Q2 2024 Fidelity National Information Services Inc Earnings Call
and James Kehoe for the The The The The The The The The The The The The
Operator: Good day, and welcome to the Fidelity National Information Services second quarter 2024 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. George Mihalos, Head of Investor Relations. Sir, the floor is yours.
Boring.
Speaker Change: Good day and welcome to the Fidelity National Information Services second quarter 2024 earnings call.
Speaker Change: At this time, all participants are in a listen-only mode.
Speaker Change: To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star 11 again.
Georgios Mihalos: Good morning, everyone. And thank you for joining us today for the FIS Second Quarter 2024 Earnings Conference. Let's call it being webcast. Today's news release, corresponding presentation, and webcast are all available on our website at fisglobal.org. Joining me on the call this morning are Stephanie Ferris, our CEO and President, and James Kehoe, our CFO.
Speaker Change: Let's call it being webcasted.
Speaker Change: Today's news release, corresponding presentation, and webcast are all available on our website at FISglobal.com.
Speaker Change: Joining me on the call this morning are Stephanie Ferris, our CEO and President, and James Kehoe, our CFO .
Speaker Change: Today's remarks will contain forward-looking statements.
Speaker Change: Please refer to the Safe Harbor Language.
Speaker Change: Also, throughout this conference call, we will be presenting non-GAAP information, including adjusted EBITDA, adjusted net earnings, adjusted net earnings per share, and free cash flow.
Speaker Change: To reposition the company on a sustainable path for growth and to unlock greater value for all of our stakeholders.
Stephanie Ferris: In May, we hosted an Investor Day, and we are seeing strong double-digit growth in our commercial lending business, where we continue to see a long growth trajectory.
Speaker Change: And the strength and durability of our business model across all economic cycles.
Speaker Change: We are executing across the growth vectors we laid out at Investor Day.
Speaker Change: In core banking, we are currently on track for a record year of new core signings.
Speaker Change: Within our digital business, we saw new sales growth of over 30% in the first half of 2024, highlighting the success of our cross-sell into existing core customers and displacing competitors.
Speaker Change: We're also winning in the fast-growing treasury and risk market, with further penetration in growth verticals such as insurance.
Speaker Change: In seeing strong double-digit growth in our commercial lending business, where we continue to see a long growth trajectory.
Speaker Change: So in summary, we're executing strongly across all growth sectors and are seeing strong momentum across the business.
Speaker Change: I am pleased to report we delivered our sixth straight quarter of outperformance as we continue to execute against our strategy.
Speaker Change: Revenue growth in the quarter was 4% with acceleration across both banking and capital markets.
Speaker Change: We exceeded our profitability targets with company margins expanding by 110 basic points.
Speaker Change: Driving normalized adjusted EPS growth of over 30%.
Speaker Change: Well ahead of our outlook.
Speaker Change: Our strong first half performance is allowing us to once again raise our financial outlook for the year.
Speaker Change: Now let me share with you some strategic highlights from the quarter.
Speaker Change: I'm thrilled with the strong new sales momentum we're driving, including our cross-sell initiatives across the enterprise, and the benefits we're seeing from our commercial relationships with WorldPay.
Speaker Change: Over the first half of 2024, cross-sell activity across the enterprise grew an impressive 15 percent.
Speaker Change: As our sales transformation efforts continue to take hold.
Speaker Change: We're accelerating our go-to-market strategy with key partnerships and innovative new product rollouts.
Speaker Change: We recently teamed up with Qirinos, a global data intelligence company, to provide FIS core banking clients with access to Qirinos' proprietary data and analytics.
Speaker Change: Helping them optimize their deposit gathering strategies and improve profitability.
Speaker Change: We also announced a partnership with Lendio, a leading small business financial solutions technology platform.
Speaker Change: to streamline SMB loan processing for financial institutions.
Speaker Change: Also within Capital Markets, we launched our Climate Risk Financial Modeler, a best-in-class SaaS-based solution designed to help corporations, insurance companies, and financial institutions assess and quantify climate risk across their portfolios.
Speaker Change: We continue to return capital to shareholders and are well on track to deliver on our $4 billion of share repurchase commitment for the year.
Speaker Change: Additionally, our board recently approved a new share repurchase authorization of $3 billion.
Speaker Change: Beginning with Money Arrest.
Speaker Change: We sell strong demand for our core banking platforms with several competitive takeaways including Third Coast Bank Shares, a leading Texas-based community bank.
