Fidelity National Information Services, Inc. · NYSE:FIS
Fidelity National Information Services — Q3 2023 Earnings Presentation
37 slides from Fidelity National Information Services's earnings presentation, Nov 7, 2023
Slide 1: Third Quarter 2023 Earnings Call
THIRD QUARTER 2023 EARNINGS CALL f November 7, 2023
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: Introductory Remarks
INTRODUCTORY REMARKS Executing with a Sense of Urgency 1 2 3 4 Executing on Worldpay Transaction Transforming FIS Into a Confident in Outlook Financial & Transforming and Global Enterprise and Future Prospects Operational Strengthening Software Leader Commitments Balance Sheet • Third consecutive qu
Slide 6: Delivering on Financial Commitments
DELIVERING ON FINANCIAL COMMITMENTS • FIS organic recurring revenue growth TOTAL COMPANY FINANCIAL COMMITMENTS of 7% (Banking + Capital Markets) 3Q Outlook 3Q Actuals • First quarter of Adj. EBITDA margin expansion since 4Q 2021 Revenue $3,640 - $3,690 $3,690 Adj. EBITDA $1,580 - $1,625 $1,632 • On
Slide 7: Accelerating Our Path Forward
ACCELERATING OUR PATH FORWARD On-Track for 1Q 2024 Separation Future Forward Update Business Separation Plan Delivering on 2023 / 2024 targets Favorable Debt Financing Secured Innovation: Delivering new products to market and existing implementations faster Nearing Completion of Leadership Team Simp
Slide 8: Leading Global Provider of Next-Gen Solutions
LEADING GLOBAL PROVIDER OF NEXT-GEN SOLUTIONS Expanding Total Addressable Market Leading global Building Differentiated Fast growing Growing cross-sell provider of software & momentum with breadth of Capital Markets opportunities risk management Modern Banking capabilities to segment serving across
Slide 9: Key Wins Across Breadth of Capabilities
KEY WINS ACROSS BREADTH OF CAPABILITIES ENTERPRISE CORE PAYMENTS & NETWORK CAPITAL MARKETS PLATFORMS Top 10 Top 5 U.S. Retailer U.S. Financial Institution Top 20 U.S. Retailer INCREASED MOMENTUM ACROSS SALES PIPELINE 9
Slide 10: Key Recognitions
KEY RECOGNITIONS Award-Winning Global Solutions Best Treasury Analytics Provider Best Cash and Treasury Management Solution 10
Slide 11: A Bright Future
A BRIGHT FUTURE Delivering on Financial and Strategic Commitments HIGH SENSE OF URGENCY CLIENT-CENTRICITY INNOVATION & FOCUS Best-in-class assets makes Ensuring clients FIS the destination for are at the center of innovation Focused on everything we do Improving: SIMPLIFICATION • Performance of the
Slide 12: Financial Results & Outlook
2 Financial Results & Outlook 12
Slide 13: New Financial Reporting Structure
NEW FINANCIAL REPORTING STRUCTURE • As of 3Q 2023 we have transitioned Worldpay into Discontinued Operations given the pending majority sale to GTCR. • Going forward, financials will be presented on a Continuing Operations basis; for the quarter, we will also present on a total company basis to allo
Slide 14: 3Q 2023 Financial Results
3Q 2023 FINANCIAL RESULTS REVENUE ADJ. EBITDA MARGIN ADJ. EPS TOTAL COMPANY (as previously reported) 3.7B 44.2% $1.65 +2% ORGANIC +50 BPS (5)% REPORTED CON. OPS. (FIS) 2.5B 43.0% $0.94 +4% ORGANIC +70 BPS (7)% REPORTED DISC. OPS. (Worldpay) 1.2B 46.8% $0.71 (1)% ORGANIC +30 BPS (3)% REPORTED KEY MET
Slide 15: Banking & Capital Markets Financial Results
