Fidelity National Information Services, Inc. · NYSE:FIS
Fidelity National Information Services — Q4 2023 Earnings Presentation
47 slides from Fidelity National Information Services's earnings presentation, Feb 26, 2024
Slide 1: Fourth Quarter 2023 Earnings Call
FOURTH QUARTER 2023 EARNINGS CALL f February 26, 2024
Slide 2: Speakers
Our Stephanie Ferris 1 Commitments Chief Executive Officer and President & Results Speakers Financial James Kehoe 2 Results & Chief Financial Officer Outlook 2
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
Slide 4: Our Commitments & Results
1 Our Commitments & Results 4
Slide 5: A Year of Significant Momentum
A YEAR OF SIGNIFICANT MOMENTUM… Executed with a Sense of Urgency in 2023 1 2 3 4 Completed Landmark Reinforcing FIS as an Recapitalized Balance Executing on Future Worldpay Transaction Enterprise Software Sheet Forward Leader • Strategic go-to-market • Accelerating revenue • Positioned to reinvest i
Slide 6: Drove Stronger Results in 2023
…DROVE STRONGER RESULTS IN 2023… • Total Company adjusted revenue growth of 2% for FY 2023 • Led by strong adjusted recurring TOTAL COMPANY FINANCIAL COMMITMENTS revenue growth of 4% Total FY23 Outlook FY23 Actuals Company; 5% Continuing Operations Revenue $14,600 - $14,650 $14,680 • Returned compan
Slide 7: Setting the Stage for Acceleration in 2024
…SETTING THE STAGE FOR ACCELERATION IN 2024 FY 2024 CON. OPS. OUTLOOK IMPROVING OUTCOMES 4 + % • Adjusted revenue growth accelerating to 4%+ • Banking revenue growth accelerating to 3%+ • Capital Markets revenue growth accelerating to 6%+ ADJUSTED REVENUE GROWTH +20 - 40 bps • Return to year-over-ye
Slide 8: Key Wins Across Breadth of Capabilities
KEY WINS ACROSS BREADTH OF CAPABILITIES ENTERPRISE CORE PAYMENTS & NETWORK CAPITAL MARKETS PLATFORMS INTERNATIONAL BANK & LEADING ALTERNATIVE FINANCIAL SERVICES GROUP ASSET MANAGER LEADING GLOBAL MEDIA COMPANY INCREASED MOMENTUM ACROSS SALES PIPELINE 8
Slide 9: Looking Forward
LOOKING FORWARD INVESTOR DAY: INNOVATION MAY 7TH CLIENT-CENTRICITY Best-in-class assets makes Ensuring clients FIS the destination for innovation • FIS Corporate Strategy are at the center of everything we do • Segment Deep Dives SIMPLIFICATION • Multi-Year Financial Simplifying operations to accele
Slide 10: Financial Results & Outlook
2 Financial Results & Outlook 10
Slide 11: Executive Summary
EXECUTIVE SUMMARY Targeting Accelerating Business Growth 1 2 3 Exceeded high-end of expectations for Worldpay transaction Anticipating accelerated business 2023, led by strong recurring revenue positions both growth in FY 2024: companies for success: Initial FY 2023 Continuing Operations FY 2023 FY
Slide 12: FIS Financial Reporting Considerations
FIS FINANCIAL REPORTING CONSIDERATIONS FIS’ 45% financial interest in Worldpay will now be Assuming a transaction close date of 12/31/23, con. reported on the Equity Method Investment line of the ops. EMI contribution would have been $0.06 higher: income statement. Consistent with prior messaging, F
Slide 13: 4Q 2023 Financial Results
4Q 2023 FINANCIAL RESULTS REVENUE ADJ. EBITDA MARGIN ADJ. EPS $3.7B 43.2% $1.67 TOTAL COMPANY +1% ADJUSTED +0 BPS (2)% REPORTED CON. OPS. $2.5B 42.1% $0.94 (FIS) +0% ADJUSTED +70 BPS (4)% REPORTED DISC. OPS. $1.2B 45.5% $0.72 (Worldpay) +2% ADJUSTED (160) BPS (1)% REPORTED KEY METRICS – TOTAL COMPAN
