Tien-tsin Huang

Tien-tsin Huang asked if Paychex was considering changing its pricing and packaging of bundles, given the observed smaller deal sizes, to potentially sell more at a lower price point. He also inquired about the PEO's better performance, specifically if insurance rates were a bigger selling point and if there was an opportunity to lean harder on the PEO given the current macro situation and clients valuing the insurance offering more.

Answer

CEO John Gibson stated that Paychex already has a comprehensive arsenal of bundles and options across SurePayroll, Paychex Flex, and Paycor to position clients effectively, and he views their fixed-fee pricing model as an advantage. While strategic reviews of pricing are ongoing, he feels well-equipped for the current market. Regarding PEO, Mr. Gibson confirmed its strong performance across demand and retention, noting that healthcare inflation is a real issue for clients. He acknowledged that Paychex's PEO, while not a 'cheap insurance' proposition, might benefit from high rate increases seen elsewhere in the market, and clients are not dropping healthcare at the same rate as last year.

Tien-tsin Huang asked about potential changes to Paychex's pricing and packaging of bundles given the smaller deal size commentary, and then inquired if the PEO's better performance was driven by insurance rates becoming a bigger selling point in the current macro environment.

Answer

CEO John Gibson stated that Paychex has a comprehensive arsenal of bundles across SurePayroll, Paychex Flex, and Paycor, and feels their current pricing, with fixed-fee components, is an advantage. He noted ongoing strategic review of pricing but believes they have offerings for everyone. Regarding PEO, Gibson confirmed its strong performance across demand and retention, despite insurance agency headwinds. He acknowledged that healthcare inflation is a real issue, and while Paychex isn't a 'cheap insurance' provider, they might benefit from high rate increases elsewhere, with clients not dropping healthcare at the same rate as last year.

Tien-Tsin Huang asked for clarification on the drivers behind the 50 basis point increase in EPS guidance and inquired about any specific call-outs regarding retention, particularly concerning PEO's record performance, Paycor's in-line results, and any continuation of higher bankruptcies or mergers at the low end.

Answer

CFO Bob Schrader attributed the EPS increase to a strong Q1 performance, higher confidence in both cost and revenue synergies, and increased confidence in the newly acquired asset. President and CEO John Gibson added that strategic decisions to quickly address integration disruption and exceeding original cost synergy commitments contributed to the confidence. Mr. Gibson noted that payroll client and revenue retention remain strong at pre-pandemic levels, with concentrated losses in small businesses primarily due to bankruptcies, which are elevated but still within pre-pandemic ranges. PEO worksite employee retention is maintaining record levels, indicating strong value proposition resonance.

Tien-Tsin Huang asked for the drivers behind the 50 basis point increase in EPS guidance and sought an update on retention, specifically regarding PEO and Paycor, and any new trends beyond higher bankruptcies and mergers at the low end.

Answer

CFO Bob Schrader attributed the EPS increase to strong Q1 performance and increased confidence in cost and revenue synergies, moving past initial conservatism. President and CEO John Gibson reported strong payroll, client, and revenue retention at pre-pandemic levels. He noted continued concentrated losses in small businesses due to bankruptcies, which remain at pre-pandemic levels, and highlighted record PEO worksite employee retention, indicating strong value proposition resonance despite market uncertainties.

Tien-tsin Huang sought clarification on the bottom-line impact of sales disruption and increased micro-business bankruptcies, and also asked for the source of the newly raised cost synergy target.

Answer

President & CEO John Gibson clarified that these impacts were small and that overall client retention still improved year-over-year. CFO Bob Schrader explained the higher synergy target is due to realizing savings sooner than expected and identifying new opportunities, which will be balanced with reinvestments into the business.

Tien-tsin Huang of JPMorgan Chase & Co. sought clarification on the impact of sales disruption and higher bankruptcies on the quarter and asked for the source of the increased cost synergy target.

Answer

President & CEO John Gibson clarified that the impact from bankruptcies was small, concentrated at the micro-end of the market, and did not prevent an overall year-over-year improvement in client retention. CFO Bob Schrader explained the higher cost synergy forecast resulted from realizing efficiencies sooner than expected across previously identified areas, not from a new source, and noted they are balancing this with reinvestments for growth.

Tien-Tsin Huang inquired if the company's thinking on sales headcount investment has changed with the Paycor deal and strong productivity, and asked about productivity drivers beyond AI.

Answer

CEO John Gibson confirmed the plan to expand sales headcount post-acquisition remains, and the key decision now is whether to invest even more aggressively given the higher cost synergy visibility. Executive Robert Schrader noted that productivity gains also stem from a focus on cost structure ahead of the ERTC headwind, back-office digital transformation, and increased client adoption of self-service technology, all of which provide a runway for future investment and margin expansion.

Tien-Tsin Huang asked if the Florida PEO data provides broader insights into SMB health demand and inquired about the current HCM pricing and discounting environment.

Answer

CEO John Gibson and EVP Robert Schrader clarified the Florida trend reflects cost-control measures, such as employees downgrading plans, rather than a drop in demand, as overall insurance attachment grew. Gibson described the pricing environment as competitive but rational, stating Paychex maintains its premium value proposition and will remain a disciplined grower.

Tien-Tsin Huang asked whether new products are expected to impact unit growth or revenue per client more, and inquired about the company's strategy for helping clients access funding.

Answer

CEO John Gibson explained the new product strategy aims to achieve both: attract new clients and provide upsell opportunities to improve retention and revenue. Regarding funding, Gibson described a vision of creating a fintech ecosystem within the Paychex platform, partnering with providers to offer clients pre-qualified, accessible funding options directly within their workflow, though he noted this is a future vision.

Tien-tsin Huang from JPMorgan Chase & Co. inquired about the perceived shift in the consulting industry's role in AI, its drivers, and the impact on business activity, also asking about the distinct nature and potential revenue contribution of new AI partnerships.

Answer

Julie Sweet, Chair and CEO of Accenture, confirmed the shift, attributing it to the foundational work required for enterprise AI adoption, emphasizing the need for security, process optimization, and data readiness. She highlighted Accenture's role in driving both growth and cost efficiency through large transformational deals and ecosystem partnerships. Sweet also noted that AI partnerships leverage Accenture's talent advantage and ability to integrate new technologies with existing client ecosystems.

Tien-tsin Huang asked about the perceived shift in the consulting industry's role in AI, inquiring if Accenture agrees, the drivers behind this change, and any resulting impact on business activity. He also questioned how new AI partnerships, such as with Anthropic, OpenAI, and Snowflake, differ from other tech ecosystem partnerships regarding time to productivity, investment in personnel certification, and their potential to reach the top 10 partner list.

Answer

Julie Sweet, Chair and Chief Executive Officer, confirmed the shift, explaining that enterprise AI differs significantly from consumer AI, requiring foundational work in security, processes, data, and a modern Digital Core. She emphasized that clients are turning to Accenture to achieve real value, driving both growth and cost agendas, and highlighted the critical role of ecosystem partners. Regarding AI partnerships, Ms. Sweet underscored Accenture's talent advantage in rapidly learning and scaling new technologies, noting that these partnerships are driven by client demand to integrate new AI solutions with existing ecosystems, contributing to market expansion.

Tien-Tsin Huang (JPMorgan Chase & Co.) inquired about Accenture's revenue growth visibility for the upcoming fiscal year, considering the large deal backlog, pipeline strength, and assumptions regarding discretionary spending amidst the current economic backdrop. He also asked for an update on AI-driven productivity gains, potential deflationary effects, and how these might impact Accenture's services, both positively and negatively.

Answer

Chief Financial Officer Angie Park stated that strong FY2025 bookings and a solid pipeline, particularly for large transformation deals, provide good positioning for FY2026. She noted that the guidance range assumes no change in discretionary spend at the top end, allowing for deterioration at the bottom. Chair & CEO Julie Sweet clarified that Accenture views AI as expansionary, not deflationary, similar to past tech evolutions. She explained that efficiency gains from AI are reinvested into new client priorities, freeing up budget for further technology initiatives, which ultimately expands Accenture's business. She emphasized that AI strategies must balance both growth and productivity.

Tien-Tsin Huang with JPMorgan Chase & Co. inquired about Accenture's revenue growth visibility for FY2026, considering backlog, pipeline strength, and assumptions regarding discretionary spending in the current economic climate. He also asked for insights into AI-driven productivity gains, potential deflationary effects, and their impact on Accenture's services.

