Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

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.

The following discussion should be read in conjunction with Item 1. Condensed Consolidated Financial Statements (Unaudited) and the Notes thereto included elsewhere in this report. The statements contained in this Form 10-Q or in our other documents or in oral presentations or other management statements that are not purely historical are forward-looking statements within the meaning of the U.S. federal securities laws. Statements that are not historical facts, as well as other statements about our expectations, beliefs, intentions, or strategies regarding the future, or other characterizations of future events or circumstances, are forward-looking statements. Forward-looking statements include statements about anticipated financial outcomes, including any earnings outlook or projections, projected revenue or expense synergies or dis-synergies, business and market conditions, outlook, foreign currency exchange rates, deleveraging plans, expected dividends and share repurchases of the Company, the Company's sales pipeline and anticipated profitability and growth, plans, strategies and objectives for future operations, strategic value creation, risk profile and investment strategies, any statements regarding future economic conditions or performance and any statements with respect to the future impacts of the Worldpay Sale or any agreements or arrangements entered into in connection with such transaction, the expected financial and operational results of the Company, and expectations regarding the Company's business or organization after the separation of the Worldpay Merchant Solutions business. These statements may be identified by words such as "expect," "anticipate," "intend," "plan," "believe," "will," "should," "could," "would," "project," "continue," "likely," and similar expressions, and include statements reflecting future results, statements of outlook and various accruals and estimates. These statements relate to future events and our future results and involve a number of risks and uncertainties. Forward-looking statements are based on management's beliefs as well as assumptions made by, and information currently available to, management.

Actual results, performance or achievement could differ materially from these forward-looking statements. The risks and uncertainties to which forward-looking statements are subject include the following, without limitation:

• changes in general economic, business and political conditions, including those resulting from COVID-19 or other pandemics, a recession, intensified or expanded international hostilities, acts of terrorism, increased rates of inflation or interest, changes in either or both the United States and international lending, capital and financial markets or currency fluctuations;

• the risk that acquired businesses will not be integrated successfully or that the integration will be more costly or more time-consuming and complex than anticipated;

• the risk that cost savings and synergies anticipated to be realized from acquisitions may not be fully realized or may take longer to realize than expected or that costs may be greater than anticipated;

• the risks of doing business internationally;

• the effect of legislative initiatives or proposals, statutory changes, governmental or applicable regulations and/or changes in industry requirements, including privacy and cybersecurity laws and regulations;

• the risks of reduction in revenue from the elimination of existing and potential customers due to consolidation in, or new laws or regulations affecting, the banking, retail and financial services industries or due to financial failures or other setbacks suffered by firms in those industries;

• changes in the growth rates of the markets for our solutions;

• the amount, declaration and payment of future dividends is at the discretion of our Board of Directors and depends on, among other things, our investment opportunities, results of operations, financial condition, cash requirements, future prospects, and other factors that may be considered relevant by our Board of Directors, including legal and contractual restrictions;

• the amount and timing of any future share repurchases is subject to, among other things, our share price, our other investment opportunities and cash requirements, our results of operations and financial condition, our future prospects and other factors that may be considered relevant by our Board of Directors and management;

• failures to adapt our solutions to changes in technology or in the marketplace;

• internal or external security or privacy breaches of our systems, including those relating to unauthorized access, theft, corruption or loss of personal information and computer viruses and other malware affecting our software or platforms, and the reactions of customers, card associations, government regulators and others to any such events;

• the risk that implementation of software, including software updates, for customers or at customer locations or employee error in monitoring our software and platforms may result in the corruption or loss of data or customer information, interruption of business operations, outages, exposure to liability claims or loss of customers;

• the risk that partners and third parties may fail to satisfy their legal obligations to us;

• risks associated with managing pension cost, cybersecurity issues, IT outages and data privacy;

• the reaction of current and potential customers to communications from us or regulators regarding information security, risk management, internal audit or other matters;

• risks associated with the expected benefits and costs of the separation of the Worldpay Merchant Solutions business, including the risk that the expected benefits of the transaction or any contingent purchase price will not be realized within the expected timeframe, in full or at all, or that dis-synergies may be greater than anticipated;

• the risk that the costs of restructuring transactions and other costs incurred in connection with the separation of the Worldpay business will exceed our estimates or otherwise adversely affect our business or operations;

• the impact of the separation of Worldpay on our businesses, including the impact on relationships with customers, governmental authorities, suppliers, employees and other business counterparties;

• the risk that the earnings from our minority stake in the Worldpay business will be less than we anticipate;

