Fidelity National Information Services, Inc. (FIS) Earnings Call Transcript & Summary

All right. So we're moving right along here with our payment symposium. Our next session is with FIS, and I'm very fortunate to have James Kehoe here. Chief Financial Officer. So James, thanks for being here with us. We appreciate it.

We were just talking about going to a you've been in your seat for about 1.5 years now. accomplished a lot, comprehensive Investor Day, which was almost a year ago. Give us your progress report on the strategic priorities that you kind of laid out in both the banking segment and the capital markets segment. And then like what's on the top of your list to really focus on in both those areas for 2025?

Okay. Maybe I'll give you the guiding principles we had at Investor Day. Maybe step by client centricity, number one. And I think I'll come to each of these. Second one was innovation. And the third one is simplification. Client centricity. I think that's a clear win across the board. Call it, go back 12 months ago, we were struggling in market, especially in community banks. Horizon, our principal offering in the area wasn't performing high level of defects. Flip forward 12 months, and we're looking at -- we've called it out on prior calls, we doubled our core wins in 2024 and most of that was in community banks. So call it -- I'm calling a range of maybe $1 billion to $10 billion in size. And whether anyone else wants to admit it or not, we've gained share in the sector, full stop. Horizon is back. Defects are down. Tickets are way, way, way, way down. And our reputation in market is much stronger than it was 12 months ago. That's one on client centricity. The other one is probably on retention exiting the year. You can see Horizon and the better product offerings in general playing out retention in the high 90s. And finally, the most important one, if you're really satisfying your clients, your ACV is up. So our ACV was up 9%. And within that, the banking was actually up low double digit. So a really strong year and a strong finish for the year. You get into innovation. I think Investor Day was a highlight in that we launched what is very much a long-term platform, which is Atelio. And we're still in test and learn phase. More recently, we launched TreasuryGPT, which is our first AI-enabled product. And I would say innovation looking forward, internal innovation will be very, very focused on AI-driven products, probably more in treasury and more in fraud as we look in the short term. The other form of innovation, 2 other forms, one is acquisition. So sometimes you can develop your innovation internally and you just buy it in the market and you slam it into your sales force and you drive revenue synergies. The 2 most recent, Dragonfly, that took us upmarket in digital in the core banking. So highly customized and strategic clients, probably bigger than we were able to do with our D1 product, and kind of fills a gap at the high end of our portfolio. And then Demica is supply chain financing, which fits really well with the last piece of innovation. I'll bring you through office of the CFO. So we're going to surround the CFOs in both corporates and banks with a suite of product offerings ranging from treasury all the way to accounts payable, accounts receivable. And that's a form of innovation. We've set up an office of the CFO within the sales force. So even we're pushing internally. And then finally, simplification. The big trigger was selling Worldpay. Let's face it. But it also opened up really a heavy workload on downsizing. We have $200 million roughly of TSAs, expiring over a 2-year period, and we're in significant cost reduction mode on back office. But at the same time, we're dramatically simplifying the company. We are leveraging Gen AI and back office, but we are also leveraging third-party business process outsourcers, organizational delevering and simplification. So I would say strong ticks across the box since Investor Day. What are my priorities? We're not happy with Q4. We had some onetime items. We want to get back into a consistent -- this is the target we set and we're going to deliver the target quarter in, quarter out. We will deliver -- and my #1 focus is finance enabling the businesses and sales to be successful. Number one is revenue. Number two is the margin journey where we play an even bigger role in driving cost reduction. And then the third one for me, a personal one is free cash flow generation. We've got a lot of recent questions on we came in at 77%. We should have been at that 85%. We got to drive a harder, sharper agenda and produce results much, much quicker. So those 3 would be priorities. They're all business priorities.

Yes. No, it's a great summary. So even on top of all the progress you've made, more work to do. I'm going to start on the banking side. Obviously, it's the bigger of the 2 segments and you alluded to some of the one-off challenges in Q4 in banking. So now we're looking ahead to 2025, we're thinking about the quarterly cadence of growth in the banking segment. 4% is the midpoint of the full year guide, and that's exactly what you told us in May of 2024 at your Investor Day, it would be. So no change there. But the shape of the year looks a little bit different. Q1 at the midpoint is about 1%, and then you guys talked about 300 basis points of acceleration in the year-over-year growth rate from Q1 into Q2. How is the visibility on that acceleration? And anything you want to tell us just about Q1 in terms of how you're feeling about that?

