Welcome to the Fiserv First Quarter 2014 Earnings Conference Call. [Operator Instructions] Today's call is being broadcast live over the Internet at fiserv.com and is being recorded for future reference. In addition, there are supplemental materials for today's call available at the company's website. To access those materials, go to the company's website and click on the link in the Events section of its Home page. The call is expected to last about an hour, and you may disconnect from the call at any time. Now I'll turn the call over to Stephanie Gregor, Vice President of Investor Relations at Fiserv.

Thank you, and welcome to our call. With me today are Jeff Yabuki, our Chief Executive Officer; Tom Hirsch, our Chief Financial Officer. Our remarks today will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We will make forward-looking statements about, among other matters, expected operating and financial results and 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, which can be found on our website at fiserv.com, for a discussion of these risk factors. You should also refer to our earnings release and the supplemental materials for today's call for an explanation of the non-GAAP financial measures discussed in this conference call and for a 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. To better coincide with our planning cycle, we have decided to move our Investor Day to the second quarter of each year. As our last update was in December, our next investor conference will now be held in the second quarter of 2015. We will provide further information toward the end of this year. Let me now turn the call over to Jeff.

Thanks, Stephanie, and good afternoon, everyone. We started out 2014 on a very positive note and are pleased with our results. Performance in the quarter was headlined by excellent internal revenue growth, expanding operating margins and a double-digit increase in sales. Adjusted revenue increased 6% in the quarter to $1.2 billion. Adjusted internal revenue growth in the quarter stepped up to 6%, matching our best quarterly performance since the beginning of 2008. The Payments segment headlined our results with 8% adjusted internal revenue growth in the quarter. Adjusted operating income was up a strong 11% in the quarter, translating to 120-basis-point improvement in adjusted operating margin compared to the prior year. Adjusted earnings per share in the quarter increased 22% to $0.82, which was driven primarily by strong operating results. Free cash flow per share was up 5%, and we also repurchased 6.1 million shares in the quarter for $351 million. We identified 3 key enterprise priorities at the start of the year to help you gauge our progress. The priorities are: first, continue to build high quality revenue growth while meeting our earnings commitments; next, extend market momentum to deepen client relationships with a larger share of our strategic solutions; and third, deliver innovation and integration, which enhances results for our clients. Our strong financial performance was slightly ahead of our expectations for the quarter. Company-adjusted internal revenue growth of 6% was compared to flat in the year-ago quarter. We saw strong internal revenue growth across a broad base of our payments, channels and account processing businesses in the quarter. The combination of high quality revenue growth and our focus on operational efficiency resulted in strong operating margin even as we invested in future growth opportunities such as Real-Time, Biller and Digital. As you know, the acquisition of Open…

Thanks, and good afternoon, everyone. As Jeff mentioned, we are pleased with our strong start to the year. Adjusted revenue for the quarter increased 6% to $1.2 billion. And with the anniversary of the Open Solutions acquisition very early in the quarter, adjusted internal revenue growth was also 6%, slightly ahead of our expectations for the quarter. We saw good performance across most of our businesses in the quarter, with stronger results in our payments, channels, account processing and output solutions businesses. The timing of termination fees had a positive impact on revenue growth in the quarter of about 90 basis points, offset somewhat by negative currency fluctuations of about 30 basis points. Adjusted operating income increased 11%, and adjusted operating margin expanded by 120 basis points compared to last year. These increases were driven by strong growth in our Payments and Account Processing businesses, as well as continued focus on operational efficiencies, including the Open Solutions cost synergy attainment. Adjusted earnings per share in the quarter was up 22% over the prior year to $0.82 per share. Adjusted internal revenue growth in the Payments segment was exceptional, growing 8% in the quarter. Importantly, this growth was driven by strong performance across the majority of businesses in the segment, including debit, bill payment, channels and output solutions. Debit transaction growth of 11% in the quarter was somewhat negatively impacted by weather, consumer spending and the timing of the Easter holiday. And yet, our growth was still up in excess of the market. Bill payment transactions increased 6% in the quarter, bolstered by new client implementations, partially offset by weaker-than-expected results from our largest client. We also added to our Payments footprint, with 30 new debit and 82 new bill payment clients in the quarter. Payments segment adjusted operating income grew…

