Well, good morning, everybody. Welcome to FIS's 2018 Investor Day. On behalf of Gary, Woody, Bruce, and Marianne, I'd like to thank you for attending today here in person. I'd also like to acknowledge and thank those who are participating via our webcast today. Today's discussion will contain forward-looking statements which are subject to risks and uncertainties as described with our various 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. Please refer to the safe harbor language. Today's remarks will also include references to non-GAAP financial measures in order to provide more meaningful comparisons between the periods presented. Reconciliations between the GAAP and non-GAAP results are provided in the appendix of today's presentation.
I'd also ask, as a courtesy to our presenters this morning, please make sure your devices are turned off or in vibrate mode. With that, it is my pleasure to turn the morning over to FIS's President and Chief Executive Officer, Mr. Gary Norcross.
Good morning. On behalf of our board of directors, the entire executive management team in front and in back, and our more than 53,000 employees, I also want to issue our welcome to the 2018 Investor Conference. As Pete mentioned, I want to kick it off today and give you an update on our strategy. We've got our two Co-Chief Operating Officers here. Bruce Lowthers will be talking about our Integrated Financial Solutions business. Marianne Brown, who you've met prior, who joined us through the SunGard acquisition, will be taking us through the Global Financial Solutions business, who's Chief Operating Officer. And then Woody, of course, who everybody knows. Woody will be coming up and talking about the financial side and increasing shareholder value.
Throughout today, you're going to hear a very consistent theme, and this is a theme that I wanted to share with you before I got kicked off on my strategic overview. That theme is why investors choose FIS or why you should choose FIS. Frankly, as we think about the company, we think it's a great buying opportunity for this stock. We have historically traded at a multiple deficit compared to a lot of our peer group, and frankly, we think we've eliminated those reasons for that deficit to exist. So we think there's a high opportunity for the stock to appreciate given the performance of the company. As you think about the company, the first theme that you're going to hear throughout today is really the theme around market leadership.
There is nobody in financial technology that has a broader set of solutions that spans a broader geography set or a broader client base than FIS, and this is a key differentiator for us. As you see various things that go on in various markets, we're somewhat insulated from that because we have, obviously, exposure to other markets that we can sell into and grow. That market leadership, a huge change that's occurred since the last time we met two years ago, was the high-quality nature and recurring nature of our revenue stream. You'll hear both Bruce and Marianne talk a lot about this.
Over the last two years, we've divested a number of companies out of our portfolio, brought focus to the overall company, and improved the quality of that revenue, which gives us much higher insight into the future and much higher insight into the growth of the company going forward. This high-quality revenue makes it very easy for us to predict double-digit earnings per share growth. This is something that we've consistently done over the last three years, and as Woody will guide, we'll continue to do over the next three years. Of course, if you take these three, market leadership, high-quality recurring revenue, and double-digit earnings per share, that translates into very strong free cash flow. Two years ago, when we stood here, one of the things that we needed to work on was improving our cash flow generation.
That's something this leadership team has been very focused on. I will tell you today, we're leading the industry from the standpoint of cash flow conversion, and that's going to continue. We think all four of those things give the people in this room a very compelling investment thesis going forward over the next three years. We're excited to spend the morning with you, look forward to your questions. We think, obviously, FIS is a great company to invest in, not only today but for the future. With that as a backdrop and a key theme that you'll hear throughout the day, I wanted to start and talk about, give you an update on our strategy. I wanted to talk about where FIS is today. We've made a lot of changes since our last investor update two years ago.
Also want to talk about our growth strategy. Now, I don't want to be a spoiler alert, there hadn't been a lot of changes on our strategy going forward. We think the strategy's working. I want to go through it again and make sure you understand how we're thinking about growing the business and what we think the results of that's going to continue. Today, we're a company with more than 53,000 employees. We have more than 20,000 strategic clients. We operate in more than 100 countries. As I talk about that market leadership and that diversification, you can see we're a very global company from that standpoint. If you remember, two years ago, we had almost 57,000 employees, and it would just indicate us bringing focus back to that portfolio with our divestitures. If you look, we've had a lot of recognition as a company.
last alone, recognized again as number one on the Fintech 100. That's five out of the last seven years we've maintained that number one position. We also were recognized by Fortune as one of the world's most admired companies. We also maintain the number one position on the RiskTech100 for three years in a row. As you think about risk especially, I will tell you that is growing more and more important to be competitive and be able to take share in the industry. Everybody's looking at how do they build trust around their data, how do they secure their data, how do they minimize their risk, and certainly FIS is leading that way, and it becomes a very strong differentiator for us as we sell into the market and take share. These are all great recognitions of the company.
We could spend the rest of today bringing up awards that we've won around our products. We've got a few highlighted here, whether it's the best use of cloud technologies, whether it's recognition around our wealth management capabilities or investment capabilities. The point here is not only does the company have scale and position, our products have scale and position. They're industry-leading across the board and continues to provide us a lot of success. If you think over the last two years, we've seen a lot of revenue expansion. Even with divestitures, we've moved from 2015 to $6.3 billion. We've grown revenue about $2.2 through both organic and inorganic activity. What's interesting about that revenue is really the quality of the revenue. As you guys know, we had some very large people-based businesses historically that came in at lower margins.
If you look now, almost all of this revenue is 100% tied to some form of software product FIS produces or partners with. The results of that are very, very strong EBITDA margin expansion. We've seen over 660 basis points of expansion just since 2015. The midpoint of the guidance is listed here, I want everybody in the room and listening over the web streaming, 36.5% is the new low water mark for our margin. What you'll hear today is not only have we established this as where the company's going to perform, we have clear line of sight of how we're going to increase that margin in the coming years. We have programs that we're focused on, that we're executing against.
Many of those programs are more than 50% complete, we have due dates on where all those deliverables are going to come. You'll hear a lot of confidence out of the leadership team on expanding these margins further. We believe at this point in time across our peer group, many of these margins are industry-leading and how we continue to expand them, we're real excited about. If you look at the quality of the revenue and the margins, obviously, we've had very strong earnings per share growth, 18% compounded annual growth rate since 2015. The thing we're most excited about is what I mentioned earlier is the free cash flow conversion. We're guiding to $1.9 billion this year. Think about the $2.2 billion of additional revenue generated $1 billion of free cash flow.
What you'll hear from Woody is this free cash flow conversion is going to continue. We're real excited about the opportunity as our organic growth, as we grow, as our earnings continue to expand and the free cash flow we produce and what we'll be able to do with that. Of course, if you've been a shareholder, you've been rewarded to be a part of FIS. Whether you look at the one, the three, the five, even the 10-year, we've outperformed the S&P 500. As I shared on my opening comments, given the gap to our peer group on some of the multiples we trade at, we think there's further acceleration in the stock, and certainly something that we hope everybody continues to participate in. With that as a backdrop, frankly, FIS is not the company you saw two or three years ago.
We have structurally transformed the company. We have divested a lot of our portfolio that doesn't make sense, that didn't have IP attached. Now what I'd like to do is really move into our growth strategy and how we're thinking about the next three years. As I started, our growth strategy is not changing. We find it's a very consistent approach. It's something that the leadership team is very excited about. It's something that's working for us in the market. To remind everybody in the room, we start with our base business. We know that the first leg of our growth strategy is we have to grow the $8.5 billion organically. Strong organic growth gives us permission to do the other things around innovation or any kind of merger acquisition that we might want to do.
Focusing on the base business, generating new products, pushing it through our cross-sell and up-sell engine into those 20,000 clients is going to be very important. Bruce will talk about a program that he launched in his prior role about mass enablement. This is all about how do you take new product capability and deploy it across thousands of institutions very quickly. Marianne will talk about how do you bring solutions together where they were just products in the former SunGard base, how do you bring solutions together and leverage her chief revenue officer to drive that across the entire Tier 1 marketplace? We have real examples of this strategy working. The base business execution is very important. The second leg of our organic growth strategy is around innovation. We know that the market is moving very quickly.
We can't just rest on our status quo. We just can't keep the exact products we have. We're going to have to continue to redeploy our capital in creative ways to innovate, to be able to build new products that our clients are asking for and need. We'll talk a lot about innovation here later in the presentation. The third leg is really inorganic. One of the things that we've shown, it's not just about acquisitions, it's also about divestitures. It's important for us to keep the portfolio focused, allow the leadership team to focus, to allow us to serve our clients in the most effective way. Over the last two years, we've done a lot of divestitures, we think that's paid off for the company.
There are a couple of other groups that we would love to divest. You guys in the room know about those as you think about businesses we report in our other segment. Fundamentally, most of the divestitures are behind us. We're very focused on our portfolio, inorganic activity could still play a role. All of these things, Woody's going to focus on this the most is our financial discipline. We are absolutely not going to give up our investment-grade balance sheet. It's something that's very important to us. We're committed to that, we'll continue to have that strong balance sheet that allows us to invest for the future and drive organic growth. We're going to continue to focus on strengthening cash flows.
Woody will talk about we're going to continue focusing on returning cash to our shareholders because we know that's a very important part of the investment thesis. Anything we would do with the prior three legs of the strategy, we would not impact or change the way we approach from a financial discipline standpoint and what you've seen over the last several years. As we think about this growth strategy, what I want to do is spend a little time about each segment and give you some insight into what we're thinking. Our base business, we're very comfortable with the markets we're in today. We obviously got large scale now in our banking business and our payments business and in our capital markets business. These are three very attractive markets for us.
This year, they're estimated to spend about $300 billion. It's a very large market, plenty of room for FIS to grow and take share in. It's actually forecasting a growth rate of 5%. A lot of growth and spend in this area. It's a very healthy market. If you look at some of the things they're spending on, they align very well with our innovation that we've been deploying in market in 2018 and things we've been working on for the last two or three years. Whether it's digital, whether it's data analytics, which we've now grown to almost a half a billion dollars business around data analytics today. When you look at cybersecurity, I mentioned us being number one on the RiskTech100. The investments FIS has made in cyber, how we deployed those lines of defense in our data center leads the industry.
Our clients tell us that, our regulators tell us that, we're very focused to continue to execute and use that as a selling differentiator for us. I know I talk a lot about the size of the business. I talk about our solution breadth. At the end of the day, for the people who are not familiar with FIS, it's really pretty simple what we do. We focus on digital enablement. We focus on account processing. We focus on movement of money. Frankly, we focus on operational excellence. The nice thing about this base business, this $8.5 billion, very long-term contracts, four to five years in duration. All of our contracts have some type of cost of living adjustment on them. We get paid as our clients grow. As more accounts come on, we're the benefactor of it.
Bruce will talk about 90% of his business is a SaaS model today. Recurring revenue, highly sticky. All of our capabilities are mission-critical. For our clients to operate each and every day, they have to use our software. These are not discretionary in nature. Marianne will talk about the growth in her SaaS model and the growth of her recurring revenue, which now that segment is up to 70%. You can see the scale and volumes across the bottom. This is a real differentiator for us. As you think about our global expansion opportunities with now over 27% of our revenue outside of the U.S., which is one of the fastest-growing areas for us. If you look at the mission-critical nature of our IP-led solutions, all of this plays very well.
As we think about the business, we do have three key areas that we certainly have been investing in to make sure that we optimize that business and continue to grow. The first is our people. I want to be real clear. There is a war on talent. I know a lot of people have brought this up. A lot of people have asked me about this. The market is moving very quickly. We took the opportunity through the Tax Act. That benefited us by $200 million this year. We took $50 million. We did something a little different than some of the other companies. We took $50 million of the $200 and invested back in our people. We launched programs around student lending repayment. We launched programs that improved our tuition reimbursement. We launched training programs. We increased merit pools.
Not only do we have to attract the best talent in the industry, we have to retain the best talent in the industry. We know in order to continue to grow the business, we're going to have to do that. The good news at FIS, we have very low turnover. We are exceptionally focused on our talent pools, and we continue to hear great feedback from our surveys on this investment into our people and into our talent going forward. We don't just stop with people. A couple of years ago, we announced a data center consolidation project, and this is where we really started investing in technology and infrastructure. I'm very pleased to tell you that we have progressed substantially on that program. We're going to complete it by 2020.
