FIX (FIS) Updates Q1 Financial Guidance

FIS™ (NYSE: FIS), a global leader in financial services technology, today updates its first quarter 2020 financial guidance based on impacts of COVID-19.

FIS has been carefully monitoring and assessing the effects of COVID-19 as conditions continue to evolve, and our thoughts are with the individuals and families who have been affected by the virus. The company has focused on the health and safety of its employees and local communities, and prioritized investments and products that help address the needs of our clients during this unprecedented time. As a critical infrastructure provider, FIS continues to serve our clients around the globe.

Our clients and communities have urgent needs, and FIS is doing its part to enable merchants and financial institutions by facilitating the distribution of funds from government relief programs in the U.S. and U.K. in support of our clients. We are leveraging our Real-Time Lending service to enable financial institutions to process loans under the CARES Act, and we are issuing additional prepaid Electronic Benefits Transfer (EBT) cards to help families safely receive their government benefits. FIS is waiving monthly minimum fees for the month of April for its U.S. and U.K. merchant clients and providing other value-added services for free, including virtual terminals to enable our merchants and retailers to easily accept secure phone and Card Not Present transactions. FIS also created a COVID-19 Online Resource Center to provide its clients with options and information to adapt and rebound in the face of COVID-19. The company will continually update the site with new offers of assistance during the current health crisis.

Prior to the impacts from COVID-19 spreading across the globe, FIS achieved strong revenue growth. As U.S. and foreign governmental authorities imposed social distancing, shelter-in-place or total lock-down orders, spending declined, most notably in travel, restaurants, entertainment, and retail, resulting in a rapid deterioration in payments volume and transaction trends on a worldwide basis beginning in March, 2020 which adversely impacted revenue in our payments businesses that earn transaction based fees. Consequently, we now estimate that we will generate revenue of $3,060 to $3,080 million during the first quarter of 2020, which represents an increase of approximately 49% to 50% over the prior year period, primarily due to the acquisition of Worldpay. Organic revenue growth is estimated to be 1% to 2% during the first quarter of 2020, including approximately $20 million in anticipated negative foreign exchange impact. We had previously projected revenue of $3,180 to $3,210 million during the first quarter of 2020, representing an increase of approximately 55% to 56% over the prior year period. Organic revenue growth was previously estimated to be 5% to 6% during the first quarter of 2020, including approximately $10 million in anticipated negative foreign exchange impact.

During the first quarter of 2020, we now estimate that our Merchant Solutions segment revenue will increase significantly over the prior year period, primarily due to the acquisition of Worldpay, with organic growth estimated to be approximately flat; our Banking Solutions segment revenue will increase approximately 7% over the prior year period with organic growth estimated to be approximately 1%; and our Capital Market Solutions segment revenue will increase approximately 9% over the prior year period with organic growth estimated to be approximately 7%. Segment revenue growth is primarily being impacted by declines in payment processing volumes within our Merchant Solutions segment as well as lower issuer processing, debit network and account transaction volumes within our Banking Solutions segment.

In response to COVID-19, we are taking several actions to manage discretionary expenses and achieve cost synergies, including limiting travel, reducing incentive compensation and decreasing third-party spending as well as accelerating automation and functional alignment across the organization.

During the first quarter of 2020, we now estimate that we will generate Diluted EPS of $(0.10) to $0.00 as compared to $0.45 in the prior year period and Adjusted EPS of $1.26 to $1.28 as compared to $1.16 in the prior year period. We had previously projected Diluted EPS of $(0.15) to $0.00 and Adjusted EPS of $1.30 to $1.34 during the first quarter of 2020.

(*Consensus sees Q1 EPS of $1.31 on revenue of $3.17 billion)

While we remain confident in the long-term fundamentals of our business, due to the speed at which the COVID-19 situation is developing and the unknown duration of this pandemic event, we are withdrawing our Full-Year 2020 financial guidance. We anticipate providing further updates and details on our first quarter 2020 earnings call.

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