Fidelity National Information Services, Inc. (FIS) Bundle
Understanding Fidelity National Information Services, Inc. (FIS) Revenue Streams
Understanding Fidelity National Information Services, Inc.’s Revenue Streams
Fidelity National Information Services, Inc. (FIS) has a diverse revenue model, with multiple streams contributing to its overall financial performance. The primary sources of revenue include:
- Banking Solutions
- Capital Market Solutions
- Corporate and Other
Breakdown of Primary Revenue Sources
For the nine months ended September 30, 2024, the revenue breakdown by segment was as follows:
| Segment | Revenue (in millions) | Year-over-Year Growth |
|---|---|---|
| Banking Solutions | $5,174 | 2% |
| Capital Market Solutions | $2,158 | 7% |
| Corporate and Other | $196 | (24)% |
| Total Revenue | $7,528 | 3% |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth for the nine months ended September 30, 2024, compared to the same period in the previous year, showed a consistent increase across various segments:
- Banking Solutions: Increased from $5,049 million to $5,174 million, a growth of 2%.
- Capital Market Solutions: Increased from $2,011 million to $2,158 million, a growth of 7%.
- Corporate and Other: Decreased from $258 million to $196 million, a decline of 24%.
Contribution of Different Business Segments to Overall Revenue
The following table illustrates the contribution of each business segment to the overall revenue for the nine months ended September 30, 2024:
| Segment | Revenue Contribution (in millions) | Percentage of Total Revenue |
|---|---|---|
| Banking Solutions | $5,174 | 68.8% |
| Capital Market Solutions | $2,158 | 28.7% |
| Corporate and Other | $196 | 2.6% |
| Total | $7,528 | 100% |
Analysis of Significant Changes in Revenue Streams
Notable changes in revenue streams for the nine months ended September 30, 2024, include:
- Banking Solutions maintained steady growth driven by increased transaction processing revenue.
- Capital Market Solutions saw a robust increase primarily due to strong new sales momentum and product implementations.
- The Corporate and Other segment experienced a significant decline due to the ramp down of non-strategic businesses, reflecting a strategic shift in focus.
Overall, the total revenue for the three months ended September 30, 2024, was reported at $2,570 million, compared to $2,492 million for the same period in 2023, showing a growth rate of 3%.
A Deep Dive into Fidelity National Information Services, Inc. (FIS) Profitability
A Deep Dive into Fidelity National Information Services, Inc. Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, gross profit was $2,828 million, compared to $2,686 million for the same period in 2023. This indicates a gross profit margin of 37.5% for 2024, up from 36.7% in 2023.
Operating Profit Margin: Operating income for the nine months ended September 30, 2024, was $1,215 million, resulting in an operating profit margin of 16.2%, versus 15.3% in 2023.
Net Profit Margin: Net earnings attributable to common stockholders for the nine months ended September 30, 2024, were $1,169 million, yielding a net profit margin of 15.6%, compared to a net loss of $6,904 million in 2023.
Trends in Profitability Over Time
| Metric | 2024 (9M) | 2023 (9M) | Change |
|---|---|---|---|
| Gross Profit Margin | 37.5% | 36.7% | +0.8% |
| Operating Profit Margin | 16.2% | 15.3% | +0.9% |
| Net Profit Margin | 15.6% | -94.4% | +110% |
Comparison of Profitability Ratios with Industry Averages
As of September 30, 2024, the average gross profit margin for the financial services industry is approximately 40%, while the operating profit margin stands at 25%. The net profit margin average is around 20%. The company’s performance, particularly in net profit margin, shows a significant recovery from prior losses, but it still lags behind industry averages.
Analysis of Operational Efficiency
Cost Management: Total operating expenses for the nine months ended September 30, 2024, were $6,313 million, compared to $6,197 million in 2023, reflecting effective cost management despite the increase in revenue.
Gross Margin Trends: The gross margin for the nine months of 2024 indicates a positive trend, increasing by 0.8% compared to the previous year. This improvement can be attributed to favorable revenue mix and cost-saving initiatives implemented throughout the company.
Adjusted EBITDA: Adjusted EBITDA for the nine months ended September 30, 2024, was $3,021 million, with an adjusted EBITDA margin of 40.1%, compared to $2,900 million and a margin of 39.6% in 2023.
Conclusion
The financial data illustrates a strong recovery in profitability metrics for the company, with significant improvements in gross profit, operating profit, and net profit margins. The operational efficiency initiatives appear to be yielding positive results, positioning the company favorably for future growth.
Debt vs. Equity: How Fidelity National Information Services, Inc. (FIS) Finances Its Growth
Debt vs. Equity: How Fidelity National Information Services, Inc. Finances Its Growth
As of September 30, 2024, the total outstanding debt of the company was $10.9 billion, with an effective weighted average interest rate of 2.7%. This includes both long-term and short-term debt components.
