Fidelity National Information Services, aka FIS, made two acquisitions in recent months as it seeks to expand, especially in providing services to chief financial officers and in providing digital services to banks.
FIS executives confirmed in an earnings webcast with analysts Tuesday that it had recently purchased the British supply chain finance software company Demica and digital corporate banking services firm Dragonfly Financial Technologies.
Those additional services would expand on the payments technology and other services Jacksonville, Florida-based FIS provides to banking and capital markets clients. The division catering to bank clients is about twice the size of the division focused on capital markets clients, based on revenue.
CEO Stephanie Ferris explained during the webcast how FIS has made five acquisitions, including Demica and Dragonfly, over the past year and is using the new businesses to expand into areas where the company sees rising demand from its banking and capital markets customers.
“We are also expanding our reach with strategic M&A, including the recent acquisition of U.K. fintech Demica,” Ferris said during the Webcast.
Spokespeople for FIS didn’t immediately respond to a request for additional information about the acquisitions, including the price paid.
A December report from Sky News about FIS’s potential acquisition of Demica said that the deal was valued at about $300 million.
The private equity firm One Equity Partners disclosed its sale of Dragonfly to FIS in November, but didn’t provide a sale price. The Dragonfly business was previously owned by ACI Worldwide, but that payments software giant sold it to One Equity Partners for $100 million in cash in June 2022, according to a press release at the time.
Ferris explained how acquisitions are positioning the company to provide more services to chief financial officers and their staff. Those services include payments, treasury, anti-fraud, supply chain management and other software tools. “That's where you're seeing us focus significantly this year,” Ferris said of FIS’s office of the CFO-focused services. “And we would expect to see incrementally more growth in sales in terms of 2025.”
Separately, she spelled out FIS’s interest in continuing to expand its digital services offering because clients are eager to keep updating their systems.
“Every financial institution is focused on their digital experience, which is why we continue to invest very significantly, both organically and then from an acquisition standpoint,” Ferris told the analysts.
FIS planned to pursue acquisitions after it sold off a majority stake in its former Worldpay merchant services unit last year to Chicago private equity firm GTCR.
FIS’s 2024 fourth-quarter adjusted earnings rose 6% to $1.12 billion over the year-earlier period as revenue increased 4% to $2.54 billion, according to its earnings release. For all of 2024, the adjusted earnings increased 5% to $4.14 billion on a 4% increase in revenue to $9.87 billion.
For this year, Ferris and FIS Chief Financial Officer James Kehoe explained that the company’s sales are off to a slow start, but promised a quick recovery. “While the first quarter will be softer than the full year, we expect an immediate pick up in the second quarter,” Kehoe said during the call.
Analysts who follow the company remarked on the sluggishness in the company’s business.
“Banking is particularly weak in Q1,” analysts at the investment firm Robert W. Baird said in a Tuesday note to their clients. “Capital Markets is expected to remain quite strong, but to decelerate after Q1.”
Likewise, analysts at Bank of America called out a decline in the company’s stock after the earnings were released. “Shares are trading sharply lower, primarily on disappointing Banking growth for 4Q24/1Q25,” the BofA analysts said in their Tuesday note to clients. “Management attributed this miss to unexpected items which hit late in the quarter.”
Still, the BofA report forecast an acceleration in sales to FIS banking clients this year, with an assist from the Dragonfly acquisition.
