Payments majors paint a bright picture for industry with results

It has been results month with many payments industry players announcing their quarterly earnings results – and it seems like good news to Payments Cards & Mobile.

Payments majors paint a bright picture

The below are highlights from the earning calls from FIS, ACI and Global Payments:

FIS

On a GAAP basis, consolidated revenue increased 1% as compared to the prior-year period to approximately $3.7 billion.

Net earnings (loss) attributable to common stockholders were $(6,596) million or $(11.14) per diluted share.

The Company recorded a non-cash goodwill impairment charge of $6.8 billion related to the Merchant Solutions reporting unit in the quarter.

On an organic basis, consolidated revenue increased 2% as compared to the prior-year period primarily due to recurring revenue growth from processing volumes and professional services in Banking, increased Merchant volumes and continued strength in Capital Markets.

Adjusted EBITDA margin contracted by 160 basis points (bps) over the prior-year period to 41.4%.

Adjusted net earnings were approximately $921 million, and Adjusted EPS decreased by 10% as compared to the prior-year period to $1.55 per diluted share.

“We are very pleased with the solid business performance we delivered by exceeding our financial targets for the second quarter, raising our full-year guidance, and accelerating our previously announced separation plan to create two highly focused global companies with greater strategic flexibility,” said FIS CEO and President Stephanie Ferris.

“These positive results are reflective of both continued operational execution by the business, as well as the success of our Future Forward enterprise transformation program.

As we enter the next chapter of FIS, I’m excited for us to drive greater focus on delivering innovative, next-generation financial technology and software solutions to our clients.”

Global Payments

GAAP revenues were $2.45 billion, compared to $2.28 billion in 2022; diluted earnings per share were $1.05 compared to a loss per share of $2.42 in the prior year; and operating margin was 24.6% compared to (23.0)% in the prior year.

Adjusted net revenues increased 7% to $2.20 billion, compared to $2.06 billion in 2022. Adjusted earnings per share increased 11% to $2.62, compared to $2.36 in 2022. Adjusted operating margin expanded 100 basis points to 44.8%.

“Our outstanding financial results for the second quarter and year-to-date period reflect continued strong and consistent execution across our businesses, despite an uncertain macroeconomic environment,” said Josh Whipple, Senior Executive Vice President and Chief Financial Officer.

Based on this performance, we are raising our expectations for 2023.

“The company now expects adjusted net revenue to be in a range of $8.660 billion to $8.735 billion, reflecting growth of 7% to 8% over 2022, and adjusted earnings per share to now be in a range of $10.35 to $10.44, reflecting growth of 11% to 12% over 2022, or 16% to 17% excluding dispositions.

We continue to expect adjusted operating margin for 2023 to expand by up to 120 basis points.”

Whipple concluded, “Our 2023 outlook reflects the continued momentum we are seeing in our business, while also accommodating the potential for a more tempered macroeconomic environment over the remainder of the year.”

ACI

In Q2 2023, total revenue was $323 million, down 2% compared to the same period in 2022. Recurring revenue in Q2 grew 5% versus last year. Net loss in the quarter was $7 million.

Total adjusted EBITDA in the quarter was $57 million compared to $66 million in Q2 2022.

New ARR bookings for the quarter were $13 million and new ARR bookings for the trailing twelve months (TTM) were $91 million, which was up 2% from the TTM ending June 2022.

Percentage change comparisons are adjusted for FX and the Corporate Online Banking divestiture.

For the full year of 2023, the company expects revenue growth to be in the mid-single digits on a constant currency and divestiture-adjusted basis, or in the range of $1.436 billion to $1.466 billion.

The company expects adjusted EBITDA to be in the range of $380 million to $395 million with net adjusted EBITDA margin expansion.

The company expects revenue to be between $335 million and $345 million and adjusted EBITDA of $70 million to $80 million in Q3 2023.

This excludes one-time charges related to the move of the company’s European data centres to the public cloud and one-time costs to implement certain efficiency strategies.

“We are pleased with our second quarter results, which came in above our expectations,” said Thomas Warsop, President and CEO of ACI Worldwide.

“I am particularly pleased with the strength in our recurring revenue in Q2 and for the first half of 2023. We also generated notable profitability improvements as a result of the interchange initiatives in our Biller segment.

As previously discussed, our renewal calendar is seasonally stronger in the second half this year, and with our new bookings and implementations tracking to plan, we remain confident in our outlook for 2023, as well as our revenue growth target of 7-9% in 2024.”

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