Fidelity National Information Services Inc (FIS) 2015 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the FIS second quarter 2015 earnings call. For the conference, all participant lines are in a listen-only mode. There will be an opportunity for your questions. Instructions will be given at that time.

(Operator Instructions)

As a reminder, today's call is being recorded. I'll turn the conference over to Mr. Pete Gunnlaugsson. Please go ahead, sir.

Thank you, John. Good morning everyone, and welcome to our second-quarter 2015 earnings conference call.

Turning to slide 2, Gary Norcross, President and Chief Executive Officer, will begin with a business summary. Woody Woodall, Chief Financial Officer, will continue with the financial results for the quarter. Today's news release and supplemental slide presentation are available on our website at FISGlobal.com. Please turn to slide 3.

Today's remarks will contain forward-looking statements. These statements are subject to risks and uncertainties as described in the press release and other filings with the FCC. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Please refer to the Safe Harbor language.

Today's remarks will also include references to non-GAAP financial measures in order to provide more meaningful comparisons between the periods presented. These non-GAAP measures are outlined on slide 3, as well. Reconciliations between the GAAP and non-GAAP results are provided in the attachments to the press release and the appendix of the supplemental slide presentation.

With that, I will turn the call over to Gary to discuss the second quarter financial highlights on slide 5. Gary?

Thank you Pete, and good morning everyone. Thank you for joining us on today's call. Starting on slide 5,

We finished the quarter with reported revenue of $1.6 billion, which is an increase of 3% on a constant-currency basis, and delivered adjusted earnings per share of $0.74, while returning $224 million to shareholders. Year-to-date, we have returned $447 million to shareholders through share repurchases and dividends.

We continue to invest for growth in order to consistently deliver shareholder returns, and generate significant re-occurring revenue. We saw strong deal closure in the quarter, and continued to drive long-term client relationships. We are pleased with the recent restructuring and re-segmentation of our business, which has allowed us to align our service and solution portfolio to address clients' unique business challenges.

As we discussed in the first-quarter call, we continue to experience lower-than-expected termination fees in 2015. This is a positive long-term outcome. Our earnings per share for the second quarter were better than expected, and we remain on track with our current guidance for the year.

Moving to slide 6, I will speak to our segment activity in the quarter. As a reminder, our two segments were created to meet the demands of two distinct markets, driven by different buying behaviors and growth profiles. These segments allow us to more effectively sell, deliver, and support the clients in these distinct markets.

The Integrated Financial Solutions segment is comprised of US financial institutions seeking comprehensive, integrated, and out-sourced solutions. This segment drives high re-occurring revenue, generates significant cash flow, and drives higher margins with expansion through increased leverage.

Our Global Financial Solutions segment is comprised of large global and international clients seeking tailored solutions, leveraging a combination of products, consulting, and professional services. This segment typically drives lower margin, and has a higher revenue growth profile.

In the quarter, IFS had 89% of it revenue recurring. Deal closure in IFS was solid this quarter, with many new wins. FIS was chosen by Pacific Western bank, a $17-billion financial institution, to replace its retail and commercial banking platform, including core processing, commercial lending, consumer and business e-banking, digital, mobile, EFT, item processing, and branch technology. This decision was driven by the bank's desire to better position itself for future growth.

In another long-term agreement, a $70-billion regional bank chose FIS to provide an end-to-end consumer loan servicing solution. This solution better positions the bank to grow and service its lending business. Also, UMB, an $18-billion institution, made the decision to partner with FIS on its loan portfolio, moving for the first time from an internally hosted platform to an FIS-hosted processing model to gain processing efficiencies and more robust lending functionality.

Finally, we signed several new digital banking and payments agreements, including one with Centennial Bank, an $8-billion community bank who was seeking a new strategic technology partner in support of the bank's initiative to upgrade its digital channels, including consumer and business e-banking, as well as wire automation solutions. All of these wins demonstrate our ability to capitalize on increasing industry demands for solutions that enhance an institution's ability to meet its strategic growth and operational goals.

Turning to our global financial solutions segment, revenue increased 8% on a constant-currency basis. We continue to invest for growth in this segment, and continue to see steady progress in signing long-term deals. Deal closure was solid, as we continue to benefit from the demand for our solutions.

