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Welcome to the Fiserv 2022 First Quarter Earnings Conference Call. [Operator Instructions] 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 Bisignano, our President and Chief Executive Officer; and Bob Hau, our Chief Financial Officer. Our earnings release and supplemental materials for the quarter are available on the Investor Relations section of fiserv.com. Please refer to these materials 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 measures. Unless otherwise stated, performance references are year-over-year comparisons. Our remarks today will include forward-looking statements about, among other matters, expected operating and financial results and strategic initiatives. 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. And now over to Frank.

Thank you, Shub, and thank you all for listening in as we share our results for the quarter and highlight the progress against our growth agenda. As you know, we serve as the operating system for commerce and money movement across our client base of banks, credit unions, fintechs and businesses ranging from SMBs to mid-market to large enterprises. We help our clients grow by extending our platform to capture new services and new money flows. Our relentless pursuit of innovation for our clients has placed us on the list of the world's Most Innovative Companies by Fast Company for the second consecutive year. We've entered 2022 with strong momentum. We delivered 11% total company organic revenue growth in the first quarter. We expanded adjusted operating margin by 60 basis points to 32%. We also achieved 20% adjusted EPS growth to $1.40. We attained $40 million of actioned revenue synergies in the quarter, reaching $520 million since the merger, 87% of the increased commitment of $600 million for the 5-year period following the merger, and now expect to hit that goal by the end of this year. As we shared with you on our year-end 2021 earnings call, we concluded our cost synergy program, having actioned the promised $1.2 billion of synergies since the closing of the merger. As we invested to accelerate growth, free cash flow came in at $603 million. The outperformance on the top and bottom line versus our full year guidance ranges puts us in a good position to meet or exceed our full year outlook. As we evaluate the year ahead, we believe it is prudent to leave our 2022 guidance unchanged, given the uncertain macroeconomic backdrop with high inflation, rising interest rates and geopolitical issues looming. Accordingly, we are maintaining our 2022 outlook for organic revenue growth of 7% to 9% and adjusted earnings per share in a range of $6.40 to $6.55, representing growth of 15% to 17% for 2022. Now turning to our business strategy. Fiserv solutions are geared towards merchants and financial institutions, including fintechs. Starting with merchants, we are transforming from selling merchants individual point solutions to offering operating systems, Clover for small- to medium-sized merchants and Carat for large enterprises. This operating systems approach expands the size of our total addressable market and makes us more valuable to our customers. We grow and create value in 3 ways. First, attracting more merchants to our operating systems; second, expanding the relationship we have with our merchants by encouraging adoption of more software and services modules; and third, benefiting from the organic growth of our existing customer base. Turning to our financial institution clients. We remain steadfast in our commitment to continuously innovate for our clients and broaden our total addressable market. In early April, we closed the acquisition of Finxact, a leading developer of cloud-native banking solutions. We have already seen a tremendous amount of interest in the platform from existing and new clients. We believe this acquisition will augment our ability to enrich and accelerate the delivery of digital solutions to existing clients as well as broaden our client base to include large financial institutions and fintechs through banking as a service and embedded finance opportunities. We advanced our strategic focus on data and analytics. This quarter, we announced partnerships with Equifax, Finicity and MX, which will utilize our vast and highly valuable real-time data to create insights to strengthen and create new offerings across fraud, risk and marketing. While early in the journey, we expect data and analytics to be a new growth driver for us. Next, diving deeper into our performance in the quarter by business segment. Let me start with Merchant Acceptance. We posted a very strong organic revenue growth of 20% year-over-year. Global merchant volume and transactions grew 11% and 8%, respectively. Our global active merchant accounts grew 6% year-over-year in the first quarter, continuing a positive trend since the start of 2021. Results were strong across all regions. North America was led by strength in SMBs, particularly within the restaurant vertical as well as strength in enterprise verticals such as travel and petro. Spending across EMEA was strong in the quarter as restrictions were lifted in the U.K. and The Netherlands in early January, followed by Ireland, Poland and Germany later in the quarter. Travel was particularly strong, followed by restaurants and hospitality. Our merchant business in LatAm was also very strong in the quarter. We've made significant progress in on-boarding merchants through exclusive merchant acquiring mandate from Caixa in Brazil with 140,000 merchants currently on-boarded. In just 1 year since signing the agreement, we are also expanding our presence rapidly in Mexico and Colombia. Spending trends in APAC were very strong as key markets such as India and Australia continue to resume normalcy, fueling discretionary spend in verticals such as travel, retail and restaurant. In addition to the cyclical rebound, the region has continued to win and implement new business. Moving to our merchant operating systems. Clover and Carat continue to gain significant traction with clients. Clover's global revenue grew 39% in the quarter, driven by volume growth of 39% as well as close to 200 basis points of sequential growth in software and services penetration of revenue to 15%. We continue to make progress on our vertical focus. Starting with restaurants. The integration of BentoBox into Clover is well underway, and the early proof points in both lead conversion rate and ARPU are all very positive. Within the services and retail verticals we are offering merchants leading solutions to address key business functions through a combination of pre-installed apps and tailored vertical SaaS offerings. Carat, the omni-commerce operating system for enterprise clients, grew revenue 20%. We saw broad-based growth across verticals, including travel, government, technology and quick-serve restaurants. In the quarter, we had some impressive wins across omni and e-com acquiring, including a card-not-present acquiring mandate for the leading fantasy sports player, DraftKings; an extension of our long-standing omnichannel partnership with Chick-fil-A; a mandate for fast food brand Jersey Mike's Subs. Within new payment flows, Carat's leadership and digital payouts continues with the doubling of disbursement volume processed in the quarter. During the quarter, we extended our contract with Coinbase to support their launch of an NFT marketplace. We are making rapid inroads into the high-growth markets such as payment facilitators and platforms. The November acquisition of NetPay gives us a differentiated solution in the market, including fully managed on-boarding, risk and funding services to support these high-growth platform businesses. We have seen rapid growth in this end market with new clients signing nearly doubling transactions in the past year. Finally, before closing out the merchant segment, an update on the progress of our point-of-sale lending offering. Our strategy all along has been to leverage our position as the operating platform for businesses, small, medium and large, to offer a range of buy now, pay later options. We are simplifying the merchant experience through an integration into the Carat operating system for large enterprises and enabling BNPL app downloads through the Clover app market for small and midsized businesses. By enabling our clients to easily connect to BNPL providers of their choice, we are making it possible for them to offer their customers in-demand payment options in an easy-to-manage cost-effective way. Moving to Payments and Network segment. Organic revenue grew 5% in the quarter. This growth was enabled by a variety of drivers for cross-sell business lines. Our North American credit active accounts on file grew 10% versus Q1 of last year. This growth was driven by new business on-boarding and our favorable credit environment. We fully ramped Genesis Financial onto our platform in the quarter, which along with the on-boarding of Atlanticus last year, marked the on-boarding of 2 of the 3 major credit processing mandates we announced in 2020. We had solid growth in our debit networks, STAR and Accel; and debit processing businesses, driven by new wins despite the stimulus-induced tough growth comparisons in the year ago. We've seen impressive growth in engagement metrics across our FIs, driven by market-leading digital solutions like CardHub, SpendTrack, our loyalty platform and our AI-based fraud system. These surrounds not only greatly enhance the competitiveness of our credit and debit card processing offering but also serve to drive more cards into our debit network and more opportunities for Fiserv to offer risk and fraud, digital banking and account processing solutions, demonstrating an attractive flywheel effect. We continue to see growth in digital payments driven by

