Yahoo Finance

James Kehoe

Thank you, Stephanie, and good morning. I'll begin on Slide 9 with an overview of our first quarter results, which we previewed on April 17. We had a great start to the year with adjusted revenue growth of 4%, exceeding the high end of our outlook. We delivered upside from both operating segments, further increasing our confidence in meeting our full year outlook. Adjusted EBITDA came in close to the high end of our outlook at $958 million, leading to an EBITDA margin of 37.8% in the quarter.
Adjusted EPS was $1.21, and it was also near the high end of our outlook, with year-over-year growth of 11%. Cash conversion improved significantly as we rolled out working capital initiatives and lapped a weak prior year. Free cash flow was $368 million in the quarter, compared to $95 million last year, with conversion rate of 71% compared to 18% in the prior year.
As a reminder, the first quarter is historically a lower conversion quarter, so we are off to a strong start on our full year target of 82% to 85%. Capital expenditures were $233 million in the quarter or 9% of revenue, consistent with our full year expectation, and we exited the quarter at our target leverage of 2.8x. Lastly, we returned $670 million to shareholders including $450 million of share repurchases, putting us well on track to meeting our $1.2 billion annual target for share repurchases. In summary, a great start to the year with strong execution across all key metrics. Turning now to our segment results on Slide 10.
Adjusted and recurring revenue growth was 4% with recurring revenue at 81% of total revenue. We continue to emphasize growth in this durable high-margin revenue stream.
Banking grew 2% in the quarter, coming in ahead of the high end of our outlook. Recurring revenue growth outpaced adjusted revenue growth at 3% in the quarter. Nonrecurring revenue increased 3% and as the anticipated 2 percentage point headwind from termination and license fees was offset by stronger performance from our card production business. Professional services declined 5% as we successfully concluded some large projects at year-end. As Stephanie discussed, client implementations are on track, and we expect accelerating professional services growth over the course of the year.
Banking EBITDA margin contracted to 40.1%, reflecting high license and termination fees last year and the timing of operating expenses. Turning now to capital markets, where we had another strong quarter. Adjusted revenue growth came in ahead of the high end of our outlook at 9% with recurring revenue growth of 6%. Nonrecurring revenue advanced 47% as the team delivered a strong license quarter, including outsized renewal timing. Professional services declined 5% year-over-year, reflecting the completion of some project work and is expected to return to growth in the second quarter.
Adjusted EBITDA margin expanded 90 basis points, reflecting strong growth in high-margin license revenue and continued favorable operating leverage. Moving now to our outlook on Slide 11. As messaged on our April 17 call, we are reaffirming our outlook for the full year, and we are not changing any of our key assumptions. Implementations are ramping on schedule, and we have good line of sight into the 150 basis points of incremental banking growth that is tied to commercial excellence. For the second quarter, we anticipate adjusted revenue growth of 4.2% to 5%.
We are targeting banking revenue growth of 3.7% to 4.4%, Consistent with our commentary on the fourth quarter call and in line with our full year outlook. This acceleration will be underpinned by strong and accelerating recurring revenue growth. For Capital Markets, we expect adjusted revenue growth of 6% to 6.7% and combined with a strong first quarter. This puts our first half growth modestly ahead of our full year outlook. We are projecting sequential margin improvement of approximately 200 basis points to around 39.8% to 40% in the second quarter.
For the year, we anticipate continued sequential margin improvement over the remaining quarters as we progress to our full year target of 41.3%. We are projecting adjusted EPS of $1.34 to $1.38 with EPS growth ranging from 0% to 3%. The result is held back by 2 items with a combined negative impact of approximately 5 points of growth. Firstly, we are lapping the sizable (inaudible) growover in interest income as we opportunistically invested Worldpay proceeds last year.
Secondly, we are facing a tough year-on-year comparison on EMI. Worldpay had a very strong performance last year, including a slower-than-planned buildup of stand-alone operating expenses. Consistent with prior quarters, we have provided our detailed assumptions in the appendix. Let's now wrap up on Slide 12. In summary, our first quarter results were above expectations with strong starts on both revenue growth and cash conversion.
We are on track for accelerating growth from our banking segment beginning in the second quarter. And we are reaffirming our full year outlook with total shareholder return of 11% to 13%. Capital returns were $670 million in the quarter putting us on schedule for our $2 billion annual capital return target. And lastly, we announced a significant transformation of our financial profile. replacing our noncash minority interest in Worldpay with a durable cash-generating asset in Issuer Solutions.
With that, operator, could you please open the line for questions?

