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Segment Information | 9 Months Ended
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Sep. 30, 2022
Segment Reporting [Abstract] |
Segment Information | Segment Information FIS reports its financial performance based on the following segments: Banking Solutions, Merchant 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 of all sizes 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 and services 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. Banking serves clients in more than 100 countries. 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. Merchant Solutions ("Merchant") The Merchant segment is focused on serving merchants of all sizes globally, enabling them to accept, authorize and settle electronic payment transactions. Merchant includes all aspects of payment processing, including value-added services, such as security, fraud prevention, advanced data analytics, foreign currency management and numerous funding options. Merchant serves clients in over 100 countries. Our Merchant clients are highly-diversified, including global enterprises, national retailers and small- to medium-sized businesses. The Merchant segment utilizes broad and varied distribution channels, including direct sales forces and multiple referral partner relationships that provide us with access to new and existing markets. Capital Market Solutions ("Capital Markets") The Capital Markets segment is focused on serving global financial services clients with a broad array of buy- and sell-side solutions. Clients in this segment operate in more than 100 countries and include asset managers, buy- and sell-side securities brokerage and trading firms, insurers, private equity firms, and other commercial organizations. Our buy- and sell-side solutions include a variety of mission-critical applications for recordkeeping, data and analytics, trading, financing and risk management. Capital Markets clients purchase our solutions and services 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, corporate finance and accounting, human resources, legal, and amortization of acquisition-related intangibles and other costs, such as acquisition and integration expenses, that are not considered when management evaluates revenue-generating segment performance. In the Corporate and Other segment, the Company recorded acquisition and integration costs primarily related to the Worldpay acquisition as well as certain other costs, including costs associated primarily with the Company's platform modernization totaling $60 million and $64 million for the three months and $220 million and $64 million for the nine months ended September 30, 2022 and 2021, respectively. These other costs also included 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 totaling $39 million and $102 million for the three months and $176 million and $102 million for the nine months ended September 30, 2022 and 2021, respectively. Additionally, the Company recorded severance and other termination expenses associated with enterprise cost control initiatives and changes in senior management totaling $17 million and $2 million for the three months and $60 million and $17 million for the nine months ended September 30, 2022 and 2021, respectively. These other costs also included stock-based compensation expense, primarily resulting from one-time performance-related awards, totaling $30 million and $42 million for the three months and $94 million and $114 million for the nine months ended September 30, 2022 and 2021, respectively. For the nine months ended September 30, 2021, the Company also recorded $104 million in accelerated stock compensation expense to reflect the impact of establishing a Qualified Retirement Equity Program that modified unvested equity awards outstanding at January 1, 2021 (see Note 9). For the three and nine months ended September 30, 2021, the Company also recorded other