Welcome to the Fiserv 2021 Second Quarter Earnings Conference Call. As a reminder, today's call is being recorded. At this time, I will turn the call over to Shub Mukherjee, Senior Vice President of Investor Relations at Fiserv.
Thank you, and good morning. With me on the call today are Frank Zlodignano, our President and Chief Executive Officer and Wang Hao, our Chief Financial Officer. Our earnings release and supplemental materials for the quarter are available on the Investor Relations section of fisap.com. Our remarks today will include forward looking statements about, Among other matters, the impact
of the
COVID-nineteen pandemic on our business, expected operating and financial results, strategic initiatives and expected benefits and synergies from the First Data acquisition. Forward looking statements may differ materially from actual results and are subject to a number of risks and uncertainties. You should refer to our earnings release for a discussion of these risk factors. Please refer to our earnings release and supplemental materials for today's call for an explanation of the non GAAP financial measures discussed in this call, Along with the reconciliation of those measures to the nearest applicable GAAP measure. Unless otherwise stated, Performance references are year over year comparisons and all references to internal revenue growth are on a constant currency basis.
And now, I'll turn the call over to Frank.
Thank you, Shu. 2nd quarter was a very strong quarter for us across the company. Total company adjusted revenue grew 20%. Adjusted operating margin grew 5 10 basis points, resulting in adjusted operating income growth of 41%. Adjusted EPS Grew 47% to $1.37 Free cash flow in the quarter was in line with last year, Just under $900,000,000 including the impact of a diminished NOL.
2nd quarter sales were up 31% with growth across the business. Our strong second quarter was driven by a combination of continued economic recovery and strong execution of our business strategy. On the macroeconomic side, we saw continued recovery in the U. S. With uneven recovery in other parts of the world.
The shift to digital commerce drove consumer demand for seamless experiences across challenge. Amidst these trends, we executed on our strategies to continue to win business and grow share. We serve as the operating system for commerce across our client base, ranging from micro merchants To the world's largest corporations, financial institutions, banks and credit unions, FinTechs and governments. This enables us to focus not only on growth at our core, But also on new services, business models and adjacencies. Given the strong results to date And our solid pipeline, we are raising our outlook range for internal revenue growth and now expect to 12% growth for 2021 from 9% to 12% previously.
Additionally, we are raising our adjusted EPS full year outlook and now expect a range of $5.50 to $5.60 up from $5.35 to $5.50 previously. The increased adjusted EPS guidance outlook represents a 24% to 27% growth versus last Drilling down to the business segments, the quarter was led by our Merchant Acceptance segment, Which posted internal revenue growth of 41% year over year. Normalizing For the year ago comps, the segment posted a 13% growth in the quarter on a 2 year basis above our pre pandemic run rate. Both North America and international Largely grew in line with the segment average. North America purchase volume was up 33% in the quarter, Accelerated is the shift to omni commerce.
Consumers are increasingly looking to engage with merchants In whatever way is most convenient, Fiserv's ability to support clients with leading solutions In both brick and mortar and e commerce environments is a differentiator. We saw the manifestation of this trend during the Q2. As offline commerce recovered with volumes growing 46% versus 2020 And 11% versus 2019. Online commerce volume also grew unabated At 21% year over year, highlighting the criticality of equipping merchants with omni channel commerce capabilities. Our lead in omni commerce is the reason we were honored with the Omnichannel Provider of the Year Award from the Straw Hacker Group, A leading payments industry analyst firm.
As you know, Clover, Carrot and Clover Connect Our Fiserv's 3 leading platforms for small and medium sized merchants, enterprises and ISVs respectively. Starting with Clover, GPV in the quarter grew 96% year over year, Reflecting a 38% CAGR since 2019 to 100 and Continue to build out vertical specific solutions in retail, restaurants and services. Our vertical sector strategy aims at expanding beyond the buy button, offering An integrated suite of products that help merchants generate revenue and run their business. Value added services on the Clover platform include Clover Capital, Clover Dining, Clover Order Ahead and Clover Inventory, as well as our unique app marketplace, That enable us to increase our share of the merchants' wallet and become the platform of choice. On the enterprise side, Carrot, Our enterprise omni channel ecosystem continued its strong momentum in the second quarter with new wins And continued innovation in key verticals.
