filings.toolsItem 8. Financial Statements and Supplementary Data
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Item 8. Financial Statements and Supplementary Data
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
INDEX TO FINANCIAL INFORMATION
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Fidelity National Information Services, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Fidelity National Information Services, Inc. and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of earnings (loss), comprehensive earnings (loss), equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively, the consolidated financial statements), and our report dated February 13, 2025 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ KPMG LLP
Jacksonville, Florida
February 13, 2025
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Fidelity National Information Services, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Fidelity National Information Services, Inc. and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of earnings (loss), comprehensive earnings (loss), equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 13, 2025 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Sale of Worldpay Merchant Business
As discussed in Notes 1 and 3 to the consolidated financial statements, the Company completed the sale of a 55% equity interest in their Worldpay Merchant Solutions business to private equity funds managed by GTCR, LLC on January 31, 2024.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Sufficiency of audit evidence over revenue
As disclosed in Note 2 to the consolidated financial statements, the Company’s revenue consists of the following types of revenue streams: i) transaction processing and services, ii) software maintenance, iii) software license, iv) professional services, and v) other recurring and non-recurring fees.
We identified the sufficiency of audit evidence over revenue as a critical audit matter. Evaluating the sufficiency of audit evidence required subjective auditor judgment because of the number of revenue streams, related revenue recognition
processes, and the number of information technology (IT) applications utilized in the revenue recognition process to capture and aggregate the data.
The following are the primary procedures we performed to address this critical audit matter. Based on our knowledge of the Company, we applied auditor judgment to determine the nature and extent of procedures to be performed over revenue. Specifically, we:
-
evaluated the design and tested the operating effectiveness of certain internal controls within relevant revenue recognition processes, including general IT controls and IT application controls
-
involved IT professionals, who assisted in the identification and testing of certain IT systems and related controls that are used by the Company in its revenue recognition process
-
selected certain individual contracts and read the underlying contract and other documents that were part of the contract for each selection and evaluated the consistency of the revenue recognition determinations with the Company’s accounting policies and revenue recognition requirements
-
assessed the recorded revenue by selecting a sample of transactions and comparing the amounts recognized for consistency with the Company’s accounting policies and underlying documentation, including contracts with customers and other relevant and reliable third-party data
-
performed a software-assisted data analysis to test relationships among certain revenue transactions. For a selection of transactions, we compared the amounts recognized by the Company with underlying documentation, including contracts with customers and cash receipts.
We evaluated the sufficiency of the audit evidence obtained by assessing the results of procedures performed over revenue.
Evaluation of the accounting for income taxes
As discussed in Note 17 to the consolidated financial statements, the Company’s provision for income taxes for the year ended December 31, 2024 was $362 million. The Company has deferred tax liabilities, net of $849 million (including a valuation allowance of $505 million) as of December 31, 2024. The Company has international operations and is subject to the tax laws and regulations of foreign jurisdictions.
We identified the evaluation of the Company’s accounting for income taxes as a critical audit matter. Challenging auditor judgment, and the involvement of tax professionals with specialized skills and knowledge, was required to evaluate the Company’s interpretation and application of income tax regulations in certain foreign jurisdictions and the accounting for income taxes attributable to an internal legal entity restructuring.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s income tax process. This included certain controls related to the Company’s interpretation and application of foreign tax regulations and the accounting for income taxes attributable to an internal legal entity restructuring. We involved tax professionals with specialized skills and knowledge in certain tax jurisdictions, who assisted in:
-
assessing the Company’s organization chart, correspondence and agreements with certain tax authorities, intercompany documentation, and correspondence with third parties
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evaluating the Company’s interpretation and application of foreign jurisdictional tax regulations and the impact of these regulations on the Company’s tax positions related to an internal legal entity restructuring
-
evaluating the Company’s accounting for income taxes attributable to an internal legal entity restructuring.
Sufficiency of audit evidence over the Sale of the Worldpay Merchant Solutions business
As discussed in Notes 1 and 3 to the consolidated financial statements, on January 31, 2024, the Company completed the sale (Worldpay Sale) of a 55% equity interest in its Worldpay Merchant Solutions business (the Disposal Group) to private equity funds managed by GTCR, LLC. The assets and liabilities of the Disposal Group were deconsolidated, and the retained 45% equity interest is accounted for as an equity method investment. The Company recorded a $3,858 million
equity method investment as of December 31, 2024, and a $578 million loss on the sale for the year ended December 31, 2024. The results of the Disposal Group's operations prior to the sale were presented as discontinued operations.
We identified the sufficiency of audit evidence over the deconsolidation of the Worldpay Merchant Solutions business and the recognition of the equity method investment as a critical audit matter. Evaluating the sufficiency of audit evidence required subjective auditor judgment due to the manual process and volume of financial information used to deconsolidate the Disposal Group’s financial information from the continuing operations of the Company and recognize the retained equity interest in the equity method investment.
The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to determine the nature and extent of procedures to be performed over the deconsolidation and recognition of the equity method investment. Specifically, we:
-
evaluated the design and tested the operating effectiveness of certain internal controls related to the Company's deconsolidation of the Disposal Group and recognition of the retained equity interest, including controls over the amounts disclosed
-
obtained and read the purchase and sale agreement for the Worldpay Sale and compared the terms of that agreement to the identification of the assets and liabilities included in the Disposal Group
-
assessed the Company's manual process to deconsolidate certain assets and liabilities of the Disposal Group by testing completeness and accuracy of certain accounting data and schedules of the Company used to deconsolidate the Disposal Group’s financial information from the continuing operations of the Company
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assessed the Company's manual process to recognize the retained equity interest by agreeing certain inputs to third party documentation and testing the completeness and accuracy of certain accounting data and schedules.
We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed, including the appropriateness of the nature and extent of audit effort.
/s/ KPMG LLP
We have served as the Company's auditor since 2004.
Jacksonville, Florida
February 13, 2025
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2024 and 2023
(In millions, except per share amounts)
| 2024 | 2023 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 834 | $ | 440 | |||||||
| Settlement assets | 479 | 617 | |||||||||
| Trade receivables, net of allowance for credit losses of $35 and $31, respectively | 1,876 | 1,738 | |||||||||
| Other receivables | 160 | 109 | |||||||||
| Receivables from related party | 84 | — | |||||||||
| Prepaid expenses and other current assets | 638 | 641 | |||||||||
| Current assets held for sale | 1,115 | 10,111 | |||||||||
| Total current assets | 5,186 | 13,656 | |||||||||
| Property and equipment, net | 646 | 695 | |||||||||
| Goodwill | 17,260 | 16,971 | |||||||||
| Intangible assets, net | 1,318 | 1,823 | |||||||||
| Software, net | 2,526 | 2,115 | |||||||||
| Equity method investment | 3,858 | — | |||||||||
| Other noncurrent assets | 1,749 | 1,528 | |||||||||
| Deferred contract costs, net | 1,241 | 1,076 | |||||||||
| Noncurrent assets held for sale | — | 17,109 | |||||||||
| Total assets | $ | 33,784 | $ | 54,973 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable, accrued and other liabilities | $ | 1,994 | $ | 1,773 | |||||||
| Settlement payables | 500 | 635 | |||||||||
| Deferred revenue | 902 | 829 | |||||||||
| Short-term borrowings | 636 | 4,760 | |||||||||
| Current portion of long-term debt | 968 | 1,348 | |||||||||
| Current liabilities held for sale | 1,094 | 8,884 | |||||||||
| Total current liabilities | 6,094 | 18,229 | |||||||||
| Long-term debt, excluding current portion | 9,686 | 12,970 | |||||||||
| Deferred income taxes | 863 | 2,179 | |||||||||
| Other noncurrent liabilities | 1,441 | 1,446 | |||||||||
| Noncurrent liabilities held for sale | — | 1,093 | |||||||||
| Total liabilities | 18,084 | 35,917 | |||||||||
| Equity: | |||||||||||
| FIS stockholders’ equity: | |||||||||||
| Preferred stock, $0.01 par value, 200 shares authorized, none issued and outstanding as of December 31, 2024 and 2023 | — | — | |||||||||
| Common stock, $0.01 par value, 750 shares authorized, 633 and 631 shares issued as of December 31, 2024 and 2023, respectively | 6 | 6 | |||||||||
| Additional paid in capital | 47,129 | 46,933 | |||||||||
| (Accumulated deficit) retained earnings | (22,257) | (22,905) | |||||||||
| Accumulated other comprehensive earnings (loss) | (364) | (260) | |||||||||
| Treasury stock, $0.01 par value, 102 and 48 common shares as of December 31, 2024 and 2023, respectively, at cost | (8,816) | (4,724) | |||||||||
| Total FIS stockholders’ equity | 15,698 | 19,050 | |||||||||
| Noncontrolling interest | 2 | 6 | |||||||||
| Total equity | 15,700 | 19,056 | |||||||||
| Total liabilities and equity | $ | 33,784 | $ | 54,973 |
See accompanying notes, which are an integral part of these consolidated financial statements.
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
Consolidated Statements of Earnings (Loss)
Years Ended December 31, 2024, 2023 and 2022
(In millions, except per share amounts)
| 2024 | 2023 | 2022 | |||||||||||||||
| Revenue | $ | 10,127 | $ | 9,831 | $ | 9,720 | |||||||||||
| Cost of revenue | 6,323 | 6,175 | 6,259 | ||||||||||||||
| Gross profit | 3,804 | 3,656 | 3,461 | ||||||||||||||
| Selling, general and administrative expenses | 2,185 | 2,096 | 2,182 | ||||||||||||||
| Asset impairments | 52 | 113 | 103 | ||||||||||||||
| Other operating (income) expense, net - related party | (142) | — | — | ||||||||||||||
| Operating income | 1,709 | 1,447 | 1,176 | ||||||||||||||
| Other income (expense): | |||||||||||||||||
| Interest income | 101 | 92 | 17 | ||||||||||||||
| Interest expense | (351) | (713) | (298) | ||||||||||||||
| Other income (expense), net | (162) | (164) | 3 | ||||||||||||||
| Total other income (expense), net | (412) | (785) | (278) | ||||||||||||||
| Earnings (loss) before income taxes and equity method investment earnings (loss) | 1,297 | 662 | 898 | ||||||||||||||
| Provision (benefit) for income taxes | 362 | 157 | 314 | ||||||||||||||
| Equity method investment earnings (loss), net of tax | (145) | — | — | ||||||||||||||
| Net earnings (loss) from continuing operations | 790 | 505 | 584 | ||||||||||||||
| Earnings (loss) from discontinued operations, net of tax | 663 | (7,153) | (17,324) | ||||||||||||||
| Net earnings (loss) | 1,453 | (6,648) | (16,740) | ||||||||||||||
| Net (earnings) loss attributable to noncontrolling interest from continuing operations | (3) | (3) | (8) | ||||||||||||||
| Net (earnings) loss attributable to noncontrolling interest from discontinued operations | — | (4) | (4) | ||||||||||||||
| Net earnings (loss) attributable to FIS | $ | 1,450 | $ | (6,655) | $ | (16,752) | |||||||||||
| Net earnings (loss) attributable to FIS: | |||||||||||||||||
| Continuing operations | $ | 787 | $ | 502 | $ | 576 | |||||||||||
| Discontinued operations | 663 | (7,157) | (17,328) | ||||||||||||||
| Total | $ | 1,450 | $ | (6,655) | $ | (16,752) | |||||||||||
| Basic earnings (loss) per common share attributable to FIS: | |||||||||||||||||
| Continuing operations | $ | 1.42 | $ | 0.85 | $ | 0.95 | |||||||||||
| Discontinued operations | 1.20 | (12.11) | (28.69) | ||||||||||||||
| Total | $ | 2.62 | $ | (11.26) | $ | (27.74) | |||||||||||
| Diluted earnings (loss) per common share attributable to FIS: | |||||||||||||||||
| Continuing operations | $ | 1.42 | $ | 0.85 | $ | 0.95 | |||||||||||
| Discontinued operations | 1.19 | (12.11) | (28.69) | ||||||||||||||
| Total | $ | 2.61 | $ | (11.26) | $ | (27.74) | |||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||
| Basic | 553 | 591 | 604 | ||||||||||||||
| Diluted | 555 | 591 | 604 |
Amounts in table may not sum or calculate due to rounding.
See accompanying notes, which are an integral part of these consolidated financial statements.
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
Consolidated Statements of Comprehensive Earnings (Loss)
Years Ended December 31, 2024, 2023 and 2022
(In millions)
| 2024 | 2023 | 2022 | ||||||||||||||||||
| Net earnings (loss) | $ | 1,453 | $ | (6,648) | $ | (16,740) | ||||||||||||||
| Other comprehensive earnings (loss), before tax: | ||||||||||||||||||||
| Foreign currency translation adjustments | $ | (216) | $ | 586 | $ | (2,042) | ||||||||||||||
| Change in fair value of net investment hedges | 353 | (677) | 1,395 | |||||||||||||||||
| Excluded components of fair value hedges | 32 | 74 | — | |||||||||||||||||
| Reclassification of foreign currency translation adjustments to net earnings (loss) from discontinued operations | (134) | — | — | |||||||||||||||||
| Share of equity method investment other comprehensive earnings (loss) | (42) | — | — | |||||||||||||||||
| Other adjustments | (9) | 1 | 39 | |||||||||||||||||
| Other comprehensive earnings (loss), before tax | (16) | (16) | (608) | |||||||||||||||||
| Provision for income tax (expense) benefit related to items of other comprehensive earnings (loss) | (88) | 116 | (4) | |||||||||||||||||
| Other comprehensive earnings (loss), net of tax | (104) | 100 | (612) | |||||||||||||||||
| Comprehensive earnings (loss) | 1,349 | (6,548) | (17,352) | |||||||||||||||||
| Net (earnings) loss attributable to noncontrolling interest | (3) | (7) | (12) | |||||||||||||||||
| Comprehensive earnings (loss) attributable to FIS | $ | 1,346 | $ | (6,555) | $ | (17,364) |
See accompanying notes, which are an integral part of these consolidated financial statements.
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
Consolidated Statements of Equity
Years ended December 31, 2024, 2023 and 2022
(In millions, except per share amounts)
(In millions, except per share amounts)
| Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| FIS Stockholders | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Accumulated | Accumulated | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Number of shares | Additional | deficit) | other | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Common | Treasury | Common | paid in | retained | comprehensive | Treasury | Noncontrolling | Total | |||||||||||||||||||||||||||||||||||||||||||||
| shares | shares | stock | capital | earnings | earnings (loss) | stock | interest (1) | equity | |||||||||||||||||||||||||||||||||||||||||||||
| Balances, December 31, 2021 | 625 | (16) | $ | 6 | $ | 46,466 | $ | 2,881 | $ | 252 | $ | (2,266) | $ | 11 | $ | 47,350 | |||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock | 5 | — | — | (7) | — | — | 12 | — | 5 | ||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | 61 | — | — | — | — | 61 | ||||||||||||||||||||||||||||||||||||||||||||
| Purchases of treasury stock | — | (21) | — | — | — | — | (1,829) | — | (1,829) | ||||||||||||||||||||||||||||||||||||||||||||
| Treasury shares held for taxes due upon exercise of stock awards | — | (2) | — | — | — | — | (109) | — | (109) | ||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | 215 | — | — | — | — | 215 | ||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends declared ($1.88 per share) and other distributions | — | — | — | — | (1,140) | — | — | (10) | (1,150) | ||||||||||||||||||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | (16,752) | — | — | 7 | (16,745) | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive earnings (loss), net of tax | — | — | — | — | — | (612) | — | — | (612) | ||||||||||||||||||||||||||||||||||||||||||||
| Balances, December 31, 2022 | 630 | (39) | $ | 6 | $ | 46,735 | $ | (15,011) | $ | (360) | $ | (4,192) | $ | 8 | $ | 27,186 | |||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock | 1 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | 40 | — | — | — | — | 40 | ||||||||||||||||||||||||||||||||||||||||||||
| Purchases of treasury stock | — | (9) | — | — | — | — | (510) | — | (510) | ||||||||||||||||||||||||||||||||||||||||||||
| Treasury shares held for taxes due upon exercise of stock awards | — | — | — | — | — | — | (22) | — | (22) | ||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | 153 | — | — | — | — | 153 | ||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends declared ($2.08 per share) and other distributions | — | — | — | — | (1,239) | — | — | (9) | (1,248) | ||||||||||||||||||||||||||||||||||||||||||||
| Other | — | — | — | 5 | — | — | — | — | 5 | ||||||||||||||||||||||||||||||||||||||||||||
| Net earnings (loss) | — | — | — | — | (6,655) | — | — | 7 | (6,648) | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive earnings (loss), net of tax | — | — | — | — | — | 100 | — | — | 100 | ||||||||||||||||||||||||||||||||||||||||||||
| Balances, December 31, 2023 | 631 | (48) | $ | 6 | $ | 46,933 | $ | (22,905) | $ | (260) | $ | (4,724) | $ | 6 | $ | 19,056 | |||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock | 2 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | 4 | — | — | — | — | 4 | ||||||||||||||||||||||||||||||||||||||||||||
| Purchases of treasury stock | — | (54) | — | — | — | — | (4,017) | — | (4,017) | ||||||||||||||||||||||||||||||||||||||||||||
| Treasury shares held for taxes due upon exercise of stock awards | — | — | — | — | — | — | (75) | — | (75) | ||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | 192 | — | — | — | — | 192 | ||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends declared ($1.44 per share) and other distributions | — | — | — | — | (802) | — | — | (5) | (807) | ||||||||||||||||||||||||||||||||||||||||||||
| Sale of Worldpay noncontrolling interest | — | — | — | — | — | — | — | (2) | (2) | ||||||||||||||||||||||||||||||||||||||||||||
| Net earnings (loss) | — | — | — | — | 1,450 | — | — | 3 | 1,453 | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive earnings (loss), net of tax | — | — | — | — | — | (104) | — | — | (104) | ||||||||||||||||||||||||||||||||||||||||||||
| Balances, December 31, 2024 | 633 | (102) | 6 | 47,129 | (22,257) | (364) | (8,816) | 2 | 15,700 |
(1) Excludes redeemable noncontrolling interest that is not considered equity. See Note 5, Virtus Acquisition, for additional information.
See accompanying notes, which are an integral part of these consolidated financial statements.
FIDELITY NATIONAL INFORMATION SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended December 31, 2024, 2023 and 2022 (In millions)
| 2024 | 2023 | 2022 | |||||||||||||||
| Cash flows from operating activities from continuing operations: | |||||||||||||||||
| Net earnings (loss) | $ | 1,453 | $ | (6,648) | $ | (16,740) | |||||||||||
| Less earnings (loss) from discontinued operations, net of tax | 663 | (7,153) | (17,324) | ||||||||||||||
| Net earnings (loss) from continuing operations | 790 | 505 | $ | 584 | |||||||||||||
| Adjustments to reconcile net earnings (loss) from continuing operations to net cash provided by operating activities: | |||||||||||||||||
| Depreciation and amortization | 1,737 | 1,744 | 1,878 | ||||||||||||||
| Amortization of debt issuance costs | 20 | 29 | 31 | ||||||||||||||
| Asset impairments | 52 | 113 | 103 | ||||||||||||||
| Loss on extinguishment of debt | 174 | — | — | ||||||||||||||
| Loss (gain) on sale of businesses, investments and other | 62 | 97 | (49) | ||||||||||||||
| Stock-based compensation | 186 | 120 | 189 | ||||||||||||||
| Loss from equity method investment | 145 | — | — | ||||||||||||||
| Deferred income taxes | (204) | (415) | (388) | ||||||||||||||
| Net changes in assets and liabilities, net of effects from acquisitions and foreign currency: | |||||||||||||||||
| Trade and other receivables | (94) | 341 | (247) | ||||||||||||||
| Receivable from related party | (84) | — | — | ||||||||||||||
| Settlement activity | 2 | (3) | 3 | ||||||||||||||
| Prepaid expenses and other assets | (205) | (155) | (72) | ||||||||||||||
| Deferred contract costs | (509) | (418) | (415) | ||||||||||||||
| Deferred revenue | 31 | 29 | 21 | ||||||||||||||
| Accounts payable, accrued liabilities, and other liabilities | 72 | 91 | (16) | ||||||||||||||
| Net cash provided by operating activities from continuing operations | 2,175 | 2,078 | 1,622 | ||||||||||||||
| Cash flows from investing activities from continuing operations: | |||||||||||||||||
| Additions to property and equipment | (97) | (115) | (227) | ||||||||||||||
| Additions to software | (720) | (665) | (769) | ||||||||||||||
| Acquisitions, net of cash acquired | (514) | (202) | — | ||||||||||||||
| Net proceeds from sale of businesses and investments | 12,833 | 45 | 50 | ||||||||||||||
| Cash divested from sale of business | (3,150) | — | — | ||||||||||||||
| Settlement of net investment hedge cross-currency interest rate swaps | (8) | (20) | 726 | ||||||||||||||
| Coupon payments on interest rate swaps | (122) | (28) | — | ||||||||||||||
| Other investing activities, net | (44) | (24) | (6) | ||||||||||||||
| Net cash provided by (used in) investing activities | 8,178 | (1,009) | (226) | ||||||||||||||
| Cash flows from financing activities from continuing operations: | |||||||||||||||||
| Borrowings | 25,430 | 93,087 | 75,293 | ||||||||||||||
| Repayment of borrowings and other financing arrangements | (33,175) | (94,444) | (74,304) | ||||||||||||||
| Debt issuance costs | (6) | (3) | (23) | ||||||||||||||
| Net proceeds from stock issued under stock-based compensation plans | 3 | 41 | 57 | ||||||||||||||
| Treasury stock activity | (4,045) | (522) | (1,938) | ||||||||||||||
| Dividends paid | (800) | (1,231) | (1,138) | ||||||||||||||
| Purchase of noncontrolling interest | — | (173) | — | ||||||||||||||
| Other financing activities, net | 43 | (7) | (20) | ||||||||||||||
| Net cash provided by (used in) financing activities | (12,550) | (3,252) | (2,073) | ||||||||||||||
| Cash flows from discontinued operations: | |||||||||||||||||
| Net cash provided by (used in) operating activities | (104) | 2,257 | 2,317 | ||||||||||||||
| Net cash provided by (used in) investing activities | (39) | (342) | (147) | ||||||||||||||
| Net cash provided by (used in) financing activities | (65) | (241) | (500) | ||||||||||||||
| Net cash provided by (used in) discontinued operations | (208) | 1,674 | 1,670 | ||||||||||||||
| Effect of foreign currency exchange rate changes on cash from continuing operations | (31) | 5 | (42) | ||||||||||||||
| Effect of foreign currency exchange rate changes on cash from discontinued operations | (32) | 105 | (421) | ||||||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | (2,468) | (399) | 530 | ||||||||||||||
| Cash, cash equivalents and restricted cash, beginning of year | 4,414 | 4,813 | 4,283 | ||||||||||||||
| Cash, cash equivalents and restricted cash, end of year | $ | 1,946 | $ | 4,414 | $ | 4,813 | |||||||||||
| Supplemental cash flow information: | |||||||||||||||||
| Cash paid for interest | $ | 396 | $ | 696 | $ | 417 | |||||||||||
| Cash paid for income taxes, net of refunds | $ | 488 | $ | 402 | $ | 963 |
See accompanying notes, which are an integral part of these consolidated financial statements.
