Executive Summary / Key Takeaways

• FIS is undergoing a significant strategic transformation, shedding its non-core merchant business to focus on its durable Banking and Capital Markets segments and high-growth verticals like digital, payments, lending, and the Office of the CFO.
• Recent financial results demonstrate accelerating momentum, with Q1 2025 adjusted revenue growing 4% and adjusted EBITDA margin at 40.1%, supported by strong recurring revenue and operational execution.
• The pending acquisition of Global Payments (GPN)' Issuer Solutions business and the sale of the remaining Worldpay stake are transformative moves expected to close in H1 2026, enhancing FIS's strategic position, strengthening its financial profile with durable cash flow, and unlocking significant cross-sell opportunities, particularly in credit issuing.
• FIS is leveraging its core technology platforms and investing in innovation, including AI-driven solutions and digital capabilities, to drive competitive advantages and meet evolving client needs, contributing to strong sales momentum and improved client retention.
• Management has reaffirmed its full-year 2025 outlook, projecting adjusted revenue growth of 4.6% to 5.2%, margin expansion of 40 to 45 basis points, and adjusted EPS growth of 9% to 11%, underpinned by visibility into signed deals, implementation schedules, and ongoing cost management programs, alongside a commitment to return $2 billion in capital to shareholders.

The Strategic Repositioning of a Fintech Giant

Fidelity National Information Services, Inc. (FIS) stands as a global leader in financial technology, underpinning the world's financial systems by powering the seamless movement of money across the entire money lifecycle. With a business model characterized by high levels of recurring revenue derived from multi-year contracts, FIS possesses inherent durability that provides stability across economic cycles. This foundational strength has enabled the company to embark on a significant strategic transformation aimed at sharpening its focus, accelerating growth, and unlocking greater shareholder value.

A pivotal step in this journey was the separation of the Worldpay Merchant Solutions business, initiated with the sale of a 55% equity interest in January 2024. This move was designed to streamline the portfolio, allowing FIS to concentrate on its core Banking and Capital Markets segments and pursue targeted growth opportunities. Building on this, FIS announced a definitive agreement in April 2025 to acquire Global Payments' Issuer Solutions business while simultaneously selling its remaining 45% stake in Worldpay to Global Payments. These transactions, anticipated to close in the first half of 2026, represent a strategic pivot, replacing a non-cash minority interest with a durable, cash-generating asset that is expected to significantly enhance FIS's value proposition, particularly within the large financial institution space.

The competitive landscape in financial technology is dynamic and fragmented, featuring large, diversified players like Fiserv (FI), Automatic Data Processing (ADP), Paychex (PAYX), and Global Payments, alongside numerous niche providers and emerging disruptors. FIS competes across various domains, including core banking software, payment processing, capital markets solutions, and specialized services like treasury and risk management. While some competitors, such as Fiserv, may exhibit higher growth rates or superior margins in certain areas (Fiserv's TTM net margin is 15% compared to FIS's 8.10%), FIS leverages its scale, integrated suite of solutions, and deep client relationships to maintain a strong market position. The company's strategic focus on specific high-growth verticals and its ability to cross-sell across its extensive client base are key differentiators in this competitive environment.

Technological Foundation and Innovation Driving Differentiation

At the heart of FIS's strategy lies its robust technological foundation, built upon core banking platforms like IBS, Horizon, and Modern Banking Platform (MBP), alongside a comprehensive suite of solutions spanning payments, capital markets, and specialized financial services. These platforms are critical to clients' operations, providing stability and reliability. FIS is actively investing in modernizing these core systems while simultaneously developing and integrating next-generation technologies to enhance its offerings and create competitive advantages.

The company's Digital One platform is a prime example of this innovation, designed to provide financial institutions with a unified, host-agnostic digital banking experience across all channels and customer types. This platform directly addresses the growing consumer preference for digital-first interactions, enabling banks to offer seamless account opening, money movement, and financial management capabilities. In the Capital Markets segment, FIS has launched solutions like the Climate Risk Financial Modeler, a SaaS-based tool to help assess and quantify climate risk, and a new Securities Finance Matching Platform in the U.S. utilizing smart automated matching technology for broker-dealers.

FIS is also embracing emerging technologies like Artificial Intelligence. Its partnership with Microsoft (MSFT) led to the development of Treasury GPT, an AI-driven tool designed to help corporate treasurers access and synthesize large data pools for improved cash management. This focus on AI has garnered external recognition, including accolades from Chartis Research. While specific, quantifiable performance metrics for all these new technologies are not consistently detailed, the strategic intent is clear: to enhance efficiency, improve risk management, unlock new revenue streams, and provide clients with cutting-edge tools that differentiate FIS from competitors. For instance, FIS's payment platforms are noted for providing greater fraud detection accuracy compared to some rivals. The company's R&D efforts are focused on these strategic areas, aiming to maintain technological leadership and support future growth, although managing the pace of innovation and investment relative to competitors like Fiserv remains a key consideration.

