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Fidelity National sets up new structure as Worldpay integration advances

A larger and more diversified Fidelity National Information Services Inc. announced its new organizational structure, which executives believe will help the financial technology giant ramp up its revenue growth in the near future.

With the completion of its acquisition of Worldpay Inc., a deal valued at $35.36 billion at announcement, the Jacksonville, Fla.-based company has set up a new framework in which its business will be split into three separate segments dedicated to merchant solutions, banking solutions and capital market solutions.

Across all three units, Fidelity National, or FIS, is now targeting organic revenue growth of about 7% in 2020 and between 7% and 9% beyond that, executives said Aug. 6 during a second-quarter earnings conference call. The Worldpay deal is also now expected to be accretive in 2020 on a full-year basis. FIS projects that it will be able to reach $150 million in annual revenue synergies by the end of 2020, which is $50 million higher than the company's prior guidance and puts it well on track to meet a targeted $500 million in total run-rate synergies by the end of 2022.

"All of that just gives us a lot of confidence as we go into the back half of the year and into 2020," FIS Executive Chairman, President and CEO Gary Norcross said on the call. "We're very pleased [with] where we are at this point in time."

By adding Worldpay, FIS was able to add recurring revenue that tends to be "predictable and resilient," CFO James Woodall said on the call. The two companies' megamerger, one of several in the fintech realm in early 2019, was largely viewed as a play to expand the combined company's presence in the payments and e-commerce business, as well as internationally.

The push into payments comes at a time when an increasing number of transactions are occurring digitally and a mix of market participants are rushing into the space.

Most recently, the Federal Reserve unveiled a plan Aug. 5 to introduce a system to move funds in real time rather than delaying their availability, which would rival a similar network controlled by some of the largest U.S. banks. The next day, Mastercard Inc. struck an agreement to build out its real-time payments capabilities by acquiring Nets A/S for €2.85 billion, or about $3.19 billion.

Both of those developments could create new chances for FIS add more payments volume, Norcross said.

"All those things create opportunities for FIS," Norcross said. "As more and more money moves to various channels, we can absolutely capture that and drive our revenue stream."