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unless stated otherwise or the context otherwise requires, all references to "FIS," "we," "our," "us," the "Company" or the "registrant" are to Fidelity National Information Services, Inc., a Georgia corporation, and its subsidiaries.
**(1)**Organization
FIS is a leading global provider of financial services technology solutions for financial institutions, businesses and developers. We improve the digital transformation of our financial economy, advancing the way the world pays, banks and invests.
On January 31, 2024, the Company completed the sale (the "Worldpay Sale") of a 55% equity interest in its Worldpay Merchant Solutions business to private equity funds managed by GTCR, LLC (such funds, the "Buyer"). FIS retains a non-controlling 45% equity interest in a new standalone joint venture, Worldpay Holdco, LLC ("Worldpay"), following the closing of the Worldpay Sale. FIS' share of the net income (loss) of Worldpay is reported as equity method investment earnings (loss), net of tax. The net cash proceeds received by FIS, net of estimated closing adjustments and transaction costs, are presented as investing cash flows within continuing operations on the consolidated statement of cash flows. See Note 4 for information regarding the equity method investment earnings (loss), net of tax, for the period from February 1, 2024, through December 31, 2024.
During the third quarter of fiscal year 2023, the Company analyzed quantitative and qualitative factors relevant to the Worldpay Merchant Solutions disposal group in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 205-20 and determined that the accounting criteria to be classified as held for sale were met, when a definitive purchase agreement was signed. Accordingly, the assets and liabilities of the disposal group are presented separately on the consolidated balance sheets for all periods presented. In addition, the disposition represents a strategic shift that will have a major impact on the Company's operations and financial results. As a result, the operating results of the Worldpay Merchant Solutions business prior to the closing of the Worldpay Sale have been reflected as discontinued operations for all periods presented and as such, have been excluded from continuing operations and segment results.
The Worldpay Merchant Solutions business included the former Merchant Solutions segment in addition to a business previously included in the Corporate and Other segment, which have been reflected as discontinued operations for all periods presented. Accordingly, the Company no longer reports the Merchant Solutions segment; it now reports its financial performance based on the following segments: Banking Solutions ("Banking"), Capital Market Solutions ("Capital Markets") and Corporate and Other. As a result of its ongoing portfolio assessments, the Company reclassified certain businesses from Capital Markets to Banking and to Corporate and Other during the quarter ended March 31, 2023, and reclassified certain non-strategic operations from Banking to Corporate and Other during the quarter ended December 31, 2023. The Company recast all prior-period segment information presented to reflect these reclassifications. See Note 22 for more information regarding our segments.
Amounts in tables in the financial statements and accompanying footnotes may not sum or calculate due to rounding.
Revision of Prior-Period Consolidated Financial Statements
During 2024, the Company identified immaterial misstatements affecting its previously issued consolidated financial statements as of and for the annual periods ended December 31, 2023 and 2022. The misstatements related primarily to the timing of the recognition of expenses associated with inventory-related accruals, along with their related balance sheet impacts, and the presentation of certain value-added tax balances in the consolidated financial statements. The Company has revised its prior-period financial statements to correct these misstatements, as well as other unrelated immaterial misstatements, including adjustments to Revenue and Other income (expense), net. The revisions ensure comparability across all periods reflected herein. A summary of the revisions to the previously reported financial statements is provided in Note 24.
**(2)**Summary of Significant Accounting Policies
The following describes the significant accounting policies of the Company used in preparing the accompanying consolidated financial statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
**(a)**Principles of Consolidation and Management Estimates
The consolidated financial statements include the accounts of FIS, its wholly-owned subsidiaries and subsidiaries that are majority-owned. Noncontrolling interests represent the minority shareholders’ share of the net earnings or loss and equity in consolidated subsidiaries. The Company’s noncontrolling interests presented in the consolidated statements of earnings (loss) include net earnings (loss) attributable to noncontrolling interests and redeemable noncontrolling interests. Noncontrolling interests are presented as a component of equity in the consolidated balance sheets. Noncontrolling interests that are redeemable upon the occurrence of an event that is not solely within the Company’s control are presented outside of equity. All intercompany profits, transactions and balances have been eliminated in consolidation.
The preparation of consolidated financial statements in conformity with United States ("U.S") generally accepted accounting principles ("GAAP") and related rules and regulations of the U.S. Securities and Exchange Commission requires our management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. These estimates may change as new events occur and additional information is obtained. Future actual results could differ materially from these estimates. To the extent that there are differences between these estimates, judgments and assumptions and actual results, our consolidated financial statements will be affected.
**(b)**Cash and Cash Equivalents
The Company considers cash on hand, money market funds and other highly liquid investments with original maturities of three months or less to be cash and cash equivalents. As part of the Company's electronic funds transfer and network business, the Company provides cash settlement services to financial institutions and state and local governments. These services involve the movement of funds among the various parties associated with automated teller machines ("ATM") and point-of-sale or electronic benefit transactions ("EBT"). This activity results in a balance due to the Company at the end of each business day that it recoups over the next few business days. The net in-transit balances due to the Company are included in Cash and cash equivalents on the consolidated balance sheets. The carrying amounts reported in the consolidated balance sheets for these instruments approximate their fair value.
The Company records restricted cash in captions other than Cash and cash equivalents in the consolidated balance sheets. The reconciliation between Cash and cash equivalents in the consolidated balance sheets and Cash, cash equivalents and restricted cash per the consolidated statements of cash flows is as follows (in millions):
| December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Cash and cash equivalents on the consolidated balance sheets | $ | 834 | $ | 440 | |||||||
| Merchant float from discontinued operations included in current assets held for sale (1) | 1,074 | 2,594 | |||||||||
| Cash from discontinued operations included in current assets held for sale | 38 | 1,380 | |||||||||
| Total Cash, cash equivalents and restricted cash per the consolidated statements of cash flows | $ | 1,946 | $ | 4,414 |
(1)Merchant float funds are considered restricted cash.
**(c)**Fair Value Measurements
Fair Value Hierarchy
The authoritative accounting literature defines fair value, establishes a framework for measuring fair value, and establishes a fair value hierarchy based on the quality of inputs used to measure fair value.
The fair value hierarchy includes three levels that are based on the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). If the inputs used to measure the fair value fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the asset or liability. The three levels of the fair value hierarchy are described below.
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Level 1. Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets.
Level 2. Inputs to the valuation methodology include the following:
-
Quoted prices for similar assets or liabilities in active markets;
-
Quoted prices for identical or similar assets or liabilities in inactive markets;
-
Inputs other than quoted prices that are observable for the asset or liability;
-
Inputs that are derived principally from, or corroborated by, observable market data by correlation or other means.
If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.
Level 3. Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Unobservable inputs are inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
Fair Value of Assets Acquired and Liabilities Assumed in Business Combinations
In a business combination transaction, an acquirer recognizes, separately from goodwill, the identifiable assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree and generally measures these items at their acquisition date fair values, except as otherwise required. Any portion of the purchase price in excess of the recorded amount of the net identifiable assets acquired is recognized as goodwill. Fair values are determined using the framework outlined above under Fair Value Hierarchy and the methodologies addressed in the individual subheadings. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, we report provisional amounts in the financial statements for the items for which the accounting is incomplete. Adjustments to provisional amounts initially recorded that are identified during the measurement period are recognized in the reporting period in which the adjustment amounts are determined. This includes any effect on earnings of changes in depreciation, amortization, or other income effects as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. During the measurement period, we also recognize additional assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets and liabilities as of that date. The measurement period ends the sooner of one year from the acquisition date or when we receive the information we were seeking about facts and circumstances that existed as of the acquisition date or learn that more information is not obtainable. Contingent consideration liabilities or receivables recorded in connection with business acquisitions are also adjusted for changes in fair value until settled.
Fair Value of Financial Instruments
The carrying amounts reported in the consolidated balance sheets for settlement assets and payables as well as short-term borrowings approximate their fair values because of their immediate or short-term maturities. The fair value of the Company's long-term debt is based on quoted prices of our senior notes and trades of our debt in close proximity to year end, which are considered Level 2-type measurements. The Company also holds, or has held, certain derivative instruments, specifically interest rate swaps, cross-currency interest rate swaps and foreign currency exchange forward contracts, which are also valued using Level 2-type measurements. These estimates are subjective in nature and involve uncertainties and significant judgment in the interpretation of current market data. The fair value of the contingent consideration from the Worldpay Sale, as discussed further in (d) Derivative Financial Instruments below, is based on unobservable inputs and assumptions with respect to the timing and level of returns that will be realized by the Buyer upon certain distribution events, which are considered Level 3-type measurements. As a result of these estimates, the value of financial instruments presented in the Company's consolidated financial statements may not necessarily be indicative of amounts the Company could realize or settle currently.
**(d)**Derivative Financial Instruments
The Company enters into derivatives to manage foreign currency and interest rate risk; the Company does not use derivatives for trading purposes, to generate income or to engage in speculative activity.
During all periods presented, the Company used cross-currency interest rate swaps to engage in hedging activities relating to changes in foreign currency exchange rates impacting its investment in certain foreign-currency-denominated operations. The Company designated these cross-currency interest rate swaps as net investment hedges. The Company also utilized foreign-
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
currency-denominated debt as non-derivative net investment hedges. During 2023, the Company also began utilizing cross-currency interest rate swaps to engage in hedging activities relating to its exposure to foreign currency risk associated with its foreign currency-denominated debt. The Company designated these cross-currency interest rate swaps as fair value hedges.
Prior to the quarter ended September 30, 2023, the Company used fixed-to-variable interest rate swaps to engage in hedging activities relating to changes in interest rates impacting the fair value of its fixed-rate long-term debt. The Company designated these interest rate swaps as fair value hedges. During the quarter ended September 30, 2023, the Company de-designated these interest rate swaps as fair value hedges and entered into offsetting variable-to-fixed interest rate swaps. The de-designated and new interest rate swaps are accounted for as economic hedges.
During all periods presented, the Company used foreign currency forward contracts as economic hedges to reduce the foreign currency risk associated with payments due at maturity or extinguishment of the Company's foreign currency-denominated debt and cross-currency interest rate swaps.
As part of the Worldpay Sale, the Company obtained the right to receive $1.0 billion of consideration contingent on the returns realized by the Buyer exceeding certain thresholds. The Company recognized this financial instrument as a derivative.
The Company records all derivatives, whether designated in accounting hedging relationships or not, on the consolidated balance sheets at fair value. The Company's derivative contracts are generally subject to master netting arrangements, which contain various netting and setoff provisions; however, the Company has elected to record derivative assets and liabilities on a gross basis in the accompanying consolidated balance sheets in Prepaid expenses and other current assets; Other noncurrent assets; Accounts payable, accrued and other liabilities; or Other noncurrent liabilities, as appropriate. See Notes 15 and 20 for additional details, including accounting policies.
**(e)**Allowance for Credit Losses
The Company monitors trade receivable balances and contract assets as well as other receivables and estimates the allowance for lifetime expected credit losses. Estimates of expected credit losses are based on historical collection experience and other factors, including those related to current market conditions and events, changes in client creditworthiness, client payment terms and collection trends.
**(f)**Settlement Assets and Payables
The principal components of the Company's settlement assets and payables on the consolidated balance sheets are as follows (in millions):
| December 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Settlement assets | ||||||||||||||
| Settlement deposits | $ | 353 | $ | 463 | ||||||||||
| Settlement receivables | 126 | 154 | ||||||||||||
| Total Settlement assets | $ | 479 | $ | 617 | ||||||||||
| Settlement payables | $ | 500 | $ | 635 |
The payment solutions that give rise to the settlement balances described below are separate and distinct from those settlement activities referred to under (b) Cash and Cash Equivalents, where the solutions we provide primarily facilitate the movement of funds.
We manage certain payment solutions and programs and wealth management processes for our clients that require us to hold and manage client cash balances used to fund their daily settlement activity. Settlement deposits represent funds we hold that were drawn from our clients to facilitate settlement activities. Settlement receivables represent amounts funded by us. Settlement payables consist of settlement deposits from clients, settlement payables to third parties or clients, and outstanding checks related to our settlement activities for which the right of offset does not exist or we do not intend to exercise our right of offset. Our accounting policy for such outstanding checks is to include them in Settlement payables on the consolidated balance sheets and operating cash flows on the consolidated statements of cash flows.
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AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
**(g)**Contract Related Balances
The payment terms and conditions in our customer contracts may vary. In some cases, customers pay in advance of our delivery of solutions or services; in other cases, payment is due as services are performed or in arrears following the delivery of the solutions or services. Differences in timing between revenue recognition and invoicing result in accrued trade receivables, contract assets, or deferred revenue on our consolidated balance sheets. Trade receivables are accrued when revenue is recognized prior to invoicing but the right to payment is unconditional (i.e., only the passage of time is required). This occurs most commonly when software term licenses recognized at a point in time are paid for periodically over the license term. Contract assets result when amounts allocated to distinct performance obligations are recognized when or as control of a solution or service is transferred to the customer but invoicing is contingent on performance of other performance obligations or on completion of contractual milestones. Contract assets are transferred to trade receivables when the rights become unconditional, typically upon invoicing of the related performance obligations in the contract or upon achieving the requisite project milestone. Deferred revenue results from customer payments in advance of our satisfaction of the associated performance obligation(s) and relates primarily to prepaid maintenance or other recurring services. Deferred revenue is relieved as revenue is recognized. Contract assets and deferred revenue are reported on a contract-by-contract basis at the end of each reporting period. At December 31, 2024 and 2023, contract assets of $220 million and $227 million, respectively, are included in Prepaid expenses and other current assets and $308 million and $240 million, respectively are included in Other noncurrent assets on the consolidated balance sheets. Noncurrent deferred revenue is included in Other noncurrent liabilities as detailed in Note 13. Changes in the contract assets and deferred revenue balances for the years ended December 31, 2024 and 2023, were not materially impacted by any factors other than those described above. In some cases, signing bonuses are paid, or credits are offered, to customers in connection with the origination or renewal of customer contracts. These incentives are recorded as Other noncurrent assets on our consolidated balance sheets and amortized on a straight-line basis as a reduction of revenue over the lesser of the useful life of the solution or the expected customer relationship period for new contracts or over the contract period for renewal contracts.
**(h)**Goodwill
Goodwill represents the excess of the total consideration transferred in business combinations over the amount of the net identifiable assets acquired in accordance with the measurement guidance for such items. Goodwill is not amortized but is assessed for impairment by reporting unit. The Company assesses goodwill for impairment on an annual basis during the fourth quarter or more frequently if circumstances indicate potential impairment. An impairment charge is recognized when and to the extent a reporting unit's carrying amount is determined to exceed its estimated fair value. Our reporting units are the same as our primary operating segments, with additional reporting units for certain non-strategic businesses within the Corporate and Other segment.
The Company has the option to first assess qualitatively whether it is more likely than not that a reporting unit's carrying amount exceeds its estimated fair value. The option of whether to perform the qualitative assessment is made annually and may vary by reporting unit. Events and circumstances that are considered in performing the qualitative assessment include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, events affecting the reporting unit or Company as a whole, including a sustained decrease in stock price. When performing the qualitative assessment, we examine those factors most likely to affect each reporting unit's fair value. If we conclude that it is more likely than not that the reporting unit's fair value is less than its carrying amount (that is, a likelihood of more than 50 percent) as a result of the qualitative assessment, or we elect to bypass the qualitative assessment for a reporting unit, then we perform a quantitative assessment for that reporting unit.
In applying the quantitative assessment, we typically engage third-party valuation specialists to assist us in determining the fair value of a reporting unit based on a weighted average of valuation techniques, a combination of an income approach and a market approach, which are Level 3-type measurements. The income approach calculates a value based upon the present value of estimated future cash flows, while the market approach uses earnings multiples of similarly situated guideline public companies. If the fair value of the reporting unit determined using the quantitative analysis exceeds the carrying amount of the reporting unit's net assets, goodwill is not impaired.
Both qualitative and quantitative assessments require a significant amount of management judgment involving the use of forecasts, estimates, and assumptions.
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AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
**(i)**Impairment of Long-Lived Assets and Intangible Assets with Finite Useful Lives
Long-lived assets and intangible assets with finite useful lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset, which are Level 3-type measurements. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. There were no significant impairments of long-lived assets or intangible assets with finite useful lives during the years ended December 31, 2024 and 2023. During the year ended December 31, 2022, the Company recognized impairment losses totaling $71 million on certain long-lived assets, primarily related to reducing office space, including $43 million for operating lease right-of-use assets.
**(j)**Intangible Assets
The Company has intangible assets that consist primarily of customer relationships and trademarks (i.e., a collective term for trademarks, trade names, and related intellectual property rights) that are recorded in connection with acquisitions at their fair value based on the results of valuation analyses. Customer relationships and trademarks acquired in business combinations are generally valued using the multi-period excess earnings method and relief-from-royalty method, respectively, which are Level 3-type measurements. Customer relationships are amortized over their estimated useful lives using an accelerated method that takes into consideration expected customer attrition rates up to a 10-year period. Trademarks with finite lives are amortized over periods ranging up to five years. Intangible assets with finite lives are reviewed for impairment following the same approach as long-lived assets.
**(k)**Software
Software includes software acquired in business combinations, purchased software and capitalized software development costs. Software acquired in business combinations is generally valued using the relief-from-royalty method, a Level 3-type measurement. Purchased software is recorded at cost and amortized using the straight-line method over its estimated useful life, and software acquired in business combinations is recorded at its fair value and amortized using straight-line or accelerated methods over its estimated useful life, typically ranging from one to 10 years.
The capitalization of software development costs is based on whether the software is to be sold, leased or otherwise marketed, or if the software is for internal use. After the technological feasibility of the software has been established (for software to be marketed) or at the beginning of application development (for internal-use software), software development costs, which primarily include salaries and related payroll costs and costs of independent contractors incurred during development, are capitalized. Research and development costs incurred prior to the establishment of technological feasibility (for software to be marketed) or prior to application development (for internal-use software) are expensed as incurred. Software development costs are amortized on a solution-by-solution basis commencing on the date of general release (for software to be marketed) or the date placed in service (for internal-use software). Software development costs for internal-use software are amortized using the straight-line method over its estimated useful life, which typically ranges from three to 10 years. Software development costs for software to be marketed are amortized using the greater of (1) the straight-line method over its estimated useful life, which typically ranges from three to 10 years, or (2) the ratio of current revenue to total anticipated revenue over its useful life.
The Company reviews software assets for impairment at each reporting date. For software to be marketed, an impairment charge is recorded to the extent the carrying amount exceeds the net realizable value. Internal-use software is reviewed for impairment following the same approach as long-lived assets. Determining net realizable values and future cash flows involves judgments and the use of estimates and assumptions regarding future economic and market conditions. Adverse changes in these conditions could result in an impairment charge which could be material to our consolidated financial statements.
