Ladies and gentlemen, thank you for standing by. Welcome to the FIS first quarter 2018 earnings call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question and answer session. Instructions will be given at that time. Should you require assistance during the call, please press star then zero. As a reminder, this conference is being recorded. Now I could turn the call over to Peter Gunnlaugsson. Please go ahead.
Thank you, David. Good morning, everyone, and welcome to FIS' first quarter 2018 earnings conference call. Turning to slide two. With me today are Gary Norcross, President and Chief Executive Officer, and Woody Woodall, Chief Financial Officer. Gary will begin today's call with company highlights for the quarter, and Woody will continue with the financial results. This conference call is also being webcasted with today's news release and corresponding presentation available on our website at fisglobal.com. Moving to slide three. Today's remarks will contain forward-looking statements. These statements are subject to risks and uncertainties as described in the press release and other filings with the SEC. The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. I refer you to the safe harbor language on the slide.
The materials presented today will also include references to non-GAAP financial measures in order to provide a more meaningful comparison between the periods presented. Reconciliations between the GAAP and non-GAAP results are provided in the attachments to the press release and in the appendix of the supplemental slide presentation. Turning to slide four. It is now my pleasure to turn the call over to Gary to discuss the business highlights for the quarter. Gary?
Thank you, Pete. Good morning, and thank you for joining us. I'm very pleased to announce today that FIS delivered a very strong quarter and start to the year, exceeding our revenue, profitability, and earnings expectations, and delivering exceptional margin expansion. Based on these results and our robust forecast, Woody will be increasing our EPS guidance for the full year. Top-line growth was driven by balanced execution across our IFS and GFS segments. Key factors include the sales momentum we have been discussing for the past several quarters, the continued expansion of existing client relationships, growth of our clients through higher volumes of transactions and accounts, and new client logos. We continue to be pleased by the accelerating market momentum globally for our products and services. Turning to slide five. In the quarter, revenue increased over 3% to $2.1 billion.
We expanded EBITDA margins by 340 basis points and adjusted earnings per share grew 33% to $1.09 per share. We delivered these strong results through continued execution of our strategic plan, investing for growth in our focus areas and driving increased efficiency within our operations. We have capitalized on our year-end sales momentum by successfully turning demand into closed deals and further expanding our strong pipeline. Our Integrated Financial Solutions segment drove top-line organic revenue growth of more than 3% for the quarter. Q1 sales were robust, building on the momentum we experienced in the previous quarter. Demand remains strong for our retail banking, wealth, and digital solutions. Outsourced solution deployments in key business verticals were particularly strong in the quarter, and we saw increased end-user adoption and transaction volume growth across our digital banking platforms. Our GFS segment delivered top-line organic growth of over 5% for the quarter.
Growth across the segment was fueled by a diverse mix of license revenue from global institutions, especially within the capital market offerings, as well as higher processing and transaction volumes across multiple businesses. Core banking, buy-side, and post-trade processing drove especially strong results. Margin expansion was exceptional this quarter at 650 basis points, driven by growth in our high-margin, IP-based offerings and through the positive impact from divestitures of lower-margin and non-strategic businesses. Going forward, we're disclosing a new revenue backlog metric, which provides insight into the total revenue under contract. We entered this year with a revenue backlog of about $19.5 billion, speaking to the strong forward visibility. Woody will provide additional insights. Turning to slide six. We continue to execute on strategic actions that reinforce our plan to drive transformational results for our clients and FIS.
This includes executing on our significant investment in continuously modernizing our offerings to meet client demand and drive our near and long-term growth. Some of the capabilities we will be delivering in market for 2018 include bringing new core banking capabilities to market that are built on cloud-based technology with common reusable components, which deliver speed, agility, and efficiency for clients. Consolidating payment platforms into our unified payment solution that delivers a consistent modern user experience across all payment transaction types. Delivering our integrated omni-channel Digital One strategy that provides modernized digital banking experiences complete with personalization, mobility, and social engagement capabilities. Bringing our next-generation post-trade solution to market, tripling processing power and performance. Continuously adding new APIs to our very robust online gateway, Code Connect, which offers nearly 1,300 APIs for financial services. Deploying more than 50% of our solutions into the FIS private cloud environment.