Thanks, Tom. As I mentioned upfront, sales were strong, increasing 17% over the prior year's quarter. Sales results in the quarter were led by Account Processing, card services and electronic payments. Going into 2014, we increased our overall sales expectations, lifting internal quota by almost 15% over last year's level. We finished the quarter at 96% quota attainment, had a robust pipeline and increased conviction in what we believe will be a very solid sales year. Integrated sales were $52 million in the quarter or 21% of our full year target, which, as you'll recall, also includes the Open Solutions revenue synergy results. Performance was strong across a broad range of solutions including bill payment, debit, statements, Mobiliti and Source Capture. We also continue to be on track in capturing the add-on solution opportunities within the Open Solutions client base. We achieved $17 million of Operational Effectiveness saves in the quarter against our $60 million goal for the year. These strong results were driven by Open Solutions cost synergy attainment and solid execution of our Operational Effectiveness objectives. We're seeing continuing stability in the financial institution market. There were 6 regulatory actions in the quarter versus 9 in the same period last year. While institutions remain focused on the significant regulatory and compliance burden, we are seeing an increased focus on making money. Loan volumes are rising and asset quality is improving. M&A activity is in focus, and we expect that to continue as institutions look to leverage scale and extend their market opportunity. As I said upfront, we're on track to achieve results within our full year outlook across all measures. Our first quarter results were strong against our easiest compare of the year. We believe the second quarter will likely be the most challenging comparison of the year,…

[Operator Instructions] Our first question comes from David Togut from Evercore.

Mike Landau in for David. Is high single-digit growth in Payments sustainable through 2014?

As we said in the discussion, we had a very strong quarter. 8% was our strongest quarter since early 2008. We had a 7% growth rate last quarter. We indicated, as you probably know and we indicated, we had our easiest compare in Q1. So while we do think we'll see stronger growth in our Payments segment for the year, we would not expect that to be at 8% each quarter for the year. We'll expect us to continue to grow our Payments segment growth rate on an annual basis, year in and year out, but we don't think it will be 8% each quarter for the year.

Got it. And can you quantify the expected margin expansion for the Financial segment for 2014?

Yes, we don't give guidance like -- by segment. So we had a really great performance in the first quarter. We're operating very well from the Operational Effectiveness standpoint, and obviously, the cost synergy execution on our Open Solutions transaction continues to be right on plan. So we'll continue to do that. Our margin guidance is -- for the year is greater than 50 basis points, and that's where we're at.

We're highly confident that we'll achieve that level of performance.

Okay. And just lastly, did you anniversary the impact in the first quarter this year of the large Account Processing client loss last year?

That was anniversary-ed in the prior year.

David Koning from Baird.

Yes. And I guess, my first question just in Payments, the fast growth, you saw -- Q1, you saw a little deceleration in bill pay transaction growth and in debit transaction growth, which I think are the 2 biggest parts of that business, yet revenue growth accelerated. I think you talked about output revenue getting better in Q1. But maybe you can talk about how those 2 core segments decelerated transactions but revenue accelerated.

Yes, I think that's one metric there, Dave. What I would first say is that we had a very good quarter in our Payments segment across all areas. And what I mean by that is clearly, bill payment, we talked a little bit about the transaction volume that's one piece of that. Clearly, that was impacted by our largest client, which was lower than what we anticipated, so that drove that down. But we're experiencing double-digit growth outside of that. But we had good growth in debit. Even though it was a little bit lower than the -- than what we had last year, it was still very strong. So we had good performance there. As you well know, it's well above market trends at 11%. And we continue to expect that's going to continue. So again, good growth in debit, good growth in bill payment, our online business, which is both in our channels and Mobiliti, had a very strong quarter. We also had good growth this quarter in our Biller business, which we have a few headwinds going forward in that because we had some client acquisition that will hit us, but we had a good quarter of growth in Biller. And then we did have a good quarter of growth in output. We signed a number of larger new clients. We did have a couple of million dollars associated with a breach that was out there of a card reissue, but that was only a couple of million dollars. So again, we really hit on all cylinders in the quarter. Very pleased with that across a number of different areas. And Jeff, I don't know if you want to add anything to that.

Yes, Dave, I would say while we -- while the growth rate in Q1 in bill pay was less than it was in Q4, it was substantially higher than it was last year in Q1. And we also continue to have good success in terms of add-on products, add-on services in some of our existing payments kinds of products. So whether we're talking about -- you take something like expedited bill payment, that's not a new -- that's not -- that transaction itself adds a lot more revenue per transaction, a lot more value per transaction, but isn't really driving the transaction itself. So from that perspective, we're seeing a lot of kinds of add-on in our debit business. We do a lot of stuff on the risk side. And as you might imagine, given a lot of the press in the first quarter, we certainly had focus in those areas. So those are just a couple of examples of where we have good add-on -- kind of add-on products or maybe thinking about it on a dollars-per-transaction basis as well.

Great, and that's a great recap. And just one follow-up. How did license revenue trend in each of the 2 segments?

You mean in the quarter? It was about flat, with last year up a couple of million dollars, Dave, but nothing substantial.

Okay. Each segment was pretty flat too and that wasn't...

Yes, yes.

Brett Huff from Stephens Inc.

You guys had a couple of nice wins. One you just announced earlier today or yesterday, and then, the Ozark win, and then, one more that you added at the beginning of your comments. Can you just talk a little bit about why folks are choosing you over other people in the marketplace, if you're hearing a theme? I guess, maybe even other than that you have many products that work together, but is there anything specifically that folks are keying in on?