Well, Q1, I can't really say much, we're too far into the quarter. But I would say that we -- it gets back to my earlier comment, we wanted to set a set of targets that we can achieve and then achieve or beat those quarter in, quarter out, probably with the benefit of hindsight, we were a tad conservative on Q1 because it was the start of the year. We have really strong visibility to the first quarter. What we're inclined to do as a company and its philosophy is the high end of the range is our internal risk-adjusted plan. And there is no real science behind the low end, it's just the creation of a range. So in theory, we're always aiming to come in close to the high end of the range, at least that's our operating plan on a risk-adjusted basis. So if you ask about visibility, we have strong visibility, that we'll be well within the range for the first quarter. Really well within. And then if we weren't confident on the drivers, we wouldn't have stepped out a policy, which we really stepped out a policy. We actually gave a banking guide for the second quarter, which is kind of -- there was a lot of debate internally. We were comfortable doing that because we have strong visibility to the build of sales over the course of the quarters. And that's what gave us the comfort to go out and kind of break with convention. And we were aiming to calm the market. It didn't actually quite work out that way. But that was the intent, and we wouldn't have done it if we didn't know we could hit the number. So there is quite a bill between Q1 in Q2, right? So you're going from, call it, the -- call it midpoint of 1 to midpoint 4. But if you take the first quarter, it's unfortunate, but we are lapping 200 basis points of really strong license quarter in 2024. We had one license deal and one termination. The license deal itself was above $25 million. So if you take out those 2 items, which were really exceptional in the long-term trend, that's about 200 bps. And then -- and getting back to your question, why do we have good visibility. There were 3 shifts, call it, out of Q1 into Q2, there were 2 clients requested deferrals of implementations. And the good news is one of those actually just went live and the other one has gone live, I think, in 2 days' time, right? So we said that the 100 bps will shift from Q1 to Q2, it's actually happened already in terms of -- it's actually implemented slightly earlier than we would have anticipated. And then the third one was a merger. It was a contract actually signed back at the end '23. And company has deferred the implementation until the merger is approved. So even if the merger doesn't get approved, the contract still gets implemented. But they're waiting for approval, which is expected during the course of Q2. So this is why we have such good visibility. We also have -- you could ask the question, well, could something else delay out of Q2 into Q3? Yes, but nothing like the magnitude of what we saw in Q1 -- the Q4 and Q1. And I guess the way to answer it is we wouldn't have guided to Q2 if we thought there was a high element of risk in the number. So we have clear building blocks into Q1 into Q2.

Okay. Okay. So it's those 3 shifts that you outlined that basically drive the 300 bps of acceleration.

And 2 out of the 3 are done.

2 of 3 are done. All right.

So done and gone live.

So that's like 2/3 of the 300 bps, I guess, that you need. So you're feeling pretty good about that. So I mean, look, frankly, I think you guys get there in Q2, it will obviously take a lot of angst out of the -- okay. Very helpful. So maybe we can -- just to rewind to Q4 for a minute, just so people kind of have the context there. There were the 3 onetime items. Some of it was nonrecurring, right? There was a reversal of a contract termination fee because, I think there was a merger called off, obviously beyond your control. There was a push out of a large license deal. And then there was a contract recognition adjustment, if I remember correctly, on the recurring side, which was about a 1% headwind. I was curious if you can just elaborate on kind of what the nature of that adjustment was? What caused -- is that something that's commonplace in the business? Or...

It is and it isn't. It's just normal review of balance sheet account positions client by client. And there was this $12 million, and it relates to the prior years, and it was trued up in the fourth quarter. Done, dusted, behind us. Very unfortunate, because we ended up with a perfect storm of a bunch of onetime items. But it was a cleanup of historical client adjustments.

Okay. Okay. All right. So I mean, anything else we should just be aware of? I mean we talked about Q2 a lot, but just in the back half, just in terms of year-over-year comps or onetime-ish things that you're lapping or anything like that?