The end of last year, we had over 38% of our compute in the private cloud at FIS. By the end of this year, we'll have more than 50%. By 2020, when we complete, we'll have more than 80% in the private cloud, and that's a very important modernization for our clients. They get speed to market. They get agility. We get to lower our cost and expand our margins. Woody's going to give you a lot of insight into how much run rate expense that's going to save us. That's just one of the many programs that we're doing over the last three years. We're also modernizing our application layers to take advantage of the cloud.
We're going to talk about, as I said, how we're spending that capital, how we're redeploying that capital, and frankly, when we see the capital actually lower, beginning in 2021 and why. The third area that we focus on our base business is really around tools and processes. We took the opportunity when we did the SunGard integration to look and say, what are the enterprise tools and processes that we need to launch across the company to really maximize not only our expense savings, but how do we optimize the results coming out of the company? SunGard had a number of enterprise tools they were using that FIS took advantage of. FIS had a number of enterprise tools that we deployed across all of SunGard.
Those programs are pretty much complete now at this point in time, and we're seeing phenomenal results of being able to view enterprise processes on a global basis at FIS, and it's really driving a much higher efficiency, which also helps us translate into bottom-line impact. All three of these things really do, and you'll hear the chief operating officers talk about it, optimize our returns for the future, whether it's the best in class and talent that allow us speed to market around innovation and delivery, consistency of process, our global reach, and our capital optimization programs all give us high confidence in the base business and continue to grow and expand. We move beyond base business, though, we also know we've got to innovate, and we're doing a lot of things around innovation.
Since the last time we met two years ago, you've seen our capital slowly tweak up, and this has been by design. We're in a big phase of transformation for the industry that we're real excited about and modernization. We've talked about what we're doing on the cloud. As I said, by the end of this year, we'll be at 50% in our private cloud. Well down the path of consolidating our data centers. You'll hear in a minute the amount of new product we're bringing to the market in 2018, all based on next-generation technologies and how we're upgrading our clients to this future state. This is not new to FIS. We've done this on multiple iterations as technologies evolve.
What you'll see is by 2021, you'll see that capital start coming back down to a more normalized about 6% of our revenues, which is where traditionally our capital has been deployed. We're real excited about these programs and really excited about the success. We think about innovation, as we think about how we're deploying that capital, it really comes across three legs of the innovation stool. The first I want to talk about is really research and development, which is really our existing solution assets, how are we investing in them and make them not only the most competitive in marketplace, but how do we continue to innovate and transition those legacy applications to the future? The team is doing an excellent job on that. Bruce and Marianne both will talk about new capabilities that we're bringing on the market.
What's important about this area is what we're not going to invest in. A lot of our products are in late stages, we've actually pulled the capital and done an excellent job of lifting that capital, no longer spending it on that legacy application and putting it towards the future. It's really resonating with our client base. We just had one of our largest user conferences about three weeks ago. It was absolutely sold out. We've got the next one next week. Once again, huge attendance. All of our customers are coming to see this investment and to get on the upgrade path to the future. We also know internally we can't innovate everything. The market's moving too quickly. We need to make sure we stay ahead of it.
Another thing we've consistently done, and we've been doing this since 2008, is really venture-type investing. This is where we look for products that might be three or five years out from a market view. They're typically in one of their early-stage rounds of fundraising, we'll take a position in those companies, we'll then put those products through our go-to-market sales strategy, give our clients an opportunity to be early adopters. One of the greatest examples of that was in 2008 when we did mobile banking. Mobile banking has now moved on, turned into an acquisition for us, and now has resulted in the Digital One platform that we'll be launching in 2018, which is third-generation digital for the industry.
This will be an important way for us also to look out in that three to five-year time horizon to make sure that we're seeing where the market might progress and take advantage of that for our more than 20,000 clients. We also are doing things with an accelerator. Many people in the room might not understand what an accelerator is. We just launched our third one in partnership with the state of Arkansas last week. The first two have been wildly successful. This is where we're really looking out further than five years. This is typically a proof of concept at the idea phase. We run them through an extremely aggressive program.
Obviously, the hope would be that those companies would be successful, move into the funding rounds of raises and take those products and mature them and put them to market, allow us to bring them through our sales force, eventually might translate into acquisitions for us. This has been a lot of fun because we've been able to get our clients exposed to some of the stuff we're thinking about five, seven, 10 years out. As I said, the first two have been phenomenally successful. We've had more than an 80% success rate coming out of these accelerators that move on to funding. If you know much about accelerators, that's an extremely high percentage.
These three ways are the ways we keep ahead of the industry, how we think about innovation in the short term, medium term, and long term, and all very important to continue to help FIS grow and accelerate our organic growth. As we think about that innovation, we also want to make sure that our spend goes towards the future. I talked a lot about that. Bruce and Marianne have done an excellent job of redeploying capital. I talked about the slight tweak-up of capital, but also under that has been the movement of spend from legacy systems to the future, which has allowed us to be so far along with our modernization programs that we're talking about today. Everything we're doing is component-based, open API. We want to make sure that we're getting leverage. We want to make sure we're getting reuse.
We no longer want to build application or software multiple times. We want to get heavy leverage out of that so that various businesses can consume those components, so some of our largest tier 1 clients can consume those components. This is very different than some of the technology and software that exists in market today. Everything we're building is cloud ready. We're much further down the path with cloud deployment than any of our major competitors, and that's going to continue to accelerate. Building those applications to take advantage of the cloud are very important. We're seeing tremendous speed to market. We're seeing tremendous redundancy and availability improvements, substantial cost lowering on this. A lot of benefits come with cloud, and we're real excited about driving that in a highly secure way. Finally, we're also spending a lot of innovation around unified client experiences.
All of our clients, you'll hear from Bruce and Marianne a lot, they're all trying to take their front, their middle, their back office components. How do you solution that, and how do you get a unified experience across that? How do you get cost out of the ecosystem? How are you going to leverage bot technologies and artificial intelligence to help reduce my cost? All of these things come in the form of that unified client experience and being able to drive that, integrating our capabilities and solutions and services certainly resonating with our client base.
If you look at our innovation principles as a backdrop, as I shared with you, this year, probably one of the biggest years for us launching new capabilities in market, I think that's why we're seeing so much excitement, one of the reasons we're seeing so much excitement in our user conferences. The team will go over these in a lot of detail, our next generation core banking. Bruce's mission is how do you take nine core banking systems down to a much fewer number over the next three to four years. Leveraging these components that we're building, upgrading our talent, our clients to the future is how we're going to do that. Launching a true open API framework called Code Connect. We launched it in Q3 of last year. We have 1,300 APIs in that already, and it's going to grow very rapidly.
We had to do this for some of the regulatory changes in Europe. Why not bring it to the U.S. and be a leader in the space? Open up some of our business, allow our customers to be able to get access to their data in a more efficient, effective way, us leveraging our own APIs to make sure that we take advantage of those. Launching our Digital One, I mentioned that earlier, our third generation of digital technology being launched in 2018. Unifying all of our payment structure. We all know that payments is going to move away from a piece of plastic. We're all going to move to some kind of digital enablement payment ecosystem.
Being able to leverage our next generation payment capabilities where the consumer can actually direct their payments, they can at least cost route their payments for us to get benefit across our fraud engines, for us to get benefit across our case management systems, and frankly, across our authorization and driving engines. All of this is coming through Apex. That's being launched. Phase one of that's going to be launched in 2018, and it's going to generate significant revenue and savings to our company in 2018 and growing into the future. Marianne will talk of an example about us launching a next generation trading platform. This was a platform that was being built when we bought SunGard. We've brought that to conclusion and now rolling that out market. As I've shared with you multiple times of where we are on our cloud journey.
All of this, we feel puts FIS in a very differentiating position when you think about the next generation of industry platforms, and these are things that all of our clients are looking to do and need help. When you think about the base business and you think about innovation, we do have to think about inorganic activity. This year we're real proud. This year's our 50th anniversary as a company. There's not too many technology companies that can say they've been around for 50 years, and that's something we're very proud of. We still have our very first client we ever signed, by the way, in 1968, and we're celebrating that 50 years with that client next week at the conference. If you look over that transition over 50 years, there's been tremendous changes in the industry.
There's been new technologies come on to the forefront. This started in a mainframe era, then mid-range came on, then PCs came on. There's been multiple solution evolutions and transformations over those years. What I would tell you, FIS has done an excellent job historically leading our clients through that change. If you look, sometimes we've done a lot of this through building internally. We've done a lot of this through investing internally with high success rates. There are times where we need to do inorganic activity. As I remind everybody how we think about inorganic activity, it's a very straightforward strategy. We're looking for something financial services-focused . We're looking for something that brings a new product or a new capability to an existing market we serve.
How do we take our 700 to 1,000 sales rep organization, how do we feed more product into that group across all of our markets? Very important. New product, new capability at an existing market we serve, or break us into an adjacent market. The perfect scenario is that it will do both. We've had some real high success. Oh, it went backwards. We've had some real high success with delivering shareholder value through these inorganic activities. I'll highlight our largest ones, whether it's SunGard, Metavante, eFunds, or Certegy. In all examples, we exceeded substantially our operation expense targets. As we think about operational expense synergies, we exceeded those significantly. You saw SunGard. We announced $200 million. We thought it might be aggressive given the fact it'd been under 10 years of ownership under private equity. You saw that we capped out the program at $320 million.
We exceeded that. You also saw in Q1, even though the program's over and the integration is officially declared complete, we're still implementing programs, and you saw us rolling that into Q1. There continues to be more and more opportunity to more tightly integrate these companies. The thing I would point out, we've done an excellent job of continuing to grow these companies organically as well and accelerate them. When we bought SunGard, we modeled a 3% organic growth rate, several people in the room called us and talked to us about us and said, "Look, they've historically been a negative growth company. They're now back to flat growth.
How do you think you're going to get to 3%?" Marianne Brown will talk about some of the things that she implemented out of the FIS playbook to help leverage the sales force on a more global basis, to really cross-sell and pull through additional products to build solutions. As you've seen, that business has actually grown about 5% historically over the acquisition. It's been a very strong grower. In Q1 of this year, it was 6% grower. We think that FIS has a very good ability to do large-scale integration and acquisitions. I'll tell you, we're only going to do them if they fit our strategy and they fit our financial model. We're not going to overpay and be irrational. We're not an irrational buyer. We've never been. We have a lot of patience in the market.
Frankly, we're going to focus on things that are going to drive and improve increased shareholder value. We also know that we've got to divest certain portfolios. We know that bringing focus to our portfolio is very important, and you've seen us do that. In 2017, obviously divested of our public sector and education business coming out of SunGard, great businesses, just not an industry we were in. You also saw us divest our solution around Capco. Capco was a great acquisition for us. We thought from a strategic standpoint, we're going to buy a consulting firm. They were going to be a tip of the spear. They were going to pull product and capability into the large tier 1s. What we saw was given FIS' scale and reputation, we were able to pull tremendous consulting in.
Now that we own 40% of them, I would tell you that strategy still works and still benefits us. Capco is doing very well. They're growing very rapidly, but we don't have the issue around margins. As we grew Capco very rapidly, obviously, it diluted our margins. The margins that people-based consulting businesses come in at a very low margin, and it just wasn't a business that made sense for us to be in, being the fact that we're so software-centric. You've also seen us announce in Q1 of this year that we're moving out of a country or a geography. Our Kingstar business is in China. China's a great market. We're just extremely subscale. We knew to get to a major position in China, we were going to have to invest a lot of money.
It just doesn't make sense for FIS at this point in time. The markets we're focused on outside the U.S. are growing very nicely for us. We want to continue to bring that discipline and focus. Before I turn it over to the Chief Operating Officers to talk about some of the operating segments, hopefully what you're seeing is our execution is yielding results. We've got a very focused plan. That plan has very definitive milestones. We're very excited about continuing to grow this company going forward. We're investing and modernizing. This is the time the industry is being modernized, and FIS is leading the way. Most of our programs are more than 50% complete.
While everybody thought we were just integrating SunGard, we were also making a lot of investments, a la cloud and a la some of the new products I presented on the prior slide. Very predictable performance. Our recurring revenue gives us high confidence in our overall outlook, gives us high confidence in our ability to expand margins, yielding strong EPS growth and free cash flow. With that, what I'd tell you is that provides you guys very consistent, predictable shareholder return. What I'd like to do is introduce our two Chief Operating Officers who are going to talk to you about IFS and about GFS. Marianne Brown, as I mentioned, you guys met Marianne two years ago after we did the SunGard acquisition. She was Chief Operating Officer at SunGard. She's been a wonderful addition to the team.
