All right, so we're moving right along here with our Payment Symposium. Our next session is with FIS, and we're very fortunate to have James Kehoe here, Chief Financial Officer. James, thanks for being here with us. We appreciate it. We were just talking about time going fast, and I mean, you've been in your seat for about a year and a half now, accomplished a lot, comprehensive Investor Day, which was almost a year ago. Give us your progress report on the strategic priorities that you kind of laid out in both the banking segment and the capital markets segment, and then what's on the top of your list to really focus on in both those areas for 2025.
Okay. Maybe I'll give you the guiding principles we had at Investor Day.
Great.
Maybe step by client centricity, number one. I think I'll come to each of these.
Okay.
Second one was innovation, and the third one simplification. Client centricity, I think that's a clear win across the board. Go back 12 months ago, we were struggling in market, especially in community banks. Horizon, our principal offering in the area, wasn't performing, high level of defects. Flip forward 12 months, and we're looking at, we've called it out on prior calls, we doubled our core wins in 2024, and most of that was in community banks. I'm calling the range of maybe $1 billion-$10 billion in size. And whether anyone else wants to admit it or not, we've gained share in the sector. Horizon is back. Defects are down. Tickets are way, way, way, way down. Our reputation in market is much stronger than it was 12 months ago. That's one on client centricity. The other one is probably on retention exiting the year.
You can see Horizon and the better product offerings in general playing out retention in the high 90s. Finally, the most important one, if you're really satisfying your clients, your ACV is up. Our ACV was up 9%. Within that, the banking was actually up low double digit. A really strong year and a strong finish for the year. You get into innovation. I think Investor Day was a highlight in that we launched what is very much a long-term platform, which is Atelio. We're still in test and learn phase. More recently, we launched Treasury GPT, which is our first AI-enabled product. I would say innovation looking forward, internal innovation will be very, very focused on AI-driven products, probably more in Treasury and more in fraud as we look in the short term. The other form of innovation, two other forms.
One is acquisition. Sometimes you can develop your innovation internally, you just buy it in the market, and you slam it into your sales force and you drive revenue synergies. The two most recent, Dragonfly, that took us up market in digital in the core banking. Highly customized and strategic clients, probably bigger than we were able to do with our D1 product. This kind of fills a gap at the high end of our portfolio. Demica is supply chain financing, which fits really well with the last piece of innovation I'll bring you through, Office of the CFO. We're going to surround the CFOs in both corporates and banks with a suite of product offerings ranging from Treasury all the way to accounts payable, accounts receivable. That's a form of innovation. We've set up an Office of the CFO within the sales force. Even we're pushing innovation internally. And then finally, simplification. The big trigger was selling Worldpay.
Right.
Let's face it. It also opened up really a heavy workload on downsizing. We have $200 million, roughly, of TSAs expiring over a two-year period. We are in significant cost reduction mode on back office. At the same time, we are dramatically simplifying the company. We are leveraging GenAI in back office. We are also leveraging third-party business process outsourcers, organizational delaying, and simplification. I would say strong ticks across the box since Investor Day. What are my priorities? We're not happy with Q4. We had some noise from one-time items. We want to get back into a consistent, this is the target we set, and we're going to deliver the target quarter in, quarter out. We will deliver. My number one focus is finance enabling the businesses and sales to be successful. Number one is revenue.
Number two is the margin journey, where we play an even bigger role in driving cost reduction. The third one for me, a personal one, is free cash flow generation. We've got a lot of recent questions on, we came in at 77%. We should have been at 85%. We got to drive a harder, sharper agenda and produce results much, much quicker. Those three would be priorities. They're all business priorities.
Yeah. Yeah. No, it's a great summary. Even on top of all the progress you've made, more work to do. I'm going to start on the banking side. Obviously, it's the bigger of the two segments. You alluded to some of the one-off challenges in Q4 in banking. Now we're looking ahead to 2025. We're thinking about the quarterly cadence of growth in the banking segment. 4% is the midpoint of the full year guide, and that's exactly what you told us in May of 2024 at your Investor Day it would be. No change there. The shape of the year looks a little bit different. Q1 at the midpoint is about 1%. You guys talked about 300 basis points of acceleration in the year-over-year growth rate from Q1 into Q2. How's the visibility on that acceleration? Anything you want to tell us just about Q1 in terms of how you're feeling about that?
