01—Abstract
Summary
Summary of the 10-Q filed November 7, 2012. Cited figures are marked; the original filing is the authoritative source.
Fidelity National Information Services, Inc. (FIS) reported solid revenue growth of 3.4% year-over-year for the nine months ended September 30, 2012, reaching $4.3 billiona.
This growth was driven by increased transaction volumes, demand for professional services, and expansion in its Financial Solutions Group (FSG) and Payment Solutions Group (PSG) segments. Despite a challenging economic environment and the negative impact of foreign currency fluctuations, FIS demonstrated improved operating margins, reflecting effective cost management and operating leverage. The company also successfully divested its Healthcare Benefit Solutions Business, which will streamline its strategic focus.
02—Key points
Key Highlights
- Revenue increased by 3.4% to $4.3 billion for the nine months ended September 30, 2012, compared to the prior year period, driven by transaction volume growth and professional services demand.
- Gross profit margin improved to 31.8% for the nine months ended September 30, 2012, up from 29.6% in the prior year, indicating better cost management and operating leverage.
- Operating income grew to $793.1 million for the nine months ended September 30, 2012, an increase from $737.5 million in the prior year, with operating margins also showing improvement.
- The company successfully sold its Healthcare Benefit Solutions Business on August 15, 2012, for $336.5 million in cash, contributing to a pre-tax gain.
- International Solutions Group (ISG) revenues, excluding foreign currency impacts, grew due to higher credit card volumes in Brazil and expansion in Europe and Asia.
- FIS is investing approximately 5-6% of 2012 revenue in capital expenditures, with a significant portion allocated to enhancing information security to mitigate cyber risks.
- The company continued its share repurchase program, buying back 3.1 million shares for $99.8 million during the quarter, with $850.2 million remaining capacity.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2012, Fidelity National Information Services, Inc. kept $0.06.
- Revenue$1.44B100.0%
- Cost of revenue−$968.8M67.4%
- Gross profit$468.1M32.6%
- Operating costs−$180.2M12.5%
- Operating income$287.9M20.0%
- Interest, other & tax−$201.1M14.0%
- Net income$86.8M6.0%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2012filed November 7, 2012Financial Statements
Q3 FY2012 against Q3 FY2011
| Line item | Q3 FY2012Q3 FY2011 | Change |
|---|---|---|
| Revenue | $1.44B$1.40B | +2.8% |
| Gross Profit | $468.10M$432.90M | +8.1% |
| SG&A Expenses | $180.20M$159.70M | +12.8% |
| Operating Expenses | $1.15B$1.13B | +2.1% |
| Operating Income | $287.90M$273.20M | +5.4% |
| Net Income | $86.80M$136.30M | −36.3% |
| EPS (Basic) | $0.30$0.45 | −33.3% |
| EPS (Diluted) | $0.29$0.44 | −34.1% |
| Shares Outstanding (Basic) | 292.40M300.90M | −2.8% |
| Shares Outstanding (Diluted) | 297.90M306.80M | −2.9% |
05—Questions
Frequently Asked Questions
What is the overall financial performance of FIS as presented in this filing?
FIS reported positive revenue growth of 3.4% for the nine months ended September 30, 2012, reaching $4.3 billion. The company also demonstrated improved profitability, with gross profit margin increasing to 31.8% and operating income rising to $793.1 million. This performance was supported by increased transaction volumes, demand for services, and effective cost management.
What significant events or divestitures occurred during the period?
A key event was the sale of the Healthcare Benefit Solutions Business on August 15, 2012, for $336.5 million in cash. This divestiture is expected to help FIS focus on its core strategic plans.
How is FIS addressing the risks related to information security and cyber incidents?
FIS has significantly increased its investment in information security, allocating 5-6% of 2012 revenue to capital expenditures for this purpose. These investments aim to reduce operational cyber security risks, improve detection and remediation of intrusions, and limit damages from future cyber security events. The company has also hired a new Chief Information Security Officer and Chief Risk Officer and is conducting a comprehensive investigation into a prior cyber-incident.
What is the impact of the Dodd-Frank Act and Durbin Amendment on FIS?
The Dodd-Frank Act and the Durbin Amendment, which include a cap on debit transaction interchange fees, have the potential to alter transaction volumes. FIS believes it is well-positioned to manage these changes due to its multiple payment solutions and expects that compliance requirements could lead to capital investments to modify products and services.
06—Continue