Frankly, a lot of the FIS playbook around integration, Marianne and her team led that process. She's really done an outstanding job of pulling together, moving from a product-focused organization to more of a solution-focused organization to really getting cross-sell and pull through in our tier 1s in our global marketplace, which is why you've seen the accelerated growth. Both of these guys will focus on their markets, how they're going to continually modernize and optimizing results. The new person you haven't met is Bruce Lowthers. I tell you, I can't be more thrilled that Bruce is the Chief Operating Officer of the IFS segment. As you guys might know, Anthony Jabbour was recruited away. He's now CEO of Black Knight. We implemented our succession planning. Bruce has been with the company 16 years and running some of our largest businesses within IFS.
What's great about Bruce is he's a serial entrepreneurial. He's done four startups himself, all with high success in his early years of his career. You're going to find he's extremely product and solution-focused and all about speed to market and how do you get more product and maximizing and optimizing sales performance to pull the products into the customer. I think Bruce is just going to do an outstanding job of accelerating organic growth in IFS and continue to expand the margin. With that, I want to thank you guys for your time. Look forward to coming back up for Q&A, and I'd like to introduce Bruce Lowthers. Thank you.
Good morning. Thank you, Gary. Appreciate it. It's great to be here today. As Gary mentioned, I'm Bruce Lowthers, and very fortunate to be here. Since this is my first Investor Day as COO, I'm excited to talk about IFS and really my focus on accelerating our growth rate. Let's jump into IFS. Integrated Financial Solutions, IFS, is positioned for growth. We have strong financial metrics. Predictability is based in the highly recurring revenue at 90%, up from 86% just a couple of years before. We have tremendous scale. Over 8 trillion in payments volume and over 280 million accounts puts us at the upper echelon in our vertical. We have great distribution with tremendous headroom within our client base. Really strong sales over the last two quarters, but especially Q1. Q1 this year was the best sales quarter we've had for Q1 in the last five years.
Our client vertical is healthy. Strong earnings over the last few years, coupled with the tax credit, has the industry forecasting increased IT spend over the years to come. Let's talk a little bit about the current market that our clients are facing. The market is really being fueled by mobile technology and the emphasis around the client experience. When we talk to our clients, they talk about the new competition. It's always been a highly competitive market, but they're talking about new entrants into the marketplace. They talk about the clients changing buyer needs and the need for the systems to be available 24/7. They talk about complex regulatory and cybersecurity environments that they're trying to deal with. When we talk to our clients about what their IT priorities are, they'll talk to us about modernization, core, digital channels, payments.
There's new and emerging interest in the APIs that we'll talk about here in a minute. They're trying to figure out how do I monetize the data that I have, and where do we go with our data initiatives? They really want to understand what the client needs are, and it's really kind of simple. The client needs that they're facing is really around the consumer experience or the customer experience that they have. They're trying to drive additional efficiencies in their own back office, navigating the cybersecurity and risk. Again, as they look at that business model, it's really about how do they accelerate their products to market so that they can compete and be relevant with the new emerging competitors. Where do we see the market going? In the next five years, we see a strong move to data-led services.
I think the Alibaba guys talk about it in the context of a revolution that's moving from IT to DT, data technology. Social banking, the emerging of social banking, always available. We're seeing those same trends emerging ourselves. The move to social banking is, you look at it was in-branch banking, went to kind of online, now social, and now we talk about things in the context of ambient bank or always available banking. The emergence of cloud services and what that means to the operational health of the business. Accelerating and automating sales and implementation. Self-help services becoming more prevalent. The great thing for us at FIS is we've been working on these initiatives for years. Upfront, I'll talk a little bit about our modernization platforms here in a second. Our secure cloud-enabled. We'll talk about that, but a real-time example of that is our Data Navigator.
It's a legacy application that really is at the heart of our payments infrastructure. A lot of our own team candidly thought we wouldn't be able to move that to the cloud. We did that this year in Q1 already, it is going to drive over $10 million in savings for us as we move this legacy application to our private cloud infrastructure. The acceleration of bringing products to market, I'll talk a lot about mass enablement as we continue, that mass enablement is really going to be the heart of things moving forward in our ability to accelerate our growth rates. The customer benefits, plug and go integration.
They have to get more product to market, but they have to be able to do it in a customized fashion so they can deliver the products they need by the verticals they're trying to pursue and compete in. Better user experience. You'll hear that over and over, an acceleration of that product. Leveraging APIs because it's going to be something that needs to happen quickly. With this backdrop, let me walk you through some of our major modernization initiatives. We really have six. I'm going to outline four, the other two is really our data center consolidation, which Woody will walk you through the real savings that's going to occur with that program.
Our movement to the cloud, which I kind of touched on a little bit, Gary talked about how we will have over 50% of our compute power by the end of the year and 80% in a couple of years. Those are real and meaningful events for us. Of the four major initiatives, they all have commonality, user experience, faster response to the market from bringing product and delivery, and then health of the system. When we look at the user experience, we went out and partnered with one of the world leaders, the reason we did that was to bring that uniform experience, not just to the front end to the consumer, but to the back office as well. So we can have that uniform experience going across the three major modernized platforms, banking, payments, and our digital channel.
When we look at the market itself, we have a distinct advantage in the market in that FIS has the opportunity to see things on a global basis and a multi-market view. It gives us the advantage to see where the market's moving and incorporate that into our modernization efforts. A great example of that is in payments. The last couple of years as payments was evolving to EMV, we had been providing EMV services for over a decade globally. The challenge for us was not about can we do EMV in the U.S. when it came here. The challenge really was how do I bring EMV and roll it out across thousands of customers extremely quickly? They all want it, they all wanted it fast.
Our focus really became around mass enablement, not can we execute an EMV transaction, but how do we automate the processes of getting this out to our clients and getting it to them fast? We drove that, and I'll talk about that more in the next slide, but you'll see that the emphasis really was about coming up with a repeatable process. Now we've been able to do that for multiple products. Things that we've been able to do, push through mass enablement, are things that would have taken us years to bring to market in the traditional sales channel, and now we're accelerating it into months. The digital channel is another great example of things that we've been able to modernize.
We heard a lot about from our customers that the digital channel is so important that we have to find ways to accelerate it. I'm happy to announce that next week at our client conference, we'll have our digital channel available for our customers to see. Those of you that went to our client conference a few weeks ago, you got to see banking and payments being demonstrated, and it came to rave reviews from our clients. We're expecting the same thing on the digital channel. We focused on the digital channel just in the first few months while I was in this role and said, "Okay, we have to accelerate it," and we're going to announce next week at the show that we're accelerating it by 12 full months.
We'll have the demo there live for them to see next week, and we'll start delivering that product this year in 2018. The vast majority of the product will be delivered in 2019. Again, 12 full months faster than they expected. APIs. The story about APIs really, again, is another global story. Marianne's group, which she'll talk about it in a second, but in the GFS world, they were really focused on PSD2 and APIs. While we had APIs and we've used APIs for years, that kind of regulatory drive over the last couple of years got us very focused on it, and now we'll deliver a little over 1,300 APIs next month. Really a focus on things that are happening globally. We get to see and move to the U.S. and accelerate our time to market.
We believe because we've done that, we're leading our industry here in the U.S. I've got two great examples of modernization and speed to market that'll really illustrate some of the transformation that's really underway. For me, what we tried to do is centralize the theme for Integrated Financial Solutions. We talk a lot about innovating financial solutions to improve people's lives. Sometimes I get the feedback that that seems very consumer-centric. As the model is changing, it's really about an experience. Everybody in the room is a consumer, but you expect that same experience to come to your business applications as well. You expect to have the same efficiencies, the same ability to execute when you want to execute. That's really what we're focused around is innovating financial solutions to improve people's lives.
These first two examples kind of hit on that theme. SecureLock and Premium Payback, these are both two products that we mass-enabled. What's cool about these two products, candidly, is there's multiple stakeholders that win in this example. I'll first go to SecureLock. SecureLock, the problem we were trying to solve with SecureLock was transactional fraud. We came out with an application that allowed our customer's customer to engage in the battle on fraud. They have an app. They were able to see a transaction. We built the transaction flow right into the auth engine, so they were able to see the transaction in real-time and accept or decline the transaction in real-time right off their phone. They also could do things on a geographic basis or, as my wife likes to do, shut my card off when I go to a boat show.
You had those features available to them. Really what they liked was the ability to engage and control their own assets, their financial assets. It was a win for the customer and the consumer. Our banks love it too. It's a win for the customer, it's a win for the bank because the bank has now someone else, another layer, helping them fight their fraud cost, mitigate the fraud exposures that the bank has. It's a great win. The other one, the second one, Premium Payback, this is really something a little bit different. It's a great product for us. It's won a lot of awards over the last couple of years. What's really neat about this is it really shows kind of the emerging ecosystem that FIS has.
When I walk through this, you'll see that it's a win for the consumer, it's a win for our merchant, it's a win for our bank, and then obviously it's a win for our shareholders. The consumer wins, and I'll just walk through. What we're trying to do is unlock the financial assets that the consumer has and put them in an opportunity for them to leverage them and use them in real-time. The assets that we focused on were loyalty points. Everybody in the room has loyalty points, but they're difficult at times to get to and leverage and use.
We created a process where, I'll just walk through the process, you go to a gas station, you pump your gas, you go to pay for the gas, the pump or your phone, depending on how you want to use it, will ask you, "Do you want to pay a discount? Would you like a discount off your gas?" You can say yes. In real-time, it will convert your points, create a cross-tender transaction at the POS. You'll go from whatever, $2.70 a gallon down to $2.60 a gallon. The consumer walks away because they saved money on their purchase, and they leveraged assets that they didn't have access to before. A big win for the consumer. The merchant loves it too, right? It's a big win for the merchant because now the way we've constructed this, it's a non-interchange transaction for that piece of the transaction.
It's real savings to the merchant. The consumer loves it, the merchant loves it, and don't forget about the bank. The bank is accruing all these points on their balance sheet. The way we constructed the model is now we have a mechanism to liquidate those points to help the bank, and we do so in a way that's profitable for the bank on that liquidation and the points off the balance sheet. Even more importantly, what we've done is we've created an application that's driving velocity and loyalty. It's bringing top-of-mind awareness to their customer, to the bank. As I said, while it was cool to win the innovation awards for this product last year, it's driven millions of dollars to our bottom line last year.
We continue to expand this and have a national footprint as we go forward into 2018 and 2019. These are some great examples of process improvement, modernization, and drivers for growth. Our three principles for accelerating growth are sales transformation, service delivery, and investment discipline. I really think as we focus on these, it will ignite and accelerate our growth rates. Let me talk a little bit about sales transformation. We talked about mass enablement a few minutes ago and talked about how EMV was really the catalyst where we had something that had to be rolled out across thousands of customers. We really pulled a cross-functional team together and we said, "Okay, let's focus on creating a process that we can repeat and drive additional product into on a long-term basis." We were successful with that.
Now, the first year we did it, there wasn't much there, candidly. It was not much of a pipeline. It was solving one particular problem. As we've moved forward and we start to bring more and more product to market, our pipeline is exploding. We're now lining up that the product that we're bringing to market is first being delivered through mass enablement, not our traditional sales channel. It does a couple things for us. One, it absolutely accelerates our ability to get product to market, and we've now done this over and over over the last year. We'll continue to accelerate that as we look at 2018 and 2019. There's a cost savings for us just on sales because we're not paying the same commission, obviously, because we're doing this through an automated fashion. The sales team is not engaged in these transactions.
What it really does for me is allows me to bring new product to market and help satisfy the appetite and the demand that our clients are asking for. It gives me the opportunity to bring my sales team, the direct channel that we've had, and realign them against the white space. We really fundamentally believe there's a tremendous amount of white space in our client base. Now I can really get my team focused on the anchor products that we have and driving further into our white space. We see a lot of positive events. There's a study out there that says by 2021, that 40% of all sales will be automated. We believe we're way out in front of the curve within our vertical. Service delivery is another great example for us.
