Fidelity National Information Services, Inc. · NYSE:FIS

Fidelity National Information Services — Q4 2022 Earnings Presentation

42 slides from Fidelity National Information Services's earnings presentation, Feb 13, 2023

  1. Slide 1: Fourth Quarter 2022 Earnings Call

    FOURTH QUARTER 2022 EARNINGS CALL f February 13, 2023

  2. Slide 2: Speakers

    1 The Path Stephanie Ferris Forward Chief Executive Officer and President Speakers 2 Financial Erik Hoag Results & Chief Financial Officer Guidance 2

  3. Slide 3: Disclosures

    Disclosures Forward-looking Statements Our discussions today, including this presentation and any comments made by management, contain “forward-looking statements” within the meaning of the U.S. federal securities laws. Any statements that refer to future events or circumstances, including our futur

  4. Slide 4: The Path Forward

    1 The Path Forward 4

  5. Slide 5: New CEO With New Agenda

    New CEO With New Agenda Positioning FIS for future growth HIGH SENSE INNOVATION OF URGENCY CLIENT-CENTRICITY Leveraging best-in-class set & FOCUS Ensuring clients of FinTech assets to make are at the center of FIS the destination for everything we do innovation Focused on Improving: • Performance of

  6. Slide 6: Moving Forward With A High Sense of Urgency & Focus

    Moving Forward With A High Sense of Urgency & Focus First 60 Days 1 2 3 4 Ongoing Strategic Review Future Forward Updated Incentive Programs New Governance Structure • Management and Board Transformation Program to drive: • Aligning incentive programs • Designated new independent committee evaluatin

  7. Slide 7: Strategic Rationale For Worldpay Spin-Off

    Strategic Rationale For Worldpay Spin-Off Three vectors of enhanced value creation for both companies 1 2 3 OPERATIONAL MANAGEMENT CAPITAL ALLOCATION SIMPLIFICATION/ FOCUS STRATEGY CLIENT NEEDS OUTCOME: Unlocks Value For Shareholders 77

  8. Slide 8: FIS and Worldpay Remain Market Leaders

    FIS and Worldpay Remain Market Leaders Marquee clients #1 Broad set of solutions Global distribution #1 Global FinTech Scale Global Provider 1 Acquirer 2 (1) IDC FinTech Ranking – September 2022 (2) Nilson Report – October 2022 8 8

  9. Slide 9: FIS Strategy To Drive Value

    FIS Strategy To Drive Value Focused on Distinct Needs of our Financial Services Clients UNLOCKING FINANCIAL TECHNOLOGY TO THE WORLD UNLOCKING FINANCIAL TECHNOLOGY TO THE WORLD • Management team and investment agenda focused on financial services clients #1 $13T Drive Disruption by Becoming Destinati

  10. Slide 10: Worldpay Strategy To Drive Value

    Worldpay Strategy To Drive Value THE MOST COMPREHENSIVE PAYMENT INFRASTRUCTURE TO ENABLE COMMERCE GLOBALLY Focused on Distinct Needs of our Payments Clients • Expand product set across scaled platform with global distribution #1 $2T Global Payments Deploy M&A Capital Acquirer by Volume • Allocate ca

  11. Slide 11: 2023 FIS RemainCo Revenue Growth

    2023 FIS RemainCo Revenue Growth 2023 ORGANIC NEAR-TERM NORMALIZED REVENUE GROWTH IMPACTS REVENUE GROWTH ELONGATED SALES CYCLES +1% 1 - 3% Large Deal Pipeline Remains Robust REDUCED DEPENDENCY ON 3 - 5% NON-RECURRING REVENUES +1% Known Reduction in Term. Fees & Attrition PATH FORWARD TO REVENUE GROW

  12. Slide 12: Future Forward is Driving Efficiency, Effectiveness and Growth

    Future Forward is Driving Efficiency, Effectiveness and Growth EFFICIENCY: • Third-party spend Enterprise Transformation Program • Client onboarding • Capital $500M cash savings targeted to be delivered in 2023 – inclusive of $200M of Capital Expenditures savings $1.25B reduction in cash spend acros

