Welcome to Fiserv 2017 Second 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 Paul Seamon, Vice President of Investor Relations at Fiserv. 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 references made throughout this call are year-over-year comparisons. Lastly, given the strategic and contextual discussion at our June 20 Investor Day, our prepared remarks for this quarter are a bit shorter than usual. With that, let me turn the call over to Jeff.

Thanks, Paul, and good afternoon, everyone. We delivered solid financial results in the quarter, consistent with our expectations, given our stronger-than-expected Q1. Our performance for the first half of the year is right in line with expectations and we expect to achieve our full-year financial objectives. Internal revenue growth was 3% in the quarter and 4% for the first half of the year. Adjusted operating margin expanded 10 basis points for the quarter and adjusted earnings per share grew 10%, both of which included a large write-off in the quarter. Free cash flow through June 30 was stellar, up 26% for the period. Market momentum continued to build, with sales results up 13% sequentially and up 10% through June 30. We have a strong pipeline entering the second half of the year and expect to achieve our full year sales targets. Now let me provide an update on our 3 key shareholder priorities for 2017, which are: first, continue to build high-quality revenue while meeting our earnings commitments; second, enhance client relationships with an emphasis on digital and payment solutions; and third, to deliver innovation and integration, which enables differentiated value for our clients. We continue to focus on high-quality revenue, which we define as long-term and recurring with attractive margin characteristics and high free cash flow conversion. Internal revenue growth was 3% in the quarter, which we highlighted on our last quarterly call would likely be lower than Q1, led by lending solutions, card services and investment services. Internal revenue growth was consistent with our expectations at 4% in the first half of the year. Adjusted operating margin in the quarter was up 10 basis points and is up 40 basis points for the year-to-date. These results include: $15 million of unusual expenses in the quarter, which Bob will discuss in a few minutes; adjusted earnings per share in the quarter was up 10%, which includes the $0.05 of additional expense I just referenced; adjusted EPS for the first half of the year was up 14%; and our continued focus on free cash flow delivered 26% growth through June 30. Again, we're on track to meet our financial commitments for the year. Our second priority is to enhance client relationships with an emphasis on digital and payment solutions. At our investor conference, we spoke to the importance of digital in the account processing decision process. During the quarter, we signed Dime Community Bank, a $6 billion asset institution to a new technology stack led by DNA, and a full digital suite, including Commercial Center and Architect, along with other security and payments products to enhance customer value. Our newly acquired digital solutions have meaningfully enhanced our value proposition, leading to pipeline growth, increased sales and market momentum. We signed 6 new DNA account processing clients in the quarter, including 4 with assets greater than $1 billion. We're also seeing growing momentum in the large "end of the credit union" market as these institutions appear to be even more focused on exploring modern technology and value-added bundles. We had 6 DNA clients go live in the quarter and expect at least 10 more this year. We crossed the $6 million mark for Mobiliti ASP subscribers in the quarter, representing nearly 30% growth over the prior year and 7% sequentially. Mobiliti business has also continued to expand as we have almost 300 live clients, with subscribers growing 17% sequentially and more than doubling as of June 30. We continue to invest in digitally oriented technologies, including the announcement of a recommended cash offer to acquire Monitise in the quarter, which we expect will enhance our footprint, accelerate digital time-to-market and provide additional flexibly for our clients. We remain bullish on the role of digital differentiation in our overarching value proposition. Our third priority is to deliver innovation and integration, which enables differentiated value for our clients. As you know, Zelle launched nationwide in June, with Fiserv clients composing nearly 40% of the launch group. The demand for Fiserv to power Zelle for the broad market continues, resulted in signings of 3 additional top 25 banks in the quarter. We believe that Popmoney and Zelle are key as consumers adopt bank-based P2P as their preferred way to move money. Three of our newer products were recognized for innovation in the quarter by the Retail Banker International Awards. Immediate Funds and Agiliti were named as finalists for the Product Innovation of the Year; and Verifast, our Palm-based biometric solution, was named the Security Innovation of the Year and was also a finalist for Best Consumer-Focused Product. Well placed innovation drives client value, builds differentiation and supports high-quality revenue growth. We continue to pursue our multi-pronged approach to securing innovation: build, buy and partner. As you saw earlier today, we announced the acquisition of PCLender. Their solution provides enhanced end-to-end retail loan-origination capabilities and better positions us to serve our clients' customers when and where they want it. PCLender is already integrated into most of our larger account processing platforms, which will allow us to hit the ground running. With that, let me turn the call over to Bob to provide more detail on our financial results.

