Welcome to the Fiserv 2016 Third 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. Ma'am, you may begin.

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

Thanks, Stephanie, and good afternoon, everyone. Our third quarter results were generally in line with our expectations, including solid internal revenue growth, strong operating performance and excellent free cash flow, leading to another increase in our full year adjusted earnings per share guidance. As we previewed in our Q2 call, sales results in the quarter were very strong, coming in at 119% of quota, and for the second quarter on a row, 34% ahead of prior year's results. Internal revenue growth was 4% in both the quarter and year-to-date, with adjusted earnings per share up 11% and 15% in each period, respectively. Free cash flow per share through September was up a healthy 20% to $3.32. Increasing our adjusted earnings per share guidance for the second straight quarter reflects our strong operating performance. At the same time, the combination of implementation delays and bringing on new revenue, along with lower termination fees, have us reducing our revenue guidance for the full year. Although we're disappointed in the shortfall, we take comfort knowing that the primary revenue variances are timing related, a combination of signing new business and some product launch delays. We are confident these revenues will come online in 2017, which will contribute to our anticipated internal revenue growth step-up next year. Now let me provide an update on our progress against our 3 key shareholder priorities for 2016, which are: first, continue to build high-quality revenue while meeting our earnings commitments; second, build and enhance client relationships with an emphasis on digital and payment solutions; and last, deliver innovation and integration which enables differentiated value for our clients. We remain committed to building high-quality revenue, which is at the core of our internal revenue growth acceleration strategy. Even with this year's revenue delays impacting internal revenue growth, we continue to see significant growth opportunities on the horizon. Adjusted operating margin in the quarter was down slightly compared to last year's Q3, which was one of our strongest margin quarters ever, but up 90 basis points sequentially, placing this quarter's results near the top of our best margin performances ever. The combination of high-quality revenue, strong adjusted operating margin and capital allocation discipline produced a 20% increase in free cash flow per share through the first 3 quarters of the year. Our second priority is to build and enhance client relationships with an emphasis on digital and payment solutions. We continue to see product demand across financial services in areas which enhance digital experiences. Along those lines, we signed a $20 billion bank to our CheckFree bill pay solution in the quarter. This Midwest institution made the decision to enrich their digital payments experience, resulting in a competitive takeaway for our market-leading bill payment solution. We were also pleased to welcome 5 new DNA clients during the quarter, which included Farm Credit Services of America. This institution, with $25 billion in assets, was focused on making a long-term decision based on modern technology and enhanced flexibility that could also be tailored to their unique business needs. We're excited about providing technology and services to this new category of specialized institutions. Mobiliti ASP subscribers increased 34% to nearly 5.2 million users compared to the prior year and 7% sequentially, reflecting the continuing importance of digital engagement between financial institutions and their customers. Mobiliti business also continued its growth, bringing nearly 30 clients live in the quarter and more than 30% sequential user growth. Earlier this week, the bank consortium, EWS, announced Zelle as the brand for its P2P service, which is scheduled to go live in early 2017. Together, we formed a partnership that, on its own, will enable real-time P2P transactions to over 80% of the deposit accounts in the U.S. Today, we support many of the 19 announced bank and credit union partners through Popmoney, and a number of these, including Ally Bank, Bank of the West and BECU, have already committed to access Zelle using our market-leading turnkey solution. In addition to broad network reach, clients selecting our offering can benefit from our proven P2P services, such as broadened credit risk management, settlement, reporting, analytics and directory management, many of which may also be utilized by institutions on an a la carte basis. We continue to believe strongly that a bank-centric P2P is a long-term winning solution, and with over 2,400 member institutions in our network, we expect to play an important role in spurring growth for this exciting new opportunity. Our third priority is to deliver innovation and integration which enables differentiated value for our clients. Last quarter, we mentioned Verifast, our advanced biometric authentication solution. Early interest continues to be strong and we've already signed 25 clients. One of our beta clients, Gesa Credit Union, has received the CUNA award for excellence in technology for their use of Verifast. In addition, Fiserv was recognized as the customer engagement category winner of the IDC Financial Insights FinTech Rankings Real Results for Gesa's rollout of Verifast as an innovation that creates meaningful and cutting-edge change in the FI space. We continue to focus energy on delivering solutions that meet the demands of rising consumer expectations. Along those lines, FCTI signed with Fiserv during the quarter to provide transaction processing for nearly 8,000 ATMs at 7-Eleven stores. In addition to direct card usage, FCTI has also enabled our award-winning CardFree Cash solution, which allows consumers to securely access their money using only a mobile phone. We're excited to partner with FCTI to bring value to their customers at the point of thought. With that, let me turn the call over to Bob to provide more detail on our financial results.