  13. Slide 13: Moving Forward With A High Sense of Urgency & Focus: Next Steps

    Moving Forward With A High Sense of Urgency & Focus Next Steps 1 2 3 4 Spin off Deliver on our Deliver $500M Drive Worldpay commitments cash savings in 2023 shareholder value Execute toward 2024 Future Forward target 13 For a description of non-GAAP measures and a reconciliation of GAAP to non-GAAP

  14. Slide 14: Financial Results & Guidance

    2 FINANCIAL RESULTS & GUIDANCE 14

  15. Slide 15: Financial Results 4Q 2022

    FINANCIAL RESULTS 4Q 2022 TOTAL REVENUE BANKING MERCHANT CAPITAL SOLUTIONS SOLUTIONS MARKETS 3.7B +4% Organic Revenue Growth +2% CC Revenue Growth(1) +10% Organic Revenue Growth 4Q 2022 Key Messages +4% ORGANIC 40.7% (400) bps 47.8% (450) bps 54.4% +220 bps • Achieved revised outlook across revenue,

  16. Slide 16: 1Q and FY 2023 Outlook

    1Q AND FY 2023 OUTLOOK ($ millions, except per share data) METRICS 1Q 2023 FY 2023 Revenue $3,375 - $3,425 $14,200 - $14,450 Organic Revenue Growth (1)% - 1% (1)% - 1% Banking Solutions (2)% - 0% 0% - 2% Merchant Solutions (2)% - 0% (4)% - (2)% Capital Market Solutions 3% - 5% 4% - 6% Adjusted EBITD

  17. Slide 17: Banking and Capital Markets Path Forward

    Banking and Capital Markets Path Forward 2023 NORMALIZED STRATEGIC IMPACT OF STRATEGIC REVENUE GROWTH PRIORITIES PRIORITIES ENHANCED SALES WITH A 3 - 5% 3 - 5%+ FOCUS ON SUSTAINABLE GROWTH AND PROFITABILITY IMPACT OF FUTURE FORWARD EXPANDING OPERATIONAL SIMPLIFICATION EXPANDING AND FOCUS ON CLIENT N

  18. Slide 18: 2023 Merchant Revenue Growth

    2023 Merchant Revenue Growth 2023 ORGANIC NEAR-TERM 2023 NORMALIZED REVENUE GROWTH IMPACTS REVENUE GROWTH LACK OF NEW PRODUCT +3% (2) - (4)% Increased New Sales & Reduced Attrition GLOBAL RECESSION 4 - 6% +5% Guidance Assumes Recession in U.S. & U.K. PATH FORWARD TO REVENUE GROWTH ACCELERATION 18 Fo

  19. Slide 19: Merchant Path Forward

    Merchant Path Forward 2023 NORMALIZED STRATEGIC IMPACT OF STRATEGIC REVENUE GROWTH PRIORITIES PRIORITIES 4 - 6% 4 - 6%+ NEW PRODUCT INVESTMENTS IMPACT OF FUTURE FORWARD EXPANDING HIGH CONTRIBUTION MARGINS EXPANDING EXPANDED THROUGH REVENUE MARGINS REACCELERATION MARGINS ACCELERATING REVENUE GROWTH A

  20. Slide 20: 2023 Full Year Adjusted EBITDA Walk

    2023 Full Year Adjusted EBITDA Walk Underlying Margin Expansion Across Banking & Capital Markets ($ millions) +$75M– +$115M ($195M)– • Future Forward driving $150M ($275M) $75 - $115 of in-year benefit. $50+$50M– - $100 ($195 - $275) $6,195 +$100M • 50+ basis points of margin $6,195M ($115M)– ($115

  21. Slide 21: Future Forward: Financial Update

    FUTURE FORWARD: FINANCIAL UPDATE Operational Expense Annual Run-Rate Expenditure Reduction (Adj. EBITDA Impact) (Cash Impact) $700M $1,000M $900M $600M $600M $800M $500M $450M $400M $600M $600M $500M $300M $300M $400M $300M $200M $150M $200M $100M $300M $200M $0M $0M FY 2023 Target FY 2024 Target FY

