Ladies and gentlemen, thank you for standing by and welcome to the Global Payments’ Fiscal 2017 Second Quarter Earnings Conference Call. [Operator Instructions] And as a reminder, today’s conference call will be recorded. At this time, I would like to turn the conference over to your host, Vice President, Investor Relations, Isabel Janci. Please go ahead.

Good morning and welcome to Global Payments’ fiscal 2017 second quarter conference call. Our call today is scheduled for 1 hour. Before we begin, I would like to remind you that some of the comments made by management during today’s conference call contain forward-looking statements, which are subject to risks and uncertainties discussed in our SEC filings, including our most recent 10-K and any subsequent filings. These risks and uncertainties could cause actual results to differ materially. We caution you not to place undue reliance on these statements. Forward-looking statements during the call speak only as of the date of this call and we undertake no obligation to update them. Some of the comments made on this call refer to non-GAAP measures such as adjusted net revenue and free cash flow, which we believe are more reflective of our ongoing performance. For a full reconciliation of these and other non-GAAP financial measures to the most comparable GAAP measurer in accordance with Regulation G, please see our press release furnished as an exhibit to our Form 8-K filed this morning and our trended financial highlights both of which are available on the Investor Relations area of our website at www.globalpaymentsinc.com. Joining me on the call are Jeff Sloan, CEO; David Mangum, President and COO; and Cameron Bready, Executive Vice President and CFO. Now, I will turn the call over to Jeff.

Thank you, Isabel and thanks everyone for joining us this morning. I am delighted to report the strong momentum we saw in the first quarter continued into the second quarter of fiscal 2017. Once again, we accelerated growth producing double-digit organic net revenue increases across nearly 90% of our businesses. Adjusted earnings per share grew 17% in the quarter. We also made significant progress on our Heartland integration efforts and are tracking ahead of plan in terms of expected synergy realization from the merger. Our North American business had an outstanding second quarter led by our U.S. direct sales channels, which generated low double-digit organic net revenue growth. This was driven by strength in OpenEdge, which again produced mid-teens growth and Heartland, which posted double-digit growth. We continue to operate exceptionally well delivering record sales months of Heartland, a testament to excellent sales and integration execution. In Europe, we generated strong local currency net revenue growth in the quarter led by double-digit organic growth in our United Kingdom and Spanish businesses. The UK produced its strongest quarter in years driven by increased tourism and strength in our e-commerce and omni-channel solutions business. While in Spain, we again saw market-leading volume and transaction growth. Lastly, our Asia-Pacific business had its best performance since I joined the company 7 years ago. Organic net revenue growth was mid-teens in the quarter driven by solid trends across most of our Asian markets. We saw double-digit growth in our Greater China markets, India and the Philippines. Ezidebit once again contributed significantly to results in the region with over 20% organic growth this quarter. In addition to our strong core growth around the world, Heartland brings new opportunities to leverage our distinctive distribution capabilities and deliver differentiated solutions to merchants globally. Just this past quarter, we…

Thanks, Jeff and good morning everyone. I am particularly pleased with our ongoing execution which enabled us to deliver a record second quarter, while at the same time making considerable progress further integrating Heartland. Total company net revenue for the second quarter was $817 million, a 58% increase over fiscal 2016. Adjusted earnings per share, was $0.89 reflecting growth of 17% or 22% on a constant currency basis. Operating margin for the quarter were 29.5%. On a constant currency basis, operating margin was 30%, representing a 50 basis point increase year-over-year. Our North America segment grew net revenue by 85% compared to the second quarter of fiscal 2016 and operating margin expanded 150 basis points despite the inclusion of Heartland, which has a lower margin profile relative to Global Payments’ historical levels. Margin expansion was principally a result of business mix and the realization of expense synergies from the Heartland merger. We are delighted with the progress of our integration efforts. Our superior execution has allowed us to integrate the business faster than we expected and accelerate expense synergies. As a result, we now expect total annual run-rate expense synergies from the transaction to be approximately $135 million, an increase of $10 million compared to our prior target. Normalized organic net revenue growth in our U.S. direct sales channels, calculated as if we owned Heartland in both this period and in the second quarter of fiscal 2016 was double-digits for the quarter surpassing our expectations and accelerating sequentially from the first quarter. This was primarily driven by our combined Heartland sales channel, which generated double-digit organic growth in our integrated solutions business, which produced another quarter of mid-teens growth. As we mentioned last quarter, we have fully integrated legacy Global Payments and Heartland direct sales forces in the U.S. in…

Thanks, Cameron. We are delighted with our second quarter results and the substantial progress we have made in integrating Heartland. Our team across the world continued to perform very well and as we look towards calendar 2017, we remain focused on continuing our track record of superior execution in generating strong returns for our shareholders. Isabel?