Answer

CFO Angie Park highlighted strong FY2025 bookings and a solid pipeline for large transformation deals, noting that the guidance's top end assumes no change in discretionary spend, while the bottom end allows for deterioration. CEO Julie Sweet further elaborated on AI's expansionary impact, emphasizing that efficiency gains are reinvested into new client priorities and growth initiatives, rather than leading to deflationary effects, similar to past technology evolutions.

Tien-Tsin Huang inquired about Accenture's revenue growth visibility for FY2026, considering its large backlog, pipeline strength, and the impact of discretionary spending amid the current economic backdrop. He also asked for Julie Sweet's latest insights on AI-driven productivity gains, potential deflationary effects, and their impact on Accenture's services.

Answer

CFO Angie Park highlighted strong FY2025 bookings of $80.6 billion and a solid pipeline, indicating robust demand for large transformation deals, with FY2026 revenue guidance of 2-5% (3-6% excluding AFS). CEO Julie Sweet clarified that AI is expansionary, not deflationary, as efficiency savings are reinvested by clients into new priorities, enabling Accenture to capture new opportunities and drive growth. She emphasized that AI strategies must balance both growth and productivity.

Tien-tsin Huang of JPMorgan Chase & Co. inquired about leadership changes and talent retention in light of recent departures and the new reorganization. He also asked about the apparent contradiction between management's commentary on 'heightened uncertainty' and the company's strong revenue performance and guidance.

Answer

CEO Julie Sweet explained that leadership changes and attrition are within normal ranges, noting Accenture has a deep bench of talent. She attributed the company's strong performance despite macro uncertainty to the resilience of its business model, which has successfully pivoted to focus on large-scale reinvention projects that clients prioritize, a strategy in place since 2022.

Tien-tsin Huang asked about talent retention amid leadership changes and the recent reorganization, and questioned how "heightened uncertainty" is impacting guidance when revenues continue to beat expectations.

Answer

CEO Julie Sweet stated that while attrition ticked up slightly, it remains within normal ranges, and leader departures are expected as they are in high demand. She explained that the company's resilience comes from its diversified model and ability to pivot quickly to client needs for large-scale reinvention, which was anticipated and built into their strategy, allowing them to perform well despite lower discretionary spending.

Tien-Tsin Huang inquired about the drivers for the revised margin outlook, including cost pressures and pricing, and asked for a framework to understand the potential revenue at risk in the U.S. Federal business.

Answer

CFO Angie Park attributed the Q2 gross margin decrease to contractor costs and prior-year comparisons but reiterated confidence in the full-year operating margin expansion of 10-20 basis points, citing stable pricing and efficiency efforts. CEO Julie T. Sweet added that the market remains competitive and stated the company's guidance range reflects their best view of the potential impact on the federal business.

Tien-Tsin Huang inquired about the drivers behind the Q1 revenue outperformance, given management's commentary that the demand environment remains unchanged. He also asked about Accenture's strategy for its U.S. federal government business amid a new administration and a focus on efficiency.

Answer

CEO Julie T. Sweet attributed the strong results to the successful execution of their strategy to pivot towards larger, 'reinvention' deals over $100 million, which positioned them for growth in FY25. She clarified the market environment itself has not improved. Regarding the U.S. federal business, Sweet expressed excitement, stating Accenture is well-positioned to help the government drive efficiency, enhance security, and improve citizen services by leveraging commercial solutions, cloud, data, and AI.

Tien-Tsin Huang inquired about how Accenture's strong bookings translate into revenue visibility, specifically asking about the relationship between Annual Contract Value (ACV) and Total Contract Value (TCV), and also questioned the company's M&A appetite for the upcoming fiscal year.

Answer

Incoming CFO Angie Park addressed the guidance, noting that the pivot to large transformation deals provides a stronger revenue base than the prior year. CEO Julie T. Sweet added that while not commenting on ACV/TCV, the 19 additional mega-deals (over $100M) this year provide confidence. Regarding M&A, Sweet stated the plan is for approximately $3 billion in capital deployment, a step down from last year and likely back-end loaded.

Tien-Tsin Huang from JPMorgan inquired about Chime's member growth, competitive landscape, and the impact of widening the funnel on customer acquisition cost (CAC).

Answer

Chris Britt, Co-founder and CEO, highlighted Chime's strong momentum as the top destination for direct deposit switches, reaffirmed by J.D. Power. He noted that organic and referral channels drive over 50% of new active member growth. Matt Newcomb, CFO, added that early engagement initiatives led to a 10% year-over-year reduction in CAC for the third consecutive quarter, improving transaction profit payback to five to six quarters from seven.

Asked for an update on the strategy of widening the customer acquisition funnel and its early results, and followed up on the drivers and sustainability of MyPay's strong transaction margin performance.

Answer

The company confirmed strong top-of-funnel growth with lower acquisition costs, driven by successful 'day one' initiatives that make the service easier to use initially. This strategy is increasing activation and funding rates. For MyPay, the improved margin is due to better-than-planned progress on loss rates (down to 140 bps from 160 bps), driven by natural cohort seasoning and improved underwriting. This progress is a key reason for the raised EBITDA guidance.

Tien-tsin Huang asked for an update on Chime's strategy to 'widen the funnel' by lifting initial restrictions for new users and inquired about the drivers behind the impressive transaction margin improvement for the MyPay product.

Answer

CEO Chris Britt explained that 'day one initiatives' like easier funding and early feature access are successfully increasing new member activation and engagement. CFO Matt Newcomb added that MyPay's transaction margin tripled quarter-over-quarter due to faster-than-planned improvements in loss rates, which fell from over 160 bps to approximately 140 bps, driven by cohort seasoning and better underwriting. This progress is a key factor in the company's raised EBITDA guidance.

Tien-tsin Huang asked about Mastercard's build versus buy strategy, the impact of recent 'build' projects (Cloud platform, Commerce Media Network) on near-term investment and needle-moving, and the company's appetite for crypto infrastructure assets versus services assets.

Answer

CEO Michael Miebach affirmed Mastercard's balanced approach to organic innovation ('build') and strategic acquisitions ('buy'). He described Commerce Media as a 'pretty big bet' with unique positioning and market interest, alongside other internal innovations like On Demand Decisioning. He declined to comment on market rumors regarding crypto infrastructure acquisitions, reiterating that M&A is strategy-led.

Tien-tsin Huang asked about Mastercard's build versus buy strategy for its Value Added Services portfolio, the impact of recent organic build projects like the Cloud platform and Commerce Media Network, and commented on market reports regarding interest in crypto infrastructure versus services assets.

Answer

CEO Michael Miebach stated that Mastercard has a strong track record of organic innovation ("build") and strategically uses acquisitions ("buy"). He views Commerce Media as a "pretty big bet" and a unique position, alongside other internal innovations like On Demand Decisioning, which receive preferential funding. He declined to comment on market rumors regarding crypto infrastructure, reiterating that the company does not comment on such reports.

Tien-tsin Huang sought confirmation that the quarterly revenue upside was driven by FX volatility and services, and requested an update on the performance and integration of the recent Recorded Future acquisition.

Answer

CFO Sachin Mehra confirmed that the Q2 revenue beat was primarily driven by higher-than-expected FX volatility, alongside solid underlying performance across the business. CEO Michael Miebach described Recorded Future as a key strategic asset, enhancing their security offerings by combining its threat intelligence with Mastercard's data to predict cyber threats. He highlighted the synergies of cross-selling solutions across both companies' client bases.

Tien-Tsin Huang of JPMorgan Chase & Co. requested more detail on the cadence of operating expenses, the split between discretionary and non-discretionary spending, and any one-time costs from the Recorded Future integration.

Answer

CFO Sachin Mehra clarified that Q1 operating expenses were lower than anticipated due to the timing of spending, particularly in advertising and marketing. He expects expenses to ramp up through the year to fund investments in secular growth, infrastructure, and services. He reiterated that the acquisition impact includes run-rate expenses, amortization, and one-time integration costs, consistent with prior guidance.

Tien-Tsin Huang asked about the 'Mastercard 2030' initiative to eliminate manual card entry in Europe, its potential to drive tokenization, and the rationale for launching in Europe first.

Answer

CEO Michael Miebach confirmed the goal is to replace manual entry with biometrics, viewing Europe as the ideal starting point due to its mature regulatory focus on security and user experience (PSD1 to PSD3). He stated that Mastercard's significant share and cross-border partnerships in the region are critical for success, positioning Europe as a reference market for a broader global rollout of the initiative.