Proof that these investments are creating strong interest and demand, three weeks ago, we hosted more than 3,000 clients, prospects, and partners at one of our large annual client events. This venue provided the platform for our clients to learn more about our strategy and modernization investments, and get hands-on with nearly 170 solutions that provide proof of the investments we are making to help them modernize for their future. Feedback from our clients has been overwhelmingly positive. Results of the conference show a strong increase in demand for our solutions.
This feedback, coupled with our strong first quarter results and robust pipeline, underscores our confidence in our strategy and investment decisions, and gives us clear line of sight into our ability to deliver on our 2018 goals and beyond, which are to innovate for long-term growth, drive strong sales with competitively differentiated solutions, and build on our global scale. We remain very confident in the value we are delivering for our clients and believe that will continue to translate into strong returns for our shareholders. Woody will now provide additional detail on the financial results for the quarter and full year. Woody?
Thanks, Gary. I'll begin on slide eight with a summary of our consolidated results for the quarter. As a reminder, our first quarter of 2018 results and comparable historical financials reflect the adoption of ASC 606 on a like-for-like basis. In the first quarter, revenue increased 3.3% on an organic basis to $2.1 billion, and EBITDA increased 6.7% to $705 million. EBITDA margin expanded a healthy 340 basis points to 34.1%, and adjusted earnings per share grew 33% to $1.09 per share. We entered the year with a more focused set of assets. We're now seeing increasing demand in the markets and improved sales momentum. Our first quarter results reflect the strength of our business model and the success our sales teams have had over the last six months. Moving to slide nine.
In the first quarter, IFS revenue grew 3.2% on an organic basis to $1.1 billion, and EBITDA grew to $451 million versus $439 million in the prior year quarter. EBITDA margins expanded 10 basis points to 42.5%. Turning to slide 10. Banking and wealth grew 5.7% for the quarter. This positive performance was driven primarily by the onboarding of new wealth accounts, as well as higher processing volumes. Payments declined 1.6%, driven by the card production business, lower termination fees, and a tough license comparable. We saw some positive signs for the remainder of the year with healthy transaction volume growth in our debit business and fraud solutions. We expect these volumes to continue to grow, giving us visibility and confidence for low single-digit growth for the full year. Corporate and digital grew 5.7% for the quarter.
Growth was driven primarily by new client onboarding to our mobile platform, increasing user adoption, and higher volumes for our small business solutions. We also saw strong growth within our corporate treasury solutions. As expected, term fees were relatively flat at $17 million in the quarter versus $18 million in the prior year period. Turning to slide 11. In the first quarter, GFS revenue grew 5.4% on an organic basis to $927 million, while EBITDA grew 15.2% to $305 million. Margins expanded 650 basis points to 32.9%. Approximately half of this expansion was driven by continued growth of higher-margin IP revenue in the quarter and operating leverage in our business. The remaining expansion reflects the removal of our consulting business divested late last year. We are pleased with the consistent improvement of the margin profile of this segment. Moving to slide 12.
For the quarter, our institutional wholesale business grew 6%, and we saw increased volume growth across our solution suites in the buy-side space and strong license sales with global institutions. We are very pleased with the start to the year for this group. As outlined in the February call, we do not expect similar growth in the second quarter based on the timing of 606. We remain confident in our full-year growth of 4%-5% for GFS and an acceleration of revenue growth in the back half of the year. Banking and payments grew 4.8%, primarily driven by a large international core banking license sale and higher transaction volumes, resulting in growth across all geographies, in particular Asia Pacific and Europe. Moving to slide 13. Corporate and other revenue in the first quarter was $80 million, with an EBITDA loss of $51 million.