Thanks, Jeff, and good afternoon, everyone. Adjusted revenue increased 5% in both the quarter and year-to-date periods to $1.3 billion and $3.9 billion, respectively. Internal revenue growth was 4% in both periods, and as we highlighted on our last call, Q3's results were negatively impacted by a large reduction in termination fees. This $10 million headwind was a bit lower than anticipated due to some acceleration in termination fees from the fourth quarter. We continue to expect full year termination fees to remain below the 2015 level. Adjusted operating income in the quarter increased 4% to $429 million and is up 6% year-to-date to $1.2 billion. Adjusted operating margin of 32.8% in the quarter was up 90 basis points sequentially, but was down 30 basis points against the very difficult prior year compare. Year-to-date, adjusted operating margin has increased 20 basis points to 32.2%, primarily related to excellent Payments segment performance and progress in operational efficiency initiatives, offset somewhat by dilution from acquisitions earlier in the year. Adjusted earnings per share was up 11% to $1.14 in the quarter and is up 15% to $3.28 for the year-to-date. We are well on our way to our 31st consecutive year of double-digit adjusted EPS growth. Turning to our segment results. Internal revenue growth in the Payments segment was 5% in the quarter and is 6% year-to-date. Payments segment revenue growth was led by Output Solutions, card services and electronic payments. EMV card personalization was strong in this quarter, leading to a less than $1 million deferral in Q3, continuing the declining deferral trend we experienced over the last several quarters. Adjusted revenue, which includes results from acquired businesses, was up 9% in the quarter to $701 million and is up 10% year-to-date to $2.1 billion. Debit transaction growth in the quarter trended up to the low double digits, and P2P transactions grew in the mid-30% range. Real-time transaction growth in the quarter was impressive, up more than 100% over the prior year period, led by growth in Popmoney instant transactions. New client growth in our Payments and Channels businesses has been solid, adding over 100 new debit clients, nearly 260 bill payment clients, and signing over 150 additional Mobiliti ASP clients through the end of September. Payments segment adjusted operating income growth was exceptional, increasing 12% in the quarter to $242 million and year-to-date is up 14% to $705 million. Segment adjusted operating margin expanded 70 basis points to 34.4% in the quarter, which is an all-time high, and up 140 basis points to 34.1% for the first 9 months of the year. Integration efforts at our acquired payments businesses are progressing well, and we expect more meaningful synergy benefits as we close out the year and roll into 2017. Adjusted revenue in the Financial segment was $624 million in the quarter and $1.8 billion during the first 9 months of the year. Segment internal revenue growth was 2% in the quarter and 1% year-to-date. But for the reduction in termination fee revenue, Financial segment growth would have been 3% for the quarter. Adjusted operating income for the Financial segment was $209 million in the quarter and is $606 million year-to-date. Adjusted operating margin was up 50 basis points sequentially to 33.5% and down 200 basis points in the quarter, driven primarily by the low termination fees, which was 120 basis points alone, and the timing of expenses such as incentives and our quarterly client conference. Along those lines, we continue to make meaningful incremental investments in some of our newer innovation solutions such as Agiliti. Corporate and Other adjusted net operating loss in the quarter was in line with expectations and consistent with the comparable prior year results. Our adjusted effective tax rate was 34.8% in the quarter compared to 34.3% in the prior year period. We expect our fourth quarter rate to approximate 36%, resulting in an adjusted effective tax rate of about 35% for the full year. Free cash flow was up 12% to $747 million through September 30 and, importantly, free cash flow per share for that period is up a very strong 20% to $3.32. Total debt outstanding was $4.6 billion as of September 30, or 2.4x trailing 12-month adjusted EBITDA. We remain disciplined in returning capital to our shareholders, repurchasing 3.1 million shares of stock in the quarter, and we've returned more than $930 million in the first 9 months of the year. There were 217.8 million shares outstanding as of September 30, and 8.1 million shares remaining under our existing share repurchase authorization. And with that, let me turn the call back to Jeff.

Thanks, Bob. As we mentioned upfront, sales performance was outstanding in the quarter, coming in 34% ahead of last year and 119% of quota. Results were strong across several areas of the company, including card, biller, Output Solutions and bank solutions. Importantly, the results included several large payments-oriented transactions, which are an important driver of future revenue growth. We enter the fourth quarter at 100% of quota -- 101% of quota, a robust pipeline, and expect to meaningfully exceed last year's sales results, providing growth momentum entering 2017. Integrated sales were up 28% to $73 million in the quarter, up 11% sequentially and it increased 12% for the first 9 months of the year. We continue to see strong demand across our digital and payment solutions. We're experiencing excellent results across our Operational Effectiveness initiatives, having achieved $44 million of savings through the end of September, already eclipsing our $40 million goal for the full year. We've combined 15 data centers this year, including one of the largest locations. Delivering increases in efficiency enhances our ability to invest in future growth and sustainably expand operating margin. The environment in the quarter remained generally stable, with clients focused on driving revenue, the evolution of the digital consumer and the need to balance investment with cost controls. Real-time money movement remains a key topic, both in the construction of the rail itself as well as the use cases which will leverage these capabilities such as Zelle. We expect to play an important role in this evolution by providing a number of solutions that will utilize these real-time services. Solutions such as NOW, which are designed to enhance ubiquity around these services, position us well in the evolving payments landscape. Turning to guidance, we expect to achieve record operating performance for adjusted EPS, adjusted operating margin and free cash flow per share for the year. The fact that we can deliver these strong results, even as the timing of revenue and lower termination fees have moderated our in-year internal revenue growth expectations, shows the strength and resilience of our business model. We now expect full year internal revenue growth to be in a range of 4% to 4.5%, which includes higher growth in Q4. We are well positioned for internal revenue growth acceleration as we head into '17. We have increased our adjusted earnings per share outlook to $4.43 to $4.46, which is $0.11 per share higher on the bottom end of the range than our original guidance or 14% to 15% growth for the full year. We continue to expect adjusted operating margin to expand by at least 50 basis points, which includes the margin dilution from the 2 acquisitions completed earlier in the year and lower termination fee revenue. And importantly, we expect free cash flow per share to be at least $4.70 for the full year. We enter the fourth quarter with sales momentum and a platform of solid financial results. We continue to perform within our long-term outlook and are committed to driving a sustainable and steady increase in our internal revenue growth rate over the next several years. During the quarter, we were fortunate to celebrate our 30th year as a public company. Over that period, Fiserv has produced a cumulative return to shareholders of more than 17,000%. This success is a byproduct of the stellar efforts of our more than 22,000 associates and all those who came before to deliver differentiated value to our clients each and every day. With that, operator, let's open the line for questions.

