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

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

Thanks, Tiffany, and good afternoon, everyone. We're pleased with our financial performance in the second quarter against our most difficult comparison of the year. We delivered better than anticipated results in the quarter and the first half and well on our way to meet our full-year of financial targets. Now before we talk about the financial results. Let me provide a brief update on the First Data transaction. We've received all required regulatory approvals and plan to close the transaction on July 29. Well within our original expectations of closing in the second half of the year. As anticipated, we received all of our approvals without any conditions. We continue to prepare for day one and are focused on moving from integration planning to actual integration. We've announced a number of our senior leadership roles and the entire organization is ready to kickoff the new Fiserv. Clients and prospects are excited about the opportunities they see for us to deliver a differentiated value and build their businesses in new and unique ways. We've been working on meaningful incremental growth opportunities such as bank merchant, credit solutions, biller services, network, and international. We believe that integrating the solutions of our two leading companies will create incremental opportunities for clients to better serve their customers, generate additional revenue, operate more efficiently, and better manage risk. Our client first focus should translate to more revenue for Fiserv and may ultimately allow us to exceed our $500 million revenue synergy target. We've made strong progress on cost synergy planning with a focus on delivering more efficiently for clients and with higher quality. Our teams are focused on the absolute dollar value of the opportunities as well as increasing the pace and timing of those savings. Upon closing, we will fully deploy our teams with…

Thank you, Jeff and good afternoon. As Jeff mentioned, we feel good about our performance for the first half of the year and are in a strong position to achieve our full-year goals. Adjusted revenue was up 7% to $1.5 billion in the quarter and 6% to $2.9 billion year-to-date as a result of growth in high quality recurring revenue and new revenue from the Elan acquisition. These quarterly results were particularly encouraging given the significant prior year licensed revenue compare. Internal revenue growth was 4% in both the quarter and year-to-date, led by strong performance across our card services, electronic payments, output solutions, and account processing businesses. Foreign currency negatively impacted internal revenue growth by 20 basis points in both the quarter and year-to-date periods. Adjusted operating income increased 7% to $470 million in the quarter and is up 5% to $927 million through June 30. Our year-to-date results include a headwind from our lending transaction that closed in Q1 of last year. Adjusted operating margin in the quarter was flat at 32.4% which is better than our internal expectations. The expected decline in license revenue, the Elan acquisition and continued investments that we described in Q1 had a collective 90 basis point headwind on adjusted operating margin in the quarter. Sequentially, adjusted operating margin improved 50 basis points on stronger operating performance and lower investments. Year-to-date adjusted operating margin was down 40 basis points to 32.1% compared to last year and it was better than our internal expectations for the period. The first half results include headwinds of more than 80 basis points, including more than 50 basis points from investments and 30 basis points from the net impact of acquisitions and divestitures. The investments in client implementations and the tax reinvestment carryover expense, which we described during…

Thanks Bob. Sales performance was up a strong 17% in the quarter and is up 14% year-to-date. We saw solid performance in several areas including our account processing businesses, card solutions and Dovetail. Sales performance has been increasing significantly up 22% over the last nine months, which we believe is especially meaningful in light of the First Data of transaction. The domestic pipeline also remains strong and up 3% in the quarter and 11% sequentially. Integrated sales was up 22% in the quarter and it's up 4% in the first half of the year reflecting the compelling Fiserv integrated value proposition. We continued to demonstrate our operational effectiveness competency, achieving $13 million of benefits in the quarter and $25 million of savings year-to-date driven largely by procurement and labor initiatives. We are on track to meet our $50 million target and close out our five-year $250 million program of full-year early. As for guidance, we're on track to achieve our full-year financial commitments buoyed by a stronger than anticipated first half of the year. We continue to expect our full-year internal revenue growth rate to be in a range of 4.5% to 5% and that second half growth will be moderately higher than the first. We continue to expect adjusted her earnings per share to increase between 10% and 14% and a range of $3.39 to $3.52 for the year with a bias at/or above the midpoint of the range. We also expect adjusted operating margin to expand by at least 50 basis points for the year and that free cash flow conversion will be more than 105%. Lastly, as a reminder, our 2019 guidance does not include or anticipate any impact from the First Data of transaction which we expect will close Monday. However, we will provide updated guidance…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question is coming from Lisa Ellis with MoffettNathanson. Your line is now open.