In Asia, we saw strong growth from continued expansion of our core banking and payments presence across the region. During the quarter we continued to expand existing relationships, as well as the sign multiple new engagements, resulting in a growth rate of 29% on a constant-currency basis for the quarter.

In Europe, we continue to see new opportunities in the emerging Challenger bank market. In the quarter, FIS became the strategic technology partner for the newly announced Adam Bank, the UK's first digital-only-based bank. We also signed another significant agreement with Credit Agricole, the leader in consumer credit business in the Netherlands, expanding our existing relationship through the addition of real-time core processing capabilities.

In North America, a top-10 US bank signed a multi-year software and services deal to utilize FIS's leading consumer lending product. This continues to solidify our advanced loan system as the leading consumer lending package in large progressive banks throughout the world.

Turning to slide 7, I would like to summarize the quarter before I turn it over to Woody for the financial report. We continue to grow revenue and return cash to shareholders. The restructuring and re-segmentation of our business has allowed us to achieve operational efficiencies, leverage our scale globally, and better align our services and solutions to address clients' business challenges. We are confident that our proven execution in deep client relationships will continue to enable us to invest for growth, maintain the strength of our balance sheet, and return value to our shareholders.

Woody will now provide details around the Q2 performance. Woody?

Thanks, Gary. I will begin on slide 9 with a summary of our consolidated results for the quarter.

In the second quarter, as expected, we continue to face difficult comparisons. Consolidated revenue was $1.6 billion, an increase of 3% on a constant-currency basis. EBITDA was $453 million, and the EBITDA margin was 28.5%.

Non-GAAP adjusted net earnings from continuing operations were $211 million for the quarter, and $397 million for the first six months of 2015. Adjusted earnings per share was $0.74 for the second quarter.

Our highly recurring revenue model, combined with several new wins Gary mentioned earlier, helped us remain consistent overall results despite the continued low termination fees, increased investment in European capabilities, and FX head winds, particularly in Brazil and Europe. FX translation held back revenue by $63 million for the quarter, and EPS by $0.03.

Non-GAAP results for the quarter are adjusted to exclude $0.12 per share for acquisition-related purchase price amortization, $0.03 per share related to acquisition, integration, and severance costs, and a $0.25 per share gain related to the previously announced divestiture of our gaming business. This sale generated $238 million in pre-tax proceeds. We are continuing to provide certain check guarantee services to the buyer, and accordingly are not treating this divestiture as a discontinued operation for accounting purposes.

I will now continue on slide 10 for second-quarter segment results. In the second quarter, Integrated Financial Solutions revenue was $969 million, which was flat to prior-year revenue.

EBITDA was $378 million, which was also flat to 2014. EBITDA margins were 39%, a slight drop of 20 basis points. This margin decline primarily reflects continued low termination fees, which were $14 million lower than the prior-year period.

In IFS, year-to-date term fees are lower than 2014 by $42 million. As we've discussed in the past, lower acquisition-related term fees have an immediate impact in terms of difficult comparisons, but create longer-term value as we retain profitable long-term relationships with our clients. Normalizing the quarter for one-time items including divestiture activities and lower term fees, IFS revenue would have been 3.6%, speaking to the strength of the underlying business.

Turning to slide 11, as you saw in the first quarter, the IFS business consistently produces strong recurring revenues, with diverse offerings helping to deliver consistent performance within the segment. IFS again produced 89% recurring revenue. Our payment solutions revenue was down 3%. This was driven by lower pass-through revenues, divestitures, and pricing pressure, partially offset by transaction volume growth.

Business solutions revenue grew 5%, primarily driven by card production activities. Banking solutions revenue were flat compared to the prior year, driven by the difficult comparisons discussed earlier.

Turning to slide 12, in the second quarter Global Financial Solutions reported revenue with $619 million. The second-quarter reported results for GFS reflect a negative foreign currency transition revenue impact of $63 million. The majority of FX translation impact was concentrated in the Brazilian real and euro.

On a constant-currency basis, GFS revenue grew 8% for the quarter and 8% percent for the first half of 2015. As anticipated, we continue to see a strong US dollar for the back half of 2015, and FX transition will continue to be a head wind.

Global Financial Solutions EBITDA was $123 million, compared to $126 million in the prior period. EBITDA was $135 million, or 7% higher on a constant-currency basis in the second quarter 2015 compared to the prior-year period. EBITDA margins were 19.8%, compared to 20% in the prior-year period.