In restaurants, Kariq powers digital commerce For 10 of the top 15 QSRs, Carrot has helped Burger King expand its mobile payments experience in the Latin America and Restaurant Brands International expansion in the UK in other parts of EMEA. In grocery, where Carrot now serves 9 of the top 10 grocers, We have helped new clients such as Wakefern, Aldi and the companies of Ahold Delhaize USA expand their digital grocery ordering capabilities with new payment types. Evidence of Carrot's commitment to the grocery industry and transformed digital experience is exemplified by Carrot's leading online EBT program that has processed $2,500,000,000 in GPB year to date. In retail, we're characters 7 of the top 10 retailers. We expand the Yum!
Merchant Services By working with clients such as Adidas on innovative solutions, including our new consumer recommendation engine. This engine connects digital experiences to local stores enabled by the integration of Radius 8, Establish new at scale leadership with crypto wallets, where we power cards funds in and funds out solutions. Through this capability, we help consumers move more than $4,000,000,000 in payments volume in and out of wallets For the past 12 months, in the second quarter alone, we moved $2,000,000,000 in volume, demonstrating the Moving to Clover Connect, our ISV focused offering. Momentum continued in the second quarter with ISV volume up 122% year over year. We signed 53 new ISV partners in the quarter, bringing new ISV partnerships 95 year to date.
We're signing up buyers of these that are new to payments and those that are converting from competitors. Year to date, almost half of our wins are competitive takeaways. Our ISV partners derive great value And getting access to our partner management tool Copilot and integrating with Clover. On our Investor Day, we talked to you about our merchant acceptance growth strategy for international. We remain focused on growing our global market presence with world class bank partners and through our direct channels, All while leveraging the strength of common platforms and connections.
In the quarter, We announced the JV with Deutsche Bank in Germany that offers us access to over 800,000 merchants, many of whom We'll power with our Clover platform. In Asia Pacific region, we won a multi country acquiring processing mandate from Citibank for its new integrated digital commerce offering, Spring by Citi. Early in July, we began onboarding and processing payment transactions as part of the merchant acquiring Services agreement signed with Brazil's Cascia Bank in April of this year. The onboarding began 70 days after contract Once again, demonstrating our speed to market. In addition to the successes I mentioned above, merchant acceptance segment, yesterday, we announced a strategic relationship with Goldman Sachs To integrate cross border payment functionality into our B2B accounts receivable and accounts payable solution, SnapPay.
As you know, B2B payments is a vast and growing market, ripe with opportunity. We believe that in partnership with Goldman Sachs, we can deliver best in class B2B payment capabilities, enhancing visibility, operational efficiencies and cost savings for our large and mid market business clients. Moving to the Payment and Network segment. We posted internal revenue growth of 7% over the Q2 of last year. Positives in the quarter included the continued growth of sales, continued strength in debit transaction volume, initial recovery in credit account volumes And international growth with some weakness in bill pay, although results improved sequentially.
The differentiated and industry leading businesses within our payments and network portfolio And our agile execution are the key reasons why we continue to win with clients. We are proceeding well with onboarding the $120,000,000 of credit issuing wins we told you about on our Investor Day. We completed boarding Atlanticus in Q2 and have completed several stages of migrating both Alliance Data and Genesis Financial to the OpSys environment. In less than 12 months, After announcing these 3 banner wins, we are poised to recognize revenue on all three clients in the Q3 of this year. We continue to grow our relationship with innovative growth stage Fintechs, Digital Banks and Consumer Lenders.
In June, we signed an agreement with Prosper, A FinTech Pioneer and a premier AI driven consumer lending marketplace for credit card processing services. This base is a growth focus for us. Our revenue with FinTech issuers grew over 300% during the first half of this year versus the same period in 2019. On Investor Day, you will recall The driving best in class integrated digital consumer journeys is a key differentiator and imperative for our clients. Experiences are the new currency of loyalty.
Customers gravitate towards institutions that can give them a unified Today, we announced enhanced Fiserv digital capabilities for integrated digital banking and card management. This enriched mobile first suite will enable financial institutions to offer their consumer And business customers a best in class digital banking experience that is designed for the way customers expect to engage. To introduce these enhanced capabilities, we rapidly integrated 2 recent acquisitions, ONDOT and SpendLabs. This offering allows us to deliver a single point of access for all banking products. Our enhanced Fiserv digital capabilities will span all three business segments in payments Through a leading digital cardholder experience.
In financial technology, by driving the penetration of our core account processing In digital surrounds, in merchant acceptance by increasing the uptake of value added services from integrating Spend Labs With our Clover platform, we expect to see incremental usage, engagement and services revenue On the Fiserv platform as a result. Before I close out the payment segment, I would like to mention the Strong growth we're seeing in our debit networks, Star and Excel, as we are winning new issuers through our ability to support All transaction types, including best in class fraud management and chargeback products. Moving to the Financial Technologies segment. The quarter was in line with our expectations, posting internal revenue growth of 5 Including an 80 basis points headwind from periodic revenue. I want to highlight some key achievements in the quarter That reflects a strong market position.
