John Kraft - VP, IR Phil Heasley - CEO Scott Behrens - CFO.

Brett Huff - Stephens Peter Heckmann - Avondale Partners David Eller - Wells Fargo George Sutton - Craig-Hallum Paul Condra - Credit Suisse Wayne Johnson - Raymond James Alex Veytsman - Monness Crespi & Hardt.

Good morning. My name is Kanishia [ph], and I will be your conference operator today. At this time, I’d like to welcome everyone to the ACI Worldwide Reports Q3 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.

[Operator Instructions] Thank you. I would like to turn the conference over to Mr. John Kraf. Sir you may begin..

Thank you Kanishia [ph], and good morning, everybody. Today's call, like all of our events, are subject to both Safe Harbor and forward-looking statements. You can find the full text of both documents on the first and final pages of our presentation deck today, a copy of which is available on our website as well as with the SEC.

On this morning's call is Phil Heasley, our CEO and Scott Behrens, our CFO. With that, I'll turn the call over to Phil..

Thanks John and good morning everyone. ACI has been very busy since last we spoke. We are pleased with where we are with business even though we did not attain our guidance. We continue to see growing interest in our universal payments solution and significant momentum in our SaaS and platform delivery options.

The benefit of the other retail payments solution are compelling to both our customers and ACI. Customers obtain our market-leading next generation UP BASE-eps technology, which they can migrate transaction volumes at their own pace.

This generates significant cost savings to the customer and allows them consolidate non-ACI transaction volume while producing incremental revenue for ACI. With up in mix, we think our large customer average deal size will grow from the current period of 40 million up to 70 million to 80 million.

In addition, customers are increasingly opting for subscription payment terms due to the larger commitments, our current renewal negotiations are taking longer than they have in the past and we're moving the contract signing dates closer to the contract termination date. This has impacted our forecast for 2016.

During the quarter we chose not to close certain renewals early, we're also willing to push out these renewals into the next year if it means obtaining appropriate pricing. And our 2016 guidance update reflects the potential of later timing of closings.

It's important to understand that the later signs of these renewals is driven by timing and that we're remaking the constant decision to realize the economic value of our annuity stream to ACI and our long-term shareholders. We continue to see growing interest in our SaaS and platform offerings.

We saw SaaS and platform bookings increase 24% over last year including several important contracts with net new customers, including our first incident payment deal in Europe and a large payment services provider in South America who will be selling our ReD anti-fraud program platform.

We also signed one of the largest quick-service restaurant chains in the world. This is a new customer to ACI and is the third top global fast-food chain running on our SaaS solution. Our omnichannel software will power store, mobile, e-commerce systems as well as providing anti-fraud protection.

These new contracts are sample to recent new customer wins and a testament to our leadership in the market, range of functionality, on unrivaled scalability. While we've had significant bookings in our SaaS and platform business, we have not implement this new business as quickly as we've planned.

The good news is that our first wave of EMV projects have now gone live. These projects and the overall market delays with of EMV have put us behind in several implementations.

Our 12 month backlog in our platform and SaaS business totals approximately $460 million, which is up $40 million versus where we restarted the year and is expected to grow even further before the end of the year. This positions us very well for growth as we enter 2017, but its value was originally planned in 2016.

Lastly, our new European datacenter is live and we have our platform running active asset in this facility as well in our Norcross, Georgia datacenter. These facilities will support instant payments, retail payments, e-commerce, and other up enabled solutions.

In our centers, we can also demonstrate to our customers the value of our [Indiscernible] one on Linux and the 50% plus savings as a cruise. We now have the ability to directly provide these efficiencies. We expect to have a number of incident payment deals in 2017. Also we look to 2017 with the datacenter build cost behind us.

Our capital expenditures are expected to decline approximately $25 million and our one-time acquisition integration expenses will be significantly reduced. We're also looking forward to our new partnership with VocaLink to increase the adoption of payment related initiatives globally.