Moving to slide 13. Year-to-date 2015, 70% of GFS revenues were recurring in nature, consistent with historical performance. For the second quarter, Asia-Pacific had strong revenue growth of 29% on a constant-currency basis, driven primarily by our expanding core banking and payments presence in India.

As Gary described, we were pleased with several new signings, and the ability for the team to expand existing relationships in the region. We expect the Asia-Pacific region to continue to be a strong grower for GFS.

Europe grew 25% on a constant-currency basis, driven primarily by our continued success with the challenger banks in the UK, revenue growth from Clear2Pay, and consulting revenue growth. We also expanded an already meaningful relationship with Credit Agricole.

In the North American region, the GFS revenues were $277 million, compared to $287 million in the prior-year period. The primary driver of the change was our previously announced non-renewal of a contract discussed in Q1. As Gary mentioned, the underlying business had some nice wins, including a large deal in our end-to-end lending solutions.

As expected, Latin America revenue growth remains modest due to macro-economic conditions in Brazil. When we re-segmented the Company in the first quarter, corporate functions directly supporting IFS and GFS were moved into the individual segment results. Residual corporate expenses were $48 million for the quarter. We expect corporate expense to trend down in the back half of the year, as we continue to focus on cost actions to improve profitability.

Other income including a gain on the sale of an investment of $7 million. The effective tax rate was 33.4% for the quarter, compared to 30.2% for the prior-year quarter. As previously mentioned, the prior-year quarter included an approximate $0.04 EPS benefit due to a discrete tax benefit.

We continue to reinvest in the business. Adjusted cash flow from operations totaled $197 million in the second quarter of 2015.

Capital expenditures in the quarter totaled $117 million, resulting in free cash flow of $79 million for the quarter. The $117 million in capital expenditures is higher than normal, primarily due to the timing of certain investments. For the year, we expect capital expenditures to be in line with our previous guidance of 5% to 6% of revenue. We still anticipate full-year free cash flow to approximate net earnings.

For the quarter, we returned $224 million to shareholders. Approximately $150 million was returned to shareholders through the repurchase of 2.3 million shares in the open market, at an average cost of $64.36 per share. The share repurchase program resulted in our weighted average diluted share count of 284.4 million. Basic shares outstanding at the end of the period were 280 million.

Approximately $1.2 billion remain on our existing purchase authorization program. In addition, we returned $74 million to shareholders through dividends.

Maintaining a strong balance sheet remains a key component of our capital allocation strategy. As of June 30 debt outstanding was $5 billion, resulting in a leverage ratio of approximately 2.7 times debt-to-EBITDA. This is slightly above our targeted 2.5 times leverage ratio, based primarily on the timing of cash flows. We expect our leverage ratio to be at 2.5 times by the end of the year. The weighted average interest rate was 3% at the end of the quarter.

Moving to slide 15, our sales execution in the quarter was a tail wind to our Q2 results. A few of the deals were signed more quickly than originally planned, helping to flatten out our back half of the year growth curve. For the full-year 2015, we continue to expect reported revenue growth in the range of 1% to 3%; margin expansion for the full year of approximately 50 basis points; 2015 adjusted earnings per share in a range of $3.27 to $3.37, which is a 6% to 9% increase over 2014; and we expect full-year free cash flow to approximate adjusted net earnings.

That concludes our prepared remarks. Operator, you may now open the line for questions.

(Operator Instructions)

David Togut, Evercore ISI.

Thank you. Good morning, Gary and Woody.

Hi, David. Good morning.

Could you talk about the drivers of second-half revenue and earnings acceleration? Clearly given the earnings pre-release back in April, it's a back-half weighted year. Maybe if you could address the drivers, and how much visibility do you have in those drivers, both in terms of revenue growth and any expense initiatives, that would be helpful?

We think about it in four buckets, David, as we've been talking about. Primarily, we've got natural acceleration in the first half versus the second half. If you look over the past four years or so, that's been probably 3% first half versus second half, in terms of accelerated growth. The second would be term fees, as we've talked about. Term fees in the first half this year were about $42 million lower than last year. We do anticipate more term fees in the back half of the year, and have pretty good visibility into them. Reiterating that, low term fees is a good thing for us long term. It does create some lumpiness, but it is a good thing for us long term.

