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spk07: How are you thinking about the Q4 backlog, you know, whether you're looking at it? I don't know if you guys are focused more on it quarter over quarter or year over year, but just wanted to get a view on that into year. Thank you.
spk03: Yeah, it's a great question. I mean, I think we've seen broadly over the last seven quarters, and I would expect to see over the next, you know, three or four quarters, A backlog in the range of $22.5 to $23.5 billion, pretty steady as we bring new business on, and then we work really hard to increase the level of implementation so it's coming out of that backlog number. It is a wonky accounting number, so I think as we come into Investor Day, we'd hope to give you a better set of metrics. But I think broadly, we think that number sits in that stable range range of 22 and a half to 23 and a half. It might go up and down per quarter. And we think we've proven pretty successfully at this point that that number will sustain a nice recurring revenue growth number for us. And if you remember in the sales transformation, we really are trying to focus on less of those really large whale deals and more of consistent sales of a lot of our platforms that we've invested heavily in and driving the margin over the overall sales number up. And so while we may not, from a dollar standpoint, drive it up this year, we would expect it to come up next year as we look to see some of those sales come in. So hopefully that helps.
spk07: It does. Good color. Thanks, Stephanie.
spk02: One moment for our next question. Our next question comes from Darren Peller with Wolf Research. Your line is open.
spk05: Hey, thanks, guys. First of all, James, congrats and welcome. But Stephanie, when we think about the demand environment and what you're seeing, that's giving us so much conviction in the sustainability of that recurring revenue growth rate. And so, you know, fourth quarter, again, putting aside the one-time items everyone seems focused on, I think, is probably a good idea. So just sustainable trends into Q4 and then Q1. you're still seemingly confident that it's, you know, 3%, 4% type banking growth on the revenue side, despite the noise on bookings. So can you just tell us what's under the hood? What exactly is the demand? What are customers actually utilizing you for more today than they were a year ago? And then is the customer, is your employee base, you know, energized? Is it really, is the wheel turning properly again, I guess, is the question? Thanks again.
spk03: Yeah, no, thanks. Thanks, Darren. So in terms of demand, I would say broadly, let's separate the demand environment from what really drives the recurring revenue over time. So demand is high if you think about our capital markets business. I continue to talk about increasing demand from our existing customers, so increasing share of wallet, from a lot of the modernized solutions we've brought into market. We talked about the clear derivatives platform, which is having a lot of success and not only selling into our existing customers, but really opening up the door to sell those types of capabilities now that they're SAS enabled into other capital markets participants who may not be traditionally there. So we see increased wallet share, and then we see the sales of the products on the capital market side being really high demand from other people who are not traditional in that segment. I think on the banking side, given the focus of banks on deposit generation, there is a high focus and demand for digital solutions. That's been in market. It's not necessarily new, although it's definitely heightened. And we're seeing a lot of demand for that, and we called out a couple of those wins this quarter. So we feel really good about that. I think that's from a demand standpoint. I would say the other thing is, In terms of thinking about what's driving the recurring, yes, it continues to be delivering those products and solutions into market. But also remember, there is an inherent same-store sales growth number that we get the benefit of from a number of transactions that go across the platform as well as deposit accounts. And so there is an inherent same-store sales growth number that we get benefits from in addition to us being strong on the sales side. So we're feeling good. That's not to say that, you know, in one quarter it's going to flip, but we're feeling the momentum is there and we're feeling good about it. I think from a culture standpoint, it's going really well. I couldn't be more proud of the team, honestly. The amount of passion and energy that they've brought to Future Forward, that they've brought to refocusing and repositioning the company and the WorldPace separation is James mentioned that it was a lot of work in accounting. It's just a lot of work, period, to separate two companies and people that have worked together for four years. So I really would say the teams have really rallied around that. It's not easy, but they are definitely taking up the call to duty there. And between Future Forward and the WorldPace separation, I couldn't be more proud of what the team's been able to do. So I think the culture is good.
spk05: Great to hear. Thanks. Guys, James, just a quick follow-up. That slide 18 was extremely helpful in clarifying some of the moving parts. So just to be clear, I mean, we look at 23 and you back out the, if we wanted to back out the WorldPay contribution, then that's, let's call it 447 at the midpoint minus that 60 to 65 cents. I think what you said was that that gives you a sense of 23 pro forma, we're getting co-earnings, but it also doesn't account for the fact that there's high interest. There's certain developments, I think you said, right? interest expense in there. I mean, it still kind of ends up with a number very close to what we modeled for RemainCo, but I'm curious what the, if there's any other moving parts.