Yes, Brett, this is Mark Ernst. I guess, I would say a couple of different things. Clearly, having a variety of different account processing platforms is giving us a competitive advantage in the sense that as we talk to a lot of different financial institutions, they have varying different needs. And the portfolio of account processing platforms that we have give us something that can beat a variety of different FI kind of strategies and what they're trying to do for their customer base. So I'd say that is one thing that clearly stands out that we think is giving us a distinct advantage in the market today. The other thing that I think is almost certainly the case is the wide range of add-on capabilities or surround capabilities that we have. While many of our competitors have sort of a similar portfolio, the truth of the matter is the quality of what we bring to the market, kind of the best-of-breed in many of those surround solutions, gives us a greater kind of advantage when we are going head-to-head, looking at somebody who is interested in making an account processing platform change. Those are the 2 things that really stand out to me.

Brett, I would also say, to some extent, Mark talked about this at Investor Day, sometimes, I would say the big intangible is momentum. And we have -- we're on a good win streak and bringing in Open Solutions and adding those DNA capabilities has really added a lot of interesting discussion. Not only because it's a different platform, but the whole notion of real time, whether we're talking about a real-time payment or how mobile technologies kind of require real time, that whole discussion, which has been generally limited to the top 50, call it the top 50, top 25 institutions in the U.S., is really starting to make its way through the entire system. And that's helping as well because we've tried to carve out, I think fairly effectively, that space for Fiserv. So I think it's Mark's point, there's a variety of points and then there's the momentum intangible, which is really quite [indiscernible].

I would say momentum is clearly something that's on our side in a lot of these markets. And I'm not sure I would call it as much intangible. I think the tangible aspect of that is these are smart -- a lot of smart people in these financial institutions, and they are looking at the kinds of analysis and decisions that others in the market are making and concluding that there's really something very substantive that we're bringing to the market that other people don't have.

That's helpful. And just one follow-up. Jeff, you mentioned that Popmoney is one of the leading sort of alternative payments outside the card system that you all are using. Are there other meaningful products that you guys sell kind of alongside that, if banks or even merchants are looking for other alternative mechanisms. Or is that -- is Popmoney probably going to be the one that is the dominant sale in that particular need?

Yes, so what I had intended to imply, Brett, and I may not have done it justice is, Popmoney as an application, right, to move money from point a to point b, think about that a little bit more on the front end. And then what we were talking about, to some degree, was this notion of the real-time payment network. And we have a couple of ways that we're doing that right now at scale. So we're -- or at -- as we move to scale. So we're using ACCEL and we have a relationship with STAR, so we're using the card networks to move from 1 DDA to another. But we're quite excited, and we talked about this a little bit at Investor Day, we've actually built a capability to attach the PEP+ to allow us to use our ACH footprint to be able to move money on a real-time basis. And in fact, that is what U.S. Bank is using to enable their real-time capability through Popmoney. So there are a variety of ways that we can do that. We don't think there's a one-size-fits-all solution. We think within the network, we have to have multiple ways to allow people to settle real-time transactions, including a direct connect option, which we're putting a lot of time and energy into on the biller side of our business.

Darrin Peller from Barclays.

I just want to start off on guidance. When you look at guidance for revenue, I just want to, I guess, touch base on your expectations for the second half again. I know, we've briefly touched on them before. But just, I mean, really given that the first half would suggest about a 5% run rate already. And obviously, you'd seen that new business still coming from -- through the year. You guys have done a lot of them then while signing a number of new deals, especially in the Payments business. Obviously, we also see some pretty good trends across different parts of payments beyond the new deals, whether it's mobile banking or bill pay. I'm just curious to know what would drive -- what would not drive that overall growth rate to be higher than the first half?

Yes. I mean, it's a good question. I mean, as we talked about, we had a very strong first quarter. We feel very good about the results. They were slightly better than what we expected in the quarter, and that's always good news. We have a lot of good, solid momentum and backlog. And we do expect the second quarter, we have that compare issue, the second quarter versus first. Obviously, Darrin, last year, we had kind of a flat first quarter so this compare is a lot better. But I would say that -- I mean, the primary issue is there's still 3 quarters left in the year. We feel really good about what's going on. We also have seen banks change their priorities and clients change their priorities. And revenue that -- we still have large bill pay implementations coming on that we thought were going to go live last year. And so there's enough that can move around that we think it's prudent to stay where we are right now. We have momentum going in for the rest of the year and let's see where we are at the second half of the year, and we'll obviously make a decision at that point. But we're very bullish, very confident in our guidance for the full year, and we think that's the prudent place for us to be right now.