The third would be the cost actions, the cost actions that we took in the first quarter. You're seeing some of that kick in, in terms of the margin, in terms of the profitability growth, and we've got more cost levers in the back half, if sales execution doesn't come where we need to be. Then the fourth would be our contract delay that we mentioned in the fourth quarter, as it's gotten back on track. You saw some lift in Q2 from it, and we believe we'll further lift in the second half the year. Those are really the four main drivers, David. We've got pretty good visibility into them, particularly on the cost lever side.

Thanks, that's helpful. As a follow-up, within GFS you mentioned 29% growth in Asia-Pacific. Is that primarily to ramp-up of the India ATM contract? If it is, how is that performing relative to your expectations?

David, the Indian ATM contract is performing very well. We're very pleased with the team. We're very pleased with the roll-out of ATMs. As volumes continue to grow, that will continue to be a tail wind for years in the future. But to answer your question, it's a combination of all the above. Frankly, it's the India contract. The team continues to do very well, signing new agreements. We announced the signing of Bandam. They're coming on line. There's just a lot of growth. Mahila continues to grow.

We also do some very nice -- we've done some nice add-on services to some of our existing clients in Thailand that we've announced around some of the channel operations. The team's executing very well. It's really a combination of prior agreements, but it's also a combination of continued strong sales quarter in and quarter out in that region.

Quick final question. Big bank progress relative to your expectations when you stepped-up investment about a year ago, Gary? Where are you relative to your plan?

I think as we mentioned in the first quarter, we have been disappointed with the results of that ramp-up to date, but I would continue to say we continue to see signs of traction throughout. We announced, as I said, a top-10 bank this quarter that pulled our consumer lending platform. That's huge to see a bank in that size transform all their consumer lendings. We see some bright spots in the execution, David. We're going to continue to monitor it.

As we said in the first quarter, we took that opportunity when we weren't seeing the product pull through that we necessarily wanted. We restructured the Company and actually brought two major divisions together. We've seen some nice synergies come through that, and operating efficiencies that Woody pointed to in the back half. Would I tell you we wouldn't do the investment again? No, I wouldn't. It's an important market for us. Being able to penetrate our product and services in those markets is going to be a long-term success criteria at FIS. This quarter showed a number of good signs of product pull-throughs.

Thank you.

Dave Koning, Robert. W. Baird.

Yes, hi guys. Nice job getting back on track here. My first question, you called out -- within IFS the banking part of that was flattish, and you called out the head winds from term fees. But in Q1 it was up 12% year over year and you had some of those same head winds that might have even been a little bigger. Just wondering why that decelerated so much?

I think what you've got is an anniversarying of some acquisition activity, Dave, that we saw benefit the first quarter that anniversaries into the second quarter. That's really what you are seeing in terms of there. The slide 11 that you're looking at is a pure growth number, not necessarily an organic growth member, so it included the Reliance Trust acquisition and CMSI in the first quarter you didn't see in Q2.

Okay. No, that totally makes sense. Then how soon are we to having all three of those components -- really the underlying question there is when is payments going to turn positive again? Do you have insight into that?

Yes, well if you look at it, Dave, frankly we've got a lot of noise going on in payments. The term fees has hit significantly there in the quarter. We actually have had an accounting change, where Woody mentioned about our pass-through revenues, so you've got some gross-to-net issues going on in there. You've also got some compression. But if you normalize all that, we think we'll see payments return to a low single-digit growth rate going into next year, and then accelerate beyond that. Also keep in mind we also had the divestiture of gaming that was in that quarter, as well, that's in that number.

Okay, so gaming did have some of a negative impact already in Q2?

It did.

Yes.

We closed that June 1, so you saw a little bit of negative there. Again, the pass-throughs as well, and some level of price compression that we saw there. Now the positive around that is we were offset by some transaction volume growth, and we're happy to see. We had about 2% growth in our overall transaction volume growth. You can see in some of the charting data that we've started to provide.

Right, okay. Lastly, I know last quarter you gave us some context on Q2, given the street numbers at the time were a little too high. You didn't really call out Q3. Are you basically saying that the street is at least in the ball park of what you would expect for Q3 and then Q4?

