Fidelity National 2025 Q1 Earnings Misses Targets with Net Income Down 89%

Fidelity National Information Services (FIS) reported its fiscal 2025 Q1 earnings on May 06th, 2025. Despite a revenue increase, the company missed expectations with a significant decline in net income. FIS introduced its second quarter outlook, projecting revenue between $2.56 billion and $2.585 billion, with adjusted EBITDA forecasted at $1.020 billion to $1.035 billion. The full-year guidance was reiterated, anticipating revenue growth of 4.6% to 5.2% and adjusted EPS growth of 9% to 11%. FIS aims to achieve revenue between $10.435 billion and $10.495 billion, and adjusted EBITDA of $4.305 billion to $4.335 billion, reflecting strategic optimism.

Revenue
Fidelity National's total revenue rose by 2.6%, reaching $2.53 billion in Q1 2025, up from $2.47 billion in Q1 2024. Banking Solutions contributed $1.72 billion, while Capital Market Solutions added $764 million. The Corporate and Other segment generated $50 million, culminating in the overall revenue of $2.53 billion.

Earnings/Net Income
Fidelity National's earnings per share (EPS) fell by 87.8% to $0.15 in Q1 2025 from $1.23 in Q1 2024. Concurrently, net income decreased by 89.0%, reaching $78 million in Q1 2025, down from $707 million the previous year. The significant decline in EPS suggests challenging financial performance.

Price Action
The stock price of Fidelity National edged down 1.54% during the latest trading day, dropped 3.48% over the most recent full trading week, and increased 1.85% month-to-date.

Post-Earnings Price Action Review
The strategy of investing in Fidelity National (FIS) shares after a quarter-over-quarter revenue drop and holding for 30 days has historically resulted in substantial losses. Over the past five years, this strategy yielded a return of -23.05%, starkly contrasting with the benchmark return of 49.40%, leading to an excess return of -72.45%. The negative Sharpe ratio of -0.59 highlights poor risk-adjusted returns, while the maximum drawdown of -25.92% underscores the strategy's high risk and potential for loss. These figures reflect the challenges and volatility associated with this investment approach, suggesting that caution is warranted for future investments under similar conditions.

CEO Commentary
"We had a great start to the year, delivering another quarter of financial outperformance, giving us the confidence to reiterate our full-year outlook," said Stephanie Ferris, CEO and President of FIS. The CEO expressed enthusiasm regarding the strategic transactions that allow the company to monetize its Worldpay stake and acquire the Issuer Solutions business, which is expected to enhance FIS's payment product suite and strengthen relationships with clients. The comments reflect an optimistic leadership outlook, emphasizing growth drivers and the positive impact of strategic initiatives on the company's financial profile.

Guidance
FIS is introducing its second quarter outlook and reiterating its full-year guidance, expecting revenue growth of 4.6% to 5.2% and adjusted EPS growth of 9% to 11%. For the second quarter of 2025, the company anticipates revenue between $2.56 billion and $2.585 billion, with adjusted EBITDA projected at $1.020 billion to $1.035 billion. For the full year, revenue guidance is set at $10.435 billion to $10.495 billion, with adjusted EBITDA expected to range from $4.305 billion to $4.335 billion, and adjusted EPS forecasted between $5.70 and $5.80.

Additional News
Fidelity National Information Services has recently announced significant strategic moves, including the sale of its Worldpay stake and the acquisition of the Issuer Solutions business. These transactions are intended to bolster FIS's payment product offerings and enhance its financial profile. Furthermore, the company has demonstrated strong capital management by returning $670 million to shareholders through share repurchases and dividends. CEO Stephanie Ferris has reaffirmed that all client conversions for the Issuer Solutions business have proceeded successfully, positively impacting banking revenues and expanding the pipeline. Additionally, the company expects $125 million in cost synergies from rationalizing duplicate vendor costs and optimizing back-office operations, leveraging TSYS's expertise for swift realization of these benefits.