I truly believe our growth positioning is more exciting than it's ever been. With that let me turn it over to Scott to provide details of our third quarter financial results and our updated guidance..

Thanks Phil and good morning everyone. I first plan to go through the highlights of the third quarter and then update our outlook for 2016. We'll then open the line for questions. I’ll be starting my comments on slide six with key takeaways from the quarter.

We saw strong growth in new bookings in the quarter up 9% from last year with SaaS and platform bookings in particular up 24%, but we continue to see strong sales growth in our merchant reseller solution including our global e-commerce payments and card-not-present fraud detection platform businesses.

We expect Q4 bookings to be strong and continue to expect whole year new bookings to be in the upper single-digits. The bookings contributed to solid growth in our 60 month backlog of 42 million in the quarter to 4 billion. Our 12 month backlog came down slightly by 2 million to 850 million over these adjusted for changes in foreign currency.

Revenue came in below our expectations and financial guidance for certain renewals were signed in -- were not signed in the time frame we originally expected. I still mentioned we are seeing large term renewals push out closely to their expiration dates that we've seen in the past.

As a result we are delayed in recognizing the non-recurring license and capacity revenues we would normally see upon these renewals. This can clearly be seen in the metrics provided in the quarterly investor deck particularly the contract duration metric which is at its lowest in the five years we reported the metric.

So for the quarter revenue was 217 million up 1% over the prior year quarter on a constant currency basis. But underlying this change in revenue was a $13 million increase in recurring revenue or nearly 8% compared to the prior year quarters offset by a decline in non-recurring revenue of 12 million.

So we even -- we didn't see the non-recurring license revenues from renewals as expected we continue to see healthy growth from our stable predictable recurring revenue stream. Excluding CFS in the indirect cost during our TSA period adjusted EBITDA was 35 million down from the 46 million generated in Q3 2015.

The decline was primarily driven by the timing of a very high margin non-recurring initial license fee revenue I just mentioned. Operating free cash flow excluding our previously announced one-time capital investments in our European datacenter and cyber security was a negative 1 million.

And we ended the quarter with 51 million in cash essentially flat with Q2. Our debt balance at quarter end was 753 million which is down €186 million year-to-date. And lastly we have 78 million remaining on our 570 share buyback authorization.

Turning next to slide seven with our full year outlook based on what we are seeing with term extensions pushing out closer to their expiration and our expectation is this trend will continue. We are reducing our full year guidance.

For the full year 2016 we now expect to generate revenue from ongoing operations in a range of 960 million to 990 million down from a range of 990 million to 1.02 billion. Adjusted EBITDA in 2016 is now expected to be in a range of 235 million to 245 million down from a range of 265 million to 275.

And these ranges exclude CFS contribution in Q1 2016 as well only one-time items. And again we continue to expect full year 2016 net new bookings to grow in the upper single-digits. That concludes my prepared remarks. Operator, we are ready, open the line for questions at this time..

[Operator Instructions] Your first question is from Brett Huff with Stephens..

I want to ask first of all can you give us just a little bit more detail on how the new contracts are structured I guess it sounds like there is renewals of the core debit processing customers and then including some of the up functionality in the renewal.

So give us just little detail on what that what different about these new contracts its making them more complex and therefore kind of getting them pushed out?.

We told you about our RPS program starting last year and under the RPS program we allow the classic customers to renew -- to renew their deal and received the up-technology in a bundled fashion.

And then it allows them for new products or a migration to start moving from their high cost -- their high cost classic hardware and middleware infrastructure to much more efficient in our recommendation is 2.1 is x86 Linux environment and that's why we put it in the -- that's why we've installed it ourselves Brett.

And what it's doing its actually -- if you look at our bookings and our projected bookings, we're going to be well above our expectations in terms of bookings for the year. What is slowing down is negotiating our way through this new renewal portion of RPF and certainly the larger deals.