• competitive pressures on pricing related to the decreasing number of community banks in the U.S., the development of new disruptive technologies competing with one or more of our solutions, increasing presence of international competitors in the U.S. market and the entry into the market by global banks and global companies with respect to certain competitive solutions, each of which may have the impact of unbundling individual solutions from a comprehensive suite of solutions we provide to many of our customers;

• the failure to innovate in order to keep up with new emerging technologies, which could impact our solutions and our ability to attract new, or retain existing, customers;

• an operational or natural disaster at one of our major operations centers;

• failure to comply with applicable requirements of payment networks or changes in those requirements;

• fraud by bad actors; and

• other risks detailed elsewhere in the "Risk Factors" and other sections of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and in our other filings with the Securities and Exchange Commission.

Other unknown or unpredictable factors also could have a material adverse effect on our business, financial condition, results of operations and prospects. Accordingly, readers should not place undue reliance on these forward-looking statements. These forward-looking statements are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Except as required by applicable law or regulation, we do not undertake (and expressly disclaim) any obligation and do not intend to publicly update or review any of these forward-looking statements, whether as a result of new information, future events or otherwise.

Overview

FIS is a financial technology company providing solutions that underpin the world's financial system to financial institutions, businesses and developers. We unlock financial technology to the world across the money lifecycle, accelerating solution innovation for money at rest, money in motion and money at work. Our people are dedicated to advancing the way the world pays, banks and invests, by helping our clients to confidently run, grow and protect their businesses. Our expertise comes from decades of experience helping financial institutions and businesses of all sizes adapt to meet the needs of their customers by harnessing where reliability meets innovation in financial technology. Headquartered in Jacksonville, Florida, FIS is a member of the Fortune 500® and the Standard & Poor’s 500® Index. FIS is incorporated under the laws of the State of Georgia as Fidelity National Information Services, Inc., and our stock is traded under the trading symbol "FIS" on the New York Stock Exchange.

Our growth has been driven by a number of factors, including growth of our customers' businesses, our internal development of new solutions that enhance our client offerings, and our sales and marketing efforts to expand our customer base and addressable markets. Acquisitions have also contributed additional solutions that complement or enhance our offerings, diversify our client base, expand our geographic coverage, and provide entry into new and attractive adjacent markets that align with our strategic objectives. We continue to strategically allocate resources to both internal and external growth initiatives to enhance the long-term value of our business.

On January 31, 2024, the Company completed the previously announced 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"). Following the closing of the Worldpay Sale, we retain a non-controlling 45% ownership interest in a new standalone joint venture, Worldpay Holdco, LLC ("Worldpay"), which will continue to provide merchant acquiring and related services to businesses of all sizes and across any industry globally, enabling them to accept, authorize and settle electronic payment transactions. In connection with the Worldpay Sale, FIS and Worldpay have entered into commercial agreements, preserving a key value proposition for clients of both businesses and reducing potential dis-synergies. FIS and Worldpay also entered into additional agreements as described in Note 4 to the consolidated financial statements.

Business Trends and Conditions

Our revenue from continuing operations is primarily derived from a combination of technology and processing solutions, transaction processing fees, professional services and software license fees. While we are a global company and do business around the world, the majority of our revenue is generated by clients in the U.S. The majority of our international revenue is generated by clients in the U.K., Germany, Canada, Australia, Brazil and Switzerland. In addition, the majority of our revenue has historically been recurring and has been provided under multi-year Banking and Capital Markets contracts that contribute relative stability to our revenue stream. These solutions, in general, are considered critical to our clients' operations. Professional services revenue is typically non-recurring, though recognition often occurs over time rather than at a point in time. Sales of software licenses are typically non-recurring with point-in-time recognition and are less predictable.

Lengthy sales cycles continued to persist during the first half of 2024, which we believe resulted from economic uncertainty. We also experienced, and continue to experience, relatively high rates of inflation in our primary markets, including increasing wage and benefits rates, which management believes is in part due to inflation and in part due to competitive job markets for the skilled employees who support our businesses, as well as increasing non-labor-related costs. The magnitude of future effects of economic uncertainty, including lengthy sales cycles, and inflation is difficult to predict, although these factors have had an adverse effect on our results of operations and, to the extent they persist, may continue to have a negative effect. Relatively high interest rates have had, and may continue to have, a negative impact on our interest expense. However, during the first quarter of 2024, and subsequent to June 30, 2024, we used a portion of the net proceeds from the Worldpay Sale to repay our borrowings under our commercial paper programs and reduce our long-term debt, which has decreased and will continue to decrease our interest expense from previous levels. Impacts of foreign currency fluctuations remained slightly favorable during the first half of 2024. Given the volatility of exchange rates and the mix of currencies involved in both revenues and expenses, the direction and magnitude of future effects of currency fluctuations are uncertain. The combined effect of the factors noted above has slowed our revenue growth rate. Over the longer term, we are targeting improvements in our revenue growth rate and margins to the extent of improving economic conditions and in response to planned management actions, including our cost savings initiatives.

