Total System Services, Inc. (NYSE:TSS) Q1 2018 Earnings Conference Call - Final Transcript
Apr 24, 2018 • 05:00 pm ET
[Operator Instructions] Our first question comes from Ashwin Shirvaikar of Citi. Please go ahead.
Thank you guys. Good quarter here. I want to first clarify that the range revenue outlook, it seems to be due to the -- partly due to Netspend CFPB pushout and partly I would say 1Q outperformance, so a sort of larification. But then the real question there becomes when you look at Issuer Solutions growth near towards the upper end of the range in spite of the challenge that you mentioned with Capital One, why should this decelerate as the year progresses if you're hanging onto the previous lower end of 5% to 7% that you've mentioned last quarter? Are there other things that we need to consider as the year progresses?
On the first point, you're exactly right. Of the roughly $50 million of raise on the revenue side, roughly $20 million of that is CFPB related and then there is rather roughly $30 million associated with over-performance. So you have that correct. As it relates to Issuer Solutions, really a couple of things, you're right we had roughly about 100 basis points of non-recurring items. And then we did have a little bit of seasonality or some things related to some seasonality activity that also play in this 1Q. So with those two items, that's what lifted us to the higher end and our expectations are pull more back to our expectations for the year.
Got it. And then as you roll out new products at an accelerated pace, and Troy, I think you referenced a number of these. Can you speak perhaps to the influence of value-add services versus transaction growth versus traditional AOS in these segments. What's that ratio is today, where it might get to?
Ashwin, I assume you're still making a reference to the Issuer group?
As we talked about on the past several quarters, probably in my tenure in this company, I am not sure we've ever had so many products. And some stage of data and/or production that we're rolling out in our Issuer Solutions group. We talked about a lot and I mentioned two or three in my prepared remarks cases customer service module that will be fully operational in the third quarter of this year.
We've talked about the developers portal, which is now live, we talked about data lake, we talked about communications engine, the digital engagement platform, it's just -- we talked about Foresight, they just keep rolling in. But all are beginning to have some degree of contribution, Ashwin, obviously some are in data, some like Foresight Score has been in production for a quarter or two, so each one has its own different dynamics. As we said before, our goal is to continue to roll out these products. So over time, the contribution of our value added number continues to grow and so it will just take time for some of these to really have a meaningful contribution to the bottom