Tien-Tsin Huang of JPMorgan Chase & Co. requested a detailed overview of Mastercard's tokenization strategy, including its penetration, growth, and benefits to the ecosystem and the company's P&L.

Answer

Chief Executive Officer Michael Miebach described tokenization as a core, cutting-edge technology investment that enhances security and boosts merchant conversion rates. He stated that Mastercard charges for this value-added service, with revenue opportunities directly linked to the upside customers experience, such as lower fraud and higher sales.

Tien‑Tsin Huang inquired about the 8% increase in revenue per employee and 10% increase in operating income per employee, asking if this lift is sustainable or structural due to AI returns. He followed up by asking about near-term gross margin performance, considering expected deal ramps and mega deals.

Answer

CEO Ravi Singisetti stated that the revenue and margin per person metrics indicate Cognizant's evolution into an AI builder company, driven by increased fixed-price managed services, higher productivity (30% AI-assisted code), and a shift towards outcome-based models. CFO Jatin Dalal noted that gross margins have largely been maintained organically, with year-over-year reduction primarily due to Belkin's consolidation, highlighting AI-led productivity, pyramid improvement, and utilization (steady at 85%) as operational levers.

Tien‑Tsin Huang inquired about the 8% increase in revenue per employee and 10% increase in operating income per employee, asking if this lift is sustainable or structural due to AI returns. He followed up by asking about near-term gross margin performance, considering expected deal ramps and mega deals.

Answer

CEO Ravi Singisetti stated that the revenue and margin per person metrics indicate Cognizant's evolution into an AI builder company, driven by increased fixed-price managed services, higher productivity (30% AI-assisted code), and a shift towards outcome-based models. CFO Jatin Dalal noted that gross margins have largely been maintained organically, with year-over-year reduction primarily due to Belkin's consolidation, highlighting AI-led productivity, pyramid improvement, and utilization (steady at 85%) as operational levers.

Tien-tsin Huang of JPMorgan Chase & Co. inquired about the drivers behind the strong Q2 bookings, the mix of new versus renewal deals, the trend of AI-driven early renewals, and the outlook for the bookings pipeline. He also asked about the gross margin outlook for the second half of the year.

Answer

CEO Ravi Kumar S described the bookings as a healthy mix of renewals and new business, driven by both productivity and innovation-led deals, noting that the annual contract value (ACV) is also increasing. CFO Jatin Dalal added that the pipeline remains strong and that while large deal ramps and hiring create margin pressure, this will be managed through resource optimization and operational rigor, noting utilization is already up year-over-year.

Tien-Tsin Huang asked about the quality of bookings, questioning if cost-cutting projects are replacing growth initiatives, and inquired about the pacing of deal awards, pricing, and margins on large deals. He also followed up on the potential for further improvement in employee utilization.

Answer

CEO Ravi Kumar S explained that Cognizant is leading in AI-led productivity deals, which it actively originates. He noted that discretionary spending is returning in Financial Services, contributing to its 6.5% YoY organic growth. He highlighted a strong large-deal pipeline, including a recent mega-deal and others pending in Q2. CFO Jatin Dalal added that winning large deals depends on solution strength and GenAI-led productivity, which can impact initial margins but are managed as a portfolio. Regarding utilization, Ravi Kumar S noted the significant jump from 82% to 85% YoY and plans to hire more fresh graduates to optimize the talent pyramid, balancing this with AI productivity gains.

Tien-Tsin Huang asked for an expansion on the Global Capability Centers (GCCs) theme and its implications for the insourcing vs. outsourcing balance. He also asked for a characterization of client budget decision-making amid current macro news flow.

Answer

CEO Ravi Kumar S explained that GCCs represent a major opportunity, allowing Cognizant to act as a service provider, help clients build and operate their own centers, and offer micro-services, thereby expanding its addressable market into client operations and engineering. Regarding budgets, he stated that technology is crucial for both growth and efficiency, positioning Cognizant to win in any environment. He concluded that budget visibility is significantly better than last year, even if not fully recovered.

Tien-Tsin Huang questioned Cognizant's confidence in replenishing its large deal pipeline and asked about the progress in diversifying into under-indexed industry verticals, noting that Health Sciences is now the largest segment.

Answer

CEO Ravi Kumar S expressed high confidence in sustaining large deal momentum by expanding into cost-efficiency deals, growing geographically beyond the Americas, and leveraging a broader services landscape including engineering and infrastructure. He highlighted the strength in Health Sciences and Financial Services, the new opportunity in manufacturing via the Belcan acquisition, and acknowledged that more progress is needed in verticals like energy.

Tien-tsin Huang asked about the tracking of PEO Worksite Employees (WSEs), ADP's performance benchmarked against peers, and impressions of ADP's market share. He also inquired if Fiserv's recent cultural shift and restructuring might alter ADP's partnership targets.

Answer

Maria Black (President and CEO) expressed confidence in PEO momentum, noting continued bookings growth (though slightly moderated from Q4) and slight improvements in retention driving WSE growth. She believes ADP holds a "winning hand structurally" and has a "winning leadership team." Peter Hadley (CFO) added that Q1 WSEs were slightly ahead of expectations, with more booking success anticipated. Maria Black reiterated ADP's strong commitment to the Fiserv partnership, calling embedded payroll a "game changer" for small businesses and CPAs. She emphasized that it's still "early innings" with the "bulk of the opportunity... in front of us," and commitment remains strong despite Fiserv's internal changes.

Tien-tsin Huang asked about the tracking of PEO Worksite Employees (WSEs) and ADP's performance benchmarked against peers. He also inquired if Maria Black's presence at the Fiserv Customer Conference indicated any potential alterations to partnership targets, given Fiserv's ongoing restructuring.

Answer

President and CEO Maria Black expressed strong positive momentum in PEO, with continued bookings growth and improving retention driving WSE growth, believing ADP has a 'winning hand.' CFO Peter Hadley added that Q1 WSEs were slightly ahead of expectations. Maria Black affirmed ADP's strong commitment to the Fiserv partnership and sales collaboration, highlighting the 'game changer' potential of embedding RUN payroll into platforms like Clover. She noted that while it's still 'early innings,' there is no lack of commitment despite Fiserv's restructuring.

Tien-tsin Huang asked about the drivers of the fiscal 2026 bookings acceleration, specifically the mix between sales headcount investments and new product sell-through, and whether the guided retention decline is due to voluntary or involuntary attrition.

Answer

President & CEO Maria Black explained that bookings growth will be driven by increased seller tenure and productivity, with headcount investments remaining in the mid-single digits, similar to prior years. CFO Peter Hadley added that the prudent retention guidance assumes a potential increase in macro-driven involuntary attrition (client out-of-business), as voluntary attrition indicators like client satisfaction remain very strong.

Tien-Tsin Huang questioned the factors behind the deceleration in Employer Services (ES) revenue in Q3 and asked for details on the size and strategic scope of the PEI acquisition in Mexico.

Answer

CFO Don McGuire explained the Q3 ES softness was anticipated due to calendar effects and FX, but results were better than expected, with a reacceleration anticipated in Q4. He noted the PEI acquisition was small (sub-$10M) and primarily focused on the domestic Mexican market. CEO Maria Black added that it supports their broader focus on Latin American expansion.

Tien-Tsin Huang asked about the strong sales pipeline, questioning if deal awards were timely and if deal sizes were increasing. He also sought Maria Black's perspective on recent industry consolidation and whether it validates ADP's multi-segment business model.

Answer

CEO Maria Black responded that deal sizes and closing times are relatively consistent with pre-pandemic norms. On consolidation, she agreed it validates ADP's broad-based strategy and expressed confidence in their competitive position across all segments with platforms like RUN, Workforce Now, and the new Lyric/WorkForce Software combination, suggesting the disruption could even be an opportunity.

Tien-Tsin Huang requested elaboration on the strong sales pipeline and whether cross-selling to WorkForce Software's logo base was a key factor in the acquisition.

Answer

CEO Maria Black confirmed that sales pipelines remain strong and consistent with the end of Q4, with no significant changes in buying behaviors. Regarding WorkForce Software, she affirmed that the opportunity is a two-way street: leveraging ADP's scale to help WorkForce Software win and also creating new opportunities by combining their product with ADP's distribution and brand, effectively inviting each other 'to all their parties' to drive a '1 plus 1 equals 3' growth narrative.

Tien-Tsin Huang from JPMorgan Chase & Co. inquired about the duration Fiserv over-earned due to deferred investments and short-term initiatives, and the timeline and cost to restore double-digit EPS growth, questioning the confidence in this target given recent analysis.

