Summary
Fidelity National Information Services, Inc. (FIS) reported its first quarter 2016 results following the significant acquisition of SunGard on November 30, 2015. The company's financial performance was heavily influenced by this acquisition, with consolidated revenues increasing substantially year-over-year. However, the integration of SunGard, along with purchase accounting adjustments and higher amortization expenses, led to a decrease in reported operating income and earnings per share compared to the prior year period. Investors should note the strategic rationale behind the SunGard acquisition, which aims to broaden FIS's solution portfolio and expand its reach into new market segments within financial services. Despite the near-term impacts of integration costs and accounting adjustments, FIS highlighted continued growth in key areas like digital solutions, card production for EMV adoption, and international markets. The company's recurring revenue model provides a degree of stability, and management expects significant cost synergies from the SunGard integration to materialize by the end of 2017. While facing macroeconomic challenges impacting professional services revenue, FIS remains focused on capitalizing on industry trends such as digital transformation, mobile payments, and the ongoing migration to EMV chip technology.
Financial Highlights
54 data points| Revenue | $2.18B |
| Gross Profit | $628.00M |
| SG&A Expenses | $444.00M |
| Operating Expenses | $2.00B |
| Operating Income | $184.00M |
| Net Income | $55.00M |
| EPS (Basic) | $0.17 |
| EPS (Diluted) | $0.17 |
| Shares Outstanding (Basic) | 324.00M |
| Shares Outstanding (Diluted) | 327.00M |
Key Highlights
- 1Consolidated revenues increased significantly in Q1 2016, primarily driven by the acquisition of SunGard on November 30, 2015. This acquisition expanded FIS's offerings and client base, particularly in wealth management and treasury services.
- 2Reported operating income and diluted earnings per share decreased in Q1 2016 compared to Q1 2015 due to factors including higher amortization of acquired intangible assets and integration-related expenses stemming from the SunGard acquisition.
- 3The company is actively integrating SunGard and anticipates realizing approximately $200 million in annual run-rate cost savings by the end of 2017, though one-time severance and other costs are expected.
- 4Processing and services revenues showed growth across both the Integrated Financial Solutions (IFS) and Global Financial Solutions (GFS) segments, with IFS benefiting from EMV card rollouts and digital solutions, while GFS saw contributions from global trading and software license renewals.
- 5The Corporate and Other segment experienced a significant operating loss increase, largely due to purchase accounting adjustments for deferred revenue, divestitures, and integration costs associated with SunGard.
- 6Cash flow from operations saw a substantial increase in Q1 2016 compared to Q1 2015, primarily due to cash generated from the SunGard acquisition.
- 7FIS noted continued demand for its solutions in international markets, with growth observed in Europe and Asia on a constant currency basis, partially offset by unfavorable foreign currency impacts due to a stronger U.S. Dollar.