FIS outstrips expectations in Q2 2022 earnings

FIS outstrips expectations in Q2 2022 earnings

Payment processor FIS has reported its Q2 2022 earnings, announcing a 7% climb in revenue to $3.7bn, beating previous projections for the quarter.

FIS exceeds revenue expectations in Q2 2022 earnings: quarterly revenue and EBITDA margin have both risen

FIS Q2 2022 earnings results

The company saw revenue increase above expectations across all four of its operating segments, which the company attributes to continued investment throughout the pandemic that has translated into strong customer demand. US consumer health and client demand has been particularly strong.

The company’s Merchant Solutions segment saw the biggest climb of 11% to $1.3bn. This includes a percentage point of headwind due to the Russia/Ukraine war, although high contribution margins from ecommerce and increased investment did see the segments EBITDA margin drop 280bp to 47.1%.

FIS’s recent acquisition of Payrix also contributed “exceptional strength”, with the company currently integrating its offerings to enhance its solutions for SMBs.

Global ecommerce remains FIS’s fastest growing business, with revenue growth at 28% in Q2, up from 23% in Q1 on a constant currency basis. Enterprise and SMB are growing 9% and 8% respectively. 

The company’s Banking segment, which includes its embedded finance offering, grew 5%, with the company highlighting how its embedded finance solutions were helping merchant clients to expand their digital footprint. Capital Markets, meanwhile, grew 5%.

Key client wins this quarter included Block, which selected FIS’s national payments network to power its Cash App card.

FIS reduces FY22 guidance

In light of the increasingly tough economic climate, FIS has also shored up its financial position, including refinancing a portion of its debt and reducing its leverage ration to 2.9 times during the quarter.

CEO Gary Norcross also highlighted that the company has traditionally performed well during economic downturns.

However, the company now anticipates FY22 revenue to reach $14.6-$14.7bn, a drop from the guidance of $14.8-14.9bn that it issued at the start of the year. This has been attributed to changing macroeconomic factors, including FX rates and increased interest rates. 

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