Fidelity National Information Services : Q2 2020 Earnings Call Presentation

SECOND QUARTER 2020 EARNINGS CALL

August 04, 2020

SPEAKERS

COVID &

BUSINESS

STRATEGY

UPDATE

2Q 2020 RESULTS

Gary Norcross

Chairman, President and Chief Executive Officer

Woody Woodall

Chief Financial Officer

DISCLOSURES

Forward-looking Statements

Our discussions today, including this presentation and any comments made by management, contain "forward-looking statements" within the meaning of the U.S. federal securities laws. Any statements that refer to future events or

circumstances, including our future strategies or results, or that are not historical facts, are forward-looking statements. Actual results could differ materially from those projected in forward-looking statements due to a variety of factors, including the risks and uncertainties set forth in our earnings press release dated August 4, 2020, our annual report on Form 10-K for 2019 and our other filings with the SEC. We undertake no obligation to update or revise any forward-looking statements. Please see the Appendix for additional details on forward-looking statements.

Non-GAAP Measures

This presentation will reference certain non-GAAP financial information. For a description and reconciliation of non-GAAP measures presented in this document, please see the Appendix attached to this presentation or visit the Investor Relations section of the FIS website at www.fisglobal.com.

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COVID UPDATE

SUPPORTING OUR COLLEAGUES, CLIENTS AND COMMUNITIES

FIS RESPONSE to COVID-19*

1

2

3

COLLEAGUES:

SAFETY FIRST

• Focusing on well-being of our colleagues
• Implemented COVID pay and illness benefits

CLIENTS:

ENABLING CLIENT FACING

INITIATIVES

• Launched Real-Time Lending platform for CARES Payroll Protection Program
• Enabling online purchasing of groceries for SNAP benefit recipients

COMMUNITIES:

HELPING IN THE COMMUNITIES WHERE WE LIVE

• • Providing hunger relief and emergency financial assistance
  • Supporting front-line health care workers
• Representative examples

1. ESG refers to Environmental, Social, and Governance

Remote Operations:

Enabling work from home

• Fostering a culture of innovation and growth
• Quickly moved from approximately 10% to 95% active work from home globally

Resiliency: Providing best-in-class service and customer experience

• Delivering innovative solutions to complex problems
• Creating best practices for agile remote delivery

Advancing Sustainability: Leveraging our scale and global reach

• Powering the global financial ecosystem through crisis
• Integrating ESG1 factors into every part of our business

BUSINESS UPDATE

EXCEPTIONAL PERFORMANCE IN TRYING TIMES

1. Excludes 6%, or ~$60 million headwind impacting processing revenue from the U.S. tax filing deadline shift	7
For a description of non-GAAP measures and a reconciliation of GAAP to non-GAAP measures, see Appendix.

ONE YEAR AGO

Pay

		Merchant	Banking
		Solutions	Solutions
		WHAT WE DO	WHAT WE DO
	Bank	We provide a unique	Our solutions allow
	capability to power	people to borrow,
Invest
	global omni-	save, pay and
		commerce	invest

Capital Market

Solutions

WHAT WE DO

We facilitate the

movement,

management and growth of money

ADVANCING THE WAY THE WORLD PAYS, BANKS AND INVESTS

INTEGRATION UPDATE

DELIVERING

ON OUR

TARGETS

	Optimized	Signed First 2
Worldpay	Debit	Bank Referral
Joins FIS	Routing	Agreements
July 31		Q3 2019
2019

Signed First	First Prepaid	Accelerated	Began
Premium	Cross-sell	Innovation with	Implementation
Payback Client	Win	FIS Ventures	of Site Strategy
	Q4 2019	Q1 2020	Q2 2020

SYNERGY

ACHIEVEMENT

SINCE DEAL

CLOSE

Cost Synergies Achieved1

$700 +

$580

$465

$200

Revenue Synergies Achieved1

$100

$80

$30

$115

Q3 2019

Q4 2019

Q1 2020

Q2 2020

Q3 2019

Q4 2019

Q1 2020

Q2 2020

1. Synergies shown in millions of dollars on an annualized basis as of quarter-end, including impact of near-term headwinds from the ongoing pandemic	9

JOURNEY TO THE FUTURE

		2018
	2017	Launched One
	FIS approach to
	Accelerated	client delivery and
2015	investment in	service
modular and
Embarked	componentized
on network	architecture for
modernization	application stack
and data center
consolidation

