• Revenue Growth: 4% in Q4 2024; full-year growth of 4%.
• Adjusted EBITDA Margin: Expanded more than 100 basis points year-over-year in Q4.
• Adjusted EPS Growth: 49% increase in Q4; 18% growth for the full year on a normalized basis.
• Shareholder Returns: $4.8 billion returned in 2024, including $1.2 billion in Q4.
• Free Cash Flow: $700 million in Q4 with a cash conversion rate of 110%.
• Total Debt: $11.3 billion with a leverage ratio of 2.65 times.
• Banking Revenue Growth: 2% in Q4; impacted by onetime items.
• Capital Markets Revenue Growth: 9% in Q4; 7% for the full year.
• 2025 Revenue Outlook: Projected growth of 4.6% to 5.2%.
• 2025 Margin Expansion: Expected 40 to 45 basis points.
• 2025 Adjusted EPS Growth: Projected 9% to 11%.
• 2025 Capital Return Target: $2 billion.

• Warning! GuruFocus has detected 6 Warning Signs with FIS.

Release Date: February 11, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Fidelity National Information Services Inc (NYSE:FIS) achieved an 18% growth in adjusted EPS on a normalized basis, exceeding their full-year outlook.
• The company returned $4.8 billion to shareholders through share repurchases and dividends in 2024, including $1.2 billion in the fourth quarter.
• FIS experienced a 70% year-over-year growth in new sales of digital solutions, driven by cross-sales into core clients.
• The company expanded its margin by 64 basis points in 2024, surpassing the original outlook of 20 to 40 basis points.
• FIS signed a strategic partnership with Affirm, enhancing its offerings with buy now pay later capabilities, demonstrating a commitment to innovation.

Negative Points

• Revenue growth in 2024 was slightly below expectations due to some one-time items, impacting the overall financial performance.
• Banking revenue growth lagged expectations in the fourth quarter due to unexpected items, including a large license deal push-out and a termination fee reversal.
• Free cash flow conversion fell short of expectations, with a full-year cash conversion of 77%, prompting the company to take action to improve working capital conversion.
• The company experienced a partial system outage in the first quarter, although it was not a cyberattack and had no material impact on results.
• Worldpay-related revenue is expected to be a slight headwind in 2025, not contributing to growth as anticipated.

Q & A Highlights

Q: Can you elaborate on the expectations for banking revenue growth acceleration throughout 2025, particularly regarding recurring and non-recurring revenue? A: Stephanie Ferris, CEO, explained that strong new sales wins from late 2023 and early 2024 are expected to impact revenue starting in Q2 2025. These are core wins and digital solutions with longer implementation tails. James Kehoe, CFO, added that Q1 will be the low point, with growth accelerating in Q2 to align with full-year expectations, driven by signed deals and improved client retention.

Q: Was there any financial impact from the technology outage in Q1? A: Stephanie Ferris, CEO, confirmed that the outage was not due to a cyberattack and did not result in data breaches. The incident was resolved quickly, and there is no expected material impact on FIS's financial results or operations.

Q: What is the outlook for Annual Contract Value (ACV) growth in 2025 compared to 2024? A: Stephanie Ferris, CEO, stated that they expect ACV growth to exceed the 9% achieved in 2024. The focus will be on digital, payments, and lending sales, with increased sales personnel in these high-growth areas. The company is also targeting the office of the CFO as a significant growth opportunity.

Q: How does the current portfolio align with FIS's strategic goals, and are there any areas for improvement? A: Stephanie Ferris, CEO, expressed satisfaction with the portfolio's alignment with strategic goals, focusing on core business wins and growth areas like digital, payments, and lending. The company is leveraging its scale and global distribution to differentiate itself from competitors, particularly in commercial lending and the office of the CFO.

Q: What are the key drivers for the 2025 free cash flow conversion guidance, and how will it improve in the long term? A: James Kehoe, CFO, highlighted that capital expenditures are projected at 9% of revenue in 2025, with a long-term goal of 8%. Improvements in accounts payable terms and collections processes are expected to enhance cash flow conversion, aiming for a return to 90% conversion by 2026.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.