Thanks, Jeff, and good afternoon. Adjusted revenues for the quarter grew 2% to $1.3 billion and increased 4% to $2.6 billion in the first half of the year. Internal revenue growth was 3% in the quarter and was 4% year-to-date, excluding the impact of acquisitions and divestitures, such as the sale of the Australian item-processing business, which closed in Q2. As we shared in our Q1 call, we expect our second quarter internal revenue growth rate to be lower than the first quarter due primarily to timing between periods. The 4% internal growth rate for the first half of the year is consistent with our expectations. Adjusted operating income in the quarter, which includes the unusual expense items Jeff mentioned upfront, increased 3% to $424 million, and is up 5% year-to-date to $853 million. Adjusted operating margin was up 10 basis points to 32.0% in the quarter and increased 40 basis points for the first half of the year to 32.3%. The $15 million charge in the quarter was in the Payments segment and was for 2 separate projects, which have been in process for the last year or so. Included in that total is a $10 million non-cash impairment of previously capitalized development costs, which were written off upon the termination of the projects. Unfortunately, developing innovative solutions can occasionally lead to projects that may not come to fruition. With that said, we have a strong track record of success and will continue to identify opportunities to invest in market-leading innovation. The impact of the $15 million expense item on the company is about 120 basis points of adjusted operating margin headwind in the quarter, 60 basis points year-to-date and $0.05 of adjusted earnings per share. But for this, adjusted operating margin in the quarter would have expanded 130 basis points and adjusted EPS would have increased by 15% on the strength of high-quality revenue growth, combined with continued outstanding performance against our operational efficiency initiatives. Adjusted earnings per share in the quarter increased 10% to $1.19 and was up 14% for the first half of the year to $2.43. We believe we are well positioned to achieve our 32nd consecutive year of double-digit adjusted earnings per share growth. Our Payments segment adjusted revenue was $716 million in the quarter and $1.4 million for the first 6 months of the year. Internal revenue growth grew 3% in the quarter and is up 4% in the first half of the year. The segment performance was led by strong results in card services and investment services. The lower growth rate in the sequential quarter is primarily related to EMV. And we saw strong EMV implementation ramp in 2016. And while absolute growth continues in 2017, the rate of growth is lower following the initial wave of EMV issuance. Payments and Digital continue to drive value for our clients and our customers, and along those lines, we experienced high single-digit debit volume growth and P2P transactions were up over 20% in the quarter. Mobiliti ASP subscribers also performed well in the period, expanding by nearly 30%. As we highlighted at Investor Day, we expect strong mobile adoption for the foreseeable future. Payments segment adjusted operating income in the quarter was up slightly from the prior year at $239 million and is up 8% to $499 million for the first half of the year. Adjusted operating margin was down 100 basis points in the quarter to 33.3%. The write-off I mentioned a few moments ago compressed the segment margin by 210 basis points in the quarter. Stated differently, adjusted operating margin would have been up 110 basis points without the charge. And for the first half of the year, adjusted operating margin was up 80 basis points to 34.7%, which is the highest first half adjusted operating margin ever achieved in the Payments segment. Turning to the Financial segment. Adjusted revenue was $623 million in the quarter and $1.2 billion in the first half of the year. Internal revenue growth was 3% for both the quarter and year-to-date, versus 1% internal growth in the comparable quarter and comparable prior year. Internal revenue growth was led by our lending solutions and account processing businesses. Adjusted operating income for the segment was up 6% to $214 million for the quarter and was $410 million for the first half of the year. Adjusted operating margin improved 130 basis points to 34.3% in the quarter on the strength of better top line results and favorable expense management. In Q1, we referenced the timing of expenses had pressured the segment margin, which moderated as expected. For the first half of the year, adjusted operating margin of the segment was up 20 basis points to 33.0%. Corporate and Other results in the quarter was generally in line sequentially and with the prior year. Our adjusted effective tax rate for the quarter was 32.5%, which was consistent with our expectations, including the excess tax benefit of share-based compensation. And we continue to expect our full year adjusted effective tax rate to be slightly below 33%, which assumes a higher rate in the second half of the year due to the timing of the tax benefits. Our free cash flow for the first half of the year was excellent at $555 million, an increase of 26% compared to prior year. Free cash flow conversion, which is free cash flow divided by adjusted net income, is our replacement cash flow guidance measure described at Investor Day and was 105% for the first half of the year. As a reminder, in connection with the SEC comment letter, we agreed to stop reporting free cash flow per share, and we've provided a full reconciliation of free cash flow conversion on Page 14 of the supplemental materials, including the GAAP to non-GAAP details as well as highlighted weighted average share counts for the applicable time periods. Total debt outstanding was $4.7 billion as of June 30 or 2.3x trailing 12-month adjusted EBITDA. We repurchased 2.5 million shares of stock in the quarter for $295 million and through June 30, we have returned $684 million to shareholders through the repurchase of 5.9 million shares. There were 210.8 million shares outstanding at the end of the quarter and 14.6 million shares remaining under our existing share repurchase authorization. With that, let me turn the call back over to Jeff.