That makes sense, makes sense. But just to be clear, I mean, in terms of the number, the new deals you still have coming on, I mean, I know there were a couple on the bill pay business, if you can just -- maybe without mentioning all the names of the clients themselves if that's -- if you're not comfortable doing that, just where are the new businesses coming on, is it mostly bill pay or...

Yes, no, actually so we've got a couple of good-sized bill pay clients coming on. We have gone live with the large -- the very large bill payment implementation that we knew would go live this year. But we've got a lot of revenue coming on really in the financial segment in the second half of the year from these implementations around DNA, Signature, Premier, a lot of the large bank discussion that Mark shared at Investor Day, we talked about today and the continuing compound growth in our mobile businesses. So it's across the board, but the big propensity of new business in numbers will come on the Financial segment because we had such a strong Account Processing year last year.

That will carry off really into '15, too. Because a lot of those conversions are also happening into '15.

Later, they're later, really later in '14.

Right. So just one follow-up on the margin side and I'll turn it back to the queue. But I mean besides term fees, and maybe if you can help us to understand what term fees did to help the margin in the quarter first of all, but then I guess besides term -- are there any other real variables why you wouldn't see, similar to the first question, you wouldn't see margins kind of run at a better rate than 50 basis points for any -- for the rest of the year, given that, obviously, we had such a material expansion this quarter?

Yes, I think again, Darrin as Jeff indicated, we're in the first quarter. We had a good quarter. Our compares, as you go through the year, as you well know, get much more difficult as we kind of go forward. And our guidance is greater than 50 basis points. So we'll continue to -- our execution on the efficiency side has been strong and we're going to continue to execute in that fashion. And so, we're going to continue down that pathway, our guidance is greater than 50 basis points and that we feel good about that for the rest of the year and we're on track.

Yes, I think the other thing, Darrin, is we had a very strong Q2 last year. Operating -- our operating margin was very high. We had a fair amount of license revenue, a fair amount of term fee revenue. So you have those kinds of things dancing around each quarter. But as Tom said, right, our guidance is at least 50 basis points. And again, we're pretty confident, given we're at the end of the first quarter.

And to answer your question on the termination fees, they went from roughly about $6 million, which is fairly low in the first quarter last year, to about $15 million in the first quarter this year, more in line with kind of our run rate type basis. So that's about $9 million of incremental termination fee revenue mainly in the Financial segment. That was offset, as I indicated, by about $3 million of currency. So those are kind of the impacts in the -- largely, in the Financial segment.

Glenn Greene from Oppenheimer & Co.

My first question is sort of following up on Darrin's question, but just wanted to be clear, the large bill pay client, did that sort of begin to convert this quarter and was a meaningful driver or how much of a driver of that 8% payments growth was it?

Yes, so the large bill payment client that we had talked about that we signed back in 2012, which we knew would go live in January, did go live in January. And that will obviously anniversary next, next -- in January of 2015, so that went live. What we were saying is there were a couple of bill payment clients, larger bill payment clients, that we had anticipated will go live last year that we now see will go live in the second half of this year and anniversary, obviously, into 2015.

Okay. But was the -- was a meaningful part of that 8 points of internal revenue growth in payments, the large bill pay client that sort of ramped sort of in January?

It obviously had an impact, right. All growth has an impact. Depending on how you define meaningful, I would say it was measurable but not necessarily meaningful.

And I think, Glenn, what I -- I think the commentary, while not all our revenue is based on transaction volume. You saw the bill pay transaction volume at about 6%. We did say it was kind of double digit outside of our largest client. So that kind of gives you a sense, right, that it's meaningful but not, as Jeff indicated, not something that's over the top.

Okay, and then, any way to give us some color on how Open Solutions revenue growth looked like? I get the sort of the contracting in the DNA wins but any one sense for certainly what the revenue growth is tracking toward?

The -- I think that Jeff kind of highlighted this. We don't disclose it. But clearly the revenue growth in that business is going to be much stronger in the second half of the year. As we've talked a lot of times, we have been hiring a lot of people on the implementation side. So a lot of these implementations, Glenn, are going to go live primarily in the second half and into 2015. And we do have difficult comps because of the fact that some of the reseller revenue that we haven't opened has gone away as we transition those relationships over to us, along with kind of a low termination fee type total. So first half is going to be more difficult for that particular business, but the second half will be much stronger.

Okay. And then just the last one. The sales growth looked nice, I think it was 17% year-over-year. Any lumpiness, meaning like any large deals that get recognized over a long period of time, or is it pretty broad-based or any way that sort of gives us some color on the components of that sales growth figure?

Yes, we had -- I mean, we had a couple of larger deals that we announced like Washington Federal. Washington Federal is kind of a go-live in '15. Bank of the Ozarks, another large deal. I mean, the average, right, the mean size of our deals is absolutely increasing. So that does have an impact in terms of kind of, in quotes, backlog and those kinds of things. One of the reasons why we were able to say in Q4 and now -- Q4 of '13 and now again in this quarter, right, that we're feeling quite comfortable about our ability to have internal revenue growth step up. So we do see that and, yes, there are larger deals that have longer implementation tails, and again, fitting into our overall guidance for this year and our visibility into next.

