01—Abstract
Summary
Summary of the 10-Q filed May 5, 2010. Cited figures are marked; the original filing is the authoritative source.
Fidelity National Information Services, Inc. (FIS) reported strong financial results for the quarter ended March 31, 2010, driven significantly by the acquisition of Metavante in October 2009.
Revenue surged by 57.4% year-over-year to $1,249.6 milliona, primarily due to the consolidation of Metavante's operations and increased demand for software and professional services. This revenue growth, combined with effective synergy realization and cost management initiatives stemming from the Metavante integration, led to a substantial increase in operating income, which more than doubled to $183.8 million. Net earnings attributable to FIS common stockholders also saw a significant rise to $93.6 million, translating to $0.25 per diluted share, compared to $33.0 million or $0.17 per diluted share in the prior year's period.
Despite increased operating expenses, largely due to integration costs and stock-based compensation related to the Metavante acquisition, the company demonstrated improved operational efficiency with a higher gross margin (27.4%b vs. 22.1%) and operating margin (14.7% vs. 10.0%). The company also made progress in managing its debt, with a reduction in long-term debt.
Cash flow from operations was robust at $271.6 millionc, providing ample resources for operations and debt service. Overall, the results reflect a successful integration of Metavante and a solid operational performance in a challenging economic environment.
02—Key points
Key Highlights
- Revenue increased by 57.4% to $1,249.6 million, largely driven by the Metavante acquisition.
- Operating income more than doubled to $183.8 million, with operating margin improving to 14.7% from 10.0% year-over-year.
- Net earnings attributable to FIS common stockholders rose significantly to $93.6 million, or $0.25 per diluted share, from $33.0 million, or $0.17 per diluted share, in the prior year.
- Gross margin improved to 27.4% from 22.1%, attributed to Metavante synergies and cost efficiencies.
- Cash flow from operations was strong at $271.6 million, an increase from $162.9 million in the prior year.
- The company repurchased 1.4 million shares of common stock for $32.2 million under its new repurchase program.
- Long-term debt decreased from $3,016.6 million to $2,815.6 million, excluding current portions.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2010, Fidelity National Information Services, Inc. kept $0.08.
- Revenue$1.24B100.0%
- Cost of revenue−$890.4M72.1%
- Gross profit$344.6M27.9%
- Operating costs−$157.2M12.7%
- Operating income$187.4M15.2%
- Interest, other & tax−$93.8M7.6%
- Net income$93.6M7.6%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2010filed May 5, 2010Financial Statements
Q1 FY2010 against Q1 FY2009
| Line item | Q1 FY2010Q1 FY2009 | Change |
|---|---|---|
| Revenue | $1.24B$794.10M | +55.5% |
| Gross Profit | $344.60M$175.70M | +96.1% |
| SG&A Expenses | $157.20M$95.90M | +63.9% |
| Operating Expenses | $1.05B— | — |
| Operating Income | $187.40M$79.80M | +134.8% |
| Interest Expense | $28.20M$31.20M | −9.6% |
| Net Income | $93.60M$33.00M | +183.6% |
| EPS (Basic) | $0.25$0.17 | +47.1% |
| EPS (Diluted) | $0.25$0.17 | +47.1% |
| Shares Outstanding (Basic) | 373.30M190.00M | +96.5% |
| Shares Outstanding (Diluted) | 379.90M191.60M | +98.3% |
05—Questions
Frequently Asked Questions
What was the primary driver of the significant revenue increase in this quarter?
The primary driver of the significant revenue increase was the acquisition of Metavante, which was completed on October 1, 2009. The results of Metavante are now consolidated into FIS's financial statements, contributing substantially to the reported revenue and overall financial performance.
How did the Metavante acquisition impact the company's profitability?
The Metavante acquisition had a positive impact on profitability. While there were incremental integration costs and increased SG&A expenses, the synergies realized from the acquisition, coupled with improved operational efficiencies, led to a significant increase in gross profit and operating income. The company's operating margin expanded considerably.
What is the company's outlook on its debt levels following the acquisition?
The company has shown a commitment to managing its debt. Long-term debt, excluding current portions, decreased from $3,016.6 million at December 31, 2009, to $2,815.6 million at March 31, 2010. The strong cash flow generated from operations provides the company with the capacity to service its debt obligations.
Are there any significant legal proceedings that could impact the company's financial standing?
The company disclosed several legal matters. Most notably, the litigation related to the Metavante merger was settled and approved by the court in March 2010, and the settlement was not material to the company. Other matters, such as the Driver's Privacy Protection Act litigation and the Lehman Brothers claim, are ongoing but the company believes they will not have a material impact on its financial position or results of operations, with the Lehman matter having been settled.
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