Welcome to the Fiserv 2016 Fourth Quarter Earnings Conference Call. [Operator Instructions] As a reminder, today's call is being recorded. At this time, I will turn the call over to Stephanie Gregor, Vice President of Investor Relations at Fiserv. You may begin. Thank you.

Thank you, and good afternoon. With me today are Jeff Yabuki, our Chief Executive Officer; Bob Hau, our Chief Financial Officer; and Mark Ernst, our Chief Operating Officer. Please note that our earnings release and supplemental presentation for the quarter are available on the Investor Relations section of fiserv.com. Our remarks today will include forward-looking statements about, among other matters, expected operating and financial results, anticipated benefits related to acquisitions and our strategic initiatives. Forward-looking statements may differ materially from actual results and are subject to a number of risks and uncertainties. Please refer to our earnings release for a discussion of these risk factors. You should also refer to our materials for today's call for an explanation of the non-GAAP financial measures discussed in this conference call, along with the reconciliation of those measures to the nearest applicable GAAP measures. These non-GAAP measures are indicators that management uses to provide additional meaningful comparisons between current results and prior reported results and as a basis for planning and forecasting for future periods. Unless stated otherwise, performance comparisons made throughout this call are year-over-year metrics. Also, please note that we will hold our Investor Day on June 20 in New York City. Please watch your inbox for additional information. With that, I will turn the call over to Jeff.

Thanks, Stephanie, and good afternoon. We punctuated 2016 with 16% adjusted earnings per share growth in the fourth quarter. Internal revenue growth in the quarter was 4%, led by our domestic businesses, which performed in line with our expectations, offset by a revenue miss in our international operations. Adjusted operating margin, free cash flow and sales results were all strong in the quarter. We extended our double-digit adjusted earnings per share growth to 31 consecutive years by registering 14% growth for the full year. Internal revenue growth was 4% for the year, led by strong performance in our Payments segment. Adjusted operating margin for the year was up 50 basis points to 32.2%, which is even more impressive when considering the margin headwind from acquisitions during the year. We achieved record free cash flow in 2016 of $1.1 billion, which translated to a 14% per share increase to $4.84. Sales performance was also a major highlight, increasing 21% over the prior year. Let me summarize our progress for each of you against our 2016 key shareholder priorities, which were: first, continue to build high-quality revenue while meeting our earnings commitments; second, build and enhance client relationships with an emphasis on digital and payments solutions; and third, to deliver innovation and integration which enables differentiated value for our clients. We continue to add high-quality revenue to our book of business even as our 4% internal revenue growth was below our initial guidance. Our 2016 performance was led by Payments segment internal revenue growth of 6%, which included strong results across a number of our businesses. As we noted in Q3's call, full year results would be impacted by the timing of revenue, primarily from implementation and product delays, which, as I mentioned, was further compounded by a Q4 revenue shortfall in…

Thanks, Jeff, and good afternoon, everyone. Adjusted revenue for the quarter increased 5% to $1.4 billion, and adjusted earnings per share increased 16% to $1.16. Internal revenue growth of 5% was led by strong performance in our Payments segment. Overall, the revenue growth in the quarter was generally in line with expectations, with the exception of international business, where revenue growth was negatively impacted by slower sales and some deal slippage. These deals were concentrated in license revenue, which created a rather large impact revenue hit for the international business in the quarter. Adjusted operating margin was up 140 basis points to 32.1% in the quarter due primarily to an easier prior year compare, as we mentioned during the Q3 earnings call. We marked the 31st consecutive year of double-digit adjusted earnings per share growth by achieving 14% for the full year. Full year operating margin was up 50 basis points to 32.2%, driven by -- primarily by Payments segment performance and a continued focus on operational effectiveness. As Jeff mentioned, this performance is even better when considering the 30 basis points of dilutive margin impact from acquisitions. Our Payments segment continued to produce strong internal revenue growth of 6% for both the quarter and the year. Performance in the quarter was led by card services, output solutions and our risk management businesses. Adjusted revenue, which includes the results from acquired businesses, grew 9% in the quarter to $728 million and 10% for the full year to $2.8 billion. Debit transaction volume growth remained in the high single digits and for the year was accompanied by a 10% increase in new client signings to more than 160 institutions. P2P transactions grew more than 30% for the full year, aided by a meaningful increase in Popmoney Instant transactions, which were up…

