Welcome to the Fiserv 2017 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 Paul Seamon, Vice President of Investor Relations at Fiserv.

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 the 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 a reconciliation of those measures to the nearest applicable GAAP measures. These non-GAAP measures are indicators that management uses to provide 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 assumed to be year-over-year comparisons. With that, let me turn the call over to Jeff.

Thanks, Paul, and good afternoon, everyone. We made important strategic progress in the quarter through several acquisitions, which further expanded our solution set in the fast growing areas of payments infrastructure and digital enablement. We expect these transactions to enrich the differentiation of our solutions, deliver meaningful value to our clients and further enhance our internal revenue growth profile. Although we remain on track to achieve our full year financial outlook, revenue in the third quarter was below our expectations. This shortfall was driven primarily by the timing of periodic revenue, the majority of which we expect to reverse in Q4, contributing to a strong internal revenue growth exit rate and setting the stage for higher growth in 2018. Internal revenue growth was 2% in the quarter, pressured by a $16 million reduction in periodic revenue versus the prior year. The growth rate in the quarter was also impacted by a tough comparison for EMV card production revenue growth versus last year's third quarter. Even with the decline in higher-margin periodic revenue, adjusted earnings per share was up 11% in the quarter and has increased 13% year-to-date. Adjusted operating margin for the quarter was down slightly versus the prior year to 32.6%, and up 60 basis points sequentially. This comparison is against last year's high watermark for adjusted operating margin and also includes a 40 basis point headwind from our 2017 acquisitions. Sales performance in the quarter stepped up, coming in at 106% of quota and is now at 91% attainment year-to-date. Our pipeline remains strong, and we are on track to meet our full year sales objectives. Now let me update you on our 3 key shareholder priorities for 2017 which are: first, continue to build high-quality revenue while meeting our earnings commitments; next, enhance client relationships with an emphasis on digital and payment solutions; and finally, deliver innovation and integration, which enables differentiated value for our clients. We continue to build high-quality recurring revenue in the quarter even in the face of lower-than-anticipated headline growth. The combination of lower periodic revenue and a decline in the revenue growth contribution from EMV impacted our comparative quarterly internal revenue growth rate by roughly 230 basis points. Adjusted earnings per share was up 11% in the quarter and 13% year-to-date. We've raised the bottom end of our adjusted EPS guidance and now expect results in the range of 14% to 16% growth for the year. We are well on our way to achieving our 32nd consecutive year of double-digit adjusted earnings per share growth. Our business continues to demonstrate strong adjusted operating margin and free cash flow characteristics. Adjusted operating margin through September 30 is up 20 basis points, which includes 20 basis points of compression from our recent acquisitions. Free cash flow is up 10% year-to-date, and we're on pace for another strong performance year across all of our key free cash flow metrics. Our second priority is to enhance client relationships with an emphasis on digital and payment solutions. We talked at length about the importance of providing strategic solutions across our account processing client base. To that end, we were pleased to expand our relationship with Prosperity Bank in the quarter. With more than $22 billion of assets, the bank selected our market-leading Architect, Commercial Center and debit processing solutions to transform their digital and payments experiences. We're seeing tremendous market momentum since adding these solutions to our market leading digital suite. We were pleased to renew our important relationship with NCR this quarter as a reseller of payment services through their digital insights solutions. This multi-year agreement enriches our long-standing bill payment partnership and helps both parties extend their payments leadership. Mobiliti ASP subscribers were up more than 20% in the quarter and increased 4% sequentially to 6.4 million. Mobiliti business has also continued to expand with users nearly doubling from the prior year's quarter. Our third priority is to deliver innovation and integration, which enables differentiated value for our clients. We continue to believe Zelle is an important catalyst to change the way consumers move money. As the leader in FI-centric P2P, we are encouraged by additional Zelle signings, progress on client implementations and as you have likely seen, early signs of very strong transaction growth. BMO Harris Bank, part of the BMO Financial Group, a highly diversified financial services provider based in North America, has signed with Fiserv to bring new capabilities and an integrated money movement platform to their customers in the U.S. using our market leading CheckFree RXP, TransferNow and Zelle solutions. We also signed Regents Bank to our turnkey Zelle solution in the quarter, bringing to 8 the number of top 25 banking institutions that to date have opted for our full Zelle solution. While still really in the decision, implementation and adoption cycle, we remain encouraged by the market enthusiasm for Zelle and expect to see measurable growth in 2018 and well into the future. As we introduced earlier in the year, our new integrated biller strategy offers a unique value proposition across several key solution areas. As one of our early proof points, Freedom Mortgage, a leading mortgage lender, expanded its existing relationship by adding LoanComplete to enable faster, more efficient loan processing while reducing overall risk. Our new strategy is already producing sales, which is further increasing our conviction around this unique approach to integrated client value. As I mentioned, we closed 3 acquisitions in the quarter to help drive innovation and client value, including PCLender, which strengthens our portfolio of digital lending products through next-generation mortgage origination technology. In September, we closed the acquisition of Monitise, which we expect will accelerate both our digital strategy and the development of a next-generation digital banking platform. Importantly, the Co-operative Bank in the U.K. with assets of GBP 25 billion became the first client to purchase our newly acquired FINkit solution. Interest has grown since our acquisition, and we expect this to be first of many sales of this unique digital capability. We also acquired Dovetail Group Limited, a leading provider of payments and liquidity management solutions. Dovetail's payments platform, which is one of the top payments infrastructure solutions in the world, enables Fiserv to help financial institutions transform their payments infrastructure to meet the changing needs of wholesale, commercial and retail customers. Dovetail positions us as a leader in the rapidly growing global payments market. Reaction to these acquisitions has been excellent, and we are optimistic about our ability to deliver differentiated client value while further extending our growth profile. With that, let me turn the call over to Bob to provide more detail on our financial results.