I mean this time of the year, we're -- we have to go from the procurement departments to the strategy departments of our customer base and we're doing that. And you'll see -- whether we have to wait a quarter or we have to even wait two quarters, to me, it's worth it for the annuity stream.

You've seen if you look at page 18 of our presentation, you see where we've deliberately brought down our duration from almost three down to almost two and so it doesn’t make sense anymore to talk to renew 18 to 30 months out unless people run out of capacity than in more volume.

Now, we're going to renew six to 18 months and not trade way the economic value. We spent almost $1 billion on building this new technology. We have to be patient and getting paid for it..

That's helpful. And my follow-up is, it sounds like you're obviously heavily engaged with some of those larger clients in talking about UP and its value proposition.

How are you hearing or kind of what are the -- what's the feedback so far on the bundled up functionality, what are folks excited about using it for, what are they seeing as the key value prop from that..

Well, not -- the industry has leaders and that it has lemmings. So, I'll tell you more about. I'll tell you two interesting phenomena that are taking place.

Some of the leaders really get that and this is all around the world and we're seeing some really -- we're seen some really quick adoption and we have one customer that will testify to 90% unit cost reduction and that's hardware, software and thus.

Our new switch at -- is almost twice as fast, which also -- so it's not only cheaper hardware, but less hardware because of the speed that it can run on the x86. So, we have people that are just jumping into it.

On the side, we have people that are -- they are dragging their feet saying we see the benefit for it, but we don't know whether we want to invest in it and whatnot. And a very interesting phenomena is taking place and it's one that requires us to stay patient.

Is that a lot of the very large customers of some of our very large customers are now pinning things that they want -- they want those efficiencies.

And it’s the reason why we don't AOD out to be able to supply this to medium and even large institutions that need that kind of -- for competitive reasons, they need that kind of efficiency in the marketplace right now. So, it’s a very fluid. It's very positive. It's kind of an interesting situation where we see ahead in bookings.

Unfortunately, we're behind in hosting on our -- we have the same EMV issues that everyone else does. But we've got our first wave out there and we're engaged in very good -- not only with our core renewal base, but with new strategic participants..

Great. Thank you. Appreciate it..

Your next question is from Peter Heckmann with Avondale..

Good morning everyone. Scott, what's the implied growth in organic SNET needed in the fourth quarter.

What's the number needed to get to high single-digit SNET growth factoring in the divestiture? Do you need to grow SNET growth like 12% -- about 12% in the fourth quarter to get there?.

That sounds about right..

Okay. And you talked about, I mean, the bookings growth looks good. You talked about some slower conversions, it doesn't appear that we're seeing it as much in the 60-month backlog.

Can you talk about why we're not seeing that number grow a bit more?.

Well, we had -- we did had pretty sizeable growth for the quarter up 40 million. So we actually….

On a percentage basis, on an organic percentage basis, would that be like 2%?.

Well, if you look historically, the backlog growth has been call out in the 2 to 3% range. Starting with 2015, we started seeing that uptick now between a range of 3 to 4%. I mean, when you are moving up $4 million number, 1% difference is can be really significant.

So we started seeing an uptick in that 60-month backlog last year closer to 4% which is above our long-term average. So I would expect to see that as we close off this year as well.

Part of that is timing on some of these large renewals, not only it is renewing this business, but it’s also the incremental value that we will receive our cash to the renewal. So part of that is, we disclosed as Phil in our appendix for the investor deck a duration that something we put out there sometime.

The average remaining contract term is at the lowest point in five years that we published the metrics. So that shows that we had a kind of book of business that is really imminently large contracts that are coming to their exploration point here in the near term.

So that will drive that in addition to driving new booking value that also drives our backlog up..

Okay. And then just as a follow-up, and a follow-up to Brett's question.

I'm still not sure I understand the comment in the press release about bundling universal payments in with renewals, is that, did you say that's just on the retail payment system side or is that also on the bank side and talk about the economics of that waving that the ILF and then just getting revenue when they convert of volumes and if that were the case, why would that be slowing down negotiations..

