Big Merchants And E-Commerce Help Drive Growth for FIS in 2022’s Early Going

Some processors are ready to put the pandemic behind them, but FIS Inc. may have already done it. The big payments processor and banking-services provider early Tuesday reported its merchant revenue increased 15% year-over-year in the first quarter, a number that exceeded the company’s expectations, chief executive Gary Norcross told equity analysts on a conference call.

The performance was buoyed by FIS’s large-enterprise client base and its growing strength in e-commerce, top executives said on the call. Altogether, the merchant solutions unit logged $1.11 billion in revenue for the quarter, representing growth in volume in key segments even without acquisitions. So-called organic revenue growth—growth excluding acquisitions—for the quarter came to 14% in the company’s key enterprise merchant unit, which serves physical and omnichannel merchants. This unit is key as it accounts for 45% of the company’s merchant revenue.

But global e-commerce has emerged as FIS’s fastest-growing business, Norcross said, pointing to the unit’s 18% organic revenue growth in the quarter. Here the company has high expectations for Payrix Solutions LLC, an e-commerce software provider it acquired late last year for an undisclosed price. Payrix’s technology helps independent software vendors embed payments capability in commerce solutions they’re building for online merchants. “Payrix really opens up card-not-present” business for FIS, said president Stephanie Ferris during the earnings call.

Altogether, FIS gained 200 basis points (two percentage points) of market share in U.S. payments volume during the quarter, the company reported. Again, FIS’s large stake in large enterprises propelled the share growth as these merchants recovered from the pandemic. “We’ve got great stickiness in enterprises, very little attrition,” Norcross noted.

On the frontier of payments, Norcross said FIS is now “the leading acquirer for cryptocurrency” following an agreement with the crypto platform Circle Internet Financial to enable settlement for that company’s USDC stablecoin. The company, Ferris added, now processes for four of the five largest cryptocurrency exchanges. “We really like crypto, it’s a really exciting vertical for us,” she said.

While ventures like crypto remain very small, they may indicate a near-future direction for FIS into ventures that carry risk but could pay off in years down the line. “At FIS, we think we are the disruptor,” Norcross told the analysts on the call.

For the quarter, FIS reported $3.5 billion in revenue, up 9% organically. At 15%, merchant solutions was easily the Jacksonville, Fla.-based company’s fastest-growing unit. Banking solutions, which logged $1.65 billion in revenue, grew 7%, while capital markets notched $658 million, up 6%.