Speaker Change: We expanded our relationship with a large regional bank with over $25 billion in assets that added its current breadth of products within our Digital One ecosystem.
Speaker Change: We also saw continued traction across Money in Motion.
Speaker Change: Synchrony joins a long list of leading card issuers who've selected FIS' premium payback offering to help differentiate their value proposition in the highly competitive consumer credit industry.
Speaker Change: This quarter, a large U.S.-based life insurance provider selected FIS' suite of risk and compliance tools.
Speaker Change: Trust Fund is a perfect example of how we're leveraging acquisitions to source and win new opportunities.
Speaker Change: The combination of FIS's strong accounting and reporting solutions, coupled with the capabilities of recently acquired DeepPool, an investor servicing software provider, were the deciding factors in allowing FIS to win a highly competitive sales process.
Speaker Change: Capital markets continues to differentiate itself from its peers by further expanding into fast-growing verticals and capitalizing on its global reach.
Speaker Change: With our Treasury and Risk Solutions product winning top honors from both Global Finance Magazine and Treasury Management International.
Speaker Change: and CNBC once again named FIS a top 250 global FinTech company.
Speaker Change: Given the durability of our highly recurring business model.
Speaker Change: Before I turn it over to James, I'd like to thank all of our colleagues here at FIS who continue to move the company's future forward. James?
Stephanie Ferris: Overall, we are very pleased with our performance in the second quarter, with strong execution across many vectors. We've delivered broad-based outperformance against our financial outlook, and this allows us to increase our full-year outlook. For the second consecutive quarter, banking revenue growth came in at the high end of our outlook range and accelerated to 3% in the quarter. Other non-recurring revenue grew 15%. We are meaningfully increasing our EPS outlook, reflecting continued strong execution and broad-based favorability across depreciation and amortization, interest expense, shares outstanding, and well-paid EMI, with banking solutions growth at 2.5 to 3% and capital markets at 7.5 to 8%. Adjusted EPS is projected to increase 35 to 39% to $1.27 to $1.31.
James Kehoe: Thank you, Stephanie, and good morning, everyone.
James Kehoe: and adjusted EBITDA margin expanded by 110 basis points year-over-year.
James Kehoe: Primarily reflecting continued cost savings and favorable revenue links.
Speaker Change: Here today, we have repurchased $2.5 billion of shares and we are well on track to deliver on our $4 billion full year target.
Speaker Change: Free cash flow was $504 million with a cash conversion rate of 85% and we are confirming our full year cash conversion target of 85 to 90%.
Speaker Change: Turning now to our segment results on slide 10.
James Kehoe: Adjusted revenue growth was 4%, with recurring revenue also growing 4% in the quarter.
James Kehoe: Banking revenue growth came in at the high end of our outlook range and accelerated to 3% in the quarter.
James Kehoe: Recurring revenue also grew 3% in line with our expectations.
James Kehoe: And we are confident recurring revenue growth will accelerate in the third quarter and for the back half of the year, reflecting strong execution and sales momentum.
James Kehoe: Other non-recurring revenue grew 21%, reflecting growth in license revenue and deconversion fees associated with bank consolidation.
James Kehoe: Lastly, professional services revenues declined 13% year over year.
James Kehoe: We expect to see an acceleration in professional services growth in the second half.
James Kehoe: Now this revenue stream has stabilized and will reaccelerate in the second half of 2024.
James Kehoe: Adjusted EBITDA margin expanded 140 basis points primarily reflecting continued cost savings and favorable revenue mix.
James Kehoe: Turning now to capital markets.
James Kehoe: Adjusted revenue growth was 7%, led by recurring revenue growth of 7%.
James Kehoe: Excluding acquisitions, adjusted revenue grew 6% up from 5% growth in the first quarter.
James Kehoe: Other non-recurring revenue grew 15%, primarily reflecting growth in license revenue.
James Kehoe: and Professional Services increased 2% in line with our expectations.
James Kehoe: Adjusted EBITDA margin expanded 60 basis points, reflecting operating leverage and growth in higher margin license revenue.
James Kehoe: Consistent with prior messaging, we continue to anticipate full-year margin expansion across both segments.
James Kehoe: Turning now to our full year outlook on slide 11.
James Kehoe: Our strong year-to-date results and good visibility into second-half growth drivers positions us for another increase to our full-year outlook.
