Fidelity National at Wolfe Research FinTech Forum: Strategic Focus on Growth

Fidelity National Information Services (NYSE: FIS) presented a strategic overview at the Wolfe Research FinTech Forum on Wednesday, 12 March 2025. The company highlighted its successful Worldpay divestiture and capital returns while acknowledging challenges in free cash flow conversion. FIS forecasts robust revenue and EPS growth for 2025, driven by new sales and improved retention.

Key Takeaways

• FIS returned $4.8 billion to shareholders in 2024 and plans $2 billion in 2025.
• Revenue growth guidance for 2025 is set at 4.6% to 5.2%, with EPS growth of 9% to 11%.
• Digital ACV increased by 70%, with overall ACV up 9%.
• Free cash flow conversion was 77% in 2024, with a target of 83.5% for 2025.
• The company is focusing on product excellence, commercial excellence, and client experience.

Financial Results

• FIS completed the Worldpay divestiture and returned $4.8 billion to shareholders in 2024.
• The company plans to return $2 billion to shareholders in 2025, including $1.2 billion through buybacks.
• Overall ACV increased by 9%, with digital ACV rising by 70%.
• Core banking revenue grew by approximately 3%, while recurring revenue increased by 3.5%.
• FIS expects revenue growth of 4.6% to 5.2% and EPS growth of 9% to 11% in 2025.
• Capital markets achieved 7% revenue growth, with adjusted EBITDA margins expanding by over 70 basis points.
• Free cash flow conversion was 77% in 2024, with a target of 83.5% for 2025.
• Capital expenditure increased to 9% of revenue.

Operational Updates

• FIS completed the Worldpay divestiture and is focusing on product, commercial, and client excellence.
• The company reported a record year for new core banking deals, driven by the Horizon platform.
• Digital sales nearly doubled, and a dedicated salesforce is targeting office of the CFO solutions.
• Retention rates improved in the second half of 2024, reaching the high 90s.
• Delays in contract implementations have been largely resolved.
• FIS is downsizing corporate functions following the Worldpay divestiture.

Future Outlook

• Revenue growth acceleration is expected to be driven by net new sales and improved retention.
• The capital markets segment is poised for growth, supported by product excellence and market conditions.
• FIS is investing in digital capabilities, particularly the D1 Flex product.
• The company aims for a long-term free cash flow conversion of over 90%.
• FIS plans to continue increasing buyback capacity as EBITDA grows.
• A significant reduction in one-time expenses is anticipated post-Worldpay TSA exits.
• Dividend growth is expected to continue in line with EPS.

Q&A Highlights

• FIS is confident in the banking segment’s acceleration due to improved retention and new sales.
• One-time items affected Q1, but normalization is expected in Q2, leading to growth.
• The capital markets forecast is conservative, with potential for further upside.
• Visibility on contract implementations is strong, with delays largely resolved.
• FIS expects slightly more positive pricing in banking in 2025, with a net 50 basis points.

For a deeper dive into Fidelity National Information Services’ strategic plans and financial performance, readers are encouraged to refer to the full transcript.

Full transcript - Wolfe Research FinTech Forum:

Unidentified speaker, Interviewer: Afternoon, everybody, and thanks again for joining us on day two of the Wolfintech Forum here in New York City. Really happy to have FIS with us and the CFO, James Keough. We also have George Miales from investor relations here. Guys, thanks for being here, James. Thanks for for being here.

I remember last year was, you know, it was a great, great conversation we had. And I think it was actually one of the earlier ones you did after switching into the role in terms of fireside chats and conferences. Right? But it’s great to have you back. So nice.

Thank you. Maybe we’ll just start off just to look back at ’24, maybe just touch on what are some of the things you’re most proud of in terms of the accomplishments of the company from last year. Obviously, it was a year after, you know, a big transition was going on, right, with Worldpay and with material capital return, but also realigning the business under new leadership. And so maybe just give us a recap a little bit of the year and how you exited the year, and we’ll go into going looking forward.

James Keough, CFO, FIS: Okay. How would I characterize it? Roller coaster? Yeah. Joking aside, Worldpay end of January, that’s when the real work starts.