Question and Answer Session

Operator

(Operator Instructions) Tien-Tsin Huang, JPMorgan.

Tien-Tsin Huang

Good morning, everyone. Just want to -- [Julian], I think Stephanie talked about timely conversions. I know the 3 deals did go live. It sounds like you're not hearing any client decision delays. I'm just curious what other feedback you're giving in terms of decision-making pipeline rebuild and of course, any client feedback that is worth sharing with respect to bringing the Issuer Solutions business on

Stephanie Ferris

Thanks, Tien-Tsin. So a couple of things. Yes, as we had indicated, those client conversions were going live in first quarter and second quarter, they're all live. So really happy about that. And you're seeing that show up in the banking revenue guide in second quarter and full year.
So very good, everything went well, progressing exactly as expected and maybe even slightly positive. In terms of overall pipeline (inaudible) the benefit of FIS is regardless of the economic cycle, we have very highly recurring and were required then not seeing any impact from clients in terms of slowing spend down. In fact, our pipeline is actually increasing very significantly, even as we compare it to year-over-year, feeling really good about pipeline.
We're obviously keeping a very tight watch on it in terms of tariff and economic activity. But I'd say that's the benefit of FIS. It's very durable, highly recurring and required spend. It's not really discretionary. And then with the last piece on [TSYS], I have to say from a client standpoint, they -- it's been really, really positive.
So we do a lot of diligence on the TSYS business, we know the team there just from in the market for a long time. We didn't compete against them, but they have such a great brand. And from their clients that are also clients of ours, people we're hearing very strong commitments to them in terms of best-in-class product suite as well as client service, and then consistent with -- didn't really see a value of having acquiring and TSYS together.
So like the focus with the ultimate acquisition by us in terms of continuing to focus on financial institutions and on that solution set because that customer base is typically not looking at merchant acquiring. So very positive all around.

Tien-Tsin Huang

Great. And just a quick follow-up. I know I've asked before on this call before, Stephanie, but just any updated thoughts on (inaudible) that it's moving a little bit more forward?

Stephanie Ferris

No. I mean, I think they had some really positive news. It sounds like it's moving forward. We have a great partnership with them. We had a great partnership with Discover.
So we see nothing but positive with them and continue to support them in everything they want to do. It's nice to see them obviously get through their hurdles and get to the other side of it. We think it's going to be a great combination.

Operator

John Davis, Raymond James.

John Davis Jr.

I just wanted to drill in a little bit to the 2Q guide for capital markets, a little bit of a decel. You do have a little bit of a tougher comp. Anything else to call out or (inaudible) anything else there would be helpful.

Stephanie Ferris

Yes. So I think when you think about second quarter, it really is a first quarter, second quarter. If you look at our first quarter results for capital, they had a very high nonrecurring benefit in the first quarter from a renewal, so that was a timing-related benefit in the first quarter. Their recurring revenue first quarter and second quarter is very consistent. And then the license and the renewal activity goes back to more of a normalized.
So they were benefiting in the first quarter from that. And so you see our second quarter being very consistent with first quarter excluding that renewal timing.

John Davis Jr.