[Operator Instructions] Our first question is from Dave Koning from Baird. Our next question is from Ramsey El-Assal from Jefferies. Ramsey El-Assal: I wanted to ask you about your -- the leverage of margin expansion in the first quarter. You've shown 20 bps of expansion year-to-date. You're looking for another 30 in the fourth quarter to kind of get to your guidance. I guess I'm trying to understand whether this is just -- that the margin expansion will come with growth acceleration from just scale efficiency? Or would you have other levers to get there in case the top line ends up not materializing the way you expected?

Yes, Ramsey, it's Bob. I think there's a couple of things to think about. First, on a year-to-date basis, we're at 32.2% operating margin, which is actually 50 basis points above where we finished last year already. So if we can hold that again, we'll achieve that 50 basis points margin expansion. And if you look at what happened in Q3 relative to what we expect for Q4, there's a number of expenses that impacted us in Q4 of last year that were timing related. And so we saw things like some incentive compensation, commissions, our fall forum actually fell into fourth quarter of last year versus third quarter of this year, so pure timing on that standpoint. And so as we enter in the fourth quarter, we've got a little bit of an easier compare, and we're confident we'll deliver 50 basis points of margin expansion on a full year basis.

And Ramsey, you said first quarter, but I think you meant third. And just on a broader perspective, and we have said for a long time and we continue to subscribe to the theory that the real benefit that the operational efficiency programs that we have, where over the last, I guess, nearly 10 years now, we've taken out over $0.5 billion of costs, is that gives us an opportunity to both, we think, support the model of increasing operating margin, but more importantly, gives us the opportunity to invest in innovation, growth and experiences that are just increasingly important in the world today. And we have the ability to moderate those investments on the basis of how we see take-up going in the market. And so we view this as an important level of flexibility and, frankly, as a driver to the strength and resilience of our operating model. Ramsey El-Assal: Great. That makes a lot of sense. I also was wondering if you could comment on the way that sort of P2P environment seems to be kind of coalescing around this -- I know you sort of mentioned the bank-centric model with maybe the sort of clearXchange example, versus Venmo on the other side of things. I mean, is it something where it's an either/or for you guys? Or could you potentially get involved or facilitate P2P with different players in the industry no matter how it sort of evolves?

Yes, let me start, Ramsey, and perhaps Mark Ernst will add to it. So we -- our sole objective is to do the right thing for our bank clients, and bank being -- representing all, really, financial institution clients. And so we have spent the last several years putting together what we think is the best turnkey solution in the market, end-to-end, everything from the user experience to the registry to settlement and recon, and payment speed, so we're happy about that. As we talked about in the discussion, we believe any number of the banks in the market will use our solution to either brand it as Zelle or Popmoney, and we'll see how that evolves over time. And I do believe that there is room for multiple payment networks in the market if that's what the market so demands. And so the opportunities -- if our clients want us to peer with a Venmo or something like that, then we would obviously investigate that. And if that made sense, then we would pursue that. Now again, that said, we do believe strongly, very strongly that a financial institution-centric model is the right model to allow the ubiquity that's necessary to move money when and where people want it. But Mark, I don't...

Yes, the only thing I'd add to that is I think it's an underappreciated aspect of this whole kind of service how important things like risk management or settlement or identity management, any number of aspects of the service that is required in order to make it work, how important those are. And as Jeff talked about kind of our development over the last several years of really building out this kind of end-to-end capability, I think as people are now taking up the interest in this market, the demands that are on the back office side of this are becoming better appreciated. And that's why we're finding a lot of people very interested in partnering with us regardless of which network solution they're really looking to serve. Ramsey El-Assal: Got it. Okay. Really quickly and lastly for me, you mentioned debit transaction trended up to low double digits. I was just wondering if there are any particular drivers to call out there?

Sales growth. I mean, we've had good success just with bringing on more and more clients. Ramsey El-Assal: New deals? Okay.

Again, we -- one of the magical elements of our model is we're able to deliver these broad suites of solutions, and we've just continued to have momentum. And we've also done some interesting work at the intersection of digital experience and card transactions, which we believe we're seeing the early benefits of that. But over the next several years, we think that intersection will be quite valuable for both banks and their customers. So there's probably a little bit of innovation at that intersection included in those results.

Our next question is from David Togut from Evercore ISI.