Thanks, Jeff, and good afternoon. Adjusted revenue for the quarter grew 2% to $1.3 billion and increased 3% to $4 billion through September 30. Internal revenue growth was 2% in the quarter and is 3% for the year-to-date. While the third quarter's internal revenue growth rate was lower than we anticipated, it was largely driven by the $16 million year-over-year decline in periodic revenue, the majority of which was in the Financial segment. In addition, we had a large comparative EMV growth headwind in the quarter, which pressured both overall internal revenue growth as well as in the Payments segment. As we've shared throughout the year, we expected internal revenue growth to accelerate into the second half of the year. This is still the case as we expect our fourth quarter's results to include much of the periodic revenue delayed in Q3 and to be our strongest internal revenue growth quarter for the year. Adjusted operating income in the quarter increased 1% to $435 million and is up 4% through September 30 to $1.3 billion. Adjusted operating margin of 32.6% was down 20 basis points in the quarter and is up 20 basis points for the year-to-date to 32.4%. Current year acquisitions had a 40 basis point negative impact on adjusted operating margin in the quarter. Absent the acquisitions, adjusted operating margin would have been up 20 basis points in the quarter and up 40 basis points year-to-date. As a footnote, the reduction in periodic revenue in the quarter had an 80 basis point negative impact on adjusted operating margin in the third quarter. Our results are benefiting from the combination of high-quality recurring revenue and exceptional operational effectiveness program execution, which has already surpassed our full year target of $60 million. We are on pace for at least 50 basis points of adjusted operating margin expansion for the year, which includes headwind from acquisitions as well as the write-off we discussed in the second quarter. Adjusted earnings per share was up 11% to $1.27 in the quarter and is up 13% to $3.71 for the first 9 months of the year, setting the stage for another year of double-digit adjusted earnings per share growth. Payments segment adjusted revenue was up 5%, both in the quarter and year-to-date, to $733 million and $2.2 billion, respectively. Internal revenue growth grew 3% in the quarter and is up 4% year-to-date. Segment internal revenue growth was led by strong results in both card services and electronic payments, partially offset by the difficult compare from EMV card production. Last year's third quarter was the peak revenue period for EMV card production, and although we're still seeing revenue build from EMV, the growth is at a more normalized level. And a major step-up in growth contribution from EMV revenue anniversaries in fourth quarter. Our debit transaction growth in the quarter was in the mid-single digits, and P2P transactions grew 20%. Real-time transactions were up more than 100% in the quarter, led by growth in Popmoney Instant Payments. As Jeff noted, early Zelle transaction growth is strong albeit off of a very small base, and we remain optimistic about the near to midterm growth potential for P2P. Payments segment adjusted operating income in the quarter was up 5% to $254 million and is up 7% to $753 million year-to-date. Adjusted operating margin expanded 20 basis points in the quarter to 34.6% and is up 60 basis points to 34.7% through September 30. Adjusted revenue in the Financial segment was $619 million in the quarter and $1.9 billion year-to-date. Internal revenue growth was flat in the quarter due primarily to the timing of license and termination fee revenue, which had a negative impact on segment internal revenue growth of more than 200 basis points. For the first 9 months of the year, the segment's internal revenue growth rate was 2%, a step-up over the 1% growth last year. Adjusted operating income for the Financial segment was $204 million for the quarter and $614 million year-to-date. Adjusted operating margin declined 40 basis points to 33.1% in the quarter, driven largely by the timing of the high-margin periodic revenue. And for the first 9 months of the year, adjusted operating margin in the segment was flat at 33%. An important driver of the Financial segment's success is our account processing footprint. Our DNA continued its market momentum, adding 9 clients in the quarter as compared to 5 in the prior year. And we've signed 20 clients to DNA for the year-to-date, and 5 DNA clients went live in the quarter, including 2 with assets greater than $1 billion. Corporate and other adjusted net operating loss in the quarter was in line with expectations and consistent with comparable prior year results. Our adjusted effective tax rate in the quarter was 30.1%. This is better than anticipated due primarily to the successful resolution of several discrete tax items earlier than anticipated along with the excess tax benefit of share-based compensation. We expect an adjusted effective tax rate for the fourth quarter of about 35% and a full year rate of just below 32%. Free cash flow for the first 9 months of the year was solid, increasing 10% to $819 million. Free cash flow conversion was 102% year-to-date and is in line with our expectations. We repurchased 2.4 million shares in the quarter, and we returned nearly $1 billion to shareholders through September 30. At quarter's end, there were 208.8 million shares outstanding and 12.2 million shares remain under our existing share repurchase authorization. Total debt as of September 30 increased due to acquisitions to $5.1 billion or 2.5x trailing 12-month adjusted EBITDA. We will continue to leverage the strength of our balance sheet combined with excellent free cash flow to create meaningful value for our clients and shareholders. With that, let me turn the call back to Jeff.