  22. Slide 22: FY 2023 Capital Allocation Priorities

    FY 2023 CAPITAL ALLOCATION PRIORITIES DEBT REDUCTION DIVIDENDS CAPITAL EXPENDITURES Prioritizing Debt Repayment Achieve ~35% Payout Ratio Targeted Reduction in CapEx Allocating excess cash to Anticipate achieving targeted payout Focused investment in higher return reduce debt ratio in 2023 projects

  23. Slide 23: Appendix

    APPENDIX 23

  24. Slide 24: Spin-Off Next Steps

    Next steps Structure & Timing Key Steps to Completion Separate Merchant Solutions business in a Establishing independent organizational Spin- tax-free spin-off transaction Expected to be completed within 12 structures and operations Refining target leverage and capital Off months strategy for Mercha

  25. Slide 25: 1Q 2023 Guidance – Additional Assumptions

    1Q 2023 Guidance – Additional Assumptions METRICS 1Q 2023 GUIDANCE Negative F/X Impact to Revenue ~$45 Corporate and Other Revenue ~$35 Depreciation and Amortization(1) ~$320 (Excluding Purchase Price Amortization) Net Interest Expense ~$155 Effective Tax Rate ~14% Weighted Average Shares Outstandin

  26. Slide 26: FY 2023 Guidance – Additional Assumptions

    FY 2023 Guidance – Additional Assumptions METRICS FY 2023 GUIDANCE Negative F/X Impact to Revenue ~$50 Corporate and Other Revenue ~$150 Depreciation and Amortization(1) ~$1,275 - $1,280 (Excluding Purchase Price Amortization) Net Interest Expense ~$660 - $665 Effective Tax Rate ~14% Weighted Averag

  27. Slide 27: Forward-Looking Statements

    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, including statements about anticipated financial outcomes, including any earnings guidance or pr

  28. Slide 28: Forward-Looking Statements

    Forward-Looking Statements • the expected qualification of the proposed spin-off as a tax-free transaction for U.S. federal income tax purposes, including whether or not an IRS ruling will be obtained; • the risk that any consents or approvals required in connection with the proposed spin-off will n

  29. Slide 29: FIS Use of Non-GAAP Financial Information

    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 summarizi

  30. Slide 30: Reconciliation of GAAP to Non-GAAP Financials

    Reconciliation of GAAP to Non-GAAP Financials THREE MONTHS ENDED DECEMBER 31, 2022 CAPITAL MARKET CORPORATE AND BANKING SOLUTIONS MERCHANT SOLUTIONS TOTAL SOLUTIONS OTHER Revenue $1,717 $1,178 $771 $48 $3,714 FX 12 42 20 2 76 Constant Currency Revenue $1,729 $1,220 $791 $50 $3,790 THREE MONTHS ENDED

  31. Slide 31: Reconciliation of GAAP to Non-GAAP Financials

    Reconciliation of GAAP to Non-GAAP Financials TWELVE MONTHS ENDED DECEMBER 31, 2022 CAPITAL MARKET CORPORATE AND BANKING SOLUTIONS MERCHANT SOLUTIONS TOTAL SOLUTIONS OTHER Revenue $6,706 $4,773 $2,763 $286 $14,528 FX 48 138 58 7 251 Constant Currency Revenue $6,754 $4,911 $2,820 $294 $14,779 TWELVE

  32. Slide 32: Reconciliation of GAAP to Non-GAAP Financials

    Reconciliation of GAAP to Non-GAAP Financials THREE MONTHS ENDED DECEMBER 31, 2022 Net cash provided by operating activities $1,140 Non-GAAP adjustments: Acquisition, integration and other payments (1) 106 Settlement activity (325) Adjusted cash flows from operations $921 Capital expenditures (2) (2

