Fidelity National Information Services, Inc. · NYSE:FIS
Fidelity National Information Services — Q1 2023 Earnings Presentation
37 slides from Fidelity National Information Services's earnings presentation, Apr 27, 2023
Slide 1: First Quarter 2023 Earnings Call
FIRST QUARTER 2023 EARNINGS CALL f April 27, 2023
Slide 2: Speakers
Our 1 Commitments Stephanie Ferris Chief Executive Officer and President & Results Speakers 2 Financial Erik Hoag Results & Chief Financial Officer Guidance 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: Exceeded 1Q 2023 Financial Commitments
EXCEEDED 1Q 2023 FINANCIAL COMMITMENTS • Raising FY 2023 outlook FINANCIAL COMMITMENTS 1Q Guidance 1Q Actuals • Outperformance across all operating segments Revenue $3,375 - $3,425 $3,510 • Heritage FIS organic recurring Adj. EBITDA $1,285 - $1,325 $1,359 revenue growth of 6% Adj. EPS $1.17 - $1.23
Slide 6: 1Q 2023 Results, Increased Outlook & Assumptions
1Q 2023 RESULTS, INCREASED OUTLOOK & ASSUMPTIONS 1Q 2023 2Q & FY 2023 CONSERVATIVE OUTLOOK & RESULTS OUTLOOK ASSUMPTIONS • 1Q 2023 outperformance in Banking & (1) - 1 % % 0 -2 % % Capital Markets driven by elevated financial services activity • 1Q 2023 outperformance in Merchant 1Q 2023 OUTLOOK 2Q 2
Slide 7: Delivering on Our Commitments
DELIVERING ON OUR COMMITMENTS Executing across multiple vectors to drive long-term shareholder value 1 2 3 Reiterating Worldpay Future Forward Governance / Sales Spin-Off Timeline Enhancements • Separation Management Transformation Program to drive: • Aligned compensation to Office created • Efficie
Slide 8: Worldpay Spin-Off Progress Update
WORLDPAY SPIN-OFF PROGRESS UPDATE Regulatory Finalizing Capital Separation Approvals Structure Business Management Execute Spin Separation Plan Commercial Targeting Strong Office • Launched Separation Business Separation Agreements Align Shared / Sub-Investment Finalize Capital Execute within the Ma
Slide 9: Strong Momentum with Future Forward
STRONG MOMENTUM WITH FUTURE FORWARD EFFICIENCY: • Third-party spend >$210M Annualized Total Cash Savings • Client onboarding Achieved Through 1Q 2023 • Capital On-track to Deliver on 2023 / 2024 Targets GROWTH: EFFECTIVENESS: • Salesforce • Product delivery productivity • Simplifying Working to Iden
Slide 10: FIS Positioned to Be a Long-Term Beneficiary of Banking Industry Stress
FIS POSITIONED TO BE A LONG-TERM BENEFICIARY OF BANKING INDUSTRY STRESS “Recent events should have IMPACT SKEWED limited impact on near-term FINTECH SPEND ACCOUNT GROWTH TO DEPOSIT revenue for core processors STABLE RESILIENT BALANCES as the current situation is impacting deposit balances, not accou
Slide 11: Resilient Banking Business Model
RESILIENT BANKING BUSINESS MODEL Balanced growth drivers with a diversified client base Organic Revenue Drivers Client Splits % of FY 2022 • Diversified base FI Asset Size of Financial Revenue Institutions ~40% >$50B ~25% • Stronger position with large FIs vs ~60% $10B - $50B ~15% peers • Significan
Slide 12: CEO Agenda
CEO AGENDA Positioning FIS for sustainable value creation HIGH SENSE OF URGENCY CLIENT-CENTRICITY INNOVATION & FOCUS Leveraging best-in-class set Ensuring clients of FinTech assets to make are at the center of FIS the destination for Focused on everything we do innovation Improving: SIMPLIFICATION •
Slide 13: Financial Results & Guidance
2 Financial Results & Guidance 13
Slide 14: Financial Results