Hi. Good evening, guys, and great to be joining your call for the first time. I wanted to ask a question about the rollout of contactless in the U.S. It looks, I guess tentatively like that might actually be coming. Can you just comment on how your bank customers are thinking about the rollout of contactless, meaning do they have specific plans for issuing contactless cards and on what timeline and then how do you expect that to impact your business over the next six to 12 months? Thank you.

Sure. Thanks Lisa, and great to have you. We are actually starting to see an uptick in demand for contactless or dual interface. We had not planned very much for that in our numbers in 2019, thinking that we would start to see that tick up in 2020 and 2021. And having contactless available in places like the New York subway, we think is helping that and obviously the brands are focused on that. So we issue about a 100 million or so payments cards or produce 100 million or so payment cards per year, we think that could actually be impactful. We don't see it having a significant impact in 2019, but we're optimistic that we'll see that roll in certainly in 2020 and 2021 as we see that move throughout the system. The other thing that we're seeing just as interestingly is, we also do a fair amount around the prepaid providers and we're seeing the prepaid providers start to issue EMV, and we believe that a number of them will actually jump straight to contactless. So we're feeling good about that. We like that as a tailwind and we'll continue to monitor that.

All right, terrific. Thank you.

Thank you.

Our next question is coming from Dave Koning with Baird. Your line is now open.

Hey guys, thanks. Nice job.

Hi, Dave. Thank you.

So I mean, as a historian, looking back at the last 10 years, it seems like both you and First Data are putting up some of the best core underlying growth that you have. And I'm wondering, a lot of it seems company specific, both of you are doing well in the market, signing well. How much of it's just the backdrop getting better and maybe what is driving that right now?

Yes. Thanks Dave. I mean, obviously, we are both continuing to run our companies separately and we'll continue to do that until Monday morning or we expect to continue to do that until Monday morning. I mean, we know that First Data has been making a number of investments both inside the U.S. and outside the U.S. We're just as pleased as everyone else to see GBS North America post a nice 5% number. And the rest of the world is looking quite strong. And I think that's just a matter of seeing the cumulative effect of the work that Frank and his team have done. And it's one of the things that we talked about as you know, Dave, we really thought that there was a mismatch between the work that the team had been doing and the way that investors had been looking at that. So from that perspective, we see that coming together, and we believe that as you put us and them into a single integrated company focused on driving innovation and excellence for clients, so that will drive incremental growth to the extent of the at least $500 million of synergies and hopefully more. And then you're seeing on our side just the continuing aggregate effect of bringing on high quality revenue and then having some nice successes in the sales area, whether it be DNA, Architect card and then the entire digital ecosystem, so Mobiliti continues to do well. We talked about Zelle. We're seeing real momentum in Zelle and we're excited about that and we believe that that will continue for the next, probably for the next six to eight quarters.

Okay, great. And just one, I guess follow-up. This is kind of just a financial question, but included in the guidance for standalone Fiserv, are you including that month of $12 billion or so of extra debt or is that almost like a, you're not including that in the $3.39 to $3.52 guidance?

Yes. Dave, we're not including that that's a transaction related cost. So you'll see that adjusted out of the non-GAAP results.

Great. Well, thanks guys. Nice job.

Thank you.

The next question is from Jim Schneider with Goldman Sachs. Your line is now open.

Good afternoon. Congratulations on the strong results, and thanks for taking my question. I guess if you – I mean, Jeff, you articulated several areas on the revenue synergy side, most of which you talked about before, but in the time you've had is contemplating the transaction for over the last six months, which is maybe one or two revenue synergy items that you are most incrementally excited about or that you didn't really anticipate before. I think international you mentioned is one, which I don't recall you talking about before. Any color and that will be helpful.

