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FIS Reports First Quarter 2023 Results

  • Increased first quarter revenue 1% on a GAAP basis and 3% on an organic basis to $3.5 billion
  • Generated first quarter GAAP Diluted EPS of $0.24 and Adjusted EPS of $1.29
  • Announces increase to full-year 2023 outlook

FIS® (NYSE:FIS), a global leader in financial services technology, today reported its first quarter 2023 results.

“We are very pleased with our strong start to the year, surpassing our financial targets for the first quarter, raising our full-year guidance and making meaningful progress with our previously announced spin-off of our Merchant business,” said FIS CEO and President Stephanie Ferris. “We are also beginning to see positive results from our Future Forward enterprise transformation program and its focus on driving a more efficient, effective and growth-enabled FIS. As economies remain challenged by macroeconomic uncertainties, FIS’ diversified client base remains a position of strength and we are continuing to unlock financial technology for our clients to drive the financial world forward.”

First Quarter 2023

On a GAAP basis, consolidated revenue increased 1% as compared to the prior-year period to approximately $3.5 billion. Net earnings attributable to common stockholders were $140 million or $0.24 per diluted share.

On an organic basis, consolidated revenue increased 3% as compared to the prior-year period primarily due to strong recurring revenue growth and professional services in Banking, increased Merchant volumes and continued strength in Capital Markets. Adjusted EBITDA margin contracted by 190 basis points (bps) over the prior-year period to 38.7%. Adjusted net earnings were approximately $767 million, and Adjusted EPS decreased by 12% as compared to the prior-year period to $1.29 per diluted share.

($ millions, except per share data, unaudited)

 

Three Months Ended March 31,

 

 

 

 

 

 

%

 

Constant

 

Organic

 

 

2023

 

2022

 

Change

 

Currency

 

Growth

Revenue

 

$

3,510

 

 

$

3,492

 

 

1%

 

2%

 

3%

Banking Solutions

 

1,685

 

 

1,659

 

 

2%

 

2%

 

2%

Merchant Solutions

 

1,105

 

 

1,112

 

 

(1)%

 

2%

 

2%

Capital Market Solutions

 

663

 

 

627

 

 

6%

 

7%

 

7%

Corporate and Other

 

 

57

 

 

 

94

 

 

(39)%

 

(37)%

 

 

Adjusted EBITDA

 

$

1,359

 

 

$

1,418

 

 

(4)%

 

 

 

 

Adjusted EBITDA Margin

 

 

38.7

%

 

 

40.6

%

 

(190) bps

 

 

 

 

Net earnings attributable to FIS common stockholders (GAAP)

 

$

140

 

 

$

120

 

 

17%

 

 

 

 

Diluted EPS (GAAP)

 

$

0.24

 

 

$

0.20

 

 

20%

 

 

 

 

Adjusted net earnings

 

$

767

 

 

$

904

 

 

(15)%

 

 

 

 

Adjusted EPS

 

$

1.29

 

 

$

1.47

 

 

(12)%

 

 

 

 

Operating Segment Information

  • Banking Solutions:

    First quarter revenue increased by 2% on a GAAP basis, and 2% on an organic basis as compared to the prior-year period to $1.7 billion primarily due to higher recurring revenue from processing volumes and professional services. Adjusted EBITDA margin contracted by 250 basis points as compared to the prior-year period to 40.1% primarily driven by revenue mix.

  • Merchant Solutions:

    First quarter revenue decreased by 1% on a GAAP basis, and increased 2% on an organic basis as compared to the prior-year period to $1.1 billion primarily due to ongoing e-commerce strength and increased volumes. Adjusted EBITDA margin contracted by 350 basis points to 43.5% primarily due to revenue mix. In the quarter, global volume increased 7% on a reported basis, and 9% on a constant currency basis, as compared to the prior-year period to $551 billion. US volume increased 7%, and transactions increased 6% as compared to the prior-year period.

Additional Merchant Disclosure

 

 

Three Months Ended March 31,

 

 

 

 

 

 

%

 

Constant

 

 

2023

 

2022

 

Change

 

Currency

Revenue ($M)

 

$

1,105

 

 

$

1,112

 

 

(1)%

 

2%

Global Volume1 ($B)

 

$

551

 

 

$

517

 

 

7%

 

9%

US Volume1 ($B)

 

$

411

 

 

$

383

 

 

7%

 

 

Transactions2 (B)

 

 

12.1

 

 

 

11.4

 

 

6%

 

 

1 Volume refers to the total dollar value of the transactions processed during the stated period.

2 Transaction refers to an instance of buying or selling a good or service in exchange for money.

  • Capital Market Solutions:

    First quarter revenue increased by 6% on a GAAP basis, and 7% on an organic basis as compared to the prior-year period to $663 million primarily due to strong recurring revenue growth. Adjusted EBITDA margin expanded by 30 basis points over the prior-year period to 48.2% primarily due to strong contribution margins from revenue growth.

