FIS Inc. senior management made it clear on Tuesday morning that growth through new acquisitions is a key priority only about 18 months after the company completed its massive buyout of the merchant processor. worldpay. But while the Jacksonville, Fla.-based company is still keeping its M&A powder dry, executives on an early morning earnings call also focused on new products and services in the pipeline. after a flat quarter for organic growth.
“Mergers and acquisitions will continue to be an important pillar of our strategy,” said Gary Norcross, chief executive of FIS. “We don’t need to do M&A to grow, but if we can accelerate our growth, we will absolutely do another M&A deal.” Neither Norcross nor Chief Financial Officer Woody Woodall commented on reports released in December that the company had talks broken off to acquire competing processor Global Payments Inc.
But in response to an analyst’s question about the potential size of an acquisition target, Norcross downplayed the importance of size, adding, “Our preference would be [a deal] that generates the most value for shareholders, whether it’s a merger or a transformational M&A. »
Norcross drew attention to the importance of the pace of new products and services. “We will invest in our business, not only in new products, but also in introducing new products faster,” he said, without mentioning details.
In the company’s merchant solutions unit, with fourth-quarter revenue of $1 billion, the second-largest of its three divisions, Covid-19 in 2020 weighed on spending at restaurants, travel and airlines, which generates a higher return for the company. Low-yielding segments like grocery stores, pharmacies and government sales grew much faster, the company said, with e-commerce volume outside of travel up 32%. In effect, e-commerce will get a big boost this year with Walmart signing, Norcross said. Overall, total merchant solutions revenue decreased 9% for the quarter compared to the fourth quarter of 2019.
Norcross said it doesn’t expect a full rebound for airlines until 2022, but additional restaurant and retail spending should return to normal sooner. “We are well positioned for recovery,” he noted, pointing in particular to a referral program the company offers to ISVs that offer payment services as well as the merchant platforms they offer. create. “Our ISV referral program will pay us huge recovery dividends,” he said.
Overall, FIS reported revenue of $3.3 billion for the quarter and $12.6 billion for the year. The former figure remained stable year-over-year, while the latter figure increased by 21% as the acquisition of Worldpay only closed in July 2019. After adjusting for acquisitions, the figure total revenue for the year decreased by 1%.