- As Fidelity National Information Services, better known as FIS, prepares to complete the sale of a majority stake in its Worldpay merchant services business next year, the company on Tuesday began offering separate views of its finances for the ongoing operations versus its discontinued operations.
- The company also updated its expectation of the proceeds to be received in connection with the sale of Worldpay, saying that a portion of the slightly higher $12 billion in proceeds will be used to pay down debt.
- As part of its third-quarter earnings report, FIS reported revenue for the quarter of $3.7 billion, including $2.5 billion for the ongoing FIS operations, which will include banking and capital markets business segments, and $1.2 billion for the discontinued operations of Worldpay.
The Jacksonville, Florida-based company is on track to complete the sale of a majority stake in Worldpay to the private equity firm GTCR in the first quarter, according to the third-quarter earnings report. In July, FIS announced an agreement to sell the unit next year.
FIS CEO Stephanie Ferris acknowledged that the company’s financial report in the current quarter will take a hit as it prepares to shed the Worldpay operations. “The fourth-quarter numbers, while overall are softer, they're driven by non-recurring items that we wanted to be transparent about,” Ferris said on the Tuesday call with analysts. “The recurring (revenue) continues to be strong, and we would expect those headwinds to abate as we move into 2024.”
The company reported net income for the slimmed-down ongoing operations jumped 19% to $260 million, up from $218 million in the year-ago period on a revenue increase of 3% to $2.49 billion. Still, including the impact from the discontinued operations, FIS reported a loss of $449 million, according to the release.
Overall, the company anticipates slightly higher revenue for this year relative to its previous forecast. It increased the 2023 expected revenue range to between $14.6 billion and $14.65 billion, up from $14.5 billion and $14.63 billion, according to a slide presentation accompanying the earnings release.
FIS is also following through on a plan to reduce expenses as it shrinks into a smaller business selling its software and technology services to banking and capital markets clients. The company expects to exit this year with a run-rate reduction of expenses of about $200 million, and about $1 billion in total cash savings, Chief Financial Officer James Kehoe told analysts on the call.
Kehoe, who started as CFO at FIS in August, is part of the new management team named by Ferris after she took the company’s top post earlier this year, following the early exit of her predecessor, Gary Norcross. It was Kehoe’s first time presenting the company’s financial results to analysts.