01—Abstract
Summary
Summary of the 10-Q filed May 6, 2021. Cited figures are marked; the original filing is the authoritative source.
Fidelity National Information Services, Inc. (FIS) reported solid revenue growth of 5% to $3,223 milliona for the first quarter of 2021, driven by an increase in Merchant CNP volumes, demand for new Banking solutions, and growth in Capital Markets managed services.
Despite a 14%b increase in SG&A expenses, primarily due to accelerated stock compensation and higher incentive compensation, gross profit saw a significant 12% increase, leading to a 3% operating margin. The company also benefited from a favorable foreign currency impact and successfully managed expenses, contributing to an improved Adjusted EBITDA margin across its key segments. The company highlighted its commitment to deleveraging following the Worldpay acquisition, with plans to reach its target leverage by the end of 2021.
Liquidity remains strong with $4,165 millionc available, and the company expects sufficient cash flow to fund its operations, capital expenditures, and debt service for the next 12 months. FIS continues to invest in innovation and modernization, including advancements in its cloud infrastructure and new digital banking platforms, positioning itself for future growth amidst evolving market trends and the ongoing recovery from the COVID-19 pandemic.
02—Key points
Key Highlights
- Revenue increased by 5% to $3.22 billion in Q1 2021, driven by Merchant, Banking, and Capital Markets segments.
- Gross profit increased by 12% due to higher revenue and effective expense management.
- Adjusted EBITDA margins improved across all key segments (Merchant, Banking, Capital Markets).
- The company is actively deleveraging post-Worldpay acquisition and aims to reach target leverage by year-end 2021.
- Liquidity remains strong with $4.17 billion available as of March 31, 2021.
- Continued investment in cloud migration (targeting 80% by end of 2021) and data center consolidation for cost savings and efficiency.
- Approved a new share repurchase program authorizing up to 100 million shares.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q1 FY2021, Fidelity National Information Services, Inc. lost $0.12.
- Revenue$3.22B100.0%
- Cost of revenue−$2.12B65.7%
- Gross profit$1.10B34.3%
- Operating costs−$1.01B31.2%
- Operating income$99.0M3.1%
- Interest, other & tax−$472.0M14.6%
- Net income−$373.0M11.6%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2021filed May 6, 2021Financial Statements
Q1 FY2021 against Q1 FY2020
| Line item | Q1 FY2021Q1 FY2020 | Change |
|---|---|---|
| Revenue | $3.22B$3.08B | +4.7% |
| Cost of Revenue | $2.12B$2.09B | +1.4% |
| Gross Profit | $1.10B$989.00M | +11.7% |
| SG&A Expenses | $1.01B$881.00M | +14.2% |
| Operating Expenses | $3.12B$2.97B | +5.2% |
| Operating Income | $99.00M$108.00M | −8.3% |
| Net Income | -$373.00M$15.00M | −2586.7% |
| EPS (Basic) | $-0.60$0.02 | −3100.0% |
| EPS (Diluted) | $-0.60$0.02 | −3100.0% |
| Shares Outstanding (Basic) | 621.00M616.00M | +0.8% |
| Shares Outstanding (Diluted) | 621.00M625.00M | −0.6% |
05—Questions
Frequently Asked Questions
What drove the 5% revenue increase in the first quarter of 2021?
The revenue increase was primarily driven by higher Merchant CNP (Card Not Present) volumes, increased demand for newly developed Banking solutions like the modern banking platform, and strong new sales contributing to growth in Capital Markets managed services and other recurring revenues. A favorable foreign currency impact, mainly due to a weaker U.S. Dollar against the Euro and British Pound Sterling, also contributed.
What is the company's strategy regarding the Worldpay acquisition and leverage?
FIS is focused on completing the post-merger integration of Worldpay to realize incremental revenue opportunities and expense efficiencies. The company is committed to reducing the leverage incurred from the acquisition and expects to achieve its target leverage ratio by the end of 2021. They have also exceeded their original targets for expense synergies and continue to drive revenue synergies through cross-selling and leveraging sales teams.
How is FIS managing its expenses and profitability amidst increased SG&A?
While Selling, General, and Administrative (SG&A) expenses increased by 14% in Q1 2021, largely due to accelerated stock compensation and higher incentive compensation, the company has maintained strong gross profit growth (12%) and improved operating margins across its core segments. This is attributed to continued expense management initiatives, including optimizing office space, reducing travel, and accelerating automation, alongside favorable revenue mix and growth.
What is the outlook for liquidity and capital resources?
FIS maintains a strong liquidity position with $4,165 million available as of March 31, 2021. The company anticipates that its cash and cash equivalents, combined with cash flows from operations over the next 12 months, will be sufficient to cover operating requirements, capital expenditures, and mandatory debt service payments. They also expect to continue paying quarterly dividends and have a new share repurchase program in place.
06—Continue