10-KPeriod: FY2016

Fidelity National Information Services, Inc. Annual Report, Year Ended Dec 31, 2016

Filed February 23, 2017For Securities:FIS

Summary

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.

Financial Highlights

57 data points
Beta

Revenue

$9.24B

31.8% Gross Margin

Net Income

$525.00M

5.7% Net Margin

EPS (Diluted)

$1.59

Total Assets

$26.03B

Cash & Equivalents

$683.00M

Free Cash Flow

$1.78B

Financial Statements
Beta
Revenue$9.24B
Cost of Revenue$5.89B
Gross Profit$2.94B
SG&A Expenses$1.71B
Operating Expenses$7.94B
Operating Income$1.23B
Interest Expense$403.00M
Net Income$525.00M
EPS (Basic)$1.61
EPS (Diluted)$1.59
Shares Outstanding (Basic)326.00M
Shares Outstanding (Diluted)330.00M

Key Highlights

  • 1Revenue increased by 40.1% in 2016 to $9.24 billion, primarily due to the SunGard acquisition.
  • 2The SunGard acquisition significantly expanded FIS's capabilities into capital markets and asset management, complementing its existing financial services technology offerings.
  • 3Operating 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.
  • 4Interest expense more than doubled in 2016 to $403 million, mainly due to debt financing for the SunGard acquisition.
  • 5The company repurchased no shares in 2016, contrasting with significant repurchases in 2015 and 2014.
  • 6FIS continues to focus on digital banking solutions and payment innovations amidst increasing competition.
  • 7Goodwill 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.

Frequently Asked Questions

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.

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.

The company expects the trend of declining check processing volumes to continue, which negatively impacts its check warranty and item-processing businesses.

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.