I love trying to find new technologies and apply them differently, and that's really what we're doing here. One cool example that we've driven in the service delivery is in our chargeback area. We focused on robotics and data, and we said, "How do we apply these and drive a different solution set for us into our chargeback process?" Brian O'Neill, my Chief Client Officer, has kind of took that and ran with it. We're very happy to know that this year we've already executed and driven that into the marketplace, where we've automated the entire process leveraging these new data solutions in robotics. What it's done for us really is a couple things. One, it's given our clients a better experience, so they're very happy about that, the ability to execute things in real time and have resolution.
That was a big win for us right there alone. Greg Montana, who's probably here somewhere too, I see him up in the back, it helps us there too because it gives us a uniformity around our transactions and helps mitigate our compliance and regulatory risk. The other thing that was pretty cool about it is we saw the call volume starting to drop as more and more of it was becoming automated. We had the opportunity to reduce that team and reallocate those assets to things that were going to drive growth for us, which really leads me to investment discipline, which is probably my favorite. When we look at investment discipline, there's a great opportunity for us here.
We started this a couple years ago when we came into the payments role, or I came into the payments role, we said we had a very low IRR, we've really aggregated all of our investment and looked at it in a process and created a methodology and a scoring model, candidly, on how we were going to move forward with our investment. We started reallocating things from business as usual to growth initiatives. We started that flywheel starting to turn on new product. Now the wheel is really starting to move, and we're bringing more and more product to market, and last year was the largest number of products we've brought to market in quite a while, and this year we'll exceed that again. It's, again, moving our capital investment spend from business as usual to growth initiatives.
Another byproduct that came out of that process was that we got to see where people were spending the money across all of our business lines. We had the opportunity, because it was centralized, to start eliminating the redundant spend. It's creating a significant opportunity for margin expansion. We're no longer investing in multiple platforms that are, in essence, doing the same thing, and we're focusing our spend. It really creates an accountability around where we're spending our money and driving a margin expansion because we're really harvesting the best we can out of the market, out of the products that we have. As we execute on these three initiatives, we fundamentally believe that they will drive growth. Growth both on the top line and the bottom line.
When we look at the products that are coming to market, I talked a little bit about how we have the flywheel starting to move. Five years ago, there wasn't a lot of new product coming into our solution set. As I said, we're starting to bring more and more. We brought some products in in 2017. We saw growth that was coming out of that and driving our top line. We've now accelerated that, but it's not just about accelerating the new products and partnering with others to get new products into the market. It was about finishing that piece out and finding a way to get the products to market quickly, and it gets across thousands of customers at the same time. That's really where mass enablement became so important. We've got new product coming in.
We have a methodology for getting those products in our clients' hands, clients that are demanding more and more product. When we're doing those two things, it will help us, as everyone knows, when people are buying from you, they don't leave. It'll help our retention. Those will absolutely drive and increase and accelerate our top-line growth. The one to many model on our margin expansion is the way the market's moving. Absolutely, we provide scale to our customers, as I said before, we're moving $8 trillion in payments. We provide scale that our customers need to be competitive. Whether you're a big institution or a small institution, they're all looking for leverage. We can provide those solutions for them and that scale for them. We're leading the industry and moving towards the cloud, and those will have real benefits for them.
The technology and optimization that we talked about that Brian led for us in the chargeback process, we're taking that same discipline, we're literally marching right across our division, looking for the same opportunities, trying to drive out additional costs. Using new technology, new methodologies to drive efficiency and become more nimble, to become more entrepreneurial. Those efforts will drive margin expansion. Then, as I talked about our investment discipline, without question, will drive margin expansion even if we just eliminate the redundant spend. With those, we feel that we are positioned for growth acceleration both on the top and bottom. Let me just summarize IFS and recap. It's a great opportunity for us in a market that's under tremendous change, but we feel like we're poised to win in this space. We're poised for growth with predictable revenue.
As I mentioned, 90% recurring revenue, increasing from 86% just a couple of years ago. A very healthy vertical with a big white space. A big white space even within our existing clients. The market demand is there. One of the things our client conference just a couple of weeks ago that I heard over and over was, "How can you get us more product? We need more product to compete." We'll now get that flywheel moving, and we're starting to drive more, and we're partnering with third parties to bring product to market, leveraging our APIs. Gary talked about our accelerator and driving new innovation from our accelerator. We'll be driving more product into those customers, the customers that need it, the customers that are financially healthy and have the capital to spend on new products. Modernization is our differentiator.
We'll be down the track and around the corner before our competitors even start this race. It will allow us to take share over the next couple of years. One to many is the future. Margin will continue to expand as a result of our investment discipline and our drive for process improvement utilizing new technologies. The next three years will be a dynamic period in our marketplace, and we feel like we're poised to really excel. It's been great to be here at my first Investor Day. It's been quite a personal journey for me. I was thinking just this morning, I was sharing with the guys, 20 years ago this month, I was here taking one of my own companies public. An incredible journey for me to be back here with this great team, and my dream job to be here as Co-COO at FIS.
Thank you for giving me the opportunity to share a little bit about IFS and how we're going to focus on accelerating our growth rates. I look forward to any questions that you all have later on, but now I have the distinct pleasure of introducing FIS's Co-COO and COO of GFS, the greatest Marianne Brown.
Good morning. It's a very distinct pleasure to be back here with all of you. As Gary mentioned, I had the fun of gracing this stage two years ago to talk about 2015 performance, and I was the ultimate FIS newbie at the time because I had just joined a couple of months in. Hopefully, I look a little clearer and a little less of a deer in the headlights. I was COO of SunGard, which is how I came to the FIS family. Prior to that, I served as CEO of a middle office institutional company called Omgeo. Before that, I was CEO of the New York Stock Exchange technology company. Way before that, spent a bunch of time and years with Broadridge, which was then ADP, in various executive leadership roles.
My remit here at FIS is as Chief Operating Officer of GFS, of course, as you know. I'm excited to tell you a little more about that. Let's get a little deeper here. Our GFS segment has the name global part. The global part in the name might imply is we serve mission-critical solutions and ventures for our global tier 1s and our tier 2 around the world in key geographies. You will see us play strategic roles for each one of these segments in the area of derivative transaction processing or asset management valuation or cross-asset class trading solutions, risk and compliance, banking and payment solutions.
One of the more impactful changes I've had the opportunity to make, as Gary alluded to, was to restructure our go-to-market plans in GFS and align our global sales team under our Chief Revenue Officer who's here somewhere in the room with us today, Jim Neve. That's been a real game changer for us because it's really been a voice of the client driver, and I'll talk in a few moments about the different drivers we see that our customers need us to respond to, and that's been really enabling. We've really had a great opportunity to leverage that sales force in an unparalleled way. That also combines with our key strategic geographies and our presence in those geographies serves us well in our growth opportunities, both as the global financial crisis recovery continues into those geographies around the world.
In addition, as those geographies see their own compelling events driven by market growth or regulatory regimes, which we're allowed to both take advantage of and enable. We're really very well-positioned, both top and bottom line. We serve a highly structured, highly regulated marketplace. We've had an incredible journey relative to the quality of our revenue, significantly improving its IP centricity, such that now we're virtually 100% IP-centric. We focused on enabling scale in the strategic geographies by way of key investments, really been a game-changer for us, and enabled us to be well-positioned in key markets to respond to things like open banking mandates in Europe, automating the investment life cycle in the U.A.E., serving the unbanked in India, and enabling real-time payments, digital enablement, and holistic life cycles on a global demand basis. That leveraged sales force, I'll come to it again and again.
Nothing drives our motivation and force behind listening to our clients and having all our investments, all our structures, all our go-to-market be leveraged and driven by our clients. Let me tell you a little more about our revenue and margin journey. In 2017, we contributed $4.1 billion in revenues. I already noted the heavy IP centricity of that revenue, with 70% of it from GFS now recurring. You'll see that continue to move over the years to come, as both we, with our solution deployment, and our customers make movement to buying more in a life cycle kind of way and expecting their key strategic partners to extend their servicing to include full hosting and managed services. Focused portfolio, managed and through the lens of a global footprint enables us to grow very well in the global markets. Our margin journey has certainly been an impressive one.
As of the 2015 reporting I talked to you about when I was here last, Global Financial Solutions margins were 27%, and we exited 2017 at 33%. As Gary indicated, we've got more paths to go there. You'll see more progress on that through 2018 and beyond. Let's talk a bit, while I remind you, if I may, on the markets we serve and the solutions that we bring to bear. We service the global institutional and wholesale market largely through the assets we acquired in the SunGard transaction. We serve the investment and investor accounting marketplace, the buy side. That includes traditional asset managers, hedge funds, the insurance marketplace, private equity. Data point is that last year we processed over $31 trillion in fund accounting assets. We serve the risk and compliance marketplace.
We enable Tier 1s, Tier 2s, and Tier 3s to aggregate and look at their risk in a way toward reporting and mitigating. That risk takes the form of market risk, counterparty risk, trading risk, concentration risk. Our compliance solutions, as the name would imply, enable our market participants to be compliant with global and local regulatory regimes. Our multi-asset class solution, Gary talked about them a little bit earlier. Whether it is our Front Arena property that covers cross-asset trading or derivatives clearing utility and stuff, enabling more cross-asset processing, that's been a real game-changer for us. That segment services equities, fixed income, structured products, and enables access to well over 150 liquidity venues around the world. Our security suite services the broker-dealer marketplace from execution management, order management, books and records, regulatory reporting, or life cycle customer reporting.
Our banking solutions are core banking solutions that service us in those key markets I've alluded to, whether it's Europe or Asia, the Middle East, LATAM or Asia Pac. Significant presence there. The digital focus sits on top of that. Again, Bruce, Gary, you'll all hear us continuing to talk about API enablement. That's a particularly good enablement here, as the market wants to see digital engagements and to be able to service their customers in an omnichannel kind of way. They view this as their way to both grow and differentiate themselves as others. Our lending platform serviced over 80 million loans last year. Our payments landscape is just absolutely moving and shaking around the world. We see more and more markets driving an anywhere, anytime lens on real-time payments. We're well-positioned to support that. In fact, we talk about our lens in our global markets.
Of the 28 global markets that we really focus on and that are already enabled for their local real-time payment schemes, we enable 21 of those. Pretty excited about that, both in our progress to date. That 28 will expand dramatically, and we'll continue to play a really key part there. Of course, we continue to take our U.S.-based assets around the world in a very fit-for-purpose and enabling way, including credit, debit, prepaid, loyalty, switch, testing, and chargeback solutions, as Bruce elaborated on. All of these become really key innovation accelerators. We've talked about the solutions we have in market. Let me spend a little bit of time telling you about the dynamics we see from our client community and where they lead us. First is just the love of ongoing regulation.
We've seen a bit of a pullback in that conversation here in the U.S., both in enforcement and content, but certainly no real change there, as we all are well aware. The plates remain very full in other places around the world. Europe probably tops the list at this point. GDPR goes live in a couple of weeks. PSD2 is the open banking rules. MiFID II, IFRS, lots to do there. Of course, lots continuing in the journey relative to Brexit. We see a global evolution very much so, including our tier 1 customers transitioning to a buy versus build dynamic. That takes into a lot of pieces. First is that we see these clients wanting to pay attention and navigate their vendor landscape and consolidate into key vendors, less vendors, and more strategic partners.
We've had some of our customers share that their journey takes them from thousands and thousands of vendors to a target end state of hundreds. I'll give a U.S.-centric example here and tell you that that's very opportunistic for FIS because given who we are and how we deploy, and the relevance we play to global markets, we get to have a seat at the grown-up Thanksgiving table. We're not at the kids' table in the kitchen. That buy versus build and that sentiment of buying and partnering with key vendors is really important for us. One of the real driving attributes there is this kind of safe and sound. Our client dynamics include trying to manage the ever-increasing volume, intensity, and complexity of cybercrime. They are always looking for a partner who is going to mimic and deploy their highest level of standards in the marketplace.
It's a scary world out there. Let's just now touch on some of the spend drivers that are connected to these client dynamics. First is the essence of reducing technology debt. It's a phrase we're all familiar with, and if I were here five years ago, I would talk to it in the context of reducing spaghetti code, having better-documented systems, don't have so many copies of replicated data, and don't have technology replicating functions all over the place. Five years later, those things certainly all apply. Let's make it worse, and let's look at the responsibilities that our client marketplace have relative to security hygiene now in this kind of cyber world that we live in. Now it's about patching servers, managing vulnerabilities, identifying them, mitigating, encrypting data any place you can find it. Big now push on reducing technology debt.