Q1, I can't really say much. We're too far into the quarter. I would say that it gets back to my earlier comment. We wanted to set a set of targets that we can achieve and then achieve or beat those quarter in, quarter out. Probably with the benefit of hindsight, we were a tad conservative on Q1 because it was the start of the year. We have really strong visibility to the first quarter. What we're inclined to do as a company and its philosophy is the high end of the range is our internal risk-adjusted plan. There is no real science behind the low end. It's just the creation of a range. In theory, we're always aiming to come in close to the high end of the range.
At least that's our operating plan on a risk-adjusted basis. If you ask about visibility, we have strong visibility that we'll be well within the range for the first quarter, really well within. If we weren't confident on the drivers, we wouldn't have stepped out of policy, which we really stepped out of policy. We actually gave a banking guide for the second quarter.
Right. Right.
Which is kind of, there was a lot of debate internally.
Yeah.
We were comfortable doing that because we have strong visibility to the build of sales over the course of the quarters. That is what gave us the comfort to go out and kind of break with convention. We were aiming to calm the market. It did not actually quite work out that way. That was the intent. We would not have done it if we did not know we could hit the number. There is quite a build between Q1 and Q2, right. You are going from, call it midpoint one to midpoint four. If you take the first quarter, it is unfortunate, but we are lapping 200 basis points of really strong license quarter in 2024. We had one license deal and one termination. The license deal itself was above $25 million.
If you take out those two items, which were really exceptional in the long-term trend, that's about 200 basis points. Getting back to your question, why do we have good visibility? There were three shifts, call it out of Q1 into Q2.
Okay.
There were two clients requested deferrals of implementations. The good news is one of those actually just went live. The other one is going live, I think, in two days' time, Right. We said that the 100 basis points will shift from Q1 to Q2. It's actually happened already in terms of it's actually implemented slightly earlier than we would have anticipated. The third one was a merger. It was a contract that was actually signed back at the end of 2023. The acquiring company has deferred the implementation until their merger is approved. Even if the merger doesn't get approved, the contract still gets implemented. They're waiting for approval, which is expected during the course of Q2. This is why we have such good visibility. We also have, you could ask the question, could something else delay out of Q2 into Q3?
Right.
Yes, but nothing like the magnitude of what we saw in Q1, the Q4 and Q1. I guess the way to answer it is we would not have guided to Q2 if we thought there was a high element of risk in the number.
Right.
We have clear building blocks into Q1 into Q2.
Okay.
Yeah.
Okay. It is those three shifts that you outlined that basically drive the 300 basis points of acceleration.
Two out of the three are done.
Two out of three are done. Okay.
Right. They're done and gone live.
That's like two-thirds of the 300 bits, I guess, that you need. You're feeling pretty good about that. I mean, look, frankly, I think you guys get there in Q2. It'll obviously take a lot of angst out of the.
Yeah, you're right.
Stock. Okay. Very, very helpful. Maybe we can just rewind to Q4 for a minute, just so people kind of have the context there. There were the three one-time items. Some of it was non-recurring, Right. There was a reversal of a contract termination fee because I think there was a merger called off, obviously beyond your control. There was a push out of a large license deal. Then there was a contract recognition adjustment, if I remember correctly, on the recurring side, which was about a 1% headwind. I was curious if you can just elaborate on kind of what the nature of that adjustment was, what caused it. Is that something that's commonplace in the business, or?
It is and it isn't. It's just normal review of balance sheet account positions client by client.
Okay.
There was this $12 million, and it relates to prior years. It was trued up in the fourth quarter. Done, dusted, behind us. Very unfortunate because we ended up with a perfect storm of a bunch of one-time items. It was clean up of historical client adjustments.
Okay.
Yeah.
Okay. All right. I mean, anything else we should just be aware of? We talked about Q2 a lot, but just in the back half, just in terms of year-over-year comps or one-time-ish things that you're lapping or anything like that?
I just go back to what we said in the fourth quarter. There are two items. If you try to bridge the full year growth rate, it is probably easier going from 2%- 4%-ish. You have 60 basis points of M&A because we did have M&A in 2024, but it was offset by dis-synergy out of Worldpay. Call it the 2% did not include any net M&A contribution. That is 60 basis points next year.
Okay.
