Fidelity National Information Services (FIS -8.54%), a major provider of technology solutions for financial institutions, reported its Q2 FY2025 earnings on August 5, 2025. The most notable update was a revenue figure of $2.60 billion (non-GAAP), beating consensus estimates. Adjusted earnings per share (EPS) came in at $1.36, in line with expectations. Despite solid revenue growth and stable operating margins, the period featured a GAAP net loss of $470 million due to a one-time, non-cash tax impact tied to the company's Worldpay asset sale. Overall, the quarter showed recurring revenue strength and operational progress but also highlighted margin pressures and increased costs tied to recent large transactions.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $1.36 | $1.36 | $1.34 | 1.5 % |
| Revenue (GAAP) | $2.62 billion | $2.58 billion | $2.49 billion | 5.2 % |
| Adjusted EBITDA (Non-GAAP) | $1.04 billion | $992 million | 4.8 % | |
| Adjusted Free Cash Flow (Non-GAAP) | $292 million | $504 million | (42.1 %) | |
| Net Earnings (Loss) (GAAP) | ($470 million) | $237 million | n/m |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Strategic Focus
Fidelity National Information Services offers software and processing solutions that power banking, payments, and capital markets around the world. Its largest businesses include banking technology platforms, payment transaction processing, and software tools for capital market clients. Its customer base includes banks, credit unions, and other financial institutions.
It has focused on growing recurring revenue through internal product development and strategic transactions. Recent moves include a planned acquisition of Global Payments' Issuer Solutions, and a continued transition away from merchant solutions via the sale of Worldpay. Management believes these changes will drive long-term growth and build a more stable, predictable revenue base. The company's competitive strengths stem from its broad product suite, cloud-based technology, and long-standing client relationships.
Quarter Highlights: Revenue Growth and Segment Developments
Revenue for Q2 2025 reached $2.62 billion (non-GAAP), up 5.0% year-over-year and above analyst projections. This growth was fueled by recurring revenue streams, which now make up around 81% of total revenue. Adjusted EBITDA increased to $1.04 billion, reflecting a 5% rise from the prior year. The adjusted EBITDA margin remained flat at 39.8% (non-GAAP), indicating a balance between cost savings and ongoing expense pressures.
In the Banking Solutions business, revenue climbed 6% year-over-year on a GAAP basis to $1.81 billion, with recurring revenue up 7%. This unit provides core banking technology, payment processing, and related software tools. However, profitability in banking was affected by higher bad debt expenses, leading to a 70 basis-point decrease in the segment's adjusted EBITDA margin to 43.6%.
The Capital Market Solutions segment reported GAAP revenue growth of 6% to $765 million. This segment offers software, processing, and treasury management solutions for investment firms and financial institutions. Although sales were higher, the adjusted EBITDA margin for Capital Market Solutions dropped 53 basis points to 50.3%, due to the financial impact from integrating a recent acquisition. Both segments experienced margin contraction in adjusted EBITDA margin, raising attention to the cost side of the business even as revenue expanded.
Recurring revenue growth of 6% in Q2 2025 remained a highlight. Across the company, nonrecurring revenue items, including software licenses and new client implementations, added to the revenue mix but did not fully offset margin declines. Management noted that the company returned $246 million to shareholders via share repurchases and paid $212 million in dividends during the quarter.
A one-time, non-cash charge of $539 million boosted the deferred tax liability and resulted in a reported net loss (GAAP) for the quarter. This was tied to the agreement to sell the remaining interest in Worldpay, the merchant payments platform the company is moving away from. The impact does not reflect cash movement, but it does affect headline net income for the quarter. Adjusted free cash flow was $292 million, down over 40% from the prior-year Q2 2024 amount of $504 million, with management pointing to working capital timing and transaction-related expenses as causes.
Product Lines and Service Developments
Within its core banking software and transaction processing, the company reported increased adoption of digital banking solutions. These tools support account management and payment card issuance for financial institutions. In capital markets, treasury management solutions and derivatives processing software attracted new clients among investment firms and corporates, supporting increases in both recurring and nonrecurring revenue.
Management noted continued pipeline growth across digital, core account, and payments technology, with recent wins including commercial lending software for clients in the private credit market. Strong cross-selling among product lines is expected to be enhanced by the company’s planned acquisition of Issuer Solutions, which should expand credit card processing and bring additional scale to the banking segment. However, ongoing integration costs and timing-related effects on some revenue, particularly related to upfront software licensing, affected overall profitability for the period.
Looking Ahead: Guidance and Key Trends
Management raised its full-year 2025 outlook, targeting revenue growth of 4.8% to 5.3% and adjusted EPS growth of 10% to 11% following the period's results. For Q3 2025, projected revenue is $2.65–2.67 billion, with adjusted EPS (non-GAAP) forecast at $1.46–1.50.
The company did not announce a change or pause in its shareholder return policy. The quarterly dividend for Q2 2025 was maintained, with management stating that dividends are expected to grow in line with adjusted EPS. Investors should watch for several factors in upcoming quarters: the closing and integration of the Issuer Solutions acquisition, cost management efforts to restore segment margins, the effects of higher interest expense from increased debt, and progress in converting operating gains into stronger cash flow. The complexity induced by ongoing transactions and one-time items, like the Worldpay sale, is set to continue influencing reported results and may make year-over-year comparisons difficult for some time.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
