Welcome to the Fiserv 2015 Fourth Quarter Earnings Conference Call. [Operator Instructions] As a reminder, today's call is being recorded. At this time, I will turn the call over to Stephanie Gregor, Vice President of Investor Relations at Fiserv. Ma'am, you may begin.

Thank you, and good afternoon. With me today are Jeff Yabuki, our Chief Executive Officer; Tom Hirsch, our Chief Financial Officer; and Mark Ernst, our Chief Operating 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, anticipated benefits related to 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 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 conference call, along with the reconciliation of those measures to the nearest applicable GAAP measures. 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. Unless stated otherwise, performance comparisons made throughout this call are year-over-year metrics. With that, I will turn the call over to Jeff.

Thanks, Stephanie, and good afternoon, everyone. We capped off 2015 with fourth quarter performance that allowed us to exceed the majority of our financial metrics for the year. These strong results were in spite of Q4 revenue that was a bit light versus expectations, driven primarily by delays in EMV card personalization and lower-than-planned license revenue. Overall, performance in the second half of '15 was solid, including 5% internal revenue growth in both the third and fourth quarters. These growth results, combined with record fourth quarter sales, should set the stage to expand our internal revenue growth rate in 2016. The organization achieved an unprecedented 30th consecutive year of double-digit adjusted earnings per share growth. In the process, we expanded adjusted operating margin by 120 basis points, grew adjusted operating income by 8% and broke $1 billion in free cash flow for the first time. We anticipate strong results again in 2016. We provided internal revenue growth guidance of 5% to 6%, consistent with our strategic objective of stepping up our growth rate an average of 50 to 100 basis points per year. We also expect another year of double-digit adjusted earnings per share growth, at least 50 basis points of adjusted operating margin expansion and a record level of free cash flow per share. As you saw on January 20, we announced the acquisition of certain digital banking and payment assets of the Community Financial Services business from ACI Worldwide. These complementary solutions are strategically aligned with our goal of enabling clients to transform their financial services experience. In addition to technology solutions, we will also welcome a group of high-quality clients and committed associates. We expect this transaction, which is subject to regulatory approval and other customary conditions, to close towards the end of the first quarter. We…

Thanks, Jeff, and good afternoon, everyone. Adjusted revenue for the quarter grew 5% to $1.3 billion and increased 4% to $4.9 billion for the year. Internal revenue growth was 5% in the fourth quarter and up 4% for the full year, including 180 basis points, respectively, of combined negative impact from FX and the unanticipated EMV card personalization delays. Our full year internal revenue growth rate would have been 5% excluding the unanticipated impact of these items. Our revenue for the year is a tale of 2 cities as our processing and services recurring revenue increased 5% even after the negative currency impact. On the other hand, product revenue was short of plan for the year and declined compared to 2014 due primarily to lower-than-anticipated base and EMV revenue in our Output Solutions business and lowered-than-planned license revenue for the year. We continue to build high-quality recurring revenue, which is key to our long-term growth profile. Adjusted earnings per share for the quarter was up 12% over the prior year to $1. Full year adjusted earnings per share exceeded the top end of our original guidance range, growing 15% to $3.87. Full year adjusted operating margin performance was up a very strong 120 basis points to 31.7%, driven by high-quality revenue growth, expense discipline and a continued focus on Operational Effectiveness. Adjusted operating margin in the quarter increased 10 basis points to 30.7% with comparisons negatively impacted by the timing of our fall client conference, revenue mix and higher expenses in our corporate segment, which, by itself, negatively impacted margin by 50 basis points in the quarter. At the segment level, our Payments businesses delivered 6% internal revenue growth in the quarter and 5% for the full year. Growth was primarily led by our card services, biller and channels businesses.…