  • Corporate and Other:

    Revenue decreased by 39% as compared to the prior-year period to $57 million primarily due to the divestitures of non-strategic businesses. Adjusted EBITDA loss was $118 million, including $133 million of corporate expenses.



    Consistent with historical practice, the Company regularly assesses its portfolio of assets and reclassified certain businesses from Capital Markets to Banking Solutions and to the Corporate and Other segment in the quarter ended March 31, 2023, and recast all prior-period segment information presented. Revenue from the reclassified businesses during the quarter ended March 31, 2023, represented less than 1% of consolidated revenue for the period.

Balance Sheet and Cash Flows

As of March 31, 2023, debt outstanding totaled $20.0 billion. First quarter net cash provided by operating activities was $632 million, and free cash flow was $641 million. In the quarter, the Company returned $309 million of capital to shareholders through dividends paid. The Company remains committed to maintaining a targeted dividend payout ratio of 35% of adjusted net earnings.

Update on Enterprise Transformation Program (Future Forward)

As of March 31, 2023, the Company achieved annualized Future Forward cash savings over $210 million. Savings included over $100 million of operational expense savings and over $110 million of capital expense savings. The Company is reiterating its previously communicated target of $1.25B of expected cash savings across the enterprise exiting 2024 (on a run-rate basis, with respect to operational and capital expense savings), prior to the effects of the planned spin-off of the Merchant Solutions business.

Planned Spin-Off of Merchant Solutions Business Update

The Company continues to make progress on the tax-free spin-off of its Merchant Solutions business. The planned separation will create two independent companies with enhanced strategic and operational focus and enable more tailored capital allocation and investment decisions to unlock growth. As previously communicated, the spin-off, which is subject to customary conditions, is expected to be completed by early 2024.

Second Quarter and Full-Year 2023 Guidance

($ millions, except share data)

2Q 2023

 

FY 2023

Revenue

$3,675 - $3,725

 

$14,285 - $14,535

Diluted EPS (GAAP)

$0.30 - $0.40

 

$1.30 - $1.80

Adjusted EPS (Non-GAAP)

$1.45 - $1.50

 

$5.76 - $6.06

Webcast

FIS will sponsor a live webcast of its earnings conference call with the investment community beginning at 8:00 a.m. (EDT) on Thursday, April 27, 2023. To access the webcast, go to the Investor Relations section of FIS’ homepage, www.fisglobal.com. A replay will be available after the conclusion of the live webcast.

About FIS

FIS is a leading provider of technology solutions for financial institutions and businesses of all sizes and across any industry globally. We enable the movement of commerce by unlocking the financial technology that powers the world’s economy. Our employees are dedicated to advancing the way the world pays, banks and invests through our trusted innovation, system performance and flexible architecture. We help our clients use technology in innovative ways to solve business-critical challenges and deliver superior experiences for their customers. Headquartered in Jacksonville, Florida, FIS is a member of the Fortune 500® and the Standard & Poor’s 500® Index.

To learn more, visit www.fisglobal.com. Follow FIS on Facebook, LinkedIn and Twitter (@FISGlobal).

FIS Use of Non-GAAP Financial Information

Generally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework of guidelines for financial accounting in the United States. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions and in the preparation of financial statements. In addition to reporting financial results in accordance with GAAP, we have provided certain non-GAAP financial measures.

These non-GAAP measures include constant currency revenue, organic revenue growth, adjusted EBITDA, adjusted EBITDA margin, adjusted net earnings, adjusted EPS, and free cash flow. These non-GAAP measures may be used in this release and/or in the attached supplemental financial information.

We believe these non-GAAP measures help investors better understand the underlying fundamentals of our business. As further described below, the non-GAAP revenue and earnings measures presented eliminate items management believes are not indicative of FIS’ operating performance. The constant currency and organic revenue growth measures adjust for the effects of exchange rate fluctuations, while organic revenue growth also adjusts for acquisitions and divestitures and excludes revenue from Corporate and Other, giving investors further insight into our performance. Finally, free cash flow provides further information about the ability of our business to generate cash. For these reasons, management also uses these non-GAAP measures in its assessment and management of FIS’ performance.