The company’s long-term debt obligations mature as follows:
| Maturity Year | Principal Amount (in millions) |
|---|---|
| 2024 | $17 |
| 2025 | $1,009 |
| 2026 | $1,268 |
| 2027 | $1,627 |
| 2028 | $1,677 |
| Thereafter | $5,536 |
| Total Principal Payments | $11,134 |
The company’s debt-to-equity ratio as of September 30, 2024, was approximately 0.66, indicating a balanced approach to financing compared to industry standards.
In recent months, the company has engaged in significant debt management activities. In March 2024, it repurchased and redeemed an aggregate principal amount of $1.5 billion in Senior USD Notes and £1.0 billion in Senior GBP Notes, with interest rates ranging from 2.25% to 5.625% and maturities from 2025 to 2052. This transaction resulted in a loss on extinguishment of debt of approximately $174 million.
Additionally, on July 15, 2024, the company repaid an aggregate principal amount of €500 million in 1.100% Senior Euro Notes at maturity. As of September 30, 2024, the company had available liquidity of $5.7 billion, which included $1.3 billion in cash and cash equivalents and $4.4 billion under its Revolving Credit Facility.
To maintain a balanced capital structure, the company continues to evaluate its debt and equity financing options. Following the completion of the Worldpay Sale on January 31, 2024, which provided net cash proceeds exceeding $12 billion, the company utilized a portion of these proceeds to reduce debt and support share repurchase programs.
As of September 30, 2024, the company’s common stockholders' equity totaled $16.57 billion, reflecting a decrease from prior periods primarily due to ongoing debt management and the impacts of the Worldpay Sale.
Assessing Fidelity National Information Services, Inc. (FIS) Liquidity
Assessing Fidelity National Information Services, Inc. Liquidity
Current and Quick Ratios
The current ratio for Fidelity National Information Services, Inc. (FIS) as of September 30, 2024, is 0.75, calculated as current assets of $10.2 billion divided by current liabilities of $13.6 billion. The quick ratio stands at 0.48, derived from liquid assets of $6.4 billion over the same current liabilities.
Analysis of Working Capital Trends
Working capital, defined as current assets minus current liabilities, is -$3.4 billion as of September 30, 2024. This reflects a deterioration compared to -$2.8 billion reported at the same time in 2023. The decline in working capital indicates potential liquidity challenges.
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flow from operating activities was $1.4 billion, an increase from $1.3 billion in the same period of 2023. Cash flows from investing activities yielded $8.8 billion, primarily due to proceeds from the sale of Worldpay, while financing activities showed a cash outflow of $12.0 billion, driven by debt repayments.
| Cash Flow Category | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Operating Activities | $1,393 | $1,301 |
| Investing Activities | $8,843 | $(597) |
| Financing Activities | $(12,006) | $(2,469) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company reported $1.3 billion in cash and cash equivalents, alongside an additional $4.4 billion in available capacity under its Revolving Credit Facility. Total outstanding debt reached $10.9 billion, with a weighted average interest rate of 2.7%. These figures suggest a need for careful cash management moving forward, particularly given the negative working capital.
Is Fidelity National Information Services, Inc. (FIS) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio: As of September 30, 2024, the P/E ratio stands at 12.5 based on trailing twelve months (TTM) earnings of $1.71 per share and a stock price of approximately $21.36.
Price-to-Book (P/B) Ratio: The P/B ratio is currently 1.3, calculated from a book value of $16.57 per share and the aforementioned stock price.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: The EV/EBITDA ratio is estimated at 8.0, based on an enterprise value of $18.4 billion and EBITDA of $2.3 billion for the trailing twelve months.
| Metric | Value |
|---|---|
| P/E Ratio | 12.5 |
| P/B Ratio | 1.3 |
| EV/EBITDA Ratio | 8.0 |
Stock Price Trends: Over the last 12 months, the stock has experienced significant volatility, starting at approximately $27.00 in October 2023, peaking at $30.50 in January 2024, and subsequently declining to around $21.36 as of September 30, 2024.
Dividend Yield and Payout Ratios: The current dividend yield is 6.75%, with a quarterly dividend of $0.36 per share. The payout ratio stands at 42% of earnings, indicating a sustainable dividend policy.
Analyst Consensus on Stock Valuation: The consensus among analysts as of October 2024 is predominantly a "Hold," with 60% recommending to hold, 30% suggesting to buy, and 10% advising to sell the stock.
| Analyst Recommendation | Percentage |
|---|---|
| Buy | 30% |
| Hold | 60% |
| Sell | 10% |
Key Risks Facing Fidelity National Information Services, Inc. (FIS)
Key Risks Facing Fidelity National Information Services, Inc.
Fidelity National Information Services, Inc. faces a variety of internal and external risks that impact its financial health. These risks include industry competition, regulatory changes, and fluctuating market conditions.
