Fidelity National Information Services Inc (FIS) Q1 2026 Earnings Call Transcript
Bullish Other 25.44B USA
Next Earnings
2026-05-05
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FIS delivered solid 2025 results, completed the Total Issuing Solutions acquisition, and issued a confident 2026 outlook centered on strong organic growth, significant margin expansion, and free cash flow growth driven by synergies and AI-enabled differentiation.
⭐ Key Highlights
Strategic portfolio simplification
FIS completed transformational moves by fully divesting its merchant-focused business and acquiring Total Issuing Solutions to sharpen focus on large financial institutions.
AI moat and data advantage emphasized
Management framed AI as a strategic accelerant built on a durable data moat, with over 1 billion accounts and 73 billion transactions enabling differentiated AI capabilities.
Strong 2025 execution and 2026 guidance
Adjusted revenue up 5.8% in 2025, EBITDA at high end of guidance, and 2026 guidance calls for 30-31% adjusted revenue growth and >$2B free cash flow.
Free cash flow and shareholder returns
Free cash flow rose to $1.6B in 2025 and the dividend was raised 10%; 2026 FCF guidance of >$2B underpins a durable capital return trajectory.
M&A-driven margin expansion and synergies
Pro forma 2026 EBITDA margin expected to expand 95-110 bps (155-175 bps on adjusted basis with issuer integration), aided by $30-40M in synergies and cost actions.
✔Positive Signals
- Adjusted revenue growth of 5.8% in 2025 and 7.4% Q4 revenue growth with 8.3% in Banking segment
- Adjusted EPS up 10% for the year and 20% in Q4
- Free cash flow of $1.6B in 2025 and guidance to exceed $2B in 2026
- Acquisition of Total Issuing Solutions enhances recurring revenue profile and data capabilities
- Declared 10% dividend increase and ongoing buyback appetite post-deleveraging
✖Negative Signals
- 2026 outlook includes $40M pretax E&D headwinds from Worldpay TSA normalization and integration costs
- Capital Markets revenue mix shift to recurring is progressing but nonrecurring revenue remains a contributor in 2026
- First-quarter 2026 forecast softer for Capital Markets due to tough year-ago nonrecurring license comparisons
- Near-term dilution from acquisitions impacting margins in 2025/2026 before synergies
📊Financial Results
- Q4 2025 revenue growth 7.4% (recurring revenue +7.8%), Banking revenue 8.3% due to digital/payments and output solutions
- Full-year 2025 revenue $10.7B, EBITDA growth 4.7%, margin headwinds from acquisitions and TSA income decline offset by cost savings
- Adjusted EPS up 10.2% for the year; 2025 free cash flow $1.6B; cash conversion 88%
- Capital expenditures 9.3% of revenue; 2025 free cash flow outpaced EPS growth
- Worldpay-related revenue dynamics discussed; accretion and cross-sell opportunities highlighted, but 2026 guidance excludes Worldpay cash tax from the sale
🔮Future Guidance
- Adjusted revenue growth guidance for 2026: 30% to 31%
- EBITDA growth guidance for 2026: 34% to 35%
- Pro forma revenue growth (including issuer) 5.1% to 5.7%; pro forma EBITDA growth 7.2% to 8.4%; pro forma margins +95 to +110 bps
- Adjusted EPS guidance for 2026: $6.22 to $6.32; issuer transaction slightly accretive in year 1
- Free cash flow guidance for 2026: over $2B; long-term target over $3B by 2028; cash conversion guide of ~90%
- First-quarter 2026 outlook: adjusted revenue up 29-30%, with banking growth ~7%–7.5% and capital markets 5.5%–6.5%; EBITDA up 33%–35% with margin expansion 115–135 bps
💡Interesting Insights
- AI is positioned as a strategic accelerant to enhance systems of record, with a focus on fraud, deposits, lending, and KYC/KYB workflows leveraging a vast data moat; management emphasizes governance and compliance as defensible barriers to AI disruption.
Detailed Analysis
AI-generated summary of Fidelity National Information Services Inc earnings call transcript.
FIS closed 2025 with revenue growth of 5.8% and EBITDA expansion, elevated by strong recurring revenue across Banking and Capital Markets, and advanced its portfolio strategy through the full divestiture of its merchant business and the acquisition of Total Issuing Solutions. Management highlighted a multi-year AI-driven data moat, enabling differentiated solutions across core banking, payments, digital, and lending, while guiding 2026 to 30-31% adjusted revenue growth, 34-35% EBITDA growth, and free cash flow of over $2B, supported by cost efficiencies, synergies from the issuer deal, and a shift toward higher-quality recurring revenue. The company expects continued bank M&A contributions, solid renewal momentum, and ongoing cash-flow growth toward a target of over $3B by 2028, with capital allocation prioritized deleveraging and eventual higher buybacks.
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