Thanks, Bob. Sales momentum picked up in the quarter, gaining nearly 40% sequentially and coming in at 106% of quota. Comparatively, sales were down 6% versus the record results in last year's third quarter but are still up 3% year-to-date. We enter our traditionally strongest sales quarter at 91% of quota and a domestic pipeline, without the benefit of any of our recent acquisitions, up 17% year-over-year. We are highly confident we will achieve our full year sales objectives. Integrated sales were $76 million in the quarter. Our traditional results were driven primarily by payments and digital solutions aided by growing contributions from our new billing and payments integrated sales focus. Our ability to deepen client relationships through add-on solutions remains an important component of our company's strategy. Operational effectiveness savings were $22 million in the quarter and are $62 million year-to-date. As Bob mentioned, we've eclipsed our full year goal of $60 million a quarter early on the strength of workforce optimization and procurement. We continuously focus on how to make our model more effective to ensure we have the capacity to invest in growth in service while expanding adjusted operating margin consistent with our long-term strategy. We continue to see optimism in the banking market, with rate tailwinds and increasing attention on driving revenue growth. Acquisitions remain a focus in the industry as market participants look to rationalize costs in branch infrastructure. Digital remains the absolute priority with an eye towards providing high-value experiences across small business and commercial services. New payment solutions such as Zelle will continue to put heat and light on rising consumer expectations and pressure institutions to deliver services to that evolving standard. Over time, we believe institutions will continue to invest meaningfully in technology to meet the needs of a growing digitocracy. As I said at the top of the call, we remain on track to achieve our full year financial objectives. Given where we are in the year, we are narrowing our 2017 internal revenue growth guidance to 4%, which implies fourth quarter growth of at least 5% as a solid jumping off point for 2018. We raised the low end of our adjusted earnings per share guidance by $0.02 and are now expecting a range of $5.05 to $5.12, reflecting growth of 14% to 16% for the year. We continue to expect that full year adjusted operating margin will expand by at least 50 basis points. This underlying performance will be even stronger than the actual result when considering the impact of in-year acquisitions. And importantly, we expect free cash flow conversion to be in the range of 108% to 111% of adjusted net income. In conclusion, we've made important strategic progress this year both organically and through acquisition. We expect to meet our financial commitments leading to our 32nd consecutive year of double-digit adjusted earnings per share growth, expanded high-quality revenue and excellent free cash flow. Lastly, we were pleased to see an increase in our associate engagement scores for the fifth year in a row. Ensuring that our thousands of employees around the world remain committed to delivering excellence for the company and its clients is the critical element of our formula for long-term success. With that, operator, let's open the line for questions.

[Operator Instructions] Our first question is from David Togut of Evercore ISI.

Jeff, you called out a $16 million year-over-year decline in periodic revenue. Could you break down the components of that between software and contract term fees? And then why the conviction that, that will improve significantly in Q4 and drive up organic revenue growth?

Sure. The substantial majority of it was contract termination fees, a bit of license. And as you know well in this industry, we get -- we have a lot of visibility to termination fees in the -- on an institution-by-institution basis. It's a little bit more difficult to judge exactly when they're going to come in. We had thought that a number of them would come in already. And so we've got some reasonable conviction that they'll come in, in Q4, and if they don't come in, in Q4, they'll come in Q1. But we feel like where we are now that we'll see that come in. And license is always strong in Q4 because of the seasonality, and so we would expect that to pick up as well.

Got it. And then you highlighted some optimism in your remarks around bank IT [indiscernible]. Any read on what 2018 bank IT budget growth will look like among your customer base?

You broke up a bit. I think you were talking about optimism around technology spend overall in the bank space.

Correct and any outlook you have for 2018 bank IT budget growth.

