01—Abstract
Summary
Summary of the 10-K filed February 23, 2017. Cited figures are marked; the original filing is the authoritative source.
Fidelity National Information Services, Inc. (FIS) reported significant revenue growth in 2016, largely driven by the substantial acquisition of SunGard, which closed in November 2015.
This acquisition expanded FIS's offerings into capital markets, asset management, and insurance, broadening its client base and global reach. The company operates through two main segments: Integrated Financial Solutions (IFS) and Global Financial Solutions (GFS). IFS primarily serves North American regional and community banks, while GFS targets larger global financial institutions.
Despite overall revenue increases, the company faced challenges such as unfavorable foreign currency impacts and the continued decline in check processing volumes. FIS's strategic focus remains on innovation, client relationship expansion, and operational efficiency, including ongoing integration efforts from the SunGard acquisition and a pursuit of cost savings and margin expansion.
02—Key points
Key Highlights
- Revenue increased by 40.1% in 2016 to $9.24 billion, primarily due to the SunGard acquisition.
- The SunGard acquisition significantly expanded FIS's capabilities into capital markets and asset management, complementing its existing financial services technology offerings.
- Operating income decreased slightly in 2016 to $1.30 billion, with operating margin falling to 14.0% from 16.7% in 2015, impacted by integration costs and amortization.
- Interest expense more than doubled in 2016 to $403 million, mainly due to debt financing for the SunGard acquisition.
- The company repurchased no shares in 2016, contrasting with significant repurchases in 2015 and 2014.
- FIS continues to focus on digital banking solutions and payment innovations amidst increasing competition.
- Goodwill on the balance sheet was substantial at $14.2 billion, reflecting a history of acquisitions, with the SunGard acquisition being the most recent major transaction.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, Fidelity National Information Services, Inc. kept $0.06.
- Revenue$9.24B100.0%
- Cost of revenue−$6.30B68.2%
- Gross profit$2.94B31.8%
- Operating costs−$1.71B18.5%
- Operating income$1.23B13.3%
- Interest, other & tax−$704.0M7.6%
- Net income$525.0M5.7%
Where FY2016 revenue went
$9.24B- Cost of revenue: $5.89B, 64% of revenue
- SG&A: $1.71B, 18% of revenue
- Net income: $525.0M, 5.7% of revenue
- Other operating costs: $410.0M, 4.4% of revenue
- Interest, other & tax: $704.0M, 7.6% of revenue
Kept 5.7% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed February 23, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $9.24B$6.60B | +40.1% |
| Cost of Revenue | $5.89B— | — |
| Gross Profit | $2.94B$2.20B | +33.4% |
| SG&A Expenses | $1.71B$1.10B | +54.9% |
| Operating Expenses | $7.94B$5.50B | +44.5% |
| Operating Income | $1.23B$1.10B | +11.8% |
| Interest Expense | $403.00M$199.00M | +102.5% |
| Net Income | $525.00M$632.00M | −16.9% |
| EPS (Basic) | $1.61$2.22 | −27.5% |
| EPS (Diluted) | $1.59$2.19 | −27.4% |
| Shares Outstanding (Basic) | 326.00M285.00M | +14.4% |
| Shares Outstanding (Diluted) | 330.00M289.00M | +14.2% |
05—Questions
Frequently Asked Questions
What was the primary driver of revenue growth in 2016?
The primary driver of revenue growth in 2016 was the acquisition of SunGard, which closed in November 2015. This acquisition significantly expanded FIS's service portfolio and client base.
How did the SunGard acquisition impact the company's financial performance?
The SunGard acquisition led to a significant increase in revenue and total assets. However, it also resulted in higher interest expenses due to debt financing, increased selling, general, and administrative expenses related to integration, and a decrease in operating margin.
What is the outlook for check processing volumes?
The company expects the trend of declining check processing volumes to continue, which negatively impacts its check warranty and item-processing businesses.
What are the company's key segments and their focus areas?
FIS operates through two main segments: Integrated Financial Solutions (IFS), which focuses on North American regional and community banks for transaction and account processing, and Global Financial Solutions (GFS), which serves larger global financial institutions with capital markets, asset management, and insurance solutions.
06—Continue