I'd just go back to what we said in the fourth quarter. There's 2 items. If you try to bridge the full year growth rate, it's probably easier, going from 2% to 4-ish. You got 60 bps of M&A because we did have M&A in 2024, but it was offset by dis-synergy out of Worldpay. So call it, the 2% didn't include any net M&A contribution, 60 bps next year. And then we called out 150 bps coming from what we call customer excellence, if you like. It's a combination of retention and new sales. Retention numbers in the second half were high 90s. So we have good visibility to retention. That's about 70 of the 150 bps. And then the 80 bps is new sales. So this -- what a new sale is the -- it's stuff that was sold prior to the end of the year and what you need to sell in 2025 that impacts revenue in 2025. So there's a long sales cycle. And of whatever you sell in 2025, only a very small proportion will actually hit the income statement. So if you take the 80 bps, 80% of it was signed as of the end of 2024. So that will have progressed. It's higher than 80% now because we're already 2 months into the year. So the further you go into the year, the more likely it is there's -- so if you want to calculate a risk on the year, you take 80 bps times 20% because it's on side.

Yes. Right to get, right? So okay. All right. So 80 bps, that's the second half of the year contribution. Did I get that right?

It's the step up. No, it's actually a full year.

That's the full year number. Okay. Got it. Got it. Okay. From the sales last year, essentially. Okay. Perfect. All right. Glad we got through all those numbers. So let's just maybe a little bit more qualitatively, I want to zoom out on just the competitive landscape in core banking. You have alluded to it a little bit, you feel really good about the Horizon product, for example. But how have you seen kind of the evolution there if we kind of break down the market into kind of small, medium and large for lack of better terms?

I would have said stability. If you look above $10 billion, banks, that's our sweet spot. The competitive the competitive environment is, I would say, easier because we have a share of that segment in the high 50s. So we've -- the competitive dynamics are pretty stable. Nothing to actually highlight. I think where it's quite different is from -- and I said it before, between $1 billion and $10 billion, we're much more competitive than we were 12 to 18 months ago. And that's where we're head-to-head with Jack Henry and Fiserv in general. And we won double the amount of cores last year compared to the previous year. Most of those incremental wins were in community banks. So I'll leave that the way it is. So I think what I would say in that sector is we're much more competitive than we were 12 months ago. So that implies that we believe we're gaining share in the segment, largely due to a much better product in terms of Horizon and much better focus on client, call it the client experience. We've put more people behind it. We answer -- we kind of answer the questions quicker and the clients are happier.

Classic just handholding and relationship management.

Yes. But as I said, stable. Demand is stable. But I would say, aside from bigger banks, we -- I would say there -- the spend continues to be in digital risk, compliance, fraud, less so on core. But spending is resilient.

Yes. And so just as we think about kind of that move down market into the $1 billion to $10 billion where you've had more success, are those deals more profitable than your market deals?

Honestly, the way we look at it, it doesn't matter that much. We have sufficient scale on all of the platforms, because we are generally a scale player. I think I'd turn it around the other way and say, IBS is, call it a scaled platform for the largest, most commercial-focused banks. And Horizon is community banks. Both products are doing exceptionally well. We're really not interested in going to credit unions or banks below $1 billion. And the reason is not product, it is the service model is too heavy. And then you would be dragging down margins, right? Yes.

Right. Right. Right. Okay. Well, plenty of wood to chop north of $1 billion, right?

Yes, there is.

Okay. I think you briefly mentioned Office of the CFO earlier kind of a newer solution bundle. Just tell us more about that product set, how you're bringing it to market? Does your guidance for 2025 contemplate any material contribution from this initiative?

Yes, there is a contribution already in there. We'll have the natural growth in all of the product suites. I think the goal we've said on past occasions is we've lined up about 100 salespeople against this initiative. So we've reorganized sales in general. We have less layers of management, more quota carriers, and we've increased the amount of specialization. And one of these groups that has been set up is called Office of the CFO. And what we're doing is they're targeting a specific persona in the target company. So they're going and they're selling a bunch of products to the CFO. And think about the first product they would start with, treasury, right? So we have a suite of treasury products that at the high end competes with Kyriba, for example, where we have mid-market offerings as well. We also have risk products. We have ForEx management products. And then you go all the way into accounts payable, accounts receivable. We bought a supply chain financing company. So you can go to the CFO and offer them a suite of products on how does they manage efficiency and cash management across the company and offer them all these offerings at the same time. So call it a new persona within our clients that we will specifically target, the seller suite of products. And we believe our product is best of breed, and we're going with a suite that's unbeatable and the competition doesn't have it.