Thanks, Bob. Sales bounced back strongly in 2016, allowing us to print a record sales year. Sales attainment was 108% in the quarter and increased 22% over the prior year. Sales were up 21% for the full year, achieving 103% of quota. Q4 sales were led by our account processing and output solutions businesses and domestically were generally strong across the board. We saw a healthy increase in the number of new large deals signed for the year. And most important, even after a record sales year, our pipeline is very solid entering 2017. Integrated sales were excellent in the quarter, increasing 17% to $105 million and up 14% for the full year to $292 million. We continue to see solid demand in areas such as card services, bill payment, custom statements and digital solutions. We realized operational effectiveness savings of $64 million, meaningfully exceeding our $40 million target for the year. Savings were led primarily by procurement and workforce optimization. We also made very good progress on our data center consolidation, combining 18 locations during the year. Our operational effectiveness target for 2017 is $60 million. There is palpable optimism in the banking market on the heels of the election, with increased conviction in a rising rate environment coupled with regulatory reform. While it's hard to translate this positive sentiment to near-term results, we do believe that it could bias favorably for technology spend over the mid- to long term. For 2017, we expect clients to focus their spend on a broad combination of digital services, risk management and, in particular, cyber, along with the return to investing in more revenue-centric technologies, such as cash management and all forms of lending. Lastly, we remain optimistic about bank focus and commitment on P2P through the Zelle consortium. We are excited…

[Operator Instructions] The first question is from Dave Koning of Baird.

Yes, and I guess, first of all, you mentioned the sale to Genpact. I was just wondering about the acquisition in January. Any metrics around rough size of revenue and if there's some margin pressure expected from that acquisition in 2017?

Yes. Dave, it's Bob. Overall, we're excited about the product and the solution that, that brings to us. But from an impact to both revenue and EPS, it's a relatively small acquisition and so you won't see a real impact. And of course, it is fully anticipated in our guidance for 2017.

And Dave, it's really a -- substantially a product acquisition. They have a nice footprint of clients, and we expect that to be both sold -- continue to be sold directly but also -- and the most important element of it in our current value proposition is to integrate it into other platforms to make our commercial services proposition substantially more robust.

Got you. Okay. And then your business is so steady and like every quarter is good, basically. So maybe if I just think long term about margins, they keep going up. Is that mostly a function of where the most growth is coming from, is just the highest incremental margin, and maybe some of the lower growth products that you have might just be lower margin? Is that the main thing? Or is it just that you're cutting cost in certain areas and allowing margins to go up that way? And maybe how sustainable is this over time, because it's been so good?

So that's a great question, Dave. And we'll probably tag team this a bit. It is -- we have the very good fortune of having a business which has any number of scaled businesses, whether it be an account processing platform like Premier or a debit processing business or bill pay. We've got a number of towers of businesses where we've put lots and lots money into the infrastructure, and as we invest, we can move those investments over large blocks of clients and large numbers of transactions. And because they're large processing engines, they tend to have higher incremental margins on the way in. So that's number one. Number two, as you know, we have -- we've had -- we're in our third phase now of operational effectiveness, and we've done a pretty good job. We got -- I think we got around $64 million in 2016 in terms of taking costs out of our infrastructure. Some of that drops through to the bottom line, but a lot of that goes back into product and allows us to invest into product in a more substitution way or pattern instead of it just being incremental. So we've got that as well. And then the other thing is, several years ago, you may remember we were investing in some technologies like mobile, where we were having to invest in front of the curve. Because we tend to buy these -- I'm sorry, we tend to build these larger technology stacks and infrastructures, we have to build them before the revenue comes on. That compresses our margin. When the revenue starts to come on, we make it up here. It's one of the reasons why, in Bob's prepared remarks, he mentioned that we are now starting to put more money into the Financial segment. And so we would expect to see Financial segment, which has really grown rapidly over the last several years, maybe start to moderate a bit because we're putting these big investments in -- or putting the investments in there. Some of them are larger. And then, over time, that will scale back up. But we've said for a long time that we believe that we have a lot of room to continue to grow margin over time, even in the face of competitive pressure, because of the proactivity we have, frankly, in managing our cost base and some of the towers of scale technologies.