Okay. Great. And then just thinking about the banking segment on a pro forma basis, can you help us -- what percentage of that banking segment will now be the combined debit issuing business that you have plus TSYS? And just maybe a rough sense of what is kind of an account on file versus a per transaction fee. Just so we get a sense of any sort of cyclicality with the slowdown from a macro perspective.

Stephanie Ferris

Well, those are great questions, John. I don't think I have all that at my fingertips. I think you heard the thing from the TSYS guys on their call that they have -- are seeing consistent strong account on file growth and they're even -- they had positive spend. They are in transaction growth and still a little bit of muted commercial. From our side of the house, debit, just like you would expect, from a consumer spend point, we're seeing consumer spend on debit continuing to be consistent with what you're hearing from everybody else.
We don't see a slowdown. It's also a very resilient part of the business plus we're seeing very strong debit transaction growth. Our credit portfolio is not very big, but we aren't seeing any slowdown there. So hopefully, that's helpful. I don't have the numbers in front of me in terms of accounts on file or transactions.

James Kehoe

Yes. The only thing we highlighted on the call was just we're adding $2.5 billion to our banking business that's roughly [7], so the scale on banking goes up by -- I think it's about 35%. So it's a $9.4 revenue -- $9.4 billion of revenue. Then we said that overall, the it's additive to margins by about 80 basis points. We didn't give any specifics here, except that we did point out that the strong position in market.
And they have, I think, the beauty of that business, the average tenure of the clients is 25 years. So it's highly durable revenue, which is very consistent with our core banking business. So 80% recurring revenue with margins in the low to mid-40s.

Stephanie Ferris

Yes. I think the other thing is it supports what we said at Investor Day in terms of ability to continue to grow payments in a very large scale and durable way, so debit and credit. And it also gives us an opportunity with clients to do more bundling as we think about the cross-sell, whether we have debit and they have credit or they have credit, and we have debit, which is pretty significant.

Operator

Dan Dolev, Mizuho.

Dan Dolev

Great results there. Really nice to see that. Stephanie, can you maybe give us a sense of how you're feeling about the Worldpay EMI outlook? And how is revenue growth has been tracking there relative to your expectations?

Stephanie Ferris

Yes. Thanks, Dan. So the Worldpay EMI outlook is very consistent year-over-year with what we've been putting in the guide. We're not seeing any softening there. In fact, we always think, as you know, that [Charles] has strong growth.
So we're always hoping for outperformance. But nothing negative at all in the EMI outlook very consistent with what they provided to us. In terms of revenue growth, and I think Cameron gave some updates as well on the call this morning, we're really pleased to see the acceleration of revenue in Worldpay last year. separating it was clearly the right decision, bringing back Charles and having growth and focus there and investment, they've really been able to turn that business around, you're seeing the revenue growth in the fourth quarter and then into the first quarter, they obviously have lapping of Easter and leap day like everybody else.
But their revenue growth continues to be consistent with the market, and they're feeling really good about where they're taking it and taking it from when we had it really as a low single-digit grower to back up to mid- to upper. So feeling really good about the performance there. They're highly focused on execution. And I think it will be great asset for Global Payments.

Dan Dolev

And just as a quick follow-up, can you give us a sense of the EBITDA margin cadence given the timing of the investments in the first quarter?

Stephanie Ferris

For Worldpay?

Dan Dolev

Yes.

Stephanie Ferris

The EBITDA margin gains for Worldpay. I don't think we externally talk about that. I think all we can show you technically is revenue and EMI. You would expect though that they are making investments in the business. They had some benefits in EMI you saw last year because the investments were a little bit slower to get started, they're fully ramping those. So no change from what we've said historically.

Operator

(inaudible) Barclays.

This is [Ryan] on for Ramsey. As we start to think about the pro forma business, what would you consider the lowest hanging fruit from a cost synergy standpoint? And any additional color you could provide on the the rate in which you expect to realize these synergies would be helpful.

