May 5, 2015
Executives
Stephanie Gregor - Vice President-Investor Relations Jeffery W. Yabuki - President, Chief Executive Officer & Director Thomas Jeffrey Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary
Analysts
Tien-Tsin Huang - JPMorgan Securities LLC David Mark Togut - Evercore ISI James Schneider - Goldman Sachs & Co. Ramsey El-Assal - Jefferies LLC Darrin D.
Peller - Barclays Capital, Inc. David J.
Koning - Robert W. Baird & Co., Inc.
(Broker) Christopher Shutler - William Blair & Co. LLC Andrew Jeffrey - SunTrust Robinson Humphrey, Inc.
Operator
Welcome to the Fiserv 2015 First Quarter Earnings Conference Call. All participants will be in listen-only mode until the question-and-answer session begins following the presentation.
As a reminder, today's call is being recorded. At this time, I will turn the call over to Stephanie Gregor, Vice President of Investor Relations at Fiserv.
Stephanie Gregor - Vice President-Investor Relations
Thank you, and good afternoon. With me today are Jeff Yabuki, our Chief Executive Officer; Tom Hirsch, 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 and strategic initiatives.
Forward-looking statements may differ materially from actual results and are subject to a number of risks and uncertainties. Please refer to our earnings release for a discussion of these risk factors.
You should also refer to our materials for today's call for an explanation of the non-GAAP financial measures discussed in this conference call along with the reconciliation of those measures to the nearest applicable GAAP measures. These non-GAAP measures are indicators that management uses to provide additional meaningful comparisons between current results and prior-reported results and as a basis for planning and forecasting for future periods.
Unless stated otherwise, performance comparisons made throughout this call are year-over-year metrics. You may notice that we have excluded the performance metric summary from our slide presentation, but we'll continue to include relevant metrics in our prepared remarks based upon strategic focus, impact on our results and other meaningful factors.
Let me also remind you that we are holding our Investor Day on Tuesday June 16 in New York City. The general sessions will begin at 9:30 AM and should end around noon followed by an optional lunch discussion.
Invitations will be sent out soon, and we look forward to seeing you at the event. With that, I will turn the call over to Jeff.
Jeffery W. Yabuki - President, Chief Executive Officer & Director
Thanks, Stephanie, and good afternoon everyone. We're pleased with our strong financial results in the quarter and are on track to meet our objectives for the year.
We delivered internal revenue growth of 4% against what was by far our most difficult revenue comparison of the year. These results include a 1 percentage point drag on revenue from a combination of currency and lower termination fees in the quarter.
Our continuing focus on high-quality revenue growth and operational efficiency drove an increase in adjusted operating income of 8% and a 150 basis point expansion in adjusted operating margin. Adjusted earnings per share was up 9%, despite an 8 percentage point negative tax rate impact on adjusted EPS in the quarter.
Free cash flow per share was up an impressive 22% in the quarter. Sales were 83% of quota in the quarter and slightly below last year's record Q1 results.
We remain confident about our sales and revenue prospects for the remainder of the year. For the second straight year, we were recognized as one of Fortune Magazine's World's Most Admired Companies.
In April, we were also named one of America's Best Employers by Forbes Magazine. In both cases, we were the only one of our core competitors to be recognized, which we believe is a reflection of our cultural focus on delivering superior value for our clients, associates and shareholders.
We identified three key enterprise priorities for 2015 in our last call, which we will update you on each quarter. The priorities are first, continue to build high quality revenue while meeting our earnings commitments.
Second, build and extend client relationships with an increased emphasis on payment and channel solutions. And third, to deliver innovation and integration, which enables differentiation and value for our clients.
As I mentioned, internal revenue growth was 4% in the quarter compared to 6% in last year's Q1, lead by strong performance in a number of our recurring revenue businesses. Growth was strong across several areas in the quarter such as card services, digital solutions including mobility ASP and account processing.
We continue to focus on building high-quality recurring revenue, which should lead to an increase in our internal revenue growth rate again this year. This targeted growth profile also helps fuel our objective to sustainably grow operating margin, which for this year is targeted to expand by at least 50 basis points.
In the quarter, adjusted operating margin increased 150 basis points. Free cash flow per share was up a very strong 22% in the quarter, reflecting the results of our attractive business model combined with the benefit of consistent disciplined capital allocation.
Overall, we are on track to deliver on each of our financial commitments for the year. Our second priority is to build and extend client relationships, and we did just that in the quarter.
We recently announced that Vibrant Credit Union, with assets in excess of $500 million, selected the DNA account processing platform, along with a number of Fiserv integrated solutions to help them deliver a unique experience to each of their 41,000 members. Four new DNA clients went live in the quarter.
We expect to more than double the number of new DNA institutions that go live this year as compared to 2014. Our core account processing growth opportunities extend well beyond DNA as our account processing offerings meet the needs of a diverse end market.
During the quarter, a top 40 bank selected our signature account processing platform along with a full suite of our market leading products, such as item processing, electronic bill payment, Popmoney, debit processing and the Accel network. We are excited about the opportunity to provide this new client a uniquely differentiated experience when they go live next year.
