Fiserv, Inc. (FISV) Q3 2012 Earnings Report, Transcript and Summary

Welcome to the Fiserv Third Quarter 2012 Earnings Conference Call. [Operator Instructions] Today's call is being recorded and is being broadcast live over the Internet at www.fiserv.com. In addition, there are supplemental materials for today's call available at the company's website. To access those materials, go to the company's website at www.fiserv.com and click on the Earnings Call link in the Events Section of the home page. The call is expected to last about an hour, and you may disconnect from the call at any time. Now I will turn the call over to Eric Nelson, Vice President of Investor Relations at Fiserv.

Good afternoon, everyone, and thank you for joining us for our third quarter earnings call. Joining me today are Jeff Yabuki, our Chief Executive Officer; and our Chief Financial Officer, Tom Hirsch. Our remarks today will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We will make forward-looking statements about, among other matters, adjusted revenue, adjusted internal revenue growth, adjusted earnings per share, adjusted operating margin, free cash flow, free cash flow per share, sales pipelines, acquisitions and our strategic initiatives. Forward-looking statements may differ materially from actual results and are subject to a number of risks and uncertainties. Please refer to our earnings release, which can be found on our website at fiserv.com for a discussion of these risk factors. You should also refer to our earnings release and slide presentation for an explanation of the non-GAAP financial measures discussed in this conference call and for a reconciliation of those measures to the nearest applicable GAAP measures. These non-GAAP measures are indicators that management uses to provide additional meaningful comparison between current results and prior-reported results and as a basis for planning and forecasting for future periods. I will now turn the call over to Jeff.

Thanks, Eric. So great job on your inaugural call. Good afternoon, everyone. Before I get to our results, let me thank each of you who joined us for our Annual Investor Conference, either in person or digitally, on October 9. We provided an update on our key solutions and how we're executing against our algorithm for growth. This formula sets forth how we intend to enhance revenue growth across our cadre of market-leading businesses and also our plans to scale our newer, innovation-based solutions, such as Popmoney and Mobiliti. We believe we are on track to achieve increasing levels of high-quality revenue growth. We also highlighted the important opportunities to expand operating margin, further enhance our already compelling free cash flow per share and our consistent and disciplined approach to capital. Our strategies are well aligned with the evolving market. We're enthusiastic about our multiple opportunities to create additional value for clients, associates and you, our shareholders. Now on to the results. We're pleased with our performance for the quarter and year-to-date and are well positioned to achieve our expectations for the full year. We again generated strong earnings growth, with adjusted EPS increasing 9% to $1.27 in the quarter and is up 13% to $3.75 for the first 9 months of the year. Adjusted revenue increased 5% in the quarter and is up 4% through September 30. Adjusted internal revenue growth was 4% in the quarter and 3% year-to-date. Adjusted operating margin increased sharply to 29.8%, 80 basis points over the prior year's quarter and up 50 basis points sequentially. Adjusted operating margin to date has increased 40 basis points to 29.3%, led by strong performance in the Financial segment and solid execution of our operational efficiency objectives. Free cash flow increased 18% to $203 million compared with the third quarter of 2011, driven by strong growth in operating earnings and favorable shifts in working capital. Year-to-date free cash flow was down slightly from the prior year period to $501 million, primarily related to higher tax payments and working capital shifts early this year. We expect a strong free cash flow quarter to end the year. For 2012, we identified 3 enterprise priorities, when taken together, represent key elements of our formula to create sustained shareholder value. First, to deliver an increased level of high-quality revenue growth and meet our earnings commitments. Next, to center the Fiserv culture on growth, leading to more clients, deeper relationships and a larger share of our strategic solutions. And third, to deliver innovation that increases differentiation and enhances results for our clients. Revenue growth accelerated in the quarter, as we benefited from robust sales and strong performance across our leading solutions such as Debit Account Processing and Mobile. The combination of increased operating leverage and continued achievement of operational effectiveness goals resulted in 8% growth in adjusted operating income in the quarter and 80 basis points of margin expansion. Adjusted EPS growth was solid in the quarter as well. Even net of a negative comparative tax impact, it has increased 13% through September 30. We're on track for another year of double-digit adjusted EPS growth. Our focus on building a culture of growth continues to translate to strong sales performance. After the expected slow start to the year, the second and third quarters had strong, above-quarter performance, which included another major bill payment win, Regions Bank, that we announced at Investors Day. That transaction, along with the signing of signing of TD Bank in the second quarter, is factual evidence that financial institutions continue to desire the significant product differentiation offered by CheckFree RXP. As we shared at Investor Day, we expect to see revenue growth acceleration in our bill payment business in 2013 and well beyond. We had more than 140 new Mobiliti signings in the quarter, driven largely by existing relationships in our account processing and online banking client base. As of quarter's end, we have nearly 1,300 mobile banking clients and a still significant growth opportunity, driven by the combination of mobile adoption and new FI clients. Our goal of delivering differentiation and innovation that leads to better results for our clients progressed well in the quarter. We have several solutions that straddle the unique intersection of strong consumer value and financial institution revenue. A great example is Popmoney. We signed more than 100 new clients in the quarter and now have over 1,700 institutions in the social payments network. We added BB&T Corporation, one of the largest financial holding companies in the U.S. to the Popmoney network, which now includes 14 of the top 30 banks. We believe realtime transaction processing is a critical Fiserv differentiator. This capability should provide new revenue opportunities for our clients, which we believe will ultimately be measured in the billions. And it's important institutions can provide unique user experiences in areas such as social payments, expedited bill pay and SpotPay, our new product, which allows small business customers to accept card-based payments through a mobile phone, courtesy of their own financial institution. And as we shared at Investor Day, our concept of expanding realtime movement is real now. In live Popmoney demonstrations, we've successfully debited the sender's account and credited the receiver's account at a different institution within 20 seconds of initiating the transaction. Integrating our proprietary DDA-based payments applications with our PIN-debit Network should create exceptional value for our clients and their customers, which will translate to attractive new growth for Fiserv, a true win-win. With that, let me hand the discussion to Tom, who will provide more detail on our financial results.