Yes, we were really clear on Q2 and Q1 when we came through this year because of just some of the deltas -- where you guys were, versus what we were seeing in the term fees and the impact. We've got a pretty good ramp in the second half, as we've all talked about; but I think we're more aligned where our heads are, as to what the back half of the year looks like.

Absolutely.

Great. Well, nice job. Thanks a lot.

Thanks, Dave.

Brett Huff, Stephens.

Good morning, guys. How are you?

Hi, Brett.

Two quick questions. I think you addressed the IFS question, so I won't ask that one. But in terms of margins, I have two questions. One is the margins are really good, especially given a tough revenue quarter, actually in both segments. I'm wondering if you guys could address that, and talk about is that just base incremental margins, or is that cost cuts, or parse that out for us? Then number two, the second part of that question is tell us about the incremental margins as we go into 3Q and 4Q, because again just addressing that back-half ramp in profitability implies really good incremental. Give us some comfort, how we're going to see those incrementals pass through?

I think, Dave, you did see a couple things in the second quarter. You saw some pull-forward of deals into the second quarter. Those were a little higher licensing, which was helpful in terms of the margin profile. You are seeing some of our cost actions start to kick in that are driving some incremental margin benefit, to answer your first question.

To answer your second question, when you look at the back half of the year, a significant component of the back half of the year growth is both in term fees, which we talked about is coming up very high incremental margins, and the majority of the cost actions are driving benefit in the second half of the year. As you heard me talk about trending corporate expenses down, as well as -- and the operations are driving some expense reduction, as well. But of those will help drive margin in the back half of the year, giving us some confidence in that 50 basis points for the full year.

Okay. That's what I needed. Thank you.

All right.

Ashwin Shirvaikar, Citigroup.

Thanks. Hi guys, good morning.

Good morning, Ashwin.

I appreciate the color that you guys gave back half, because that clearly is the elephant in the room with regards to your acceleration. If I just look at normal first-half to second-half acceleration, typically you guys do 46%, 47% of your revenues, of your EPS, in the first half. This year it looks more like 42%. That's about a $0.27 gap -- $0.27, $0.28 gap to the middle of your range. I'm wondering, I get $0.08, $0.09 off that from term fees impact. Is the remainder of it cost action? What specific cost action are you taking that is going to have that sort of a benefit?

You've got two items outside of that. You are right on the natural acceleration. We believe it's there. We do have the term fees that we've talked about, so you've got that captured correctly. The cost actions, we've taken some cost actions in Q1. You saw some further cost actions in Q2. To the extent we don't see the sales execution that we're looking for, we'll potentially take further cost actions. We have other levers within our cost structure that could help us continue to make sure we maintain the profitability guidance, Ashwin, and protect the profitability guidance that we give in the market place. Those are the three big ones.

The fourth would be back to our contract delay. We've got some milestones that we'll meet in the back half of the year on one of those larger deals that will drive some incremental earnings per share, as well. If you add the four of those together, that is the bridge to the back half of the year. It is a steep curve, but we're pleased with first -- I mean second quarter, as we saw a little bit of the flattening of that curve as we brought some extra EPS into the quarter.

We've also got a number of key deals, Ashwin, that we've signed. As you know, given the nature of our long-term revenue streams, and the high re-occurring revenue, our deals that we sign also take often times a number of months, or even greater than a year to on-board. You're seeing some of those large deals that we've signed historically that we've talked about come on line. You can start seeing that in some of the numbers we've actually disclosed for IFS, et cetera, where we've got some large core banking deals that have been coming on.

All of those things, to Woody's point, the levers that help us control our expense line and profitability line, and also just new sales and the on-boarding, the prior sales all give us some confidence going into the back half.

Okay. One thing I don't understand is the term fee. How can you tell visibility into term fees? You can't possibly know what contract is going to terminate because of M&A, or something like that. Is there a contract of size that you lost or something like that because of M&A? Could you provide some color there?

Actually, some of the term fees we've already been notified on, Ashwin, but they are waiting regulatory approval. You've got an idea in working with the customer as to when the big conversion time horizon would be, and when you would actually see them go away. We do have some visibility into those term fees already. Your point is valid. On others we don't have every dollar lined up, or have been notified on every dollar. But we do have pretty visibility into a large chunk of those based on the conversion time frame that the customer's looking at.