Constant currency revenue represents reported operating segment revenue excluding the impact of fluctuations in foreign currency exchange rates in the current period.

Organic revenue growth is constant currency revenue, as defined above, for the current period compared to an adjusted revenue base for the prior period, which is adjusted to add pre-acquisition revenue of acquired businesses for a portion of the prior year matching the portion of the current year for which the business was owned, and subtract pre-divestiture revenue for divested businesses for the portion of the prior year matching the portion of the current year for which the business was not owned, for any acquisitions or divestitures by FIS. When referring to organic revenue growth, revenues from our Corporate and Other segment, which is comprised of revenue from non-strategic businesses, are excluded.

Adjusted EBITDA reflects net earnings (loss) before interest, other income (expense), taxes, equity method investment earnings (loss), and depreciation and amortization, and excludes certain costs and other transactions that management deems non-operational in nature, or that otherwise improve the comparability of operating results across reporting periods by their exclusion. This measure is reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance. For this reason, adjusted EBITDA, as it relates to our segments, is presented in conformity with Accounting Standards Codification 280, Segment Reporting, and is excluded from the definition of non-GAAP financial measures under the Securities and Exchange Commission's Regulation G and Item 10(e) of Regulation S-K.

Adjusted EBITDA margin reflects adjusted EBITDA, as defined above, divided by revenue.

Adjusted net earnings excludes the impact of certain costs and other transactions which management deems non-operational in nature or that otherwise improve the comparability of operating results across reporting periods by their exclusion. These include, among others, the impact of acquisition-related purchase accounting amortization and equity method investment earnings (loss), both of which are recurring.

Adjusted EPS reflects adjusted net earnings, as defined above, divided by weighted average diluted shares outstanding.

Free cash flow reflects net cash provided by operating activities, adjusted for the net change in settlement assets and obligations and excluding certain transactions that are closely associated with non-operating activities or are otherwise non-operational in nature and not indicative of future operating cash flows, less capital expenditures. Free cash flow does not represent our residual cash flow available for discretionary expenditures, since we have mandatory debt service requirements and other non-discretionary expenditures that are not deducted from the measure.

Any non-GAAP measures should be considered in context with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP measures. Further, FIS’ non-GAAP measures may be calculated differently from similarly titled measures of other companies. Reconciliations of these non-GAAP measures to related GAAP measures, including footnotes describing the adjustments, are provided in the attached schedules and in the Investor Relations section of the FIS website, www.fisglobal.com.

Forward-Looking Statements

This earnings release and today’s webcast contain “forward-looking statements” within the meaning of the U.S. federal securities laws. Statements that are not historical facts, including statements about anticipated financial outcomes, including any earnings guidance or projections, projected revenue or expense synergies or dis-synergies, business and market conditions, outlook, accruals and estimates, foreign currency exchange rates, deleveraging plans, expected dividends and share repurchases of the Company and, following the proposed spin-off of the Merchant Solutions business, the Company’s and the Merchant Solutions business’ sales pipelines and anticipated profitability and growth, assumptions and strategies of the Company and the Merchant Solutions business following the proposed spin-off, the anticipated benefits of the spin-off, the expected timing of completion of the spin-off, as well as other statements about our expectations, beliefs, intentions, or strategies regarding the future, or other characterizations of future events or circumstances, are forward-looking statements. These statements may be identified by words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “will,” “should,” “could,” “would,” “project,” “continue,” “likely,” and similar expressions. These statements relate to future events and our future results and involve a number of risks and uncertainties. Forward-looking statements are based on management’s beliefs as well as assumptions made by, and information currently available to, management.

