Fidelity National Information Services (FIS) Morgan Stanley US Financials, Payments & CRE Conference 2024 summary

Strategic priorities and operational changes

• Refocused on core strengths and simplified operations, highlighted by the sale of Worldpay to private equity, which clarified capital allocation and improved management focus.

• Emphasized customer centricity, slowing forced migrations and prioritizing client satisfaction, leading to improved NPS scores and operational excellence.

• Shifted management attention to payments and digital investments, with $90 million allocated to enhance digital offerings for community banks.

• Combined banking and capital markets sales forces to drive cross-sell and incentivized recurring revenue over non-recurring sales.

• Hired new leadership in technology and platforms, launching an embedded finance platform and fostering innovation.

Financial performance and growth outlook

• Achieved five consecutive quarters exceeding set goals, rebuilding investor confidence and market perception.

• Set core growth targets: banking at 3% (in line with account growth), digital at 10%, and capital markets at 6%+ driven by both organic and M&A contributions.

• Recurring revenue in banking is at 83% and expected to rise gradually; capital markets at 72%, targeting 80% by 2026.

• Pricing contribution in banking is projected as neutral due to contract renewals, while capital markets benefit from 200 basis points of pricing power.

• Tax optimization initiatives aim to reduce the effective tax rate from 17.5% to 12-13% through structural changes and strategic planning.

Capital allocation and M&A strategy

• Share repurchase program increased from $2.5 billion to $4.5 billion, with a focus on free cash flow conversion and capital return to shareholders.

• Targeting $1 billion annually for small, synergistic M&A to accelerate growth, with a commitment to return unspent capital to investors.

• Dividend payout maintained at 35%, yielding 2%, above peer averages.

• M&A focus is on lending, treasury, risk, and regulatory sectors, with selective acquisitions to enhance digital and payments capabilities.

• Worldpay remains a key EPS contributor, with ongoing transparency, board representation, and private equity commitment to invest $1+ billion in capability-building.