FIS Q4 Profit Tops Estimates, Revenue Up 4% On Organic Basis; To Spin Off Merchant Business

Fidelity National Information Services, Inc. (FIS) reported that its fourth quarter adjusted EPS was $1.71, down 11% from last year. On average, 28 analysts polled by Thomson Reuters expected the company to report profit per share of $1.70, for the quarter. Analysts' estimates typically exclude special items.

Fourth quarter net loss to stockholders were $17.4 billion or $29.28 per share. The company recorded a non-cash goodwill impairment charge of $17.6 billion related to the Merchant Solutions reporting unit in the quarter.

Fourth quarter revenue was $3.71 billion compared to $3.67 billion, previous year. Analysts on average had estimated $3.68 billion in revenue. On an organic basis, revenue increased 4% primarily due to strong recurring revenue growth and professional services in Banking, increased Merchant volumes and continued strength in Capital Markets.

"We delivered fourth quarter results consistent with our expectations in our Banking and Capital Markets businesses. Revenues and margins in our Merchant Solutions business came under slightly more pressure than anticipated as a result of increasing recessionary impacts in the UK and a shifting of consumer spend from goods to services in the US," said FIS CEO Stephanie Ferris.

For the first quarter, the company expects: adjusted EPS in a range of $1.17 - $1.23; and revenue of $3.375 - $3.425 billion.

For fiscal 2023, the company expects: $5.70 - $6.00; and revenue of $14.20 - $14.45 billion.

FIS is increasing cash savings target as part of the Enterprise Transformation Program, now branded Future Forward, from $500 million+ to $1.25 billion of expected cash savings by year end 2024, consisting of $600 million of operating expense savings, $300 million of capital expense savings and $350 million of savings from the reduction or elimination of acquisition, integration and transformation-related expenses.

Separately, FIS announced plans for a tax-free spin-off of its Merchant Solutions business. This will create two independent companies. Upon completion, the Merchant Solutions business will operate as Worldpay. The company expects the spin-off to be completed within the next 12 months.

Shares of FIS are down 7% in pre-market trade on Monday.

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