James Kehoe: We are raising our full-year EPS outlook by 13 to 15 cents to $5.03 to $5.11, reflecting normalized growth of 13 to 15 percent.
James Kehoe: This increase is driven by strong execution and broad-based favorability across multiple areas.
James Kehoe: Let's walk through the key changes on slide 12.
James Kehoe: We are raising our absolute revenue target by $20 million to reflect more favorable forex impacts.
James Kehoe: Segment growth rates are unchanged. We continue to expect banking growth of 3% to 3.5%, and capital markets of 6.5% to 7%.
James Kehoe: We are increasing the low end of our adjusted EBITDA range by $15 million, reflecting year-to-date outperformance.
James Kehoe: and we remain confident in achieving our new full year EBITDA range.
Operator: Our first question comes from the line of Ramsey L. Asal with Barclays. Your line is open.
Speaker Change: Our ability in the prior years that were growing over but first quarter the second quarter.
Speaker Change: Recurring revenue is slightly down because of a large west coast bank that was sold out of receivership.
Speaker Change: You probably know it that day converted off of our platform in the second quarter.
Speaker Change: And so that coming off which is what we expected by the way that was in the guide.
Jason: And even with that to Jason's point, we feel really good about the back half of 2024, I think as you know in terms of nonrecurring we're growing over some pretty negative numbers last year.
Jason: So we're looking in terms of.
Jason: It was becoming more flat to not negative.
Speaker Change: If you look at our full year guide with respect to nonrecurring it kind of comes out to be flat year over year. So I think what you should expect to see from us as we move into the midterm as recurring and adjusted revenue in banking become more in line, but we are dealing with some choppy prior year Comparables that makes some of the numbers go up and down.
Jason: James and I look at first half second half.
James Kehoe: On a two year basis and the prior year and if you look first half second half on a two year basis, it's pretty consistent over time, both in terms of recurring and nonrecurring post.
Ramsey El: And that's super helpful. And just to make sure I understand the commentary on the 5% recurring revenue exiting the year, it sounded like you were kind of pointing towards that being like a relatively easier comp than from the prior year. So when we think about sort of the jumping off point, should we be thinking about somewhere in a sort of in between that level and where you guys are for the rest of the
Unknown Attendee: Digital strength, I guess.
Speaker Change: Okay, that's great and just very quick follow up would just be for an update on the commercial relationship with world pay it obviously came out better than we expected at your Investor day, and it's been it's been a couple of quarters now and so maybe just a quick update on thoughts on how that's been trending and cross sell and partnership there.
Speaker Change: Yeah.
Speaker Change: First of all I might just comment on where I'll pay broadly we feel really good about the separation of where I'll pay you can see in their numbers that they're that team over there is operating the business better than we were when it was inside out by us.
Speaker Change: Commercial relationships with World are really strong and continue to be strong as we go to market together and as we identify opportunities in different regulatory schemes, where we can put for example of the network.
Speaker Change: The network and the merchant relationships together, we will do that where we can compete together around data. So we landed as part of the acquisition or set of commercial relationships and we continue to identify even more opportunities and we'll be signing those as well so it's going very very well.
Operator: Thank you. Please take a moment for our next question.
Speaker Change: Thank you one moment our next question.
Dan <unk>: And that will come from the line of Dan <unk> with Mizuho. Your line is open.
Dan <unk>: Hey, guys great results here. Thank you for taking my question.
Dan <unk>: Can you I mean EBITDA margins were really strong can you maybe gives us a little bit of a puts and takes of the headwinds and tailwind that went into EBITDA margin. This quarter and then I have a quick follow up.
Dan <unk>: Okay.
Speaker Change: I think we are.
Speaker Change: As we highlighted since we gave guidance at the beginning of the year, we did highlight.
Speaker Change: The first half will be especially strong.
Speaker Change: To come through as we're not seeing.
Speaker Change: The full extent of dis synergies with world payable, we're getting significant traction on the future forward cost savings, which if you recall, we started rebuilding margins in the second half of last year. So margins grew very strongly in Q3 and Q4 last year.
Speaker Change: Incredibly strong in the first quarter second quarter here.
Speaker Change: <unk>.
Speaker Change: So you look at it is.
Speaker Change: Very visible cost management across both businesses under the headquarters we still have a long.
Speaker Change: Run way on this so this is not what it will taper off a little bit in the second half. The second one is revenue mix was pretty strong in both quarters. This year.
