How did FIS manage to reduce operating expenses significantly in Q4 2024?

Fidelity National Information Services (FIS) was able to reduce its operating expenses significantly in Q4 2024, primarily due to strategic initiatives and operational efficiencies. Here are the key factors that contributed to this reduction:

1. **Strategic Acquisitions**: FIS's acquisition of the Issuer Solutions business for $12 billion and the sale of the minority Worldpay stake for $6.6 billion have strengthened its financial profile and positioned it to optimize operational costs. These transactions have likely led to a more efficient operating structure, reducing overheads and improving overall profitability.
2. **Optimization of Operations**: The company's focus on digital transformation and the adoption of cloud-based solutions have likely led to better operational efficiency. Digital core banking platforms, as recognized by IDC MarketScape, suggest a strategic shift towards modern, cost-effective banking solutions. This transition typically involves rationalizing legacy systems, reducing hardware costs, and minimizing maintenance expenses.
3. **Reduced Selling, General, and Administrative (SG&A) Expenses**: FIS reported a decline in SG&A expenses, which came in at $558 million, a 2.6% decrease year-over-year. This reduction, coupled with a decrease in net interest expenses, reflects effective cost management and a more streamlined organizational structure.
4. **Improvement in Capital Markets Segment**: The Capital Markets segment experienced a 90-bps EBITDA margin improvement, driven by strong recurring revenues and a 47% growth in non-recurring revenue due to strong license renewals. This indicates a healthier revenue model with less dependence on costly projects and more predictable income from recurring services.

In summary, FIS's ability to reduce operating expenses significantly in Q4 2024 can be attributed to strategic acquisitions, operational optimizations, reduced SG&A costs, and improvements within its Capital Markets segment. These factors collectively contributed to a more efficient and profitable operating environment for the company.