So I'm not a great prognosticator about how banks will -- how their spend will be in the aggregate. But I do know, based on what we see and conversations with the market on a daily basis, that banks will continue to focus their energy on all things digital in terms of whether it's moving over to technologies such as Zelle. We're seeing a lot of demand for our Architect and Commercial Center solutions, and so that is a critical element of where spend is going. You also have a lot of focus in areas of risk, cyber and just ensuring that the back offices and the back-office infrastructure can keep up with the front-office demands of rising expectations. It's one of the reasons why, frankly, we see -- continue to see good growth in areas like DNA, Premier and other of our headline kind of star account processing platforms. So we have a lot of conviction overall that those areas will continue to pick up. And then lastly, of course, payments, so whether it's Zelle, we did our Dovetail acquisition in the quarter, really, because the world is moving to real-time money movement faster than we anticipated, say, a year -- a year or 2 ago, and so we see that to be an important part of our portfolio. So we're going to see more bulking up of spend there. Frankly, some of it will be offset by reductions in other areas, but we feel pretty fortunate about where our investments have been and where we'll ride that ride that -- sorry, where we will ride that wave of increasing spend.

Just a couple quick housekeeping questions. How much did the 3 acquisitions closed in Q3 contribute to revenue in Q3 and rest of year?

So it wouldn't be anything on the internal side, but Bob, I don't know if you can supply the...

Yes. David, the 3 of them closed throughout the quarter so not meaningful in the third quarter to speak of, one of them mid-August, the other beginning of September. So you saw a little bit but to Jeff's point, not included in our internal revenue growth metric.

Great. And then just end-of-period share count?

208.8 million shares.

The next question comes from Dave Koning of Baird.

So I guess, this question's a little granular, but the last 5 Q4s, the revenue's been up between $35 million and $48 million sequentially, so it's very tight actually in terms of how much it grows. It sounds like, on top of that normal rate, you're going to get maybe that $16 million back into Q4. Plus, the acquisitions maybe help by another $10 million sequentially. But just trying to bridge the gap, where is kind of the rest coming from? Is there going to be some just unnaturally strong seasonal movements in license? Or how do we get to that?

Yes. So it would be -- I mean, there's any number of factors. So one of them, obviously, will be the shifting of the periodic revenue as we talked about. We have some acquisitions that have gone from inorganic to organic such as Architect as we've talked about. We have just the aggregate impact of sales and implementations, DNA, Zelle, those kinds of things that are coming in. And then we have a lighter compare from the EMV, which will also anniversary at the end of Q4 in terms of the drag. And so that's going to lighten up meaningfully in Q4 as well. So we have all of those things, Dave, on top of the seasonality that you're talking about. So the seasonality is the Q3 to Q4 sequential, and most of the things that I'm talking about are more of a Q4-over-Q4 change.

Okay. Okay, got you. And then, I guess, the one other thing is just EBIT also has to be up like $50 million sequentially, $50 million, $60 million maybe even to get to your numbers, and that historically has been -- it kind of has moved around but kind of sometimes down a little, sometimes up a little but is a lot of what's coming on term fee certainly very high incremental margin. But is most of the stuff coming on pretty high incremental?

Well, to your point, we are going to have, based on what relative termination fee revenue was in last year's Q4 plus some of the periodic revenue that we expect -- or the majority of the periodic revenue, which we expect will come into Q4, again, that's going to come in at pretty high margins. So we are anticipating a very strong margin quarter.

The next question comes from Tien-tsin Huang of JPMorgan. Tien-Tsin Huang: Just on the EMV production, we get the comps are tough. But are you seeing normal reissuance activity? Has there been any change? Or is there any fatigue there? Just trying to understand because I think FIS had some muted growth there as well.

Yes. I -- Tien-tsin, I would say that we're seeing kind of normal reissue activity but for the fact that over the last, call it, 15 months, you had some banks decide or financial institutions decide to accelerate their reissue a bit to get onto the EMV bandwagon, and so this year, there's a little bit of sorting out going in there. But we're continuing to see institutions issue EMV. We also haven't had -- even with all the breach noise in the market, there has not been any big retail breach, which has driven, what I would call, unusual or off-cycle reissue or at least nothing meaningful. Tien-Tsin Huang: Right. So normal replenishment. Nothing like -- I know you mentioned breach for like Equifax breach, things like that. No sort of slowdown as a result, it sounds like.

Yes. At this stage the institutions are still trying to figure out what to do about the Equifax problem. Tien-Tsin Huang: Yes, just like me. Trying to think. Okay. Just my follow-up and I'll jump off. Just thinking about Zelle. You mentioned it will be meaningful in '18. It sounds like there's a lot of activity pipeline backlog in terms of banks. Can you maybe just give us a little bit more detail on what you're seeing? Is it really just going after some of the smaller banks and turning them on? Or are you actually engaging with the larger banks as well? You mentioned a bunch, I know, on the bigger side but just trying to understand a little bit better as we go into '18.