See Note 10 for software asset impairment losses and incremental software amortization expense recognized during the years ended December 31, 2024, 2023 and 2022.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
**(l)**Deferred Contract Costs
The Company incurs costs as a result of both the origination and fulfillment of our contracts with customers. Origination costs relate primarily to the payment of sales commissions that are directly related to sales transactions. Fulfillment costs include the cost of implementation services related to software as a service ("SaaS") and other cloud-based arrangements when the implementation service is not distinct from the ongoing service. When origination costs and fulfillment costs that will be used to satisfy future performance obligations are directly related to the execution of our contracts with customers, and the costs are recoverable under the contract, the costs are capitalized as a deferred contract cost. Impairment losses are recognized if the carrying amounts of the deferred contract costs are not recoverable.
Origination costs for contracts that contain a distinct software license recognized at a point in time are allocated between the license and all other performance obligations of the contract and amortized according to the pattern of performance for the respective obligations. Otherwise, origination costs are capitalized as a single asset for each contract or portfolio of similar contracts and amortized using an appropriate single measure of performance considering all of the performance obligations in the contracts. The Company amortizes origination costs over the expected benefit period to which the deferred contract cost relates. Origination costs related to initial contracts with a customer are amortized over the lesser of the useful life of the solution or the expected customer relationship period. Commissions paid on renewals are amortized over the renewal period. Capitalized fulfillment costs are amortized over the lesser of the useful life of the solution or the expected customer relationship period.
See Note 11 for deferred contract cost incremental amortization expense recognized during the years ended December 31, 2023 and 2022.
**(m)**Property and Equipment
Property and equipment is recorded at cost, less accumulated depreciation and amortization. Depreciation and amortization are computed primarily using the straight-line method based on the estimated useful lives of the related assets typically as follows: 30 years for buildings and three to seven years for furniture, fixtures and computer equipment. Leasehold improvements are amortized using the straight-line method over the lesser of the initial term of the applicable lease or the estimated useful lives of such assets.
**(n)**Income Taxes
The Company recognizes deferred income tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities and expected benefits of using net operating loss and credit carryforwards. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The impact on deferred income taxes of changes in tax rates and laws, if any, is reflected in the consolidated financial statements in the period enacted. A valuation allowance is established for any portion of a deferred income tax asset for which management believes it is more likely than not that the Company will not be able to realize the benefits of all or a portion of that deferred income tax asset. The Company has provided for residual income tax on unremitted earnings related to certain foreign subsidiaries based on the Company's cash management strategy including consideration of needs and uses as set forth in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources." Certain of the Company's earnings are indefinitely reinvested offshore and could be subject to additional income tax if repatriated. It is not practicable to determine the unrecognized deferred tax liability on a hypothetical distribution of those earnings.
**(o)**Operating Leases
The Company leases certain of its property, primarily real estate, under operating leases. Operating lease right-of-use ("ROU") assets are included in Other noncurrent assets, and operating lease liabilities are included in Accounts payable, accrued and other liabilities and Other noncurrent liabilities on the consolidated balance sheets. ROU assets represent the Company's right to use an underlying asset for the lease term, and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of fixed lease payments over the lease term. Operating lease ROU assets also include any prepaid lease payments and exclude lease incentives received. The Company uses an incremental borrowing rate based on information available at commencement date in determining the present value of lease payments. Lease term for accounting purposes may include options to extend (generally ranging from one to five years) or to terminate the lease when it is reasonably certain that
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the Company will exercise that option. For certain equipment leases, the Company applies a portfolio approach to effectively account for the operating lease ROU assets and liabilities. Lease agreements may include lease and related non-lease components, which are accounted for as a single lease component. Fixed costs included in the measurement of ROU assets are recognized as operating lease cost generally on a straight-line basis over the lease term. Certain leases require the Company to pay taxes, insurance, maintenance and other operating expenses associated with the leased asset. Such amounts are not included in the measurement of the ROU assets and lease liabilities to the extent they are variable in nature; instead, they are recognized as variable lease cost when incurred.
**(p)**Revenue Recognition
The Company generates revenue in a number of ways, including from the delivery of account- or transaction-based processing, SaaS, business process as a service ("BPaaS"), cloud offerings, software licensing, software-related services and professional services.
The Company enters into arrangements with customers to provide services, software and software-related services such as maintenance and implementation either individually or as part of an integrated offering. The Company assesses the solutions and services promised in its contracts with customers and identifies a performance obligation for each promise to transfer to the customer a solution or service (or bundle of solutions or services) that is distinct - i.e., if a solution or service is separately identifiable from other items in the bundled package and if a customer can benefit from it on its own or with other resources that are readily available to the customer. To identify its performance obligations, the Company considers all of the solutions or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. The Company recognizes revenue when or as it satisfies a performance obligation by transferring control of a solution or service to a customer.
Revenue is measured based on the consideration that the Company expects to receive in a contract with a customer. The Company's contracts with its customers frequently contain variable consideration. Variable consideration exists when the amount which the Company expects to receive in a contract is based on the occurrence or non-occurrence of future events, such as processing services performed under usage-based pricing arrangements or professional services billed on a time-and-materials basis. Variable consideration is also present in certain transactions in the form of discounts, credits, price concessions, penalties, and similar items. If the amount of a discount or rebate in a contract is fixed and not contingent, that discount or rebate is not variable consideration. The Company estimates variable consideration in its contracts primarily using the expected value method. In some contracts, the Company applies the most likely amount method by considering the single most likely amount in a limited range of possible consideration amounts. The Company develops estimates of variable consideration on the basis of both historical information and current trends. Variable consideration included in the transaction price is constrained such that a significant revenue reversal is not probable.
Taxes collected from customers and remitted to governmental authorities are not included in revenue. Postage costs associated with print and mail services are accounted for as a fulfillment cost and are included in cost of revenue.
Technology or service components from third parties are frequently embedded in or combined with our applications or service offerings. We are often responsible for billing the client in these arrangements and transmitting the applicable fees to the third party. The Company determines whether it is responsible for providing the third-party solution or service as a principal or for arranging for the solution or service to be provided by the third party as an agent. Judgment is applied to determine whether we are the principal or the agent by evaluating whether the Company has control of the solution or service prior to it being transferred to the customer. The principal versus agent assessment is performed at the performance obligation level. Indicators that the Company considers in determining if it has control include whether the Company is primarily responsible for fulfilling the promise to provide the specified solution or service to the customer, the Company has inventory risk and the Company has discretion in establishing the price the customer ultimately pays for the solution or service. Depending upon the level of our contractual responsibilities and obligations for delivering solutions to end customers, we have arrangements where we are the principal and recognize the gross amount billed to the customer and other arrangements where we are the agent and recognize the net amount retained.
The total transaction price of a contract is allocated to each performance obligation in a manner depicting the amount of consideration to which the Company expects to be entitled in exchange for transferring the solution(s) or service(s) to the customer (the "allocation objective"). If the allocation objective is met at contractual prices, no allocation adjustments from contract prices are made. Otherwise, the Company reallocates the transaction price to each performance obligation identified in the contract on a relative standalone selling price basis, except when the criteria are met for allocating variable consideration to
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one or more, but not all, performance obligations in the contract. The Company allocates variable consideration to one or more, but not all, performance obligations when the terms of the variable payment relate specifically to the Company's efforts to satisfy the performance obligation (or transfer the distinct solution or service) and when such allocation is consistent with the allocation objective when considering all performance obligations in the contract. Determining whether the criteria for allocating variable consideration to one or more, but not all, performance obligations in the contract requires judgment and may affect the timing and amount of revenue recognized.
To determine the standalone selling price of its promised solutions or services, the Company conducts a regular analysis to determine whether various solutions or services have an observable standalone selling price. If the Company does not have an observable standalone selling price for a particular solution or service, then the standalone selling price for that particular solution or service is estimated using all information that is reasonably available and maximizing observable inputs using approaches including historical pricing, cost plus a margin, adjusted market assessment, and a residual approach.
The following describes the nature of the Company's primary types of revenue and the revenue recognition policies and significant payment terms as they pertain to the types of transactions the Company enters into with its customers.
Transaction Processing and Services Revenue
Transaction processing and services revenue is primarily comprised of payment processing, data processing, application management, and outsourced services, including our SaaS, BPaaS and cloud offerings. Transaction processing and services revenue is recurring and is typically volume or activity based depending on factors such as the number of payments, transactions, accounts or trades processed, number of users, number of hours of services or amount of computer resources used. Fees may include tiered pricing structures with the base tier representing a minimum monthly usage fee. Pricing within the tiers typically resets on a monthly basis, and minimum monthly volumes are generally met or exceeded. Contract lengths for processing services typically span one or more years; however, when distinct hosting services are offered, they are often cancelable without a significant penalty with 30-days' notice. Payment is generally due in advance or in arrears on a monthly or quarterly basis and may include fixed or variable payment amounts depending on the specific payment terms and activity in the period.
In transaction processing and services contracts, the nature of the Company's promise to the customer is to stand ready to provide continuous access to the Company's processing platforms and perform an unspecified quantity of transaction processing and outsourced services for a specified term or terms. Accordingly, transaction processing and services are generally viewed as stand-ready performance obligations comprised of a series of distinct daily services. The Company typically satisfies its transaction processing and services performance obligations over time as the services are provided. A time-elapsed output method is used to measure progress because the Company's efforts are expended evenly throughout the period given the nature of the promise is a stand-ready service. The Company has evaluated its variable payment terms related to its transaction processing and services revenue accounted for as a series of distinct days of service and concluded that they generally meet the criteria for allocating variable consideration entirely to one or more, but not all, performance obligations in a contract. Accordingly, when the criteria are met, variable amounts based on the number and type of services performed during a period are allocated to, and recognized on, the day in which the Company performs the related services. Fixed fees for processing services are generally recognized ratably over the contract period.
Transaction processing and services revenue also includes network, interchange, and other pass-through fees. Pass-through fees generally represent variable consideration and are allocated to, and recognized on, the day on which the related services are performed. Pass-through fees are billed monthly. Network and interchange fees are presented on a net basis; other pass through fees may be recorded on either a gross or a net basis depending on whether the Company is acting as a principal or an agent.
Software Maintenance Revenue
Software maintenance is comprised of technical support services and unspecified software updates and upgrades provided on a when-and-if-available basis. Software maintenance revenue is generally based on fixed fees. Payment terms are typically annually, quarterly, or monthly in advance. Contract terms vary and can span multiple years. The Company generally satisfies its maintenance-related performance obligations evenly using a time-elapsed output method over the contract term given there is no discernible pattern of performance.
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Other Recurring Revenue
Other recurring revenue is comprised primarily of services provided by dedicated personnel resources who work full time at client sites and under the client's direction. Revenue from dedicated resource agreements is generally based on fixed monthly fees per resource. Payment terms are typically annually, quarterly, or monthly in advance. Contract terms vary and can span multiple years. The Company generally satisfies its dedicated resource obligations evenly using a time-elapsed output method over the contract term given there is no discernible pattern of performance.
Software License Revenue
The Company's software licenses generally have significant stand-alone functionality to the customer upon delivery and are considered to be functional intellectual property. Additionally, the nature of the Company's promise in granting these software licenses to a customer is typically to provide the customer with a right to use the Company's intellectual property. The Company's software licenses are generally considered distinct performance obligations. Revenue allocated to software licenses is typically recognized at a point in time upon delivery of the license and is non-recurring. Contracts that contain software licenses often have non-standard terms that require significant judgments that may affect the amount and timing of revenue recognized.
When a software license requires frequent updates that are integral to maintaining the utility of the license to the customer, the Company combines the software license and the maintenance into a single performance obligation, and revenue for the combined performance obligation is recognized in Transaction processing and services revenue as the maintenance is provided, consistent with the treatment described for maintenance above. When a software license contract also includes professional services that provide significant modification or customization of the software license, the Company combines the software license and professional services into a single performance obligation, and revenue for the combined performance obligation is recognized as the professional services are provided, consistent with the methods described below for professional services revenue.
The Company has contracts where the licensed software is offered in conjunction with hosting services. The licensed software may be considered a separate performance obligation from the hosting services if the customer can take possession of the software during the contractual term without incurring a significant penalty and if it is feasible for the customer to run the software on its own infrastructure or hire a third party to host the software. If the licensed software and hosting services are separately identifiable, license revenue is recognized when the hosting services commence and it is within the customer's control to obtain a copy of the software. If the software license is not separately identifiable from the hosting service, then the related revenue for the combined performance obligation is recognized ratably over the hosting period and classified as processing revenue.
Occasionally, the Company offers extended payment terms on its license transactions; however, such transactions are generally not considered to have a significant financing component.
Professional Services Revenue
Professional services revenue is comprised of implementation, conversion, and programming services associated with the Company's data processing and application management agreements and implementation or installation services related to licensed software. Although this revenue is non-recurring in nature, it is generally recognized over time, with service durations spanning from several weeks to several years, depending on the scope and complexity of the work. Payment terms for professional services may be based on an upfront fixed fee, fixed upon the achievement of milestones, or on a time-and-materials basis.
In assessing whether implementation services provided on data processing, application management or software agreements are a distinct performance obligation, the Company considers whether the services are both capable of being distinct (i.e., the customer can benefit from the services alone or in combination with other resources that are readily available to the customer) and distinct within the context of the contract (i.e., the services are separately identifiable from the other performance obligations in the contract). Implementation services and other professional services are typically considered distinct performance obligations. However, when these services involve significant customization or modification of an underlying solution or offering, or if the services are complex and not available from a third-party provider and must be completed prior to a customer having the ability to benefit from a solution or offering, then such services and the underlying solution or offering will be accounted for as a combined performance obligation.
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The Company's professional services that are accounted for as distinct performance obligations and that are billed on a fixed fee basis are typically satisfied as services are rendered; thus, the Company uses a cost-based input method, such as cost-to-cost or efforts expended (labor hours), to provide a faithful depiction of the transfer of those services. For professional services that are distinct and billed on a time-and-materials basis, revenue is generally recognized using an output method that corresponds with the time and materials billed and delivered, which is reflective of the transfer of the services to the customer. Professional services that are not distinct from an associated solution or offering are recognized over the common measure of progress for the overall performance obligation (typically a time-elapsed output measure that corresponds to the period over which the solution or offering is made available to the customer).
Other Non-recurring Revenue
Other non-recurring revenue is comprised primarily of hardware, one-time card production, and early termination fees. The Company typically does not stock in inventory the hardware solutions sold but arranges for delivery of hardware from third-party suppliers. The Company determines whether hardware delivered from third-party suppliers should be recognized on a gross or net basis by evaluating whether the Company has control of the solution or service prior to it being transferred to the customer. Equipment and one-time card production revenue is generally recognized at a point in time upon delivery. Early contract terminations are treated as contract modifications. Early termination fees are added to a contract's transaction price once it becomes likely that liquidated damages will be charged to a customer, typically upon notification of early termination. Early termination fees are recognized over the remaining period of the related performance obligation(s).
Material Rights
Some of the Company's contracts with customers include options for the customer to acquire additional, or renew existing, solutions or services in the future. Options may represent a material right to acquire solutions or services if the discount is incremental to the range of discounts typically given for those solutions or services to that class of customer in that geographical area or market and if the customer would not have obtained the option without entering into the contract. If deemed to be a material right, the Company will account for the material right as a separate performance obligation and determine the standalone selling price based on directly observable prices when available. If the standalone selling price is not directly observable, then the Company estimates the standalone selling price to be equal to the discount that the customer would obtain by exercising the option, as adjusted for any discount that the customer would receive without exercising the option and for the likelihood that the option will be exercised.
**(q)**Cost of Revenue and Selling, General and Administrative Expenses
Cost of revenue consists of costs directly associated with providing solutions or services to clients and includes payroll, employee benefits and other costs associated with personnel employed in customer service and service delivery roles as well as third-party costs involved in fulfillment of performance obligations for which the Company is acting as a principal. Cost of revenue also includes data processing costs, amortization of software, customer relationship and trademark intangible assets, and depreciation on operating assets.
Selling, general and administrative expenses include payroll, employee benefits and other costs associated with personnel employed in sales, marketing, human resources, finance, risk management and other administrative roles, as well as acquisition, integration and certain other costs that are not considered when management evaluates revenue-generating segment performance. Selling, general and administrative expenses also include depreciation on non-operating corporate assets as well as advertising and other marketing-related program costs.
**(r)**Equity Method Investment
The Company reports its investments in unconsolidated entities over whose operating and financial policies the Company has the ability to exercise significant influence, but not control, under the equity method of accounting. Equity method investments are initially recorded at cost and are included in Equity method investment on the consolidated balance sheet, and our share of the investee's earnings or losses is reported in Equity method investment earnings (loss), net of tax, in the consolidated statement of earnings (loss). Given Worldpay's capital structure under the terms of Limited Liability Company Operating Agreement ("LLCA"), which grants us a liquidation preference ahead of other unit holders, we apply the hypothetical liquidation book value ("HLBV") method to determine our share of the investee's earnings or losses because our liquidation rights and priorities differ from our underlying ownership interest. The HLBV method calculates the proceeds that would be
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attributable to each investor based on the change, during the reporting period, of the amount of net assets to which each investor would be entitled under the liquidation provisions of the governing contractual arrangements if the investment were to be liquidated at book value, excluding any contributions or distributions during the reporting period. The Company also reports its investor-level tax impact relating to equity method investments as a component of Equity method investment earnings (loss) in the consolidated statement of earnings (loss). The carrying values of our equity method investments are adjusted for our equity method investment earnings (loss) before application of investor-level taxes and for our pro rata share of the investee's other comprehensive earnings (loss). The Company monitors its investments for other-than-temporary impairment by considering factors, such as current economic and market conditions and the operating performance of the investees and records reductions in carrying values when necessary. Equity method investees are considered related parties of the Company.
Distributions received from our equity method investments are recorded as reductions in the carrying value of such investments and are classified on the consolidated statement of cash flows pursuant to the cumulative earnings approach. Under this approach, the distributions should be classified as either a return on investment, which would be included in operating activities, or a return of investment, which would be included in investing activities. Any distributions received up to the amount of cumulative equity in earnings of the investee would be considered a return on investment and classified in operating activities. Any distributions in excess of cumulative equity in earnings of the investee would be considered a return of investment and classified in investing activities. Thus, to the extent our equity in earnings of the investee reflects cumulative losses, the distributions are considered a return of investment and classified in investing activities.
**(s)**Stock-Based Compensation Plans
The Company accounts for stock-based compensation plans using the fair value method. Thus, compensation cost is measured based on the fair value of the award at the grant date and is recognized over the service period. For our service-based stock awards, we recognize the compensation cost on a straight-line basis over the award's service period, which is generally three years. For our performance-based stock awards with market conditions which typically cliff vest on the third anniversary date of the grant, we recognize the compensation cost on a straight-line basis over the service period when it is probable the outcome of that performance condition will be achieved. The Company adjusts the compensation expense over the service period based upon the expected achievement level of the applicable performance condition. Certain of our stock awards contain only market conditions. In those circumstances, compensation cost is recognized over the service period and is not reversed even if the award does not become exercisable in the event the market condition is not achieved. The Company estimates future forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ significantly from those estimates.
**(t)**Foreign Currency Translation
Our functional currency is the U.S. dollar. The functional currency of each of our operating subsidiaries is generally the currency of the economic environment in which the subsidiary primarily does business. Our foreign subsidiaries with non-U.S. dollar functional currencies are translated into U.S. dollars for consolidation purposes using the foreign exchange rates applicable to the dates of the financial statements. Generally, these consist of the exchange rates in effect at the balance sheet date for balance sheet accounts and the average exchange rates in effect during the relevant period for revenue and expense accounts. The adjustments resulting from the translation are included in Accumulated other comprehensive earnings (loss) in the consolidated statements of equity and consolidated statements of comprehensive earnings and are excluded from net earnings.
Gains or losses resulting from measuring foreign currency transactions into the respective functional currency are included in Other income (expense), net in the consolidated statements of earnings (loss).
**(u)**Net Earnings (Loss) per Share
The basic weighted average shares and common stock equivalents for the years ended December 31, 2024, 2023 and 2022, are computed using the treasury stock method.
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Net earnings (loss) and earnings (loss) per share for the years ended December 31, 2024, 2023 and 2022, are as follows (in millions, except per share data):
| Year ended December 31, | |||||||||||||||||
| 2024 | 2023 | 2022 | |||||||||||||||
| Net earnings (loss) from continuing operations attributable to FIS | $ | 787 | $ | 502 | $ | 576 | |||||||||||
| Net earnings (loss) from discontinued operations attributable to FIS | 663 | (7,157) | (17,328) | ||||||||||||||
| Net earnings (loss) attributable to FIS | $ | 1,450 | $ | (6,655) | $ | (16,752) | |||||||||||
| Weighted average shares outstanding-basic | 553 | 591 | 604 | ||||||||||||||
| Plus: Common stock equivalent shares | 2 | — | — | ||||||||||||||
| Weighted average shares outstanding-diluted | 555 | 591 | 604 | ||||||||||||||
| Net earnings (loss) per share-basic from continuing operations attributable to FIS | $ | 1.42 | $ | 0.85 | $ | 0.95 | |||||||||||
| Net earnings (loss) per share-basic from discontinued operations attributable to FIS | 1.20 | (12.11) | (28.69) | ||||||||||||||
| Net earnings (loss) per share-basic attributable to FIS | $ | 2.62 | $ | (11.26) | $ | (27.74) | |||||||||||
| Net earnings (loss) per share-diluted from continuing operations attributable to FIS | $ | 1.42 | $ | 0.85 | $ | 0.95 | |||||||||||
| Net earnings (loss) per share-diluted from discontinued operations attributable to FIS | 1.19 | (12.11) | (28.69) | ||||||||||||||
| Net earnings (loss) per share-diluted attributable to FIS | $ | 2.61 | $ | (11.26) | $ | (27.74) |
The diluted net loss per share for the year ended December 31, 2023 and 2022, did not include the effect of common stock equivalent shares of 2 million and 3 million, respectively.
