10-QPeriod: Q2 FY2021

Fidelity National Information Services, Inc. Quarterly Report for Q2 Ended Jun 30, 2021

Filed August 3, 2021For Securities:FIS

Summary

Fidelity National Information Services, Inc. (FIS) reported a strong performance for the second quarter of 2021, with consolidated revenue increasing by 17% to $3.475 billion compared to the prior year period. This growth was driven by a significant rebound in Merchant Solutions revenue, up 45%, reflecting the easing of pandemic-related restrictions and increased consumer spending. Banking Solutions revenue grew 8% and Capital Markets Solutions revenue increased by 6%, both benefiting from new sales and recurring revenue streams. The company also demonstrated improved profitability, with gross profit margin expanding to 39% and operating income seeing a substantial increase of 689% due to revenue growth, favorable revenue mix, and ongoing expense management. The company's financial health remains robust, with available liquidity of $3.932 billion as of June 30, 2021, and a commitment to reducing leverage incurred from the Worldpay acquisition. FIS continues to invest in innovation and modernization across its segments, including its cloud-native core banking solutions and fraud/security offerings. Despite ongoing risks associated with the COVID-19 pandemic and global economic conditions, FIS is well-positioned due to its diversified revenue streams, recurring revenue models, and strategic focus on digital transformation and payment technologies. The company expects to meet its target leverage by the end of 2021.

Financial Highlights

56 data points
Beta

Revenue

$3.48B

38.6% Gross Margin

Net Income

$341.00M

9.8% Net Margin

EPS (Diluted)

$0.55

Total Assets

$82.29B

Cash & Equivalents

$1.30B

Free Cash Flow

$954.00M

Financial Statements
Beta
Revenue$3.48B
Cost of Revenue$2.13B
Gross Profit$1.34B
SG&A Expenses$977.00M
Operating Expenses$3.11B
Operating Income$363.00M
Net Income$341.00M
EPS (Basic)$0.55
EPS (Diluted)$0.55
Shares Outstanding (Basic)619.00M
Shares Outstanding (Diluted)624.00M

Key Highlights

  • 1Consolidated revenue increased 17% year-over-year to $3.475 billion, driven by strong performance across all segments.
  • 2Merchant Solutions revenue surged 45% to $1.177 billion, indicating a significant recovery in consumer spending and easing of pandemic restrictions.
  • 3Adjusted EBITDA for Merchant Solutions increased by 77% to $587 million, with a margin improvement of 910 basis points, highlighting operational efficiency.
  • 4Banking Solutions revenue grew 8% to $1.578 billion, supported by recurring revenue and new product offerings, with Adjusted EBITDA up 19%.
  • 5Capital Markets Solutions revenue rose 6% to $630 million, driven by strong new sales in outsourced solutions and services.
  • 6Gross profit margin improved significantly to 39% from 31% in the prior year period, reflecting revenue growth and effective expense management.
  • 7The company ended the quarter with $3.932 billion in available liquidity and reaffirmed its commitment to reducing leverage by year-end 2021.

Frequently Asked Questions

The primary driver for the 17% year-over-year consolidated revenue growth to $3.475 billion was the strong rebound in Merchant Solutions, which increased by 45%. This surge was attributed to the easing of COVID-19 lockdown restrictions, leading to increased consumer spending, particularly in card-present transactions. Banking and Capital Markets Solutions also contributed positively with steady growth in recurring revenues and new sales.

FIS remains committed to reducing its leverage incurred from the Worldpay acquisition. The company expects to reach its target leverage by the end of 2021. This is supported by strong operational cash flows and strategic financial management. The report indicates a decrease in interest expense due to lower outstanding debt and a lower weighted average interest rate on debt.

While the company experienced lessened impacts from COVID-19 in Q2 2021 compared to prior periods due to market reopenings and vaccine rollouts, it continues to monitor the situation. Reduced consumer spending still impacts certain discretionary verticals and regions with ongoing restrictions. FIS has implemented robust pandemic plans to ensure business continuity and employee safety, and it is adapting to evolving consumer preferences, such as the accelerated digitization of banking and payment services.

FIS is making strategic investments in modernization, innovation, and integrated solutions. This includes developing next-generation digital solutions, enhancing proprietary core systems across its segments, and investing in cloud-native platforms like its Modern Banking Platform. The company also established FIS Impact Ventures to prioritize development and investment in next-generation technology and innovation. Furthermore, significant investments are being made in information security to address growing cyber threats and create new business opportunities.