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FIS NYSE· Fidelity National Information Services, Inc
Earnings report Q3 2023

FIS Reports Mixed Revenue Performance in Latest Quarter

Segments of Revenue

FIS, a leading provider of financial technology services, reported a mixed performance in its latest quarter. The company's financial performance is based on three segments: Banking Solutions, Capital Market Solutions, and Corporate and Other.

In the Banking Solutions segment, revenue increased by 2% year over year for the nine months ended September 30, 2023. This growth was driven by a 4% contribution from recurring revenue, fueled by increased payment volumes in commercial services and value-added processing businesses. Additionally, revenue was boosted by volumes associated with servicing federally funded pandemic relief programs. However, non-recurring revenue declined by 2% due to a reduction in license revenue and termination fees compared to the prior year.

The Capital Market Solutions segment's revenue performance for the latest quarter was not provided in the available information.

Strengths

FIS boasts a highly diversified customer base, with no single customer accounting for more than approximately 1% of its total revenue in 2022. This diversification reduces the company's reliance on any specific client and enhances its stability.

The company's position as a leading provider of financial technology services to the top 100 U.S. banks by asset size and other global financial institutions positions it well to benefit from the growth in the financial industry. FIS continues to provide services for banks that closed during the first nine months of 2023 and is paid during their transition, minimizing revenue exposure from potential contract terminations.

Management attributed the increase in adjusted EBITDA and adjusted EBITDA margin to Future Forward cost savings, indicating effective cost management strategies.

Challenges

The specific revenue performance of the Capital Market Solutions segment was not provided in the available information, limiting our assessment of this segment's financial performance.

Adjusted EBITDA and adjusted EBITDA margin declined year over year due to revenue mix, partially offset by Future Forward cost savings. Further details regarding the impact of revenue mix on profitability were not provided.

Noteworthy

The available information did not provide any noteworthy or out-of-the-ordinary factors regarding FIS's performance in the latest quarter.

Summary

FIS reported a mixed revenue performance in its latest quarter. While the Banking Solutions segment experienced a 2% increase in revenue, driven by growth in recurring revenue and volumes associated with pandemic relief programs, non-recurring revenue declined. The specific revenue performance of the Capital Market Solutions segment was not disclosed. FIS's strengths lie in its highly diversified customer base and its position as a leading provider of financial technology services to major financial institutions. The company's effective cost management strategies, reflected in increased adjusted EBITDA and adjusted EBITDA margin, contributed to its overall performance. However, challenges include the decline in adjusted EBITDA and adjusted EBITDA margin due to revenue mix, although specific details were not provided.

Source documents

Form 10-Q  filed on Nov 07, 2023
71 pages scanned

Reference data

Company financials Q3 revenue 2.49B
Analyst estimates Q3 EPS beat by 4.21%
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