We added 10 new core account processing clients in the quarter, including 8 on the D and A platform and 4 in the over $1,000,000,000 asset size market. As the smaller end of the banking industry consolidates, we're moving up the asset chains, winning share in the $1,000,000,000 to $50,000,000,000 market. One such win is Sunstream Business Services, a service entity which spans 12 Financial Institutions and provides business and technology services to farm credit associations, Totaling more than $115,000,000,000 in assets, Sunstream will be converted into D And a number of surround solutions. Continuing our strong momentum in the de novo bank market, We signed LCA Financial Services, a newly created a newly chartered bank focused on small business. While we continue to win with our digital surround solutions, ABILITY is the new paradigm in digital banking.
A single retail and business online and mobile platform. We had our first client go live on the ABILITY platform in the Q2 with more than 100 clients signed up. We are also fully embracing openness as a strategy. The Fiserv Developer Studio It's aimed at attracting the developer community to build innovative products using the range of APIs we expose across cards, payments, banking, small, medium and large businesses. Additionally, we are building a pre integrated Fintech app marketplace, where our financial institutions clients can acquire, test and deploy 3rd party apps seamlessly, easily and quickly.
This openness strategy creates a net new revenue Opportunity within our existing client base, while widening the value added services opportunity. With that, let me update you on our integration efforts. Through the second quarter, We've already actioned $1,100,000,000 of over $1,100,000,000 of cost savings and are well on our way to completing a one $200,000,000 cost synergy objective by the end of this year. With the majority of the integration work behind us, We are focused on driving further growth and sustainable value in the years ahead. On the revenue side, We're pleased with the level of synergy sales, which accelerated in the second quarter.
As of the end of the second quarter, We've already actioned $325,000,000 in annual revenue synergies and our synergy sales Pipeline is growing robustly and we expect to meet or exceed our $600,000,000 target over the 5 years post merger. Revenue synergies in the quarter were driven by payments, debit network in card sales across our 3 major client segments, FIs, Corporates and Government. Additionally, as the partner of choice, we continue to see momentum in our bank merchant program. Now let me pass the discussion to Bob for more detail on our financial results.
Thank you, Frank, and good morning, everyone. If you're following along on our slides, I will cover some detail on each of our segments starting with Slide 4. We had a very strong second quarter, thanks to our broad portfolio of products and services, as well as the positioning of our assets And strong execution across the business. Total company internal revenue growth was 18% in the quarter, With growth across all segments and led by the Merchant Acceptance segment, which grew 41%. Year to date, Total company internal revenue grew 11%, also led by the Merchant Acceptance segment, which grew 23%.
2nd quarter adjusted operating income was up a strong 41 percent to 1 point Operating margin increased by a very strong 510 basis points to 33.9%. This margin improvement was driven by our outstanding revenue results and our continued and disciplined cost synergy execution, Which produced $90,000,000 of incremental cost synergies during the quarter as well as strong operating performance. 1st half adjusted operating income increased 28 percent to $2,400,000,000 Adjusted operating margin through the end of June expanded 4.40 basis points to 32.7%. 2nd quarter adjusted earnings per share Increased 47 percent to $1.37 compared to $0.93 in the prior year. Through June 30, Adjusted earnings per share increased 32 percent to $2.54 putting us on a pace to achieve our 36th Consecutive year of double digit adjusted earnings per share growth, a testament to the incredible resiliency of this company.
Free cash flow in the quarter of $897,000,000 was in line with last year, With free cash flow for the 1st 6 months of the year up 4% to $1,720,000,000 Free cash flow conversion was 97% to adjusted net income, including a $172,000,000 impact from reduced net operating loss carry forwards. Year to date, free cash flow conversion came in at 100% And we continue to expect at least 108% free cash flow conversion for 2021. Now looking at our segment results. Internal revenue growth in the Merchant Acceptance segment was a stellar 41% in the quarter and 23% year to date. Our results were driven by a strong performance of our SMB platform Clover, Our enterprise platform, Carrot and our ISV platform, Clover Connect.
These results were driven by a strong global performance Despite uneven economic recovery outside North America. The second quarter was a record quarter for Clover, In addition to a very strong 96% annualized GPV growth, this quarter was also the highest shipment volume for Clover hardware, having recently shipped our 2 millionth Clover device. Moving to Carrot, we won 52 new global enterprise e commerce clients on the platform in the quarter. Including existing clients, Karatone or expanded business with brands such as Sporttrade, Aldi and Yapstone. In India, Carrot won the business of a leading digital food delivery platform.