Options to purchase approximately 7 million, 8 million and 5 million shares of our common stock for the years ended December 31, 2024, 2023 and 2022, respectively, were not included in the computation of diluted earnings (loss) per share because they were anti-dilutive.
**(v)**Recent Accounting Guidance
Recently Adopted Accounting Guidance
In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker. The update is required to be applied retrospectively to prior periods presented, based on the significant segment expense categories identified and disclosed in the period of adoption. The Company adopted the new standard for the fiscal year ending December 31, 2024 and expanded disclosures around significant segment expenses. See Note 22 for further information.
Recent Accounting Guidance Not Yet Adopted
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU requires that an entity disclose specific categories in the effective tax rate reconciliation as well as provide additional information for reconciling items that meet a quantitative threshold. Further, the ASU requires certain disclosures of state versus federal income tax expense and taxes paid. The amendments in this ASU are required to be adopted for fiscal years beginning after December 31, 2024. Early adoption is permitted for annual financial statements that have not yet been issued. The amendments should be applied on a prospective basis although retrospective application is permitted. The Company is currently evaluating the impact of adoption on our financial disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The ASU requires disclosure on an annual and interim basis, in the notes to the financial statements, of disaggregated information about specific categories underlying certain income statement expense line items. This guidance is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted and is effective on either a prospective basis or retrospective basis. The Company is currently evaluating the impact of adoption on our financial disclosures.
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**(w)**Certain Reclassifications
Certain reclassifications have been made in the 2023 and 2022 consolidated financial statements to conform to the classifications used in 2024 as described below.
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As a result of our ongoing portfolio assessments, the Company reclassified certain businesses from Capital Markets to Banking and to Corporate and Other during the quarter ended March 31, 2023, and reclassified certain non-strategic operations from Banking to Corporate and Other during the quarter ended December 31, 2023. The Company recast all prior-period segment information presented to reflect these reclassifications. See Note 22 for more information regarding our segments.
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December 31, 2023, was the final deadline for states to complete all benefit issuance under federally funded pandemic relief programs. Accordingly, revenue associated with services the Company provided related to these programs has been classified within the Banking segment as Other non-recurring commencing during the quarter ended December 31, 2023, and related prior-period amounts have been reclassified from Transaction processing and services to Other non-recurring for comparability. See Note 6 for further information.
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Revenue related primarily to software licenses requiring frequent, integral updates was classified as Transaction processing and services revenue during the quarter ended December 31, 2024, and related prior-period amounts have been reclassified from Other recurring revenue to Transaction processing and services for comparability. See Note 6 for further information.
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The consolidated statements of cash flows for the year ended December 31, 2024, are presented on a continuing operations basis, with summarized cash flows from discontinued operations for operating, investing and financing activities shown separately. The consolidated statements of cash flows for the year ended December 31, 2023 and 2022, have been reclassified to conform to the 2024 presentation.
**(3)**Discontinued Operations
Sale of Worldpay Merchant Solutions Business
As discussed in Note 1, the Company completed the Worldpay Sale on January 31, 2024. The results of the Worldpay Merchant Solutions business prior to the closing of the Worldpay Sale have been presented as discontinued operations. Certain assets and liabilities included as part of the Worldpay Sale have not yet been conveyed and continue to be reported as assets held for sale, and their related earnings (loss) are reported in Earnings (loss) from discontinued operations, net of tax, on the consolidated statements of earnings (loss).
The following table presents a reconciliation of the major components of Earnings (loss) from discontinued operations, net of tax, presented in the consolidated statements of earnings (loss), reflecting activity for the year ended December 31, 2024, 2023 and 2022 (in millions). The Company's presentation of earnings (loss) from discontinued operations excludes general corporate overhead costs that were historically allocated to the Worldpay Merchant Solutions business. Additionally, beginning on July 5, 2023, the Company ceased amortization of long-lived assets held for sale in accordance with FASB ASC Topic 360, Property, Plant and Equipment.
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| 2024 | 2023 | 2022 | |||||||||||||||
| Major components of earnings (loss) from discontinued operations before income taxes: | |||||||||||||||||
| Revenue | $ | 413 | $ | 4,859 | $ | 4,809 | |||||||||||
| Cost of revenue | (73) | (1,662) | (2,604) | ||||||||||||||
| Selling, general, and administrative expenses | (158) | (1,992) | (1,936) | ||||||||||||||
| Asset impairments | — | (6,844) | (17,606) | ||||||||||||||
| Interest income (expense), net | 3 | 27 | 6 | ||||||||||||||
| Other, net | (6) | 63 | 55 | ||||||||||||||
| Earnings (loss) from discontinued operations related to major components of pre-tax earnings (loss) | 179 | (5,549) | (17,276) | ||||||||||||||
| Loss on assets held for sale | — | (1,909) | — | ||||||||||||||
| Loss on sale of disposal group | (578) | — | — | ||||||||||||||
| Earnings (loss) from discontinued operations | (399) | (7,458) | (17,276) | ||||||||||||||
| Provision (benefit) for income taxes | (1,062) | (301) | 52 | ||||||||||||||
| Earnings (loss) from discontinued operations, net of tax, attributable to FIS | $ | 663 | $ | (7,157) | $ | (17,328) |
During the year ended December 31, 2023, we recorded a $1.9 billion loss on assets held for sale related to the Worldpay Merchant Solutions reporting unit to reduce its carrying value to its estimated fair value less estimated costs to sell, primarily as a result of the exclusion of certain deferred tax liabilities that were not expected to be transferred in the transaction. This amount was subsequently updated until the closing of the Worldpay Sale.
As a result of the Worldpay Sale, during the year ended December 31, 2024, we recorded a loss on sale of disposal group of $578 million, including the impact of post-closing adjustments recorded to date. We also recorded a cumulative tax benefit of $1.1 billion in connection with the Worldpay Sale, primarily from the release of U.S. deferred tax liabilities that were not transferred in the Worldpay Sale, net of the estimated U.S. tax cost that the Company expects to incur as a result of the Worldpay Sale. Completion of remaining purchase agreement provisions in connection with the Worldpay Sale could result in further adjustments to the loss on sale amount and the estimated U.S. tax cost.
Additionally, as part of the Worldpay Sale, the Company obtained the right to receive $1.0 billion of consideration contingent on the returns realized by the Buyer exceeding certain thresholds ("Worldpay Sale contingent consideration"). The Company recognized this financial instrument as a derivative as discussed further in Note 15.
The following table presents the major classes of assets and liabilities of the disposal group classified as held for sale presented in the consolidated balance sheets as of December 31, 2024, and December 31, 2023 (in millions). As of December 31, 2024, the table excludes the value of certain assets and liabilities held for sale related to the expected sale of a non-strategic business, unrelated to the Worldpay transaction, for which the results are not reported in discontinued operations. Assets held for sale are reported at the lower of their carrying value or fair value less cost to sell and are not depreciated or amortized.
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| December 31, 2024 | December 31, 2023 | ||||||||||
| Major classes of assets included in discontinued operations: | |||||||||||
| Cash and cash equivalents | $ | 38 | $ | 1,380 | |||||||
| Settlement assets | 1,074 | 6,727 | |||||||||
| Trade receivables, net of allowance for credit losses of $0 and $52, respectively | 3 | 1,843 | |||||||||
| Prepaid expenses and other current assets | — | 161 | |||||||||
| Total current assets | 1,115 | 10,111 | |||||||||
| Property and equipment, net | — | 207 | |||||||||
| Goodwill | — | 10,906 | |||||||||
| Intangible assets, net | — | 5,971 | |||||||||
| Software, net | — | 1,321 | |||||||||
| Other noncurrent assets | — | 613 | |||||||||
| Total noncurrent assets | — | 19,018 | |||||||||
| Less valuation allowance | — | (1,909) | |||||||||
| Total assets of the disposal group classified as held for sale | $ | 1,115 | $ | 27,220 | |||||||
| Major classes of liabilities included in discontinued operations: | |||||||||||
| Accounts payable, accrued and other liabilities | $ | 2 | $ | 998 | |||||||
| Settlement payables (1) | 1,074 | 7,821 | |||||||||
| Other current liabilities | — | 65 | |||||||||
| Total current liabilities | 1,076 | 8,884 | |||||||||
| Deferred income taxes | — | 599 | |||||||||
| Other noncurrent liabilities | — | 494 | |||||||||
| Total noncurrent liabilities | — | 1,093 | |||||||||
| Total liabilities of the disposal group classified as held for sale | $ | 1,076 | $ | 9,977 |
(1)As of December 31, 2024, Settlement payables includes $134 million due to Worldpay, which is a related party.
Settlement Assets
The principal components of the Company's settlement assets of the disposal group are as follows (in millions):
| December 31, 2024 | December 31, 2023 | ||||||||||
| Settlement assets | |||||||||||
| Settlement deposits | $ | — | $ | 56 | |||||||
| Merchant float | 1,074 | 2,594 | |||||||||
| Settlement receivables | — | 4,077 | |||||||||
| Total Settlement assets | $ | 1,074 | $ | 6,727 |
(4)Equity Method Investment
As discussed in Note 1, the Company completed the Worldpay Sale on January 31, 2024, retaining a non-controlling equity interest in Worldpay. We account for our 45% minority ownership in Worldpay using the equity method of accounting. This investment is reflected in Equity method investment on our December 31, 2024, consolidated balance sheet. During the eleven-month period from February 1, 2024, through December 31, 2024, the Company's share of the net income of Worldpay and our investor-level tax impact is reported as Equity method investment earnings (loss), net of tax, in the consolidated statement of earnings (loss). During the year ended December 31, 2024, we received distributions of $47 million from Worldpay, which are recorded in Other investing activities, net on the consolidated statement of cash flows for the year ended December 31, 2024.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Summary Worldpay financial information is as follows (in millions):
| Eleven months | ||||||||
| ended | ||||||||
| Statement of Earnings (Loss) | December 31, 2024 | |||||||
| Revenue | $ | 4,732 | ||||||
| Gross profit | $ | 2,422 | ||||||
| Earnings (loss) before income taxes | $ | (342) | ||||||
| Net earnings (loss) attributable to Worldpay | $ | (444) | ||||||
| FIS share of net earnings (loss) attributable to Worldpay, net of tax (1) | $ | (145) |
(1)For the eleven months ended December 31, 2024, this amount is net of $67 million of investor-level tax benefit, as well as intra-entity eliminations for timing differences between the Company and Worldpay's recognition of profits and losses on related-party transactions.
| Balance Sheet | December 31, 2024 | ||||
| Current assets | $ | 8,126 | |||
| Noncurrent assets | $ | 15,834 | |||
| Current liabilities | $ | 5,979 | |||
| Noncurrent liabilities | $ | 9,321 | |||
| Noncontrolling interest | $ | 1 |
Continuing Involvement with Discontinued Operations and Related-Party Transactions
In connection with the closing of the Worldpay Sale, the Company entered into, and subsequently amended, an LLCA with respect to Worldpay, and a registration rights agreement with respect to the Company's retained equity interest in Worldpay. The LLCA provides that FIS has the right to appoint a minority of the board of managers of Worldpay and that FIS has customary consent and consultation rights with respect to certain material actions of Worldpay, in each case, subject to ownership stepdown thresholds. The LLCA contains, among other things, covenants and restrictions relating to other governance, liquidity and tax matters, including non-solicitation and noncompetition covenants, distribution mechanics, preemptive rights and follow-on equity funding commitments of the Buyer, and restrictions on transfer and associated tag-along and drag-along rights. Neither FIS nor the Buyer may transfer any of its interest in Worldpay prior to January 31, 2026, without the other's prior written consent. Each of FIS and the Buyer will have the right to require Worldpay to consummate an initial public offering ("IPO") or sale transaction after the fourth anniversary of the closing, subject to certain return hurdles and (in the case of an IPO) public float requirements, which requirements will fall away following the sixth anniversary of the closing.
We have continuing involvement with Worldpay, primarily through our remaining interest, an employee leasing agreement ("ELA"), a transition services agreement ("TSA"), and various other commercial agreements. Under the terms of the ELA, which was substantially completed by July 1, 2024, the Company leased certain employees to Worldpay in the United States, China, Colombia and South Korea. The compensation and benefit costs paid by the Company for the leased employees was billed to and reimbursed by Worldpay. Under the terms of the TSA, the Company is procuring certain third-party services on behalf of Worldpay and providing technology infrastructure, risk and security, accounting and various other corporate services to Worldpay for a period of up to 24 months after the closing, subject to a six-month extension, and Worldpay is providing various corporate services to the Company, allowing it to maintain access to certain resources transferred in the Worldpay Sale.
During the eleven months ended December 31, 2024, pass-through costs of $247 million were incurred under the ELA, and third-party pass-through costs of $159 million were incurred under the TSA, and were netted against the equal and offsetting reimbursement amounts due from Worldpay. Additionally, during the eleven months ended December 31, 2024, net TSA services income of $142 million was recognized in Other operating (income) expense, net - related party, with approximately two-thirds of the corresponding expense recorded in Cost of revenue and the remainder recorded in Selling, general and administrative expense in the consolidated statement of earnings (loss). Revenue earned during the eleven months ended December 31, 2024, from various commercial services provided to Worldpay was $140 million.
For the eleven months ended December 31, 2024, we collected net cash of $704 million related to the ELA, TSA and commercial agreements with Worldpay. As of December 31, 2024, we recorded a receivable of $84 million in Receivable from
FIDELITY NATIONAL INFORMATION SERVICES, INC.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
related party on the consolidated balance sheet in connection with the TSA and commercial agreements. Under the TSA and commercial agreements, amounts are generally invoiced monthly in arrears and are payable by electronic transfer within 30 days of invoice. As of December 31, 2024, we recorded a settlement payable of $134 million in Current liabilities held for sale on the consolidated balance sheet for amounts to be settled to Worldpay. The settlement payable is generally paid within five business days. As of December 31, 2024, we also recorded other payables to Worldpay of $25 million in Accounts payable, accrued and other liabilities on the consolidated balance sheet. These amounts are generally payable within 30 days.
Prior to the Worldpay Sale, the Company issued standby letters of credit and made parental guarantees (collectively "Guarantees") in the ordinary course of its business to various counterparties on behalf of certain former subsidiaries included in the Worldpay Sale, including a guarantee of a liability that a Worldpay subsidiary owes to the former owners of Worldpay Group plc (the "CVR Liability"). FIS and Worldpay have agreed to maintain these Guarantees through January 31, 2026, affording Worldpay time to arrange for alternatives to the Guarantees. Worldpay’s aggregate amount of borrowing capacity under the standby letters of credit guaranteed by FIS is $273 million. As of December 31, 2024, there were no amounts outstanding under the standby letters of credit. As of December 31, 2024, Worldpay’s CVR liability was $378 million and is due on October 12, 2027. There is no limitation to the maximum potential future payments under the other remaining Guarantees, and such maximum potential amount of future payments cannot be estimated due to the conditional nature of the Company's obligations and the unique facts and circumstances involved in each agreement. As of December 31, 2024, there are no amounts drawn under any of the Guarantees. In the event a Worldpay subsidiary were to default on a performance obligation covered by the Guarantees, the Company could be required to make payment or be subject to claims; however, in any such case, Worldpay is required under the terms of the agreement governing the Worldpay Sale to fully reimburse and indemnify the Company. The Company considers the likelihood of incurring a loss under the Guarantees to be remote, and no amounts have been accrued with respect to these Guarantees.
**(5)**Acquisitions
2024 Business Combinations
During the year ended December 31, 2024, the Company completed acquisitions of three businesses for total cash consideration, net of cash acquired, of $514 million. These acquisitions were recorded as business combinations. The results of operations and financial position of the acquisitions are included in the consolidated financial statements subsequent to the closing of each acquisition. We recorded an allocation of the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values, consisting primarily of $83 million of customer relationships and $153 million of software assets. The Company also recorded $351 million of goodwill for the residual amount by which the purchase price exceeded the fair value of the net assets acquired. The purchase price allocations are provisional as of December 31, 2024, and the Company expects to finalize them as soon as practicable, but no later than one year from each of the respective acquisition dates. There were no significant business combinations, individually or in the aggregate, completed during 2023 and 2022.
Virtus Acquisition
On January 2, 2020, FIS acquired a majority interest in Virtus Partners ("Virtus"), previously a privately held company that provides high-value managed services and technology to the credit and loan market. The acquisition was accounted for as a business combination. FIS acquired a 70% voting and financial interest in Virtus with 30% interest retained by the founders of Virtus ("Founders"). The agreement between FIS and the Founders provided FIS with a call option to purchase, and the Founders with a put option requiring FIS to purchase, all of the Founders' retained interest in Virtus at a redemption value determined pursuant to performance goals stated in the agreement, exercisable at any time after two years and three years, respectively, following the acquisition date. In January 2023, the Founders exercised their put option, and as a result, FIS paid the $173 million redemption value, recorded as a financing activity in the consolidated statement of cash flows, and now owns 100% of Virtus.
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AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
**(6)**Revenue
As a result of the Company's ongoing portfolio assessments, the Company reclassified certain businesses from Capital Markets to Banking and to Corporate and Other during the quarter ended March 31, 2023, and reclassified certain non-strategic operations from Banking to Corporate and Other during the quarter ended December 31, 2023. The Company recast all prior-period segment information presented to reflect these reclassifications.
Disaggregation of Revenue
In the following tables, revenue is disaggregated by primary geographical market and type of revenue. The tables also include a reconciliation of the disaggregated revenue with the Company's reportable segments.
For the year ended December 31, 2024 (in millions):
| Banking Solutions | Capital Market Solutions | Corporate and Other | Total | |||||||||||||||||||||||
| Primary Geographical Markets: | ||||||||||||||||||||||||||
| North America | $ | 5,893 | $ | 1,839 | $ | 117 | $ | 7,849 | ||||||||||||||||||
| All others | 999 | 1,140 | 139 | 2,278 | ||||||||||||||||||||||
| Total | $ | 6,892 | $ | 2,979 | $ | 256 | $ | 10,127 | ||||||||||||||||||
| Type of Revenue: | ||||||||||||||||||||||||||
| Recurring revenue: | ||||||||||||||||||||||||||
| Transaction processing and services | $ | 5,146 | $ | 1,507 | $ | 207 | $ | 6,860 | ||||||||||||||||||
| Software maintenance | 362 | 576 | 2 | 940 | ||||||||||||||||||||||
| Other recurring | 244 | 62 | 3 | 309 | ||||||||||||||||||||||
| Total recurring | 5,752 | 2,145 | 212 | 8,109 | ||||||||||||||||||||||
| Software license | 196 | 431 | 1 | 628 | ||||||||||||||||||||||
| Professional services | 551 | 399 | 4 | 954 | ||||||||||||||||||||||
| Other non-recurring | 393 | 4 | 39 | 436 | ||||||||||||||||||||||
| Total | $ | 6,892 | $ | 2,979 | $ | 256 | $ | 10,127 |
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
For the year ended December 31, 2023 (in millions):
| Banking Solutions | Capital Market Solutions | Corporate and Other | Total | |||||||||||||||||||||||
| Primary Geographical Markets: | ||||||||||||||||||||||||||
| North America | $ | 5,812 | $ | 1,712 | $ | 167 | $ | 7,691 | ||||||||||||||||||
| All others | 931 | 1,054 | 155 | 2,140 | ||||||||||||||||||||||
| Total | $ | 6,743 | $ | 2,766 | $ | 322 | $ | 9,831 | ||||||||||||||||||
| Type of Revenue: | ||||||||||||||||||||||||||
| Recurring revenue: | ||||||||||||||||||||||||||
| Transaction processing and services (1) (2) | $ | 4,981 | $ | 1,409 | $ | 276 | $ | 6,666 | ||||||||||||||||||
| Software maintenance | 364 | 531 | 2 | 897 | ||||||||||||||||||||||
| Other recurring (2) | 227 | 53 | 4 | 284 | ||||||||||||||||||||||
| Total recurring | 5,572 | 1,993 | 282 | 7,847 | ||||||||||||||||||||||
| Software license | 131 | 369 | 8 | 508 | ||||||||||||||||||||||
| Professional services | 562 | 391 | 9 | 962 | ||||||||||||||||||||||
| Other non-recurring (1) | 478 | 13 | 23 | 514 | ||||||||||||||||||||||
| Total | $ | 6,743 | $ | 2,766 | $ | 322 | $ | 9,831 |
For the year ended December 31, 2022 (in millions):
| Banking Solutions | Capital Market Solutions | Corporate and Other | Total | |||||||||||||||||||||||
| Primary Geographical Markets: | ||||||||||||||||||||||||||
| North America | $ | 5,710 | $ | 1,566 | $ | 284 | $ | 7,560 | ||||||||||||||||||
| All others | 915 | 1,065 | 180 | 2,160 | ||||||||||||||||||||||
| Total | $ | 6,625 | $ | 2,631 | $ | 464 | $ | 9,720 | ||||||||||||||||||
| Type of Revenue: | ||||||||||||||||||||||||||
| Recurring revenue: | ||||||||||||||||||||||||||
| Transaction processing and services (1) (2) | $ | 4,806 | $ | 1,300 | $ | 421 | $ | 6,527 | ||||||||||||||||||
| Software maintenance | 358 | 498 | 2 | 858 | ||||||||||||||||||||||
| Other recurring (2) | 189 | 32 | 1 | 222 | ||||||||||||||||||||||
| Total recurring | 5,353 | 1,830 | 424 | 7,607 | ||||||||||||||||||||||
| Software license | 160 | 377 | — | 537 | ||||||||||||||||||||||
| Professional services | 632 | 419 | 8 | 1,059 | ||||||||||||||||||||||
| Other non-recurring (1) | 480 | 5 | 32 | 517 | ||||||||||||||||||||||
| Total | $ | 6,625 | $ | 2,631 | $ | 464 | $ | 9,720 |
(1) December 31, 2023, was the final deadline for states to complete all benefit issuance under federally funded pandemic relief programs. Accordingly, revenue associated with services the Company provided related to these programs has been classified as Other non-recurring commencing in the fourth quarter of 2023, and related prior-period amounts have been reclassified from Transaction processing and services to Other non-recurring for comparability. Revenue associated with services the Company provided related to these programs was $151 million and $112 million for the years ended December 31, 2023 and 2022, respectively.
