FIS Shares Plummet on Spinoff Plan, Outlook

Fidelity National Information Services (FIS) was the worst-performing stock in the S&P 500 after the payment services provider announced that it will spin off its merchant solutions unit, Worldpay, and warned about 2023 profit.

FIS indicated that it plans to make Worldpay a standalone company after the board and management determined that the move offers the best path to enhance shareholder value. FIS purchased Worldpay for $43 billion in 2019, and the new firm will have that name. FIS said the transaction will be completed in the next year.

Chair Jeffrey Goldstein explained that the “pace of disruption in payments is rapidly accelerating, requiring increased investment in growth and a different capital allocation for our Merchant Solutions business.” He added that the separation will help both firms have a sharper focus and increased agility.

FIS noted that a decline in revenue at the division affected fourth quarter results, with Merchant Solution sales falling 1% to $1.18 billion. CEO Stephanie Ferris blamed the drop on increasing recessionary impacts in the U.K., and “a shifting of consumer spend from goods to services in the U.S.”

Guidance Misses Estimates

Overall, the company reported revenue rose 1% to $3.71 billion in the period, and earnings per share (EPS) were $1.17. Both were slightly higher than forecasts. However, FIS predicted full-year EPS of $5.70 to $6, well below analysts’ estimates.

Shares of FIS cratered 12.5%, and they've lost 41% in the past year.