Fidelity National Information Services, Inc. (FIS) 2024 Q2 Earnings Call Summary

Optimistic Highlights

• Record Year for Core Signings: FIS is on track for a record year in new core banking signings, driven by competitive takeaways and greater traction in the community banking market.

• Digital Sales Growth: The company saw over 30% growth in new sales in the digital business in the first half of 2024, indicating strong cross-sell into existing core customers and success in displacing competitors.

• Strong Demand Across Money Lifecycle: FIS reported strong demand for its offerings across the entire money lifecycle, including core banking, digital business, loyalty solutions, and payments offerings.

• Strategic Partnerships and Product Innovation: FIS announced partnerships with Curinos and Lendio to enhance banking clients' capabilities and launched a climate risk financial modeler for corporations and financial institutions.

• Capital Return to Shareholders: FIS is on track to deliver on its $4 billion share repurchase commitment for the year, with an additional $3 billion share repurchase authorization approved by the board.

Pessimistic Highlights

• Professional Services Revenue Decline: Professional services revenue declined 13% year-over-year, although it is expected to reaccelerate in the second half of 2024.

Company Outlook

• Raised Financial Outlook for 2024: FIS has raised its financial outlook for the year, driven by strong first-half performance and good visibility into delivering forward outlook due to the durability of its highly recurring business model.

• Q3 and Full Year Projections: For Q3 2024, adjusted revenue growth is projected at 4% to 4.5%, with banking solutions growth at 2.5% to 3% and Capital Markets at 7.5% to 8%. The full-year EPS outlook has been increased to $5.03 to $5.11, reflecting normalized growth of 13% to 15%.

Q & A Highlights

• Q: Can you elaborate on the drivers behind the strong visibility to banking growth in Q3 and Q4? (Ramsey El-Assal, Barclays)

  A: The strong performance in Q1 and Q2, along with sales execution in the latter half of last year, provides confidence in the guide for the second half of 2024. Banking revenue growth is expected to accelerate due to stronger execution and sales. (Stephanie Ferris)

• Q: What's been resonating with the community banking space, and how do you see its contribution to growth going forward? (Will Nance, Goldman Sachs)

  A: The strength of FIS's cores, particularly in banks with commercial banking customers, along with digital and payments offerings, has been resonating well. This focus is expected to contribute to growth as FIS continues to take market share. (Stephanie Ferris)

• Q: Can you provide an update on the commercial relationship with Worldpay and its impact? (Darrin Peller, Wolfe Research)

  A: The commercial relationships with Worldpay are strong and continue to identify more opportunities for collaboration. This partnership is performing well and contributing to FIS's growth. (Stephanie Ferris)

• Q: How do you view the card processing business and banking business in light of potential macroeconomic slowdowns? (Tien-Tsin Huang, JP Morgan)

  A: The consumer spend is not significantly impactful to FIS's banking business, which is more insulated due to its focus on debit card transactions and not being directly affected by consumer spend trends. (Stephanie Ferris)

• Q: Can you discuss the expected acceleration in Professional Services in the second half and fourth quarter? (James Faucette, Morgan Stanley)

  A: The acceleration is driven by new sales implementations, particularly in core, digital, or payments, as professional services revenue has stabilized and is expected to grow due to easier comparisons and ongoing implementations. (Stephanie Ferris)