Fidelity National Information Services’ Earnings Call Contradictions: Capital Markets Execution vs. Market Factors, Growth Outlook Shifts

Date of Call: Aug 4, 2026

Financials Results

• Revenue: $3.4 billion, up 5.3% on a pro forma basis
• EPS: $0.33 per diluted share (adjusted EPS grew 8.8%)
• Operating Margin: Adjusted EBITDA margin expanded 113 basis points

Guidance:

• Adjusted revenue growth forecast reduced to 4.5%-5% from 5.1%-5.7% previously.
• Banking revenue growth outlook reiterated.
• Capital Markets revenue growth reduced to 3%-3.5% (225-basis-point reduction).
• Full-year EBITDA margin expansion expected to be 85-105 basis points.
• Adjusted EPS expected to grow 7%-8.5%.
• Free cash flow outlook raised by $100 million to $2.2 billion for the year (36% growth at midpoint).
• Q3 pro forma revenue growth projected at 2.9%-3.7%.
• Q3 EBITDA margin expected to expand 80-100 basis points.
• Q3 adjusted EPS expected to grow 4.6%-7.3%.

Business Commentary:

Revenue Growth and Business Model Durability:

• FIS reported revenue of $3.4 billion for Q2 2026, up 5.3% on a pro forma basis.
• Banking grew 6.1% at the high end of the outlook, driven by momentum in Banking and payments, while Capital Markets grew 3.2% at the low end.
• The growth demonstrates the durability of FIS's business model with expanding margins and increased cash flow.

Total Issuing Solutions (TSYS) Acquisition Impact:

• The TSYS acquisition expanded FIS's total addressable market by $28 billion, contributing to strong client wins and revenue growth.
• TSYS's performance aligned with payments growth, with significant contributions from new large financial institutions in Latin America and India.
• The acquisition has enhanced cross-selling capabilities, with enterprise-wide ACV sold to joint clients growing 35% year-over-year.

Capital Markets Segment Challenges:

• Capital Markets revenue increased 3.2%, with recurring revenue growth decelerating to 5.3%.
• Professional services declined by 17% due to lower sales and slower-than-anticipated conversion of backlog.
• The segment is undergoing a strategic review to evaluate alternatives for select products that do not fit the strategic profile of the overall business.

AI Integration and Productivity Gains:

• FIS has seen significant productivity improvements from AI integration, with engineering throughput increasing by 1.5 to 2 times and defects reduced by 30%.
• In servicing, manual tickets were reduced by 70% and triage time by nearly 75% due to AI-powered capabilities.
• These improvements are enhancing client experiences and accelerating product delivery, contributing to FIS's competitive differentiation.

Sentiment Analysis:

Overall Tone: Positive

• Management stated: 'Our second quarter results are strong and demonstrate the durability of our business model.' They highlighted 'extremely strong' free cash flow, 'real client wins and revenue growth' from the TSYS acquisition, and that AI investments are 'compounding in our products, in our productivity, and in our client conversations.'

Q&A:

• Question from Tien-Tsin Huang (JPMorgan): Could you better understand the weakness in Capital Markets professional services? Was it broad-based? Are clients choosing cheaper forms of delivery? Are they prioritizing other tech projects?
  Response: The miss is operationally on FIS, not due to market trends. They had a strong backlog but underperformed on sales and conversion. Non-recurring professional services is not expected to be a growth driver going forward.

• Question from Tien-Tsin Huang (JPMorgan): Could you share more on the strategic review of products within Capital Markets? Are these standalone products or bundled with other contracts?
  Response: The review focuses on products within Capital Markets that don't fit the overall company's strategic profile, such as those not serving large financial institutions or aligning with core solution ecosystems.

• Question from Dan Dolev (Mizuho): How did TSYS perform this quarter? What are you seeing on the competitive landscape?
  Response: TSYS performed in line with payments growth. The competitive landscape is favorable as Visa Pismo targets small to mid-size banks, not large institutions where FIS competes, and FIS wins 80% of the time in large-scale client wins.