costs related to data center consolidation activities totaling $4 million and $32 million and incremental costs directly related to COVID-19 totaling $14 million and $33 million, respectively. The Corporate and Other segment also includes impairment expense, which for the three months ended September 30, 2022, totaled $17 million primarily related to certain software rendered obsolete by platform modernization. For the nine months ended September 30, 2022, the Company also recorded $58 million of impairments primarily related to real estate-related assets as a result of office space reductions and $29 million of impairments primarily related to a non-strategic business. Adjusted EBITDA Adjusted EBITDA is a measure of segment profit or loss that is reported to the chief operating decision maker 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 and other transactions that management deems non-operational in nature or that otherwise improve the comparability of operating results across reporting periods by their exclusion. The items affecting the segment profit measure generally include the purchase price amortization of acquired intangible assets as well as acquisition, integration and certain other costs and asset impairments. Adjusted EBITDA also excludes incremental and direct costs resulting from the COVID-19 pandemic. 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. 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. For the three months ended September 30, 2022 (in millions):
|  |  |  |  | Capital |  |  |  |
| Banking |  | Merchant |  | Market |  | Corporate |  |
| Solutions |  | Solutions |  | Solutions |  | and Other |  | Total
Revenue | $ | 1,680 |  |  | $ | 1,180 |  |  | $ | 671 |  |  | $ | 73 |  |  | $ | 3,604 |
Operating expenses | (1,107) |  |  | (708) |  |  | (423) |  |  | (904) |  |  | (3,142) |
Depreciation and amortization (including purchase accounting amortization) | 148 |  |  | 88 |  |  | 82 |  |  | 614 |  |  | 932 |
Acquisition, integration and other costs | — |  |  | — |  |  | — |  |  | 164 |  |  | 164 |
Asset impairments | — |  |  | — |  |  | — |  |  | 17 |  |  | 17 |
Adjusted EBITDA | $ | 721 |  |  | $ | 560 |  |  | $ | 330 |  |  | $ | (36) |  |  | $ | 1,575 |
Adjusted EBITDA |  |  |  |  |  |  |  |  | $ | 1,575 |
Depreciation and amortization |  |  |  |  |  |  |  |  | (324) |
Purchase accounting amortization |  |  |  |  |  |  |  |  | (608) |
Acquisition, integration and other costs |  |  |  |  |  |  |  |  | (164) |
Asset impairments |  |  |  |  |  |  |  |  | (17) |
Interest expense, net |  |  |  |  |  |  |  |  | (76) |
Other income (expense), net |  |  |  |  |  |  |  |  | (41) |
(Provision) benefit for income taxes |  |  |  |  |  |  |  |  | (91) |
Net earnings attributable to noncontrolling interest |  |  |  |  |  |  |  |  | (5) |
Net earnings attributable to FIS common stockholders |  |  |  |  |  |  |  |  | $ | 249 |
Capital expenditures | $ | 109 |  |  | $ | 122 |  |  | $ | 63 |  |  | $ | 37 |  |  | $ | 331 |
For the three months ended September 30, 2021 (in millions):
|  |  |  |  | Capital |  |  |  |
| Banking |  | Merchant |  | Market |  | Corporate |  |
| Solutions |  | Solutions |  | Solutions |  | and Other |  | Total
Revenue | $ | 1,610 |  |  | $ | 1,161 |  |  | $ | 654 |  |  | $ | 82 |  |  | $ | 3,507 |
Operating expenses | (1,012) |  |  | (647) |  |  | (419) |  |  | (1,291) |  |  | (3,369) |
Depreciation and amortization (including purchase accounting amortization) | 144 |  |  | 86 |  |  | 81 |  |  | 747 |  |  | 1,058 |
Acquisition, integration and other costs | — |  |  | — |  |  | — |  |  | 187 |  |  | 187 |
Asset impairments | — |  |  | $ | — |  |  | $ | — |  |  | 202 |  |  | 202 |
Adjusted EBITDA | $ | 742 |  |  | $ | 600 |  |  | $ | 316 |  |  | $ | (73) |  |  | $ | 1,585 |
Adjusted EBITDA |  |  |  |  |  |  |  |  | $ | 1,585 |
Depreciation and amortization |  |  |  |  |  |  |  |  | (344) |
Purchase accounting amortization |  |  |  |  |  |  |  |  | (714) |