The RPS program, which we told you about we’ve put in the year ago, it only eliminates the ILF, that enters the RPS program in this two levels to it. One level you reduced ILF because they produced – they have to produce a percentage growth incremental volume over run rate.

We go to full subscription when they may commit 25% incremental volume in that case we go to a full that’s above the run rate that’s not about last contract.

So that’s the incentive and that's quite honestly that's the complication, right because we have to be prescriptive in terms of how it’s actually economic benefits to them and everyone wants new technology, but think about it they would love to pay as that was the old technology.

So we are [indiscernible] keep their old technology and migrate at their own pace and we are providing them new technology and therefore, it does not same price point.

Okay. I'll get back in the queue..

Your next question is from David Eller with Wells Fargo. .

Good morning and thanks for taking my call.

It looks like Q3 sales were little bit more than 10% below the guidance you gave on July 28, and I was wondering if you could talk about maybe when you started to see a change and may be kind of what was the main driver? I think you called out, making a conscious decision, but if there was anything beyond that?.

Why don't just to clarify, stating every revenue not the sales booking that's offshore, our sales bookings were actually up 9% over last year. But on the revenue side the delay is coming from really the customers, these are deals that we thought are going to close before the end of September.

And in some cases, these are customers now that they flipped into fourth quarter, they are in their quarter of exploration.

So based on the maturity, the negotiations, the time and I think what Phil is talking about in terms of customer having choices right down is they've got organizationally decide or do they just want to do standard renewal or are they ready organizationally to take advantage of the up capabilities, but that typically going to be consolidating volumes on the ACI platforms.

The infrastructure decision they have to make and they got to be ready to make those.

So, they're really they're dilemma right now in which path that they want and those terminals for which we were expecting some of the non-occurring revenue on renewal, they aren’t lost, they are likely either pushed into the fourth quarter, depending on the exploration maybe pushed out to early part of next year.

So again all the deals, we expected that would close this quarter delays in assessment of which cap these customer want to take is really pushing them closer to exploration day..

Okay.

And then kind of as a follow-up, I think you mentioned in your typical period for renewal is the 18 months to 30 months out, now it's going to be six months to 18 months, and I think you said you might have to wait two to three additional quarters to kind of sign some of those deals, so should we be expecting pressure kind of going through Q1 of 2017 or Q2 or like what's the outlook for next year?.

No, Scott you may answer, but if you look at page eight, again go to that we’ve bought the direction down significantly already and this is not first quarter and not first year that we have been – we are just there is no value to our shareholders for us to negotiate against ourselves for 90 day result.

And we have just come to firm limit, that in terms of the value, the annuity value going forward that makes more sense for giving very, very good value for our price and there is no reason for us to negotiate against ourselves.

I don’t know I am sure that you guys are aware of it, but a lot of our competitors or a lot of people in that field, they are drawing everything in the kitchen sink to make their numbers and sometimes you have to have guts everyone else is jagging and say I am going to say my dry powder instead of showing my kitchen sink to make my numbers every quarter.

So why we would discount the value of ACI because it’s a dry patch that everyone is participating in right now and take your loans 90 days and worst case, we take our loans for 180 days, we do not be taking loan in 2017, because we see ourselves in renewal structure that largely eliminates us negotiating against ourselves..

Okay..

Kind of we are answering it, but that is the nuts and bolts..

Okay. I guess maybe the way I would, maybe I would ask it in a different way.

Should we be kind of expecting 2017 growth to be more second half weighted than first half weighted?.

Let me answer this way, what we are seeing right now deals that are slipping closer to exploration.

There is a century of backend to that in that deals that slip out of Q3 either expire in Q4 or in some cases expire in the first half of next year, so those deals will essentially get done before their exploration day, I mean that’s essentially [indiscernible].

So you know the fact that deals that we originally expected to be second half of this year are actually going to be pushed to the first half of the next year, I think that would be more of a tailwind than headwind in the first half..

