FIS reports 10% Y/Y rise in revenue in Q3 2021
FIS (NYSE:FIS), a global leader in financial services technology, today reported its third quarter 2021 results.
On a GAAP basis, revenue grew by more than $300 million, or 10%, to $3.5 billion in the third quarter of 2021. Net earnings attributable to common stockholders amounted to $158 million or $0.26 per diluted share.
On an organic basis, which excludes the impact of FX, revenues also grew 10%. Adjusted EBITDA grew 17% to $1.6 billion. Adjusted EBITDA margin expanded by 270 basis points (bps) to 45.2%, primarily due to high contribution margins from revenue growth as well as ongoing revenue and expense synergies.
Adjusted net earnings increased 21% to $1.1 billion and adjusted net earnings per share increased 22% to $1.73 per diluted share.
The Merchant Solutions segment saw revenue grow 14%, including a 4% headwind created by the unusual shift of the U.S. tax reporting deadline in 2020 to July 15 from April 15. As compared to the third quarter of 2019 (pro forma for the Worldpay acquisition), revenue grew 16% to $1.2 billion as the global economy continues to recover from the ongoing pandemic. Adjusted EBITDA increased 23% over the prior year period to $600 million. Adjusted EBITDA margin expanded 380 basis points to 51.7%, primarily due to high contribution margins from new revenue as well as ongoing synergies.
The Banking Solutions segment generated revenue of $1.6 billion, up 8% from the year-ago period. Banking’s strong third quarter performance is primarily due to new sales execution. On an organic basis, which excludes the impact of FX, revenue also increased 8%. Adjusted EBITDA increased 14% to $742 million. Adjusted EBITDA margin expanded 250 basis points over the prior year period to 46.1%, primarily due to revenue mix, high contribution margins from new revenue, and ongoing synergies related to the Worldpay acquisition.
The Capital Market Solutions segment generate $654 million in revenues in the third quarter of 2021, up 11% from a year earlier. Capital Market’s strong third quarter performance is primarily due to robust sales of end-to-end SaaS solutions and includes an approximate 2% benefit from the timing of renewals. On an organic basis, which excludes the impact of FX, revenue increased 10%. Adjusted EBITDA increased 20% to $316 million. Adjusted EBITDA margin expanded 330 basis points over the prior year period to 48.4%, primarily due to high contribution margins from new revenue and revenue mix.
FIS also provided an update on achieved synergies related to the Worldpay acquisition, exiting the third quarter of 2021 as follows:
- Revenue synergies of approximately $600 million on an annual run-rate basis, including strong cross-selling wins spanning the Premium Payback loyalty network, digital banking, issuer, core software and data wins. The company expects to achieve its $700 million annual run-rate revenue synergy target by the end of the year.
- Cost synergies of approximately $875 million, including approximately $475 million of operating expense synergies. The company expects to achieve its $900 million annual run-rate expense synergy target by the end of the year, including operating expense synergies of approximately $500 million.