Fidelity National Information Services, Inc.

Good day and thank you for standing by. Welcome to the FIS fourth quarter 2025 earnings call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. I would now like to hand the conference over to your speaker today, George Mihalos, Head of Investor Relations.

Good morning, everyone. Thank you for joining us today for the FIS fourth quarter 2025 earnings conference call. This call is being webcasted. Today's news release, corresponding presentation, and webcast are all available on our website at fisglobal.com. Joining me on the call this morning are CEO and President Stephanie Ferris, and James Kehoe, the CFO. Stephanie will begin the call with a strategic and operational update, followed by James who will review our financial results. 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, and adjusted net earnings per share. These are important financial performance measures for the company, but they are not financial measures as defined by GAAP. Reconciliation of our non-GAAP information to the GAAP financial information presented in our earnings release. And with that, I'll turn it over to Stephanie.

Good morning, and thank you, George. I'm excited to share our results today. But before I do, let me start off by saying how thankful and incredibly proud I am of the teams at FIS. The last 12 months has been full of change and complexity, but through it all, our team has stayed focused on our customers. on executing against our strategy and delivering on our expected outcomes. We didn't let the noise become a distraction, and that's exactly what you'll see here today. As we move into 2026, market transformation persists and the technology changes continue to accelerate. But when I look at how the businesses are positioned, the innovation that we're bringing to market, and the strength of our client relationships alongside their growing demand for technology, I've never been more confident in the gross prospect of the financial services industry or of FIS's ability to grow with it. I'm extremely excited by the opportunities that lie ahead of us. Now let me walk you through why. We delivered very strong results in 2025. First, we met or exceeded our key financial commitments for the year, positioning us for an even stronger 2026. Second, we are executing on our strategy to transform and simplify our portfolio. by fully divesting our merchant-focused business and acquiring the market leader in credit issuing, strengthening our position in the large financial institution space. And third, we are positioning our business to double our cash flow in three years to over $3 billion. Now let's move to slide four. We delivered on the key strategic pillars we set out to achieve. Adjusted revenue grew 5.8%, exceeding our outlook. EBITDA came in at the high end of expectations. Adjusted EPS grew over 10% to $5.75. And we generated robust free cash flow, enabling us to return $1.3 billion to shareholders through buybacks. These results reflect a business delivering on the commitments we made when we began our transformation journey. But the story isn't just about strong execution. It's about what these results enable us to do at this moment When Financial Services is Positioned to Grow. Turning to slide five. We are witnessing a generational moment reshaping financial services, and FIS is in the best position to capitalize on it. Three powerful forces are converging simultaneously. First, the banking industry is experiencing exceptional strength. Banks have excess capital, stable credit, and strong operating performance. emboldening them to pursue aggressive growth agendas. Second, banks are executing on those agendas now. We've seen approximately $50 billion in announced M&A in 2025, and analysts project financial services tech spending will increase roughly 30% by 2029. Third, emerging technology, particularly AI, is moving from experimental to mainstream at unprecedented speed. AI adoption is accelerating to eight times 2023 levels. and Banks Recognize AI isn't a future opportunity. It's a competitive imperative today. Here's what makes this moment so compelling for FIS. No technology provider is better positioned to capitalize on this convergence. We have three important advantages. Proprietary data sets spanning the entire money lifecycle, long-standing, deeply embedded relationships with institutions built on trust, and a highly specialized regulatory and compliance infrastructure that took decades to build and cannot be replicated quickly. We believe these advantages translate to a significant opportunity for FIS to deliver differentiated AI solutions, which challengers without comparable data, scale, operational integration, trust, or relationship cannot replicate. I'm going to discuss more around our AI moat in a few slides. Moving to slide six. Unlike some peers, our focus isn't about serving the most banks. Our strategy is partnering with banks that are growing faster than the market, both organically and through consolidation. Our strategy is to grow side-by-side with them in areas where they're spending, payments, digital, and lending. These LFIs represent a particularly attractive segment, accounting for a disproportionate percentage of industry revenue, account, and payment transaction growth. Over the past 10 years, the number of LFIs has grown by 56%. And those banks continue to increase their spend on technology, with tech spending increasing 11% of their revenue today. As a reminder, this is exactly where FIS shines. Working with growing banks, looking to take advantage of technology to continue to grow their franchises. In 2025, bank M&A increased approximately 30% compared to the prior year. with over 170 deals announced, including a number of mega deals, creating super regional banks with expanded geographic footprints. FIS was on the winning side of most transactions, including the ones listed on this slide. In fact, one large bank CEO called out FIS as the most scalable platform to help them consolidate acquisitions and grow their business. This is why our strategy is focused on helping these banks modernize and grow. and why our investments and innovations are focused on the places where these banks are spending money. Now turning to slide seven. Our issuer solutions acquisition positions FIS to lead across every major industry theme shaping banking and payments today. Demonstrating the value of our combined data assets, we've already established a modern product roadmap, announcing a new product on the first day after the close of our acquisition. This includes the industry's first AI transaction platform supporting agentic commerce, enabling AI agents to make, negotiate, and pay for purchases using pre-approved payment methods, keeping banks central to