The only thing I'd add to that is things like data center consolidation, this is something Jeff commented on in the -- or Bob maybe did in the prepared remarks, but we are really in year 2 of a 5-year process. There's -- a lot of opportunity remains in something like that. There are any number of these things where we know we can become much more efficient, and it actually enhances the delivery that we have for our clients because of the efficiency that we're able to put into our operations. So I would agree; we've got a lot of room to run yet.

Our next question is from Andrew Jeffrey of SunTrust.

Jeff, I'm just wondering if you can comment a little bit in the U.S., I think -- I'm thinking particularly about the credit union market, but generally on the competitive environment and whether you've seen a change there. You've obviously done very well with DNA. So maybe you can discuss takeaways and maybe in pricing perhaps on some of those wins. I'm just trying to get a general sense of what you're seeing out there.

Sure. And when you say credit union, Andrew, I assume you mean the core account processing piece of the credit union?

Yes, exactly, right.

Yes. I would say that, across credit union and bank and frankly everywhere, the market is competitive and it continues to be competitive. And as we've talked about on several different occasions, there's a dynamic in the market where there are more competitors chasing less financial institutions. And that's a pretty good formula for intensity. And so we continue to see that. It is one of the reasons why we have been investing the way we have in some products, such as Architect, as we mentioned earlier. And in fact, even financial messenger by OBS will also -- or Messenger Center by OBS will also allow some of the larger credit unions to provide commercial services to their clients. So I think that's -- we are looking to build a broader formula for differentiation around our account processing core value proposition. Frankly, we think that DNA is the strongest -- what's the right way to say it -- is the strongest account processing engine facing off to the credit union market today because of the modern elements of the platform and the workflows, et cetera, et cetera. And frankly, we're going head-to-head with competitors that I'm sure you can imagine on a regular basis. As far as takeaways, we typically don't give those numbers, but we're winning over our fair share of the beauty pageants that we're invited to participate in. So we feel good about where we're going in that space.

And don't let anybody ever say you're not good looking, right? Would you characterize the environment competitively as -- I know you said consistently it's competitive. Has it gotten more so in your view in the last 12 months?

So again, one of the problems is, because all of us, all of the core competitors have both core and other products, it depends on what you're talking about. If we're talking about digital, everything digital is very competitive in terms of you've got some competitors that you know about, you've got 7 kids in a garage building new technologies, and it's pretty easy to put stuff out there. So those -- the fringes of the core processing platforms, or the value, some of the value -- interesting value elements of the core processing platforms are more competitive. And even in the credit union space, there are companies such as Corelation that weren't in the mix a couple of years ago. You've got some folks coming in from outside. So I would say that the processes are more competitive. I frankly don't see -- I don't see a lot of different movement in the market as we sit here today, but it is incumbent upon companies like us -- and I can only speak to us strategically -- that we're building value propositions that will allow us to continue to prosper over the mid to long term.

Okay, that's helpful. And one quick one, Bob. Could you perhaps quantify the benefits in your EPS guidance from the excess tax benefits from SBC?

Yes, I think the way to think about it is the slightly less than 33% tax rate is, call it 1.5 points below what we've seen over the last couple of years. So 34.5% in '16, 34.5% in 2015. That equates to an order of magnitude about $0.13, $0.14 benefit in 2017. And again, as we mentioned in the opening comments, that is something that we expect to see for the foreseeable future. So this is a step down and then holds for that -- for a period of time.

That's the non-GAAP tax rate, okay.

That is the -- it's an adjusted tax rate, that's correct, but this change in accounting is GAAP driven.

Our next question is from David Togut of Evercore ISI.

This is Rayna Kumar for David Togut. For 2017, could you please quantify expected organic revenue growth and margin expansion between Payments and Financial segments and maybe just call out the drivers?

Yes. From the standpoint of 2016, we actually don't break that…

2017.

2017, we don't break that out between the 2 segments. In our 4% to 5% guidance for the internal rate of growth, you can certainly expect, like we've seen for the last several years, our Payments segment will grow faster than our Financial segment. But we don't give specific guidance between the 2 segments.

Got it. What percent of your customers have completed the EMV card reissuance? And maybe if you can just tell us what that breakdown is between credit and debit.