To your point about lumpiness. I wouldn't say there's anything lumpy in particular about this quarter's sales. There wasn't any -- aside from the things that we've called out, it's a lot of good performance across almost every part of the business.

Tien-tsin Huang from JPMorgan Securities.

Great. A lot of good questions had been asked already. Obviously, the quarter growth was good. Just curious on the pricing front from the new sales, anything surprising there?

Tien-tsin, did you say on the pipeline front?

No, pricing.

No, pricing. Sorry, just pricing, and Jeff, sorry if you can't hear me. I'm at the airport, but just pricing in general. I heard your commentary about revenue transaction were going up [ph] but I think that's more of a mix issue. But what about some of the new deals that you're signing, how does the pricing look there?

Tien-tsin, this is Mark. I'd say the pricing is not inconsistent with what we've been seeing for the last -- between 3, 4 quarters, so I'm not sure that there's anything that we would call out that's unusual in the things that we saw this quarter.

Okay, but -- and then, just how would you describe discretionary spending in general among the banks. There's been some mixed data points out there in check land [ph] in general seems like things are quite good here. How would you describe it?

Yes, I would say that it depends on the category in which you're talking about. I mean, I -- if regulatory and compliance is now nondiscretionary, and I would say that discretionary spending is relatively limited. Although we are seeing some interesting activity on the loan servicing side of the house and the larger institutions. I mean, clearly, the big focus is on making money -- beyond regulatory and compliance, making money. But I don't see gigantic levels of discretionary spend. I mean, I'd like to see a lot more discretionary spend. But we are seeing -- we are having a lot of conversations that I think will turn into kind of goodness in -- late in this year and into next year. I mean the pipeline looks good. And even the early pipeline, just the things people are focused on tells me that there's more optimism in terms of where rates will go and how their income statements are going to look over time.

Got it, got it. And then just -- I know that -- a few questions on the outlook. I get the conservatism early in the year, et cetera. But I just want to make sure, was there anything that's actually slowing or coming in -- or ramping slower than expected that's maybe driving some of that conservatism? I heard something about international timing. Sorry, Jeff.

No, I'm sorry to cut you off, Tien-tsin. I mean, there's nothing strange in our timing, the model. Kind of how we would have modeled the year looks pretty good. We're not seeing any meaningful deals slipping around at these stage -- or at this stage. I would say the thing that is probably most negatively impactful for the remainder of the year is we mentioned when we gave guidance at the beginning of the year that we had some acquisitions that had occurred, the clients in our Biller business, and much of that was post Q1. So we'll have some downward pressure on that, but again, built into our guidance. And then the big question is the clients that are going live in the second half of the year. The good news on the majority of those kinds of clients is, given the types of solutions, you're really talking about account processing and the bundle that goes around it, you don't have the real ability to have those slip in material ways. So within a few months, I suspect we're going to be just fine in that area.

I think, just add to that is that as you know, we're very focused on full year performance. And we have some comparability, things that happen with, as you know, license fees or termination fees or other sorts of things. So that's the other thing that's kind of impacting the future.

Yes, the comps aside, the trends definitely look good. Last one, just the buyback activity was pretty strong. I'm assuming no change of philosophy, but should we read that maybe that the M&A pipeline is a little bit smaller perhaps or the appetite is not as strong?

No, I mean, we're -- share repurchase is our capital allocation benchmark, and we're going to continue to execute down that pathway. But we continue to look for different opportunities and mergers & acquisitions and will continue to do so, as that's an avenue of growth for us, and value. So we continue to look there, and we'll continue to do so.

I think the other thing is, I mean, we're, over a long period of time, right, we're quite focused on repurchasing shares. And when there are times to be opportunistic in the market, we want to take advantage of those opportunities.

Ramsey El-Assal from Jefferies.

A question on your debit card processing growth rate. They continue to come in higher than the underlying growth rates reported by the networks, as you mentioned. Can you parse out for us, kind of remind us of the different drivers of that above-market growth? Is it more the smaller asset-size banks you service are under-penetrated, are you taking share? Is it the Durbin factor in terms of interchange exemption for the small banks leading to more focus or higher growth? Can you kind of help us understand the drivers behind the above-market growth rate?

