10-QPeriod: Q1 FY2021

Fidelity National Information Services, Inc. Quarterly Report for Q1 Ended Mar 31, 2021

Filed May 6, 2021For Securities:FIS

Summary

Fidelity National Information Services, Inc. (FIS) reported solid revenue growth of 5% to $3,223 million 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% 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 million 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.

Financial Highlights

56 data points
Beta

Revenue

$3.22B

34.3% Gross Margin

Net Income

-$373.00M

-11.6% Net Margin

EPS (Diluted)

$-0.60

Total Assets

$82.32B

Cash & Equivalents

$1.04B

Free Cash Flow

$767.00M

Financial Statements
Beta
Revenue$3.22B
Cost of Revenue$2.12B
Gross Profit$1.10B
SG&A Expenses$1.01B
Operating Expenses$3.12B
Operating Income$99.00M
Net Income-$373.00M
EPS (Basic)$-0.60
EPS (Diluted)$-0.60
Shares Outstanding (Basic)621.00M
Shares Outstanding (Diluted)621.00M

Key Highlights

  • 1Revenue increased by 5% to $3.22 billion in Q1 2021, driven by Merchant, Banking, and Capital Markets segments.
  • 2Gross profit increased by 12% due to higher revenue and effective expense management.
  • 3Adjusted EBITDA margins improved across all key segments (Merchant, Banking, Capital Markets).
  • 4The company is actively deleveraging post-Worldpay acquisition and aims to reach target leverage by year-end 2021.
  • 5Liquidity remains strong with $4.17 billion available as of March 31, 2021.
  • 6Continued investment in cloud migration (targeting 80% by end of 2021) and data center consolidation for cost savings and efficiency.
  • 7Approved a new share repurchase program authorizing up to 100 million shares.

Frequently Asked Questions

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.

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.

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.

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.