignano: Very specific purpose, very clear to our banks, we're not competing with them, we have great bank partners, you know, probably the largest bank portfolio in the world when you take merchant business and all our other businesses, and we're a business to help our banks grow. This ultimately supports our smaller banks, who do not have sponsorship, and we can bring it. It became more clear in the merger when we were able to cross-sell to our community banks and others, which would not have happened at First Data, that our ability to sponsor them ourselves would be very, very important. Thank you, Frank.

Speaker Change: Very clear to all banks were not competing with them.

Speaker Change: We have great bank partner as you know.

Speaker Change: Probably the largest bank portfolio.

Speaker Change: And in the World when you take merchant business and Oh, all other businesses and we're in business to help out bank's ROE. This ultimately supports our smaller banks, who do not have sponsorship and we could bring it it became more clear in the merger when we were able to.

Cross sell to our community banks, and others, which would have not happened at first data that our ability to sponsor them ourselves. So it would be very valuable.

Speaker Change: Thank you Frank.

Speaker Change: Yeah.

Operator: The Bulletproof Executive 2013, Thank you. Our next question comes from Dave Koning from Baird. Please go ahead.

Thank you. Our next question comes from Dave Koning from Baird. Please go ahead.

David Koning: Yeah, Hey, guys, great great year, and I guess my question on merchant. So you you guided 25% to 28% organic and then you talked about 14% benefit from FX and inflation. So you got to get down to core of kind of 11% to 14% due both North America and international grow in that range.

David Koning: Yeah, hey guys, great, great year. And I guess my question on merchants, so you guided 25 to 28% organically, and then you talked about 14% benefit from FX and inflation. So you're down to a core of kind of 11 to 14%. Do both North America and international grow in that range, which presumably is taking quite a bit of share? Yeah, so the merchant business overall, obviously good growth. Our Latin, excuse me, our international region, Europe, Latin America, APAC, all growing very nicely. OMEA, larger than Latin America, is growing a bit slower from an organic standpoint.

Which presumably is taking quite a bit of share.

Speaker Change: Yeah, so the the merchant business overall, obviously good growth.

Speaker Change: To me our international regions.

Speaker Change: Europe, Latin America, APAC, all growing very nicely EMEA.

Speaker Change: Larger than Latin America, growing a bit slower from an organic standpoint.

Robert W. Hau: Broadly, our North American business, a very high single-digit growth rate. And obviously, the international business is growing meaningfully higher than that, given the size of the business and the opportunity to continue to grow and add merchants and sell more services there also. But good business, most definitely, in all four. Gotcha.

Speaker Change: Broadly, our north American business very high single digit growth rate.

Speaker Change: Obviously, the international business is growing meaningfully higher than that given the size of the business and the opportunity to continue to.

Speaker Change: To grow.

Speaker Change: And at merchants and sell more services, they're also but good business, most definitely and in all four regions.

Robert W. Hau: And just a quick follow-up, FX losses, will you not add those back again through 2024? I know Q4 seems like an anomaly, but you won't add those back.

Speaker Change: Got you and just a quick follow up FX losses will you not add those back again through 2024, I know Q4. It seems like the anomaly you won't add those back and maybe how big do you expect that to be in interest expense in 2024.

Robert W. Hau: And maybe how big do you expect that to be in interest expense in 2024? Yeah, so let me be, make sure we're clear. What we adjusted out was actually not the fourth quarter, not December; it was December 12. It was the one-day devaluation that the new president of Argentina put into place, to a little more than a 50% devaluation, and it was only the impact of revaluing the balance sheet, which in most currencies stays on the balance sheet, but because Argentina is hyperinflationary or highly inflationary, the accounting rules require you to revalue the balance sheet through the income.

Speaker Change: Yeah, absolutely be make sure we're clear.

Speaker Change: What we have.

Speaker Change: Adjusted out was actually not fourth quarter not December it was December 12. It was the one day devaluation that the new president of Argentina put it into place towards a little more than a 50% eval and it was only the impact of.

Speaker Change: Revaluing the balance sheet.

Speaker Change: Which in most currencies stays on the balance sheet, but because Argentina is hyperinflation or highly inflationary accounting rules require you to revalue the balance sheet through the income statement. We did that every day of 2022, we did it every day of 2023.

Robert W. Hau: We did that every day of 2022. We did it every day of 2023, with the exception of the one-time significant move that we felt was really non-normal course, non-operational. So we dialed that piece out only. All of the other 364 days went through the income statement.

