How FIS Is Banking on Bank Sales Post Worldpay

FIS Inc. isn’t quite the factor in merchant processing it once was, but the big Jacksonville, Fla.-based processor remains a significant factor in digital payments, specifically for banks, its top management was at pains to stress early Tuesday as the company reported its second-quarter results.

“We’re very pleased with our performance with respect to banking revenue,” FIS chief executive Stephanie Ferris noted during a presentation of the company’s June-quarter results. “We had lost our way. We have really been focusing there.” Ferris early last year succeeded Gary Norcross, who had been CEO since 2015.

The current focus on payments processing for financial institutions comes as FIS continues to wrestle with the after-effects of its spin-off in January of Worldpay, the massive merchant processor it spent more than $40 billion to acquire in 2019. FIS retains a 45% stake in Worldpay, which has set up as an independent company with the private-equity firm GTCR holding the 55% majority interest.

Ferris early Tuesday indicated FIS’s investment will pay dividends. “We feel real good about the separation. We think that [new] team is running Worldpay better than we did when it was part of FIS,” she told equity analysts on the earnings call. But she implicitly reminded her audience of that 45% stake. “We can continue to identify opportunities [with Worldpay],” she said, adding the partnership is “going very, very well.”

And the company continues to check out potential deals, Ferris said. The pipeline for acquisitions “is very good,” she noted. “We’re very focused on inorganic acquisitions where we have a product we haven’t been able to develop.” Indeed, the tighter focus, for now, appears to be on FIS’s traditional market in processing for banks.

More specifically, the company is looking to growth in its traditional strength in card processing, especially in debit products for financial institutions. Besides point-of-sale activity, FIS also owns the NYCE ATM network. “There’s a big opportunity to cross-sell digital payments” into banking, she said.

Among other priorities, FIS remains focused on buttressing its equity position, having launched an initiative late last year to repurchase its own shares. “We’re well on track against a $4-billion share repurchase commitment this year,” Ferris noted. FIS was trading in the high $70s per share early Tuesday after its earnings release, well above the low $60s per share it began the year with. Helping here was its reported adjusted $1.36 earnings per share for the quarter, above analysts’ consensus estimate of $1.23.

For the quarter, FIS took in $2.49 billion in revenue, up 2.7% year-over-year, with $1.71 billion from the banking solutions sector, up 2.6%. Most of the remaining sales came in its unit that sells technology for capital markets.