That means that as the market looks on where corporate profits are being deployed, and by the way, here in the U.S., where are the benefits of tax reform being deployed, this topic is front and center. We've all seen that in the headlines in the recent weeks. This topic is front and center for investment across our marketplace. Having said that, the balance of challenge between CapEx and investing in reducing OpEx remains more so in the U.K. and continental Europe these days as the journey of Brexit continues and its related uncertainty, and regulators' interest in making sure they have enough capital hoarded up, if you will, to manage toward any uncertainties. That leaves our client community focused on delivering the following desired outcomes. First is just to do it all, navigating risk and regulatory demands, and just hitting the nail at every turn.
Next is continuing the journey constantly and always to drive efficiency and lower the cost of ownership. More and more conversations around AI and leveraging that in a very lifecycle, holistic kind of way, whether it's in the asset management community or on delivery of services on the dealer side. None of that can happen without a core, consistent, deliberate focus on modernizing processes and enabling those services that those processes deploy to be modernized as well. Guess what else? They have to grow. They have to enable infrastructures to deliver growth by way of consistent game-changing client innovative experiences. Let me connect the dots now to where those demand points fuel innovation, and certainly for us. Multi-asset class, we spent a lot of investment dollars and a lot of focus bringing that to market. It's been really enabling for us.
In the capital market space, the world grew up in silos. You have your equity silos, you have your structured products, you have fixed income. That's just not sustainable. It's incredibly expensive. It's incredibly inefficient as both regulators and risk committees want to truly get a view of risk by asset class and/or very much so by counterparties. By the way, the buy side buys in a strategy kind of way crossing all those asset class. There's a level of cost there and process that's just not sustainable. The front to back solutioning enables betterment of process and a more holistic lifecycle experience. Life cycle solutions. The market does not want to buy point step four out of one to 10. They want to buy one through 10 from that key vendor, versus 1 million vendors, a key vendor, and enable that entirety of the life cycle.
They're extending that life cycle as they engage with us. They're understanding the value of the IP owner offering them end-to-end delivery, and they're extending their relationships with us, as I noted, to include full life cycle managed services. By the way, they want those partners to be key thought leaders. They want us to be able to help them get to market sooner, quicker, faster, and deploy solutions more quickly so that they get the benefits more quickly. We talked about Code Connect and APIs. We talked about it enabling regulatory regimes and schemes. Let me quickly touch on how it enables a consumer-level digital omnichannel experience. Lets that consumer start on their phone, start a transaction, decide it's a little too complex. That's what I would do. It's a little too complex. I'm going to go home and do it on my computer.
I'm not quite sure about this next step. I want to go in and see my friendly neighborhood teller and have that all delivered in one omnichannel type of experience. APIs are uniquely enabling in that landscape as well. Payments as a Service, end-to-end, real-time ready solutions, enabling seamless payments, and again, leveraging the API layers. As that's come to market in various places around the world, we've been able to leverage innovative partners and solution that in a Payments as a Service kind of way, leveraging APIs into a gateway, hubbing those transactions, reconciliation attributes around of it, all of it safe and sound hosted within the FIS cloud. A real rent-what-you-need go to market. Last but not least, is modernizing our core banking platforms and partnering with our customers to embrace and augment that modernization.
It's enabling a delivery of innovative and customized client experiences, a really important game changer for us and our customers relative to client adoption and retention. Let me bring those kind of examples to life for you in a couple of client stories. The first is this essence of multi-asset class. We worked with one of the larger banks in Europe to deploy our Front Arena solutions into their infrastructure. It enabled them to do a number of important things. One was to get a much more streamlined, efficient process across asset classes. Two was it allowed them to reduce some vendors because they used multiple vendors across various asset classes. Last but not least, they were able to do a shutdown of some internal systems that did some other asset class, as well as reconciliation across these various systems, lowering their total cost of ownership.
It was a real streamlined life cycle for us. It really was a check all the box. Very well received, and has really enabled many more conversations like that in the market. We engaged in a critical opportunity with a client to create a digital bank, their quest was to increase deposits. Their view is the best way to go about this was to really create an effective and engaging customer-level omnichannel experience, leveraging in-person, phone, and online. They launched our Profile 8 modern core banking system. The client quote when choosing that system was, "Why would you build a bank of the future on a bank platform of the past?" We agree. By the way, within 13 days, they opened accounts in 50 states, in less than a year, they had $3 billion in deposits. Pretty excited about that partnership.
Then there's this reimagining of client experiences. We work with a tier 1 in this example that had a legacy. This is on real-time payment deployment and that constant demand for anywhere and everywhere. They had, as many do, these kind of legacy middle office platforms. They needed a way to bridge the gap. They worked with us on our Clear2Pay open payments framework and our suite of APIs as the connective tissue to their legacy platforms to enable real-time payments. Creating a modern experience, real-time settlement, seamless integration, a very simple user interface, and by the way, best-in-class for risk and controls. I would tell you that our GFS segment has a really good standing in both top and bottom line opportunities.
Our go-to-market enhancements and how we have enriched our service offerings to deliver solution life cycles and simplify deployment to get the value to our customers quicker, sooner, faster, as well as driving our own revenue velocity. Sales productivity. Aggregation of that process under our key executive there. Optimizing the top talent, giving them the best tools, creating a culture of sales where winning is fun, and getting sales productivity year over year over year. Continuous innovation, continuing to partner closely, listen to our clients, and drive and invest in the things that deliver improved client outcomes. On the bottom line in our margin journey, we continue to leverage services at every turn to create centers of excellence and deploy them across the world in places where they are most impactful.
Continuous process improvement, making sure that each and every day we focus on doing it better tomorrow than we did today, and doing it better next week and beyond. Really important part of our culture. I will add on to Bruce's comments around having a really structured investment discipline, understanding who we are, where we need to grow, fed by our clients, and being very careful about what we invest in, and making sure we hold ourselves accountable for the results of those investments. We are well-positioned for growth. We have a predictable revenue base, highly IP-centric. Recurring revenue continues to grow. Large addressable market. We have key presence around the world to be enabled in key geographies. We are very aligned with market demand. Gary talked about our focus on our portfolio. That is a diligence we walk through every single day with.
We make sure that we leverage our investments across key geographies, and we offer absolutely differentiated solutions, whether it's by way of our journey on modernization, leveraging our client voice at every turn, and ensuring that what we deliver enables that client to learn and grow and differentiate themselves in partnership with us. Our focus on creating and taking advantage of operational leverage continues at every turn. We embrace operational excellence, and you'll continue to see that manifest itself in upside on margin expansion. I am delighted, on that note, to introduce one of my BFFs and favorite colleagues, our CFO, James Woodall. Thanks, Sam.
Good morning. Thank you all for spending the morning with us. We really appreciate having the opportunity to come out and talk to you about what we think we can do over the next few years, what our business is about. I'm going to cover three topics this morning, really a financial review, giving you a bit of how we performed against what we told you two years ago here on this same stage. I want to drill down to a couple of key financial metrics that we've seen significant improvement in. I'll go to the 2019 to 2021 outlook, what we think we can deliver over the next few years in terms of revenue growth, in terms of margin expansion, in terms of earnings per share. I'll close out, again, with why invest in FIS.
If you move to the financial review, for those that of you have followed us for a number of years, you've seen this model before. It's really the engine that drives FIS, and it's really predicated on high-quality revenue for mission-critical applications that produce high incremental margins. The sales ultimately drive high incremental margins. That's due to operating leverage within the business model. We've got a one-to-many model that drives incremental margin profile, and we also have a continuous focus on cost, whether that be data center consolidation that I'll cover later today, whether it be integration synergies that you've seen in M&A transactions, or just ongoing cost management. The combination of these two really drives sustainable double-digit earnings per share growth. It's consistent, it's predictable, and that earnings per share has a significant cash flow generation metric.
That cash flow generation allows us to reinvest and fuel that organic growth. It allows us to return capital to our shareholders through dividends and share buybacks, and it lets us fund acquisitions. It's been a consistent business model for many years. It's driven value to our clients, and it's driven value to our shareholders, and we think it will continue to drive value for a long time to come. If you go back to 2017, it wouldn't be a good investor event without highlighting what you did in the history. We did 8.7% of adjusted revenue in 2017. This has been adjusted for ASC 606, and any and all of our financial results that are being published now are in a consistent ASC 606 basis, apples to apples, all the history, all the future.
We expanded margins 280 basis points, driven through operating leverage within the business, as well as through ongoing synergies that we've had. That drove 16% in earnings per share growth for 2017. We've continually talked about a 13%-18% in our previous Investor Day and certainly delivered on that. Our cash flow generation and conversion was very strong at 110%. You'll be seeing me talk about that a bit today as we've seen significant improvement in cash flow generation and our ability to sustain these levels and incrementally improve levels of cash flow generation. We also divested 2 non-strategic businesses. You heard Gary talk a little bit about it in 2017, and in the first quarter of 2018, another one. These businesses improved the margin profile. It reduced the volatility in the revenue.
It increased the predictability, and I think it was a great answer for us to move into 2018 with a higher quality set of assets that generates more cash. This consistent performance has generated long-term shareholder returns and will continue. If you look at our fundamentals, we think they're attractive. Our strategic operating segments, again, have higher quality assets than they did in the past. We've got long-term revenue under contract. You've seen significant backlog in our ability to drive revenue going forward with visibility. They're mission-critical applications. They're very sticky with high retention rates. We're serving a healthy and improving end user market. Again, we think this is a very linchpin of our operating segments and their ability to drive growth going forward. Our margin expansion has been very strong.
It's been driven off of operating leverage in the business and continued focus on driving cost out of the business, and we see a line of sight to drive margin expansion into the future. I think one of the questions we had gotten several times was, after you finish your SunGard integration, how are you going to continue to drive margins? I hope we can clearly articulate that today to show you we're going to drive margins into the future through continued cost management and high-quality assets that generate high incremental margins. The 2 of those together drive premium cash flow conversion. You'll see me drill into that a bit more. We're very pleased with the improvement in cash flow generation that we've had over the past few years. We think we can sustain it at these levels and incrementally improve it over time.
Double-digit earnings per share growth, consistent and predictable. We build our models on a conservative basis with a conservative bias and believe we can continue to execute. I'll talk about that we exceeded our 2018 guidance that we produced two years ago in this very room, and give you some color around how we outpaced that. We're entering into 2018 with a strong balance sheet. We've paid debt down. We've reduced our leverage profile since the SunGard acquisition. I'll give some more color around that. It really gives us some flexibility to drive value-generating ways of utilizing that excess cash on a go-forward basis. Those fundamentals, we believe, are really strong in terms of building a foundation for long-term shareholder returns. IFS has been really a long-term foundation of growth for FIS. It's $4.3 billion in revenue. It's a one-to-many model with significant operating leverage.
One of the items we talk about is how do you continue to grow margins. This significant operating leverage is a key component of that. It gives us a lot of visibility and predictability. As Bruce talked about, there's 90% recurring revenue in this base, all in a SaaS-type model, very little license, almost zero, and 44% EBITDA margins in this business. It's a very predictable model, and it includes highly integrated solutions that really allow our clients to compete more effectively in a very rapidly changing environment, and at the same time, lowering their total cost of ownership. If you move to GFS, I would tell you it's really one about structural improvement. We've made a lot of changes here over the past several years, starting with the SunGard acquisition. GFS revenues now are roughly 45% of our consolidated revenues.
They serve the global markets, which we believe have higher demand opportunities and higher growth capabilities in terms of being able to drive revenue growth there. They're very large wallets. As we see some incremental sentiment and spending sentiment, it doesn't take a lot to drive incrementally higher revenues by just grabbing a little bit more of these very large wallets that they spend every year. The recurring revenue profile has improved significantly, about 10 points up to 70%. As you heard Marianne talk about, we'll see that continue to improve over the next few years as you see adoption of a SaaS-type model in this space as well. The margin profile, we're very pleased with. 33% last year, growing higher this year.