Good to see you were able to raise earnings guidance despite the shortfall in organic revenue growth. Can you kind of give us your thoughts on fourth quarter? And then fourth quarter is the jumping-off point for 2017 organic revenue growth given the sales performance you've had to date and the visibility you have on implementation of new contracts?

So when you say fourth quarter, are you talking about what are the drivers to the acceleration?

Yes.

Yes. So we see a couple of things. We see, obviously, the sales. We had a slow start to sales in the year and that's ramped up in Q2 and Q3, and we expect to see that. We had a $10 million headwind from termination fee revenue in Q3, which we don't believe will recur again in Q4. And then some of the newer solutions that we have been talking about have been pushed during the year, and we'll start to see them come online into Q4. And then some of the normal cyclicality that we would expect to see in Q4 in our business, whether it be in the card and statement area, license revenue, those kinds of things.

Understood. And Jeff, you called out a $20 million -- $20 billion asset bank as a new customer in the bill pay business. I'm wondering, more broadly, are you seeing an increasing propensity by large banks to outsource in this environment given the pressure on NIM and higher regulatory and compliance spending?

Yes, we are seeing that. And David, we, the industry, have been talking about this for a few years. We are seeing that, but one of the areas in which we're seeing it more recently are in the areas of digital experience, where institutions sometimes are finding it difficult to keep up. We have had tremendous interest in our CheckFree RXP solution set this year as banks believe that, that remains the killer app, whether it's accessing online or mobile. And then the services themselves, we're seeing some larger institutions say -- or examine the opportunity to outsource even that, where, frankly, 3 or 4 years ago, a large institution outsourcing their digital experience just wouldn't have happened. So we are seeing some interesting movement in those spaces. And frankly, one of the, again, byproducts of something like Zelle is it's just pushing the digital capabilities, payments and money movement, making them front and center both on the business and commercial side of the bank.

Understood. Just shifting gears to the smaller FIs, could you comment on DNA bookings or sales in the third quarter? And any thoughts on the pipeline for DNA?

Sure. So we had 5 DNA wins in the quarter, of which one of them was a $25 billion bank that we referenced in the prepared remarks. We are seeing -- continuing to see very, very strong interest in DNA. But I will also say that what's intriguing, David, is the interest that we're seeing in DNA brings us -- brings more than just DNA to the forefront. So there may be a bank that's -- a bank or a credit union that's interested in DNA, it may turn out that they don't want all that complexity and they want a simpler solution, and we have other alternatives there. Plus, of course, it has the benefit of driving the broader bundles of value. But we continue to have fantastic momentum with DNA. And I would be -- the pipeline is pretty strong, and I believe that we'll have a superior DNA sales year next year even to the reasonably strong year we're having this year. As we see more of our clients that have now been live for a period of time, they're adding capabilities. We're making meaningful investments in DNA to ensure that, that platform continues to have a very strong role in the market. So all in all, I would say we're in very good shape there.

Good to hear. Just a quick final question for me. I was glad to hear the EMV personalization revenue picked up in Q3. What are your thoughts on how far along you are with EMV reissuance from magstripe to chip? And any granularity you could give on credit v. debit would be helpful.

Sure. So we're actually making good progress. I would say that we're probably a bit ahead on reissue this year. Let me say it a different way. We're a bit ahead on card manufacturing so far than we thought we would be. We're still waiting to see how personalizations ends up shaking out. We don't expect to have the amount of deferral next year that we had this year. But we're so new right now, David, that we're wanting to learn that and examine it. Remember, the substantial majority of our base is debit, and so we don't do a lot of credit card production. So we're -- the credit -- most of the credit cards have been reissued, but debit still is in the stages where we're watching the trends and trying to see how they develop.

Maybe the only thing I'd add is prepaid is still kind of -- is going nowhere. So...

We did -- we were pretty excited, though, David. One thing I would say is we had our first large institution issue contactless in the quarter, and we're pretty bullish on what contactless will eventually mean in terms of our business and, frankly, the digital experience. So that's something that we're going to be watching as well.

And when does contactless really get going from a revenue standpoint?

Well, I think the question is when does content contactless get going? And that is probably a ways off. But there are some institutions who have said we're going to bypass straight EMV and go right to contactless because the use cases are compelling. And for those people who have traveled outside the U.S., contactless is just a far easier, better, quicker experience. So there are some of the big transit systems are moving to contactless over the next, call it, 12 to 18 months, depending on if they stay on schedule, and things like that will start to make a big difference.

Our next question is from Tien-tsin Huang from JPMorgan. Tien-Tsin Huang: I just wanted to dig into the implementation delays. How much of that would you call macro-driven type delays versus just -- I think you said product push or product delays were also part of the explanation there?

Yes, so Tien-tsin, let me give it a start, and then Bob and Mark can kind of add in as necessary. So we really had 2 types of delays that caused us to moderate our revenue expectation really for Q4, and that is we had some pretty large payments-oriented transactions that are nonfinancial institutions where the implementations pushed from Q3 to now to '17. It's not a macro at all. It's really about the partnership between a new client and us, and we're highly confident that, that will go live in the early part of '17. We had a couple of those kinds of things. And then I would say the other area is several of the solutions that we have been putting into the market, some of the newer solutions have been either delayed because it took us longer to get it into the market or it's been delayed because it's taken the banks longer to make those products available to their end customers, and we get paid on a click or a usage basis. So those 2 delays combined are the implementation delays that we were talking about here. Tien-Tsin Huang: Understood. So no -- so nothing really macro driven or cancellations or surprise attritions to call out?