Thanks, Jeff, and good afternoon, everyone. Adjusted revenue increased 5% in the third quarter to $1.05 billion and increased 4% in the first 9 months of 2012 to $3.1 billion. As anticipated, adjusted internal revenue growth in the third quarter accelerated over the second quarter to 4% and is now at 3% year-to-date. Adjusted earnings per share increased 9% to $1.27 in the quarter and increased 13% to $3.75 through September 30. Earnings in the quarter was negatively impacted by $0.04 per share due to an almost 2-percentage-point lower tax rate in the prior year's third quarter. Adjusted operating income was up 8% to $312 million in the quarter, and adjusted operating margin was 29.8%, up 80 basis points over the prior year. For the first 9 months, adjusted operating income increased 5% to $910 million, and adjusted operating margin expanded 40 basis points to 29.3% compared to the prior year. The combined license and termination fee revenue through September 30 is about the same as last year. Now on to the segment results. Adjusted revenue in the Payments segment increased 4% to $548 million in the quarter and is up 5% to $1.6 billion for the first 9 months of the year. Adjusted internal revenue growth was 2% in both the quarter and year-to-date. Card services and digital channels continue to drive strong internal revenue growth, which is partially offset by weaker performance in bill payment, investment services and the continued negative Durbin impact on our Biller Solutions business. Bill payment transactions declined 2% in the quarter. This decline is due primarily to a lower number of non-weekend bill payment processing days in September, which accounted for an approximate 3-percentage-point decline in the quarter, which, we expect, will reverse in the fourth quarter. We continue to anticipate higher growth in our bill payment business in 2013 in light of the recent large signings of TD Bank, Regions Bank and our still strong pipeline of additional opportunities. Debit transactions grew 15% in the quarter and are up 18% year-to-date, primarily from better-than-market transaction growth and on-boarding of new clients. We've added 125 new debit clients so far this year and expect a strong sales finish to the year. Our Popmoney ramp is continuing with transactions up 111% and 119% in the quarter and year-to-date, respectively. Our focus on building the network is critical, as more consumers are exposed to this new technology. As you know, Popmoney is yet to meaningfully contribute to our revenue. Operating income for the quarter was $168 million in the Payments segment compared with $162 million in the third quarter of 2011. Year-to-date, operating income was $489 million compared to $482 million in the prior year. Adjusted operating margin was 30.7% for the quarter, down slightly from the prior year period and up 90 basis points sequentially. Year-to-date, adjusted operating margin for the segment was down 90 basis points, primarily due to the impact of previously discussed bill payment deconversions, the expected dilution from the acquisition and integration of CashEdge and the impact of ramping up our offerings in mobile and online banking. Internal revenue growth in the Financial segment rebounded as anticipated, increasing 5% to $513 million in the quarter compared with the prior year. Year-to-date internal revenue growth was 3%. The timing of license revenue also rebounded in the quarter, as expected, compared to the second quarter of this year. The gains in year-over-year revenue are primarily driven by recurring revenue growth in our account processing and lending businesses. Operating income in the Financial segment was up 15% to $165 million for the quarter, and operating margin expanded by 270 basis points to 32.1%. This performance is driven by a number of factors, including the higher license and termination fee revenue, efficiency gains and item processing, our operational effectiveness initiatives and an easier comparison to the prior-year quarter. Year-to-date, operating income was up 10% to $479 million, and operating margin has increased 190 basis points to 31.6%, in each case, compared with the prior year. The operating loss in the Corporate segment for the third quarter was $21 million, consistent with our second quarter operating loss and $6 million greater than the third quarter last year. Our adjusted effective tax rate in the quarter was 36.6%, an increase of almost 2 percentage points over the 34.7% rate in 2011. Last year's third quarter rate was much lower due to a number of timing items that, in the aggregate, positively impacted the period. Our full year adjusted tax rate is projected to be approximately 36% and 37% in the fourth quarter. Net interest expenses declined $9 million year-to-date versus the prior year, primarily due to lower interest rates. Free cash flow rebounded nicely in the quarter, consistent with our plan of stronger second-half performance. Free cash flow in the quarter was $203 million compared to $172 million in the prior year quarter, an increase of 18%. For the first 9 months of 2012, free cash flow was $501 million, down slightly to the prior year and negatively impacted in the current year by higher tax payments and incentive accruals paid in the first quarter of the year. Free cash flow per share through September 30 was up 3% to $3.62 compared to the prior year period. Total debt at September 30 was $3.45 billion or 2.4x trailing 12 months' EBITDA. In September, we raised $700 million of 10-year public debt at a coupon rate of 3.5%. The proceeds were used to repay a portion of our $1.1 billion term loan, which is due in November of 2012. The effective interest rate on the new debt will be higher than the coupon due to the interest rate derivatives entered into a few years ago and settled in conjunction with the recent transaction. However, the overall debt cost on the new financing will be lower than the existing term loan. We are very well positioned with our debt structure. And after the paydown of our term loan in November, we will not have a mandatory principal payment until late 2015. We repurchased 2.7 million shares of stock in the quarter for $189 million. And year-to-date, we have repurchased 8.5 million shares for $577 million. As of September 30, there were approximately 6.2 million shares remaining under our existing share repurchase authorization. With that, I will turn the call back over to Jeff.