On January 31, 2024, the Company completed the previously announced Worldpay Sale for cash consideration in a transaction valuing the Worldpay Merchant Solutions business at an enterprise value of $18.5 billion, including $1.0 billion of consideration contingent on the returns realized by Buyer exceeding certain thresholds. The net cash proceeds received by FIS at the closing were greater than $12 billion, net of estimated closing adjustments, debt restructuring fees, taxes and transaction costs. We used a portion of the proceeds from the sale to retire debt and repurchase shares, and we plan to continue to use the remaining proceeds to return additional capital to shareholders through our existing share repurchase authorization, as well as for general corporate purposes, including acquisitions, while maintaining an investment grade credit rating. In connection with the sale, FIS and Worldpay have entered into commercial agreements, preserving a key value proposition for clients of both businesses and minimizing potential dis-synergies. FIS and Worldpay also entered into additional agreements as described in Note 4 to the consolidated financial statements. Upon closing of the Worldpay Sale, we recorded a loss on sale of the disposal group of $466 million and retained a non-controlling 45% ownership interest in Worldpay. Post-closing selling price adjustments could result in further adjustments to the loss on sale amount. FIS' share of the net income of Worldpay is now reported as Equity method investment earnings (loss), net of tax.

We continue to assist financial institutions and other businesses in migrating to outsourced integrated technology solutions to improve their profitability and address increasing and ongoing regulatory requirements. As a provider of outsourced solutions, we benefit from multi-year recurring revenue streams, which help moderate the effects of broader year-to-year economic and market changes that otherwise might have a larger impact on our results of operations. We believe our integrated solutions and outsourced services are well-positioned to address this outsourcing trend across the markets we serve.

We continue to invest in modernization, innovation and integrated solutions to meet the demands of the markets we serve and compete with global banks, financial and other technology providers, and emerging technology innovators. We invest both internally and through investment opportunities in companies building complementary technologies in the financial services space. Our internal development activities have related primarily to the modernization of our proprietary core systems in each of our segments, design and development of next-generation digital and innovative solutions and development of processing systems and related software applications and risk management platforms. We expect to continue to invest an appropriate level of resources to maintain, enhance and extend the functionality of our proprietary systems and existing software applications, to develop new and innovative software applications and systems to address emerging technology trends in response to the needs of our clients, and to enhance the capabilities of our outsourcing infrastructure.

Consumer preference continues to shift from traditional branch banking services to digital banking solutions, and our clients seek to provide a single integrated banking experience through their branch, mobile, internet and voice banking channels. We have been providing our large regional banking customers in the U.S. with Digital One, an integrated digital banking platform, and are now adding functionality and offering Digital One to our community bank clients to provide a consistent, omnichannel experience for consumers of banking services across self-service channels like mobile banking and online banking, as well as supporting channels for bank staff operating in bank branches and contact centers. The uniform customer experience extends to support a broad range of financial services including opening new accounts, servicing of existing accounts, money movement, and personal financial management, as well as other consumer, small business and commercial banking capabilities. Digital One is integrated into several of the core banking platforms offered by FIS and is also offered to customers of non-FIS core banking systems.

Consolidation within the banking industry has occurred and may continue, primarily in the form of merger and acquisition activity among financial institutions, which we believe would broadly be detrimental to the profitability of the financial technology industry. However, consolidation resulting from specific merger and acquisition transactions may be beneficial to our business. When consolidations of financial institutions occur, merger partners often operate systems obtained from competing service providers. The newly formed entity generally makes a determination to migrate its core and payments systems to a single platform. When a financial institution processing client is involved in a consolidation, we may benefit by their expanding the use of our solutions if such solutions are chosen to survive the consolidation and to support the newly combined entity. Conversely, we may lose revenue if we are providing solutions to both entities, or if a client of ours is involved in a consolidation and our solutions are not chosen to support the newly combined entity. It is also possible that larger financial institutions resulting from consolidation may have greater leverage in negotiating terms or could decide to perform in-house some or all of the solutions that we currently provide or could provide. We seek to mitigate the risks of consolidations by offering other competitive solutions to take advantage of specific opportunities at the surviving company.