BANKING & CAPITAL MARKETS FINANCIAL RESULTS 3Q 2023 RESULTS TOTAL REVENUE BACKLOG RECURRING REVENUE 2.4B $22.5B +7 / +4 % % (1) +4% ORGANIC +2% ORGANIC ORGANIC BANKING SOLUTIONS CAPITAL MARKETS REVENUE GROWTH +7 / +3 % %(2) REVENUE GROWTH +8% +3% Recurring Revenue Growth +6% Recurring Revenue Growth
Slide 16: Updated 2023 Outlook
UPDATED 2023 OUTLOOK Increasing Total Company Outlook TOTAL COMPANY OUTLOOK METRICS ($ millions) PRIOR UPDATED Fav. / (Unfav.) CC Var.(1) Revenue $14,500 - $14,631 $14,600 - $14,650 +$125 / +$44 Organic Revenue Growth ~1% ~1% - 2% - / +1% Banking Solutions ~1% - 2% ~1.3% - 1.7% Capital Market Soluti
Slide 17: FIS Post-Transaction Close Considerations
FIS POST-TRANSACTION CLOSE CONSIDERATIONS Updated D&A and Tax Rate Considerations Net Proceeds Increasing to >$12B (from ~$11.7B)(1) Reducing gross debt to ~$10B • Net WAIR of ~3.25% - 3.75% Deployment of Proceeds Share repurchase of at least $3.5B through 2024 (from >$2.5B) • Includes ~$500M of sha
Slide 18: 2023 Outlook for Continuing Operations
2023 OUTLOOK FOR CONTINUING OPERATIONS Ongoing Base Earnings Power of $4.40 - $4.55 METRICS FY 2023 Con. Ops METRICS Con. Ops. to Normalized Revenue $9,810 - $9,840 Adjusted EPS (Con. Ops.) $3.30 - $3.40 Adj. EBITDA $3,930 - $3,970 Assuming Transaction Occurred 1/1/2023: D&A ~$1,000 NCI Contribution
Slide 19: Future Forward: Con. Ops. Financial Update
FUTURE FORWARD: CON. OPS. FINANCIAL UPDATE Operational Expense (Adj. EBITDA Impact) $500M Value Drivers of Future Forward $450M $425M $400M • Efficiency: Automating and improving processes to optimize expense base $350M $315M $300M • Effectiveness: Improving ways of working to accelerate $250M deliv
Slide 20: FIS Capital Allocation Priorities
FIS CAPITAL ALLOCATION PRIORITIES Reinitiating Share Repurchases This Year; Increasing Goal To At Least $3.5 Billion Through 2024 SHARE DEBT REDUCTION DIVIDENDS REPURCHASE / M&A Prioritizing Debt Repayment Maintain ~35% Payout Ratio Incremental Capital Return Targeting long-term range of gross 2.5x
Slide 21: Closing Remarks
CLOSING REMARKS • Repositioning the enterprise for long-term success • Third consecutive quarter of meeting or exceeding high-end of expectations • Raising total company outlook for both revenue & adjusted EBITDA • Establishing 2023 pro-forma baseline for Continuing Operations financials and providi
Slide 22: Q&A
Q&A 22
Slide 23: Appendix
Appendix 23
Slide 24: 2023 Outlook – Additional Assumptions
2023 Outlook – Additional Assumptions (1) ($ millions) METRICS FY 2023 OUTLOOK Year-Over-Year F/X Impact to Revenue - Corporate and Other Revenue ~$220 - $225 24 (1) The Company presents the operating results and cash flows of the Worldpay Merchant Solutions business as discontinued operations for a
Slide 25: 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 outlook or pro
Slide 26: Forward-Looking Statements
Forward-Looking Statements • risks associated with the expected benefits and costs of the pending Worldpay transaction, including the risk that the expected benefits of the pending Worldpay transaction or any contingent purchase price will not be realized within the expected timeframe, in full or at
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 THREE MONTHS ENDED SEPTEMBER 30, 2023 CAPITAL MARKET CORPORATE AND BANKING SOLUTIONS MERCHANT SOLUTIONS TOTAL SOLUTIONS OTHER Revenue $1,756 $1,191 $677 $66 $3,690 FX (6) (22) (5) (2) (35) Constant Currency Revenue $1,750 $1,169 $671 $64 $3,655 THREE MON
Slide 29: Reconciliation of GAAP to Non-GAAP Financials – Con. Ops.
