FIS marks 50% Y/Y rise in revenues in Q1 2020

Maria Nikolova

Revenue increased 50% to $3,078 million, primarily driven by the acquisition of Worldpay.

Financial services technology provider FIS (NYSE:FIS) today reported its financial results for the first quarter of 2020, with revenues up sharply thanks to the positive impact of the Worldpay deal, whereas net earnings fell.

On a GAAP basis, revenue increased 50% to $3,078 million, primarily driven by the July 31, 2019 acquisition of Worldpay.

On an adjusted basis, organic revenue growth increased 2% over the prior year period. Adjusted EBITDA margin expanded by 510 basis points (bps) over the prior year period to 40.5%, primarily driven by the acquisition of Worldpay and associated expense synergies. Adjusted net earnings was $802 million or $1.28 per diluted share.

Net earnings attributable to common stockholders was $15 million or $0.02 per diluted share.

The Merchant Solutions segment saw first quarter revenue increase significantly to $935 million, primarily reflecting the Worldpay acquisition, and excluding $10 million which was reclassified to the Corporate and Other segment. Organic revenue growth was flat compared to the prior year period, primarily attributable to declines in payment processing volumes associated with the ongoing COVID-19 pandemic. Adjusted EBITDA margin was 45.2%.

The Banking Solutions segment marked a 6% year-on-year rise in revenues to $1,462 million, excluding $40 million which was reclassified to the Corporate and Other segment. Organic revenue growth was 1% over the prior year period, including approximately 2 percentage points of negative impact created by non-recurring revenue realized in the prior year period as well as declines in issuer processing, debit network and account transaction volumes associated with the ongoing COVID-19 pandemic. Adjusted EBITDA margin was 42.0%.

The Capital Market Solutions segment registered revenue of $631 million in the first quarter of 2020, up 10% from a year earlier. Organic revenue growth was 7% over the prior year period. Adjusted EBITDA margin was 44.4%.

As the company continues to execute on its integration workflows and optimize its portfolio of assets, certain non-strategic businesses were reclassified from Merchant Solutions and Banking Solutions into the Corporate and Other segment. These operations represent less than 2% of first quarter 2020 revenue. This segment saw first-quarter revenue decrease 18% to $50 million. Adjusted EBITDA loss was $70 million, including $81 million of corporate expenses.

FIS continued to realize revenue and expense synergies during the first quarter of 2020. The company achieved annual run-rate synergies exiting the first quarter 2020 as follows:

  • Revenue synergies of approximately $100 million, an increase of $20 million compared to the fourth quarter of 2019;
  • Expense synergies of approximately $580 million, inclusive of approximately $275 million in interest expense savings, an increase of $115 million compared to the fourth quarter of 2019.

As a result, FIS reiterated its previously-announced revenue synergy targets and increased its expense synergy target as follows:

Revenue synergy targets on an annual run-rate basis:

  • $200 million exiting 2020;
  • $550 million exiting 2022.

Expense synergy target on an annual run-rate basis:

  • At least $700 million exiting 2020, inclusive of approximately $275 million in interest expense savings, an increase of more than $100 million as compared to the fourth quarter of 2019.

Read this next

Digital Assets

Alameda sues Voyager Digital to recover $445 million

FTX’s failed trading arm, Alameda Research, asked a court to claw back $445 million from Voyager Digital, which it said SBF’s empire paid to the crypto lender before collapsing into bankruptcy.

Metaverse Gaming NFT

Toyota taps Astar Network to explore Web3 in grand style

Although the crypto ecosystem has faced its fair share of bumps, Japanese automaker Toyota is seemingly bullish about the space and continue to look at Web3 as a promising opportunity.

Digital Assets

Bitcoin dominates inflows into crypto funds, AuM hits $28B

As the price of bitcoin continues to consolidate around recent highs, investors expand their positions in funds designed to profit from further appreciation in the cryptocurrency.

Institutional FX

Fiserv secures major payment institution licence in Singapore

Brookfield-based financial services technology provider Fiserv Inc has obtained nod for a Major Payment Institution license in Singapore.

Institutional FX

Finalto expands NDFs line-up with Taiwanese dollar

Finalto announced today that it has expanded its non-deliverable forwards (NDFs) offering with the addition of Taiwan’s dollar to its trading platform.

Opinion

It’s time for FX to Harness Crypto’s Potential

Jonathan Cumberlidge, FX Sales Director for BVNK, makes the case for cryptocurrencies in improving the efficiency and flexibility of foreign exchange trading.

Digital Assets

Owner of OptionMint, OptionKing, and OptionQueen gets 30 months in prison

A US federal judge has sentenced Ohio resident Jared Davis, who was found guilty for his participation in a multi-million fraud scheme carried out by Israeli-run binary options websites.

Executive Moves

iS Prime co-founders Raj Sitlani and Jonathan Brewer leave, but “business as usual”

“For our clients and teams at iS Prime, iS Risk and iS Prime Hong Kong, it is business as usual. We will be increasing our investment in our technology and staff, putting our clients first as we drive the business forwards to maintain our market leadership position.”

Digital Assets

Germany-focused DekaBank taps METACO for digital asset custody offering

“Digital assets are a critical part of the future, a radical new way for how assets will be represented, from currencies to real estate.”

<