FINANCIAL RESULTS 1Q 2023 RESULTS TOTAL REVENUE ADJ. EBITDA MARGIN ADJUSTED EPS 3.5B 38.7 % $1.29 +3% ORGANIC (190) BPS (12)% REPORTED 1Q 2023 KEY METRICS FREE CASH FLOW CAPEX CAPITAL RETURN BALANCE SHEET $641M $279M $309M $20B 3.2x 3.0% 84% Conversion 8% of Revenue Dividends Paid Total Debt Leverag
Slide 15: Heritage FIS Financial Results
HERITAGE FIS FINANCIAL RESULTS 1Q 2023 RESULTS TOTAL REVENUE BACKLOG RECURRING REVENUE 2.3B +4% ORGANIC $22.5B 0% ORGANIC +6% ORGANIC BANKING SOLUTIONS CAPITAL MARKETS REVENUE GROWTH +4% REVENUE GROWTH +11% +2% Recurring Revenue Growth +7% Recurring Revenue Growth ORGANIC (23)% ORGANIC +2% ADJ. EBIT
Slide 16: Banking Solutions Results & Outlook
BANKING SOLUTIONS RESULTS & OUTLOOK 1Q 2023 2Q & FY 2023 OUTLOOK & RESULTS OUTLOOK ASSUMPTIONS (2) - 0 % % 0 -2 % % • 1Q 2023 outperformance primarily driven by strong execution and elevated financial services activity 1Q 2023 OUTLOOK 2Q 2023 OUTLOOK • Anticipate 2Q 2023 growth in-line with FY 2023
Slide 17: Capital Markets Results & Outlook
CAPITAL MARKETS RESULTS & OUTLOOK 1Q 2023 2Q & FY 2023 OUTLOOK & RESULTS OUTLOOK ASSUMPTIONS 3 -5 % % 4 -6 % % • 1Q 2023 outperformance primarily driven by strong execution and elevated financial services activity 1Q 2023 OUTLOOK 2Q 2023 OUTLOOK • Anticipate normalization in recurring revenue growth
Slide 18: Heritage Worldpay Financial Results
HERITAGE WORLDPAY FINANCIAL RESULTS 1Q 2023 RESULTS TOTAL REVENUE ADJ. EBITDA MARGIN GLOBAL VOLUME 1.1B +2% ORGANIC 43.5 % (350) BPS $551B +9% CONSTANT CURRENCY MERCHANT SOLUTIONS +15 % (5) % (3) % Global eCommerce Enterprise Organic SMB Organic Growth Organic Growth (1) Growth (3)% (7)% North Ameri
Slide 19: Heritage Worldpay Results & Outlook
HERITAGE WORLDPAY RESULTS & OUTLOOK 1Q 2023 2Q & FY 2023 OUTLOOK & RESULTS OUTLOOK ASSUMPTIONS (2) - 0 % % (1) - 1 % % • 1Q 2023 outperformance largely driven by more favorable consumer spending as compared to prior expectations and 1Q 2023 OUTLOOK 2Q 2023 OUTLOOK strong operating execution in eComm
Slide 20: 2Q and FY 2023 Outlook
2Q AND FY 2023 OUTLOOK ($ millions, except per share data) METRICS 2Q 2023 FY 2023 Revenue $3,675 - $3,725 $14,285 - $14,535 Organic Revenue Growth 0% - 2% 0% - 1% Banking Solutions 0% - 2% 0% - 2% Merchant Solutions (1)% - 1% (2)% - (1)% Capital Market Solutions 4% - 6% 4% - 6% Adjusted EBITDA $1,5
Slide 21: Future Forward: Financial Update
FUTURE FORWARD: FINANCIAL UPDATE Operational Expense (Adj. EBITDA Impact) $700M $600M $600M Value Drivers of Future Forward $500M $450M • Efficiency: Automating and improving processes to optimize expense base $400M $300M • Effectiveness: Improving ways of working to accelerate $300M delivery and ti
Slide 22: Heritage FIS Capital Allocation Priorities
HERITAGE FIS CAPITAL ALLOCATION PRIORITIES SHARE REPURCHASE DEBT REDUCTION DIVIDENDS / TUCK-IN M&A Prioritizing Debt Repayment Maintain ~35% Payout Ratio Incremental Capital Returned Allocating excess cash to Achieve targeted payout ratio in 2023 Further capital returned to shareholders reduce debt
Slide 23: Appendix
APPENDIX 23 23
Slide 24: 2Q 2023 Guidance – Additional Assumptions
2Q 2023 Guidance – Additional Assumptions METRICS 2Q 2023 GUIDANCE Negative F/X Impact to Revenue ~$0 Corporate and Other Revenue ~$50 Depreciation and Amortization(1) ~$335 - $340 (Excluding Purchase Price Amortization) Net Interest Expense ~$165 Effective Tax Rate ~14% Weighted Average Shares Outs
Slide 25: 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 ~$225 Depreciation and Amortization(1) ~$1,300 - $1,305 (Excluding Purchase Price Amortization) Net Interest Expense ~$645 Effective Tax Rate ~14% Weighted Average Share