The corporate and other segment results include $67 million of corporate expenses for the quarter, compared to $70 million in the prior year period, a reduction of 5%, reflecting continuing cost management. Moving to slide 14. Cash flow for the quarter was $226 million. First quarter cash flow was primarily impacted by a one-time shift of approximately $100 million in tax payments related to Hurricane Irma from late 2017 into the first quarter of 2018. To a lesser extent, cash flow was also impacted by the timing of working capital. Despite these headwinds, which were contemplated in our full-year forecast, we remain confident in our full-year target of approximately 110% free cash flow conversion. Debt outstanding as of March 31st was approximately $9.1 billion. The weighted average interest rate is 3.3%, and approximately 95% of our total debt is fixed rate.
As expected, our effective tax rate for the quarter was 20%. For the first quarter, we returned $500 million to our shareholders through dividends and share repurchases. We paid $106 million to shareholders in dividends for the quarter and repurchased 4.1 million shares for approximately $400 million. In April 2018, we repurchased an additional 2.1 million shares for approximately $200 million, bringing our year-to-date total to 6.2 million shares for approximately $600 million. Approximately $3.3 billion remain on our existing share repurchase authorization. Finally, the weighted average diluted share count was 334 million at the end of the quarter, and our basic share count was 330 million. Starting this quarter, we will begin disclosing our revenue backlog. Revenue backlog is defined as revenue signed and under contract, which will be recognized in future periods. As Gary mentioned, the current backlog is approximately $19.5 billion.
Over the next 12 months, we expect to recognize about one-third of this revenue, or approximately 80% of our 2018 revenue guidance. The remaining two-thirds of the backlog will be recognized in future periods. Our consolidated recurring revenue figure for the first quarter was 84%, which is in line with what we have previously messaged. Moving to slide 15. This morning, we announced that we are raising our adjusted EPS guidance. Our previous full-year EPS guidance was $5.10-$5.30 per share, which we are raising by $0.04 given the strong operating performance in the first quarter. Therefore, we are now expecting 2018 full-year adjusted EPS of $5.14-$5.34 per share, representing 20%-25% growth. We are confident in our increased full-year earnings per share guidance. Although one quarter does not make a year, we are very pleased with the start of 2018.
For the remainder of the year, we will continue to leverage our significant investments in market-leading solutions and client service to produce strong cash flows and maintain a healthy balance sheet. This value-added business model creates predictable and consistent top-line growth. Our ability to drive ongoing margin expansion and strong cash flows allows us to invest for future growth and return cash to shareholders. In closing, we're excited to see you next week, Tuesday, May 8th at our 2018 Investor Day in New York City. That concludes our prepared remarks. Operator, you may now open the line for questions.
Ladies and gentlemen, if you'd like to ask a question, please press *1 at this time. You'll hear a tone indicating you're placed in queue, and may remove yourself from the queue by pressing the # key. Once again, if you'd like to ask a question, please press *1 at this time. Our first question will come to the line of Dave Koning with Baird. Please go ahead.
Yeah. Hey, guys. Great job again.
Thanks, Dave.
Thanks, Dave.
Yeah. I guess, first of all, Q1, if I remember right, in the whole first half, was supposed to be a little slower than the rest of the year. I think maybe even the margins, not quite as good as the rest of the year, but margins were right at the top end, I think, of guidance growth, revenue growth, right about at the top end too. Maybe what drove it to be better than you expected in Q1, and does that momentum kind of keep going through the year so it's maybe closer to the higher end of revenue growth than the lower end, or did Q1 steal a little bit from the rest of the year? Just that dynamic.
Yeah, no, I'll start Dave, and let Woody add. We had a very strong Q1 across the board. We had really good sales in Q4. It came into Q1 and had really good sales in Q1 as well. As we've talked in the prior in the call, that gives us confidence for the back half of the year because most of our sales, as you know, there's a long sales cycle, and then there's a long onboarding cycle. We also had some nice license deals out of GFS that the team did an excellent job on, in banking and payments in various regions. We continue to see good, strong momentum on our synergies.