Speaker Change: We have more profitable highlight license mix.
Speaker Change: So we're very happy about the first run eight cylinders literally on margins.
Speaker Change: We remain entirely.
Speaker Change: <unk> on a long term goal of 40% to 60 bps margin enhancement going into the future.
Speaker Change: Got it. Thank you and then quick one on M&A can you give us a quick update on the pipeline and were there any acquisitions you made in <unk>. Thank you.
Speaker Change: Yes, no we didn't we didn't close anything in the second quarter. The pipeline Dan is very good in fact, we like the economic environment as it sits right now.
Speaker Change: High interest rates and lots of macro pressure into potential M&A candidates. It makes them much more willing to sell it makes them much more willing to sell at the right price.
Speaker Change: So pipeline is good just as a reminder, we're very focused on.
Speaker Change: Or inorganic acquisitions, where we have or need a product that we haven't been able to develop organically. We can add it to the platform and then push it through our very large distributions. So it's accretive to revenue and margins as quickly as possible.
Speaker Change: So continue to have a very healthy pipeline that being said, we're very focused on return on invested capital. So we arent.
Speaker Change: <unk> to put a transaction on but we are very active and we think the market is very helpful. Right now.
Speaker Change: Thank you one moment our next question.
Speaker Change: And that will come from the line of Jason Kupferberg with Bank of America. Your line is open.
Jason Kupferberg: Good morning, guys. So just coming back to the banking segment, a big part of the acceleration here in the second half as the ramp of the bookings from the second half of last year. As you mentioned can you talk a bit about just implementation efficiency sounds like there's probably been some improvement there maybe just talk about some of the elements of that in.
Speaker Change: Are those now optimize those kind of implementation timelines or is there room for further improvement because it sounds like youre executing solidly to plan there.
Speaker Change: Yeah, No I think there's always room for improvement in terms of implementation, but I think we have a nice robust pipeline of implementations.
Raymond James: With Raymond James Your line is open.
Speaker Change: Hey, good morning, guys James on the free cash flow here, you're reiterating the 85 to 90 per cent guide this year, which implies well over 100% in the back half of the year. So any comments there on kind of what gives you that confidence and then anything on the pre Q4 cadence.
James Kehoe: Yeah, there's a lot of timing between the first half and the second half. For example, there's a misalignment in that you're inclined to pay out your prior year bonus in the first half of the year, and there's no bonus outflows in the second half. Similarly, with the timing of interest, cash interest that you pay, for some reason, our contracts are more skewed to cash outflows in the first half. These are two examples.
Speaker Change: Yes, there is a lot of Permian between first half second half for example.
Speaker Change: There was a misalignment.
Speaker Change: Youre inclined to play pay up to a prior year bonus in the first half of the year and there is no bonus outflows in the second half similarly, with the timing of interest cash interest that you pay for some reasonable contracts are more skewed to cash outflows in the first half. These are two examples that shifts around 300.
James Kehoe: That shifts around 300 million between the first half and the second half, in terms of change of trajectory. And you know, with the benefit of hindsight, we probably should have gone out with our 85 to 90 and said it would be lower in the first half, because that's what the plan said, and it'll be much higher in the second half. So if I adjust for these two or three timing items that are just naturally higher in the first half between the first and second half, I comfortably get to the 115 kind of number. But you're right, it does require a 115 in the second half, and we have a good line of sight for that. Good question, and we're very focused on it. Okay, great.
Speaker Change: London between first half second half.
Speaker Change: In terms of change of trajectory.
Speaker Change: The benefit of hindsight, we probably should have gone out with our 85 to 90 instead it will be lower in the first half because thats what the plan said.
Speaker Change: And it will be much higher in the second half so if I adjust for these two or three timing items that are just naturally higher in the first half between first and second half I comfortably get to the $1 15 kind of number but you are right. It is it does require a $1 15 in the second half and we have good line of sight to that.
Speaker Change: Good question.
Speaker Change: We're very focused on it.
Stephanie Ferris: Okay, Great and then Stephanie is a little bit of a follow on to Tien <unk> question. How do you think about the card processing business and maybe the banking business overall, maybe just remind us what percent of that is more transaction based or it could be a little bit more cyclical in nature as we think about slowing spending in the U S.
John: Yeah John.
John: He was waiting for someone asked me that so.