Thanks, Bob. Sales in the second quarter were down 3% due to the timing of prior year sales and up 10% for the first half of the year. Quota attainment, which reflects our expectations of increased performance, came in at 82%. Our domestic pipeline was up 20% through June 30 and was up 11% sequentially. We fully expect to achieve our full year sales target. Integrated sales were $67 million in the quarter, driven primarily by Payments and Digital solutions. We expect to see a further build of our integrated sales results as the biller solutions strategy shared at Investor Day gains traction. Our ability to extend client relationships through add-on solutions remains a critical element of our strategy. We had another excellent quarter for operational effectiveness with results coming in at $20 million. Savings were led by workforce optimization, procurement and data center consolidation. Through the midpoint of the year, we are well ahead of plan at $40 million. We fully expect to exceed our operational effectiveness goal of $60 million for the full year. Payment speed and solution proliferation continue to grab many of the industry headlines, which we didn't discuss in depth at our Investor Day. The combined impact of rising expectations, digital ubiquity and payment speed is changing the way people approach financial services and meaningfully impacting the size and shape of FinTech. More recently, we're pleased to see more approvals of de novo bank charters, which creates new opportunities for market participants. We remain fully committed to our full year financial objectives. We continue to expect 2017 internal revenue growth of 4% to 5% and anticipated higher revenue growth exit rate going into 2018. We expect full year adjusted earnings per share to be in a range of $5.03 to $5.17, and that adjusted operating margin will expand by at least 50 basis points. Finally, we expect our new cash flow metric, free cash flow conversion, to be in a range of 108% to 111% of adjusted net income for the year. We're positioned well going into the second half of the year. We're on pace to meet our financial commitments and are investing organically and via acquisition to ensure your company is driving accelerated revenue growth, strong operating margin and excellent free cash flow for years to come. Our success is a product of the more than 23,000 associates who display commitment, dedication and excellence for clients and shareholders each and every day. With that, let's open the line for questions.

[Operator Instructions] First question comes from Ramsey El-Assal from Jefferies. Ramsey El-Assal: I wanted to ask you about the acceleration in the second half. Can you kind of list through the drivers there, talk about your general confidence level that we're going to see, the expected acceleration?

Sure. Thanks, Ramsey. So I'll take it and Bob and Mark can add in as needed. I would say -- I guess, I would say, first of all, we're confident that we're going to see the acceleration, and it's really 5 or 6 items, and I'll just tick through them. First is, remember, we had quite strong sales last year in the second half of the year and we expect that, along with the Fast Start program we had in Q1, to make a contribution in the second half of the year. Second, and really a derivative of that, is the larger implementations that we have been talking about will come online kind of towards the end of third, fourth quarter. And that includes the 10 DNA transactions that I mentioned in my prepared remarks. As we shared at Investor Day, we're going to have some early biller strategy contributions from some of the bundled value propositions, which will come online in Q4 and ramp through '18, and so we're excited about that. We have some contributions coming from acquisitions as they go from exclusion to being organic, and most of that will probably be an add-in, in Q2, so we expect to have those implementations, and then some processing continuing to build throughout the year and again into '18. And we expect all of that to lead to a pretty strong exit rate as we move into 2018. Ramsey El-Assal: And that's tremendously helpful. And then on the EMV headwind that you called out or that you [indiscernible] your year-over-year compare, what's the cadence of that last year? When should we start to see that really abating?