Actual results, performance or achievement could differ materially from those contained in these forward-looking statements. The risks and uncertainties to which forward-looking statements are subject include the following, without limitation:

  • changes in general economic, business and political conditions, including those resulting from COVID-19 or other pandemics, a recession, intensified international hostilities, acts of terrorism, increased rates of inflation or interest, changes in either or both the United States and international lending, capital and financial markets or currency fluctuations;
  • the effect of legislative initiatives or proposals, statutory changes, governmental or applicable regulations and/or changes in industry requirements, including privacy and cybersecurity laws and regulations;
  • the risks of reduction in revenue from the elimination of existing and potential customers due to consolidation in, or new laws or regulations affecting, the banking, retail and financial services industries or due to financial failures or other setbacks suffered by firms in those industries;
  • changes in the growth rates of the markets for our solutions;
  • the amount, declaration and payment of future dividends is at the discretion of our Board of Directors and depends on, among other things, our investment opportunities, results of operations, financial condition, cash requirements, future prospects, and other factors that may be considered relevant by our Board of Directors, including legal and contractual restrictions;
  • the amount and timing of any future share repurchases is subject to, among other things, our share price, our other investment opportunities and cash requirements, our results of operations and financial condition, our future prospects and other factors that may be considered relevant by our Board of Directors and management;
  • failures to adapt our solutions to changes in technology or in the marketplace;
  • internal or external security breaches of our systems, including those relating to unauthorized access, theft, corruption or loss of personal information and computer viruses and other malware affecting our software or platforms, and the reactions of customers, card associations, government regulators and others to any such events;
  • the risk that implementation of software, including software updates, for customers or at customer locations or employee error in monitoring our software and platforms may result in the corruption or loss of data or customer information, interruption of business operations, outages, exposure to liability claims or loss of customers;
  • risks associated with the impact or terms of the previously announced proposed spin-off of the Company’s Merchant Solutions business, including the impact on our businesses, resources, systems, procedures and controls, diversion of management’s attention and the impact on relationships with customers, governmental authorities, suppliers, employees and other business counterparties;
  • risks associated with the expected benefits of the proposed spin-off, including the risk that the expected benefits of the proposed spin-off will not be realized within the expected timeframe, in full or at all, and the risk that conditions to the proposed spin-off will not be satisfied and/or that the proposed spin-off will not be completed within the expected timeframe, on the expected terms or at all;
  • failure to obtain the expected qualification of the proposed spin-off as a tax-free transaction for U.S. federal income tax purposes, including whether or not an IRS ruling will be obtained;
  • the risk that any consents or approvals required in connection with the proposed spin-off will not be received or obtained within the expected timeframe, on the expected terms or at all;
  • risks associated with expected financing transactions undertaken in connection with the proposed spin-off and risks associated with indebtedness incurred in connection with the proposed spin-off, including the potential inability to access or reduced access to the capital markets or increased cost of borrowings, including as a result of a credit rating downgrade;
  • the risk that dis-synergy costs, costs of restructuring transactions and other costs incurred in connection with the proposed spin-off will exceed our estimates or otherwise adversely affect our business or operations;
  • the reaction of current and potential customers to communications from us or regulators regarding information security, risk management, internal audit or other matters;
  • the risk of losses in the event of defaults by merchants (or other parties) to which we extend credit in our card settlement operations or in respect of any chargeback liability, either of which could adversely impact liquidity and results of operations;
  • the risk that acquired businesses will not be integrated successfully or that the integration will be more costly or more time-consuming and complex than anticipated;
  • the risk that cost savings and synergies anticipated to be realized from acquisitions may not be fully realized or may take longer to realize than expected;
  • the risks of doing business internationally;
  • the risk that policies and resulting actions of the current administration in the U.S. may result in additional regulations and executive orders, as well as additional regulatory and tax costs;
  • major bank failures or sustained financial market illiquidity;
  • competitive pressures on pricing related to the decreasing number of community banks in the U.S., the development of new disruptive technologies competing with one or more of our solutions, increasing presence of international competitors in the U.S. market and the entry into the market by global banks and global companies with respect to certain competitive solutions, each of which may have the impact of unbundling individual solutions from a comprehensive suite of solutions we provide to many of our customers;
  • the failure to innovate in order to keep up with new emerging technologies, which could impact our solutions and our ability to attract new, or retain existing, customers;
  • an operational or natural disaster at one of our major operations centers;
  • failure to comply with applicable requirements of payment networks or changes in those requirements;
  • fraud by merchants or bad actors; and
  • other risks detailed in the “Risk Factors” and other sections of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, in our quarterly reports on Form 10-Q, in our current reports on Form 8-K and in our other filings with the Securities and Exchange Commission.

Other unknown or unpredictable factors also could have a material adverse effect on our business, financial condition, results of operations and prospects. Accordingly, readers should not place undue reliance on these forward-looking statements. These forward-looking statements are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Except as required by applicable law or regulation, we do not undertake (and expressly disclaim) any obligation and do not intend to publicly update or review any of these forward-looking statements, whether as a result of new information, future events or otherwise.