Sure. Thanks Jim. We have been very pleased at the work that the teams have done in identifying a large categories of synergies everything from expanding the way technologies such as point-of-sale lending will look, focus on how do we help merchants get their money faster, the use of data in terms of thinking about how to make better decisions around fraud, and the like. And then outside the U.S., one of the things that – because we were pretty small in Fiserv outside the U.S. and First Data is much larger, we've been able to take a number of the solutions that we have and move them through the, sorry, not move them through, but look at how do we move them through the First Data distribution system or the First Data network outside the U.S. So we think that's going to be interesting. And also looking at where we have some larger clients where First Data may not trying to leverage those kinds of relationships. So I don't see us creating a lot of new innovation in terms of putting the international businesses together per se, in the base business. But we do see interesting ways that we'll invest there in the future.

That's helpful. Thanks. And then maybe a sort of a macro comment in terms of your bank clients and what they're telling you right now. Just wondering if the, a, the change in the interest rate environment and the reversal there. And/or b, any change in the M&A environment is impacting their spending plans as you see at heading into the back half of this year and 2020.

Yes. It's a good question, Jim. I mean, we obviously know banks are not excited about the fact that the Fed has changed their stance on interest rates. I think it was a little bit of a foregone conclusion or it has been at least for the last quarter or so. That said, we are not seeing any change in the demand structure for the institutions that we're serving and showing up both in terms of the large event forum that we hosted back in May. We can see it in our pipeline and then the manifestation of course in sales and the fact that – we're going to – we believe that we will achieve our full-year objectives. So that's all to say that the need to spend money on technology is not changing. You can see that in how the large banks talked in their calls and we see it and we continue to see money shifting from supporting legacy technologies to try to do some of the newer call them digital based or front end kinds of experiences. So right now, for what we can see, we continue to feel like the spending environment remains consistent for now. We're obviously watching it closely and so that that looks in good shape. And then on the M&D front, we continue to see generally the same amount of activity as you know, when rates come down a little bit, you see banks looking more for scale and that's certainly happening.

Thank you.

Thank you.

The next question is from Darrin Peller with Wolfe Research. Your line is now open.

Hey, thanks guys. Congrats on the – approvals on the deal closing first of all. But look you just alluded to the strong growth at First Data, especially in the merchant acquiring side. And again, I touched on this last quarter, but are these trends, the type of growth rates you guys anticipated in your deal accretion and pro forma run rate? Or are they coming in better than you thought? And then just while I'm on the topic of First Data, is there anything you can update around the JV relationship with Bams? Just given how much noise there has been in the market around it?

Sure, sure. So I would say that that when we put our original models together and thought about it. I don't know that we were deeply focused on what would be happening in 2019. It was our belief that First Data had been doing things, both organically and through the allocation of capital that would show up and that we didn't believe that investors were giving First Data all the do that they should. And I think we're seeing that manifest now and we're hopeful and strategically focused on making sure that we make the right decisions. So that will continue. So we feel - I would say that we feel quite good about the performance that we've seen to date as well as the guidance for the remainder of the year. As it relates to the JV, I mean, obviously we've had lots and lots of questions about the JV which expires next June. Both Fiserv and First Data have long-term multi-solution relationships with Bank of America. And we have every reason to believe that's going to continue. And we know that First Data and Bank of America are continuing to work on a plan that makes sense. What I can say is during the diligence process, we put a lot of time into understanding all of the outcomes or the likely outcomes, at least that we expected could come through that the JV. And since that point we've continued to make sure that we're working with the bank to understand what's going on and we're quite comfortable with all of the different scenarios. And what I can say and I think this is really important, is that currently we don't anticipate a financial outcome that creates any meaningful negative impact the First Data’s earnings and free cash flow for at least the next three to five years. And there were actually some scenarios in which a structural change could be accretive to the numbers, once you get past that that point in the future. So from that standpoint, we feel pretty good about that. From a timing perspective, we do expect this issue to be better understood in the third quarter. So we think that the parties are coming together to create a situation that makes sense. I would also say very importantly that the Bank of America JV, the different outcomes that we can see, the scenarios are fully factored into our transaction accretion estimates, which as you know, is 20% to adjusted EPS in year one and 40% at the full run rate. So Darrin, we think that that we've done the work. We think we understand the risks, the pluses and the minuses and we just don't see it having a meaningful negative impact post-closing.

