Vasundhara Govil • Keefe, Bruyette & Woods (KBW)

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President & CEO Greg Adelson explained that the M&A headwind is due to the timing and terms of specific deals, not a structural issue, and clarified that no decision has been made on the large merger, with any impact not expected until fiscal 2027. He attributed slower account growth to competition from neobanks, SMBs using other providers, and banks purging dormant accounts. CFO Mimi Carsley added that the company's long-term growth opportunities remain intact.

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CFO Mimi Carsley attributed the guidance change to macroeconomic prudence, a slowdown in hardware sales (down $11M YTD), and delays in non-recurring projects. CEO Greg Adelson commented on competitive positioning, stating that Jack Henry's single platform for both debit and credit remains a key differentiator and he is bullish on Q4 core opportunities, seeing no major change in the competitive landscape yet.

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CEO Greg Adelson explained that the number of Banno wins was not a concern and was largely due to timing, noting strong Banno Business sales. He acknowledged challenges in selling Banno outside the base due to competitors' lack of openness but revealed a new, parallel strategy to bypass typical integration points. CFO Mimi Carsley reaffirmed the full-year free cash flow conversion guidance of 65% to 75%, explaining that the Q1 figure was skewed by the timing of annual maintenance collections.

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CSO Aaron Greenberg clarified that while the company still intends to complete one to two more acquisitions, he does not expect to reach the previously mentioned $25 million inorganic revenue figure but reiterated confidence in meeting the overall 30-35% growth guidance. He also explained that the Nayax Capital acquisition was brought in-house to centralize and accelerate the rollout of the rental-based financing model, which is seeing success in Brazil and is now being launched in Australia. CFO Sagit Manor emphasized that organic growth remains the primary driver.

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Interim CEO & CFO Mike Milotich noted that while the crypto use case is performing better, it remains volatile. He positioned Marqeta's card solution as a key bridge for stablecoins. Regarding traditional banks, he reiterated that it is a long-term opportunity, still several years away, with a current strategy focused on securing initial partnerships in niche use cases.

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CEO Stephanie Ferris noted that while bank M&A is a positive tailwind, only completed deals are in the current guide. She stated that FIS's pricing remains consistent and competitive, attributing its strength to the company's scale and product set, in contrast to challenges mentioned by peers. CFO James Kehoe added that both business segments saw positive net pricing.

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CEO Stephanie Ferris did not provide a specific quarterly ACV number but expressed confidence in sales momentum, particularly in core and digital, and high retention rates. Regarding the Capital One-Discover deal, she confirmed FIS is a partner to both firms and sees it as a positive opportunity, but noted it is not expected to 'materially move the needle' on FIS's overall financial goals.

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CFO James Kehoe explained the Worldpay EMI guide of 7.5% growth was agreed with Worldpay management and is considered comfortable, factoring in both strong performance and headwinds from delayed stand-alone costs. CEO Stephanie Ferris reiterated that FIS views bank M&A as a net positive opportunity, as the company primarily serves larger institutions that are often consolidators.

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CEO Stephanie Ferris highlighted success with the IBS core for banks over $20B and noted that the Modern Banking Platform (MBP) is gaining traction with super-regionals and internationally, citing a new win in APAC. Regarding Worldpay, Ferris attributed its outperformance to stronger revenue growth and a slower-than-expected ramp in operating expenses. CFO James Kehoe added that while it's too early to change the 7.5-9.5% long-term growth outlook, much of the current outperformance should carry forward.

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Chairman, CEO & President Michael Brown explained that the CoreCard acquisition model already assumes the eventual loss of the Apple contract, but they anticipate retaining it for several years due to the platform's complexity. He noted this provides a marquee reference to cross-sell into Euronet's global client base. Regarding the EFT segment, Mr. Brown attributed the slower growth to a difficult comparison against an exceptionally strong Q2 last year and stated he expects margins to increase with transaction growth and an elongated tourist season.

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President & CEO Mac Schuessler explained that the Latin America segment, including Cynquia, outperformed expectations due to successful multi-year initiatives in technology modernization and contract repricing, which are flowing through to results. EVP & CFO Joaquin Castrillo-Salgado added that the improved outlook reflects a strong first half, though the second half will see tougher comps as pricing initiatives are lapped. He noted the guidance includes some conservatism for potential tariff uncertainty but no direct impact has been identified.

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Chief Financial Officer Joaquin Castrillo explained that the outperformance was broad-based, with Merchant Acquiring benefiting from strong consumer confidence, Latin America showing a reacceleration in Brazil, and Business Solutions seeing onetime hardware sales. He noted the guidance's low end accounts for some potential consumer confidence degradation. President and Chief Executive Officer Morgan Schuessler added that M&A remains a key focus with a robust pipeline, but declined to comment on EVERTEC as a potential acquisition target.

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CFO Matt Cagwin confirmed the EuroChange acquisition contributed approximately 2% to revenue in the quarter and is performing well, with Q3 expected to be seasonally strong. CEO Devin McGranahan clarified they are not seeing a material shift from retail to digital due to immigration policies; rather, they observed an aggregate slowdown in transaction volume in both channels, particularly in the U.S. to Mexico corridor.

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CEO Devin McGranahan assessed that increased deportations would likely impact transaction frequency among recent arrivals but could be offset by higher principal per transaction. He quantified the direct risk as limited, noting that new-to-retail customers sending to LACA represented only 2.5% of 2024 revenue. Regarding crypto, McGranahan reiterated a compliance-first stance, stating that while the company is exploring crypto for back-end settlement to improve efficiency and reduce float, it would only proceed in a manner that protects customers and financial integrity.

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CEO Cameron Bready agreed the guidance was at the upper end of the prior outlook, attributing it to increased conviction in the transformation's benefits and the company's ability to manage the associated changes without significant disruption. He explained that the Issuer modernization is critical for long-term growth, as it expands the Total Addressable Market (TAM) by enabling the company to serve smaller FIs, enter new geographies more easily, and offer consumable services to fintechs.

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