So this will all fall into the Capital Markets segment or will...

No, it actually will straddle both, will straddle both.

Some of the different pieces.

Yes. But the sales force does not necessarily mirror. The sales force is set up by persona, who you're trying to address in the client.

I see rather than being aligned by product.

But rather than being fully aligned to product. You'll still have VP sales for capital markets. But there's also one for Office of the CFO. There's another one for core banking. There's another one for VP of Cards and Money Movement. So it's set up, call it, by natural sales territory.

Presumably, some of those doors to the CFO are already open to you guys because they're using your core, right?

Yes.

So okay, interesting to watch. So post Worldpay, obviously, FIS is not in the merchant acquiring business anymore, but you still have some exposure to the payments market. You've got the issuer processing business. I mean it's actually about half of your banking segment. So I was just curious to kind of get an update there on how are you getting paid per transaction, right? So -- and it's primarily debit? How are the transaction trends looking in the card business?

They're actually okay. There's nothing really to call out. There was a bit of a negative couple of weeks when bad weather in February, I believe, and then it's since bounced back. So it was kind of just a blip on weather and it's passed us, and it's back to fairly normalized trends.

Okay. Okay. Good to hear. Obviously, a fair bit of macro noise.

Yes, they do get paid by transaction. So...

Yes, you're not worried about ticket size.

We're more exposed to debit, much more exposed to debit. And debit in general, in a recession or in a time of, call it, uncertainty, debit cards are inclined to be used more and they're inclined to be used more frequently.

For sure. For sure. Yes. We've seen that historically. So I want to move over to the Capital Markets segment. Execution has been really good there. And tell us what you think has primarily been driving that? I know you've got a myriad of products and you gave us some good detail on that at the Investor Day last year. But what would you highlight is kind of really driving the strong performance?

Great products. If I had to say one thing, it's just great products. They largely started a modernization journey maybe 3 years back or 4 years back and the products are much more modernized than some of the competitors we're meeting against. They're generally best-in-breed. I would say an unbeatable sales coverage globally. They're -- it's highly exposed to international as well. So international is a big business based out of London or Singapore. So they -- it's a very international business. It's got more price leverage than banking. The TAM, I would say, if you go back to Investor Day, the TAM is 5% to 6%. So this is -- it's a category that's sitting with high underlying growth rates and the great set of products. And generally, if you got great products, you'll outpace the TAM.

And so if we think about the growth rates for that business, so you're guiding Capital Markets 6.5%, 7%, right, for 2025. I think the longer-term target from the Investor Day is 7.5%, 8.5%, so a point-ish of difference. What are the accelerants that get us there? I mean is it just some incremental acquisition activity or...

Yes, it's mostly M&A. We were a little slower in 2024 on M&A. We only spent $600 million out of the $1 billion we have thought. So you don't get the carryover impact of that. And then secondly, I think the guide includes about 140 bps of M&A, and I think we range that 150 to 200 kind of thing. So it's probably mostly -- it's mostly -- I would say there's 2 factors in Capital Markets, it's lower M&A and some element of conservatism. We came in quite strongly at the end of the year on licenses, and we didn't change our license forecast for '25, so the growth rate has shifted down slightly.

Okay. Right. Maybe a pull forward or whatever it was.

Well, it wasn't even a pull forward, we saw strength as well in the first quarter on license. So the business is really, really strong. Yes. I think you'll see, if you look at the first quarter, we're actually guiding, I think, the 7% to 8% growth in the first quarter. So opposite, the Banking, actually Capital Markets is coming out stronger in the first quarter than the full year growth. So it would imply probably -- it's a fairly conservative full year goal.

Okay. Understood. So I want to talk about diversification into some of the nontraditional end markets within the Capital Markets business and -- because at the Investor Day, I think you highlighted that about 30% of the revenue is coming from some of those nontraditional areas. So maybe give us some examples of those markets. And then how fast is that 30% piece growing?

