Fidelity National Information Services (FIS)
Q1 2011 Earnings Call
May 03, 2011 8:30 am ET
Gary Norcross - Chief Operating Officer and Corporate Executive Vice President
Frank Martire - Chief Executive Officer, President, Director and Member of Executive Committee
Mary Waggoner - Senior Vice President of Investor Relations
Michael Hayford - Chief Financial Officer and Corporate Executive Vice President
Brett Huff - Stephens Inc.
David Togut - Evercore Partners Inc.
David Koning - Robert W. Baird & Co. Incorporated
Kartik Mehta - Northcoast Research
Ashwin Shirvaikar - Citigroup Inc
Wayne Johnson - Raymond James & Associates, Inc.
Ashish Sabadra - Crédit Suisse AG
Peter Heckmann - Avondale Partners, LLC
Previous Statements by FIS
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Thank you, Steven, and welcome to everyone joining us this morning. Today's news release and supplemental slide presentation have been posted to our website. A webcast replay of the audio portion of this call will also be available on the website shortly after the call.
With us today morning are Frank Martire, President and Chief Executive Officer; Gary Norcross, Chief Operating Officer; and Mike Hayford, Chief Financial Officer.
Today's comments will focus on results from continuing operations and will include references to non-GAAP financial measures in order to provide more meaningful comparisons between the periods presented. Reconciliations between GAAP and non-GAAP results are provided in the attachments to the news release and the supplemental slide presentation. Please refer to the Safe Harbor language on Page 2 of the presentation.
Today's discussion will contain forward-looking statements. These statements are subject to risks and uncertainties as described in the news release and other filings with the SEC. The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
I will now turn the call over to Frank Martire.
Thanks, Mary. Good morning, everyone, and thank you for joining us on today's call. I'll begin today's business review with a brief summary of financial results and business highlights for the first quarter of 2011. Gary will follow with the operations report, and then Mike will provide additional insight into our financial results and outlook for 2011.
Revenue increased at $1.4 billion in the quarter, which represents organic growth of 6.2%, driven by excellent results within our Financial Solutions and International segments. Growth within capital also contributed to the strong top line performance. Earnings per share came in at $0.45 for the quarter and free cash flow totaled $189 million.
We are pleased with the progress we are making in our strategy to drive higher organic revenue growth through cross-selling existing clients and expanding into higher opportunity markets such as large FIs and international markets, which we believe will drive sustainable earnings growth and greater value for our shareholders over the long run.
In April, we hosted one of several client conferences scheduled for 2011. The feedback from this meeting was very positive, and we feel good about the strength of our client relationships. The conference was well attended and we continue to see increased interest in our solutions to our client base, further supports our belief that the recovery is continuing.
We are looking forward to hosting our first international client conference in Dubai next month. Global expansion is one of our key growth initiatives and we are making good progress in improving our visibility and high-growth international markets that we are currently serving. These client conference help us to continue to be the best -- to build the best relationships in the industry and expand our cross sell success.
Although we're only a few months into this transaction, we are pleased with the increased exposure that Capco offers in the large U.S. and international banking markets. The combination is performing in line with our expectations. The European practice, in particular, is having a very strong start to the year.
During the first quarter, approximately 60% of Capco's revenue was generated in New York and the remaining 40% was generated in North America. The working relationship between the FIS and Capco teams is excellent, and we are very excited about discussions that are taking place with respect to business transformation, IT outsourcing and application management opportunities.
Before I turn the call over to Gary, I would like to provide additional detail regarding certain recent unauthorized activities that occurred on our Sunrise prepaid card platform as described in this morning's earnings release. I will describe what happened and we'll also discuss the actions we have taken to improve the layers of security surrounding our Sunrise platform. As we disclosed, we incurred a loss all approximately $13 million as a result of unauthorized activities that took place on 22 prepaid cards accounts involving one client running on our Sunrise platform. We have identified that a total of 7,170 active prepaid accounts may have been at risk, and that personal information involving three individual cardholders may have been disclosed as a result of these activities. We immediately notified the affected clients, as well as the card associations and implemented additional security controls around our platforms. We also worked with our clients to take appropriate actions, including blocking and reissuing cards on the impacted accounts and establishing identity theft protection for the impacted cardholders.