- Fourth quarter GAAP Diluted Earnings Per Share for continuing operations of $0.11 and Adjusted EPS of $0.94
- Including discontinued operations, fourth quarter GAAP Diluted Earnings Per Share of $0.42 and Adjusted EPS of $1.67
- Full-year 2023 GAAP Diluted Earnings Per Share for continuing operations of $0.85 and Adjusted EPS of $3.37
- Including discontinued operations, full-year 2023 GAAP Diluted (Loss) Per Share of $(11.26) and Adjusted EPS of $6.17
- Outperformed Future Forward expectations in 2023; raising Future Forward operational expense savings goal in 2024
- Announces increase to previously communicated share repurchase goal; increasing goal to repurchase at least $4.0 billion of shares by year end 2024, up from previous goal of at least $3.5 billion, including $510 million of shares repurchased in 4Q 2023
- Announces first quarter and full-year 2024 outlook including accelerated revenue growth, expanding adjusted EBITDA margins, and year-over-year adjusted EPS growth
JACKSONVILLE, Fla.–(BUSINESS WIRE)–FIS® (NYSE:FIS), a global leader in financial services technology, today reported its fourth quarter and full-year 2023 results.
“Our 2023 results and our 2024 outlook reflect the continued positive momentum of the business as we delivered on our financial commitments for the fourth consecutive quarter and successfully closed the Worldpay transaction,” said FIS CEO and President Stephanie Ferris. “I am pleased with our outperformance on our Future Forward expectations, and to announce that we are once again increasing our share repurchase goal by $500 million reflecting our confidence in the strength of the business and our ongoing commitment to returning capital to shareholders. As we turn the page to the next chapter of FIS, I look forward to providing you with a comprehensive deep-dive into FIS’ corporate strategy at our upcoming Investor Day in New York City on May 7th.”
Financial Reporting Considerations for Completed Worldpay Transaction
On July 6, 2023, the Company announced an acceleration of its previously announced separation plan to create two highly focused global companies with greater strategic flexibility. FIS signed a definitive agreement to sell a 55% stake in its Worldpay Merchant Solutions business to private equity funds managed by GTCR. The Worldpay transaction was completed on January 31, 2024.
Unless otherwise noted, all results are presented on a continuing operations basis and exclude the results of the Company’s Worldpay Merchant Solutions business that was classified as discontinued operations as of the third quarter of 2023.
Beginning in the first quarter of 2024, FIS’ 45% ownership of the Worldpay Merchant Solutions business will be reported under the “Equity method investment earnings (loss)” line of the income statement (EMI).
Capital Allocation Update
The Company remains committed to shareholder returns and is increasing its goal to repurchase at least $4.0 billion of shares by year end 2024, up from the previous goal of at least $3.5 billion, inclusive of $510 million of shares repurchased in the fourth quarter of 2023. Additionally, the Company continues to target a dividend payout ratio of 35% of adjusted net earnings, excluding equity method investment earnings (loss) (EMI).
On February 25, 2024, FIS’ Board of Directors approved a regular quarterly dividend of $0.36 per common share. The dividend is payable on March 22, 2024, to shareholders of record as of close of business on March 8, 2024.
Fourth Quarter 2023 Financial Results
On a GAAP basis, excluding $1.2 billion of revenue classified as discontinued operations, revenue decreased 1% as compared to the prior year period to approximately $2.5 billion. GAAP net earnings attributable to common stockholders from continuing operations were $64 million or $0.11 per diluted share. Including discontinued operations, GAAP net earnings attributable to common stockholders were $251 million or $0.42 per diluted share.
On an adjusted basis, revenue was flat as compared to the prior-year period driven by 7% adjusted recurring revenue growth, offset by a 16% decline in adjusted non-recurring revenue. Adjusted EBITDA margin expanded by 70 basis points (bps) over the prior-year period to 42.1% primarily driven by cost efficiencies. Adjusted net earnings for continuing operations were approximately $558 million, and adjusted EPS decreased by 4% as compared to the prior-year period to $0.94 per diluted share primarily due to a $0.07 headwind associated with higher interest costs. Including discontinued operations, adjusted net earnings were approximately $985 million and adjusted EPS decreased 2% as compared to the prior-year period to $1.67 per diluted share primarily due to a $0.05 headwind associated with higher interest costs.
