Fidelity National Information Services, Inc. (FIS) Q1 2025 Earnings Summary

Executive Summary

• Adjusted revenue grew 4% to $2.532B, above the high end of outlook; adjusted EBITDA was $958M with margin 37.8%, and adjusted EPS rose 11% to $1.21, near the high end of guidance .
• Banking Solutions grew 2% with margins contracting to 40.1% on lapping high license/termination fees; Capital Markets grew 9% adjusted with margin expansion to 48.3% on strong license renewals; consolidated adjusted EBITDA margin compressed 142 bps YoY on prior-year non-recurring mix .
• Free cash flow conversion was strong (71%) with adjusted FCF of $368M; cash from operations was $457M; capital returns were $670M ($450M buybacks, $220M dividends) .
• Reiterated FY25 guidance (revenue $10.435–$10.495B, adjusted EBITDA $4.305–$4.335B, adjusted EPS $5.70–$5.80) and introduced Q2 guidance (revenue $2.560–$2.585B, adjusted EPS $1.34–$1.38), with management calling for sequential margin improvement of ~200 bps in Q2 and banking acceleration tied to commercial excellence (+150 bps) .
• Strategic repositioning: sale of remaining Worldpay stake to Global Payments ($6.6B) and acquisition of Issuer Solutions (net EV $12B) expected to be accretive in first 12 months and to strengthen recurring revenue, margins, and cash flow profile; closing targeted 1H26 pending approvals .

What Went Well and What Went Wrong

What Went Well

• Adjusted revenue growth of 4% exceeded the high end of outlook; adjusted EPS $1.21 grew 11% YoY, reflecting recurring revenue acceleration from 2% in Q4 to 4% in Q1; management reaffirmed full-year outlook .
• Capital Markets delivered 9% adjusted revenue growth and 90 bps margin expansion to 48.3% on strong license and renewal timing; professional services expected to return to growth in Q2 .
• Free cash flow conversion improved materially (71%) driven by working capital initiatives (e.g., vendor terms to ~90 days); adjusted FCF reached $368M vs $95M in prior year .

Management quotes:

• “We delivered adjusted revenue growth of 4%…free cash flow conversion exceeded 70%…confident in reaffirming our full-year outlook.” — CEO Stephanie Ferris .
• “Adjusted EBITDA came in close to the high end…Free cash flow was $368 million…conversion rate of 71%.” — CFO James Kehoe .

What Went Wrong

• Consolidated adjusted EBITDA margin compressed 142 bps YoY to 37.8% due to lapping high prior-year license and termination fees; Banking margin contracted 379 bps to 40.1% on similar mix and timing .
• Banking professional services declined 5% as large projects concluded at year-end; Banking nonrecurring revenue was only +3% as expected headwinds offset by card production .
• Equity method investment (Worldpay) was a $71M loss (net of tax) impacting GAAP EPS; EMI creates tougher year-on-year comparisons near term as operating expenses ramp at Worldpay .

Financial Results

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Our durable business model is underpinned by high levels of recurring revenue…delivering consistent financial results across all economic cycles.” — CEO Stephanie Ferris .
• “We are reaffirming our outlook for the full year…projecting sequential margin improvement of approximately 200 basis points in the second quarter.” — CFO James Kehoe .
• “Issuer Solutions…will expand FIS’ payment product suite…accretive in the first 12 months to adjusted EPS, EBITDA margins and adjusted free cash flow.” — CEO Stephanie Ferris .
• “We have good line of sight into the 150 basis points of incremental banking growth that is tied to commercial excellence.” — CFO James Kehoe .
• “Our pipeline is increasing very significantly…not seeing any impact from clients in terms of slowing spend.” — CEO Stephanie Ferris .

Q&A Highlights

• Pipeline and implementations: All three delayed client conversions are live; pipeline trending strongly despite macro; Issuer Solutions client feedback positive .
• Capital Markets outlook: Q2 deceleration versus Q1 driven by outsized Q1 renewal timing; recurring trends consistent .
• Banking + Issuer Solutions pro forma: Adds ~$2.5B revenue, increases banking scale ~35%, ~80% recurring with margins low-to-mid 40s; cross-sell opportunities across debit/credit bundles .
• Worldpay EMI and comps: EMI outlook consistent; tougher YoY comparisons near term as stand-alone expenses ramp; management not guiding to Worldpay margins .
• Working capital and capex: Vendor term extensions (~90 days) and governance driving cash conversion; capex expected ~8–9% of revenue with ongoing TSYS modernization .
• Dis-synergies: No dis-synergies expected from Worldpay sale beyond those already taken at 55% separation .

Estimates Context

• Wall Street consensus (S&P Global/Capital IQ) for Q1 2025 revenue, EPS and EBITDA was unavailable via our data pull; as a result, we cannot benchmark the quarter against external consensus at this time (values unavailable; attempted retrieval on Primary EPS Consensus Mean, Revenue Consensus Mean, EBITDA Consensus Mean for Q1 2025, Q4 2024, Q3 2024, FY 2025) [GetEstimates: unavailable].
• Internally, management stated adjusted revenue, EBITDA, and EPS were near or above the upper end of their guidance ranges for the quarter, and reaffirmed FY25 guidance, implying limited need for estimate revisions if execution continues .

Key Takeaways for Investors

• Recurring revenue acceleration and high mix (81%) underpin stability; near-term Banking acceleration is driven by “commercial excellence” with sold deals converting to revenue in 2H25 .
• Margin compression in Q1 reflects lapping prior-year non-recurring license/termination fee mix; management guides ~200 bps sequential margin improvement in Q2 and progression to 41.3% for FY25 .
• Capital Markets strength (license renewals) normalized for Q2, but recurring growth and operating leverage remain intact; watch for license cadence and PS recovery .
• Free cash flow conversion initiatives are tangible; Q1 conversion at 71% provides confidence in the FY target and ongoing capital returns ($1.2B buybacks planned for 2025) .
• Strategic actions (Issuer Solutions acquisition; Worldpay stake monetization) are potentially accretive to margins/EPS/FCF and transform the mix toward durable issuer processing revenue; monitor regulatory/closing timeline (1H26) and synergy capture ($150M EBITDA synergies; $125M LT revenue synergies) .
• Near-term trading: Q2 print is a catalyst given guided sequential margin improvement and banking acceleration; estimate compares to consensus unavailable, but internal guidance implies stability. Medium-term thesis: mix shift to scaled issuer + debit processing, improved cash generation, and tight cost control support multiple resilience .
• Risks: EMI comparisons, integration execution, regulatory approvals, macro; management indicates high visibility on cost programs and no additional Worldpay dis-synergies expected .