2019	Today
Global Leader
Upgraded and	in Digital
Integrated	Payments,
enterprise toolsets	Banking and
	Investments

FUTURE READINESS

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CORPORATE STRATEGY

We have a blueprint for FIS' continued success

I

INVEST IN

TECHNOLOGY AND

INNOVATION

ACCELERATE

REVENUE

GROWTH

PIVOT TO GROWTH

II

DRIVE EFFICIENCY AND SCALABILITY

EXPAND

MARGINS

III

STRATEGICALLY

ALLOCATE

CAPITAL

MAXIMIZE

SHAREHOLDER

VALUE

WE CONTINUE TO STRENGTHEN OUR EXECUTION CAPABILITIES TO FULFILL THE POTENTIAL OF FIS

OUR CLIENTS ARE RESPONDING

BANKING

Top 30 Bank

9th Modern Banking Platform Win, including 4 in the Top 30

(7th Large Win in 3 Quarters)

COVID-19 Support

Rapid roll-out and delivery of multiple PPP / Pandemic EBT solutions

MERCHANT

Top U.S. Pharmacy

Implementing Premium

Payback across approximately

10,000 locations

Largest Independent U.K.

Fuel Station Operator

Supporting 900+ locations

CAPITAL

MARKETS

Top German Bank

Consolidating multiple

providers with our integrated

end-to-end solution

Large Nonprofit

Sold commercial lending suite using entirely virtual sales cycle

OUR INNOVATION CONTINUES TO RESONATE IN THE MARKET

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2Q 2020 RESULTS

HIGHLIGHTS & ACCOMPLISHMENTS

2Q 2020 RESULTS

demonstrate the durability of FIS' unique business model

• Organic revenue decreased 7%, as growth in Banking and Capital Markets was offset by lower Merchant payment volumes primarily due to the impacts of COVID-19
• Adjusted EBITDA margin expanded 150 basis points (bps) to 39%, exceeding expectations
• Adjusted EPS of $1.15 in the quarter

INTEGRATION AHEAD OF SCHEDULE

with growing revenue and cost synergy achievement

• Revenue synergies increased to $115 million, primarily due to new merchant wins related to bank referral agreements and Premium Payback cross-selling wins
• Achieved cost synergies in excess of $700 million dollars, including $350 million dollars in operating expense savings

EXCEPTIONAL SALES AND PIPELINE

with robust client new sales dialogues related to COVID-19

• Backlog increased 7% organically to $21 billion reflecting strength in sales execution

REVENUE ($ in millions)

2Q20	$2,962

2Q19

40% Growth

(7)% Organic

ADJUSTED EBITDA ($ in millions)

2Q20$1,157

2Q19	46% Growth
	(39.1% Margin, Up 150 bps)

ADJUSTED EPS

2Q20

$1.15

(12)%

2Q19

For a description of non-GAAP measures and a reconciliation of GAAP to non-GAAP measures, see Appendix.

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SEGMENT RESULTS

BANKING SOLUTIONS

• 4% organic revenue growth primarily due to continued strong growth in recurring revenue
• Organic revenue growth includes a 1% headwind from lower transactional revenue associated with the ongoing COVID pandemic
• 2Q 2020 EBITDA margin of 41.1%

MERCHANT SOLUTIONS

• (25)% organic revenue decline primarily due to lower consumer spending associated with the ongoing COVID pandemic
• (19)% organic revenue decline excluding 6%, or ~$60 million, headwind primarily due to shift in the U.S. tax filing deadline1
• 2Q 2020 EBITDA margin of 40.8%

CAPITAL MARKET SOLUTIONS

• 3% organic revenue growth primarily due to continued strong growth in recurring revenue
• 2Q 2020 EBITDA margin of 45.6%

REVENUE ($ in millions)

2Q20	$1,479

2Q19

9% Growth

4% Organic

REVENUE ($ in millions)

2Q20	$812

2Q19

Significant Growth

(19)% Organic1

REVENUE ($ in millions)

2Q20	$629

2Q19

6% Growth

3% Organic

1. Excludes 6%, or ~$60 million headwind impacting processing revenue from the U.S. tax filing deadline shift For a description of non-GAAP measures and a reconciliation of GAAP to non-GAAP measures, see Appendix.