spk00: Yeah, I think the key part is the right-hand side of that chart, which, you know, just to explain the DISCOPs, there's a set of rules around it that are somewhat illogical because accounting is not always fully logical, and you can only allocate to a DISCOPs P&L something that's actually directly related. So you can't allocate anything. You can't put in interest costs unless the legal entity had interest costs. So that's why on the right-hand side, what we were thinking of is, you know, we've actually filed quarterly income statements for disc ops and remain comp to help you rebuild your models. But if you rebuild based on what we gave you, you'll arrive at 330 to 340 for remain comp. But it's wrong. because you've got $630 million, $650 million of interest expense. Once we pay down the debt, that's going to go down by half. I'm just giving you rough numbers. And then two is you're taking the repurchases. And all we did in calculating this capital deployment of 65, we basically say you're paying down $9 billion of debt, And you're paying it down at the average interest rate, which is quite low. It's 3.2%. The other part is you're taking a share repurchase. And this is quite conservative because what we've done is we took the $3.5 billion and we assumed that we would have repurchased shares during the course of 2023. But if you flip out, you know, 2020, no, 2023. And then if you flip out, because this is trying to represent what the base year would look like if the transaction was done at the beginning of the year. But if you look at some of the opportunities here, first of all, you're going to grow off the 440 to 455 base. So you're going to have a normal year of growth. But also, you're going to get the full year impact of the share repurchase program. Once we start doing it, you're going to get the full year. Now, that will hit more in 2025. And then, you know, as I look at this, I see there's incredible opportunity on the NCI line. So this $0.60 to $0.65, I think there's a lot of opportunity. You know, this is a standalone company. It'll be more aggressively managed for cash. I think they'll pay down debt incredibly quickly. And because they've loaded it with so much debt, the actual change in EPS contribution will be probably quite a fast clip. So we're careful here not to give guidance on the future, but what we're saying is we're trying to put a stake in the ground and say the base here is this. It'll be kind of strange next year because once we start reporting against continuing operations and we've separated the two companies, we will be reporting very high EPS growth rates because we'll be comparing against the $3.30, $3.40, and you will be you will be implementing a buyback of 3.5 billion, and you'll have a huge saving on interest expense. So the headline EPS growth rates will be extraordinary. But what we're trying to say is some of that is coming from the fact that you're recovering from the dilutive transaction. So that's why this chart, we hope it helps every participant to understand the way we're thinking about this. But 440, 455 is the floor rate. And against that floor, we're going to grow next year.
spk05: Yeah, that's really helpful. Thanks, guys. Appreciate it.
spk02: Thank you.
spk01: One moment for our next question. Our next question comes from Dan Dolev with Mizzou.
spk08: Your line is open.
spk02: Dan DeLove with Mizzou, your line is open.
spk01: If your line is muted, please unmute or please rejoin using the call me feature.
spk08: One moment for our next question.
spk02: Our next question comes from Vess Ontaro with with KBW. Your line is open.
spk04: Hi, thank you for taking my questions. I guess the first one, Stephanie, on just the macro backdrop and any help you can provide us on sensitivities that we might see in the banking and cap market segments if the economy were to soften a little bit from here.
spk03: Oh, you want me to tell the future. That's a hard one. I would say You know, what's interesting on consumer spend, you know, banking capital markets are no longer as positioned towards consumer spend like the merchant business, the WorldPay business. So we think we've moved largely away from that. Not to say we're not totally immune because we do process debit card transactions. I think from a macro standpoint, the concern that I think we should have, and we'll keep a close eye on, be transparent, is around if we see demand drop for products and solutions. And we're not seeing that. And so as you think about both the financial institutions and the capital market participants, they're all undergoing different levels of stress where they are in the industry. Our solutions are still in high demand in terms of whether they're digital or a next-gen banking platform, wanting to drive more money movement. So the secular trends are there. We'll continue to watch them, but we're no longer exposed from the WorldPay side in terms of consumer spend going up and down and that impacting us. That's probably the best I can do, Vasu.
spk04: Thank you. That's helpful. And just a quick follow-up on the debit routing for GuideNotPresent. I know you mentioned a few wins with retailers and fintechs, which was nice to see. I mean, it's clearly a shared gain opportunity for the Knights Network. Do you think it could be a needle mover for the business in 2024?
spk03: I think it should be. I think the challenge we need to, we've been tripling down on it and selling it. We actually are one of the few networks that had that up and running very quickly and have the dual messaging capability that's required. We continue to press on and we've had some significant wins. My payments guys will tell you I continue to press them very hard on. It should continue to accelerate growth. So more to come as we come into 2024. But we do think, you know, we have a strategic advantage there.
spk04: Thank you very much.
spk01: One moment for our next question.
spk02: Our next question comes from Dan Dulev with Mizzou. Dan, your line is open.
spk06: Oh, hey, thanks again. Somehow I didn't hear you before. Great results, guys. Two questions. One, Stephanie, you talked about the Salesforce transformation. Can you maybe tell us what makes you feel more confident in Salesforce? Thanks.
spk03: Yeah, thanks, Dan. I think... You know, we spent a bunch of time in the first half of this year really refocusing the sales force on both selling all the products and solutions that we have across the segments, which we're seeing, which we call Amplify, which we're seeing a lot of uptake there. But more importantly, really making sure that we were selling the technology-enabled software that we've invested in and that we think really should be where we should drive some high returns. I'm feeling really good about that, like I said. We have seen the quality of sales has improved as we came into this quarter. New sales have improved 50 bits in terms of overall margins. And so as we look to transform the sales force over time, we're seeing that really start to take root. I think, too, moving away from some of the non-recurring in terms of selling and into the recurring is also starting to be uh pretty good for us and we're feeling good about that continuing to underpin the recurring revenue growth as we move into 2024. so feel good about the sales pipeline feel good about sales productivity feel good about the quality of sales but it's still early days and we are managing it very closely and the teams i'm i'm on a sales call every week and i have my own win-loss ratio i hold myself accountable as well so feeling good about where we are, but we'll continue to be pressing on this as it's critically important for us.
spk06: Okay, great. Well, since the market opened, I'm going to spare you my second question. I think people want to leave, but thank you.
spk02: Thanks, Dan. Thank you. That concludes the question and answer session. At this time, I would like to turn the call back to Stephanie Ferris for closing remarks.
spk03: Well, thank you, everyone, for joining us this morning. As you can tell, we're very excited about the next chapter for FIS. While we're only in the first year of our journey, we've already made significant progress unlocking shareholder value, delivering our third consecutive quarter, meeting or exceeding our financial commitments. We're excited about the WorldPace separation and future forward. We're delivering significant upside by resuming our buyback program and with an upside commitment to further reposition FIS for attractive long-term growth. All of this leads to confidence in our current year outlook, our future prospects, and our plan to drive long-term shareholder value. Thank you for your interest in FIS. We look forward to connecting with you over the next coming days and weeks.
spk02: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
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