  33. Slide 33: Reconciliation of GAAP to Non-GAAP Financials

    Reconciliation of GAAP to Non-GAAP Financials TWELVE MONTHS ENDED DECEMBER 31, 2022 Net cash provided by operating activities $3,939 Non-GAAP adjustments: Acquisition, integration and other payments (1) 573 Settlement activity (287) Adjusted cash flows from operations $4,225 Capital expenditures (2)

  34. Slide 34: Reconciliation of GAAP to Non-GAAP Financials

    Reconciliation of GAAP to Non-GAAP Financials THREE MONTHS ENDED DECEMBER 31, 2022 2021 Net earnings (loss) attributable to FIS common stockholders $(17,365) $291 Provision (benefit) for income taxes 153 125 Interest expense, net 109 46 Other, net (9) (7) Operating income (loss), as reported $(17,11

  35. Slide 35: Reconciliation of GAAP to Non-GAAP Financials

    Reconciliation of GAAP to Non-GAAP Financials TWELVE MONTHS ENDED DECEMBER 31, 2022 2021 Net earnings (loss) attributable to FIS common stockholders $(16,720) $417 Provision (benefit) for income taxes 377 371 Interest expense, net 275 214 Other, net (51) 53 Operating income (loss), as reported $(16,

  36. Slide 36: Reconciliation of GAAP to Non-GAAP Financials

    Reconciliation of GAAP to Non-GAAP Financials THREE MONTHS ENDED DECEMBER 31, 2022 2021 Earnings (loss) before income taxes and equity method investment earnings (loss) $(17,209) $416 (Provision) benefit for income taxes (153) (125) Net (earnings) loss attributable to noncontrolling interest (3) - N

  37. Slide 37: Reconciliation of GAAP to Non-GAAP Financials

    Reconciliation of GAAP to Non-GAAP Financials TWELVE MONTHS ENDED DECEMBER 31, 2022 2021 Earnings (loss) before income taxes and equity method investment earnings (loss) $(16,331) $789 (Provision) benefit for income taxes (377) (371) Equity method investment earnings (loss) - 6 Net (earnings) loss a

  38. Slide 38: Notes to Unaudited - Supplemental GAAP to Non-GAAP Reconciliations

    Notes to Unaudited - Supplemental GAAP to Non-GAAP Reconciliations (1) This item represents purchase price amortization expense on all intangible assets acquired through various Company acquisitions, including customer relationships, contract value, technology assets, trademarks and trade names. Thi

  39. Slide 39: Notes to Unaudited - Supplemental GAAP to Non-GAAP Reconciliations

    Notes to Unaudited - Supplemental GAAP to Non-GAAP Reconciliations (5) This item represents our equity method investment earnings or loss and was predominantly due to our equity ownership interest in Cardinal Holdings, LP, which was sold on April 29, 2021. (6) For the year ended December 31, 2021, t

  40. Slide 40: Reconciliation of GAAP to Non-GAAP Financials

    Reconciliation of GAAP to Non-GAAP Financials DECEMBER 31, 2022 2021 CHANGE GROWTH (1) Backlog (2) $23.5 $23.0 $0.5 1% Organic adjustments (3) 1% Organic Backlog 2% (unaudited) (1) Backlog growth percentage may not calculate due to rounding. (2) Backlog reflects the approximate transaction price all

  41. Slide 41: Reconciliation of GAAP to Non-GAAP Financials on Guidance

    Reconciliation of GAAP to Non-GAAP Financials ON GUIDANCE THREE MONTHS ENDING MARCH TWELVE MONTHS ENDING 31, 2023 DECEMBER 31, 2023 LOW HIGH Net earnings per share-diluted attributable to FIS common stockholders $0.05 $0.20 $1.25 $1.75 Estimated adjustments (1) $1.12 $1.03 $4.45 $4.25 Adjusted net e

  42. Slide 42: Advancing the Way the World Pays, Banks and Invests

    (— | S ADVANCING THE WAY THE WORLD PAYS, BANKS AND INVESTS™

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