Yes. I'll take the last piece first. It's growing double digit. So this 30% is growing double digit. And we see it as -- you think of that as an insurance company, corporates, but it's also asset leasing and lending. Those type of clients. And I would say we're less -- overall, the areas are less penetrated, more fragmented. And it's one of the reasons why we've set up Office of the CFO. If you can think about -- one of our targets is the CFO of corporates, and the door to get in is with treasury systems. And our treasury systems sit probably quite a bit above where SAP is in the market and much more head to head with Kyriba. So you're going in there with a highly sophisticated treasury product, a suite of risk products, and they're going to offer accounts payable, accounts receivable, supplier financing, commodity trading products, if needed. Companies like Cargo, for example. Those kind of companies are way more sophisticated in the usage of capital market type products. That's why it's a big vertical. And I think our treasury -- I get this wrong. I think we said at our Investor Day, we have 1,300 installed treasury systems. So we're not a small player in treasury. So we're a fairly big player, especially at the high end.

Yes. Right. And you can cross sell into that base.

Cross-sell. Then we find asset leasing is very dynamic. The move to electric cars has changed the model. Increasingly, the software is much more sophisticated. So there's many reasons why there's double-digit growth here in these verticals.

So let's talk about sales. You alluded to it earlier, so in 2024 total company, new sales, ACV, if you will, up 9%. I think you just mentioned earlier that Banking was actually a little bit better than that, right, low double digits. So how should we be thinking about the potential growth rates in sales for 2025, what have you built into the plan?

Well, you shouldn't be because we're not going to give you a target. We want to continue to make -- I would highlight one thing about '24. We also said the recurring sales were up probably 25% plus across both of the businesses. There's a shift within the business. We're actually okay if the ACV is growing even low to mid-single digit, but we're really focused on the recurring sales, because that is the long-term life blood of the company. It's durable revenue. It's repeating every quarter in, quarter out. So I would say, looking into 2025, what have we done recently or what are we doing that we expect ACV to be positive outcome again. I talked about the specialization of the sales force, Office of the CFO is one example. The other example is -- and this is over the last 6 months, we realize that the general sales force in banking was selling too many products. So now that we hired a VP sales actually from one of the competition responsible for cards and money movement. So call it that big part of the business, which it's a $2 billion business, right? And then we've put dedicated salespeople, mostly hired from the outside under this position. So we have a dedicated cards and money movement of about 60 people, which we didn't have before. And as we do this, you're obviously shifting resources between the various categories. So more specialization, much more focus on faster-growing categories, hiring more from the outside to get this, I would call, a scrappiness that comes with current money movement versus, call it, longer-term contracting that is more banking. So there's a lot of changes, and we changed the incentive schemes in the first quarter in '25 fiscal year, generating more focus on recurring versus professional services.

Okay. So the plans are just kicking in now in this...

They're kicking in for this year. So I think you'll see a change in the composition. The change in the composition of ACV is much more important to us than the absolute growth number. So we want to sell -- we're giving incremental incentives to the sales force to sign a recurring versus a professional services.

Right, right, which makes sense. Okay. And then you have the cross-selling initiative, Amplify, as you call it. I think there was a 10% boost in sales there for Amplify. So any specific call-outs in terms of what drove that? Or are there kind of isolated areas of particular focus for Amplify in 2025?

Not really. I think it's -- the sales force has it built into their goals at the start of the year. So it's not -- it is -- there are a set of goals against it. Examples -- like the examples can be quite small or quite big. But we call out some now and then on the call. So in the most recent quarter, a large regional bank who buys a lot of banking products for the first time bought a product from Capital Markets to manage transfer agency. That's one example. So that's a -- it's a clear cross-sell that we probably wouldn't have done if we didn't have the banking client. Another one was another client in the quarter took a commercial lending product from Capital Markets. So there is cross-sell. It just needs to be -- it's kind of a matrix like this. You got to do cross-sell, but the specialization is also important. Sales guy cannot go in and sell a 100 products, it's too many. They have to be focused on the segment they're expert in.

Yes. Yes. Okay. And so let's shift over to margins because that was an important topic at the Investor Day, and I know you've been very focused on it. You guys did a really good job on margins last year. You're talking about 40 to 45 basis points this year. What's going to drive that? And then maybe you can tack on a little bit of mention of what drives sort of the incremental acceleration in the rate of margin expansion in 2026 per the Investor Day targets that are out there?