While we finished the overall SunGard synergy program, we had not completely finished all of the programs we had lined up, so we've actually, we're onboarding some of those through the back half of last year and into this year, and that's generating results on the margin. Really just across the board, we just had a really good quarter. Woody talked about our transaction volume, so that we're improving in Q1 as well. All that just translates into very higher revenue than we expected at very nice margins.
Yeah, Dave, if you think about it, we certainly feel incrementally better about the full year. There's certainly some timing items in Q2 we talked about, but we feel incrementally better about the full year. That's why we raised both bottom end and top end of the EPS guidance.
Got you. I guess just to follow up then, as we think about Q2, because you mentioned the timing issues and stuff, is that more-- you were at about the top end, close to 3.5% in Q1. Should it be back down to 2.5% in Q2, and then the rest of the year, I guess we can figure out later. Is that kind of what you're thinking for now?
I would say more directly, we're right on top of consensus estimates for Q2.
Okay, got you. That's great. Well, great job, guys. Thank you.
Thanks, Dave.
Next, we go line of David Togut with Evercore ISI. Please go ahead.
Morning. Congrats on the strong results.
Thanks, Dave.
Thanks, David.
The institutional and wholesale business accelerated versus the fourth quarter, up to 6% organic. Are the drivers behind that growth sustainable and is 6% a number we should be thinking about for the rest of the year?
Well, let me talk about it from the sales channel. We're very pleased where the institutional and wholesale team is executing. We've had really good, strong demand for sales across those product lines. As we've talked in the past, David, we're seeing a lot of those customers, especially tier 1 institutions, where they built a lot of those capabilities in-house. They're now looking to lower their total cost of ownership. You've seen the growth in our utility and post-trade, but you also see good, strong license sales and also SaaS model sales across that group. It's really being driven by market conditions with just a lot of disparate capabilities.
We saw all this in the SunGard due diligence, but it's really nice to see it coming forward through the sales channel, and people are just looking for more effective w ays to really pull together the front, middle, and back office with capabilities that lower overall cost of ownership. Sales has been strong. You do get some lumpiness in the institutional and wholesale business because of the license fee nature, although we are pushing more and more to a SaaS model that'll level that out over time. We're very pleased with the growth rates in I&W, and we continue to see very strong demand in the pipeline, and the team's doing an excellent job executing against that pipeline and closing business.
Got it. You seem more constructive about end market demand than on the Q4 call. Are you seeing any sort of increased demand tied to the tax cuts in the U.S., banks being more willing to spend that dividend?
Well, at times we can be a little more conservative. We saw good strong demand in Q4, but frankly, one quarter doesn't make a difference for us. We've now had two really strong sales quarters in a row, which frankly, does make us lean in a little more to market conditions and seeing them improve. The pipeline looking forward into Q2, we feel good about our sales momentum going into Q2 and what the pipeline looks like there. I do think, right now, demand in the markets are improving.
I think, David, that really gives us higher visibility in both back half and more importantly, the out years, 2019 and beyond.
Got it. Quick final question. You alluded to some additional margin expansion initiatives beyond SunGard. What are those initiatives, and are those drivers of 2019 and beyond?
I think, David, one of the things we've been talking about in the past is data center consolidation and one of the factors that could drive future margin expansion. We're seeing strong traction in that program to date. We're going to talk more about phase 2 of that program next week, but we certainly see the ability to drive margins beyond 2018.
Understood. Thank you very much.
Thank you.
Next we have the line of Brett Huff with Stephens Inc. Please go ahead.
Good morning, guys. Congrats on a nice quarter.
Thanks, Brett.
Thanks, Brett.
Can you guys talk a little bit about your digital products? We've had some questions on trying to get a handle around what do you guys consider total digital revenue? Any sense of how that's trending, growing, accelerating, et cetera, as you think about your business?