Yes. As you mentioned, these termination fees are strictly related to financial institutions getting acquired or consolidating. To Woody's point, we have to be given -- we're given notice, because we've got work to do to help them de-convert as they move on to their acquiring platform, which is the typical situation. We've had some situations where it's come the opposite direction, and we've discussed on prior calls. But we get some pretty good visibility.

Typically, this is something that can get modeled pretty easily. What we were surprised by in the first half of the year is that we didn't get that notification -- which as we've said now multiple times, that's a great outcome for the Company, because we're retaining a very profitable client that's going to be buying more products and services from us.

Understood. One last question on Clear2Pay. With regards to that acquisition, if you could provide an update on how that's progressing, what the client feedback is, and what the products road map is?

Yes, we've actually gotten some great response through that acquisition. As always, we put forward a very aggressive pro forma around growth as we accelerate it through our sales engine. We also put always an aggressive target, to make sure we get the synergies necessary as we put -- integrate these companies into our Company. I will tell you, we're right on plan for both of those. Pipeline's very strong, good deal closures quarter in, quarter out. Response from the clients have been very positive.

As we talked about when we did that acquisition, one of the things that resonated us most with Clear2Pay, especially with their open-payment framework, was the fact that they were already penetrating many of the tier ones through a single payment type around the world. What the opportunity there is you penetrate with a particular payment type, say ACH, and then you come in and you add wires. You add other types through the open-payment framework.

We're very pleased with his acquisition at this point. It's integrated very cleanly into the Company. GFS has done a good job of accelerating the product growth rate by putting it through our sales engine. Right now it's still early, but we would say we're very pleased.

Okay. Thank you, guys.

Tien-tsin Huang, JPMorgan.

Good morning. I just wanted to ask on the -- I think you said some deals signed earlier than expected. Is that related to the investments and other things that you're pushing? Just curious what really drove that, and how you feel just in general about accelerating pipeline and backlog conversion?

Yes, no it's a good point. It is part of the investment. We feel very good about our deal closure. Year to date, frankly, when we look at total contract value on a new total contract value, we're up 10% over 2014 at this point in time. Frankly, if you adjust it for currency, that's greater than that gross around 15%, so we feel very good about it. From that standpoint, our pipeline's very strong, and we're opportunistic of opportunities.

As I've said on multiple calls, Tien-tsin, I look for deal-flow through a pipeline. You're not going to be able to sign them all, but are we having really good deal churn, and are we making sure that our sales teams are re-filling that pipeline. I would tell you we're seeing that. As I said, the results are showing that we're up year to date against this time last year on new sales, and frankly, across both groups. All in all, we're pleased with the results, and pleased with the investment, and we've highlighted a number of those sales. When we bring a sale forward in our prepared remarks, keep in mind these are large multi-million-dollar engagements. The team's doing a nice job.

Okay, good to hear that the big-deal activity is very healthy. One more from me. On the other line, it was a little bit bigger than $11 million. What drove that exactly in the quarter?

If you remember in my prepared remarks, we sold a small investment. It ended up being about $7 million in there, Tien-tsin. That was -- the other's just normal noise in there, but $7 million was a small investment gain.

Understood. Thanks so much, guys.

Thank you.

Darrin Peller, Barclays

Thanks again, guys. Listen, I just want to start off with the organic revenue. You talked about still maintaining your EPS, which I think is great to see given the ramp needed. All the one-time items was helpful. But when we look at the guidance you had given initially for the year being I think 5%-plus for organic constant currency with all the add-backs and moving out. Can you -- I didn't hear if that number was updated or maintained or what? Then I have some follow-up questions on some of the large deals that you're announcing.

Yes, we would still say that's exactly where we think we're going to land, still in that 5% to 7% range, Darrin. Given what we've done to date and talked about the back half of the year it may trend towards the lower end of that, but still in that 5% to 7% range. Yes, I think it's still there.

Okay, that's helpful, thanks. That's good to hear. Look, I just want to ask one follow-up. On the large deals you're mentioning -- first of all, it's good to see a $70-mllion and $17-million deal. Are there others in the pipeline like that? Then the next question's on Credit Agricole. You mentioned an add-on in terms of new additional opportunities there. Just if you can expand on a little bit. Is that an expansion to what you pre-existing had already with them? Lastly, is there anything like another Credit Agricole or [Samesberry] in the pipeline for these large transformational deals that you're doing in the GFS segment?