Financial Performance Reflecting Strategic Execution

FIS's recent financial performance underscores the progress made in its strategic repositioning. For the first quarter of 2025, the company reported adjusted revenue of $2.53 billion, representing a 4% increase compared to $2.47 billion in the prior-year quarter. This growth was primarily fueled by recurring revenue expansion in both the Banking (up 2%) and Capital Markets (up 4%) segments, benefiting from higher transaction volumes and the successful onboarding of prior-year sales. The Capital Markets segment, in particular, demonstrated strong performance with 8% revenue growth, exceeding expectations, driven by recurring revenue and a significant increase in non-recurring license revenue.

Profitability metrics also showed progress. The adjusted EBITDA margin for Q1 2025 stood at 40.1%, compared to 43.9% in Q1 2024. While the year-over-year comparison was impacted by revenue mix and the timing of operating expenses, management anticipates sequential margin improvement throughout 2025, targeting a full-year margin expansion of 40 to 45 basis points. This expected improvement is underpinned by strong execution of cost management initiatives and favorable operating leverage, which are anticipated to more than offset the impact of TSA roll-offs and revenue mix shifts. Adjusted EPS for the quarter was $1.21.

Cash flow generation remains a key strength and focus. Net cash provided by operating activities from continuing operations was $457 million in Q1 2025, a significant increase from $206 million in the prior-year period. This improvement was primarily attributed to better working capital management and the timing of tax payments. Capital expenditures were $233 million in the quarter, consistent with the full-year expectation of approximately 9% of revenue. The company's liquidity position remains solid, with $4.0 billion of available liquidity as of March 31, 2025, including $0.80 billion in cash and cash equivalents and $3.20 billion available under its revolving credit facility. Total debt stood at $12.0 billion, with a weighted average interest rate of 2.90%.

Outlook and the Path Forward

Management has reaffirmed its full-year 2025 outlook, projecting adjusted revenue growth of 4.6% to 5.2%. This acceleration is expected to be driven by the Banking segment, with anticipated growth of 3.7% to 4.4%, reflecting the benefits of strong 2024 sales, improved retention rates, and the ramp-up of previously signed deals. The Capital Markets segment is projected to continue its strong performance with growth of 6.5% to 7%. The outlook for adjusted EPS growth is set at 9% to 11%, aligning with the company's midterm targets.

This guidance is supported by management's high degree of visibility into the revenue pipeline, particularly in Banking, where a significant portion of the expected growth is tied to already signed contracts and ongoing implementations. The successful resolution of client-requested implementation delays mentioned in prior quarters further bolsters confidence in the near-term trajectory. While the second quarter of 2025 EPS is expected to face headwinds from lapping prior-year interest income benefits and a tough comparison on Worldpay EMI, the underlying operational performance is projected to drive sequential improvement in margins.

Strategically, the pending transactions with Global Payments are central to the long-term outlook. The acquisition of the Issuer Solutions business is expected to significantly enhance FIS's capabilities in credit issuing, a key area for large financial institutions, and create substantial cross-sell opportunities. This move is anticipated to be accretive to adjusted EPS, EBITDA margins, and adjusted free cash flow, further strengthening FIS's financial profile. The sale of the remaining Worldpay stake accelerates the monetization of this asset, providing capital for the Issuer Solutions acquisition and enabling a sharper focus on the core business.

Risks and Considerations

Despite the positive momentum and strategic clarity, investors should consider several key risks. The successful integration of the acquired Issuer Solutions business is critical to realizing anticipated synergies and benefits. Integration efforts can be complex and time-consuming. Regulatory approvals for the pending transactions are also a necessary condition for closing, and delays or unexpected requirements could impact the timeline or terms.

Competitive pressures remain intense across all segments. While FIS aims to differentiate through its integrated suite and technology, rivals continue to innovate and pursue their own strategic initiatives. The company is also exposed to risks related to technology changes, cybersecurity threats, and operational disruptions, although management emphasizes its focus on security and resilience. Furthermore, the company noted facing aggressive price increases from some technology suppliers, which could impact capital expenditures and operational costs if not effectively managed. Litigation related to past business activities and a recent system outage also present potential, though currently assessed as non-material, risks.

Conclusion

FIS is in the midst of a significant transformation, strategically repositioning itself for accelerated growth and enhanced shareholder value. By divesting its non-core merchant business and focusing on its foundational Banking and Capital Markets segments, complemented by targeted investments in high-growth areas and strategic acquisitions like the pending Issuer Solutions deal, FIS is building a more focused and financially robust enterprise. The company's durable recurring revenue base, coupled with its technological capabilities and renewed commercial execution, provides a solid platform for future performance. While integration risks and competitive dynamics warrant careful monitoring, the reaffirmed 2025 outlook, underpinned by tangible operational momentum and a clear strategic roadmap, suggests that FIS is on a path to deliver on its commitments and unlock further value for investors. The successful execution of its strategy, particularly the integration of the Issuer Solutions business and continued leverage of its technology and scale, will be key determinants of its long-term success in the evolving fintech landscape.