Answer

CEO Mike Lyons explained that the recent rigorous analysis, prompted by Q2 surprises, revealed issues beyond major projects, including optimistic assumptions and short-term revenue focus. He expressed confidence in the new baseline and the path to double-digit EPS growth through long-term client focus and disciplined capital allocation.

Tien-Tsin Huang asked about the duration of Fiserv's over-earning due to deferred investments and short-term initiatives, the timeline and cost to reverse this trend, and the confidence in achieving double-digit EPS growth as a long-term target.

Answer

CEO Mike Lyons explained that a rigorous analysis identified four factors: Argentina's cyclical growth, recalibrated optimistic assumptions, deferred investments, and deprioritization of short-term initiatives. He noted that excluding Argentina, organic revenue growth was mid-single digits (6% in 2023/2024, 3% YTD 2025). Lyons expressed confidence in the new baseline, a clear path to solid mid-single-digit growth, and eventual acceleration, affirming that the company's free cash flow generation and capital management plan support double-digit EPS growth.

Tien-tsin Huang of JPMorgan Chase & Co. requested more detail on which specific strategic initiatives are being extended and sought elaboration on the factors, both internal and external, contributing to these delays.

Answer

President, CEO & Director Mike Lyons clarified that the revised outlook is due to the timing of getting a wide range of new products to market, not a quality issue with the initiatives themselves. He noted that some delays are internal execution-related, while others are due to external factors like partner integrations and macro uncertainty. CFO Robert Hau added that the original guidance factored in a stronger macro recovery, and the choppier environment contributed to landing at the lower end of the initial range.

Tien-tsin Huang from JPMorgan Chase & Co. requested more detail on which specific strategic initiatives were being extended or delayed, asking for elaboration on the factors Fiserv controls versus those it does not.

Answer

Mike Lyons, President, CEO & Director, clarified that the delay was not due to one or two major items but a broad, granular list of initiatives whose rollout timing was being adjusted to ensure quality and scalability. He noted some delays are internal execution matters, while others involve external factors like partner integrations. Robert Hau, CFO, added that the updated guidance reflects a choppier macro environment and slower initiative rollout than initially planned, moving expectations from the midpoint to the low end of the original range.

Tien-Tsin Huang asked for Chairman and CEO Frank Bisignano's perspective on a competitor's strategy to unbundle merchant acquiring, contrasting it with Fiserv's integrated model and its strategic implications.

Answer

Chairman and CEO Frank Bisignano strongly defended Fiserv's integrated strategy, highlighting the unique combination of Clover, an unparalleled bank partnership model, a leading debit network, and a dominant issuing business as a key competitive advantage. President and incoming CEO Michael Lyons added that clients value Fiserv's scale and stability, and that conversations are focused on expanding relationships at the intersection of commerce and banking.

Tien-Tsin Huang asked new President Mike Lyons about what surprised him most about Fiserv during his due diligence, compared to his prior views as a client and investor.

Answer

President Mike Lyons stated that there were few surprises given his long history with the company. He highlighted the unparalleled opportunity in cross-selling between the merchant and financial platforms, the significant international potential, and the depth of talent focused on innovation. Lyons affirmed his belief in the current strategic plan and his focus on execution.

Tien-Tsin Huang inquired about the drivers behind the strong acceleration in Enterprise Solutions revenue, asking to clarify the impact of transitory factors and a PayFac conversion, and what a sustainable growth level might be.

Answer

CFO Bob Hau explained that transaction growth was up 12%, matching Q1 levels. He confirmed a large PayFac client began to ramp up significantly in Q3, a trend expected to continue into Q4 before normalizing. He noted the business line's year-to-date adjusted growth stands at a strong 11%.

Tien-Tsin Huang asked about PayPal's strategic priorities regarding agentic commerce, its right to win in this evolving space, the ability to fund necessary investments without sacrificing incremental margins, and the sufficiency of current partnerships for ubiquity.

Answer

CEO Alex Chriss explained that agentic commerce aligns with PayPal's existing strategy to be available everywhere consumers want to pay and merchants want to sell. He highlighted PayPal's strong position due to its merchant ecosystem, consumer trust, and ability to integrate with multiple LLMs. CFO Jamie Miller noted that agentic partnerships involve investments in product, tech, and co-marketing, which could be a near-term headwind to transaction margin dollars or earnings growth in the next year. Alex Chriss added that PayPal has good scale and ubiquity with announced partnerships like OpenAI, Perplexity, and Google.

Tien-Tsin Huang (JPMorgan Chase & Co.) inquired about PayPal's strategy for agentic commerce, specifically if it alters strategic priorities, PayPal's competitive advantage, funding for investments without impacting incremental margins, and the sufficiency of current partnerships for ubiquity.

Answer

CEO Alex Chriss explained that agentic commerce is an evolution of PayPal's existing omnichannel strategy, highlighting PayPal's strong position due to its merchant ecosystem, consumer trust, and partnerships with major LLMs like OpenAI, Perplexity, and Google. CFO Jamie Miller noted that investments in agentic commerce, including product, tech, and co-marketing, are expected to be a near-term headwind to transaction margin dollars and earnings growth in 2026.

Tien-tsin Huang of JPMorgan Chase & Co. inquired about the new PayPal World and Pay with Crypto initiatives, asking if they expand the total addressable market at potentially lower take rates and whether they will be accretive to revenue and profit.

Answer

President, CEO & Director Alex Chriss clarified that both initiatives are seen as expanding the total addressable market (TAM). He explained that PayPal World allows merchants to maintain their existing branded checkout economics while accessing billions of new users. He also noted that Pay with Crypto has attractive net take rates due to lower expenses, positioning it as a TAM expansion as well.

Tien-Tsin Huang asked for an assessment of consumer and small business health and whether macroeconomic or geopolitical factors are causing a reordering of strategic priorities like Buy Now, Pay Later (BNPL) and Venmo.

Answer

CEO Alex Chriss stated that priorities are not being reordered, but the company is watching trends closely. He noted that PayPal's rewards and BNPL offerings are well-positioned to help consumers. CFO and COO Jamie Miller added that core credit portfolios are stable, with improving charge-off rates and delinquencies, indicating healthy consumer and SMB trends entering a potentially uncertain period.

Tien-Tsin Huang asked about the primary drivers for Venmo's growth—whether it's user growth, new products, or ARPU expansion—and sought clarification on the sustainability of the 2025 CapEx increase.

Answer

CEO Alex Chriss stated that Venmo's growth strategy involves both increasing its active user base and driving monetization through products like the debit card and Pay with Venmo, which have low single-digit penetration. CFO Jamie Miller clarified that the CapEx increase to $200-$300 million is a two-year program for tech and data center build-outs, after which it should decrease.

Tien-Tsin Huang inquired about the specific drivers for the favorable outlook on transaction margin dollar growth and what key areas are expected to accelerate into 2025 to offset interest income headwinds.

Answer

CFO Jamie Miller highlighted consistent trends in branded checkout, the holistic margin improvements in Braintree, and strong monetization momentum from Venmo and P2P transfers. CEO Alex Chriss reinforced this, noting that innovations like Fastlane and PayPal Everywhere are designed to drive durable growth in the core branded checkout business. Miller also quantified the potential impact of interest rate cuts, stating a 25 basis point cut equals about $40 million in transaction margin.

Tien-Tsin Huang asked about recent trends in the retail and North America segment, seeking elaboration on encouraging signs, particularly regarding Mexico. He also inquired about the visibility and incremental margins of the Consumer Services' travel money business, given its projected growth.

Answer

CEO Devin McGranahan explained that lows from mid-summer have improved, especially in Mexico and other important corridors, with some now approaching stable or flat trends. CFO Matt Cagwin added that travel money's projected growth is supported by the Eurochange acquisition, expansion into new markets, and a competent management team, noting the acquisition is performing significantly above initial models.

Tien-tsin Huang asked about recent trends in the retail and North America segment, specifically regarding Mexico, and then inquired about the visibility and incremental margins of the Consumer Services' travel money business.

Answer

Devin McGranahan (CEO) noted that lows from midsummer have improved, particularly in Mexico, with some corridors stabilizing. He expects positive trends in the back half of the year, though conditions remain lumpy. Matt Cagwin (CFO) highlighted the eurochange acquisition's contribution to travel money growth, expansion into new markets, and strong management, noting the acquisition is performing above initial models.

