Bank Upgrades, Worldpay Buy Fuel FIS Q1 Growth

Fidelity National bested first quarter estimates on the heels of transaction growth and increased spending by banks as they embraced upgrades to infrastructure amid transitions to digital banking and payments. Management also pointed to synergies and tailwinds behind the pending acquisition of Worldpay.

Adjusted earnings per share of $1.64 beat the Street by a dime; revenue of $2.06 billion was slightly higher than estimates, and up 5 percent on an organic basis.

Drilling down into individual segments, the Integrated Financial Solution segment was up 7 percent to $1.1 billion, and margins were up 160 basis points.

In remarks on the conference call, CEO Gary Norcross said new sales were up 30 percent from a year ago. He repeated previously stated goals that, with the decision to acquire Worldpay, revenue synergies will be $500 million over three years with a combined top line of $12 billion.

“As a reminder, the new revenue opportunities for the combined organization include expanded global offerings for merchants with innovative eCommerce solutions; deeper and broader solutions for financial institutions, such as fraud tools, payment processing and a global merchant referral network; and enhanced and innovative payment solutions creating a faster payments community for high-volume retail and high-value commercial payments,” he said on the call.

Management said on the call, too, that transaction and processing volumes were up, with a continued focus on digital channels. Norcross said later in the call that larger financial institutions are looking to modernize back offices and embrace cloud computing. He noted that “even global institutions have held on too long to their existing technology stacks, and they’re really looking for cloud-native-type capabilities to gain the efficiencies out of the cloud that other industries have been able to take advantage of.”

The Global Financial Solutions segment was up with 2 percent organic revenue growth to $863 million, and margin expansion was up 300 basis points.

“These sales results will translate to accelerated recurring revenue growth for the remainder of the year and into 2020. Revenue growth for our GFS banking and payments division grew almost 10 percent organically,” said Norcross. “Much of this growth was driven by increased transaction and processing volumes.”

CFO James Woodall said banking and wealth results were up 7.2 percent for the quarter at $386 million, and payments were up 9.6 percent. “Additionally, our loyalty-as-a-currency solution continues to see strong adoption, and grew nearly 30 percent year over year. Corporate and digital grew 4 percent in the quarter, with new sales wins for our small business and integrated payable solutions,” he noted.