The paragraph is an introduction from the FIS First Quarter 2025 Earnings Call. George Mihalos, Head of Investor Relations, opens the call by welcoming participants and introducing the agenda. The earnings call is accessible via a webcast, and materials are available on the company's website. The call features forward-looking statements that carry risks and uncertainties, as noted in their SEC filings. Non-GAAP financial information will be presented, and reconciliations are available in the earnings release. Stephanie Ferris, CEO and president, will provide a strategic update, and CFO James Kehoe will review financial results. Ferris acknowledges the strong start to 2025.

The article's second paragraph discusses the company's strong financial performance and strategic moves aimed at enhancing shareholder value. The company is achieving commercial excellence by simplifying its portfolio and maintaining a durable business model with high recurring revenue. Notably, the strategic acquisition of a global payments issuer business and sale of a minority Worldpay stake are expected to enhance the company's client value propositions and financial strength. In the first quarter, the company exceeded expectations with a 4% adjusted revenue growth and a significant rise in recurring revenue growth from the previous quarter. With adjusted EBITDA at the high end of the outlook and free cash flow conversion over 70%, the company is optimistic about its full-year outlook. The adjusted EPS grew by 11%, and $670 million was returned to shareholders. Confident in their strong execution, the company reaffirms its full-year outlook and highlights new client wins and strong demand for core solutions.

FIS has achieved significant wins, including being selected by a leading East Coast commercial bank and a Midwest Community Bank, both with over $15 billion in assets, for its IBS core and digital solutions, respectively. These successes demonstrate FIS's strong competitive positioning and improved retention rates. The company continues to gain market traction with its digital solutions and office of the CFO capabilities. FIS expanded its relationship with a multinational engineering and technology firm by providing treasury management and payment solutions, illustrating its ability to serve a diverse client base beyond traditional financial institutions. Overall, FIS is on track to meet its sales goals, supported by a strong pipeline of opportunities and positive market reception.

The paragraph discusses the company's strategic expansion and recent transactions. It highlights their growth in private equity and private capital, mentioning a new client for their commercial lending solution and a buy-side firm using their derivatives processing solution for self-clearing. It then covers two significant transactions: selling their 45% stake in Worldpay to Global Payments for $6.6 billion, and acquiring Issuer Solutions for a net enterprise value of $12 billion, including a $1.5 billion tax benefit. These moves are aimed at strengthening their strategic and financial position, enhancing their product offerings, and increasing cross-sale potential with existing clients.

The transaction is expected to immediately enhance adjusted EPS, EBITDA margins, and adjusted free cash flow, with more substantial benefits anticipated in the long term due to synergy targets. It improves the company’s financial profile and recurring revenue stream while allowing the monetization of a non-strategic asset. The company is excited to partner with Global Payments and confident in the transaction's positive impact. James Kehoe reports strong first-quarter financial results, with adjusted revenue growth of 4% and significant cash flow improvements. Adjusted EBITDA reached $958 million, with a 37.8% margin, and adjusted EPS grew by 11% to $1.21. The company achieved a cash conversion rate improvement to 71% and maintained its target leverage ratio of 2.8 times, with capital expenditures consistent with expectations.

The company returned $670 million to shareholders, with $450 million in share repurchases, and is on track to meet its $1.2 billion annual repurchase target. Revenue growth was strong, with 4% growth in adjusted and recurring revenue, which now accounts for 81% of total revenue. The banking segment saw a 2% increase, exceeding expectations, and non-recurring revenue went up by 3%, while professional services declined by 5%. Banking EBITDA margin decreased to 40.1% due to high license and termination fees from the previous year. In capital markets, adjusted revenue grew by 9%, with non-recurring revenue up by 47%. Professional services in this segment also declined by 5% but is expected to recover by the second quarter. The adjusted EBITDA margin for capital markets improved by 90 basis points. The company reaffirms its full-year outlook and maintains its key assumptions.

In the article's seventh paragraph, the company reports that it is on schedule with its implementations and positive about achieving 150 basis points of banking growth linked to commercial excellence. For the second quarter, the company projects adjusted revenue growth of 4.2% to 5%, with banking revenue growth targeted at 3.7% to 4.4%. Capital markets are expected to see adjusted revenue growth of 6% to 6.7%, positioning the first half's growth slightly ahead of the annual outlook. A sequential margin improvement of about 200 basis points is forecasted for the second quarter, and a full-year margin target of 41.3% is anticipated. Adjusted EPS is projected at $1.34 to $1.38, with minimal EPS growth due to a large one-time interest income benefit from the prior year and strong past performance by Worldpay. Despite these challenges, the company reaffirms its full-year outlook and projects a total shareholder return of 11% to 13%, as first quarter results exceeded expectations and set a strong foundation for future growth.

