Fiserv, Inc.

Welcome to the FISERB 2019 First Quarter Earnings Conference Call. All participants will be in a listen-only mode until the question and answer session begins following the presentation. As a reminder, today's call is being recorded. At this time, I will turn the call over to Tiffany Willis, Vice President of Investor Relations at FISERB.

Thank you and good afternoon. With me today for the call are Jeff Yabuki, our Chief Executive Officer, and Bob Howe, our Chief Financial Officer. Please note that our earnings release and supplemental presentation for the quarter are available on the investor relations section of Fiserv.com. Our remarks today will include forward-looking statements about, among other matters, expected operating and financial results, strategic initiatives, and the anticipated combination with first data, including expected benefits, financial projections, synergies, financing, and timing of and the ability to complete the transaction. Forward-looking statements may materially differ from actual results and are subject to a number of risks and uncertainties. Please refer to our earnings release for a discussion of these risk factors. You should also refer to our materials for today's call for an explanation of the non-GAAP financial measures discussed in this call, along with a reconciliation of those measures to the nearest applicable GAAP measure. These non-GAAP measures are indicators that management uses to provide additional meaningful comparisons between current results and prior reported results, and as a basis for planning and forecasting for future periods. And less stated otherwise, performance references made throughout this call are assumed to be year-over-year comparisons. As a reminder, prior year adjusted earnings and adjusted earnings per share amounts in the press release, supplemental materials, and comments are adjusted for the sale of a majority interest of our lending solutions business, which closed in March 2018. And with that, let me turn the call over to Jeff.

Thanks, Tiffany, and good afternoon, everyone. Our financial performance carried the momentum of last year into the first quarter, highlighted by 5% internal revenue growth and 12% adjusted earnings per share growth. We also followed the record sales in last year's Q4 with one of our highest first quarter sales totals ever, further validating the demand for our market-leading solutions. Our better-than-anticipated start to the year has us well-positioned to achieve our full-year financial commitments. In addition to serving clients, engaging associates, and delivering strong financial results, we are also focused on integration planning for our first data combination. Along those lines, shareholders overwhelmingly approved, with more than 99% support, the issuance of Fiserv shares in connection with the merger. As you know, we received a second request for information on our transaction from the Department of Justice and are working cooperatively to achieve clearance. We continue to believe the transaction will be approved, business divestitures will not be required, and we will close in the second half of the year, all completely consistent with our original expectations. Upon close, our number one priority is to provide even more differentiated value to clients of all shapes, sizes, and industries. For example, we've made great progress in identifying ways to further enable the offerings of community-based financial institutions and the variety of customers they serve. We see a number of client and customer advantages, which we will further evaluate upon closing to determine the absolute best way to bring these to market. The integration planning teams are working well together across multiple work streams, centered on delivering incremental client and shareholder value, ensuring we have the best talent, and identifying ways to sustainably exceed our synergy targets of $500 million of recurring annual revenue and $900 million of run rate cost benefits. We have a shared desire to advance the market and to redefine the way in which payment and fintech services will be delivered. Along those lines, we also announced a commitment to invest an incremental half billion dollars in solution innovation on top of the significant investments each of our companies make today. We expect this investment to create multiple sources of client and customer value, which should lead to even stronger results, none of which has been incorporated in our financial projections. With that, let's review performance against our 2019 key shareholder priorities, which are first, to continue to build high-quality revenue while meeting our earnings commitments, next, to enhance client relationships with an emphasis on digital and payment solutions, and third, to deliver innovation and integration, which enables differentiated value for our clients. As I mentioned, we're pleased with our strong financial results in the quarter, including 5% internal revenue growth, led by 6% internal growth in the financial segment and 4% in the payment segment. We saw good performance in the quarter across our recurring revenue businesses, along with some acceleration of license revenue in the financial segment. First quarter adjusted earnings per share was up 12% over the prior year through higher revenue growth, better than planned adjusted operating margin, and some benefit from lower taxes. The change in adjusted operating margin was primarily from a combination of ramp and climb implementations, carryover from last year's tax reinvestment programs, and dilution related to acquisitions and divestitures, all of which Bob will discuss in more detail. These investments are focused on driving additional client value and should contribute to a continuing step up in our internal revenue growth rate over the next several years. Free cash flow conversion of 90% was generally consistent with our expectations for the quarter and the full year, given the cadence of expected investments throughout 2019. Our second priority is to enhance client relationships with an emphasis on digital and payment solutions. As you will recall last quarter, we signed the largest new account processing client in our history at a New York community bank with over $50 billion of assets. We continue to focus on growing our core account processing client base, signing 14 institutions in the quarter, including six on our market-leading Premier platform. Also during the quarter, ITE Group issued its U.S. Core Banking System Evaluation, which named Fiserv as the sole best-in-class provider. This is based on a robust evaluation of all qualified market participants and is primarily based on vendor strength, market reputation, and breadth of product portfolio. We are very pleased with this award and recognition. We also signed six DNA clients in the quarter, with four having assets greater than $1 billion including a competitive takeaway of Nassau Educators Federal Credit Union, with $3.2 billion in assets, who selected DNA, along with several important surround solutions. We also completed seven new client implementations in the quarter and expect that total to build throughout the year. Increasing digital engagement with customers remains a top priority for financial institutions. Along those lines, mobility ASP subscribers through nearly 20% in the quarter to just under 8.5 million. Importantly, the average app store rating for this multi-institution solution, a critical barometer of digital experience, has now achieved an average star rating of 4.7 out of 5. These strong results reflect our commitment to digital differentiation and enhanced user experience and expanded features such as integrated notifications, card controls, and enhanced biometrics. We continue to see meaningful opportunities to help clients increase their revenue through expanded debit, credit, and network programs. We signed 21 clients in the quarter, including Atlanta Postal Credit Union, with over $2.1 billion in assets, which selected both debit and credit card processing to service their more than 100,000 members across the United States. Atlanta Postal Credit Union, who is not a core account processing client, also selected our credit advisory subscription service to provide additional support across their account and fraud management processes. Our third priority is to deliver innovation and integration, which enables differentiated value for our clients. Building on Key4's momentum, we continue to see clients select Fiserv as the market continues its move towards meaningful payments innovation. In a competitive process, a top 35 bank selected Dovetail our leading payment hub technology, to meet their evolving commercial and international business needs. We expect to see payments modernization continue for the next three to five years and believe our growing position as a front-to-back payments provider creates opportunities to create unique network value for our clients. In addition to payments, we're seeing growing traction in our commercial digital solutions as banks look to enhance the services to their most important customers. Commercial Center, which we acquired a couple of years ago, has added nearly 50 new institutional clients due to their market-leading functionality and capabilities. In fact, we had eight clients go live in the first quarter alone, and the pipeline remains very strong. Another example of commercial services growth can be seen in our mobility business commercial digital solution. Financial institution clients grew 24% year over year, and the number of end business clients utilizing the service was up a very strong 65% over the prior year and 11% sequentially. We expect the digitization of commercial services to drive important value for clients and enhance revenue growth for us. Our enthusiasm and commitment for Zelle continues to expand, not just in terms of our clients, but for the market as a whole. We believe the network benefits of Zelle will enhance the services financial institutions deliver to their customers. First Citizens Bank, with over $35 billion in assets, selected Zelle in a competitive replacement. This replacement decision was driven in part by their ability to utilize our value-added Zelle fraud and risk management capabilities. We also signed a leading online financial services provider to our turnkey Zelle solution in the quarter. We expect to meaningfully expand our Zelle leadership position this year as the market more fully embraces this important opportunity. With that, let me turn the call over to Bob to provide more detail on our financial results.