Thank you, Frank, and good morning, everyone. I'll cover some additional operating detail on our 3 segments. If you are following along on our slides, I'm starting with our financial metrics and trends on Slide 4. As Frank said, we started off the year strong. Total company organic revenue was up 11% in the quarter with growth across all segments, led by the Merchant Acceptance segment, which grew 20%. Total company adjusted revenue grew 10% to over $3.9 billion. Our adjusted operating income was up 12% to $1.2 billion, and adjusted operating margin expanded 60 basis points to 32%, in line with our expectations. As a reminder, we delivered 360 basis points of margin expansion in the year-ago quarter, resulting in 420 basis points of expansion over the last 2 years. We reaffirm our outlook to deliver at least 150 basis points of adjusted margin expansion for the year. First quarter adjusted earnings per share increased 20% to $1.40. Free cash flow was $603 million for the quarter, resulting in a conversion rate of 65%, driven by a combination of: first, increased capital expenditures in the areas of technology and integration of newly acquired capabilities; second, increased working capital investment, driven by revenue growth, including growth in anticipation revenue in Latin America; third, increased hardware inventory to minimize any potential disruption to our clients given the supply constraints; and finally, timing factors impacting cash from one quarter to the next. We reaffirm our outlook to achieve 95% to 100% free cash flow conversion for the full year. Now looking to our segment results, starting on Slide 5. Organic revenue growth in the Merchant Acceptance segment was a very strong 20% in the quarter. Adjusted revenue growth was 18% year-over-year. Global merchant volume and transactions grew 11% and 8%, respectively. Excluding the loss of a processing client mid last year, global merchant volume and transactions grew 15% and 10% in the quarter, respectively. Clover, our operating system for small and medium-sized businesses, continues to build on the strength of its product offering to attract and retain more merchants and expand relationships with them. In the quarter, Clover posted a strong 39% revenue growth, and quarterly GPV was $49 billion or $197 billion on an annualized basis, 39%. Our ISV volume in the quarter through Clover Connect grew 51% year-over-year. We signed 44 ISVs this quarter. Carat, our omni-commerce operating system for enterprise clients, grew revenue 20% in the first quarter. Adjusted operating income in the acceptance segment increased 21% to $470 million, and adjusted operating margin was up 70 basis points to 28.4% as we balanced efficiency gains with continued investment for growth. In the quarter, we completed the sale of certain merchant contracts from an Alliance joint venture that we disclosed last year. As we shared with you on the fourth quarter 2021 earnings call, the impact of this sale is estimated to be under 50 basis points of total company adjusted revenue. It is fully contemplated in our full year 2022 outlook. Turning to Slide 6. The Payments and Network segment posted organic revenue growth of 5% in the quarter, within our guided range of 5% to 8% for the year. As expected, our credit issuer solutions business saw strong growth, driven by the growth in credit active accounts on file as well as the impact of new clients coming onboard. Our debit processing and network businesses continued to perform well, driven by the compelling value proposition of our digital surrounds even as debit transaction growth decelerated to 3% year-over-year against a very difficult year-ago comparison. Consumer demand for account-to-account and P2P offerings continued with all transactions up 40%, and the number of clients live on