Slide 26: 2022 Organic Revenue Base
2022 Organic Revenue Base ORGANIC BASE 1Q 2022 2Q 2022 3Q 2022 4Q 2022 FY 2022 Banking Solutions $1,659 $1,678 $1,703 $1,733 $6,772 Merchant Solutions 1,112 1,302 1,180 1,178 4,773 Capital Markets Solutions 627 632 633 739 2,631 Operating Segment Total $3,398 $3,612 $3,515 $3,650 $14,176 TOTAL REVEN
Slide 27: 2022 Adjusted EBITDA Base
2022 Adjusted EBITDA Base ADJUSTED BASE 1Q 2022 2Q 2022 3Q 2022 4Q 2022 FY 2022 Banking Solutions $707 $746 $738 $708 $2,900 Merchant Solutions 522 613 560 563 2,258 Capital Markets Solutions 300 311 315 412 1,338 Operating Segment Total $1,530 $1,670 $1,613 $1,683 $6,497 TOTAL ADJUSTED EBITDA 1Q 20
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, including statements about anticipated financial outcomes, including any earnings guidance or pr
Slide 29: Forward-Looking Statements
Forward-Looking Statements • the reaction of current and potential customers to communications from us or regulators regarding information security, risk management, internal audit or other matters; • the risk of losses in the event of defaults by merchants (or other parties) to which we extend cred
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 GAAP to Non-GAAP Financials
Reconciliation of GAAP to Non-GAAP Financials THREE MONTHS ENDED MARCH 31, 2023 CAPITAL MARKET CORPORATE AND BANKING SOLUTIONS MERCHANT SOLUTIONS TOTAL SOLUTIONS OTHER Revenue $1,685 $1,105 $663 $57 $3,510 FX 8 25 10 1 44 Constant Currency Revenue $1,693 $1,130 $673 $59 $3,555 THREE MONTHS ENDED MAR
Slide 32: Reconciliation of GAAP to Non-GAAP Financials
Reconciliation of GAAP to Non-GAAP Financials THREE MONTHS ENDED MARCH 31, 2023 Net cash provided by operating activities $632 Non-GAAP adjustments: Acquisition, integration and other payments (1) 99 Settlement activity 189 Adjusted cash flows from operations $920 Capital expenditures (2) (279) Free
Slide 33: Reconciliation of GAAP to Non-GAAP Financials
Reconciliation of GAAP to Non-GAAP Financials THREE MONTHS ENDED MARCH 31, 2023 2022 Net earnings attributable to FIS common stockholders $140 $120 Provision (benefit) for income taxes 48 54 Interest expense, net 137 43 Other, net 12 (60) Operating income, as reported $337 $157 Depreciation and amor
Slide 34: Reconciliation of GAAP to Non-GAAP Financials
Reconciliation of GAAP to Non-GAAP Financials THREE MONTHS ENDED MARCH 31, 2023 2022 Earnings before income taxes $189 $175 (Provision) benefit for income taxes (48) (54) Net (earnings) loss attributable to noncontrolling interest (1) (1) Net earnings attributable to FIS common stockholders $140 $12
Slide 35: 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
Slide 36: Reconciliation of GAAP to Non-GAAP Financials
Reconciliation of GAAP to Non-GAAP Financials MARCH 31, 2023 2022 CHANGE GROWTH (1) Backlog (2) $22.5 $22.5 $0.0 0% Organic adjustments (3) 0% Organic Backlog 0% (unaudited) (1) Backlog growth percentage may not calculate due to rounding. (2) Backlog reflects the approximate transaction price alloca
Slide 37: Reconciliation of GAAP to Non-GAAP Financials on Guidance
Reconciliation of GAAP to Non-GAAP Financials ON GUIDANCE THREE MONTHS ENDING TWELVE MONTHS ENDING JUNE 30, 2023 DECEMBER 31, 2023 LOW HIGH LOW HIGH Net earnings per share-diluted attributable to FIS common stockholders $0.30 $0.40 $1.30 $1.80 Estimated adjustments (1) 1.15 1.10 4.46 4.26 Adjusted n
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