We called out 150 basis points coming from what we call customer excellence, if you like. It is a combination of retention and new sales. Retention numbers in the second half were high 90s. We have good visibility to retention. That is about 70 of the 150 basis points. The 80 basis points is new sales. What a new sale is, it is stuff that was sold prior to the end of the year and what you need to sell in 2025 that impacts revenue in 2025. There is a long sales cycle.
Right. Right.
Of whatever you sell in 2025, only a very small proportion will actually hit the income statement.
Yeah.
If you take the 80 bits, 80% of it was signed as of the end of 2024.
I see.
That will have progressed. It's higher than 80% now because we're already two months into the year.
Right.
The further you go into the year, the more likely it is there's—if you want to calculate a risk on the year, you take 80 basis points times 20% because it's onside.
Yes. Right. Right. So okay. All right. So 80 basis points, that's the second half of the year contribution. Did I get that Right.
It's the step up. No, it's actually a full year contribution.
Oh, that's the full year number.
Yeah. It's a full year.
Got it. Got it. Okay. From the sales last year, essentially. Okay. Perfect. All right. Glad we got through all those numbers. Let's just maybe a little bit more qualitatively. I want to zoom out on just the competitive landscape in core banking. You alluded to it a little bit. You feel really good about the Horizon product, for example. How have you seen kind of the evolution there if we kind of break down the market into kind of small, medium, and large, for lack of better terms?
I would have said stability. If you look above $10 billion banks, that's our sweet spot. The competitive environment is, I would say, easier because we have a share of that segment in the high 50%. The competitive dynamics are pretty stable. Nothing to actually highlight. I think where it's quite different is from, and I said it before, between $1 billion and $10 billion, we're much more competitive than we were 12 to 18 months ago. That's where we're head to head with Jack Henry and Fiserv in general. We won double the amount of cores last year compared to the previous year.
Most of those incremental wins were in community banks. I'll leave that the way it is. I think what I would say in that sector is we're much more competitive than we were 12 months ago. That implies that we believe we're gaining share in the segment, largely due to a much better product in terms of Horizon and much better focus on client, call it the client experience. We've put more people behind it. We kind of answer the questions quicker, and the clients are happier.
Classic just handholding and relationship management.
Yeah. As I said, stable. Demand is stable. I would say aside from bigger banks, I would say the spend continues to be in digital, risk, compliance, fraud, less so on core.
Less so on core. Okay.
Spending is resilient.
Yep. Just as we think about kind of that move down market into the 1-10 where you've had more success, are those deals more profitable than your upmarket deals?
Honestly, the way we look at it, it doesn't matter that much. We have sufficient scale on all of the platforms because we are generally a scale player. I think I'd turn it around the other way and say IBS is called a scaled platform for the largest, most commercial-focused banks. Horizon is community banks. Both products are doing exceptionally well. We're really not interested in going to credit unions or banks below $1 billion. The reason is not product. It is the service model is too heavy. You would be dragging down margins.
Right.
Yeah.
Right. Right. Right. Okay. Plenty of wood to chop north of a billion, Right.
Yeah, there is. Yeah.
Okay. I think you briefly mentioned office of the CFO earlier, kind of a newer solution bundle. Just tell us more about that product set, how you're bringing it to market. Does your guidance for 2025 contemplate any material contribution from this initiative?
Yeah, there is a contribution already in there. We'll have the natural growth in all of the product suites. I think the goal we've set on past occasions is we've lined up about 100 salespeople against this initiative. We've reorganized sales in general. We have fewer layers of management, more quota carriers. We've increased the amount of specialization. One of these groups that is being set up is called Office of the CFO. What they're doing is they're targeting a specific persona in the target company. They're going and they're selling a bunch of products to the CFO. Think about the first product they would start with, Treasury, Right. We have a suite of Treasury products that at the high end competes with Kyriba, for example. We have mid-market offerings as well. We also have risk products.
We have forex management products, Right. You go all the way into accounts payable, accounts receivable. We bought a supply chain financing company. You can go to the CFO and offer him a suite of products on how does he manage efficiency and cash management across the company and offer him all these offerings at the same time. Call it a new persona within our clients that we will specifically target, the seller suite of products. We believe our products are best of breed. We are going with a suite that's unbeatable and the competition doesn't have it.
Will this all fall into the capital markets segment, or will it kind of cross?
No, it actually will straddle both. It will straddle both.
Okay. Some of the different pieces of the product.
Yeah. The Salesforce does not necessarily mirror. The Salesforce is set up by persona where you're trying to address in the client.