Thanks, Bob. I am very proud of the results we've accomplished this quarter. As diversity and inclusion continues to be at the top of our CSR agenda, we are focused on ensuring alignment and investment into our employee and community engagement strategies. In the first quarter, in addition to the Fast Company most innovative recognition I mentioned earlier, Fiserv was named as a 2022 Great Place to Work in Argentina, Uruguay, Colombia and Mexico. For the second consecutive year, Fiserv has been designated by VETS Indexes as a 5-star employer. In addition, our Nenagh technology center in Ireland has been recognized as a Great Place to Work for the fourth consecutive year. Fiserv has activated several initiatives in response to Russia's invasion of Ukraine, including financial grants for our associates, direct donations to local not-for-profit organizations and other humanitarian programs for civilians displaced in the region. We've also activated a matching donation campaign in support of American Red Cross efforts. A quick note that our 2021 CSR report will be finalized and published in the coming weeks. As I close, I would like to thank all 40,000-plus hardworking associates around the world for working relentlessly to service our clients and you, our shareholders. With that, operator, please open the line for questions.

[Operator Instructions] Our first question will come from the line of Tien-Tsin Huang from JPMorgan. .

I had a couple of questions. The first one, on the acceptance segment, obviously, very strong there. It looks like volume growth matched Visa's but the revenue growth did exceed that. So what's driving the higher revenue spread to volume in this quarter? And what should we expect here going -- as we go through the balance of the year? And I had a quick follow-up, if you don't mind.

Yes, Tien-Tsin. I think there's -- like we saw in previous quarters, there are a number of differences between our volumes and Visa's volumes and the international mix and cross-border mix, et cetera, et cetera. So as you said, we're in line from a volume standpoint. We had good revenue growth overall. As we've talked, yield is a metric that ebbs and flows quarter-to-quarter. The last couple of quarters, the math has been a little bit weaker. This quarter, it's quite strong. I think there's a lot of variation in there. And it's one of the things we continue to point to, that we're quite focused on revenue growth and margin expansion, a little less so on the yield because of that quarterly variation. Clearly very pleased with the performance of our merchant segment with good, very strong growth continuing in Clover, good growth in Carat and across the board. Having a 20% organic revenue growth for the segment in the quarter is a great start to the year.