Digital solutions and mobile in particular continue to be a high priority for the market. We added to our Mobiliti consumer business, signing 36 new clients in the quarter.
Late last year, we began implementing programs to help our clients drive higher levels of mobile adoption, which contributed to even stronger growth in Mobiliti ASP subscribers in Q1. Mobile usage also tends to enable a variety of value-added opportunities such as real-time payments and deposits, Mobile Capture and Snap-to-Pay.
As you may recall our Mobiliti Business solution went live in the fourth quarter of last year. Through the end of Q1, we've already signed 8% of the business banking client base to this important new solution.
Although only a handful of clients are currently live, we expect this strategic product to drive value for some of our clients' most profitable customers and an attractive recurring revenue stream for us. We just wrapped our spring Forum client event, where we hosted nearly 4,000 people representing a broad range of financial institutions, billers, lenders and other purveyors of financial products.
At Forum, we provided updates on our market leading solutions and latest innovations from across the company. Our Solutions Center was highly trafficked, with more than 2,000 unique visits to different product areas including the NOW Network, digital solutions, real-time payments, lending, billing, EMV and investment services.
We are pleased with the early returns from Forum and look forward to our next event, coming in the fall. Our third priority is to deliver innovation and integration, which enables differentiation and value for our clients.
While we expect to cover several of these opportunities in depth at our Investor Day, some highlights for the quarter include a new unique agreement with Morgan Stanley to jointly provide a global turnkey asset management platform for financial institutions outside the U.S. Our market-leading managed account technology solution, which now supports multi-currency, portfolio accounting, model management and trading will be combined with the breadth and expertise of Morgan Stanley to create differentiated value and an attractive source of brand new growth.
We're excited about this opportunity and expect to go live in early 2016. We're gaining traction embedding our real-time payment capabilities into CheckFree RXP and Popmoney.
Real-time transactions were up 54% in the quarter, which has the dual benefit of meeting a critical customer need while delivering high quality fee revenue for our clients. We also advanced our new real-time deposit capability in the quarter.
This newer use case allows consumers faster guaranteed access to their phones and drives fee revenue for our clients. These real-time opportunities, which are generally enabled by the NOW Network, are a strong link to changing consumer expectations.
Interest for Agiliti, our UK cloud-based account processing solution, expanded once again in the quarter. The far-reaching demand has moved from being core based to include several key add-on solutions such as card processing, digital capabilities and risk.
We continue to build out our integrated platform and expect to go live later this year. Last, we continue our focus on EMV.
The number and level of client conversations remains elevated, and we've increased our capacity to deliver against the anticipated market demand. And while debit EMV card issuance continues to lag credit, we expect to see a ramp in the second half of the year and expect that to continue over the next several years.
With that, let me turn the call over to Tom to provide additional detail on our results.
Thomas Jeffrey Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary
Thanks, Jeff, and good afternoon everyone. Internal revenue growth was 4% and adjusted revenue was up to $1.2 billion in the quarter against our toughest compare of the year.
This performance was even stronger below the surface given the negative currency impact along with lower termination fees, which together pushed our growth rate down by 1 percentage point. Growth in our card processing, digital channels including Mobiliti, account processing and risk solutions led our performance in the quarter.
This high quality revenue growth and a continued focus on operational efficiency drove an 8% increase in adjusted operating income to $371 million and an impressive 150 basis point increase in adjusted operating margin. Adjusted earnings per share for the quarter was $0.89, increasing 9% over last year.
Our adjusted EPS in the quarter was negatively impacted by about $0.07 or 8 percentage points of growth from this year's much higher comparable tax rate due to significant discrete tax benefits in last year's first quarter. Moving on to the segment results, our Payments segment adjusted revenue, all internal, was up 4% to $613 million compared to one of our strongest growth quarters in the past several years.
Growth was led by our card processing and digital channels businesses, and was partially offset by the anniversary impact of some larger bill payment client implementations and biller headwinds. We believe the Payments segment revenue growth in the quarter will be the low watermark of the year, as biller headwinds ease at the end of the second quarter, ongoing conversion of the Mobiliti backlog, output solutions revenue acceleration and the early revenue benefit of EMV.
For reference, we continue to expect that the majority of the EMV related revenue will bias to later in the year. Debit transaction growth was a very strong 12% in the quarter driven by the dual benefit of growing card usage and strong sales.
Mobiliti growth was excellent as backlog grew and ASP subscribers increased 65% year-over-year to more than $3.2 million. Bill payment transaction growth remained in the low single-digits and P2P transactions grew 30% in the quarter.
Our focus on delivering value-added services in these solutions closely aligns with the industry's focus on faster payments. Real-time transactions were up more than 50% in the quarter.
Payments segment adjusted operating income grew 6% to $191 million and operating margin expanded 60 basis points. This solid performance includes the offsetting negative impact of additional investments in several areas including biller solutions and expanding our EMV capabilities.
Adjusted revenue in the financial segment was up 3% to $594 million. Performance was solid in our recurring revenue businesses including account processing and lending, notwithstanding the more than 1% negative revenue growth impact from currency and lower termination fees.