Oh, I see. Rather than being aligned by product.
Rotterdam being fully aligned by product. You'll still have a VP sales for capital markets.
Okay.
There is also one for Office of the CFO. There is another one for core banking. There is another one for VP of Cards and Money Movement.
Okay.
Yeah. It is set up, call it by natural sales territory.
Presumably some of those doors to the CFO are already open to you guys because they're using your core, Right.
Yeah.
Okay. Interesting to watch. Post-Worldpay, obviously, FIS is not in the merchant acquiring business anymore, but you still have some exposure to the payments market. You've got the issuer processing business. I mean, it's actually about half of your banking segment. I was just curious to kind of get an update there on how are you getting paid per transaction, Right. It's primarily debit. How are the transaction trends looking in the card business?
They're actually okay. There's nothing really to call out. There was a bit of a negative couple of weeks when bad weather in February, I believe. It has since bounced back. It was kind of just a blip on weather. It is past us and it is back to fairly normalized trends.
Okay. Okay. No, good to hear. Obviously, a fair bit of macro noise out there.
Yeah. You get paid by transactions, so.
Yeah. You're not worried about ticket size, Right.
We are more exposed to debit, much more exposed to debit. Debit in general, in a recession or in a time of, call it uncertainty, debit cards are inclined to be used more. They are inclined to be used more frequently.
For sure. For sure. Yep. We've seen that historically. I want to move over to the capital markets segment. Execution's been really good there.
Yeah.
Tell us what you think has primarily been driving that. I know you've got a myriad of products and you gave us some good detail on that at the Investor Day last year. What would you highlight as kind of really driving the strong performance?
Great products.
Okay. Okay.
If I had to say one thing, it's just great products. They largely started a modernization journey maybe three years back or four years back. The products are much more modernized than some of the competitors we're meeting against. They're generally best in breed. I would say an unbeatable sales coverage globally. It's highly exposed to international as well.
Right.
International is a big business based out of London or Singapore. It is a very international business. It has more price leverage than banking.
Right.
The TAM, I would say, if you go back to Investor Day, the TAM is 5%-6%. It is a category that is sitting with high underlying growth rates and a great set of products. Generally, if you got great products, you will outpace the TAM.
If we think about the growth rates for that business, you're guiding capital markets 6.5%-7% for 2025. I think the longer-term target from the Investor Day is 7.5%-8.5%, so a point-ish of difference. What are the accelerants that get us there? I mean, is it just some incremental acquisition activity, or?
Yeah, it's mostly M&A.
Okay.
We were a little slower in 2024 on M&A. We only spent $600 million out of the $1 billion we had thought. You do not get the carryover impact of that. Secondly, I think the guide includes about 140 basis points of M&A. I think we ranged at 150-200 basis points kind of thing.
Okay.
It is probably mostly, I would say there are two factors in capital markets. It is lower M&A and some element of conservatism. We came in quite strongly at the end of the year on licenses, and we did not change our license forecast for 2025. The growth rate kind of shifted down slightly.
Okay. Right. Maybe a pull forward or whatever it was. Yeah.
It wasn't even a pull forward. We saw strength as well in the first quarter on license.
Right. Right.
The business is really, really strong.
Right.
Yeah. I think you'll see if you look at the first quarter, we're actually guiding, I think, the 7%-8% growth in the first quarter. Opposite the banking, actually, capital markets is coming out stronger in the first quarter than the full-year growth. It would imply probably it's a fairly conservative full-year goal.
Okay. Understood. I want to talk about diversification into some of the non-traditional end markets within the capital markets business. Because at the Investor Day, I think you highlighted that about 30% of the revenue is coming from some of those non-traditional areas. Maybe give us some examples of those markets and then how fast is that 30% piece growing?
Yeah. I'll take the last piece first. It's growing double-digit. This 30% is growing double-digit. We see it as, you think of it as insurance company, corporates, but it's also asset leasing and lending, those type of clients. I would say we're less overall, the areas are less penetrated, more fragmented. It's one of the reasons why we've set up Office of the CFO. If you can think about one of our targets is the CFO of corporates. The door to get in is with Treasury systems. Our Treasury systems sit probably quite a bit above where SAP is in the market and much more head-to-head with Kyriba. You're going in there with a highly sophisticated Treasury product, a suite of risk products.