So you'll remember that we're substantially a debit provider, and most people know that debit was kind of in the back seat relative to credit issuance because of the differentials and potential fraud risk. We would say we're kind of in the middle innings of the reissue, and we expect to see -- continue to see benefits this year or next year. We also mentioned earlier in the year that we had our first major institution go to contactless, and we expect that, that will also start to create a little bit of momentum in the market going towards the end of '17 but certainly into '18 and '19.

Okay. And one last one from me. If you can just call out term fees in the fourth quarter and how that compares to last year and your expectations for '17.

So for term fees in the fourth quarter, as expected, we did see some growth year-over-year for the quarter. But on a full year basis, as we described in our Q3 earnings call, we did see term fees down year-over-year. Overall license and term in aggregate was up, call it about $10 million on a full-year basis. For 2017, again, we don't give that specific guidance but certainly incorporate it in our overall internal rate of growth of 4% to 5%.

Our next question is from Ramsey El-Assal of Jefferies.

This is Christen Chen in for Ramsey. I guess maybe piggyback off of Dave's question. Just on the '17 guide, aside from operating leverage and the operational cost initiatives, are there any other items to call out in terms of impacting -- impacts on margins? I mean, potentially the acquisitions you all made in '16 that was dilutive could make some contributions. Are there any other items that we should be thinking about? And then also, does your guidance assume any share buybacks?

So on the margin question specifically, our guidance for the year is at least 50 basis points. We would expect that as we grow the acquisitions that we brought into the family that they would probably have some barely de minimis impact on margin this year. Because you have to sell and then it has to convert to revenue, there could be something small. But the majority -- the substantial, substantial majority of the margin is coming from a combination of revenue growth against scaled solutions and our efforts against operational effectiveness.

Share repurchase.

Yes, I mean, all of the uses of capital that we contemplate during the year would be included in our guidance.

Okay. And then just switching gears a little bit. We've seen some of the PIN debit networks get more aggressive in terms of rolling out PINless debit and kind of authentication solutions that are relevant to signature. How far along are you all with that kind of process in terms of being able to handle signature transactions? And how do you guys see that debit market evolving now that Visa's backed off of some of their EMV-related routing strategies?

Yes, that's a really good question. We have been working on this technology for a couple of years in preparation for a day when the market could be more open. And so we're, let's say, well prepared to take advantage of those opportunities where they exist, and we're excited about how the market is moving.

Our next question is from Jim Schneider of Goldman Sachs.

I guess -- apologies if this was already answered, but can you maybe talk about the outlook you see for bank consolidation this year and whether that's any kind of factor in terms of your outlook for this year and then kind of maybe the impact further on out?

So we don't anticipate bank consolidation to be any -- in any way meaningfully different than we saw in '16. Although there is certainly significantly more optimism at this stage of the year than there was last year, the banking business is still tough. And there will continue to be winners and losers in the acquisition and merger wars, and we will continue to win and take, hopefully, our fair share of those. So we haven't accounted for it specifically. We don't sit here and say that there is going to be a significant change in both termination fees or anything else. And specifically with regard to '17, because of the timing on deconversions, typically we have a good idea already of what that's going to look like, and so we would have factored a lot of that into our numbers already.

That's helpful color. And then I'm not sure if I missed it or you mentioned it, but can you maybe talk about the DNA wins that you kind of achieved in 2016 and whether you expect 2017 to be better or worse than that?

So wins in 2016 were roughly 20%, a little bit more than 20% greater than they were in '15 in terms of number of institutions. 20 institutions went live. Of those institutions that went live, 7 of them had assets greater than $1 billion. We did sign our largest DNA client ever in 2017 -- in 2016, I'm sorry, in terms of size, asset size. So we're quite excited about that installation. It actually opens up a new segment of the market that we're focused on right now. Momentum in DNA is very strong. And the combination of DNA coupled with the steps that we've taken to enhance our commercial services capabilities we think is a winning combination. So we expect to have pretty good pipeline building during the year and hopefully a few more wins. But over time, we expect that to be a very powerful combination, the pairing up of real-time, straight-through-processing commercial capabilities that already links up to our what we would say is best in the market retail proposition.

Our next question is from Ashwin Shirvaikar of Citi.

