FIS 2024 Q4 Earnings Call: Unpacking Contradictions in Banking Revenue, Acquisitions, and Cash Flow Dynamics

These are the key contradictions discussed in Fidelity National Information Services' latest 2024Q4 earnings call, specifically including: Banking Revenue Growth Expectations, Impact of Acquisitions on Financial Projections, and Free Cash Flow Conversion Improvements:



Revenue Growth and Financial Performance:
- FIS reported a 4% adjusted revenue growth for Q4 2024, slightly below expectations but still marking an improvement from Q3.
- The growth was driven by a 10% increase in Amplify cross-sales and higher margin recurring revenue, despite headwinds from timing issues and onetime items.
- Adjusted EPS increased by 49% or 9% on a normalized basis, exceeding the full-year outlook.

Banking Revenue and Sales Momentum:
- Banking revenue grew 2% in Q4, below expectations due to some onetime items and client-requested implementation delays.
- Despite this, strong ACV sales growth of 9% in 2024 suggests future revenue acceleration as signings convert into revenue.
- Key client wins in money at rest, money in motion, and money at work, including a strategic partnership with Affirm, contributed to sales momentum.

Capital Markets Performance:
- Capital Markets achieved 9% adjusted revenue growth in Q4, driven by strong recurring revenue growth of 7% and high-margin license sales.
- The segment benefited from operating leverage and growth in higher-margin license sales, leading to an expanded adjusted EBITDA margin of 190 basis points.

Cost Management and Shareholder Returns:
- FIS returned $1.2 billion to shareholders in Q4, including $1 billion in buybacks, aligning with a target of returning $2 billion in capital in 2025.
- Margin expansion of 64 basis points exceeded original targets due to cost management and operational efficiencies.
- The focus on profitability and shareholder value was emphasized, with expectations for double-digit total returns to investors in 2025.