Our ISV volume in the quarter through Clover Connect grew 122% year over year and we're winning both ISVs that are new to payments as well as competitive takeaways. Adjusted operating income in the Acceptance segment increased 135% The $524,000,000 in the quarter and adjusted operating margin was up more than 12 full percentage points, that 31.4% Driven by the strength in the top line. Through June 30, adjusted operating income improved 80% to $911,000,000 And adjusted operating margin grew 9.50 basis points to 29.7%. The Payments and Networks segment posted internal revenue growth of 7% in this quarter, resulting in year to date growth of 4%. Debit transactions grew a strong 31% in the quarter and this was a low double digit sequential grower versus last quarter.
We continue to build upon the strong momentum of transaction growth and account to account transfers and P2P solutions. Versus prior year, Zelle transactions in the quarter were up 94% and the number of clients live on Zelle was up 88% in the quarter. Our bill pay business saw sequential improvement in growth from Q1 and is expected to continue to improve Through the second half of this year. We continue to expect to see the full year internal revenue growth for the Payments and Networks segment To be toward the upper end of the medium term growth rate of 5% to 8%. Adjusted operating income for the segment was up 14% The $636,000,000 and adjusted operating margin was up 260 basis points to 44.6% in the quarter.
Year to date, adjusted operating income was up 8% to $1,200,000,000 and adjusted Operating margin was up 140 basis points to 43%. The results were driven by positive momentum In our Issuer business and the impact of revenue and cost synergies. The Financial Technologies segment Internal revenue grew in line with expectations at 5% in the second quarter as continued growth in high quality recurring revenue Was partially offset by lower periodic revenue, which created an 80 basis points of headwind to internal revenue growth. For the first half of the year, internal revenue growth for the Financial Technologies segment is now 4%, Reaching the lower end of our medium term outlook for this segment of 4% to 6%. Demand for our digital banking capabilities And for our deep offering of digital solutions continues to build momentum.
As Frank mentioned, we had 10 new core account processing clients in the quarter. Total mobile subscribers across our leading digital platforms, mobility and architect Grew 9% in the quarter. Mobile deposits in Q2 grew 12% over the prior year, While self-service ATM deposits grew 70% over last year. Adjusted operating income was up Strong 8% in the quarter to $273,000,000 and up 14% year to date to $519,000,000 Adjusted operating margin in this segment increased a robust 80 basis points in the quarter to 36.2 percent and 300 basis points to 34.9 percent through the end of June due to a combination of revenue growth, The adjusted corporate operating loss Was $124,000,000 in the quarter, in line with our expectations, up from last year, largely on higher variable compensation expenses. The adjusted effective tax rate in the quarter was 21.3%, increasing 80 basis points versus prior year.
We also expect our full year adjusted effective tax rate will be fairly consistent with 2020 rate Strategy by repurchasing 5,000,000 shares for $588,000,000 and we have more than 55,000,000 shares remaining authorized for repurchase. We completed 2 acquisitions in the quarter Spend Labs, a mobile native cloud based commercial card payments and Software Company and Pineapple Payments, a leading independent sales organization focused on integrated payments. Additionally, we divested our remaining interest in the Investment Services business and received pre tax proceeds of $466,000,000 from the transaction. Total debt outstanding was $20,800,000,000 on June 30 and the debt to adjusted EBITDA ratio decreased To 3.3 times, putting us well on track to achieve our targeted leverage of less than 3 times by the end of this year. We are fully committed to our long standing capital allocation strategy, which includes maintaining a strong balance sheet, making organic investments in innovative solutions and pursuing high value acquisitions.
Importantly, Share repurchase remains our benchmark for capital deployment. With that, let me turn the call back to Frank.
Thanks, Bob. I'm very proud of the results we've delivered. The quality of our assets, our relentless focus on innovation, Our agility, speed of new client implementation with examples like Kasha, ADS, Atlanticus and Genesis put us in a great spot to serve our clients. Our speed to market With the enhanced Fiserv digital capabilities for banking and card management announced yesterday, Along with the integration of business expense management into the Clover platform, all of which Leverage the full capabilities of recent acquisitions, OnDOT and Spend Labs, add to our continued success. In addition to delivering on our financial results, we continue to focus on our people and on our communities.