I guess my first question is with regards to CapEx, and what are the top 2 key areas of investment that you're doing? I am specifically asking this question because, Jeff, you highlighted innovation. So that's where I want to go with...

Yes, I would say, Ashwin, that probably the largest, by a good amount right now, is the data center work that we've got going on, both in terms of the consolidation as well as improving the overall efficiency of those data centers and actually preparing to lower cost in the short term as well as gain scale in the long term as we consolidate that. Those operations, we build in best-in-class capability as well as scalability. So we see some long-term benefits of that investment. That would definitely be the highest one we've got right now for '16 and '17 for that matter.

And Ashwin, we are making a lot of different investments in innovation. Make no mistake about that. But for better or worse, almost all of the investments that we make in innovation tend to be around people, and we have a pretty conservative posture that we take on cap software. And therefore, it's running through the P&L. So that's one of the things -- one of the reasons why we highlighted the margin, the change in shift from the Payments segment to starting to move some incremental investments over to financial because they -- we don't capitalize the majority of them and they run through the P&L. That's where they're going to be seen.

Understood. And then going back to the topic of competition, and I appreciate the answer you gave a short while ago, but when core deals come up for renewal nowadays, do you still expect the percent won by incumbents would stay relatively consistent? I mean, there are, at least the way I look at it, really the top 2, 3 players tend to win most of the stuff that comes up, and that's how it's been. And is that going to change? Is that -- I'm kind of wondering why you brought up the topic of competition, heightened competition. And FIS had done the same so...

Yes, I only brought it up because someone asked a question. Ash, what I would say, again, it depends on the market. If you were talking about mobile banking, there could easily be 30 or 40 competitors for mobile banking, where frankly, 6 years ago, there was -- there were probably the account processors, the core processors and Digital Insight. And now it's a much broader space, and that has spread to the -- some of the payments capabilities and everything else that gets dragged along. There are -- there is new -- there's more competition on the credit union side of the house, certainly around core processing. And we have some non-U.S. competitors in the larger end of the market that we were not seeing before who are in the market trying to take share. Conversely, what I would say is, at least our data would say that less clients are switching nowadays. And so the incumbents do have a -- they do have a strong position in that people are saying, "I'd rather not switch my core because there's all these other things that I need to do," whether it's put in a new commercial cash management system or a new mobile experience, or whatever the case may be, that's tending to take more priority than swapping core.

Understood. My last question is with regards to -- in your prepared remarks you talked about how banks are at least beginning to look at some, let's call it -- I think the term you used was revenue-centric demand, which is a great term. I guess the question there becomes, as your clients invest in this demand, is it more advantageous to potentially sort of lead with some sort of consulting or people-based capability? Do they look for that kind of thing? Being focused more on revenue growth, does it give you any kind of benefit on pricing? Could you answer those sorts of questions perhaps?

Sure. So I'll give you my perspective, and others may want to add as well. It really depends a little bit on the size of the institution and what's their DNA. There are some larger institutions that do everything through -- or do make a lot of their bigger decisions using people-based consulting services to help them get to a place where they can make a technology decision. And sometimes those consultants will have an impact or bearing on the actual technology that's ultimately selected. But for the majority, the substantial majority of the market, these decisions are not made via kind of the people-based services that you're talking about. Sometimes there are independent third parties who are helping the institutions to intermediate the buying decisions. They're running processes, buying processes and things like that. But for the most part, on the kinds of products that we're talking about here, whether they be new commercial cash management or commercial lending or some of the consumer lending types of products, the solutions that are going to drive real tangible revenue, could also be digital account opening, those types of capabilities, we're not seeing a lot of intermediation there. Mark, I don't...

I think that's exactly right. We just don't see that going on very much in the market. I mean, certainly there's anecdotal situations where that occurs, but it's more -- far more the exception when we see it than it is any kind of a trend. And as a result, we don't feel compelled to help solve that problem.

Our next question is from Kartik Mehta of Northcoast Research.

Jeff, you talked about, at the beginning of the call, banks feeling better, obviously interest rates improving and also them hoping for regulatory relief. Has that yet resulted in better spending? Or is it that the banks just are anticipating this and when it happens you'll see the spending?

