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FIS Reports Strong First Quarter 2024 Results and Increases Full-Year Adjusted EPS Outlook

FIS® (NYSE:FIS), a global leader in financial technology, today reported its first quarter 2024 results. “We are off to a very strong start in 2024. This marks the fifth straight quarter of exceedi...

Business Wire
  • First quarter GAAP Diluted Earnings (Loss) Per Share for continuing operations of $0.03 and Adjusted EPS of $1.10
  • Including discontinued operations, first quarter GAAP Diluted Earnings (Loss) Per Share of $1.25 and Adjusted EPS of $1.33
  • Continuing operations revenue increased 3% on a GAAP basis and 3% on an adjusted basis to $2.5 billion
  • Continuing operations adjusted EBITDA margin expanded 200 basis points (bps) to 39.5%
  • Announces $500 million increase to 2024 share repurchase goal; targeting $4.0 billion of repurchases for the year
  • Reaffirms full-year revenue and adjusted EBITDA outlook and raises full-year adjusted EPS outlook by $0.22
  • The Company will host an Investor Day on May 7, 2024

JACKSONVILLE, Fla.: FIS® (NYSE:FIS), a global leader in financial technology, today reported its first quarter 2024 results.

“We are off to a very strong start in 2024. This marks the fifth straight quarter of exceeding our financial outlook, and we are pleased with the continued new sales momentum we are seeing across the business,” said FIS CEO and President Stephanie Ferris. “We are confident in our ability to deliver on our full-year outlook, as the Future Forward strategy we put in place last year is delivering improved operational and financial outcomes. We look forward to updating you on FIS’ corporate strategy and medium-term financial targets at tomorrow’s Investor Day.”

Financial Reporting Considerations for Completed Worldpay Sale

On July 6, 2023, the Company announced an acceleration of its previously announced separation plan to create two highly focused global companies with greater strategic flexibility. FIS signed a definitive agreement to sell a 55% stake in its Worldpay Merchant Solutions business to private equity funds managed by GTCR (the "Worldpay Sale"). The Worldpay Sale was completed on January 31, 2024.

Unless otherwise noted, all results are presented on a continuing operations basis and exclude the results of the Worldpay Merchant Solutions business that was classified as discontinued operations as of the third quarter of 2023.

Following the close of the Worldpay Sale on January 31, 2024, FIS retains a non-controlling 45% ownership interest in a new standalone joint venture, Worldpay Holdco, LLC ("Worldpay"), and records its proportionate share of Worldpay's earnings (loss) in the "Equity method investment earnings (loss), net of tax" (EMI) line of the income statement, which for the first quarter of 2024 consists of the two-month period from February 1 to March 31, 2024.

Capital Allocation Update

The Company remains committed to shareholder returns and is increasing its goal to repurchase approximately $4.0 billion of shares in 2024, up from the previous goal of at least $3.5 billion. The Company repurchased $1.4 billion of shares in the first quarter. Additionally, the Company continues to target a dividend payout ratio of 35% of adjusted net earnings, excluding EMI.

Investor Day

FIS will sponsor a live webcast of its Investor Day with the investment community beginning at 8:30 a.m. (EDT) on Tuesday, May 7, 2024. At the conference, FIS' executive leadership team will be providing an update to the company’s corporate strategy and a medium-term financial outlook. To access the webcast, go to the Investor Relations section of FIS’ homepage, www.fisglobal.com. A replay will be available after the conclusion of the live webcast.

First Quarter 2024 Financial Results

On a GAAP basis, excluding $403 million of revenue classified as discontinued operations, revenue increased 3% as compared to the prior-year period to approximately $2.5 billion. GAAP net earnings (loss) attributable to common stockholders for continuing operations were $17 million or $0.03 per diluted share. Including discontinued operations, GAAP net earnings (loss) attributable to common stockholders were $724 million or $1.25 per diluted share.

