FIS - Fidelity National Information stock skids down 10% after soft guidance spinoff announced

Shares in Fidelity National Information Services ( NYSE: FIS ), also known as FIS, tumbled 10% in Monday premarket trading after the company posted issued weak 2023 guidance, posted better-than-expected Q4 earnings, and unveiled its plan to spin off its Merchant Solutions business as Worldpay.

"We delivered fourth quarter results consistent with our expectations in our Banking and Capital Markets businesses," said FIS ( FIS ) CEO and President Stephanie Ferris. "Revenues and margins in our Merchant Solutions business came under slightly more pressure than anticipated as a result of increasing recessionary impacts in the U.K. and a shifting of consumer spend from goods to services in the U.S."

The company that provides technology products and services for financial institutions and merchants said Monday it expects Q1 adjusted EPS of $1.17-$1.23, less than the $1.40 consensus, and revenue of $3.38B-$3.43B vs. consensus of $3.56B. For the year, it expects adjusted EPS of $5.70-$6.00, below the average Wall Street estimate of $6.69, and revenue of $14.2B-$14.5B vs. $15.09B consensus.

FIS ( FIS ) increased its estimate for cash savings from its Enterprise Transformation Program, now called Future Forward, to $1.25B by the end of 2024, vs. its previous estimate of $500M+. The new projection is comprised of $300M of capital expense savings, $350M of savings from the reduction or elimination of acquisition, integration, and transformation-related expenses, in each case prior to the effects of the proposed spinoff of the Merchant Solutions unit.

Q4 adjusted EPS of $1.71 vs. $1.70 consensus, fell from $1.74 in the prior quarter and from $1.92 in the year-ago period.

Revenue for the quarter ended Dec. 31, 2022, rose to $3.71B from $3.60B in the prior quarter and from $3.67B in the year-ago period. The current quarter exceeded the average analyst estimate of $3.69B.

Banking Solutions segment sales of $1.72B rose from $1.68B in Q3 and from $1.67B in Q4 2021.

Merchant Solutions revenue of $1.18B, was unchanged from  Q3 and declined from $1.19B in Q4 2021.

Capital Market Solutions revenue of $771M vs. $671M in Q3 and $716M in Q4 2021.

FIS's ( FIS ) adjusted EBITDA, at $1.61B declined from  $1.58B in the prior quarter and from $1.71B in the year-ago quarter.

Conference call at 8:30 AM ET.

Earlier, Fidelity National Information ( FIS ) non-GAAP EPS of $1.71 beats by $0.01, revenue of $3.71 beats by $20M, guides FY23 and Q1 outlook below estimates.

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