Fidelity National Information Services, Inc. · NYSE:FIS
Fidelity National Information Services — Q3 2021 Earnings Presentation
34 slides from Fidelity National Information Services's earnings presentation, Nov 4, 2021
Slide 1: Third Quarter 2021 Earnings Call
THIRD QUARTER 2021 EARNINGS CALL November 4, 2021
Slide 2: Speakers
SPEAKERS BUSINESS & Gary Norcross STRATEGY Chairman and Chief Executive Officer UPDATE FINANCIAL RESULTS & Woody Woodall Chief Financial Officer GUIDANCE
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: Business & Strategy Update
BUSINESS & STRATEGY UPDATE
Slide 5: Strong Execution Across the Company
STRONG EXECUTION ACROSS THE COMPANY TOTAL REVENUE ADJUSTED EPS AND EBITDA MARGIN BACKLOG GROWTH $3.5B $1.73 NEW SALES & MARQUEE CLIENT WINS 45.2% $22B 10% 10% 22% 7% ORGANIC GROWTH ORGANIC GROWTH +270 BPS EXCEPTIONAL SEGMENT PERFORMANCE BANKING SOLUTIONS MERCHANT SOLUTIONS CAPITAL MARKETS 8% 18% 11%
Slide 6: Narrative-Induced Generational Buying Opportunity
NARRATIVE-INDUCED GENERATIONAL BUYING OPPORTUNITY Directly and transparently addressing common questions from the investment community Platform Initiatives 1 Will you provide an update on • Componentized architecture seamlessly integrates the best collection of assets in the industry your competitiv
Slide 7: The Best Collection of Assets in the Industry
THE BEST COLLECTION OF ASSETS IN THE INDUSTRY Revenues are primarily usage-based with multi-year contracts, creating highly visible revenue streams DIVERSE REVENUE MIX HIGHLY RECURRING BUSINESS MIX PERCENT OF FIS CONSOLIDATED REVENUE1 Banking and Capital Markets generate 65% of consolidated revenue
Slide 8: Creating the Destination for Innovation
CREATING THE DESTINATION FOR INNOVATION Our core competency is developing leading software and processing electronic transactions that speed commerce in a digital economy ILLUSTRATIVE EXAMPLES FIS COMPONENTIZED ARCHITECTURE CUSTOMIZABLE CLIENT EXPERIENCES EMBEDDED GLOBAL MONEY VIRTUAL FINANCE MOVEME
Slide 9: Capital Allocation Strategy
CAPITAL ALLOCATION STRATEGY Prioritizes long-term growth through ongoing investments in organic opportunities and M&A and delivers return to shareholders with share repurchase and consistent dividend growth 1 LONG-TERM GROWTH 2 RETURN OF CAPITAL ORGANIC SHARE REPURCHASE Internal investment in techno
Slide 10: Financial Results & Guidance
FINANCIAL RESULTS & GUIDANCE
Slide 11: 3Q 2021 Results
3Q 2021 RESULTS CONSOLIDATED RESULTS TOTAL REVENUE ($ in millions) demonstrate consistently strong execution • Revenue growth of 10% on both a reported and organic basis 3Q21 $3,507 • Adjusted EBITDA margin expanded 270 basis points to 45.2%, reflecting high contribution margin of new revenue and sy
Slide 12: Strong Balance Sheet and Free Cash Flow
STRONG BALANCE SHEET AND FREE CASH FLOW RETURN OF CAPITAL 3Q 2021 STRONG BALANCE SHEET 3Q 2021 Free Cash Flow $1,147M Total Debt $19.8B Dividends Paid $238M Weighted Average Interest Rate 0.9% Shares Repurchased 9.0M Leverage Ratio 3.3x Share Repurchase Amount $1,196M Target Leverage Ratio ~3.0x • T
Slide 13: FY 2021 Guidance
FY 2021 GUIDANCE ($ millions, except per share data) METRICS FY 2021 Revenue $13,900 - $14,000 Organic Revenue Growth 10% - 11% Adjusted EBITDA $6,125 - $6,200 Year-over-year Growth 16% - 18% Margin Expansion 220 - 240 bps Adjusted EBITDA Margin 44% - 45% Adjusted EPS $6.50 - $6.60 Year-over-year Gr