Got you.

And then maybe if you could just speak one for one second on capital allocation, you got the 78 million of share repurchase authorization, I wondered if maybe this would be, you might be looking to be more aggressively deploying that this year or whether you're maybe just kind of keep that in your pocket?.

Well, we actually have – we purchased 60 million this year so far and I would just say our projected use of -- normal use of cash will again be debt purchase investments and tuck-ins and we do still have $78 million left as well..

Okay. Thank you for taking the questions..

Your next question is from George Sutton with Craig-Hallum..

Thank you. Phil you started off the call saying you're pleased with where you are and I want to put my former private equity hat on for a second.

So, the public market this morning are obviously going to mark the sock down because of the results, if instead this was a private equity call and we are looking at our investment quarter-over-quarter, in your view would we be marking up the value of the business for any reason, keeping it the same or looking at any revisions just that of curiosity.

.

Well, I think we're a private and there's a lot of private equity guys that follow this company. I think on the private equity side, they've applaud what we did because what we've done is we've said that the forward value of the company is more important to us that 90 or 100 -- 180 days. And you know George, we're booking more.

Yes, we have an issue in terms of getting our SaaS and our platform business either implemented or boarded as quickly as we should and we're going to work on that and that's a negative. But the only negative there also is timing.

The reason we did this is that we believe with the size of our SaaS and platform business, it's now bigger from a 60-month backlog standpoint than our installed.

We're at a point that we just don't have to discount our installed business and in order to do that we have to wait 180 days to get the cash flow annuity stream where it needs to be then we'll wait. Who knows maybe people will turn around and side to renew quicker and whatnot, but we're just not to negotiate against ourselves.

And I actually -- the Street will ding for a period of time and the next year, we're going to -- we land up being something totally different because we've got stronger annuity streams and we have the leverage instead of people trying to use leverage against us.

I mean I see what everyone else is doing to try to make their quarters and I just -- I'm not going to go around -- I'm just not going to go with the crowd..

So, appreciate your thoughts on that. So, relative to your -- you talked about leaders and lemmings relative to the customers -- or potential customers.

So, what I'm curious about is you talk about what the leaders are doing, I'm curious why are the lemmings not acting? I mean if they're going to see unit cost come down, if they are going to see greater functionality, what do you see keeping them from moving quicker?.

Well, some of them have bigger problems than this George and some of them are -- this is huge shift from our card present purchasing to card not purchasing and it really is changing the nomenclature of the entire industry. So, I'm not talking about ATM side of the business, that's yet and in and really good and whatnot.

But its deminimus versus the point of sale e-commerce side of the business. And I think everyone -- I think there is a notion that they can get bigger and there's fundamental -- people are trying -- there's a lot of big players out there that are just trying to put a course onto everything that they do and therefore improve their margin.

Whereas the guys are out there and they're restructuring their business model and believe it not, they're probably showing a little bit less 90-day good news than some of the guys that's probably have real 360, 720-day issues when these guys can come to market with a much more integrated, much more efficient offering.

We see it on the merchant side of the business too, 75% to 80% of EMV is still sits in front of the U.S. market. So, you got a bunch of leaders who are out there, getting it done and using it to has a lever to have more control on payments. And then you got 75%, 80% that's trying to figure out what to do, how to get there..

Got you. Okay. Thank you..

Your next question is from Paul Condra with Credit Suisse..

Hey, good morning. Thanks. Scott, I just wanted to ask about expenses. So, if I'm just kind of trying to get your EBITDA for the year and I'm wondering sequentially where do we see the kind of leverage our improvement expenses just to kind of help get there..

Well, two things, for those deals, for example, that have pushed out to the fourth quarter, they come with on the renewals, they come with the ILF. A lot of that revenue is very high margin, there's very little incremental fulfillment cost on those -- just primarily the selling cost.