Fidelity National Information Services, Inc.

Earnings Release Supplemental Financial Information

April 27, 2023

 

Exhibit A

Condensed Consolidated Statements of Earnings - Unaudited for the three months ended March 31, 2023 and 2022

 

 

Exhibit B

Condensed Consolidated Balance Sheets - Unaudited as of March 31, 2023, and December 31, 2022

 

 

Exhibit C

Condensed Consolidated Statements of Cash Flows - Unaudited for the three months ended March 31, 2023 and 2022

 

 

Exhibit D

Supplemental Non-GAAP Financial Information - Unaudited for the three months ended March 31, 2023 and 2022

 

 

Exhibit E

Supplemental GAAP to Non-GAAP Reconciliations - Unaudited for the three months ended March 31, 2023 and 2022

 

 

Exhibit F

Supplemental GAAP to Non-GAAP Reconciliations on Guidance - Unaudited for the three months ending June 30, 2023, and year ending December 31, 2023

FIDELITY NATIONAL INFORMATION SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS — UNAUDITED

(In millions, except per share amounts)

Exhibit A

 

 

 

 

 

Three months ended March 31,

 

2023

 

2022

Revenue

$

3,510

 

 

$

3,492

 

Cost of revenue

 

2,169

 

 

 

2,242

 

Gross profit

 

1,341

 

 

 

1,250

 

Selling, general, and administrative expenses

 

1,004

 

 

 

1,035

 

Asset impairments

 

 

 

 

58

 

Operating income

 

337

 

 

 

157

 

Other income (expense):

 

 

 

Interest expense, net

 

(137

)

 

 

(43

)

Other income (expense), net

 

(11

)

 

 

61

 

Total other income (expense), net

 

(148

)

 

 

18

 

Earnings before income taxes

 

189

 

 

 

175

 

Provision (benefit) for income taxes

 

48

 

 

 

54

 

Net earnings

 

141

 

 

 

121

 

Net (earnings) loss attributable to noncontrolling interest

 

(1

)

 

 

(1

)

Net earnings attributable to FIS common stockholders

$

140

 

 

$

120

 

 

 

 

 

Net earnings per share-basic attributable to FIS common stockholders

$

0.24

 

 

$

0.20

 

Weighted average shares outstanding-basic

 

592

 

 

 

610

 

Net earnings per share-diluted attributable to FIS common stockholders

$

0.24

 

 

$

0.20

 

Weighted average shares outstanding-diluted

 

593

 

 

 

614

 

FIDELITY NATIONAL INFORMATION SERVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS — UNAUDITED

(In millions, except per share amounts)

 

 

 

Exhibit B

 

 

 

 

 

March 31,

2023

 

December 31,

2022

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

1,871

 

 

$

2,188

 

Settlement assets

 

4,425

 

 

 

5,855

 

Trade receivables, net

 

3,476

 

 

 

3,699

 

Other receivables

 

486

 

 

 

493

 

Prepaid expenses and other current assets

 

708

 

 

 

583

 

Total current assets

 

10,966

 

 

 

12,818

 

Property and equipment, net

 

838

 

 

 

862

 

Goodwill

 

34,424

 

 

 

34,276

 

Intangible assets, net

 

8,531

 

 

 

8,956

 

Software, net

 

3,222

 

 

 

3,238

 

Other noncurrent assets

 

1,988

 

 

 

2,048

 

Deferred contract costs, net

 

1,109

 

 

 

1,080

 

Total assets

$

61,078

 

 

$

63,278

 

 

 

 

 

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable, accrued and other liabilities

$

2,465

 

 

$

2,754

 

Settlement payables

 

5,331

 

 

 

6,752

 

Deferred revenue

 

825

 

 

 

788

 

Short-term borrowings

 

3,968

 

 

 

3,797

 

Current portion of long-term debt

 

2,139

 

 

 

2,133

 

Total current liabilities

 

14,728

 

 

 

16,224

 

Long-term debt, excluding current portion

 

13,905

 

 

 

14,207

 

Deferred income taxes

 

3,494

 

 

 

3,550

 

Other noncurrent liabilities

 

1,847

 

 

 

1,891

 

Total liabilities

 

33,974

 

 

 

35,872

 

 

 

 

 

Redeemable noncontrolling interest

 

 

 

 

180

 

 

 

 

 

Equity:

 

 

 

FIS stockholders’ equity:

 

 

 

Preferred stock $0.01 par value

 