Yeah. We haven't necessarily disclosed the exact revenue of digital. It's been a very strong grower for us over the years. As I just talked about in my prepared remarks, we're rolling out our new Digital One capabilities, which is really an omni-channel approach to digital, and frankly, will be our third generation digital that we've been deployed, dating all the way back to 2008. We continue to see very strong demand across our client base. We've disclosed on prior calls more than 40 million consumers running, for example, our mobile banking app. We think it's going to be a continued strong grower for us for the foreseeable future. Digital has really now moved beyond just the mobile banking experience and really has moved across true omni-channel, and we're excited about this next generation capabilities we're rolling out.
That's a great opportunity for us to upsell our existing clients, but also continue to take market share with our leading capabilities.
Thanks. The follow-up question is, as you look across your portfolio of assets, you guys are a really big company and have lots of broad products. Where would you like to most add scale, if you could? Where is a hole in technology that you feel most compelled to add to?
Well, for us, when we think across our various verticals that we're serving, retail banking, payments, institutional, and wholesale, from a true product gap trying to fill, I would say we've got very little gaps there. You've seen us fill a few over the last several years. We made an investment, for example, in wealth management. We did something with Clear2Pay on real-time payments. Honestly, we feel very good about the portfolio. One of the things we'll be talking about next week in the investor update is really line of sight, and you're hearing us talk about some of the new capabilities we're bringing to market, which will allow us to consolidate, frankly, in some instances, two, three, four platforms down to one next generation capability. From a scale standpoint, we do feel that scale's always important.
While we have tremendous scale, especially in the processing world, as we talked about our revenue backlog today, we'd be interested in adding scale across any of those three verticals, if it made sense for our shareholders and for the company.
Great. Thank you, guys. I appreciate it.
Thank you.
Thanks, Brett.
Next question comes line of James Schneider with Goldman Sachs. Please go ahead.
Good afternoon. Thanks for taking my question. Gary, could you maybe update us on the kind of the broad outlook at your bank customer set, both in terms of what you see with respect to the consolidation of your customers, the bank M&A landscape? Then also, it sounds like there's a little bit more incremental willingness to spend on discretionary items in terms of outsourcing. Is that something you think that's kind of really picked up in terms of your conversations with clients?
Yeah, Jim, it's a great question. We're not forecasting a drop in consolidation in the industry. We think the consolidation will stay steady, although, with me talking to clients as much as I do, a consistent theme, our valuations are getting expensive. Right? As people look at their various opportunities to do acquisitions, that will come into play. We do think through 2018, we'll see fairly consistent consolidation in the industry. From a demand standpoint, I do see increased demand. We're seeing it in our sales channel and closing. Frankly, we run multiple large user conferences just given the size of our company. We just completed, as I said, three weeks ago, our first one. We've got our next one coming up in another three weeks.
In both of those enrollment, it was up tremendously year-over-year, which also shows that banks are willing to start spending more discretionary dollars on travel to actually get exposed to new capabilities. There's a couple of things that would indicate demand is definitely growing over the last two quarters, and we're seeing that push into the second quarter as well. Woody and I are pretty confident in the remainder of the year that demand's going to continue. We also think that you'll continue to see some fairly significant consolidation going on in the industry, assuming valuations don't just continue to rise at too high of a rate.
That's helpful. Thanks. Maybe as a follow-up, speaking of expensive valuations, can you maybe just give us your updated thoughts on the M&A landscape in terms of targets for FIS, specifically your view on valuations and any kind of complementary businesses, whether that be merchant acquiring or I&W businesses, or other areas where you think there could be attractive targets, M&A relative to share buyback?
Well, we're confident that we can do M&A activity, and it drive tremendous shareholder value, as indicated by the SunGard acquisition. What I'd share with you is we also are a mature buyer. In other words, we can look across retail banking, we can look across payments, we can look across institutional and wholesale, and there would be certain opportunities in any of those three verticals that could make sense. Valuations are high. Probably not telling you anything you don't know. For us, we're very confident in our strategy we have. We're very confident on our increasing organic growth and expanding our margins.