You're going to offer accounts payable, accounts receivable, supplier financing, commodity trading products if needed, companies like Cargill, for example. Those kind of companies are way more sophisticated in the usage of capital market-type products. That's why it's a big vertical.
Yeah.
I think our Treasury, I get this wrong. I think we said at Investor Day, we have 1,300 installed Treasury systems. So we're not a small player in Treasury. It's a lot.
Right. Right.
We're a fairly big player, especially at the high end.
Yeah. Yeah. Right. And you can cross-sell into that base.
I cross-sell.
Yeah.
We find asset leasing is very dynamic. The move to electric cars has changed the model.
Okay.
Increasingly, the software is much more sophisticated. There are many reasons why there is double-digit growth here in these verticals.
Let's talk about sales. You alluded to it earlier. In 2024, total company new sales, ACV, if you will, up 9%. I think you just mentioned earlier that banking was actually a little bit better than that, Right. Low double-digits.
Yeah, low double-digit.
Yeah. How should we be thinking about the potential growth rates in sales for 2025? What have you built into the plan?
You shouldn't because we're not going to give you a target.
Okay.
We want to continue to make. I would highlight one thing about 2024. We also said the recurring sales were up probably 25% plus across both of the businesses. There's a shift within the business. We're actually okay if the ACV is growing even low to mid-single digit, but we're really focused on the recurring sales because that is the long-term lifeblood of the company. It's durable revenue. It's repeating every quarter-end quarter out. I would say looking into 2025, what have we done recently or what are we doing that we expect ACV to be a positive outcome again? I talked about the specialization of the salesforce.
Yep.
Office of the CFO is one example. The other example is, and this is over the last six months, we realized that the generalist salesforce in banking was selling too many products. Now that we hired a VP Sales, actually from one of the competition responsible for cards and money movement. Call it that big part of the business, which it's a $2 billion business, Right. We have put dedicated salespeople, mostly hired from the outside, under this position. We have a dedicated cards and money movement of about 60 people, which we didn't have before. As we do this, you're obviously shifting resources between the various categories.
More specialization, much more focus on faster-growing categories, hiring more from the outside to get this, I would call it scrappiness that comes with card and money movement versus, call it, longer-term contracting that is more banking. There are large changes. We changed the incentive schemes in the first quarter for the 2025 fiscal year, generating more focus on recurring versus professional services.
Oh, okay. Those plans are just kicking in now in this quarter?
They're kicking in for this year. I think you'll see a change in the composition. The change in the composition of ACV is much more important to us than the absolute growth number. We want to sell. We're giving incremental incentives to the salesforce to sign a recurring versus a professional services.
Right. Right. Right. Right. Which makes sense. Okay. You have the cross-selling initiative, Amplify, as you call it. I think there was a 10% boost in sales there for Amplify. Any specific callouts in terms of what drove that, or are there kind of isolated areas of particular focus for Amplify in 2025?
Not really. I think the salesforce has it built into their goals at the start of the year. So it is, there are a set of goals against it. Examples, like the examples can be quite small or quite big, but we call out some now and then on the calls. In the most recent quarter, a large regional bank who buys a lot of banking products for the first time bought a product from capital markets to manage transfer agency. That's one example. It's a clear cross-sell that we probably wouldn't have done if we didn't have the banking client. Another one was another client in the quarter took a commercial lending product from capital markets. There is cross-sell. It just needs to be, it's kind of a matrix like this. You got to do cross-sell, but the specialization is also important.
Right.
Sales guy cannot go in and sell 100 products. It's too many.
Exactly.
They have to be focused on the segment they're expert in.
Yeah. Okay. Let's shift over to margins because that was an important topic at the Investor Day. I know you've been very focused on it. You guys did a really good job on margins last year. You're talking about 40-45 basis points this year. What's going to drive that? Maybe you can tack on a little bit of mention of what drives sort of the incremental acceleration in the rate of margin expansion in 2026 per the Investor Day targets that are out there.
Yeah. Yeah, you said it. Last year was a great year for margins. It did not sink in on the call from many investors. We were quite proud of it. 64 basis points expansion versus a goal at the beginning of the year, I think was 20-40 basis points. We took out a lot of costs during the year. We still have a lot of costs to take out over the next two years to offset TSAs. You can think about it, cost reduction of, I think we said 170 basis points roughly a year, which is a large number, offsetting exiting TSAs at 95 basis points and call it the cost of doing business, which is inflation and growth investments. We have on the 40-45 basis points of this year, I would say the degree of certainty on the cost reduction is exceptionally high, Right.