Adjusted operating income in the financial segment was up 10% to $204 million. This very strong performance translated to a 220 basis points increase in segment adjusted operating margin for the quarter.
These results were driven by high-quality revenue growth in our account processing businesses, and the positive impact from our operational efficiency programs. The Corporate segment generated an operating loss of $24 million, which is in line with last year's results.
Our effective adjusted tax rate in the quarter was 35%, up sharply compared to the prior year, but in line with our full-year expectations. Last year's tax rate of 30% benefited from significant discrete tax benefits.
Free cash flow per share is one of our most important performance metrics. Free cash flow in the quarter was up significantly to $268 million, and up an even stronger 22% on a per-share basis to $1.10.
Strong operating earnings growth and working capital improvements drove the excellent quarterly results. Total debt at quarter end was $3.9 billion or 2.2 times trailing 12 month adjusted EBITDA, well within our target leverage ratio.
We allocated $290 million to share repurchase in the quarter, buying 3.8 million shares at an average cost of $75 per share. There were 16 million remaining shares authorized for repurchase at quarter's end.
With that, let me turn the call back over to Jeff.
Jeffery W. Yabuki - President, Chief Executive Officer & Director
Thanks, Tom. Sales for the quarter were solid at 83% of quota.
These results were slightly off last year's exceptional Q1 results, but generally consistent with expectations coming off our very strong Q4 finish. We had several high profile wins in the quarter, which demonstrate the power of both our integrated value proposition and the innovation that we are supplying to the dynamic market.
For the full year, we expect actual sales value to be up roughly 10% compared to last year's record level. Integrated sales were $44 million or 18% of our full-year goal.
During the quarter, we also passed through the $900 million mark for cumulative integrated sales in the second phase of our program, which we launched in 2010. We expect to surpass our five-year program goal of $950 million of total integrated sales in the second quarter.
We're on track with our operational effectiveness goals, achieving $13 million in the quarter and are making good progress against our infrastructure consolidation this year. For example, we expect to complete our Alpharetta building project and consolidate a number of our Atlanta-based facilities and over 2,000 associates in the fourth quarter of this year.
Not only do we expect increased associate engagement and enhanced client interaction, we also expect to see meaningful operational effectiveness benefits in 2016 and beyond. There were only five regulatory actions in the quarter, which was consistent with last year's level.
While at Forum, we had the opportunity to hear directly from our clients about their priorities and technology focus. Tone continues to moderately improve and strategic conversations tend to center on building revenue, delivering digital capabilities, faster payments and a focus on differentiated customer experiences.
Overall, we are on track to achieve our objectives for the year. We continue to expect internal revenue growth of 5% to 6% and adjusted earnings per share of $3.73 to $3.83, a range of 11% to 14% growth for the year.
We also expect internal revenue growth to further accelerate in the second half of the year as more of our sales and related revenue come online. We expect full year adjusted operating margin to expand at least 50 basis points, and importantly that free cash flow per share will be at least $4.12 for the year.
In conclusion, we are pleased with our strong start to the year. We're on track to meet our financial and strategic commitments, which include recording an increase in the rate of internal revenue growth for the third consecutive year.
These results, and the third party recognition I mentioned upfront, are a strong testament to the focus and dedication of our more than 21,000 associates who drive value for our clients each and every day. With that, Mary, let's open the line for questions.
Operator
Thank you. We ask that you limit yourself to one question and one follow-up.
You may return to the queue for additional questions. Our first question comes from Tien-Tsin Huang of JPMorgan.
Tien-Tsin Huang - JPMorgan Securities LLC
Hi, good afternoon. Good margins here, I wanted to ask on that first.
Just the 150 bp expansion despite the lower term fees, anything unusual this quarter and did you consider raising your margin outlook for the year given the big start in Q1?
Thomas Jeffrey Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary
Yes. I'll take that and Jeff will add to that.
I think there really wasn't anything unusual in there. It's again the layering on to that high quality recurring revenue that we really have in both segments and it's been a big focus of our company as you know over the last several years, as we've kind of accelerated our internal revenue growth rate and we plan doing that again this year.
So again, high quality recurring revenue, continuing to focus on our operational efficiencies and those are the primary drivers. And at this time, we're not going to be changing our guidance.
Jeffery W. Yabuki - President, Chief Executive Officer & Director
Yes. I would say, Tien-Tsin that it's early in the year.
I mean, we expect to continue to perform well throughout the year. And we'll obviously take a better look at that when we get through at least the first half.
Just to accentuate a point that Tom made, for several years as you will recall, we talked about making investments in some of our new products, solutions such as Mobiliti ASP, which we had to spend a lot of capital, both human and financial, upfront build the solution, sell it, distribute it, continue to add feature and function. And now we're getting to a point where we have scale and as that scale, as we continue to add users, we continue to get a nice drop through benefits in that.
So it's solutions like that that are really adding to our margin, because of that focus on this high-quality recurring revenue.
Tien-Tsin Huang - JPMorgan Securities LLC
All right. So high incremental margins.