Thanks, Tom. Sales in the quarter were again strong with quota attainment at 116%. Actual sales value in the quarter was more than 40% higher than last year's Q3 and just below the stellar results of this year's second quarter. Our digital channels and payments businesses led the performance, including, as we highlighted earlier, some great wins for our Popmoney and bill payment products. We are at 99% sales quota attainment on a straight-line basis through the end of the third quarter. Our qualified pipeline remains strong and is above where it was at this time last year. We expect to meet our annual sales target for the year. Integrated sales were also solid in the quarter, with payments and channel solutions, again, experiencing the highest demand. Through the first 9 months of the year, integrated sales were $120 million or roughly 60% of our annual target. We also expect to achieve our 2012 objective of $200 million. We had another strong quarter of operational effectiveness performance and, through September 30, are now at $45 million in cost savings or 113% of our full year target. As we shared at Investor Day, the environment facing financial institutions is stable but continues to be somewhat challenged. And while technology spend is growing slowly, it is still growing. We believe institutions will focus their technology decisions on areas that contribute to enhanced customer experience, create revenue and drive operational excellence. Technology solutions that deliver tangible, measurable value will likely get the lion's share of available spend and that lines up very well with our overall positioning. Through September 30, on the regulatory front, there have been 52 actions, down significantly from 91 in the same period last year. Total assets of the impacted institutions are down significantly to about $10 billion compared with $34 billion in 2011. As we said up front, we're on track to achieve results for 2012 within our guidance. We continue to expect adjusted revenue to increase 4% to 6% and adjusted internal revenue growth in the 3% to 4.5% range, both with a bias to the lower end of the range for the full year. We expect adjusted earnings per share of $5.08 to $5.20, a range of 11% to 14% growth for the year, as compared to $4.58 in 2011. We expect adjusted operating margin to expand in the range of 30 to 60 basis points for the full year, free cash flow growth of 8% to 12% and free cash flow per share to be at least $5.70 for the full year. We continue to move the business forward each day, with a singular goal of making your company stronger. We have made strategic progress and remain bullish [Audio Gap]

[Operator Instructions] Our first question is from David Togut from Evercore Partners.