Acquisition, integration and other costs |  |  |  |  |  |  |  |  | (187) |
Asset impairments |  |  |  |  |  |  |  |  | (202) |
Interest expense, net |  |  |  |  |  |  |  |  | (46) |
Other income (expense), net |  |  |  |  |  |  |  |  | 110 |
(Provision) benefit for income taxes |  |  |  |  |  |  |  |  | (41) |
Net earnings attributable to noncontrolling interest |  |  |  |  |  |  |  |  | (3) |
Net earnings attributable to FIS common stockholders |  |  |  |  |  |  |  |  | $ | 158 |
Capital expenditures | $ | 94 |  |  | $ | 74 |  |  | $ | 47 |  |  | $ | 50 |  |  | $ | 265 |
For the nine months ended September 30, 2022 (in millions):
|  |  |  |  | Capital |  |  |  |
| Banking |  | Merchant |  | Market |  | Corporate |  |
| Solutions |  | Solutions |  | Solutions |  | and Other |  | Total
Revenue | $ | 4,988 |  |  | $ | 3,595 |  |  | $ | 1,992 |  |  | $ | 239 |  |  | $ | 10,814 |
Operating expenses | (3,281) |  |  | (2,167) |  |  | (1,295) |  |  | (3,078) |  |  | (9,821) |
Depreciation and amortization (including purchase accounting amortization) | 448 |  |  | 268 |  |  | 258 |  |  | 1,946 |  |  | 2,920 |
Acquisition, integration and other costs | — |  |  | — |  |  | — |  |  | 574 |  |  | 574 |
Asset impairments | — |  |  | — |  |  | — |  |  | 104 |  |  | 104 |
Adjusted EBITDA | $ | 2,155 |  |  | $ | 1,696 |  |  | $ | 955 |  |  | $ | (215) |  |  | $ | 4,591 |
Adjusted EBITDA |  |  |  |  |  |  |  |  | $ | 4,591 |
Depreciation and amortization |  |  |  |  |  |  |  |  | (1,035) |
Purchase accounting amortization |  |  |  |  |  |  |  |  | (1,885) |
Acquisition, integration and other costs |  |  |  |  |  |  |  |  | (574) |
Asset impairments |  |  |  |  |  |  |  |  | (104) |
Interest expense |  |  |  |  |  |  |  |  | (166) |
Other income (expense), net |  |  |  |  |  |  |  |  | 51 |
(Provision) benefit for income taxes |  |  |  |  |  |  |  |  | (223) |
Net earnings attributable to noncontrolling interest |  |  |  |  |  |  |  |  | (9) |
Net earnings (loss) attributable to FIS common stockholders |  |  |  |  |  |  |  |  | $ | 646 |
Capital expenditures | $ | 385 |  |  | $ | 374 |  |  | $ | 210 |  |  | $ | 114 |  |  | $ | 1,083 |
For the nine months ended September 30, 2021 (in millions):
|  |  |  |  | Capital |  |  |  |
| Banking |  | Merchant |  | Market |  | Corporate |  |
| Solutions |  | Solutions |  | Solutions |  | and Other |  | Total
Revenue | $ | 4,729 |  |  | $ | 3,303 |  |  | $ | 1,908 |  |  | $ | 265 |  |  | $ | 10,205 |
Operating expenses | (3,041) |  |  | (1,927) |  |  | (1,259) |  |  | (3,378) |  |  | (9,605) |
Depreciation and amortization (including purchase accounting amortization) | 441 |  |  | 263 |  |  | 248 |  |  | 2,029 |  |  | 2,981 |
Acquisition, integration and other costs | — |  |  | — |  |  | — |  |  | 629 |  |  | 629 |
Asset impairments | — |  |  | — |  |  | — |  |  | 202 |  |  | 202 |
Adjusted EBITDA | $ | 2,129 |  |  | $ | 1,639 |  |  | $ | 897 |  |  | $ | (253) |  |  | $ | 4,412 |
Adjusted EBITDA |  |  |  |  |  |  |  |  | $ | 4,412 |
Depreciation and amortization |  |  |  |  |  |  |  |  | (918) |
Purchase accounting amortization |  |  |  |  |  |  |  |  | (2,063) |
Acquisition, integration and other costs |  |  |  |  |  |  |  |  | (629) |
Asset impairments |  |  |  |  |  |  |  |  | (202) |
Interest expense, net |  |  |  |  |  |  |  |  | (169) |
Other income (expense), net |  |  |  |  |  |  |  |  | (58) |
(Provision) benefit for income taxes |  |  |  |  |  |  |  |  | (246) |
Equity method investment earnings (loss) |  |  |  |  |  |  |  |  | 6 |
Net earnings attributable to noncontrolling interest |  |  |  |  |  |  |  |  | (7) |
Net earnings attributable to FIS common stockholders |  |  |  |  |  |  |  |  | $ | 126 |
Capital expenditures | $ | 301 |  |  | $ | 270 |  |  | $ | 157 |  |  | $ | 149 |  |  | $ | 877 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI https://asc.fasb.org/topic&trid=2134510 + Details
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