Got it. Just as my follow-up and I guess just on the EMV front, I know you said that could pursue to the higher end for the year on the revenue side.
Just curious, at what point would you start to have enough order flow for you to sort of make that call that it's coming through? I'm guessing we won't see a lot of change over close to the holidays.
So just trying to understand the timing of when that might be visible to you. Thank you.
Thomas Jeffrey Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary
Yes, sure. Thanks.
And I mean I would say that we always knew that the EMV revenue would bias to late in the year. We've just as I mentioned had our client conference, we had lots and lots of discussion around EMV.
We've got a lot of demand that is building in the pipeline. And frankly, we won't know enough until at least into the third quarter on, where we'll end up biasing for the year.
I would say right now, we would be slightly below where we would have expected to be or where we potentially anticipate it to be, and it's only because of the timing of institutions. On the other side of the coin, I would say we're increasingly optimistic about the size of the opportunity and we'll certainly talk more about that at Investor Day.
Tien-Tsin Huang - JPMorgan Securities LLC
Very good. Thank you.
Thomas Jeffrey Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary
Thanks, Tien-Tsin.
Operator
Thank you. Our next question is from David Togut, of Evercore ISI.
David Mark Togut - Evercore ISI
Thanks. Good afternoon, Jeff and Tom.
Jeffery W. Yabuki - President, Chief Executive Officer & Director
Hey, David.
Thomas Jeffrey Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary
Good morning, David.
David Mark Togut - Evercore ISI
Could you update us specifically on sales performance in the quarter of DNA? Anything to call out in terms of new bookings and competitive trends?
Thomas Jeffrey Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary
Yes, I would say we had definitely had some wins in the quarter. We had a very strong fourth quarter.
Last year, we had a couple of transaction that slid from Q4 to Q1, which made Q1 quite strong last year. We continue to be extremely happy with the performance of DNA.
We expect to more than double the number of go-lives we have this year. We mentioned the Vibrant Credit Union win.
It was a very nice win against one of our more entrenched competitors. And so we continue to have a lot of interest in the solution on the larger credit union side as well as on the large bank side.
As more and more of the bank and larger banking institutions are looking at real-time as an option and given that DNA is the only real modern technology platform that is U.S.-based, interest is quite high.
Jeffery W. Yabuki - President, Chief Executive Officer & Director
And I'd just add to that that the pipelines that we have right now have never been stronger for that, both on the credit union and the banking side. So we're very pleased with that.
David Mark Togut - Evercore ISI
Great. And just as a follow-up, I noticed that you didn't provide a metrics page in the handout, Tom, although you did, I think Jeff went through a couple of metrics.
Perhaps you could give the operational effectiveness versus target. And then if you could provide the breakout of term fees both for the first quarter of this year and then the year ago number.
And just to slip in one more, just the quarter-end share count.
Thomas Jeffrey Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary
Yes, obviously all the metrics, we put all the metrics inside our script, David. So they are all in there.
We just have a number of different metrics that will change over time depending on relevance and SIL (24:17), but all those metrics are in there. We have $13 million of operational effectiveness benefits in the quarter.
So another strong quarter of execution. And so, that was very positive.
Regarding the share count, as of April 30, that is 236.8 million. As of March 30, it was 237.7 million, regarding that.
And regarding term fees, they're down approximately $5 million from where we were last year. So that was roughly a 50 basis point hit to our growth rate.
David Mark Togut - Evercore ISI
Anything to call out in terms of term fee comparisons for 2Q to 4Q?
Thomas Jeffrey Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary
We did have as you know last year when we look back at last year, I think our first quarter of last year that was our lowest quarter of the year until we were down here in the first quarter compared to last year and then it kind of accelerated through the year. They were pretty consistent.
So when you look at 2014 and we continue to manage that within our overall guidance, and but overall in the first quarter they were down. And again, last year in the first quarter was our lowest level.
Jeffery W. Yabuki - President, Chief Executive Officer & Director
And David, the operational effectiveness goal for the full year is $50 million.
David Mark Togut - Evercore ISI
Thank you very much.
Thomas Jeffrey Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary
Thank you.
Operator
Thank you. Our next question is coming from Jim Schneider of Goldman Sachs.
James Schneider - Goldman Sachs & Co.
Good afternoon and thanks for taking my question. Relative to the 30 DNA wins you're expecting to capture this year, I think you mentioned four came in in Q1.
Was that in line with what you had expected? Or did any deals slip out into the following quarters?
And can you maybe just update us on the profile of those on-boardings you expect. Is it more back-end loaded than front half?
Thank you.
Jeffery W. Yabuki - President, Chief Executive Officer & Director
Sure. Thanks, Jim.
So just for clarity, we had four new DNA clients go live in the first quarter. We expect that to be 30 or so for the full year.
That'll bias into the second half of the year. And some of our very large implementations will go live in the second half of the year.
We're on track where we would expect it to be on those implementations. I'm going to separate that from sales for a minute.
The sales momentum is quite strong. As Tom mentioned, the pipeline is at its fullest level ever.
