Fidelity National Information Services NYSE: FIS reported second-quarter results marked by stronger Banking Solutions growth, expanding margins and sharply higher cash flow, while reducing its full-year outlook for Capital Markets because of weaker professional-services sales and slower backlog conversion.
Chief Executive Officer and President Stephanie Ferris said the quarter reflected progress in the company’s multiyear transformation plan, which has centered on accelerating banking growth, improving profitability and increasing cash generation. FIS reported $3.4 billion in revenue, up 5.3% on a pro forma basis, while adjusted EBITDA increased 7.4% and adjusted EBITDA margin expanded 113 basis points.
Adjusted earnings per share rose 9%, toward the high end of the company’s outlook range, and free cash flow more than tripled year over year. FIS generated $525 million of free cash flow in the quarter and about $1 billion in the first half of 2026.
Banking growth and issuing momentum
Banking Solutions revenue rose 6.1% on a pro forma basis, including 5.6% growth in banking and 6.4% growth in payments. Recurring revenue in the segment grew 5%, while non-recurring revenue increased 21%, helped by license activity that was weighted toward the first half of the year.
Banking Solutions adjusted EBITDA rose 10.6%, and margin expanded 178 basis points, which Chief Financial Officer James Kehoe attributed to favorable product mix, cost savings and integration synergies.
Ferris said Total Issuing Solutions, or TSYS, continued to support FIS’s payments growth and cross-selling efforts. The company said it won two large financial-institution clients during the quarter: a top-10 Latin American bank and a top-10 private-sector commercial bank in India.
Since the beginning of 2025, FIS has renewed about one-third of Total Issuing revenue, with 72% of the portfolio now under contract through 2029 and beyond, compared with 65% at the time of the company’s prior update. Ferris said more than 90 accounts have signed up for modernized components, including 60 U.S. banks, while the company’s win rate on opportunities involving at least 1 million accounts exceeds 85%.
“When we are competing, we are winning,” Ferris said during the question-and-answer session, pointing to FIS’s scale and conversion capabilities for large financial institutions. She said Total Issuing revenue was growing at the same pace as the overall payments business and that FIS expects payments to remain a mid-single-digit growth business over time.
Capital Markets outlook reduced
Capital Markets revenue grew 3.2% in the quarter, at the low end of FIS’s prior outlook. The segment generated $1.6 billion in first-half revenue, of which 74% was recurring, and delivered a 51.7% adjusted EBITDA margin.
However, the company said Capital Markets underperformed its expectations, particularly in professional services. Professional-services revenue declined 17% in the second quarter, as sales fell short of plan and conversion of the existing backlog progressed more slowly than expected.
Ferris characterized the shortfall as an internal execution issue rather than a change in market conditions. “The miss is on us. It’s not a market condition,” she said, adding that FIS does not expect non-recurring professional-services revenue to be a growth driver over the longer term as it emphasizes recurring revenue.
Kehoe said lower professional services accounts for more than half of the roughly $90 million reduction in expected Capital Markets revenue. He said the larger issue was lower professional-services annual contract value sales in the first half, while delayed implementation and backlog conversion were also factors.
The segment also faced a known headwind from UBS’s acquisition of Credit Suisse. Client attrition tied to that transaction is expected to reduce 2026 Capital Markets revenue growth by about one percentage point. FIS had expected its lending business to add about one percentage point of organic growth, but interest-rate pressure weighed on lending volumes and tempered that expectation.
FIS lowered its full-year Capital Markets revenue-growth outlook to 3% to 3.5%, from its prior expectation of 5.5%. The revised outlook includes a 120-basis-point impact from lower professional services, with the remainder coming from slower recurring-revenue growth.
The company said it expects Capital Markets recurring growth to finish 2026 in the mid-single digits, with modest acceleration in 2027 as UBS-related attrition laps and delayed conversions contribute. It does not expect lending to provide upside in either 2026 or 2027.
Portfolio review, cash-flow outlook and AI initiatives
FIS also announced it is evaluating strategic alternatives for select Capital Markets products that may not fit the broader company’s strategic profile. Ferris said the review involves products rather than a sale of the entire Capital Markets segment. Kehoe noted that any divestiture analysis must account for shared infrastructure, fixed costs and potential stranded costs.
Despite the lower revenue outlook, FIS raised its 2026 free-cash-flow outlook by $100 million to a range of $2.15 billion to $2.25 billion, or $2.2 billion at the midpoint. The company said the increase reflects EBITDA growth, lower cash taxes and faster reductions in one-time cash expenses. FIS reiterated a goal of generating more than $3 billion of free cash flow by 2028.
FIS now expects full-year adjusted revenue growth of 4.5% to 5%, down from 5.1% to 5.7% previously. It reiterated its Banking Solutions outlook, projected adjusted EBITDA margin expansion of 85 to 105 basis points, and forecast adjusted EPS growth of 7% to 8.5%.
On artificial intelligence, Ferris said FIS has 10 AI products in market, about 200 customers using those products and a pipeline of more than 500 opportunities. The company reported that AI-enabled engineering efforts have produced 1.5 to two times throughput and 30% fewer defects, while service initiatives have reduced manual tickets by 70% and triage time by nearly 75%.
FIS has also launched work with Anthropic on AI-powered anti-money-laundering and fraud capabilities. Ferris said the company has more than 40,000 active AI copilot users, who have generated more than 16 million assisted actions.
About Fidelity National Information Services (NYSE:FIS)
Fidelity National Information Services NYSE: FIS is a global provider of financial technology solutions and services for banks, capital markets firms, merchants and corporations. The company develops and delivers software, processing, and outsourcing services that support core banking, payments and merchant acquiring, wealth and retirement platforms, risk and compliance, and trading and capital markets operations. Its offerings include cloud-based and on-premises core banking systems, card processing and gateway services, e-commerce and point-of-sale payment solutions, and a range of back-office and advisory services designed to automate and modernize financial operations.
FIS serves a broad international client base across North America, Europe, Latin America, and the Asia-Pacific region through a combination of direct clients and partner channels.
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