Slide 14: Merchant Deep Dive
MERCHANT DEEP DIVE
Slide 15: Merchant Revenue Growth Accelerating
MERCHANT REVENUE GROWTH ACCELERATING Leading capabilities to serve clients before, during and after the pandemic 3Q RESULTS MERCHANT SOLUTIONS • Revenue increased 14% year-over-year, including a 4% PROFORMA REVENUE GROWTH VS 2019 headwind created by the unusual U.S. income tax date in 2020 • Revenue
Slide 16: Merchant Volume Growth Trending with Networks
MERCHANT VOLUME GROWTH TRENDING WITH NETWORKS FIS volume growth mirrors major networks GLOBAL VOLUME GROWTH 30% 20% 10% 0% -10% -20% 1Q 2019 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020 4Q 2020 1Q 2021* 2Q 2021* 3Q 2021* U.S. VOLUME GROWTH 40% 30% 20% 10% 0% -10% 1Q 2019 2Q 2019 3Q 2019 4Q 2019 1
Slide 17: Winning Strategy Across Client Types
WINNING STRATEGY ACROSS CLIENT TYPES Leveraging superior capabilities and sustainable competitive advantages Merchant 27% 45% 28% Revenue Mix Global Enterprise Software-led eCommerce SMB Leading global merchant Digital only merchants Physical merchants including Small merchants with acquirer before,
Slide 18: Global Ecommerce
GLOBAL ECOMMERCE Leading provider uniquely positioned to benefit from accelerating secular shift to ecommerce 1 1 TAM CAGR FIS MIX 4 GLOBAL ECOM TAM Global eCom Revenue Mix Domestic2 8-10% 50% 2 TAM CAGR Cross-border2 25-30% 13-15% 50% SMB3 12-14% FIS REVENUE GROWTH VS 2019 0% GLOBAL ECOMMERCE 33% 3
Slide 19: Enterprise
ENTERPRISE Large TAM and sticky relationships creating continued global expansion opportunity 2 TAM CAGR1 FIS MIX ENTERPRISE Enterprise Revenue Mix North America Enterprise 2-5% 1 63% TAM CAGR 4-7% International 5-7% 37% FIS REVENUE GROWTH VS 2019 ENTERPRISE 11% WHY WE WIN 6% Differentiated vertical
Slide 20: Software-Led Small and Medium-Sized Business (SMB)
SOFTWARE-LED SMALL AND MEDIUM-SIZED BUSINESS (SMB) Software-led strategy and new Access Worldpay gateway create opportunity to bring our leading Global eCommerce capability downstream to serve SMBs online and instore 1 REVENUE GROWTH RELATIVE TO 2019 2 SMB TAM 26% 24% 50% TAM CAGR 1 7-9% All Other R
Slide 21: FIS Revenue Mix Is Highly Recurring
FIS REVENUE MIX IS HIGHLY RECURRING Solution revenues are primarily usage-based, creating durable revenue streams FIS REVENUE MIX TERMINAL GROWTH INTACT PERCENT OF CONSOLIDATED REVENUE1 Banking and Capital Markets generate 65% of consolidated revenue with durable revenue streams created by Merchant
Slide 22: Global Acquiring TAM Enables Double-Digit Merchant Growth
GLOBAL ACQUIRING TAM ENABLES DOUBLE-DIGIT MERCHANT GROWTH Diverse business mix across high-growth TAM supports mid-term revenue growth outlook 1 TAM CAGR FIS MIX FIS OUTLOOK GLOBAL Global eCom Revenue Mix ACQUIRING Global eCommerce 13-15% 27% Above TAM growth due 1 TAM to multinational revenue mix a
Slide 23: Appendix
APPENDIX
Slide 24: FY 2021 Guidance – Additional Assumptions
FY 2021 GUIDANCE – ADDITIONAL ASSUMPTIONS ($ millions) METRICS FY 2021 GUIDANCE Positive F/X Impact to Revenue ~$150 Corporate and Other Revenue Growth ~(10)% Depreciation and Amortization ~$1,170 (Excluding Purchase Price Amortization) Net Interest Expense ~$215 Effective Tax Rate ~14.5% Weighted A
