FIS Merchant Services Revenues Gain 10 Percent

Fidelity Information Services (FIS) posted results that showed organic growth across business segments, and better than expected synergies in the wake of its 2019 acquisition of Worldpay.

In terms of headline numbers, adjusted earnings per share came in at $1.57, three pennies better than expected.

Total 4Q revenues were $3.3 billion, meeting expectations.

Drilling down into segments, Merchant Solutions grew by 10 percent to $1.1 billion, as measured on an organic rate. The Banking Solutions segment was up 5 percent on an organic basis to $1.5 billion. Capital markets was up 8 percent to $669 million.

Management said on the conference call with analysts that growth was seen in eCommerce and integrated payments in the Merchant Solutions segment.

Banking results saw a tailwind from recurring revenues and new sales conversion.

Management also said that the integration of Worldpay has exceeded initial synergy targets, having met the $400 million target within five months of close.

The company has increased its 2020 cost synergy target to $600 million.

The 2022 synergy target has been boosted to $675 million.

CEO Gary Norcross said that the organic growth rate for the company overall was 7 percent.

He told analysts that “we continue to see increasing demand for SaaS deployment” and added that the company is “ balancing that demand with our on-premise license business.”

In further detail on the Worldpay acquisition, Norcross said that “we are also accelerating our achievement of revenue synergies. While initially expecting to reach $100 million of annualized revenue synergies by the end of 2020, we have already achieved $80 million in annual run-rate synergies in the first five months after closing.” As a result, he said the company is increasing its revenue synergy targets to $200 million exiting 2020, and $550 million exiting 2022.

Norcross said later in the call that the company raised its synergy targets in the wake of cross-selling winds.

“I can honestly tell you the pipeline is full as I’ve ever seen for core banking on a global basis for next-generation capabilities,” Norcross told analysts. Chief Financial Officer Woody Woodall said that eCommerce and integrated payments growth were both in the mid to high teens percentages.