Fidelity National Information Services Inc Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ramsey El-Assal - Barclays Bank PLC - Analyst : You called out strong visibility to banking growth in both Q3 and Q4. And I was just wondering if you could roll it all up for us and pick apart what the drivers are there and again comment on your confidence level about hitting the full-year guide especially given the tough comp in Q3. Are there any levers or are you relying on any events that are coming up to meet your target?

Question: Ramsey El-Assal - Barclays Bank PLC - Analyst : Okay. And a related question as a follow-up. It looks like recurring revenue growth slowed a little bit versus last quarter. Non-recurring accelerated pretty nicely. I know you commented a little bit on this already, but can you help us think about that algorithm and what we should expect going forward in terms of recurring versus non-recurring in Q3 and Q and how those two drivers meet up to get you to your full-year targets? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2024 / 12:30PM, FIS.N - Q2 2024 Fidelity National Information Services Inc Earnings Call

Question: Will Nance - Goldman Sachs - Analyst : I wanted to follow up on some of the comments in the script on, you mentioned, greater traction in the community banking space. I'm just wondering if you can elaborate on what has been resonating with that part of the market, what products have been key to turning that around, and just how you're thinking about the contribution of that segment to growth overall going forward.

Question: Will Nance - Goldman Sachs - Analyst : That's super helpful. And just to make sure I understand the commentary on the 5% recurring exiting the year. It sounded like you're pointing towards that being a relatively easier comp from the prior year. So when we think about a jumping off point, should we be thinking about somewhere in between that level and where you guys are for the rest of the year?

Question: Darrin Peller - Wolfe Research, LLC - Analyst : Just to follow up a little bit on the core strength on the banking side. Again, you're saying you're seeing you're on track for record core signings in '24 and then digital strength. I guess, Stephanie, when you think about where demand is today versus where it was in the beginning of the year and maybe just the timing of what these new signings can contribute, it seems like this would probably set you up into '25 if I'm not mistaken, just given the conversion timing needed on some of these. And so maybe just help understand and frame a little bit more high level on just where demand is today and what you've seen in the market and then obviously the timing of some of that opportunity into next year? It seems like third and fourth quarter, you're convicted around from last year's into earlier half this year, right? So these signings will contribute to '25? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2024 / 12:30PM, FIS.N - Q2 2024 Fidelity National Information Services Inc Earnings Call

Question: Darrin Peller - Wolfe Research, LLC - Analyst : Okay. That's great. And just very quick follow-up would just be for an update on the commercial relationship with Worldpay. It obviously came out better than we expected at your Investor Day, and it has been a couple of quarters now. And so maybe just a quick update on thoughts on how that has been trending in cross-sell and partnership there?

Question: Dan Dolev - Mizuho Securities USA LLC - Analyst : Can you -- I mean, EBITDA margins were really strong. Can you maybe give us a little bit of the puts and takes of headwinds and tailwinds that went into EBITDA margin this quarter? And then I have a quick follow up.

Question: Dan Dolev - Mizuho Securities USA LLC - Analyst : And then a quick one on M&A. Can you give us a quick update on the pipeline, and were there any acquisitions you made in 2Q?

Question: Jason Kupferberg - BofA Securities - Analyst : So just coming back to the banking segment, a big part of the acceleration here in the second half is the ramp of the bookings from the second half of last year as you mentioned. Can you talk a bit about just implementation efficiency? It sounds like there has probably been some improvement there? Maybe just talk about some of the elements of that. And are those now optimized, those implementation timelines, or is there room for further improvement? Because it sounds like you're executing solidly to plan there.

Question: Jason Kupferberg - BofA Securities - Analyst : And then just a follow-up. A big theme at the Investor Day was cross selling. I think you mentioned cross-sell is up 15% year to date, not sure if that's bookings or revenue, but which specific cross-sell initiatives are you getting the most traction with?

Question: Tien-Tsin Huang - JPMorgan Chase & Co - Analyst : Just two questions. One on card processing. Just curious with a lot going on there, litigation push out. I think Visa announced some new card products as well like flex credentials. Is that having any influence on pipeline activity? And are you satisfied with your win share on the card side?