And then also in our -- generally our cost structure is relatively fixed, both on the license software side as well as SaaS side. So, even where we see an uplift in the SaaS business, it's on a relatively fixed cost base. So, the incremental revenue that we get in Q4 is going to drive pretty high incremental margins..

Okay, so those costs on expense lines look like pretty good run rate levels..

Yes, I mean we typically exit the year at a lower -- if we look at full quarter view, we'll typically exit the year at a lower cost structure and we're expecting that this year as well..

Okay, thanks. And could you comment on just kind of the new accounts application line that was setup so strongly. What's the product there that's driving that and how does that kind of feed into I guess the bigger strategy, what you've been talking about with renewals and larger deals does that matter. Thanks..

Where that strength is coming from is our pay on product or red product very much so from our retail -- our retail merchant, not retail bank, but in retail merchants, we told you that we just signed another one of the global top players in fast-food and whatnot.

The growth is coming very, very -- very much so on the SaaS side and on the platform side of our business.

And then the renewals actually aren’t lagging by that much, but then on the more installed side of the business, we're not -- we're seeing growth, we're not seeing anywhere as near the growth that we're seeing on the SaaS side -- the platform side of the business..

And how should we think about that, like it from margin contribution perspective, is that business sales?.

Well, that's a perfect question, because this is going to be the second to last quarter that we report our numbers the way we're reporting our numbers because as we go into next year, we're going to start presenting our self as on a two P&L basis.

We're going to give you our SaaS results and the profit model that sits underneath that and we're going to give you the installed and the profit model that sits underneath because we're really averaging two different behaviors at the moment.

And going into next year, we see the importance of actually changing how we do that, especially with -- five years ago SaaS was in 20% of our business, now it’s a larger piece of our 60 -- and more and more of our customers are asking us to eider platform or run SaaS their business. And that's where our growth is coming from.

And it's important that we're going to start delineating that..

Okay, great.

And I guess just I wanted if you could talk about competition, I mean, I think you've made some comments, but when you think about the delays in the installed side and how much of that is maybe related to just more products out there that your clients are looking at versus just kind of struggling with you on pricing and agreements and getting things where they wanted to be..

On the EMV side, our limiting factor is our ability to implement -- we can only take on as much business as we can implement and grow our capability. We've got -- so that one the demand -- our product is doing extremely well as it relates to that.

That's very much true in card not present fraud management and that's also true in terms of the gateway infrastructure on pay-on.

We have good traction in new markets as it relates either to expanding or growing our installed base and we're little bit limited, we just opened up a datacenter because we have so much business in Europe that we need -- of our quad, we need two centers in Europe, two centers in the U.S.

We've consolidated over two dozen centers into these four quads that we are going and as we keep -- as we stabilize that, we can then reach out further across the global, but right now, we're limited to North America, Western Hemisphere and Europe in terms of our staff and hosted SaaS and platform business. So, the growth there is extremely good.

I think there's a basic fee change in terms of where and how people want to put new technology. We're seeing it come even from our traditional customers, there's much more interest in SaaS delivered than installed software..

Okay. Thanks a lot.

Your next question is from Wayne Johnson with Raymond James..

Hi, yes, good afternoon -- I mean good morning, excuse me, it's been a long earning season, feels like afternoon.

The two questions -- first for Scott, how should we think about the debt pay down cadence going forward? You guys have done a great of reducing that debt levels recently, how should we think about that next year?.

Well, I would generally look at the term amortization. I mean obviously we got do the churn amortization to get the revolver down to zero, but I don't over and above the kind of schedule debt payments that we would he necessarily pay down that term debt any earlier. Obviously, we'll redeploy the excess cash in other places.

But I would again look -- term plus the revolver..

Right. Okay I appreciate that.

And then Phil you touched on it a little bit already, you were saying that EMV kind of Phase 1 is enabled, at the risk of talking more about EMV here, what was Phase 1 for you guys? And what's kind of Phase 2 and 3 and how do you see that unfolding over the next couple years? And how does ACI benefit from those trends?.