Thanks, Tom. Strong sales in the quarter led to a 3% increase in TCV over the last year's record level. In addition to the wins mentioned earlier, we had excellent results across most of our businesses in the quarter. Full year sales were short of expectations primarily due to a reduction in the number of larger in-year new client sales closed compared to the last several years, which we expect to reverse in '16. Pipeline trends are strong, including a more typical number of larger transactions, which should bode well for a faster start this year. Integrated sales were outstanding at nearly $90 million in the quarter and $257 million for the full year. Standouts included card services, bill payment, Mobiliti and custom statements. We achieved Operational Effectiveness savings of $64 million in 2015, well above our goal of $50 million. Savings this year were driven primarily by strong results in procurement and workforce optimization. After the successful completion of our Atlanta facility consolidation in 2015, we will further progress our real estate and data center initiatives this year. You will also recall from our Investor Day that 2016 kicks off our new 5-year $250 million Operational Effectiveness program. Our Operational Effectiveness target for 2016 is $40 million. One of the bigger stories in the environment last year was increasing FI M&A activity, which we expect will continue. We view the Fed rate increase for the first time in a decade as good news for banks and a way to help fund needed increases in IT spend as institutions look for ways to keep up with the broad changes across the technology landscape. There is no question that digital and, specifically, mobile, is having a dramatic impact on the banking experience. Branches are in decline and the payment world is…

[Operator Instructions] Our first question is coming from the line of David Togut from Evercore ISI.

Congratulations on the strong free cash flow growth. Nice to go out on a high note, Tom.

Absolutely, David.

So just moving into some of the targets, your 2016 Operational Effectiveness target of $40 million is less than what it was in 2015. What are the drivers behind that?

I think, yes, David, we're in the first part of our new program, and so there's a number of different items. So we anticipate that this is going to accelerate on a year-over-year basis. We feel highly confident in that number. We are doing a lot of things, as Jeff indicated in the script, around our real estate and data center consolidation. And most of those impacts, we're doing a lot of the consolidation activities around our data center optimization efforts in '16, which is not going to have the full run rate benefit until largely '17 and '18, and so that's probably the biggest driver in that case because it's a little bit different than the benefits we had in '15, which were focused a lot on procurement. So those benefits are going to scale up as we go through the next few years, along with a -- continued on the workforce optimization side. But that's really the biggest issue there.

Understood. And then what is the 2016 sales target?

In -- David, in terms of gross numbers or...

Yes. In terms of total new bookings. You mentioned you fell a little short for '15.

We fell a little short -- we typically don't supply that number, the actual number. But we do expect to have higher sales growth in '16 versus '15, and that'll be reflected in our quota for the year.

Got it. Okay. And then just one question on your acquisition of the ACI Worldwide digital assets. How should we think about the $50 million tax benefit? Over what period of year -- number of years is that recognized? And is that an income statement item or just a cash flow item?

It's just a cash flow item, David. So that's the discounted value -- or the net present value of those tax benefits over a 15-year period.

Right. So the $50 million is the NPV, David. So actually, the gross number would be meaningfully larger, but that is the NPV.

Got it. And then, Tom, final time, what was the December 31 share count?

I actually had that written down on my piece of paper here, David. So we had roughly 225.3 million at the end of December. And at the end of January, we bought back about another 2 million shares in the month of January.

Our next question is from Ramsey El-Assal from Jefferies.

I was wondering if you could help us understand the dynamic with your clients in terms of them ordering manufacturing -- having you manufacture cards and then sort of delaying the personalization. Is it just a question of they're not turning over their cardholder base in terms of reissuing cards as fast as they had intended? Or what's the dynamic there that is sort of causing a delay? It seems like they're putting one foot in the water but not the other.

Hey, this is Mark Ernst, so let me take that real quick. Fundamentally, what we're seeing happen with the clients is that they were kind of working on their own internal schedules to get EMV cards ready and out the door. And we just sort of had a bit of a delay in how many of those were finally issued to their consumers. And some of that is a systems readiness issue and some of that was kind of just the timing with which they wanted to go through with the reissue process. But because of the concerns that have been out there in the industry about the availability of chips, we saw a lot of people pushing for the manufacturing to get done and put that into their inventory in anticipation of needing to get the reissues done. So I think it's a combination of both a lot of internal process differences by clients but, very importantly, concern over not coming up short on the EMV chip availability.