U.S. bank failures could negatively impact our results to the extent more of our customers become illiquid; however, our current exposure to past bank closures is limited, and we may be a long-term beneficiary of these closures. As a leading provider of financial technology services to the top 100 U.S. banks by asset size as well as other global financial institutions, FIS boasts a highly diversified customer base, with no single customer accounting for more than approximately 2% of 2023 revenue from continuing operations. With respect to U.S. financial institution customers that closed during 2023, FIS expects to continue to provide services for the majority of these banks, and our revenue exposure from potential contract terminations related to these banks is not material. Further, FIS' core banking customer contracts are generally structured with fees that increase based on the number of active accounts or transactions rather than the amount of deposits. Thus, to the extent account volume increases, we are positioned to benefit from this growth as a leading core banking services provider to large financial institutions.

We continue to see demand in the payments market for innovative solutions that will deliver faster, more convenient payment options in mobile channels, internet applications, in-store cards, and digital currencies. The payment processing industry is adopting new technologies, developing new solutions, evolving new business models, and is being affected by new market entrants and by an evolving regulatory environment. As financial institutions respond to these changes by seeking solutions to help them enhance their own offerings to consumers, including the ability to accept card-not-present payments in eCommerce and mobile environments, as well as contactless cards and mobile wallets at the point of sale, FIS believes that payment processors will seek to develop additional capabilities in order to serve clients' evolving needs. To facilitate this expansion, we believe that payment processors will need to enhance their technology platforms so they can deliver these capabilities and differentiate their offerings from other providers.

We believe that these market changes present both an opportunity and a risk for us, and we cannot predict which emerging technologies or solutions will be successful. However, FIS believes that payment processors, like FIS, that have scalable, integrated business models, provide solutions across the payment processing value chain and utilize broad distribution capabilities will be best-positioned to enable emerging alternative electronic payment technologies in the long term. Further, FIS believes that its depth of capabilities and breadth of distribution will enhance its position as emerging payment technologies are adopted by merchants and other businesses. FIS' ability to partner with non-financial institution enterprises, such as mobile payment providers and internet, retail and social media companies, continues to create attractive growth opportunities as these new entrants seek to become more active participants in the development of alternative electronic payment technologies and to facilitate the convergence of retail, online, mobile and social commerce applications.

Cyberattacks on information technology systems and the vendors and technological supply chain they rely on continue to grow in frequency, complexity and sophistication. This is a trend we expect to continue. The continued growth in the frequency, complexity and sophistication of cyberattacks presents both a threat and an opportunity for FIS. Using expertise we have gained from our ongoing focus and investment, we have developed and we offer fraud, security, risk management and

compliance solutions to target this growth opportunity in the financial services industry. We also use certain of these solutions to manage our own risks.

Critical Accounting Policies and Estimates

There have been no significant changes to our critical accounting policies and estimates as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

Consolidated Results of Operations - Comparisons of three-month and six-month periods ended June 30, 2024 and 2023

			Three months ended June 30,																								Six months ended June 30,
															$						%																		$						%
			2024						2023						Change						Change						2024						2023						Change						Change
			(In millions)																								(In millions)
Revenue			$	2,489					$	2,424					$	65					3		%				$	4,957					$	4,821					$	136					3		%
Cost of revenue			(1,538)						(1,519)						(19)						1						(3,091)						(3,086)						(5)						—
Gross profit			951						905						46						5						1,866						1,735						131						8
Gross profit margin			38		%				37		%																38		%				36		%
Selling, general and administrative expenses			(609)						(553)						(56)						10						(1,182)						(1,073)						(109)						10
Asset impairments			(4)						(1)						(3)						NM						(18)						(1)						(17)						NM
Other operating (income) expense, net - related party			(40)						—						(40)						NM						(73)						—						(73)						NM
Operating income			$	378					$	351					27						8						$	739					$	661					78						12
Operating margin			15		%				14		%																15		%				14		%

NM = Not meaningful

Revenue

Revenue for the three and six months ended June 30, 2024, increased primarily due to strong recurring revenue growth in the Banking and Capital Markets segments. Revenue was not materially impacted by foreign currency movements versus the prior year period. See "Segment Results of Operations" below for a more detailed explanation.

Cost of Revenue, Gross Profit and Gross Profit Margin

Cost of revenue for the three and six months ended June 30, 2024, increased due to variable transaction processing and hosting expenses, partially offset by lower intangible asset amortization resulting primarily from using accelerated amortization methods which apply a declining rate over time. The lower intangible asset amortization and an increase in high-margin non-recurring revenue contributed to higher gross profit and gross profit margin.

