FIS may cut thousands of workers, Bloomberg reports

The news report on workforce reductions at the payments processor follows its announcement earlier this month that it would embark on a $500 million cost-cutting program

Payments processor behemoth Fidelity National Information Services may dismiss thousands of workers in a new cost-cutting campaign as a new CEO takes over, Bloomberg reported, citing unnamed sources.

The cuts "may affect several thousand staffers and contractors at the payments company," Bloomberg reported. The reductions are expected to be "gradual," the news organization said, without providing a timetable.

The company, known in the industry as FIS, said earlier this month that it planned to cut $500 million in costs. FIS disclosed the plans after it reported lackluster third-quarter financial results that CEO Gary Norcross and his appointed successor, President Stephanie Ferris, acknowledged as disappointing during a Nov. 3 earnings call with analysts. The executives also said they aimed to right-size the company, which typically refers to job cuts.

The Jacksonville, Florida-based company has about 65,000 employees as of the end of last year, including 40,000 outside the U.S., according to its annual filing with the Securities and Exchange Commission.

An FIS spokesperson, Scott Krugman, declined to comment, saying he wouldn’t respond to “rumor and speculation.”

The reductions could mean as many as 3,000 FIS employees will be cut next year, according to analysts who follow FIS for the financial firm Robert W. Baird. "We currently model $250 million of in-year savings in 2023, which could imply ~2-3k of employee cuts," the Baird Equity Research analysts said in a note to their investor clients today.

The potential workforce cuts at FIS come as other companies across the industry, including fintechs Klarna and Stripe, have announced they’re making significant job cuts in the face of worsening economic conditions, including higher interest rates and rising inflation.

Ferris, who will become CEO next year, said this during the earnings call: “We are not satisfied with our results,” she said, promising “immediate action” for a “transformation program.”

Even though third-quarter revenue rose 3% to $3.6 billion, the adjusted earnings figure the company deems indicative of its performance declined one percent to $1.58 billion, according to the Nov. 3 earnings press release. That entailed an earnings margin contraction for the banking and merchant solutions segments, the release said.

The FIS executives blamed cost inflation, a drop in pandemic-related revenue, investments in e-commerce and recent outsourcing contracts, among other factors.

“Early expectations are to deliver at least $500 million of cash savings with an additional update to be determined as we go through the planning process,” Ferris said earlier in the month. 

The company said last month that Ferris will succeed Norcross in January when he becomes executive chairman.

By Lynne Marek on Nov 22, 2022
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