FIS Cuts Guidance, Pauses Buybacks After Debt-Funded Deal
Fidelity National Information Services trimmed its full-year outlook after adjusted earnings growth slowed to 8.8% and it took on debt to close the Total Issuing Solutions acquisition.
Fidelity National Information Services (FIS) cut its full-year 2026 growth guidance and disclosed a temporary halt to share buybacks, as costs tied to a debt-funded acquisition weighed on the fintech payments processor's second-quarter results.
GAAP diluted earnings per share fell to $0.45 in the quarter from $4.58 in the first quarter, though that comparison reflects the roughly $2.2 billion after-tax gain FIS booked in the first quarter from the sale of its Worldpay stake, a gain that did not recur. The more telling figure was adjusted earnings per share, which rose 8.8% year-over-year to $1.48, decelerating from 12% growth in the first quarter and 20% growth in the fourth quarter of 2025.
Pro forma revenue growth slowed to 5.3% from 6.5% in the prior quarter, and pro forma adjusted EBITDA growth eased to 7.4% from 9.4%. Margins moved the other way: adjusted EBITDA margin on a GAAP-combined basis expanded to 41.7% from 39.6%, a 193-basis-point year-over-year gain that outpaced the 176-basis-point expansion in the first quarter and reversed a 36-basis-point contraction in the fourth quarter of 2025.
Banking Solutions, the company's largest segment, again showed the split between reported and organic performance. Segment revenue rose to $2.483 billion, up roughly 44% from a year earlier and in line with the first quarter's 45% pace, driven by the Total Issuing Solutions acquisition. Stripped of that deal, pro forma organic growth for the segment slowed to 6.1% from 7.7%, and the segment's adjusted EBITDA margin expansion decelerated sharply to 179 basis points from 299 basis points.
Capital Market Solutions turned from a margin gainer to a margin loser. The segment's adjusted EBITDA margin had expanded 162 basis points in the first quarter; in the second quarter it contracted 32 basis points to 51.9%, which FIS attributed to higher labor costs and the timing of customer-related expenses. Corporate and Other revenue, meanwhile, fell 26% to $84 million as FIS continued winding down non-strategic businesses, an acceleration from the 12% decline posted in the first quarter.
Free cash flow rose 220% year-over-year to $525 million, building on 111% growth in the first quarter, though both comparisons run against depressed prior-year figures. FIS raised its full-year free cash flow guidance by $100 million to a range of $2.15 billion to $2.25 billion, implying 33% to 39% growth.
That cash flow guidance increase came alongside cuts elsewhere. FIS lowered its full-year pro forma revenue growth guidance to 4.5%-5.0% from 5.1%-5.7% and its pro forma adjusted EBITDA growth guidance to 5.9%-6.9% from 7.2%-8.4%, both of which had been reiterated as recently as the first quarter. Adjusted revenue growth guidance was trimmed to 29%-30% from 30%-31%, adjusted EPS growth guidance narrowed to 7.0%-8.5% from 8%-10%, and adjusted EBITDA growth guidance was lowered to 32%-34% from 34%-35%.
FIS will temporarily curtail share repurchases and pause tuck-in acquisitions to accelerate deleveraging toward a target of roughly 2.8 times gross leverage, a disclosure not present in either of the prior two quarters. Debt outstanding climbed to $21.2 billion as of June 30 following the debt-funded Total Issuing Solutions close, with goodwill rising to $25.0 billion from $17.8 billion and total assets to $44.1 billion from $33.5 billion since year-end 2025. Capital returned to shareholders fell to $270 million in the quarter, just $42 million of buybacks alongside $228 million of dividends, compared with $2.1 billion returned for all of 2025, including $1.3 billion of buybacks.