Not on all. Not at all. Tien-Tsin Huang: Great. No, I guess I'm asking because I'm just trying to think as we sort of form our expectations for next year, why wouldn't -- or could we assume that you could grow faster than your prior 5% to 6% target, assuming there's a catch-up from these implementations? Sounds like you're pretty confident they'll come in to '17, plus you've got the big sales backlog that you've been referring to all year. Can you comment on that?

Sure. Just for the record, though, it's all year since the second quarter because the first quarter was pretty slow from a sales perspective. Tien-Tsin Huang: Right. You did say a slow start for [indiscernible].

Bob put the big sign up, Tien-tsin. He wanted to make sure I said that. But I don't see us doubling up on the revenue next year, and the reason why is this is all recurring-oriented revenue. And so the revenue really only comes in on the basis of the elapsed time. So the revenue that we didn't get this year, while we have a high degree of certainty it'll come on in '17, we don't get 17 months of that revenue in a 12-month period. Now for the optimist in us, I mean, we'll get it at the very end of the contract, but it doesn't double up in the following year. That doesn't mean that we won't -- we like our momentum going into '17, with the number of -- the good sales successes we're having there, but I also want to make sure that we don't let anyone get ahead. We're sitting here in October, we feel good about acceleration, we feel good that we're -- we'll be back on track, but I wouldn't be giving guidance at this stage.

Our next question is from Chris Shutler from William Blair.

On the second issue that caused the -- I guess, the guidance reduction, some of the newer solutions that were delayed or took longer to get into market, just could you flesh out that point a little bit more, Jeff? What were the specific products?

Sure, I mean, unfortunately, there were several. But some of the headline products would've been IPS, Notifi, CardValet, a couple of products that are -- all these products are transactionally based, and it either took us longer to get into -- to get the GA, to get to general availability, or it took us longer -- and in some cases "and" -- it took us longer to put it into release and then to have the banks adopt it, and then to push it to their customers. One of the things that we did not anticipate, and we've now learned from it, is that once some of these products are in market, the banks don't necessarily make it available, or even in some cases, where users of the technology have to update -- something as simple as updating their apps to get access to the new functionality, it takes a little bit longer than we thought. Now that's a discrete example. There's just a group of solutions like that where we just have had more breaks against us than for us.

Okay. And then for 2017, just so -- maybe level set for all of us. Can you just walk us through the reasons why revenue growth will accelerate, maybe in order of magnitude, and what potential pitfalls you could see?

Sure. So I would first say, Chris, that we're not giving guidance, right, we're trying to give a little bit of a calculus to it.

Understood.

Yes. I would say, number one, it's the implementation of the large transactions that we were talking about that were delayed in '16. Number two, it's really around the new sales. Remember that we had a fairly weak 2015 with a weak Q1. So we really had 5 quarters of weeks -- weaker-than-we-expected sales. We had -- the last 2 quarters were up 34% each, and we're expecting to have a reasonably strong Q4. So the cumulative effect of that, we believe, will provide a growth lift. The third item is really around these new products, where we're talking about the launches and go lives. We'll see some aggregate cumulative effect of those products which are in the market. In many cases, these products are sold already, so we don't have to sell them. We just have to deliver them into the market. So that's the third item. Fourth, I would say is just some continuing success around adoption of some of the products, i.e. Mobiliti. We continue to make progress there, whether it's on the consumer side or on the retail side. And then maybe the last one would be we aren't expecting any meaningful EMV deferral this year. So the turnaround on that will hopefully benefit us as well. So those are 4 or 5 items that I think at least give me confidence that we'll see the step-up on top of just the normal transactional growth that we're seeing, whether it's a little bit higher in debit and those kinds of things.

Got it, okay. And then lastly, just what has driven the stronger sales over the last 2 quarters? I mean, have there been changes to the sales organization incentive structure, et cetera? And just trying to gauge sustainability there.

Yes. So it is -- we did actually make some changes to our sales structure. Specifically, in our digital and payment areas, we've made some changes. We didn't feel like we were moving fast enough in those areas. And again, one of the things we talked about in our prepared remarks, Chris, is that as banks look to really try to differentiate at the point of digital experience, which is currently the handheld device, the mobile device, we're seeing some nice wins and a lot of energy in the digital and payments area. And those are -- tend to be larger transactions. So that has been one of the areas. We also -- we've also introduced a couple of new products. We've introduced something called BillMatrix Next, which is on the -- in the biller side of the business where we've had some fair success this year. Traditionally, we have been focused on the unregistered side of payments. This allows us to have an all-in registered, unregistered, let us handle all of your payments from e-bill all the way to payment acceptance and reconciliation. And this product is getting some nice attention out there. That actually came -- some of those capabilities came from our acquisition of Hewlett-Packard Enterprise's Convenience Pay platform. So that's an example of some of the new products that are out there. And then I would say, lastly, it's really -- it has really been about focus. I think we had -- '13 and '14 were big record-year-on-record-year and we probably didn't put just enough focus on that. We've been very focused around making sure that not only are we winning more deals but that they are larger deals. And frankly, Mark Ernst has put a tremendous amount of energy on ensuring not are we just winning deals, but that the pipeline -- the pipelines are strong. So we're going to enter '17 with a much stronger pipeline than we had going into the prior year even with a much better sales result. So it's a combination of factors but things that we want to -- we believe we've learned from and will benefit us again in '17.

