Fiserv, Inc.

Welcome to the FISERV 2019 Fourth 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 Peter Pullian, Senior Vice President of Investor Relations at FISERV.

Thank you, Ivy, and good afternoon, everyone. With me today are Jeff Yabuki, our Chairman and Chief Executive, Frank Pizzignano, our President and Chief Operating Officer, and Bob Howe, our Chief Financial Officer. Our earnings release and supplemental presentation for the quarter and full year 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 expected benefits and synergies from our recent acquisition of First Data. 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. Please 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 measures. Unless stated otherwise, performance references made throughout this call are year-over-year comparisons, and all references to internal revenue growth are on a constant currency basis. Also note that non-GAAP financial measures included in our earnings release and supplemental materials include the fourth quarter of 2018, and full-year 2019 and 2018 results for First Data, which have been prepared by making certain adjustments to the sum of historical First Data and Fiserv GAAP financial information. For additional historical combined financial information, please refer to the Form 8-K, which we filed on October 3rd. As a reminder, we'll host an investor conference on March 25th in New York City. We expect the presentation to run from about 8.30 a.m. to noon, and we'll also host a lunch following the program. We look forward to seeing you at this important event.

And now I'll turn the call over to Jeff. Thanks, Peter, and good afternoon, everyone. 2019 was a year of transformation, growth, and excellent financial performance. It was just over a year ago that we announced our plans to transform the industry through the acquisition of First Data in just over 180 days since we've closed. At the announcement, we shared our belief that First Data was a stronger business than people understood, and that the industrial logic of the combination was incredibly compelling. We continue to get positive market feedback as we center on creating long-term and differentiated value for clients. Although the transaction has only been closed for a short time, we've made substantial progress against our goals and are even more bullish about the scope of opportunities for the combined company. Our key tenets of shareholder value, high-quality recurring revenue growth, expanding operating margin, strong free cash flow, and disciplined capital allocation were on full display in 2019. Our financial performance included internal revenue growth of 6%, adjusted operating margin expansion of 100 basis points, and we achieved our 34th year in a row of double-digit adjusted earnings per share growth. Importantly, free cash flow was up 16% to more than $3 billion last driven by excellent free cash flow conversion of 118%. Sales were strong, accelerating to 15% growth in the quarter and up 10% for the year. We repaid debt as promised, divested several businesses, and restarted our programmatic share buybacks earlier than anticipated. These outstanding results combined to deliver total shareholder return of 57% in 2019 and was also up 118% and 226% for the three- and five-year periods, respectively. Turning to 2020, our performance outlook of higher internal revenue growth, superior operating margin expansion, adjusted EPS growth in the mid-20s, and strong free cash flow is a great start to what we believe will be an outstanding decade for your companies. Results for the fourth quarter were right in line with the guidance we provided in Q3. Internal revenue growth of 5% was led by another excellent quarter in our merchant business, up 9% in the quarter and 10% for the full year. Adjusted earnings per share in the quarter was up 18% to $1.13, and adjusted operating margin was up 100 basis points to 31.4%. Free cash flow was outstanding, reaching nearly $1 billion in the quarter. Full-year internal revenue growth was up a very strong 6%, adjusted earnings per share was up 16% to $4, and adjusted operating margin was up 100 basis points to 29.7%. Free cash flow for the full year increased 16% to $3.3 billion. We are intensely focused on growing high-quality free cash flow and allocating that capital in a way that optimizes long-term shareholder value on both an overall and per share basis. We continue to see strategic operational and market proof points which taken together reinforces the power of the combination. Momentum is strong and our opportunity to differentiate is greater than ever. The privileged relationships we have in our account processing businesses are critical in our strategy to serve clients exceptionally well. One of our key priorities is to deeply integrate high-value solutions such as our bank merchant offering which enables our clients to generate revenue while serving their most important customers. Along those lines, we signed 24 new account processing clients in the quarter, including Canon DNA, such as AgFirst Farm Credit Bank with more than $34 billion in assets, American Eagle Financial Credit Union, the largest community-based credit union in Connecticut with $1.8 billion in assets, and Independent Bank with $3.6 billion in assets. Our Clover platform has continued its stellar growth, increasing its annualized gross payment volume by more than 40% year-over-year. Payment devices shift was up 25% for the year, and the adoption of add-on Clover services continues to increase across the growing base. We recognize the strategic importance of technology-oriented merchant acquiring and are focused on sustainably growing our ISV and e-commerce footprints through both sales and innovation. We continued to see digital momentum, signing more than 80 new direct e-commerce clients for the year and 23 in the fourth quarter alone. E-commerce transactions were up 30% for the year, reflecting the continuing strength of digital commerce globally. Our focus on delivering customer-based digital innovation led to the recent Connected Commerce announcement, enabling Exxon and Amazon Alexa to team up the gas pump utilizing voice-based technology. We continue to see significant growth potential in our integrated payments business, where our ISV partners grew more than 25% for the year. Importantly, ISV revenue grew by nearly 60% in 2019, and we expect to see continuing strong growth moving forward. Our merchant business also continues to perform well outside the United States, signing Delta Airlines for acquiring services across several international regions. We also renewed our important merchant JV relationship in January with ICICI, one of India's leading banks, which positions us for further expansion in that important growth market. ZA Bank is one of the first institutions to have been granted a virtual banking license in Hong Kong and has chosen Fiserv to manage its card processing. And Vietcom Bank, one of Vietnam's leading banks with more than 17 million accounts, went live in January on our flexible and scalable Signature International Core Processing Platform. With that, let me turn the call to Frank to provide an update on our integration and synergy progress.