Before we begin our question-and-answer sessions, I would like to ask everyone to limit their questions to one with one follow-up in order to accommodate everyone in the queue. Thank you. Operator, we will now go to questions.

Thank you. [Operator Instructions] Our first question comes from the line of Glenn Greene of Oppenheimer. Your line is now open.

Thanks. Good morning, everyone. Very nice quarter.

Thanks, Glenn.

Thanks, Glenn.

So first maybe Jeff, I mean, obviously, I heard sort of the specific commentary related to our Heartland in terms of the costs revenue synergies whatnot, but just talk a little bit more qualitatively about how the integration is going a little bit more on the sales progress, what’s allowing you to increase the cost synergy target and it did sound like you included at this point 50 basis points within the revenue guidance?

Hey, Glenn. It’s Jeff, I’ll start and I will ask David and Cameron to join thereafter. So we have been partners with Heartland at this point for 6 months since from the close – since the date of November. I would tell you probably 5 to 6 months I believe were record new sales at Heartland. I think we have been successful in doing what we do in our partnership, because as we have done with the Ezidebit, APT and PayPros really enabling the people who are best suited to continue the acceleration of their business to go ahead and do that without interference from us here in Atlanta. And I think that’s really not different at Heartland than it was at Ezidebit, APT and PayPros. And of course, those new sales are now translating into revenue in calendar 2017. I think we are focused on what we think we can do best here at corporate, which is enabling cross sales into additional regions around the world, which we described I think now in the last three calls as well as providing a consistent, stable technology and operating environment for the whole company, but in particular, for Heartland. David, do you want to talk a little bit more some of the...

Yes, Jeff, I’d be happy to. I mean, I can amplify that a little bit Glenn, again when you look around, I would start by saying that the sales leadership that was in place when we executed the merger is still in place. We have moved some things around. We have actually restructured a little bit, but that’s all as a platform for the next phase of growth. So, the same leaders in place as you would expect, by the way, that’s our track record around the world as you know whether you are in the UK or Asia, you run into a local leader who knows the markets and then we enable cross sales, we enable synergies, we enable consistency of service levels, that’s what we do best, so really happy with the team. They are making great progress as you have already heard from some of the sales and Jeff’s prepared comments, really good progress around the world. That all resulted in 10% transaction growth for Heartland between the holiday period and far more than that with e-commerce. E-commerce was much, much higher than that, but all in that was a really nice number for the peak holiday period. In addition, just in the period we have owned Heartland, that sales team has delivered low-teen sales growth, record months, month after month, as Jeff noted, so really happy with the trajectory. But don’t miss the fact that beyond that, we are selling leads that they generate abroad. We have closed a lead in the UK. We closed Heartland’s first deal in Puerto Rico. And also don’t miss the fact that it’s beyond just that sales force, right. It’s also the TouchNet Campus Solutions where we sold a deal in Canada just this past quarter. To an existing software customer we sold them Global Payments payment solutions. And then obviously at Heartland, commerce continues to make great progress in Canada as well where we are selling our gift platform to Canadian customers of Global Payments as well as Canadian customers of our dealers. So, all-in really good momentum starts with the fact that it’s an integration strategy matter. We wanted to keep the team in place and better equip them to sell more and all that’s working just as planned right now.

Hey, Glenn. It’s Cameron. I will wrap up maybe just spend a moment on the expense side of the equation. As David highlighted and I think I have said before, our priority from an integration point of view has always been not to disrupt the sales momentum in the business and I think we have done a particularly good job of that as we work through the last 7 or 8 months since closing the transaction in April. On the expense side, we have identified incremental opportunities relative to what we assumed going into the transaction, particularly in the area of corporate support functions. As I noted in my prepared remarks, we also have identified some tax planning initiatives between the two companies that we think will yield some tax benefits that flow through the effective tax rate. We have also identified incremental savings in our operating environment. So, we have been able to leverage as we look to combine operating centers here in the U.S. and continue to leverage our offshore in the Philippines. So from our point of view, again, we have raised our overall synergy run-rate targets to $135 million from the prior $125 million. A lot of the technology integration work is still in front of us. I think we remain optimistic about our ability to realize obviously the synergies that we have targeted in that area, but much of that work is still yet to come, but sitting here today, I think we are pretty enthusiastic about where we sit.

And Cameron, a little bit different direction but a segue so the North American margin performance was up 160 basis points and as you suggested that it has some margin dilution actually from Heartland. But could you talk about what’s sort of happening with North America profitability, I think its two quarters in a row where you sort of significantly beat our expectations? And I want to get a sense for the core GPN North America ex-Heartland and then how much is coming from synergies?