Reconciliation of GAAP to Non-GAAP Financials – Con. Ops. THREE MONTHS ENDED SEPTEMBER 30, 2023 BANKING SOLUTIONS CAPITAL MARKET SOLUTIONS CORPORATE AND OTHER TOTAL Revenue $1,756 $677 $56 $2,489 FX (6) (5) (2) (14) Constant Currency Revenue $1,750 $671 $55 $2,476 THREE MONTHS ENDED SEPTEMBER 30, 20
Slide 30: Reconciliation of GAAP to Non-GAAP Financials
Reconciliation of GAAP to Non-GAAP Financials THREE MONTHS ENDED SEPTEMBER 30, 2023 Net cash provided by operating activities $1,091 Non-GAAP adjustments: Acquisition, integration and other payments (1) 104 Settlement activity 10 Adjusted cash flows from operations $1,205 Capital expenditures (298)
Slide 31: Reconciliation of GAAP to Non-GAAP Financials
Reconciliation of GAAP to Non-GAAP Financials THREE MONTHS ENDED SEPTEMBER 30, 2023 2022 Net earnings (loss) attributable to FIS from continuing operations $260 $218 Provision (benefit) for income taxes 74 102 Interest expense, net 162 78 Other, net (21) (14) Operating income (loss), as reported $47
Slide 32: Reconciliation of GAAP to Non-GAAP Financials
Reconciliation of GAAP to Non-GAAP Financials THREE MONTHS ENDED SEPTEMBER 30, 2023 2022 Net earnings (loss) attributable to FIS from discontinued operations $(709) $31 Provision (benefit) for income taxes (382) (11) Interest expense, net (4) (2) Other, net 30 60 Operating income (loss) $(1,065) $78
Slide 33: Reconciliation of GAAP to Non-GAAP Financials
Reconciliation of GAAP to Non-GAAP Financials THREE MONTHS ENDED SEPTEMBER 30, 2023 2022 Earnings (loss) attributable to FIS from continuing operations $260 $218 Non-GAAP adjustments from continuing operations: Purchase accounting amortization (1) 173 193 Acquisition, integration and other costs (2)
Slide 34: Reconciliation of GAAP to Non-GAAP Financials
Reconciliation of GAAP to Non-GAAP Financials THREE MONTHS ENDED SEPTEMBER 30, 2023 2022 Net earnings (loss) per share-diluted attributable to FIS from continuing operations $0.44 $0.36 Non-GAAP adjustments from continuing operations: Purchase accounting amortization (1) 0.29 0.32 Acquisition, integ
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: Notes to Unaudited - Supplemental GAAP to Non-GAAP Reconciliations
Notes to Unaudited - Supplemental GAAP to Non-GAAP Reconciliations 2023 THREE MONTHS ENDED SEPTEMBER 30, 2022 Continuing Operations: Acquisition and integration $12 $14 Enterprise transformation, including Future forward and platform modernization 79 55 Severance and other termination expenses 6 16
Slide 37: Reconciliation of GAAP to Non-GAAP Financials
Reconciliation of GAAP to Non-GAAP Financials SEPTEMBER 30, 2023 2022 CHANGE GROWTH (1) Backlog (2) $22.5 $22.5 $0.0 2% Organic adjustments (3) 0% Organic Backlog 2% (unaudited) (1) Backlog growth percentage may not calculate due to rounding. Backlog growth is calculated on an unrounded basis. (2) B
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