Fidelity National Information Services, Inc.

Good day and thank you for standing by. Welcome to the FIS second quarter 2026 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.

Thank you, Operator. Good morning, everyone. Thank you for joining us today for the FIS Second Quarter 2026 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. On the call with me this morning is our CEO and President, Stephanie Ferris, and our CFO, James Kehoe. 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 Thank you for joining us. to the GAAP financial information presented in our earnings release. And with that, I'll turn the call over to Stephanie.

Thanks, George, and good morning, everyone. Several years ago, we laid out a bold multi-year plan to reposition FIS. We committed to reaccelerating growth in our banking business, improving our margins, and driving increased cash flow. Every one of those actions was in service of three outcomes. To make FIS more client-centric, Thank you for joining us. with real client wins and revenue growth across the portfolio, as well as significantly improved cash flow. At the same time, our partnership with Anthropic is progressing. While our overall results reinforce the strategy and priorities we've been executing against for several years, you've seen by now our expectations for capital markets for the remainder of the year. I want to assure you that we are not satisfied with our performance in capital markets. and remain focused on improving those results. Both James and I will cover this in our prepared remarks. Turning to slide five. Our second quarter results are strong and demonstrate the durability of our business model. We delivered revenue of 3.4 billion, up 5.3% on a pro forma basis. Banking grew 6.1% at the high end of our outlook Driven by continued momentum in both banking and payments. Capital markets grew 3.2% at the low end of our outlook. Recurring revenue grew 5% across both segments. And recurring sales grew 14%. Adjusted EBITDA grew 7.4%. Margins expanded 113 basis points and adjusted EPS grew 9%. toward the high end of the range, reflecting stronger execution across the business. Free cash flow was extremely strong in the quarter, increasing more than threefold and leading us to raise our full year free cash flow outlook by $100 million. These results reflect the financial model we've been intentionally building. Durable revenue, expanding margins, disciplined capital deployment, cash generation, and to drive shareholder value. Turning to slide six. Let me spend a moment on how we've structured FIS because it is central to understanding both this quarter's results and where we're headed. We serve financial services companies of every size, from the largest and most complex financial institutions in the world to small banks and credit unions. We are central to our clients' day-to-day operations and modernization efforts, and we deliver against that Post the total issuing solutions acquisition, we expanded our total addressable market by $28 billion, significantly increasing the opportunity for our combined solution portfolio. Most importantly, that broader portfolio complements the way clients have always engaged with us. Now 72 of our top 100 clients consume capabilities across banking, payments, and capital markets. We typically enter a client relationship through a core ledgering platform, whether a banking core, a commercial lending core, or a trading system in capital markets. And once that foundation is established, we expand the relationship by selling payments and other value-added services, executing our cross-sell and expand strategy. The economics of this model are compelling. On average, clients consuming solutions across all three ecosystems generate nearly twice the revenue of clients using only a single solution. A second benefit of our integrated portfolio is AI. Because we run many of our clients' core systems, we sit on a rich set of data across banking payments and capital markets. As AI adoption grows, that data becomes a meaningful advantage and enables us to deliver smarter solutions, automate workflows, and improve outcomes for clients. We're already seeing early proof points in areas such as fraud and financial crimes where connecting data across our platform creates value for clients and further differentiates FIS. The third benefit of serving clients across an integrated portfolio is showing up in our commercial performance. As I said earlier, we serve financial service companies of every size. Our consolidated commercial engine continues to gain momentum as we execute our strategy to shift from lower margin products to higher margin solutions. Enterprise-wide sales growth increased double digits over the last 12 months, reflecting a more focused portfolio and strengthening commercial motion. One of the best examples of this is in our total issuing business. Turning to slide seven. Let me remind you of the thesis for this deal. Through the acquisition of TSIS, we gained access to a large and rapidly growing global issuing TAM, a market we did not previously serve at scale. And we did it by acquiring the industry's best, most scaled processor. And importantly, that platform serves the same set of financial institutions FIS has built its business around. The strategic fit was there from day one. Same clients, complementary capabilities, One Integrated Value Proposition. In the quarter, we won two new very large financial institutions, a top 10 Latin American bank and a top 10 private sector commercial bank in India. And on renewal velocity, we continue our momentum of renewals. And since the start of 2025, we've renewed approximately a third of total issuing revenue with 72% of the portfolio now under contract through 2029 and beyond. up from 65% the last time we spoke. That's validation of the platform and the predictability of the revenue base.