Fidelity National Information Services(FIS) - 2023 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company improved adjusted free cash flow conversion to 95% in 2023 from 72% in 2022 [11] - Capital expenditures decreased to approximately 8% of total revenue in 2023, down from 9% in 2022 [11] - Adjusted EPS for continuing operations was $0.94 in the fourth quarter, a decline of 4% year-over-year [17] Business Line Data and Key Metrics Changes - Banking recurring revenue grew 7% in the fourth quarter, while total Banking revenue was flat [35] - Capital Markets revenue increased 5% for the full year, driven by strong recurring revenue growth of 9% [37] - Adjusted revenue growth for the full year was 3%, led by strong recurring revenue growth of 5% [37] Market Data and Key Metrics Changes - Demand for digital banking solutions remains strong, with significant sales from the Digital One platform [13] - The sales pipeline for digital banking is expanding, with demand from large financial institutions increasing in double digits [13] - The Treasury Solutions segment had strong new sales, including engagements with various sectors [14] Company Strategy and Development Direction - The company is focused on its Future Forward strategy, which aims to drive operational excellence and efficiency [9] - The strategic partnership with Worldpay is expected to enhance distribution channels and revenue growth [7] - The company plans to repurchase at least$ 3.5 billion of stock in 2024, reflecting confidence in its business and capital position [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in accelerating revenue growth from 3% in 2023 to 4% to 4.5% in 2024 [32] - The company anticipates adjusted EPS growth of 38% to 41% year-over-year on a continuing operations basis [71] - Management highlighted the importance of digital capabilities and regulatory technology in driving future growth [102] Other Important Information - The company completed the majority sale of the Worldpay business, which is expected to enhance strategic flexibility [22] - The adjusted EBITDA margin is projected to expand by 20 to 40 basis points in 2024 [41] - The company expects to return over $4 billion to shareholders in 2024, up from$ 1.7 billion in 2023 [69] Q&A Session Summary Question: Comments on the Banking side and revenue acceleration - Management is optimistic about accelerating total company revenue growth in 2024, particularly in Banking, due to strong recurring revenue and backlog conversion [45][46] Question: M&A considerations in the banking sector - Management noted the importance of having diverse assets across the fintech ecosystem and emphasized the strategic relationship with Worldpay [47][48] Question: Long-term TAI and dis-synergy impact - Management indicated that the dis-synergy impact from the Worldpay transaction is expected to be around $450 million in 2024 [55] Question: Recurring revenue growth trends - Management expects recurring revenue growth to align more closely with total revenue growth, with a sustainable acceleration anticipated [56][82] Question: Changes in FedNow implementation - Management reported increased client demand and a growing sales pipeline, particularly in digital and money movement capabilities [58][99]