If an opportunity presented itself that made sense, that brought us a new product or capability to one of those existing verticals or broke us into an adjacent market we found interesting, and we could do that and really return a lot of value to our shareholders, we'd consider it.
Thank you very much.
Next we move to the line of Joseph Foresi with Cantor Fitzgerald. Please go ahead.
Hi. I was wondering if we could get an update on the debt retirement plan, and have your targets changed at all with M&A being less of an opportunity?
I would say we closed out 2017 with about $8.8 billion in debt. That ticked up slightly in Q1, which was expected. We anticipate aggregate debt to be down slightly year-over-year and leverage to come down based on our EBITDA growth. We will pay debt down slightly over the course of the year. We've bought back about $600 million of shares to date, year-to-date, and we continue to look at that as a use of excess cash flow as well.
Got it. Then on the margin front, can you remind us of the margin drivers? I think the top driver has been data center consolidation in the past. Maybe you can give us an update on where you stand with that. I hope I'm not stealing anything from the analyst day. Thanks.
Well, I think more broadly, the last few years have been a lot of synergy from margin expansion perspective. This quarter, you had a couple of components. One, we really saw high margin revenue growth as the main driver of margin expansion. We certainly are seeing increased traction around the data center consolidation that will drive future expansion in the back half of the year and in 2019 and beyond. We've seen some divestiture of low margin businesses. That's a combination of the three main drivers of margin expansion.
Thank you.
Next question comes line of Andrew Jeffrey with SunTrust. Please go ahead.
Hey, guys. Good morning.
Good morning.
Good morning, Andrew.
Pardon me. Interesting to hear you talk a little bit about volumes as well as mix. I think maybe, Woody, you touched on a little bit in GFS in terms of license sales. Can you just expand a little bit on how sensitive the business is broadly to volume, how much visibility you have to changes in volume? Then also on the revenue mix side, recognizing that SunGard historically was a little more license heavy than FIS, is there anything meaningful that's changed sort of in the complexion of the business in that regard?
No, I wouldn't say we've had a meaningful change in the complexion of the business. We had an 84% recurring revenue base as the starting backdrop, which is very consistent with what we've talked about in the past of 80-plus %. We did have high license revenues in the quarter. We saw also increasing processing volumes. The processing volumes are a little more difficult to predict. I think you look at it in terms of
Looking at both those combined, we feel very good about what we have, but no major change in the landscape or the revenue type in terms of what's driving it.
Okay. On the backlog figure, which is helpful, thank you. Any color on how that's grown historically and how that's translated into current period revenues?
Yeah. I would tell you our back testing would say the translation into revenue has been very similar, which really aligns to about an 80% recurring revenue number. That has ticked up some as we've divested the non-recurring revenue businesses that we've talked about in the past. We haven't spent as much energy going way back looking at backlog as it's a relatively new disclosure. Obviously, we'll be trending it going forward. It's obviously ultimately going to drive in line with our longer-term growth rates.
Okay. As the last one for me, in that backlog figure, is the increment, let's say, just sequentially in the first quarter, sort of similar to the mix of business? In other words, a little more contribution from GFS than IFS?
I would say the contribution is similar. As you think about our business on a broad scale, Andrew, it's a very predictable-.
Sure
Forecastable business. We have some lumps here and there in terms of license. Again, very predictable in terms of our ability to forecast.
Yeah, keep in mind, our IFS business has a much higher recurring revenue rate, right? As you think about it really is that revenue under contract based on the remaining term of the agreement and onboarding. To Woody's point, it really onboards in that backlog very similar with the recurring revenue rate of the various segments.
Okay, thanks a lot.
Next we go to the line of Glenn Greene with Oppenheimer. Please go ahead.
Thanks. Good morning. Gary, I just wanted to go back to sort of the sales strength you've seen for the last couple of quarters, and nice to hear you talking about the macro environment getting better. One of the first companies sort of acknowledging that. My question is really more, where are you seeing the pickup in demand across products, service sets? If there's a little bit more color you could give us on where specific pockets of demand are.