It would be more the latter than the former. It is right now manifesting in conversations. So for example, I've had a couple of conversations this year with CEOs that I haven't had in a while, and the conversation went something like this: "So why don't you tell me what you have that can help us build our business?" That's a different conversation than, "Why don't you tell us what you can do to help us save some money on our technology spend?" And that -- I'm using that only as an example to say that is the feeling in the market right now. But as we said in the remarks as well, I see this to be much more of a mid- to long-term benefit because, first of all, some things are going to have to happen. Opinions are changing, but something's going to have to happen to have people say, "All right, I'm going to be able to lock in some benefit, and now I can do something different with it."

At this point, this is a 60-day phenomenon. I mean -- and we think it's going to continue because of where rates are going and because the prospect of regulatory kind of easing, but there's a long way between there and spending.

And I would say that right now, as we sit here today, our guidance clearly does not contemplate any kind of meaningful change in buying behaviors in the market.

And Jeff, if you look at the momentum behind the organic growth improvement for you in 2017 compared to 2017 -- 2016, is that the result of innovation? Is it the result of that the banks needed to spend on things that you're offering? And just to take it one step further, what would change that momentum into 2018?

So the big drivers going from '16 to '17, probably the first -- the most important item is sales. We had a pretty weak '15, we had a weak Q1, and we had a very strong Q2, 3 and 4. And we have a fairly strong pipeline entering 2017. And so a 20% increase in sales, which obviously will have to get implemented over time, much of those sales get implemented over time, we feel like that is something that is on the shelf and now it's a matter of us getting implemented and having -- making sure the clients and the way we partner with clients gets that done. And we talked about that in Q3, how that actually had a little bit of a negative effect on us because we got delayed. But that's point one. Point two is we have some products that we talked about today, Notifi being one of them, but Notifi and instant issue, CardValet, IPS, some products that we expected would have bigger benefits in '16. And we're seeing some continuing aggregate demand there. And we expect that, that will now start to come online and help us, for better or worse, coming off a lower compare in '16 than we had originally anticipated. We also, as we mentioned, are having some good traction in products like BillMatrix Next and Architect, which were previously not treated as organic revenue growing products because they were in the first year of acquisition, and so we'll get some tailwind from that. A little bit more EMV. Mobiliti will continue to grow. And then probably the last thing I would say is Zelle, right. Zelle is predicted to go live in June. And if it goes live, we'll get some benefit. But the beauty there is it has everyone looking at their retail payment strategies and how they fit. And our -- some of our technologies, like our IPS experience, which is a single-landing idea for account-to-account transfers, bill pay and P2P, we expect things like -- technologies like that to have an impact. We talked about Popmoney Instant transactions I think being up nearly 400% for the year. I think those are the areas that give us some comfort going into '17. And frankly, the thing that could derail us is if something happens in the market where clients freeze up and they're not implementing or they're not moving forward. That is where I see the big risk in our numbers this year.

Our next question is from Chris Shutler of William Blair.

So I guess first, just wondering what happened in the quarter in international, maybe just a little bit more detail there. I'm assuming it was around Agiliti, but maybe just quantify what happened in terms of the shortfall over -- how much was timing versus something else?

Yes, it wasn't Agiliti at all. In fact, Agiliti, we had a couple of go-lives in Q4 which actually went pretty well. And Agiliti is longer-tailed revenue. So an issue with Agiliti we would have known. It was all really license-oriented revenue, so high amounts of sales converting to impact revenue. The majority of those got pushed into '17, and so we'll look for that lay-in, in '17, all things being equal.

Okay, great. And then on DNA, would you mind just running through those numbers with us again? And I'm curious how many of the DNA signings and implementations have been new clients versus existing ones?

So sales in 2017 were up 22%. Institutions in 2016, sorry, were up 22 -- 20% versus 2015. And implementations were at 20, and 7 of those implementations were -- 7 of those implementations were assets -- institutions with assets greater than $1 billion. On the credit union side it is -- you have a little bit more migration of existing platforms to new, but definitely we have new. And on the bank side, it's almost all new.

Okay, got you. And then lastly, Jeff, when you talk about sales, sales were up, I think, 22% in the quarter, so strong number. Is that sales number measuring TCV sold in the quarter? Or is that kind of an annualized revenue from sales? I'm just trying to understand that.

It's TCV.

Okay. Could you give us some sense of the annualized revenue growth? I just -- I ask because I know that in the market there have been a lot more sales that have been kind of longer, longer and longer time frames.