Slide 14: Banking & Capital Markets Financial Results 4Q 2023
BANKING & CAPITAL MARKETS FINANCIAL RESULTS 4Q 2023 RESULTS TOTAL REVENUE BACKLOG RECURRING REVENUE $2.4B $23.5B +7% +0% ADJUSTED (1)% ADJUSTED ADJUSTED BANKING SOLUTIONS CAPITAL MARKETS REVENUE GROWTH +7% REVENUE GROWTH +7% +0% Recurring Revenue Growth +1% Recurring Revenue Growth ADJUSTED (22)% AD
Slide 15: Banking & Capital Markets Financial Results FY 2023
BANKING & CAPITAL MARKETS FINANCIAL RESULTS FY 2023 RESULTS TOTAL REVENUE BACKLOG RECURRING REVENUE $9.5B $23.5B +5% +3% ADJUSTED (1)% ADJUSTED ADJUSTED BANKING SOLUTIONS CAPITAL MARKETS REVENUE GROWTH +4% REVENUE GROWTH +9% +2% Recurring Revenue Growth +5% Recurring Revenue Growth ADJUSTED (6)% ADJ
Slide 16: Future Forward: Outperforming on Savings
FUTURE FORWARD: OUTPERFORMING ON SAVINGS Operational Expense (Adj. EBITDA Impact) $600M Value Drivers of Future Forward $530M $500M • Growth: Investing in sales and support ecosystems to $435M improve colleague and client experience $400M >$370M • Efficiency: Automating and improving processes to op
Slide 17: FIS Capital Allocation Priorities
FIS CAPITAL ALLOCATION PRIORITIES Increasing Share Repurchase Target To At Least $3.5 Billion In FY 2024 (From $3B) SHARE DEBT REDUCTION DIVIDENDS REPURCHASE / M&A Target Leverage Ratio Maintain ~35% Payout Ratio Increasing Capital Return Targeting long-term range of gross 2.5x - Based on Adj. Net E
Slide 18: FY 2024 Outlook
FY 2024 OUTLOOK ($ millions, except per share data) METRICS FY 2024 ASSUMPTIONS • Includes FX Headwind ~$20M Revenue $10,100 - $10,150 • Corporate & Other Revenue ~$245M • ~(50) bps Dis-Synergy / ~70 bps M&A Adjusted Revenue Growth 4.0% - 4.5% • 3.8% - 4.3% Net of M&A & Dis-Synergies Banking Solutio
Slide 19: Normalized FY 2023 Adj. EPS Results
NORMALIZED FY 2023 ADJ. EPS RESULTS Continuing Operations Adj. EPS and normalized Adj. EPS were within outlook ranges OUTLOOK ACTUAL 3Q 2023 CALL RESULTS FY 2023 Adj. EPS (Con. Ops.) $3.30 - $3.40 $3.37 Assuming transaction occurred 1/1/2023: EMI Contribution (Worldpay) $0.60 - $0.65 $0.67 Capital D
Slide 20: 1Q 2024 Outlook
1Q 2024 OUTLOOK ($ millions, except per share data) METRICS 1Q 2024 ASSUMPTIONS • Includes FX Headwind ~$5M Revenue $2,430 - $2,455 • Corporate & Other Revenue ~$70M Adjusted Revenue Growth 2.5% - 3.5% Banking Solutions 1.0% - 2.0% Capital Market Solutions 6.0% - 7.0% Adjusted EBITDA $955 - $970 Adj
Slide 21: Closing Remarks
CLOSING REMARKS • Exceeded high-end of expectations for FY 2023 driven by strong recurring revenue growth. • Worldpay transaction positions both companies for future success. • FIS continuing operations (“FIS”) projected to accelerate business growth in FY 2024. • Adjusted revenue growth projected t
Slide 22: Q&A
Q&A 22
Slide 23: Appendix
Appendix 23
Slide 24: Key Assumptions FY 2024
KEY ASSUMPTIONS FY 2024 UPDATED Net Proceeds >$12B(1) (~$9B debt paydown, ~$3B share repurchase) Excess FCF $1B towards share repurchase (~$510M 4Q 2023, ~$490M YTD 2024) Depreciation and Amortization ~$1,075M Net Interest Expense ~$345M - $350M Effective Tax Rate ~17.2% - 17.5% Weighted Average Sha
Slide 25: Reclassified Revenue Base
RECLASSIFIED REVENUE BASE FISCAL YEAR FISCAL YEAR 2023 2022 Reclassified Revenue Base (1) Q1 Q2 Q3 Q4 FULL YEAR FULL YEAR Banking Solutions $1,646 $1,666 $1,730 $1,692 $6,733 $6,624 Capital Markets Solutions 663 672 677 755 2,766 2,631 Operating Segment Total $2,309 $2,338 $2,407 $2,447 $9,499 $9,25
