10-KPeriod: FY2020

Fidelity National Information Services, Inc. Annual Report, Year Ended Dec 31, 2020

Filed February 18, 2021For Securities:FIS

Summary

Fidelity National Information Services, Inc. (FIS) reported solid revenue growth in its 2020 10-K, driven significantly by the acquisition of Worldpay. Total revenue reached $12.55 billion, up from $10.33 billion in 2019, reflecting a 21% increase, largely attributed to the integration of Worldpay's merchant solutions. Despite this top-line growth, the company faced challenges stemming from the COVID-19 pandemic, which impacted payment processing volumes, particularly in sectors like travel and hospitality, leading to a decrease in gross profit margin. However, FIS demonstrated resilience through effective cost management and synergy realization from the Worldpay integration, exceeding expense synergy targets. The company's strategic priorities for 2020 focused on building upon its core strengths in Merchant, Banking, and Capital Markets solutions. FIS continued to invest in technology modernization and innovation, aiming to drive efficiency and scalability across its operations. The company also managed its debt prudently, working to reduce leverage incurred from the Worldpay acquisition, and maintained a strong liquidity position. The report highlights a continued commitment to returning capital to shareholders through dividends and share repurchases, underscoring a stable financial outlook despite the prevailing economic uncertainties.

Financial Highlights

56 data points
Beta

Revenue

$12.55B

33.5% Gross Margin

Net Income

$158.00M

1.3% Net Margin

EPS (Diluted)

$0.25

Total Assets

$83.84B

Cash & Equivalents

$1.96B

Free Cash Flow

$4.18B

Financial Statements
Beta
Revenue$12.55B
Cost of Revenue$8.35B
Gross Profit$4.20B
SG&A Expenses$3.52B
Operating Income$552.00M
Interest Expense$339.00M
Net Income$158.00M
EPS (Basic)$0.26
EPS (Diluted)$0.25
Shares Outstanding (Basic)619.00M
Shares Outstanding (Diluted)627.00M

Key Highlights

  • 1Total revenue increased by 21% to $12.55 billion in 2020, primarily due to the Worldpay acquisition.
  • 2The company experienced a decrease in gross profit margin from 36% to 33% in 2020, attributed to higher acquired intangible asset amortization and the impact of COVID-19 on high-margin services.
  • 3Selling, general, and administrative expenses rose significantly, by 32%, largely driven by Worldpay integration costs.
  • 4Operating income saw a substantial decrease of 43% from $969 million in 2019 to $552 million in 2020.
  • 5FIS reported a net earning of $158 million for 2020, a decrease from $298 million in 2019, with EPS also declining.
  • 6The company maintained a strong liquidity position with $4.6 billion in available liquidity as of December 31, 2020.
  • 7FIS is focused on reducing leverage incurred from the Worldpay acquisition and expects to reach its target leverage in 2021.
  • 8The company's Merchant Solutions segment, heavily impacted by COVID-19, saw revenue surge by 94% year-over-year due to Worldpay, but adjusted EBITDA margin decreased.
  • 9Banking Solutions revenue grew 6% year-over-year, with flat adjusted EBITDA margins.
  • 10Capital Market Solutions revenue increased 5% year-over-year, with improved adjusted EBITDA margins.

Frequently Asked Questions

The primary driver of FIS's revenue growth in 2020 was the acquisition of Worldpay, Inc., which significantly expanded its Merchant Solutions segment and contributed substantially to the overall revenue increase.

The COVID-19 pandemic adversely impacted FIS's financial performance, particularly in its Merchant Solutions segment, by reducing payment processing volumes in discretionary spending areas like travel and restaurants. This led to a decrease in gross profit margin and operating income. However, the company implemented cost-saving measures and managed its operations effectively to mitigate some of these impacts.

Following the Worldpay acquisition, FIS incurred substantial debt. The company is committed to reducing its leverage and expects to reach its target leverage levels in 2021. This focus on deleveraging is a key part of its financial strategy.

FIS continues to invest in modernizing its core systems and developing next-generation digital solutions across its Banking, Merchant, and Capital Markets segments. These investments are aimed at enhancing capabilities, improving efficiency, and responding to evolving market demands and technological trends, including cloud adoption and AI.