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MERCHANT TRENDS

Monthly Volume and Transaction Trends1

					Dollar Volume		Transaction Count
							4%
			-7%		-1%
			-11%			-7%	-11%
-18%	-21%
	April				May		June		Q2

• Merchant trends improved throughout the second quarter as restrictions related to the COVID pandemic were relaxed
• Merchant trends have also continued to improve modestly through July
• Global eCommerce transactions increased approximately 30% during the second quarter, excluding Travel and Airlines

1. Monthly Volume and Transaction Trends

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BALANCE SHEET, CASH FLOW AND LIQUIDITY

BALANCE SHEET AND CASH FLOW		JUNE 30, 2020
Dividends Paid1		$217M
Debt Paydown1		$544M
Free Cash Flow1		$655M
Total Debt		$20B
Leverage Ratio2		3.5x
Weighted Average Interest Rate		1.7%

LIQUIDITY POSITION	JUNE 30, 2020
Cash and Cash	$1.2B
Equivalents
Available Borrowing	$2.3B
Capacity3
Total Liquidity	$3.5B

• Robust cash flow of 22% conversion to revenue, an increase from 18% in 1Q 2020
• Strong balance sheet which remains on track to reach target leverage of 2.7x in 2021
• Ample liquidity to manage operations and continue to invest in innovation
• Next bond maturity: €500M in 1Q 2021

1 2Q 2020 amounts in millions of dollars

2 Debt excludes settlement borrowings and adjusted EBITDA is unburdened by stock compensation and includes integration synergies 3 $5.5 billion revolving credit facility less outstanding commercial paper and drawn revolver balances.

For a description of non-GAAP measures and a reconciliation of GAAP to non-GAAP measures, see Appendix.

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COMMITTED TO GROWTH

FOR OUR COLLEAGUES

• Becoming the FinTech employer of choice
• Maintaining an inclusive and diverse environment
• Fostering a culture of innovation and growth

FOR OUR CLIENTS

• Delivering innovative solutions to solve complex problems
• Fully leveraging our scale and global reach to benefit our clients
• Providing best-in-classservice and quality customer experiences

FOR OUR COMMUNITIES

TECHNOLOGY

AND

INNOVATION

AT SCALE

• Integrating Environmental, Social and Governance factors throughout our business

APPENDIX

FORWARD-LOOKING STATEMENTS

This presentation and today's webcast contain "forward-looking statements" within the meaning of the U.S. federal securities laws. Statements that are not historical facts, including statements about anticipated financial outcomes, including any earnings guidance of the Company, projected revenue or expense synergies, business and market conditions, outlook, foreign currency exchange rates, deleveraging plans, expected dividends and share repurchases, the Company's sales pipeline and anticipated profitability and growth, as well as other statements about our expectations, beliefs, intentions, or strategies regarding the future, are forward-looking statements. These statements relate to future events and our future results and involve a number of risks and uncertainties. Forward-looking statements are based on management's beliefs as well as assumptions made by, and information currently available to, management. Any statements that refer to beliefs, expectations, projections or other characterizations of future events or circumstances and other statements that are not historical facts are forward-looking statements.

Actual results, performance or achievement could differ materially from those contained in these forward-looking statements. The risks and uncertainties to which forward-looking statements are subject include the following, without limitation:

• the outbreak of the novel coronavirus ("COVID-19") and measures to reduce its spread, including the impact of governmental or voluntary actions such as business shutdowns and stay-at-home orders;
• the duration of the COVID-19 pandemic and its impacts, including the general impact of an economic recession, reductions in consumer and business spending, and instability of the financial markets across the globe;
• the economic and other impacts of COVID-19 on our clients which affect the sales of our solutions and services and the implementation of such solutions;
• the risk of losses in the event of defaults by merchants (or other parties) to which we extend credit in our card settlement operations or in respect of any chargeback liability, either of which could adversely impact liquidity;
• changes in general economic, business and political conditions, including those resulting from COVID-19 or other pandemics, intensified international hostilities, acts of terrorism, changes in either or both the United States and international lending, capital and financial markets and currency fluctuations;
• the risk that the Worldpay transaction will not provide the expected benefits or that we will not be able to achieve the cost or revenue synergies anticipated;
• the risk that the integration of FIS and Worldpay will be more difficult, time-consuming or expensive than anticipated;
• the risk that other acquired businesses will not be integrated successfully or that the integration will be more costly or more time-consuming and complex than anticipated;
• the risk that cost savings and other synergies anticipated to be realized from other acquisitions may not be fully realized or may take longer to realize than expected;
• the risks of doing business internationally;
• the effect of legislative initiatives or proposals, statutory changes, governmental or other applicable regulations and/or changes in industry requirements, including privacy and cybersecurity laws and regulations;
• the risks of reduction in revenue from the elimination of existing and potential customers due to consolidation in, or new laws or regulations affecting, the banking, retail and financial services industries or due to financial failures or other setbacks suffered by firms in those industries;
• changes in the growth rates of the markets for our solutions;
• failures to adapt our solutions to changes in technology or in the marketplace;
• internal or external security breaches of our systems, including those relating to unauthorized access, theft, corruption or loss of personal information and computer viruses and other malware affecting our software or platforms, and the reactions of customers, card associations, government regulators and others to any such events;
• the risk that implementation of software, including software updates, for customers or at customer locations or employee error in monitoring our software and platforms may result in the corruption or loss of data or customer information, interruption of business operations, outages, exposure to liability claims or loss of customers;

