FIS Raises Outlook After Strong Q3 Growth in Fintech Revenue

One of the world’s largest fintech companies, FIS operates at the heart of the global financial system, providing the technology that powers thousands of banks, capital markets firms and financial institutions. The Fortune 500 company, which processes over US$10tn in global payments annually, has transformed itself over the past year through the sale of a majority stake in its Worldpay merchant payments business to focus on its core banking and markets technology operations.

The Florida-based company has reported a 4% increase in adjusted revenue to US$2.6bn in the third quarter of 2024, as demand for digital banking and trading technology continues to grow among financial institutions. The results represent the first full quarter since FIS completed the sale of a 55% stake in Worldpay to private equity firm GTCR in January 2024 for US$11.7 billion, retaining a significant minority position of 45% in the merchant payments business.“We delivered another strong quarter of financial outperformance, and are once again raising our full-year outlook,” says Stephanie Ferris, CEO and President of FIS.

“The strength of the partnerships and new business signings this quarter underpin our continued execution against our strategy to unlock financial technology to the world across the money lifecycle.”

Capital return and balance sheet

FIS has maintained its commitment to shareholder returns, having repurchased US$3bn worth of shares year-to-date, including US$500 million in the third quarter. The company maintains its target to buy back US$4bn of shares through 2024. It says it paid US$199m in dividends during the quarter, targeting a payout ratio of 35% of adjusted net earnings, excluding earnings from its Worldpay investment.

The company’s debt stood at US$10.9bn at the end of September. Operating cash flow reached US$641m for the quarter, while adjusted free cash flow – which excludes certain operating expenses and capital expenditures – was US$530m.

The banking solutions division, which provides core processing and digital banking technology to banks and credit unions, saw revenue rise 3% to US$1.8bn. The unit’s adjusted EBITDA margin – a measure of operating profitability before interest, tax, depreciation and amortisation – expanded by 10 basis points to 45.2%, driven by cost reduction initiatives and operational leverage.

The capital markets division, which supplies trading and risk management software to investment banks and asset managers, reported an 8% increase in GAAP revenue to US$730m, with adjusted revenue up 7%. This included 6% growth in recurring revenue and increased high-margin software licence sales, helping push the division's adjusted EBITDA margin up by 90 basis points to 49.9%.

The corporate segment, which includes central costs and other activities, saw revenue fall 27% to US$61m with an adjusted EBITDA loss of US$108m, including US$119m of corporate expenses.

On a GAAP basis, which reflects standard accounting principles, FIS reported net earnings attributable to common stockholders from continuing operations of US$246m, or $0.45 per diluted share, representing a 7% increase over the same period last year. Adjusted earnings per share rose 49% to $1.40.

Outlook and strategy

FIS has raised the lower end of its full-year revenue and adjusted EBITDA guidance. It now expects adjusted earnings per share of $5.15 to $5.20, approximately 2% higher than previous forecasts. This includes 11 months of equity method investment earnings from its remaining Worldpay stake.

As Stephanie Ferris explains: “The strength of the partnerships and new business signings this quarter underpin our continued execution against our strategy to unlock financial technology to the world across the money lifecycle.”

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