Slide 25: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation and today’s webcast contain “forward-looking statements” within the meaning of the U.S. federal securities laws. Statements that are not historical facts, including statements about anticipated financial outcomes, including any earnings guidance or projec
Slide 26: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS • competitive pressures on pricing related to the decreasing number of community banks in the U.S., the development of new disruptive technologies competing with one or more of our solutions, increasing presence of international competitors in the U.S. market and the entry
Slide 27: FIS Use of Non-GAAP Financial Information
FIS USE OF NON-GAAP FINANCIAL INFORMATION Generally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework of guidelines for financial accounting in the United States. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizi
Slide 28: Reconciliation of GAAP to Non-GAAP Financials
RECONCILIATION OF GAAP TO NON-GAAP FINANCIALS ($ millions, unaudited) THREE MONTHS ENDED SEPTEMBER 30, 2021 MERCHANT BANKING CAPITAL MARKET CORPORATE TOTAL SOLUTIONS SOLUTIONS SOLUTIONS AND OTHER Revenue $1,161 $1,610 $654 $82 $3,507 FX (17) (4) (6) - (27) Constant Currency Revenue $1,144 $1,606 $64
Slide 29: 2020 Organic Base
2020 ORGANIC BASE ($ millions, unaudited) Organic Base 1Q 2020 2Q 2020 3Q 2020 4Q 2020 FY 2020 Banking Solutions $ 1,444 $ 1,462 $ 1,488 $ 1,551 $ 5,944 Merchant Solutions 935 812 1,017 1,003 3,767 Capital Market Solutions 597 593 587 663 2,440 Operating Segment Total $ 2,976 $ 2,867 $ 3,092 $ 3,217
Slide 30: Reconciliation of GAAP to Non-GAAP Financials
RECONCILIATION OF GAAP TO NON-GAAP FINANCIALS ($ millions, unaudited) THREE MONTHS ENDED SEPTEMBER 30, 2021 2020 Net earnings (loss) attributable to FIS common stockholders $158 $20 Provision (benefit) for income taxes 41 121 Interest expense, net 46 84 Other, net (107) 6 Operating income, as report
Slide 31: Reconciliation of GAAP to Non-GAAP Financials
RECONCILIATION OF GAAP TO NON-GAAP FINANCIALS THREE MONTHS ENDED SEPTEMBER 30, ($ millions, unaudited) 2021 2020 Earnings before income taxes and equity method investment earnings (loss) $202 $143 (Provision) benefit for income taxes (41) (121) Equity method investment earnings (loss) - - Net (earni
Slide 32: Reconciliation of GAAP to Non-GAAP Financials
RECONCILIATION OF GAAP TO NON-GAAP FINANCIALS ($ millions, unaudited) THREE MONTHS ENDED SEPTEMBER 30, 2021 Net cash provided by operating activities $1,833 Non-GAAP adjustments: Acquisition, integration and other payments 117 Settlement activity (565) Adjusted cash flows from operations $1,385 Capi
Slide 33: Reconciliation of GAAP to Non-GAAP Financials
RECONCILIATION OF GAAP TO NON-GAAP FINANCIALS ($ billions, unaudited) SEPTEMBER 30, 2021 2020 CHANGE GROWTH2 Backlog1 $22.0 $21.0 $1.0 6% Organic Adjustments: Corporate and Other 1% Acquisitions and Divestitures - Organic Backlog 7% 1 Backlog reflects the approximate transaction price allocated to t
Slide 34: Advancing the Way the World Pays, Banks and Invests
(— | — ADVANCING THE WAY THE WORLD PAYS, BANKS AND INVESTS™
Fidelity National Information Services — Q3 2021 Earnings Presentation on 6ix