It looks like on paper it’s done. It’s not done. TSAs are in place. Gotta do the accounting for them. Two is a big change.

We’re proud of the pivot that we made to returning capital to shareholders. You know, the full year of 4,800,000,000.0. This year, we’re committing to 2,000,000,000, of which a buyback 1.2. It’s above what we said at investor day.

Unidentified speaker, Interviewer: Yep.

James Keough, CFO, FIS: And that brings me to another theme, investor day. I think it’s a useful exercise. It was the first time in six years. It’s useful to go through it when you try to carve out and explain what the business is. We broadly achieved our goals, but even as you step back now, I’m still not sure the market fully appreciates the value of the capital markets business.

And then, I think the bigger breakthrough was on operational excellence. I think you started to see the fruits of this. And I’ll just give you a couple of numbers. The ACV was up 9% of which banking was up low low teens. That’s a big success.

Okay. Recovering from a weaker prior year, but it’s a good stake in the ground that the sales force is focused on the right stuff. Within that, digital was up 70%, lending up double digit. So I think we particularly we exited the year in a position of strength in the sales force with a reinvigorated sales force. Horizon or call it lower to mid market core platform had regained its momentum in the market and that’s why we had a record year of core wins.

You know, the the MPS stores started improving, implementation times were better, the product quality was better. So it really has got our position back in the market, and we’re going to continue to win in core.

Unidentified speaker, Interviewer: Nice. Maybe just going back for a moment to fourth quarter, if you could just revisit it, make sure investors understood whatever you wanted them to really take away from the quarter, it’ll be a good place to start.

James Keough, CFO, FIS: I was avoiding your question. Okay. That didn’t work. You know, what do you want to take away from the quarter? One is we were unhappy about it.

We got hit late in the quarter with stuff I would describe as purely one time. It it created almost a perfect storm. A termination that got reversed in the quarter and you have the true up of some other small stuff. And really it was small stuff relating to prior years. And it just showed how much the market is focused on one number in banking.

And I think what was a bit lost on the market was the strength of the delivery in the overall year was pretty good. If you carve out the one time stuff, the headwinds we had, and you take out M and A, you take out Worldpay, revenue, all the rest. The core revenue in banking was up around 3%, which was still a decent year. And then the recurring revenue was up about three and a half percent. Again, a decent year.

And I think it serves to we should have highlighted more. If you look back over four or five years, this is a business that consistently grows at 3% to 4%. Right? And it has all the potential to accelerate from there. Okay?

I think that was missing. Margins were good in the fourth quarter across both businesses. Capital markets had a spectacular year, exited very strongly as well, beat the full year guide convincingly. And I think we’re remembered for the miss as opposed to the consistency of delivery over two years, which that’s the way the markets work. But we were surprised by the reaction to it because the underlying core of the business was actually decently strong.

Unidentified speaker, Interviewer: Right. So look, I mean, I guess when we take into account some of these items that did affect the quarter, and it kind of brings me to the next question. I mean, you guided for overall company wide revenue growth of 4.6% to 5.2% for the year. As you said, it should be a recurring stable revenue story. Right?

James Keough, CFO, FIS: Yeah.

Unidentified speaker, Interviewer: And we saw some fits and starts with one time items. But, you know, looking at the year ahead of us, you also guided EPS growth of 9% to 11%, which is pretty similar to your Investor Day targets. If you could just talk about the puts and takes in the year ahead, the reason for the conviction in the acceleration from first quarter guide of around 3% to that midpoint closer to 5%. Yep. And really me especially the banking segment, you know, what informs that acceleration and the conviction in it?

Do you still have as much conviction now as you did when you gave it? And then just what informs the bottom end of the range versus the top end out outcomes?

James Keough, CFO, FIS: Yep. I’ll start with the easy one, which is capital markets. In all of the individual meetings, we continue to get the question, is it a conservative forecast? You know, what happened in capital markets is they came in very strong in Q4, particularly on licenses. We didn’t change the license forecast for ’25.

So is there some opportunity in capital markets in 2025? Probably. If you look at the banking business, there is an acceleration. We have in first quarter, we have some shift of business between about 100 basis points between Q1 and Q2. So that explains some of the step up.