Stephanie Ferris

Sure. Maybe I'll take the types of cost synergies and I'll default over to James in terms of rate. But I think what we shared was we think the biggest amount of cost synergies. And just as a reminder, we talked about $125 million would be rationalizing duplicate vendor costs, so when you think about bringing the -- both card businesses together, whether it's debit or credit, we use the same set of vendors, think vendors like technology, software, fraud vendors, et cetera. So we think there's quite a bit there.
You would expect us to pull those very quickly. . We also anticipate back office optimization. So when you think about whether you're producing a debit card or a credit card, we have consistent card production, capabilities. We have print mail capabilities.
Those can be optimized. You can imagine that the (inaudible) side is bigger than our side, but we don't need all of them. So you would expect us to have back office optimization there. And then to the extent we have operational capabilities that we think we can bring together and quite frankly, use the TSYS expertise because it's much larger than ours on the credit side, we think we could see opportunities there.
In terms of cost synergies, you should expect to see us get out the gate very quickly with those. They're obviously the lower-hanging fruit. And so we will use the time frame between now and signing to very organized around that. I don't know that what cadence James we gave a view towards revenue and EBITDA synergies

James Kehoe

What we said was, if you look at total synergies of $150 million, we said split it evenly over year 2 and year 3, while we will get some cost synergies in the first year, we will have some (inaudible) from global in the first period. So we'll get our arms around it. But as Stephanie said, we'll go really quickly on cost synergies. I think the upside is bigger than the $150 million longer term. What we did say on the call was that only included $45 million of revenue synergies up in the first 3 years, but we did highlight a long-term potential on revenue synergies of $125 million.
So that $150 million will build as you look further out in the period. But take a 50-50 over year 2 and year 3, and you won't be too far along.

Operator

Andrew Schmidt, Citi.

Andrew Schmidt

I know you mentioned that the Issuer Solutions transaction will be accretive in the first 12 months. But I'm wondering if you could just comment on the level of accretion that you expect, we get to low single digit for 12 months and then higher, maybe mid-single, but in 24, months; obviously, there's probably some upside to that depending on timing and favorability and things like that, but any comments there would be helpful. .

James Kehoe

I think we're not going to go any further than what we said on the transaction call. We're very happy that it's immediately accretive. And as I said, the what will happen is it's immediately accretive, but it's transforming at the same time. So the EPS accretion, I think, is the least important number because we're losing a fairly, a very accretive Worldpay stake. That also gave us tax benefits, but we're replacing it with a boost to our banking revenue at 35%.
More importantly, our cash flow will go up 35%, so the construction of the company is completely different. The scale is flowing through to cash as opposed to EPS. That's the part I would point to more than anything else. The margins are booster as well, which strengthens our in business. The specific EPS accretion is not the most attractive part of the deal.
It is solidifying the strength of the banking business. And call it, fortifying our banking business going forward, driving enhanced scale on the total company, but what really plays out for me is on the cash line, which is adding $700 million when the reality is our current cash flow is in the region of $2 billion on an adjusted basis.
So that's an incredible boost. And I think we're -- you look at the revenue synergies longer term, and that can only be additive to the attractive financial profile of the company.

Andrew Schmidt

Both on the cash flow and strategic benefits, I appreciate that. If you could just talk about a little more detail, the sales motion with cross-selling credit issuance processing I assume often with large FIs you're talking at enterprise level. So that part of the business can be pulled in. But just curious, just maybe a process question and how you go about the cross-sell motion .