Yes. That -- it has been a longer lag, Ramsey, than we anticipated, that we normally see, because these clients are actually paying obviously for all of this product and taking title to the cards also. So it has been, to Mark's point, for us, it's been very surprising this year that we'd see that. But obviously, over time, these cards are going to get issued over the next year or 2, and that cycle is going to dramatically reduce, we believe, because they're going to be issuing these cards to their consumers.

Okay. That was my next question, and this is probably a rather obvious question. But there's no risk that the deferred revenue never gets implemented, right? These could -- this is sort of like money in the bank in a sense that these plastics will get reissued. It's not like they'll just -- that deferred revenue would need to be adjusted at some point. It's sort of just a matter of when rather than if.

That's correct because they've paid us for these, right? We receive the cash and defer the revenue, and so it's going to get recognized when those cards are ultimately shipped to the end consumer. And that's going to happen. Right. So it's just a matter of timing. And as I think Jeff indicated on his prepared remarks, the -- we look at '16 right now, we see at least initially the middle part of the year to be when a lot of personalization is going to occur, but we continue to watch it closely, and -- but those cards are definitely going to get issued over the next 2 years here.

And I think even if they weren't issued for some bizarre reason, they've already -- the titles were already transferred, so there's no risk of not recognizing that revenue.

Yes. And the chips, actually, have a finite life, so it is -- Ramsey, to your point, it's a little bit of an oddity. I also think the community, primarily, this is a community bank issue, the community banks are making decisions on the timing of their -- should they do a mass reissue, should they do partial reissues, there are a lot of factors. So you saw the FI landscape kind of ignore the issue, and then, all of a sudden, it became very urgent. And then they bought them, and then they had to think about what's the best way to get them distributed. The other thing to keep in mind is the cards don't have the same level of value if the merchants aren't live on their end. And so we are just really seeing -- and you're probably -- we're all seeing it every once in a while now, finally, a merchant says, "All right, well, you have to put your card into the machine." So that landscape is coming together, and the end-to-end equation is being built. We expect that will continue to build, and that'll match up well with the institutions deciding to send the cards out to their consumers and get them finally personalized.

Got it. Okay. And last one for Tom, fittingly, the higher expenses in the corporate segment this time around, that was really all -- can you give us a little color on that? That was all basically -- that was relatively transient and should correct going forward?

That's correct. We had a little time and if you look at -- we have about the same level of expenses as we had in the previous 3 quarters this year. We just had a very -- last year's fourth quarter was very, very low, so we had some onetime items there that were more of a benefit. And you're going to see us around -- we had about $100 million for the full year for the corporate and other segment, and that should be pretty much where it's at for the next -- in '16.

Our next question is from David Koning from Baird.

Yes. And I guess, first of all, it sounds like -- well, I mean with the acquisitions, I guess it sounds like not overly material, but are they in the EPS guidance right now?

So we had -- as we talked about, we had 2 acquisitions. We had a small biller acquisition, a very, very small biller acquisition, and so that is in our guidance. We believe ACI, the numbers are in our guidance as well. The results -- because of when it will close and how it's going to come on, we think it's going to be fairly immaterial to our numbers. When it closes in the next quarter that we report, we'll give some more insights into that. We also think that the majority of the synergies in this deal will be -- it'll take -- we have to transition the solutions over. These are recurring revenue kinds of solutions that have to move into our data centers, and things like that. So it probably -- we won't see the benefit of the synergies likely until '17. And that's important when we think about how the earnings will effectively come on.

Yes, great. That makes sense. And then what were term fees in Q4? And do you expect them to be similar in '16 as they were in '15 just given the M&A environment in banks is a little high right now?

Yes. We don't see really any change with that on a year-over-year basis. They were up just I think $1 million or $2 million in the fourth quarter over last year. So about the same, but up slightly, Dave.

Our next question is from Glenn Greene from Oppenheimer & Co.

I guess the first question on maybe just a little bit more granularity on the key catalyst to drive the acceleration in the organic growth. I know you talked about it at a high level. It sounds like it's a combination of less drags from FX and EMV, but maybe more of the positives. How much incremental do you expect from Agiliti, Mobiliti, just a little bit of color on the key high-level drivers?