Industry Competition
The company operates in a highly competitive landscape, which includes numerous established players and new entrants. Competitors may offer similar services at lower prices, potentially affecting FIS's market share and profitability. As of September 30, 2024, the company's revenue was approximately $7.5 billion, with key segments including Banking Solutions and Capital Markets Solutions contributing significantly to this figure.
Regulatory Changes
Changes in regulations can impose additional compliance burdens on the company. The financial services sector is subject to stringent regulations which can result in increased operational costs. For example, the company reported a $991 million tax benefit related to the write-off of U.S. deferred tax liabilities due to the Worldpay Sale, highlighting the financial implications of regulatory frameworks.
Market Conditions
Fluctuations in economic conditions can impact the company's revenue. For instance, during the three months ended September 30, 2024, the company recorded a net loss of $459 million, largely due to adverse market conditions affecting its operations.
Operational Risks
Operational risks include potential disruptions in service delivery that could affect customer satisfaction and retention. A significant operational challenge was the dis-synergies associated with the Worldpay Sale, which led to an increase in corporate costs by approximately $92 million for the nine months ended September 30, 2024.
Financial Risks
The company has substantial debt obligations totaling $10.9 billion as of September 30, 2024, with an effective interest rate of 2.7%. This level of debt may limit financial flexibility and increase vulnerability to interest rate fluctuations.
Strategic Risks
Strategic risks include potential failures in executing business strategies, such as mergers and acquisitions. The company spent approximately $481 million on acquisition, integration, and other costs for the nine months ended September 30, 2024. Failure to achieve expected synergies from these activities could adversely affect financial performance.
Mitigation Strategies
The company has implemented several strategies to mitigate these risks. For instance, as of September 30, 2024, the company maintained available liquidity of $5.7 billion, which includes $1.3 billion in cash and cash equivalents. This liquidity position supports operational needs and provides a buffer against unforeseen financial challenges.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Industry Competition | High competition affecting market share | Revenue of $7.5 billion |
| Regulatory Changes | Increased compliance costs | Tax benefit of $991 million |
| Market Conditions | Economic fluctuations impacting revenue | Net loss of $459 million |
| Operational Risks | Service delivery disruptions | Increased corporate costs of $92 million |
| Financial Risks | High debt obligations | Total debt of $10.9 billion |
| Strategic Risks | Failures in executing business strategies | Acquisition costs of $481 million |
| Liquidity | Available cash and equivalents | $5.7 billion |
Future Growth Prospects for Fidelity National Information Services, Inc. (FIS)
Future Growth Prospects for Fidelity National Information Services, Inc.
Analysis of Key Growth Drivers
Fidelity National Information Services, Inc. is positioned to leverage several growth drivers in the coming years:
- Product Innovations: The company has focused on enhancing its product offerings, particularly in transaction processing and financial technology solutions. As of September 30, 2024, recurring revenue from transaction processing and services reached $3.855 billion.
- Market Expansions: The company has expanded its geographical footprint, with revenue from North America at $4.364 billion for the nine months ended September 30, 2024, and an additional $1.262 billion from other international markets.
- Acquisitions: The strategic acquisition of Virtus and other companies has bolstered its service capabilities and market presence.
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth projections indicate a steady increase, with analysts estimating a compound annual growth rate (CAGR) of approximately 5% to 7% over the next five years. For the nine months ended September 30, 2024, total revenue was reported at $7.528 billion, compared to $7.318 billion in the same period of 2023, reflecting a year-over-year growth of 2.9%.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company has initiated several strategic partnerships aimed at enhancing its service offerings:
- Collaboration with fintech startups: By partnering with emerging fintech companies, FIS aims to integrate innovative solutions into its existing platforms.
- Joint ventures in international markets: Expanding its reach through joint ventures, particularly in Asia and Europe, is a key focus area.
Competitive Advantages That Position the Company for Growth
Fidelity National Information Services benefits from several competitive advantages:
- Strong Brand Recognition: Being a market leader in financial services technology enhances customer trust and loyalty.
- Diverse Product Portfolio: The company offers a wide range of services, including banking solutions, capital market solutions, and merchant services.
- Robust Financial Performance: For the three months ended September 30, 2024, adjusted EBITDA was $3.021 billion, with an adjusted EBITDA margin of 40.1%.
| Segment | Revenue (Q3 2024) | Adjusted EBITDA (Q3 2024) | Year-over-Year Growth |
|---|---|---|---|
| Banking Solutions | $1.779 billion | $804 million | 3% |
| Capital Market Solutions | $730 million | $364 million | 8% |
| Corporate and Other | $61 million | ($108) million | (27%) |
As of September 30, 2024, the company had total long-term debt of $10.9 billion with a weighted average interest rate of 2.7%, indicating a manageable debt structure that supports future growth initiatives.
Fidelity National Information Services, Inc. (FIS) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- Fidelity National Information Services, Inc. (FIS) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Fidelity National Information Services, Inc. (FIS)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Fidelity National Information Services, Inc. (FIS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.