FIS Goes All in on the Issuer

Fidelity National Information Services (FIS) said during a Tuesday (May 6) first-quarter earnings report that it continues to see strong demand from banks to modernize their core banking systems.

Executives pointed to the company’s pending acquisition of Global Payments’ issuing solutions unit as an event that is expected to add cross-selling opportunities to those banks.

Recurring revenue growth accelerated in the first quarter to 4% from a previous level of 2%, according to an earnings presentation. Recurring revenue represents most of the company’s sales, at 81%.

The banking solutions segment revenues gained 2% to $1.7 billion, with recurring revenues up 3%, while the capital markets segment gained 9% in sales to $764 million, with recurring revenues up 6%.

FIS CEO Stephanie Ferris said during an earnings conference call with analysts that the company’s money movement strategy remains intact.

The “Money at Rest” portion of the roadmap has been bolstered as “we continue to see strong demand for our core solutions and are expecting another year of solid sales” as the firm capitalizes on opportunities tied to consolidation in the financial services space, she said.

“We anticipate momentum in core wins to continue in the second quarter with an active pipeline of opportunities we expect to close,” Ferris said during the call. “Our digital solutions continue to gain traction in the market.”

The digital segment has been growing as banks, for example, modernize branch teller technologies. The “Money in Motion” efforts have been seeing growth among corporate clients seeking to centralize, standardize and process payments, she said.

As for the acquisition of Global Payments’ issuer solutions business, the deal “complements our existing banking solutions product suite with best-in-class credit capabilities at scale and enhances our value proposition to large banks and corporates, unlocking greater cross-sell potential across existing clients,” Ferris said during the call.

The transaction is slated to close in the first half of 2026.

FIS Chief Financial Officer James Kehoe said during the call that the company anticipates adjusted revenue growth in the second quarter of between 4.2% and 5%.

“We are targeting banking revenue growth of 3.7% to 4.4%, consistent with our commentary on the fourth-quarter call and in line with our full-year outlook,” he said, adding that the capital markets segment should grow sales in the quarter of between 6% and 6.7%.

Shares slipped 2% in intraday trading Tuesday.

Asked on the conference call about end-market demand, Ferris said the company is “not seeing any impact from clients in terms of slowing spend down.”

In reference to the pending Capital One/Discover deal, she said: “Sounds like it’s moving forward. We have a great partnership with them. We have a great partnership with Discover, so we see nothing but positives with them and continue to support them in everything they want to do.”

Ferris said during the call that FIS’ banking segment will see growth through the combination of debit-focused offering and the issuing solutions business, as TSYS, which merged with Global Payments in 2019, has seen “consistent, strong account-on-file growth, and they had positive spend [and] transaction growth… From our side of the house, … we’re seeing consumer spend on debit continuing to be consistent with what you’re hearing from everybody else. We don’t see a slowdown.”

“We’re seeing very strong debit transaction growth,” she added. “Our credit portfolio is not very big, but we aren’t seeing any slowdown there.”

Kehoe said during the call that the scale of the banking business will increase, as the issuing acquisition adds $2.5 billion to operations that contribute nearly $7 billion in annualized sales for a total of $9.4 billion on a pro forma basis.

Ferris highlighted the cross-selling opportunities, where there are several clients supported by both the FIS operations and the issuing unit that is being brought on board.

“On our side, we could be doing core and network and debit, as well as trading and lending…,” she said during the call. “So, we already have that cross-sell motion going between the banking and capital markets business and offer out a bundled solution set there. The opportunity has always been not having the credit capabilities upmarket. So, when you think about an ability and an opportunity to add credit now to credit and debit as well as core network lending and trading, we think we’re uniquely positioned because… we’re the only player that has that cross section of product sets.”

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