That's really helpful, Jeff. Thanks. Just one quick follow-up is just, one of the exciting parts of these synergies, we were hoping for is that Clover would be cross-sold through the banks pretty quickly, given I think sort of the cloud-based approach where you guys manage the banks help, manage the banks websites. And just curious if you still think that can happen soon in terms of maybe even second half 2019 where Clover starts to be distributed in the near term.

Yes. And Darrin we are – we set at the time and our planning teams have been working well together on the idea of bank merchant. I would say we are actually a bit more bullish today even and we were pretty bullish then, but we're even more bullish today and it's really on two vectors. The first one is the traditional in branch, enablement of Clover. And then we're also doing some really interesting things on the digital enablement front and we fully expect that after we close on July 29 that we will be in the market and see proof points come in the second half of the year about the power of the combination in terms of providing value to the merchant customers of the banks.

Okay. That's great. Thanks guys.

Thanks, Darrin.

Thanks, Darrin.

The next question comes from Brett Huff with Stephens Incorporated. Your line is now open.

Good afternoon, guys and congrats on getting closer on the deal.

Thanks, Brett.

Thanks, Brett.

Question on the mix of front and back office tech spending, we've kind of heard over the last 18 months and then you guys have seen this to folks, certainly not ignoring the back office and trying to untangle the spaghetti there, but definitely shifting more towards frictionless onboarding on the front. You mentioned a little bit about that. Could you aluminate any acceleration on that side or any changes in how people are perceiving this specifically? Are there more and more banks that are now in the category of they need to do better digital onboarding and kind of how fast is that evolving?

Yes, Brett. There is no question that the majority of the emphasis at in – really all sized institutions have been focused kind of at the edge of the bank, right. So at the point of intersection between the customers and the financial institution and creating, whether it be digital onboarding or any kind of digitization of the variety of financial experiences that that customers engage in with their institution. So that's been a big piece of the focus. What we are seeing is, and we announced one of the proof points of it today was around our Dovetail, our market leading payment hub technology. We had I think five signings in the core in the quarter and that's really about enabling pieces of the back office. So think about it as payments modernization to keep up with going well what the real-time right now world that's happening at the edge. And so we are seeing a lot of exploration into that, call it the end to end that's necessary to ultimately deliver those experiences to the retail and the commercial customers and the small business customers of the bank. So we are seeing that happening. If you said, is it more about the using your words to spaghetti or more about the experience. It's more about the experience. But I will say that that the need to bring the solutions together is making its way back into some of the infrastructure and turning kind of some of the legacy into more modern systems. And that's going to take a long time to get done. But that's where we see people into RFPs and taking a look at what do we need to do serve, you see more end-to-end on that front.

That's helpful. And the follow-up, another kind of product question is, I and I think others are excited about having a couple of these big mega deal companies kind of own, if you will, the relationship both on the funding account on the consumer side, the DDA, and then the merchant point-of-sale, and seeing maybe some interesting near-term easy wins to make transactions more frictionless, but maybe also a little more science fiction down the road. Now that you've studied this combination for awhile, can you talk any more about how you're seeing those opportunities evolve?