Sure, sure, Tien-tsin. So I think what we said is we would see some measurable growth in '18, and we expect that growth to accelerate. That growth will accelerate for a fairly -- I think a fairly lengthy period of time. We had Wells talk about over 45% growth in the quarter. We had Bank of America talk about almost 70% growth in the quarter, PayPal another almost 50% growth in their product. So it feels like the U.S. is moving towards a kind of the early stages of a pretty important wave of P2P. Advertising launched just yesterday across Zelle, and I think they talked about a double-digit millions kind of initial campaign. So there is a lot of energy in there. We mentioned in our comments that we've signed officially so far 8 of the top 25 banks. We're having lots of other conversations. So we have over 2,000, nearly 2,500 institutions who use our Popmoney solution today. I suspect, over the next couple of years, most of them will move over. But in the nearer term, really, the substantial, substantial majority of larger institutions will move over to Zelle. And frankly, the benefit that we have is because of the position that we've staked out, I think many of them will either create their own solution or they'll come through us in the, call it, the top 50, top 100 institutions. So we feel pretty good about our position right now and that will allow us to grow faster early than we may have if we were just back in the days of standard linking into our account processing platforms. So we're feeling good about where we are today. Obviously, time will tell. But best we can sort out right now, it's -- the wave is starting, and we should be well positioned to ride it.

The next question comes from Jeff Cantwell of Guggenheim Securities.

On the back of that earlier question about the acquisition, can you talk a little bit about the go-forward expectations for those 3 acquisitions? Just want to get a better understanding of their size in terms of revenue and their potential impact in 2018.

So for right now we would expect the impact to be fairly muted since our current practice is not pick that up. We might get a -- under our current practice, I think we would only get 1/4 next year, so we wouldn't expect it to have much impact there. Monitise was a small public company in the U.K. Their revenue was public, so it's out there. It's not very large. PCLender was pretty small, and Dovetail was pretty small. So all of these are much more around adding to our solution set and being able to deliver them across our client base. So we see that the inherited -- what's the right way to say it, the inherited organic growth benefiting, but we're optimistic, by the time this starts to really layer in to our organic growth, that we will have the benefit, not only of the businesses that we acquired but frankly, the opportunity to continue to sell it across our base, which is what's been frankly our MO and where we have a lot of muscle over time.

And then just on the back of that, if you could just take a step back and think high level. Could you just help explain to us how those acquisitions fit in the context of your overall strategy? I'm just thinking in terms of areas like international expansion, et cetera.

Sure. So Monitise had both a U.S. -- kind of a smallish U.S. business and a smallish primarily EMEA-based business, both around digital banking. That's a very important priority for us, so we're looking to -- always looking for opportunities to create scale. But they also have a very, very unique technology called FINkit that we are using at the center of what we think is a kind of the next wave of where digital is moving to a microservices architecture, which allows much faster adding of feature, function and new capabilities, and we're also using it at the center of creating what we believe is the next-generation digital banking platform serving larger institutions around the world. So that's number one. Around Dovetail, Dovetail is a real-time-based payments platform, which is critical as the U.S. makes its move to real time. So the primary reason for buying that was to enable us to better serve U.S.-based financial institutions and frankly, as a very strong benefit is Dovetail serves some of the larger institutions globally, and they have a very strong business globally. They're ranked at the top of the world rankings around this payments capability, and so we're excited to have an opportunity to sell that to additional institutions both in the U.S. and outside the U.S. And then lastly, PCLender, that is a digital mortgage origination technology as well as an in-branch or in-bank origination technology. Adding that capability into our digital banking platform again to enable our clients to have these best-in-class digital experiences was the rationale for that. And then Architect and Commercial Center that we acquired previously, again, that's about building out our digital services to enable banks to serve both retail as well as commercial and small business customers. So it all really fits in payments and digital. That's the majority of where our acquisition focus has been over the last several years, and if I had to guess, I would say it would continue.

The next question comes from Ramsey El-Assal of Jefferies.

This is Damian Wille on for Ramsey. So I just wanted to ask about kind of the segment growth rates here. So we've seen some moderating segment growth rates more recently. First, is there any change in terms of long-term growth potential for Fiserv? And then secondly, kind of given the maturation in the industry, would you contemplate more transformative M&A that might be growth accretive?

Yes. Damian, it's Bob. On the Payments segment growth rate, there's really been a couple of key drivers. We talked a little bit about them in some of our opening comments. The EMV growth provided a nice lift last year. Q3 was the peak quarter of growth in 2016 so a very difficult compare. For 2017, we will anniversary that revenue growth drivers in the fourth quarter. But we also have talked about some of the larger programs that we won last year, a lot of the sales activities we had last year. And the timing of those implementations, because of the size of them and the complexity with our client base on getting those ramped up, is going to give us a lift into Q4 of this year and certainly into next year. And of course, we also see the benefit of things like Zelle continuing to mature. The advertising that was just launched yesterday will provide a nice lift into those transactions. It's very early into that growth opportunity. And so we see that lifting into 2018 and beyond. And we also talked about the digital insights relationship we expanded. So we see our Payments segment continuing to provide strong internal revenue growth lift relative to the overall company. It has in the past, and we'll continue to see that going out into the future.