On an adjusted basis, revenue increased 3% as compared to the prior-year period driven by 5% adjusted recurring revenue growth, offset by a 10% decline in professional services adjusted revenue. Adjusted EBITDA margin expanded by 200 basis points (bps) over the prior-year period to 39.5% primarily driven by cost saving initiatives. Adjusted net earnings for continuing operations were approximately $635 million, and adjusted EPS increased by 53% as compared to the prior-year period to $1.10 per diluted share. Including discontinued operations, adjusted net earnings were approximately $768 million and adjusted EPS increased 3% as compared to the prior-year period to $1.33 per diluted share reflecting one month of discontinued operations contribution in the first quarter of 2024 as compared to three months in the prior year.

($ millions, except per share data, unaudited)

 

Three Months Ended March 31,

 

 

 

 

 

 

%

 

Adjusted

Continuing Operations

 

2024

 

2023

 

Change

 

Growth

Banking Solutions Revenue

 

1,684

 

 

1,646

 

 

2%

 

2%

Capital Market Solutions Revenue

 

706

 

 

663

 

 

7%

 

6%

Operating Segment Total Revenue

 

$

2,390

 

 

$

2,309

 

 

4%

 

3%

Corporate and Other Revenue

 

 

77

 

 

 

88

 

 

(12)%

 

-

Consolidated FIS Revenue

 

$

2,467

 

 

$

2,397

 

 

3%

 

-

Adjusted EBITDA

 

$

975

 

 

$

900

 

 

8%

 

 

Adjusted EBITDA Margin

 

 

39.5

%

 

 

37.5

%

 

200 bps

 

 

Net Earnings (Loss) (GAAP)

 

$

17

 

 

$

96

 

 

*

 

 

Diluted Earnings (Loss) Per Common Share (GAAP)

 

$

0.03

 

 

$

0.16

 

 

*

 

 

Adjusted Net Earnings

 

$

635

 

 

$

426

 

 

49%

 

 

Adjusted EPS

 

$

1.10

 

 

$

0.72

 

 

53%

 

 

($ millions, except per share data, unaudited)

 

Three Months Ended March 31,

 

 

 

 

 

 

%

 

Adjusted

Total FIS (Including Discontinued Operations)

 

2024

 

2023

 

Change

 

Growth

Net Earnings (Loss) (GAAP)

 

$

724

 

 

$

140

 

 

*

 

 

Diluted Earnings (Loss) Per Common Share (GAAP)

 

$

1.25

 

 

$

0.24

 

 

*

 

 

Adjusted Net Earnings

 

$

768

 

 

$

767

 

 

0%

 

 

Adjusted EPS

 

$

1.33

 

 

$

1.29

 

 

3%

 

 

 

*Indicates comparison not meaningful

Segment Information

  • Banking Solutions:
    First quarter revenue increased 2% on a GAAP basis and 2% on an adjusted basis as compared to the prior-year period to $1.7 billion, including adjusted recurring revenue growth of 4%. Adjusted EBITDA margin expanded by 350 basis points as compared to the prior-year period to 44.3% primarily driven by cost saving initiatives and a favorable revenue mix compared to the prior year, including an increase in high-margin license revenue.
  • Capital Market Solutions:
    First quarter revenue increased by 7% on a GAAP basis and 6% on an adjusted basis as compared to the prior-year period to $706 million reflecting adjusted recurring revenue growth of 9%. Adjusted EBITDA margin contracted by 80 basis points over the prior-year period to 47.4% primarily due to revenue mix.
  • Corporate and Other:
    First quarter revenue decreased by 12% as compared to the prior-year period to $77 million. Adjusted EBITDA loss was $105 million, including $117 million of corporate expenses.

Discontinued Operations (Worldpay Merchant Solutions)

For the month of January, discontinued operations revenue was $403 million. Adjusted EBITDA was $187 million, and Adjusted EBITDA margin was 46.4%. Having completed the Worldpay Sale on January 31, 2024, year-over-year growth comparisons are not meaningful.

Balance Sheet and Cash Flows

As of March 31, 2024, debt outstanding totaled $11.2 billion. First quarter net cash provided by operating activities for continuing operations was $206 million, and free cash flow for continuing operations was approximately $95 million. Free cash flow in the quarter was negatively impacted by approximately $195 million of transitory impacts. In the quarter, the Company returned $1.6 billion of capital to shareholders through $1.4 billion of share repurchases and $209 million of dividends paid.