Tien-Tsin Huang inquired about the specific drivers behind the expected gradual improvement in results, seeking details on contributions from new agents, digital acceleration, and consumer services beyond the Euro Change acquisition. He also asked about April trends and the significance of higher principal per transaction (PPT).

Answer

CFO Matt Cagwin identified several growth drivers, including new partnerships in the Middle East with STC and Europay, which are expected to ramp up in the second half of the year. He also noted that while the Argentina bill pay business was weaker than expected, the Travel Money business is poised to strengthen Consumer Services. CEO Devin McGranahan addressed April trends, explaining that a calendar-wise slowdown was due to the timing of holidays (Ramadan and Easter) but that underlying trends have stabilized. He highlighted that the acceleration in PPT is a new dynamic suggesting customers are sending more money less frequently, which speaks to their resilience.

Tien-Tsin Huang from JPMorgan Chase & Co. inquired about the key variables influencing the high and low ends of the 2025 revenue outlook and the factors behind the projected deceleration in Consumer Services growth from its strong Q4 rate.

Answer

CFO Matt Hagan explained that the revenue guidance range accounts for market uncertainty but assumes stable macroeconomic conditions. The high end could be achieved through accelerated retail stabilization or stronger-than-expected growth in branded digital and consumer services. Hagan noted the Consumer Services growth moderation is expected as the business cycles past strong Q4 performance in the Media Network and laps recent product launches, while still targeting a robust 10% to 15% growth for the year.

Tien-Tsin Huang inquired about the progress of the Evolve 2025 strategy, noting areas of outperformance and asking about plans for a new mid-term outlook beyond 2025.

Answer

CEO Devin McGranahan stated that the company is roughly six months ahead of its Evolve 2025 plan, with durable transaction growth now established. He highlighted stronger-than-expected momentum in international retail and accelerated growth in Consumer Services. McGranahan confirmed they are working on 2025 guidance and plan to host an investor event in the second half of 2025 to detail the strategy for the years beyond, focusing on their developing financial ecosystem.

Tien-tsin Huang of JPMorgan Chase & Co. inquired about the fiscal 2026 revenue outlook, asking for the key factors that could lead to deceleration versus the exit rate and what might be hindering a potential acceleration in core revenue growth. He also welcomed the new CFO and asked for her early impressions of the company and any planned changes to investor relations or guidance philosophy.

Answer

Founder, CEO & Chairperson René Lacerte expressed confidence in growth, citing foundational strengths in the platform, mid-market segment, and AI capabilities. CFO Rohini Jain explained that the guidance is prudent, accounting for a potential Q4 spend pull-in due to tariff concerns, which could impact TPV and take rates in the upcoming year. She noted that discretionary spend categories might face pressure. Regarding her new role, Ms. Jain shared her excitement about the company's sticky products and strong team, stating her focus will be on strengthening communication and transparency with the investor community.

Tien-Tsin Huang of JPMorgan asked about management's confidence level in investment returns over the past 90 days and for observations on April's SMB spending trends compared to past cycles of uncertainty.

Answer

CEO René Lacerte affirmed that internal confidence has increased due to strong execution on strategic priorities. He noted that SMBs are facing the most uncertainty since early COVID, resulting in fewer transactions and slightly lower spend. However, he expressed confidence in BILL's position, citing its large market, deep SMB expertise, resilient customer base, and data-rich platform as key advantages in helping businesses navigate the current environment.

Tien-Tsin Huang requested clarification on the size of the currency volatility impact, asked if second-half monetization would improve, and inquired about the progress and returns on the company's $45 million targeted investment spend.

Answer

CFO John Rettig quantified the FX headwind on international payments monetization at about 0.3 basis points and confirmed the outlook for monetization expansion in the second half of fiscal 2025. He added that the $45 million investment spend is progressing well, though backloaded in the year. CEO René Lacerte then detailed significant progress across the four key investment areas: value proposition, supplier experiences, accountant relationships, and ecosystem expansion, expressing confidence in future growth.

Tien-Tsin Huang asked for an update on the progress and learnings from the company's planned $45 million investment. He also questioned BILL's risk appetite for credit products like invoice financing, given improving TPV trends.

Answer

President and CFO John Rettig confirmed that progress is being made on the investments, though the spending profile is more back-end loaded due to hiring schedules. Chairman, CEO and Founder René Lacerte addressed risk, stating that BILL's significant scale and proprietary data allow for effective risk management of credit products. Mr. Rettig added that while they take a targeted approach, it is normal to see higher loss rates early in a new product's lifecycle, and they are focused on optimizing these as the offerings scale.

Tien-Tsin Huang asked about the planned $45 million investment, questioning its pacing, expected returns beyond the FY26 growth target, and whether it was driven by new opportunities, competition, or a catch-up in spending. He also sought to clarify if the investments were offensive or defensive.

Answer

CEO René Lacerte characterized the investment as "absolutely offensive" and opportunity-driven, aimed at widening BILL's market lead. He detailed four key areas: enhancing existing solutions, augmenting the supplier experience, deepening accountant relationships, and expanding the ecosystem. CFO John Rettig added that the spend would be somewhat front-loaded and is expected to drive multi-year growth, with profitability expansion resuming in FY26.

Tien-tsin Huang inquired about Globant's new AI-based subscription model, asking for details on the 18 clients who have adopted it, the nature of the work, and how contract terms differ from traditional models. He also asked about the pipeline conversion assumptions in the second-half outlook.

Answer

CEO Martín Migoya and CTO Diego Tártara explained that the 18 customers are using the subscription model for software development powered by AgenTik AI, with Globant supervising the output. They noted this new model is a significant driver of the recent pipeline growth. Regarding the outlook, Migoya stated that while deal conversion is improving, the company remains cautious due to macro uncertainty.

Tien-Tsin Huang inquired about the recovery timeline for demand in Latin America, whether project work was being delayed or canceled, and what levers Globant has to protect margins if the environment deteriorates further.

Answer

CEO Martín Migoya stated that while some decisions are being pushed out, the pipeline is 20% larger than the prior year, suggesting deals are delayed, not canceled. He noted recovery is underway in Argentina and Chile. CFO Juan Urthiague added that the full-year guidance is conservative and does not assume a significant second-half recovery. He confirmed that Globant has already implemented measures to protect margins and has additional levers to pull if market conditions worsen.

Tien-Tsin Huang inquired about the key drivers behind the company's confidence in accelerating organic growth for the upcoming year, 2025.

Answer

CFO Juan Urthiague attributed the positive outlook primarily to the ramp-up of large deals, new contracts in the Middle East, strong performance from their top account, and an acceleration in AI-related projects. He noted that while stabilizing macro factors like interest rates help, the main drivers are specific to Globant's business momentum.

Tien-tsin Huang asked about the visibility and potential risks in the Lodging segment's forecast and what plans were in place to re-energize its growth. He also inquired about the expected earnings impact from the planned non-core divestitures, targeted to raise over $1.5 billion.

Answer

President, Chairman & CEO Ronald Clarke explained that about half the Lodging segment's softness is due to lower emergency/distressed activity (FEMA, airlines) and the other half is from insufficient new sales. He stated the fix is to improve the sales engine now that the product base has stabilized. Regarding divestitures, Clarke noted these are 'good businesses' and the goal is for the transactions to be non-dilutive, contingent on achieving attractive multiples in the teens against EBITDA.

Tien-tsin Huang questioned the visibility into the Lodging segment's performance and what factors could change the outlook. He also asked about the expected earnings impact from the planned non-core divestitures, seeking clarity on whether they would be dilutive or accretive.

Answer

President, Chairman & CEO, Ronald Clarke, explained that Lodging softness is due to lower emergency/distressed activity and insufficient new sales, not a fundamental issue with the stabilized base. Regarding divestitures, he stated the goal is for the transactions to be a 'push' and not dilutive, contingent on achieving attractive multiples in the teens against EBITDA for the 'good businesses' being sold.

Tien-tsin Huang inquired about the rollout timeline and geographic phasing for new products like Remitly Business and RemitlyOne, and asked if these initiatives would be accretive to revenue and profit without altering existing financial commitments.

Answer

Co-Founder and CEO Matt Oppenheimer confirmed the excitement around the new products, noting Remitly Business is already growing and RemitlyOne is launching soon, without expecting a major impact on marketing spend. CFO Vikas Mehta added that the full-year guidance already incorporates these initiatives and that targeted marketing for them would begin in H2 within the guided envelope.