Sure. So Glenn, let me take it, and then Tom and Mark can add in as needed. So when I think about the drivers of the growth acceleration in '16, you have -- as we laid out at Investor Day, we laid out that we were thinking about our growth in 2 separate baskets: the momentum-based growth, which is really the mass of the company in our kind of existing business portfolio; and then we had 6 solutions that we highlighted as representative of areas of innovation-based growth. We actually talked about 12, but we highlighted 6. And so from each of those 6 areas: Agiliti; DNA; EMV; NOW; Integrated Payments, or IPS; and Mobiliti, we see each of those areas contributing some level of incremental growth in '16. It won't surprise you to know we're not going to talk about it specifically, but on an order of magnitude basis, we did lay out at Investor Day how we saw the ramp coming year-over-year. And so we expect some incremental benefit in '16, even more in '17, even more in '18. So we have a high degree of confidence and visibility that, that's going to happen. So that's point one. Point two is we expect to have a little less drag from FX. We expect to not be surprised by this lag between EMV card manufacturing and EMV card personalization. So we think that will turn as well. So when you add all those up, it gives us a pretty good degree of confidence and frankly a good degree of visibility into how we get from 2015 into 2016, which we believe will act as a step to 2017.

Okay. Next question, on the ACI assets. Just to make sure I'm thinking about it right, because I think you suggested 5x EBITDA including synergies. And I assume that's including the tax benefit also. So is it then implying sort of run rate $30 million EBITDA once you've got the synergies fully borne?

Yes. Like, listen, that math even I can do. So I would say that's probably a reasonable way to think about it, yes.

Okay. And then the revenue contribution and how you're going to finance it?

So I believe we said it's between 1% and 2% of our revenues. And again, we want to wait and see. Number one, we don't have a good sense, we don't have a perfect sense. We think we have a good sense, but not a perfect sense for when it's going to close and therefore how much revenue we're going to bring in this year, which is why we're giving the range. But it's in that range. On a full year basis, it's in that range. And then we finance it off of our revolver.

Okay. And then just remind me one more on the growth driver. Where are you in terms of the big account and bill pay conversions that you sort of had in your pipeline? What's concluded at this point? And what's still to come in '16?

The -- all of the large bill pay wins that we had been talking about before are now on. They're all completed. Now that I've said that, there may be a small portion of one of the institutions, which is a multi-chartered institution, but they're substantially onboard at this point. Now remember that one of [Audio Gap] referenced in his remarks is through our integrated payment strategy, which is a new experience that brings bill pay, transfer and P2P together. Effectively, that's introducing a new experience to all the more than 24 million bill pay users. And we think that's actually, Tom referenced, the early returns are positive. We're seeing a very nice acceptance and therefore utilization of this new experience which will be chunked out over -- basically, over the next 12 to 18 months.

And I think your question on the account processing side, Glenn, just to add to that, I think we've seen some -- we had a number of larger institutions go live in the fourth quarter on our DNA solution and one large client in particular also converted, and so when those are going to be bringing out more revenue as we go into '16 and '17 clearly because of the surround impact and as those kind of roll in, but we had a good conversion quarter in the fourth quarter.

And we still have a fairly large backlog of DNA conversions moving forward.

Our next question is from Tien-tsin Huang from JPMorgan Securities.

Just a couple of questions on the, I guess, first on the license sale. Why did you say that was below plan again? Was that cyclical or something more specific?

Yes. We had some timing with that and it just wasn't as strong. There were a few deals that are -- both are international and our channels area that we just didn't hit on in the fourth quarter that kind of pushed off into '16. And it's not a large number for us, as you know, because the license revenue is fairly small, but a couple of those deals were just a little short on the license end in the current year.

Got it. And then just on the large deals coming back, that's nice to hear. We've heard that with some other players as well. What kind of projects are you seeing? Is it more on the account processing or integrated or DNA front? Just any context will be great.

Yes, it is. Actually, it's a pretty broad swath of larger deals. I would say that we have them in the account processing space, Output Solutions, Biller solutions, some actually good-sized deals in the card world. I mean, we actually -- I think the -- a bit of an absence of them -- or of the same number in '15, a lot of pipeline work got done and so it's fairly broad. It's not in just a single area. It's probably in 4 or 5 areas.