Question: Tien-Tsin Huang - JPMorgan Chase & Co - Analyst : Okay, great. Just my quick follow-up on the capital markets side. A lot of market volatility, up versus down market. Down market have any change in how you generate revenues or penetrate your traditional verticals? Just trying to revisit some of the old SunGard stuff if you don't mind.

Question: John Davis - Raymond James - Analyst : James, on the free cash flow, I hear you reiterating the 85% to 90% guide this year, which implies well over 100% in the back half of the year. So any comments there on what gives you that confidence and then anything on 3Q, 4Q cadence?

Question: John Davis - Raymond James - Analyst : Okay, great. And then, Stephanie, a little bit of follow-on Tien-Tsin's question. How do you think about the card processing business and maybe the banking business overall? Maybe just remind us what percent of that is more transaction-based or could be a little bit more cyclical in nature as we think about slowing spending in the US? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2024 / 12:30PM, FIS.N - Q2 2024 Fidelity National Information Services Inc Earnings Call

Question: Dave Koning - Robert W. Baird & Co. Incorporated - Analyst : Hey, guys, nice job. And I guess my first question, capital markets, really good quarter, ongoing good recurring revenue growth. But non-recurring had, I think, the strongest growth since 2021 or so. Is that part of the reason for a really good guide in Q3 and for the margin strength sequentially in Q2?

Question: Dave Koning - Robert W. Baird & Co. Incorporated - Analyst : And I guess my follow-up, the Worldpay contribution was something like $150 million, I think, in Q2, and you're guiding to something like $110 million in Q3. Is that line item going to be lumpy like that? Or is there something in Q2 that was a little one-off and the $110 million is the baseline to think of in future quarters?

Question: Vasu Govil - Keefe, Bruyette, & Woods, Inc. - Analyst : Stephanie, I wanted to follow up on the prior question about consumer spend just given the macro concerns in the market. I know like you called out the FIS business is more defensive than the Worldpay is. But if you could give us any sort of guidelines on how to think about potential sensitivity to the extent we do start to see some slowdown. And then the same question for the Worldpay EMI contribution just given that that business is more exposed to spend, any high-level views on how they might look to balance expenses versus investments if the macro were to slow down?

Question: Vasu Govil - Keefe, Bruyette, & Woods, Inc. - Analyst : And just a quick follow-up for you, James. I don't know if I missed it, but did you give us the growth rates excluding M&A and dis-synergy in the quarter? And then just any change to the dis-synergy expectations either on revenue or EBITDA for the year?

Question: Vasu Govil - Keefe, Bruyette, & Woods, Inc. - Analyst : Just any change to the dis-synergy expectations either on revenue or EBITDA for the year?

Question: James Faucette - Morgan Stanley - Analyst : A lot of my questions have been asked, but I did want to understand a couple of things that are happening. First, can you help us understand what's driving -- what looks like an expected acceleration in professional services in the second half and fourth quarter? Like what are the services you're expecting to pick up? And how do we think about durability of that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2024 / 12:30PM, FIS.N - Q2 2024 Fidelity National Information Services Inc Earnings Call

Question: James Faucette - Morgan Stanley - Analyst : And then on cost savings actions, anything left (technical difficulty) or any projects there that are still in flight or have the majority of actions been taken, and so we're kind of at normalizing OpEx and expense run rates?

Question: Ken Suchoski - Autonomous Research - Analyst : I wanted to ask about the $4 billion repurchase outlook. The company did $2.5 billion year to date, including $1.1 billion in 2Q. So it seems like you're well on track to hit your $4 billion target for the full year. Maybe just talk about your appetite to continue the pace of buyback that we saw in 2Q, and could we actually end up above that $4 billion target that you called out? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2024 / 12:30PM, FIS.N - Q2 2024 Fidelity National Information Services Inc Earnings Call

Question: Ken Suchoski - Autonomous Research - Analyst : Okay, great. That that's really helpful. And then maybe just as my follow-up, I wanted to ask about Worldpay, and I know it's a smaller part of the business, but what's allowing you to raise the EMI contribution related to Worldpay? I think you said it added $0.08 to the EPS guide. I think if I had the numbers right, Worldpay revenue grew 3% year over year, but I think EBITDA was down mid-single digits. So any thoughts on how that EMI contribution is increasing would be great.