Tien-Tsin Huang from JPMorgan Chase & Co. inquired about the key drivers behind the significant 9% year-over-year increase in send volume per active customer, the highest rate since 2021.

Answer

CFO Vikas Mehta attributed the growth to increased customer engagement, strong performance from high-amount senders, and the addition of micro-business users. CEO Matt Oppenheimer added that sophisticated risk and compliance technology has enabled more dynamic sending limits, reducing friction for customers sending larger amounts.

Tien-Tsin Huang questioned the Q4 outlook, suggesting it appeared conservative and asking why the seasonal pattern would be different from the past, especially given the strong Q3 results.

Answer

CFO Vikas Mehta broke down the Q4 growth algorithm, expecting a modest sequential increase in new active customers, send volume per customer in line with the prior year's Q4, and a sequentially softer gross take rate due to mix. He reiterated that Q4 is off to a good start and in line with their expectations, emphasizing that take rate is not the best indicator due to its many influencing factors.

Tien-tsin Huang inquired about Marqeta's business visibility for the second half of the year, considering TPV trends and customer renewals, and asked about the growth and priority of value-added services.

Answer

Interim CEO & CFO Mike Milotich expressed strong confidence in the business trajectory, citing unexpected TPV acceleration in Q2 driven by the lending and BNPL verticals. He confirmed that value-added services are a high priority, with gross profit more than doubling year-over-year, driven by platform maturity and the need to provide holistic solutions for embedded finance clients.

Tien-Tsin Huang asked about Marqeta's capacity to handle an increase in complex program conversions and whether resourcing issues contributed to the Varo deal termination. He also followed up on the health of the sales pipeline and any changes in consumer behavior.

Answer

Mike Milotich, Interim CEO and CFO, stated that resourcing is not a concern for handling migrations and that the company is well-prepared. He clarified the Varo decision was based on Varo's choice to focus on existing products. Regarding the pipeline, he noted no slowdowns, stable TPV growth into April, and that some prospects are even looking to accelerate launches.

Tien-Tsin Huang asked for the rationale behind acquiring TransactPay instead of building the capability in-house and inquired about the competitive landscape for a recent airline win and the current deal pipeline's strength.

Answer

Interim CEO and CFO Mike Milotich explained that acquiring TransactPay provides an immediate e-money license and specialized talent, which would have taken several years to build, accelerating their European strategy. He noted the pipeline is strong, with roughly two-thirds now comprising embedded finance opportunities, and highlighted that the new airline partner sought a more dynamic, embedded loyalty solution than traditional offerings, which was key to Marqeta winning the deal.

Tien-Tsin Huang from JPMorgan Chase & Co. asked how Marqeta could maintain its 2025 adjusted EBITDA outlook despite the reduced gross profit forecast and the potential costs of fixing the program launch delays.

Answer

CFO Michael Milotich explained that significant investments in compliance were already made in late 2023 and early 2024, and the company is ahead of schedule on expense optimization initiatives. He clarified the 2025 gross profit impact is a timing issue from delayed program ramps, not a structural change. He detailed how a few months' delay significantly shifts the TPV ramp curve but expects to be back on the previously guided trajectory by 2026, allowing them to reaffirm the 2025 adjusted EBITDA target of approximately $50 million.

Tien-tsin Huang inquired whether the initial momentum for the Genius platform was driven by new customer wins or conversions. He also asked about the Issuer segment's status and potential client pauses ahead of its divestiture.

Answer

CEO Cameron Bready clarified that the primary focus and success of the Genius launch has been in winning net new 'front book' opportunities. President & COO Robert Cortopassi added that cross-selling to existing payments-only clients is also a key opportunity. Regarding the Issuer segment, Bready confirmed that the business remains on track with its modernization program and implementation pipeline, with no significant client pauses, and is performing well ahead of the planned divestiture.

Tien-tsin Huang asked if the initial momentum for the Genius platform was driven more by net new customers versus converting the existing base. He also inquired if the Issuer segment experienced any client pause ahead of its divestiture and if backlogs remain on track.

Answer

CEO Cameron Bready clarified that the primary focus for Genius is winning 'front book' or net new opportunities. President & COO Robert Cortopassi added that cross-selling to existing payments-only clients is also a key opportunity. Regarding the Issuer segment, Bready confirmed that business remains on track with no client pause, implementations are proceeding as planned with 15 million cards converted in H1, and the new business pipeline includes four letters of intent.

Tien-Tsin Huang inquired about the strategic importance of the recently acquired orchestration layer for minimizing client disruption during the Worldpay integration and how it impacts the deal's risk profile. He also asked if more business dispositions were planned.

Answer

CEO Cameron Bready stated the orchestration layer is critical for the client experience, providing a single, easy integration point for all products and capabilities. COO Bob Cortopassi added that it acts as an 'amplifier,' flattening the internal architecture to accelerate product delivery and simplify the Worldpay technology integration. Bready also confirmed that with about $300 million of a targeted $500-$600 million in revenue dispositions completed, more are likely to come to further streamline the business.

Tien-Tsin Huang from JPMorgan Chase & Co. inquired about the timing of the newly increased $600 million operational transformation savings and asked about the strategy behind buying out JV partners in Europe and Mexico versus exiting markets in Asia.

Answer

CFO Joshua Whipple clarified that the increased savings would primarily be realized in 2026 and 2027, with the full $600 million run rate achieved in 2027. CEO Cameron Bready explained that buying out JVs (like CaixaBank and HSBC) simplifies operations and governance, while the Asia exits involve subscale, wholly-owned businesses where the company sees limited growth potential, allowing resources to be focused on higher-opportunity markets.

Tien-Tsin Huang asked about the nature of the softness in commercial spend and followed up on the commercial agreement for AdvancedMD, questioning if Global Payments would remain the exclusive payment provider and if there was room for further penetration.

Answer

CEO Cameron Bready characterized the commercial spend slowdown as broad-based, reflecting general business caution rather than being limited to T&E, and confirmed no customer losses. Regarding AdvancedMD, he affirmed that Global Payments will remain an integrated partner with a significant opportunity to increase payment penetration in both the existing customer base and with new wins under Francisco Partners' ownership.

Tien-tsin Huang asked for clarification on the sequentially lower Q3 EBITDA guidance, questioning the role of unlocked investments and tariff expenses. He also inquired if the new Toast Go 3 handheld is expected to drive an upgrade cycle.

Answer

CFO Elena Gomez confirmed the lower Q3 margin guidance is due to increased investments in high-momentum new customer segments and a greater impact from tariffs in the second half of the year. CEO Aman Narang added that the Toast Go 3 is expected to appeal to both new customers and existing customers during their hardware refresh cycles, citing its cellular backup as a key feature.

Tien-tsin Huang asked if the record ARR signed in the quarter was a result of dynamically shifting resources to high-demand areas. He also inquired about the current state of the sales pipeline and any changes in client decision-making cycles.

Answer

President & COO Rob Orgel clarified that the record ARR was led by travel and education, consistent with previous periods, and that while the company always tunes its go-to-market plan, there have been no dramatic resource shifts. He confirmed the sales pipeline is expanding very nicely and that there have been no notable changes in sales cycles.

Tien-Tsin Huang asked about the primary sources of the Q1 upside and where management has gained more conviction on growth, and also inquired if the healthcare business is 'turning a corner'.

Answer

CFO Cosmin Pitigoi identified the travel vertical as the number one driver of Q1 outperformance, with Australia being less negative than expected. President and COO Rob Orgel confirmed they feel the healthcare business has turned a corner, citing a unique, integrated offering that is driving new wins, pipeline growth, and increased client interest.

Tien-Tsin Huang of JPMorgan Chase & Co. sought to understand the primary objective of the portfolio review—whether it's for efficiency or growth—and questioned the basis for the projected 30% revenue decline in Canada and Australia.

Answer

CEO Mike Massaro explained the review aims to optimize investments and organizational focus on the highest-return opportunities. CFO Cosmin Pitigoi detailed that the 30% decline assumption for Canada is based on existing negative trends, while for Australia, it represents a prudent forecast given early signs of visa-related demand pressure.

Tien-tsin Huang of JPMorgan Chase & Co. inquired about Kyndryl's Q1 revenue performance relative to its plan, the expected growth cadence for the remainder of the fiscal year, and the potential revenue exit rate.