Second Quarter and Full-Year 2024 Outlook

The Company is introducing its second quarter outlook and, for the full-year, is reaffirming its outlook for revenue and adjusted EBITDA and is increasing its outlook for adjusted EPS by $0.22 compared to the prior outlook. The adjusted EPS outlook reflects 11 months of EMI contribution for the full-year.

Following the close of the Worldpay Sale on January 31, 2024, FIS retains a non-controlling 45% ownership interest in a new standalone joint venture, Worldpay Holdco, LLC ("Worldpay"), and records its proportionate share of Worldpay's earnings (loss) in the EMI line of the income statement, which for the first quarter of 2024 consists of the two-month period from February 1 to March 31, 2024.

($ millions, except share data)

2Q 2024

 

FY 2024

Revenue

$2,465 - $2,490

 

$10,100 - $10,150

Adjusted EBITDA (Non-GAAP)1

$980 - $995

 

$4,100 - $4,140

Adjusted EPS (Non-GAAP)1

$1.21 - $1.25

 

$4.88 - $4.98

1The Company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. The Company is unable to address the probable significance of the unavailable information.

Webcast

FIS will host a recorded webcast of its earnings conference call with the investment community beginning at 4:30 p.m. (EDT) on Monday, May 6, 2024. To access the webcast, go to the Investor Relations section of FIS’ homepage, www.fisglobal.com. A replay will be available after the conclusion of the live webcast.

About FIS

FIS is a financial technology company providing solutions to financial institutions, businesses and developers. We unlock financial technology that underpins the world’s financial system. Our people are dedicated to advancing the way the world pays, banks and invests, by helping our client’s confidently run, grow and protect their businesses. Our expertise comes from decades of experience helping financial institutions and businesses adapt to meet the needs of their customers by harnessing the power that comes when reliability meets innovation in financial technology. Headquartered in Jacksonville, Florida, FIS is a member of the Fortune 500® and the Standard & Poor’s 500® Index. To learn more, visit www.FISglobal.com. Follow FIS on Facebook, LinkedIn and X (@FISglobal).

FIS Use of Non-GAAP Financial Information

Generally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework of guidelines for financial accounting in the United States. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions and in the preparation of financial statements. In addition to reporting financial results in accordance with GAAP, we have provided certain non-GAAP financial measures.

These non-GAAP measures include constant currency revenue, adjusted revenue growth, adjusted EBITDA, adjusted EBITDA margin, adjusted net earnings, adjusted EPS, and free cash flow. These non-GAAP measures may be used in this release and/or in the attached supplemental financial information.

We believe these non-GAAP measures help investors better understand the underlying fundamentals of our business. As further described below, the non-GAAP revenue and earnings measures presented eliminate items management believes are not indicative of FIS’ operating performance. The constant currency revenue and adjusted revenue growth measures adjust for the effects of exchange rate fluctuations and exclude discontinued operations, while adjusted revenue growth also excludes revenue from Corporate and Other, giving investors further insight into our performance. Finally, free cash flow provides further information about the ability of our business to generate cash. For these reasons, management also uses these non-GAAP measures in its assessment and management of FIS’ performance.

Constant currency revenue represents reported segment revenue excluding the impact of fluctuations in foreign currency exchange rates in the current period.

Adjusted revenue growth reflects the percentage change in constant currency revenue for the current period as compared to the prior period. When referring to adjusted revenue growth, revenue from our Corporate and Other segment is excluded.

Adjusted EBITDA reflects net earnings (loss) before interest, other income (expense), taxes, equity method investment earnings (loss), and depreciation and amortization, and excludes certain costs and other transactions that management deems non-operational in nature, or that otherwise improve the comparability of operating results across reporting periods by their exclusion. This measure is reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance. For this reason, adjusted EBITDA, as it relates to our segments, is presented in conformity with Accounting Standards Codification 280, Segment Reporting, and is excluded from the definition of non-GAAP financial measures under the Securities and Exchange Commission's Regulation G and Item 10(e) of Regulation S-K.

Adjusted EBITDA margin reflects adjusted EBITDA, as defined above, divided by revenue.