Stephanie Ferris

So the reason why this transaction makes just so much sense is the amount of clients that we both support. So on our side, we could be doing core and network and debit as well as trading and lending when you think about these large financial institutions.
So we already have that cross-sell motion going between the banking and capital markets business and offer out a bundled solution set there. The opportunity has always been having -- not having the credit capabilities up market. So when you think about an ability opportunity to add credit now to credit and debit as well as core network lending and trading.
We think we're uniquely positioned because we think we're the only player that has that cross section of product sets, and we already have the motion in play. We also think just relationship-wise, if you think about where we play typically with the banking and capital market solution sets, typically back office.
So when you think about who we're interacting with Chief Technology Officer, CIOs, when you start to talk about credit issuing, we're now in the front part of the bank because of how much revenue-generating capability it is. So for us, we really think about this as a big unlock of incremental market for us in a large financial institution space, whereby we are already have existing relationships, have cross-sell motion and now we're adding a product set and a set of a team that has significant relationships. So win, win, win there, and very excited about it.
And then as I mentioned to Tien-Tsin in the very beginning of the call, hearing from clients just really positive around both the TSYS products set and team over there in terms of customer service. but also that they like the benefits of dealing with FIS altogether as you think about 1 provider serving them across their ecosystem makes it easier for them from a regulatory standpoint and overall from getting the optimized metrics for them. So that's been very positive as well.

Operator

Jason Kupferberg, Bank of America.

Jason Kupferberg

I wanted to start on the banking side. It looks like based on the Q2 guide, maybe 200 basis points of acceleration in the second half to get to the midpoint of the full year and I know that's pretty consistent with what you originally anticipated. Now that we're third of the way through the year? Can you hone in on the specific drivers there? I don't know if it's mostly just the ramp of the 3 delayed implementations and just your overall visibility and confidence level on that acceleration?

Stephanie Ferris

More numeric. I think as you think about margins for us, it's really 2 things going into second quarter and the back half of the year. The first 1 is just overall mix. So as we talked about the sales and high levels of revenue retention, when we did our guide in the fourth quarter into 2025, we talked about the mix of less lower margin and more higher margin and not really taking hold in the back half of 2025, so we think from a margin standpoint, we would expect, and as you can know, as you can see, we now have really strong visibility to a positive mix driver for that in the back half of this year. .
In addition to that, we, as you know, have been executing against all of our future forward cost programs and continue to significantly ramp those. And so as we sit here today in May, I feel very confident about the activities we've already done and what are yet to be done as we think about going into the rest of the year. We have a lot of muscle around this. We have a lot of programmatic focus on this and have been doing it since the end of 2023. And then probably the last thing I would say is, we just have an easier comp as we go into the second half, if you look at the year-over-year.
So really focusing on mix, continued of our operating expense programs, which we think we're really good at, at this point and an easier comp makes it where we feel really confident around the margin expansion. I don't know, James, do you want to talk about anything else?

James Kehoe

No, I would say that this is -- I would say the way it's playing out is very much as we predicted when we put our plans in place at the end of last year. You'll recall back as far as Investor Day, we said we would do roughly annually 175 bps of production. We're actually running ahead of that. The only thing is last year, the first half had the highest proportion of cost reduction relative to the total year, and this year back half has a higher proportion of the total cost reduction. I would say our visibility to the cost reduction initiatives is excellent.
I don't think it could be any higher. All of the initiatives are in full swing. . We actually are probably in the first half doing slightly better. So we're actually very, very comfortable in the first half, second half split.
Maybe we didn't telegraph it well enough to the market. But as Stephanie said, there's 2 things happening, and I'll double down on this. One is the mix. And the mix is basically a first quarter story is that we're lapping these these exceptionally high margins in the first quarter of last year. That's done.
It's behind us. There's none of this on a go-forward basis. So the revenue mix contribution improves in the latter 3 quarters. And then as I said, on the cost side, we could not -- I just want to be clear on this. We could not have better visibility to the cost programs.
These are just managed extremely tightly. And we got no surprises in the first quarter whatsoever. So fully, fully on track.

Jason Kupferberg

Okay. So comps mix and costs very clear there. So maybe just on the revenue side of Banking. That too, I know the expectation was to be kind of second half footed how you're feeling about the visibility there? When you've got the 3 implementations that are now live, but I don't know to what extent you're -- depending on kind of new sales kind of formulating and ramping in the latter part of the year, just kind of give us some color on the drivers there because I think we need maybe a couple of points of second half versus first half acceleration to get to the midpoint on the full year.