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FORWARD-LOOKING STATEMENTS

• the reaction of current and potential customers to communications from us or regulators regarding information security, risk management, internal audit or other matters;
• competitive pressures on pricing related to the decreasing number of community banks in the U.S., the development of new disruptive technologies competing with one or more of our solutions, increasing presence of international competitors in the U.S. market and the entry into the market by global banks and global companies with respect to certain competitive solutions, each of which may have the impact of unbundling individual solutions from a comprehensive suite of solutions we provide to many of our customers;
• the failure to innovate in order to keep up with new emerging technologies, which could impact our solutions and our ability to attract new, or retain existing, customers;
• an operational or natural disaster at one of our major operations centers;
• failure to comply with applicable requirements of payment networks or changes in those requirements;
• fraud by merchants or bad actors; and
• other risks detailed in the "Risk Factors" and other sections of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, in our quarterly reports on Form 10-Q and in our other filings with the Securities and Exchange Commission.

Other unknown or unpredictable factors also could have a material adverse effect on our business, financial condition, results of operations and prospects. Accordingly, readers should not place undue reliance on these forward-looking statements. These forward-looking statements are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Except as required by applicable law or regulation, we do not undertake (and expressly disclaim) any obligation and do not intend to publicly update or review any of these forward-looking statements, whether as a result of new information, future events or otherwise.

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FIS USE OF NON-GAAP FINANCIAL INFORMATION

Generally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework of guidelines for financial accounting in the United States. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions and in the preparation of financial statements. In addition to reporting financial results in accordance with GAAP, we have provided certain non-GAAP financial measures.

These non-GAAP measures include constant currency revenue, organic revenue growth, EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted net earnings, adjusted EPS, and free cash flow. These non-GAAP measures may be used in this release and/or in the attached supplemental financial information.

We believe these non-GAAP measures help investors better understand the underlying fundamentals of our business. As further described below, the non-GAAP revenue and earnings measures presented eliminate items management believes are not indicative of FIS' operating performance. The constant currency and organic revenue growth measures adjust for the effects of exchange rate fluctuations, while organic revenue growth also adjusts for acquisitions and divestitures, giving investors further insight into our performance. Finally, free cash flow provides further information about the ability of our business to generate cash. For these reasons, management also uses these non-GAAP measures in its assessment and management of FIS' performance.

Constant currency revenue represents reported revenue excluding the impact of fluctuations in foreign currency exchange rates in the current period.

Organic revenue growth is constant currency revenue, as defined above, for the current period compared to an adjusted revenue base for the prior period, which is adjusted to add pre-acquisition revenue of acquired businesses for a portion of the prior year matching the portion of the current year for which the business was owned, and subtract pre-divestiture revenue for divested businesses for the portion of the prior year matching the portion of the current year for which the business was not owned, for any acquisitions or divestitures by FIS.

EBITDA reflects earnings from continuing operations before interest, taxes, depreciation and amortization.

Adjusted EBITDA is EBITDA, as defined above, excluding certain costs and other transactions which management deems non-operational in nature, the removal of which improves comparability of operating results across reporting periods. This measure is reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance. For this reason, adjusted EBITDA, as it relates to our segments, is presented in conformity with Accounting Standards Codification 280, Segment Reporting, and is excluded from the definition of non-GAAP financial measures under the Securities and Exchange Commission's Regulation G and Item 10(e) of Regulation S-K.

Adjusted EBITDA margin reflects adjusted EBITDA, as defined above, divided by revenue.

Adjusted net earnings excludes the impact of certain costs and other transactions which management deems non-operational in nature, the removal of which improves comparability of operating results across reporting periods. It also excludes the impact of acquisition-related purchase accounting amortization and equity method investment earnings (loss), both of which are recurring.

Adjusted EPS reflects adjusted net earnings, as defined above, divided by weighted average diluted shares outstanding.