And Brett, obviously, you know, you've known us for a long time. You know, that's one of the areas that we've been focused on really since back to 2012 when we bought CashEdge to really accelerate our focus on P2P through Popmoney, and obviously now Zelle. I mean, we're very, very excited about the opportunity to use, you called it the funding account, the transactional account as a way for consumers to interact with any of their providers in a more frictionless way. And I think that's going to manifest in a variety of different forms over the next several years. And for us, we just want to make sure that we're in this. We think the scale of First Data with kind of roughly 40% of the merchant footprint and the scale of Fiserv with over a 100 million transaction accounts. We like that. We liked the optionality, and we're excited to work with our partners, with the financial institutions and ultimately with some corporates to see what's out there, that can deliver better service. I think for now, we're really studying that. We'll be able to study it a lot closer once we close, but we're very excited about that and we're going to continue to plant flags around areas like Zelle because we think that is one of the differentiators to make some of that. I think you called it science fiction. Some of that actually happened.

Great. That's what I needed. Thanks for the time.

Thank you.

Thanks Brett.

And the next question is from Ramsey El-Assal with Barclays. Your line is now open.

Thanks for taking my question. I wanted to ask about revenue synergies more than the context of timing. Now that you've had a little time to dig in and look under the hood, what is your kind of most updated thinking on which specific opportunities are most kind of realizable or in the near-term sort of quickly realizable understanding that you're the bulk of the benefit we'll see probably in 2020 rather than 2019? Which opportunities feel the most sort of readily achievable?

Yes. I mean it is, when we had talked about this originally, we talked about kind of the payments and network, innovation opportunities playing an important role in the near-term, call it over the next 12 to 18 months. We are going to be very, very focused on selling. I mean we're excited to have a chance to get out of the blocks a little bit faster than we thought. We think base merchant is a very good opportunity in the near-term and the reality is, is that we have businesses like our Biller Solutions business where we do a little part of the overall acquiring with these providers and being able to bring First Data in and having them be able to bring us in. We see a lot of, we call it integrated sales, but a lot of real high value cross-sell that can move pretty quickly. Again, we won't know until we hit the. That the problem that we have to the extent that there is a timing problem is as you know, Ramsey, we have to sell it and then we have to implement it and then it has to go live. We like to thank merchant. We think some of those things can happen quickly. Some of the network and payments opportunities we think can happen quickly. And so we see those to be a little bit faster than the others, but we're going to be focused on that and you'll hear us talk about how we're doing on that each and every quarter.

Great. Just one follow-up I wanted to ask about the industry more broadly. It just seems like the Universe is scaling up through your M&A, what's your view on how this broader processing industry looks in five years? Do you think this space just continues to really dramatically pull up, so even players with the scale that you guys are sort of amassing, or get larger and larger and larger, or do you think there's some measure of stability that we've achieved with these kind of specific deals kind of having been consummated recently?

Yes. It's a really great question. And I fear that we won't have time to go fully back and forth. I would say that if you would've asked many of the industry participants that you're referring to five years ago, they would've thought that five years later that the industry would have taken the steps that it had taken, I suspect that people would say no, and certainly you asked how quickly, if it all changed, I think you would get an absolute, you've got to be kidding me. From our perspective, we see opportunities to deploy capital every single day, but it's important for us to stay really focused on one of the key drivers to the more than 33,000% return we've had over the last 33 years as a public company. And that's making sure we're allocating capital to drive value for shareholders. So we're going to remain focused on – what the capital allocation strategy that we've used. And if there occasionally there's something meaningful to do, we'll certainly consider it. But we see lots of ways to drive value without having to do major scale transactions. I think we'll have to see how they come together over the next few years. We're just really, really focused on how do we drive as much cash flow for shareholders that we can and make sure we deploy that capital to build the most value possible.

Very helpful. Thanks.

Thank you.

The next question is from Daniel Perlin with RBC Capital Markets. Your line is now open.

Thanks. Good afternoon.

Hi, Dan.

How are you doing?

Okay.

I had a question about the kind of the fintechs and payments and really other areas increasingly becoming these kind of quasi deposit gatherers. And here I'm thinking like a square's debit and been mode's debit card where they're clearly trapping cash now where they used to let it kind of be more of a straight through process with these entities. And so I'm just wondering, Jeff, when you look at your portfolio, what are the – one of the products or services that you've created to help kind of come back those competitive threats for your bank today?