So to the extent that some of these closed early on the year, could they convert to revenues in '16? And is that assumed?

We -- so yes, some of them could. Large deals typically take 12 to 18 months to convert, so some of them could. And I would say that our guidance assumes that we have normal conversion cycles.

Our next question is from Kartik Mehta from Northcoast Research.

Jeff, just out of curiosity, any -- the conversation you've had with banks, any thoughts about spending as they look in 2016? I know we hear a lot about energy and maybe the exposure isn't as great for your clients. But just thoughts as to how they're thinking about spending for 2016.

Yes. So I mean, clearly, there are some institutions that are being hit on the energy/oil issue, so that is having some impact. But I would call that relatively narrow. The majority of the banking industry seems to be at or slightly above in their "budget" for what they're going to spend on technology. And there's a lot of energy on mobile and on lending. Lending, there's a lot of noise in the market on alternative lenders and so you've got a lot of focus on how to think about a new lending experience that starts to merge mobile with data, real-time, speed, those kinds of assets and attributes. So you've got that going on. And you've got a fair amount of thought around branch transformation, and so all of that leads to good healthy conversations. We'll see how it ends up at the end of the year, but banks were pretty bullish going into this year. I think the current level of turmoil, it is a little bit of a wait-and-see market turmoil. But on balance, I think we're at least at the level that we would have seen for last year with the bias up.

And then, just finally. You've talked a lot about EMV and I understand just the basic opportunity you have to reissue cards. But as you've learned more about EMV, any other opportunities that you're seeing that maybe medium term or long term could generate additional revenue for you?

I don't know if I would say that I see additional opportunities directly related to the EMV card itself. I do see that there is a tremendous amount of activity in the payment space overall, and so there's a lot of -- that war at point-of-sale continues to be quite interesting. And then -- and frankly just so much energy around real-time non-point-of-sale payments. So the types of payment discussions are becoming very different, but exclusive to EMV, I don't...

The only thing that really comes to mind is that we're obviously deeply involved in a lot of conversations about how tokenization of all different types of payments could be affected. And I'd say, that's an adjunct to what's happening with EMV.

And so, Mark, is there -- do you need to acquire any assets or technology or do you think where you are is good enough right now for you to take advantage of some of those?

I'm not sure there's a lot you would acquire per se in that space; it's more about how you would set up your operations to provide tokenized services. So we're looking at all that.

Our next question is from Jim Schneider from Goldman Sachs.

Jeff, I was wondering if you could maybe start off on the installed targets for DNA in 2016. I don't think you maybe provided that in your prepared script, so I think it was 30 in 2015 and you did 28. Can you maybe share with us what it looks like for this year?

Jim, I don't actually have that number off the top of my head. We'll do some work and get back to you, and then we'll make sure that we talk about it more broadly. But it likely would not be 28 this year. It'll a little bit lower than that. And then, of course, we'll have the benefit of all of the conversions that we moved in, in '15 will annualize in '16.

Okay. And then just a clarification. I just want to make sure that I fully understand. On the ACI contributions this year, it sounds like by the time you get it closed, it's a little bit over a point contribution. And I just want to make sure that I heard you right that, that is included in the 5% to 6% full year revenue growth guidance.

No. The 5% to 6% is internal revenue only, not acquired revenue. So all acquired revenue is excluded from that calculation. Total adjusted revenue would be higher when you include the revenue. We were only -- I was only talking about the impact to our adjusted EPS.

I understand. And then, one final one. Just in terms of the margin expansion potential, you obviously delivered very strong expansion this year and you're guiding to a little over 50 bps for 2016. Beyond the programmatic cost savings impact that you outlined of $40 million, are there other mix-related or are there other benefits that could potentially drive upside to that 50 bps of expansion?

Yes, I think we're obviously, Jim, coming off a very strong year where we delivered 120 basis points of margin expansion. And one of the key things has been the driving of the quality revenue that we have. If you look at our Payments-related segment, the Payments segment margins were up nicely. And that is a function of that high-quality revenue. Clearly, we gave guidance in '15 of greater than 50 basis points. I'm not saying we're going to outperform by that extent, but our guidance is greater than 50 in 2016 and our business model is functioning well and we're going to continue to push those levers. And I think I'm most pleased by is the opportunity we have over the next years to continue to drive that high-quality revenue and scale, along with this additional $250 million of Operational Effectiveness savings that we have good visibility into over the next several years.