Jeff, it's David Togut. Can you walk through some of the biggest drivers of the 5% organic revenue growth in Financial? And do you see this continuing for the balance of the year and into 2013? [Technical Difficulty]

Can you repeat the question? I think you were talking about the revenue growth, but we just want to make sure.

Yes. What were the key drivers of the 5% organic revenue growth in Financial during the third quarter? And to what extent is this growth sustainable for the balance of the year and into 2013?

Yes. Clearly, David, we just had a really good quarter in our Financial segment. As you know, coming off the second quarter, which was a little bit more abnormally low, because we had some timing of license revenue. But we had a solid revenue quarter from a license standpoint. We had -- did have a little higher termination fees. But we had a strong quarter, as Jeff highlighted, in both account processing and our lending business which continue to have a strong performance. And as you know, the Financial segment has bounced around a little bit. And -- we look at it from a year-to-date standpoint. So clearly, good progress. 3% organic revenue growth from the Financial segment, which we're pleased with, and really solid across those recurring revenue businesses. But the growth rate is going to bounce around as license fees do impact that particular segment.

What were the termination fees in the third quarter?

Roughly, as a company, they were approximately $9 million, which was, I think, up, David, about $4 million to $5 million over the prior year quarter. But as another reminder, year-to-date, from a contract termination fee and our license fees, they're about flat with the prior year. So I always tend to look at those on a year-to-date basis for better comparisons.

I see. And just as a quick follow-up, when would you expect Payments' organic revenue growth to pick up as a result of the Regions Bank and TD Bank wins? And can you quantify the impact to revenue from these 2 wins for FY '13?

So those transactions will go live, obviously, some time in '13. They'll have different dates. And I think we had a slide up at Investor Day, which said that those 2 banks, plus Zions, had about 8 million accounts that would potentially be able to be within or would potentially be able to take bill pay. And so if you just think about normal percentages of pay grade against that, it could be as low as 10%. And typically, banks of that size are running at a higher level into the upper teens. So on a percentage basis, if you think about that, relative to the 24 million active bill pay accounts we have today, that's probably the best way to think about it, knowing of course, that, that will ramp over time. So we think they'll have important contributions to our growth in '13. But as we have a -- we won't have a full year until we get into '14. We think that'll be strong growth. And we're also going to benefit from the anniversary-ing of some of the negatives, like the Wachovia deconversion and a couple of remit and bar deconversions that we had this year as well.

Yes. I think you'll -- to add to that, David, I think you'll continue to see sequential improvement in that growth rate as we move forward.

Quick final question for me, Jeff. The American Banker had a big article on the community bank market last week, a pretty negative piece citing higher capital requirements, tough pressure on net interest margin. Any updated thoughts, just on your customers and their overall spending levels with Fiserv, particularly community bank customers?

Sure. We -- one of the things that we talked about at Investor Day at some depth is the overall pressure that is in the financial institution space. And community banks nor credit unions are exempt from that. I think the capital requirements are the capital -- yes, the capital requirements under Basel III would certainly put more pressure on the industry. That said, most of the community bankers -- a substantial majority of the community bankers, that I interact with, understand that the model is changing and that they need to make investments in technology that allow them to actually be more efficient, serve their customers in a different way and look for some other product opportunities to drive additional revenue. And that's one of the reasons why, frankly, we're quite bullish about the technologies that we have within our suite. It's one of the reasons why we have such a strong take-up in things like Popmoney and Mobiliti. And as much as that model will be under pressure, the beauty of it is, as these institutions have really taken the expense side down and really been more -- I think more prudent around their expense model, as revenues start to come back online, and they certainly will at some point, you'll see more of a fall-through. So I think most of the bankers are preparing for that inevitability. We are not at all bearish on the community banks base. We think it's an attractive space. We think structurally within the U.S., you need to have significant -- a significant community bank system. And there's nothing that we've seen that would indicate that, that's going to change.

The next question is from Dave Koning from Baird.