The paragraph discusses a financial update, highlighting a $670 million capital return for the quarter, contributing to a $2 billion annual target. It also mentions the transformation of the financial profile by replacing a non-cash minority interest in Worldpay with a cash-generating asset in Issuer Solutions. During the Q&A session, Tien-Tsin Huang from JP Morgan inquires about client decision-making and feedback regarding the Issuer Solutions business. Stephanie Ferris responds that client conversions are proceeding smoothly and that the banking revenue guide reflects this positive progress. She notes that the pipeline from clients is increasing significantly, showing no signs of slowing down despite the economic cycle, due to FIS' recurring and essential services.

The paragraph discusses the company's positive outlook on its pipeline, highlighting the durable and recurring nature of FIS's offerings, which are not discretionary. The speaker notes the successful integration and positive feedback from the TSYS acquisition, emphasizing the strong brand and client commitment to the company's best-in-class products and services. Additionally, there's mention of progress with partnerships involving Capital One and Discover, with the partnerships viewed positively as they advance. The discussion ends with a question about guidance for the second quarter in capital markets, noting a deceleration in growth.

In this discussion, Stephanie Ferris explains that the first quarter had a high non-recurring benefit due to a renewal in the capital markets segment, but the recurring revenue from the first to the second quarter remained consistent. For the second quarter, they anticipate results similar to the first quarter if excluding the renewal timing. In terms of the banking segment, John Davis inquires about the composition of their debit issuing business combined with TSYS and potential cyclicality. Ferris notes that while she lacks precise details at the moment, TSYS has reported strong account growth and positive transaction growth, despite slower commercial activity. Consumer spending on debit remains stable with strong transaction growth, and their credit portfolio has not experienced a slowdown.

The paragraph discusses a financial update where James Kehoe highlights an increase in their banking business by $2.5 billion, which represents a 35% scale increase, leading to a total of $9.4 billion in revenue. It is noted that this is beneficial to margins by about 80 basis points, with 80% of the revenue being recurring and operating with margins in the low to mid-40s. Stephanie Ferris mentions the positive impact on payment growth and the potential for more bundling opportunities in credit and debit services. Additionally, in response to a question about the Worldpay EMI outlook, Ferris states that its revenue growth aligns with expectations and there is no softening in its performance, suggesting consistent strength and the potential for outperformance.

In the paragraph, the speaker discusses the revenue growth of Worldpay, noting that separating it from Global Payments was a beneficial decision. With leadership changes and increased focus and investment, Worldpay has seen a significant improvement in revenue growth, progressing from low single-digit to mid-to-upper single-digit growth. The speaker expresses optimism about the company's performance and execution. Regarding the EBITDA margin for Worldpay, Stephanie Ferris mentions that detailed discussions on it are not typically shared externally, but investments are underway as planned. An unidentified analyst then asks about potential cost synergies in the pro forma business, seeking insights on realizing these synergies.

In the paragraph, Stephanie Ferris discusses anticipated cost synergies from a business merger, focusing on rationalizing duplicate vendor costs and optimizing back-office operations. She mentions that they expect to see quick benefits from these synergies, particularly by leveraging TSYS's expertise. James Kehoe adds that they expect total synergies of $150 million, with the benefits split evenly over the second and third years, while some cost synergies will begin in the first year. They believe the long-term potential exceeds the initial $150 million estimate.

In this paragraph, the company discusses expected revenue synergies from a specific transaction, initially estimating $45 million over the first three years and a long-term potential of $125-$150 million. An analyst inquires about the accretion level of the Issuer Solutions transaction. James Kehoe responds by emphasizing that while the transaction will be immediately accretive and transformative, the focus should be on the significant boost to cash flow and margins, rather than just EPS accretion. The transaction reshapes the company's structure by enhancing banking revenue and cash flow by 35%, making these changes more important than the EPS figures.

The paragraph discusses a company's strategy to strengthen its banking business by leveraging synergies from a recent transaction. This move is expected to boost cash flow significantly, adding $700 million to an already substantial $2 billion adjusted cash flow. The company plans to enhance its financial profile by cross-selling various services like credit issuance and processing to large financial institutions (FIs). Stephanie Ferris highlights the transaction's logic, emphasizing the company's diverse product offerings and established cross-sell processes. This positions them uniquely to bundle services like credit, debit, lending, and trading, and capitalize on relationships, particularly in back-office solutions, in the banking and capital markets sectors.