Earlier this month, Fiserv was named by Forbes as the best employer for diversity, our commitment to putting diversity at the forefront of our values And having implemented long term initiatives to create a more inclusive environment. During the quarter, We published our 1st annual corporate social responsibility report, which is available on the corporate social responsibility section of our website. We also expanded a back to business grant program beyond the original locations that were selected in 2020. In May, we partner with the New York Mets to recognize small businesses as part of our Asian American and Pacific Islander Heritage Month. And in June, we awarded grants to businesses in Tulsa As part of the centennial observation of the Tulsa Race Massacre.
None of these achievements Would have been possible without our world class talent. I thank our more than 40,000 associates around the world for their commitment Encourage as we stand together to deliver value for clients, our colleagues and you, our shareholders. And finally, before I close, I want to congratulate the Milwaukee Bucks For winning the NBA championship at Fiserv Forum last week. The Bucks, our terrific partners And our partnership goes way beyond putting a name on their arena. Clover has been deployed throughout Fiserv Forum For food and beverage concessions, providing attendees with seamless, quick and easy transactions.
With that operator, let's open up the line for questions.
Our first question comes from Lisa Ellis from MoffettNathanson. Please go ahead.
Hi, good morning. Thanks, guys. Good to hear from you. I wanted to follow-up on the 2 year CAGR call out for the Merchant Acceptance segment. I believe you said it's running now at a 13% Internal revenue growth on a 2 year CAGR basis.
1, wanted to just confirm that number. And then 2, I wanted to kind of just drill into it a little bit given that that's Above your medium term outlook for that segment, which as per Investor Day was 9% to 12%. Can you just highlight like What you're seeing, say, in North America versus ex U. S. And, are there any unusual dynamics in this Quarter or do you see that sustainable going forward and kind of what's different about the business now than prior to the pandemic when I believe it was running closer to about 10%?
Thank you.
I think it starts with the U. S. Has been in the strong spot in the recovery right now. You heard us talk about unevenness outside the U. S, but I do think You saw a robust even last July when it all began coming back.
I do think you got to focus on the 3 legs in the U. S. And internationally. The 3 legs are Clover, and Clover Connect, right? And all of those were continued investments, continued build out And we're seeing it show up in the client's office.
So I would say, it's Really driven by U. S. When you see that we say U. S. And international for the quarter performed fundamentally evenly, that was a Body, even this meaning not every country was the same and you could kind of map to where recoveries are happen or not.
So I think it's all about our platform strategy and our client strategy that's That's driving the outcomes and I think our teams galvanize very well around it.
And Lisa, just To hit the first part of that question, 13% is an average growth rate. If you look at Q2 of last year, It was actually down 15% over the prior year. We're now up 41% over 2020, so the average 13% there.
Terrific. Thank you. Good stuff.
Next, we'll go to the line of Dave Koning from Baird. Please go ahead.
Yes. Hey, guys, congrats and go Bucks.
Buck in 6.
There we go. That was fun. Well, Yes. And maybe my first question, just on the Merchant segment momentum, I guess, a little bit like what Lisa was asking about. I went back several years and The second half usually has quarters that look a lot like Q2.
So usually Q3 and Q4 look a lot like Q2. But the question I guess is, is the momentum building? I mean, you mentioned international still has room to improve. U. S.
Momentum seems kind of off the charts. BAM's actually grew faster year over year than your core merchant business for the first time probably in many, many years. So is it are we in a momentum situation that Q3 and Q4 could actually be better than Q2 this year compared to when normally it's the same?
I think the answer to that is yes. I mean, there is concern in the world, Right. I mean, so that's a little bit in how we think about it when we talk to you about What we're doing, so there is a degree of us saying the world's not out of the woods yet. Although I think Big Horn has had to grow with this. So it's highly possible What you're saying could happen?
I mean, we're driving the business to get the results we're getting. You see all the partnerships Sure. We're aligning to bring more. So yes, I'd say it's possible. But The world has spot in us right now too.
Yes. No, that's great. And I guess secondly, just as a follow-up, The past, I guess, handful of quarters at different times KKR has sold. They're down to a much smaller position than they were a year or 2 ago. But on the heels of now a really good quarter, what do you think their thoughts are about selling now?
I'd start off with 1st and foremost, I do not anticipate them conducting additional secondary offerings. I'm in a routine and pragmatic way going forward. So I don't think we're going to see another secondary.
Sounds great. Thanks guys.
Thank you.
Thank you. Next, we'll go to Timothy Chiodo from Credit Suisse. Please go ahead.