Slide 26: Adjusted EBITDA Base
ADJUSTED EBITDA BASE FISCAL YEAR FISCAL YEAR 2023 2022 Q1 Q2 Q3 Q4 FULL YEAR FULL YEAR Banking Solutions $671 $723 $786 $747 $2,928 $2,882 Capital Markets Solutions 320 337 331 402 1,390 1,338 Operating Segment Total $991 $1,060 $1,118 $1,149 $4,318 $4,220 Corporate and Other (90) (116) (48) (92) (3
Slide 27: Banking Solutions Revenue Recast
BANKING SOLUTIONS REVENUE RECAST FISCAL YEAR FISCAL YEAR 2023 2022 Q1 Q2 Q3 Q4 FULL YEAR FULL YEAR Banking Solutions adjusted recurring revenue growth Adjusted recurring revenue growth prior to reclassifications (1) 3.6% 2.6% 6.6% 3.2% 4.0% 5.4% Impact from reclassification of non-strategic operatio
Slide 28: 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, as well as other statements about our expectations, beliefs, intentions, or strategies regarding
Slide 29: Forward-Looking Statements
Forward-Looking Statements • 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
Slide 30: 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
Slide 31: Reconciliation of Financials – Con. Ops.
Reconciliation of GAAP to Non-GAAP Financials – Con. Ops. THREE MONTHS ENDED DECEMBER 31, 2023 BANKING SOLUTIONS CAPITAL MARKET SOLUTIONS CORPORATE AND OTHER TOTAL Revenue $1,692 $755 $63 $2,510 FX (5) (6) (2) (13) Constant Currency Revenue $1,687 $748 $62 $2,497 THREE MONTHS ENDED DECEMBER 31, 2022
Slide 32: Reconciliation of Financials – Con. Ops.
Reconciliation of GAAP to Non-GAAP Financials – Con. Ops. YEAR ENDED DECEMBER 31, 2023 BANKING SOLUTIONS CAPITAL MARKET SOLUTIONS CORPORATE AND OTHER TOTAL Revenue $6,733 $2,766 $322 $9,821 FX - 1 (4) (3) Constant Currency Revenue $6,733 $2,767 $318 $9,818 YEAR ENDED DECEMBER 31, 2022 BANKING SOLUTI
Slide 33: Reconciliation of Financials
Reconciliation of GAAP to Non-GAAP Financials THREE MONTHS ENDED DECEMBER 31, 2023 CONTINUING OPERATIONS DISCONTINUED OPERATIONS TOTAL Revenue $2,510 $1,223 $3,733 FX (13) (16) (29) Constant Currency Revenue $2,497 $1,207 $3,704 THREE MONTHS ENDED DECEMBER 31, 2022 CONTINUING OPERATIONS DISCONTINUED
Slide 34: Reconciliation of Financials
Reconciliation of GAAP to Non-GAAP Financials YEAR ENDED DECEMBER 31, 2023 CONTINUING OPERATIONS DISCONTINUED OPERATIONS TOTAL Revenue $9,821 $4,859 $14,680 FX (3) (14) (17) Constant Currency Revenue $9,818 $4,845 $14,663 YEAR ENDED DECEMBER 31, 2022 CONTINUING OPERATIONS DISCONTINUED OPERATIONS TOT
Slide 35: Reconciliation of Financials
Reconciliation of GAAP to Non-GAAP Financials THREE MONTHS ENDED DECEMBER 31, 2023 Net cash provided by operating activities $1,526 Non-GAAP adjustments: Acquisition, integration and other payments (1) 210 Settlement activity (404) Adjusted cash flows from operations $1,332 Capital expenditures (278
Slide 36: Reconciliation of Financials
Reconciliation of GAAP to Non-GAAP Financials YEAR ENDED DECEMBER 31, 2023 Net cash provided by operating activities $4,335 Non-GAAP adjustments: Acquisition, integration and other payments (1) 494 Settlement activity (151) Adjusted cash flows from operations $4,678 Capital expenditures (1,122) Free
Slide 37: Reconciliation of Financials
Reconciliation of GAAP to Non-GAAP Financials THREE MONTHS ENDED DECEMBER 31, 2023 2022 Net earnings (loss) attributable to FIS from continuing operations $64 $109 Provision (benefit) for income taxes 17 107 Interest expense, net 158 112 Other, net 92 51 Operating income (loss), as reported $331 $37
