Fidelity National Information Services, Inc. Q4 FY2025 earnings call

• Stephanie Ferris expressed pride in the teams at FIS, noting strong results in 2025, including meeting key financial commitments, executing on strategy to transform and simplify portfolio, and positioning to double cash flow in 3 years. • Delivered on strategic pillars with adjusted revenue growing 5.8%, EBITDA at high end of expectations, adjusted EPS growing over 10%, and robust free cash flow enabling return of $1.3 billion to shareholders. • Three powerful forces converging in financial services: strength in banking industry, banks executing on growth agendas with M&A and tech spending increase, and emerging technology like AI moving to mainstream. • FIS has advantages of proprietary data sets, long-standing relationships, and specialized regulatory/compliance infrastructure. • Issuer Solutions acquisition positions FIS to lead across industry themes, with new product roadmap, 12 new modernized offerings in 2025, expanded relationships with top U.S. LFIs, and confidence in achieving revenue and expense synergy targets. • Recurring ACV sales grew 20% in Q4, with strong growth across segments like digital, payments, lending. • Build by partner approach driving innovation, with examples like Money Movement Hub, SmartBasket, and acquisition of Amount and [DWA] enhancing capabilities.

Fourth quarter adjusted revenue grew 7.4% with recurring revenue growing faster at 7.8%. Banking adjusted revenue growth was 8.3%, well above the high end of the implied outlook, led by recurring revenue growth of 8.8% with strength in digital and payments and higher output solutions than anticipated. Banking EBITDA margin expanded 132 basis points. Capital markets adjusted revenue growth of 5.6% came in largely in line with expectations, with recurring revenue growth of 5.3%. Capital Markets EBITDA margin expanded by more than 200 basis points. Full year banking adjusted revenue grew 5.6%, led by strong 6% growth in recurring revenue. Capital Markets posted adjusted revenue growth of 6.3%, including recurring revenue growth of 5.8%.

• 2026 outlook: On an adjusted basis, revenue projected to grow 30%-31% with EBITDA growing 34%-35%, EBITDA margins projected to increase 155-175 basis points. On a pro forma basis, revenue anticipated to grow 5.1%-5.7%, pro forma EBITDA to grow 7.2%-8.4%, pro forma margins to expand 95-110 basis points. Adjusted EPS projected to grow 8%-10% to $6.22-$6.32. • 2026 free cash flow anticipated to be over $2 billion, growing 27%-33% year-on-year. • First quarter 2026 adjusted revenue projected to grow 29%-30%, pro forma growth 5.5%-6.2%, adjusted EBITDA projected to increase 33%-35%, margins to expand 115-135 basis points, pro forma EBITDA to increase 7.1%-8.4%, pro forma margin expansion 35-55 basis points, adjusted EPS expected to increase 4%-7% to $1.26-$1.30.

Q: Tien-Tsin Huang with JPMorgan asked about the risk of AI automating or replacing key functions FIS provides to banks.

A: Stephanie Ferris said FIS has a durable advantage with mission-critical systems of record, proprietary data sets, deep integration into regulated workflows, and enterprise-grade governance. AI is a strategic accelerant for enhancing capabilities like fraud prevention, client onboarding, and productivity initiatives.

Q: Ramsey El-Assal with Cantor Fitzgerald asked about the pace of shift in capital markets to higher-quality recurring revenue.

A: Stephanie Ferris said the shift is ongoing, with recurring revenue in capital markets expected to be mid- to high-single digits in 2026, and James Kehoe added it's a continuing trend.

Q: Darrin Peller with Wolfe Research asked about competitive dynamics in issuer business and financial incorporation of issuer synergies.

A: Stephanie Ferris said acquisition of Total Issuing business brings strong product capabilities and leverages existing relationships, with product capabilities being large, scaled, and best-in-class, and issuer synergies will be incorporated as part of the financial outlook.

Q: William Nance with Goldman Sachs asked about growth drivers in Banking business.

A: Stephanie Ferris said it's broad-based with commercial excellence, strong products, and buy-build partner strategy.

Q: Timothy Chiodo with UBS asked about Worldpay revenue.

A: Stephanie Ferris said continued growth is due to strong use of FIS products like loyalty and premium payback.

Q: Bryan Bergin with TD Cowen asked about sources of free cash flow expansion to $3 billion by 2028.

A: James Kehoe said it includes capital intensity reduction, working capital optimization, and reduction in transformation and integration costs.

Q: Andrew Schmidt with KeyBanc Capital Markets asked about bank M&A in outlook and Agentic solutions.

A: Stephanie Ferris said more bank M&A expected, and Agentic is focused on ensuring banks can handle Agentic commerce transactions and fraud.

Q: Vasu Govil with KBW asked about AI engagement from bank clients and margin variability.

A: Stephanie Ferris said banks are rapidly adopting AI for cost reduction and growth, and James Kehoe said higher customer demand for lower-margin products and currency rates impacted margins in Q4 but core margins were strong.