Well, so we're still seeing absolute growth. It's just the growth contribution itself is down a bit. And I don't think we're going to see an abatement. I think we're now at a level that we'll see over the next few quarters, and we won't really see that abate until we're at the point where we start to see a new contactless cycle, and I think we're well away from that. So I think we're starting to see -- we're kind of moving into this normal level of EMV issuance. What I would say is we will expect to see continuing uplift in debit processing as the unlocking of the EMV chip adds revenue. So as more and more EMV comes online, we'll see an uplift in our processing revenues. But that will be slowly as the cards themselves move into circulation and utilization.

Our next question comes from David Koning from Baird.

I guess, to follow up on the last question just a little bit. I guess, in the Payments segment, specifically, it's often in Q2 kind of flat to up $20 million or so sequentially, and this year was down $4 million. So it almost feels like there -- was there anything else other than EMV? Because I know you said EMV's not really a downdraft, it's more stable. I'm just wondering if there was either weak term fees or license or anything else that contributed a little, too.

Yes. No, it's a good question, Dave. So we had obviously, the EMV that we talked about. We had -- and we talked about this a little bit in Q1, we had some periodic revenue last year that we saw in Q2 that we got in Q1 this year. The other thing I would say is last year, we were 6% in Q2, 7% in the first half of the year in payments. So the compare was a little bit tougher. A lot of that buoyed by EMV. But we're still really bullish about the growth in the segment, and we expect that to be the big driver of acceleration in the second half of the year.

Got you. Yes, that totally makes sense. And just secondly, I mean the acquisitions coming out, I mean that's pretty exciting, Monitise and PCLender. What's the timing? Like should we just think of that as kind of a end of Q3-type event? And maybe, what rough revenue should we expect?

So PCLender is actually announced and closed, so that is now -- they're -- the PCLender folks are part of the family so we're excited to have them in here. PCLender is a fairly small business, Dave. You made a notation in your note. I would say that I don't expect that to have any meaningful impact. Obviously, it's not organic revenue until we anniversary. We bought that primarily because they've got some really good people and they've got a really good origination solution. And with people moving to digital, we see the importance of origination technologies, merging it with the digital experiences. And so that's something that we've been looking to add in for the last, oh, I would say 12 to 24 months, so we're happy to have that in the family. Monitise, which we made a recommended cash offer to their shareholders, we had said all along that we thought that transaction was likely a Q3-type transaction and that's still our current belief.

Our next question comes from David Togut from Evercore.

Jeff, you called out strength in the large credit union market, growing momentum, and congrats on the Dime win. Could you give us maybe a little bit more color on what's driving that strength? And is this more kind of outsourcing, competitive takeaways?

Yes, so David, I was really talking about competitive takeaways. We're seeing more and more activity in the large -- in the larger credit union space. As you know, D+H had a transaction earlier this year. And typically when those transactions occur, it tends to have people take a look at their provider, and we're seeing that going on. And what's interesting to us is that we're seeing, especially in bake-offs where it's not our client today, we're seeing this -- we're seeing the participants, the credit unions really wanting the newer technology. And so, as you know well, that is the forte of DNA. There are a couple of other small providers out there who are dealing with -- or I'm sorry, who are offering the newer, modern architecture, and their -- as between us and those types of providers, we're seeing more decisions going in that direction. So for us, we're excited, given how locked up that space had been for the last several years.

Understood. That's helpful. And then, you called out the outperformance and operational effectiveness. It looks like you're 2/3 of the way through the $60 million target at the midpoint of the year. What are the major drivers of outperformance on cost takeout?

So Dave, it's Bob. I would really point to, actually the 3 things that Jeff mentioned in his opening comments. Workforce optimization has certainly been a key driver. That's been part of the acceleration or the bigger savings that we saw versus the first half of last year. We continue to see good progress in our procurement space as well as data center optimization beginning to really take hold. So we're certainly pleased with the progress in the second half of the year, and as Jeff said, at this point, we expect to overdrive or overachieve against the $60 million full-year outlook that we had in place.

Yes, I think the other thing, David, is as you know, we built a lot of muscle in the Fiserv machine around this, and it's always an estimate at the beginning of the year on how we're going to do and the progress that we're going to make, especially when we're relatively early in a program as we are with the current phase. And part of what gave Bob the confidence to be quite bullish at our Investor Day is the progress that we're making this year. One of the things that we're also working on that we didn't talk about but it's important is over the last quarter -- or the last several quarters and just going live this week, we moved our Architect platform to the cloud. And that kind of work, which is part of this, doesn't drive any definitive cost sales now but it allows us to provide a fully cloud-based solution, digital solution, to our customers -- or sorry, to our clients, but also over time, the economic benefits of being cloud-enabled are very, very, very substantial. So we're finding that mix between making investments and doing things that are going to pay off today and making investments and taking actions that are really setting ourselves up for the next phase that Bob referenced at our recent Investor Day.