The biggest single driver in the step up year on year is the impact of net new sales, 150 basis points. And it comes from two things, roughly split fifty-fifty. One is better retention and the other one is new sales that you sell that you sold last year or you will sell in the current year. So let let me take both of those. So retention in general was in the high 90s in the second half.

So this is of every contract negotiation we’re in, you’re basically retaining all of your customers. So what happens is that means that if you’re retaining a higher number, the level of attrition in the future year goes down and it is a positive driver on the year on year growth rate. The biggest single driver though is new sales And what we said was in banking it’s 80 bps, 20% of that is unsigned and 80% already signed. So if you think about a risk profile, the maximum risk in the guide for banking is 20% of 80 bps. That’s the way I would try and simplify the calculation.

So that is it’s effectively sales that you will sell ACV you will sell in twenty five twenty twenty five that will convert to revenue in 2025. That’s the risk. I would say retention is probably an opportunity versus when we put the budget together. And then you asked about conviction. We actually after we put the budget together, the fourth quarter, particularly in both businesses, but particularly in banking, came in better on ACV in the fourth quarter.

Unidentified speaker, Interviewer: Okay.

James Keough, CFO, FIS: And ACV in the fourth quarter is will convert in 2025, probably in the latter part of 2025. So what you have, if you can think about it, the net new sales in q one is x, q two is x plus 50 bps, q two is x plus a hundred bps, q four is x plus 50 bps. It continues to accelerate, during the year as the 2024 sales in particular convert in 2025.

Unidentified speaker, Interviewer: Okay. So your conviction is as high. I mean, we’re in March I

James Keough, CFO, FIS: would say the conviction is probably even higher.

Unidentified speaker, Interviewer: Okay. Because where we are in March now and seeing what you saw on AC

James Keough, CFO, FIS: There’s a bit of madness in the markets right now, but we’re in a very, resilient sector, if you think about it. We’re not impacted by tariffs. As a company, we’re not exposed to consumers particularly. We have a fairly small credit exposure and a much bigger debit debit business. And debit generally does better Yeah.

Unidentified speaker, Interviewer: A little more non discretionary.

James Keough, CFO, FIS: Uncertainty. It’s less discretionary. So we’re feeling in an okay place. We don’t see a slowdown in bank spending. So we’re kind of steady as she goes.

Strong rigor around commercial excellence Good. And a lot of focus on it.

Unidentified speaker, Interviewer: So the step function in your embedded guide from q one, especially in the banking segment, right, it probably has a lot to do with some of these nature, some of these one time item, you know, events happening, whether it’s comping term fees and license fees Yeah. Drawing over the synergies of the Worldpay, you know, transition and whatnot. But help us understand again. I mean, you’re gonna you’re guiding to I think it’s 1% growth in banking overall in q one, and then you have it accelerating as the year progresses.

James Keough, CFO, FIS: Yeah.

Unidentified speaker, Interviewer: Because for the full year, your guide is, you know, what, three to 4% or so for the banking segment. Right?

James Keough, CFO, FIS: Yeah. Well, I think we had a we’d called out two items on the call. And I hate to do this excluding excluding because you kind of end up being defensive. But if you take the guide, you said it’s 1%, There were lapping about 202 basis points of licenses in the prior quarter. We only called those out.

There was two massive. One was a term term fee and the other was a really large license like in the May.

Unidentified speaker, Interviewer: Q ’1 ’20 ’4.

James Keough, CFO, FIS: Q ’1 of ’20 ’4. We called that out. Mhmm. And then we said there’s some delays from q one to q two. That’s about a hundred bps.

If you do that, Matt, you kinda get to a four percent normalize, but I think the market doesn’t wanna hear all the normalization because it comes across as defensive. We actually once you carve out those specific items we’re lapping, the actual core is, call it close to a 4% and that’s x m and a. So, you know, that’s kind of where we look at it. You try to get we tried to give comfort to the market on our visibility and we took the unusual step of giving a form of guide for the second quarter on banking, basically saying we’ll be well within the full year guide. Right.