Our next question is from Darrin Peller from Barclays.

I may have missed this, but did you give a sense into the growth by segment between the Payments, Financial in terms that's embedded in your guidance for the year?

No, we did not. We don't give segment guidance. But you can clearly tell, Darrin, right, the Payments segment just given the fact that EMV and IPS and a few other things that we talked about there are big drivers of kind of growth. So that's going to continue to be higher than our Financial segment.

Okay. I just wanted to now hone in for a moment on the competitive dynamics around the real-time solutions you guys have clearly been doing well on, whether it's DNA or other platforms. But I mean it feels like that's been -- there's been a lot of demand in the market for that and you have the right solutions for that. Can you just comment on how much demand there is going into '16 around that specific offering capability on core account and what the competitive dynamic is out there for similar offerings for -- again, more for the real-time solutions?

Sure. And Darrin, you're really talking about on the account processing side, not on the payment side, right?

That's exactly right, yes.

Yes. So there's a lot of talk around real-time core systems and there is a lot of looking going on -- or there's not a lot -- not a lot relative numbers, but a lot on a relative basis to what we've seen historically for larger institutions looking at what would it take to convert real-time. There's a couple of larger mid-tiers that are in the process of doing conversions right now. And so there is focus out there. We see some of the more progressive institutions in the $1 billion to $10 billion space taking a look at that, but we haven't seen beyond DNA. We've not seen a lot of movement in the market. And frankly, as I sit here today and I think about the larger transactions that have been done over the last 3 or 4 years, I can't think of a -- I honestly cannot think of a real-time solution that we did not win that went to anyone else. And so I only raise that because the other solutions that are being chosen are not real-time. So that means -- that may mean that the real-time is still early, or it may mean that our solution on a real-time basis is one of the better solutions in the market. It's probably a little bit of both. So I think it's still very early in that genesis. Remember that on the credit union side of the community base, institutions base, they're all real-time and the old thrifts are real-time. So you really have what -- the core banking world as the focus for real-time. And I think we'll continue to see that over the next 3 to 5 years, but we're early.

Okay. Just last question for me, I appreciate it. But have you guys expressed any interest -- or do you find yourselves at all interested growing into the much, much larger global FIs in the world that we've seen some of your competitors trying to do? And on that note, I mean, you mentioned talking about international acquisitions down the road at some point. Any update on that front in terms of appetite now?

Sure. So the short answer is no. But we do -- but after I've said that, we do provide channel services, so our Corillian solution and our Mobiliti solution, to some of the larger banks in the world, whether it's ANZ or Bank of Ireland or Westpac. A number of clients today we're doing niche solutions. We are not in the business of doing large global banks on the core systems side. We are not in the business of doing services to large global banks unless they support one of our licensed technologies. We have risk solutions in a number of, again, niche solutions, but we're not going into that large services and licensed space.

Our next question is from Andrew Jeffrey from SunTrust Robinson Humphrey.

Recognizing that we're only talking about 100 basis points or so of revenue growth from EMV, to the extent that we see a ramp in '16 in the middle quarters and then ostensibly the sort of the rat moves through the snake. As we think about '17, do you have enough line of sight to say that '16 is in sort of a bulge year for revenue growth? Can we expect over time -- recognizing that you're not guiding to '17 today -- but can we expect over time, all else being equal, sort of a gradual improvement in organic revenue growth? Or are we going to be talking about difficult comps against the midpoint of '16 when we get out a year from now?