Yes. So let me ask my quick follow-up, if you don't mind, just on the free cash conversion. I heard the CapEx and opportunistically buying some terminals here, but you're keeping the full year at 95% to 100% the same. So what's the outlook for some of the moving pieces here to drive that confidence in getting to that 95% to 100% for the full year?

I think -- it's Frank. First of all, it was way more than physical terminals. It was component parts also, and we thought it was a very prudent and smart move to buy ahead into the supply chain given the volume opportunities we have across the board which drive growth. So that would be clearly in the one-timer inventory category. Obviously, we see -- as we reiterate our confidence on margin also, we see the ability to grow and expand margins as part of the confidence story going forward. And obviously, these are ebbs and flows quarter-to-quarter also and timing of capital. So I think about it in those manners. We feel great about the growth. We feel good about our ability to expand the margins. And we feel good about the ability of what we bought ahead actually thrive, grow and not have that expenditure going forward.

Our next question comes from Lisa Ellis from MoffettNathanson.

I'll take payments and networks, I guess, which came in at the lower end of your long-term outlook of 5% to 8% there. I know there's a lot of moving pieces within payments and networks. You highlighted, I think, both some lapping effects of stimulus hitting the prepaid business and the debit business but then also the bill payment business, which has been a bit of a struggle coming out of the pandemic. Can you just parse those apart a little bit, meaning what was sort of onetime versus lapping issues related to stimulus in the quarter versus where we might see more of a protracted drag as we go throughout the year? And then I have a quick follow-up as well.

Sure, Lisa. So within the payments segment, stimulus certainly created a tough compare to Q1 of last year with our prepaid business. And as we saw really late '20 and into '21, a consumer shift of credit to debit, which we think was stimulus-driven, we're now starting to see that kind of revert back to mean or to norm with more move to credit than it is debit. Of course, as you know, we get paid on a per transaction basis on the debit side, but on a credit processing side in the payments segment, we're paid on gross active accounts. And so now we're seeing a nice lift in the number of accounts, but the transaction shift from debit to credit doesn't manifest itself in revenue directly. So good growth in our credit business this quarter versus Q1, still had growth in debit but not as high as we had all of last year. Debit Q1 of last year was quite weak and came back throughout the year. And then in the bill pay and biller side, we've actually seen an improvement of the headwind. So it's still an issue for us. And we talked to a couple of things that we see, things beginning to improve over probably the last 2 quarters. The rate of growth decline has improved quite a bit. And as we go live with a number of new clients, particularly in the fintech space, and as we launch the new user interface this summer, we see continued opportunity to improve both in the bill pay/biller business but also in payments overall. And of course, as we now have implemented 2 of the big 3 credit issuers, with the third one going live here late second quarter, you'll see accelerating growth from the credit issuer side of the business.

Got it. Okay. A quick just follow-up maybe for Frank on the new -- I guess, new highlight around advanced data and analytics with these partnerships with Equifax and Finicity, et cetera. Can you just give maybe a little bit of color or examples of the types of offerings there? And is this kind of new revenue stream or is this more of a win rate stickiness dynamic in the bank base? Just elaborate a bit...

No, it's a new revenue stream. We've always believed that we had a data advantage. And we did some things organizationally, maybe you remember, at the top of the house where we've dedicated talent against it, and it is manifesting itself. We have a pretty good road map to capabilities to offer to our clients and then to jointly offer with partners and combining capabilities. That is why we believe when we come into the latter part of this year and then going into next year, a completely new revenue stream with high margins in those capabilities in providing real-time data, in providing decisioning data, and that's what we have right now. We do see the opportunity, as we said, in marketing and other information. We yet -- haven't proved out that proof of concept yet, but the others have been proved. And we expect to be in market at the latter quarter of this year.

Next, we'll go to the line of Darrin Peller from Wolfe Research.

First, on the growth side, on the top line, I just want to touch on both -- first, the fintech segment. When we look at the growth, it does seem like mid-single digits seem pretty resilient now. And on top of the Finxact acquisition and what that can do, I'd love to hear more thoughts on what that can actually do to add to business given the pipelines you're seeing. But CPI price escalators potentially built in, to what extent do you expect to push those through this year? And can that also contribute?