Selling**,** General and Administrative Expenses

Selling, general and administrative expenses for the three and six months ended June 30, 2024, increased primarily due to higher acquisition, integration and other costs and increased corporate costs, which were slightly higher year over year due to dis-synergies associated with the Worldpay Sale, offset for the most part by other cost saving initiatives.

Asset Impairments

The three and six months ended June 30, 2024, included impairments primarily related to the termination of certain internally developed software projects.

Other operating (income) expense, net - related party

As described in Note 4 to the consolidated financial statements, under the terms of the TSA, the Company is providing technology infrastructure, risk and security, accounting and various other corporate services to Worldpay. The amount is recorded in Other operating (income) expense, net - related party, and the corresponding expense was recognized in Cost of revenue and Selling, general and administrative expense in the consolidated statement of earnings (loss).

Operating Income and Operating Margin

The change in operating income and operating margin for the three and six months ended June 30, 2024, resulted from the revenue and cost variances noted above.

Total Other Income (Expense), Net

			Three months ended June 30,																								Six months ended June 30,
															$						%																		$						%
			2024						2023						Change						Change						2024						2023						Change						Change
Other income (expense):			(In millions)																								(In millions)
Interest expense, net			$	(43)					$	(160)					$	117					NM						$	(120)					$	(302)					$	182					NM
Other income (expense), net			(13)						(77)						64						NM						(167)						(113)						(54)						NM
Total other income (expense), net			$	(56)					$	(237)					181						NM						$	(287)					$	(415)					128						NM

NM = Not meaningful

The decrease in interest expense, net during the three and six months ended June 30, 2024, was primarily due to a reduction in our outstanding borrowings under our commercial paper programs and senior notes using a portion of the net proceeds from the Worldpay Sale and increased interest income generated on the proceeds of the Worldpay Sale.

Other income (expense), net for the periods presented consists of various income and expense items outside of the Company's operating activities, including foreign currency transaction remeasurement gains and losses; realized and unrealized gains and losses on equity security investments, including impairment losses on these investments; and fair value adjustments on certain non-operating assets and liabilities, including certain derivatives as further described in Note 10 to the consolidated financial statements. The six-month period ended June 30, 2024, included loss on extinguishment of debt of approximately $(174) million, as discussed in Note 9 to the consolidated financial statements. The three- and six-month periods ended June 30, 2023, included $32 million of impairment on an equity security investment which the Company agreed to sell for less than its carrying value subsequent to June 30, 2023.

Provision (Benefit) for Income Taxes

			Three months ended June 30,																								Six months ended June 30,
															$						%																		$						%
			2024						2023						Change						Change						2024						2023						Change						Change
			(In millions)																								(In millions)
Provision (benefit) for income taxes			$	89					$	29					$	60					NM						$	116					$	65					$	51					NM
Effective tax rate			28		%				25		%																26		%				26		%

NM = Not meaningful

The increase in the effective tax rate for the three months ended June 30, 2024, was predominately driven by book-tax differences in the treatment of stock compensation awards. As described in Note 2 to the consolidated financial statements, the Company reflects its investor-level tax impact relating to equity method investments as a component of Equity method investment earnings (loss), net of tax in the consolidated statement of earnings (loss). Therefore, equity method investment earnings (loss) and the related investor-level tax are excluded from the calculation of FIS' estimated annual effective tax rate.

Equity Method Investment Earnings (Loss)

																											Five months						Six months
			Three months ended June 30,																								ended						ended
															$						%						June 30,						June 30,						$						%
			2024						2023						Change						Change						2024						2023						Change						Change
			(In millions)																								(In millions)
Equity method investment earnings (loss), net of tax			$	10					$	—					$	10					NM						$	(76)					$	—					NM						NM

NM = Not meaningful

As discussed in Note 1 to the consolidated financial statements, the Company completed the Worldpay Sale on January 31, 2024, retaining a non-controlling ownership interest in Worldpay. We account for our remaining minority ownership in Worldpay using the equity method of accounting. As of June 30, 2024, we own 45% of Worldpay. During the period from February 1, through June 30, 2024, our share of the net income of Worldpay is reported as Equity method investment earnings (loss), net of tax, in the consolidated statement of earnings (loss) and reflects FIS' investor-level tax impact on its investment in Worldpay. See Note 4 to the consolidated financial statements for summary Worldpay financial information.