Adjusted net earnings excludes the impact of certain costs and other transactions which management deems non-operational in nature or that otherwise improve the comparability of operating results across reporting periods by their exclusion. These include, among others, the impact of acquisition-related purchase accounting amortization which is recurring. For purposes of calculating Adjusted net earnings, our equity method investment earnings (loss) (EMI) from Worldpay is also adjusted to exclude certain costs and other transactions in a similar manner.

Adjusted EPS reflects adjusted net earnings, as defined above, divided by weighted average diluted shares outstanding.

Free cash flow reflects net cash provided by operating activities, adjusted for the net change in settlement assets and obligations and excluding certain transactions that are closely associated with non-operating activities or are otherwise non-operational in nature and not indicative of future operating cash flows, less capital expenditures. Free cash flow does not represent our residual cash flow available for discretionary expenditures since we have mandatory debt service requirements and other non-discretionary expenditures that are not deducted from the measure. Free cash flow as presented in this earnings release excludes cash flow from discontinued operations, which our management will not be able to freely access following the Worldpay separation.

Any non-GAAP measures should be considered in context with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP measures. Further, FIS’ non-GAAP measures may be calculated differently from similarly titled measures of other companies. Reconciliations of these non-GAAP measures to related GAAP measures, including footnotes describing the adjustments, are provided in the attached schedules and in the Investor Relations section of the FIS website, www.fisglobal.com.

Forward-Looking Statements

This earnings release and today’s webcast contain “forward-looking statements” within the meaning of the U.S. federal securities laws. Statements that are not historical facts, as well as other statements about our expectations, beliefs, intentions, or strategies regarding the future, or other characterizations of future events or circumstances, are forward-looking statements. Forward-looking statements include statements about anticipated financial outcomes, including any earnings outlook or projections, projected revenue or expense synergies or dis-synergies, business and market conditions, outlook, foreign currency exchange rates, deleveraging plans, expected dividends and share repurchases of the Company, the Company’s sales pipeline and anticipated profitability and growth, plans, strategies and objectives for future operations, strategic value creation, risk profile and investment strategies, any statements regarding future economic conditions or performance and any statements with respect to the future impacts of the Worldpay Sale or any agreements or arrangements entered into in connection with such transaction, the expected financial and operational results of the Company, and expectations regarding the Company’s business or organization after the separation of the Worldpay Merchant Solutions business. These statements may be identified by words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “will,” “should,” “could,” “would,” “project,” “continue,” “likely,” and similar expressions, and include statements reflecting future results, statements of outlook and various accruals and estimates. These statements relate to future events and our future results and involve a number of risks and uncertainties. Forward-looking statements are based on management’s beliefs as well as assumptions made by, and information currently available to, management.

Actual results, performance or achievement could differ materially from these forward-looking statements. The risks and uncertainties to which forward-looking statements are subject include the following, without limitation:

  • changes in general economic, business and political conditions, including those resulting from COVID-19 or other pandemics, a recession, intensified or expanded international hostilities, acts of terrorism, increased rates of inflation or interest, changes in either or both the United States and international lending, capital and financial markets or currency fluctuations;
  • the risk that acquired businesses will not be integrated successfully or that the integration will be more costly or more time-consuming and complex than anticipated;
  • the risk that cost savings and synergies anticipated to be realized from acquisitions may not be fully realized or may take longer to realize than expected or that costs may be greater than anticipated;
  • the risks of doing business internationally;
  • the effect of legislative initiatives or proposals, statutory changes, governmental or applicable regulations and/or changes in industry requirements, including privacy and cybersecurity laws and regulations;
  • the risks of reduction in revenue from the elimination of existing and potential customers due to consolidation in, or new laws or regulations affecting, the banking, retail and financial services industries or due to financial failures or other setbacks suffered by firms in those industries;
  • changes in the growth rates of the markets for our solutions;
  • the amount, declaration and payment of future dividends is at the discretion of our Board of Directors and depends on, among other things, our investment opportunities, results of operations, financial condition, cash requirements, future prospects, and other factors that may be considered relevant by our Board of Directors, including legal and contractual restrictions;
  • the amount and timing of any future share repurchases is subject to, among other things, our share price, our other investment opportunities and cash requirements, our results of operations and financial condition, our future prospects and other factors that may be considered relevant by our Board of Directors and management;
  • failures to adapt our solutions to changes in technology or in the marketplace;
  • internal or external security or privacy breaches of our systems, including those relating to unauthorized access, theft, corruption or loss of personal information and computer viruses and other malware affecting our software or platforms, and the reactions of customers, card associations, government regulators and others to any such events;
  • the risk that implementation of software, including software updates, for customers or at customer locations or employee error in monitoring our software and platforms may result in the corruption or loss of data or customer information, interruption of business operations, outages, exposure to liability claims or loss of customers;
  • the risk that partners and third parties may fail to satisfy their legal obligations to us;
  • risks associated with managing pension cost, cybersecurity issues, IT outages and data privacy;
  • the reaction of current and potential customers to communications from us or regulators regarding information security, risk management, internal audit or other matters;
  • risks associated with the expected benefits and costs of the separation of the Worldpay Merchant Solutions business, including the risk that the expected benefits of the transaction or any contingent purchase price will not be realized within the expected timeframe, in full or at all, or that dis-synergies may be greater than anticipated;
  • the risk that the costs of restructuring transactions and other costs incurred in connection with the separation of the Worldpay business will exceed our estimates or otherwise adversely affect our business or operations;
  • the impact of the separation of Worldpay on our businesses, including the impact on relationships with customers, governmental authorities, suppliers, employees and other business counterparties;
  • the risk that the earnings from our minority stake in the Worldpay business will be less than we anticipate;
  • competitive pressures on pricing related to the decreasing number of community banks in the U.S., the development of new disruptive technologies competing with one or more of our solutions, increasing presence of international competitors in the U.S. market and the entry into the market by global banks and global companies with respect to certain competitive solutions, each of which may have the impact of unbundling individual solutions from a comprehensive suite of solutions we provide to many of our customers;
  • the failure to innovate in order to keep up with new emerging technologies, which could impact our solutions and our ability to attract new, or retain existing, customers;
  • an operational or natural disaster at one of our major operations centers;
  • failure to comply with applicable requirements of payment networks or changes in those requirements;
  • fraud by bad actors; and
  • other risks detailed elsewhere in the “Risk Factors” and other sections of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and in our other filings with the Securities and Exchange Commission.

Other unknown or unpredictable factors also could have a material adverse effect on our business, financial condition, results of operations and prospects. Accordingly, readers should not place undue reliance on these forward-looking statements. These forward-looking statements are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Except as required by applicable law or regulation, we do not undertake (and expressly disclaim) any obligation and do not intend to publicly update or review any of these forward-looking statements, whether as a result of new information, future events or otherwise.

Fidelity National Information Services, Inc.
Earnings Release Supplemental Financial Information
May 6, 2024

Exhibit A

Condensed Consolidated Statements of Earnings (Loss) - Unaudited for the three months ended March 31, 2024 and 2023

 

 

Exhibit B

Condensed Consolidated Balance Sheets - Unaudited as of March 31, 2024, and December 31, 2023

 

 

Exhibit C

Condensed Consolidated Statements of Cash Flows - Unaudited for the three months ended March 31, 2024 and 2023

 

 

Exhibit D

Supplemental Non-GAAP Adjusted Revenue Growth - Unaudited for the three months ended March 31, 2024 and 2023

 

 

Exhibit E

Supplemental Disaggregation of Revenue - Recast and Unaudited for the three months ended March 31, 2024 and 2023

 

 

Exhibit F

Supplemental Non-GAAP Financial Information - Recast and Unaudited for the three months ended March 31, 2024 and 2023

 

 

Exhibit G

Supplemental Non-GAAP Cash flow Measures - Unaudited for the three months ended March 31, 2024 and 2023

 

 

Exhibit H

Supplemental GAAP to Non-GAAP Reconciliations - Unaudited for the three months ended March 31, 2024 and 2023

 

 

Exhibit I

Supplemental Financial Information of Worldpay - Unaudited for the two months ended March 31, 2024


Fonte: Business Wire

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