And we are seeing a lot more interest from larger institutions, frankly those institutions that would not be having the conversations with us but for the fact that we have this modern technology platform. Again, when we acquired Open Solutions, we anticipated a number of benefits.
Frankly, we had not anticipated the fact that the world would change so dramatically since January of 2013, that real-time would become so critical along with the processing and data capability of that platform. So we're involved in a number of larger transactions.
Now the negative to the extent there is one, is those larger transactions tend to have long sales cycles, but we're excited to be in there. And frankly another of the benefits is, as you know we have a lot of very strong relationships with large financial institutions that tend to be based in our payments technologies and/or our channels technologies, our risk technologies, and this is now giving us an opportunity to be able to go in and have more wholesome conversations centered on the core processing solution of DNA.
James Schneider - Goldman Sachs & Co.
That's helpful. And then as a follow-up, one of your primary competitors this quarter cited some significant or increasing pricing pressure in debit processing.
I was wondering if first of all that's something that you see in the market, and second if so, if it's big enough to impact your results as we enter the year.
Jeffery W. Yabuki - President, Chief Executive Officer & Director
So we announced in the quarter that we have 12% debit growth. Obviously that's coming from a combination of what I would call a kind of a lag utilization rate in the market.
And then but the other real factor is, we have a significant sales engine. And the majority of our sales really come from selling into our existing client base.
So we've got a number of over 5,000 account processing clients. We've developed differentiation that's centered in integration, whether it's into the core or into our mobile services, risk services et cetera.
So that's a very different value proposition. Now we're also competing against some of the larger players that are not connected to our core.
But the reality is that the majority of our success has historically come from the integration value that we can create in core. And that's a different sale, it's a different transaction, certainly we have to price into the market.
But frankly, because we can deliver value that no other provider can deliver, we're able to create a better arrangement overall.
James Schneider - Goldman Sachs & Co.
Great. Thank you.
Jeffery W. Yabuki - President, Chief Executive Officer & Director
Thank you.
Operator
Thank you. Our next question coming from Ramsey El-Assal of Jefferies.
Ramsey El-Assal - Jefferies LLC
Hi, guys.
Jeffery W. Yabuki - President, Chief Executive Officer & Director
Hey Ramsey.
Ramsey El-Assal - Jefferies LLC
Jeff, I wanted to clarify something that you said on DNA. Are you expecting the kind of cadence of your implementations to flow more into the back half of the year or is it more sort of a steady stream and you're just expecting a couple of large ones in the second half?
Jeffery W. Yabuki - President, Chief Executive Officer & Director
No, we are expecting in the range of 30 for the full year. We had four in the first quarter, and they will continue to ramp.
The beauty of an account processing client is it's recurring revenue and it lasts typically for a long period of time. The downside is, is implementation cycles are anywhere from 12 to 24 months.
So if you think back to the successes that we've had in winning these clients, as they go, that just takes time to go live. So I do see it being biased to later in the year both in terms of absolute numbers as well as in terms of some of the sizing of the transactions, primarily because of when we won the clients.
And we think that will continue into the following year, so we're going to continue to have success in that arena.
Ramsey El-Assal - Jefferies LLC
Okay. This is sort of a longer view.
The question is asking for your longer view on sort of margin expansion over the next 24 or 36 months. I mean obviously there is some great intrinsic operating leverage in the business.
Are there any product categories or areas of cost take-out that you think will be a particularly sort of consistently additive source of margin expansion over time?
Jeffery W. Yabuki - President, Chief Executive Officer & Director
Well I mean, when you think about the margin expansion as you said, it really comes from two primary arenas. It comes from scaling, either scaling new product investments or being additive to existing solutions that are already scaled.
So that's one category. Within that category, we're always looking for, how can we be more efficient, part to be able to expand margin.
But it frankly. part of that is to ensure that we're able to continue and to invest in our products in a meaningful way.
The other big piece of margin expansion frankly is on the operational effectiveness that we have been executing really fairly well since 2007. Most of that work has not touched our infrastructure today.
We've had small numbers of data centers to be consolidated. We've done a location here or there.
We're now focused on making sure that we are able to leverage the company that we built for the last three to five, seven years. And Tom and I both talked about the fact that we're doing these infrastructure consolidations.
So we're doing more on the data center front. We're doing more in looking for ways to bring people together to create better communities of effort and around our clients.
And then lastly, we're also continuing to focus on what are the right ways for us to get the best leverage across our labor bases. We're pretty spread out.
We still have lots of opportunities to create value there. So those are the three areas that we're really focused on right now from an operational effectiveness.
Combined with the scale, that really gives us a high degree of confidence that we're going to be able to continue to expand margin consistent with our long-term guidance into the foreseeable future. Lastly, I would say that you will see us spend a fair amount of energy on this at Investor Day to be able to provide confidence for the next several years that that will continue, not just for us, but also for you, our owners.
Ramsey El-Assal - Jefferies LLC
Great. That's really helpful.
Thanks.
Jeffery W. Yabuki - President, Chief Executive Officer & Director
Yes.
Operator
Thank you. Next is from Darrin Peller of Barclays.