Discontinued Operations

			Three months ended June 30,																								Six months ended June 30,
															$						%																		$						%
			2024						2023						Change						Change						2024						2023						Change						Change
			(In millions)																								(In millions)
Revenue			$	4					$	1,322					NM						NM						$	406					$	2,435					NM						NM
Earnings (loss) from discontinued operations related to major classes of pretax earnings (loss)			$	1					$	(6,637)					NM						NM						$	184					$	(6,581)					NM						NM
Pretax gain (loss) on the disposal of discontinued operations			$	—					$	—					NM						NM						$	(466)					$	—					NM						NM
Provision (benefit) for income taxes			$	—					$	43					NM						NM						$	(991)					$	55					NM						NM
Earnings (loss) from discontinued operations, net of tax			$	1					$	(6,680)					NM						NM						$	709					$	(6,636)					NM						NM

NM = Not meaningful

As discussed in Note 1 to the consolidated financial statements, the Company completed the Worldpay Sale on January 31, 2024. The results of the Worldpay Merchant Solutions business prior to the completion of the Worldpay Sale have been presented as discontinued operations.

As discussed in Note 3 to the consolidated financial statements, certain businesses included in the Worldpay Sale have yet to be conveyed to Worldpay due to pending regulatory approvals; these businesses continue to generate an immaterial amount of revenue and earnings from discontinued operations. For the three- and six-month periods ended June 30, 2024, changes in each of the captions above are a result of the Worldpay Sale.

For the three and six months ended June 30, 2023, Earnings (loss) from discontinued operations related to major classes of pretax earnings (loss), as well as Earnings (loss) from discontinued operations, net of tax, included a $6.8 billion impairment of goodwill. Additionally, beginning on July 5, 2023, the Company ceased amortization of long-lived assets held for sale.

For the six-month period ended June 30, 2024, pretax gain (loss) on the disposal of discontinued operations of $466 million was recorded upon the closing of the Worldpay Sale and reflects the impact of the excess of the carrying value of the disposal group to the estimated fair value less cost to sell.

For the six-month period ended June 30, 2024, the Company recorded a tax benefit of $991 million, primarily from the write-off 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.

Post-closing selling price adjustments and completion of other 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.

Segment Results of Operations - Comparisons of three- and six-month periods ended June 30, 2024 and 2023

FIS reports its financial performance based on the following segments: Banking Solutions, Capital Market Solutions, and Corporate and Other.

Adjusted EBITDA is reported to our chief operating decision maker, the Company's Chief Executive Officer and President, 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. The items affecting the segment profit measure generally include purchase price amortization of acquired intangible assets, as well as acquisition, integration and certain other costs and asset impairments. These costs and adjustments are recorded in the Corporate and Other segment for the periods discussed below. Adjusted EBITDA for the respective segments excludes the foregoing costs and adjustments. Financial information, including details of Adjusted EBITDA, for each of our segments is set forth in Note 13 to the consolidated financial statements.

Banking Solutions

			Three months ended June 30,																								Six months ended June 30,
															$						%																		$						%
			2024						2023						Change						Change						2024						2023						Change						Change
			(In millions)																								(In millions)
Revenue			$	1,710					$	1,666					$	44					3		%				$	3,394					$	3,312					$	82					2		%
Adjusted EBITDA			$	765					$	723					42						6						$	1,511					$	1,394					$	117					8
Adjusted EBITDA margin			44.8		%				43.4		%																44.5		%				42.1		%
Adjusted EBITDA margin basis points change			140																								240

Three months ended June 30:

Revenue in our Banking segment increased 3% for the three months ended June 30, 2024. Recurring revenue contributed 2% to total segment growth, driven by higher transaction processing revenue. Non-recurring revenue contributed 2% to growth, as strong license sales and termination fee growth offset a decline in revenue from servicing federally funded pandemic relief programs. Professional services revenue contributed (1%) to segment growth.

Adjusted EBITDA increased year over year due to the revenue impacts noted above and the results of the Company's cost savings initiatives. Adjusted EBITDA margin expanded year over year, driven by the Company's cost savings initiatives and a favorable revenue mix compared to the prior year, including an increase in high-margin license revenue.

Six months ended June 30:

Revenue in our Banking segment increased 2% for the six months ended June 30, 2024. Recurring revenue contributed 2% to total segment growth, driven by higher transaction processing revenue. Non-recurring revenue contributed 1% to growth, as strong license sales and termination fee growth offset a decline in revenue from servicing federally funded pandemic relief programs. Professional services revenue contributed (1%) to segment growth.