Speaker Change: Ill, just remind everybody that banking business has a payments business inside of it.
Speaker Change:
Speaker Change: A majority of that is related really around debit card transactions. So when you think about consumer spend volatility typically that insulated in terms of everyday spend.
Speaker Change: Also price on transactions. So we don't get the benefit of inflation on the way up or on the way down so we're protected from that.
Speaker Change: And broadly I would say our debit processing business is and the credit which is smaller trending just like the markets are stronger in the first quarter, a little bit lighter in the second quarter, and then July was a little bit lighter, but even with all of that.
Speaker Change: We're just not that exposed to consumer spend trends across.
Speaker Change: And so when you think about safety in terms of not having impact on consumers said, one way or the other that's really what this banking business now looks like separating the <unk> business out.
Speaker Change: And with all even with our consumer transactions coming down slightly that's all baked in our guidance and we feel good about the outlook.
Speaker Change: Thank you one moment our next question.
Speaker Change: And that will come from the line of Dave Koning with Baird. Your line is open.
Dave Koning: Yeah, Hey, guys nice job.
Dave Koning: My first question capital markets really good quarter ongoing good recurring revenue growth, but nonrecurring had I think the strongest growth since 2021, or so is that part of the reason for a really good guide in Q3 and for the margin strength sequentially in Q2.
Speaker Change: Sure.
Speaker Change: Yes, I think I think I'll start and maybe James can jump in I think as we look at capital markets. They did have a strong nonrecurring benefit in the second quarter, which obviously helps both the revenue growth and the margins in terms of the contribution.
Speaker Change: Sure I think as you look out over.
Speaker Change: The first half second half in terms of 2024, we continue to feel good about the recurring revenue and we are seeing a little bit of an increase in terms of the nonrecurring pieces that are contributing a little bit to revenue I don't know Jamie do you have anything else you were I think I think in general you could look at it on a professional services and custom brokerage last year was down.
Jamie: In most quarters and as we said on the prepared that stabilized when used with the growth of the center related. So that's one driver went from like a negative surprise to a plus five kind of thing.
Speaker Change: And then we are seeing is we're seeing good volumes on the licenses, particularly in international.
Speaker Change: So I think the different different trends in Q3, and that's what gives us the confidence to Colo.
Speaker Change: Pretty good pretty good visibility to them.
Speaker Change: Thank you and I guess my follow up the World pay contribution was something like $150 million I think in Q2 and Youre guiding to something like 110. In Q3 is that line item going to be lumpy like that or was there something in Q2 that was a little one off in the 110 is kind of the baseline to think of kind of future.
Speaker Change: Quarters.
Speaker Change: Yes, I mean, I'll again start and let James add and I think you were expecting to see with where all pay is the EMI contribution as they stand up their organization would be a little bit lumpy. They add the people into their organization and they take down the TSA.
Speaker Change: So I don't know that we could call a normalized number of 110 quite yet we feel really confident with the forecast they gave us which they do give to us and there are obviously outperforming that but I think the back half for them is really about.
Speaker Change: Adding in standing up the people to run the systems as they take get ready to take down the TSA has over 2025 et cetera. So it's really investments, they're making in the business as they stand those costs up.
Unknown Attendee: And I think the other thing I'd add is we rely on the forecast they provide to us. We don't get into intense levels of detail, but Stephanie is right. They've got stand-up costs right now, plus they're making some select investments to drive future growth in the business. So we all think it's a very doable forecast, and we're very confident in the four-year projections we're getting today.
Unknown Attendee: Yeah, and I think
Speaker Change: And I think the other thing on the others.
Speaker Change: We rely on the forecast provided to us we don't because of the intense levels of detail. Stephanie This is Ron.
Speaker Change: <unk> costs for us plus the filmmaking.
Speaker Change: So we're making some select investments to drive future growth business. So we don't think it's.
Stephanie Ferris: Very doable forecast and we're very confident.
Stephanie Ferris: Projections for Brazil.
Stephanie Ferris: Okay.
Speaker Change: Thank you one moment for our next question.
Speaker Change: And that will come from the line of <unk> <unk> with <unk>. Your line is open.
Stephanie Ferris: Hi, Thanks for taking my question, Stephanie I wanted to follow up on the prior question about consumers spend just given the macro concerns in the market I know like you called out the <unk> business is more defensive than the world's babies, but if you could give us any sort of guidelines on how to think about potential sensitivity to the extent, we do start to see some slowdown and then the same question for the world.