Yes, Glenn, it’s hard to disaggregate the synergy expansion to each individual driver. I will talk about it more from a macro point of view and then share a little bit of color around just how the underlying business had performed, but I think also obviously contributes to the results we have seen. So as we look at the core business, as I mentioned in my prepared remarks, our estimate for Heartland growth in the quarter on an organic basis in the direct sales channel was roughly low double-digits, so think about as kind of 11%, 12%. Legacy GPN, we also view as being in the low double-digits in the quarter as well, probably 10%, 11% this quarter, both accelerating sequentially from the first quarter. When those businesses – those direct sales businesses, which are higher margin businesses are growing at that pace, that’s obviously going to contribute to margin expansion in a fairly meaningful way. In addition to that, our technology led businesses in the U.S., our integrated business as well as our software-driven businesses at Heartland, Heartland commerce, campus solutions, school solutions each of those grew either high single, low double in the quarter as well. Those are higher margin businesses. They are also contributing to the margin expansion we saw in the quarter. And then lastly, synergies are naturally an important driver of margin expansion in the business. They help us to absorb the margin degradation that we obviously have assumed with Heartland coming in at a lower margin. But the growth we have seen in the business has helped offset some of that to a large degree coupled with our ability to realize expenses in the quarter has driven that certainly what we view to be fairly attractive margin expansion for the North American business.

Great. Thanks a lot.

Thanks, Glenn.

Thanks, Glenn.

Thank you. Our next question comes from the line of Bryan Keane of Deutsche Bank. Your line is now open.

Hi, guys. Good morning. When we think about that organic growth in North America, I think it was high single-digits, the direct business in the first quarter and then obviously it accelerated to the low double-digits. I guess, what can you point to that cause that acceleration? And when you look at the guidance it looks like you guys are believing it will go back down or decelerate back to the high single-digits, which is still a good growth rate, but just want to understand the dynamics there?

Hey, Bryan, it’s Jeff. I will start off and I will ask Cameron to join me. So I would say really it’s a continuation of the trend of strengthening of that business. As Cameron mentioned to Glenn, our higher growth, higher margin businesses both at legacy global and also at Heartland are accelerating. So when those businesses are already growing north of the market continue the rates of growth at better margin opportunities, you are naturally going to see higher rates of growth in North America really led by as we said in our prepared remarks, lead by OpenEdge, which 4.5 years after we closed that transaction in APT produced another mid-teens quarter. In many of the Heartland businesses, Heartland Payments, but also as Cameron said school, campus, Heartland commerce etcetera. So, I think it’s really the businesses continue to hit their stride. As David mentioned, we have record sales months at Heartland. While that doesn’t translate in general to immediate revenue acceleration, it does over the cycle of course. And now that it’s been 6 months since we closed the Heartland transaction, our expectation is that they continue to see the benefits of that partnership in our rates of revenue growth. There is really no deceleration expectation into calendar 2017. As you know, our models that we have been articulating certainly since our Investor Day in October ‘15 and updated in December ‘15 post the announcement of our partnership with Heartland is high single-digits organic growth. So, I would read into, gee, you produced the 11 and 12 and now you are saying high single-digits any other Bryan than a reiteration of what our model is over the cycle. Obviously, we are giving guidance here on January 9 for all of calendar ‘17. As you know, with our history, it’s important for us to make sure we are in the trajectory heading into the calendar year.

Okay. And then just as a follow-up, did the Mercury migration still impact results? And when does, if you could quantify that, when does that officially anniversary going forward? Thanks and congrats on the super quarter.

Thanks, Bryan.

Sure. Thanks, Bryan. It’s Cameron. I will jump in on that. So, Mercury did impact obviously the quarter as it relates to reported net revenue. Our ISO or wholesale business was down low double-digits again this quarter similar to Q1 as we have not yet annualized the anniversary of Mercury migrating off. That will happen really at the end of the first quarter of calendar 2017. So at that point, I would expect it to no longer be a headwind to growth. Obviously, we have clearly grown through that from an earnings point of view. It’s really a revenue optic issue that we have been managing through here over the last 9 months or so since they really migrated off of us, so that we anniversary at the end of the first quarter of Q1. At that point, we would expect the wholesale business in calendar ‘17 beyond that point to essentially be flat to maybe down slightly as we have been guiding for the last couple of years.

Okay, super. Thanks.

Thanks, Bryan.

Thanks, Bryan.

Thank you. Our next question comes from the line of George Mihalos of Cowen. Your line is now open.

Great, thanks and congrats on another nice quarter guys. Wanted to start off on the U.S. business as well and just looking at the 50 basis points of enhancement from Heartland, is that all cross-sell or is there some pricing that’s built into that? And I am just wondering broadly in the U.S., is it macro that feels better to you or do you just think that you are executing better and that’s what coming in through the numbers?