Prior to SunGard, this was in the low 20s, so we've grown it over 10 points, and see its clear line of sight to continue to grow it into the future. There's a revenue shift here. You'll see a long-term shift of more and more of these customers using our services on a SaaS or outsourced model to drive long-term predictability in the revenue. This is one of the things we're most proud of over the past few years. We, in 2015, were below 30% in terms of consolidated EBITDA margin. If you use the midpoint of our guide this year, that's 660 basis points of margin improvement with incremental improvement every year. It's really driven off higher margin, higher quality revenue that's very IP-centric, as some of the guys talked about.
Almost everything we do now whether it be services, whether it be ongoing maintenance, whether it be license, everything we do is really connected to technology at this point. We've got benefits of our data center consolidation program. Some of that has been reflected in the 2018 guide. More of that will be reflected in 2019 through 2021 as we enter phase 2 of the program. We do have acquisition integration synergies in this. We've divested lower-margin business. We've gotten integration synergies through SunGard over the past few years, and we always have ongoing cost management initiatives, and we'll talk more about that as well. We have high confidence in, as Gary said, this being the low bar in terms of our margin profile and our ability to grow EBITDA margins going forward. We've also seen significant improvement in our cash flow conversion. Very proud of this.
If you go back to 2015, we're at roughly 14% cash flow conversion as a percentage of revenue. We'll end 2018 with over 22% in terms of the amount of cash flow we're converting as a percentage of revenue. We think that level is sustainable, and we can incrementally grow it going forward with a higher quality set of assets and ongoing sales of high margin business as well as cost reductions. This is a really critical component. As you saw, we grew revenue $2.2 billion from 2015 to 2018 and converted $1 billion of incremental cash on that. Seeing very significant improvement in our free cash flow conversion. We'll enter into 2018 with a very strong balance sheet. We've reduced our debt by $2.6 billion.
Our leverage has decreased from roughly a little over four times when we did the SunGard acquisition in 2015 to about 2.8 times as of the end of the year 2017. We'll bring leverage back in line with pre-SunGard levels by the end of this year. We will reduce debt slightly through 2018, and leverage will drift down really as you see EBITDA growth over time. In this interest rate environment, we're very pleased with our debt stack and where we're at. We've got a weighted average interest rate on our total debt portfolio, 3.3%. 95% of that is fixed, so feel very good going into the interest rate environment where we are right now. Our weighted average maturity on the debt is about six years, and more importantly, any individual maturity within the debt stack can be paid with free cash flow within a year.
We've also got about a $3 billion credit facility that allows us some flexibility, gives us ample liquidity, and lets us continue to operate the business and grow the business going forward. Pretty pleased with this as well. We had a bridge 2016 Investor Day two years ago that outlined how we're going to get to 13%-18%. We looked at the organic revenue growth, we looked at margin expansion as a component, debt paydown really driving interest expense reduction, and effective tax rate reduction. Ultimately driving 13%-18% earnings per share growth per year. I'm pleased to report we delivered on each one of these commitments to the marketplace. We had organic revenue growth at 3%, albeit at the lower end of the range, to be fair, we certainly have removed some of the higher growth revenue that had low margin but had higher volatility.
Removed some of that volatility and just increased our predictability in the overall revenue composition of the business. Margin expansion exceeded our expectations. As Gary talked about, we came into the SunGard transaction thinking about driving about $200 million of integration synergies. We ultimately landed greater than $325 million, driving very good margin expansion through the business. You'll hear me talk about data center consolidation more granularly in a minute. That's driving roughly $100 million of run rate synergies or run rate cost reductions as of 2018, and very pleased with the overall margin improvement story that we've made over the past few years. If you look at debt paydown, we aggressively paid down our debt over the past few years, $2.6 billion, driving interest costs down. We also used our global footprint to utilize market conditions in Europe.
We refinanced 4% debt in the U.S. by issuing our inaugural European debt issuance and refinanced that debt at about 1%, and are very pleased that we could use our global footprint and drive that benefit through to the shareholders. Tax rate reduction. We were well on our way to drive our tax rate down in the original expectations that we had, but ultimately, we were able to get some incremental benefit out of Washington last year as well. 13%-18%. We delivered 15% in 2016, we delivered 16% in 2017, and with the benefit of ongoing operational excellence and the tax rate, we updated our guidance last week to 20%-25% growth. I think one of the takeaways here is that when we're building multi-year outlooks, we try to do it on a conservative basis.
We want to make sure we deliver on our commitments and meet or exceed what we outline at these investor days and meet or exceed our commitments to our investors every year. If you go back to 2016, when we outlined what we thought we could do in 2018, we outlined a $470 million low to $510 million high. There were two items that really were of significance that weren't contemplated in the original guidance. Certainly, the tax rate reform was not contemplated in the original guidance, which was a net tailwind, even inclusive of the reinvestment Gary talked about. We also had some divestitures that were not contemplated in the original guide either. We removed public sector education, we removed Capco out of the business, and we sold Kingstar. None of those were in there as well, and if you combine those, they roughly offset.
The guidance we gave last week of $514 million to $534 million significantly outperformed that original outlook. I think it's important as I outline our outlook in a few moments that you think about that in terms of our ability to build a conservative estimate, but to also make sure we deliver something that we can meet or exceed to the marketplace. If you look to our 2019-2021 outlook, I want to cover a few things. We see improving organic revenue growth. I think it's based on three foundational elements. One, our predictable revenue base. We've got higher quality assets now. The revenue base is roughly 80% recurring. You've seen that we've disclosed our backlog of $19.5 billion as of March 31st. Good visibility into revenues going forward. They are on mission-critical applications, long-term contracts.
You've got a very comfortable level of our ability to predict our foundational revenue base. Our portfolio is more focused than it was. You heard Bruce talk about it. You heard Marianne talk about it. We're very focused on driving incremental growth into the business. The end markets that we serve are healthy. They're improving. I think you've heard our competitors over the last few weeks in the earnings calls talking about improved sentiment. We saw that in the fourth quarter in terms of sales. We saw that certainly in the first quarter in terms of sales. We are seeing that improved sentiment not only be an improved discussion in pipeline, but it's driving incremental sales growth, and we're very pleased to see that. We're also well-positioned in high-growth markets outside the U.S.
We think global scale and global expansion and global footprint matters. We believe that we'll continue to be positioned well in those growth markets. Those clients have very large wallets. It only takes an incremental small share of that incremental wallet to drive incremental growth for our company. The third would be the level of focus on modernization, the level of focus on innovation and investment that we believe that drive differentiated solutions and help us win in the market over time. Collectively, these three things are going to drive an increase in our organic growth. We did 2% in 2017. Midpoint of guide for 2018 is 3%. You'll see in a moment we're absolutely going to increase and accelerate that organic growth pace.
When you think about margin expansion, again, one of the questions we've continued to get about how do you continue to drive margin expansion? I think we start with scale matters. There's significant operating leverage within this business. You've got high incremental margins on sales. You've got a one-to-many model that doesn't have high incremental cost on those sales. The margins flow, and the profitability flows. We've also got a global delivery platform. Bless you. We've got a global delivery platform that allows us to deliver very high levels of quality service at a lower cost than many of our competitors. Data center consolidation, modernizing the network, reducing our overall geographic footprint is going to drive incremental cost as well. I'm going to drill down into that a moment. Enterprise excellence.
As you've seen us over the years, we look at any way we can to drive incremental profitability. We're looking at automation, we're looking at robotics in finance, for example, and then try to drive costs out of mundane activities and improve efficiencies. We're always looking to reduce our overall overhead cost or management cost as a percentage of the total revenue base. You've heard us talk about data center consolidation a lot. We talked about it in 2015 when we did SunGard. We had about 53 data centers. We felt like that level of footprint was too broad. It's difficult to patch, it's difficult to do upgrades, difficult to maintain the highest levels of security that we needed. We needed to modernize. We thought this data center footprint was just unsustainable.
We outlined a plan, and built a plan to drive lower data center consolidation, and reduce our overall footprint. The benefits of that are really around lower operating costs. It's higher resiliency, ultimately for our customers and our clients. You have faster, more agile deployment of security, of patching, and of new applications that you can push through the market, as Bruce talked about in terms of trying to mass enable and push product through faster. By the end of 2018, we'll reduce our data center footprint down to about 35. We'll produce $100 million in run rate savings, by the end of 2018. That's certainly part of our continued margin expansion story. From 2018 to 2021, we'll drive an incremental $150 million of run rate savings for a total exiting 2021 of $250 million of annual savings.
Our data center footprint will be less than 15 data centers. The total project will drive about $700 million of savings over the life of the project. We're pleased about this, not only from a cost perspective, which I'm always pleased to see cost coming out of the business, but the levels of client service in terms of resiliency, our ability to patch, our ability to be secure, our ability to deploy on a more agile basis will be greatly impacted by this, and we're very pleased with this. Ido Gileadi is here in the audience, who's our Chief Information Officer. We definitely want to talk with him a little bit after the meeting. If you look at our capital allocation principles, they've remained very consistent over the years. We're going to continue to invest for growth.
That's the fuel that drives the business long term, and keeps our clients renewing these long-term contracts, adding new capabilities with FIS, and growing our overall base. We're going to return capital to shareholders. Since 2015, we've returned about a billion and a half to shareholders through dividends and share buybacks, and we believe we can continue to create value through M&A. We're going to always do that on a disciplined basis, that fits in both the strategic and financial metric framework that we've outlined for a number of years. These have been a consistent, improving capital allocation framework, and we're going to continue to drive capital allocation on these principles. Our M&A strategy's worked. We think it's been able to accelerate shareholder returns. It's driven off of two tenets, really. One, it's got to be a very strategic fit.
It has to give us a new capability or an increased capability in a market that we serve, that we can push that capability through our distribution channel and grow it. It also needs to expand a market opportunity or an adjacent market. If we can do both of those, it's a really good fit, which SunGard was. The second, which is more in my area, is around the financial measures. It's got to have an attractive risk-adjusted return. In fact, the strategic and financial benefit both have to have more attractive attributes than buying back our own shares. At the end of the day, you've got to have identifiable and actionable cost synergies. It's not just about cost-cutting, though.
I mean, that's table stakes as FIS thinks about it in terms of our playbook, but it's about growing the business, growing the overall revenue profile, and improving the acquired company through our scale. We believe this has been a proven strategy. It accelerates returns and drives benefits to the company and to the shareholders. If you look at 2019 to 2021, we are expecting improved organic growth. We did about 2% in 2017. Midpoint of guide of 2018 is 3%. We anticipate being able to grow organic revenue growth approximately 4% per year over the next three years. One of the questions we've gotten a lot and we've talked about, we're going to continue to be able to expand margins on a very solid basis, roughly 75 to 125 basis points per year.
Then we'll supplement excess free cash flow to drive incremental returns at the EPS level and drive about 10%-13% per year. If you take this, it ultimately outlines a projected EPS in 2021 of $7 per share to $7.50 per share. Again, all this built in a conservative basis on the same type modeling we've done over the past few years. We're highly confident we can meet or exceed these expectations and look forward to delivering on it. I'll wrap up really with why invest in FIS. It really tries to bookend and end the day where we started the day. If you look at the returns over the past one, five or 10 years, one year at 23%, five years at 21%, and 10 years at 18% in terms of annualized return.
We've outpaced the S&P 500 every one of those years and on a significant basis. We believe we can continue to drive very good returns into the future. Putting your money in FIS, particularly at these valuation levels, we think is a great place to invest. I'll end with the formula works. We've continued to invest in capabilities. We've continued to drive growth in the markets that we serve with a leadership position. We think this is very important to continue to attract clients, to get more and more of their wallet and grab dollars and drive those dollars through the revenue. Our revenue continues to be very high quality. It's recurring long-term contracts on very sticky businesses that have very high renewal rates. It's very predictable, and our growth profile within it is very confident around it.
If you look at our earnings growth, we're going to drive double-digit earnings growth through the next three years and beyond that as well. It's been another consistent area between the high-quality revenue, operating leverage within the business, and specific programs to drive cost out of the business. We're very comfortable with double-digit earnings growth over the next few years. Those earnings convert to cash at a very high level, giving us an ability to continue to fuel organic growth, return cash to shareholders, and fund acquisitions to the extent we need to over time. We again believe this is a very compelling investment thesis. It's worked very well, as proven on the last slide, in terms of long-term historical returns. We think it'll drive incremental returns over the next several years, all at what we believe is a very compelling valuation.