Speaker Change: <unk> contribution just given that that business is more exposed to spend.
Speaker Change: Any high level views on how they might look to balance expenses versus investments.
Speaker Change: If the macro where it does slow down.
Speaker Change: Yeah, I think broadly that to the consumer spend is not impactful in terms of thinking about.
Speaker Change: As it sits today, we do make money on transactions, we don't see Cigna, even if the transactions go up or down in terms of a point or point a couple of points over a quarter. It's just not material to the overall revenue impact because of how much revenue really comes from core and digital and the other.
Speaker Change: Pieces of the payments business.
Speaker Change: So they're really if youre thinking about consumer spend we don't have a big impact on consumer spend in the payments business and banking.
Speaker Change: And if you go back and you look at even 2020 and you strip merchant out you'll see that I think revenue in capital markets. Even during those time periods, where consumers spend was almost at zero revenues still grew in those those businesses about 3%.
Speaker Change: So just to give you a bunch of confidence around that I think in terms of the <unk> I think what I would say I can't comment I mean, you guys clearly know the world pay business well. They are obviously impacted by consumer spend but I think what youre seeing even in terms of the revenue and EBITDA that they're putting in the first and second.
Stephanie Ferris: Quarter is.
Stephanie Ferris: They are operating the business more effectively the revenue growth is doing better because of the operational execution that theyre, bringing into the business.
Stephanie Ferris: I think you can go back and look at the historical views of what happened to <unk> revenue with respect to consumer spend on I'm not going to comment on that but.
Stephanie Ferris: But I do think and we're pleased with the <unk> team over there and what they are what they are focused on it and remember they are really focused on driving operational execution into the business over the next two or three years.
Stephanie Ferris: And making sure they stand up the business and they are ready to go and taking market share I think their first and second quarter revenue would say that they're doing good job on that.
Speaker Change: Great. Thank you for the color and just a quick follow up for you James I don't know if I missed it but did you give us the growth rates, excluding M&A and dis synergy in the quarter and then just any change to the dis synergy expectations, either on revenue or EBITDA for the year.
Speaker Change: Well, we said that sorry, I missed the second half I'm just concentrating on the FERC. This way capital markets has an impact of 100 basis points in the quarter.
Stephanie Ferris: Yes.
Speaker Change: The banking business banking businesses zero contribution so on a total level, it's almost a wash I think that works out to.
Stephanie Ferris: 30, or 40 basis points of net contribution so it doesn't even round up to a point.
Speaker Change: The second part of your question was just any change to the dis synergy expectations, either on revenue or EBITDA for the year.
Speaker Change: Nothing of any material honestly, it's in line with expectations.
Operator: Thank you. Please take a moment for our next question.
Speaker Change: Thank you one moment for our next question.
Speaker Change: And that will come from the line of James Fawcett with Morgan Stanley. Your line is open.
Unknown Attendee: Great. Thank you very much. Thanks for all the details.
James Fawcett: Great. Thank you very much thanks for all the details a lot of my questions been asked but I did want to understand a couple of things that are happening first.
Unknown Attendee: A lot of my questions have been asked, but I did want to understand a couple of things that are happening. First, can you help us understand what's driving what looks like an expected acceleration in professional services in the second half and fourth quarter? Like, what are the services you're expecting to pick up? And how do we think about the durability of that?
James Fawcett: Can you help us understand what's driving what looks like an expected acceleration in professional services in the second half and fourth quarter.
Speaker Change: What are the services youre expecting to pick up and how do we think about durability of that.
Speaker Change: Yes, I'm happy to take that in terms of what's right. So professional services. If you look at the trend in the back half of last year step down that was really driven by the lack of new wins that we had had and we're converting professional services typically goes along with high levels of implementations.
James Fawcett: So as you look at professional services revenue, it's stabilized coming into the first half of this year and then it's continuing to be driven by our new sales implementations, whether it's core or digital payments.
James Fawcett: And I think as you think about the back half of this year, it's an easier grow over but we have we have stabilized the number broadly and it's really tied to new wins going into the platform.
Speaker Change: Got it.
Speaker Change: On cost savings actions.
Speaker Change: Anything left.
Speaker Change: Or any projects there that are still in flight or the majority of action has been taken in and so we're kind of it.
Speaker Change: Normalizing opex in <unk>.
Speaker Change: That's one rates.