Darrin D. Peller - Barclays Capital, Inc.
Thanks, guys. Listen, just want to quickly follow up on the margin first.
I mean obviously, I think it's a follow-up to Tien-Tsin question earlier. 150 basis points in the quarter was clearly more than we had anticipated.
We did anticipate some expansion, but still. When I look at the G&A number, Tom, over the past, I don't think I have seen it that low over the past five quarters.
I mean is there anything, and I think you said there was nothing unusual. So I guess the bigger question is, is that new G&A number sort of sustainable at that run rate or maybe on a percentage of revenue basis you can look at it that way?
And then I just have a follow-up on the drivers on mobile for a moment.
Thomas Jeffrey Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary
Yes I think, and Darrin you may be looking at kind of the GAAP number and sometimes that GAAP number includes higher levels of severance like we had in the previous quarter last year. Still when we look at our SG&A rate today, we do believe that is sustainable.
Clearly it's going to fluctuate on a quarterly basis. We don't manage it that way, but we continue to believe we're at a good place there and will continue to leverage in our operating model.
Darrin D. Peller - Barclays Capital, Inc.
All right. I guess just more broadly, Tom, I mean G&A overall, just your cost structure, it sounds like there is nothing unusual in that number, in the overall expenses number.
Thomas Jeffrey Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary
No, absolutely not.
Darrin D. Peller - Barclays Capital, Inc.
So that percentage of revenue margin-wise sounds like that's a good number.
Thomas Jeffrey Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary
Yes. Absolutely.
Darrin D. Peller - Barclays Capital, Inc.
All right. That's great to hear.
All right, thanks. And then just, listen, on the mobile side again the growth rate has been outstanding.
And I guess we just want to understand in terms of business mix, I know you guys have been somewhat reluctant to call out specific percentage of revenue from mobile. But what about just overall online banking, mobile, some of the more digital initiatives on that front.
If you can give us a little more color on percentage of your business now, because obviously it's a big growth driver for you.
Jeffery W. Yabuki - President, Chief Executive Officer & Director
Yes. You're right.
We have stayed away from that and we're going to continue to stay away from that at least for today's call. We'll supply a bit more detail on that at Investor Day, because it really is becoming a bigger part of the business.
And we actually see it being able to become an even larger part of the business going forward, not just in terms of driving subscription revenue or license revenue or services revenue depending on the deployment method, but also the importance of mobile as it kind of drags along additional capabilities, whether they be payments and the like. So we will definitely spend more time on it.
The point that we were trying to make earlier just as it relates to margin, is as you know Darrin, we've been investing in this for a number of years. We're now at the point where we've hit the tipping point and we would expect it to be fairly positive for us from now over the next several years.
Darrin D. Peller - Barclays Capital, Inc.
And I guess later in the year with term fees coming on, or a more normal comp, that's I guess as a follow-up to the question earlier in the call, that should only be better, right?
Jeffery W. Yabuki - President, Chief Executive Officer & Director
That's correct, but we're going to continue to make investments as we go, so we obviously are sticking with our guidance right now at 50 basis points, at least 50 basis points for the full year. We need to get past Q2 and take a look at it before we make any adjustments for Q1.
Thomas Jeffrey Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary
We did have, as I previously said, Darrin, we did have higher levels of termination fees in the last three quarters of last year, just so you are fully aware of that.
Darrin D. Peller - Barclays Capital, Inc.
Okay. On a comp basis, makes sense guys.
All right. Thanks very much.
Thomas Jeffrey Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary
Yes.
Jeffery W. Yabuki - President, Chief Executive Officer & Director
Thank you.
Operator
Thank you. Next Dave Koning of Baird.
David J. Koning - Robert W. Baird & Co., Inc. (Broker)
Yes. Hey, guys.
Nice job.
Thomas Jeffrey Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary
Thanks, Dave.
Jeffery W. Yabuki - President, Chief Executive Officer & Director
Thanks, Dave.
David J. Koning - Robert W. Baird & Co., Inc. (Broker)
Yes, so I guess the first question, it sounded like you were talking about the second half being better than the first half in terms of growth. But it looks like the second quarter is actually the easiest comp of the year.
And I'm wondering, should Q2 be better than Q1 in growth just given it's a much easier comp?
Thomas Jeffrey Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary
Dave, I would say that again, where we went all the way back to our call, when we kicked off the year in January. We really believe the second half is where it's going to be primarily.
And the reasons for that are some of the things that we've already talked about, are the DNA implementations. We're going to have some larger benefits from both our bill payment and international business.
Our biller headwinds, we mentioned this, that in our biller business, which is really growing our electronic transactions – they are double digits – we've had some tough comparisons. There were some client consolidation and those headwinds are going to abate towards the end of the second quarter.
And then also, we talked about our EMV revenue, which is primarily all second half kind of driven. So again, we continue to believe we're going to have a much stronger second half than first half and as we're sitting here today, that continues to be that trend.
David J. Koning - Robert W. Baird & Co., Inc. (Broker)
Okay. Okay.