(2) Revenue related primarily to software licenses requiring frequent, integral updates has been classified as Transaction processing and services revenue commencing in the quarter ended December 31, 2024, and related prior-period amounts have been reclassified from Other recurring revenue to Transaction processing and services for comparability. Revenue reclassified for the year ended December 31, 2023, was $21 million, $28 million and $37 million within Banking, Capital Markets and Corporate and Other, respectively. Revenue reclassified for the year ended December 31, 2022, was $21 million, $26 million and $37 million within Banking, Capital Markets and Corporate and Other, respectively.
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Contract Balances
The Company recognized revenue of approximately $728 million, $677 million and $696 million, during the years ended December 31, 2024, 2023 and 2022, respectively, that was included in the corresponding deferred revenue balance at the beginning of the periods.
Transaction Price Allocated to the Remaining Performance Obligations
As of December 31, 2024, approximately $23.5 billion of revenue is estimated to be recognized in the future from the Company's remaining unfulfilled performance obligations, which are primarily comprised of recurring account- and volume-based processing services. This excludes the amount of anticipated recurring renewals not yet contractually obligated. The Company expects to recognize approximately 32% of our remaining performance obligations over the next 12 months, approximately another 24% over the next 13 to 24 months, and the balance thereafter.
**(7)**Property and Equipment
Property and equipment as of December 31, 2024 and 2023, consist of the following (in millions):
| 2024 | 2023 | ||||||||||
| Land | $ | 32 | $ | 33 | |||||||
| Buildings | 439 | 435 | |||||||||
| Leasehold improvements | 98 | 105 | |||||||||
| Computer equipment | 1,404 | 1,387 | |||||||||
| Furniture, fixtures, and other equipment | 110 | 114 | |||||||||
| 2,083 | 2,074 | ||||||||||
| Accumulated depreciation and amortization | (1,437) | (1,379) | |||||||||
| Total Property and equipment, net | $ | 646 | $ | 695 |
During the years ended December 31, 2024, 2023 and 2022, the Company entered into financing arrangements of $29 million, $53 million and $63 million, respectively, for certain hardware and software purchases. The assets are included in Property and equipment, net, and Software, net, and the financing arrangements are classified as Long-term debt, on our consolidated balance sheets. Periodic payments are included in Repayment of borrowings and other financing arrangements on the consolidated statements of cash flows.
Depreciation and amortization expense on property and equipment totaled $175 million, $165 million and $186 million for the years ended December 31, 2024, 2023 and 2022, respectively.
**(8)**Goodwill
Changes in goodwill during the years ended December 31, 2024 and 2023, are summarized below (in millions).
| Banking Solutions | Capital Market Solutions | Corporate and Other | Total | ||||||||||||||||||||
| Balance, December 31, 2022 | $ | 12,536 | $ | 4,260 | $ | 20 | $ | 16,816 | |||||||||||||||
| Goodwill attributable to acquisitions | 37 | 64 | — | 101 | |||||||||||||||||||
| Foreign currency adjustments | 15 | 39 | — | 54 | |||||||||||||||||||
| Balance, December 31, 2023 | 12,588 | 4,363 | 20 | 16,971 | |||||||||||||||||||
| Goodwill attributable to acquisitions | 138 | 217 | — | 355 | |||||||||||||||||||
| Foreign currency adjustments | (27) | (39) | — | (66) | |||||||||||||||||||
| Balance, December 31, 2024 | $ | 12,699 | $ | 4,541 | $ | 20 | $ | 17,260 |
For our Banking and Capital Markets reporting units, we performed a quantitative annual assessment in 2022 which concluded that the fair values of these reporting units substantially exceeded their respective carrying amounts. For 2023 and
FIDELITY NATIONAL INFORMATION SERVICES, INC.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
2024, we performed a qualitative annual assessment of these reporting units and concluded that it remained more likely than not that the fair values of these reporting units continued to exceed their respective carrying amounts. Given the substantial excess of fair value over carrying amounts, we believe the likelihood of obtaining materially different results based on a change of assumptions to be low.
**(9)**Intangible Assets
Intangible assets as of December 31, 2024, consist of the following (in millions):
| Cost | Accumulated Amortization | Net | |||||||||||||||
| Customer relationships | $ | 6,296 | $ | (5,056) | $ | 1,240 | |||||||||||
| Trademarks and other | 148 | (70) | 78 | ||||||||||||||
| Total Intangible assets, net | $ | 6,444 | $ | (5,126) | $ | 1,318 |
Intangible assets as of December 31, 2023, consist of the following (in millions):
| Cost | Accumulated Amortization | Net | |||||||||||||||
| Customer relationships | $ | 6,326 | $ | (4,583) | $ | 1,743 | |||||||||||
| Trademarks and other | 142 | (62) | 80 | ||||||||||||||
| Total Intangible assets, net | $ | 6,468 | $ | (4,645) | $ | 1,823 |
Amortization expense for intangible assets with finite lives was $641 million, $467 million and $486 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Estimated amortization of intangible assets for the next five years is as follows (in millions):
| 2025 | $ | 582 | |||
| 2026 | 214 | ||||
| 2027 | 182 | ||||
| 2028 | 161 | ||||
| 2029 | 95 |
**(10)**Software
Software as of December 31, 2024 and 2023, consists of the following (in millions):
| 2024 | 2023 | ||||||||||
| Software from acquisitions | $ | 880 | $ | 754 | |||||||
| Capitalized software development costs | 3,151 | 2,775 | |||||||||
| Purchased software | 605 | 633 | |||||||||
| 4,636 | 4,162 | ||||||||||
| Accumulated amortization | (2,110) | (2,047) | |||||||||
| Total Software, net | $ | 2,526 | $ | 2,115 |
During the years ended December 31, 2024, 2023, and 2022, the Company entered into long-term payment arrangements of $158 million, $28 million, and $3 million, respectively, for certain purchased software. The related long-term payment obligations are classified as Other noncurrent liabilities, with the current portion recorded in Accounts payable, accrued and other liabilities, on our consolidated balance sheets. Periodic payments are included in Other investing activities, net, on the consolidated statements of cash flows.
During the years ended December 31, 2024, 2023 and 2022, the Company recorded $19 million, $81 million and $31 million, respectively, of software asset impairments and $0 million, $18 million and $75 million, respectively, of incremental software amortization expense driven by the Company's platform modernization. Platform modernization includes sunsetting
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
certain technology platforms, which resulted in shortened estimated useful lives and accelerated amortization methods primarily impacting the associated assets over an approximate three-year period, beginning in the third quarter of 2021.
Amortization expense for software was $585 million, $588 million and $640 million for the years ended December 31, 2024, 2023 and 2022, respectively.
**(11)**Deferred Contract Costs
Origination and fulfillment costs from contracts with customers capitalized as of December 31, 2024 and 2023, consists of the following (in millions):
| 2024 | 2023 | ||||||||||
| Contract costs on implementations in progress | $ | 381 | $ | 291 | |||||||
| Contract origination costs on completed implementations, net | 602 | 542 | |||||||||
| Contract fulfillment costs on completed implementations, net | 258 | 243 | |||||||||
| Total Deferred contract costs, net | $ | 1,241 | $ | 1,076 |
For the years ended December 31, 2024, 2023 and 2022, amortization of deferred contract costs on completed implementations was $336 million, $310 million and $324 million, respectively.
During the years ended December 31, 2024, 2023 and 2022, the Company recorded $0 million, $6 million, and $34 million respectively, of incremental amortization expense related to deferred contract costs driven by the Company's platform modernization.
**(12)**Accounts Payable, Accrued and Other Liabilities
Accounts payable, accrued and other liabilities as of December 31, 2024 and 2023, consists of the following (in millions):
| 2024 | 2023 | ||||||||||
| Accrued salaries and incentives | $ | 445 | $ | 472 | |||||||
| Income taxes payable | 279 | 3 | |||||||||
| Trade accounts payable | 214 | 110 | |||||||||
| Taxes other than income tax | 126 | 123 | |||||||||
| Accrued interest payable | 117 | 144 | |||||||||
| Accrued benefits and payroll taxes | 74 | 106 | |||||||||
| Operating lease liabilities | 74 | 85 | |||||||||
| Related-party payables | 25 | — | |||||||||
| Other accrued liabilities | 640 | 730 | |||||||||
| Total Accounts payable, accrued and other liabilities | $ | 1,994 | $ | 1,773 |
**(13)**Other Noncurrent Assets and Liabilities
Other noncurrent assets as of December 31, 2024 and 2023, consists of the following (in millions):
| 2024 | 2023 | ||||||||||
| Accrued accounts receivable and contract assets | $ | 606 | $ | 468 | |||||||
| Operating lease ROU assets (1) | 230 | 214 | |||||||||
| Equity security investments | 191 | 195 | |||||||||
| Customer inducements | 162 | 150 | |||||||||
| Deferred compensation plan assets | 161 | 152 | |||||||||
| Derivatives | 120 | 172 | |||||||||
| Other | 279 | 177 | |||||||||
| Total Other noncurrent assets | $ | 1,749 | $ | 1,528 |
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Other noncurrent liabilities as of December 31, 2024 and 2023, consists of the following (in millions):
| 2024 | 2023 | ||||||||||
| Derivatives | $ | 633 | $ | 789 | |||||||
| Operating lease liabilities (1) | 177 | 178 | |||||||||
| Deferred compensation plan liabilities | 151 | 138 | |||||||||
| Purchased software with long-term payment arrangements | 146 | 17 | |||||||||
| Pensions | 127 | 110 | |||||||||
| Deferred revenue | 117 | 149 | |||||||||
| Other | 90 | 65 | |||||||||
| Total Other noncurrent liabilities | $ | 1,441 | $ | 1,446 |
(1)See Note 16, Operating Leases
Equity Security Investments
The Company holds various equity securities without readily determinable fair values. These securities primarily represent strategic investments made by the Company as well as investments obtained through acquisitions. Such investments totaled $191 million and $195 million at December 31, 2024 and 2023, respectively, and are included within Other noncurrent assets on the consolidated balance sheets. The Company accounts for these investments at cost, less impairment, and adjusts the carrying values for observable price changes from orderly transactions for identical or similar investments of the same issuer. These adjustments are generally considered Level 2-type fair value measurements. The Company records realized and unrealized gains and losses on these investments as well as impairment losses, as Other income (expense), net on the consolidated statements of earnings (loss) and recorded net (losses) gains of $(5) million, $(48) million and $(31) million for the years ended December 31, 2024, 2023 and 2022, respectively, related to these investments. The net loss recorded for the 2023 period primarily relates to impairments. The net loss recorded during 2022 included a $78 million impairment loss.
**(14)**Debt
Long-term debt as of December 31, 2024 and 2023, consisted of the following (in millions):
| December 31, 2024 | ||||||||||||||||||||||||||||||||
| Weighted | ||||||||||||||||||||||||||||||||
| Stated | Average | |||||||||||||||||||||||||||||||
| Interest | Interest | December 31, | ||||||||||||||||||||||||||||||
| Rates | Rate (1) | Maturities | 2024 | 2023 | ||||||||||||||||||||||||||||
| Fixed Rate Notes | ||||||||||||||||||||||||||||||||
| Senior USD Notes | 1.2% - 5.6% | 3.7% | 2025 - 2052 | $ | 6,381 | $ | 8,659 | |||||||||||||||||||||||||
| Senior Euro Notes | 0.6% - 3.0% | 2.7% | 2025 - 2039 | 4,154 | 4,968 | |||||||||||||||||||||||||||
| Senior GBP Notes | 2.3% - 3.4% | 9.6% | 2029 - 2031 | 214 | 1,178 | |||||||||||||||||||||||||||
| Revolving Credit Facility (2) | 5.6% | 2029 | 151 | 127 | ||||||||||||||||||||||||||||
| Financing arrangements for certain hardware and software | 66 | 96 | ||||||||||||||||||||||||||||||
| Other (3) | (312) | (710) | ||||||||||||||||||||||||||||||
| Total long-term debt, including current portion | 10,654 | 14,318 | ||||||||||||||||||||||||||||||
| Current portion of long-term debt | (968) | (1,348) | ||||||||||||||||||||||||||||||
| Long-term debt, excluding current portion | $ | 9,686 | $ | 12,970 |
(1)The weighted average interest rate includes the impact of the fair value basis adjustments due to interest rate swaps and the impact of cross-currency interest rate swaps designated as fair value hedges and excludes the impact of cross-currency interest rate swaps designated as net investment hedges (see Note 15). The impact of the included fair value basis adjustments and cross-currency interest rate swaps in certain cases results in an effective weighted average interest rate being outside the stated interest rate range on the fixed rate notes.
(2)Interest on the Revolving Credit Facility is generally payable at Secured Overnight Financing Rate ("SOFR") plus a spread of 0.100% plus an applicable margin of up to 1.625% and an unused commitment fee of up to 0.200%, each based upon the Company's corporate credit ratings. The weighted average interest rate on the Revolving Credit Facility excludes fees.
FIDELITY NATIONAL INFORMATION SERVICES, INC.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(3)Other includes the amount of fair value basis adjustments due to interest rate swaps (see further discussion below and in Note 15), unamortized debt issuance costs and unamortized non-cash bond discounts.
Short-term borrowings as of December 31, 2024 and 2023, consisted of the following (in millions):
| December 31, 2024 | |||||||||||||||||||||||
| Weighted | |||||||||||||||||||||||
| Average | |||||||||||||||||||||||
| Interest | December 31, | ||||||||||||||||||||||
| Rate | Maturities | 2024 | 2023 | ||||||||||||||||||||
| Euro-commercial paper notes ("ECP Notes") | 3.1 | % | Up to 183 days | $ | 104 | $ | 2,118 | ||||||||||||||||
| U.S. commercial paper notes ("USCP Notes") | 4.6 | % | Up to 397 days | 532 | 2,642 | ||||||||||||||||||
| Total Short-term borrowings | $ | 636 | $ | 4,760 |
The Company is a party to interest rate swaps that, prior to de-designation as fair value hedges during the quarter ended September 30, 2023, converted a portion of its fixed-rate debt to variable-rate debt. As a result of the de-designations, the final fair value basis adjustments recorded through the dates of de-designation as a decrease of the long-term debt are subsequently amortized as interest expense using the effective interest method over the remaining periods to maturity of the respective long-term debt. The fair value basis adjustments reflected in Other in the long-term debt table above totaled $(228) million and $(594) million as of December 31, 2024 and 2023, respectively.
The Company is also party to fixed-for-fixed cross-currency interest rate swaps under which it agrees to receive interest in foreign currency in exchange for paying interest in U.S. dollars. These are designated as fair value hedges.
The Company has also entered into cross-currency interest rate swaps under which it agrees to receive interest in U.S. dollars in exchange for paying interest in a foreign currency. These are designated as net investment hedges. Although these cross-currency interest rate swaps are entered into as net investment hedges of its investments in certain of its non-U.S. subsidiaries, and not for the purpose of hedging interest rates, the benefit or cost of such hedges is reflected in interest expense in the consolidated statement of earnings (loss). As of December 31, 2024, the weighted average interest rate of the Company's outstanding debt was 3.7%, including the impact of fair value basis adjustments due to interest rate swaps and cross-currency interest rate swaps designated as fair value hedges but excluding the impact of cross-currency interest rate swaps designated as net investment hedges. Including the impact of the net investment hedge cross-currency interest rate swaps on interest expense, the weighted average interest rate of the Company's outstanding debt was 2.8%.
See Note 15 for further discussion of the Company's interest rate swaps and cross-currency interest rate swaps and related hedge designations.
The obligations of FIS under the Revolving Credit Facility, ECP Notes and USCP Notes, and all of its outstanding senior notes rank equal in priority and are unsecured.
The following table summarizes the amount of our long-term debt, including financing obligations for certain hardware and software, as of December 31, 2024, based on maturity date.
| Total | |||||
| 2025 | $ | 969 | |||
| 2026 | 1,275 | ||||
| 2027 | 1,535 | ||||
| 2028 | 1,629 | ||||
| 2029 | 680 | ||||
| Thereafter | 4,878 | ||||
| Total principal payments | 10,966 | ||||
| Other debt per the long-term debt table | (312) | ||||
| Total long-term debt, including current portion | $ | 10,654 |
There are no mandatory principal payments on the Revolving Credit Facility and any balance outstanding on the Revolving Credit Facility will be due and payable at the Revolving Credit Facility's scheduled maturity date, which occurs on September 27, 2029.
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Senior Notes
FIS may redeem the Senior USD Notes, Senior Euro Notes and Senior GBP Notes (collectively, the "Senior Notes") at its option in whole or in part, at any time and from time to time, at a redemption price equal to the greater of 100% of the principal amount to be redeemed and a make-whole amount calculated as described in the related indenture in each case plus accrued and unpaid interest to, but excluding, the date of redemption, provided no make-whole amount will be paid for redemptions of the Senior Notes during the period described in the related indenture (ranging from one to six months) prior to their maturity.
On July 15, 2024, FIS repaid an aggregate principal amount of €500 million in 1.100% Senior Euro Notes on their due date, pursuant to the related indenture.
On March 7 and 8, 2024, pursuant to cash tender offers, FIS purchased and redeemed an aggregate principal amount of $1.5 billion in Senior USD Notes and an aggregate principal amount of £1.0 billion in Senior GBP Notes, with interest rates ranging from 2.25% to 5.625% and maturities ranging from 2025 to 2052, resulting in a loss on extinguishment of debt of approximately $174 million, recorded in Other income (expense), net on the consolidated statement of earnings (loss), relating to tender discounts and fees; the write-off of unamortized bond discounts, debt issuance costs and fair value basis adjustments; and gains on related derivative instruments. The Company funded the purchase and redemption of the Senior Notes using a portion of the net proceeds from the Worldpay Sale.
On March 1, 2024, FIS repaid an aggregate principal amount of $750 million in Senior USD Notes, on their due date, pursuant to the related indenture. On May 21, 2023, FIS repaid an aggregate principal amount of €1.3 billion in Senior Euro Notes, on their due date, pursuant to the related indenture. On March 1, 2023, FIS repaid an aggregate principal amount of $750 million in Senior USD Notes, on their due date, pursuant to the related indenture. On December 3, 2022, FIS repaid an aggregate principal amount of €1.0 billion in Senior Euro Notes, on their due date, pursuant to the related indenture.
On July 13, 2022, FIS completed the issuance and sale of Senior USD Notes with an aggregate principal amount of $2.5 billion with interest rates ranging from 4.5% to 5.6% and maturities ranging from 2025 to 2052. The proceeds from the debt issuance were used for the repayment of debt under our commercial paper programs in the third quarter of 2022.
The Senior Notes are subject to customary covenants, including, among others, customary events of default.
Commercial Paper
The Company has a Euro commercial paper ("ECP") and a U.S. commercial paper ("USCP") program for the issuance and sale of senior, unsecured commercial paper notes, up to a combined maximum aggregate amount outstanding at any time of $4.5 billion. Borrowings are limited to the availability of funds under the Revolving Credit Facility, which backstops the commercial paper programs. The ECP and USCP programs are generally used for general corporate purposes.
During the first quarter of 2024, the Company repaid its ECP Notes and USCP Notes using a portion of the net proceeds from the Worldpay Sale before resuming borrowings during the third quarter of 2024.