The paragraph discusses interactions with chief technology officers and CIOs, highlighting the significance of credit issuing in generating revenue for banks. The company views this as an opportunity to expand in the large financial institution space by leveraging existing relationships and offering new products and teams with strong relationships. The paragraph also mentions positive feedback from clients regarding the TSYS product set, customer service, and the benefits of working with FIS as a single provider, which simplifies regulatory processes and optimizes metrics. Additionally, Jason Kupferberg from Bank of America inquires about the banking side, noting the need for a 200 basis point acceleration in the second half of the year to meet the full-year midpoint. Stephanie Ferris responds by emphasizing the importance of mix in driving margins for the second quarter and latter half of the year.

The paragraph discusses the company's strategic focus on increasing higher-margin sales and executing cost reduction programs as planned. The company is confident about its margin expansion due to strong visibility of its positive mix driver and ongoing cost initiatives that have been in place since the end of 2023. An easier year-over-year comparison in the second half of the year is also expected to contribute to improved margins. James Kehoe adds that the cost reduction efforts, projected to reduce costs by roughly 175 basis points annually, are progressing ahead of schedule, with a greater portion of reductions expected in the second half of the year. Overall, the company is optimistic about achieving its financial goals.

The paragraph discusses the company's strong performance and clear visibility into cost management and revenue mix improvement, particularly in the latter three quarters of the year. The first quarter had challenging comparisons due to exceptionally high margins from the previous year, but those are now behind them. Jason Kupferberg inquires about the revenue expectations for banking, particularly in the second half of the year. James Kehoe expresses confidence in meeting the second quarter targets and notes that the company's revenue growth will be driven by 150 basis points coming from commercial excellence in the banking sector. The company remains confident about hitting its full-year guidance.

The paragraph discusses the company's performance and future outlook, particularly in the banking sector. It highlights strong sales and high retention rates, especially in the banking business, which has contributed to a 150 basis point increase. The company expects no new sales in the second half to impact that period's performance, as the year was already strong for banking in 2024 with a 12% increase. Despite this, the second half is expected to recognize revenue from earlier work. Last year saw record wins in core business and digital growth of 50%. Stephanie Ferris expresses confidence in the full-year guidance. Additionally, Bryan Bergin from TD Cowen asks about progress in net working capital optimization and operational expense leverage related to combining with Issuer Solutions.

The paragraph discusses improvements in cash flow driven by net working capital initiatives, attributed to efforts like extending payment terms with vendors and enhancing governance around client terms. It highlights significant year-on-year improvement in cash flow from 18% to 71%, partly due to a poor previous year and partly due to new initiatives. The speaker expresses satisfaction with early progress, especially since Q1 is typically a low quarter. Regarding CapEx, the Issuer business aims for a long-term goal of 8% of revenue, currently running at 9%. Overall, the speaker is optimistic about the improved financial outlook.

The paragraph discusses synergy opportunities, specifically how increased scale with vendors and suppliers could lead to more favorable terms, potentially reducing operational and capital expenditures. However, there's a caution regarding TSYS's ongoing modernization program, which may maintain higher capital levels until completion. James Kehoe comments that a continued rate of about 8% is expected due to the modernization efforts. Stephanie Ferris highlights excitement over opportunities in non-traditional verticals, noting progress in sales and potential within non-traditional private credit hedge funds as traditional and non-traditional markets merge.

The paragraph discusses the company's focus on leveraging traditional opportunities in trading and processing by integrating new capabilities like Demica and Torstone, which are being cross-sold to their existing customer base. Capital markets are performing well, with new products driving significant sales and growth, indicating a promising future in both traditional and non-traditional areas. During the Q&A session, Rayna Kumar from Oppenheimer asks about dissynergies related to the sale of the Worldpay business, to which Stephanie Ferris responds that there are none since they were addressed during the separation. Vasu Govil from KBW inquires about ACV growth, and Ferris notes they feel good about it, mentioning that the first quarter is usually the lowest in sales, but showing strong year-over-year growth in core and digital areas.

The paragraph discusses the positive impact of product investments on increased annual contract value (ACV) and high revenue retention, attributed to a commercial excellence program implemented by the CEO. This program focuses on cross-selling to existing customers and maintaining high renewal rates. The CEO expresses confidence in future growth and recurring revenue, projecting success through 2026, despite the first quarter typically being the weakest. Vasu Govil inquires about the opportunities presented by the recently approved Capital One and Discover deal. Stephanie Ferris responds by highlighting the partnership with Capital One as an opportunity aligned with the company's sales goals, emphasizing the importance of the transaction's closure for both parties.

The paragraph conveys that while the topic in question may not significantly alter the company's approach, the relationship remains active and important. The session is concluded, and participants can now disconnect.

This summary was generated with AI and may contain some inaccuracies.