 

 

 

 

Common stock $0.01 par value

 

6

 

 

 

6

 

Additional paid in capital

 

46,802

 

 

 

46,735

 

(Accumulated deficit) retained earnings

 

(15,141

)

 

 

(14,971

)

Accumulated other comprehensive earnings (loss)

 

(364

)

 

 

(360

)

Treasury stock, at cost

 

(4,206

)

 

 

(4,192

)

Total FIS stockholders’ equity

 

27,097

 

 

 

27,218

 

Noncontrolling interest

 

7

 

 

 

8

 

Total equity

 

27,104

 

 

 

27,226

 

Total liabilities, redeemable noncontrolling interest and equity

$

61,078

 

 

$

63,278

 

FIDELITY NATIONAL INFORMATION SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED

(In millions)

 

 

 

Exhibit C

 

 

 

 

 

Three months ended March 31,

 

2023

 

2022

Cash flows from operating activities:

 

 

 

Net earnings

$

141

 

 

$

121

 

Adjustment to reconcile net earnings to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

895

 

 

 

1,013

 

Amortization of debt issuance costs

 

8

 

 

 

7

 

Asset impairments

 

 

 

 

58

 

Stock-based compensation

 

20

 

 

 

57

 

Deferred income taxes

 

(41

)

 

 

(112

)

Net changes in assets and liabilities, net of effects from acquisitions and foreign currency:

 

 

 

Trade and other receivables

 

214

 

 

 

62

 

Settlement activity

 

(189

)

 

 

(162

)

Prepaid expenses and other assets

 

(153

)

 

 

(152

)

Deferred contract costs

 

(118

)

 

 

(73

)

Deferred revenue

 

61

 

 

 

55

 

Accounts payable, accrued liabilities and other liabilities

 

(206

)

 

 

22

 

Net cash provided by operating activities

 

632

 

 

 

896

 

 

 

 

 

Cash flows from investing activities:

 

 

 

Additions to property and equipment

 

(48

)

 

 

(108

)

Additions to software

 

(231

)

 

 

(304

)

Settlement of net investment hedge cross-currency interest rate swaps

 

(10

)

 

 

135

 

Other investing activities, net

 

(4

)

 

 

(13

)

Net cash provided by (used in) investing activities

 

(293

)

 

 

(290

)

 

 

 

 

Cash flows from financing activities:

 

 

 

Borrowings

 

20,233

 

 

 

15,902

 

Repayment of borrowings and other financing obligations

 

(20,582

)

 

 

(16,609

)

Debt issuance costs

 

(2

)

 

 

 

Net proceeds from stock issued under stock-based compensation plans

 

47

 

 

 

33

 

Treasury stock activity

 

(14

)

 

 

(77

)

Dividends paid

 

(309

)

 

 

(287

)

Payments on tax receivable agreement

 

(94

)

 

 

(46

)

Purchase of noncontrolling interest

 

(173

)

 

 

 

Other financing activities, net

 

(2

)

 

 

(1

)

Net cash provided by (used in) financing activities

 

(896

)

 

 

(1,085

)

 

 

 

 

Effect of foreign currency exchange rate changes on cash

 

86

 

 

 

(103

)

Net increase (decrease) in cash, cash equivalents and restricted cash

 

(471

)

 

 

(582

)

Cash, cash equivalents and restricted cash, beginning of period

 

4,813

 

 

 

4,283

 

Cash, cash equivalents and restricted cash, end of period

$

4,342

 

 

$

3,701

 

FIDELITY NATIONAL INFORMATION SERVICES, INC.

SUPPLEMENTAL NON-GAAP ORGANIC REVENUE GROWTH — UNAUDITED

(In millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit D

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31,

 

2023

 

2022

 

 

 

 

 

 

Constant

 

 

 

Acquisition &

 

 

 

 

 

 

 

 

 

Currency

 

 

 

Divestiture

 

Adjusted

 

Organic

 

Revenue

 

FX

 

Revenue

 

Revenue

 

Adjustment

 

Base

 

Growth (1)

Banking Solutions

$

1,685

 

$

8

 

$

1,693

 

$

1,659

 

$

 

$

1,659

 

2

%

Merchant Solutions

 

1,105

 

 

25

 

 

1,130

 

 

1,112

 

 

 

 

1,112

 

2

%

Capital Market Solutions

 

663

 

 

10

 

 

673

 

 

627

 

 

 

 

627

 

7

%

Corporate and Other

 

57

 

 

1

 

 

59

 

 

94

 

 

 

 

94

 

N/A

Total

$

3,510

 

$

44

 

$

3,555

 

$

3,492

 

$

 

$

3,492

 

3

%

Amounts in table may not sum or calculate due to rounding.