And you can be assured that our our methodology, I think I said it last year, is the high end of our guide is the it’s not the banking forecast or the banking budget. It’s the banking budget risk adjusted. We do a risk adjustment at corporate and say Okay. We think banking can do this. That’s the high end of the guide.

The low end, there’s no science. We basically say you just want some range on revenue. You want some cushion. Good. But it’s not scientific.

I you could actually or so I I’ll give you a good example. Let’s say the banking plan was 4%. As a matter of policy, we can’t range from three and a half to four and a half. That’s just a company policy. You have to have a plan that substantiates the high end of the range.

Unidentified speaker, Interviewer: Okay.

James Keough, CFO, FIS: So it’s it kinda ties our hands a little bit and makes us work with a narrow range.

Unidentified speaker, Interviewer: So when we consider the those items, the 200 bips that you’re gonna basically anniversary, right, through one quarter, combined with, you know, some of the other nuances we just talked about, you end up with that alone being assuming implementations go effective, right, being back to 4% for second quarter. And it sounds like you’re still seeing

James Keough, CFO, FIS: Of course.

Unidentified speaker, Interviewer: Conviction in that. Yeah. I I think the that brings me to the question of your visibility on the implementations. Right? I mean, again, you said yourself it was about a hundred basis point impact, last quarter.

Right? And so, you know, what are you seeing? I mean, there has been delays. I mean, what are your what are what’s causing those delays for us? What happened in there?

Was it the customer that was taking longer? Was it you guys? And where are we on those implementations now?

James Keough, CFO, FIS: Yeah. Two out of the three were client requests. They basically said we’re too close to Thanksgiving. We’re coming up to Christmas period. We don’t want to implement over year end.

Yep. It’s a peak transaction time. The good news is one of the two is has already went live last week, I believe.

Unidentified speaker, Interviewer: Okay.

James Keough, CFO, FIS: And the other one is going live next week. So we’re kinda later than planned. We’re doing what we said we would do because both of them are going live. The first one is slightly ahead of when we expect it. The other one is a large merger.

And, you know, it’s my understanding is it’s slated for the second quarter, and that should be reasonably certain. But this is a contract dating back to 2023 that was signed in 2023 that the client delayed pending the outcome of their merger. But if even if the merger doesn’t go through, the contract is still a valid contract.

Unidentified speaker, Interviewer: Alright. That’s that’s a great to hear. That’s great to hear, James. Let’s just shift for a little bit to the community banking side of of things. I mean, you’ve noted, obviously, you’re refocusing on core operations.

You’ve seen some tangible gains on that front. I know you’ve talked about digital sales having nearly doubled and the number of core banking deals signed on track above 23 levels, and other prior levels for that matter. So just how are you guys thinking of leveraging this momentum and to drive future growth? It’s an area that I know you’ve had, you know, fits and starts on over the last few years. Right?

Yeah. So it seems like we’re really investing back into it again. And what’s helping you win share in that that community and regional bank segment again?

James Keough, CFO, FIS: Yeah. I think I I think I would crystallize the phase one was client centricity. This year is all about and the go forward is all about we got three pillars in the company. Yep. One is product end to end product excellence.

And I think the horizon shows once you have a core product that’s actually working, you can sell it. Right? And our sales force can sell it. We’ve we have a product excellence case study in Horizon, and I’ll come back to it. The second part of the journey is I would call it, commercial excellence, ACV and selling into the client.

Again, I’ll come back to that in a minute. And the third one is client experience. So we see these three vectors driving our performance going forward. Let me I’ll go through one by one. So product, first of all, with Horizon, the product had defects, the execution in market was slower than planned, clients were dissatisfied.

Stephanie came in, fixed the execution, the product is way, way better and we’re winning traction in the market. Record year of new cores mostly driven by traction on horizon. So we’re in a position where the company is focused on if we have products, they will be working, they won’t have defects, they will be it’s called product excellence. Number two is the experience that the client receives is not necessarily the product they get. You gotta implement it.

You’ll have questions when you’re running the product. You’ll have tickets that open up. We’re marshaling teams around the client experience with goals around NPS scores at the client level plus implementation timelines that you referred to before. We’re holding one organization accountable for the implementation of sales already sold in prior periods. The final one is customer sorry, call call it commercial excellence.