Yeah. Glenn, it's a great question, and honestly, we're seeing good strong pull-through across a number of our verticals. We're pretty excited about all the new capabilities over the last three years. We were doing a lot of integration work on SunGard, but we were also doing a lot of innovation work around new capabilities, and a lot of that's coming into market in 2018. We've seen really nice growth across our digital channels, both in volume but also in sales momentum. We're seeing several of our back-office services as people are trying to drive cost out of their businesses, and lower their overall total cost of ownership, seeing nice growth there. As we move over into GFS, we're seeing good demand on our new core capabilities, especially in some very large institutions, and seeing good traction around some of those components and driving those into market.
We've talked on several questions today about the strength across institutional and wholesale. It's really a nice blend, and that's one of the things that we always have felt great about FIS, is we have such a diverse product portfolio. Various clients are investing in various areas based on their needs, and given our capability and strength of our capabilities, we can participate in those engagements.
Okay. Woody, just a quick question on the payments growth and outlook within IFS. That was the one sort of negative in the quarter, it sounded like you've got confidence that that kind of accelerates in the back half, I think you suggested low single digit or some growth for the year. Maybe just get a little bit of color why you've got visibility for payments growth getting better in the back half.
I'll get more specific on Q1. We had a term fee that was about a point of headwind. We had a license last year that was a difficult compare, which was about a point. You add those back, you're getting roughly two points of growth. We anticipate seeing that. We saw underlying volume growth in both fraud and debit and are seeing visibility into those volumes into the back half of the year. We think that's the low water mark for the payments business this year.
Yeah.
All right, great. Thank you.
Thank you.
Next question we go to is Bryan Keane with Deutsche Bank. Please go ahead.
Bryan?
Sorry about that. Just thinking about the increasing demand. You guys are seeing better sales, pipeline's strong. We got a good recurring revenue backlog. You guys decided not to raise the revenue guide. When does that translate all the stuff you're seeing better than expectations into potential upside to your top line?
Yeah, I would tell you, if you think about our sales and then when the onboarding, it gives us higher confidence into the acceleration in the back half of the year we've talked about. Also gives us a point of view around further accelerating in 2019 and beyond. We were very good this quarter. 3.3% was still within the top end of our range for the year. We're relatively conservative, so one quarter doesn't make a year, but as we talked about, feel incrementally better about the year, and we're certainly ahead of our plan to date.
Okay, helpful. I did see the stronger buyback in the quarter. Is that because you guys aren't finding much on the M&A front, and we should expect more capital return in terms of buybacks?
I think about it in terms of M&A continuing to be a part of our long-term strategy. The deal's got to fit strategically, and it's got to make good financial sense. We're disciplined buyers. We don't just buy to buy, and we feel like our balance sheet's healthy. We feel like our leverage is about where we need to be. We would anticipate continuing to see share buyback over the course of the year, absent a good M&A deal with a good valuation that fits strategically. I think that's evidenced by year to date, $600 million of share buyback.
Great. Thanks for the color and solid quarter.
Thank you.
Next question comes in on Georgios Mihalos with Cowen. Please go ahead.
Good morning, guys. Not to beat a dead horse around where the strength is coming from within the business, but maybe instead of looking at it from a vertical perspective, Gary, maybe you can talk a little bit about spending patterns in some of your tier 1 banks versus some of the smaller community banks and maybe international versus domestic. Is it sort of broad-based strength, or is something really standing out between those groups?
Well, I think, if there would be something that's really standing out, I try to make some of those comments, Georgios. We've talked a lot about domestically in community banking, this need to outsource virtually 100% of their capabilities on a SaaS model. What we're seeing, especially in the larger banks and regional banks, both domestically and internationally, I mentioned this in my prepared remark, we continue to see an increased demand for SaaS in those markets as well. One of the things that I've been surprised by, we continue to talk about that, but the size of institution that's willing to consider outsourcing a product, whether it's debit or credit processing, whether it's core banking, whether it's institutional and wholesale, post-trade, we're continuing to see a stronger increased demand in those outsourcing trends, which gives us a lot of confidence.
