A stumble on the balance sheet with fourth-quarter 2023 numbers has thrown Fidelity National Information Services, Inc. (FIS) off-course. Adjusted earnings per share (EPS) came in at 94 cents, missing the Zacks Consensus Estimate by 1.1%, presenting a worrying 4% drop year-over-year. Total revenues saw a 1% dip, reaching $2.51 billion, falling below the market’s projected $2.52 billion benchmark.
The company’s performance was shadowed by the Banking Solutions segment’s underwhelming input and a sharp uptick in interest expenses, sending its pre-market shares down by 2%. The only silver lining was the boosted performance in the Capital Market Solutions sector, assisted by a rise in recurring revenues.
Q4 Performance Analysis
Cost of revenues swerved down 2.2% to $1.5 billion chronologically. Selling, general, and administrative costs reduced by 3.8%, resting at $539 million, straying above the anticipated $504.4 million. Net interest expenses spiraled up by 41.1%, clocking in at $158 million, marginally veering off from the expected $166.4 million.
Segment-wise Evaluation
The Banking Solutions arm registered flat revenues, shy of both market and internal forecasts. Meanwhile, Capital Market Solutions saw a 2% revenue growth, surpassing estimates, despite a 250 bps dip in adjusted EBITDA margin. On the flip side, the Corporate and Other unit took a hit, with revenues dropping by 32% due to strategic divestitures.
Financial Snapshot
Exiting the year with mixed results, Fidelity National wrapped up Q4 with a dip in cash reserves, but saw spikes in net cash from operations and free cash flows. However, the total equity tumbled by nearly 30% from the previous year’s end figures, reflecting challenges on the balance sheet.
Embracing Change and Revamping Strategies
Looking to the future, the company recently inked a deal to divest a majority stake in the Worldpay Merchant Solutions business. Additionally, an enterprise transformation program has garnered them annualized cash savings north of $550 million, with sights set on a $1 billion mark by 2024, promising substantial growth in adjusted EBITDA. Exciting times ahead, surely!
Glimpse into the Future
Foreseeing the upcoming quarter, management anticipates a cautious revenue outlook, with Banking Solutions eyeing marginal growth and Capital Market Solutions poised for a healthier expansion. The grand reveal of 2024 guidance paints a picture of measured growth, aiming an upward trajectory in revenues bolstered by optimistic performances from key units.