(1) Total organic growth excludes Corporate and Other.

FIDELITY NATIONAL INFORMATION SERVICES, INC.

SUPPLEMENTAL NON-GAAP CASH FLOW MEASURES — UNAUDITED

(In millions)

Exhibit D (continued)

 

 

 

 

 

Three months ended

 

Three months ended

 

March 31, 2023

 

March 31, 2022

Net cash provided by operating activities

$

632

 

 

$

896

 

Non-GAAP adjustments:

 

 

 

Acquisition, integration and other payments (1)

 

99

 

 

 

136

 

Settlement activity

 

189

 

 

 

162

 

Adjusted cash flows from operations

 

920

 

 

 

1,194

 

Capital expenditures (2)

 

(279

)

 

 

(408

)

Free cash flow

$

641

 

 

$

786

 

Free cash flow reflects adjusted cash flows from operations less capital expenditures (additions to property and equipment and additions to software, excluding capital spend related to the construction of our new headquarters). Free cash flow does not represent our residual cash flows available for discretionary expenditures, since we have mandatory debt service requirements and other non-discretionary expenditures that are not deducted from the measure.

 

(1)

Adjusted cash flows from operations and free cash flow for the three months ended March 31, 2023 and 2022, exclude cash payments for certain acquisition, integration and other costs (see Note 2 to Exhibit E), net of related tax impact. The related tax impact totaled $16 million and $24 million for the three months ended March 31, 2023 and 2022, respectively.

 

(2)

Capital expenditures for free cash flow exclude capital spend related to the construction of our new headquarters totaling $4 million for the three months ended March 31, 2022.

FIDELITY NATIONAL INFORMATION SERVICES, INC.

SUPPLEMENTAL GAAP TO NON-GAAP RECONCILIATIONS — UNAUDITED

(In millions, except per share amounts)

Exhibit E

 

 

 

 

 

 

 

Three months ended March 31,

 

 

2023

 

2022

Net earnings attributable to FIS common stockholders

 

$

140

 

$

120

 

Provision (benefit) for income taxes

 

 

48

 

 

54

 

Interest expense, net

 

 

137

 

 

43

 

Other, net

 

 

12

 

 

(60

)

 

 

 

 

 

Operating income, as reported

 

 

337

 

 

157

 

Depreciation and amortization, excluding purchase accounting amortization

 

 

347

 

 

363

 

Non-GAAP adjustments:

 

 

 

 

Purchase accounting amortization (1)

 

 

548

 

 

650

 

Acquisition, integration and other costs (2)

 

 

127

 

 

190

 

Asset impairments (3)

 

 

 

 

58

 

Adjusted EBITDA

 

$

1,359

 

$

1,418

 

See Notes to Exhibit E.

FIDELITY NATIONAL INFORMATION SERVICES, INC.

SUPPLEMENTAL GAAP TO NON-GAAP RECONCILIATIONS — UNAUDITED

(In millions, except per share amounts)

Exhibit E (continued)

 

 

 

Three months ended March 31,

 

 

2023

 

2022

Earnings before income taxes

 

$

189

 

 

$

175

 

(Provision) benefit for income taxes

 

 

(48

)

 

 

(54

)

Net (earnings) loss attributable to noncontrolling interest

 

 

(1

)

 

 

(1

)

Net earnings attributable to FIS common stockholders

 

 

140

 

 

 

120

 

Non-GAAP adjustments:

 

 

 

 

Purchase accounting amortization (1)

 

 

548

 

 

 

650

 

Acquisition, integration and other costs (2)

 

 

146

 

 

 

242

 

Asset impairments (3)

 

 

 

 

 

58

 

Non-operating (income) expense (4)

 

 

11

 

 

 

(61

)

(Provision) benefit for income taxes on non-GAAP adjustments

 

 

(78

)

 

 

(105

)

Total non-GAAP adjustments

 

 

627

 

 

 

784

 

Adjusted net earnings

 

$

767

 

 

$

904

 

 

 

 

 

 

Net earnings per share-diluted attributable to FIS common stockholders

 

$

0.24

 

 

$

0.20

 

Non-GAAP adjustments:

 

 

 

 