So let me try to answer this and make sure that we've got it answered, and Tom and Mark will help as needed. So you'll remember when we laid this out at our Investor Day in June, we laid out kind of a year-by-year view and that there would be 2 sources of revenue that we thought we would benefit from. We thought we would benefit from the EMV card issuance itself, which is both the manufacturing and the personalization, and we believed that we would also benefit as cards got into force and we were processing those debit or credit transactions, that we would have a small lift on our processing revenue. And that, over time, that piece especially would build. We also anticipated that EMV would primarily happen between '15 and '17. And we're not coming off that view at this stage. I want to -- sorry, and then when we get to full bow, because these cards expire like every other cards expire, that we will get into a very natural reissue cycle as we've always been in. And so while there may be a slight hump in a quarter or in quarters, that we don't see that to be having a meaningful -- strike that, a material impact on our comps moving forward. Now if every single institution decides to issue in the middle of Q3 in '17 -- '16, that could create a problem. We don't see that happening. I think it's highly unlikely and I don't think anyone could actually make that happen from a manufacturing and personalization perspective. That's a long-winded way of saying we can't predict the future. I can't tell you what's going to happen on quarterly comps for sure. But on a year-by-year basis, I feel like once we get into '17 that we're going to see -- definitely see that smoothing that we laid out at Investor Day. And if you go back and take a look at that, I think that's probably the way that lays out.

I think the other thing -- and then, Mark, I know you have a comment, too. I think, Andrew, remember our build is to grow 50 to 100 basis points on an annual basis. And at Investor Day, you could see we have a number of different moving parts there. As we look out I think longer, and Jeff just really hit on the EMV side of this, but if you look at different things like IPS, or you look at things like Agiliti, or you look at things like the NOW Network, those are factored in over those longer period cycles, which is '16, '17, '18, '19, because we're really trying to build this base of 50 to 100 basis points on average each year. And so Mark, I don't know if you want to add to that.

The only other thing I was going to say about EMV is, and Jeff and Tom had it right that, while we will see the bigger uplift now in '16 over '15 and then it starts to flatten out because we don't get the ramp but we do have the continued level of reissue, as Jeff pointed out. The only other thing that we talked about at Investor Day was the potential in the event that prepaid becomes a card type that adopts EMV, that continues to be a big opportunity for us. But so far, we're not seeing anything in the market that would suggest that's likely to happen soon.

Okay, all right. That helps me out. And then, Tom, again, kudos to you and the job you've done. We'll miss working with you. You've done a particularly good job in the last couple of years of improving working capital, which is exceptional I think for a processor. It's not something we often think about. How much working cap opportunity is there left in terms of being additive to core free cash flow from operations?

I think we've gone pretty far with that. I think our business model though will continue to stay very honed in on that. What I mean by that, you're not going to see a lot of receivable growth in this company because of how -- that our high-quality revenues are going to turn into cash flow. So we've done a very good job of optimizing that, so I don't think there's a lot there. There are always a lot of different things, as we talk about, whether they be tax benefits through acquisitions, whether it continues to be on the CapEx side -- which, again, you saw higher levels this year because of our Alpharetta type deal. That's going to come back down to normal next year. And so I don't think anything really changing from that standpoint.

Our next question is from Moshe Katri from Sterne Agee CRT.

I appreciate the color on the big picture and the feedback from some of the FI clients. Obviously, we're about a month into the first quarter of the calendar year. Is there anything that kind of makes you worried about the possibility of budget slippages or any sort of pullback in spending given the macro environment?

Sure. I wish I had a fully reliable crystal ball for this. I mean, I would say the volatility in the market, as everyone feels like there's volatility, and we just have to continue to watch that. The beauty of the majority of the solutions that we provide is they're not discretionary. And with all of the digital transformation that's occurring in the market today, there's a real need for institutions to invest and to keep up with what's going on. Consumer expectations are growing so rapidly because of the -- everything that's going on in the retail world and in the non-financial services world that there -- and as those expectations are requiring institutions to invest it's becoming -- very much becoming nondiscretionary. And so I continue to believe we're going to continue to see solid growth in those kinds of solutions in '16 and into the foreseeable future.

And then if you look at your revenue base, is there a way to quantify which part of the revenues are generated from what we call discretionary and nondiscretionary? So can we assume that maybe 80%, 90% of your business is kind of recurring and kind of critical for the day-to-day operation of your typical FI?