Yes, I mean, we don't provide that information. I will say that the -- what's -- the best way to think about it is the implementation cycles for the things that were sold, there were a couple of items we mentioned -- a couple of big sales we mentioned in Q2 that we thought were going to have shorter cycles, and lo and behold, they're going to end up being 12- to 18-month cycles. So I would say, for the most part, the tracking of the implementation cycles is about on par with where it has been historically.

Our next question is from Joseph Foresi of Cantor Fitzgerald.

This is Mike Reid on for Joe. I was wondering if you could give us maybe some color on some of the new initiatives: CheckFree, DNA, Mobiliti, Popmoney and even some of the newer ones. Does one of those, you think, have opportunity to move the needle this year maybe more than some of the others?

We're all sitting here thinking. We're contemplating the question. I think in the aggregate they'll move the needle. The ability for any one of -- I mean, the beauty of our model is it's a recurring revenue model and it builds in transactions over time. The difficulty in our model is it's a recurring revenue model which builds in transactions over time. And so from our perspective, we care a lot more about how well are we doing it at building the products and putting them into the market and having them drive value so they're going to be adopted and drive revenue. So yes, in the aggregate, they're going to move the needle a bit in '17, but when you think about '18 and '19, that's where it's going to matter. And I would use Mobiliti as an example. I think Bob mentioned in his prepared remarks that Mobiliti users have grown 90% over the last 2 years and that -- to 5.5 million. To the extent that some of these products have the ability to do that -- and they do. In fact, products like Notifi are much broader-based than something like Mobiliti. They can have meaningful impacts on the company for a long period of time in terms of driving growth. But more importantly, they create differentiated advantages for our clients, for us and therefore our clients, and that's why these solutions are so important.

But the net effect of that is almost nothing can kind of pop in a given year and move the needle.

In those kinds of products.

In those kind of solutions.

Okay, individually.

Yes.

Okay. And then keeping it on to 2018, then, do you think that could be an acceleration year if the momentum continues? And then what would be an early indication of that taking hold?

So the answer to the first part of the question was yes, and the answer to the second part of the question is I think that's a better discussion at Investor Day.

Our next question is from Tien-tsin Huang of JPMorgan.

Good to catch up. I jumped in a little bit late, but just, I guess, Jeff, following up on your comment around the potential for freezing of client spending, that makes sense, which sort of reminded me to ask, is compliance revenue -- how big of a contribution has that been in terms of new sales in the last couple of years? And how big is it in terms of revenue now? I'm curious if that's an area where you could see some delays or deferrals.

So while compliance was at the top of everyone's list, I was frustrated that we weren't moving fast enough to put products into the market against that demand. So now when we think maybe compliance products will be a little bit more out of vogue, I'm not too concerned about the impact on our revenue.

Okay, good. I figured so much. And then just on the -- just overall big picture, just thinking about visibility, I know you've gotten a lot of questions around it, but just thinking about visibility in this environment today versus 12 months ago, how would you characterize that?

Revenue visibility?

Yes, I'm sorry, revenue visibility, earnings visibly, however you want to handle that.

Yes, pretty -- I mean, pretty high. We are blessed with, again, a business model that, as you know, has a pretty high degree of recurring revenue. And for the most part we can see what's coming. The beauty of any number of the products and services that we've been building is we're selling them fairly early. They're getting queued. The biggest issue that I -- that we will have is if clients make decisions that delays implementations, especially large ones. Yes, that's -- and to the extent that some of these products are dependent upon consumer adoption, obviously you've got an issue because of the intermediary role that the institutions play. But on balance, I think we're in reasonable shape.

Our next question is from Paul Condra of Credit Suisse.

Just a couple quick ones, I guess. You didn't size that impact on the international kind of timing issue in the Financial segment?

No.

Okay. And then the -- you mentioned dilution from the acquisition. Could you quantify that, on the margin impact? I'm just kind of curious how much you outgrew that.

Yes. So we talked about it in terms of the full year impact in 2016. Had we not had that dilution, the margins for the overall company would have been up by about 30 basis points. For our Payments segment alone it's about 60 points.

Okay. Okay, great. And should we think of that 50 bps as kind of continuing into 2018, the way to think about continued margin expansion?