Slide 38: Reconciliation of Financials
Reconciliation of GAAP to Non-GAAP Financials THREE MONTHS ENDED DECEMBER 31, 2023 2022 Net earnings (loss) attributable to FIS from discontinued operations $187 $(17,474) Provision (benefit) for income taxes 28 46 Interest expense, net (13) (3) Other, net (46) (60) Operating income (loss) $156 $(17
Slide 39: Reconciliation of Financials
Reconciliation of GAAP to Non-GAAP Financials YEARS ENDED DECEMBER 31, 2023 2022 Net earnings (loss) attributable to FIS from continuing operations $503 $608 Provision (benefit) for income taxes 157 325 Interest expense, net 621 281 Other, net 186 4 Operating income (loss), as reported $1,467 $1,218
Slide 40: Reconciliation of Financials
Reconciliation of GAAP to Non-GAAP Financials YEARS ENDED DECEMBER 31, 2023 2022 Net earnings (loss) attributable to FIS from discontinued operations $(7,157) $(17,328) Provision (benefit) for income taxes (299) 52 Interest expense, net (28) (6) Other, net (64) (55) Operating income (loss) $(7,548)
Slide 41: Reconciliation of Financials
Reconciliation of GAAP to Non-GAAP Financials THREE MONTHS ENDED DECEMBER 31, 2023 2022 Earnings (loss) attributable to FIS from continuing operations $64 $109 Non-GAAP adjustments from continuing operations: Purchase accounting amortization (1) 172 190 Acquisition, integration and other costs (2) 1
Slide 42: Reconciliation of Financials
Reconciliation of GAAP to Non-GAAP Financials YEARS ENDED DECEMBER 31, 2023 2022 Earnings (loss) attributable to FIS from continuing operations $503 $608 Non-GAAP adjustments from continuing operations: Purchase accounting amortization (1) 696 778 Acquisition, integration and other costs (2) 505 681
Slide 43: Reconciliation of Financials
Reconciliation of GAAP to Non-GAAP Financials THREE MONTHS ENDED DECEMBER 31, 2023 2022 Net earnings (loss) per share-diluted attributable to FIS from continuing operations $0.11 $0.18 Non-GAAP adjustments from continuing operations: Purchase accounting amortization (1) 0.29 0.32 Acquisition, integr
Slide 44: Reconciliation of Financials
Reconciliation of GAAP to Non-GAAP Financials YEARS ENDED DECEMBER 31, 2023 2022 Net earnings (loss) per share-diluted attributable to FIS from continuing operations $0.85 $1.00 Non-GAAP adjustments from continuing operations: Purchase accounting amortization (1) 1.17 1.28 Acquisition, integration a
Slide 45: Notes to Unaudited Supplemental 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
Slide 46: Notes to Unaudited Supplemental Reconciliations
Notes to Unaudited - Supplemental GAAP to Non-GAAP Reconciliations THREE MONTHS ENDED DECEMBER 31, 2023 2022 2023 YEARS ENDED DECEMBER 31, 2022 Continuing Operations: Acquisition and integration $27 $17 $48 $50 Enterprise transformation, including Future forward and platform modernization 89 88 312
Slide 47: Reconciliation of Financials
Reconciliation of GAAP to Non-GAAP Financials DECEMBER 31 2023 2022 CHANGE GROWTH (1) Backlog (2) $23.5 $23.5 $0.0 (1)% Adjustments (3) 0% Adjusted Backlog (1)% (unaudited) (1) Backlog growth percentage may not calculate due to rounding. Backlog growth is calculated on an unrounded basis. (2) Backlo
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