those flows. Additionally, total issuing solutions rolled out 12 new modernized offerings in 2025, including enhanced loyalty solutions and Origination's pre-approval and decisioning capabilities. Client validation is equally compelling. With this acquisition, we have expanded our relationship with 14 of the top 25 U.S. LFIs across our banking and capital markets businesses. Over the last 12 months, we have renewed or extended relationships accounting for approximately 30% of total issuance revenue and have no large renewals pending in 2026. That renewal momentum tells you something important. The largest, most sophisticated banks in the country are choosing to deepen their commitment to FIS. We're confident in achieving our revenue and expense synergy targets of $45 million and $125 million in three years, respectively, as we laid out in April of 2025. The integration is tracking well, and the combined platform positions us to meet evolving market needs from real-time payments and digital currency to AI-powered fraud and risk management. All of this gives us confidence in the value creation ahead. Turning to slide eight. Now let's talk a bit more about the value I just discussed. With the completion of this transaction, we exclusively serve the financial services industry and operate the most comprehensive data platform in financial technology, with over 1 billion accounts on file driving approximately 73 billion transactions annually. We can now see money at rest in core banking deposits, money in motion across all payment rails, and money at work in lending and investing. In a world where data is essential for AI-enabled insights, this integrated visibility is highly differentiating. Demonstrating the power of this combined data even before the transaction closed, we started working with a large regional bank to grow their credit card portfolio, combining core data from FIS and credit transaction data from total issuing solutions together into a model. enabling the bank to increase their consumer's credit limit, ultimately resulting in higher consumer spend and transaction income to the bank. Our product set is wide and deep, creating valuable systems of record. And here's why that matters. A recent Forbes article explained that AI agents make systems of record more valuable because these core systems provide the accurate, authoritative data AI needs to function effectively. FIS operates mission-critical systems of record defined by deep integration into regulated workflows, decades of accumulated proprietary data, and enterprise-grade governance, security, and auditability. These characteristics cannot be easily replicated by standalone AI tools or horizontal platforms. And financial institutions continue to prioritize reliability, accountability, and compliance, areas where incumbency and trust matters most. That scale, that trust, that operational integration are durable, differentiating advantages. Turning to slide nine. Our commercial muscle is flexing across the entire enterprise. In Q4, we grew recurring ACV sales 20% year over year, clearly demonstrating enterprise-wide commercial excellence. I will detail these on the next slide. Another example of our strategy in action, our build-by-partner approach. It's driving innovation and accelerating new product development. Beyond our Argentic Commerce solution I discussed earlier, we built and rolled out next-gen cloud-based solutions like Money Movement Hub, with over 100 customers signed up since our launch in 2025. Other recent launches include SmartBasket, a real-time AI-powered solution that analyzes shopping behavior to automatically apply optimal payment methods, personalized rewards, and targeted promotions at checkout. and our acquisition of Amount is offering clients a modern digital account opening solution that helps banks grow across deposits and lending. We've won 22 new deals since acquiring this capability late last year. More recently, our acquisition of DWA in capital markets puts us at the forefront of computational law and regulation. Leveraging DWA's AI capabilities, the acquisition strengthens our competitive position across the buy and sell side compliance space. Empowering our clients to make millions of accurate regulatory decisions across global jurisdictions. The common thread? Modern, cloud-based, and AI-enabled. No one else sees money across its entire lifecycle, and that data advantage is now our strategic engine. We 4X'd our investment in data and AI transformation. Unifying our data stack, deploying agents that drive real client outcomes, and building domain-specific AI capabilities. The result is differentiated value for clients on the things that matter most. Fraud prevention, deposit lending growth, and operational efficiency. Our data moat gets stronger every day given our infrastructure powers critical and complex workflows for our clients at scale. AI is a strategic accelerant for FIS with adoption unfolding inside existing platforms. Augmenting software to improve automation, decisioning, and productivity rather than replacing core systems. This dynamic favors data-rich platform owners like FIS. Moving to slide 10. We saw strong recurring ACV growth across all segments in Q4, with banking solutions up 13% and capital market solutions up 34% year-over-year. Our high-growth solutions delivered very strong full-year results. Digital solutions grew recurring sales ACV 123%, payments grew 70%, and lending grew 62%. These are leading indicators of where the enterprise is heading as we drive improved product and revenue mix. This is our strategy in action, what we highlighted at Investor Day, driving significant increases in highly recurring revenue. And all of this is driving significantly improved and higher quality revenue and margin mix as we head into 2026. Turning to slide 11. So let me bring this together. We are executing our differentiated strategy from a position of strength. We delivered strong results in 2025, and our commercial and operational excellence momentum gives us confidence heading into 2026. Our innovation strategy is working. Our focus and targeted investments in high growth vectors such as payments, digital and lending are resonating in the market with strong recurring ACV growth. And we continue to drive innovation across the enterprise. Leveraging emerging technology, including AI, to accelerate new product development. We are uniquely positioned for this moment. In a fast-growing financial services sector, we are in the right markets at the right time with the right solutions. We are at the center of an important inflection point in our industry, and we're uniquely positioned to capitalize on it. With that, let me turn it over to James to discuss our financial results and outlook in more detail.