Fidelity National Information Services (FIS)
Q2 2011 Earnings Call
July 19, 2011 5:00 pm 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.
Julio Quinteros - Goldman Sachs Group Inc.
David Koning - Robert W. Baird & Co. Incorporated
John Kraft - D.A. Davidson & Co.
Ashwin Shirvaikar - Citigroup Inc
Glenn Greene - Oppenheimer & Co. Inc.
Previous Statements by FIS
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Thank you, Kathy, and welcome to everyone joining us this afternoon. Today's news release and supplemental slide presentation have been posted to our website at www.fisglobal.com. A replay of the audio portion of this call will be available on the website, as well as the dial-in number shortly after the call. With us today are Frank Martire, President and Chief Executive Officer; Gary Norcross, Chief Operating Officer; and Mike Hayford, Chief Financial Officer.
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 press release and other filings with the SEC. The company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. 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 is provided in the attachment to the press release and the supplemental slide presentation.
I will now turn the call over to Frank Martire.
Thanks, Mary. Good afternoon, everyone, and thank you for joining us on today's call. I will begin the discussion with a brief summary of our financial results and business highlights for the second quarter. Gary will follow with the operations report, and then Mike will provide additional insight into our financial results and outlook for 2011.
We are very pleased with our continued revenue momentum and the strong growth in earnings per share. Revenue increased to $1.4 billion in the second quarter, which represents organic growth of 5.8%. These results were driven by strong performance within our Financial Solutions and International segments, including strong growth within Capco's European practice. Earnings per share increased 17% to $0.55 in the second quarter, and free cash flow rose to $195 million.
Starting with our Investor Day in 2009 and again in 2010, we shared with you our path to achieving 6% to 9% organic revenue growth. Because we serve all major market segments in the U.S., including community institutions, regional banks and large banks, and also have a substantial international business, we believe that FIS is very well positioned to participate in the market recovery as evidenced by the progress we are making towards achieving our long-term growth plan.
Organic growth has improved consistently during the last 6 quarters and has measured approximately 6% in each of the last 3 reporting periods. As we have discussed on prior calls, 2010 was a great year for new sales. We are off to another excellent start in 2011, and our global sales pipeline is stronger than ever.
As you will hear from Gary a little later on in the call, we continue to build on the success of the FIS and Metavante combination, which has enabled us to leverage our combined banking and Payment Solutions and industry expertise. We expect to achieve similar success with our recent acquisition of Capco. Capco's deep domain expertise and strong relationship in the large U.S. and global banking markets, combined with our market-leading technology, creates a very compelling value proposition for our clients.
Demand for Capco's services is particularly robust in Europe, as shown by the strong growth in the first half of the year. We are very excited about having Capco as part of the FIS team, as we work with clients to solve their business challenges and transform their technology platforms.
Overall, we are very pleased with our second quarter results and the progress we are making to increase organic revenue growth and to drive higher earnings per share. And I am extremely proud of our management team and employees for staying focused on serving our clients and growing the business. Now Gary will continue with the business report. Gary?
Thank you, Frank, and thanks to everyone on the call. I will begin today's review with an overview of the global sales climate, followed by the operating highlights. As Frank discussed, we continue to see evidence of an improved spending environment, which is driving strong growth in our sales pipeline across the globe. Industry consolidation, regulatory changes and the ongoing challenges of competition and processing scale that our clients are facing, continue to drive opportunity for FIS.
The combination of our product set, which we believe is the broadest in the industry, and our global distribution team, have allowed us to participate in the improving spend environment. As discussed last quarter, we have seen clients continue to favor hosted solutions over in-house implementation, which have resulted in a mix shift from license revenue to processing and professional services. These trends provide longer-term stable revenue streams and also eliminate some of the volatility in both our revenue and margins due to onetime license fees.