FIS Sees ‘Expanding Pipeline’ for Core Banking Solutions

Fidelity National Information Services (FIS) reported results that showed momentum across what management has termed “the money lifecycle,” where funds might be “at rest, “in motion” or “at work.”

CEO Stephanie Ferris said during the Monday (Nov. 4) conference call with analysts that recurring revenue growth accelerated to 6%.

Supplemental materials released by the company detailed that adjusted revenues were 4% higher to $2.6 billion.

Cross-Selling Momentum

Cross-selling opportunities grew across its installed base as client firms and financial institutions (FIs) continued to modernize and digitize their core operations. Ferris said cross-selling activity across the enterprise was up more than 20% year over year.

Within the money “at rest” segment, Ferris told analysts there were strong results in the core banking operations, having signed “more core engagements through the first three quarters of 2024 than we did in all of 2023 … our pipeline of core opportunities continues to expand.” There’s been particular strength from the community banking space, she said.

Digital banking has also seen momentum, she said, with “new sales nearly doubling year over year.” She said the recent acquisition of Dragonfly “complements our Digital One portfolio, expanding our digital offerings across large financial institutions, including some of the largest regional banks … [where] we already have significant relationships. The company provides banks with a full suite of solutions to meet the needs of large, complex commercial customers, including managing liquidity, combating fraud, and handling payments. Dragonfly also services a number of banks not currently using an FIS core, creating attractive cross-sell opportunities for us,” she said during the call.

Within the “money in motion” operations, Ferris said payment offerings, particularly those tied to loyalty, were strong. Treasury and risk management products also saw growth.

CFO James Kehoe said on the call that banking revenue growth of 3% came in at the higher end of the company’s outlook. As for the Dragonfly acquisition, Kehoe said “the deal is closing as we speak.”

“Our acquisition pipeline remains robust and we expect to close additional deals in the near future,” the CFO said. The company slightly boosted the bottom end of its guidance for revenues for the current year, to a range of $10.14 billion to $10.17 billion; the lower end had previously been $10.12 billion.

Shares were roughly flat during intraday trading on Monday.

With remarks on the current and near term operating environment, Ferris said “we continue to see very stable economic trends across banking and capital markets … Banks continue to spend. Technology continues to be one of their largest spend[ing] areas … Nothing is causing us concern as we think about the fourth quarter.”

Asked later in the call about acquisitions, Ferris said that “we’re looking at small tuck-in acquisitions that can advance our growth verticals … [in] digital payments, commercial lending, treasury, et cetera, risk. So these are areas that have higher growth, higher margin for us … The universe continues to be fairly robust and we think valuations are fair.”