Our next question is from Joseph Foresi from Cantor Fitzgerald.

It sounds like some of the new growth initiatives were a little bit slower than expected in '16 due to some of the issues you pointed out. So I guess I'm wondering what gives you confidence to get back on track in 2017. And are the product delays you mentioned obviously largely behind you?

Yes. I would say we've learned from what happened this year. We feel like some of the products that were delayed, we don't believe they're going to be re-delayed, so we're in good shape there. In fact, a couple of them -- a couple of the bigger ones will be launched in Q4, so we're feeling good about that. Just too late -- because they're transactional, it's too late to really impact the revenue much. And then on some of the -- frankly, on some of the products where we've been stuck a little bit between the intermediary and the recognition of the revenue, we saw that happening earlier in the year, and so we've been working on ways to remediate that. I don't think it will be perfect, but it gives us confidence -- the steps that we're taking right now give us confidence that we will have revenue -- internal revenue growth acceleration in '17 over the '16 level, which puts us back on track.

John, what I'm going to add is something Jeff said earlier, is that in many cases, these products that are now getting into market have sales against them. So it's not a matter of getting them to market and then tuning up sales. We have sales activity already.

Got it. So you're not changing your overall outlook for the business. It's just the timing? Just to be clear.

That's right. Very specifically around the timing.

Okay. And just one other question for me. Is the overall type of businesses you're seeing in the pipeline, are they different than -- or the type of business is different than you've seen in the past? Have conversion rates changed at all? I'm just wondering, with all this new digital business coming in the door, is there faster or slower conversion rates, and can the timing shift a lot more than what you've seen historically?

Yes. This is Mark. I think we're seeing the timing be a little bit slower than what we may have seen historically. But we're actually seeing our conversion rates ticking up very nicely this year. And on average, we're doing bigger deals this year. And that is really kind of the tailwind of beginning focus that we had starting in 2015, frankly, of getting very focused on building pipeline, understanding what's in that pipeline and then maturing those deals. But larger deals, which is part of the reason we're seeing better sales results this year, also take longer to accomplish. So you're seeing kind of the success now of a strategy that was put in place well over a year ago.

And part of why we like the robustness of our pipeline right now is it has a good smattering of the larger deals which will close, hopefully, in both Q4 but also in Q1 to give us a little bit of a bigger start. One of the biggest issues we called out in '15 is the number of sales we had was generally consistent, but the -- we did not have the typical preponderance of the larger transactions.

Our next question is from Darrin Peller from Barclays.

Just to be clear, I mean, you're saying acceleration into '17. That's, I guess, off the new base though, right, just to be safe in our modeling. Off the 4% to 4.5% is how we should think about that, not off the previous base of growth of 5-plus percent?

That's correct. I mean, Darrin, as you know well, given our model and the nature of the revenue, with so much of it being recurring, it's very difficult for us to jump more than that 50 to 100 basis points in a year.

Okay. Make sense. All right. And then just a follow-up on the operational efficiency goals. You've done well, obviously, ahead of your goal for the year. Just for modeling out the rest of the year, and I guess in line with your margin guidance, I mean, should we assume that there is more to go there? I mean, can you give us some examples of what may be some other opportunities on that? And really going forward, I mean, is there still plenty of room on that front?

Yes, Darrin, as you know, we're is in the first year of a 5-year program expected to save $250 million. We anticipated this first year of that 5-year program to be a little bit slower, particularly because a portion of that savings is associated with our data center consolidations, and that takes time to ramp up. What we've seen is some nice progress there, but also around labor optimization and our procurement savings. So as we pointed out in our opening comments, we're $44 million into a $40 million full year target, and we certainly aren't stopping in the fourth quarter. We'll continue to progress and make progress against that 5-year goal of $250 million.

Okay. That's helpful. Just -- I guess Jeff, just high level now, if you don't mind. I'm trying to figure out kind of the demand in the environment. I know that you had a lot going on, and you've had good sales pipe over the last couple of quarters. Can you give us a little more color specifically on what you're seeing, maybe by size of bank or by some of your horizontal offerings in terms of which are really -- there's demand, inbound requests from your clients for -- versus areas that might have slowed down? I mean, we're hearing a lot from banks that have said they expected interest rate hikes earlier in the year that never came, so discretionary spending may not have been as strong. Any evidence of that? Or it's generally your offerings, obviously, showing good sales growth the last couple of quarters?