Revolving Credit Facility
On September 27, 2024, FIS entered into an amendment and restatement agreement to the Revolving Credit Facility to amend certain covenant provisions, revise lender commitments for certain counterparties, and extend the scheduled maturity date to September 27, 2029. As of December 31, 2024, the borrowing capacity under the Revolving Credit Facility was approximately $3,713 million (net of $636 million of capacity backstopping our commercial paper notes and $151 million of Revolving Credit Facility outstanding balance).
The Revolving Credit Facility is subject to customary covenants restricting, among other things, the incurrence of indebtedness, certain restricted payments and use of proceeds as well as requiring us to maintain certain financial ratios.
We monitor the financial stability of our counterparties on an ongoing basis. The lender commitments under the undrawn portion of the Revolving Credit Facility are comprised of a diversified set of financial institutions, both domestic and international. The failure of any single lender to perform its obligations under the Revolving Credit Facility would not adversely impact our ability to fund our operations.
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Fair Value of Debt
The fair value of the Company's long-term debt is estimated to be approximately $806 million and $1,086 million lower than the carrying value, excluding the fair value basis adjustments due to interest rate swaps and unamortized discounts, as of December 31, 2024 and 2023, respectively.
**(15)**Financial Instruments
Fair Value Hedges
The Company held fixed-to-variable interest rate swaps with aggregate notional amounts of $1,854 million, £925 million and €0 million at December 31, 2024 and $1,854 million, £925 million and €500 million at December 31, 2023. Prior to the quarter ended September 30, 2023, these swaps were designated as fair value hedges for accounting purposes, converting the interest rate exposure on certain of the Company's Senior USD Notes, Senior GBP Notes and Senior Euro Notes, as applicable, from fixed to variable. While designated as fair value hedges, changes in fair value of these interest rate swaps were recorded as an adjustment to long-term debt. During the quarter ended September 30, 2023, the Company de-designated these swaps as fair value hedges. As a result of the de-designations, the final fair value basis adjustments recorded through the dates of de-designation as a decrease of the long-term debt are subsequently amortized as interest expense using the effective interest method over the remaining periods to maturity of the respective long-term debt. We amortized $50 million and $41 million of these balances as Interest expense during the years ended December 31, 2024 and 2023, respectively (see Note 14). During the quarter ended March 31, 2024, $316 million of unamortized fair value basis adjustments recorded as a decrease of the long-term debt tendered was written-off and recorded as part of the loss on extinguishment of debt (see Note 13). The remaining unamortized fair value basis adjustments recorded as a decrease of the long-term debt totaled $228 million and $594 million at December 31, 2024 and 2023, respectively.
Concurrently with the de-designations described above, the Company entered into new offsetting variable-to-fixed interest rate swaps with aggregate notional amounts of $1,854 million, £925 million and €500 million. At December 31, 2024, the aggregate notional amounts remaining are $1,854 million, £925 million and €0 million. The Company accounts for the de-designated fixed-to-variable and offsetting variable-to-fixed interest rate swaps as economic hedges; as such, effective as of the de-designation dates, changes in interest rates associated with the variable leg of the interest rate swaps do not affect the interest expense recognized, eliminating variable-rate risk on the fixed-to-variable interest rate swaps. The terms of the new interest rate swaps when matched against the terms of the existing fixed-to-variable interest rate swaps result in a net fixed coupon spread payable by the Company. The impact of the go-forward changes in fair values of the new and existing interest rate swaps, including the impact of the coupons, is recorded as Other income (expense), net pursuant to accounting for economic hedges and totaled $(22) million and $(52) million, for the years ended December 31, 2024 and 2023, respectively. The coupon payments are recorded within Cash flows from investing activities from continuing operations on the consolidated statements of cash flows and totaled $122 million and $28 million in cash outflows for the years ended December 31, 2024 and 2023, respectively. The new and existing interest rate swap fair values totaled assets of $33 million and $12 million and liabilities of $(595) million and $(675) million at December 31, 2024 and 2023, respectively.
During the quarter ended September 30, 2023, the Company entered into an aggregate notional amount of €3,375 million fixed-for-fixed cross-currency interest rate swaps to hedge its exposure to foreign currency risk associated with its Senior Euro Notes. During the quarter ended June 30, 2023, the Company entered into an aggregate notional amount of £925 million fixed-for-fixed cross-currency interest rate swaps to hedge its exposure to foreign currency risk associated with its Senior GBP Notes. These swaps are designated as fair value hedges for accounting purposes. During March 2024, the Company partially terminated certain fixed-for-fixed cross-currency interest rate swaps that were hedging foreign currency risk associated with its Senior GBP Notes that were partially tendered (see Note 14). After such partial termination, there remained an aggregate notional amount of approximately £170 million in fixed-for-fixed cross-currency interest rate swaps that hedge the Company's exposure to foreign currency risk associated with its Senior GBP Notes. The fair value of these swaps totaled assets of $4 million and $134 million and liabilities of $(84) million and $0 million at December 31, 2024 and 2023, respectively. Changes in the swap fair values attributable to changes in spot foreign currency exchange rates are recorded in Other income (expense), net and totaled $(226) million and $61 million for the years ended December 31, 2024 and 2023, respectively. This amount offset the impact of changes in spot foreign currency exchange rates on the Senior GBP Notes and Senior Euro Notes also recorded to Other income (expense), net during the hedge period. Changes in swap fair values attributable to excluded components, such as changes in fair value due to forward foreign currency exchange rates and cross-currency basis spreads, are recorded in Accumulated other comprehensive earnings (loss) ("AOCI"). The Company recorded $32 million and $74 million
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
for the years ended December 31, 2024 and 2023, respectively, through Other comprehensive earnings (loss) for the changes in swap fair values attributable to excluded components. The amounts recorded in AOCI generally affect net earnings (loss) through Interest expense using the amortization approach. For the years ended December 31, 2024 and 2023, $46 million and $20 million, respectively, was recognized as Interest expense using the amortization approach. As a result of the partial terminations during March 2024, the Company received $33 million in net proceeds recorded within Other financing activities, net on the consolidated statement of cash flows and recorded a $19 million reduction to the loss on extinguishment of debt due to reclassifying the amount of AOCI related to the partially terminated hedges into earnings (see Note 14).
Net Investment Hedges
The purpose of the Company's net investment hedges, as discussed below, is to reduce the volatility of FIS' net investment value in its Euro- and Pound Sterling-denominated operations due to changes in foreign currency exchange rates. Changes in fair value due to remeasurement of the effective portion are recorded as a component of AOCI for net investment hedges. The amounts included in AOCI for the net investment hedges will remain in AOCI until the complete or substantially complete liquidation of our investment in the underlying foreign operations. Any ineffective portion of these hedging instruments impacts net earnings when the ineffectiveness occurs. The Company assesses effectiveness of cross-currency interest rate swap hedging instruments using the spot method. Under this method, the periodic interest settlements are recorded directly in earnings through Interest expense (see Note 14).
The Company recorded net investment hedge aggregate gain (loss) for the change in fair value and related income tax (expense) benefit within Other comprehensive earnings (loss), net of tax, on the consolidated statements of comprehensive earnings (loss) for its designated net investment hedges as follows (in millions). No ineffectiveness has been recorded on the net investment hedges.
| Years ended December 31, | ||||||||||||||||||||
| 2024 | 2023 | 2022 | ||||||||||||||||||
| Foreign currency-denominated debt designations | $ | 43 | $ | (138) | $ | 534 | ||||||||||||||
| Cross-currency interest rate swap designations | 219 | (363) | 500 | |||||||||||||||||
| Total | $ | 262 | $ | (501) | $ | 1,034 |
Foreign Currency-Denominated Debt Designations
The Company has designated certain foreign currency-denominated debt as net investment hedges of its investment in Euro-denominated operations. An aggregate of €250 million and €1,115 million of Senior Euro Notes with maturities ranging from 2024 to 2025 was designated as a net investment hedge of the Company's investment in Euro-denominated operations as of December 31, 2024, and 2023, respectively. An aggregate of €100 million and €419 million of ECP Notes was also designated as a net investment hedge of the Company's investment in Euro-denominated operations as of December 31, 2024 and 2023, respectively.
The Company held €375 million and €1,500 million aggregate notional amount of foreign currency forward contracts as of December 31, 2024 and 2023, respectively, to economically hedge its exposure to foreign currency risk associated with Senior Euro Notes and ECP Notes that were previously de-designated as net investment hedges. The foreign currency forward contract fair values totaled a net liability of $(11) million and a net asset of $41 million at December 31, 2024 and 2023, respectively. Upon maturity of the forward contracts, the Company records the net proceeds paid or received within Other financing activities, net on the consolidated statement of cash flows. During the year ended December 31, 2024, the Company received $19 million in net proceeds. The change in fair value of the foreign currency forward contracts is recorded as Other income (expense), net pursuant to accounting for economic hedges and offsets the impact of the change in spot foreign currency exchange rates on the de-designated Senior Euro Notes and ECP Notes, which is also recorded as Other income (expense), net.
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Cross-Currency Interest Rate Swap Designations
The Company holds cross-currency interest rate swaps designated as net investment hedges of its investment in Euro- and Pound Sterling-denominated operations. As a result of the Worldpay Sale, the Company terminated its outstanding cross-currency interest rate swaps designated as net investment hedges of its investment in Pound Sterling-denominated operations on January 31, 2024.
As of December 31, 2024 and 2023, aggregate notional amounts of €5,045 million and €6,143 million, respectively, were designated as net investment hedges of the Company's investment in Euro-denominated operations, and aggregate notional amounts of £0 million and £2,180 million, respectively, were designated as net investment hedges of the Company's Pound Sterling-denominated operations. The cross-currency interest rate swap fair values totaled assets of $128 million and $38 million and liabilities of $(12) million and $(240) million at December 31, 2024 and 2023, respectively.
During the years ended December 31, 2024 and 2023, the Company (paid) received net proceeds of approximately $(8) million and $(20) million, respectively, for the fair values of the cross-currency interest rate swaps as of the settlement dates. The proceeds were recorded within investing activities on the consolidated statements of cash flows.
Worldpay Sale Contingent Consideration
As part of the Worldpay Sale, the Company obtained the right to receive $1.0 billion of consideration contingent on the returns realized by the Buyer exceeding certain thresholds. The Company recognized this financial instrument as a derivative at fair value when it recorded the Worldpay Sale transaction. Subsequent changes in fair value are recorded through Other income (expense), net in the consolidated statement of earnings (loss). The fair value of the contingent consideration from the Worldpay Sale is $108 million at December 31, 2024, included in Other noncurrent assets on the consolidated balance sheet. The Company recognized a $37 million gain for the change in fair value for the eleven-month period from February 1, 2024, through December 31, 2024.
**(16)**Operating Leases
The classification of the Company's operating lease ROU assets and liabilities in the consolidated balance sheets as of December 31, 2024 and 2023, is as follows (in millions):
| December 31, | ||||||||||||||||||||
| Classification | 2024 | 2023 | ||||||||||||||||||
| Operating lease ROU assets | Other noncurrent assets | $ | 230 | $ | 214 | |||||||||||||||
| Operating lease liabilities | Accounts payable, accrued and other liabilities | $ | 74 | $ | 85 | |||||||||||||||
| Other noncurrent liabilities | 177 | 178 | ||||||||||||||||||
| Total operating lease liabilities | $ | 251 | $ | 263 |
Operating lease cost was $73 million, $90 million and $157 million, and variable lease cost was $27 million, $27 million and $29 million for the years ended December 31, 2024, 2023 and 2022, respectively. Operating lease cost for the year ended December 31, 2022, included $43 million, in ROU asset impairment charges. There were no significant ROU asset impairment losses recognized during the years ended December 31, 2024 and 2023. Cash paid for amounts included in the measurement of operating lease liabilities included in operating cash flows was $101 million, $106 million and $124 million for the years ended December 31, 2024, 2023 and 2022, respectively. Operating lease ROU assets obtained in exchange for operating lease liabilities was $89 million and $47 million for the years ended December 31, 2024 and 2023, respectively. The weighted average remaining operating lease term was 5.9 years and 4.4 years and the weighted average operating lease discount rate was 3.9% and 2.8% as of December 31, 2024 and 2023, respectively.
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Maturities of operating lease liabilities, as of December 31, 2024, are as follows (in millions):
| 2025 | $ | 77 | ||||||
| 2026 | 62 | |||||||
| 2027 | 42 | |||||||
| 2028 | 30 | |||||||
| 2029 | 21 | |||||||
| Thereafter | 62 | |||||||
| Total lease payments | 294 | |||||||
| Less: Imputed interest | (43) | |||||||
| Total operating lease liabilities | $ | 251 |
**(17)**Income Taxes
Income tax expense (benefit) attributable to continuing operations for the years ended December 31, 2024, 2023 and 2022, consists of the following (in millions):
| 2024 | 2023 | 2022 | |||||||||||||||
| Current provision (benefit): | |||||||||||||||||
| Federal | $ | 357 | $ | 235 | $ | 458 | |||||||||||
| State | 103 | 96 | 130 | ||||||||||||||
| Foreign | 109 | 96 | 84 | ||||||||||||||
| Total current provision | $ | 569 | $ | 427 | $ | 672 | |||||||||||
| Deferred provision (benefit): | |||||||||||||||||
| Federal | $ | (183) | $ | (193) | $ | (319) | |||||||||||
| State | (41) | (73) | (54) | ||||||||||||||
| Foreign | 17 | (4) | 15 | ||||||||||||||
| Total deferred provision | (207) | (270) | (358) | ||||||||||||||
| Total provision for income taxes | $ | 362 | $ | 157 | $ | 314 |
The provision for income taxes is based on pre-tax income from continuing operations, which is as follows for the years ended December 31, 2024, 2023 and 2022 (in millions):
| 2024 | 2023 | 2022 | |||||||||||||||
| United States | $ | 920 | $ | 330 | $ | 718 | |||||||||||
| Foreign | 377 | 332 | 180 | ||||||||||||||
| Total | $ | 1,297 | $ | 662 | $ | 898 |
Total income tax expense (benefit) attributable to continuing and discontinued operations for the years ended December 31, 2024, 2023 and 2022, is allocated as follows (in millions):
| 2024 | 2023 | 2022 | |||||||||||||||
| Tax expense (benefit) per statements of earnings (loss) | $ | 362 | $ | 157 | $ | 314 | |||||||||||
| Tax expense (benefit) on income from discontinued operations | (1,062) | (301) | 52 | ||||||||||||||
| Change in fair value of net investment hedges | 91 | (176) | 361 | ||||||||||||||
| Foreign currency translation adjustments | — | 40 | (360) | ||||||||||||||
| Share of equity method investment | (11) | — | — | ||||||||||||||
| Other components of other comprehensive earnings (loss) | 8 | 20 | 3 | ||||||||||||||
| Total income tax expense (benefit) allocated to other comprehensive earnings | 88 | (116) | 4 | ||||||||||||||
| Total income tax expense (benefit) | $ | (612) | $ | (260) | $ | 370 |
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
A reconciliation of the federal statutory income tax rate to the Company's effective income tax rate for the years ended December 31, 2024, 2023 and 2022, is as follows:
| 2024 | 2023 | 2022 | |||||||||||||||
| Federal statutory income tax rate | 21.0 | % | 21.0 | % | 21.0 | % | |||||||||||
| State income taxes | 4.7 | 5.7 | 6.5 | ||||||||||||||
| Federal benefit of state taxes | (1.0) | (1.0) | (1.3) | ||||||||||||||
| Foreign rate differential | 1.1 | 0.8 | 2.9 | ||||||||||||||
| Withholding on actual and estimated remittances | 2.4 | 2.4 | 1.2 | ||||||||||||||
| Tax loss (benefit) from stock-based compensation | 0.7 | 2.3 | 4.0 | ||||||||||||||
| U.K. tax rate adjustment | — | (0.1) | 0.3 | ||||||||||||||
| Non-deductible executive compensation | 0.6 | 0.6 | 0.3 | ||||||||||||||
| Foreign-derived intangible income deduction | (2.3) | (4.4) | (2.4) | ||||||||||||||
| U.S. tax on foreign earnings | 1.4 | 1.0 | 0.4 | ||||||||||||||
| Research and development credit | (1.1) | (1.8) | — | ||||||||||||||
| Unrecognized tax benefits | (0.3) | (0.4) | (0.4) | ||||||||||||||
| Return to provision | — | (1.7) | — | ||||||||||||||
| Other | 0.7 | (0.6) | 2.5 | ||||||||||||||
| Effective income tax rate | 27.9 | % | 23.8 | % | 35.0 | % |
The significant components of deferred income tax assets and liabilities as of December 31, 2024 and 2023, consist of the following (in millions):
| 2024 | 2023 | ||||||||||
| Deferred income tax assets: | |||||||||||
| Net operating loss carryforwards | $ | 364 | $ | 219 | |||||||
| Capital loss carryforwards | 220 | — | |||||||||
| Employee benefit accruals | 115 | 105 | |||||||||
| Outside basis difference | — | 919 | |||||||||
| Other deferred tax assets | 170 | 95 | |||||||||
| Total gross deferred income tax assets | 869 | 1,338 | |||||||||
| Less valuation allowance | (505) | (1,055) | |||||||||
| Total deferred income tax assets | 364 | 283 | |||||||||
| Deferred income tax liabilities: | |||||||||||
| Equity method investments | (15) | — | |||||||||
| Amortization of goodwill and intangible assets | (707) | (2,066) | |||||||||
| Deferred contract costs | (259) | (245) | |||||||||
| Other deferred tax liabilities | (232) | (121) | |||||||||
| Total deferred income tax liabilities | (1,213) | (2,432) | |||||||||
| Net deferred income tax liability | $ | (849) | $ | (2,149) |
Deferred income taxes are classified in the consolidated balance sheets as of December 31, 2024 and 2023, as follows (in millions):
| 2024 | 2023 | ||||||||||
| Noncurrent deferred income tax assets (included in Other noncurrent assets) | $ | 14 | $ | 30 | |||||||
| Noncurrent deferred income tax liabilities | (863) | (2,179) | |||||||||
| Net deferred income tax liability | $ | (849) | $ | (2,149) |
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
We believe that based on our historical pattern of taxable income, projections of future income, tax planning strategies as necessary and other relevant evidence, the Company will produce sufficient income in the future to realize its deferred income tax assets (net of valuation allowance). A valuation allowance is established for any portion of a deferred income tax asset for which we believe it is more likely than not that the Company will not be able to realize the benefits of all or a portion of that deferred income tax asset. We also receive periodic assessments from taxing authorities challenging our positions; these assessments must be taken into consideration in determining our tax accruals. Resolving these assessments, which may or may not result in additional taxes due, may require an extended period of time. Adjustments to the valuation allowance will be made if there is a change in our assessment of the amount of deferred income tax asset that is realizable.
As of December 31, 2024 and 2023, the Company had net income taxes payable of $236 million and $3 million, respectively. As of December 31, 2024, $279 million of income tax payable was included in Accounts payable, accrued and other liabilities and $43 million of income tax receivable was included in Other receivables in the consolidated balance sheet. As of December 31, 2023, $3 million of income tax payable was included in Accounts payable, accrued and other liabilities.
As of December 31, 2024 and 2023, the Company has federal, state and foreign net operating loss carryforwards resulting in deferred tax assets of $364 million and $219 million, respectively. The federal and state net operating losses result in deferred tax assets as of December 31, 2024 and 2023, of $70 million and $72 million, respectively, which expire between 2025 and 2043. The Company has a valuation allowance related to these deferred tax assets for net operating loss carryforwards in the amounts of $47 million and $46 million as of December 31, 2024 and 2023. The Company has foreign net operating loss carryforwards resulting in deferred tax assets as of December 31, 2024 and 2023, of $294 million and $147 million, respectively. The increase in foreign net operating loss carryforwards is driven by an underlying change of facts arising during 2024 with respect to amounts previously restricted under local law. The Company maintains a valuation allowance against substantially all of the foreign net operating loss amounts as of December 31, 2024 and 2023.
As a result of the Worldpay Merchant Solutions disposal group being classified as held for sale as of December 31, 2023, the Company recognized a deferred tax asset of $919 million related to the excess tax-over-book outside basis difference for Worldpay Merchant Solutions' investment in foreign subsidiaries, offset by a valuation allowance of $829 million for the portion of the outside basis difference for which it was not more likely than not to recognize a tax benefit. The net deferred tax asset of $90 million at December 31, 2023, represented the portion of then-future capital loss for which we had an available capital gain against which the loss could be utilized. As of December 31, 2024, as a result of the Worldpay Sale, the Company recorded a deferred tax asset of $220 million related to the U.S. capital loss recognized as part of the transaction, offset by a valuation allowance of $130 million. Consistent with the amount recognized as of December 31, 2023, the net deferred tax asset of $90 million represents the portion of the capital loss for which we have an available capital gain against which the loss can be utilized. Additionally, as a result of the Worldpay Sale, the Company recognized a $15 million deferred tax liability for the difference between the tax basis of the Worldpay equity method investment and the corresponding financial statement carrying value. The measurement and character of this deferred tax liability is consistent with our current intention to hold the investment. We will continue to assess our intention at each future reporting period. If the manner or expected time of recovery of our investment in Worldpay changes, the amount or character of deferred taxes associated with our investment could change and result in an incremental deferred tax liability, which could be material.