And I guess my first question, just on bill pay, I know, prior to kind of the last 4 quarters, you always grew transactions in the ballpark of 6% to 9% for many quarters. Can you get back to there on kind of a -- on a normalized basis? Even without Regions and TD and Zions, can you get back there, just as some of the remittance-only stuff anniversaries? Or do you think we're going to be a little below that, but get the benefit of adding some of these bigger banks?

Yes, it's a great question and one that we think about on a fairly regular basis. We have continued to win a large number of bill payment clients every quarter. So when we think about our transaction growth really benefit from 2 areas -- we benefit from new wins within really the account processing distribution platform. And then secondly, kind of the growth of transactions -- kind of natural growth of transactions, which is a function of the number of makers that you have and the number of transactions per maker. Frankly, since 2008, we've seen transactions be frankly lower as less people -- or people have been paying less bills. And so we've had some issues with that, and I think that's one of the things that's been running through the numbers. So part of the answer to the question is, when will that stabilize? And we think it has. And we would expect to see that begin to move back up. I think the other thing that we talked about at Investor Day, that we're really excited about, is the opportunity to basically move bill payments on a faster basis, whether they're faster bill payments or expedited or realtime. We think that is not going to just create interesting fee opportunities but have people use bill payment on a more frequent or regular basis. So we think that will help as well. All of that said, I think it would be conjecture to understand, can we get that number back up to 6% to 9% without winning deals? And I think the reality is, we need to do all of that. We need to win deals. We need to continue to innovate our product to deliver better and more impactful ways for institutions to benefit from bill payment and for consumers to use the technology. So I feel like we're in -- I think we're in a good position. I do think we'll see very strong transaction growth coming from these new wins. And frankly, we expect to continue to win deals moving forward. So even though we have a pretty high penetration in, call it, the top-30-or-so banks in the U.S., we have a pretty good opportunity to extend below the top 30 into, call it, banks 30 to 100. And so we're quite focused on that area as well.

Okay, great. And then the Durbin headwind that started to have impact you, I think that started in early October of last year, kind of the way it flowed through your business in the Payments segment. I guess, the anniversary of that, does that really start to benefit in Q4 this year and maybe by how much about?

Well, Dave, when we gave our guidance, I think we said roughly about 50 basis points for the year. And there continues to be some of that impact, just given the nature of what that is. So I think you're going to continue to see some of that in the fourth quarter.

But I think Dave, to your point, you'll see that start to lift as we move through -- we did start -- it started kind of later in the fourth quarter last year, and some of that pressure will diminish as we move into '13.

Yes.

Okay, great. And then my final, just quick one is, the guidance range on EPS is still pretty wide. I don't think you made a comment about kind of where it might fall in that. I'm just wondering if we should expect kind of the upper end of that range or if you just want to keep it wide for now.

Yes. I mean, we're -- we -- you probably remember that in the second quarter, we actually moved up -- we moved up our range by, what, $0.04 in the quarter or as of the end of June. And one of the variants that we always have going into the fourth quarter is the amount of license revenue. And as we talked about before, that can bounce around. And it's about $2.5 million per $0.01. So from our perspective, we see some variability there. And we think the range that we lay out is the right range for the remainder of the year.

The next question is from Glenn Greene, Oppenheimer.

I'll ask just so [ph] in the interest of getting disconnected potentially. Last call, 3 questions and then just hop out. First one, the sales strength from the quarter, if I heard right, is 40% year-over-year. Just wanted to understand the key items that drove that and within that, how much Zions contributed. Second question, the bill pay comments related to fiscal '13, if I heard it right, it suggests the acceleration. And I understand that TD and Regions, but wanted to know if that reflected the drag from the BofA renewal. And the third is the integrated sales goal of $200 million that suggests a heck of a fourth quarter to get there. What kind of gives you the confidence to get there?

Sure. So we'll start with the last one first, and then we'll move through them. So as it relates to integrated sales, we feel quite confident. Last year, we actually had quite a strong fourth quarter, I think around $70 million. Because what we can see in our pipeline, we feel like there are a lot of good-sized deals that will come in, in the quarter. So we're confident there, given it's only a few million dollars higher than we saw last year in Q4. So that gives us confidence. On the second point, which is really on the bill pay acceleration, we really see that growth coming from the wins that we have had, the anniversary-ing of the Wachovia and some of the other deconverts that we talked about earlier in the year, and obviously, offset by the -- by any discount we were to give -- we are to give to Bank of America. So -- but we -- as we talked about at Investor Day, we have a good level of confidence and growth in '13, but not just in '13. As we talked about these transactions, institutions are going to ramp up. And we have a good, solid pipeline there. And we believe we'll continue to win transactions. And then last, from a Zions perspective, most of the growth that we see in '13 will not come from Zions. Zions would be smallest of the 3 big deals that we quantify. We'll get some nice growth there, but it won't be the largest of all of them.