Yes. Yes, sure, Darrin. I mean, I would say -- let me give it a shot. Mark can add in. Make no mistake, discretionary spending is not -- is being managed and moderated. There's no question about that, in terms of banks are absolutely focused on where they're spending money. And frankly, in many cases, banks are slowing spending down in certain areas of the bank and trading it off to be able to invest in the areas that are the most meaningful right now. And those areas are tending to be around digital experience, they tend to be around payments, commercial services for banks, and risk and fraud compliance. I mean, those areas are critically important. We are -- fortunately, many of the investments that we've been making over the last several years happened to be in those areas. That, combined with the fact that we have products like CheckFree, which are clearly at the center of digital experience, we're the beneficiary of a little bit of excess demand in those areas. I'm sure there are some areas that we are not seeing the same kind of growth, but they're -- from a sales perspective, they're more than offset by the level of activity we're seeing out here. And that's really across all-sized institutions, the very largest -- we had -- at least, I can think of one transaction this year that we've had that I would not have anticipated, and it's really all because of -- large transaction all because of the digital -- kind of the focus on digital experience by the largest banks.

The only thing I'd add to that is when you think about the -- okay, so if that's the case, where's the offset to that? The one thing that we are seeing in the industry is less churn in core processing. And that's a double-edged sword for us because we'd like to see more of that coming our way. On the other hand, we are a beneficiary of that because we have such a large installed base. But that's probably the place where you see less activity than what we would've seen 2, 3, 4 years ago.

Our next question is from Jim Schneider from Goldman Sachs.

Sorry to belabor the point on the whole discretionary spending topic versus the reviews for the revenue shortfall. But can you maybe just give us a little bit of color of -- on the discretionary spending, do you feel like that took a lot of potential upside off the table in addition to the kind of product and customer-specific things you mentioned before? In other words, did you see that deteriorate over the past couple of quarters? And do you think that was also a kind of a contributor to the revenue in the current year or not?

Yes. I would say, on balance, not, because we have such a broad set of solutions. But I will tell you that there is a little bit of a nuance that's probably important to mention along these lines. We are seeing a bit of a shift from some of the license sales over to recurring revenue sales. So especially in the area of cross-sell, where we are -- because we have such a large installed base and we're the primary technology provider, we build a lot of products. Some of those products are license add-ons, and some of those products are recurring revenue that takes time to get lined up. And we are seeing more of the products move to the recurring revenue, and there is a longer implementation cycle on those kinds of things. So where we are building product, the product that we're building, that, we're seeing more in those areas. Again, Jim, I'm sure that there are some areas within the company where the level of discretionary spending is hitting us, but I would not be able to call out that, that is a primary issue of any shortfall that we're having this year.

That's helpful. And then just maybe following up on the comments around Zelle and Popmoney. I think I got it right. You support 19 Popmoney clients now. You signed up 4 with Zelle so far. Can you maybe just talk about whether there is any transition that we could expect to see between the time that some of your clients -- or existing Popmoney clients maybe phase-out Popmoney and are not live on Zelle yet? I mean, is there any potential for kind of a pothole in revenue, understanding that's not a particularly big contributor, as you get them to ramped to Zelle?

Sure. So Jim, let me try to clarify some of the comments to make sure that we get the kind of P2P by the numbers right. Today, we serve about 2,400 institutions with Popmoney, not including a reasonable backlog of clients that still need to go live. There are 19 clients -- 19 financial institutions who have indicated that they're going to brand a P2P service as Zelle. Of those 19, many of those are our clients for Popmoney today. A few of them granted us permission to use their name in our prepared remarks because they're going to be using our turnkey solution a la Popmoney re-branded as Zelle. We believe that the majority -- the substantial majority of the clients that are in the Popmoney network today will continue to access our technology because we have the only full-featured end-to-end P2P bank-centric technology in the U.S., the only one. And so from that perspective, we may have people brand as Zelle. There may be -- there will be a number of clients that are branded as Popmoney. Just like you can have a debit network with EXL or a debit network with Interlink. You can -- there are different networks that are out there. But at least for the foreseeable future, we're going to be the provider of many of those services. And we actually believe that our revenue from Popmoney, if the clearXchange folks are right, and we believe that, that approach is the right approach, that that's going to actually expedite substantially bank-centric P2P, and that we would expect to see a benefit from that in our numbers beginning next year and moving forward.

Our next question is from Moshe Katri from Wedbush Securities.

Just again, for reference. Obviously, there's a lot of focus on -- in the market around the macro headwinds. If you look at your revenue base today, can you just remind us which part of it is recurring? And then which part of that revenue base is potentially susceptible to any sort of macro volatility, just to put this into context of some of the discussion points during the call?

Sure, sure. So let me give you -- and these are going to be approximations, and they're really going to be based on our -- the last Investor Day we did, which was midyear '15. And we'll do another one in '17, and we'll certainly supply some additional information. On balance, I think we indicated roughly 88% of our revenue was categorized as recurring at that point. The remaining 12% is split between services -- nonrecurring services revenue, license revenue, and then some odds and ends. But that -- it's really 88% and 12% is roughly the cut that we used last time.

And just again, going back, has that changed throughout -- during the past few years? Has that kind of changed -- has that kind of remained steady or stable?

I don't have the data in front of me, but my gut says that it has increased.

Yes. It's more recurring today than it has historically been.

Our next question is from Andrew Jeffrey from SunTrust.

