Fidelity National Information Services (FIS) posted earnings results for the fourth quarter that showed continued movement of banks and merchants toward digital-first initiatives.
The company also said that eCommerce volumes were up double-digit percentages, and management also noted on the conference call with analysts that its Premium Payback offering has a strong pipeline in place.
Adjusted earnings per share came in at $1.62, six cents better than the Street. Revenues were up 21 percent year over year, and at $3.3 billion met Street expectations. Organic revenues were flat overall, the company said. Drilling down into results, the company said that organic revenue growth was positive for Banking Solutions, which gained 5 percent to $1.6 billion, while Capital Market Solutions was up 3 percent to $663 million. Merchant Solutions slipped 9 percent to $1 billion, due to negative consumer spending trends seen amid the pandemic.
In supplemental materials posted by the company in tandem with its earnings, FIS said that eCommerce payment volumes — excluding travel and airlines (which slid 49 percent) — were up 32 percent year on year, while restaurant-related volumes were down 5 percent. Total payments volume was up 2 percent. U.S. non-discretionary spend – on medicines and groceries, for example – gained 8 percent, as measured in 2020 volume. Verticals with strong growth during the pandemic were about 65 percent of the mix; verticals facing headwinds account for the remaining 35 percent.
Within the quarter, for merchant monthly volumes, October and November saw 5 percent dollar volume growth, and December saw 3 percent dollar volume growth, said FIS.
Management (including CFO James “Woody” Woodall and Gary Norcross, CEO) said on the conference call with analysts that the firm anticipates “significant growth,” particularly in its merchant segment, as it laps COVID-19 impact in the second quarter of this year and volumes improve in discretionary verticals and travel and airlines. It’s likely that airlines won’t see real improvement until 2022, they noted. CFO Woodall also said the firm sees “a great opportunity for cross-selling” on top of the 23 percent growth seen in 2020.
With a nod to the trend toward digital banking, said management, financial institutions (FIs) continue to evaluate existing technology with an eye on the cloud, while early adopters have been marked by having decades-old systems. There was also continued strong demand for the company’s Premium Payback point of sale system, which features loyalty programs with PayPal as a partner. The program contributed strongly to the $200 million revenue synergies seen with the Worldpay acquisition — notwithstanding the impact from the pandemic, which has hit retail sales in the current environment, especially at brick-and-mortar locations.