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FIS takes hit from UK recession

Payment processor FIS saw revenues rise 5% to $3.6bn in Q3 2022. However, the company’s adjusted EBITDA margin contracted 150 bps, to 43.7%, amidst inflationary pressures and softness in the UK merchant market. 

FIS sees revenue rise driven by merchant solutions, banking
FIS quarterly revenue and EBITDA margin

Revenue gains were driven primarily by the company’s banking and capital markets segments – which both saw revenue growth of 6% – and the merchant solutions segment, which saw 5% revenue increase. Meanwhile, the company’s corporate segment declined 13% due to a divestiture of a non-core business in Q3, as well as client attrition in ‘non-strategic’ businesses. 

Adjusted EBITDA margins declined across the merchant (-430 bps to 47.4%) and banking (-320 bps to 42.9%) segments, and rose 90 bps to 49.3% for the capital markets segment. Profits were hit by inflationary cost pressures, reduction in pandemic-related revenue and increased investment in ecommerce and sales channels for Payrix, the company’s embedded payments platform. 

The company now aims to reduce its spend by more than $500m by streamlining its operating structure and reducing capex, with more details on this strategy coming in 2023. It has downgraded its revenue guidance from $14.66bn to $14.5bn and its adjusted EBITDA from $6.53bn to $6.19bn. 

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