The one I'd talk about, I think the team in fintech and their maniacal focus on how to serve the client and growth is showing up. We had an expectation that we would get to these type of levels. And when we laid it out in December of 2020, I think the action plans in that team and the product innovation and bringing all the components of the company where we think we have a strategic advantage actually got us to where we are today. I think our digital assets play very, very well. So I talked about those surrounds. Our ability to have a good digital lens really is a strategic advantage. And then you saw us do things like bringing Ondot into Mobiliti, which also is a one-of-a-kind offering. And when that all comes together in the client's office, it gets us to where we are today. I think thinking beyond today, Finxact is very strategic. It -- as we had said, we think it expands our TAM capability. And we think over the long haul, a combo of our assets plus Finxact, allow us to get to other markets we weren't intending to before. So when you look at it, we feel great about the job the team has done. The Finxact acquisition, as you know, 20-plus days closed, and that's moving along very, very well. The integration of the team and the ability to deliver what we expect over the next few years from that, we have clear line of sight, we believe. And I think that's how we think about the totality of our current business, our digital offerings and our future digital offerings and expanding the total addressable market that we were addressing around that segment.

And Darrin, in terms of CPI, we do get -- particularly in our core account processing business, a typical contract does allow for annual CPI changes. Those are very typically annual items. So at the end of the year, we calculate the CPI index and apply it to the next year's billing. And contracts vary. Some have caps, some have full CPI, and it varies across the board. But that is fully baked into, first of all, our guidance. You're seeing it in the Q1 results. And because it's an annual bill, that's locked for the year.

I have one quick follow-up -- that's helpful. But Frank, just from an M&A standpoint, when we think about what you just said, the leverage level now below 3. Obviously, opportunistic buybacks make a ton of sense. But at the same time, there's definitely valuations coming in across the market. So can you just revisit your preference in terms of capital allocation going forward and what types of assets?

Yes. I think we've demonstrated a pretty balanced approach to our capital allocation, both if you look at what we did with Finxact or if you look what we've done with BentoBox or Ondot. And you'd find all of them really leaning into helping our clients grow their business with their clients in a digital framework. So I put that out there because it is largely about addressing new markets, new opportunities and how, in fact, we help our clients grow their business, which, in fact, would become the beneficiary also. And you should expect that mindset around future acquisitions, which is just another form of investing for growth. You just saw and Bob talked through that 29% over the last 24 months of our capital allocation went into merchant integration expense and debt paydowns. And that capital is now deployable, and obviously, we will continue to have a better growth rate. And I think you should expect that we will use the same methodology of investing for growth where we believe we can leverage our assets inside the house to bring other market opportunities, and we'll be buying back the shares opportunistically and returning those dollars to our shareholders as we always have in that tried and true methodology. And we feel kind of great about what we've done so far on the capital allocation. Hope you guys do, too. And we feel even stronger about it going forward.

Our next question comes from Dave Koning from Baird.

Great job. And I guess my first question, you had the investor meeting a few -- a handful of weeks ago and talked about 11.5% growth in merchant over time. Should we expect that every quarter of the year? And I guess, kind of behind that, it seems like we're entering a period maybe we'll get into smaller tickets, inflation. Pricing seems to be getting better in the industry. Now all those things contributing -- are all those fair assumptions? And then that 11.5% question.

So from a quarterly flow standpoint, obviously, first quarter closing after going through that merchant conference, we put up a 20% number. So we certainly don't expect 11.5% every year or 11.5% every quarter. Obviously, a great first quarter out of a 5-year projection, lots left to do, in very good shape in terms of executing on the multiple elements of growth that we talked about during that conference. Clover and Carat continued to perform well. We continue to invest in new capabilities there. So I feel like we're off to a great start. Of course, that conference, I think, was in early March. So we're early into the process, but we're in a very good position, and we think we've got a great set of assets in terms of operating systems to bring to both our enterprise and small business clients. We've got a great distribution system, our global reach and geography. Frank talked about in his prepared remarks how well Caixa is going and the strength in Latin America. So I think we're hitting on all cylinders. And we're quite pleased with where we are so far, but plenty more to go.

Yes. Great, great. And then just one follow-up. The margin cadence through the year, Q1 was a little slower than the guidance. Q2 a little slower, too. Is that fair and then the back half is when you get maybe above the full year guidance?