Yes.

And we -- what we have said, Paul, is that we believe as part of our long-term guidance that we have the ability to increase our adjusted operating margin by generally at least 50 basis points per year on average.

Perfect. Okay, great. And then one just kind of broader question. I mean, a lot of focus on H-1B visas. And I'm curious if you have any kind of -- like your mix of employees that work with those visas and how you're thinking about changes to that program and any impact you might have.

I think at this stage we're paying attention to what's going on and we'll likely see how it all settles out.

Our last question is from Brett Huff of Stephens Inc.

Can you talk a little bit about the commercial cash management or treasury management, however we want to talk about it? All of a sudden it seems like there's a lot of focus on that. Jack Henry is starting to build their own. You guys bought a nice asset. What's the driver for that? Is it just sort of time? Or is it that banks are refocusing on that? Or have we just underinvested in it? Kind of what's changing in the market that's driving that, do you think?

Yes. So Brett, I would say that it's a combination of factors. If you look at surveys right now of bank executives who are making technology decisions or maybe business technologies that are enabled by technology, near the top of the list you're going to see commercial cash management and commercial lending. And so those capabilities, because they are serving the most important clients in the bank, have always been important, but they're becoming more important. And they're becoming more important because the retail profitability of the banks is getting compressed, and therefore banks are going to the places that they know and that's serving their commercial clients. And the further up you want to move in the size of the institution -- so as you break through $1 billion or $3 billion or $5 billion or $10 billion, the commercial capability is the most important part of the -- often the most important part of the analysis, the buyer analysis. And so that's why I believe you're hearing people talk about it. For us, we made a decision that said -- we have been looking at building, and we have built our product meaningfully over the last 3 or 4 years, but our decision was it was time to leapfrog the market. And we -- the solution that we bought is a solution that the guys who did the business had been -- actually was the original Magnet guy, Dan Myers, and he -- this has been his life. And he -- they know how to build cash management. It has gotten fantastic reviews. We heard it, we kept hearing about it from clients, and it was a little bit of if you can't beat them, join them. And instead of having to wait 3, 4, 5 years to build something and get into the market -- because you really -- this is an area where you need to have deep, deep, deep functional expertise, and we thought this was by far the most prudent way to go. And we are thrilled with the responses that we've gotten from our clients and prospects as it relates to this acquisition.

That's helpful. And then just last one on P2P. I know it's been discussed a little bit. Any updates on your view on the game between bank-driven versus nonbank-driven peer-to-peer? With PayPal starting to work more together with banks I think the distinction maybe got a little bit murkier. Any additional data or any additional thoughts you have on this peer-to-peer as it evolves, number one? And then number two, monetization of peer-to-peer other than express payments, or is this more of a relationship we want to make sure our customers stay within our digital footprint?

So Brett, I would say -- and Mark may want to add on to this. I would say that it's been our belief that if you give a consumer a choice, would you rather move your money through a regulated financial institution or a company that is a merchant acquirer, they probably won't know what a merchant acquirer is and they'll likely go with the regulated financial institution. Now I'm -- it's a little tongue-in-cheek because Venmo has done well, and those folks have done a nice job with it, no question about that. The -- we're very aligned with what's going on with Zelle, and we are optimistic that, through Zelle and Popmoney and any number of others, that banks will end up being the primary place in which payments move from one person to another. Our revenue model is based on transactions. And so while there may be no consumer-based transaction, as is the case in many other examples, we are providing a very safe and very secure product that allows that money to move with complete confidence to the consumer. And we've invested lots of money to make sure that we have the leading product in the market. And we do, and we're excited about that. So we do see monetization there on top of the real-time instant opportunity that we talked about.

Yes, the only thing I'd add is we do a lot of research, and we are tracking the market and consumer attitudes around this whole space pretty regularly. We have not seen any change in the fact that consumers, by a large margin, prefer their financial institution, their existing bank or credit union, to be the provider of this service, and they are looking for a common network or a common brand through which to do that. And so we -- that's why we are so excited about the prospect of the Zelle capability coming online.

Thanks, Brett. Thanks, everyone, for joining us this afternoon. If you have any further questions, don't hesitate to give us a call. We also look forward to seeing you at our Investor Day later on in the year. Have a good night, everyone.

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