And then I guess the only other question I had, on the postage line, we never really pay attention to that. But is that, are we're going to able to see that clearly ramp?
And that's maybe one of the biggest indicators that we can just see the underlying EMV kind of driving the payments growth.
Thomas Jeffrey Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary
Yes, I don't think it will be reflected there, because of the card production. But I would comment that as you saw, one of the reasons in our payments segment, our output solutions business was fairly flat.
We kind of had a difficult compare, we had compared to the prior year. And again that's one of the businesses where we really expect a better second half, due to the acceleration both in the base business and then also in EMV production.
As Jeff highlighted, we're primarily on the debit side, which is going to trail credit and therefore that's when we expect to see that.
David J. Koning - Robert W. Baird & Co., Inc. (Broker)
Okay, great. Thanks.
Good job.
Thomas Jeffrey Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary
Thank you.
Jeffery W. Yabuki - President, Chief Executive Officer & Director
Thank you.
Operator
Thank you. And next is Chris Shutler of William Blair.
Christopher Shutler - William Blair & Co. LLC
Hey, guys. Good afternoon.
Jeffery W. Yabuki - President, Chief Executive Officer & Director
Hey, Chris.
Thomas Jeffrey Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary
Hey, Chris.
Christopher Shutler - William Blair & Co. LLC
I thought that the comment on the Morgan Stanley relationship was interesting, guys. Maybe you can provide a little bit more detail on how that opportunity developed, who is going to be doing what and maybe just some more color overall on what the product is going to look like.
Jeffery W. Yabuki - President, Chief Executive Officer & Director
Sure. It's a unique arrangement.
As you may know, we've got a very strong position in, call it just broadly, managed account administration in the U.S. We have a very strong pricing network, a very large-scale business and we've been working with Morgan Stanley for a couple of years.
They've wanted to have a way to expand their business. And we began working together to look how could we use our technology with their knowledge of the business and their connectivity outside the U.S.
And we basically put this together in a way that allows really them to go out and take the lead, almost prime, go out, make, form and leverage their relationships outside the U.S., get it set up with product et cetera, and then we'll go in and do the managed account administration as we do here. And so we're quite excited about it.
It's nothing that we've done before. And frankly, we have a pretty high level of confidence in this because we spend a lot of time understanding Morgan Stanley's capabilities and how they're going to approach the market.
And so we're pretty excited. We think it's going to drive some growth into 2016.
It won't have any impact this year, but it's just another driver for 2016.
Christopher Shutler - William Blair & Co. LLC
Sure. Okay.
And then just one other one, totally different question. But I was hoping to get an update on the integrated sales effort, specifically with former Open Solutions clients.
So just wondering if there is still a big opportunity or just what inning you're in there with that opportunity? Thanks.
Jeffery W. Yabuki - President, Chief Executive Officer & Director
Yes sure, Chris. So we just continue to be very, very pleased with the success that we're having in providing additional value-add solutions to that base, whether it's in the DNA base or the total plus base, we've had a lot of success on delivering product.
We did a lot of work as you'll recall over the last 15, 18 months in terms of driving what I would call the first level of integration. We're now starting to bring in some of our next tier, higher value, higher integration value products.
And so we remain very confident that we're going to hit or frankly exceed the revenue synergy numbers that we talked about when we acquired Open. The inning question is an interesting question, because from a sales inning perspective, we're probably somewhere in the middle innings in terms of aggregate value sold.
In terms of the revenue recognized on that, I would say we're in the very early stages of the ball game, and have a lot of runway left ahead. Some of that is because of implementation queues, some of it is we've signed contracts that don't expire for, where they have competitive agreements and expire for a period of time.
But again, that's one of the things that gives us confidence, not just into the second half of this year, but frankly on our exit run rate. So it's pretty early on that opportunity.
Christopher Shutler - William Blair & Co. LLC
All right. great.
Thanks Jeff.
Jeffery W. Yabuki - President, Chief Executive Officer & Director
Thank you.
Operator
Thank you. Next is Andrew Jeffrey of SunTrust.
Andrew Jeffrey - SunTrust Robinson Humphrey, Inc.
Hi guys. Thanks for taking the question.
Jeffery W. Yabuki - President, Chief Executive Officer & Director
Sure.
Andrew Jeffrey - SunTrust Robinson Humphrey, Inc.
So Jeff interesting, as we do a read a lot about real-time payments. Interesting to hear your emphasis increasingly perhaps across Fiserv's business on how faster payments can drive growth.
Can you be a little more granular? Do you think most of your opportunities are in terms of market share given your technology sophistication and position or do you think it's pricing or a combination of the two?
And I'm thinking about your comments, both with regard to DNA as well as Mobiliti.
Jeffery W. Yabuki - President, Chief Executive Officer & Director
Yes, so it's a great question and hopefully I'll capture it in this answer. So I think about real-time on several levels, but you've got solutions such as DNA, which I think of a little bit more as a file drawer and we're creating this real-time capability that allows for a lot of optionality to put files in that drawer which are the real-time applications.