Speaker Change: No I think.
Speaker Change: What you've seen.
Speaker Change: He gave guidance.
Speaker Change: Our medium term guidance.
Speaker Change: And reflecting the success with future forward.
Speaker Change: I actually said that.
Speaker Change: We're facing the TSA is that will be rolling off the business.
Speaker Change: Over the coming 24 months and that gives us pleasure pressure on future margins, but we basically signed up for annual savings of 165 to 175.
Speaker Change: So you should presume that thing.
Speaker Change: Current performance one of May tail off a little bit in the second half of this year, probably has a runway of 24 months.
Speaker Change: Because what we need to do now is we have the TSA is rolling off we have to resize corporate expense structures more in line with a company of 10 billion post the.
Speaker Change: The sale of locally so we do have a lot of cost initiatives looking forward one of the items. We did highlight on the call was.
Speaker Change: How do we apply journey.
Speaker Change: <unk>.
Speaker Change: Automation across all of the functions in the company to drive favorable costs, but also to improve customer service and drive new sources of revenue. So.
Speaker Change: In summary, I think we have a fairly long runway, probably 24 months on cost reduction because we have the TSA is to eliminate.
Speaker Change: We've actually already started working on this we have an active program.
Speaker Change: We're probably ahead of the curve in terms of identifying the customer initiatives going forward.
Operator: Thank you, and we do have time for one final question, and that will come from the line of Ken Suchoski with Autonomous Research. Your line is open.
Speaker Change: Thank you and we do have time for one final question.
Ken <unk>: And that will come from the line of Ken <unk> with Autonomous Research. Your line is open.
Ken <unk>: Hey, good morning, Thanks for taking the question I wanted to ask about the 4 billion repurchase outlook. The company did $2 5 billion year to date, including $1 1 billion in Q2, so it seems like Youre well on track to hit your $4 billion.
Speaker Change: Target for the full year, maybe just talk about your appetite to continue the pace of buyback that we saw in Q2.
Speaker Change: And we actually ended up above that $4 billion.
Speaker Change: Target that you called out thank you.
Speaker Change: No I think I think so at least one five for the remainder of the year you should assume that will be skewed to the fourth quarter. So you put simplistically say one third two thirds.
Speaker Change: The reason being is split the $4 billion, we have to reinvest some.
Speaker Change: Internationally.
Speaker Change: I think we said it on one of the protocols, but we expect this repatriation in the fourth quarter. So.
Speaker Change: To the extent, we can discussion sooner, we would do it sooner, but right now we kind of have a skew to the fourth quarter.
Speaker Change: Okay great.
Speaker Change: It's really helpful. And then maybe just as my follow up I wanted to ask about world pay I know, it's a smaller part of the business but.
Speaker Change: What's allowing you to raise the EMI contribution related to world. There I think you said it added <unk>.
Speaker Change: To the EPS guide.
Speaker Change: If I had the numbers right well pay revenue grew 3% year over year, but I think EBITDA was down mid single digits. So any any thoughts on how that Eni contribution is increasing.
Speaker Change: Great. Thanks, so much.
Ken Suchoski: Yeah, we look at it kind of differently. We're looking versus our prior forecast, and I can tell you that the beat is coming equally from EBITDA and interest expense. They did some refinancing a couple of weeks ago, and that has delivered and locked in some future savings. And then, an equal amount is coming from EBITDA. So they're actually doing quite well, I would say, on the margins as well. So it's not just a revenue gain here. So we're very happy, and it's a good quality improvement for minority users. I think they also did a refinancing.
Speaker Change: Yes, we look at it differently, we're looking versus our prior forecast.
Speaker Change: The big pieces coming equally from EBITDA and interest expense.
Speaker Change: Refinancing in a couple of weeks back and that is delivered and locked in some future savings.
Speaker Change: But on the equivalent ounces coming from EBITDA. So they are actually doing quite well I would say on the margins as well so it's not just a revenue.
Speaker Change: So we're very healthy is it good quality improvement and minority interest.
Speaker Change: They also did a refinancing.
Speaker Change: In the second quarter that is delivering some nice EMI profit for them as well.
Ken Suchoski: I think they also did a refinancing in the second quarter that is delivering some nice EMI for us and for them as well.
Operator: Thank you all for participating. This concludes today's program. You may now disconnect.
Speaker Change: Thank you all for participating. This concludes today's program you may now disconnect.
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