Yes. George, I will start. This is David and let the other guys chime in. In back half of your question, I would say it’s not macro. We think it’s actually very good execution and very well positioned businesses. When we are tech-led as we are software-enabled we think we are in the right spot. You will find other competitors talking about just beginning to think about entering the integrated space right now. Obviously we are 5 years into that process and really still continuing to grow great there. So, I would look to good execution, a good combination of assets and obviously, cross-sell is helping us drive enhanced growth beyond what one might expect from the space. In terms of your direct question about revenue synergies for the year driving the kinds of numbers that Cameron quoted in his prepared comments, there are really a couple of categories. There is some new products of rolling out based on the combined technologies. There is also sort of some new sales strategies and then finally their economic enhancements. I will talk about each for just a moment. Couple of new projects are our insights products, which is high level analytics where we can combine our payments information with customer information for a restaurant and our commerce business as well as our payments business to give small to medium-sized customers exactly what we talked about in our Analyst Day 1.5 years ago which is the same abilities that their much larger competitors have to take data – to take new versus repeat customers and total visits and sales volumes and day park sales and things like that and analyze that and drive that into marketing campaigns and loyalty campaigns. There is a new lending with series of products we are bringing out…

Great. Appreciate that. And just as a quick follow-up maybe on the M&A side you guys talked a lot about software and some of your software-led solutions. Should we expect Global to be more acquisitive on the software point-of-sale front?

Yes, George. It’s Jeff. What I would say is it’s really an extension of our technology enabled distribution discussion that we have been having since really our October ‘15 Analyst Day. I think that our perspective is, as we said in the Analyst Day, that’s our third of the company’s revenues generating the vast majority of its growth. I think we have been very successful as we discussed on today’s release over a period of multiple years. With that strategy, we have made progress as Cameron described, with our partners at Heartland in bringing some of their nonpayment specific, but technology enabled related businesses to grow far faster than the market. And that’s something we think is a key theme heading over the next period of time in our cycle. So, I would say yes to your question, but I really view it as a subset that technology-enabled discussion that we have been having since October 2015. If we can find businesses that are in our sweet spot, George, they are growing at 2x to 3x the rate of the market rate of growth at very attractive margins north of where we are trading, north of where we are operating and we have been going to accelerate those with what we do not just in the United States but globally, those are pretty good positions for us to be in.

Maybe if I could put a finer point on that too, Jeff. George, if we can find technology businesses that look like OpenEdge or campus or commerce, so cloud-based SaaS solutions where we can innovate in a defined vertical market, provide software-enabled solutions as well as commerce solutions and payment solutions. That’s very attractive as in a place where software and payment solutions compliment each other. So, I would maybe say it’s not as simple as we are looking for point-of-sale software companies. We are looking for places where software naturally drives payments and payments naturally drives software where they compliment each other and we can drive enhanced growth the way Jeff described it.

That makes sense. Thanks, guys.

Thanks, George.

Thanks, George.

Thank you. Our next question comes from the line of Ashwin Shirvaikar of Citi. Your line is now open.

Thank you. Good morning, Jeff, David, Cameron.

Good morning.

My congratulations for the results as well. I want to ask about the political assumptions that you guys are making, I guess, both on the Brexit front or the impact, not just limited to FX, there is more discussion about the possible downturn in the UK economy in the near-term and then Trump assumptions here in the U.S. Any preliminary comments about how you are planning for potential changes in tax rate, maybe regulation interchange, repatriation and things like that?

Yes, Ashwin, it’s Jeff. I will start off. So, let me take the second point first, because the U.S., of course, represents two-thirds of the revenue of the company. As I said over the last number of months since the election, there is really nothing but good news coming out of the U.S. economy and the political environment here in the United States in the immediate to near-term. Our business as we have just described in our second quarter and David was alluding to a few minutes ago our business is experiencing very good growth and very good margins with very low attrition and that’s all prior to the election. And David also gave a description of our experience during the holiday season at Heartland. So, I really don’t think that there is anything in the election in the United States for two-thirds of business, which is anything but help our view of where our business is going, especially with targeted economy and getting GDP to grow more quickly in a stable environment. So we are performing very well before that. I think we continue to see indications as we suggested in our guidance that we will continue to see that. So I am very confident in our business here in the United States. People, for example, have asked about touching Durban post the election. As we said many times, I think any change to interchange up or down generally is good news for our business. Obviously, our markets are highly competitive and those all dissipate over periods of time, but we have a lot of experience, for example, with the networks of touching pricing initiatives twice a year across most of our markets. So up or down, there is really no difference in many of the things that we see perhaps on some of the regulatory reforms than we have seen before in other elements of our business. As it relates to Brexit, I think Cameron said it’s exactly right in our prepared remarks, we probably have one of the best performances we have ever had across Europe, in particular, in the United Kingdom and of course, also Spain, but for purposes of Brexit in the United Kingdom, we also had a very good experience in our omni-channel solutions as Cameron also described based in Ireland, which is part of EU and not real X. So I think as we look at our business, we haven’t seen any impact, in fact, quite the opposite we performed quite nicely in our UK and European EU related businesses since the June 23 vote and the like. So it’s really been a story of FX to the point that you made around the euro and around the pound.