Yes. I would add a couple of things before we get to the acquisition question. I mean, I would say that we've had more jumpiness in our growth rates than we have seen this quarter so more movement and largely around the periodic revenue, right, having an odd quarter where we're $16 million down in periodic revenue. And one of the reasons -- we don't love that because it creates some dialogue like this, but we expect to have growth this year that is at or above last year's level. So we are targeting 4%, which is consistent with our guidance albeit at the low end, and we expect to see acceleration as we said in our comments today. So as much as the Payments segment is not quite as strong so far this year largely on the back of EMV, financial is actually up year-over-year. And so we think the diversity of our portfolio allows us to be able to combat the puts and takes of day-to-day business. Underlying all that, we're continuing to build out our recurring revenue, which is one of the reasons why we continue to build out margin. We're adding acquisitions that we think will enhance our growth rates as we go over time. We're already getting some contributions for some of the things we've done over the last couple of years. So we feel quite good about our portfolio. And then as we talked about in Investor Day, we've added a new corner to our model, and that's our integrated biller strategy, which is a brand-new initiative that we've just begun selling off of and delivering value to clients, will begin really in earnest next year. So we feel like the portfolio is in reasonable shape. And while there's been some ups and downs in our quarters this year, we do expect to have higher growth this year and higher growth again next year. So that is at least how I would think about the question on growth rates and the moderation. As it relates to -- Damian, on the transformative acquisition, the answer is we're always open to looking at what are the best ways to deploy capital. We use as our guiding principle how do we think we can deliver the most value for shareholders and the most value for clients. And if that happens to be an acquisition that is kind of labeled in air quotes as "transformative", then we'll do that. And otherwise, we'll continue to go down the path of -- I think our total payout ratio so far this year is about 120%, so we'll continue to focus on that as well as we've spent several hundred million dollars on acquisitions so using our balance sheet to make sure that we're creating as much value for shareholders as we can.

The next question comes from James Schneider of Goldman Sachs.

Maybe, Jeff, if we could start with the -- how to think about and square your sales results, which were up 21% last year in 2016 and then 3% year-to-date, with the comments around accelerating growth outlook. Can you maybe give us a little bit of color on how that sales pipeline will kind of convert into revenue, how much from, for example, 2016 will convert to 2018 and 2017 to 2018 help -- to help us give us a sense of the level of confidence around that acceleration in revenue next year?

Sure. So we -- one of the compare challenges in Q3 is we had an unusually -- really an unusually large Q3 last year, and we would expect to not have -- or sorry, we did not have an unusually large Q3. This year, we had a very solid Q3, actually performed a little bit better than we anticipated. As you saw, we were 106%, but we do expect to actually have quite a strong Q4 based on what we see in the pipeline today. And some of those transactions, we believe, will have a little shorter implementation windows than we might typically see. Now on the other side of that coin, Jim, some of the larger transactions that we had last year in Q3 are still not live, and so that -- they will end up leading into '18. So from that perspective, there's a little bit of a mismatch, which is also feeding into our confidence that by the time we get into the second half of '18 next year that we'll have a little bit of a multiplied benefit of sales to revenue in our numbers.

That's helpful. And then maybe can you also give us your update on kind of the strategic view as you see it? As you talk with your bank partners, the outlook for bank consolidation and M&A in the space clearly from a cyclical perspective, whenever you see rates go up dramatically, you tend to get a lot of M&As. So what do you see from the kind of the small-, medium-sized bank perspective at this point?

So I don't have a crystal ball, but I would say that M&A activity has been either fortunately or unfortunately strong for the last several years. We saw a little breather coming in as valuations popped up towards the kind of the last 3, 4 months of last year and into this year. We're now seeing people kind of get more comfortable with the valuation levels, and so we're seeing a little bit more activity there. And as I mentioned in our prepared remarks, to your point, with rates going up and the need to invest in digital and some of the back-office infrastructure, I think you're going to continue to see acquisitions go in at a fairly healthy clip.

The next question comes from Paulo Ribeiro of BMO Capital Markets.

First question is on the margin. You mentioned that -- at least 50 basis points and you had some headwinds from the acquisitions. So could you help us get a sense of how much that headwind was and try to get more flavor around also how much of that expansion was due to cost save initiatives or just overall operating leverage? Second point is if you could remind us a little bit about the economics around Zelle, not pricing specifically but how you make money out of it. Is it similar to Popmoney? And yes, that's it.

Yes. Paulo, it's Bob, I'll answer the margin question. So first off, the margin impact for the second quarter from M&A, so the acquisitions that we completed in 2017 was about a 40 basis point headwind for the quarter and about a 20 basis point headwind on a year-to-date basis. We also talked about, in some of our prepared comments, the impact of the periodic revenue was certainly an impact to the third quarter. That comes back to us in the fourth quarter. And in Q3, that was an 80 basis point headwind so certainly suppressed the third quarter results. And of course, as that periodic revenue comes back into fourth quarter, that gives us the confidence that we'll achieve that greater than -- or at least 50 basis point margin expansion on a full year basis. That is really driven on the back of high-quality recurring revenue, continuing to provide growth throughout 2017 as well as the benefit of operational effectiveness. So through third quarter, we achieved already our full year outlook, our original full year guidance for the benefit of that operational effectiveness, and we'll continue to see some benefit into the fourth quarter.