Yes. Yes you said that last year was a great year for margins. It didn't sink in on the call for many investors. We were quite proud of it, 64 bps expansion versus a goal at the beginning of the year, I think, was 20 to 40 bps. So we took out a lot of costs during the year. We still have a lot of cost to take out over the next 2 years to offset TSA. So you can think about it cost reduction of, I think we said 170 bps roughly a year, which is a large number. Offsetting -- exiting TSAs at 95 bps and, call it, the cost of doing business, which is inflation and growth investments. So we have -- on the 40 to 45 bps of this year, I would say the degree of certainty on the cost reduction is exceptionally high, right? But many of the initiatives were rolled out in the fourth quarter. So we're not going -- we're not waiting for something to happen and roll out in the second half of this year. Most -- I would say, 85% of what needed to be done was rolled out before the start of the year. So we're getting savings early in the year. And I think longer term, I think where you're going to see the model changes, once you got the TSAs behind us, you're going to see pure, call it, operating leverage and favorable mix drive the equation. There will always be some cost reduction to offset inflation. But we said that the natural leverage of the business is, I think, 70 to 90 bps, right? So if I was to do a trajectory, I'd say, 40 to 45 bps in '25, 60 kind of range in 2026, and well above -- probably above 60 in '27. It will be a continued escalation. As the revenue throws off, because let's face it, if we're -- if you work out the math and we're doing -- if we deliver the guided mid-single digit on total company and you manage your overheads reasonably tightly, you're going to throw off leverage. That's it. That's the business we're in. It's highly scaled, highly levered. We're not going down market into low-margin products. Quite the opposite. We're continuing to drive scale in all of our platforms. Less platforms, more scale, more operating mix favorabilities and tightly manage overheads as part of the business, the business model.

Yes. So it sounds like a lot of it is really in your control and you're just benefiting from the natural economy.

Yes, very high level of visibility on, especially on the cost reduction, really, really high.

Excellent. Excellent. Let's talk about free cash flow. I know you mentioned it as a priority of yours for 2025, and there's some moving parts here. I wanted to start with the acquisition and integration-related payments. I know those get added back in the adjusted free cash flow calculation. If I'm not mistaken, that was about $475 million last year. How much of that is related to Worldpay separation versus other factors? And any way to think about how that $475 million may trend this year or next year?

Yes. We get the question a lot. I was surprised when I joined the company, it's the first time I've ever seen the free cash flow adjusted for onetime items. And when I wanted to change it, I was told that's what the financial services sector does. But either $475 million, we said we'll go down to $415 million to $425 million, call it, a 12% reduction cash basis. The accrued basis reduction is much higher because we're starting to step out of Worldpay. So on a crude basis, the P&L accruals will drop by about 30%. So what that means is the reduction on cash basis in '26 will be well of 15%, right? So you'll continue to -- the decline will start accelerating in '26 and will be quite dramatic in '27. There's 2 big -- 2 really big drivers, one is future forward and the other one is Worldpay. And you get kind of applauded great you sold Worldpay, but then people don't like the onetime costs to actually get rid of it, right?. So there's huge teams working on transferring the systems from our company to Worldpay. Huge teams.

Is that happening on schedule so far?

It's -- they're actually accelerated a bit. So within our guide, they're exiting the TSAs quicker to the tune of maybe $20 million. So we've basically taken out more cost. But it's Worldpay costs and that will trend down future forward as of the end of the year. As a cost program, will start trending down. And we'll have some residual cost reduction into 2026. Basically, the streamlined corporate functions, continue to streamline them. So our commitment is we're going to dramatically reduce cash restructuring costs over the next couple of years. But we got to get this Worldpay stuff behind us first.

Right. Yes. Okay. We'll be looking at smaller add-backs basically.

Much smaller add-backs longer term.

With each successive year, essentially. Okay. Good, good. CapEx, I know a couple of quarters you guys started taking about the fact that there were some pretty big price hikes from some of your IT vendors. So I think you're running about 9% of revenue now and you're expecting that to persist this year. Target range is a little bit less than that, 7% to 8%. So is 7% to 8% achievable in 2026? Does it take longer?

