Fiserv (FISV) Jeffery W. Yabuki on Q4 2015 Results - Earnings Call Transcript

| About: Fiserv, Inc. (FISV)

Fiserv, Inc. (NASDAQ:FISV)

Q4 2015 Earnings Call

February 02, 2016 5:00 pm ET

Executives

Stephanie Gregor - Vice President-Investor Relations

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Thomas J. Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary

Mark A. Ernst - Chief Operating Officer & Executive Vice President

Analysts

David Mark Togut - Evercore Group LLC

Ramsey El-Assal - Jefferies LLC

David J. Koning - Robert W. Baird & Co., Inc. (Broker)

Glenn Greene - Oppenheimer & Co., Inc. (Broker)

Tien-tsin Huang - JPMorgan Securities LLC

Kartik Mehta - Northcoast Research Partners LLC

James Edward Schneider - Goldman Sachs & Co.

Darrin D. Peller - Barclays Capital, Inc.

Andrew Jeffrey - SunTrust Robinson Humphrey, Inc.

Moshe Katri - CRT Capital Group LLC

Paul Condra - Credit Suisse Securities (NYSE:USA) LLC (Broker)

Operator

Welcome to the Fiserv 2015 Fourth Quarter Earnings Conference Call. All participants will be in a 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 Stephanie Gregor, Vice President of Investor Relations at Fiserv. Ma'am, you may begin.

Stephanie Gregor - Vice President-Investor Relations

Thank you and good afternoon. With me today are Jeff Yabuki, our Chief Executive Officer; Tom Hirsch, our Chief Financial Officer; and Mark Ernst, our Chief Operating Officer. Please note that our earnings release and supplemental presentation for the quarter are available on the Investor Relations section of fiserv.com.

Our remarks today will include forward-looking statements about, among other matters, expected operating and financial results, anticipated benefits related to acquisitions and our strategic initiatives. Forward-looking statements may differ materially from actual results and are subject to a number of risks and uncertainties. Please refer to our earnings release for a discussion of these risk factors.

You should also refer to our materials for today's call for an explanation of the non-GAAP financial measures discussed in this conference call, along with the reconciliation of those measures to the nearest applicable GAAP measures. These non-GAAP measures are indicators that management uses to provide additional meaningful comparisons between current results and prior reported results and as a basis for planning and forecasting for future periods. Unless stated otherwise, performance comparisons made throughout this call are year-over-year metrics.

With that, I will turn the call over to Jeff.

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Thanks, Stephanie, and good afternoon, everyone. We capped off 2015 with fourth quarter performance that allowed us to exceed the majority of our financial metrics for the year. These strong results were in spite of Q4 revenue that was a bit light versus expectations, driven primarily by delays in EMV card personalization and lower-than-planned license revenue.

Overall, performance in the second half 2015 was solid, including 5% internal revenue growth in both the third and fourth quarters. These growth results, combined with record fourth quarter sales, should set the stage to expand our internal revenue growth rate in 2016. The organization achieved an unprecedented 30th consecutive year of double-digit adjusted earnings per share growth. In the process, we expanded adjusted operating margin by 120 basis points, grew adjusted operating income by 8%, and broke $1 billion in free cash flow for the first time.

We anticipate strong results again in 2016. We provided internal revenue growth guidance of 5% to 6%, consistent with our strategic objective of stepping up our growth rate an average of 50 basis points to 100 basis points per year. We also expect another year of double-digit adjusted earnings per share growth at least 50 basis points of adjusted operating margin expansion and a record level of free cash flow per share.

As you saw on January 20, we announced the acquisition of certain digital banking and payment assets of the Community Financial Services business from ACI Worldwide. These complementary solutions are strategically aligned with our goal of enabling clients to transform their financial services experience.

In addition to technology solutions, we will also welcome a group of high-quality clients and committed associates. We expect this transaction, which is subject to regulatory approval and other customary conditions, to close towards the end of the first quarter. We estimate the purchase price, including the tax benefits and run rate synergies, to be right around 5 times EBITDA. We will supply additional financial information after the transaction closes.

At the beginning of the year, we established three key priorities to help you assess our performance which were: first, to continue to build high-quality revenue while meeting our earnings commitments; second, build and extend client relationships with an increased emphasis on payment and channel solutions; and third, deliver innovation and integration which enables differentiation and value for our clients.

Reported internal revenue growth of 4% for the year were short of our guidance, as we could not overcome the revenue delay, resulting from the unanticipated impact of the lag between EMV card manufacturing and personalization we mentioned in Q3. But for that negative impact, internal revenue growth for the full year would have been 5%.

We saw a good growth across many of our recurring revenue businesses such as Card Services, Biller Solutions, Digital Channels, and Account Processing. Importantly, we continue to build our capabilities to steadily accelerate our internal revenue growth rate into the future. These areas of high-quality revenue growth, combined with our focus on operational efficiency, drove strong adjusted operating income growth of 8% and 120 basis points of adjusted operating margin expansion.

Full-year adjusted earnings per share grew 15%, which was $0.04 above the top end of our original guidance, and we achieved a record $4.23 in free cash flow per share. We again demonstrated the strength of our business model and like our trajectory going into 2016.

Our second priority was to build an extend client relationships with an increased emphasis on payment and channel solutions.

January marked the three-year anniversary of the Open Solutions acquisition. By any measure, this transaction has been successful, adding a modern innovative account processing technology solution, talented associates and a passionate client base. To-date, we have signed 75 DNA clients and delivered substantial value to the existing client base through high-quality add-on solutions.

For the year, 28 new DNA clients went live, including 9 financial institutions with assets greater than $1 billion. And of the nine, six went live in the fourth quarter. We anticipate that these recent implementations, along with the planned 2016 activity, will progressively increase revenue throughout this year.

We added a number of privileged client relationships across multiple account processing platforms in the quarter. For example, United Nations Federal Credit Union, the 28th largest credit union in the U.S. with approximately $4.3 billion in assets, selected DNA along with a suite of integrated solutions to service more than 115,000 members located in 200 nations and territories around the world.

Suffolk County National Bank with assets nearing $2 billion selected the Premier account processing platform, along with a full suite of payment and channel solutions including Retail and Business Online, Mobiliti, Bill Payment, Popmoney, and Source Capture. By selecting Fiserv as a single provider of these services, these clients expect to amplify their technology, streamline operations and enhance their clients' experience.

In addition to new clients, we remain focused on deepening existing relationships with an emphasis on our payments and channel solutions. Our integrated debit and credit value propositions continue to resonate well. And in fact, we added nearly 50 new debit clients in the fourth quarter alone. For the full year, we contracted to add more than 700 payment solutions across Card Services, bill payment and Popmoney.

In addition, we've signed more than 260 institutions for our new CardValet solution which provides value at the intersection of mobile experience and card payments. We added 43%, more than 1.2 million subscribers, to end the year with over 4 million users on Mobiliti ASP.

We have several important Mobiliti releases queued up this year which should enhance functionality and extend user engagement. We also continue to gain momentum with Mobiliti Business. This solution in its inaugural year added 60 clients in the quarter, and we now have more than 100 businesses live with thousands of underlying users.

Our third priority in 2015 was to deliver innovation and integration which enables differentiation and value for our clients. At our Investor Conference in June, we highlighted six of our innovation base solutions – Agiliti, Mobiliti, DNA, EMV, NOW and IPS – that together form an important part of our internal revenue growth acceleration story. We exited the year with our thesis intact and continue to expect sequential growth rate increases in the 2016 to 2019 period.

During the year, we expanded the breadth of our Popmoney network through business disbursements and charitable giving. During the quarter, we signed a payment agreement with CARE, one of the leading humanitarian organizations in the world to accept donations using Popmoney. Through this relationship, millions of consumers will now have the option to use Popmoney to make the world a better place one payment at a time.

One of our newest in market innovations, Immediate Funds, gained important traction in the quarter. This solution enables financial institutions the option of providing consumers real-time access to deposited funds across the channel of their choice. Even after signing our first top 10 bank to Immediate Funds in the quarter, the pipeline remains strong for this real-time right-now solution.

Client focus on EMV remains heightened and activity levels are increasing. Car manufacturing accelerated again this quarter, and backlog is building. We have much better line of sight into EMV manufacturing and personalization activity going into 2016. Accordingly, we expect strong EMV growth with volume nearing our expected peaks in the middle quarters of the year.

We signed our second client to Agiliti, our UK cloud-based account processing solution in the fourth quarter. Camden Bank, a de novo institution, selected Agiliti, paired with our Mobiliti solution to bring its unique digital banking experience to the market later this year.

In January, Cornerstone Mutual Services signed with Agiliti as the banking platform for the UK Credit Union Expansion Project with plans to initially migrate up to 40 UK credit unions in 2016. Our Agiliti pipeline remains strong as we head into the year.

Finally, we closed a very small Biller Solutions acquisition in January, buying Hewlett-Packard Enterprise's Convenience Pay Services business. This expands our biller footprint through a modern SaaS platform, enabling electronic payment acceptance for a broad range of billers. We anticipate the business will generate roughly one half of 1% of total revenue and that the synergy adjusted net purchase price multiple will be around 3 times EBITDA.

With that, let me turn the call over to Tom to provide additional detail on our financial results.

Thomas J. Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary

Thanks, Jeff, and good afternoon, everyone. Adjusted revenue for the quarter grew 5% to $1.3 billion and increased 4% to $4.9 billion for the year. The internal revenue growth was 5% in the fourth quarter and up 4% for the full year, including 180 basis points respectively of combined negative impact from FX and the unanticipated EMV card personalization delays.

Our full-year internal revenue growth rate would have been 5%, excluding the unanticipated impact of these items. Our revenue for the year is a tale of two cities, as our processing and services recurring revenue increased 5% even after the negative currency impact. On the other hand, product revenue was short of plan for the year and declined compared to 2014, due primarily to lower-than-anticipated base and EMV revenue in our Output Solutions business and lower-than-planned license revenue for the year.

We continue to build high-quality recurring revenue which is key to our long-term growth profile. Adjusted earnings per share for the quarter was up 12% over the prior year to $1. Full-year adjusted earnings per share exceeded the top end of our original guidance range growing 15% to $3.87. Full-year adjusted operating margin performance was up a very strong 120 basis points to 31.7%, driven by high-quality revenue growth, expense discipline and a continued focus on operational effectiveness.

Adjusted operating margin in the quarter increased 10 basis points to 30.7% with comparisons negatively impacted by the timing of our Fall Client Conference, revenue mix and higher expenses in our corporate segment which, by itself, negatively impacted margin by 50 basis points in the quarter.

At the segment level, our Payments businesses delivered 6% internal revenue growth in the quarter and 5% for the full year. Growth was primarily led by our Card Services, Biller and Channels businesses. Our Output Solutions business saw a base business momentum in the fourth quarter, and EMV demand was strong as we had anticipated.

A longer lag between manufacturing and personalization of EMV cards led to an additional $7 million revenue deferral in the quarter on top of the $9 million in the third quarter. Our clients purchased a large amount of manufactured EMV card product in 2015 which has not yet been rolled out to their customers. Given visibility and demand, we anticipate that EMV revenue will accelerate substantially into 2016, as our clients move forward with the final card personalization and distribute the EMV cards to consumers.

We again leveraged the power of our integrated card value proposition and finished the year with a very strong sales quarter, signing 49 new debit clients and a total of nearly 150 for the year. Debit transactions continued to grow above market with high-single-digit growth for the year.

Our industry-leading bill payment and person-to-person payment solutions continued to grow. For the year, bill payment transactions grew in the low-single digits, and Popmoney transactions were up over 20%. In Q4, we delivered the first release supporting our Integrated Payment Strategy or IPS, which forms a new integrated bill payment, P2P, and transfer experience. The early returns are encouraging as we expect further growth in these payment transactions in 2016 and over the next several years.

As Jeff mentioned, Mobiliti ASP users were up sharply year-over-year, gaining over 40% and crossing the 4 million subscriber threshold. We continue to believe digital transformation is forging a long runway for revenue growth in both digital subscribers and transactional services.

Payments segment adjusted operating income was excellent, increasing 11% in the quarter to $224 million and for the year was up 9% to $840 million. Segment adjusted operating margin expanded 150 basis points in the quarter to 33.6% and was up 130 basis points to 33% for the year. This strong performance was driven by high-quality revenue growth and operational efficiency, even as we continue to invest in targeted innovation.

Adjusted revenue in the Financial segment was $631 million in the quarter and $2.4 billion for the year. Internal revenue growth in the Financial segment was 4% in the quarter and 3% for the year. This solid performance, which includes a negative currency impact of 60 basis points in the quarter and 70 basis points for the year, was led by our Account Processing and Lending businesses.

Adjusted operating income in the Financial segment was $195 million in the quarter and $826 million for the year. Adjusted operating margin in the quarter was pressured by the timing of expenses including our Fall Client Conference and business mix in the quarter. Full year adjusted operating margin was excellent, up 120 basis points, driven by growth in our scale businesses such as Account Processing and the benefit of our operational effectiveness initiatives.

Corporate segment net adjusted operating performance in the quarter was in line sequentially but up over the prior year, primarily due to the timing of expenses and an increase in certain consulting expenses. This year-over-year increase in expense reduced overall company operating margin in the quarter by 50 basis points.

Our effective adjusted tax rate was 34.6% in both the quarter and year. The adjusted effective tax rate for the quarter was slightly lower than expected due to the renewal of the R&D tax credit, offset by the timing of other discrete tax items. Our effective adjusted tax rate was up 60 basis points for the full year due to lower discrete tax benefits in 2015 than the prior year, which equates to about a 1% or $0.04 per share negative impact on this year's adjusted EPS growth rate. We expect our adjusted effective tax rate to be 35% in 2016.

We generated over $1 billion of free cash flow in 2015, free cash flow per share increased 11% to $4.23, 9% higher than our adjusted EPS of $3.87. We believe the combined benefits of focusing on high-quality revenue along with disciplined capital allocation will continue to produce excellent free cash flow per share results.

We received $36 million of cash distributions from our StoneRiver joint venture in 2015 which are substantially excluded from our free cash flow results. In January, we received an additional $140 million distribution related to the sale of an underlying business. Since the formation of the venture in 2008, we have received, including the proceeds from the original sale of our 51% interest, over $1 billion of gross distributions. The joint venture has fairly limited assets remaining given the success to-date.

Total debt at year-end was up about $500 million since the beginning of the year to $4.3 billion but is still only 2.3 times trailing 12-month adjusted EBITDA, well within our target leverage ratio.

We repurchased 4.5 million shares of stock in the quarter for $422 million. For the year, we repurchased over 17 million shares at an average cost of less than $85 per share, returning nearly $1.5 billion to our shareholders. We announced the new 15 million share repurchase authorization in the fourth quarter and at year-end had 17.4 million remaining shares authorized for repurchase.

With that, let me turn the call back over to Jeff.

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Thanks, Tom. Strong sales in the quarter led to a 3% increase in TCV over the last year's record level. In addition to the wins mentioned earlier, we had excellent results across most of our businesses in the quarter. Full-year sales were short of expectations primarily due to a reduction in the number of larger in-year new client sales closed compared to the last several years which we expect will reverse in 2016. Pipeline trends are strong, including a more typical number of larger transactions which should bode well for a faster start this year.

Integrated sales were outstanding at nearly $90 million in the quarter and $257 million for the full year. Standouts included card services, bill payment, mobility and custom statements. We achieved operational effectiveness savings of $64 million in 2015, well above our goal of $50 million. Savings this year were driven primarily by strong results in procurement and workforce optimization.

After the successful completion of our Atlanta facility consolidation in 2015, we will further progress our real estate and data center initiatives this year. You will also recall from our Investor Day that 2016 kicks off our new five-year $250 million operational effectiveness program. Our operational effectiveness target for 2016 is $40 million.

One of the bigger stories in the environment last year was increasing FI M&A activity which we expect will continue. We view the Fed rate increase for the first time in a decade is good news for banks and a way to help fund needed increases in IT spend as institutions look for ways to keep up with the broad changes across technology landscape.

There is no question that digital and specifically mobile is having a dramatic impact on the banking experience. Branches are in decline, and the payment world is more dynamic than ever which we believe will lead to meaningful opportunity.

Financial institutions are increasingly looking at technology providers to help them navigate these changing times. We believe the trends in the market align well with our innovation-based agenda and should drive further growth over the next several years.

With that, let's move to 2016. Our three key enterprise priorities which remain generally unchanged are: first, continue to build high-quality revenue while meeting our earnings commitments; next, build and enhance client relationships with an emphasis on digital and payment solutions; and third, deliver innovation and integration which enables differentiated value for our clients.

For 2016, we expect internal revenue growth to be in a range of 5% to 6%. Our roadmap for revenue acceleration includes continued growth in our scaled high-quality revenue businesses, incremental contributions from our innovation-based solutions and less negative impact from both currency and the lag between EMV card manufacturing and personalization. As high-quality revenue comes on slowly, we again expect the higher growth rate in the second half of the year and that will likely build sequentially.

We expect adjusted earnings per share to grow in a range of 12% to 15% or $4.32 to $4.44 for the year. We also expect adjusted operating margin expansion of at least 50 basis points and that free cash flow per share will be greater than $4.70 for the year. Lastly for guidance purposes, we do not expect the ACI asset acquisition to have a material impact on our operating results this year.

On balance, we performed well in 2015 and showcase the power of our business model. Although we fell a bit short on reported revenue, we achieved our 30th consecutive year of double-digit adjusted earnings per share growth, drove exceptional operating margin and delivered another year of strong free cash flow.

We also added meaningful new innovation to our solution portfolio and are well positioned for the foreseeable future. Our results are a product of the commitment and dedication of our 21,000 associates around the world who strive to be their best. I'm grateful to be part of a company that delivers today while creating an even brighter tomorrow.

Lastly, as we shared with you in Q3, we expect this to be Tom's final earnings call as our CFO, and we thank him for the many contributions he has made to support the success of our clients, associates and you, our shareholders. On the selection front, we have been very pleased with the significant interest in this important role and are on track to have a successor named and in place this quarter.

With that Laura, let's open the line for questions.

Question-and-Answer Session

Operator

Thank you, sir. We will now begin the question-and-answer session Our first question is coming from the line of David Togut from Evercore ISI. Sir, your line is now open.

David Mark Togut - Evercore Group LLC

Hi, Jeff and Tom.

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Hi, David.

Thomas J. Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary

Good morning.

David Mark Togut - Evercore Group LLC

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

Thomas J. Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary

Absolutely, David

David Mark Togut - Evercore Group LLC

So, just moving into some of the target, you're 2016 operational effectiveness target of $40 million is less than what it was in 2015. What are the drivers behind that?

Thomas J. Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary

I think David, we're in the first part of our new program. And so, there's a number of different items. So we anticipate that this is going to accelerate on a year-over-year basis. We feel highly confident in that number. We are doing a lot of things, as Jeff indicated in the script, around our real estate and data center consolidation. And most of those impacts, we're doing a lot of the consolidation activities around our data center optimization efforts in 2016 which is not going to have the full run rate benefit until largely 2017 and 2018. And so, that's probably the biggest drive in that case, because it's a little bit different than the benefits we had in 2015, which we're focused a lot on procurement. So those benefits are going to scale up as we go through the next few years, along with – continued on the workforce optimization side, but that's really the biggest issue there.

David Mark Togut - Evercore Group LLC

Understood. And then what is the 2016 sales target?

Jeffery W. Yabuki - President, Chief Executive Officer & Director

David, in terms of gross numbers or...

David Mark Togut - Evercore Group LLC

Yeah, in terms of total new bookings. You mentioned you fell a little short for 2015.

Jeffery W. Yabuki - President, Chief Executive Officer & Director

We fell a little short. We typically don't supply that number, the actual number, but we do expect to have higher sales growth in 2016 versus 2015, and that will be reflected in our quota for the year.

David Mark Togut - Evercore Group LLC

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

Thomas J. Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary

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

Jeffery W. Yabuki - President, Chief Executive Officer & Director

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

David Mark Togut - Evercore Group LLC

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

Thomas J. Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary

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

David Mark Togut - Evercore Group LLC

Got it. Thanks so much.

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Thank you.

Operator

Thank you. Our next question is from Ramsey El-Assal from Jefferies. Sir, your line is now open.

Ramsey El-Assal - Jefferies LLC

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

Mark A. Ernst - Chief Operating Officer & Executive Vice President

This is Mark Ernst. Let me that real quick. Fundamentally, what we're seeing happen with clients is that they were kind of working on their own internal schedules to get EMV cards ready and out the door. And we just sort of had a bit of a delay and how many of those were finally issued to their consumers. And some of that is a system's readiness issue and some of that was kind of just the timing with which they wanted to go through the reissue process.

But because of the concerns that have been out there in the industry about the availability of chips, we saw a lot of people pushing for the manufacturing to get done and put that into their inventory in anticipation of needing to get the reissues done. So I think it's a combination of both a lot of internal process, differences by client but very importantly, concern over not coming up short on EMV chip availability.

Thomas J. Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary

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

Ramsey El-Assal - Jefferies LLC

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

Thomas J. Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary

That's correct because they paid us for these, right? We received the cash and deferred revenue. And so, it's going to get recognized when those cards are ultimately shipped to the end consumer, and that's going to happen, right? So it's just a matter of timing. And as I think Jeff indicated on his prepared remarks, we look at 2016 right now, we see at least initially the middle part of the year to be when a lot of personalization is going to occur, but we continue to watch it closely. But those cards are definitely going to get issued over the next two years here.

Mark A. Ernst - Chief Operating Officer & Executive Vice President

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

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Yeah. And the chips actually have a finite life. So...

Mark A. Ernst - Chief Operating Officer & Executive Vice President

Yeah, right.

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Ramsey, to your point, it's a little bit of an odyssey. I also think the community – primarily, this is a community bank issues. The community banks are making decisions on the timing of their should they do a mass reissues, should they do partial reissues. There are a lot of factors. So you saw the FI landscape kind of ignore the issue. And then all of a sudden, it became very urgent, and then they bought them, and then they had to think about what's the best way to get them distributed.

The other thing to keep in mind is the cards don't have the same level of value if the merchants aren't live on their end. And so, we are just really seeing and you're probably – we're all seeing it every once in a while now. Finally, a merchant says, all right, we have to put your card in the machine. So that landscape is coming together, and the end-to-end equation is being built. We expect that will continue to build and that will match up well with the institutions deciding to send the cards out to their consumers and get them finally personalized.

Ramsey El-Assal - Jefferies LLC

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

Thomas J. Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary

That's correct. We have a little timing. If you look at – we had about the same level of expenses as we had in the previous three quarters this year. We just had a very – last year's fourth quarter was very, very low. So we had some one-time items there that were more of a benefit, and you're going to see us around – we had about $100 million for the full year for the Corporate and Other segment, and that should be pretty much where it's at for the next – in 2016.

Ramsey El-Assal - Jefferies LLC

Okay, fantastic. Well, thanks so much.

Thomas J. Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary

Yeah.

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Thank you.

Operator

Thank you. Our next question is from David Koning from Baird. Sir, your line is now open.

David J. Koning - Robert W. Baird & Co., Inc. (Broker)

Hey, guys. Great job again this year.

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Thanks.

Thomas J. Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary

Hey, David.

David J. Koning - Robert W. Baird & Co., Inc. (Broker)

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

Jeffery W. Yabuki - President, Chief Executive Officer & Director

So, as we talked about, we had two acquisitions. We had a small biller acquisition, a very, very small biller acquisition and so that is in our guidance. We believe ACI, the numbers are in our guidance as well. Because of when it will close and how it's going to come on, we think it's going to be fairly immaterial to our numbers.

When it closes in the next quarter that we'll report, we'll give some more insights into that. We also think that the majority of the synergies in this deal will be, it'll take – we have to transition the solutions over. These are recurring revenue kinds of solutions that have to move into our data centers and things like that. So it probably – we won't see the benefit of the synergies likely until 2017, and that's important when we think about how the earnings will effectively come on.

David J. Koning - Robert W. Baird & Co., Inc. (Broker)

Yeah, great. That makes sense. And then, what were term fees in Q4? And do you expect them to be similar in 2016 as they were in 2015 just given the M&A environment in banks is a little high right now?

Thomas J. Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary

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

David J. Koning - Robert W. Baird & Co., Inc. (Broker)

Okay, great. Well, that's all I've got. Nice job. Thanks.

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Thank you.

Thomas J. Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary

Thanks.

Operator

Thank you. Our next question is from Glen Greene from Oppenheimer & Company. Sir, your line is now open.

Glenn Greene - Oppenheimer & Co., Inc. (Broker)

Thank you. Good afternoon, Jeff and Tom.

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Hi, Glenn.

Thomas J. Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary

Hi, Glenn.

Glenn Greene - Oppenheimer & Co., Inc. (Broker)

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

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Sure. So, Glenn, let me take it, and then Tom and Mark can add in as needed. So when I think about the drivers of a growth acceleration in 2016, you have – as we laid out at Investor Day, we laid out that we were thinking about our growth in two separate baskets: the momentum-based growth, which is really the mass of the company in our kind of existing business portfolio; and then we had six solutions that we highlighted as representative of areas of innovation-based growth. We actually talked about 12, but we highlighted six.

And so from each of those six areas, Agiliti, DNA, EMV, NOW, Integrated Payments or IPS, and Mobiliti, we see each of those areas contributing some level of incremental growth in 2016. It won't surprise you to know that we're not going to talk about it specifically. But on an order of magnitude basis, we did lay out at Investor Day how we saw the ramp coming year-over-year. And so we expect some incremental benefit in 2016, even more in 2017, even more in 2018. So we have a high degree of confidence and visibility that that's going to happen. So that's point one.

Point two is we expect to have a little less drag from FX. We expect to not be surprised by this lag between EMV card manufacturing and EMV card personalization. So we think that will turn as well. So when you add all those up, it gives us a pretty good degree of confidence and frankly a good degree of visibility into how we get from 2015 into 2016 which we believe will act as a step to 2017.

Glenn Greene - Oppenheimer & Co., Inc. (Broker)

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

Jeffery W. Yabuki - President, Chief Executive Officer & Director

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

Glenn Greene - Oppenheimer & Co., Inc. (Broker)

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

Jeffery W. Yabuki - President, Chief Executive Officer & Director

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

Glenn Greene - Oppenheimer & Co., Inc. (Broker)

Okay. And then just remind me one more on the growth driver, where are you in terms of the big account and bill pay conversions that you sort of had in your pipeline? What's concluded at this point and what's still to come in 2016?

Jeffery W. Yabuki - President, Chief Executive Officer & Director

All of the large bill pay wins that we had been talking about before are now on. They're all completed. Now that I'd said that, there may be a small portion of one of the institutions which is a multi-charter institution, but they're substantially onboard at this point.

Now, remember that one of the things that we're doing – and Tom referenced it in his remarks, is through our Integrated Payment Strategy which is a new experience that brings bill pay transfer and P2P together, effectively, that's introducing a new experience to all the more than $24 million bill pay users. And we think that's actually, Tom referenced, the early returns are positive. We're seeing a very nice acceptance and therefore utilization of this new experience which will be chunked out basically over the next 12 months to 18 months.

Thomas J. Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary

And I think your question on the account processing side, Glenn, just to add to that, I think we've seen some – we had a number of larger institutions go live in the fourth quarter on our DNA solution, and one large client in particular also converted. And so what those are going to be, bringing on more revenue as we go into 2016 and 2017 clearly because of the surround impact and as those kind of roll in. But we had a good conversion quarter in the fourth quarter.

Jeffery W. Yabuki - President, Chief Executive Officer & Director

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

Thomas J. Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary

Yeah.

Glenn Greene - Oppenheimer & Co., Inc. (Broker)

Okay, great. Thanks a lot.

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Thank you.

Operator

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

Tien-tsin Huang - JPMorgan Securities LLC

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

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Yeah. We had some timing with that, and it just wasn't the strongest. We had a few deals in both our international, our channels area that we just didn't hit on in the fourth quarter that kind of pushed off into 2016. And it's not a large number for us, as you know, because the license revenue is fairly small. But a couple of those deals were just a little short on the license and in the current year.

Tien-tsin Huang - JPMorgan Securities LLC

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

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Yeah, it is. Actually, it's a pretty broad swap of larger deals. I would say that we have them in the Account Processing space, Output Solutions, Biller Solutions, some actually good-sized deals in the card world. I mean we actually – I think a bit of an absence of them or of the same number in 2015, a lot of pipeline work got done, and so it's fairly broad. It's not in just a single area. It's probably in four or five areas.

Tien-tsin Huang - JPMorgan Securities LLC

So to the extent that some of these closed early on in the year, could they convert to revenues in 2016, and is that assumed?

Jeffery W. Yabuki - President, Chief Executive Officer & Director

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

Tien-tsin Huang - JPMorgan Securities LLC

All right, great. Thanks. And Tom, all the best to you again.

Thomas J. Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary

Okay, thank you.

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Thanks, Tien-tsin.

Operator

Thank you. Our next question is from Kartik Mehta from Northcoast Research. Your line is now open.

Kartik Mehta - Northcoast Research Partners LLC

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

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Yeah. So, I mean clearly, there are some institutions that are being hit on the energy/oil issue. So that is having some impact, but I would call that relatively narrow. The majority of the banking industry seems to be at or slightly above in their "budget" for what they're going to spend on technology. And there's a lot of energy on mobile and on lending. Lending, there's a lot of noise in the market on alternative lenders, and so you've got a lot of focus on how to think about a new lending experience that starts to merge mobile with data, real-time speed, those kinds of assets and attributes. So you've got that going on.

And you've got a fair amount of thought around branch transformation, and so all of that leads to good healthy conversations. We'll see how it ends up at the end of the year, but banks were pretty bullish going into this year. I think the current level of turmoil, it is a little bit of a wait-and-see market turmoil but on balance. I think we're at least at the level that we would have seen for last year with the bias up.

Kartik Mehta - Northcoast Research Partners LLC

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

Jeffery W. Yabuki - President, Chief Executive Officer & Director

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

Mark A. Ernst - Chief Operating Officer & Executive Vice President

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

Kartik Mehta - Northcoast Research Partners LLC

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

Mark A. Ernst - Chief Operating Officer & Executive Vice President

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

Kartik Mehta - Northcoast Research Partners LLC

Thank you very much. Appreciate it.

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Thank you.

Operator

Thank you. Our next question is from Jim Schneider from Goldman Sachs. Sir, your line is now open.

James Edward Schneider - Goldman Sachs & Co.

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

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Jim, I don't actually have that number off the top of my head. We'll do some work to get back to you, and then we'll make sure that we talk about it more broadly. But it likely would not be 28% this year. It'll be a little bit lower than that. And then of course, we'll have the benefit of all of the conversions that we moved in in 2015 will annualize in 2016.

James Edward Schneider - Goldman Sachs & Co.

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

Jeffery W. Yabuki - President, Chief Executive Officer & Director

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

James Edward Schneider - Goldman Sachs & Co.

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

Thomas J. Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary

Yeah. I think, we're obviously, Jim, coming off a very strong year where we delivered 120 basis points of margin expansion. And while the key things has been the driving of the quality revenue that we have, if you look at our Payments-related segment, the Payments segment margins were up nicely, and that is a function of that high-quality revenue. Clearly, we gave guidance in 2015 of greater than 50 basis points.

I'm not saying we're going to outperform by that extent, but our guidance is greater than 50 basis points in 2016. And our business model is functioning well and we're going to continue to push those levers. And I think I'm most pleased by is the opportunity we have over the next years to continue to drive that high-quality revenue and scale along with this additional $250 million of operational effectiveness savings that we have good visibility into over the next several years.

James Edward Schneider - Goldman Sachs & Co.

Thank you. And good luck, Tom.

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Thanks, Jim.

Thomas J. Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary

Thanks, Jim.

Operator

Thank you. Our next question is from Darrin Peller from Barclays. Sir, your line is now open.

Darrin D. Peller - Barclays Capital, Inc.

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

Thomas J. Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary

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

Darrin D. Peller - Barclays Capital, Inc.

Okay. Thanks. I just wanted to now hone in for a moment on the competitive dynamics around the real-time solutions, you guys have clearly been doing well on, whether it's your DNA or other platforms. But I mean it feels like there's been a lot of demand in the market for that, and you have the right solutions for that. Can you just comment on how much demand there is going into 2016 around that specific offering capability on core account and what the competitive dynamic is out there for similar offerings, again more for the real-time solutions?

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Sure. And Darrin, you're really talking about on the Account Processing side, not on the Payments side, is that right?

Darrin D. Peller - Barclays Capital, Inc.

That's exactly right, yes.

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Yeah. So there's a lot of talk around real-time core systems, and there is a lot of looking going on – or it's not a lot, not a relative numbers, but a lot on a relative basis to what we've seen historically for larger institutions looking at what would it take to convert real time. There's a couple of larger mid-tiers that are in the process of doing conversions right now. And so, there is focus out there.

We see some of the more progressive institutions in the $1 billion to $10 billion space taking a look at that, but we haven't seen – beyond DNA, we've not seen a lot of movement in the market. And frankly, as I sit here today and I think about the larger transactions that have been done over the last three years or four years, I can't think of – I honestly cannot think of a real-time solution that we did not win that went to anyone else. And so, I only raise that because the other solutions that are being chosen are not real time.

So, that means – that may mean that the real time, it's still early, or it may mean that our solution on a real-time basis is one of the better solutions in the market. It's probably a little bit of both. So, I think it's still very early in that genesis. Remember that on the credit union side of the community base, institution space, they're all real time.

Darrin D. Peller - Barclays Capital, Inc.

Yeah.

Jeffery W. Yabuki - President, Chief Executive Officer & Director

And the old thrifts are real-time. So you really have what the core banking world as the focus for real-time, and I think we'll continue to see that over the next three years to five years, but we're early.

Darrin D. Peller - Barclays Capital, Inc.

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

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Sure. So the short answer is no.

Darrin D. Peller - Barclays Capital, Inc.

Okay.

Jeffery W. Yabuki - President, Chief Executive Officer & Director

But we do – but after I said that, we do provide channel services, so our Corillian solution and our Mobiliti solution, and some of the larger banks in the world whether it's ANZ or Bank of Ireland or Westpac. A number of clients today were doing nichey solutions. We are not in the business of doing large global banks on the core system side. We are not in the business of doing services to large global banks unless they support one of our license technologies. We have risk solutions in a number of, again, nichey solutions, but we're not going into that large services and license space.

Darrin D. Peller - Barclays Capital, Inc.

All right. That's very helpful, guys. Thanks again.

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Thank you.

Thomas J. Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary

Thanks, Darrin.

Operator

Thank you. Our next question is from Andrew Jeffrey from SunTrust Robinson Humphrey. Sir, your line is now open.

Andrew Jeffrey - SunTrust Robinson Humphrey, Inc.

Hi, guys. Good afternoon.

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Good afternoon.

Andrew Jeffrey - SunTrust Robinson Humphrey, Inc.

Pardon me. Thanks for taking the question. Recognizing that we're only talking about 100 basis points or so of revenue growth from EMV, to the extent that we see a ramp in 2016 in the middle quarters and then extensibly sort of the rat moves through the snake, as we think about 2017, do you have enough line of sight to say that 2016 isn't sort of a bulge year for revenue growth? Can we expect over time recognizing that guiding to 2017 today? But can we expect over time, all else being equal, sort of a gradual improvement in organic revenue growth, or are we going to be talking about difficult comps against the midpoint of 2016 when we get out a year from now?

Jeffery W. Yabuki - President, Chief Executive Officer & Director

So, let me try to answer this and make sure that we've got it answered, and Tom and Mark will help as needed. So, you'll remember, when we laid this out at our Investor Day in June – excuse me, we laid out kind of a year-by-year view and that there would be two sources of revenue that we thought we would benefit from. We thought we would benefit from the EMV card issuance itself which is both the manufacturing and the personalization. And we believe that we would also benefit as cards got into force and we were processing those debit or credit transactions that we would have a small lift on our processing revenue, and that over time that piece especially would build.

We also anticipated that EMV would primarily happen between 2015 and 2017, and we're not coming off that view at this stage. I want to – sorry, and then when we get to full boat, because these cards expire like every other cards expire, that we will get into a very natural reissue cycle as we've always been in. And so while there may be a slight hump in a quarter or in quarters that we don't see that to be having a material impact on our comps moving forward.

Now, if every single institution decides to issue in the middle of Q3 in 2016, that could create a problem, we don't see that happening. I think it's highly unlikely, and I don't think anyone could actually make that happen from a manufacturing and personalization perspective. That's a long-winded way of saying we can't predict the future, I can't tell you what's going to happen on quarterly comps for sure. But on a year-by-year basis, I feel like once we get into 2017 that we're going to definitely see that smoothing that we laid out at Investor Day. And if you go back and take a look at that, I think that's probably the way that lays out.

Thomas J. Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary

Yeah. I think the other thing – and then, Mark, I know you have a comment too. I think, Andrew, remember our build is to grow 50 basis points to 100 basis points on an annual basis. And at Investor Day, you could see we have a number of different moving parts there. As we look out, I think, longer – and Jeff just really hit on the EMV side of this. But you look at different things like IPS or you look at things like Agiliti, or you look at things like the NOW Network, those are factored in over those longer period cycles which is 2016, 2017, 2018, 2019, because we're really trying to build this base of 50 basis points to 100 basis points on average each year. And so, Mark, I don't know if you want to add to that.

Mark A. Ernst - Chief Operating Officer & Executive Vice President

The only other thing I was going to say about EMV is – and Jeff and Tom have it right that we will see the bigger uplift now in 2016 over 2015. And then it starts to flatten out because we don't get the ramp, but we do have the continued level of reissue as Jeff pointed out. The only other thing that we talked about at Investor Day was the potential in the event that prepaid becomes a card type that adopts EMV. That continues to be a big opportunity for us. But so far, we're not seeing anything in the market that would suggest that that's likely to happen soon.

Andrew Jeffrey - SunTrust Robinson Humphrey, Inc.

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

Thomas J. Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary

I think we've gone pretty far with that. I think our business model though will continue to stay very honed in on that. What I mean by that, you're not going to see a lot of receivable growth in this company because of how the high-quality revenues are going to turn the cash flow. So we've done a very good job at optimizing that, so I don't think there is a lot there.

There are always a lot of different things as we talk about, whether they be tax benefits or acquisitions, whether it continues to be on the CapEx side which again you saw higher levels this year because of our Alpharetta-type deal. That's going to come back down to normal next year. And so I don't think anything really changing from that standpoint.

Andrew Jeffrey - SunTrust Robinson Humphrey, Inc.

Okay. Wonderful. Thank you.

Thomas J. Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary

Thank you.

Operator

Thank you. Our next question is from Moshe Katri from Sterne Agee CRT. Your line is now open.

Moshe Katri - CRT Capital Group LLC

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

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Sure. I wish I had a fully reliable crystal ball for this. I mean I would say that volatility in the market as everyone feel like there's volatility and we just have to continue to watch that. The beauty of the majority of the solutions that we provide is they're not discretionary. And with all of the digital transformation that's occurring in the market today, there's a real need for institutions to invest and to keep up with what's going on.

Consumer expectations are growing so rapidly because of everything that's going on in the retail world and in the non-financial services world that those expectations are requiring institutions to invest. It's very much becoming non-discretionary. And so I continue to believe we're going to see solid growth in those kinds of solutions in 2016 and into the foreseeable future.

Moshe Katri - CRT Capital Group LLC

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

Jeffery W. Yabuki - President, Chief Executive Officer & Director

I mean, I don't know that there's much that we do that's not important to the FI. I mean, we have very small businesses that are data-oriented businesses, which I guess you could argue are not necessarily – that are not necessarily mission-critical. But even the things that we sell that are quote, discretionary. It's hard to know – if you have to upgrade software on a solution that you use to manage risk, that purchase may be discretionary. So you may have some wiggle room. But much of what we do is non-discretionary from that perspective.

I don't think we're ever going to see a whole lot of variability in any year almost regardless of the situation. But clearly, I have the same crystal ball question that everyone else has. We believe that the banking industry right now is in pretty good shape. The rate increases will move through this year, and I think that'll be generally good for banks. I'm talking about not perspective increases but just the December raise, and I think that'll be good. And we'll see how the economy develops. I think that will be the ultimate linchpin for how banks decide to invest over the next year.

Moshe Katri - CRT Capital Group LLC

Okay. Thanks.

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Thank you.

Operator

Thank you. Our last question is from Paul Condra from Credit Suisse. Sir, your line is now open.

Paul Condra - Credit Suisse Securities (USA) LLC (Broker)

Hey. Good afternoon, guys. Thanks for having me on.

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Hello, Paul.

Paul Condra - Credit Suisse Securities (USA) LLC (Broker)

Just a couple of quick ones. Just the $250 million operational effectiveness plan, is that kind of a six-year plan, so that's like $40 million, $50 million a year?

Thomas J. Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary

Yes, five years. But yeah, that's exactly right, and it's going to ramp a little bit like I talked about earlier.

Paul Condra - Credit Suisse Securities (USA) LLC (Broker)

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

Jeffery W. Yabuki - President, Chief Executive Officer & Director

We feel really good about the surge in 2016, primarily because we know what's been manufactured, we know what has not been personalized, we know what has been personalized, we know what's been ordered. So we absolutely have pretty good visibility into what's going to happen in 2016.

We don't have a lot of visibility right now into what's going to happen in 2017, except we will know who has not issued. And remember, you've got in 2017 – I believe in 2017, you've got one more liability shift that's going to happen. So, we feel really pretty confident about the EMV at the level that we have incorporated into our guidance.

It could go – I suppose it could go a little bit higher. It could always go a little bit lower. But it's pretty solid at this stage.

Thomas J. Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary

And remember Paul, the clients have paid for this, a lot of the manufacturing stuff, right? So, they're going to want to issue these cards when they can. And again, we have to wait for that. But as Jeff indicated right now, we feel good about where we are in 2016 and going into 2017 also.

Mark A. Ernst - Chief Operating Officer & Executive Vice President

The other thing I'd add to that is, 2015 was really the wildcard year from our perspective because we didn't know how fast financial institutions were going to adopt EMV and whether there would a mass reissue. That debate is pretty much behind us now, and we can see what our clients are doing and how they're approaching it. So, we have a pretty good line of sight into what we think is going to happen now in 2016.

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Yeah. One other point I would make is actually in Q4, we had more demand for bin configuration than we could actually convert. So, we really saw the surge coming into the year which again helps support the confidence. And remember, even if we have a bit of a blip up in 2016, which we believe we will, we do think that we'll get to a steady state level. We don't see that EMV – we do think that EMV will be constant on a card manufacturing or personalization basis moving forward, so long as plastic is being issued and I think that's going to be issued for a very long time, and then a layer of uptick on the premium processing element of EMV.

Thomas J. Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary

I think I'd also just check out what Mark went over at Investor Day, because it's pretty well holding as far as what we anticipated where we'd be a little softer in 2015 obviously. But nonetheless, it's ramping as we thought it would there.

Paul Condra - Credit Suisse Securities (USA) LLC (Broker)

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

Jeffery W. Yabuki - President, Chief Executive Officer & Director

No. It is something I still am very excited about. It is taking longer to get scales than I would have liked. But I am very optimistic about the runway for the solution given the pairing of P2P with real-time which I think changes the experience dramatically. And then the other use cases that we have for Popmoney disbursements and some of the charities we think are very important.

And then the last thing is we've got a new technology that we are delivering in 2016. We call it CardFree Cash, and it is a way for our debit clients, our ATM clients to be able to access money in an ATM without a card using the bank's mobile solution. Well, that's actually going to be branded Popmoney across the U.S. So, that brand will show up across 20,000, 30,000 ATMs. So again, we have a good level of comfort that it will grow. Yes, it's competitive but over time I still believe the banks are going to be the ultimate winners of the P2P value.

Paul Condra - Credit Suisse Securities (USA) LLC (Broker)

Thanks. Congrats, Tom.

Thomas J. Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary

Thank you, Paul.

Jeffery W. Yabuki - President, Chief Executive Officer & Director

Thanks, everyone. We appreciate your support. If you have any further questions, please don't hesitate to call our Investor Relations group. And have a good evening.

Operator

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

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