Fidelity National Information Services, Inc. (FIS) Q3 2025 Earnings Summary

Executive Summary

• Q3 revenue was $2.717B (+6% YoY), adjusted EBITDA $1.135B with margin of 41.8% (+53 bps YoY), and adjusted EPS $1.51 (+8% YoY); GAAP diluted EPS was $0.50 .
• Free cash flow of $798M and adjusted free cash flow of $929M grew 101% and 75% YoY, respectively; adjusted cash conversion ran >140% in the quarter and the full-year target was raised to >85% .
• FY25 guidance was raised: revenue $10.595–$10.625B, adjusted EBITDA $4.330–$4.345B, and share repurchases increased to ~$1.3B; adjusted EPS range narrowed to $5.74–$5.78 (maintained) .
• Strategy update: Issuer Solutions acquisition now expected to close in Q1 2026, with deleveraging to ~2.8x gross leverage within 18 months post-close; Worldpay minority stake sale proceeds fund the deal .
• Key stock reaction catalysts: raised FY revenue/EBITDA guidance, exceptional FCF conversion, visible recurring revenue momentum, and line-of-sight to credit issuer scale in 2026 .

What Went Well and What Went Wrong

• What Went Well

  • Banking Solutions delivered 6% revenue growth to $1.9B with margin expanding 68 bps to 45.8%; CEO highlighted “disciplined execution driving outperformance against all of our financial commitments” .
  • Capital Markets grew revenue 7% (adjusted +6%) to $783M with margin expanding 60 bps to 50.5% on cost management and favorable mix .
  • Cash generation surprised positively: free cash flow $798M and adjusted FCF $929M; CFO noted cash conversion >140% on accelerated working capital actions, boosting repurchase target to $1.3B .

• What Went Wrong

  • Corporate & Other revenue fell 34% to $40M; adjusted EBITDA loss was $129M, inclusive of $143M corporate expenses .
  • Worldpay equity method investment continued to be a GAAP headwind (−$23M in Q3), reflecting investor-level tax and JV results; other non-operating items remain volatile .
  • Margin headwinds tied to 2025 tuck-in M&A and TSA persisted (CFO: M&A dilutive ~45–50 bps in 2025; TSA ~50 bps), with accretion expected in 2026 as cost programs ramp further .

Financial Results

Segment breakdown (Q3 2025):

KPIs and mix:

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO: “We delivered strong results this quarter with disciplined execution driving outperformance against all of our financial commitments… Our differentiated positioning… is translating into strong sales performance across all segments of our business” .
• CEO (AI/data scale): “More than three out of four banks have actively launched or are piloting GenAI… FIS holds a foundational advantage with over 200 petabytes of data” .
• CFO: “Free cash flow was $800 million… Adjusted free cash flow was approximately $930 million, with cash conversion… more than 140%… We… increased our annual target for share repurchases to $1.3 billion” .
• CFO (2026 outlook): “We are confident in delivering margin expansion of greater than 60 basis points in 2026… on track to deliver 90% conversion in 2026” .

Q&A Highlights

• Banking growth durability: Management sees organic banking growth mid-to-high 4% sustained by net new sales (~100 bps), transactions/account growth, and pricing tailwinds; not yet raising medium-term guide but “feeling really good about 2026” .
• Free cash flow quality: Base FIS exiting FY25 at ~85% conversion with upside from lower capital intensity and normalized taxes; issuer business roughly ~90% conversion, implying strong blended FCF despite one-time integration costs .
• Margin drivers: Dilution from tuck-ins (~45–50 bps) turns slightly accretive (~10 bps) in 2026; TSA headwind ~50 bps persists; bigger drivers are mix shift to higher-margin recurring and cost programs .
• Network pricing: Pricing environment described as rational; NICE performance driven by merchant wins and least-cost routing rather than price changes .
• Core consolidation opportunity: Industry core consolidation creates RFP opportunities; FIS is satisfied with its modernized three strategic platforms and strong renewals; expects competitive wins without a “massive swing” .
• EBT program exposure: Not material; shutdowns expected immaterial; revenue tied to card counts, with limited anticipated 2026 impact .

Estimates Context

• S&P Global consensus estimates for Q1–Q3 2025 were unavailable at time of query; therefore, beats/misses vs Street cannot be determined currently using S&P Global data.
• Versus company Q3 guidance provided alongside Q2 results, FIS reported above the ranges: revenue $2.717B vs $2.650–$2.665B and adjusted EPS $1.51 vs $1.46–$1.50, reflecting stronger-than-anticipated banking and recurring growth .

Key Takeaways for Investors

• Recurring revenue and mix improvements are driving sustainable margin expansion; Q3 adjusted EBITDA margin rose to 41.8% with segment margins expanding in both Banking and Capital Markets .
• Cash generation is a key near-term catalyst: Q3 adjusted FCF of $929M and raised FY conversion target to >85% supports increased buybacks (~$1.3B) and ongoing dividends ($0.40 per share) .
• Banking growth is broad-based across digital, core, and payments; Dragonfly and Money Movement Hub traction plus pricing tailwinds underpin mid-to-high single-digit recurring growth .
• 2026 setup looks favorable: tuck-in M&A turns accretive, cost programs ramp, and issuer credit scale adds $500M adjusted cash flow in 2026 rising to $700M post integration, with >60 bps margin expansion targeted .
• Worldpay JV remains a GAAP volatility source near term (equity method loss), but strategic monetization via minority stake sale and redeployment to Issuer Solutions simplifies the portfolio and enhances scale .
• Regional mix continues to tilt toward North America (Q3 NA revenue $2.125B), supporting stable demand from larger FI clients and pricing for value .
• Near-term trading: positive bias on raised FY guidance and FCF outperformance; monitor TSA headwind, any macro sensitivity in capital markets licensing, and execution on working capital and cost programs through Q4 .