Purchase accounting amortization (1)

 

 

0.92

 

 

 

1.06

 

Acquisition, integration and other costs (2)

 

 

0.25

 

 

 

0.39

 

Asset impairments (3)

 

 

 

 

 

0.09

 

Non-operating (income) expense (4)

 

 

0.02

 

 

 

(0.10

)

(Provision) benefit for income taxes on non-GAAP adjustments

 

 

(0.13

)

 

 

(0.17

)

Adjusted net earnings per share-diluted attributable to FIS common stockholders

 

$

1.29

 

 

$

1.47

 

Weighted average shares outstanding-diluted

 

 

593

 

 

 

614

 

Amounts in table may not sum or calculate due to rounding.

See Notes to Exhibit E.

FIDELITY NATIONAL INFORMATION SERVICES, INC.

SUPPLEMENTAL GAAP TO NON-GAAP RECONCILIATIONS — UNAUDITED

(In millions, except per share amounts)

Exhibit E (continued)

Notes to Unaudited - Supplemental GAAP to Non-GAAP Reconciliations for the three months ended March 31, 2023 and 2022.

The adjustments are as follows:

 

(1)

This item represents purchase price amortization expense on all intangible assets acquired through various Company acquisitions, including customer relationships, contract value, technology assets, trademarks and trade names. This item also includes $26 million for the three months ended March 31, 2022, of incremental amortization expense associated with shortened estimated useful lives and accelerated amortization methods for certain acquired software driven by the Company's platform modernization. The Company has excluded the impact of purchase price amortization expense as such amounts can be significantly impacted by the timing and/or size of acquisitions. Although the Company excludes these amounts from its non-GAAP expenses, the Company believes that it is important for investors to understand that such intangible assets contribute to revenue generation. Amortization of assets that relate to past acquisitions will recur in future periods until such assets have been fully amortized. Any future acquisitions may result in the amortization of future assets.

 
(2)

This item represents costs primarily comprised of the following:

 

 

 

Three months ended

 

 

March 31,

 

 

2023

 

2022

 

 

 

 

 

Acquisition and integration

 

$

9

 

$

48

Enterprise transformation, including Future forward and platform modernization

 

 

76

 

 

80

Severance and other termination expenses associated with enterprise cost control initiatives and changes in senior management

 

 

28

 

 

11

Planned spin-off of the Merchant Solutions business

 

 

11

 

 

Stock-based compensation, primarily from certain performance-based awards

 

 

 

 

24

Other, including divestiture-related expenses, enterprise costs control and other initiatives

 

 

3

 

 

28

Subtotal

 

 

127

 

 

190

Accelerated amortization (a)

 

 

19

 

 

52

Total

 

$

146

 

$

242

Amounts in table may not sum due to rounding.

(a)

For purposes of calculating Adjusted net earnings, this item includes incremental amortization expense associated with shortened estimated useful lives and accelerated amortization methods for certain software and deferred contract cost assets driven by the Company's platform modernization. The incremental amortization expenses are included in the Depreciation and amortization, excluding purchase accounting amortization line item within the Adjusted EBITDA reconciliation.

 

(3)

For the three months ended March 31, 2022, this item primarily includes impairment of real estate-related assets as a result of office space reductions.

 

(4)

Non-operating (income) expense primarily consists of other income and expense items outside of the Company's operating activities, including fair value adjustments on certain non-operating assets and liabilities and foreign currency transaction remeasurement gains and losses.

FIDELITY NATIONAL INFORMATION SERVICES, INC.

SUPPLEMENTAL GAAP TO NON-GAAP RECONCILIATIONS ON GUIDANCE — UNAUDITED

(In millions, except per share amounts)

Exhibit F

 

 

Three months ending

 

Year ending

 

June 30, 2023

 

December 31, 2023

 

Low

 

High

 

Low

 

High

 

 

 

 

 

 

 

 

Net earnings per share-diluted attributable to FIS common stockholders

$

0.30

 

$

0.40

 

$

1.30

 

$

1.80

 

 

 

 

 

 

 

 

Estimated adjustments (1)

 

1.15

 

 

1.10

 

 

4.46

 

 

4.26

 

 

 

 

 

 

 

 

Adjusted net earnings per share-diluted attributable to FIS common stockholders

$

1.45

 

$

1.50

 

$

5.76

 

$

6.06

(1)

Estimated adjustments include purchase accounting amortization, acquisition, integration and other costs, and other items, net of tax impact.

 

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