Well, I'd say the 9% this year. Take it a different way, it's got about 40 bps in there for pressure on pricing coming from those 2 suppliers. We will -- we are developing plans to exit the suppliers or at least have a credible back up. So the next time we negotiate, the power is in our hands, not in theirs. But that's going to take 2 or 3 years to wind through. The other one is we are ramping up infrastructure and capacity investments. And honestly, the way I look at it is I'd much prefer to be spending more on CapEx to drive future revenue, right? So it's either -- so rather -- be less of a problem, I got to deliver total cash and then I got to give cash back to shareholders. That's my different problem. So with all of this noise on free cash flow, I do want to point out one thing, it's kind of frustrating. We still -- like we committed 77% at the end of the year versus 85%, right, the cash conversion. We still returned $4.8 billion to investors, which is exactly what we said 4 months previously, because with the benefit of hindsight, I probably spent too much time on capital allocation and optimizing tax rate, now I'm shifting my guns to cash flow, and we will get results quickly. Where I've intervened aggressively and moved cash flow, call it, the cash [indiscernible], it wasn't really a [indiscernible], I thought they were in out of treasury and into strategic finance. We have a SWAT team ongoing. We're taking this incredibly seriously, improve forecasting capability, extend terms to suppliers more aggressively than was done in the past. And then actually, just ensure appropriate enforcement and governance over client terms. There were some extended terms given in 2024. The good news is we collected in 2025, but that should never have happened. Finance was getting involved too late in the process and commitments were already taken with customers. So 2025 as -- and I'll get back to your question on CapEx. CapEx at 9%, a different outlook on net working capital. And some of this is -- 2024 was an unusually bad year for net working capital. If we just eliminate the extended terms, we'll have a decent free cash flow conversion year in 2025. Well, we're putting in place a significant number of actions to make sure we can deliver the consistency that investors expect. And even with the 2025 guide, we're still giving $1.2 billion of buybacks, $800 million dividends. So a total return of $2 billion in the year, which is actually $400 million higher than what we said at Investor Day. So we're not shy on giving the ship money back. There's other ways to get cash, repatriating cash from international, changing your treasury structures. It's what's called as trapped cash. We released about $500 million to $800 million of -- closer to $800 million of trapped cash over the last 18 months, which is cash that was offshore and it was brought back. The problem is, can you bring it back cash tax-free? And we've brought all the cash back tax-free, and that's what's allowed us to deliver on commitments to shareholders.

Is there still more of that you can do or...

No. We're kind of there, but that's why we could continue to deliver on the cash returns to shareholders.

Right. So on the working capital side, I guess, are the opportunities more on the payable side or the receivables side?

Both, I would say. We don't intend to go out and shorten terms to clients, we actually just intend to enforce what we have. Don't give extended terms when you don't have to, ensure a better trade-off between cash and pricing and insert finance earlier process. So receivables is the absence of negatives, and payables will be driving extension of payables. On average, 30 to 45 days, which is outrageous. We will be over a 2-year period mandating 90-day terms.

Okay. So that make a big difference.

We've already changed 3 of the 4 consulting companies that work for us.

Is that right?

Yes. So no, no, we'll be dogmatic if -- the instructions we've given if you don't agree to 90 days, you're not getting RFPs. You won't get them, you're not a strategic supplier.

Right. So when you boil all this down, free cash flow conversion, I think the guide is 82% to 85% this year. The longer-term target, I think still stands at...

It still stands at 90%. I think we, capital in 2026, the goal is to get to 90% plus. And I'd say capital will be in or around 8%, kind of 8%.

Okay. Okay. Understood. Understood. I know we're running out of time, but just tell us -- I'm curious just on Worldpay. Just remind us what are the options at least over the long term to monetize potentially the 45% stake?

I think Worldpay will always be almost like a sales channel or a partner into perpetuity. That's one piece of it. The other piece is we do not want to be a long-term holder of a 45% stake in Worldpay. And we said it on multiple occasions, and it's unchanged, we will monetize when GTCR monetizes. That's the private equity company. And when they monetize, we will sell at the same time. Unfortunately, an IPO would take multi years to free up your stake, because you'll probably have a lock in for a couple of years. But it's not a long-term strategic asset for the company, and that's consistent with what we said previously. They're doing really well. We're doing really well and it's worth a lot more than it was when we did the first...

Revenue growth has really turned around there.

And revenue growth has turned around. There's a great management team in their. They're performing strongly. And it just shows the benefit of good management who knows the sector and a strong focus on the business. Yes.

All right. We'll end on that happy note. James, thank you very much. We appreciate it. Thank you for the time.

Thanks, Jason. Thank you.