Fidelity National Information Services, Inc. (FIS) said late Thursday
that earnings rose 18 percent in Q1 as revenue in core business segments posted strong gains. Fidelity National said that it earned $70.5 million in the first quarter, or $.36/share, compared to $59.5 million, or $.31/share, in the year-ago period.
"While FIS achieved solid revenue growth in the first quarter, earnings came in at the low end of our guidance, primarily due to lower-than-expected software and professional services revenue," said William Foley, executive chairman for FIS. Foley said the company had updated its earnings guidance to reflect "challenges faced by the financial services industry," lowering the range of expected revenue growth for the year.
The company now expects revenue growth of 13 to 16 percent for 2008, compared to previous guidance of 14 to 16 percent. Shares were off roughly 6.6 percent in mid-afternoon trading Friday, as a result.
Fidelity National's two key operating segments posted revenue gains over one year earlier, despite a drop in revenue tied to its ubiquitous MSP servicing platform. The company's transaction processing services group -- which includes solutions for online banking, payment processing, and core financial transaction management -- saw revenue jump from $656.0 million to $826.8 million, although bottom-line margins were compressed by a decline in higher-margin software license sales and a drop in professional services revenue.
The company's lender processing services segment -- the part of Fidelity National that most in the mortgage industry think of when they refer to "Fidelity" -- posted a 12.6 percent increase in revenue, generating $464.1 million in the first quarter. The company attributed top-line growth to its default management and appraisal services; in both segments, Fidelity National holds dominant market share.
Fidelity National is in the process of spinning off its lender processing services segment, which it said Thursday it expects to complete by the middle of 2008.
For more information, visit http://www.fidelityinfoservices.com
Disclosure: The author held no positions in FIS when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.