0001136893-26-000040
SEC filingFIS reported a strong Q1 2026 with revenue up 30% YoY, driven by the Issuer Solutions acquisition, and net income surged to $2.37B due to a $2.2B gain on sale of Worldpay equity interest.
FIS delivered a solid first quarter in 2026, with revenue reaching $3.295B, up 30% year-over-year from $2.532B. The growth was primarily fueled by the acquisition of the Issuer Solutions business on January 9, 2026, which contributed $591M in revenue. Excluding the acquisition, organic revenue grew 7%. Gross profit increased 26% to $1.108B, but gross margin declined to 33.6% from 34.7% due to the dilutive impact of acquired intangible amortization and product mix. Operating income rose 22% to $423M, while operating margin contracted to 12.8% from 13.7%, pressured by higher amortization and acquisition-related costs. Net income attributable to FIS surged to $2.366B from $77M, driven by a $2.2B pre-tax gain on the sale of the remaining Worldpay equity investment, partially offset by $44M in related tax expense. Diluted EPS was $4.58 versus $0.15 in the prior year.
Total assets increased to $43.484B from $33.488B at year-end 2025, mainly due to goodwill (+$6.8B from acquisitions) and intangible assets (+$3.5B). Cash and cash equivalents stood at $755M, up from $599M. Debt levels rose significantly: total debt (including short-term) reached $21.056B (short-term $4.164B, long-term $16.892B), compared to $13.082B at year-end 2025. The increase reflects the $7.7B drawn under the Term Facility to fund the Issuer Solutions acquisition, which was subsequently refinanced with new senior notes. The company maintained available liquidity of $3.5B (cash plus revolving credit capacity). Equity increased to $15.98B from $13.902B, aided by retained earnings from the gain on Worldpay sale. Deferred tax liabilities fell to $327M from $1.215B due to the reversal of deferred taxes related to the Worldpay investment.
Operating cash flow was robust at $713M, up from $457M, reflecting improved operating performance and higher net income adjusted for non-cash items. Key non-cash adjustments included $628M in depreciation and amortization, $104M in asset impairments, and the $2.214B gain on equity method investment (subtracted). Capital expenditures totaled $261M ($50M property/equipment, $211M software), resulting in free cash flow of $452M. Investing activities used $8.171B, primarily for the Issuer Solutions acquisition ($7.859B net of cash acquired). Financing activities provided $7.654B, driven by significant borrowings and repayments, as well as $232M in dividends and $67M in treasury stock activity. The company completed the sale of its Worldpay stake for $5.8B net cash, which was used to partially fund the acquisition.
Management highlighted the strategic rationale for the Issuer Solutions acquisition, which is expected to strengthen FIS's banking and capital markets offerings. The company noted that the acquisition contributed 45% revenue growth in the Banking segment and elevated overall revenue. Adjusted EBITDA for Banking Solutions increased 56%, with margin expansion of 299 bps. Capital Market Solutions saw 5% revenue growth and 8% EBITDA growth, with margin improvement of 162 bps. Corporate and Other segment revenue declined 12% due to a divestiture. Management discussed ongoing cost management and enterprise transformation initiatives, with $148M in acquisition and integration costs recorded in the quarter. The company expects higher interest expense going forward due to increased debt levels. No formal forward guidance was provided, but the company indicated it will prioritize deleveraging before resuming significant share repurchases. Risks highlighted include integration of Issuer Solutions, ongoing securities litigation, tariff impacts (not yet material), and foreign currency fluctuations.
Segment reporting was realigned this quarter to include Issuer Solutions within Banking Solutions and reclassify certain businesses. The Banking Solutions segment posted revenue of $2.374B (45% growth), with Adjusted EBITDA of $1.038B (margin 43.7%). Capital Market Solutions generated $823M revenue (5% growth) and $424M Adjusted EBITDA (margin 51.6%). Corporate and Other reported revenue of $98M and negative Adjusted EBITDA of $158M. The goodwill balance increased to $24.585B, with $6.908B from acquisitions and $16M impairment on non-strategic businesses. Intangible assets net were $4.450B; software net was $5.220B. Deferred contract costs were $1.291B. The company maintained a $7.0B commercial paper program backstopped by revolving credit facilities. Interest rate swaps and cross-currency swaps were used to manage rate and FX risk. The effective tax rate was 41%, elevated due to a one-time discrete item. Stock-based compensation totaled $44M. The company settled a securities class action in principle, with the amount expected to be substantially covered by insurance.