Taking it up a level whereas before we looked at the function as this is a sales function. Now we’ve we’ve improved the specialization. We’ve changed sales incentives, and we’re focused much more on enterprise level pricing. So we’re going to be relying on these three vectors going forward. The organization is very much focused on this in the current year.

New teams have been set up against each one of these. So call it a doubling down on client centricity. This is stage two. And I I have really high hopes for performance and especially into ’22 exiting ’25 and into 2026.

Unidentified speaker, Interviewer: Great. That’s that’s really helpful. From a demand and from a it sounds like you said before, demand for banking in terms of technology upgrades and probably digitization is still as high as or any changes or what you’re seeing out there?

James Keough, CFO, FIS: No. I I think it’s more of a validation over existing strategy. You know, we said at investor day core banking will go along at its normal low single digit growth, and we don’t expect major change versus that over a long term horizon. But we see tremendous growth in digital, up 70% last year. We have ambitious goals for this year.

It does require investment. We’re investing we have strengthened the bigger institutions and we did a Dragonfly Yep. Acquisition. We’re investing most of our capital investment is on D1 Flex, call it the mid to lower market digital product. We still have some catching up to do.

So I would say you’re gonna see continued gains in our digital ACV sales going forward. The other big one that we’re highly focused on is office of the CFO, which is how do we bring to bear the the big suite of best in breed products for CFOs that have different necessarily things that they wanna solve for leading treasury systems, risk products, accounts payable, receiving, billing systems. And we’re gonna bring a suite of products to we are bringing a suite of products to market. We’ve already assembled a salesforce, dedicated salesforce of a hundred people focused on this with a dedicated VP of sales. So we’re taking, I think and it’s the other part of the change that underpins future growth, which is stage one was capture capture cross sell across the business.

Stage two were we implemented in q four, which is pushing more specialization down into the sales force.

Unidentified speaker, Interviewer: Very good. Yeah. Alright. When we go to the capital markets segment, you mentioned it earlier, you were getting some questions. But again, I mean, it had another strong year last year and probably beget some of the questions you’re getting of the kind of growth you’ve been already seeing and sustainability around that.

So again, you delivered 7% revenue growth with adjusted EBITDA margins also expanding, right, over 70 basis points. Segment was strong. It had license sales. It had cost savings, operating leverage. It was really it just seemed like a big success overall, even relative to your own Investor Day expectations.

So just maybe revisit that again. What are the biggest opportunities for the segment? Heading into ’25? Your guidance calls for the segment to be, I think you said, six and a half to 7%. Right?

James Keough, CFO, FIS: Yep.

Unidentified speaker, Interviewer: So let’s just talk about what gives you the confidence in maintaining this relatively healthy pace for what could be considered, you know, often a natural recurrent revenue story, but not necessarily always the fastest growing. But for you guys, it’s been showing some really good traction.

James Keough, CFO, FIS: Yeah. I think it’s this is a case study on the end to end product excellence over a long period of time. This is a business that was investing heavily two and three years ago to get products cloud enabled and have a best in breed product across most of the sectors and it pays off. And and what’s remarkable about the business is there’s three big businesses, trading and asset management, which is probably close on 50% of the business. That you would say is a TAM that’s growing at 4% to 5%.

It considerably outpaced TAM last year.

Unidentified speaker, Interviewer: Yep. Yep.

James Keough, CFO, FIS: So even the theoretically slower growth business in the portfolio is outpacing the time in the market. Why? Because the products are better. The other part that as a sector, a small business a little over 10% is what we call lending. We grew that at almost 20% last year.

ACV was strong as well. ACV stronger than 20%, which means we’re probably gonna have another really strong year in lending this year. Think about even asset leasing. And I think what characterizes capital markets, very few direct competitors. And when you’re in there, you’re in there with a best of breed product.

You’re not at a disadvantage. Right? So and you’re you’re you’re dealing with highly sophisticated buyers of highly sophisticated products. Right. These are and and I would say what gives me comfort with it, it’s an average TAM growth of 5% which you if you include the non traditional verticals, corporates, insurance companies, and the rest.