Got it. And just a separate question completely, I guess, are you seeing different trends between integrated payments versus software enablement, so any relative pros and cons to actually owning the software versus integrating?

Yes, Ashwin, it’s David. I think what we see with both these businesses is properly positioned and properly executed. You have got really nice growers. As Cameron pointed out another quarter of mid-teens growth from OpenEdge, really nice double-digit and mid-teens growth from our key TouchNet software and other campus solutions assets, so we like the characteristics. I think what you will see us do is continue to look at the right way to serve verticals and go deeper by marrying technology to payments. So, in many cases, that’s partnering like in OpenEdge with this amazing degree of integration we provide to multiple verticals than the campaign management managing the partner base. In other verticals we are going to look closely and say wow, the integration is so tight between the software and the payments and this is a vertical that’s not competitive anywhere else in our space. So, why don’t we think about pursuing the entire vertical ourselves and own the entire technology stack, that’s what campus does, that’s what we do in commerce. Each of which has zero over level OpenEdge. So you can see we have the opportunity to blank at the United States vertical by vertical, customizable flexible solutions and then uniquely unlike anyone else in the space globalize the same solutions, take them abroad with our technology infrastructure and our unique sales reach.

Understood. Thank you, guys. Congratulations again.

Thanks, Ashwin.

Thank you. Our next question comes from the line of Oscar Turner of SunTrust. Your line is now open.

Good morning. Congrats on a strong quarter.

Thanks, Oscar.

So just to follow-up to one of the answers from a previous question, could you quantify the potential runway to upside from pricing to Heartland portfolio to value?

Yes, Oscar, it’s Cameron, I will jump in. I would say sitting here today, I would leverage off the comments we made when we announced the Heartland transaction back in December of 2015. At that time, we talked about 1% to 2% revenue enhancement opportunity coming from the merger over time. Obviously, the revenue side takes a little longer to scale as opposed to the expense side where you can start taking out cost fairly quickly and we have been able to I think do that very effectively since closing on the transaction in April. On the revenue enhancement side, sitting here today, we have targeted 50 basis points of expansion in our calendar 2017 guide. I view that as the foundation. Obviously, as we work towards the 1% to 2% we talked about back in December of 2015, which would represent about $30 million to $60 million of incremental revenue coming from these enhancement opportunities that David described earlier. I will just reiterate something he said and I think is very important, this is not pricing for pricing sake, this is obviously cross-selling between our various distribution channels both domestically, internationally, it’s new product, it’s a digital enhancement to our customers and it’s ensuring again that we are paid and compensated appropriately for the level of value service and capability that delivering to our customers through our combined business.

Okay, thanks. And then the second question, you guys spoke a bit about some of the rest of world initiatives focused on the integrated channel. I was just wondering if you could provide some color on the size and penetration levels of the integrated opportunities in Europe and Asia and how do those compare to the integrated market in the U.S.?

Yes, Oscar, it’s David. I am going to broadly answer the integrated question and suggest to you that we have substantial opportunities as we have enabled more and more platforms to sell fully integrated solutions across Europe and Asia. That includes something in Jeff’s prepared comments, which is taking our micro-payments, unattended payment technology services around the world we are distributing that in Asia right now through a systems integrator. In addition, Heartland commerce, our restaurant hospitality SaaS-based integrated software solution can be sold all across Asia and all across Europe. We are enabling payment platforms to work with those folks as well and TouchNet, the software solution that powers campus solution is enabled for Puerto Rico, Canada and shortly UK and Asia. We are actually investing in a sales force in Europe and in Asia to resell that combined campus solutions commerce solution of Global Payments’ payments with Heartland software in the campus area and in fact, the next month or so, we should enable them selling that actively, so really good progress there. I think your question maybe about the integrated solutions globalization projects we kicked off about 1 year, 1.5 years ago we talked about the Analyst Day that continues to make great progress. So we have over 60 partners signed in Canada. We also have a number of partners signed in the UK. We are exploring broader integration, broadening that to Asia. In addition, we have taken U.S. based partners in the UK and Canada. We actually have delivered over 1,000 merchants in Canada and the UK by an OpenEdge globalization, which may not sound like an enormous amount in the greater context of Global Payments, but each of these singles adds up to enhanced growth around the world and that’s just the beginning of taking integrated payments around the world. As you can tell from my comments earlier about the vertical software married to the OpenEdge globalization strategy.

Okay, thanks.

Thank you. Our next question comes from the line of Tien-tsin Huang of JPMorgan. Your line is now open.