• Question from Dan Dolev (Mizuho): How should we think about the KPI of 30 million new accounts converted over the last 12 months going forward? What can be done to re-accelerate?
  Response: Account conversion has been strong, especially post a major U.S. bank acquisition. Going forward, FIS expects continued growth and winning in both large U.S. and global markets with its PRIME product.

• Question from Vasu Govil (KBW): Could you provide parameters around the size of assets under consideration in the Capital Markets strategic review? When should investors expect more clarity?
  Response: No specific details on asset size yet. Management will provide updates as soon as they have something.

• Question from Vasu Govil (KBW): Is there a need to reaccelerate investments in security and fraud prevention due to AI-driven cyber threats? Are these requirements already contemplated?
  Response: No need to increase cyber investment; it is already a top priority. FIS is well-positioned with significant technologists and uses AI internally to enhance cyber defenses.

• Question from Darrin Peller (Wolfe Research): Could you revisit comments on Pismo and the competitive landscape? Help us understand bundling and cross-sell and why FIS has a right to win.
  Response: FIS serves the largest financial institutions globally with an 85% win rate for clients with over 1 million accounts. Visa Pismo targets a different market segment, and FIS's scale, product capabilities, and successful client renewals validate its competitive position.

• Question from Darrin Peller (Wolfe Research): What are you seeing in terms of customer demand and decision-making timing in the Banking segment?
  Response: Banking demand is strong with high interest in payments, fraud, data capabilities, lending, and modernization. No evidence of delayed decision-making from institutions.

• Question from Andrew Schmidt (KeyBanc Capital Markets): Could you discuss FIS's technology strategy in Banking Solutions regarding 'hollowing out the core'? How is FIS positioned to adapt?
  Response: FIS is uniquely positioned to support both modernization on existing cores and complete core hollow-out strategies with its acquired orchestration platform capabilities, aiming to announce significant wins by year-end.

• Question from Andrew Schmidt (KeyBanc Capital Markets): Could you dig into the assumptions for mid-single-digit recurring growth in Capital Markets and modest acceleration to 2027? How confident are you?
  Response: Confidence is based on strong recurring sales momentum, attrition returning to normal levels post-UBS impact, and backlog conversion. No upside is expected from lending due to stable interest rates.

• Question from Jason Kupferberg (Wells Fargo): Is the 6% growth in payments sustainable in the second half based on account conversion backlog and pipeline?
  Response: Payments growth is expected to continue at similar mid-single-digit levels, driven by TSYS integration and FIS's overall mid-single-digit growth target.

• Question from Jason Kupferberg (Wells Fargo): On Capital Markets professional services, were issues due to insufficient resources, misscoping, or overly aggressive timing projections?
  Response: The principal issue was a large miss in first-half ACV sales for professional services, which disproportionately impacts current-year conversion. It was predominantly a sales issue.

• Question from Will Nance (Goldman Sachs): What drove the 21% non-recurring revenue growth in Banking in the first half? What is the outlook for 2027?
  Response: The growth was driven by large term fees and strategic license deals. For 2027, Banking Solutions is expected to be a lower single-digit grower, with payments in the mid-single digits.

• Question from Will Nance (Goldman Sachs): How are you thinking about the feasibility and puts and takes of offloading businesses in Capital Markets?
  Response: Offloading is challenging due to high integration and fixed costs. Decisions will focus on creating the right portfolio to return to sustainable mid-single-digit growth, accepting some leakage.

• Question from Bryan Bergin (TD Cowen): To offset the trading headwind, are you assuming the lending contribution reverses or holds at lower levels? Is the Q4 acceleration based on lapping comps or visibility?
  Response: The Q4 acceleration is based on lapping the attrition headwind and sales from earlier in the year. No rebound is expected in lending for 2026 or 2027.

• Question from Bryan Bergin (TD Cowen): Can you comment on progress adopting AI internally, particularly in engineering and customer support?
  Response: AI is driving productivity with 1.5-2x throughput, 30% fewer defects in engineering, and manual tickets down 70% in servicing. It enhances both productivity and client experience.