Thanks a lot. Thank you for taking the question. So over the last year or so, we've seen a few merchant acquirers become public. They have Pretty fast growth in some more niche verticals, so online gambling, regulated financial services. Clearly, the First Data, Fiserv Merchant Acquiring Business is extremely well diversified and has a much, much larger scale, meaning that any one vertical can be Overly meaningful, but maybe you could just touch on your approach to participation in those types of verticals, the extent to which you either are or will, How much it could help your business?
What are the pros, cons, etcetera? Thanks a lot.
Well, I think we're in every vertical. I think we have I mean, we talk about grocer, QSR, Retail, but we're in gaming, we're across the board. You don't have a business of this size and scale That isn't serving all markets. And when you look at our capability, We do a good job of bringing base capability and then segmenting to what verticals specifically need. So I think we are completely deployed against and we're deployed against growth.
I mean, we're deployed against growth. Where we invest is where we believe the growth of your segments are.
Tim, I think one of The keys for our growth and quite frankly how we work through the pandemic and continue To grow the business meaningfully is we're very well diversified in terms of the way we go to market, whether that's Our direct channel through our bank partners, to our non financial institution partners, joint ventures, etcetera, but also extremely well diversified across And we participate essentially in all of them and have offerings that get us Revenue growth across a very wide spectrum.
All right, excellent. Thank you so much. Really appreciate that. As a minor follow-up, Was there any comment you could give on the assessments timing on the contra revenue, any impact in Q2 given the difference in quarter Quarter growth Q1 to Q2, some of those impacts that we saw last year.
Yes. You recall, we had a pretty significant impact in Q2 2 of last year negative impact in Q2 that rebounded in the second half of last We're seeing the opposite now as we saw a big rebound in Q2 of this year. We do have a tailwind That will be muted a bit in the second half of the year. We don't have quite the same snapback in the second half as we did in the second half of Last year, so call it roughly of the 12 full points of margin improvement we saw This year over Q2 of last year, about 4 points of that was the brand assessment fees. And then that will be a bit of a Headwind for us in the second half of the year, but we certainly see margin expansion continuing into the second half.
Perfect. That's really helpful. Thank you so much both of you.
Thank you. Next, we'll go to the line of James Faucette from Morgan Stanley. Please go ahead.
Hey, thanks a lot and really appreciate your comments this morning. I know Bob talked a little bit about capital allocation, but I'm wondering if you can just let us help us think about how priorities or at least the way that you allocate may be changing if at all, Especially given kind of what's happening from a perspective is your stock is a little cheaper now and so maybe that speaks to wanting to do buybacks. On the other hand, we're kind of continuing to see massive flows of capital into competitors both through the private and public markets And the like. So just wondering if there's any evolution there on your thinking of how to prioritize use of capital going forward?
I'd start with 3.3 Leverage, that will be well behind us. And we did talk about Investor Day, dollars 30,000,000,000 of free cash. And so I think you also see us continuing the strategy of taking Silicon Valley Digital expertise and capability integrated into our company and fundamentally creating Experiences that nobody in our peer group can do. You start with Clover back in the day And when I talked about On Dot, I did say that the acquisition of On Dot and then subsequently Spend Labs, but On Dot Typically would bring a Clover like effect to our company and the fact that so you'll see us deploy Capital to those type of acquisitions, but I want to bring clarity to what I mean in a clover type. We've created a single instance For consumers to be able to get every banking product they have and have card functionality That surpasses the industry by a lot.
So we have tremendous everything from digital issuance To the ability to put it in the wallet, I think you got to really think about what we're doing there. And then we will invest in these products quite heavily, right? So I think you'll see us Continue to do those type of acquisitions that drive the digital presence, But we've done things unparalleled through those acquisitions. So we've talked about $30,000,000,000 You see the properties we bought, You see us integrating those properties, integrating for growth, and I think you'll see us always though using Buyback as
a benchmark. Jay, I think this quarter is perhaps a prototypical example, this Digital enhancement, digital innovation that Frank talked about in his prepared remarks and just referenced is a combination of investing in our business Organically, internal investment advancing our digital banking capability with Obility, bringing more feature function capability to our mobile Capability. Adding to that, inorganic investment, the acquisitions of SpendLab and On Dot, In the quarter that we also repurchased 5,000,000 shares. So the $30,000,000,000 of capital available we've had we have this year and The next 4 or 5 years allows us to buy back shares, make inorganic investments in M and A and Develop internal products and internal innovation and generate very high return.
That's great color. Thank you very much to both of you.
Thank you.
Thank you. Next, we'll go to Dan Dolev from Mizuho. Please go ahead.
Hey, guys. Good morning. Great results.
Thanks, Dan.