Hey, good morning. Good acceleration here. Just on the two questions. Asia-Pac is running above trend now, a couple of quarters, well above trend. So you are guiding above I think your cycle guidance, which was high single-digits, so are you more confident in your distribution or is the market growth just maybe better than you thought?

Hey, Tien-tsin, it’s Jeff, I’ll start. No, I think we are more confident in our execution, distribution strategy. So I certainly think that there is likely going to be some benefit heading forward as we annualized some of the macro issues that we had in Greater China. But even before we did, I think you alluded this in your question, this is probably the third quarter in a row where we are seeing very good performance not just of course at Ezidebit where we are a good partner for about 2.5 years now, but in what we called business as usual Asia, which is Asia ex-Australia and New Zealand. This quarter, in particular, we singled out Greater China, India and the Philippines, of course, outside of Australia and New Zealand. So, I would say it’s better distribution strategies, better execution in technologies, better product environments, for example, I think we are the only payment services technology company that’s enabled Apple Pay. In all the markets, Apple Pay is around the world. We obviously, as you know, have a common technological and operational infrastructure for almost all of our markets, including in particular in this conversation for Asia, especially the new Asia. Our partnership, which is now 1.5 year old with – back in the Philippine Islands is performing quite nicely and one of the fastest GDP growth economies in Asia, the Philippines where you now have 28% or second largest market share in that country. So I think Tien-tsin, it’s the aggregation of all those factors. If you like to think that the market itself will continue to accelerate and make it easier for us and I think we are hopeful that’s the case, particularly across Greater China, but what I would say though is I think it really is a team out there who has done a fantastic job probably in the last three quarters in a row of helping to take our business where it really hasn’t been the last 7 years.

And Tien-tsin, it’s Cameron, I will just add. On top of that, we have certainly improved scale in that business over the course of time. I think revenue in Asia since the end of fiscal ‘14 is up probably 75%. So if you are thinking about the business we are operating today, we have diversified distribution outside of kind of the Greater China market, those businesses tend to be growing at faster rates than even our Greater China businesses. We have created a much more scalable platform in that market. And I would certainly think what you have seen in Q1 and Q2 is the headwinds we saw in the Greater China markets back in fiscal ‘16 obviously have dissipated. We are seeing a more normalized macroeconomic environment that coupled with I think fantastic execution from our team there has really created a more optimistic outlook for what we can deliver in calendar 2017.

Okay, that’s great and that’s all good to know. So just my second question on the Heartland acceleration there, can you specify, is that coming more from the core merchant business or in the non-card variety both in revenue and new sales? Thanks.

Yes, Tien-tsin, it’s David. I will give you some business probably like Cameron answer any direct math question, but I am not authorized to do that. So I point you back to a couple of things. One is we continue to post record sales month, so that’s the core based merchant sales force which you are familiar, but I would point out, that merchant sales base is increasingly selling technology-enabled solutions. They are directly involved in each Heartland commerce sales and also involved in selling these add-on and cross-sell products. We are talking about each of which adds more value and more technology to our customers, but we are seeing consistent low-teen sales performance. As I said earlier, we had really nice double-digit transaction growth in the holiday period, much faster e-comm growth, so that core base is performing very, very well. And then the more integrated channels, the software-led technology-enabled channels, campus solutions and schools are both performing at double-digit or high single-digit levels led by TouchNet software, which is in its own mid-teens. And then of course, that obviously is bundled in or at least in terms conceptually bundled in for us with the rest of our tech solutions, the tech-enabled double-digit growers, mid-teens growers like OpenEdge. So really nice business performance across what you might think of as both sides of the Heartland channel, the traditional 1,500 sales folks as well as the tech-enabled software-led solutions in commerce school and campus.

And Tien-tsin, it’s Cameron. I will just add a little bit of color around the math side of it as we talked about before clearly the Heartland sort of payment side of the business. As we talked about, our estimate was it grew low double-digits this quarter, call it 11%, 12%, somewhere in that range which was acceleration relative to Q1. I would say, the collective software businesses that David described also accelerated slightly in Q1 to Q2. In aggregate, those businesses probably grew low double-digits as well led by again, campus and commerce and school also had a good quarter growing in the high single-digits. So I’d say each of those businesses performed very well in the quarter and accelerated to some degree relative to their Q1 performance, which contributed to the overall Q2 results.

Got it. Thanks, guys.

Thank you. Our next question comes from the line of Steven Kwok of KBW. Your line is now open.

Hi, guys. Thanks for taking my questions. Most of them have been answered already. Just following up on, I guess, two questions. One was just any early read into how December is doing given some of the, I would say, mixed retail sales numbers that we have been getting?

Yes. Steven, I can tell you the high level December looks fine. It looks kind of down in the middle of fairway for us overall, particularly if you are asking about kind of the Heartland base that has that retail quick service restaurant and restaurant exposure. We think we have a solid sales month and solid transaction month.

Great. And then just around – are there any plans perhaps to hedge some of your FX and interest rate exposure, just wanted to see given both or the volatility around FX rates and then interest rates are expected to rise, just want to see your thoughts around that? Thanks.

Yes. Hey, Steven, it’s Cameron. I will jump in there. On the FX side of the equation, we have talked about this a lot in the past and we were naturally hedged in, to some degree, in every market we operate in and around the world and that we have local denominated expenses associated primarily with our sales and distribution capabilities in markets. We don’t do any sort of natural other hedging, excuse me, of FX exposures around the globe largely because we do the business as being a multinational business – part of being a multinational business is having foreign currency exposures. I think we took obviously a big amount of FX risk out of the business by virtue of executing the Heartland transaction which pivoted us from about 50-50 U.S. dollar to foreign currency exposure to roughly two-thirds U.S. dollar, which we think was a good thing for us to do in light of the strong dollar environment we have seen here over the last few years. But I wouldn’t expect us to do “derivative hedging” of FX exposure around the globe. Again, we think that’s just part of managing a multinational business. And we think the right way to operate the company more importantly is the way we are operating where a lot of the expense structure is U.S. dollar, because we are leveraging common technology and operating environments that are typically U.S. dollar driven, that’s the most efficient way to operate and scale business like this. And I think that’s the way we will continue to operate obviously going forward. On the interest rate side, as we talked about before, we did enter into an incremental interest rate hedge $250 million notional amount in December that brings our total hedge position today to about $1 billion represents about 22% of our variable rate exposure. We do anticipate entering into additional interest rate hedges in calendar 2017 such that between debt reduction and incremental hedges, I would expect as we are exiting calendar 2017 to be towards our targeted hedge ratio of about 40% to 50%. We think that’s the right place for us to be as a business. As you can imagine, our outlook for calendar 2017 assumes underlying rates are going to rise, so that is already baked into our expectations for calendar ‘17 as well as us entering into incremental hedges as we work through that targeted hedge position.

Great. That’s helpful. Thanks for taking my questions.

Thanks, Steven.

Thank you. Our next question comes from the line of Dan Perlin of RBC Capital Markets. Your line is now open.

Thanks. Good morning, guys. I wanted to just kind of dig into a question and it really pertains to each geography but starting in North America, when we think about the growth which has consistently been above market, how much would you attribute to kind of incremental product sales at our existing clients versus share gains from competitors or even kind of taking share from your legacy wholesale business?

Yes, Dan, it’s Jeff, I will start. I will ask David to comment as well. What I would say is we probably have a 3 or 4-year history now of growing more quickly than the market and we also probably have a 3 or 4-year history on some of what we call our wholesale businesses like our ISO and direct businesses being relatively flat on a normalized basis and the margin environment speaks first in North America primarily United States, which is two-thirds of the company that’s growing kind of mid single-digits call it 5% transactionally. It’s kind of hard to separate product from new sales, because obviously what our sales folks are selling, particularly in some of our business units like Heartland but are also in OpenEdge and also in school and campus Heartland commerce, what they are selling are in many cases new products. What I would say is at this point, American Express, OptBlue, which is something we sell last time talking about probably a couple of years ago as, I don’t know like, Cameron, probably double or triple anniversary at this point. So large, stepwise functions of products that really neatly shift the revenue curve in a certain direction either double or triple anniversary those at this point here in the United States, obviously, we do a lot of these things all the time, but in terms of looking for those kind of quantum leap things, we just posted, as Cameron said, 11% or 12% depending on how you calculate legacy Global, legacy Heartland, U.S. direct growth business, yes, as we double or triple anniversary, something like AmEx and OptBlue. So clearly the majority of what is driving the growth is just better sales execution targeted at more attractive end markets. As you know, here in the U.S., we are primarily SME-focused not just at OpenEdge but also at Heartland. And I think historically, that’s been a very good place to be and I think going forward with some of the things that happened the last couple of quarters in the election and everything else, I think that will continue to be a very attractive place to be. So, new product sales are something we knew all the time, but as you can see from our performance this quarter and over the last year or so, we certainly don’t need to see step-like functions for us to continue to grow at rates like we have been growing at the last period of time.

Yes, I think Dan, I agree with that first it is about taking market share not about cross-sells, maybe I will push it just a little bit, if the question is really particularly about strategic initiatives for brand new cross-sells whether that’s Heartland in cross-selling Heartland technology or global payments technology across the Heartland base and then broadening that for initiatives like the OpenEdge initiative I commented on earlier to Oscar’s question, we are really just getting started on those. So you can see the beginnings of what we think can be the returns of that in the revenue enhancement guidance that Cameron set. Think ahead to ‘18, I am very confident these are going to be really meaningful numbers from ‘18 and beyond. We are planting seeds for all these cross-sells. We are planting seeds for these cross-sells right now. And in some ways, they are just getting started where what described is the way we run the business everyday. It’s cross-sell. It’s new products that we can sell in North America, then to UK, then to Asia as well. So, lots more to come I think over some period of time.