Many of the initiatives were rolled out in the fourth quarter. We are not waiting for something to happen and roll out in the second half of this year. I would say 85% of what needed to be done was rolled out before the start of the year. We are getting savings early in the year. I think longer-term, where you are going to see the model change is once you have the TSAs behind us, you are going to see pure, I call it operating leverage and favorable mix drive the equation. There will always be some cost reduction to offset inflation. We said that the natural leverage of the business is, I think, 70 to 90 basis points.
Right.
If I was to do a trajectory, I'd say 40-45 basis points in 2025, 60 kind of range in 2026, and probably above 60 in 2027.
Right.
It'll be a continued escalation as the revenue throws off because let's face it, if you work out the math and we're doing, if we're delivering the guided mid-single digit on total company and you manage your overheads reasonably tightly, you're going to throw off leverage. That's it. That's the business we're in.
Yeah.
It's highly scaled, highly levered. We're not going down market into low-margin products. Quite the opposite. We're continuing to drive scale, right, in all of our platforms. Fewer platforms, more scale, more operating mix favorabilities. Then tightly manage overheads as part of the business, the business model.
Yeah. It sounds like a lot of it's really in your control and you're just benefiting from the natural economy.
Yeah. Very high level of visibility, especially on the cost reduction. Really, really high.
Excellent.
Yeah.
Excellent. Let's talk about free cash flow. I know you mentioned it as a priority of yours for 2025, and there's some moving parts here. I wanted to start with the acquisition and integration-related payments. I know those get added back in the adjusted free cash flow calculation. If I'm not mistaken, that was about $475 million last year. How much of that is related to Worldpay separation versus other factors and any way to think about how that $475 million may trend this year, next year?
Yeah, we get the question a lot. I was surprised when I joined the company. It's the first time I'd ever seen a free cash flow adjusted for one-time items. When I wanted to change it, I was told that's what the financial services sector does. The $475 million, we said we'll go down to $415 million-$425 million, call it a 12% reduction cash basis. The accrued basis reduction is much higher because we're starting to step out of Worldpay. On accrued basis, the P&L accruals will drop by about 30%. What that means is the reduction on a cash basis in 2026 will be well above 15%, Right. You'll continue to, the decline will start accelerating in 2026 and will be quite dramatic in 2027. There are two really big drivers. One is Future Forward and the other one is Worldpay.
You get kind of applauded, great, you sold Worldpay, but then people do not like the one-time cost to actually get rid of it, Right. There are huge teams working on transferring the systems from our company to Worldpay.
Right.
Huge teams.
Is that happening on schedule so far?
They're actually accelerated a bit. Within our guide, they're exiting the TSAs quicker to the tune of maybe $20 million. We've basically taken out more costs. It's Worldpay costs and that will trend down. Future forward, as of the end of this year, as a cost program, will start trending down.
Right.
We will have some residual cost reduction into 2026, basically to streamline corporate functions, continue to streamline them. Our commitment is we are going to dramatically reduce cash restructuring costs over the next couple of years.
Right.
We got to get this Worldpay stuff behind us first.
Right.
Yeah.
Okay. We'll be looking at smaller add-backs, basically.
Much smaller add-backs longer term.
Yeah, with each successive year, essentially.
Yeah.
Okay. Okay. Good. Good. CapEx, I know a couple of quarters you guys started talking about the fact that there were some pretty big price hikes from some of your IT vendors. I think you're running about 9% of revenue now, and you're expecting that to persist this year. Target range is a little bit less than that, 7-8%. Is 7-8% achievable in 2026? Does it take longer?
I'd say to nine this year, take it a different way. It's got about 40 basis points in there for pressure on pricing coming from those two suppliers. We are developing plans to exit the suppliers or at least have a credible backup. The next time we negotiate, the power is in our hands, not in theirs. That's going to take two or three years to wind through. The other one is we are ramping up infrastructure and capacity investments.
Okay.
Honestly, the way I look at it is I'd much prefer to be spending more on CapEx to drive future revenue, Right. It is either.
Exactly.
So.
Rather than just making your business.
CapEx should be less of a problem. I got to deliver total cash, and then I got to give cash back to shareholders.
Right.