Understood. Quick final question for me. If we strip out the write-off in the Payments business, it looked like you continue to have nice margin expansion there. How much of that is driven by the 30% Mobiliti ASP growth? And to what extent is that type of growth sustainable?

So there are really a few drivers to that, and I'll probably miss some of it and so Bob will add in. There's certainly a little bit of it -- or some of it coming through from Mobiliti and the ASP technology. And most of that is just because, as you know, most of our investments are big investments, are fixed-cost investments, and then the revenue that comes through is at a pretty high margin and so we're seeing that. But we're seeing that drop through on many of our products. So whether it's debit or our ACH-processing platform or whatever the scale payments platforms are, those are going to make those contributions. We're also making a little less organic investment in the segment right now. We have been making significant investments, as you know, around EMV. That's now fully scaled. The other thing is that because we are now anniversary-ing against EMV, right, the margin itself, we're not getting a lot of lower -- a little bit lower incremental margins. So your point about backing the $15 million out, I mean, those margins are quite high. And I think as Bob mentioned in his remarks, the 34.7% margin for the first half of the year is the highest first half margin we've ever had in payments.

And that number includes the $15 million charge. Right.

The $15 million.

Our next question comes from Brett Huff from Stephens.

Two questions. One, can you give us just more thoughts on the P2P? You mentioned some really nice rollouts and some good numbers. How was the working with the broader umbrella of Zelle? It sounds like it's benefiting you guys, particularly given it sounds like you got a lot of people in the first class of go-lives. Any insights in the first month or so since that's been live?

Yes, I would say that as -- I'll put this in air quotes. "As bank consortia go that the Zelle Group, the former clearXchange, EWS Group is -- has worked together well and we have a very strong relationship with them, which has allowed us to be close to the decisions and be on top of what we need to be doing to make sure that our clients, and frankly, new clients that we're winning already be not only -- that as you know, we have well over 2,000 institutions who are or have been Popmoney institutions. And so we expect many of those, if not all of those, over time, to become part of "Zelle". But we're also winning few clients. Of the few that we mentioned today, of the top 25, 1 of those 3 was brand new to the company. And I can think of a large -- or sorry, a number of institutions who are just coming in because we happen to have the payments -- the DDA-based payments expertise and, frankly, the most working knowledge in the industry around P2P. So -- and remember, the importance of P2P is not just moving money, but it's having the mature risk capabilities and network capabilities that we have been working on, frankly since 2011.

That's helpful. And then any update on the OBS and the cash management consolidation or the investments you're making there? We're looking around and seeing there's a number of new entrants, be it another core processor is going to have an organic version. There's a lot of people who seem to kind of be reinvesting in that as processors go out for that. Any thoughts on that market, how it's developing and how you guys feel about the position?

Sure. I mean, the commercial cash management is really important because institutions are serving generally the -- who they would view as their most important clients with that technology. And it's the intermediary technology that the commercial customers are using many, many, many times per day, and so it's critical. Now we have -- we had, for many years, a very strong kind of mid-market technology, but it just -- we didn't think that was sufficient to meet the rising expectations that we see out in digital, and so buying OBS, as you know, brought that to the party. Frankly, we have -- even as bullish and as optimistic as we were with that acquisition at the time, the combination of OBS to allow institutions to serve their large commercial customers -- and as you know, this goes all the way up through the sizing of banks, the Cap One and SunTrust are both large OBS customers. So we have the ability to serve very large and commercial customers. So for us, that combination with Architect has really been quite powerful in the market. It really is -- it has -- in the early days, retail was more important in the -- because so many institutions were interacting with the -- I'm sorry, so many customers were interacting with the FIs on that basis, but commercial is now absolutely critical. And the ability to go out and win larger, bundled deals like the Dime Community Bank that we talked about today, is quite important. So we're excited about it, and we think that's going to lead us to a lot of new business over the next several years.

Our next question comes from Ashwin Shirvaikar from Citigroup.