Now, in the short term, Georgios, as you expect, especially in that GFS market, we have more license fees. There's a balance as people move more to a SaaS model, we could see some lumpiness and actually some pullback in our license fees. We're very pleased by that trend. Obviously, as our recurring revenue continues to go up in GFS, that'll raise the overall recurring revenue of the company, which certainly gives us much, much higher visibility, not only into our quarters, but into multiple years out in our backlogs, et cetera. I would say that's the thing that probably is standing out the most for me, and we just continue to see that trend accelerate in the last several quarters.
Great. That's helpful. Then Woody, can you just remind us what the expectation is for term fees for the full year relative to 2017?
Yeah, our expectation is relatively flat. We've had about $62 million last year. We've got roughly $60 million in our forecast for the year.
Great. Thank you.
Our last question will come from the line of Paul Condra with Credit Suisse. Please go ahead.
Hey, thanks. Good morning. Thanks for taking my question. I just wanted to ask about the competitive environment, and I wondered if that has anything to do with the improved demand that you're seeing from your customers. I know that I think a few quarters back you mentioned that being a bit more of a headwind. Can you comment on that and talk about how that's evolved?
I think it's still a competitive marketplace no matter what market we're participating in. I think we've talked in quarters in the past, we might run into different competitors depending on the geographic region or the particular product line. As I've also shared, we've got extremely competitive products, and we're competing very well in the market. Our sales teams are executing very well. We continue to invest behind our sales force and grow the sales force, in our various geographic and market regions. That's obviously going to continue to pay benefits as well as we onboard additional sales reps and get them up to speed. I would say we've not seen any change in the competitive environment to speak of. Our products just continue to perform very well in market.
Great. I guess, just another question around demand as you think about the impact of tax reform, and I think a lot of institutions maybe are still in planning stages, but you're seeing demand, I guess, early. Does it feel to you like a lot of your customers are budgeting things a year from now, two years from now, or are things really getting underway this early?
I really do see, we've talked about a lot on this call. We really are seeing just increased demand in market. Q4 was a strong sales quarter for us, pretty much across the board. Q1 was a strong sales quarter for us across the board. Pipeline continues to grow and have good velocity. Interesting on our user conferences with the increase in participation. Typically, that's the very first thing that's cut, is travel. If people are really curtailing expenses. We're seeing nice increase across all of our major conferences. All those would be good indicators for me that demand's growing, and we feel it's going to continue because people are really entering into, as you guys know, our contracts are long-term in nature. Typically, the sales cycle is anywhere from 6 to 12 months, probably closer to the 12 months in duration.
Our onboarding times are in a similar range. These are big strategic commitments our clients are making to purchase mission-critical, IT-centric capabilities. We feel good about it.
Okay, great. Thanks. Appreciate the time.
That was our last question. I'll turn the call back over to our speakers.
Thank you for joining us today and for your ongoing interest in FIS. We are pleased to start the year with a quarter of strong revenue, profitability performance, and earnings growth. Importantly, we are pleased to have a robust pipeline that positions us for another year of strong results. I look forward to sharing additional details about our accelerating growth plans and multi-year outlook when we convene at the St. Regis in New York City next week for our 2018 Investor Day. Joining Woody and me for a strategic update will be Marianne Brown, Chief Operating Officer of our Global Financial Solutions business, and Bruce Lowthers, Chief Operating Officer of our Integrated Financial Solutions business. In closing, I'd like to thank our loyal clients who depend on and trust us to keep their businesses running and growing every day.
I'd also like to thank our leaders and employees for their hard work and dedication in serving our clients. It is because of both that FIS continues to empower the financial world. Thank you for joining us today.
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