Jeff, you make a -- what I think is a really important assertion regarding the nature of mobile, I think, generally, but C2C in particular, namely the idea that you think the prevailing model will be bank centric. And I know going back over the years with bill pay, there was a discussion of bank-centric versus biller-direct offerings, and I think the market may be split down in the middle. What do you think about -- what exactly drives your conviction that banks versus a Venmo, for example, will ultimately prevail and to Fiserv's benefit?

So I believe, notwithstanding the fact that Venmo has incredible word-of-mouth and has really grown tremendously, the majority of the U.S. prefers to do financial transactions with their regulated financial institution. And therefore, if you look at all of the use cases that are available to P2P -- I mean, the use cases that we see most often in Venmo are use cases that are around really repaying money or paying money from one person to another, not necessarily for services but for advances and splitting checks and things like that. The substantial majority of the person-to-person transactions that happen in the U.S. today are everything from that use case but paying your babysitter and paying a dog walker and paying a component of rent. I mean, there are many, many use cases that tend to look more like a derivative of bill pay than they do here -- passing $5 or $10 or $20 from person A to person B. That's real estate that the banks tend to own historically. And my conviction is really based on the fact that I believe that ultimately, money movement is something that will need to be done in a safe and secure environment. And today, the bank-centric system is really the only safe and secure system that exists. And as we move to a real-time rail, I think that will actually become more important. Now that said, I do believe that there will be opportunities for bank centric to peer with non-bank centric and, ultimately, you'll have a different kind of world. But in the long run, I would expect bank centric to win or prevail.

Okay, Okay. That helps. And one quick one. Just generally, as you talk about DNA and share wins and recognizing that you signed some big credit unions, when you think about sort of average credit unions -- average in size, I mean, any change in sort of the economic or margin environment as you take share? I guess I'm asking a competitive and pricing question.

So I would say that, to Mark's point that he made a few moments ago, there are generally less switches today than there were 3, 4 years ago. There are many less de novo institutions than there were 3, 4 years ago. And so in that context, you're going to have a more competitive environment. And I would say that the market dynamics tend to reflect that. Again, from our perspective, and I think most of the competitors in this market, they're selling a more bundled solution. And so there are pretty large -- there's large movement of technology platforms that are occurring. We are seeing, in the places where we would expect, pricing has held up. In the places that are -- get closer to commodity, right, prices don't tend to hold up quite as well. It's not so much the size of the institution as it is the competitiveness of the underlying market.

Our last question at this time is from Ashwin Shirvaikar from Citi.

So I wanted to go back to sort of the various sources of revenue weakness that you've highlighted, and was wondering if you could size the relative impact of each of those.

We -- of course, Ashwin, you would be surprised if we said we could not, so you know we can, but we're not going to go into it here. We're going to say that we think, in the aggregate, it was enough to cause us to moderate our in-year growth expectation, and we expect that it will end up reversing next year. I think Bob did, in his prepared remarks, talk about the fact the termination fee reduction was $10 million through the end of the third quarter, but that's the only sizing that we're going to provide at this point.

Okay. And just looking at your sales success which, on a full year basis or a trailing 12-month basis, typically is -- it's fairly spectacular versus your revenue growth, where you've tended to, over time, have challenges with regards to being, let's say, at the upper end of a guidance that you provide. Clearly, the lumpiness of sales growth makes it difficult to translate that to revenue growth, but are there sort of annualized metrics or anything like that, that you can provide to give investors sort of a level of confidence that the sales growth that you're seeing will eventually translate into a certain level of revenue growth?

Yes, that's a great question, Ashwin. I would say it is difficult because we tend to measure our sales in total contract value as our primary metric, and we look at annual contract value as a secondary metric, and impact revenue as a tertiary metric. And so we're -- there are many of those metrics that we look at that we're not communicating externally. I would say that it's probably not a coincidence that we had record sales in '12, '13 and '14, and we had an easier growth journey in '13, '14 and '15, where, in '15, sales were not as strong as we liked and we had quite a soft start to this year. So when you add all that together, it's clearly important. And in each of the last 2 Investor Days, we've provided statistics on how our top deals turn into revenue. And it shows that there's a -- it can be anywhere from a 12- to 18-month average turn to revenue. So from that perspective, that's not a bad way to look at it. I would also say that this year, we've had some deals, specifically in the nonfinancial institution space, that we do expect to turn to revenue quicker, which is also going to help us.

Got it. And last question with regards to the use cases that you expect on Zelle. If I think of it broadly as normal P2P versus things like disbursements, maybe you could go into payroll, things like that. And the reason I'm making that distinction is because it's not clear to me, regardless of whether something -- whether to please banks and take or not take [ph] -- that you could actually charge for it. But maybe you can charge for disbursements. Do you have, I mean, sort of a prognosis of where we are headed with the types of products that can come out because of having Zelle as sort of a multibank consortium?

Yes. I mean, that's probably a longer question than we can go through here. I would say that there's a difference between the financial institution to their customer monetization versus us as the builder and supplier of the technology and our ability to monetize that technology. But I would tend to agree with you that the P2P monetization is going to be difficult. And I do think disbursements, it could be quite a lucrative potential use case. But I think that's one of the areas we'll probably cover at our Investor Day next year. Thanks, Ashwin. And thanks, everyone, for joining us for our third quarter call. If you have any questions, please feel free to contact our Investor Relations group. Have a nice evening.

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