Fidelity National Information Services, Inc.

Thank you for standing by, and welcome to the FIS Fourth Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker, Mr. Nate Rozoff. head of corporate finance and investor relations. Please go ahead, sir.

Thank you. Good morning. And thanks to everyone for joining us today for the FIS fourth quarter and full year 2020 earnings conference call. The call is being webcasted. Today's news release, corresponding presentation, and webcast are available on our website at FISglobal.com. Gary Norcross, our chairman, president, and CEO, will discuss our operating performance. and share our strategy to continue accelerating revenue growth and maximizing shareholder value. Woody Woodall, our Chief Financial Officer, will then review our financial results and provide forward guidance. Bruce Lothers, President of Banking and Merchant Solutions, will also be joining the call today for the Q&A portion. Turning to slide three, today's remarks will contain forward-looking statements. These statements are subject to risks and uncertainties as described in the press release and other filings with the SEC. The company undertakes no obligation to update any forward-looking statements whether as a result of new information, future events, or otherwise, except as required by law. Please refer to the Safe Harbor language. Also, throughout this conference call, we will be presenting non-GAAP information, including adjusted EBITDA, adjusted net earnings, adjusted net earnings per share, and free cash flow. These are important financial performance measures for the company, but are not financial measures as defined by GAAP. Reconciliation of our non-GAAP information to the GAAP information information are presented in our earnings release. With that, I'll turn the call over to Gary who will begin his remarks on slide five.

