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Segment Information | 3 Months Ended
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Mar. 31, 2023
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. T he Company regularly assesses its portfolio of assets and reclassified certain businesse s from Capital Market Solutions to Banking Solutions and to the Corporate and Other Segment in the quarter ended March 31, 2023, and recast all prior-period segment information presented. Revenue from the reclassified businesses during the quarter ended March 31, 2023, represented less than 1% of consolidated revenue for the period. 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 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. On February 13, 2023, we announced plans to spin off our Merchant Solutions business as further discussed in Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations." 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 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, integration and transformation-related expenses, that are not considered when management evaluates revenue-generating segment performance. In the Corporate and Other segment, the Company recorded acquisition, integration and other costs comprised of the following (in millions):
|  | Three months ended
|  | March 31,
|  | 2023 |  | 2022
Acquisition and integration |  | $ | 9 |  |  | $ | 48 |
Enterprise transformation, including Future forward and platform modernization |  | 76 |  |  | 80 |
Severance and other termination expenses associated with enterprise cost control initiatives and changes in senior management |  | 28 |  |  | 11 |
Planned spin-off of the Merchant Solutions business |  | 11 |  |  | — |
Stock-based compensation, primarily from certain performance-based awards |  | — |  |  | 24 |
Other, including divestiture-related expenses, enterprise costs control and other initiatives |  | 3 |  |  | 28 |
Total acquisition, integration and other costs |  | $ | 127 |  |  | $ | 190 |
Amounts in table may not sum due to rounding. Other costs in Corporate and Other 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 $19 million and $52 million for the three months ended March 31, 2023 and 2022, respectively, which is recorded in depreciation and amortization in the statement of operations. Additionally, during the quarter ended March 31, 2022, the Company recorded $58 million of impairments primarily related to real estate-related assets resulting from office space reductions. 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) 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. 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 March 31, 2023 (in millions):
|  |  |  |  | Capital |  |  |  |
| Banking |  | Merchant |  | Market |  | Corporate |  |
| Solutions |  | Solutions |  | Solutions |  | and Other |  | Total
Revenue | $ | 1,685 |  |  | $ | 1,105 |  |  | $ | 663 |  |  | $ | 57 |  |  | $ | 3,510 |
Operating expenses | (1,164) |  |  | (720) |  |  | (436) |  |  | (853) |  |  | (3,173) |
Depreciation and amortization (including purchase accounting amortization) | 155 |  |  | 96 |  |  | 93 |  |  | 551 |  |  | 895 |
Acquisition, integration and other costs | — |  |  | — |  |  | — |  |  | 127 |  |  | 127 |
Adjusted EBITDA | $ | 676 |  |  | $ | 481 |  |  | $ | 320 |  |  | $ | (118) |  |  | $ | 1,359 |
Adjusted EBITDA |  |  |  |  |  |  |  |  | $ | 1,359 |
Depreciation and amortization |  |  |  |  |  |  |  |  | (347) |
Purchase accounting amortization |  |  |  |  |  |  |  |  | (548) |
Acquisition, integration and other costs |  |  |  |  |  |  |  |  | (127) |
Interest expense, net |  |  |  |  |  |  |  |  | (137) |
Other income (expense), net |  |  |  |  |  |  |  |  | (11) |
(Provision) benefit for income taxes |  |  |  |  |  |  |  |  | (48) |
Net earnings attributable to noncontrolling interest |  |  |  |  |  |  |  |  | (1) |
Net earnings attributable to FIS common stockholders |  |  |  |  |  |  |  |  | $ | 140 |
Capital expenditures | $ | 98 |  |  | $ | 102 |  |  | $ | 63 |  |  | $ | 16 |  |  | $ | 279 |
For the three months ended March 31, 2022 (in millions):
|  |  |  |  | Capital |  |  |  |
| Banking |  | Merchant |  | Market |  | Corporate |  |
| Solutions |  | Solutions |  | Solutions |  | and Other |  | Total
Revenue | $ | 1,659 |  |  | $ | 1,112 |  |  | $ | 627 |  |  | $ | 94 |  |  | $ | 3,492 |
Operating expenses | (1,104) |  |  | (682) |  |  | (413) |  |  | (1,136) |  |  | (3,335) |
Depreciation and amortization (including purchase accounting amortization) | 152 |  |  | 92 |  |  | 86 |  |  | 683 |  |  | 1,013 |
Acquisition, integration and other costs | — |  |  | — |  |  | — |  |  | 190 |  |  | 190 |
Asset impairments | — |  |  | — |  |  | — |  |  | 58 |  |  | 58 |
Adjusted EBITDA | $ | 707 |  |  | $ | 522 |  |  | $ | 300 |  |  | $ | (111) |  |  | $ | 1,418 |
Adjusted EBITDA |  |  |  |  |  |  |  |  | $ | 1,418 |
Depreciation and amortization |  |  |  |  |  |  |  |  | (363) |
Purchase accounting amortization |  |  |  |  |  |  |  |  | (650) |
Acquisition, integration and other costs |  |  |  |  |  |  |  |  | (190) |
Asset impairments |  |  |  |  |  |  |  |  | (58) |
Interest expense, net |  |  |  |  |  |  |  |  | (43) |
Other income (expense), net |  |  |  |  |  |  |  |  | 61 |
(Provision) benefit for income taxes |  |  |  |  |  |  |  |  | (54) |
Net earnings attributable to noncontrolling interest |  |  |  |  |  |  |  |  | (1) |
Net earnings attributable to FIS common stockholders |  |  |  |  |  |  |  |  | $ | 120 |
Capital expenditures | $ | 160 |  |  | $ | 143 |  |  | $ | 81 |  |  | $ | 28 |  |  | $ | 412 |

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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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