The Company participates in the IRS' Compliance Assurance Process ("CAP"), which is a real-time continuous audit. The IRS has completed its review for years through 2021. Currently, we believe the ultimate resolution of the IRS examinations will not result in a material adverse effect to the Company's financial position or results of operations. Tax years that remain subject to examination by major foreign and state tax jurisdictions are 2017 and forward.
As of December 31, 2024 and 2023, the Company had gross unrecognized tax benefits of $49 million and $41 million of which $41 million and $38 million, respectively, would favorably impact our income tax rate in the event that the unrecognized tax benefits are recognized.
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The following table reconciles the gross amounts of unrecognized tax benefits at the beginning and end of the period (in millions):
| Gross Amount | |||||
| Amounts of unrecognized tax benefits as of December 31, 2022 | $ | 48 | |||
| Amount of decreases due to lapse of the applicable statute of limitations | (5) | ||||
| Amount of decreases due to settlements | (8) | ||||
| Increases as a result of tax positions taken in the prior period | 4 | ||||
| Increases as a result of tax positions taken in the current period | 2 | ||||
| Amount of unrecognized tax benefit as of December 31, 2023 | 41 | ||||
| Amount of decreases due to lapse of the applicable statute of limitations | (6) | ||||
| Amount of decreases due to settlements | 4 | ||||
| Increases as a result of tax positions taken in prior period | 4 | ||||
| Increases as a result of tax positions taken in the current period | 6 | ||||
| Amount of unrecognized tax benefit as of December 31, 2024 | $ | 49 |
The total amount of interest expense recognized in the consolidated statements of earnings (loss) for unpaid taxes is $3 million, $2 million and $3 million for the years ended December 31, 2024, 2023 and 2022, respectively. The total amount of interest and penalties included in the consolidated balance sheets is $10 million and $11 million as of December 31, 2024 and 2023, respectively. Interest and penalties are recorded as a component of income tax expense in the consolidated statements of earnings (loss).
**(18)**Commitments and Contingencies
Securities and Shareholder Matters
On March 6, 2023, a putative class action was filed in the United States District Court for the Middle District of Florida by a shareholder of the Company. The action was consolidated with another action and the consolidated case is now captioned In re Fidelity National Information Services, Inc. Securities Litigation. A lead plaintiff has been appointed, and a consolidated amended complaint was filed on August 2, 2023. The consolidated amended complaint names the Company and certain of its current and former officers as defendants and seeks damages for alleged violations of federal securities laws in connection with our disclosures relating to our former Merchant Solutions segment, including with respect to its valuation, integration, and synergies. On September 30, 2024, the court denied the defendants' motion to dismiss, and the case therefore has moved into the discovery phase. We intend to vigorously defend this case, but no assurance can be given as to the ultimate outcome.
On April 27, 2023, a shareholder derivative action captioned Portia McCollum, derivatively on behalf of Fidelity National Information Services, Inc. v. Gary Norcross et al., was filed in the same court by a stockholder of the Company. Subsequently, that stockholder dismissed the suit without prejudice and sent a demand pursuant to Georgia Code § 14-2-742 (the "McCollum Demand"). Another stockholder, City of Hialeah Employees' Retirement System, sent a similar demand (the "Hialeah Demand"), and two other stockholders, City of Southfield Fire and Police Retirement System and Young Family Living Trust, also subsequently sent similar demands (the "Southfield Demand" and the "Young Demand"). The demands claim that FIS officers and directors violated federal securities laws and breached fiduciary duties, including with respect to the valuation, integration, and synergies of our former Merchant Solutions segment, and they demand that the Board investigate and commence legal proceedings against officers and directors in connection with the purported wrongdoing. On August 25, 2023, the Board established a Demand Review Committee to consider the McCollum and Hialeah Demands and any related demands that are received (such as the Southfield Demand and the Young Demand), and make recommendations to the Board with respect to the demands. The Demand Review Committee has hired independent counsel. The Board has made no final decision with respect to the demands and has not rejected the demands.
On October 18, 2023, a shareholder derivative action captioned City of Hialeah Employees' Retirement System v. Stephanie L. Ferris et al. (the "Hialeah Action") was filed in the same court by the stockholder that previously had sent the Hialeah Demand. The complaint in the Hialeah Action, which names certain of the Company's current and former officers and directors as defendants (the "Individual Defendants"), seeks to assert claims on behalf of the Company for violations of federal securities laws, breach of fiduciary duty, unjust enrichment, and contribution and indemnification, including with respect to the valuation, integration, and synergies of our former Merchant Solutions segment. On March 29, 2024, the Company and the Individual
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Defendants filed a motion to stay or dismiss the action without prejudice pending the completion of the Board's consideration of the demands and the Individual Defendants concurrently filed a separate motion to dismiss.
On October 22, 2024, another shareholder derivative action was filed in the same court by the stockholder who previously sent the McCollum Demand, captioned Portia McCollum, derivatively on behalf of Fidelity National Information Services, Inc. v. Gary Norcross et al. (the "McCollum Action"). The complaint in the McCollum Action, which names certain of the Company’s current and former officers and directors as defendants, seeks to assert claims on behalf of the Company for violations of federal securities laws, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, waste, and unjust enrichment, including with respect to the valuation, integration, and synergies of our former Merchant Solutions segment. On November 7, 2024, the court entered an order staying the McCollum Action.
January 15, 2025, Partial System Outage
On January 15, 2025, a local area power disruption and coincident hardware failure resulted in a partial system outage that temporarily disrupted the operations of certain FIS clients. The outage was not the result of any cyber attack or other malicious conduct. FIS has restored impacted applications. In connection with this disruption, we have received a customer notice of its intent to seek indemnification relating to potential costs allegedly incurred as a result of this disruption, and a lawsuit was filed in state court in North Carolina by a purported class of customers of one of the affected banks. Although the Company is unable to estimate the impact of the incident, it does not believe that it will have a material impact on the Company or its financial condition or its results of operations.
Indemnifications and Warranties
The Company generally indemnifies its clients, subject to certain limitations and exceptions, against damages and costs resulting from claims of patent, copyright, or trademark infringement associated solely with its customers' use of the Company's solutions. Historically, the Company has not made any material payments under such indemnifications but continues to monitor the conditions that are subject to the indemnifications to identify whether it is probable that a loss has occurred, in which case it would recognize any such losses when they are estimable. In addition, the Company warrants to customers that its software operates substantially in accordance with the software specifications. Historically, no material costs have been incurred related to software warranties, and no accruals for warranty costs have been made.
Purchase Commitments
The Company has agreements with various vendors, generally with one- to five-year terms, principally for software, maintenance, and consulting and outsourced services, including cloud hosting and data centers. The Company's estimated aggregate contractual obligation remaining under these agreements is approximately $696 million as of December 31, 2024. However, this amount could be more or less depending on various factors such as the inflation rate, foreign exchange rates, the introduction of significant new technologies, or changes in the Company's processing needs. The foregoing amounts do not include obligations of the Company under operating leases.
**(19)**Employee Benefit Plans
Stock Purchase Plan
FIS employees participate in an Employee Stock Purchase Plan ("ESPP"). Eligible employees may voluntarily purchase, at current market prices, shares of FIS' common stock through payroll deductions. Pursuant to the ESPP, employees may contribute an amount between 3% and 15% of their base salary and certain commissions. Shares purchased are allocated to employees based upon their contributions. The Company contributes a matching amount as specified in the ESPP of 20% of the employee's contribution. The Company recorded expense in continuing operations of $10 million, $11 million, and $17 million, respectively, for the years ended December 31, 2024, 2023 and 2022, relating to the participation of FIS employees in the ESPP. The Company recorded expense in discontinued operations of less than $1 million, $1 million and $2 million, respectively, for the years ended December 31, 2024, 2023 and 2022, relating to the participation of Worldpay-related employees in the ESPP.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
401(k) Profit Sharing Plan and Non-U.S. Defined Contribution Plans
The Company's U.S. employees are covered by a qualified 401(k) plan. Eligible employees may contribute up to 40% of their eligible compensation, up to the annual amount allowed pursuant to the Internal Revenue Code. The Company generally matches 50% of each dollar of employee contribution up to 6% of the employee's total eligible compensation. The Company's non-U.S. employees are also covered by various defined contribution plans. The Company recorded expense in continuing operations of $107 million, $106 million and $109 million, respectively, for the years ended December 31, 2024, 2023 and 2022, relating to the participation of FIS employees in the 401(k) plan and the Company's contributions to non-U.S. defined contribution plans. The Company recorded expense in discontinued operations of $3 million, $29 million and $25 million, respectively, for the years ended December 31, 2024, 2023 and 2022, relating to the participation of Worldpay-related employees in the 401(k) plan and the Company’s contributions to non-U.S. defined contribution plans.
Stock Compensation Plans
The Company grants to certain employees equity awards pursuant to shares authorized under the FIS 2022 Omnibus Incentive Plan established in 2022 ("FIS Plan"). The number of shares available for future grants under the FIS Plan is 24 million as of December 31, 2024.
Stock Options
The Company grants stock options which typically vest annually over three years. All stock options are non-qualified stock options, the stock options granted by the Company expire on the seventh anniversary of the grant date, and the stock options converted through the Company's 2019 acquisition of Worldpay expire on the tenth anniversary of the grant date.
The following table summarizes stock option activity for the year ended December 31, 2024, which includes both continuing and discontinued operations (in millions except for per share amounts):
| Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | ||||||||||||||||||||
| Balance, December 31, 2023 | 8 | $ | 100.19 | 3.3 | $ | — | |||||||||||||||||
| Granted | — | — | |||||||||||||||||||||
| Exercised | — | 65.23 | $ | 1 | |||||||||||||||||||
| Cancelled | (1) | 86.42 | |||||||||||||||||||||
| Balance, December 31, 2024 | 7 | $ | 103.85 | 2.9 | $ | 6 | |||||||||||||||||
| Options exercisable at December 31, 2024 | 5 | $ | 110.51 | 2.3 | $ | 3 |
The intrinsic value of options exercised during the years ended December 31, 2024, 2023 and 2022, was $1 million, $8 million and $20 million, respectively. The intrinsic value of the outstanding options and options exercisable is based on a closing stock price as of December 31, 2024, of $80.77. The Company issues authorized but unissued shares or shares from treasury stock to settle stock options exercised.
The number of options granted for the years ended December 31, 2023 and 2022, was 2 million and 1 million, respectively. The weighted average exercise price was $78.42 and $95.06 for the years ended December 31, 2023 and 2022, respectively. The Company did not grant any stock options during the year ended December 31, 2024.
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The weighted average fair value of options granted during the years ended December 31, 2023 and 2022, was $12.91 and $20.89, respectively, using the Black-Scholes option pricing model with the assumptions below:
| 2023 | 2022 | |||||||||||||
| Risk free interest rate | 4.2 | % | 1.7 | % | ||||||||||
| Volatility | 37.6 | % | 30.5 | % | ||||||||||
| Dividend yield | 3.3 | % | 2.0 | % | ||||||||||
| Weighted average expected life (years) | 4.1 | 4.1 |
The Company estimates future forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ significantly from those estimates. The Company bases the risk-free interest rate that is used in the Black-Scholes model on U.S. Treasury securities issued with maturities similar to the expected term of the options. The expected stock volatility factor is determined using historical daily price of the common stock and the impact of any expected trends. The dividend yield assumption is based on the current dividend yield at the grant date or management's forecasted expectations. The expected life assumption is determined by calculating the average term from the Company's historical stock option activity and considering the impact of future trends.
Restricted Stock Units and Performance Stock Units
The Company issues restricted stock units, which typically vest annually over three years. The grant date fair value of the restricted stock units is based on the fair market value of our common stock on the grant date. The number of restricted stock units granted during the years ended December 31, 2024, 2023 and 2022, was 3 million, 3 million and 1 million, respectively. The weighted average grant date fair value of these awards granted during the years ended December 31, 2024, 2023 and 2022, was $70.65, $61.34 and $92.07, respectively. The total fair value of restricted stock units that vested was $93 million, $40 million and $261 million in 2024, 2023 and 2022, respectively.
The Company grants performance-based stock units that typically cliff vest on the third anniversary date of the grant. The ultimate number of units to be earned depends on the achievement of performance conditions. Some performance-based stock units also include market conditions. The performance conditions are typically based on a measure of the Company’s Adjusted revenue growth and Adjusted Earnings Per Share. In 2024, following the completion of the Worldpay Sale, the Company modified the performance criteria for the 2024 performance year under the outstanding 2022 performance stock units to match the performance criteria for the 2024 performance year included in the performance stock units granted in 2024, since the prior criteria were established when FIS owned Worldpay and were no longer appropriate following the sale. The modification did not result in significant incremental compensation costs. The market conditions are based on the Company’s total shareholder return ranked against that of other companies that are included in the Standard & Poor’s 500 Index. The fair value of each performance-based stock unit with only performance conditions is based on the fair value of our common stock on the grant date. The fair value of each performance-based stock unit with a market condition is estimated on the date of grant using a Monte Carlo simulation model with the following weighted-average assumptions:
| 2024 | 2023 | 2022 | |||||||||||||||
| Risk free interest rate | 4.3 | % | 4.6 | % | 1.6 | % | |||||||||||
| Volatility | 38.6 | % | 37.2 | % | 34.2 | % | |||||||||||
| Dividend yield | 2.1 | % | 3.3 | % | 2.0 | % |
The number of performance-based stock units granted during the years ended December 31, 2024, 2023 and 2022, was less than 1 million, 1 million and 2 million, respectively. The weighted average grant date fair value of these awards granted during the years ended December 31, 2024, 2023 and 2022, was $69.75, $65.43 and $99.27, respectively. The total fair value of the performance-based stock units that vested was $17 million, $10 million and $35 million in 2024, 2023 and 2022, respectively.
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The following table summarizes the restricted stock units and performance stock units activity for the year ended December 31, 2024, which includes both continuing and discontinued operations (in millions except for per share amounts):
| Restricted Stock Units | Performance Stock Units | ||||||||||||||||||||||
| (In millions) | (In millions) | ||||||||||||||||||||||
| Shares | Weighted Average Fair Value | Shares | Weighted Average Fair Value | ||||||||||||||||||||
| Balance December 31, 2023 | 4 | $ | 70.24 | 2 | $ | 96.33 | |||||||||||||||||
| Granted | 3 | $ | 70.65 | 1 | $ | 69.75 | |||||||||||||||||
| Vested | (2) | $ | 73.34 | — | $ | 141.52 | |||||||||||||||||
| Forfeited | (1) | $ | 70.26 | (1) | $ | 106.10 | |||||||||||||||||
| Balance December 31, 2024 | 4 | $ | 69.52 | 2 | $ | 82.44 |
Stock Compensation Cost
The Company recorded total stock compensation expense in continuing operations of $186 million, $120 million and $189 million for the years ended December 31, 2024, 2023 and 2022, respectively, included in Selling, general, and administrative expenses in the consolidated statements of earnings (loss). The Company recorded total stock compensation expense in discontinued operations of $3 million, $34 million and $26 million for the years ended December 31, 2024, 2023 and 2022, respectively. Stock compensation expense related to grants with performance conditions is recorded based on management's expected level of achievement of the financial performance measures during the performance period and is adjusted as appropriate throughout the performance period based on the shares expected to be earned.
As of December 31, 2024, the total unrecognized compensation cost related to non-vested stock awards was $222 million. As of December 31, 2023, the total unrecognized compensation cost, including continuing and discontinued operations, was $219 million. The total unrecognized compensation cost as of December 31, 2024 and 2023, includes $222 million and $166 million, respectively, related to continuing operations, which is expected to be recognized in pre-tax income over a weighted average period of 1.5 years and 1.4 years, respectively.
**(20)**Components of Other Comprehensive Earnings (Loss)
The following table shows Accumulated other comprehensive earnings (loss) attributable to FIS by component, net of tax, for the years ended December 31, 2024, 2023 and 2022 (in millions):
| Change in Fair Value of Net Investment Hedges | Foreign Currency Translation Adjustments | Share of Equity Method Investment Other Comprehensive Earnings (Loss) | Reclassification of Foreign Currency Translation Adjustments to Net Earnings (Loss) from Discontinued Operations | Other | Total | |||||||||||||||||||||||||||||||||
| Balances, December 31, 2021 | $ | (305) | $ | 629 | $ | — | $ | — | $ | (72) | $ | 252 | ||||||||||||||||||||||||||
| Other comprehensive earnings (loss) before reclassifications | 1,034 | (1,682) | — | — | 36 | (612) | ||||||||||||||||||||||||||||||||
| Balances, December 31, 2022 | 729 | (1,053) | — | — | (36) | (360) | ||||||||||||||||||||||||||||||||
| Other comprehensive earnings (loss) before reclassifications | (501) | 548 | — | — | 53 | 100 | ||||||||||||||||||||||||||||||||
| Balances, December 31, 2023 | 228 | (505) | — | — | 17 | (260) | ||||||||||||||||||||||||||||||||
| Other comprehensive earnings (loss) before reclassifications | 262 | (216) | (31) | — | 15 | 30 | ||||||||||||||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive earnings (loss) | — | — | — | (134) | $ | — | (134) | |||||||||||||||||||||||||||||||
| Balances, December 31, 2024 | $ | 490 | $ | (721) | $ | (31) | $ | (134) | $ | 32 | $ | (364) |
See Note 17 for the tax provision associated with each component of other comprehensive earnings (loss).
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
**(21)**Concentration of Risk
The Company generates a significant amount of revenue from large clients; however, no individual client accounted for 10% or more of total revenue in the years ended December 31, 2024, 2023 and 2022.
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash equivalents and trade receivables, as well as derivatives in a net asset position. The Company places its cash equivalents with high credit-quality financial institutions and, by policy, limits the amount of credit exposure with any one financial institution. Concentrations of credit risk with respect to trade receivables are limited because a large number of geographically diverse clients make up the Company's client base, thus spreading the trade receivables credit risk. The Company seeks to minimize credit risk for derivatives by selecting counterparties with investment grade credit ratings. The Company also manages credit risk exposure through monitoring procedures.
**(22)**Segment Information
As described in Note 1, effective as of the third quarter of 2023, the Company reports its financial performance based on the following segments: Banking Solutions, Capital Market Solutions and Corporate and Other. Below is a summary of each segment.
Banking Solutions ("Banking")
The Banking segment is focused on serving financial institutions with core processing software, transaction processing software and complementary applications and services, many of which interact directly with core processing software. We sell these solutions on either a bundled or stand-alone basis. Clients in this segment include global financial institutions, U.S. regional and community banks, credit unions and commercial lenders, as well as government institutions and other commercial organizations. We provide our clients integrated solutions characterized by multi-year processing contracts that generate recurring revenue. The predictable nature of cash flows generated from the Banking segment provides opportunities for further investments in innovation, integration, information and security, and compliance in a cost-effective manner.
Capital Market Solutions ("Capital Markets")
The Capital Markets segment is focused on serving global financial services clients and corporations with a broad array of buy- and sell-side, treasury, risk management and lending solutions. Clients in this segment include asset managers, private equity firms, sell-side securities brokerage and trading firms, insurers, asset and auto financiers and other commercial organizations. Our solutions include a variety of mission-critical buy- and sell-side applications for recordkeeping, data and analytics, trading and financing as well as corporate treasury and risk management applications. Capital Markets clients purchase our solutions in various ways including licensing and managing technology "in-house," using consulting and third-party service providers, as well as procuring fully outsourced end-to-end solutions. Our long-established relationships with many of these financial and commercial institutions generate significant recurring revenue. We have made, and continue to make, investments in modern platforms, advanced technologies, open APIs, machine learning and artificial intelligence, and regulatory technology to support our Capital Markets clients.
Corporate and Other
The Corporate and Other segment consists of corporate overhead expense, certain leveraged functions and miscellaneous expenses that are not included in the operating segments, as well as certain non-strategic businesses that we plan to wind down or sell. The overhead and leveraged costs relate to corporate marketing, finance, accounting, human resources, legal, compliance and internal audit functions as well as other costs, such as acquisition, integration and transformation-related expenses and amortization of acquisition-related intangibles, that are not considered when management evaluates revenue-generating segment performance. Our other operating income recorded in connection with the TSA is also recorded in Corporate and Other.
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
In the Corporate and Other segment, the Company recorded acquisition, integration and other costs for the years ended December 31, 2024, 2023 and 2022, comprised of the following (in millions):
| 2024 | 2023 | 2022 | ||||||||||||||||||
| Acquisition and integration | $ | 88 | $ | 48 | $ | 50 | ||||||||||||||
| Enterprise transformation, including Future Forward and platform modernization | 262 | 312 | 279 | |||||||||||||||||
| Severance and other termination expenses | 56 | 70 | 89 | |||||||||||||||||
| Separation of the Worldpay Merchant Solutions business | 148 | 17 | — | |||||||||||||||||
| Incremental stock compensation directly attributable to specific programs | 58 | 15 | 83 | |||||||||||||||||
| Other, including divestiture-related expenses and enterprise cost control and other initiatives | 12 | 20 | 80 | |||||||||||||||||
| Total acquisition, integration and other costs | $ | 624 | $ | 482 | $ | 581 |
Amounts in table may not sum due to rounding.