Contradiction Point 1

Capital Markets Professional Services Performance Attribution

Contradiction on whether the sales miss was due to internal execution or market-wide factors.

Tien-Tsin Huang (JPMorgan) - Tien-Tsin Huang (JPMorgan)

2026Q2: The PS miss is attributed to internal execution, not market trends. - Stephanie Ferris(CEO)

Was the weakness in Capital Markets professional services broad-based, and are clients prioritizing cheaper delivery methods over other tech initiatives? - Ramsey El-Assal (Cantor Fitzgerald)

2026Q1: The pressure is on loan syndication, specifically a temporary slowdown in debt issuances due to macro volatility. - James Kehoe(CFO)

Contradiction Point 2

Payments Growth Sustainability

Contradiction on the sustainability of the 6% payments growth rate into the second half.

Jason Kupferberg (Wells Fargo) - Jason Kupferberg (Wells Fargo)

2026Q2: Payments is the largest business and a key driver of FIS's mid-single-digit growth trajectory. It will continue at similar mid-single-digit levels in the back half. - Stephanie Ferris(CEO)

Is the 6% payments growth sustainable in the second half, and what were the root causes of the Capital Markets PS miss (resource issues, misscoping, or aggressive timing projections)? - Jason Kupferberg (Wells Fargo)

2026Q1: Payments growth is likely to outpace banking recurring revenue by at least a point in the long term, though both are expected to grow at similar rates this year. - James Kehoe(CFO)

Contradiction Point 3

Strategic Use and Impact of AI

AI's role shifts from a strategic accelerant to a defensive tool, with changing emphasis on its application.

Vasu Govil (KBW) - Vasu Govil (KBW)

2026Q2: Cybersecurity is already the biggest technology spend... The company's scale and Project Glasswing (partnership with Anthropic) provide a strong defense. The company's team uses AI internally to improve productivity... - Stephanie Ferris(CEO)

Given AI-driven cyber threats, should the company accelerate security and fraud prevention investments beyond the current long-term outlook? - Tien-Tsin Huang (JPMorgan Chase & Co)

2025Q4: AI is viewed as a strategic accelerant, not a replacement. FIS's mission-critical systems of record provide accurate, authoritative data essential for AI. - Stephanie Ferris(CEO)

Contradiction Point 4

Growth Outlook for Capital Markets Segment

The expected growth trajectory for Capital Markets in 2026-2027 appears inconsistent with the 2025Q4 guidance.

Darrin Peller (Wolfe Research) – Follow-up - Darrin Peller (Wolfe Research) – Follow-up

2026Q2: Recurring growth in 2026 is expected to end in the mid-single-digit (~5%) range. In 2027, with no M&A headwind, recurring growth should accelerate modestly. - James Kehoe(CFO)

What factors support the Capital Markets outlook of mid-single-digit recurring growth in 2026 and modest acceleration in 2027? - Ramsey El-Assal (Cantor Fitzgerald)

2025Q4: FIS is leaning into this with a focus on mid- to high-single-digit recurring revenue growth in 2026. - Stephanie Ferris(CEO) and James Kehoe(CFO)

Contradiction Point 5

Capital Markets Growth Outlook and Confidence

Contradiction in the level of confidence and drivers for Capital Markets growth in 2026 and 2027.

Andrew Schmidt (KeyBanc Capital Markets) - Andrew Schmidt (KeyBanc Capital Markets)

2026Q2: The 2026 outlook accounts for a known attrition headwind... For 2027, confidence comes from: 1) Attrition returning to normalized rates... 2) Conversion of the 2026 sales backlog... 3) A stronger recurring revenue base. - Stephanie Ferris(CEO)

What underpins the Capital Markets outlook of mid-single-digit recurring growth in 2026 and modest acceleration in 2027? - Jason Kupferberg (Wells Fargo)

2025Q3: Capital Markets may be a little lighter, banking stronger. - James Kehoe(CFO)