For us Phase 1 of EMV was -- we're approaching it a little bit differently than -- I guess everyone has a different approach.

What we're doing is we're basically installing payment engines into medium to -- high medium to very large retailers and we're giving them the ability to not only manage EMV, but actually to manage their payments so that they can go and -- I used to think it was going to be lease cost routing, but I don't think it's going to be lease cost routing anymore.

I think it's going to be just a multiplicity of end points. They are just going to decide what business they put where.

So, we've been very, very in the business of basically putting castellan switches at a whole series of retailers and getting them enabled from an EMV standpoint and helping them in terms of how to rethink how they feel with PCI and their rewards programs. We're not directly involved in those.

Our limiting factor is we could only do N number of those against the resources and learning curve and the EMV standards and whatnot, were coming out.

We've now finished our first wave and instead of trying to just make a fortune on the margins of that, we're basically making decision to double our ability -- to double the number of engines that we'll end up deploying and whatnot.

So, we're going on a bit of vector, because we believe this is a multiyear -- it’s a little bit of a land grab in terms of -- there's fundamental change going on, we've got a very unique product, because remember when I spoke today about the large fast-food company we talked about that we're putting the engine and we're putting the EMV capability in, and we're putting the fraud capability and we're putting the networking -- the Gateway capability.

And so we're actually giving them -- we are giving retailers the ability to manage their payment versus find a single payment management arrangement. So, that's our overall--.

Okay, I appreciate.

That's helpful color and so kind of -- if we're kind of in Phase 1 right one, right now, what does Phase 2 and 3 look like?.

Well, I think Phase 2 hopefully is twice as many and about 75% to 80% of the time to implement. And then Phase 3 hopefully is broadening that out a couple of times again on top of that and hopefully brining in the time to implement even a little bit further. We're refocusing our organization to be able to do that globally.

So, we've got the guys in South Africa humming away on that and we're just building the capability to allow that to come to fruition. We this is as a very big global opportunity. So, it allows them to manage -- it allows them to them input to managing what that average interchange -- what that average cost of sales is..

Great. Thank you..

Your next question is from Alex Veytsman with Monness Crespi & Hardt..

Good morning guys. I just want to kind of follow-up on the capital allocation question, right. So, you have about $78 million outstanding in share buybacks. And my question is first of all, are you expecting any buybacks next quarter or is that we might been delayed now until 2017.

And I guess tied to that, I mean do you expect to up your authorization next year..

Well, I'd say we've historically taken a pretty balanced approached in terms of our use of cash. We’ve done that this year with share buyback. I don't think that necessarily project what our intention was in the fourth quarter, but I'd say we -- going forward, we'll continue to be balanced in our use of cash well..

All right. Right.

And as far as, I mean I mentioned that you would probably mix it with some new deals, with some targeted yields I guess like at this point especially given everything which you've done over the last couple of years and of course CFS what is your kind of a targeted deal size, and I guess in which part of the revenue streams do we see some upside?.

Well, when we say targeted deal size, as Phil mentioned, many of these larger deals historically have been in the 30 to 40 range or essentially looking to be 2x.

As customers assessed their strategy for the next five years, a standard renewal would probably back at those 30 million to 40 million in size, but a renewal that included the universal payments capability is likely to be about 2x that size.

And so that's what our customer are assessing right now as are they ready organizationally to in take advantage of that technology in the near-term and they've got to be ready organizationally to take advantage of that one to save time and renewal, otherwise, they go down a normal renewal path.

That's where we believe on the edge we get to the end of the expiration on these, one of two paths. And I believe that especially with the quarter we're at on many of our large renewals that we'll see in the 18 months that many of those will go down to larger Up path..

That makes sense. Thank you for the color guys..

And at this time, there are no questions..

Thanks everybody for joining us. We look forward to catching up in the coming weeks..

This concludes today's conference. You may now disconnect..