|
($ millions, except per share data, unaudited) |
|
Three Months Ended December 31, |
||||||||||
|
|
|
|
|
|
|
% |
|
Adjusted |
||||
|
Continuing Operations |
|
2023 |
|
2022 |
|
Change |
|
Growth |
||||
|
Banking Solutions Revenue |
|
1,692 |
|
|
1,694 |
|
|
0% |
|
0% |
||
|
Capital Market Solutions Revenue |
|
755 |
|
|
739 |
|
|
2% |
|
1% |
||
|
Operating Segment Total Revenue |
|
$ |
2,447 |
|
|
$ |
2,433 |
|
|
1% |
|
0% |
|
Corporate and Other Revenue |
|
|
63 |
|
|
|
93 |
|
|
(32)% |
|
– |
|
Consolidated FIS Revenue |
|
$ |
2,510 |
|
|
$ |
2,526 |
|
|
(1)% |
|
– |
|
Adjusted EBITDA |
|
$ |
1,057 |
|
|
$ |
1,045 |
|
|
1% |
|
|
|
Adjusted EBITDA Margin |
|
|
42.1 |
% |
|
|
41.4 |
% |
|
70 bps |
|
|
|
Net Earnings (GAAP) |
|
$ |
64 |
|
|
$ |
109 |
|
|
(41)% |
|
|
|
Diluted Earnings Per Common Share (GAAP) |
|
$ |
0.11 |
|
|
$ |
0.18 |
|
|
(39)% |
|
|
|
Adjusted Net Earnings |
|
$ |
558 |
|
|
$ |
585 |
|
|
(5)% |
|
|
|
Adjusted EPS |
|
$ |
0.94 |
|
|
$ |
0.98 |
|
|
(4)% |
|
|
|
($ millions, except per share data, unaudited) |
|
Three Months Ended December 31, |
||||||||||
|
|
|
|
|
|
|
% |
|
Adjusted |
||||
|
Total FIS (Including Discontinued Operations) |
|
2023 |
|
2022 |
|
Change |
|
Growth |
||||
|
Net Earnings (Loss) (GAAP) |
|
$ |
251 |
|
|
$ |
(17,365) |
|
|
* |
|
|
|
Diluted Earnings (Loss) Per Common Share (GAAP) |
|
$ |
0.42 |
|
|
$ |
(29.28) |
|
|
* |
|
|
|
Adjusted Net Earnings |
|
$ |
985 |
|
|
$ |
1,019 |
|
|
(3)% |
|
|
|
Adjusted EPS |
|
$ |
1.67 |
|
|
$ |
1.71 |
|
|
(2)% |
|
|
|
*Indicates comparison not meaningful |
||||||||||||
Full-Year 2023 Financial Results
On a GAAP basis, excluding $4.9 billion of revenue classified as discontinued operations, revenue increased 1% as compared to the prior year to approximately $9.8 billion. GAAP net earnings attributable to common stockholders from continuing operations were $503 million or $0.85 per diluted share. Including discontinued operations, GAAP net earnings (loss) attributable to common stockholders were $(6,654) million or $(11.26) per diluted share, including a $6.8 billion non-cash goodwill impairment charge recorded in the year related to the Merchant Solutions reporting unit.
On an adjusted basis, revenue increased 3% as compared to the prior year driven by 5% adjusted recurring revenue growth, partially offset by a 4% decline in adjusted non-recurring revenue. Adjusted EBITDA margin contracted by 40 basis points (bps) over the prior year to 40.4% as cost efficiencies were more than offset by a lower contribution from higher margin non-recurring revenue. Adjusted net earnings for continuing operations were approximately $2.0 billion, and adjusted EPS decreased by 11% as compared to the prior year to $3.37 per diluted share primarily due to a $0.49 headwind associated with higher interest costs. Including discontinued operations, adjusted net earnings were approximately $3.7 billion and adjusted EPS decreased 7% as compared to the prior year to $6.17 per diluted share primarily due to a $0.46 headwind associated with higher interest costs.