Answer

Chairman & CEO Martin Schroeter explained that key growth drivers like Kyndryl Consult and hyperscaler alliances show strong momentum and are on track to meet annual targets. He noted that while some Q1 deals slipped, they are now closing. Schroeter reaffirmed the full-year 1% constant currency revenue growth guidance, stating that growth will accelerate from Q1 to Q2 and further in the second half, supported by a strong and less concentrated sales pipeline compared to the prior year.

Tien-Tsin Huang asked if Kyndryl can maintain a book-to-bill ratio above 1x through fiscal 2026 and questioned how the duration of the backlog and Annual Contract Value (ACV) are evolving with recent large deal wins.

Answer

Chairman and CEO Martin Schroeter affirmed that they expect to maintain a book-to-bill ratio above 1x on a trailing 12-month basis to support medium-term growth, driven by momentum in Kyndryl Consult and hyperscaler alliances. CFO David Wyshner added that the average signing duration was slightly longer in fiscal 2025, contributing 20-25% of the signings growth. He highlighted a good balance between faster-converting Consult deals and longer-duration managed services contracts that build the backlog.

Tien-Tsin Huang of JPMorgan Chase & Co. inquired about Kyndryl's signings pipeline following the calendar year-end, the company's confidence in converting its backlog, and the effectiveness of its hedging strategies against foreign exchange volatility.

Answer

CEO Martin Schroeter confirmed a strong fiscal Q4 pipeline, driven by Kyndryl Consult and alliance activities, noting that increasing IT complexity acts as a tailwind. CFO David Wyshner added that while foreign exchange is a year-over-year headwind, the company's hedging program has effectively minimized the bottom-line impact, keeping it consistent with initial expectations for the year.

Tien-Tsin Huang asked about the sustainability of the strong signings momentum and questioned the decision not to raise the full-year outlook despite the strong quarterly performance.

Answer

CFO David Wyshner affirmed the signings momentum is sustainable, citing over 30% LTM growth and the value of Kyndryl Bridge. Chairman and CEO Martin Schroeter addressed the outlook, explaining that while the first half was strong, the current guidance already reflects significant profit improvement and a return to revenue growth in Q4. He emphasized that as the mix shifts away from lower-margin inherited contracts, the P&L will dramatically strengthen in the future.

Tien-tsin Huang of JPMorgan Chase & Co. inquired about potential changes in client decision-making and spending behavior due to macro trends, stablecoins, and AI.

Answer

CEO Stephanie Ferris stated that clients show high interest in these areas, viewing them as an opportunity. She noted strong demand for digital asset capabilities, as banks do not want to be left behind, positioning FIS as a key enabler for all payment types, including emerging digital currencies.

Tien-Tsin Huang inquired about client decision-making, pipeline health, and the market's reaction to the announced acquisition of Global Payments' Issuer Solutions (TSYS) business.

Answer

CEO Stephanie Ferris confirmed that previously delayed client implementations are now live, positively impacting the banking revenue outlook. She stated that the sales pipeline is increasing significantly with no negative macro impact, citing the durable, required-spend nature of FIS's offerings. Ferris also reported that client feedback on the TSYS acquisition has been 'really, really positive,' with customers valuing the product quality and FIS's strategic focus.

Tien-Tsin Huang asked about the outlook for Annual Contract Value (ACV) growth in 2025 following 9% growth in 2024, and questioned the potential impact of 'office of the CFO' wins on Banking segment EBITDA margins.

Answer

CEO Stephanie Ferris projected ACV growth would be 'more than 9%' in 2025, driven by focused sales efforts in digital, payments, lending, and the 'office of the CFO'. She clarified that the Q4 margin pressure was from a one-time termination fee reversal and that she expects banking margins to expand in 2025 due to strong cost discipline.

Tien-Tsin Huang asked for an update on Q4 visibility, specifically regarding revenue trends and the drivers behind increased CapEx. He also sought clarification on the cause of the prior-period accounting revision and its impact on the long-term outlook.

Answer

CEO Stephanie Ferris confirmed stable economic trends, while CFO James Kehoe highlighted a strong Q4 margin outlook. Kehoe attributed the higher CapEx to strategic growth investments and significant price increases from certain technology suppliers, which he described as a manageable, temporary issue. He clarified the accounting revision was an immaterial, non-cash adjustment related to the output solutions business, is fully resolved, and has no impact on future operations or the long-term outlook.

Tien-tsin Huang of JPMorgan Chase & Co. asked if AI is driving client re-engagement, questioned the new President of CES on his assessment of the business, and requested clarity on gross margin comparability after a reclassification.

Answer

President & CEO Raul Fernandez confirmed AI is an 'additive' opportunity driving new proactive solutions. Ramnath Venkataraman, President of CES, expressed confidence in the segment's 'extremely strong' foundational elements, focusing on converting its strong book-to-bill into revenue. CFO Rob Del Bene clarified that gross margins are stable quarter-to-quarter.

Tien-Tsin Huang asked for clarification on deferred marketing and IT investments and whether the lower-than-expected restructuring charges for the year represented a reduction in the total plan or a pushout into fiscal 2026.

Answer

CFO Rob Del Bene explained that new leaders in marketing and IT are being more deliberate with spending, causing a delay in planned investments. He confirmed the remaining $150 million from the original restructuring budget, which was not spent in fiscal 2025, is now planned to be utilized in fiscal 2026 to continue driving efficiencies.

Tien-Tsin Huang asked for CEO Raul Fernandez's perspective on whether improving macroeconomic visibility, such as post-election certainty and potential rate cuts, would benefit the more economically sensitive GBS business.

Answer

CEO Raul Fernandez responded that while he observes the same macro trends as others, he firmly believes DXC's performance in the next 12-24 months will be driven more significantly by internal 'self-help' initiatives and improved execution on fundamentals rather than by shifts in the broader economic environment. He stressed that the biggest key to success is capitalizing on every available opportunity.

Tien-tsin Huang of JPMorgan Chase & Co. asked which products have shown strong attachment rates over the last year and what new innovations are in the pipeline. He also requested an update on the company's strategy for leveraging indirect sales channels and partners.

Answer

Founder and CEO Dax Dasilva highlighted the success of 'Insights' for retail inventory management, enhanced by the unique New Order integration, and the hospitality suite including Table Side and KDS. President JD St. Martin added that partnerships, including referral and reseller networks, have always been a strong channel, particularly in Europe, and will continue to be a focus for future growth.

Tien-Tsin Huang asked for details on the 35% increase in product development spending, specifically if it's for people or tools. He also questioned if the source of new customer locations in growth markets is changing, particularly regarding new businesses versus competitive takeaways.

Answer

Founder and CEO Dax Dasilva clarified that the investment is primarily for increasing headcount to create more development squads for both retail and hospitality platforms. President J.D. Saint-Martin stated that the customer acquisition mix remains consistent, with about one-third being new businesses, one-third switching from legacy systems, and one-third moving from modern but less functional platforms.

Tien-Tsin Huang asked if the recent 9% software growth should be considered a floor for future performance and whether M&A would be reconsidered for capability build-outs, such as payroll, alongside the share repurchase.

Answer

CFO Asha Bakshani confirmed that 9% is viewed as a floor and that the company expects double-digit software growth in fiscal 2026. On M&A, she clarified there are no plans for large strategic deals, but the company remains opportunistic for smaller, tuck-in acquisitions that could accelerate its product roadmap.

Tien-tsin Huang of JPMorgan Chase & Co. inquired about Visa's investment priorities, asking if they are shifting given the focus on AI and stablecoins, and pointed to higher operating expenses as a potential indicator of this change.

Answer

CEO Ryan McInerney stated that overall investment priorities have not changed, and the company feels great about its product pipeline and market momentum. CFO Chris Suh clarified that Q3 OpEx was higher due to a lower-than-expected FX benefit and higher personnel costs related to a mark-to-market on deferred compensation, which he noted is EPS neutral. For Q4, OpEx growth is expected to be in line with revenue growth.

Tien-tsin Huang of JPMorgan Chase & Co. inquired about Visa's investment priorities, asking if they have shifted given the focus on AI and stablecoins, and pointed out that operating expenses appeared to be running higher.

Answer

CEO Ryan McInerney stated that investment priorities have not changed and the company feels confident in its product pipeline. CFO Chris Suh clarified that Q3 OpEx was higher due to a lower FX benefit and increased personnel costs related to a mark-to-market adjustment on deferred compensation, which he noted is EPS-neutral. He added that Q4 OpEx is expected to grow in line with revenue.

Tien-tsin Huang from JPMorgan Chase & Co. inquired about Visa's investment priorities, particularly concerning AI and stablecoins, and whether they are shifting given the higher operating expenses.