So I guess, my first question is on free cash flow performance, pretty solid in the first half. But as your internal growth recovers in the second half and, also, you have ongoing digital investments, would you expect the free cash flow performance to sort of decelerate in the second half? The reason I asked is your new FCF metric would support this, but on the other hand, you've got cost initiatives, the Fast Start program, which would indicate otherwise. So can you comment on expected free cash flow performance?

Yes, Ashwin, it's Bob. I would say overall, obviously, we're very pleased with where we started the first half of the year, up meaningful over the prior year. I certainly wouldn't anticipate that level of year-over-year growth to continue into the balance of the year, but we certainly expect to have a very strong free cash flow. The guidance on the free cash flow conversion metric is 108% to 111%. We fully expect to achieve that through the first half of the year. We're at 105%, but off to a great start.

Okay. And second question is, I guess, on competitive landscape. And Jeff, I get your comments that you had on Misys-D+H. But on the other hand, Temenos, on its call indicated a strong pipeline. They won Commerce Bank, Avidbank, in the past year or so. Obviously, 2 clients against the thousands you had. Small, but they're good-sized banks, not something that happens too often. And the question really becomes, you're going to be increasingly fighting cloud-based deals, Architect and -- against Temenos and so on. How does that affect the economics of your business that needed CapEx and so on?

Yes, I mean, that's a good question, Ashwin. Obviously, the Commerce deal was something that we were battling for as well, and we did not end up getting selected. The difference between that kind of a transaction or the Ally transaction, where, in many of the smaller institutions -- and I don't mean that negatively, but the smaller institutions will tend to buy on a bundled basis. In the larger clients, that's not the case. So Commerce bought -- may have bought a core engine, but we actually provide them many of their digital and payment solutions. And so as you move up that food chain, winning the core processing capability is certainly important and something we'd like to do, but we still have many relationships with these institutions. And in this case, the core provider doesn't have the capabilities to displace us, and so it is a little bit different than you see in other parts of the landscape. The other thing I would say is those larger clients, as much as we'd like to win them, they tend to be multiyear, 2-, 3-, 4-, 5-year kinds of implementations. And frankly, it's a lot of services revenue, and for us, we don't think that's necessarily our sweet spot. We really are building our company to be in the -- call it, in the $25 billion and less space on the bundled value proposition. Now we'll move up and we have clients that are larger than that. And for clients who want the modern technologies that we provide and they want an integration advantage, then that's great. But if they're really looking for very heavy, professional services and license-type transaction, we have to evaluate each one of those and make a determination. Is it somewhere where we want to play, and are we best suited to deliver that given the opportunity costs associated with those kinds of transactions?

Our next question comes from Jim Schneider from Goldman Sachs.

Jeff, in the prepared comments, you talked about the number of DNA wins you expect to come on back half of the year as well as some Mobiliti means you expect to come on later this year. Can you maybe give us a sense about the relative magnitude of both of those items, and then whether you expect these to kind of be more Q4 events or whether we can see some contribution in Q3 as well?

Sure. So on DNA, we generally would expect those to be probably even. I think we said at least 10, 5 and 5-ish. And -- but remember, you've got the aggregate effect of that because we had 6 go-live in this quarter. So -- but we would expect to see that. And then as it relates to payments, we would expect to see -- my guess is, most of those implementations will bias to Q4 just because it takes time to get them implemented and get the UIs where they want to be. So that'll probably bias a little bit more to Q4.

That's helpful. And then maybe to follow up on an earlier question for you, Bob. Can you maybe give us a status update in terms of the -- on the data center part of operational effectiveness, what actions you took in the quarter, and then whether you think that there's any potential to kind of pull in any of the planned 2018 actions to 2017, given you're running ahead of plan?

Yes, I would say, overall, the favorability or the strength of the overall OE savings, the $40 million in the first half of the year, I think we described it as workforce optimization, procurement and TCO, I would put them in that order in terms of the actual savings generated, with TCO being a relatively modest contributor at this point. We're still in the phase of getting that activity ramped up and expect to see that in the latter part of the current phase of the program.

Jim, I would say that the way to think about TCO is there are very long planning tails on that. And if you move up something by a month or by 2 months, right, which is unlikely, right, they're usually right up to the expected time, you'd get only a tiny benefit. So the majority of the increment is -- doesn't come from TCO. We would have to start doing things now to see benefits at the end of, probably at the end of '18 into early '19. So just think about it, those are longer-tailed activities.