|
($ millions, except per share data, unaudited) |
|
Twelve Months Ended December 31, |
||||||||||
|
|
|
|
|
|
|
% |
|
Adjusted |
||||
|
Continuing Operations |
|
2023 |
|
2022 |
|
Change |
|
Growth |
||||
|
Banking Solutions Revenue |
|
6,733 |
|
|
6,624 |
|
|
2% |
|
2% |
||
|
Capital Market Solutions Revenue |
|
2,766 |
|
|
2,631 |
|
|
5% |
|
5% |
||
|
Operating Segment Total Revenue |
|
$ |
9,499 |
|
|
$ |
9,255 |
|
|
3% |
|
3% |
|
Corporate and Other Revenue |
|
|
322 |
|
|
|
464 |
|
|
(31)% |
|
– |
|
Consolidated FIS Revenue |
|
$ |
9,821 |
|
|
$ |
9,719 |
|
|
1% |
|
– |
|
Adjusted EBITDA |
|
$ |
3,972 |
|
|
$ |
3,961 |
|
|
0% |
|
|
|
Adjusted EBITDA Margin |
|
|
40.4 |
% |
|
|
40.8 |
% |
|
(40) bps |
|
|
|
Net Earnings (GAAP) |
|
$ |
503 |
|
|
$ |
608 |
|
|
(17)% |
|
|
|
Diluted Earnings Per Common Share (GAAP) |
|
$ |
0.85 |
|
|
$ |
1.01 |
|
|
(16)% |
|
|
|
Adjusted Net Earnings |
|
$ |
1,999 |
|
|
$ |
2,297 |
|
|
(13)% |
|
|
|
Adjusted EPS |
|
$ |
3.37 |
|
|
$ |
3.78 |
|
|
(11)% |
|
|
|
($ millions, except per share data, unaudited) |
|
Twelve Months Ended December 31, |
||||||||||
|
|
|
|
|
|
|
% |
|
Adjusted |
||||
|
Total FIS (Including Discontinued Operations) |
|
2023 |
|
2022 |
|
Change |
|
Growth |
||||
|
Net Earnings (Loss) (GAAP) |
|
$ |
(6,654) |
|
|
$ |
(16,720) |
|
|
* |
|
|
|
Diluted Earnings (Loss) Per Common Share (GAAP) |
|
$ |
(11.26) |
|
|
$ |
(27.68) |
|
|
* |
|
|
|
Adjusted Net Earnings |
|
$ |
3,655 |
|
|
$ |
4,033 |
|
|
(9)% |
|
|
|
Adjusted EPS |
|
$ |
6.17 |
|
|
$ |
6.65 |
|
|
(7)% |
|
|
|
*Indicates comparison not meaningful |
||||||||||||
Segment Information
-
Banking Solutions:
Fourth quarter revenue was flat on a GAAP basis and an adjusted basis as compared to the prior-year period at $1.7 billion reflecting adjusted recurring revenue growth of 7%, offset by a 22% decrease in adjusted non-recurring revenue. Adjusted EBITDA margin expanded by 270 basis points as compared to the prior-year period to 44.2% primarily driven by cost efficiencies.Full-year revenue increased by 2% on a GAAP basis and 2% on an adjusted basis as compared to the prior year to $6.7 billion reflecting adjusted recurring revenue growth of 4%, partially offset by a 6% decrease in adjusted non-recurring revenue. Adjusted EBITDA margin was flat as compared to the prior year at 43.5% with Future Forward cost efficiencies being offset by a lower contribution from higher margin non-recurring revenue.
-
Capital Market Solutions:
Fourth quarter revenue increased by 2% on a GAAP basis and 1% on an adjusted basis as compared to the prior-year period to $755 million primarily due to adjusted recurring revenue growth of 7%, partially offset by a 10% decline in adjusted non-recurring revenue. Adjusted EBITDA margin contracted by 250 basis points over the prior-year period to 53.2% primarily due to lower contribution from higher margin non-recurring revenue.Full-year revenue increased by 5% on a GAAP basis and 5% on an adjusted basis as compared to the prior year to $2.8 billion primarily due to adjusted recurring revenue growth of 9%, partially offset by a 7% decline in adjusted professional services revenue. Adjusted EBITDA margin contracted by 60 basis points over the prior year to 50.3% primarily due to revenue mix.
-
Corporate and Other:
Fourth quarter revenue decreased by 32% as compared to the prior-year period to $63 million primarily due to the divestitures of non-strategic businesses. Adjusted EBITDA loss was $92 million, including $101 million of corporate expenses.Full-year revenue decreased by 31% as compared to the prior year to $322 million. Adjusted EBITDA loss was $345 million, including $410 million of corporate expenses.
As a result of our ongoing portfolio assessments, the Company reclassified certain non-strategic operations from Banking Solutions to Corporate and Other in the quarter ended December 31, 2023, and recast all prior-period segment information presented. Revenue during the year ended December 31, 2023, from the operations reclassified during the fourth quarter of 2023 represented approximately 1% of consolidated revenue for the year ended December 31, 2023.
Discontinued Operations (Worldpay Merchant Solutions)
Fourth quarter revenue increased by 3% on a GAAP basis and 2% on an adjusted basis as compared to the prior-year period to $1.2 billion. Adjusted EBITDA decreased 1% to $556 million. Adjusted EBITDA margin contracted by 160 basis points as compared to the prior-year period to 45.5% primarily due to revenue mix.