No. I mean, I don't know that there's much that we do that's not important to the FI. I mean, we have very small businesses that are data-oriented businesses, which I guess you could argue are not necessarily -- that are not necessarily mission-critical. But even the things that we sell that are "discretionary," it's hard to know if you're on a -- if you have to upgrade software on a solution that you use to manage risk, that purchase may be discretionary so you may have some wiggle room. But much of what we do is nondiscretionary from that perspective. I don't think we're ever going to see a whole lot of variability in any year almost regardless of situation. But clearly, clearly, I have the same crystal ball question that everyone else has. We believe that the banking industry right now is in pretty good shape. The rate increases will move through this year, and I think that will be generally good for banks. I'm talking about not prospective increases, but just the December raise, and I think that'll be good. And we'll see how the economy develops. I think that will be the ultimate linchpin for how banks decide to invest over the next few years.

Our last question is from Paul Condra from Credit Suisse.

Just a couple of quick ones. Just the $250 million Operational Effectiveness Plan. Is that kind of a 6-year plan? So that's like $40 million, $50 million a year?

Yes, 5 years. But yes, that's exactly right. And it's going to ramp a little bit like I talked about earlier.

Okay. And then, lastly, just to return to EMV one last time. I mean, is it possible that this goes on longer than you're expecting; that maybe you don't get the surge in mid-2016 and it's just kind of a steady ramp over the next couple of years?

We feel really good about the surge in '16, primarily because we know what's been manufactured, we know what has not been personalized, we know what has been personalized. We know what's been ordered. So we actually have pretty good visibility into what's going to happen in '16. We don't have a lot of visibility right now into what's going to happen in '17 except for we'll know who has not issued. And remember, you've got in '17 -- I believe in '17 you've got one more liability shift that's going to happen. So we feel really pretty confident about the EMV at the level that we have incorporated into our guidance. It could go -- I suppose, it could go a little bit higher. It could always glow bit lower, but it's pretty solid at this stage.

And remember, Paul, the clients have paid for the -- a lot of the -- right, the manufacturing stuff, right, so they're going to want to issue these cards when they can. And again, we have to wait for that. But as Jeff indicated right now, we feel good about where we are in '16 and going into '17 also.

The only other thing I'd add to that is 2015 was really the wildcard year from our perspective, because we didn't know how fast financial solutions were going to adopt EMV and whether there would be a mass reissue. That debate is pretty must behind us now and we can see what our clients are doing and how they're approaching it. So we have pretty good line of sight into what we think is going to happen now in '16.

Yes. One other point I would make is, actually, in Q4, we had more demand for BIN configuration than we could actually convert. So we really saw this surge coming into the year which, again, helps support the confidence. And remember, even if we have a bit of a blip up in '16, which we believe we will, we do think that we'll get to a steady-state level. We don't see the EMV -- we do think that EMV will be constant on a card manufacturing and personalization basis moving forward so long as plastic is being issued. And I think that's going to be issued for a very long time, and then a layer of uptick on the premium processing element of EMV.

And I think I'd also just check out what Mark went over at Investor Day, because it's pretty well holding as far as what we anticipated where we'd be a little softer in '15 obviously. But nonetheless, it's ramping as we thought it would there.

Okay that's great. And Jeff, maybe just last thoughts on Popmoney. There's a lot of competition in that space now, and I know you've been really excited about that business. I mean, any kind of modifications or changes to your view?

No. It is something I still am very excited about. It is taking longer to get scales than I would have liked. But I am very optimistic about the runway for the solution given the pairing with -- of P2P with real-time, which I think changes the experience dramatically. And then the other use cases that we have for Popmoney disbursements and some of the charities we think are very important. And then the last thing is we've got a new technology that we are delivering in 2016. We call it card-free cash and it is a way for our debit clients, our ATM clients to be able to access money at an ATM without a card using their mobile -- the bank's mobile solution. Well, that's actually going to be branded Popmoney across the U.S. So that brand will show up across 20,000, 30,000 ATMs. So again, we have a good level of comfort that it will grow. Yes, it's competitive. But over time, I still believe the banks are going to be the ultimate winners of the P2P battle. Thanks, everyone. We appreciate your support. If you have any further questions, please don't hesitate to call our Investor Relations group. And have a good evening.

That concludes today's conference. Thank you all for participating. You may now disconnect.