This raises the time up to closer to 6%. Right. So you got a natural tailwind in this business. Good products, natural tailwind, decent execution, you get the six and a half to seven. It includes 140 bps from acquisitions already executed.

That’s Demeka. Again, a double down on call it the type of office of the CFO that the contribution from acquisitions is similar to 2024. A little bit behind the Investor Day, the contribution from acquisitions, but we don’t build in acquisitions that are on-site.

Unidentified speaker, Interviewer: Right.

James Keough, CFO, FIS: So we’re this business is just a jewel. As you said, it’s not just the margin increase year on year, it’s the absolute margin. The absolute margin is 50% plus, right? On a business that’s growing consistently six, seven, eight, depending on the year with remarkable consistency. That’s a jewel, and I think it’s not fully appreciated in the market.

Yeah.

Unidentified speaker, Interviewer: I don’t disagree. Yeah. Right. So it sounds like from a growth standpoint, things are going in the right direction, and we’ll have to see some of the evidence as you know, some of these one time items kind of go behind us, and you’ll see the real growth. But the other question we had a lot about was really free cash flow, right?

I mean, you ended up at 77% conversion in 24%, and I know you’re guiding now to, let’s it, a midpoint of 83.5% for this year. So it’s an improvement. But, I guess we could just touch on, number one, the key drivers of that improvement, any risks to achieving those targets. Maybe just a follow-up on FIS. You also increased your CapEx levels to 9%.

So what’s really driving that? And obviously, supplier costs are a piece of it and vendor costs. But just help us understand the dynamic there and the conviction of the improvement in free cash conversion.

James Keough, CFO, FIS: Well, that was how many questions did you ask at the same time? CapEx, I’ll take the last one first. Yes, we’ve raised it to nine. Some of it coming from suppliers, maybe 40,000,000 a year, Concentrated into suppliers, we are developing contingency plans that it won’t happen with and we will we will teach a lesson over a period of time. We will develop alternatives over but it takes time, two to three years to build out a plan b.

The other part is the revenue is growing and we’re building infrastructure and capacity in the system. It’s just a timing thing that most of it is hitting 2025.

Unidentified speaker, Interviewer: Right.

James Keough, CFO, FIS: We do expect to get back closer to the 8% in 2026.

Unidentified speaker, Interviewer: Just from a leverage on revenue standpoint. Yeah.

James Keough, CFO, FIS: And free cash flow, I would say disappointed with the execution. We didn’t see some changes coming or we had governance that needs to be strengthened. Wasn’t the payables problem, wasn’t really the capital problem. It was all down on receivables. There were two changes.

A couple of contracts were signed with terms we expect it would be much shorter and that cost approximately $80,000,000 and there was another $80,000,000 coming from a higher mix of longer term contracts as opposed to shorter term recurring. Our forecasting system should have picked it up. It didn’t pick it up. We didn’t intervene quickly enough. I think a good way to think about ’25 versus ’24, ’20 ’5 will be the absence of the negatives that happened in ’24.

In particular, the extended terms will all be collected in 2025.

Unidentified speaker, Interviewer: Got it.

James Keough, CFO, FIS: And we’re putting in place new governance much earlier in the process so these terms can’t get extended again. So you’re gonna collect what you didn’t collect in ’24 Right. And you’re putting in place governance to stop the leakage that happened.

Unidentified speaker, Interviewer: So it should continue to get better. Because I know you said in ’26, it keeps getting better. I think I even asked the question on your last earnings call.

James Keough, CFO, FIS: Yeah. And then and then yeah. You’re right. Thanks for reminding me. Our goal remains 90% plus.

We also have gotten pushback from some investors on the level of one time expense. And the cash one time expense is about 4.8% last year. And we said it will drop closer to 4.2% this year. You know, I do wanna remind the audience, we’re in heavy restructuring mode because we’re still divesting Worldpay. People think it’s finished.

It’s not. We have TSAs that are being exited. We’re downsizing all the corporate functions to resize the structure. We have people working on passing over the systems to Worldpay. You you do have our commitment.