Other costs in Corporate and Other also include incremental amortization expense associated with shortened estimated useful lives and accelerated amortization methods for certain software and deferred contract cost assets resulting from the Company's platform modernization, as described in Notes 10 and 11, impairment charges described in Notes 10 and 11 and costs that were previously incurred in support of the Worldpay Merchant Solutions business but are not directly attributable to it and thus were not recorded in discontinued operations.
Adjusted EBITDA
Adjusted EBITDA is a measure of segment profit or loss that is reported to the chief operating decision maker, the Company's Chief Executive Officer and President, who utilizes the measure for purposes of making decisions about allocating resources to the segments and assessing their performance. For this reason, Adjusted EBITDA, as it relates to our segments, is presented in conformity with FASB ASC Topic 280, Segment Reporting. Adjusted EBITDA is defined as net earnings (loss) before net interest expense, net other income (expense), income tax provision (benefit), equity method investment earnings (loss), and depreciation and amortization, and excludes certain costs that do not constitute normal, recurring, cash operating expenses necessary to operate our business. These excluded costs generally consist of the purchase price amortization of acquired intangible assets as well as acquisition, integration and certain other costs and asset impairments. These excluded costs are recorded in the Corporate and Other segment. After adjusting for the foregoing items, our significant segment expenses consist of the following categories:
-
Direct cost of revenue, which consists primarily of the cost of shipping, equipment, third-party data processing, loyalty program redemptions, printing, and card stock;
-
Net personnel costs, which consist primarily of employee compensation and benefits expense and third-party labor and outsourcing costs, net of capitalized amounts;
-
Infrastructure expense, which consists primarily of software, hardware, facilities and network costs;
-
Allocated costs, which consist primarily of shared infrastructure and related operational personnel costs that are allocated to Banking and Capital Markets from Corporate and Other according to estimated usage; and
-
Other costs, which consists primarily of the cost of third-party consulting and advisory services, employee travel and training, marketing, insurance, and bad debt, offset by TSA services income.
Summarized financial information for the Company's segments is shown in the following tables. The Company does not evaluate performance or allocate resources based on segment asset data; therefore, such information is not presented.
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
For the year ended December 31, 2024 (in millions):
| Banking Solutions | Capital Market Solutions | Corporate and Other | Total | ||||||||||||||||||||
| Revenue | $ | 6,892 | $ | 2,979 | $ | 256 | $ | 10,127 | |||||||||||||||
| Direct cost of revenue | (1,038) | (168) | (61) | (1,267) | |||||||||||||||||||
| Net personnel costs | (1,867) | (914) | (889) | (3,670) | |||||||||||||||||||
| Infrastructure costs | (255) | (88) | (571) | (914) | |||||||||||||||||||
| Allocated costs | (554) | (237) | 791 | — | |||||||||||||||||||
| Other costs | (146) | (53) | 59 | (140) | |||||||||||||||||||
| Adjusted EBITDA | $ | 3,032 | $ | 1,519 | $ | (415) | $ | 4,136 | |||||||||||||||
| Adjusted EBITDA | $ | 4,136 | |||||||||||||||||||||
| Depreciation and amortization | (1,062) | ||||||||||||||||||||||
| Purchase accounting amortization | (675) | ||||||||||||||||||||||
| Acquisition, integration and other costs | (624) | ||||||||||||||||||||||
| Asset impairments | (52) | ||||||||||||||||||||||
| Indirect Worldpay business support costs | (14) | ||||||||||||||||||||||
| Interest expense, net | (250) | ||||||||||||||||||||||
| Other income (expense), net | (162) | ||||||||||||||||||||||
| (Provision) benefit for income taxes | (362) | ||||||||||||||||||||||
| Equity method investment earnings (loss), net of tax | (145) | ||||||||||||||||||||||
| Net earnings (loss) from discontinued operations, net of tax | 663 | ||||||||||||||||||||||
| Net earnings attributable to noncontrolling interest | (3) | ||||||||||||||||||||||
| Net earnings (loss) attributable to FIS | $ | 1,450 | |||||||||||||||||||||
| Capital expenditures (1) | $ | 625 | $ | 350 | $ | 29 | $ | 1,004 | |||||||||||||||
| Depreciation and amortization (including purchase accounting amortization) | $ | 638 | $ | 387 | $ | 712 | $ | 1,737 |
(1) Capital expenditures include $187 million of certain hardware and software purchases subject to financing or other long-term payment arrangements.
For the year ended December 31, 2023 (in millions):
| Banking Solutions | Capital Market Solutions | Corporate and Other | Total | |||||||||||||||||||||||||||||
| Revenue | $ | 6,743 | $ | 2,766 | $ | 322 | $ | 9,831 | ||||||||||||||||||||||||
| Direct cost of revenue | (1,036) | (180) | (48) | (1,264) | ||||||||||||||||||||||||||||
| Net personnel costs | (1,833) | (844) | (912) | (3,589) | ||||||||||||||||||||||||||||
| Infrastructure costs | (283) | (86) | (464) | (833) | ||||||||||||||||||||||||||||
| Allocated costs | (564) | (226) | 790 | — | ||||||||||||||||||||||||||||
| Other costs | (119) | (40) | (34) | (193) | ||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 2,908 | $ | 1,390 | $ | (346) | $ | 3,952 | ||||||||||||||||||||||||
| Adjusted EBITDA | $ | 3,952 | ||||||||||||||||||||||||||||||
| Depreciation and amortization | (1,047) | |||||||||||||||||||||||||||||||
| Purchase accounting amortization | (696) | |||||||||||||||||||||||||||||||
| Acquisition, integration and other costs | (482) | |||||||||||||||||||||||||||||||
| Asset impairments | (113) | |||||||||||||||||||||||||||||||
| Indirect Worldpay business support costs | (167) | |||||||||||||||||||||||||||||||
| Interest expense, net | (621) | |||||||||||||||||||||||||||||||
| Other income (expense), net | (164) | |||||||||||||||||||||||||||||||
| (Provision) benefit for income taxes | (157) | |||||||||||||||||||||||||||||||
| Net earnings (loss) from discontinued operations, net of tax | (7,153) | |||||||||||||||||||||||||||||||
| Net earnings attributable to noncontrolling interest | (7) | |||||||||||||||||||||||||||||||
| Net earnings attributable to FIS | $ | (6,655) | ||||||||||||||||||||||||||||||
| Capital expenditures (1) | $ | 433 | $ | 269 | $ | 131 | $ | 833 | ||||||||||||||||||||||||
| Depreciation and amortization (including purchase accounting amortization) | $ | 598 | $ | 354 | $ | 791 | $ | 1,743 |
(1) Capital expenditures include $53 million of certain hardware and software purchases subject to financing or other long-term payment arrangements.
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
For the year ended December 31, 2022 (in millions):
| Banking Solutions | Capital Market Solutions | Corporate and Other | Total | ||||||||||||||||||||
| Revenue | $ | 6,625 | $ | 2,631 | $ | 464 | $ | 9,720 | |||||||||||||||
| Direct cost of revenue | (986) | (176) | (148) | (1,310) | |||||||||||||||||||
| Net personnel costs | (1,749) | (802) | (987) | (3,538) | |||||||||||||||||||
| Infrastructure costs | (249) | (69) | (491) | (809) | |||||||||||||||||||
| Allocated costs | (703) | (218) | 921 | — | |||||||||||||||||||
| Other costs | (98) | (28) | (18) | (144) | |||||||||||||||||||
| Adjusted EBITDA | $ | 2,840 | $ | 1,338 | $ | (259) | 3,919 | ||||||||||||||||
| Adjusted EBITDA | $ | 3,919 | |||||||||||||||||||||
| Depreciation and amortization | (1,101) | ||||||||||||||||||||||
| Purchase accounting amortization | (778) | ||||||||||||||||||||||
| Acquisition, integration and other costs | (581) | ||||||||||||||||||||||
| Asset impairments | (103) | ||||||||||||||||||||||
| Indirect Worldpay business support costs | (180) | ||||||||||||||||||||||
| Interest expense, net | (281) | ||||||||||||||||||||||
| Other income (expense), net | 3 | ||||||||||||||||||||||
| (Provision) benefit for income taxes | (314) | ||||||||||||||||||||||
| Net earnings (loss) from discontinued operations | (17,324) | ||||||||||||||||||||||
| Net earnings attributable to noncontrolling interest | (12) | ||||||||||||||||||||||
| Net earnings attributable to FIS | $ | (16,752) | |||||||||||||||||||||
| Capital expenditures (1) | $ | 502 | $ | 271 | $ | 286 | $ | 1,059 | |||||||||||||||
| Depreciation and amortization (including purchase accounting amortization) | $ | 597 | $ | 331 | $ | 951 | $ | 1,879 |
(1) Capital expenditures include $63 million of certain hardware and software purchases subject to financing or other long-term payment arrangements.
Clients in the U.K., Germany, Australia, Brazil, Switzerland and France accounted for the majority of the revenue from clients based outside of North America for all periods presented. No individual country outside of North America accounted for more than 10% of total revenue for the years ended December 31, 2024, 2023 and 2022.
Long-term assets, excluding goodwill and other intangible assets, located outside of the United States totaled $760 million and $651 million as of December 31, 2024 and 2023, respectively. These assets are predominantly located in the United Kingdom, Germany, Australia, India and Switzerland.
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
**(23)**Quarterly Financial Data (unaudited)
| 2024 | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | |||||||||||||||||||
| Revenue | $ | 2,468 | $ | 2,490 | $ | 2,570 | $ | 2,599 | |||||||||||||||
| Gross profit | 909 | 944 | 977 | 977 | |||||||||||||||||||
| Operating income | 354 | 371 | 490 | 494 | |||||||||||||||||||
| Equity method investment earnings (loss), net of tax | (86) | 10 | (33) | (36) | |||||||||||||||||||
| Net earnings (loss) from continuing operations | — | 238 | 247 | 305 | |||||||||||||||||||
| Earnings (loss) from discontinued operations, net of tax | 707 | 1 | (22) | (23) | |||||||||||||||||||
| Net earnings (loss) | 707 | 239 | 225 | 282 | |||||||||||||||||||
| Net (earnings) loss attributable to noncontrolling interest from continuing operations | (1) | (1) | (1) | (1) | |||||||||||||||||||
| Net (earnings) loss attributable to noncontrolling interest from discontinued operations | — | — | — | — | |||||||||||||||||||
| Net earnings (loss) attributable to FIS | 706 | 238 | 224 | 281 | |||||||||||||||||||
| Net earnings (loss) attributable to FIS: | |||||||||||||||||||||||
| Continuing operations | $ | (1) | $ | 237 | $ | 246 | $ | 304 | |||||||||||||||
| Discontinued operations | 707 | 1 | (22) | (23) | |||||||||||||||||||
| Total | $ | 706 | $ | 238 | $ | 224 | $ | 281 | |||||||||||||||
| Net earnings (loss) per common share attributable to FIS from continuing operations: | |||||||||||||||||||||||
| Basic | $ | — | $ | 0.43 | $ | 0.45 | $ | 0.57 | |||||||||||||||
| Diluted | $ | — | $ | 0.43 | $ | 0.45 | $ | 0.56 | |||||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||||
| Basic | 576 | 554 | 545 | 536 | |||||||||||||||||||
| Diluted | 578 | 557 | 548 | 540 |
Amounts in tables in the financial statements and accompanying footnotes may not sum or calculate due to rounding.
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
| 2023 | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | |||||||||||||||||||
| Revenue | $ | 2,400 | $ | 2,427 | $ | 2,492 | $ | 2,512 | |||||||||||||||
| Gross profit | 823 | 900 | 961 | 970 | |||||||||||||||||||
| Operating income | 306 | 346 | 470 | 326 | |||||||||||||||||||
| Net earnings (loss) from continuing operations | 108 | 87 | 249 | 62 | |||||||||||||||||||
| Earnings (loss) from discontinued operations, net of tax | 45 | (6,679) | (708) | 188 | |||||||||||||||||||
| Net earnings (loss) | 153 | (6,592) | (459) | 250 | |||||||||||||||||||
| Net (earnings) loss attributable to noncontrolling interest from continuing operations | — | (1) | (1) | (1) | |||||||||||||||||||
| Net (earnings) loss attributable to noncontrolling interest from discontinued operations | (1) | (1) | (1) | (1) | |||||||||||||||||||
| Net earnings (loss) attributable to FIS | 152 | (6,594) | (461) | 248 | |||||||||||||||||||
| Net earnings (loss) attributable to FIS: | |||||||||||||||||||||||
| Continuing operations | $ | 108 | $ | 86 | $ | 248 | $ | 61 | |||||||||||||||
| Discontinued operations | 44 | (6,680) | (709) | 187 | |||||||||||||||||||
| Total | $ | 152 | $ | (6,594) | $ | (461) | $ | 248 | |||||||||||||||
| Net earnings (loss) per common share attributable to FIS from continuing operations: | |||||||||||||||||||||||
| Basic | $ | 0.18 | $ | 0.15 | $ | 0.42 | $ | 0.10 | |||||||||||||||
| Diluted | $ | 0.18 | $ | 0.15 | $ | 0.42 | $ | 0.10 | |||||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||||
| Basic | 592 | 592 | 592 | 589 | |||||||||||||||||||
| Diluted | 593 | 592 | 592 | 591 |
Amounts in tables in the financial statements and accompanying footnotes may not sum or calculate due to rounding.
**(24)**Revision of Prior-Period Consolidated Financial Statements
As discussed in Note 1, below is a summary of the revisions to the Company's previously reported financial statements. Revisions to our previously reported disclosures have also been reflected within the consolidated financial statements being filed with this Annual Report on Form 10-K. The misstatements created immaterial reclassifications within the Company's cash flows from operating activities of continuing operations on the consolidated statements of cash flows; however, there was no net impact to cash flows from operating activities, investing activities or financing activities of continuing operations on our consolidated statement of cash flows. Accordingly, a revision table for the consolidated statement of cash flows is not included below.
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The following tables set forth our revisions to the consolidated statement of earnings (loss) and comprehensive earnings (loss) for each of the years ended December 31, 2023 and 2022 (in millions).
| For the year ended December 31, 2023 | For the year ended December 31, 2022 | |||||||||||||||||||||||||||||||||||||
| As reported | Adjustment | As revised | As reported | Adjustment | As revised | |||||||||||||||||||||||||||||||||
| Revenue | $ | 9,821 | $ | 10 | $ | 9,831 | $ | 9,719 | $ | 1 | $ | 9,720 | ||||||||||||||||||||||||||
| Cost of revenue | 6,145 | 30 | 6,175 | 6,216 | 43 | 6,259 | ||||||||||||||||||||||||||||||||
| Operating income | 1,467 | (20) | 1,447 | 1,218 | (42) | 1,176 | ||||||||||||||||||||||||||||||||
| Other income (expense), net | (183) | 18 | (164) | 4 | (2) | 3 | ||||||||||||||||||||||||||||||||
| Earnings (loss) before income taxes and equity method investment earnings (loss) | 663 | (2) | 662 | 941 | (44) | 898 | ||||||||||||||||||||||||||||||||
| Provision (benefit) for income tax | 157 | (1) | 157 | 325 | (11) | 314 | ||||||||||||||||||||||||||||||||
| Net earnings (loss) from continuing operations | 506 | (1) | 505 | 616 | (33) | 584 | ||||||||||||||||||||||||||||||||
| Net earnings (loss) attributable to FIS | (6,654) | (1) | (6,655) | (16,720) | (33) | (16,752) | ||||||||||||||||||||||||||||||||
| Net earnings (loss) attributable to FIS from continuing operations | 503 | (1) | 502 | 608 | (33) | 576 | ||||||||||||||||||||||||||||||||
| Basic earnings (loss) per common share attributable to FIS from continuing operations | 0.85 | — | 0.85 | 1.01 | (0.05) | 0.95 | ||||||||||||||||||||||||||||||||
| Basic earnings (loss) per common share attributable to FIS | (11.26) | — | (11.26) | (27.68) | (0.05) | (27.74) | ||||||||||||||||||||||||||||||||
| Diluted earnings (loss) per common share attributable to FIS from continuing operations | 0.85 | — | 0.85 | 1.01 | (0.05) | 0.95 | ||||||||||||||||||||||||||||||||
| Diluted earnings (loss) per common share attributable to FIS | (11.26) | — | (11.26) | (27.68) | (0.05) | (27.74) | ||||||||||||||||||||||||||||||||
| Net earnings (loss) | (6,647) | (1) | (6,648) | (16,708) | (33) | (16,740) | ||||||||||||||||||||||||||||||||
| Comprehensive earnings (loss) | (6,547) | (1) | (6,548) | (17,320) | (33) | (17,352) | ||||||||||||||||||||||||||||||||
| Comprehensive earnings (loss) attributable to FIS | (6,554) | (1) | (6,555) | (17,332) | (33) | (17,364) |
Amounts in tables may not sum or calculate due to rounding.
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The following table sets forth our revisions to the consolidated balance sheet as of December 31, 2023 (in millions).
| December 31, 2023 | ||||||||||||||||||||
| As reported | Adjustment | As revised | ||||||||||||||||||
| Trade receivables, net of allowance for credit losses of $31 | $ | 1,730 | $ | 8 | $ | 1,738 | ||||||||||||||
| Other receivables | 287 | (178) | 109 | |||||||||||||||||
| Prepaid expenses and other current assets | 603 | 38 | 641 | |||||||||||||||||
| Total current assets | 13,788 | (132) | 13,656 | |||||||||||||||||
| Total assets | 55,105 | (132) | 54,973 | |||||||||||||||||
| Accounts payable, accrued and other liabilities | 1,859 | (86) | 1,773 | |||||||||||||||||
| Deferred revenue | 832 | (3) | 829 | |||||||||||||||||
| Total current liabilities | 18,318 | (89) | 18,229 | |||||||||||||||||
| Total liabilities | 36,006 | (89) | 35,917 | |||||||||||||||||
| (Accumulated deficit) retained earnings | (22,864) | (42) | (22,905) | |||||||||||||||||
| Total FIS stockholders' equity | 19,093 | (43) | 19,050 | |||||||||||||||||
| Total equity | 19,099 | (43) | 19,056 | |||||||||||||||||
| Total liabilities and equity | 55,105 | (132) | 54,973 |
Amounts in tables may not sum or calculate due to rounding.
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The following table sets forth our revisions to the consolidated statements of equity (deficit) for years ended December 31, 2023 and 2022 (in millions).
| (Accumulated deficit) / Retained earnings | Total equity | |||||||||||||||||||||||||||||||||||||
| As reported | Adjustment | As revised | As reported | Adjustment | As revised | |||||||||||||||||||||||||||||||||
| Balances at December 31, 2021 | $ | 2,889 | $ | (8) | $ | 2,881 | $ | 47,358 | $ | (8) | $ | 47,350 | ||||||||||||||||||||||||||
| Issuance of restricted stock | — | — | — | 5 | — | 5 | ||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | 61 | — | 61 | ||||||||||||||||||||||||||||||||
| Purchases of treasury stock | — | — | — | (1,829) | — | (1,829) | ||||||||||||||||||||||||||||||||
| Treasury shares held for taxes due upon exercise of stock awards | — | — | — | (109) | — | (109) | ||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | 215 | — | 215 | ||||||||||||||||||||||||||||||||
| Cash dividends declared ($1.88 per share) and other distributions | (1,140) | — | (1,140) | (1,150) | — | (1,150) | ||||||||||||||||||||||||||||||||
| Net earnings (loss) | (16,720) | (32) | (16,752) | (16,713) | (32) | (16,745) | ||||||||||||||||||||||||||||||||
| Other comprehensive earnings (loss), net of tax | — | — | — | (612) | — | (612) | ||||||||||||||||||||||||||||||||
| Balances at December 31, 2022 | (14,971) | (40) | (15,011) | 27,226 | (40) | 27,186 | ||||||||||||||||||||||||||||||||
| Issuance of restricted stock | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | 40 | — | 40 | ||||||||||||||||||||||||||||||||
| Purchases of treasury stock | — | — | — | (510) | — | (510) | ||||||||||||||||||||||||||||||||
| Treasury shares held for taxes due upon exercise of stock awards | — | — | — | (22) | — | (22) | ||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | 153 | — | 153 | ||||||||||||||||||||||||||||||||
| Cash dividends declared ($2.08 per share) and other distributions | (1,239) | — | (1,239) | (1,248) | — | (1,248) | ||||||||||||||||||||||||||||||||
| Other | — | — | — | 7 | (2) | 5 | ||||||||||||||||||||||||||||||||
| Net earnings (loss) | (6,654) | (1) | (6,655) | (6,647) | (1) | (6,648) | ||||||||||||||||||||||||||||||||
| Other comprehensive earnings (loss), net of tax | — | — | — | 100 | — | 100 | ||||||||||||||||||||||||||||||||
| Balances at December 31, 2023 | (22,864) | (41) | (22,905) | 19,099 | (43) | 19,056 |
Amounts in tables may not sum or calculate due to rounding.
Previous: Item 7A. Quantitative and Qualitative Disclosures About Market Risk · Next: Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure