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Fidelity National Information Services (NYSE:FIS)

Q3 2012 Earnings Call

November 05, 2012 5:00 pm ET

Executives

Mary K. Waggoner - Senior Vice President of Investor Relations

Frank R. Martire - Chairman, Chief Executive Officer and Member of Executive Committee

Gary A. Norcross - President and Chief Operating Officer

Michael D. Hayford - Chief Financial Officer and Corporate Executive Vice President

Analysts

David J. Koning - Robert W. Baird & Co. Incorporated, Research Division

Ashwin Shirvaikar - Citigroup Inc, Research Division

Brett Huff - Stephens Inc., Research Division

Glenn Greene - Oppenheimer & Co. Inc., Research Division

Bryan Keane - Deutsche Bank AG, Research Division

Roman Leal - Goldman Sachs Group Inc., Research Division

Timothy W. Willi - Wells Fargo Securities, LLC, Research Division

Tien-Tsin T. Huang - JP Morgan Chase & Co, Research Division

David Togut - Evercore Partners Inc., Research Division

Gregory Smith - Sterne Agee & Leach Inc., Research Division

John Kraft - D.A. Davidson & Co., Research Division

Peter J. Heckmann - Avondale Partners, LLC, Research Division

Kartik Mehta - Northcoast Research

Operator

Ladies and gentlemen, thank you very much for standing by. Welcome to today's FIS Third Quarter Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. And I would now like to turn the conference over to our host today, Senior Vice President investor Relations, Ms. Mary Waggoner. Please go ahead, ma'am.

Mary K. Waggoner

Thank you, Dave. We'd like to welcome everyone joining us this afternoon for the Third Quarter Earnings Report. With me today are Frank Martire, Chairman and Chief Executive Officer; Gary Norcross, President and Chief Operating Officer; and Mike Hayford, Chief Financial Officer.

Before we get started, I would like to ask you to please mark your calendars for our 2013 Investor Day, which is scheduled for Tuesday, February 12, in New York. Similar to our 2012 event, we will begin the day with the discussion of our fourth quarter and full year results followed by the business outlook and financial guidance for 2013. We look forward to seeing you there.

Now, onto the third quarter earnings report. Please -- I'm sorry, today's news release and supplemental slide presentation have been posted to our website at www.fisglobal.com. A replay of today's presentation will be available shortly after the call. Please refer to the Safe Harbor language on Slide 3 of the presentation.

Today's discussion will contain forward-looking statements. These statements are subject to risks and uncertainties as described in the press release and other filings with the SEC. The company undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law. As a reminder, we will focus on results from continuing operations, reflecting the reclassification of our healthcare business as a discontinued operation. Also included in discontinued operations are expenses related our former BPO operations in Brazil.

Please turn to Slide 4. Our commentary will include references to non-GAAP financial measures in order to provide more meaningful comparisons between the periods presented. Reconciliations between GAAP and non-GAAP results are provided in the attachment for the press release and the supplemental slide presentation. Now, if you will turn to Slide 6, I will turn the call over the Frank Martire. Frank?

Frank R. Martire

Thanks, Mary. Good afternoon, everyone, and thank you for joining us on today's call. I'll begin today's business review with a brief summary of our financial performance and business highlights for the third quarter. Gary will follow with the operations report, and Mike will provide additional insight into our financial performance and our outlook for the remainder of the year.

Our third quarter results were very strong, including organic revenue which grew 5%. We are consistently delivering on our strategic commitments to maximize performance through organic revenue growth, margin expansion and returning cash to shareholders. As we move away from acquiring and integrating large companies, our results underscore that our change in strategy is working.

As shown on Slide 7, organic growth has rebounded nicely since 2009, fueled by strong sales execution and the ongoing market recovery. As you can see on the right, we have maintained our momentum and consistently delivered organic growth of 5% or higher in 7 of the last 8 quarters.

Turning to Slide 8, we are achieving the financial targets that we communicated earlier this year. They included organic revenue growth of 3% to 5%, EBITDA growth of 5% to 7%, margin expansion of 40 to 80 basis points and double-digit growth in earnings per share.

Through the first 9 months of 2012, besides generating 5% organic revenue growth, we've registered a 7% rise in EBITDA, expanded the margin by 90 basis points and increased earnings per share by 15%. Today's results position us very well to achieve our goals for the year.

Additionally, our strong cash flow and disciplined capital management enabled us to return $427 million to our shareholders in the form of dividends and shareholder repurchases through the first 9 months of the year.

Now on Slide 9. Our strong third quarter performance reflected 12% organic growth in our international business and 7% organic growth in Financial Solutions. The EBITDA margin was 30.8%, and adjusted earnings per share increased to $0.63 from $0.60 in the prior year.

In mid-August, we've completed the previously announced sale of our healthcare business, which is aligned with our primary focus to serve financial institutions and operate in markets where we have meaningful scale. Mike will provide additional details regarding this transaction later on the call.

To continue with Slide 10, I will highlight a few additional accomplishments. Long-standing client relationships that grow over time serve as the foundation of our business. Earlier today, we announced the completion of a new and expanded 5-year agreement with BMO Harris. FIS and BMO Harris have maintained an excellent relationship for many years, and we are pleased to continue our strategic partnership. We will provide more detail on the new agreement later on the call.

In addition, last week, Gary and I met with the most senior executives from Bank of Montreal. The discussion was positive, and we are very optimistic that we will have opportunities to further grow our relationship with Bank of Montreal.

We continue to invest for growth with a strong focus on innovation, including supporting American Express on its new Bluebird initiative. We are also focused on increasing our footprint in high-potential markets, including India where we are significantly expanding our existing ATM operations.

Market leadership serves as the guiding principle of our company, and we are very proud to again rank #1 on the FinTech 100. Our success is a result of a delivered strategy that enables our clients to achieve success by providing them with industry-leading solutions and thought leadership; leverage our size and global scale to deliver cost-effective solutions; continually process innovation by developing or acquiring new products and services in addition to integrating our existing solutions; and a strategy that is reinforced by hiring and retaining the most talented employees in the industry. Our top ranking serves as a testament to the ongoing confidence that our clients have in us, and it validates our winning strategy.

Overall, I am very pleased with our continued strong performance. We are confident that we will deliver on the near and long-term financial objectives we communicated in February. As always, we remain steadfast in our commitment to serve our clients well and drive higher value for our shareholders.

Now, I will turn the call over to Gary for the business report. Gary?

Gary A. Norcross

Thank you, Frank, and thanks to everyone for being with us today. FIS is building the future of financial services, and our latest quarterly performance substantiates our continued role leading the industry. As Frank mentioned, we recorded another very strong quarter for our company. The current results continue to build on our solid operational performance across all financial metrics.

My presentation will focus on 3 main highlights. First, I will cover our revenue accomplishments with emphasis on our strong year-to-date global sales performance and our third quarter rebound in sales to North American financial institutions specifically. Next, I'll provide an update on where we are expanding our value propositions and investing for growth, emphasizing new solution innovation and providing client examples of continued demand for our integrated solutions. Last, I will provide a greater understanding of our new 5-year agreement with BMO Harris, which will continue to be a top 5 revenue client for us. This agreement virtually eliminates the negative EBITDA impact in 2013.

Please turn to Slide 12 to begin my review, where I'll start with a review of our sales performance. Our global sales performance continues its solid year-to-date growth. We saw strong year-over-year and sequential increases in total contract value, where we are up 30% year-to-date. These new wins will drive future revenue growth for our company. This sales expansion signifies that overall investment spending continues to improve as our clients focus on driving greater efficiency and adapting their business models to align with the evolving paradigm shift in banking. We are seeing an ongoing shift towards outsourced services and integrated solutions for more traditional single-product purchases. Overall, we feel good about the strength of the total global sales pipeline and expect new contract value in 2012 to exceed our 2011 results.

I will continue with North America on Slide 13. As expected, we registered a strong rebound in new sales to North American financial institutions in the third quarter from the second period. And sales also increased year-over-year. We have a robust pipeline heading into the fourth quarter, and we feel good about our continued sales success for the remainder of the year.

Continuing in my sales performance review, Slide 14 provides an update on our international business. During the quarter, we closed significant sales outside of North America, where larger opportunities are developing for payments, software and outsourced services. Organic revenue growth in our international business accelerated to 12% in the third quarter, driven by solid results in all major regions.

In emerging markets, growth continues to outpace that of Europe and North America. For example, when you exclude currency, revenue grew 14% in Brazil, propelled by higher card volumes and more favorable pricing. While growth in Europe is less robust than in emerging markets, our European business continues to perform very well. Challenging market conditions are driving strong demand for Capco's consulting services as clients seek to improve overall performance. And on the professional services front, we continue to see strong demand, especially for core banking platform enhancements throughout the region.

Turning to Asia, which is an important market for our international strategy, we continue to pursue many opportunities. We recently added our first ATM switching client in Thailand, where a majority of the top banks run on an FIS core solution. And we also added our first core processing plant in Vietnam.

In August, we announced a significant expansion of our footprint in India. Over the next 2 years, we will increase the number of ATMs that we support in India to more than 9,000. For the next 7 years, we will also provide ongoing outsourced services, including supply, setup and ATM operations. This is a tremendous win for FIS, which, once at full scale, is expected to generate nearly $100 million in additional revenue per year at a margin that is accretive to our international business.

All in all, I am very pleased with our third quarter sales performance of both North America and our international markets and encouraged by a robust pipeline heading into our final quarter of the year.

Switching topic, I will continue on Slide 15 with an overview of a few select business expansion initiatives, which emphasize our new solution innovation and demand for our integrated solution offerings.

Financial institutions continue to concentrate on replacing lost fee income and identifying new efficiencies. This is driving demand for a broader set of services that include outsourced technology, business process services and consulting expertise. We also are seeing strong interest in mobile access and delivery, new payment technologies and regulatory compliance. Consequently, we are expanding our investment in these areas to meet the growing demand.

For example, we continue to focus on solution innovation in higher growth areas, expanding our offerings and capabilities in such areas as mobile and real-time payment solutions. As a result, we have experienced a significant increase in our mobile banking client base in 2012, with the launch of our tablet, mobile wallet and business mobile banking offerings.

Nearly 450 financial institutions and 3 million consumers now use mobile solutions powered by FIS. This represents increases of 150% and 200% respectively in 2012, and we expect growth to remain strong as consumer adoptions and our sales momentum continues.

Additionally, we recently launched PayNet, the industry's first real-time, noncard-based global payments network. It enables instant authorization of payment transactions in seconds or less, expediting payments for e-commerce, P-to-P, bill pay, mobile and emerging digital payments. PayNet supports our strategy to remain at the forefront of real-time and global movement of money and serves as a great example of our ability to leverage existing capabilities and global scale, including the NYCE network. This broad market presence, combined with new capability, enables us to continue to drive new innovative solutions for our clients.

PayNet is currently in pilot with 145 financial institutions, and we will be working with additional clients to increase network participation and market share throughout 2013.

Also exemplifying our solution innovation is our very exciting announcement that we've been selected by American Express to support certain components of its new Bluebird initiative, as Frank mentioned earlier. Our innovative mobile solution lets consumers use their smartphones to scan a check and load funds into their Bluebird account, limiting fraud by leveraging our analytics and payment guarantee technologies.

For these and other industry-changing offers, FIS continues to be the partner of choice where depth of experience, proven solution capability and delivering innovation intersect, providing clients an unmatched breadth and depth of global capability.

Further reflecting our strategy to supplement organic growth through small acquisitions, we recently acquired ProNet Solutions, expanding our outsourcing and advisory capabilities. This provider of managed IT solutions for banks complements our leveraged outsourcing capabilities. ProNet also offers a proprietary information management tracking system, which further expands our regulatory compliance and advisory product suite. This new capabilities allow us to leverage our existing client base and unified sales force to drive higher cross-sales. Early sales results have been positive since the acquisition.

Continuing the overview of our business expansion and opportunities, I will highlight new examples for our integrated solution offerings. Over the years, FIS has made substantial investments to develop and integrate a full array of industry-leading solutions across every transaction and touchpoint within the financial commerce. These bundled solutions reduce the number of systems that our clients have to manage and enable them to deliver a more seamless experience to their customers at a lower cost.

FIS core banking solutions were recently recognized by ITAGroup for leadership in feature functionality, vendor experience, as well as ease of integration. These attributes enable a strong selling proposition and help to drive client demand.

In August, we announced that Bremer Financial, an $8 billion holding company, selected FIS as its core technology partner. As a part of their implementation, the bank will deploy additional FIS solutions, including item processing and imaging, treasury and cash management, ACH, branch automation and analytics. The tight integration of these components with our core platform together with our ability to support the bank's growth strategy were key factors in the selection of FIS as its new core banking provider.

Also during the quarter, we announced that Barclays has deployed our core banking solution to support the launch of its direct bank in the U.S. And we are pleased to report that CapitalOne also has expanded their relationship with FIS as the go-forward partner for its new direct bank. These are just a few examples of where our solution integration and industry-leading technology help us drive growth.

Next, if you would turn to Slide 16, I am very pleased to share with you today an update on BMO Harris and our new 5-year agreement, which virtually eliminates the negative EBITDA impact in 2013 that we discussed last quarter. We are also making good progress towards replacing some of the lost M&I revenue through a broader relationship with Bank of Montreal and other new sales wins.

In early October, we completed the migration of the legacy M&I accounts to the BMO Harris in-house platform. And as we announced this morning, FIS will continue as the bank's partner.

In addition to extension of the core application management agreement, we also expect to provide additional IT professional services on an annual basis. Further, we will continue providing a number of ancillary solutions to the bank, such as EFT, online bill pay, institution wealth management services, image and output solutions and mobile banking, all on an outsourced basis.

We are very pleased with how our relationship with BMO Harris is progressing, and we consider the new agreement which solidifies BMO Harris as a top 5 revenue client to be a great outcome for FIS and the bank. Mike will provide a financial overview of the new agreement later on the call.

In closing, let me leave you with the following key takeaways outlined on Slide 17. First, we are delivering on our plan to drive profitable revenue growth and margin expansion, as evidenced by our strong global performance through the first 9 months of the year. We are encouraged with the rebound in North American financial institution sales in the third quarter, as well as the continued strength of our global sales through the first 9 months of the year. We also are very pleased with the strength of our pipeline as we head into the end of the year. The extension of BMO Harris is an important milestone for 2012 and puts us in a strong position to deliver on the remainder of the year. And we remain optimistic about the opportunity to further expand our relationship in the future.

We feel extremely good about our strong competitive position as we continue to invest for growth. We remain focused on generating new sales and driving value to our clients through solution and service innovation and integrated delivery of our deep and broad global offering. These healthy results demonstrate our ongoing success as we continue to build on our consecutive quarters of strong operational performance.

Again, thank you for joining us this afternoon. I'll now turn it over to Mike for the financial report.

Michael D. Hayford

Thanks, Gary. I'll continue the presentation with Slide 19. Consolidated revenue increased 2.8% to $1,437,000,000 in the third quarter. After normalizing for the impacts of acquisitions and currency, organic growth was 5% driven by a 7% growth in Financial Solutions and 12% growth in international. Third quarter EBITDA increased 2.8% to $442 million. EBITDA margin was 30.8%, which is comparable to the third quarter of 2011.

As we discussed at the February Investor Day, in 2012, we are reinvesting some of our underlying margin improvements back into infrastructure and security. These investments are timed more heavily in the back half of the year, including information security spending, which negatively impacted the margins by 120 basis points in the third quarter.

The operating segments start on Slide 20 with FSG. Financial Solutions revenue increased 8.1% to $566 million and grew 7% organically driven by growth in account processing, consulting and services revenues. Financial Solutions EBITDA totaled $224 million, which is comparable to the 2011 quarter. The EBITDA margin was 39.7% compared to 42.8% in the prior year. The decline is primarily attributable to increased investments in information security and a change in revenue mix.

On Slide 21, Payment Solutions revenue totaled $576 million in the third quarter, which is comparable to the third quarter of 2011. Consistent with prior years, payments revenue declined sequentially due to -- due primarily to peak tax processing revenues in the second quarter. Growth within our Payments business was negatively impacted by approximately 90 basis points relative to the third quarter of 2011 due to the deconversion of a large former e-Fund debit issuing client that we referenced on our second quarter call. Excluding the check businesses, Payments revenue increased approximately 2% driven by continued growth in electronic payments, including the NYCE PIN-debit network, which grew 11% compared to the third quarter of 2011.

Payment Solutions EBITDA increased 6.1% to $235 million. EBITDA margin increased 230 basis points to 40.7%, reflecting ongoing expense management.

As a reminder, we are facing a difficult comparison in our Payments business in the fourth quarter due primarily to higher revenue growth and margin expansion in the fourth quarter of last year. For the full year 2012, we expect revenue within our Payments business to be comparable to 2011 revenue with a strong margin expansion.

Turning to international on Slide 22, international revenues declined 0.7% on a reported basis. Organic growth was 11.9% in the third quarter, excluding the $38 million of currency impact. The increase was driven by growth across all regions: our Brazilian card operations, Capco's European consulting practice and Asia. International EBITDA increased 6.6% to $71 million. The margin improved 170 basis points to 24.7% compared to 22.5% in the prior year due to greater scale and leverage as this business continues to grow.

Let's turn to Slide 23, I will summarize the financial impact of the M&I core migration project and our ongoing relationship with BMO Harris. On our last call, we shared that we had anticipated a $60 million annual run rate EBITDA impact related to M&I migration, and that the termination fees will offset approximately half of that impact in 2013. With the signing of the new agreement, we now expect that the negative EBITDA impact in 2013 will be virtually eliminated by; first, a $40 million one-time termination and settlement fees; second, additional professional services that we expect to provide to BMO as part of this new agreement; and lastly, we are in the process of finalizing additional deals that will provide approximately $10 million in new recurring EBITDA for FIS.

Similar to the process we file during every planning cycle to manage the impact of client losses through market consolidation, we are working aggressively to eliminate the impact of the M&I migration beyond 2013. The Bremmer Bank win that Gary referenced earlier and our ongoing discussions with Bank of Montreal are good first steps towards achieving that goal.

Please turn to Slide 24 for a reconciliation of net earnings. GAAP net earnings from continuing operations totaled $148 million in the third quarter, adding back the $40 million in after-tax purchase amortization results in adjusted earnings from continuing operations of $188 million. Weighted average shares totaled $298 million in the third quarter of 2012 compared to $307 million in the third quarter of 2011. Adjusted earnings per share from continuing operations increased 5% to $0.63 compared to $0.60 in the third quarter of 2011. Last year's number included $0.04 of benefit from tax due to some favorable tax outcomes in the third quarter of 2011. The impact of foreign currency on earnings per share was not material due to our natural hedging by region and the lower cost of our Indian captive.

As we expected, the effective tax rate increased to 34% in the third quarter of 2012 compared to 29% in the second quarter of 2012 and 30% in the prior year quarter. The effective tax rates in the prior periods were reduced by favorable resolution of certain tax provisions taken by the company. We continue to anticipate a full year tax rate of 33% in 2012.

On Slide 25, cash flow from operations totaled $255 million in the third quarter of 2012 with capital expenditures totaling $71 million, resulting in free cash flow of $193 million for the quarter.

Next, I will provide an overview of our sale of our healthcare business on Slide 26. The sale is completed on August 15 in an all-cash transaction valued at approximately $335 million, with net proceeds of approximately $220 million after-tax. We recognize an after-tax GAAP loss of $56 million related to the sale, which is included in the discontinued operations. Consistent with our capital allocation strategy and the terms of our credit agreement, the after-tax proceeds will be used to reinvest in the business. Although these proceeds from the healthcare divestiture will provide us with greater flexibility regarding the use of our operating cash, including potential additional share repurchases.

Slide 27. On February 14, we outlined our capital allocation strategy that focuses on 3 specific areas, namely investing in our business, strengthening the balance sheet, and returning cash to shareholders. We continue to execute on that plan. Gary provided several examples of where we're investing to expand our solutions suite to new product development and tuck-in acquisitions that leverage our existing capabilities and global distribution channels.

On September 30, we completed the ProNet transaction for approximately $24 million in cash. In 2012, we have completed a total of 3 acquisitions at a combined cost of less than $70 million. The nature and size of these deals clearly reflect a strategic shift in our M&A focus. We continue to strengthen the balance sheet and are working towards our goal to attain an investment grade rating. Total debt outstanding declined by $332 million in the quarter to $4.5 billion. The weighted average interest rate was 4.7% as of September 30, and debt-to-EBITDA improved to 2.6x at quarter end.

In February, we also aligned our plan to return excess cash to shareholders to a fourfold increase in the dividend and a $1 billion stock buyback program, which targets $250 million in baseline annual share repurchases over the next 4 years.

In the third quarter, we purchased 3.1 million shares at a total cost of $100 million, which includes approximately $50 million with the cash proceeds of option exercises. Dividends totaled $59 million in the quarter.

Through the first 9 months of the year, we have repurchased $251 million of our stock or 8 million -- 8.3 million shares, and paid $176 million in dividends for a total cash of $427 million returned to our shareholders. Approximately $850 million in share repurchase authority remains under the existing plan.

Before I open the lines for question, I will provide a few key takeaways from today's overview as summarized on Slide 28. We continue to execute the strategic shift that we communicated to shareholders in February. We are delivering on a financial commitment and capital allocation plan, more specifically, 5% organic growth, 90 basis points of margin expansion and a 15% increase in earnings per share through the first 9 months of the year. And we have returned $427 million to shareholders through dividend and share repurchases.

We are encouraged by the year-to-date increase in global sales activity, including the third quarter rebound in sales to North American financial institutions. We anticipate that new contract value across all of our business lines in 2012 will exceed our new contract value from 2011.

We have solidified our relationship with BMO Harris as a top 5 client. In addition, we have virtually eliminated the 2013 EBITDA impact of the M&I migration and are working aggressively to eliminate the impact beyond 2013. Our focus on information security is ongoing, and we will continue to invest to further improve security and risk management across the company.

In closing, we feel good about our execution for the -- through the first 3 quarters of 2012. For the full year, we expect revenue to come in at the high end of our range of 3% to 5% organic growth, margins to be in our expected range of a 40- to 80-basis-point expansion over 2011, and earnings per share from continuing operations in the middle of our range of $2.45 to $2.55 per share.

That concludes our prepared statements for today. Operator, you can now open the line for questions.

Question-and-Answer Session

Operator

[Operator Instructions] And first, we will go to the line of Dave Koning with Baird.

David J. Koning - Robert W. Baird & Co. Incorporated, Research Division

And I guess first of all, just on M&I, just to make sure we're clear on it. Last quarter, you basically said there was the $60 million hole. Now you're basically saying, given some of the wins you've got, there's a $40 million hole but it'll be offset next year by a term fee. And then going into to 2014, hopefully you'll sign more stuff to offset the $40 million. Is that a good way to characterize it?

Michael D. Hayford

Yes, David, I think that's a very good way to look at it. And again, last quarter, we were in a situation where we had M&I getting ready to migrate over in October and felt we should share with the Street where we were at with that. But we did not have that agreement signed. So as you can see, the outcome of the agreement came up better than we anticipated. The $40 million is a 2013 one-time, the rest of it we anticipate going forward. But as we stated, we lose clients through consolidation of marketplace every year. And every year, we have to refill those buckets. So we feel pretty good about the time we have left to get ready for beyond 2013.

Frank R. Martire

David, we are -- this is Frank. We are very pleased with the results, but as important now with our strong relationship with Bank of Montreal. We're pretty excited about the future.

David J. Koning - Robert W. Baird & Co. Incorporated, Research Division

Yes, that's great news, definitely. And then the second thing, I didn't realize how big the India win was. How long do you think it'll take to get to the $100 million revenue run rate?

Gary A. Norcross

This is Gary. We're very excited about that. That was a very competitive win. There was a formal auction process. We won 2 large circles at a really premium rate. Those will be coming over. The overall deal is 7 years in nature. Keep in mind, we have an existing business there that's already growing very nicely, so this layers on. But we'll be coming up to speed over the next several years installing those ATMs, and then the adoption will come around but -- and we'll see growth over the next 3 to 4 years to those numbers.

David J. Koning - Robert W. Baird & Co. Incorporated, Research Division

Okay, that's great news too. And then finally, last quarter, there were some uncertainty about some of Visa's pricing strategies and a little bit of fear around NYCE. But that was great to hear 11% year-over-year growth in NYCE. Maybe you can just give just a quick summary of kind of the competitive dynamics in that business right now.

Michael D. Hayford

Well, as you can see, NYCE continues to perform very strong for us. I'd say we still are monitoring what's going on with Visa and some of the actions that they've taken. But the network we have is very competitive. It's very integrated to our product set, and we continue to get a lot of questions on how NYCE is performing, and NYCE is performing very well.

Frank R. Martire

Yes, that's exactly right, Dave. I mean, we're seeing strong transaction growth. But as Mike points out, keep in mind, our sales are up significantly for the year, and so -- across the entire company. And when you think about NYCE, we're seeing good cross-sales into our existing customers. And so we're seeing nice growth for it. As we've shared with you in past quarters, VPN has been an issue, but we have some strategies, as well, that helps address that. So we're confident in that group continuing to perform.

Operator

Next we'll hear from the line of Ashwin Shirvaikar, I believe, with Citi.

Ashwin Shirvaikar - Citigroup Inc, Research Division

So one question I have is you're tracking to the upper end of the range. Sometimes, you went a little bit higher on most of your metrics, even when I consider the information security spending. So would you say you're kind of, for 4Q, leaning more towards maybe the upper end of the range? And why wouldn't you raise guidance, why -- at least to say that you're at the upper end of the range?

Michael D. Hayford

Well, again, Ashwin, we -- our revenue is tracking very strong, as you can see, through 3 quarters we're at the high end of our 3% to 5% range. I think if you keep in mind in the last quarter, we adjusted our EPS for the divestiture healthcare, so that $0.07 came out. And then we turned around and bumped it up for primarily for some tax. So we've already bumped it up $0.05, if you look at it that way. I think we feel good about where we're going to be on earnings in the middle of the range. You can see it's putting some money back into the business, but we're pretty excited about the revenue of strength that we've seen now for 8 quarters. And again, we got a good headstart on where we're going to end up for the full year.

Ashwin Shirvaikar - Citigroup Inc, Research Division

Okay. And that information security spending, that kind of spikes up in 3Q and 4Q here. Does that begin to taper off early part of next year? Or how much of that is ongoing, I guess, has been my question?

Michael D. Hayford

Well, that comes in 2 components. One is there's some project work related to some of the activities that we're undertaking. And then we do believe that, on an ongoing basis, our level of spending in information security and, to some degree as well, the risk management area will be higher going forward than it has been in the past. I think when we finalize our budget and sit down and talk about '13, we'll give you a sense of where that spend will be for '13. But we've got -- as you can see, a lot of activities going on in that area. And we anticipated that spend in the second half of the year being a little higher than the first half.

Ashwin Shirvaikar - Citigroup Inc, Research Division

Okay. Last question, just a clarification, the North America FI sales rebound. Is that broad-based, and does that kind of include already the BMO deal? Or is that more 4Q, I mean, when will that completely finalize, I guess?

Michael D. Hayford

Yes, Ashwin. Well, keep in mind, the number that we gave you would being new sales of new revenue, not renewals. But so it would include the new sales within BMO. So the reality is we saw just strong rebound in the quarter. I mean, we told you in the second quarter we thought we would have some bleed over from the second quarter. We saw those deals get signed, and we saw a very, very nice rebound over second quarter and then year-over-year.

Frank R. Martire

It's actually -- and I think BMO signed in early October, so it wouldn't include -- now when I think about it, it would not include that number. So it was a very strong quarter for sales, not only in North America but across the spectrum.

Michael D. Hayford

And that's showing a strong pipeline going forward also.

Operator

And next, we will hear from the line of Brett Huff with Stephens, Inc.

Brett Huff - Stephens Inc., Research Division

As you guys -- one of the things that sort of stuck out to me was your investment in the security stuff, and I understand why you're doing it. Some of it, I think like you said, is projects, and some of it as, I think, you're positioned to be sort of a market leader. When we look out next year and you think about your long-term guidance for margin expansion, is that long-term guidance still accurate relative to the incremental investments you-all think you need to make in that security stuff next year? Or what kind of color can you give us as we think forward for the long-term model?

Frank R. Martire

Yes, I mean, again, I -- our long-term expectation in that range, we've laid out 36 basis points of margin expansion. We would anticipate we will continue to execute against that. You can see this year, we're still 40 to 80. You can see the level of spending we're putting back into that particular area. But our long-term numbers are still intact.

Gary A. Norcross

And, Brett, as you mentioned, we are very focused on the investment class in this area. And we think it's going to be the new normal, and it's going to be required in order to compete in the market. And we've always taken a long-term view of the market. And we've always invested heavily to be able to be as competitive as possible. So we think it will be a differentiator for us in the future.

Brett Huff - Stephens Inc., Research Division

Great. And then one follow-up question. In Europe, obviously, it sounds like Capco continues to carry a lot of water there, which is great. I know one of the things that we've been hoping to see at some point in the medium term is Capco helping generate a big core win or similar win in Europe or in other region where they have operations. Can you give us any just qualitative thoughts about how conversations for those larger deals are going and what we might expect here in the medium term?

Frank R. Martire

Yes, Brett, I mean, we've talked about this on a number of calls. I'll tell you, Capco is really paying off for us across all front. As you said, they're performing exceptionally well both in Europe and North America. So the growth is there, the margin expansion's there. All I can say is the level of conversations we're having this year at this point in time are far greater than where we were a year ago. The types of conversations we're having in very large financial institutions, not only around core banking but services and payments and how to bring our capabilities, are exciting. So we think Capco has already turned out to be a success for us, and we think in the near term, you're going to see us sign some business that are very complementarity as a result of this combination.

Michael D. Hayford

Yes, I mean, as Gary said, Capco is performing very strong stand-alone, just by itself. And now we just see the significant opportunities we have as being part of the total FIS family.

Operator

We'll go to the line of Glenn Greene with Oppenheimer.

Glenn Greene - Oppenheimer & Co. Inc., Research Division

The first question, probably for Gary, sort of looking at the Slide 12, the 30% increase in new contract value sold, and I think you said year-to-date. And then you suggested BMO, the incremental part of it, would sort of roll on to the fourth quarter. It sounds like the pipeline's robust. But then you suggested the new contract value in '12 could basically be -- it sounded like almost flattish to 2011.

Gary A. Norcross

No, no, I'm sorry, if I did, I misspoke. Absolutely, we're very comfortable that 2012 total contract value in new sales will exceed 2011. We're up through the first 9 months globally. We brought an issue in the second quarter because we saw a dip in North American financial institutions. We saw that recover in Q3, which was what we expected. As you can see, we've already signed BMO in the quarter in October, so we're very comfortable that our total contract sales will exceed our 2011 results.

Glenn Greene - Oppenheimer & Co. Inc., Research Division

Okay. And then just a little bit of more color in the North America. Was it just sort of timing of deals that slipped from 2Q to 3Q? And related to that, I just want to get a sense for like the environment, has -- are banks making more decisions or what sort of happened 3Q relative to 2Q?

Frank R. Martire

Well, I can tell you, we've said this on a number of calls. We're definitely seeing deal elongation. I mean, it takes longer to get these deals closed. So yes, we did see slippage in Q2, and the results of that were quickly in Q3, we were able to pick up a number of those. So the decisions are being made as evidenced by our sales success, not only within North America but abroad. But it is taking longer to get these deals done. They're more complex, they're bigger. But as we shared in the opening comments, we are seeing our clients look to leverage innovative solutions to help drive their costs down and become more efficient and compete. So the decisions are out there, but definitely, we see some slippage from time to time. And that's what happened in Q2.

Glenn Greene - Oppenheimer & Co. Inc., Research Division

And then for Mike, just sort of given that you successfully filled the hole on BMO, any reason to think that you'll be outside of your long-term EPS targets in 2013?

Michael D. Hayford

No. I -- we'll still be -- I would expect that when we sit down in '13, we'll give you specific numbers. But the long term being the full year range that we gave you back in February, is kind of our look at what the current environment will give us in terms of top line growth, margin expansion and EPS growth. And as I said before, we're still very comfortable that we'll continue to be in those ranges. When you give a kind of long-term outlook like that, nothing ever happens exactly how you'd expect it. But given the size and the diversity of our company, we're able to adjust and make up any challenges that we have. So sitting here today, as we said, we're still very comfortable with where we're going to be.

Operator

We'll go to the line of Bryan Keane with Deutsche Bank.

Bryan Keane - Deutsche Bank AG, Research Division

I want to ask about the Payment Solutions business. I know it's been sluggish for a couple of quarters. When do you guys see on the horizon that, that business might turn? Is that some point in 2013?

Gary A. Norcross

Well, Bryan, yes, as we adjust every quarter, we adjust out our paper-based businesses, so we are seeing some growth in the business. We're seeing great margin expansion, which shows the flexibility of our model. We have a huge Payment business, so the reality is a number of our areas like bill payment and then some of those areas are seeing very good growth, some of the things that we're doing around mobile payments. But we feel like our Payments business going forward is going to be, at least sort of next year or so, mid- to low-single-digit top line. But we think we'll get very strong organic growth. So we're pleased with how the business is performing. And you see some of the examples of like the growth that Mike highlighted around NYCE this quarter.

Bryan Keane - Deutsche Bank AG, Research Division

And I assume that PayNet might start contributing to revenue in that business segment, probably '13 and '14? I guess that's the first question. And second question, how does that compare to something like a Popmoney? How do you guys think it compares? And one last piece of that, do you guys see yourselves competing directly with the networks like Visa and MasterCard with PayNet?

Michael D. Hayford

Well, let's take your first question. PayNet, as we shared with you, we've already got over 100 clients running in pilot today. We'll roll additional functionality through that solution. We'll continue to have -- to bring on customers and expand the network through 2013. And, yes, you'll -- we'll start seeing some revenue contribution in 2013, and that's going to grow in 2014 and beyond. We think it's got potential to be -- to produce some fairly sizable revenue. As far as the comparisons to other solutions, we think we have a very competitive offering. We're very confident, the things that we're going to be able to do with PayNet, and so we think we'll be very competitive in the industry. As far as competing with Visa and some of the schemes, we're, once again, not sure. The reality is we'll just continue to compete on the strength of our product and through our sales engine, and cross-sell and drive value to our clients. And that's, frankly, how we think about all of our solutions that we roll out.

Bryan Keane - Deutsche Bank AG, Research Division

Do you think about selling PayNet directly to the merchants, or was it just -- will be mostly to the FIs?

Frank R. Martire

It's going to be an FI-centric solution, but they'll have some merchant components to it as well. So we're pleased with what we've developed.

Bryan Keane - Deutsche Bank AG, Research Division

Okay. And then last question for me. Just on the -- when we talk about the BMO Harris, the $40 million of term fees -- term and settlement fees, does that show up in any one given quarter or is that spread throughout, equally, through the 4 quarters of 2013?

Michael D. Hayford

Yes, I mean, you should anticipate that being spread fairly evenly throughout the year.

Bryan Keane - Deutsche Bank AG, Research Division

And did you guys also say that $10 million to $20 million of that -- you said something about -- not all of that $40 million is onetime. I just want to make sure I heard that correctly.

Michael D. Hayford

Right. So that $40 million of the term and settlement fees, I don't think it'll be evenly spread throughout 4 quarters, but you'll see it hit all 4 quarters across 2013.

Bryan Keane - Deutsche Bank AG, Research Division

So I guess my question is, is that a -- is there -- is that $40 million all kind of -- do we have any of that carry forward into 2014?

Michael D. Hayford

No. That is a 2013 event.

Operator

And next, we'll hear from the line of Julio Quinteros of Goldman Sachs.

Roman Leal - Goldman Sachs Group Inc., Research Division

It's Roman Leal in for Julio. First, on the sales growth, maybe you can -- can you help us out and just kind of walk us through what -- where is most of the growth coming from? I know you say it's pretty broad-based, but perhaps what segments are beating your expectations versus just meeting them?

Gary A. Norcross

Yes, well, as we shared within North American financial institutions, we saw a rebound from second quarter to the third, and we saw a year-over-year growth and also sequential quarter growth. And that really was on the strength of a lot of our core banking and payments technologies in the U.S. And the international markets, depending on what region of the world you're talking about, we're seeing good sales and expansion through core, through payments, like the India is a huge win for us, and so that's driving a lot of revenue growth. We're also seeing some nice expansion around our services businesses, IP services in North America. So really, there's -- those are the primary areas that are ahead for the year.

Roman Leal - Goldman Sachs Group Inc., Research Division

Okay. And then just based on your commentary that -- and your confidence that total contract value for the year will be ahead of last year. Is it just fair to say that heading into 4Q '12 and 2013, you're more comfortable at this point than you were a year ago heading to 2012?

Gary A. Norcross

I don't -- obviously, we'll give you 2013 guidance later. But we're very confident with our pipeline. We had a strong sales year last year. We're exceeding that growth this year as far as new sales go. Obviously, we need that level of sales to continue to push the company and drive on the top end, high recurring revenue and organic growth. So we're confident that we'll be able to push into next year like we did last year.

Michael D. Hayford

We're confident because we've had nice growth in '12 over '11, so it makes you feel more optimistic going forward.

Operator

Next is from the line of Tim Willi with Wells Fargo.

Timothy W. Willi - Wells Fargo Securities, LLC, Research Division

I just had a question, I guess it probably applies sort of the topic of PayNet, which is payments overall. Could you talk about how you think about PayNet or any of your other payment-related assets in the business-to-business world, not just necessarily the consumer-to-consumer, consumer-to-business?

Gary A. Norcross

Well, when we're looking to build out capabilities, Tim, I mean, obviously, we're wanting to hit the multiple markets that exist. So we certainly want to think about our payments and our innovation to drive not only personal but also business electronic adoption. And as one of the nice things about our company is we've built such a breadth of portfolio of solution that we're able to package more creatively and address those markets. So we think about them differently because they do take different solutions. I mean, PayNet, is certainly an opportunity for us to move, as I shared with you some of the ideas around P2P and some of the things we're doing to transfer over that network. But we're also doing a lot of payment activities around B2B as well. But so we think about our capabilities depending on the market we're going on and make the investments where we think we can get the most growth, that's also not only going to drive the most revenue but also the most profit expansion for us.

Timothy W. Willi - Wells Fargo Securities, LLC, Research Division

Do you think as you -- I know nothing here, necessarily, is material in the near term given the breadth of the company, but as you think about the B2B market, which I think is so much more paper-intensive than consumer, do you feel like you have the assets or the bandwidth internally to continue to evolve and develop that marketplace when you believe the time is right? Or would that actually be an avenue where a targeted acquisition might make more sense for you?

Gary A. Norcross

Well, tuck-in acquisitions will always play in our strategy. As Mike mentioned, we've done 3 acquisitions this year. We think it's an important component. But do we have the ability to expand the markets? We always evaluate markets to see, is there really a potential to monetize our sales force. I mean, we have one of the largest sales forces in the industry. We also have one of the largest investments from a capital standpoint back into our products each and every year. So those 2 come together in concert, and we make sure we're making the investments where we think can drive the most growth for the company. So can we go tackle B2B? We would agree with you, it's a very paper-intensive market. Certainly, as we see that market evolve, what we will certainly -- if there's a business -- if there's an opportunity for us to take advantage of it, we will, as we've shown over the last several quarters of performance.

Michael D. Hayford

Tim, you might see us do more buildout in our partnership in this space. And one of the reasons why it's probably underinvested as a whole is it's harder to make money in the B2B space, that's why we don't see as many competitors. So I think we have some very good underlying technology to get back to real-time transactions. And whether we would look at acquiring or building or maybe even more, like I said, partnering with people. But that -- this is an area that we think is going to have some investment dollars over the next few years.

Gary A. Norcross

Absolutely.

Operator

Next, we'll hear from the line of Stephanie Davis with JPMorgan.

Tien-Tsin T. Huang - JP Morgan Chase & Co, Research Division

It's actually Tien-Tsin. I wanted to just make sure I heard this correctly. I mean, if B2B is up, your bookings and sales are up, is it fair to say that the reg letter issues from before are sort of behind you, and sort of yesterday's news at this point?

Gary A. Norcross

Well, I -- we certainly had a confidential regulatory letter go out where we certainly feel like we've addressed or are addressing that process with our clients. We're communicating very openly with them. We continue to work with our clients, and I would say the results speak for themselves from a sales standpoint. We were concerned in Q2 that it might be having some impact. We saw that rebound nicely in Q3. So at this point in time, we're continuing to move forward and just work with our clients and sell the best solution we can.

Tien-Tsin T. Huang - JP Morgan Chase & Co, Research Division

Okay, good. So the -- and then separately, the debit issuer deconversion that was mentioned on the release, sorry if I missed it in your prepared remarks. What was that and what was the size?

Michael D. Hayford

Well, we had called out last call, in the second quarter call, that we had a large client, that happens to be a large legacy funds client that had been with us for a long period of time. And they, quite frankly, had been in the process of deconverting literally for years. And they left our platform in the second quarter, so we knew that would be a hit for us in the third and fourth quarter, so we didn't give a specific number. But you can see that in the results that growth went down a little bit at linked quarters.

Tien-Tsin T. Huang - JP Morgan Chase & Co, Research Division

Okay, understood. Last one, just the India timing. I know Dave Koning asked this before, but how should that progress? I mean, is that a design managed services outsourcing contract, or are there some deliverables and assumed transactions to get there? I'm just curious what...

Michael D. Hayford

Yes, no, that's a great question. This is part of all the financial inclusion that's going on within India. The good news is, Tien-Tsin, we've got a very strong business that exists in India today that has shown very nice growth over the last several years. So we're not stepping into this with, we would consider, incorrect expectations. There are some assumptions on transaction and volume growth, but we think, from multiple years of experience we had, that we certainly can hit our financial numbers that we talked about in the call. As I shared, the contracts are done. We'll be rolling those out over the next couple of years on top of our existing business. So we're very comfortable that the growth factor we disclosed will be there.

Operator

Next, we'll hear from the line of David Togut with Evercore Partners.

David Togut - Evercore Partners Inc., Research Division

On the Payments business, Mike, you highlighted a tough compare coming up in Q4 in the margin front. But you did have 230 basis points of EBITDA margin expansion there despite flat revenue. How should we think about the margin trends in payments as we look to 2013? Are there additional major cost takeout actions that we should expect?

Michael D. Hayford

Yes, I don't know if I get to mention the '13 at this time. I mean, you can see the last 2 years, the team has done a really good job with margins in PSG, in an environment that has a relatively low growth. So they look at how we end up '12. You can see, as we look at the second half, it's a little more challenging in the first half on the revenue, but the earnings are still pretty solid in there. And as we look at '13, we'll have to go through that business and see what kind of growth we can get. And then as you've seen Gary and the team do in past years, if we don't have the top line growth, I'm sure we'll find ways to get the bottom line expansion.

Gary A. Norcross

And, David, that's something we do every year. Gary does that consistently year after year. We look at our growth potential, and we're realistic about it. And then if we have to optimize or do something on the expense side, we take action and we do it.

David Togut - Evercore Partners Inc., Research Division

Definitely good to see the progress there. Gary, your thoughts on the new business pipeline in Brazil, should we expect some significant new addition to the Banco Bradesco card processing JV?

Gary A. Norcross

We've got a fantastic relationship down there, David, and it continues to perform very nicely. We saw some nice growth there this quarter, and then we highlighted it in the call. I would tell you, the relationship can't be stronger as Bradesco continues to grow, the joint venture will definitely be the recipient of that. The question is whether ELO's going to take off. There's a number of interesting things going on in Brazil, and it's hard to predict what the adoption rate or some of those are going to be. But we're very comfortable with the position we have in Brazil. We're the largest third-party processor in the country, and we're very pleased with that business.

Frank R. Martire

We're just well positioned.

David Togut - Evercore Partners Inc., Research Division

I'm sorry, just a quick final question, if I could sneak one in. On September 30 share count, Mike, basic and fully diluted?

Michael D. Hayford

Yes, I think you'll get all the detail in the Q when it comes out later this week. But it's $298 million, is where we ended up the count, fully diluted.

Operator

Next, we'll hear from the line of Greg Smith with Sterne Agee.

Gregory Smith - Sterne Agee & Leach Inc., Research Division

Just a quick one. The minority interest increasing, that's just increased profitability in the Brazilian JV, is that correct?

Gary A. Norcross

That's correct.

Gregory Smith - Sterne Agee & Leach Inc., Research Division

Okay, so that's probably sustainable, there was nothing one-time in the quarter, per se, right?

Gary A. Norcross

No, no. That's just the continued growth of that business.

Michael D. Hayford

Yes, that business is just a pure processing business based on volume.

Gregory Smith - Sterne Agee & Leach Inc., Research Division

Okay. And then just your outsourced prepaid card processing, it sounds like you're working with AmEx, but I don't think you're doing the actual processing on that. I was just -- my question is, what's demand like both in the U.S. for other banks kind of entering the prepaid card space? And then, also, do you have international processing capabilities for prepaid cards?

Frank R. Martire

We do -- a lot there, I mean, first, no, we're not actually doing the card processing for Bluebird for AmEx. We are doing, as we shared, a lot of the mobile capabilities, doing a lot of the back-office, BPO-type of services work around that. When you think about prepaid both within North America and abroad, we do have extensive capabilities for prepaid outside of the U.S., and we're seeing very strong growth of that business in Europe. We're also partnered with American Express on a number of their gift card programs. So we're seeing good solid growth within North America as far as demand goes, but also in the international markets as well.

Gregory Smith - Sterne Agee & Leach Inc., Research Division

Okay, great. And then just one last one, the legacy check business, the check risk management, the old Certegy business, any potential for a transaction there? I know you've explored it a number of times, or should we just expect it to kind of continue to bleed lower?

Michael D. Hayford

Well, I mean, it is a business that's got a secular decline in the payments, which we see both in that check verification business, as well as our item processing. But there's -- it's a business that, as you know, we've looked in the past. We continue to get pretty good margins out of it. And even though the revenues have continued to decline, the teams have been able to just improving the algorithms, improving the process to maintain the profits. So it's one of those situations where I don't think somebody is going to come in and look at writing us a big enough check based on the money we're going to take out of that the next few years.

Gregory Smith - Sterne Agee & Leach Inc., Research Division

Yes, yes, you're certainly doing a good job on the margin side there.

Frank R. Martire

We're focused on running the business, optimizing the business and making sales where we could.

Operator

Next, we'll hear from the line of John Kraft with D.A. Davidson.

John Kraft - D.A. Davidson & Co., Research Division

Just a couple of follow-ups here. Mike, I thought, in response to just the last couple of questions, you said something about the -- that large conversion actually happening in Q4 as well. Is that not completed in Q3?

Michael D. Hayford

No, no. That was a, I think, the related payment was a deconversion that occurred towards the end of the second quarter and impacted the third quarter and will also impact fourth quarter in payments.

David Togut - Evercore Partners Inc., Research Division

So it's -- but it's completely done?

Michael D. Hayford

Yes.

Gary A. Norcross

Correct.

John Kraft - D.A. Davidson & Co., Research Division

And then, also, you called out the strength in NYCE a couple different times. But in the press release, you mentioned strength in bill pay. Would you say things were accelerating there? Are you gaining some share? Can you talk a little bit about the market there?

Gary A. Norcross

Yes, we're having some very nice wins in bill payment. And we're seeing good growth, not only top, bottom line, but also in transaction volumes. So that's driving, not only from adoption with the existing clients, but also good cross-sales. We shared with you guys over the last couple of years, we made a lot of investments in bill payment over the years. We've got a very competitive offering there, and we're real pleased with what the team is accomplishing this year.

Operator

Next, we'll go to the line of Peter Heckmann with Avondale Partners.

Peter J. Heckmann - Avondale Partners, LLC, Research Division

Most of my questions have been answered, but I just wanted to clarify on some of the revenue impact that we're talking about from BMO Harris and M&I. My assumption is that with the termination fee and some of the additional professional services, we might have the revenue headwind for 2013 down to perhaps less than 50 basis points, but then it would move up to another 100 basis points in 2014. Is that about the right way to look at it?

Michael D. Hayford

It might be a little bit higher than 50 basis points on the revenue side, but probably in that neighborhood, between 50 and 100 would be the revenue impact, depending on how much professional services would be pulled through.

Peter J. Heckmann - Avondale Partners, LLC, Research Division

Okay, okay, that's helpful. And then are there any capital requirements on the expansion of those ATMs in India, or is that on a third party?

Gary A. Norcross

No, we'll see some capital requirements. That's pretty typical of that business. But as we've shared in the comments, I mean, we think it's very accretive to our overall international business and the way it's operating today.

Peter J. Heckmann - Avondale Partners, LLC, Research Division

Sure, sure, okay. And then, I'm sorry, back to BMO Harris. Final question there is that, you were clear on the last call that you're consolidating the core, and in today's press release, you referenced bill pay and debit and some other tangential services. Are you consolidating all of those services in the U.S. with FIS?

Gary A. Norcross

We did. We've already completed that. We've completed not only the core conversion, which is an application management engagement, but we also completed all those ancillary services that we talked about in the script. We've converted those, as well, on a combined basis so...

Operator

The final question in queue currently comes from the line of Kartik Mehta with Northcoast Research.

Kartik Mehta - Northcoast Research

Gary, when you're talking about new sales, you'd said the sales cycle is lengthening. I'm wondering, are you seeing anything in the new sales you're doing, whether it's India, whether it's the professional services, where it would lead you to believe that the revenue cycle would be different, as well, versus what it's been in the past?

Gary A. Norcross

No, not at all. I mean, the reality is, we've talked about this on multiple calls, the swing towards not only outsourcing but the packaging of services augment a particular product through an outsourced engagement is really occurring in quite a dramatic way. So that revenue comes online, however, in some instances, even faster if it's some type of services engagement. But that the onboarding of that revenue is typically about -- they're about the same length. The reality is our clients, we saw some pent-up demand because of the economy. We're now seeing that free up. They're making some decisions. But I would say the -- obviously, the economy is pushing some of the elongation out, but frankly, just the complexity of the overall solution. When you look at some of those things we referenced, like Bremmer, there's not too many banks that size in North America that are going to make a decision to convert off their income in core and then bring all of those additional services in a big bang approach. BMO Harris is a great example, as well. We converted all of that single system. It took us a long time to negotiate that agreement right up to the time we actually did the conversion. So at the end of the day, I think the revenue comes on in very much the same way.

Kartik Mehta - Northcoast Research

And then, Gary, just the last question. You're seeing some really good organic growth, especially on the financial institutions side. What do you think the market is growing at? And I guess the reason I asked is your ability to continue this momentum, you've done it for a long period of time now. And it seems as though with the sales momentum you have, you should be able to continue putting out these kind of numbers.

Gary A. Norcross

Well, we're pretty pleased with the team. I think all of us are. We think the opportunity to continue to grow is there, frankly. When you look at the assets that we assembled over the last 10 years, how we've bought together those assets, the innovation that we've wrapped around them and invested in, we think it puts us in a very different place. When you augment that with what we're doing abroad in our international markets, it's a very complementary mix that has allowed, as Frank and Mike highlighted, very nice organic growth, 7 out of the last 8 quarters, so over 5%. So at the end of the day, we're comfortable that we can continue to grow the business. We're comfortable that we got the team that can execute, the sales team and the operational team. We obviously got to keep innovating and keep making sure we're making the investments, do tuck-in acquisitions that make sense and allow it to come through our sales force.

Michael D. Hayford

And then, finally, how we integrated all our products. That was key to our success of what we're integrating in all our product lines.

Mary K. Waggoner

And that concludes -- thank you. That concludes today's call, and thanks, everyone, for joining us today. Please remain on the line for the replay instructions.

Operator

Thank you very much. And ladies and gentlemen, a replay will be made available today from 7 p.m. and running through the 19th of this month at midnight. You may access the AT&T executive playback service at any time by dialing 1 (800) 475-6701 and then entering the access code 266164. International participants, dial (320) 365-3844. That concludes your conference today. We appreciate your participation as well as your using AT&T Executive Teleconference, and you may now disconnect.

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