Yes, it's really –it's an interesting time and whether you're talking about the Chimes, or the N26s and lots of other things that are going on, whether they be traditional banks or non-traditional banks, PayPal of course. And I put Venmo as hero example of what has to happen to make sure that the deposit balances are being trapped in the banks. I think that's one of them. I think to the extent that we can make sure that we are enabling more commerce to happen at point of sale and whether that be through better decisioning models or point of sale lending, right, credit of being available at the point of thought, those kinds of things so that consumers don't go to other places. I think the whole intersection of digital experience, better decisions based on data. I think we'll see that become very important. Venmo is a little bit of a capsule and what can you put in it and around it to make sure not Venmo, I'm sorry Zelle, what do you put around that to make sure that it's driving value for the financial institution clients and that the other thing is I think that you see us as part of the $0.5 billion that we're going to invest. I think you'll see a fair amount of that go to the points of intersection between financial experience, commerce and making sure that banks are winning with their deposit gathering.

That's great. The follow-up question I had is – the $120 million of interest savings that you just talked about on the financing. Just philosophically how should we be thinking about that? Are you planning on letting that flow through into the pro forma model early or are you viewing that opportunity as away in which to invest more quickly in this transactions integration? Thank you.

Yes, Dan. It’s Bob. I would look at it as an opportunity to grow our earnings per share. From a standpoint of invest back in the company, we're certainly planning to appropriately invest as needed to get at the synergies as well – both on the cost and the revenue standpoint. And that's fully baked into the model. As Jeff pointed out in the prepared remarks, we're very comfortable that we will achieve the at least 20% earnings accretion in year one and 40% at full run rate synergies. That $120 million of lower interest certainly helps with that. It also generates some cash flow, allows us to pay debt down faster and get back into share repurchase.

Fantastic. Thank you.

Thank you.

The next question is from Matthew O'Neill with Autonomous Research Company. Your line is now open.

Yes. Hi, guys. Thanks for taking my question. My only question at this point really is just a follow-up, I think to Darrin's question earlier around the BAMS JV and how that that process is going? I know, it's still a little premature for you guys to talk about it. One thing, Jeff though that you said that I was hoping I could just glean some more color from was that there'd be no impact for three to five years. Is there any kind of read through to that that there's view that the ownership, percentage might come down and maybe some discussion on the exclusivity ending and so certain merchants might be rolling off? Is there contracts kind of expire over that sort of three to five year phase or was that just a – this is how far we can sort of confidently see into the future for now and we'll update you more is we hear how the deal progresses?

Yes, Matt and thanks for asking the follow-up. So what I was trying to say is, for at least the next three to five years and it really is a matter of, it's hard to look that far into the future in a scenario that is not fully baked. But there's no cliff at the end of that. It's just a matter of saying, we think that should give investors confidence that there's nothing to really worry about at this stage. And that as the ultimate facts come to light. We'll work very cooperatively with – and no matter what the scenario is to make sure that that both sides are being optimized in what they're doing. And I do think one of the unique things here is, this is not – this arrangement, no matter how it ends up playing out. It's not a win lose scenario. It's going to be a win-win scenario. And everyone feels like that's been the case. Obviously, we haven't been in the direct conversations, but that that's really the outcomes that are being driven here.

Got it. Thank you very much. And then just as a final follow-up on that if I can. Has there been any sort of cross discussion with Bank of America regarding the CheckFree relationship, which I think is next up and maybe 2023, I suspect not, but figured too?

Yes, and we just to be even more blunt. We have not had any direct conversations with the bank. We are operating as separate companies on the joint venture discussion and there hasn't on for Fiserv, there hasn't been any specific conversation pointing out that. We have a very good relationship with the bank on that front and we're always looking to make sure that we're helping Bank of America to continue to be the number one digital bank in the U.S. and that's an important part of it strategy.