Yes, no problem. So did I hear that correctly? You said that this quarter was a record shipment quarter for Clover?
That's correct.
And so it sounds like it's more idiosyncratic Share gains than anything market or reopening related. Maybe can you comment a little bit on who you're gaining share from, maybe Specific verticals and then maybe kind of the trajectory you went from 36% in Q1 to 96% in Q2. How should we think about the remainder of the year? Thank you.
Well, I want to start off with, look at I think Clover is a platform of choice And Clover is a partner platform of choice. And we did talk about that Clover would get Other distribution channels and that distribution could be owned outside the U. S, it could be with our ISV partners. And then just in our base core business, our own, I mean, when we're Your question is share when you're as big as we are, we're competing with everybody and we feel that Clover is at the top of the list What people want as a product. So I think it is about the differentiated product and the capability That gets the type of numbers you saw in this quarter.
And then Dan, just to add The 96% growth year over year, remember this is the quarter that's comparing to Q2 of last year, which was Obviously, a very difficult year across the board. I think the pertinent number here is a 38% CAGR over the last 2 years. So Obviously, Clover growing incredibly well, continue to expect that to be a lift and a share gainer for us As we lead with Clover in the marketplace, we're seeing benefits of continued innovation, Continued investments in Clover as new business formation kicks in post pandemic as Merchants that were not transacting at all or very much come back, our investments in Clover Dining, etcetera, Pay off when the economy recovers, people think of Clover and allow us to serve them with Clover devices hitting our For shipment as well as giving us that nice lift in overall GPB.
Yes, great. I agree. It's definitely everywhere. Great stuff.
Thank
you. Thank you.
Thank you. Next, we have Darrin Peller from Wolfe Research. Please go ahead.
Thanks guys. Let me
just shift to the FinTech segment for a minute, which for several quarters was really in the 3% to 4% range and did show the acceleration To that 5, you guys have talked about it being something that can do 4% to 6% growth and we're seeing some signs of improvement now. You talked a lot about digital banking in your release also. And so I'm curious, from a structural standpoint, given all the new competition out there, Just if you could touch on the assets you have and your capabilities and in your view confidence level around that segment actually being in that 4% to 6% or better Versus low single digit over time, that'd be great. Thanks.
Yes. Well, you see a number of things going on in our FinTech segment. Well, let me bring I want to bring complete clarity on the digital offering because I think it affects Both core and our digital business. And ultimately, What we have a deep belief is that we're here to help our clients serve their clients. So the ability to take 2,100 mobility banks And bring them a fully integrated card experience at the highest level of And bring that in a way that maybe the simple way to think about it is Everything you can imagine in one application that allows you to do everything from originate transactions to digital card issuance, to digital card view, to card free cash, All in the same place that you're doing your bill pay, and you're doing your Zelle transactions.
So we're going to take 2,100 Mobility clients, 1300 CardValet and bringing that to them. And then that will be what we all and those are financial institutions. We believe that will also help our clients increase their digital adoption quotient with their clients. So we see this as a game changer. So it's early innings.
We got banks up and running on it and we will deploy and then you hear us talking about on top of all of that For the financial institutions, we bring in ability that sits on top of all of it. But the most important thing to think about is our cores are strategic. The front end though is where we believe the tip of the spear and where we win To help our clients serve their clients and I mean you saw what we posted now, but I look forward to Continuing to generate more revenue through better function we bring to clients that allow them to do more with their clients. And then you got an integration of a SpinLab into Clover, Which allows these are our digital platforms. We're talking about digital platforms, one of a kind digital platforms.
So And I think what you should take away, there is an element of this company that's digitally agile And can deliver and you saw it on those credit conversions. I think those are good track rate speeds For those size and scope, cautious unparalleled, 70 days from signing, We're boarding merchants for them every day. And then you look at us taking SpendLabs and On Dot And I think we're going to have that same effect that Clover had when we look years out from now. Okay.
Back to the
sorry, go ahead.
No, no, no, Bob, go ahead please.
I just got to bring you back to the 5% Obviously, we had a good quarter hitting 5%. We indicated that periodic revenue Headwind would abate. I think it was 150 basis points. Last quarter, we said we expected this quarter to be half that. We saw 80 basis points into the second half of the year.
We see that no longer being a headwind. And through the first Half of the year, we're now at 4%. So we reached the bottom end of that medium term guidance and continue to be Quite comfortable that we will be in that 4% to 6% range this year and for things that Frank's talked about the investments we're making in digital banking, gives us an opportunity to continue to see that good mid single digit growth going forward.