Yes. And I think your other question was, Glenn, around the strength of our sales performance on a year-over-year basis and continues to be driven by our digital channels business. A lot of activity there. You saw some of the Popmoney wins. You saw our bill payment wins. And the other thing I would say is that we still have a very good pipeline in that particular business and along with a lot of our other businesses. So our pipeline continues to be strong. And so from a sales standpoint, we feel good going into the finishing out the year on a strong basis. And a lot of those sales have been more recurring revenue or long-term, recurring revenue versus license and debt. That's a good thing for the long-term nature of our business and especially, the size of some of these wins, which are a lot larger than what we've seen as a company, kind of across the board when you look at the breadth of the wins that we have, not just in bill payment but in other areas, larger transactions, which I think is contributing to that year-over-year increase in our performance in the third quarter of roughly 40% from a sales standpoint.

The next is from Chris Shutler from William Blair.

First one, I just wanted to gauge your confidence in your ability to hit the long-term internal revenue growth target for the first 3-year period, which I think is 2011 to 2013. Just given all the things like Durbin, BofA, et cetera, it seems like that would a bit of a stretch to hit that. So just wanted to gauge your confidence in that.

Are -- and Chris, are you talking about kind of over the 3-year period?

Correct.

Yes. I mean, obviously, we're not going to give guidance for '13 at this point. I think what we have said is, from a notional standpoint, we expect to have growth higher in '13 than '12. But we'll deal with that question in a little bit more depth in February.

Okay, figured I'd try. And then Tom, the weighted average interest rate that we should look out for Q4 as opposed to Q3?

It's going to be slightly lower, just given the fact of that recent refinancing, but shouldn't be material but it will be slightly lower going into the end of the year.

On the term loan, what was the rate that you were paying?

It was somewhere around 5 plus on that thing when -- because some of that debt was FX. So there's going to be a slight benefit in Q4 and slight benefit as we look into '13.

And then we'll pay off the balance of the term loan not until -- kind of November, right?

November, that's correct.

Okay. And then you might have mentioned this earlier, I'm not sure, but the term fees and the breakout between the 2 segments?

Yes, it's a combination of both. We don't typically give that breakout between the 2. But there's -- I think it was, as I indicated, I think, $9 million roughly in the quarter. It was up $4 million to $5 million over the prior year. And I think you'll have a couple of million in each, because we have some in each segment. And so that's roughly where it was at.

Our last question comes from Bryan Keane from Deutsche Bank.

This is Ashish calling on behalf of Bryan. Quick question on the strength in the Financial segment. So you've highlighted license wins and the termination fees as the less [ph] strength in the processing business. I was wondering how do you -- when you think about the fourth quarter and all the macroeconomic uncertainty, how should we think about Financial segment going forward? Just -- do you expect the same kind of license revenue strength to persist? And also, any indication on what the term fee expectations are for the fourth quarter?

So let me just -- I guess let me just back up just to make sure I answer that question appropriately. The -- as you know our business, we tend to have volatility as termination fees and license fees. And they move quarter-to-quarter. As I highlighted year-to-date, when you look at the first 9 months of the year compared to the prior year, our license fees and our term fees just about offset. So they're about flat when you look at that compared to the prior year period. And those can move around as we go from quarter-to-quarter. And we're not going to give guidance as we look into Q4 around termination fees, et cetera, or license fees. But that being said, we have historically performed well from a license fee standpoint in the fourth quarter compared to previous quarters. We continue to have a good pipeline there. We have to sell to a number of different financial institutions, but we're confident we're going to hit our guidance for the full year as we've laid out.

And -- yes, that's helpful. And just in terms of margin expansion also, so you've guided to -- 30 to 60 basis points. And any color on where it could lie? I understand it's a small range, but any color there on the expectations where it could lie?

No. It's -- we feel comfortable with that range and for the full year.

Thanks, everyone. We appreciate you joining us this afternoon. We apologize for the technical difficulties. If you have any further questions, please don't hesitate to contact our Investor Relations group. Have a good afternoon.

Thank you. This concludes today's conference call. Thank you for joining. You may disconnect at this time.