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Our remarks today will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We will make forward-looking statements about, among other matters, adjusted revenue, adjusted internal revenue growth, adjusted earnings per share, adjusted operating margin, free cash flow, free cash flow per share, sales pipelines, acquisitions and our strategic initiatives. Forward-looking statements may differ materially from actual results and are subject to a number of risks and uncertainties. Please refer to our earnings release, which can be found on our website at fiserv.com, for a discussion of these risk factors.You should also refer to our earnings release for an explanation of the non-GAAP financial measures discussed on this conference call and for a reconciliation of those measures to the nearest applicable GAAP measures. These non-GAAP measures are indicators that management uses to provide additional meaningful comparisons between current results and prior-reported results and as a basis for planning and forecasting for future periods. Also, please mark your calendars to attend our Annual Investor Day, which will be held in New York on Tuesday, October 9. We plan to send out invitations later this summer, and you may also follow up with our Investor Relations team for additional information. I will now turn the call over to Jeff. Jeffery W. Yabuki Thanks, Peter, and good afternoon, everyone. We again generated strong earnings growth in the quarter, with adjusted EPS increasing 13% to $1.28 and is up 15% to $2.48 for the first half of the year. Adjusted revenue increased 3% in the quarter and 4% through June 30. Adjusted internal revenue growth was 1% in the quarter and is 2% year-to-date. Adjusted operating margin was 29.3% in the quarter, consistent with the prior year, and up 60 basis points sequentially. Adjusted operating margin has increased 20 basis points to 29% year-to-date, led by very strong performance in the Financial segment. Free cash flow increased 26% in the quarter to $115 million compared with the second quarter of 2011, driven by growth in operating earnings and favorable shifts in working capital. Year-to-date, free cash flow is down 11% to $298 million, primarily related to higher tax payments.
Strong sales in the quarter led to the second-highest results in the company's history. Only the fourth quarter of 2011 was higher. On balance, we're pleased with the results for the first half of the year, which are in line with our expectations. We continue to expect and are on track for stronger second half results, which should lead to another year of solid growth and financial performance.That said, we do recognize that there is more variability in our results this quarter than is typical, which merits further explanation. There are 3 areas, 2 of which are generally timing-related, which impacted our second quarter results. First, the timing of license and termination fees pressured our second quarter growth rate by just over 1%. A swing from the first quarter's results, which had been positively impacted by just under 1%. And although these types of revenue are less than 5% of the company total, on the margin, a few million dollars can move the growth rate in a quarter. Second, we were impacted by several large intricate client implementations, primarily in our online channel business, where significant increases in scope and project duration shifted the timing of revenue from this period to out over the next several quarters. The last is the impact of several unusual bill payment deconversions, primarily Wachovia, which we have discussed for a couple of quarters within the Payments segment. These impacts were largely anniversary-ed by the end of the third quarter. The cumulative impact of these items on the company's internal revenue growth rate in the quarter is approximately 2.5 percentage points and approximately 1 percentage point for the year-to-date. The majority of the impact is in the Payments segment. These items are also compressing margin commensurately. Tom will provide more color in his discussion of our financial results.
As we shared at the beginning of the year, we are focused on 3 key enterprise priorities in 2012 which more fully represent our formula to create sustainable shareholder value. First, to deliver an increased level of high-quality earnings growth and meet our revenue commitments. Next, to center the Fiserv culture on growth, leading to more clients, deeper relationships and a larger share of our strategic solutions. And third, to deliver innovation that increases differentiation and enhances results for our clients.Revenue growth in the quarter and year-to-date was driven by steady increases in recurring revenue across a number of our traditional businesses, including debit, account processing and lending. The operating leverage in these recurring revenue businesses combined with the continued progress of our operational effectiveness initiatives resulted in 4% growth in adjusted operating income and 20 basis points in margin expansion in the first half of the year, despite the second quarter impacts I just discussed. Adjusted EPS through June 30 has increased 15%, and we're on track to extend our streak of 26 consecutive years of double-digit adjusted EPS growth. Read the rest of this transcript for free on seekingalpha.com