Adjusted EBITDA increased year over year due to the revenue impacts noted above and the results of the Company's cost savings initiatives. Adjusted EBITDA margin expanded significantly year over year, driven by the Company's cost savings initiatives and favorable revenue mix compared to the prior year, including an increase in high-margin license revenue.

Capital Market Solutions

			Three months ended June 30,																								Six months ended June 30,
															$						%																		$						%
			2024						2023						Change						Change						2024						2023						Change						Change
			(In millions)																								(In millions)
Revenue			$	722					$	672					$	50					7		%				$	1,428					$	1,335					$	93					7		%
Adjusted EBITDA			$	367					$	337					30						9						$	702					$	657					45						7
Adjusted EBITDA margin			50.8		%				50.2		%																49.1		%				49.2		%
Adjusted EBITDA margin basis points change			60																								(10)

Three months ended June 30:

Revenue in our Capital Markets segment increased 7% for the three months ended June 30, 2024. Recurring revenue contributed 5% to total segment growth due to strong new sales momentum and continued movement to a SaaS-based recurring revenue model. Non-recurring revenue contributed 2% to total segment growth due primarily to strong license sales growth.

Adjusted EBITDA increased year over year due to the revenue impacts noted above. Adjusted EBITDA margin expanded year over year, due primarily to the Company's operating leverage.

Six months ended June 30:

Revenue in our Capital Markets segment increased 7% for the six months ended June 30, 2024. Recurring revenue contributed 6% to total segment growth due to strong new sales momentum and continued movement to a SaaS-based recurring revenue model. Non-recurring revenue contributed 1% to total segment growth due primarily to strong license sales growth.

Adjusted EBITDA increased year over year due to the revenue impacts noted above. Adjusted EBITDA margin remained approximately flat year over year.

Corporate and Other

			Three months ended June 30,																								Six months ended June 30,
															$						%																		$						%
			2024						2023						Change						Change						2024						2023						Change						Change
			(In millions)																								(In millions)
Revenue			$	57					$	86					$	(29)					(33)		%				$	135					$	174					$	(39)					(22)		%
Adjusted EBITDA			$	(134)					$	(115)					(19)						17						$	(239)					$	(207)					(32)						15

The Corporate and Other segment results consist of selling, general and administrative expenses and depreciation and intangible asset amortization not otherwise allocated to the reportable segments. Corporate and Other also includes operations from certain non-strategic businesses.

Three months ended June 30:

Revenue in our Corporate and Other segment decreased 33% for the three months ended June 30, 2024, due to the ramp down of non-strategic businesses.

Adjusted EBITDA decreased primarily due to the revenue impacts noted above. Corporate costs were slightly higher year over year due to dis-synergies associated with the Worldpay Sale, which were mostly offset by other cost saving initiatives.

Six months ended June 30:

Revenue in our Corporate and Other segment decreased 22% for the six months ended June 30, 2024, due to the ramp down of non-strategic businesses.

Adjusted EBITDA decreased primarily due to the revenue impacts noted above. Corporate costs were slightly higher year over year due to dis-synergies associated with the Worldpay Sale, which were mostly offset by other cost saving initiatives.

Liquidity and Capital Resources

Cash Requirements

Our principal ongoing cash requirements include operating expenses, income taxes, debt service payments, capital expenditures, stockholder dividends, working capital and timing differences in settlement-related assets and liabilities and may include discretionary debt repayments, share repurchases and business acquisitions. Our principal sources of funds are cash generated by operations and borrowings, including the capacity under our Revolving Credit Facility, the U.S. commercial paper program and the Euro-commercial paper program discussed in Note 9 to the consolidated financial statements, in addition to the net proceeds from the Worldpay Sale, which closed on January 31, 2024.

As of June 30, 2024, the Company had $6.6 billion of available liquidity, including $2.1 billion of cash and cash equivalents and $4.5 billion of capacity available under its Revolving Credit Facility. Approximately $1.1 billion of cash and cash equivalents is held by our foreign entities. The majority of our cash and cash equivalents relates to unused proceeds from the Worldpay Sale, in addition to settlement payables and net deposits-in-transit, which are typically settled within a few business days. Debt outstanding totaled $11.2 billion, with an effective weighted average interest rate of 2.8%. The Company repaid an aggregate principal amount of €500 million in 1.100% Senior Euro Notes at maturity on July 15, 2024.

Although we continue to evaluate the optimal capital structure for our business following the completion of the Worldpay Sale, we intend to maintain investment grade debt ratings for FIS.