Okay. Yes. And I was just trying to figure out the – I mean, is the product portfolio still much bigger now than all these guys are going to market with it, that’s just incrementally is driving a lot of business but it also is driving sales. It sounds like both but...

I would say you have hit an important point there. So if you go back to I think we were answering to a previous question about our mix of businesses, so we were talking about technology enabled back certainly when we partnered with APT in 2012 and if you think back to October ‘15 Analyst Day we talked about tech-enabled being a third of the company driving 8% of revenue. We have got a bunch of our peers who have come out and said they hope to get in that business one day. I think it’s important to understand that more people increasingly are selling is less of the traditional wholesale like sales referrals that you asked is the beginning part of your question and more of the products and services that are really dedicated to technology-enabled sales that are distinctive distribution team. So I do think you are seeing some of that in our numbers. I would talk it up to good strategy and good execution rather than step-like functions in a product where I certainly think we are seeing the benefits of having made those investments over time.

Yes. I didn’t mean to belittle the execution. I was just trying to make sure I understood. I got just a quick – the calendar year cost synergies, I didn’t hear that number and can you just briefly update us in terms on what your plan is for filling out the stub period for us in the future for calendar numbers? Thanks.

Yes, both good questions, Dan. I didn’t you a specific estimate for realized synergies in calendar 2017, so you are right to pickup on that. My expectation is about $90 million of realized synergies in calendar 2017. So that will translate into an exit rate of about 110, from which we will scale from there as we get into calendar 2018 as we wrap up a lot of the technology work that will get us to that overall 135 run-rate target that we are now seeking as the company. Secondly, to your other question, we are going to fill out calendar 2016 results when we finalize our stub period audits, which we are in the midst of beginning right now and file our 10-K for the transition period, it’s a 10-K T, which we would expect to file towards the end of February or early March. That is a 10-K for the 7-month period from June 1 to December 31. Once we get that work done, we will fill out the calendars for 2016, so you can see obviously actual results for all of calendar 2016 as well as the quarterly distribution of results. Naturally, as you can tell from the growth rates we have given you today for our calendar 2017 guide you can back into our current estimate for calendar 2016 recognized that’s based on 11 months of actual and 1 month of estimate for December as we are still in the process of closing those books.

Excellent. Thank you guys very much.

Thanks, Dan.

Thank you. And our last question comes from the line of Dave Koning of Baird. Your line is now open.

Yes. Hey, guys. Nice job.

Thanks, Dave.

Yes. I guess, two questions from Europe, I guess, first of all, just Spain and UK very strong this quarter. Can you just talk about in the UK we should see deceleration in the coming quarter just as you anniversary the interchange benefit, but Spain holds up strongly going forward, is that the right way to think about that?

Yes, I think that’s a fair way to think about it, Dave. We will anniversary or did anniversary the pricing benefits in December that came into effect in the UK. We are seeing good, strong fundamental performance in the UK as we talked about in our prepared comments, double-digit growth led by very strong transaction and volume growth in market, but we are going to anniversary those pricing benefits which will create a little of a headwind as we go into the beginning of the year. I would say, Spain, Q2, fantastic performance again building off of market leading transaction and volume trends and the execution there has been superb. Our partnership with Caixa remains I think the gold standard for bank-based JVs around the world and continues to perform exceptionally well. So as we go into Q1, I think we feel good about how we are positioned in Europe, which obviously gives rise to our guide for the calendar year. Obviously, that’s going to be impacted fairly significantly by FX headwinds largely from the pound in Europe.

Got it. And that really transitions into my second question. So when you say for calendar ‘17 reported mid single-digit growth in Europe and constant currency growth of mid-teens when you include the acquisition, is that still low double-digits on an organic constant currency basis?

It’s probably going to be high single is my estimate, Dave, for Europe. It did probably double-digit in Q2. But again, as we go into the year, I would say, our expectation is the region the segment is going to perform kind of at our cycle guidance which would be high single-digit growth organically. Obviously, our guidance reflects a range of possible outcomes around the variety of factors including growth. But I think our base case assumption going into the year is that the Europe produces high single-digit organic growth. You get a little bit of benefit from not having anniversarying the Erste joint venture until June. And then obviously that produces an overall mid-teens expectation that ends up being mid-single when you factor in the fairly significant decline in the pound and euro in particular as well as the check run.

Yes, makes sense. Great. Thank you. Nice job.

Thanks, Dave.

On behalf of Global Payments, thank you very much for joining our call this morning.

Ladies and gentlemen, thank you for participating in today’s conference. That does conclude today’s program. You may all disconnect. Everyone have a great day.