Our next question comes from Paulo Ribeiro from BMO Capital Markets.

Jeff, last quarter, you talked about Fast Start, and could you just tell -- give an update how is that going? Or was that more specific for first quarter in terms of shortening conversion cycles and driving revenue early into the year? And second and kind of a related question here is on receivables, we also saw last quarter you were able to bring it down and you did it again this quarter. Do you anticipate that you'd continue to bring it down in terms of U.S. dollars and days in the second half of the year?

So let me -- this is Mark Ernst. Let me start with the kind of what our learning is on the Fast Start. Overall, I think we would just judge that some of the things that we did demonstrated that we do have the ability to, within range, kind of move some of the sales activity forward. We're pretty encouraged by that. It's unclear at this point whether that results in more overall sales, but it does have the effect of bringing in transactions that we can't implement more quickly and, therefore, get a fourth quarter effect that might have otherwise slipped into the subsequent year. So overall, I'd say we are pleased with what we saw so far with Fast Start, but kind of the full -- and the full effects of it, I think, are still things that we're working through.

And then in terms of accounts receivable, Paulo, it's -- we saw some ramp up, if you recall, into the second half of last year. We saw that come down nicely in Q1 and again in Q2 to a slightly lesser extent but still an improvement. I would expect us to be able to maintain it from a days' standpoint, with some growth in revenue in the second half of the year, accelerated growth. We'll continue to work that receivable and generate good cash for the full year.

Paulo, one thing I would add to the Fast Start commentary is when we created the program, we had a thesis that if it were to work, we would likely see more increases in product-oriented, license-oriented product revenue. And in fact, what we ended up seeing was some of that but actually more sales of, whether they be in-house to outsourced migrations, but other kinds of revenue that is more recurring that we thought had longer cycles. And we saw people work hard to bring them in early. And to Mark's point, that revenue, instead of slipping into the earlier part of '18, because it wouldn't have gotten signed until the middle of the year or later in the year, we're optimistic that we'll start to see some of that rev come in, in Q4. But that was an interesting learning. The ability to move clients on the decision cycle on even longer recurring revenue kinds of add-on sales.

Great color. Just if I can sneak one more in. Just quickly, generally, in terms of IT spend, do you see some change this quarter versus last quarter in terms of where banks are putting their dollars?

I would say generally, no, with one exception, and that is that, especially in the larger banks, Zelle is taking a lot of the mind share, people wanting to get on the Zelle bandwagon before the consortium starts its advertising and marketing. But really, the priorities remain the same: focused on digital experience, commercial, making money, those kinds of things. And there continues to be a bit of optimism in the market on rates and those kinds of things. So -- but it's about -- the spend itself is about the same.

Our next question comes from Andrew Jeffrey from SunTrust.

Jeff and Mark maybe, sort of a longer-term question, understandably a lot of enthusiasm about Zelle and the ramp and the visibility it creates for your organic revenue growth for the back half and beyond. Can you shed a little light on how you see the longer-term nature of those contracts going onwards? I imagine there are some minimums upfront and, at some point, it transitions over into either user-based pricing or transaction-based pricing. How would you expect that revenue stream to evolve?

So I think at Investor Day, Mark had laid out some -- I think using iPay data, laid out a -- kind of how the P2P market would grow. And so we, none of us, have a crystal ball, and there's lots of hypothecation out there. But we generally think that hypothesis is as good as any of them. But we do think that P2P is going to grow. And P2P is going to end up being an important part of how consumers move money as compared to the check and cash that generally P2P payments are focused with today. So most of our pricing is transactional. And so as transactions grow, we would expect to follow that kind of growth, much like we did in the bill payment business and the early days of CheckFree when it went from very little up to being quite significant. And so we do expect that. Right now, the majority of the revenue, the new revenue that's being created, is still small in the transactional side and much more around implementation, so services and the like. So that's how we see that. And again, I expect that to happen -- we expect that to happen over quite a long period of time in terms of having the market grow to some level of quasi-maturity.

Okay. So -- and I imagine, given the sort of rolling nature of these implementations, it gives you some time line as far as end-user adoption.