Free cash flow reflects net cash provided by operating activities, adjusted for the net change in settlement assets and obligations and excluding certain transactions that are closely associated with non- operating activities or are otherwise non-operational in nature and not indicative of future operating cash flows, less capital expenditures. Free cash flow does not represent our residual cash flow available for discretionary expenditures, since we have mandatory debt service requirements and other non-discretionary expenditures that are not deducted from the measure.

Any non-GAAP measures should be considered in context with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP measures. Further, FIS' non-GAAP measures may be calculated differently from similarly titled measures of other companies. Reconciliations of these non-GAAP measures to related GAAP measures, including footnotes describing the specific adjustments, are provided in the attached schedules and in the Investor Relations section of the FIS website, www.fisglobal.com.

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RECONCILIATION OF GAAP TO NON-GAAP FINANCIALS

($ millions, unaudited)				Three months ended June 30, 2020
						Capital
	Merchant		Banking		Market	Corporate
	Solutions	Solutions	Solutions	and Other		Total
Revenue	$	812	$	1,479	$	629	$	42	$	2,962
FX		5		15		4		-		24
Constant Currency Revenue	$	817	$	1,494	$	633	$	42	$	2,986
				Three months ended June 30, 2019
						Capital
	Merchant		Banking		Market	Corporate
	Solutions	Solutions	Solutions	and Other		Total
Revenue	$	97	$	1,357	$	594	$	64	$	2,112
In Year Adjustments		986		87		20		-		1,093
Adjusted Base	$	1,083	$	1,443	$	615	$	64	$	3,206
Organic Growth		(25)%		4%		3%	(35)%		(7)%

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RECONCILIATION OF GAAP TO NON-GAAP FINANCIALS

($ millions, unaudited)

		Three months ended
		June 30,
		2020			2019
Net earnings attributable to FIS common stockholders	$	19	$	154
Provision (benefit) for income taxes		4			40
Interest expense, net		88			72
Other, net		(65)			125
Operating income, as reported	$	46	$	391
Depreciation and amortization, excluding purchase accounting amortization		237			193
Non-GAAP adjustments:
Purchase accounting amortization		678			175
Acquisition, integration and other costs		196			35
Adjusted EBITDA	$	1,157	$	794

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RECONCILIATION OF GAAP TO NON-GAAP FINANCIALS

($ millions, unaudited)

Earnings (loss) before income taxes and equity method investment earnings (loss) (Provision) benefit for income taxes

Equity method investment earnings (loss)

Net (earnings) loss attributable to noncontrolling interest Net earnings attributable to FIS common stockholders Non-GAAP adjustments:

Purchase accounting amortization Acquisition, integration and other costs

Loss (gain) on sale of businesses and investments Debt financing activities

Non-operating (income) expense

Equity method investment (earnings) loss

(Provision) benefit for income taxes on non-GAAP adjustments

Three months ended

June 30,

	2020			2019
$	32	$	199
	(4)			(40)
	(7)			(4)
	(2)			(1)
$	19	$	154
	678			175
	202			46
	-			-
	-			102
	(74)			-
	7			4
	(114)			(57)

Total non-GAAP adjustments	$	699		$	270
Adjusted net earnings	$	718	$	424
Net earnings (loss) per share - diluted attributable to FIS common stockholders	$	0.03	$	0.47
Non-GAAP adjustments:
Purchase accounting amortization		1.08			0.54
Acquisition, integration and other costs		0.32			0.14
Loss (gain) on sale of businesses and investments		-			-
Debt financing activities		-			0.31
Non-operating (income) expense		(0.12)			-
Equity method investment (earnings) loss		0.01			0.01
(Provision) benefit for income taxes on non-GAAP adjustments		(0.18)			(0.17)
Adjusted net earnings per share - diluted attributable to FIS common stockholders	$	1.15	$	1.30
Weighted average shares outstanding-diluted		625			327

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RECONCILIATION OF GAAP TO NON-GAAP FINANCIALS

($ millions, unaudited)	Three months ended
	June 30, 2020
	Net cash provided by operating activities	$	1,231
	Non-GAAP adjustments:
	Acquisition, integration and other payments		208
	Settlement activity		(541)
	Adjusted cash flows from operations	$	898
	Capital expenditures		(243)
	Free cash flow	$	655
		Three months ended
			June 30, 2019
	Net cash provided by operating activities	$	526
	Non-GAAP adjustments:
	Acquisition, integration and other payments		46
	Tax payments on divestitures		10
	Settlement activity		(29)
	Adjusted cash flows from operations	$	553
	Capital expenditures		(140)
	Free cash flow	$	413

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