Full-year revenue increased by 1% on a GAAP basis and 1% on an adjusted basis as compared to the prior year to $4.9 billion. Adjusted EBITDA decreased 2% to $2.2 billion. Adjusted EBITDA margin contracted by 160 basis points as compared to the prior year to 44.9% primarily due to revenue mix.
Balance Sheet and Cash Flows (Total Company, Including Discontinued Operations)
As of December 31, 2023, debt outstanding totaled $19.1 billion. Fourth quarter net cash provided by operating activities was $1.5 billion, and free cash flow was approximately $1.1 billion. In the quarter, the Company returned $815 million of capital to shareholders through $510 million of share repurchases and $305 million of dividends paid.
For the year, net cash provided by operating activities was $4.3 billion, and free cash flow was approximately $3.6 billion. For the year, the Company returned $1.7 billion of capital to shareholders through $510 million of share repurchases and $1.2 billion of dividends paid.
Future Forward Outperformance
As of December 31, 2023, on a continuing operations basis, the Company outperformed its expectations and achieved annualized run-rate Future Forward cash savings of over $550 million exiting the quarter, including over $370 million of operational expense savings and approximately $180 million of capital expense savings. The Company is increasing its target for operational expense savings and is reiterating its target for total cash savings exiting 2024 of $1.0 billion, of which over 75 percent represents run-rate cash savings.
First Quarter and Full-Year 2024 Outlook
The Company is introducing first quarter and full-year outlook and, for the full-year, is projecting accelerated revenue growth, expanding adjusted EBITDA margins and year-over-year adjusted EPS growth. The adjusted EPS outlook reflects 2 months of EMI contribution for the first quarter and 11 months of EMI contribution for the full-year.
Beginning in the first quarter of 2024, FIS’ 45% ownership of the Worldpay Merchant Solutions business will be reported under the “Equity method investment earnings (loss)” line of the income statement (EMI).
|
($ millions, except share data) |
1Q 2024 |
|
FY 2024 |
|
Revenue |
$2,430 – $2,455 |
|
$10,100 – $10,150 |
|
Adjusted EBITDA (Non-GAAP)1 |
$955 – $970 |
|
$4,100 – $4,140 |
|
Adjusted EPS (Non-GAAP)1 |
$0.94 – $0.97 |
|
$4.66 – $4.76 |
|
1The Company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. The Company is unable to address the probable significance of the unavailable information. |
|||
Webcast
FIS will sponsor a live webcast of its earnings conference call with the investment community beginning at 8:30 a.m. (EST) on Monday, February 26, 2024. To access the webcast, go to the Investor Relations section of FIS’ homepage, www.fisglobal.com. A replay will be available after the conclusion of the live webcast.
About FIS
FIS is a leading global provider of financial services technology solutions for financial institutions, businesses and developers. We improve the digital transformation of our financial economy, advancing the way the world pays, banks and invests. We provide the confidence made possible when reliability meets innovation, helping our clients run, grow and protect their business. Headquartered in Jacksonville, Florida, FIS is a member of the Fortune 500® and the Standard & Poor’s 500® Index. FIS is incorporated under the laws of the State of Georgia as Fidelity National Information Services, Inc., and our stock is traded under the trading symbol “FIS” on the New York Stock Exchange.
To learn more, visit www.fisglobal.com. Follow FIS on Facebook, LinkedIn and X (@FISGlobal).
FIS Use of Non-GAAP Financial Information
Generally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework of guidelines for financial accounting in the United States. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions and in the preparation of financial statements. In addition to reporting financial results in accordance with GAAP, we have provided certain non-GAAP financial measures.
These non-GAAP measures include constant currency revenue, adjusted revenue growth, adjusted EBITDA, adjusted EBITDA margin, adjusted net earnings, adjusted EPS, and free cash flow. These non-GAAP measures may be used in this release and/or in the attached supplemental financial information.
We believe these non-GAAP measures help investors better understand the underlying fundamentals of our business. As further described below, the non-GAAP revenue and earnings measures presented eliminate items management believes are not indicative of FIS’ operating performance. The constant currency revenue and adjusted revenue growth measures adjust for the effects of exchange rate fluctuations and exclude discontinued operations, while adjusted revenue growth also excludes revenue from Corporate and Other, giving investors further insight into our performance. Finally, free cash flow provides further information about the ability of our business to generate cash. For these reasons, management also uses these non-GAAP measures in its assessment and management of FIS’ performance.
Constant currency revenue represents reported segment revenue excluding the impact of fluctuations in foreign currency exchange rates in the current period.
Adjusted revenue growth reflects the percentage change in constant currency revenue for the current period as compared to the prior period. When referring to adjusted revenue growth, revenue from our Corporate and Other segment is excluded.
