Equity Method Investment

6 Months Ended

Jun. 30, 2024

Equity Method Investments and Joint Ventures [Abstract]

As discussed in Note 1, 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. This investment is reflected in Equity method investment on our June 30, 2024, consolidated balance sheet. During the five-month period from February 1, 2024, through June 30, 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 three months ended June 30, 2024, we received distributions of $29 million from Worldpay, which are recorded in Other investing activities, net on the consolidated statement of cash flows for the six months ended June 30, 2024.

Summary Worldpay financial information is as follows (in millions):


	Three months		Five months
	ended		ended
	June 30, 2024		June 30, 2024
Revenue	$	1,349	$	2,181
Gross profit	$	668	$	1,053
Earnings (loss) before income taxes	$	3	$	(227)
Net earnings (loss) attributable to Worldpay	$	(28)	$	(271)
FIS share of net earnings (loss) attributable to Worldpay, net of tax (1)	$	10	$	(76)

(1)For the three- and five-month periods ended June 30, 2024, this amount is net of $22 million and $45 million, respectively, of investor-level tax benefit.

Continuing Involvement with Discontinued Operations and Related-Party Transactions

In connection with the closing of the Worldpay Sale, the Company entered into a limited liability company operating agreement (the "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. 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 three- and five-month periods ended June 30, 2024, pass-through costs of $132 million and $247 million, respectively, were incurred under the ELA, and third-party pass-through costs of $36 million and $93 million, respectively, were incurred under the TSA, and were netted against the equal and offsetting reimbursement amounts due from Worldpay. Additionally, during the three- and five-month periods ended June 30, 2024, net TSA services income of $40 million and $73 million, respectively, 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 three- and five-month periods ended June 30, 2024, from various commercial services provided to Worldpay was $32 million and $55 million respectively.

For the three- and five-month periods ended June 30, 2024, we collected net cash of $272 million and $411 million, respectively, related to the ELA, TSA and commercial agreements with Worldpay. As of June 30, 2024, we recorded a receivable of $169 million in Receivable from related party on the consolidated balance sheet in connection with the ELA, TSA and commercial agreements. Under the ELA, amounts are generally invoiced to Worldpay on the 15th of each month for the preceding and subsequent payroll periods and are payable by wire transfer within 10 days. As of June 30, 2024, $58 million included in our related-party receivable is offset by an equal amount of accrued employee-related liabilities recorded in Accounts payable, accrued and other liabilities on the consolidated balance sheet. Upon termination of the ELA, the amount of the accrued employee-related liabilities as of the date of termination will be assumed by Worldpay in satisfaction of the corresponding receivable. 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 June 30, 2024, we recorded a settlement payable of $116 million in Current liabilities held for sale on the consolidated balance sheet for amounts to be settled from our RealNet subsidiary to Worldpay. The settlement payable by RealNet to Worldpay is generally paid to Worldpay's submerchants on behalf of Worldpay via ACH within five business days according to payment instructions provided by Worldpay. As of June 30, 2024, we also recorded other payables to Worldpay of $36 million in Accounts payable, accrued and other liabilities on the consolidated balance sheet. These amounts are generally payable within 30 days.