We’re dramatically gonna reduce one time expense. Absent M and A activity, we will dramatically reduce one time expense post getting rid of the Worldpay TSAs. You know, we have to do this. And, you know, I I do wanna finish up one thing. We might have come in at 77.

We still gave back the 4,800,000,000.0 we committed to at the beginning of the year. Right.

Unidentified speaker, Interviewer: That’s

James Keough, CFO, FIS: true. With the benefit of hindsight, I spent probably too much time on capital allocation and freeing up trapped cash and not enough time on free cash flow. We’ve dramatically changed the governance internally. We’ve moved the oversight out of treasury into strategic finance. There’s a SWAT team ongoing.

We will fix this quickly, and we will put in place mechanisms to ensure this won’t repeat.

Unidentified speaker, Interviewer: Okay.

James Keough, CFO, FIS: You have my commitment on that. That’s great to hear. Yeah.

Unidentified speaker, Interviewer: So you mentioned Worldpay and the restructuring still. So maybe just touch on that for a moment. I mean, you obviously you’re still going through some adjustment to it, but your goal is to obviously have relationships on a revenue side between the two of you still going forward. So maybe just touch on how that’s been playing out versus your initial expectation in terms of revenue share models, areas you work together still, you know, and if you could start with that, it would be helpful.

James Keough, CFO, FIS: Yeah. Yeah. Yeah. But, you know, we’ve said on prior occasions, there will always be an important partner, Worldpay. There think of them like an alternative sales channel.

There’s great relationships between the two companies. It’s all contractual as well and it’s a it’s a long term relationship. The revenue contribution in ’24 Yeah, I think it was 140,000,000, which was coming off at 30,000,000 in the prior year. A lot of this is on nice premium payback. There’s relationships in place that are durable over time.

In ’twenty five, I wouldn’t expect Worldpay to be a contributor to faster revenue growth. I think as we discussed in prior occasions, we said probably the related party’s revenue will be below a hundred and 40 or at least not accretive in 2025. Important, platform for us. It’s sustainable in the future, but it’s not gonna be a massive growth rate.

Unidentified speaker, Interviewer: So the revenue doesn’t go away. It just

James Keough, CFO, FIS: doesn’t go away. Really grow. It just will be a more moderate growth on a go forward basis.

Unidentified speaker, Interviewer: And what about the TSEs? I mean, that’s something that was a, you know, benefit from a margin or a loss rate standpoint. And so where where does that shake out now over the next couple of years? And what are your plans if there’s any, you know, need to offset the implications of that as it runs off?

James Keough, CFO, FIS: Yeah. So as a it it was at investor day, we said roughly 95 bps a year, so call it a hundred million each year. That’s lost income in ’25 of a hundred million, lost income in ’26 of a hundred. It’s been accelerated a little bit. They’re exiting some of the systems quicker, so it’s maybe running 20,000,000 higher than we thought.

The cost reduction is running running higher as well. Right. So there’s no impact on

Unidentified speaker, Interviewer: margins. Expectations? Okay.

James Keough, CFO, FIS: I think I actually prefer if they would exit our system sooner, Just personally, it allows us what we’re doing is we’re significantly downsizing corporate functions, finance, HR, legal, all of those spans and layers taking out levels of the organization, resizing for the new reality that we sold Worldpay, and we’re a smaller company.

Unidentified speaker, Interviewer: Right. Yeah. Okay.

James Keough, CFO, FIS: And the cost plans are very well identified. And Right.

Unidentified speaker, Interviewer: So that’s all embedded in your margin targets.

James Keough, CFO, FIS: It’s all embedded in the margin target. Yeah.

Unidentified speaker, Interviewer: Can we visit revisit your capital allocation strategy at the moment? I mean, you you obviously still have a decent level for this year. I think you said, what, one, two, if I remember correctly from the

James Keough, CFO, FIS: last day. $5. Yeah.

Unidentified speaker, Interviewer: And then you also still anticipate some ahead. Right? You’ve done a couple of deals, but still not as much as maybe we thought you would have done so far. But help us understand where you are in that in that journey on a capital allocation standpoint between both.