We have significant strength in the fintech industry. Believe our leadership position will continue to drive value for our clients and our shareholders. We believe $7-$7.50 is a very attainable number. If you risk adjust that back, it's really a question of what would you pay for that today. With that, I'll like to ask Gary to come back up and we'll do some Q&A. Thank you very much. I think we've got some mics going around the room, and I'll try to moderate. I'll start with Ashwin.
Thank you. Great presentation, guys.
Thanks, Ashwin.
Let me start with a lot of talk about SaaS and how you're getting deeper into that. If you could sort of lay out how that affects your contract structures, how that affects the growth rate. Historically, you guys used to talk about sort of a 150 basis point pressure on renewals.
I'm thinking this might actually help in that case. Is that true? That's one question, maybe I'll save the second one for just after.
As you think about our SaaS model, as you think about movement more to that, you'll watch the recurring revenue continue to accelerate. Both of our COOs highlighted that Bruce has moved from 86% to now 90%. It's just a further indication that everything that we're putting through IFS is really going through this software as a service model. When you look at Marianne coming from 60% to 70%, you'll see that grow substantially over the next few years as well. From a contracting standpoint, still long-term nature, moving away from on-premise and maintenance revenues to actually what we really like, which is really long-term revenue that's tied to transactions, accounts, money movement, et cetera. All of that gives us, as we move more in that direction, gives us much more visibility in the predictability of the revenue and growth.
Some of the stuff we divest at Ashwin really took that, some of the less predictable stuff away for us. As far as our headwinds with regards to losses, as you said, we consistently see about 150 basis points of a headwind on that front. I'm not sure it's going to impact that much. I do think that obviously as you do interact more on a SaaS model, the mission-critical and sticky nature of the relationship expands because they now have, to Bruce's point, as we put more and more product and solution into that channel, it just becomes broader of a landscape across our cloud. I do think long term, it could make it a little more sticky. At this point in time, we're not modeling that.
Got it. The second question is, strategically and historically, you guys have always been very bank-focused, as you think of end-to-end payments with-
Yeah
consumer on one side, merchant on the other, you guys did talk about mass enablement, would you consider strategically sort of deepening your relationships with merchants or directly with consumers in a bit more radically scaled-up fashion.
Yeah. I think there's two questions there. Let me go for the second side of the question first, then I'll come back to the acquiring side. As you look at financial services, it is clear there are financial services that are leaving the financial institution ecosystem. I would tell you, we are doing a number of engagements with clients that are offering financial services that aren't your traditional FI. We're empowering them to offer those services. As you look at the acquiring side, that's an area of payments that frankly, while we've got a very small position in acquiring today, the team's doing an excellent job of growing that, we really are very subscale in acquiring. So, growing that to a top position through organic is not reasonable given the nature of that side.
Bruce's example, keep in mind, was a great initiative for the issuer side of the business. It really was how do you take a contingent liability on the books today, convert that to a profitable conversion rate to benefit the consumer at the point of sale. Everybody really wins in that ecosystem. It started trying to solve a client need that we have today, which is a large loyalty pool, given the fact that we have such a large issuer presence.
David?
Thank you. David Togut at Evercore ISI. Have we reached a tipping point with Tier 1 bank outsourcing? It seems like there are some signs in the market, whether it be your success with the derivatives utility-
more propensity to outsource in bigger banks. Is this a trend that is just starting to open up?
Yeah. I've been very consistent on this, David, I think Marianne would agree. I think we're at the early stage of this process, I am very amazed at the size of institution now that's talking about leveraging our capability in our private cloud deployment or in our SaaS model. We've seen over the last several years that size of institution consistently raise. To Marianne's point, she referred to it as technology debt, I'd say it a different way. Everybody's encumbered with a huge basis of legacy interoperability, where they've had a lot of disparate systems loosely linked together across large technology deployments. Being able to simplify that to get your total cost of ownership down is a requirement. We really are seeing larger and larger clients look to an FIS because of how far we are now down the path.
We can come up and talk to them about where we are in cloud deployment, we're just further along than most people in the industry, that comes through. When you come back to where we are on cyber and cyber resiliency, and availability, and all of those things, not only are they looking to modernize their platforms, now you're talking about them having to modernize their entire technology debt infrastructure. There's just not enough money to do that. Frankly, it just doesn't make sense. I think we are at the early stage of this process, you've seen the success around the post-trade derivatives utility that continues to accelerate. We're seeing a number of larger and larger banks outsource and leverage our environments around payment products.
We're also seeing that the example Marianne gave of a large digital bank growing $3 billion deposits leveraging our infrastructure. All of that is an indicator that it's definitely accelerating.
Could we see a top 10 or top 20 bank in the next couple of years outsource core processing to FIS?
Yeah, I think you could definitely see a top 20 bank do that. Especially as you go on a modernized basis and start consuming our components. They would take our components through our cloud and then migrate their legacy over time to those components. The way those banks are going to do that over time, they're not going to go with a big bang approach, right? If you look at classic even large community banks or even large regional, they'll tend to move all of their particular deposit or lending products on the same weekend. You're going to see a top 20. They will consume various product sets over time, and as they consume those product sets onto our next generation technology, it'll come through our SaaS offering. You'll see that.
Thank you.
George?
Thank you. Georgios Mihalos, Cowen. Good job, guys.
Hey, George.
I wanted to kick things off, just thinking of the cash flow and obviously the firepower now with the balance sheet, given that it's delevered. How are you thinking about balancing returning capital to shareholders versus M&A? You also brought up the point of this valuation discount with some of your peers. They seem to buy back 5%-6% of the stock every year. How is that part of your strategy versus M&A?
If you really look at the model the multi-year model outlines share buyback as the default right now. You've seen us do both over the years. You've seen us do large strategic acquisitions, and you've seen us de-lever, now going back into share buyback mode. It certainly doesn't say that if something strategic presents itself in evaluation that makes some sense for us, we wouldn't take a look at it. I think from an evidence standpoint, you can look at current valuations in the marketplace, and you can look at what we've done over the past few months. Bought back about $700 million in shares. That's certainly our default right now. What we don't want to do is to continue just to drive debt down for the sake of driving raw debt down. We'd rather deploy that excess cash and drive incremental returns.
I think, again, the model that we showed, the 10%-13%, if you look at the operating components to get to the 10%-13%, you're looking at share buyback as part of that excess free cash flow.
Okay. Just wanted to ask a quick follow-up. If we think of the institutional business, maybe some of the headlines coming out of some of the global banks scaling down some of their operations
Trading and the like, how much of an impact is that having on the model? Maybe you could just help us think of transaction flows, AUMs, and fixed-based pricing.
Actually, that's an opportunity for us, George, right? As people are looking to take their costs down, what a better way when some of the stuff Marianne's talking about is they then are moving those capabilities into our delivery models and into our SaaS model. Where we're seeing push is interesting, moving from on-prem or more of a license model. In GFS, today we're sitting at around roughly 9% of total revenues there as a license fee. You're going to see that percentage drop over time, this is the very issue, because as volumes decline or as people are looking to take down their total cost of ownership, it's a great opportunity to outsource that, move it into our leveraged environment, get the benefits of new technology. Actually benefits our revenue stream long term, makes it much more predictable.
It's actually an opportunity for us.
The other area I heard that maybe was in your question was around AUM and maybe our pricing effectively. We don't have contracts that are priced based on AUM. It's really around processing for the fund itself, whether the fund goes up or fund goes down.
That's right.
Very little volatility from that front. All right. Ramsey?
Hi, Ramsey El-Assal from Jefferies. This question's for both of you, maybe for Marianne as well. Can you talk about the impact that blockchain might have on your capital markets-focused solutions, trade technology? Is that a potential disruptive threat? Is it an opportunity? Is it both? Any thoughts would be appreciated.
I'll start at the highest level and let Marianne build on it if she wants. Honestly, when we look at blockchain, when we look at any technology shift, for that matter, in the industry. For us, we do a lot of proof of concepts. We partner with our clients on those various technologies, and we've done that in blockchain as well. For us, it's really a matter of monitoring how the market evolves around blockchain. At that point in time, if there's mass adoption or demand, we certainly will deliver on blockchain technologies. Right now, we're not seeing the movement as much as some people had predicted. As I said, a lot of our tier 1s have done some proof of concepts with us.
We do think that there could be some applicability in the capital markets especially, still just waiting for some adoption there to really warrant heavy investment in the space. When that occurs, just like you're seeing all through the presentation, we'll very consistently look at it from a return on investment basis, make those investments, and drive it into market.
We're seeing movements. Obviously, we just saw JPMorgan Chase and stuff in terms of we're seeing movement where individual counterparties who do a high level in either volume or notional value with other individual counterparties are engaging, and that's the extent of it, right? It's an expensive solution to deploy, so it needs to be very fit for purpose. To Gary's point, we're at the ready, listening closely and carefully to see where the take-up is.
One last one from me. Woody, can you talk about the cadence of CapEx coming down through 2021? Can we expect a steady decline every year and maybe a corresponding improvement in free cash flow conversion? Is it more lumpy or back-end loaded?
I think you'll see more of an inversion of the data center consolidation curve, frankly.
Yeah.
You've seen us increment up with some modernization efforts within the product capabilities. You've seen us incrementing up already in terms of data center consolidation and data centers coming down. I think you'll see it more of a drift in 2020 and 2021.
That's right.
Not a steady decline from today's efforts. In fact, I would even anticipate 2019 to be at similar levels in terms of percentage of revenue.
Great. Thanks.
Brett?
Good morning. Brett Huff from Stephens. Thanks as always for hosting the event. Useful information. I really only have one question, and that revolves around getting to your 100 basis points on average margin. A lot of people had asked us questions, just like they ask you, how do we keep doing that after the SunGard acquisition? You told us a little bit that it seems like about 50 bips, give or take, is from this data center consolidation. The other 50 is the question. The thing I really want to hear about is, more than in the past, you've talked about rationalizing platforms-
It's something that's been out there for every core processor-
Yeah
for years. It sounds like it's a bigger focus now. Gary, you answered a question earlier on modularity-
Yeah
and something like that. Can you tell us more rumors on the street, how does that happen? What are you hearing? Is there a bigger push for that? Are banks finally realizing that their back offices, they need help? How does that really work? Does that impact your SaaS strategy as well? Are those the same things?
Yeah. It's a great question, Brett, I think the approach is going to be different depending on the market you're talking about. Let's go to Bruce's approach first. Given the fact that we're already so highly a SaaS model in Bruce, right? At 90% of his revenues all running out of our data centers. What's interesting is the team's done an excellent job of transforming our client base through an upgrade process, and we're getting the benefit of that. As I talked about, 38% has already been moved to the cloud, 50% by this year, moving to 80%. This is really us just modernizing the environment, and honestly, our clients, because they are outsourcing the software as a service, they're just taking that service. How it's deployed, it doesn't matter to those customers.
If you look, though, that application layer that Bruce highlighted, since most of all of his applications are deployed through that SaaS model, we're doing the same thing across IFS at the application layer. As you look at the payments unification project that we talked about, which is code-named Apex in the company, he talked about the value that's going to drive in cost reductions. That really is just taking our legacy systems, modernizing that into the cloud. All of our customers upgrade as they would any normal upgrade process with IFS, therefore we get the benefit of it. Application rationalization through our SaaS model is already playing a role and will continue to play a role for the next three years. When you look at Marianne's world, a little different.
When we deploy, even in the SaaS model in Marianne's world, tends to be more one to few. There's a lot more customization involved. That's where, frankly, the componentization structure will come into play. What we'll see is, as I shared earlier, we definitely will see larger and larger, and are seeing it today, larger and larger institutions are starting to consume those components, and they're taking advantage of those components through our cloud. We'll get there in a little different ways. It'll be much more component by component in the large globals. We will definitely see some application collapse on that side as well. You'll see it accelerated on the IFS side, just given the nature of the one to many model and the way that those customers consume those. There's not that much customization.
We upgrade those platforms all the time, upgrading to newer technologies is just part of the roadmap.
If you bust that down to components of margin expansion, you're right. Data center consolidation, a key component of it. High margin, IP revenues. IP-led revenues, where more and more of our revenues are driven related to the technology, and the high incremental margins in that one to many model is the second component, just operating leverage within the business.
That's right.
Third, that operational excellence. We're looking at process automation, robotics, and any other way we can manage corporate and overhead cost is really the third leg of that stool from a margin expansion standpoint, Brent.
