Fidelity National Information Services (NYSE:FIS) lowered its 2026 outlook and projected a potential decline in revenue and earnings next year, as clients delay some implementations and shift away from traditional software licenses.
The financial technology company said third-quarter revenue and margins grew, but it expects lower non-recurring revenue and continued investment in technology and security to weigh on results through 2027. Management said it anticipates a return to more normalized growth in 2028.
2026 Outlook Reduced
FIS now expects Banking Solutions revenue growth of 3.5% to 4% for 2026, down from its previous forecast of 5% to 5.5%. The company lowered its Capital Markets growth outlook to 2% to 2.5% from 3% to 3.5% and also reduced its revenue outlook to reflect the sale of a non-core prepaid business.
CFO James Kehoe said the Banking reduction reflected implementation delays, a large bank consolidation and lower assumptions for non-recurring revenue. The Capital Markets revision primarily reflected reduced license activity as customers move toward cloud-based products sold under recurring contracts.
FIS now expects full-year adjusted EBITDA margin expansion of 20 to 30 basis points and adjusted earnings per share growth of 1.2% to 2.4%. It reaffirmed its approximately $2.2 billion free cash flow forecast, saying working capital programs and lower non-GAAP cash expenses would offset reduced earnings.
Ferris said the delayed implementations involve fewer than 10 clients, generally larger institutions. Some projects have restarted in the fourth quarter, while others have been replanned into 2027. Almost all delayed conversions are contractually required, she said, and the company expects their benefits to return next year, though not for the full year.
Non-Recurring Revenue to Pressure 2027
For 2027, FIS provided a preliminary adjusted revenue growth range of a 0.5% decline to a 1% increase. Kehoe said underlying organic growth was expected to contribute 2.5 to 3.5 percentage points, but lower non-recurring revenue would reduce growth by 250 to 300 basis points.
Among the expected headwinds are the absence of $140 million in strategic distribution partnership revenue recorded in 2026 and lower termination fees as bank consolidation returns to more typical levels. FIS is also moving away from some low-margin equipment business and expects a gradual reduction in Capital Markets license revenue.
FIS anticipates Banking revenue growth of flat to 1.5% in 2027, including approximately 3% recurring revenue growth. For Capital Markets, it expects revenue to range from a 1.5% decline to a 0.5% increase, with recurring revenue growing at a mid-single-digit rate.
The company expects 2027 adjusted EBITDA margins to be flat to down 100 basis points and adjusted EPS to decline in the high-single- to low-double-digit range. Kehoe estimated that cyber and security spending would have a margin impact of roughly 20 to 30 basis points. He said incremental capital expenditure next year would be approximately $50 million, following a significant increase in spending this year.
Third-Quarter Growth and Cash Flow
FIS reported pro forma third-quarter revenue growth of 3.7%, while recurring revenue grew 2.5%. Adjusted EBITDA margin rose 94 basis points to 42.9%, and adjusted EPS increased 6.6% to $1.61. Year-to-date free cash flow rose 57% to $1.9 billion.
Banking Solutions pro forma revenue grew 3.9%. Its recurring revenue growth slowed to 2.4%, which Kehoe attributed to lower merger-and-acquisition activity than in the first half, client-led conversion delays and select bank consolidation. Non-recurring revenue grew 22.8%, helped by strategic distribution partnerships.
Capital Markets revenue increased 3%, while non-recurring revenue grew 24.6%. Professional services revenue declined 20%, reflecting weaker first-half sales and slower-than-expected client implementations. Kehoe said that pressure was expected to continue in the fourth quarter.
CFO Transition and Strategic Review
Ferris said Chief Accounting Officer Alex Brooks would become interim CFO on November 5, while the board searches for a permanent successor. Kehoe said he is leaving after three years to pursue other opportunities and will help with the transition.
FIS is also continuing a review of strategic alternatives across its portfolio, with a more substantial update expected in early 2027. Ferris said the review extends beyond Capital Markets and pointed to the recent sale of the non-core prepaid business within Banking.
Kehoe said pressure on adjusted EBITDA would delay the company’s progress toward a 2.8-times leverage ratio and could push out the resumption of share repurchases. He declined to confirm the previous timing target, noting that the strategic review and stronger cash flow could offset some of that pressure.
About Fidelity National Information Services (NYSE:FIS)
Fidelity National Information Services, Inc (NYSE:FIS) is a global financial technology company that provides software, services and technology infrastructure to banks, financial institutions, merchants and other businesses. Its solutions are designed to support transaction processing, digital banking, payments, risk management and other essential financial operations.
FIS offers core banking and digital banking platforms, card and payment processing services, fraud and financial crime prevention tools, and technologies that help financial institutions manage accounts, lending and other banking activities.