Yes, that's exactly where we're at. And I believe we said in prepared remarks, we're up 60 basis points for the first quarter. That's right in line with our internal expectations, and obviously, our internal expectations have us achieving the 150 for the full year. And we continue to execute. And it's not really "a hockey stick." It's a matter of the tempo of the business. We did, as you know, a significant amount of integration work in the last couple of years. We ended merger and integration treatment, i.e., we're no longer adding back to our adjusted results for merger and acquisition -- merger and integration spending. And we still have some of those projects going on as we finish up the, what, 2-plus years now since we merged. That will ease in -- over the next couple of quarters, those costs will be reduced, and we'll continue to get good growth and fall-through into the business. So you'll see the 150 come in over the course of the year.

Next, we'll go to the line of Jason Kupferberg from Bank of America.

I just wanted to come back to the payments segment for a second. It sounds like you're seeing some positive signals there. You've got some newer wins coming down the pike. But just so that our expectations are calibrated properly, I know you're talking about the medium-term range of 5% to 8% being good for this year, but should we think about more of the lower half to maybe the midpoint just given that we're starting the year at 5%? I just want to make sure that we've kind of got the right cadence in our thought process because I know the comps get tougher from here on out.

Comps do get tougher, but pipeline comes in over time, too. And I think we talked about the elements of it. Obviously, we've talked a whole bunch leading into this year about $120 million of issuer wins, and we're beginning to see them in our numbers. We also feel the assets are very, very strong assets. And you heard us talk about a change in direction on bill pay from where we were a year ago. So we feel -- we don't feel at all that we're at the low end in our range on that in the go forward.

Okay. That's good to hear, sure. And just a follow-up on the Finxact acquisition. How much revenue do you expect it to contribute to the fintech segment this year? And can you just go a little deeper maybe into the go-to-market strategy there and the kind of synergy that Fiserv is going to bring to this asset?

Yes. Well, you won't -- Bob can talk about more, but you won't see anything in this year's numbers. So we change structurally our growth rate. Obviously, these are long cycle sales. But the go-to-market strategy has multi prongs. One is the ability to bring to our clients today a digital sidecar if they want to. If they want to build crypto or digital bank capability, we have the ability to do that. So that expands the TAM of what we can do and I think doing that given the fact that you won't see anything in the economics for this year. But that's one element of it. The second element is the combination of DNA and Finxact together being able to bring an unbelievable offering to a number of clients in a different manner. The third is standing up fintechs and digital banks and other embedded finance. And you hear us talk about our open finance initiative and how well Finxact complements that. And then I think Finxact has a great demonstration of a current base that they've sold into that, in some cases, would be larger than where maybe our lifetime sweet spot was. But you should expect that to be more TAM opportunity. We go to market together in a very concerted fashion. And when the assets on our surrounds all come to it, it becomes a very, very strong offering. I think you'll see that growth in the outer years, not in this year, but you should expect it to be highly accretive to our growth rate over time.

Just to hit the point home on revenue this year. Of course, it would all be inorganic. So it is -- it wouldn't impact our 7% to 9% for the total company or the 4% to 6% for the fintech segment. But overall, very small from an adjusted revenue standpoint also.

Next, we'll go to the line of Ramsey El-Assal from Barclays.

Can you guys share your updated view on consumer spending trends? Are you seeing any sign across the business that inflation or higher fuel prices or other macro factors are sort of tipping from tailwind to headwind? Any kind of clues that the robust spending levels that we've seen will prove sustainable?

Well, I mean, I would say if you looked at April, it fundamentally looks the same with maybe some places having a little more and some places having a little less. Obviously, areas like petro services and restaurants are holding up at the same level, maybe a little bit on travel and retail. But clearly, we've been conscious of the consumer. And as we think about the future, we factored in what would happen if this slowdown did occur, and that's really -- that's in our prepared remarks. We talked about our prudence and prudent management around the thought process. So very little change right now, but we're very guarded and we're managing in a guarded fashion.

Okay. And I also was wondering if you could give us a little more color on the revamped bill pay interface that you mentioned that would be rolling out, I believe, in the summer. What kinds of things can you do with that business to kind of continue the nice inflection that I think you're seeing back in the right direction?

Yes. I think it's really about the user experience. It's all about the user experience and about giving them capabilities that were refreshing in that environment. It allows our bank partners to then be able to actually increase their bill pay capability with their clients. So remember, we're always focused. And you hear it in my M&A comments. You hear it in how we run the business, on how we give our clients the opportunity to do more business with their clients. So think about it as a very good, easy, usable front end that actually will be the most modern you can touch, that allow much more ability for that end user to be able to navigate versus what they had before. And our banks and us believe -- that change, as we've completely built it with our banks in mind and their conversation, we believe that it allows them to get more user capability, which will equal more usage and higher engagement by the client base.