James Keough, CFO, FIS: Yeah. Last year, we underspent the M and A, but I think we did 600 instead of a billion. And that’s why we from a messaging point of view, we said, okay. We’re giving that 400 back to shareholders. And we basically said the 800 we thought we would do was buy back in 2025.

We’re taking it up to 1.2.

Unidentified speaker, Interviewer: Right.

James Keough, CFO, FIS: It’s a clear message to shareholders that if we don’t do the acquisitions we said we will do, the shareholders will get the money. Yep. Right. So we’re we’re very consistent and the same will happen this year. We spend less, we’ll give it back to shareholders.

Got it. Really, really clear. The the the the 1,000,000,000 was intended to be kind of a cap to basically say we’re not gonna go off and do crazy acquisitions because we need to rebuild confidence in the market on our ability to execute against acquisitions. I would say we’ve this we talked about free cash flow. I’m very confident that we’ll be significantly increasing over time the buyback capacity.

As EBITDA grows, our strategy is that we continue to borrow at 2.8 times and all of the incremental leverage goes into share repurchase.

Unidentified speaker, Interviewer: Okay.

James Keough, CFO, FIS: You know, dividends will will grow with EPS. And you saw what we did earlier this year, we increased dividend 11%. It’s basically the midpoint of our guidance range. Right?

Unidentified speaker, Interviewer: Right. Right.

James Keough, CFO, FIS: And we will continue to do that on a go forward basis. M and A fixed and all the risk goes to buyback.

Unidentified speaker, Interviewer: We’re gonna turn it to the audience in a minute for questions. But we’ve gotten questions recently about the competitive landscape and pricing and whether or not you guys have been aggressive on price in cases to be able to cross sell or other companies are trying to go after different markets, more upmarket and or even vice versa, you having success downmarket. Just give a quick comment on what you’re seeing out there relative to what you’ve seen maybe a year ago.

James Keough, CFO, FIS: I would say banking relative to a year ago, I would say banking has been slightly more positive on pricing. We had a net 50 bps in ’24, and we’re roughly planning on the same in

Unidentified speaker, Interviewer: Oh, okay.

James Keough, CFO, FIS: ’25.

Unidentified speaker, Interviewer: So it’s not And

James Keough, CFO, FIS: the prior year was kind of flat, and ’23 was flat. So I would have say In terms of pricing contribution to your growth pricing. Net pricing contribution, which means on a gross basis think of it. It’s it’s almost like a 20 to a 50 basis point gross pricing offset by compression of maybe 80 to a hundred bps.

Unidentified speaker, Interviewer: Got it.

James Keough, CFO, FIS: We are fairly competitive in the market, but we have good products. We’re out there to win in core and defend our territory. We’re not finding any rising competitive in the market. We still meet the same people, in the same RFP processes. It’s not any more competitive than before.

Great.

Unidentified speaker, Interviewer: Where do you want I mean, just where do you want this year to end for you to say that you’ve succeeded on your goals and this was the the year you wanted to to achieve?

James Keough, CFO, FIS: Oh, I think I think we gotta just deliver all the goals we set out in the last earnings call. And on top of that, exit the year with a decent result in terms of ACV sales, particularly on recurring. And if you have to hold us accountable for something, can we grow recurring ACV exiting the year?

Unidentified speaker, Interviewer: Yep.

James Keough, CFO, FIS: I think the business is in a really healthy position. We’re intensely focused. I wanna emphasize that product excellence, commercial excellence, and then the client experience. And I think we’re gonna knock those three out of the park room. We’re almost doubling down.

This is stage two of the journey, and it makes me highly optimistic about the first of all, we have to hit the numbers. We will hit the numbers this year. And then more even more optimistic about the acceleration in 2026. We’re doing some really good stuff on, call it, re energizing the company and really getting into the, call it, hyper improvement phase. So it’s kind of exciting.

It’s an exciting moment. Great. Yeah. Great.

Unidentified speaker, Interviewer: Alright, guys. Questions? Any questions, guys? Alright.

James Keough, CFO, FIS: The questions are too good.

Unidentified speaker, Interviewer: Yeah. Yeah. No. I think we’re about out of time anyway. So James, thank you so much for joining us.

Yeah. Thanks so much. Presentation.

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