James Kehoe

I think I'd point out first that the comfort at which we're confirming the second quarter should not be lost on you. We called this out 3 months ago when we gave the full year guide on the second quarter. and we still have just as strong conviction if not even higher. So we have great visibility into the second quarter. What we said on the full year guide is, there is 1 big driver in the banking acceleration.
It's 150 basis points that's coming from commercial excellence. And this is, as you said correctly on the call, you said it's essentially it's new sales, but any new sales you have in the second half is not going to impact your second half performance? What I mean -- I mean new ACV, you get in the second half has no impact on the second half. This is all stuff that's already being sold and most of it was sold in 2024, which was a very strong year for the banking business.
And I think we said the total was up 12 -- I think it was 11%, 12% on banking. So all of that, you see it flowing in. The other part that we called out was the incredibly high retention rates that we're seeing, particularly on the banking business. It's actually across the entire business. But banking compared to the past is it's a very, very strong number in the high 90s.
So when you've got this retention and you had a strong sales year in the prior year, that's what's driving the step-up of the 150 basis points. So actually, funny enough, our conviction is extremely high just because it's work that's already done and dusted. And I'll just add on. Last year was a record year for core wins as well. So we have almost -- and then digital was up 50%.
We gave all these data points before. The second half field is stuff that has already been put in place. And now it's just recognizing it as revenue in the second half. So we have a high level of comfort on the full year guide.

Stephanie Ferris

I don't think I could say it any better than that.

Operator

Bryan Bergin, TD Cowen.

Bryan Bergin

I wanted to start on free cash flow. Could you just comment on further progress in the net working capital optimization initiatives you have? And then as you think about combining with issuer solutions, appreciate the OpEx leverage commentary you shared earlier. From a CapEx standpoint, may a broader scale give you added flexibility there to drive more favorable terms in areas like infrastructure?

James Kehoe

Questions. The thing we're really pleased. We did say it on the last call, we were rolling out working capital initiatives, and we said we weren't going to steer at the problem, we're going to move pretty quickly. So most of the cash flow improvement versus prior year is coming from net working capital. And if you split that in 2, last year was a rocky first quarter and there were some onetime items.
I would say of the total improvement year-on-year from 18% to 71%. Half of it is coming from a bad year last year. and slightly more than half is coming from initiatives put in place. I'll give you examples. The procurement organization is -- has worked on the top 50 customers and taking them to -- sorry, vendors and taken them to 90-day turns.
We're not all the way there yet, but we've already locked in a large number for the current year, and we're working now on Tier 2 suppliers. So that's actively in motion and then increased governance around the extension of terms to clients. And sometimes it's the simple stuff that gives you the biggest benefits. What I'm really happy about is we're seeing it early in the year, and we don't have a show-me story in the second half. And just to emphasize this, the Q1 is historically an incredibly lower.
So Q1 of 2023, I think, was 40% and Q1 of 2024 was 18% and this year 71%. This is a great start ahead of the gate that really makes us comfortable on the full year of cash guide. So I'm feeling good about that.
Your point on CapEx, if I get my numbers right, I think the issuer business is running at about 8% of revenue, and we we're at 9% this year with a long-term outlook of 8. I think you're right. We will be looking, as Stephanie earlier 1 of the synergy opportunities is we are -- we have bigger scale with with our vendors and suppliers, and we would be expecting more attractive terms. And you're exactly right. You would expect to see a benefit in the P&L in terms of lower OpEx and you would expect to see a benefit in terms of lower CapEx.
But we still got to approve all this stuff out. It's well in front of us, but your point is not -- is well taken.