We believe that our current level of cash and cash equivalents plus cash flows from operations will be sufficient to fund our operating cash requirements, capital expenditures and debt service payments for the next 12 months and the foreseeable future.

A regular quarterly dividend of $0.36 per common share is payable on September 24, 2024, to shareholders of record as of the close of business on September 10, 2024. We currently expect to continue to pay quarterly dividends at a target payout ratio consistent with our capital allocation strategy, without regard to our equity method investment earnings (loss) attributable to our interest retained in Worldpay post-separation. However, the amount, declaration and payment of future dividends is at the discretion of the Board of Directors and depends on, among other things, our investment opportunities (including potential mergers and acquisitions), results of operations, financial condition, cash requirements, future prospects, and other factors, including legal and contractual restrictions, that may be considered relevant by our Board of Directors. Additionally, the payment of cash dividends may be limited by covenants in certain debt agreements.

In January 2021, our Board of Directors approved a share repurchase program under which it authorized the Company to repurchase up to 100 million shares of our common stock. In August 2024, our Board of Directors approved a separate, incremental share repurchase program authorizing the repurchase of up to $3.0 billion in aggregate value of shares of our common stock. Repurchases under these programs will be made at management's discretion from time to time on the open market or in privately negotiated transactions and through Rule 10b5-1 plans. Neither of these repurchase programs has an expiration date, and either program may be suspended for periods, amended or discontinued at any time. Approximately 20 million shares remained available for repurchase under the January 2021 program as of June 30, 2024, and the Company will exhaust its authorization under this program prior to repurchasing shares under the new program. We plan to continue to prioritize share repurchases under these share repurchase authorizations. We intend to repurchase approximately $4.0 billion of our shares during 2024, inclusive of $2.5 billion in shares repurchased during the first half of 2024.

Cash Flows from Operations

Our net cash provided by operating activities consists primarily of net earnings, adjusted to add back depreciation and amortization and other non-cash items, including asset impairments, loss on extinguishment of debt, and loss from equity method investment. Cash flows from operations were $752 million and $767 million for the six month periods ended June 30, 2024 and 2023, respectively. Cash flows from operations decreased $15 million during the six months ended June 30, 2024, primarily due to timing of working capital, offset by an increase in earnings adjusted for non-cash items.

Cash Flows from Investing

Our principal investing activity relates to capital expenditures for software (purchased and internally developed) and property and equipment. We invested approximately $385 million and $371 million in capital expenditures (excluding other financing obligations for certain hardware and software) during the six-month periods ended June 30, 2024 and 2023, respectively. We expect to continue investing in software and in property and equipment to support our business.

We also invest in acquisitions that complement and extend our existing solutions and capabilities and provide additional solutions to our portfolio, and we dispose of assets that are no longer considered strategic. In the first half of 2024, we used approximately $56 million of cash (net of cash acquired) related to new acquisitions. In 2024, in connection with the Worldpay Sale, we received approximately $12.8 billion in cash proceeds and divested $3.1 billion in cash, cash equivalents and restricted cash included in current assets held for sale at the date of sale. We expect to continue to invest in acquisitions as part of our strategy to add solutions to help win new clients and cross-sell to existing clients.

During the three months ended June 30, 2024, we received distributions of $29 million from Worldpay recorded as investing cash flows. We expect to continue to receive regular cash distributions from Worldpay pursuant to the terms of the LLCA.

Cash flows from investing also occasionally include cash received or paid relative to other activities that are not regularly recurring in nature.

Cash Flows from Financing

Cash flows from financing principally involve borrowing funds, repaying debt, repurchasing shares and paying dividends. In 2023, we paid $173 million related to the 2020 Virtus acquisition to redeem a put option exercised by the founders as described in Note 5 to the consolidated financial statements.

Financing

For more information regarding the Company's debt and financing activity, see "Risk Factors—Risks Related to Our Indebtedness" in Item 1A of our Annual Report on Form 10-K filed on February 26, 2024, and "Quantitative and Qualitative Disclosures About Market Risk—Interest Rate Risk" in Item 3 below as well as Notes 9 and 10 to the consolidated financial statements.

Contractual Obligations

There were no material changes in our contractual obligations through the three months ended June 30, 2024, in comparison to the table included in our Annual Report on Form 10-K for the year ended December 31, 2023, except as disclosed in Note 9 to the consolidated financial statements.

Recent Accounting Pronouncements

No new accounting pronouncement issued or effective during the fiscal year had or is expected to have a material impact on our consolidated financial statements or disclosures.