Speaker Change: With the exception of the one time significant transact or significant move that we felt was really not normal course nonoperational. So we dialed that piece out only all of the other 364 days went through the income statement and in fact <unk>.

Robert W. Hau: And in fact, we're larger than what we took in that one day. That will occur in 2024. Obviously, if there's another significant deval, we may evaluate that. But we're not anticipating that.

Speaker Change: Larger than what we took care of that one day, we have that that will occur in 2024, obviously if theres. Other another significant D. Bell, we may evaluate that we're not anticipating that we think things are quote.

Robert W. Hau: We think things are, quote, normal stabilizing in Argentina remains to be seen. It's a unique economy. We've got some great leadership down there that are running our Latin America business that have been through these cycles multiple times over decades of leadership. So we feel very good about being able to handle the kind of ongoing normal things. This one time, one day default is what we dialed out.

Speaker Change: More stabilizing in Argentina remains to be seen.

Speaker Change: Unique economy, we've got some great leadership down there that are running our Latin America business that have been through these cycles multiple times over decades of leadership. So we feel very good about being able to handle the kind of ongoing normal things. This one time, one day Dee Valley was what we do though.

Operator: Gotcha. Thanks, guys. Great job. And for our final question, we'll go to the line of Ashwin Shirvaikar from Citi. Please go ahead. Thank you, Frank. Hi, Bob.

Speaker Change: Got you thanks, guys great job.

Speaker Change: Thank you.

Speaker Change: And for our final question will go to the line of Ashwin <unk> from Citi. Please go ahead.

Speaker Change: Yeah.

Ashwin: Thank you.

Ashwin: Hi, Bob.

Ashwin Shirvaikar: I guess my question is with regard to the cadence of segment revenues and segment margins, what should we expect through the year? Because there are, I think, a couple of factors, at least with regard to how, I guess, Argentina's impact plays out. Does it reduce through the course of the year? And then, carrot, I would imagine, you know, much better than the half of the year because of the lack of.. and Jeff Komp.

Ashwin: I guess my question is with regards to the.

Ashwin: The cadence of segment revenues and segment margins, what should we expect through the year because there are I think a couple of factors.

Ashwin: With regards to.

Ashwin: How I guess Argentina.

Ashwin: Jack plays out because it does it reduce through the course of the year.

Speaker Change: And then Ken.

Speaker Change: Kenneth I would imagine much better back half of the year because the lack of.

Speaker Change: Uh huh.

Robert W. Hau: Factors like that, I mean, how should we think of cadence through the course of the year? Yeah, I think first off, broadly, across the company, I don't see a big variation from quarter to quarter or first half to second half. There are obviously some specific comparisons within individual segments or individual margins, but broadly, generally, across the board with the one nuance in our merchant acceptance business, I would expect organic revenue to be higher in the first half of the year than in the second half of the year because we do anticipate some improvement in interest rates and inflation in the second half relative to what's going on there as the economy deals with some of the things that the government is putting in place, hopefully with But, of course, that's offset by FX.

Speaker Change: Hum pretty tough comp.

Speaker Change: And factors like that I mean, how should we think of cadence through the course of fear.

Ken: Yeah, I think first off broadly across the company I don't see big variation from quarter to quarter or first half to second half.

Ken: We see some specific comparisons within individual segments or individual margins, but broadly generally in line.

Ken: Across the board with the one nuance in our merchant acceptance business I would expect organic revenue to be higher in the first half of the year than in the second half of the year, because we do anticipate some in <unk>.

Ken: <unk> mint in interest rates and inflation in the second half.

Ken: Relative to what's going on there is as the economy.

Ken: With some of the things that the government is putting in place hopefully with their expectation that they ease inflation and interest rates remains to be seen but of course, that's offset by FX. So on an adjusted revenue basis from a margin standpoint, and an EPS relatively stable.

Robert W. Hau: So on an adjusted revenue basis, from a margin standpoint, EPS is relatively stable. The other thing I would just reiterate, we talked a bit about it in our prepared remarks. Cash flow will definitely have some variation with tailwinds in the second half of the year after some headwinds in the first half. But again, I have a good degree of confidence in the $4.5 billion.

Ken: Other thing I would just reiterate we talked a bit about it in our prepared remarks cash flow will definitely have some variation.

Ken: With a tailwind in the second half of the year after some headwinds in the first half but again.

Ken: Have a good degree of <unk>.

Ken: Confidence in the $45 billion for the full year.

Speaker Change: Got it and then the quick follow up if I sort of small business index.

Robert W. Hau: And then the quick follow-up is Fiserv's small business index. I guess how indicative is it of the health of Fiserv's own client base? And can you comment, generally speaking, on small business health? It seemed to me like your economic assumptions call for more or less a soft landing, but I just want to clarify. Yeah, first off, the latter part, yes, I would agree. We are anticipating, I think, like the rest of the world at this point, a soft landing. Things seem to be on track for that, a bit softer macro environment, and modestly slower GDP in 2024.

Speaker Change: I guess, how indicative is it of the.

Speaker Change: <unk> of the health of five one.

Speaker Change: <unk> client base.

Speaker Change: And then can you comment generally speaking on small business has.

Speaker Change: It seems to me like you would.

Speaker Change: Economic assumptions call for more or less a soft landing but.

Speaker Change: I just wanted to clarify.

Speaker Change: Yes first off the latter part yes, I would agree we are anticipating I think like the rest of the world at this point.

Speaker Change: Soft landing things seem to be on track for that.

Speaker Change: Bit soft soffer macro environment modestly slower GDP.

Speaker Change: In 2024.

Robert W. Hau: The FSBI is based on a very broad set of data that we have across our company that we then extrapolate to the entire U.S. market. Thus, it is not a direct indication of FISERV activity. If there are differences in region, mix of, you know, we're very strong in restaurants; we might have more restaurants than we do nail salons, or so we go through the NICS codes across the country, different industry weightings, different regions, but we take our data and extrapolate it across the U.S., so it's a very real-time indicator of the health of small businesses. Now, relative to our performance, we are the So if there's variation in the FSBI, you're likely to see variation in Pfizer's results.

Speaker Change:

Speaker Change: The FSP I is based upon a very broad set of data that we have across our company that we then extrapolate to the entire U S market. So it is not a direct indication of Pfizer of activity if there.

Our differences in region.

Speaker Change: Mix of work.

Speaker Change: We're very strong in restaurant, we might have more restaurants than than.

Speaker Change: And then we do nail salons or so we go through the Nics codes.

Speaker Change: Across the country different industry weightings different regions, where we take our data and extrapolate it.

Speaker Change: Across the U S. So it's very much a very real time indicator of the health of small businesses.

Speaker Change: Now.

Speaker Change: Relative to our performance.

Speaker Change: The largest merchant acquirer in the country.

Speaker Change: So if there's variation the FSB youre likely see variation in <unk> results.

Robert W. Hau: Relative to some nuances of different regions, industry weightings, etc., but certainly, you know, a strong FSBI indicator index would be good for us. A weaker index would be a headwind for us. We're actually quite proud of that capability. Not only is it using all of the data we have, by the way, including cash transactions, which obviously don't manifest themselves in our numbers for merchant acquiring, but we have the data, and it's in real time. We're able to provide that information two days after the month ends. It's not a perfect proxy, but it's a proxy.

Speaker Change: Relative to some nuances of different regions industry, weightings et cetera, but certainly.

Speaker Change: Truong FSP I indicator index would be good for us, but a weaker index would be a headwind for us.

Speaker Change: We're actually quite proud of that capability not only is it using all of the data we have by the way, including cash transactions, which obviously don't manifest themselves in our numbers for merchant acquiring but we have the data and it's very real time, we're able to.

Speaker Change: And provide that information two days after the month ends.

Speaker Change: It's not a perfect proxy, but it's a proxy.

Operator: Got it. Thank you for all the information. Thanks. Thank you everyone for your attention today. Please feel free to reach out to our IR team with any questions and have a great day. Thank you all for participating in the FISER Fourth Quarter 2023 Earnings Conference Call. That concludes today's call. Please disconnect at this time and have a great rest of your day.

Speaker Change: Got it thank you for again.

Speaker Change: Thanks.

Speaker Change: Well, thank you everyone for your attention today.

Speaker Change: I just feel free to reach out to IR team with any questions and have a great day.

Speaker Change: Thank you all for participating in the Pfizer fourth quarter 2023 earnings Conference call that concludes today's call. Please disconnect at this time and have a great rest of your day.

Speaker Change:

Speaker Change: [music].