Yes, and we're going to be -- just given the size of our base and the demand in the market, we're going to be implementing people for a long time. We literally have thousands of implementations -- we're going to have thousands of implementations to do. So that is going to be a nice bridge while the transactions themselves are building. The other really important element of this is we believe that as people become more fluent users with P2P that, in fact, that will also translate to other DDA-based payments, so more bank-based bill pay, more account-to-account transfer, more activity used in the personal payments device that we refer to as a phone. So all of that, we think, will turn into goodness across our DDA-based payment suites. Suite.

Our next question comes from Paul Condra from Crédit Suisse.

Jeff, I just wanted to ask, you talked about some de novo activity that looked positive. I wondered if you could give a little more detail there and talk about what you're seeing.

Yes, I think we're actually now into the double digits of de novos this year. So I think we're around 10. We're in that high single-digit, low double-digit range, and there are lots of applications in there. And so we're optimistic now. It doesn't sound like a lot relative to the past, but frankly, that's probably as many de novos as we've seen in the last 3 to 4 years combined. So we're feeling good about that.

I mean, is there anything that stands out to you as to why that activity would be picking up? Just where we are in the cycle, interest rates or...

I think it's a combination of bank regulators being more comfortable with the stability of the market, and frankly, the ability to make a little bit more money as rates have been moving up. But there's been a lot of demand for de novos for a while. It's really just been the regulators who have not been willing to approve charters.

And then, I guess, nice job maintaining the outlook even with the $0.05 hit. Bob, I was just curious if you would be -- would have been raising your EPS outlook for the year if you didn't have that one-time expense issue.

Yes, that's an interesting hypothetical question. The fact is we've done well from an operational efficiency standpoint, having $40 million behind us and now expecting to overachieve the $60 million. Now a $0.05 headwind certainly is an impact to the overall guidance range. It's got $0.14 in it. Certainly disappointed that we have the charge, but still feel good about, a, having record operating margin in the quarter, both for the Payments segment as well as the overall company; and being able to maintain the guidance.

I mean, those kinds of hypotheticals are almost impossible to answer. I would say that historically by the time we get to Q2, we have a pretty good feel for how the rest of the year is going to shake out on the EPS side. We're highly confident in our EPS range for the year, and so -- and that's taking the $0.05 in. So I would say that we would be even more confident if we weren't making up for that $0.05. We are excited about the fact that next year, right, that $0.05 will not recur, and that's good news.

Our next question comes from Joseph Foresi from Cantor Fitzgerald.

I was wondering if you could update us on the growth initiatives, especially given the charge, maybe what's working and what isn't?

Are you talking about the growth initiatives that we talked about at Investor Day?

That's right. I wasn't sure if the charge was linked to it. Maybe if you could give us an update on -- or more detail on the charge and any update on how the growth initiatives are after the Investor Day?

Yes, I would say that nothing has changed since Investor Day. We're -- with those items. The charge had nothing to do with the growth initiatives that we laid out. It really had to do with some internally used software.

Okay. And then just on the pipeline, I know you gave some color earlier, but how does the pipeline for the second half look versus the first half? And maybe you can give us some color on some expectations on your conversion rate assumptions. Are they the same in the second half as the first half?

Sure, sure. We have good growth in our pipe. We are up in sales about 10% for the year. We expect our win rates to remain about the same. We have some larger transactions that are in the pipeline. And we're also filling the pipeline nicely against some of the strategic initiatives that we talked about. So we basically -- we have confidence in the numbers, and we're comfortable that we'll make the full-year sales.

Our next question comes from Jeff Cantwell from Guggenheim.

Just wanted to get your thoughts on the potential impact on your margin Zelle could have, looking a little further out, as it ramps more meaningfully. You mentioned this quarter, ex the one-time item, operating margin would have been up significantly. So I'm wondering if Zelle's ramp would mean you could do even better looking out into 2018? Or just how you would think about quantifying this impact.

Sure. So the best -- probably the best way to think about Zelle is in the kind of the foreseeable -- in the foreseeable future. So as we're going through our implementation cycles, the majority of the revenue that comes in on that conversion and implementations is different -- has different characteristics than the transactional revenue. When the transactions start to bypass the implementation revenue, we would expect those kinds of margins to look very similar to all of the other large payments processing engines that we have in the company, whether they be debit or bill pay or the like. So we would expect, over time -- without regard to pricing, we would expect over time that those margins would look pretty attractive. All right. Thank you, everyone for joining us this afternoon. We appreciate your support. If you have any further questions, please don't hesitate to contact our Investor Relations group. Have a great evening.

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