Stephanie Ferris

It is. The only thing I would add is, just to be a little bit cautious on that. Remember, TSYS is in the middle of a modernization program. So while we would look to definitely get savings from joint vendors, we also don't want to take away and continue to have in our model, consistent with their model, the work we need to do to continue their modernization efforts. So that could be what would keep us at higher levels of capital while we finish out that program with them.

James Kehoe

Yes. I think we said on the transaction call actually, we said that we would anticipate a continued rate at about 8% for the foreseeable future because of exactly what Stephanie just said. So I wouldn't go building in any major changes in trajectory until we're well past the modernization of systems.

Bryan Bergin

All right. That's clear. On the capital markets side, can you just comment on how sales are progressing in [traditional] and non traditional verticals .

Stephanie Ferris

So I think we mentioned -- as we mentioned on the call, and let's start with the nontraditional guided about things we are seeing as opportunities both in the pipeline as well as closing on nontraditional private credit, hedge funds using our capabilities as we see the markets emerge across traditional and nontraditional. In addition to that, on the traditional side, continue to see a lot of opportunities in trading and processing, especially as we bring in capabilities and add additional capabilities like (inaudible)
And cross-sell those products into our existing base. So capital markets continues to execute at very high levels the products they continue to bring to market are driving a lot of increased pipeline and ultimate sales, and we're not slowing down in terms both the increased number of products that are being brought to market as well as that pipeline and close sales. So feeling really good about both traditional and our opportunity in the non-traditional.

Operator

Rayna Kumar, Oppenheimer.

Rayna Kumar

Can you talk a little bit about any potential dis-synergies that may be tied to the sale of your Worldpay business? And any potential offsets to it?

Stephanie Ferris

We don't have any dissynergies from the Worldpay business. I mean I think we already took all of that as we separated the 55%. So there aren't any.

Operator

Vasu Govil, KBW.

Vasundhara Govil

Apologies if I missed this in the prepared remarks, Stephanie, but can you comment on the ACV growth this quarter? I know historically, you've given us that number.

Stephanie Ferris

I don't think we've historically given them. I think we talked about it for a full year basis. I think we feel good about ACV coming into the year. First quarter is typically our lowest quarter in terms of sales, and that's consistent year-over-year. See very strong growth across the business in cores, digital, consistent with the way we talked about it on a year-over-year basis.
As James mentioned, our products continue to drive increased ACV in sales, but we also are seeing the incremental benefits of the product investments in high levels of revenue retention, we talked about as we come into the fourth quarter, our level of confidence and then James just reiterated it in the first quarter in both sales that we saw at the end of the fourth quarter and in the first quarter, as well as high levels of revenue retention, both of those were part of the commercial excellence program I put in place since I started as CEO because as James mentioned, it's not just about new, it's about making sure we can cross-sell into the existing base and that we have high levels of renewal rates.
And we think that's significantly as well, underpinning the confidence we have as we go into the back half of the year. And then we'll continue that program as we think about continuing to activate sales as well as recurring revenue or high renewal rates into 2026. So feel very good about the activity.
But as I mentioned, first quarter always is our lowest quarter, but things continue to go well.

Vasundhara Govil

And I know you alluded to this a little bit before, but with the [GAAP 1] and Discover deal now approved, just curious of that unlocks any additional opportunities for you in addition to what you've already implemented for both of them and like the time it look for to hear any such announcements .

Stephanie Ferris

Yes. So we -- as I mentioned, we are on both sides of that transaction, very excited to partner with Capital One and help them meet all of their expectations as they look to close on that transaction. It's always an opportunity for us. I think as we think about being a good partner to them in terms of whatever they want to do, it would be part of our sales goals for the year. And obviously, that getting closed is important to us like it is important to them.
I don't know that materially moves the needle for us as we think about what we need to do for them. But it's a very active and very important relationship.

Operator

Ladies and gentlemen, that concludes today's question-and-answer session in today's conference call. You may disconnect your lines at this time. Thank you for your participation.