That's my different problem. With all of this noise on free cash flow, I do want to point out one thing. It's kind of frustrating. We committed 77% at the end of the year versus 85% cash conversion. We still returned $4.8 billion to investors, which is exactly what we said four months previously.
Sure.
Because with the benefit of hindsight, I probably spent too much time on capital allocation and optimizing tax rate. Now I'm shifting my guns to cash flow, and we will get results quickly. Where I've intervened aggressively and moved cash flow, call it the cash czar, who wasn't really a czar I thought they were in out of Treasury and into strategic finance.
Okay.
We have a SWAT team ongoing. We're taking this incredibly seriously, improve forecasting capability, extend terms to suppliers more aggressively than was done in the past. Actually just ensure appropriate enforcement and governance over planned terms. There were some extended terms given in 2024. The good news is we collected in 2025, but that should never have happened. Finance was getting involved too late in the process, and commitments were already taken with customers.
Oh, I see.
Look to 2025 as, and I'll get back to your question on CapEx. CapEx at 9%, a different outlook on networking capital. Some of this is 2024 was an unusually bad year for networking capital. If we just eliminate the extended terms, we'll have a decent free cash flow conversion year in 2025. We are putting in place a significant number of actions to make sure we can deliver the consistency that investors expect. Even with the 2025 guide, we're still giving $1.2 billion of buybacks, $800 million of dividends. A total return of $2 billion in the year, which is actually $400 million higher than what we said at Investor Day.
Right.
We're not shy on giving the ship money back.
Yeah.
are other ways to get cash, repatriating cash from international, changing your Treasury structures. It is what is called trapped cash. We released about $500 million-$800 million, closer to $800 million, of trapped cash over the last 18 months, which is cash that was offshore and it was brought back. The problem is can you bring it back tax-free?
Right.
We have brought all the cash back tax-free. That is what has allowed us to deliver on commitments to shareholders.
Is there still more of that that you can do or?
No, we're kind of there.
Yeah, yeah.
That is why we could continue to deliver on the cash returns to shareholders.
Right. On the working capital side, I guess are the opportunities more on the payable side or the receivable side?
Both, I would say. We do not intend to go out and shorten terms to clients. We actually just intend to enforce what we have to do.
Right. Don't bend the.
Don't give extended terms when you don't have to.
Right.
Ensure better trade-off between cash and pricing and insert finance earlier in the process. Receivables is the absence of negatives and payables will be driving extension of payables. On average, 30-45 days, which is outrageous. We will be over a two-year period mandating 90-day terms.
Okay. That'll make a big difference. Yeah.
Ninety-day. We've already changed three of the four consulting companies that work for us.
Is that Right.
Yeah. No, no, we'll be dogmatic if, and the instructions we've given, if you don't agree to 90 days, you're not getting RFPs.
Right.
You won't get them. You're not a strategic supplier.
Right. When you boil all this down, free cash flow conversion, I think the guide is 82%-85%, Right. This year, the longer-term target, I think, still stands.
90. It still stands at 90.
Okay.
Yeah.
You think we can hit that next year?
Capital. In 2026, the goal is to get to 90+.
Yeah.
I'd say capital will be in or around 8% range.
8%. Okay. Okay. Understood. Understood. I know we're running out of time, but just tell us, I'm curious just on Worldpay, just remind us, what are the options, at least over the long term, to monetize potentially the 45% stake?
You know, I think Worldpay will always be almost like a sales channel or a partner into perpetuity.
Right.
That's one piece of it. The other piece is we do not want to be a long-term holder of a 45% stake in Worldpay.
Right.
We have said it on multiple occasions and it is unchanged. We will monetize when GTCR monetizes. That is the private equity company. When they monetize, we will sell at the same time. You know, unfortunately, an IPO would take multiple years to free up your stake.
Right.
Because you'll probably have a lock-in for a couple of years. It is not a long-term strategic asset for the company. That is consistent with what we said previously.
For sure.
They are doing really well.
They are?
We're doing really well and it's worth a lot more than it was when we did the first.
Yeah. Revenue growth has really turned around there.
Revenue growth has turned around. There is a great management team in there. They are performing strongly. It just shows the benefit of good management who knows the sector and strong focus on the business.
Yeah.
Yeah.
All right. We'll end on that happy note. James, thank you very much. We appreciate it. Thank you for the time.
Thanks, Joseph. Thank you.