Yes, I mean, it's really -- I would boil it down to kind of 2 areas. We are taking share in -- primarily in the smaller financial institutions, connected to both a combination of kind of the integrated debit value proposition that we deliver and the win rates that Mark was talking about on the -- in the core account processing space. And then, the second piece of that frankly is, again, in the larger -- I'm sorry, in the smaller financial institutions, that's a group that is still kind of, yes, under-penetrated versus the largest institutions in the U.S. And I think, yes, I think over time that will moderate, but there's still a lot of opportunity in the debit business. And the good news in the quarter that we -- one of the good news points in the quarter that we didn't mention is the kind of the Durbin 3, or whatever we want to call it, right, the appeal to keep interchange where it was. I mean, that was good news and I think that will continue to have people get focused back on debit and should, and maybe serve as a little bit of a tailwind for the remainder of the year.

Well, that was sort of one of my follow-ups. Given the placement of Easter, when this nasty winter weather finally passing, do you see -- is debit growth accelerating a little bit in the final 3 quarters of the year?

Boy, I mean, it's kind of a little bit of a crystal ball question about consumer spending and GDP and everything else. I mean, why -- I don't think there's any question that retail sales were affected by the weather. At least that's certainly what it appears to be. And since the weather has broken, we have seen better trends in that business. And we'll likely follow the market with the premium that you see. And so if weather stays good and the economy stays good, I mean, I think we'll have some good results.

Fair enough. You mentioned higher output solution revenues in the quarter. Was this related to -- was this breach-related kind of reissuance or was it sort of separate from that type of activity?

No, it was really separate. It was really the new business side. We really signed some nice clients there. We did have a reissue in the quarter, but that was just a couple of million dollars. I think $2 million to $3 million on that special reissue.

Okay. And then very one last one for me. Incremental EMV card issuance, are you seeing any more of a demand or any more activity in terms of issuing EMV cards versus mag-striped cards or is it still sort of early days for that in your book?

Yes, it's still pretty early days. We're having a lot of conversations about that and we're trying to gauge the desire inside of our client base for that kind of reissue. But we're not seeing activity, meaningful activity there just yet. But we are having those conversations. I think that could be a good opportunity for us going into '15.

And I mean, you look at something like the MasterCard and Target announcement today. I mean, I think EMV is clearly -- whether it's EMV or other kinds of protection vehicles it's -- because that's going to get more and more attention and certainly, we would expect to see that, and frankly, be a beneficiary of that over time.

And our businesses are well prepared to address that need.

Andrew Jeffrey from SunTrust Robinson Humphrey.

Jeff, nice performance, obviously, in Payments. And it sounds like some of the strategies and the market share sort of positioning and associated gains are starting to pay off, so it's good to see. You made a comment toward the end of your prepared remarks about confidence about 2015 being even an acceleration year. Can you just frame that up in terms of the existing business versus additional customer wins, be they bill pay or, for example, Open Solutions, DNA wins? And maybe also just provide a little color as to perhaps your thinking around Mobiliti and whether that's part of your confidence even as you preliminarily look out into 2015.

Yes, it's a great question. So I'll give it a shot and then probably, both Mark and Tom will add to it. It really is a combination of things. I would say our strategy for the last several years has been to focus on bringing in high-quality revenue, and we define high-quality revenue as recurring revenue with good, solid operating margins. Margins that produce free cash flow that we can then reallocate for our shareholders. So we have, frankly, at times, probably to the detriment of what some would have liked us to have done, we tried to shy away from revenue that we didn't think was high quality. But for the last few years, we've been talking about a strategy that allows us to step up our revenue sustainably -- or I would say our internal revenue growth sustainably each year. So this year -- we were 3% last year, our range this year is 4% to 4.5%. And what we've said is we believe that we'll see a step-up in adjusted internal revenue growth again in 2015. Now barring the fact that there's a lot of things going on that we probably can't predict. But right now, everything that we can see would say that would happen. And that will happen for a combination of reasons. It will happen because for the last 3 or 4 years, we've had very strong sales performance. And that's coming on, on a regular basis. Number two, we've actually seen better retention within the client base, a little bit better compression trends and those kinds of things, not gigantic but meaningful in a large base over time. Now that doesn't mean we don't lose clients, because we certainly do. But on balance, we put real energy into that, making sure that we're driving value propositions that deliver that over time. So that's the second item. Third is some of the new types of products that we're talking about, whether they be the mobile ASP business that grew 90% in the quarter. Tom talked about business mobile banking, tablet, our new Biller Advantage technology, new things that are -- that we've been selling, that will begin coming live later in the year, ASP tablet. Those kinds of things. And then, the last is all of these kind of 12-month implementations, 18-month implementations of things that Mark was talking about around our core businesses. I mean it's all coming together. Again, it comes on slow because it's recurring revenue, but it's good, high-quality revenue.

The only thing I would add to that, because I think that's right, it's adoption rates, it's retention, it's compression, it's bringing on the new business that we've been talking about. The other thing that again, that gives us confidence as we look into the future, continues to be the sales pipeline. This is not just something that's going to run out of steam it really is a kind of momentum around the entire model that we've been building.