So it could be deposits, it could be data management, it could be payments, any of those different opportunities. And we're going to see that both in real-time core, but the mandate is coming much more off of how consumers are accessing those technologies or frankly how business owners are accessing those technologies, through Mobiliti and online and the like.
And we're in the enviable position of having both the account processing or the core platform as well as the channels platforms, which we have a very long legacy on the online side that we're now complementing on the mobile side. That however is only part of the opportunity.
Frankly, I am at least if not more excited about the second part of the opportunity. And that is today, because of the solutions that we have in the market, be it the CheckFree RXP solution or Popmoney, our ACH solutions, we have rails today, which are slower rails, but are moving many, many, many millions and millions and billions of transactions.
And what we're seeing is financial institutions get quite excited about the opportunity to provide real-time capabilities, payments and deposits. We mentioned that in our prepared remarks, real-time deposit credit is another intriguing opportunity, where institutions can create small fees that make sense to the consumers and make sense to them.
So they can create a little bit of fee revenue. Consumers can get what they want from a time-to-move or speed-to-move perspective.
And because we're the enabling party, we're getting that as well. And my belief is that we're going to see some meaningful percentage.
Take bill pay, where we've got roughly 1.5 billion transactions a year. Some meaningful percentage of those have the propensity to go on a real-time basis.
And that will create real value, not just in terms of growing the transactions, but on a rev-per-tran basis that could be very, very impactful to our model over time. So it's a little bit of a long-winded answer.
You can be sure we're going to talk about this at Investor Day, but it's a very, very important opportunity. And uniquely it's a place where the interests of consumers or users, whether they be retail or business; the financial institution, whether that be a bank, a credit union, a lender, a biller whoever it is; and our interests all intersect at this point of real-time.
Andrew Jeffrey - SunTrust Robinson Humphrey, Inc.
And that's helpful. Thank you.
Would you expect to see the adoption of real time payments or the offer of real-time payments and bill pay, for example, to consumers be accompanied by new fee structures? You know for those of us who've been using bill pay for a long time, we're accustomed to for the most part having free payments, albeit with a lag.
Would you expect to see financial institutions introducing more tiered pricing?
Jeffery W. Yabuki - President, Chief Executive Officer & Director
Yes, absolutely. And in fact, we talked about our real-time payments being up more than 50% quarter-over-quarter.
Almost, I would estimate that virtually every one of those payments carried a premium fee. Every one of those real-time payments carried a premium fee structure.
It could be like a reverse interchange, but a variety of different premium add-ons are in that more than 50%.
Andrew Jeffrey - SunTrust Robinson Humphrey, Inc.
Okay. Thank you.
Jeffery W. Yabuki - President, Chief Executive Officer & Director
Thank you.
Operator
Thank you. Our last question is from Brian Bowden (48:37) of Deutsche Bank.
Unknown Speaker
Hey, guys.
Thomas Jeffrey Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary
Hi, Brian (48:39).
Unknown Speaker
How you doing?
Thomas Jeffrey Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary
Been great.
Unknown Speaker
Most of my questions have been asked and answered. I was just curious on the EMV opportunity, we're hearing different things.
I guess how big of a revenue opportunity is that for you guys? I mean is that upwards of $100 million on an annual basis?
And any possibility that they delay the October liability shift that you're hearing about?
Jeffery W. Yabuki - President, Chief Executive Officer & Director
So, the EMV opportunity is meaningful. There's no question about that.
And we're going to talk about that in detail at our Investor Day in terms of quantifying the sizing of that. We have EMV benefits coming from two places.
We have EMV benefits coming from our existing debit processing clients. And then we also have clients who are not our debit processing clients who have a relationship with us through our output solutions business, both on the manufacturing and on the personalization side.
So we'll spend time at that on Investor Day. As it relates to the liability shift, we haven't heard anything that would have us believe that that shift, that there is going to be a delay in the shift.
So we are at least planning for that to happen on time.
Unknown Speaker
Okay. And then just one question for Tom.
Just how big or if you can quantify the impact of term fees in the guidance for this year that would be helpful. Thanks so much.
Thomas Jeffrey Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary
Yes. We don't, I mean we don't quantify certain impacts.
It's factored into our guidance. Clearly one of the things I would say, Brian, (50:12) is we're coming off a very strong year in 2014 from a termination fee standpoint, so I mean that's kind of context for it.
Unknown Speaker
Okay. So, it will be down this year on a year over year.
Thomas Jeffrey Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary
It's hard to, every year we have puts and takes and things happen in the marketplace and sometimes they come quickly. But we did have a very strong at least last three quarters of last year in regards to termination fees.
Unknown Speaker
Okay. Thanks for taking the questions.
Thomas Jeffrey Hirsch - Chief Financial Officer, Treasurer & Assistant Secretary
Yes.
Jeffery W. Yabuki - President, Chief Executive Officer & Director
Thanks everyone for joining us this afternoon. We always appreciate it.
And we're looking forward to seeing everyone on June 16 in New York for our investor presentation. If you have any additional questions, please don't hesitate to contact our Investor Relations team.
Have a great evening.
Operator
Thank you. You may now disconnect.