Jim.
Jim Schneider from Goldman Sachs. Thanks for taking my question. I was wondering if you maybe comment on the large money center banks. Some of them over recent months have disclosed they're spending five, eight, or even $10 billion internally on technology.
We just want a small percentage.
That's right. Just a little bit.
Just my question is that something you worry about in terms of those banks being able to pull ahead in terms of technology capability and consumer-facing capability relative to what you're offering your clients? Or do you think that's going to be mostly chewed up and them replumbing their existing legacy infrastructures?
Yeah, I think it's more of the latter. What we're actually seeing is, given our investment, we're actually able to empower our clients to be very competitive across the large money center banks. As you know, they spend a tremendous amount of money, to your point. A lot of it is against the technology debt. We're not necessarily seeing the top five banks lean into us that much, but certainly when you get broader than that, we're seeing very large institutions now talking about how do they take advantage of our scale and our investment capacity. At the end of the day, we build software for a living. For us, our software is able to, because we can deploy it many times and over thousands of institutions, it's very functionally rich. That plays out in the industry.
We're not worried about them getting ahead of the rest of the market. That certainly gives opportunities for FIS for people to want to leverage FIS to compete with those institutions. No matter what your size, there is going to be a base level of functionality you're going to have to offer in order to compete in the market, and that plays well for FIS.
That's helpful. Thanks. Maybe as a follow-up, one thing you didn't spend much time about today is talking about international and going back. We have a history of some large footprints in Brazil, the U.K., India, et cetera. Maybe you can retrospectively look back and give us a scorecard of which ones have gone well, which ones have gone not so well, and then maybe talk about going forward, your appetite for incremental expansion and which markets you find more attractive, whether that be Europe, LATAM, or others.
Yeah. I tried to make a comment in my opening comments. We've now got our non-US revenues at about 27%. It's been growing very rapidly. We're actually very excited about it. What you've seen us do over the years is really bring focus to almost everything we're doing at FIS. I would say we've narrowed our focus somewhat in the non-US markets, and it's allowed us to see accelerated growth. Our joint venture in Brazil has been very successful. We continue to have a long-term partnership with Bradesco. They've been a fantastic partners over the years. You've seen us be the benefactor of some of their portfolios. We continue to have ongoing discussions with them about where will we take this relationship in the future. There's some opportunities where we think there's a bigger opportunity in Brazil and Latin America.
We'd have to free up some of our requirements under the joint venture to take advantage of those. Long term, it's just a great partner and it's going to continue. If you look at Europe and you look at the U.K., we've had a lot of success in the U.K., not only in banking payments, but also across the whole capital market space. Western Europe doing very well in the German markets and also France. India's been just a phenomenal success story. You go back, good grief, what is it? I've been with the company 30 years. You go back five years ago, 10 years ago, we hardly had any revenue in India. We were an employer in India and been very successful with that. We've now grown that. That market will do $250 million in revenue this year, just in India, all from an organic basis.
We've been very excited about the growth opportunities. Frankly, in retail banking, in payments, has been the big growth area. We picked up a large presence in Singapore in and around the capital markets. The team does an excellent job of growing capital markets in Singapore and Hong Kong. We just got best-in-class capabilities across all the capital markets, so anywhere those kind of services are consumed, high growth. The team refocused our efforts on the Philippines about two years ago, and we've had a real nice turnaround story in the Philippines. We had a strong position there, frankly started losing market share to some of the local competitors. We refocused our efforts as we started narrowing our focus on the countries we played in, and you've seen a turnaround in acceleration. Australia continues to be strong. A couple of years ago, we entered into Vietnam.
That was really the first major, I would say, country expansion we had in Asia in a number of years, and did that by choice. We had an opportunity with Vietcombank, one of the largest banks in Vietnam. A huge program where we took the entire bank and moved it to our technologies. Had great success with that. That was a very successful program launch. We've got a real nice pipeline opportunity building out in Vietnam because of the success of that program, where other banks are looking to leverage a lot of our capabilities. Long-winded answer to we're bullish on the non-U.S. markets. We're excited about what's going on in the U.S. We've got a lot of opportunity here, but we're equally excited about our opportunities outside the U.S.
Marianne's done an excellent job of now bringing up a Chief Revenue Officer, where we're really focusing on global presence. Up until this year, we frankly weren't even getting leverage out of the large money center banks that were operating on a global basis, right? We were selling them off on one-off on various territories. We're now raising that up and getting leverage out of that interaction. A lot of opportunities in the global marketplace where people are trying to take out cost. We read it every day where people are struggling with it. That's an opportunity for us, and we see it that way. It'll continue to be a very important part of our story. We think it's a key differentiator for our story as well.
As we're making investments in our product, we have a much larger geography and much larger market opportunity to leverage that investment over.
Tien-Tsin. Right here.
Yeah, thanks. Tien-Tsin Huang from J.P. Morgan. Just wanted to ask on the, with this push towards modernization, API enablement, and data center consolidation, is there a need to share a lot some of that price savings or cost savings back to the client? How is the pricing algorithm changing? Is there a chance at better price for value?
It's interesting. We've talked a lot about that, Tien-Tsin. I think it's too early to tell. We're still modeling in the consistent headwind that we've seen over the last several years. As far as passing the savings on, we've seen no real driver to that yet because keep in mind, they're also getting a lot of benefit from this new technology. The speed to market, the increase in resiliency just from a business continuity standpoint, where we're moving more to hot-hot technology or hot-warm technologies. These are big benefits to our clients as well. Right now we haven't seen any change in the pricing model. The client's definitely getting a lot of benefit. As we deploy it and we're getting some very nice cost savings through that process.
Andrew.
Wait, we have a question right here.
Oh, sure.
Oh, okay.
Dave.
Yeah. Hey, guys. Thanks. Dave Koning at Baird. It seems like you guys have about the most confidence I've ever seen you have in acceleration. As we think about the bridge, is it as easy as right now the pipeline and backlog are so good, plus I think you get maybe 50 basis points each from the corporate line getting easier comps and EMV hitting easier comps. Is that really the formula or any other kind of items to think about?
Well, I think we've streamlined the portfolio. Keep in mind, we had a really volatile piece of business that was within GFS that could actually accelerate very rapidly at very low margins, but it could also decline very rapidly. The predictability on that revenue stream was a large piece of the revenue at the time of GFS. So it was hard to have a lot of confidence on the direction of that because running a large consulting firm, you could have those people furloughed fairly quickly, right? They're the exact opposite of what we're used to dealing with. They're not long-term engagements, they're short-term engagements, right? They're people-based. So now you really look at all of GFS as pretty much 100% tied to intellectual property or a piece of software. Could be on premise, could be in our data center.
You look at Bruce and Bruce's world of strengthening not only our reoccurring revenue, but a tremendous amount of investment in new capability coming in market. All those things give us a lot of confidence as we look. We had a very strong Q4 in sales. We had a very strong Q1 in sales. Pipeline is accelerating new product capabilities to cross-sell and put through our sales engine is coming online. It does give us a lot of confidence going into this next three-year guide.
Great, thanks. Just one quick follow-up. Just Capco, how's that doing? Is there a point where it becomes a catalyst that we can see it hit your minority interest line?
It's doing very well. We've re-accelerated the growth rate outside the U.S. Obviously, you guys saw it before. As you accelerate growth rate, margins can be challenging, but they're investing in the business, which is what we thought they would do and what we wanted them to do. We continue to engage with Capco on a consulting basis from the standpoint of bringing them into our customers. We get still benefit, and our clients get the benefit of very thoughtful financial services-focused consulting, but they continue to operate very well.
Yeah. I think between the leverage on their balance sheet and their continued investment-
Yeah
in trying to drive that top-line growth, you're not going to see a lot of incremental minority interest flowing through. We've outlined that last year. That'll probably remain at a relatively below the radar number. Andrew?
Thanks, guys. It definitely sounds like you have a lot of initiatives that are allowing you to control your own destiny, particularly in GFS, as far as growth is concerned. Can you parse a little bit perhaps how much of an economic cyclical tailwind there is versus how much of a structural growth is embedded in your outlook? It sounds like the business is getting a little less cyclical by virtue of change in the contract structure and SaaS delivery and so forth. Maybe just the interplay between structural demand and the cycle would-
Yeah. I think the structural demand and the actual execution of sales and the higher recurring revenue with the predictability is the primary item that we're looking at. We typically don't build significant macro improvements in our model-
Yeah
nor do we model anything of significant macro decline. I would say it's much more around the underlying structure that we're seeing today and that we're seeing going forward. That said, we've talked about sentiment a couple of times today, and I think it's hard to just ignore the level of cash flow into the system from tax reform, the change in the interest rate environment that gives incremental benefit to our bank customers. I think both of those certainly have sentiment that has increased. We've seen that translate into sales so far. There's definitely some in the overall picture of our comfort and our confidence, but not a whole lot of that model.
Okay. As a follow-up, with regard to faster payments or fast ACH, can you elaborate a little bit on potential solutions, be they B2B or B2C, especially as we see Zelle grow as quickly as it has?
Yeah. It's a great opportunity for us. We've talked about this on several times. As you look at new payment schemes, whether it's faster payments, Zelle, whatever, gives us a great opportunity. It gives us an opportunity to open up as a gateway to all the downstream financial institutions, a lot of the community and regional banks, et cetera. The overall group of Zelle doesn't want to have to go do those one-off interfaces. It allows us to leverage that. It's just another payment transaction type for us. Marianne talked about faster payments and real-time payments and how that's deploying. Bruce did as well.
All of that, we like to see those kind of activities because it tends to be a nice tailwind for FIS long term because it gives us opportunities for our thousands and thousands of institutions and just a great way for us to leverage some of our mass enablement capabilities. What we hope is some of these things really take off. As we mass enable three or four or five thousand clients, then you get transaction volume lift on top of that. It'd be a great benefit for us.
I think we got time for one more. I'll give it to Glenn.
Thanks. Glenn Greene, Oppenheimer. I'll ask two. Gary, you had alluded to certain areas that were maybe less strategic or diluting growth and profitability and saying continue to prune the portfolio. I don't know if you care to share maybe some of those areas. The other question related to that is how do you balance that with taking some earnings dilution, which you've done with some of the other divestitures you've done recently?
Yeah. Glenn, I think the most obvious ones are we've got a couple of businesses in our other segment reporting today. We've talked about them a lot. I don't know if we'll ever be able to sell the check business, but the reality is we try to intentionally take the remaining non-strategic businesses and place them in the other segment. The way we think about dilution factors, when we look at some of our other businesses we've sold, really bringing more focus to the portfolio, really being able to accelerate growth across the remaining portfolio. We think it's the right strategic move. If we're not going to invest in them, then let's get them into someone's hands who wants to invest in them and try to make a business of it. We've tried to take our remaining non-strategic items and place it in the other segment.
Okay. Just a quick follow-up for Woody. You gave the organic growth expectations for IFS and GFS, but you didn't really for the margins. Should we just continue to think the skew is going to be toward GFS given the data center consolidation dynamic?
You're exactly right. I think you're going to see growth in both segments based on data center consolidation benefiting both strategic segments. You probably will see higher margin growth in the GFS segment compared to the IFS segment. That's right.
Yeah. Okay.
Want to wrap it up?
Yeah. Look, we appreciate you guys taking time with us today. We wanted to be efficient users of your time, and hopefully, you found this session to be beneficial. I'll wrap up where I started and where Woody wrapped up his comments. We really do think there's a compelling investment thesis here at FIS. At the end of the day, there is a multiple valuation gap that we think there's an opportunity to take advantage of. Hopefully, we've talked to you about our presence in the markets, why we feel that leadership drives strategic value long term. The improvement around our revenue can't be underestimated and the high-quality nature of that and recurring and how often, how predictable that is with $19.5 billion in backlog, and you'll see that number continue to tweak up over the next several years.
The EPS growth, high confidence in double-digit EPS growth into the future. The cash flow was an area of focus for us. As Woody talked about, the conversion rates are very high. We do believe if you think about all of the differences between us and our peer group, we've eliminated those differences. Accelerated growth rate, accelerated EPS, accelerated cash flow. A great opportunity to invest in FIS. We think therefore it's very compelling for the people in the room. Thank you for your time, and please, we'd love to join you for a cup of coffee. Thank you.