Okay, so it's pretty well -- pretty broad-based and pretty diversified it sounds like, with a little bit of tailwind from the macro.

Yes. And importantly, I mean it's a whole bunch of things that come together in this model, right? I mean, we're -- we've got 600, 700 different products and solutions, and you've got all of the implementations that have to happen over time. So it is broad-based, there's no easy answer. The only reason why I mentioned it is we are not sitting here today relying on any of the -- at Investor Day, we talked about these breakthrough growth opportunities. We talked about Real-Time and P2P and these things that just can really change our trajectory. We don't -- we aren't relying on that kind of a breakthrough to have these kinds of step-ups. All of that is incremental optionality to our growth rates.

Okay, all right. That's helpful. And then one mechanical question, and I apologize if it's beyond the scope of this call. But I'm intrigued by the real-time capabilities in Popmoney, and you mentioned U.S. Bank. Can you just talk a little bit about who bears fraud risk on an instant ACH transaction? Is that Fiserv or is that the initiating or the issuing institution?

Yes. So the answer to that is it depends on the institution itself. And let me just step back. We are not in the business of taking fraud risk. So that risk belongs to the institution. It's typically going to be on the originating institution. And the originating institutions are setting limits for these real-time transactions based on the models that they have, which tend to look a little bit like credit model. So these are -- we are in the business of creating technology, banks are in the business of taking risk. And so, that does sit there. And I think over time, right, over a longer horizon, building out the models that begin to be able to anticipate the non-POS real-time fraud risk, we think is one of the key measures or one of the key actions that need to be taken. And we're quite involved in how that's going to happen across the -- across our client base who is using that today. But that is one of the key check-off boxes that need to happen for real time to become ubiquity -- real-time non-POS to become ubiquitous, but it really is a pretty intriguing opportunity right now.

Okay. And one more if I might just sneak it in as -- maybe it's just a yes-or-no answer, Jeff. Is Mobiliti pricing kind of developing along the lines in the way that you would have anticipated a year or 2 ago?

I would say it's slightly better today than I would have anticipated it to be a year or 2 ago.

Bryan Keane from Deutsche Bank.

I heard most of the call. I missed a few parts, so just a couple of clarifications. On the Payments business, I think the question was asked that bill payment and the debit both decelerated, but the revenue growth in payment upticked 200 basis points. Was that due to outplacement? Or what exactly was that, that caused that increase in payment?

Well, I'll go into that. I think I answered that in the first question, but I'll go through it. I think, Brian, what I would say is in the whole Payments segment, we have a lot of different things in there. So we saw a lot of good growth in our online, our channels business, which is our online and Mobiliti business. Our debit business, while you're right, the volumes grew 11% I think last year, the fourth quarter was around 13%, we still had a very strong quarter for our debit business. Our volume was a little lighter due to the weather and a few other things, but as Jeff highlighted earlier, we have a lot of add-on product sales in the risk area and a whole host of different things in our debit business. So we still had a very strong quarter in debit. We had a very good quarter in our online and Mobiliti business. We had a good quarter in our Biller business, which is our Biller Solutions type business. And we did highlight the fact that a few of our clients are being acquired in that space over the remainder of the year, but we had a good quarter there. Our bill payment business grew 6% on the transaction side but did have a very solid revenue growth quarter. It was kind of brought down due to the fact that our largest client did not really meet expectations from a growth standpoint. We did grow double digit outside of that. And then finally, our Output Solutions business did have a good quarter, primarily tied to new sales. And so overall, we just really hit on a lot of different cylinders there. And the 6% bill payment growth in the quarter, last year, for the full year, we had about 7%. So again, it is a little lower due to the reason I mentioned, but again, we had a majority or -- a vast majority of the businesses in here that really have a good quarter, and so we're very pleased with that start to the year.

Yes, it sounds like there was a lot of different pieces to it. I just wondering if there was any one leading piece, but...

No, I think, again, that it's across each of those.

I would say good execution across virtually all of these businesses.

Yes, yes, I know. I mean, it's always good to hear good news about Output Solutions. So just on organic growth, it sounds like your organic growth for the second quarter will be down, maybe sounds like 3 to 4. And then the average of the first and second quarter, we should expect for the second half of 2014. Did I hear that correctly? And then -- because I guess that means that 6% is likely the highest growth for the year. Because originally, I know last quarter you talked about it being strong. Lowest point being the first quarter and then progressing every quarter throughout, so it just sounds like a different trajectory of organic growth.

Yes. Actually, Brian, the -- I think -- first of all, while we don't give quarterly guidance, we did want to remind people that we had a very strong second quarter last year. I think what we actually said this year is we actually expected, because last year's first quarter was flat, we expected actually to have kind of a good, a very good first quarter relative to that performance. In 2013, we indicated that we thought that we would step up. We started with 0 but that we would move up throughout the year and that we would exit at a higher rate. So I mean, I think the best way to summarize it is we feel really good about our performance for the year. We have good visibility into the rest of '14 and frankly, into '15. And we feel like we have a good prospect of being able to step up our sustainable, high-quality internal revenue growth rate in '15 over '14.