Adjusted EBITDA reflects net earnings (loss) before interest, other income (expense), taxes, and depreciation and amortization, and excludes certain costs and other transactions that management deems non-operational in nature, or that otherwise improve the comparability of operating results across reporting periods by their exclusion. This measure is reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance. For this reason, adjusted EBITDA, as it relates to our segments, is presented in conformity with Accounting Standards Codification 280, Segment Reporting, and is excluded from the definition of non-GAAP financial measures under the Securities and Exchange Commission’s Regulation G and Item 10(e) of Regulation S-K.
Adjusted EBITDA margin reflects adjusted EBITDA, as defined above, divided by revenue.
Adjusted net earnings excludes the impact of certain costs and other transactions which management deems non-operational in nature or that otherwise improve the comparability of operating results across reporting periods by their exclusion. These include, among others, the impact of acquisition-related purchase accounting amortization which is recurring.
Adjusted EPS reflects adjusted net earnings, as defined above, divided by weighted average diluted shares outstanding.
Free cash flow reflects net cash provided by operating activities, adjusted for the net change in settlement assets and obligations and excluding certain transactions that are closely associated with non-operating activities or are otherwise non-operational in nature and not indicative of future operating cash flows, less capital expenditures. Free cash flow does not represent our residual cash flow available for discretionary expenditures since we have mandatory debt service requirements and other non-discretionary expenditures that are not deducted from the measure. Free cash flow as presented in this earnings release includes cash flow from discontinued operations, which our management will not be able to freely access following the Worldpay separation.
Any non-GAAP measures should be considered in context with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP measures. Further, FIS’ non-GAAP measures may be calculated differently from similarly titled measures of other companies. Reconciliations of these non-GAAP measures to related GAAP measures, including footnotes describing the adjustments, are provided in the attached schedules and in the Investor Relations section of the FIS website, www.fisglobal.com.
Forward-Looking Statements
This earnings release and today’s webcast contain “forward-looking statements” within the meaning of the U.S. federal securities laws. Statements that are not historical facts, as well as other statements about our expectations, beliefs, intentions, or strategies regarding the future, or other characterizations of future events or circumstances, are forward-looking statements. Forward-looking statements include statements about anticipated financial outcomes, including any earnings outlook or projections, projected revenue or expense synergies or dis-synergies, business and market conditions, outlook, foreign currency exchange rates, deleveraging plans, expected dividends and share repurchases of the Company, the Company’s sales pipeline and anticipated profitability and growth, plans, strategies and objectives for future operations, strategic value creation, risk profile and investment strategies, any statements regarding future economic conditions or performance and any statements with respect to the sale of a majority stake in the Merchant Solutions business or any agreements or arrangements entered into in connection with such transaction, the expected financial and operational results of the Company, and expectations regarding the Company’s business or organization after the separation of Worldpay. Forward-looking statements may be identified by words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “will,” “should,” “could,” “would,” “project,” “continue,” “likely,” and similar expressions, and include statements reflecting future results or outlook, statements of outlook and various accruals and estimates. These statements relate to future events and our future results and involve a number of risks and uncertainties. Forward-looking statements are based on management’s beliefs as well as assumptions made by, and information currently available to, management.
Actual results, performance or achievement could differ materially from these forward-looking statements. The risks and uncertainties to which forward-looking statements are subject include the following, without limitation:
- changes in general economic, business and political conditions, including those resulting from COVID-19 or other pandemics, a recession, intensified or expanded international hostilities, acts of terrorism, increased rates of inflation or interest, changes in either or both the United States and international lending, capital and financial markets or currency fluctuations;
- the risk that acquired businesses will not be integrated successfully or that the integration will be more costly or more time-consuming and complex than anticipated;
- the risk that cost savings and synergies anticipated to be realized from acquisitions may not be fully realized or may take longer to realize than expected or that costs may be greater than anticipated;
- the risks of doing business internationally;
- the effect of legislative initiatives or proposals, statutory changes, governmental or applicable regulations and/or changes in industry requirements, including privacy and cybersecurity laws and regulations;
- the risks of reduction in revenue from the elimination of existing and potential customers due to consolidation in, or new laws or regulations affecting, the banking, retail and financial services industries or due to financial failures or other setbacks suffered by firms in those industries;
- changes in the growth rates of the m
Contacts
Ellyn Raftery, 904.438.6083
Chief Marketing & Communications Officer
FIS Global Marketing & Corporate Communications
Ellyn.Raftery@fisglobal.com
George Mihalos, 904.438.6438
Senior Vice President
FIS Investor Relations
Georgios.Mihalos@fisglobal.com
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