Thanks a lot. I'll leave it there. I appreciate it.

The next question is from Andrew Jeffrey with SunTrust Robinson Humphrey. Your line is now open.

Hi. Good afternoon. Good to talk to you. Jeff, you mentioned and highlighted a Dovetail as part of Fiserv's real time payments, infrastructure offerings and efforts. Bill pay is a product that or service that is back in the news these days. And I wonder if you can just elaborate on how you think that market's evolving, whether or not the consolidator model maybe can clawbacks some share from biller direct and to what extent if any, the merger maybe adds value, and helps you accelerate that shift or drive more bill pay volume across your platform?

Yes. Thanks for the question. That's actually one of my favorite topics. It is an interesting thing because your point of it's a little bit, kind of a little bit in the rear view in terms of people talking about it is so interesting because you see all kinds of people trying to get into the business and you wonder, well, why are they trying to do that? And I think they're trying to do that because we all understand that the ability to facilitate payments for a consumer or for a small business, especially through this consolidated model, is way more convenient than website hopping to make that happen. The key is, is how do you bring in the biller merchant in – the biller and merchant information to make that experience top notch. The other piece of it is ultimately having real time, money, movement, real time payment that you can consistently and constantly use across all kinds of billers, is I think the next big twist and the next big point that's going to change that value proposition. And so again, we're working with a number of our partners. It's one of the things that we're very excited about the work with First Data. We think they've got a lot of interesting connectivity to make that happen. And I do think that it may take longer than people understand, but you're going to see bill payment be at the front of real time consumer payments. And so whether you're using your illustrative hypothetical wallet to make a bill payment in real time, or to engage in commerce in real time, or to make a P2P payment in real time. I think you're going to see that come together. And it's one of the reasons why technologies such as Dovetail are so important as you see new clearings coming online especially here in the U.S.

And as a follow-up to that. I always appreciate your insight on the subject. As a follow-up, do you see debit cards generally, or even in specific verticals playing more of a role in bill payment? Or do you think sort of direct ACH bill pay is going to be the – is still going to be sort of ubiquitous?

Again, this is a little bit of the world according to Jeff and I want to make sure that I'm clear about that. If you think about the card space as a pan-based space, right, the 16-digit number, and then you think about the transactional account as an account number model. I see them both having pluses and minuses. The connectivity to the debit card implies speed, real time, safety and securely. And I think that matters. And so figuring out how to bring them together, I think is an interesting way to look at it.

Thanks a lot.

Thank you.

The next question is from Kartik Mehta with Northcoast Research. Your line is now open.

Hey Jeff. Jeff, I wanted to ask you a little bit about share repurchase. When you look at after the companies combined, are there benchmarks that you're looking as in, is it strictly a leverage ratio issue? Is it that you've achieved a certain amount of cost savings? Is it that you've invested so much money? Is it what the economy is doing? What's the decision point for you to go back in the market and kind of do what Fiserv has always done, which is return a ton of capital back to shareholders?

Yes. Thanks for asking that question, Kartik primarily because this was the first quarter, I think in my entire tenure where we were unable to buyback a share of stock. And I don't – for people who know Fiserv and know me, that's not what we aspire to do. So our objective is to look at our leverage ratios, to paydown debt to grow EBITDA and to deploy the capital that we're going to create the $4 billion or so of free cash flow that we're going to have a few years out, so that we can make sure that we're building shareholder value in a way that we have or consistent with how we have over the last, at least the last 14 or 15 years. And it'll also obviously depend on our valuation and everything else and we'll continue to use the same methodology that we have historically. And so the real answer is, we'll do it as quickly as we can. As you know, we did not suspend our program. We deferred it, and so I would expect us to get into the market as soon as we have the right level of comfort that we've met our commitments to the rating agencies and that we can build shareholder value effectively and efficiently and consistently.

