Revenues grew 3.6% year over year to $2.6 billion. However, the top line missed the consensus mark by 1.3%.
Strong fourth-quarter earnings benefited from robust recurring revenue growth in both segments and new sales momentum. It witnessed improved results from both the Banking Solutions and Capital Market Solutions units. Improved higher-margin license revenues benefited the Capital Market Solutions segment. However, higher costs of revenues partially offset the positives.
Fidelity National Information Services, Inc. price-consensus-eps-surprise-chart | Fidelity National Information Services, Inc. Quote
The cost of revenues was $1.6 billion in the quarter under review, which rose 5.2% year over year. Selling, general and administrative expenses of Fidelity National decreased 10.4% year over year to $483 million, which was lower than our estimate of $539.7 million. Net interest expenses declined 57.6% year over year to $67 million, which was lower than our estimate of $101 million.
Adjusted EBITDA from continuing operations rose 6% year over year to $1.1 billion and beat our model estimate by a small margin. Adjusted EBITDA margin of 42.9% improved 103 basis points (bps) year over year in the fourth quarter.
Fidelity National exited the fourth quarter with cash and cash equivalents of $834 million, up from $440 million at 2023-end. Total assets of $33.8 billion fell from $55 billion at 2023-end.
Long-term debt, excluding the current portion, amounted to $9.7 billion, down from $13 billion at 2023-end. The current portion of long-term debt totaled $968 million. Short-term borrowings amounted to $636 million at the fourth-quarter end.
Total equity of $15.7 billion decreased from $19.1 billion at 2023-end.
Fidelity National generated net cash from operations of $2.2 billion in 2024, which improved 4.7% year over year. Adjusted free cash flows increased 9.6% year over year to $1.8 billion.
Adjusted 2024 EPS improved 56% from a year ago to $5.22. Total revenues rose 3% to $10.1 billion. Adjusted EBITDA improved 5% year over year to $4.1 billion.
Fidelity National rewarded $1.2 billion to its shareholders to the tune of share buybacks worth $1 billion and dividends of $192 million in the fourth quarter. FIS increased its quarterly dividend to 40 cents per share.
Management announced its target of $1.2 billion of share buybacks in 2025. Fidelity National reiterates its aim to achieve a dividend payout ratio of 35% of adjusted net earnings, excluding equity method investment earnings (loss).
Management forecasts revenues between $2.485 billion and $2.510 billion. Adjusted EBITDA is projected to be in the range of $940-$960 million. Adjusted EPS is estimated to be between $1.17 and $1.22. Adjusted EBITDA margin is projected to be in the range of 37.8-38.2%.
Revenues are now expected to be within $10.435-$10.495 billion for 2025, indicating 4.6-5.2% adjusted revenue growth. The Banking Solutions and Capital Market Solutions units are estimated to record year-over-year increases of 3.7-4.4% and 6.5-7%, respectively.
Adjusted EBITDA is projected to be between $4.305 billion and $4.335 billion in 2025, increasing from the 2024 figure of $4.1 billion. Adjusted EBITDA margin is anticipated to be around 41.3%.
Adjusted EPS guidance is expected to be between $5.70 and $5.80, which implies a significant growth from the 2024 figure of $5.22.
Fidelity National currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Of the other Business Services sector industry players that have reported December-quarter results so far, the bottom-line results of Mastercard Incorporated MA, Visa Inc. V and Trane Technologies plc TT beat the Zacks Consensus Estimate.
Mastercard reported fourth-quarter 2024 adjusted earnings of $3.82 per share, which surpassed the Zacks Consensus Estimate by 3.8%. The bottom line improved 20% year over year. Net revenues of the leading technology company in the global payments industry advanced 14% year over year to $7.5 billion. The top line beat the consensus mark by 1.4%. Gross dollar volume increased 12% on a local-currency basis to $2.6 trillion. Cross-border volumes rose 20% on a local currency basis.
Switched transactions improved 11% year over year to 42.2 billion. Value-added services and solutions’ net revenues of $3.1 billion advanced 16% year over year. Mastercard’s clients issued 3.5 billion Mastercard and Maestro-branded cards as of Dec. 31, 2024. Adjusted operating income was $4.22 billion, which grew 15% year over year. Adjusted operating margin improved 10 bps year over year to 56.3%.
Visa’s first-quarter fiscal 2025 EPS of $2.75 outpaced the Zacks Consensus Estimate of $2.66 by 3.4%. The bottom line increased 14% year over year. Net revenues of $9.5 billion improved 10% year over year. The top line beat the consensus mark by 1.8%. Visa’s payments volume increased 9% year over year on a constant-dollar basis in the fiscal first quarter. Processed transactions (implying transactions processed by Visa) grew 11% year over year to 63.8 billion.
On a constant-dollar basis, the cross-border volume of Visa rose 16% year over year. Excluding transactions within Europe, its cross-border volume (that boosts a company’s international transaction revenues) also rose 16% year over year on a constant-dollar basis. Service revenues increased 8% year over year to $4.2 billion in the December quarter. Data processing revenues of $4.75 billion grew 9% year over year. International transaction revenues rose 14% year over year to $3.44 billion.
Trane Technologies reported fourth-quarter 2024 adjusted EPS of $2.61, which surpassed the Zacks Consensus Estimate by 2.8% and increased 20.3% year over year. Revenues of $4.9 billion beat the consensus mark by 2.2% and rose 10.2% year over year on a reported basis and organically. Bookings were up 11% year over year on a reported basis and organically. The Americas segment’s revenues of $3.8 billion increased 12.2% year over year on a reported basis and organically. Bookings were up 1% on a reported basis and organically to $3.7 billion.
The Europe, Middle East and Africa segment’s revenues were $690.3 million, up 5% year over year on a reported basis and 7% organically. Bookings were up 8% year over year on a reported basis and 9% organically to $614.8 million. Revenues from the Asia Pacific segment were up 1% year over year on a reported basis and organically to $381.2 million.
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