Well, to answer your question on the first part about the multi-billion-dollar financial institutions and signing those large deals, are there others in the pipeline? The answer is yes. I think what you've seen over the last several years is we've consistently executed on those. I'll go back to [Anumpla]. I'll go back to the Citi announcement. All of these are big engagements with very large multi-engagements. CIT last quarter. If you think about it, we continue to sign and close very nice transactions in that size.

If you look in GFS, Credit Agricole is a great example where we started with a consulting engagement. It's led to a professional services engagement. We're now engaging around the product side. Good growth of the way we think that GFS will head in the way we -- investments we've made. There's other large deals in the pipeline that we continue to pursue. Of course we don't sign them all, right? But that goes back to my deal flow comment in the earlier question. All in all, we are pleased with the size of institutions we're sign. We're pleased with -- we're starting to see product pull-through in the GFS organization, and IFS continues to execute very effectively.

All right, guys. That's helpful. Thanks a lot.

Thanks Darren.

Our final question will be coming from Bryan Keane with Deutsche Bank.

Good morning, guys. Wanted to look at constant-currency revenue growth for IFS in GFS going forward in the third and fourth order. Just some of your expectations there? I think I heard a comment that maybe the third and the fourth order would be pretty equal in growth rate profile, so just curious to see how it maps out between the two groups?

Yes, I think fourth quarter typically if you map out the path has a little bit of a higher growth rate as the institutions are working through their capital planning and capital budgeting process. We do see them flushing some capital budgets in the fourth quarter. That's historic, in terms of both IFS and GFS. You will see a little bit of a ramp there.

Also to add on that, your always see nice transaction spikes in the fourth quarter due to the holiday season.

That's exactly right. You will see a little bit higher in the fourth, but that's more normal trend line, if you will, there. Beyond that, we don't have a significant other transaction change or volume change that we haven't already discussed in terms of either term fees or sales execution.

Okay. Any comment individually for the two segments, IFS and GFS, on what to expect on constant currency for the third and the fourth?

IFS really has very little, if any, currency impact in it. Nothing there in terms of that constant currency. Then you can back-math where we are, where we're going to be sort of 5% to 7% in the aggregate, for the full year, what we've got through the first half of the year, at about 3.2% for the quarter. You can back-math it and see what your models say.

The increase to get to 5%, or 5% to 7%, from 3% is going to come mostly through GFS, or GFS and IFS both accelerating third and fourth quarters?

It will be some of both, because some of the term fees are flowing through IFS. We're getting over some of the comps that we've talked about. Then GFS would also have some acceleration of the deals we've talked about signing.

Okay. Then can you size the term fees for us that you're expecting for the second half 2015?

Yes, we've outlined -- we've talked about full year we thought we would have about $50 million. In the first half of the year we've had about $11 million, so very small. We do anticipate term fees to be much more significant in the back half of the year. I can't reiterate this enough. I know you guys are looking quarter to quarter. I can't reiterate this enough that lower term fees is a good thing for us long term. We maintain the customer relationship, we cross-sell, we up-sell, and we keep the profitability line.

Then remind us what the term fees were for the second half of last year, just so we can compare?

I think last year was about $20 million, with a full year 2014 of about $75 million.

But as we said earlier in another question, you just can't predict when these things are going to happen. M&A is going to -- consolidation is going to occur at different times, and so there's always lumpiness around these kind of fees.

Okay, great. Thanks for the color.

All right.

That will conclude the Q&A session. I will turn it back to the Company for closing remarks.

Thank you for your questions today and for your continued interest in FIS. I'd like to summarize by saying we continue to deliver revenue growth fueled by significant re-occurring revenue streams, with industry-leading margins and strong sales results. We are pleased with our recent restructuring and re-segmentation of our business, which has allowed us to align our services and solution portfolio to address clients' unique business challenges.

In closing, I'd like to thank are more than 42,000 employees around the world who are committed to empowering our clients each and every day. This passion for moving our clients' businesses forward to make them successful has earned us the loyalty of over 14,000 institutions across the globe. Together we are empowering the financial world. Thank you for joining us today.

Ladies and gentlemen, that does conclude that your conference. Thank you for your participation. You may now disconnect.