Great. Frank, just quick follow-up on M and A. I mean, what are your thoughts on doing more tuck ins that keep improving the tech stack and Really thinking about maybe even just accretive to revenue growth, maybe even dilutive to EPS, just type deals just really add to the long term growth strategy? Thanks,
guys. Well, I feel obviously you've watched over Time, the type of properties we buy, our ISV strategy was born out of acquisition, now it's a winning strategy. Clover was born out of acquisition and I think you'd have to argue that's a bigger than winning strategy. You'll watch These assets on Dot and SpinLab. So I think you're just going to continue.
I don't think it needs to be dilutive to EPS. I think we know how to make it Accretive pretty darn quick. And what I just talked about was Kind of the dream of the acquisition when we put the companies together that we could take an asset like an On Dot And spread it all the way through because of what a great bank partner we were and that we could bring it all the way from merchant To our FinTech. So I think you should expect us to continue to do more like that. And I think we have a We keep the talent, we grow the talent and we build a bigger digital gene pool in the process.
Our next question comes from Jason Kupferberg from Bank of America. Please go ahead.
Yes. Can you comment just on any July trends In the Acceptance segment, any impacts from the Delta variant? And then also just on the revenue yield dynamics, I know those were positive in the second quarter in Acceptance. How should we think about that for Q3? Will volumes and revenues be a little bit more in sync?
Yes. So in terms of July trends in our merchant I'd say, obviously, through what 26 days or so, we have information yesterday, the day before. Slightly better than June, so continued improvement in growth and I'm talking about versus 2019. When you do a 2020 compare, you get some real odd variations on a comparison point. So we're looking at versus prior year As well as versus 2019, but slight improvement in July versus what we saw in June, Consistent with what we've got loaded in our full year outlook with that growth rate and EPS growth, And And in terms of yield, you saw a recovery, so to speak, in Q2 versus what we saw in Q1 is our SMB portfolio continues to grow nicely.
I think that's going to be consistent in the second half of the year.
Okay. So we should expect that as positive yield dynamics to continue. I just wanted to switch over to the payments segment for a minute. I know you're reiterating the higher end of the 5% to 8% target range, and I think you'd probably have to do 10%, 11% in the second half to get there. I know you've got some New portfolio is ramping up, but just talk about the visibility on that acceleration relative to where you were in the first half.
Yes. I mean, I think, you see the credit momentum and you see us talking about that We'll have good second half revenue from that. You see, general, That's on the wins and then you see general credit momentum beginning in our portfolio. Debit networks, I talked about the strength of them and we feel very, very strongly about what's going on there in debit transaction growth. So when you put all those in the calculation, your stores go from 2 to 7 and you should expect us to Continue our trajectory, North.
Okay. Good stuff. Thanks, guys.
Thanks, Jason.
Thank you. Our last question comes From Ramsey El Assal from Barclays. Please go ahead.
Hi, guys. Thanks for squeezing me in here. I wanted to ask about your Payment mix in the acceptance segment sort of on the sort of in a post pandemic environment. I know we're maybe not 100% there yet, but When you think about digital versus offline, debit versus credit, SMB versus enterprise, Do you expect kind of a different mix in your business after the pandemic? And then how does that feed into your kind of longer term growth algorithm?
Ramsey, I think we certainly have seen a broad movement To digital everything, it's why you hear us talk about the investments we're making and mobile capability and And integrating our digital banking and card management experience, more and more digital transactions, e commerce, Etcetera is certainly, I believe the pandemic brought forward multiple periods of Transition into that space. And I do think it was not transitory. Those changes are here to stay and we'll see As people return to whatever normal is going to be, what that continued transition growth rate happens, but obviously we're seeing great growth in Zelle. We're seeing more and more transactions on account to account transfers And good e com volume here to talk about in our merchant space up 21%. So Getting mobile first capability and digital experiences was a focus of ours over the last Several quarters and we're bringing a number of that into a single instance right now and continue to see that integration going forward.
Great. Let me squeeze one quick last one in here, which is, do you see the Fed's revisiting the Durbin routing rules As kind of opening up a market opportunity for STAAR and Xcel?
Yes. Short and sweet.
Yes, obviously, Ramsey remains to be seen the timing and when that will happen, but Does look to be a real opportunity for us.
Yes. And I think the thing is Our capabilities around fraud and chargeback management and our capabilities to serve the biggest Issuers is very deep. And I think that many times, having a third network is very valuable to everybody, both merchants and And so and Star and Excel, we've invested heavily in them and that's why we get the type of transaction growth you're seeing there. So We like we really, really love that that networks.
Great. Fantastic. Thanks.
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