Next, we'll go to the line of James Faucette from Morgan Stanley.

I wanted to touch on the fintech segment first. Just obviously, the -- and try to get a sense of appetite of banks to spend and continue to upgrade their systems, especially given what looks to be a strong earnings period and potential for them as interest rates change, et cetera. So just what's your feel right now for opportunity sets there? And are you seeing any changes or improvements in appetite?

Yes. Having spent a fair amount of time in charge of the spending of banks around these assets and now having been here, what I find is that the appetite is very, very strong. The appetite being strong means if they can get digital capabilities, if they can serve their clients better, if they believe that the change is actually going to help them grow and do a better job, they're completely committed. We've seen a lot of those DNA wins. We've seen it from small to tall, as I would like to say. And the addition of Finxact, in my mind, just has opened a lot of our current banks' eyes and a lot of our nonbanks', that we're not serving in that space, eyes towards the capabilities we can bring to them in the here and now. So I find it to be a tremendously encouraging time for that business.

Got it. Got it. And as you think about -- obviously, there's lots of focus always on the merchant business and that kind of thing. But consistent with the Finxact acquisition and when you think about M&A, is there place where you feel like, okay, we need to prioritize if we're going to look at potential acquisitions on merchant versus fintech? Or based on what your -- where you're seeing traction and where you feel like there's opportunity, are you leaning in one direction or another as you're evaluating acquisitions?

Well, I think Finxact was a very, very big acquisition which gave us, in my opinion, the most modern platform in the industry that can tremendously scale. So I think that, that was very important and sets us up for the long haul. If you go back to my comments earlier, I think we're very focused on helping our clients grow in places we're not -- weren't or we're not in manner. If you look at BentoBox, it allows us to move to be in the front of the store capability. What that does to ARPU for us in our restaurant business is very, very strong. And so you should expect us to deploy our capital in acquisitions more in the space of how to better serve our clients in markets that we're not collecting revenue, so investing for growth as opposed to back-end synergies and really a digital eye on all of it.

James, the one thing I'd add is, I guess, I don't think about it and I don't think Frank thinks about it as which should we do. I think given the capital we have available to deploy, we think we can do both. In the last 15 months, I think we've done 8 different acquisitions, both focused on digital as well as on our merchant business. Those digital investments benefited our merchant segment, they benefited our fintech segment, and they benefited our payments segment. And ultimately, as Frank pointed out, it's all about how can we better serve our customers so that they can better serve their customers.

And our final question comes from Jamie Friedman from Susquehanna.

This Slide 25 on the annual guide is super helpful. But Bob, I was wondering if there were any call-outs specific to the Q2 of '22. For example, are there any standouts that we should be aware of from the Q2 of '21, like periodic or anything else that we should keep in mind?

No. I guess the thing to think about is within every individual quarter last year, we had ebbs and flows of the pandemic recovery. We had a big stimulus push in Q1 of last year. Not only did we benefit by having more cash into the U.S. consumer, but we actually helped put the cash into the consumer, i.e., we issued the cards. That was a Q1 activity. And then Q2 and Q3, we saw -- and Q4 for that matter, we saw the benefit of the consumer using that cash. But overall, if you look at the Q2 growth rate last year, it's a pretty difficult compare. We did 18% growth, in particular very strong merchant business, but that was off of a recovery of a very difficult Q2 of 2020. So -- and we feel good about the overall growth of the business, and we expect all 3 of our segments to continue to perform well.

Any similar comment about the Q2 margin expectation?

Yes. We talked a little bit about this earlier. We get various flows. We actually, I think, said this back in Q4 when we first gave the 150 basis -- at least 150 basis points expansion for the full year. Because of some of the timing of the investments we're making, because of the ramping down of some of the integration work that we're no longer adding back from an adjusted operating margin standpoint, you'll see margins improve in the second half. Obviously, we still improved this quarter; in fact, a little bit better than we expected at 60 basis points. But you'll see us reach that 150 for the full year throughout the year but more expansive, I guess, in the second half.

Thank you. Thank you, everybody, for your attention today. Please feel free to reach out to our IR department and team with any questions. And have a great day, and I look forward to talking to you in the future. Thank you.