Okay, that helps. And then last, Tom. Free cash flow was flat year-over-year. I think net income was up 17% so just wanted to understand what were the moving pieces there and should we expect free cash flow to match adjusted net income growth of about high single digits?

Yes, I mean, we -- our free cash flow per share, I think, is about 10%. One of the things I want to highlight, Brian, was that last year, in the first quarter, our free cash flow was up about 30% over the prior year so we did have a real bang up first quarter last year. We did get impacted in this quarter a little bit on the timing of AR, as you'll see. We actually had a decline. We had stronger growth in the quarter, so our AR was flat. So we had a couple of working capital type items. But it's really timing this year. And so for the full year, we're very confident in our free cash flow per share that we had increasing $3.65. So we're very, very pleased with that.

Ashwin Shirvaikar from Citigroup Investment Research.

A couple of questions to start. One is a clarification with regards to the term fee. I know term fees are a regular part of the business, so just want to kind of quantify, is roughly 100 basis point benefit to financial margins, is that fair if I count that most of it drops down?

Yes, if you count. I mean, it's mainly about $9 million increase over the prior year, so it's a little bit more than that.

I was netting out the currency, I guess.

Yes, it's offset by the currency. But for the company, those term fees were up about -- were up $9 million, as I indicated before.

You can do the math.

Yes, absolutely. And the bill payment, when you mentioned the largest client not meeting expectations in the quarter, is that a multi-quarter issue? Is that -- what happened?

Yes, I mean, Ashwin, we had said actually when we gave guidance during the year, we had a question on bill pay. And we had shared that on balance, our largest client had not been growing at the rate that we would like. And I mean, I think everyone is aware of the strategic choices that are being made there. And from that perspective, we are a little bit pensive about what that growth rate will look like moving forward. So I think it is a little bit of a -- let me say it a different way. It is -- it is not an anomaly in the quarter. We think it's something that is going on with the institution. We've kind of accounted for it in our numbers, right, it's part of why our numbers are where they are. We're -- we have an intimate relationship with the bill payment numbers for all of our clients and so we're pretty good at predicting what's going on. So I think we're comfortable with what is going on there and have embedded it in our guidance for the year.

Right, right, understood. I was just trying to figure out if there was a reason you highlighted that particular reason. I guess one thing I worry about sometimes is when you talk about Real-Time, and that's pretty good opportunity. But is there a way to think of what these real-time transactions are replacing to the extent they're replacing other non-real-time transactions that you do yourselves. I mean, what's your net transaction growth and how does that, from an economic standpoint, translate to revenue growth?

I mean, good question. We'll give a quick answer because it's probably longer than we can cover here. But on balance, there are 2 kinds of real-time transactions that we're thinking about right now. We're thinking about around Popmoney and P2P. Now keep in mind, that's a new payment category. So you're going from check and cash to an electronic transaction. So that's an incremental electronic transaction. And then for folks that are selecting real time, that's basically incremental revenue per transaction. So we think that's kind of a -- that category itself has to be established. It's not replacing anything. The other area, and frankly, one of the areas that I'm personally very bullish on, and is what we categorized as expedited payments in our bill payment business. As you know, we have about 1.3 billion transactions a year. So those are existing transactions. And what we're doing is we're making available to a bill-payment user the opportunity at their option and at their expense to move money same day. And so you're not replacing anything. You're basically just adding revenue per transaction that the user wants, they're deeming it to be valuable. Institution shares in that revenue, it's an existing transaction. I actually believe that to the extent that we get expedited to take off, it will actually bring in more opportunity, more transactions per maker than we're having now because people would be more reliant. It basically is a strategy of allowing the users to move money at the speed of their choice. And that's -- that is fundamental to our long-term payment strategy.

That's very useful. If I can sneak one last one in. At your Investor Day, you've kind of talked about, obviously, account processing for large institutions. And I think at that time, for last year, it was sort of -- you had 5 or 7 deals. I was just wondering post 1Q, how does the pipeline for [indiscernible] account processing for large institutions?

Yes, it looks fine. I wouldn't say it's gangbusters but I think that's more a reflection of the fact that -- for that, in that category, I think that's more kind of just a reflection of the sort of episodic nature of large institutions and how they think about making changes. But we've got a nice pipeline and continue to have lots of great discussions.

Thanks, Ashwin. And thanks, everyone, for joining us. We appreciate your support. If you have any further questions, please don't hesitate to call our Investor Relations teams. Have a great afternoon.

Thank you. That does conclude today's conference. Thank you for your participation. You may now disconnect from the audio portion.