Fidelity National Information Services (NYSE:FIS) Chief Executive Stephanie Ferris said the company is working to rebuild investor credibility after client implementation delays and higher spending on cybersecurity and resiliency contributed to a reset of its 2027 outlook.
Ferris said several large financial institutions changed the timing of projects for individual reasons, including cybersecurity needs and delayed modernization. None of the projects were canceled, she said, and one or two have already restarted.
The delayed implementations are client-directed, with revenue expected to come in through 2027 and into 2028 as volumes increase, Ferris said. She added that 10 delays had contributed to an earnings issue and that FIS intends to provide a more prudent outlook with room for such changes.
“We obviously had a bit of a bump last quarter, and we are here to earn back credibility,” Ferris said.
Cybersecurity spending and margins
Ferris said banks’ technology budgets remain robust and that the industry typically increases technology spending by 7% to 8% annually. Cybersecurity, infrastructure and fraud prevention remain priorities, she said, while banks are also tailoring modernization projects to their individual strategies.
For FIS, the pace at which cybersecurity vulnerabilities must be addressed has accelerated, Ferris said. She said the company is reallocating resources to address cyber risks while continuing product implementations, rather than directing those resources toward margin improvement.
“The margin expectation will be impacted as we think about 2027,” she said.
Ferris said sales measured by annual contract value remain strong across products including bank modernization, treasury, lending and digital services, although she acknowledged that demand ultimately needs to translate into revenue. She also expects bank mergers and consolidation to generate demand, while creating some timing variability.
Recurring revenue shift
Ferris discussed two changes affecting revenue: FIS is placing its products with outside distribution partners, while customers in its capital markets business increasingly favor cloud-based software subscriptions over on-premises licenses.
Demand from distribution partners generated license revenue that creates a one-time comparison for the company, she said. FIS expects recurring revenue from those channels to emerge in 2028 and 2029, as it works with partners in 2027 to help them sell its products.
In treasury software, Ferris said customers are moving from on-premises products such as FIS’s Quantum to cloud-based offerings such as Integrity. She described the shift as a response to market demand and said it should lead to higher recurring revenue over time.
Portfolio review and TSYS
FIS continues to review its portfolio, including whether products can be sold across its financial-services customer base, their exposure to potential artificial intelligence risks and their profitability, Ferris said. She said the company had sold a prepaid business from its banking operations and is prioritizing debt repayment.
Ferris cautioned that selling businesses is challenging because disposals are dilutive, taxable and draw on a shared cost base.
On TSYS, Ferris said FIS had reiterated its expense targets and remained confident in its revenue synergy targets, though those involve long sales cycles. She said the company is seeing demand and competitive wins outside the United States and expects more revenue synergies internationally.
Ferris also highlighted the launch of the FIS AML Investigations Agent, developed with two partner banks. She said the company is working with Anthropic and partners on potential further applications, with card disputes among the areas being considered next.
About Fidelity National Information Services (NYSE:FIS)
Fidelity National Information Services, Inc. (FIS) provides financial technology and services to banks, credit unions, capital markets firms and other financial institutions. Its offerings include systems for processing transactions, managing accounts and supporting day-to-day financial operations. The company’s products and services also cover digital banking, payments, risk management, regulatory compliance, treasury operations and capital markets activities such as trading and securities processing.