Yes. Paulo, as it relates to the economics of Zelle, it is much the same as Popmoney in that the longer-term economics are really built on transaction fees that we realize as the solution builds in the market. I would say, in the shorter-term this year and probably into the first half of next year, for sure, more of the revenues from that is coming to us in the form of professional services fees as we are helping our clients get ready for and kind of set up the capability to do this. So in the nearer term, it's really kind of a waiting -- it's a preparation game and then waiting for the transactional lifts that we think are going to happen with the network effects.

I think, Paulo, the other thing is, to Mark's point, we have services for the larger clients. Then, there's going to be a very significant wave of implementation -- an implementation wave of the smaller clients, and that will likely -- my guess is it'll take, unfortunately, a couple of years at least to get that done. And so there's going to be -- you're going to have conversion fees or you're going to have implementations going on for a long period of time while the actual transaction growth is ramping.

Perfect. Quick follow-up on Zelle. How does it -- would it work with the TCH, VocaLink solution? Because if I understand correctly, Zelle now primarily leverage the debit networks from Visa, MasterCard. And is it a competing offering when TCH -- because you guys are involved with that too, right? How should I think about Zelle versus the TCH solution?

Yes. You really should think about it as Zelle is a real-time -- it's a real-time transaction. There are several ways of delivering on a real-time transaction today, the debit networks being one of those but only one of those. And in fact, I would suspect -- I don't know this for a fact, but I would suspect more of the transactions are not going through those rails. They're going through other kind of point-to-point rails that are -- that exist in the market between a number of the financial institutions. We are using the NOW Network as the kind of network that connects the various different endpoints that are going -- that we are installing. The beauty of the NOW Network is that it actually enables -- it's enabled to ride any number of different real-time rails that we can apply in different use cases or different situations depending on kind of what the most cost effective and delivery time urgent delivery is for a transaction. So in many ways, as The Clearing House capability comes online, it'll be another option in the sort of delivery of a transaction, but it'll just be another option.

The next question comes from Brett Huff of Stephens Inc.

This is Blake on for Brett. You noted at your Analyst Day and in this call as well your new combined biller internet banking and digital product, and it sounds like the interest is high. Can you tell us what you think the early client wins see in this product that is really different from existing products? And then is there sort of a killer app use case of this product?

Sure. So Blake, if -- let me clarify. So the biller strategy, this integrated biller solution strategy is not about digital banking per se. It's about enabling billers through the different unique solutions we have, which range from acquiring biller payments to lighting up e-bill delivery within our RXP solution to doing print, to doing -- we talked about LoanComplete, which is enabling a lender to be able to use some of our back-office and risk products. There are some digital capabilities as well, e-bill, electronic statements, electronic communications. So it's integrating all of that together and basically creating a network for billers, which is, to some extent, distinctive from the digital banking or what we're doing from the bank -- in the bank space. Over time, we actually think, and to Mark's point around NOW, we think we'll be able to create a very interesting bank-to-biller and biller-to-bank payment exchange, payment network that will be very unique because of the position that we have. But that's a down-the-road strategy. The integrated biller solution strategy is a -- I think we talked about it at Investor Day being over -- we see it being over a $500 million annual revenue opportunity just cross selling the products that we have today -- or nearly $500 million, just cross selling the products that we have today with our existing client base so a very good opportunity. And what I said on the call, I gave an example of Freedom Mortgage, who acquired our LoanComplete solution, but we've had several other wins and lots of demand, which is increasing our conviction that this strategy has real legs. Unfortunately, that revenue won't begin to come on until '18, and frankly, the propensity of it will be after '18. But we're excited about the fact that we'll have another layer or another lever of growth that we haven't had historically.

And then just my follow-up is are there clear integrations of your existing Fiserv products into the Dovetail payments hub in the near term?

Well, I mean, I would say it in a different way. There are a number of examples where Dovetail is already integrated into either our account processing products or into banks where we're running PEP+ and some of the other opportunities. One of the most intriguing and exciting opportunities is the thinking about what we've done in the PEP+ ACH network that we have and linking that with Dovetail to frankly create what we think could be a very exciting proprietary payments network, for lack of a better way to say it, but one that has not just the payment hub capabilities but some of the liquidity management solutions, risk solutions and linking that to our Commercial Center product, our cash management products, which today is being used by a number of the largest banks in the U.S. as well as into our account processing base. So again, we see a very nice synergy linking into the fact that banks are now turning a lot of attention to making sure they can provide real-time digitally integrated solutions to serve their most valuable customers, which are their commercial and wholesale customers.