Answer

CEO Ryan McInerney stated that investment priorities remain unchanged, expressing confidence in the product pipeline. CFO Chris Suh clarified that Q3 OpEx was higher due to a smaller FX benefit and an EPS-neutral mark-to-market adjustment on deferred compensation. He added that Q4 OpEx growth is expected to align with revenue growth, reflecting ongoing investments.

Tien-Tsin Huang of JPMorgan Chase & Co. asked about client decision-making and deal pipelines, particularly with international clients, in the current economic environment.

Answer

CEO Ryan McInerney explained that Visa's primary focus has been on partnering with clients to navigate the uncertain environment by providing data, tools, and advisory services, rather than focusing on new deal negotiations. He emphasized that this is a time for Visa to be at its best for its clients, helping them manage their complex businesses.

Tien-Tsin Huang asked for an update on the Asia Pacific region, which has been a relative laggard, and sought clarification on whether the quarter's restructuring charge was included in prior guidance.

Answer

Chris Suh, Chief Financial Officer, confirmed the restructuring charge is reflected in the updated full-year guidance and that no further charges are expected this year. Regarding Asia Pacific, he acknowledged that its growth, while slightly improved, remains muted at 1% year-over-year, reflecting a challenging macroeconomic environment in the region.

Tien-Tsin Huang asked how growth in fiscal 2025 might look different from 2024 across Visa's three main segments: consumer payments, new flows, and value-added services.

Answer

CFO Chris Suh explained that Visa does not guide by segment but outlined the key variables for the overall FY25 forecast. He identified incentives, cross-border volumes, currency volatility, and the macroeconomic environment as the primary factors influencing the guidance range.

Tien-Tsin Huang asked about trends on the enterprise client side, such as changes in sales cycles or pricing, and requested historical context for the CFO's comment on the business's sensitivity to GDP, seeking a comparable past cycle.

Answer

CEO Melissa Smith stated that Q1 was a very strong sales quarter, including with larger mobility customers, as the value proposition of saving money resonates in uncertain times. She compared the current environment to the Great Recession, noting WEX fared well and came out stronger by maintaining sales and product momentum. CFO Jagtar Narula added context on the OTR segment, noting that only about 10% of truck volume is import-related, mitigating tariff impacts.

Tien-Tsin Huang asked for the rationale behind increasing sales investments given WEX's historically strong new logo performance and questioned if the company's view on the EV transition's impact has changed.

Answer

CEO Melissa Smith explained the investment is about capitalizing on a proven, high-return growth lever to do more, rather than fixing a problem. She stated that the company is more bullish than ever on the EV transition, viewing it as a long-term opportunity to provide higher-value services, which will enhance unit economics over time.

Tien-Tsin Huang of JPMorgan Chase & Co. asked for clarification on the company's confidence to grow without new sales, questioning if it's driven more by the existing backlog or by higher e-payment penetration. He also asked if market volatility is affecting client decision-making.

Answer

Founder and CEO Dushyant Sharma confirmed that their confidence is based on a combination of strong same-store sales and a significant implementation backlog, which remains robust even after recent large client launches. CFO Sanjay Kalra added that a strong pipeline and a healthy conversion pace also bolster their outlook. Sharma noted that uncertain economic times can be beneficial, as clients seek efficiency and modernization, which Paymentus provides.

Tien-Tsin Huang inquired if the accelerated go-lives of large clients indicate a structural improvement in onboarding and questioned why Q4 contribution profit guidance was stable, contrary to historical seasonal increases.

Answer

CEO Dushyant Sharma confirmed that faster onboarding is a result of a combination of factors, including improved post-pandemic client interactions and internal technological advancements. CFO Sanjay Kalra explained the conservative Q4 guidance is due to a lack of historical data on the seasonality of the newly onboarded large enterprise clients, prompting a prudent 'wait and see' approach.

Tien-Tsin Huang pointed out the widening spread between transaction growth and payment volume (TPV) growth, asking if this was expected to normalize and what learnings could be drawn from the trend.

Answer

CFO Joel Wilhite explained that the total transaction number is a composite of a large base of invoice transactions and a smaller, but faster-growing, base of payment transactions, which drives the TPV growth. He noted the 13.5% growth in payments revenue (ex-float/political) correlates with the 10% TPV growth, reflecting incremental yield. CEO Michael Praeger added that the macro impact on discretionary spend directly affects the overall transaction number, contributing to the spread.

Tien-Tsin Huang noted the widening gap between transaction growth and total payment volume (TPV) growth, asking if this trend is expected to normalize and what it indicates about the business.

Answer

CFO Joel Wilhite explained that the divergence is due to the composition of the metrics: the total transaction number includes a large base of slower-growing invoice transactions, while the faster-growing payment transactions drive the higher TPV growth. CEO Michael Praeger added that the macro-driven impact on transaction retention also directly affects the overall transaction count.

Tien-Tsin Huang asked for an update on new products like Payment Accelerator 2.0 and spend management, and how they are expected to contribute in 2025.

Answer

CEO Michael Praeger provided a timeline for the innovation pipeline. Payment Accelerator 2.0 is in-market and expected to be a material contributor in 2025. The new Pay Platform is an ongoing enhancement. Spend management is about a year behind, with initial customer rollouts in the next 90 days and a material impact anticipated in 2026. Marketplace initiatives are in the earliest stages.

Tien-Tsin Huang of JPMorgan Chase & Co. asked whether the trend of suppliers choosing lower-cost payment acceptance solutions is a cyclical phenomenon or a more permanent, secular shift.

Answer

CEO Michael Praeger stated that he does not view the trend as cyclical but rather as a function of the value proposition. He explained that once a supplier chooses a payment modality, they tend to stick with it. The key opportunity is converting the 50% of suppliers still on paper checks by offering a range of electronic options that balance speed, price, data, and automation, which sometimes requires a specific price point to encourage the switch.

Tien-Tsin Huang sought clarification on the implied flat sequential revenue for Q2, which is seasonally unusual, and asked if the strong real estate top-of-funnel growth was driven by AppFolio or broader factors.

Answer

CFO Joel Wilhite confirmed the implied Q2 outlook reflects a cautious posture in guidance due to the macro environment, not a significant change in business activity. CEO Michael Praeger clarified that the strong real estate growth was broad-based across multiple partners, including both mature relationships and the new AppFolio partnership, rather than being dominated by a single source.

Tien-Tsin Huang asked for a review of what caused the high client losses in 2023, the corrective actions taken, and if retention rates could improve further. He also questioned the relationship between implementation go-lives and the weak demand for project revenue.

Answer

CEO David Guilmette attributed the 2023 losses to service disruptions and client uncertainty during the cloud migration, noting these issues are resolved and there is still room for retention improvement. CFO Jeremy Heaton clarified there is no direct link between implementation work for new deals and project work for existing clients, and the company is confident in its implementation capacity.

Tien-Tsin Huang requested details on the $10 million revenue guidance increase, asking about the key drivers and the factors determining the high and low ends of the range. He also asked which elements require more work to reach the 4-6% midterm growth target in 2025.

Answer

CFO Jeremy Heaton attributed the guidance raise to Q3 outperformance in both recurring and project revenue, noting the range's bookends are now primarily driven by the cautious outlook on project work. CEO David Guilmette stated that for 2025, key factors for growth include the COBRA headwind being resolved, strong bookings momentum, and successful renewals, while margins are expected to improve regardless of the growth profile.

Tien-Tsin Huang requested an explanation for the $10 million revenue guidance increase and asked which elements of the business require the most work to achieve the 4% to 6% midterm growth target for 2025.

Answer

CFO Jeremy Heaton attributed the guidance raise to better-than-expected Q3 performance in both recurring revenue (Wealth, mid-market Health) and accelerated project work. CEO David Guilmette noted that for 2025, key factors for growth include strong bookings, successful renewals, and improved margins from streamlining, while Jeremy Heaton added that time will provide a clearer view on the macro environment and project revenue demand post-election.

Tien-Tsin Huang asked for clarification on the drivers of pricing pressure, questioning whether it was primarily competitive, cyclical, or secular in nature.

Answer

President and CEO Jeffrey Puritt described the pressure as a combination of all three factors. He noted a persistent client expectation for 'more for less,' aggressive pricing from peers, and a technology-driven downward trend in CX pricing. In the AI space, he explained that competitors are focused on a 'land grab' for revenue growth rather than profitability, forcing TELUS Digital to accept lower margins to secure market share.