And just one last one, Jeff. As you look at your community and regional bank customers, as you know, they're dealing with the net interest margin squeeze possibly, but they're also dealing with investing in all these digital solutions, but unable to get rid of some of the other legacy solutions cost continued to increase for them. How do you see them managing that and do you anticipate that the investment that they're continuing to make will – that they will be able to do so in the future?

Yes. I mean there is a bit of a squeeze in the community bank space or whether they be banks or credit unions in the community financial institutions space for the reasons that you're mentioning. And I think one of the opportunities for us is to build products and solutions that that will allow these institutions to take advantage of digital, which is a more cost effective way to interact, but also to build revenue. It's one of the reasons why we're even more excited today about the bank merchant opportunity because we think we can see a lot of white space out there, where community-based financial institutions are not optimizing the amount of merchant revenue that they can create. And we're looking at how do we help systemically using our technology to better optimize revenue. So it's a combination of how do we create more revenue, there are certainly going to be – there's going to be always pressure on costs as there have been for the entire 35 years of our existence. And then lastly, it really is about how do you use this digital ecosystem to be more efficient? I think that's the Trifecta that we're at least focused on.

Thank you. Appreciate it.

Thanks, Kartik.

The next question is from Glenn Greene with Oppenheimer & Company. Your line is now open.

Thanks. My questions have actually been answered, so thanks and congrats on the close.

Thanks, Glenn.

Thanks, Glenn.

The next question is from Timothy Willi with Wells Fargo. Your line is now open.

Thanks and good afternoon. Just a housekeeping question around the balance sheet and sort of a discussion around debt and interest. So I think you said you did $12 billion of notes across variety of currencies. First Data had roughly $7 billion. Could you just sort of any insights around that $5 billion gap in terms of that that's where the priority to pay down first or if there's possibly some other activity that will happen regarding that that we should think about?

Yes, Tim. Thanks for the question. We have arranged a $5 billion bank term loan that will round out the $17 billion we need to refinance. So the combination of that $5 billion a term loan and the $12 billion of notes that we raised in late June, early July will cover the full $17 billion needed.

Okay, awesome. Thanks so much for clarifying.

Yep.

Thanks, Tim.

Our last question will be from Vasundhara Govil with Keefe, Bruyette & Woods. Your line is now open.

Hi, thanks. I appreciate you guys squeezing me in last minute. I wanted to extend my congratulations for getting all the approvals.

Okay.

Jeff, I just wanted to follow-up on the discussion regarding international synergies before. Did you elaborate a little bit on what type of products you are focused on there? Are we thinking about potentially setting core banking products in deforested as distribution outside or more on the payment side? And then if you could also talk about what kind of capital investments might be acquired to enable that?

Sure. So I would say – right now we have one core banking platform called Signature that we sell outside the U.S. We also have a – we also sell that inside the U.S. And so we'll continue to focus on that. But really we're most excited about leveraging the existing First Data footprint to try to go-to-market with some of our digital products, which we have a good footprint around the world. Dovetail, we're very excited about Dovetail payment hubs. The modernization of the payments ecosystem is happening actually more rapidly outside the U.S. and inside the U.S. and Dovetail was a UK company, when we acquired it with most of their presence outside the U.S. and so for us, gaining more distribution is a great example. We also have some strong cash oriented products, risk products, some fraud products, data warehousing, a number of different products that we can just add on or hopefully add onto the relationships that we have and we don't see those being significant investments. The other thing that we have is First Data has a nice footprint of data centers outside the U.S. We don't have out data centers outside the U.S. and the ability to take some of our products and not just deliver them on a licensed basis, but deliver them on a hosted basis, will allow us to build not just revenue, but really the high quality recurring revenue that we strive to deliver.

Thank you. That's very helpful.

Thank you.

And thank you everyone for joining us today. We always appreciate your support and we're really excited to come Monday to close the transaction with First Data, and start the new Fiserv. So thanks everyone. Have a good evening.

And that concludes the conference. Thank you for your participation. You may now disconnect.