Thank you, Nate. Good morning and thank you for joining us. I'm pleased to announce our fourth quarter and full year results starting on slide five. 2020 was an unprecedented year for the world and for FIS, with the COVID-19 pandemic impacting the world on a human as well as an economic level. Despite the extraordinary year, we leveraged our scale and resources to keep the global economy running while delivering solid results. We generated $12.6 billion in revenue as our balanced solution portfolio allowed us to offset weaker consumer spending trends with strong demand for our banking capital market solutions. As we close out 2020, all three of our business segments ended the year with record annual sales, continuing to prove that our solutions and technologies are winning share around the globe. Our backlog grew 7% organically to $22 billion. This gives us exceptional visibility into our future growth trajectory and drives our confidence in accelerating organic revenue growth for our banking and capital market segments. From a merchant perspective, given the accelerating rollout of COVID vaccines globally and improving trends and economic indicators, we are confident we will see strong merchant revenue acceleration throughout 2021. Our team continues to execute at the highest levels demonstrated by our ability to expand adjusted EBITDA margins by 120 basis points for the full year, despite near-term COVID challenges. We also made great progress with the WorldPay integration, remaining well ahead of plan and exited the year generating more than $200 million in revenue synergies and more than $750 million in cost synergies. With this impressive momentum, we are excited to build on our strengths as we look ahead to accelerating organic revenue growth in 2021. Turning to slide six, FIS had a very successful year operating the business, and I couldn't be prouder of the team's accomplishments and unwavering commitment to support our clients and communities. The modernization and innovation investments we've made are paying dividends, enabling us to accelerate organic growth across our entire business. Amazon, a long-term merchant client, added our capital markets industry-leading treasury management system to the growing portfolio of services that we provide them. Further, Walgreens and Giant Eagle expanded their long-standing relationships with FIS. Walgreens selected our integrated payable solution, and Giant Eagle selected a series of our back-office financial solutions from our comprehensive banking suite. We also recently developed an innovative benefits card solution with United Health Group that combines strengths from across FIS. In this partnership, we created a fully in-house solution where we accept transactions as the merchant processor, route them through our network, and finish with our own authorization and settlement engine. 2020 highlighted how our unique capabilities are being successfully combined to serve our clients in ways that they can't find anywhere else. We continue to invest in cutting-edge technologies for the future, including contactless, voice-enabled and self-service solutions, as well as AI and automation. We launched over 60 new products in 2020 with a focus on enabling our clients to grow their revenues and operate more efficiently. All of this enables FIS to emerge from the pandemic in an even stronger competitive position. We also continue to be relentlessly focused on improving our own operational efficiencies. We made exceptional progress in integrating WorldPay as well as consolidating platforms and data centers with over 70% of our global compute now running in the cloud. To continue our upward margin momentum, we are beginning the next phase of our enterprise transformation. We will leverage data analytics and automation to reduce our cost and create new efficiencies by upgrading and consolidating our technology platforms as well as continuing to simplify our technology architecture. As a result, FIS will be faster, more agile, and deliver frictionless service by transforming our operating model and streamlining our organization. Given the tremendous achievements from our data center consolidation program and ongoing cost synergies, I am confident in our ability to deliver 45% adjusted EBITDA margins this year and then continue to expand them in each year for the foreseeable future. From a market viewpoint, demand continues to increase. Both our sales pipeline and backlog continue to grow. and we are finding new sources of revenue synergies and cross-sell wins to accelerate our business further. Turning to slide seven. In banking solutions, we continue to win share and accelerate revenue growth. Our investments have enabled us to build a differentiated offering, winning new logos across markets of all sizes, and actively expanding wallet share with existing clients. As a result, our backlog within the banking business expanded by 8% organically, and generated $3.5 billion in new sales during 2020, which is our largest selling year ever. Cross-selling of new solutions into our existing client base is also up, including a 23% increase in cross-selling solutions to our top 100 clients. In addition, three of our recent Modern Banking Platform wins are now live, and we project that the Modern Banking Platform will generate in excess of $100 million of revenue in 2021. We expanded our relationship with Bank of Hawaii to power their digital banking product offering. They will implement our Digital One solution to bring modern, best-in-class capabilities to both self-service and banker-assisted channels. Lastly, U.S. Bank, a top five bank, selected our bill pay solution due to our simple integration and personalization across digital channels. Our multi-year sales success, strong revenue backlog, continued strength in the pipeline and ability to consistently drive innovation into the market lay out a clear path for banking to accelerate revenue growth in 2021. Turning to slide eight. In merchant, we will leverage our technology advantage and leading competitive position to continue to win share, all while taking advantage of the revenue tailwind being presented by recovering economic and pandemic indicators. We continue to outpace the industry regarding total volumes being processed, indicating not only the overall strength of our capabilities, but our continued ability to gain share throughout the pandemic. We are also seizing the opportunity created by the rapid shift of consumer spending to online and digital channels, where our e-commerce volume, excluding travel and airlines, grew 32%. We provide advanced and highly differentiated omnichannel capabilities, including buy online and pick up or return in store, which merchants must have to compete in the digital economy. Our expanded relationship with Walmart to process e-commerce transactions is a great example, and we are also winning new business with innovative online providers like Grubhub. Norton LifeLock also selected FIS to provide global e-commerce acquiring using our innovative Access WorldPay gateway, which the Strawhecker Group just recognized for having the highest authorization rates in the industry. Looking forward, our global reach, tailored solutions, and innovative technology will continue to drive share gains for us as changing merchant and consumer behaviors play to our strengths. Moving to slide nine. Demand is strong for our end-to-end front, middle, and back office solutions within capital markets and our leading regulatory compliance technology. We continue to gain traction with our SaaS-based delivery model, which drove a 7 percent increase in new sales for reoccurring revenue in 2021, including a 19 percent increase in the fourth quarter. In addition, new logos contributed to 26% of our fourth quarter new sales, and average deal size grew 9% as we continue to add to our portfolio of leading buy-side and sell-side clients. All of these are strong indicators for accelerating growth in 2021. A few sales highlights include BNP Paribas, who recently chose to expand our relationship. We will transform their post-trade derivatives clearing platform, which will allow them to benefit from significant costs and operational efficiencies, as well as enhance customer service, all while reducing risk. We also signed an agreement with Allianz, a large global insurance company, to provide payment and cash processing platforms. On the buy side, Vanguard recently expanded their relationship with us to include outsourced tax reporting, highlighting one of our leading RegTech solutions. Our differentiated end-to-end solutions are winning share, and our transition to reoccurring SaaS-based revenue streams is also taking hold. which gives us confidence in our ability to further accelerate this business. I'd like to underscore that we are pleased with our full year 2020 results across all of our business segments. We expect this positive momentum to continue into 2021 and beyond. Woody will now provide additional detail on the financial results for the quarter, as well as forward guidance.