The next question comes from Andrew Jeffrey of SunTrust.

Jeff, I wonder if you could just comment generally on the competitive environment, I'm thinking both in credit unions for the DNA product, where it seems like you're having some nice success. So wonder if there's a pricing call out there at all. And just generally, we're hearing about some of these sort of next-gen cloud-based solutions. Wonder how often you see them at -- in RFPs and whether they're sort of changing the competitive conversation at all.

Sure. It's a great question. So we continue to have a lot of success with DNA amongst any number of other solutions, but for clients that are -- or prospects that would put themselves in the technology savvy, we want a modern platform with a lot of database optionality, DNA is a pretty good fit. We have a lot of momentum in the larger credit union space. There are some interesting dynamics going on in that space, and we feel fortunate that DNA is rising to the top there. And so that's fantastic news. And we're also seeing good success on the large bank side. As it relates to cloud, there is a fair amount of move to cloud in the digital banking space. We -- I think we might have mentioned last quarter that we've now moved Architect -- or engineered Architect, I was going to say architect Architect. We've engineered Architect to be able to run in the cloud, so it's cloud enabled. And so that's an important piece of optionality that institutions will want over time. And then there are -- there's a plethora of other, I'm going to call them, FinTechs that would lay claim to being cloud-based solutions, lots of noise and discussion there but very little real movement at this point. And over time, I really see us and others to be clearinghouses of that kind of capability so delivering it through Architect or through Corillian or through Retail Online or Virtual Branch or any of our digital solutions, Mobiliti, Mobiliti ASP and the like. So there will be here -- there will be, here and there, decisions made around that, but for the most part, we don't really see any move there or any move in kind of large cloud enablement. Now on the solution side, I guess, the last point of clarification I would make is that there is a continuing movement to cloud as a way to run infrastructure, period. And so we're quite happy about that because cloud, we think, is a more modernized way to talk about outsource, and that's been our business for a long time. And we're moving our own solutions to the cloud, and we see that to be good from a pricing perspective and an efficiency perspective and think that will be the way applications will run over the long haul.

The next question is from Ashwin Shirvaikar of Citigroup.

I wanted to start with -- Jeff's made this comment a few times with regards to the periodic revenues not being in the quarter. And I wanted to ask if -- when it comes to things like term fees, for example, I mean, you guys brought this up, FIs brought this up, is there something deeper going on in the background in the industry? You generate term fees when there's a milestone associated with contract termination. Are your bank clients pushing off terminations because they're looking at digital transformations, bigger solutions? What's going on in the background there?

No, Ashwin, there isn't. From our perspective, we're actually seeing contract terms get a bit longer as opposed to shorter, so we don't see that. And the -- for us, being down in termination fees in the quarter isn't for a lack of termination fees. It's for regulatory approvals take the time that they take, and there are -- there's complexity, right, to putting these transactions together. And so that's what takes the time -- I'm sorry, to getting them closed. So that's what's taking the time. It's not -- there's nothing under the covers going on there. And in fact, termination fees have grown over the last several years, and frankly, there's no indication that, that's not going to continue.

Okay. No, I just thought I would check on that. The other question I had was with regards to Monitise, and you talked, obviously, on this call and in other forums about the strategic impact of it. When I look at the digital banking piece, is this -- I mean, if you get to a next-gen digital banking platform, you already have clearly an -- you have the partnership with NCR. Could you help sort of put all together? Are these targeted at different markets, different kinds of -- different types of clients or different-sized banks or what have you? What's the strategy with regards to having 3 solutions potentially in the market?

Sure. So it's a great question, Ashwin. The -- we -- Corillian is our kind of top of the market solution, which runs a number of institutions here in the U.S. and runs something as large as Westpac Bank in Australia. So it's quite a robust solution. It's primarily a solution that is targeted at the online banking space, not the mobile banking space, although it has the capability to deliver mobile, again, as we do in Westpac. What we're looking at doing is bringing our mobile capabilities and our Corillian capabilities together in a single platform using this microservices architecture, which will do 2 things. It will meaningfully lower TCO per client and fit into the space that I think about being between the kind of the top 10 in the market. So for the next -- and then -- and call it the everything below 100. So in that 50 to 90 institutions, which are trying to really fight with the largest players, we're looking at architecting a solution that gives them control and a very, very robust structure to bring sophisticated feature function to market when they want to. So they don't want an ASP solution, but they also, with all the pressure on efficiency ratio, they want a TCO that is more -- let's say, better fits their economic model. And so acquiring Monitise and bringing the FINkit capability, we saw that we had been looking at doing that and had already started doing that, but the FINkit technology is going to allow us to go meaningfully faster. We'll actually be in market in '18, and it will actually end up being a far more sophisticated, cloud-enabled technology. So we're very, very excited about that. And thanks, everyone, for talking to us this afternoon. If you have further questions, please don't hesitate to contact our Investor Relations team. Have a great afternoon and evening.

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