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What changed in Fidelity National Information Services's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Fidelity National Information Services's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+374 added−410 removedSource: 10-K (2024-02-26) vs 10-K (2023-02-27)

Top changes in Fidelity National Information Services's 2023 10-K

374 paragraphs added · 410 removed · 242 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

57 edited+21 added−36 removed80 unchanged
Biggest changeClients in this segment operate in more than 100 countries and include asset managers and servicers, securities brokerage and trading firms, insurers, private equity firms, and other commercial and corporate organizations. Our solutions include a variety of mission-critical applications for recordkeeping, treasury, data and analytics, order management and trading, securities processing and financing, and risk and compliance.
Biggest changeCapital 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, sell-side securities brokerage and trading firms, insurers, private equity firms, asset and auto financiers and other commercial organizations.
As a provider of electronic data processing and back-office services to financial institutions, FIS is subject to regulatory oversight and examination by the FFIEC, an interagency body of federal banking regulators including the Federal Deposit Insurance Corporation ("FDIC"), the Office of the Comptroller of the Currency ("OCC"), the Board of Governors of the Federal Reserve System ("FRB"), the National Credit Union Administration ("NCUA") (collectively, the Federal Banking Agencies or "FBA") and the CFPB, as part of the Multi-Regional Data Processing Servicer ("MDPS") program.
As a provider of electronic data processing and back-office services to financial institutions, FIS is subject to regulatory oversight and examination by the FFIEC, an interagency body of federal banking regulators including the Federal Deposit Insurance Corporation ("FDIC"), the Office of the Comptroller of the Currency ("OCC"), the Board of Governors of the Federal Reserve System ("FRB"), the National Credit Union Administration ("NCUA") (collectively, the Federal Banking Agencies or "FBA") and the CFPB, including as part of the Multi-Regional Data Processing Servicer ("MDPS") program.
We believe that keeping our team and our capital strategically focused benefits our existing clients and our ability to win new clients. Segment Information FIS reports its financial performance based on the following segments: Banking Solutions ("Banking"), Merchant Solutions ("Merchant"), Capital Market Solutions ("Capital Markets") and Corporate and Other.
We believe that keeping our team and our capital strategically focused benefits our existing clients and our ability to win new clients. Segment Information FIS reports its financial performance based on the following segments: Banking Solutions ("Banking"), Capital Market Solutions ("Capital Markets") and Corporate and Other.
Organic 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.
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.
These various regulatory regimes require compliance in respect of many aspects of our payment services business including without limitation corporate governance and oversight functions, capital requirements, liquidity, safeguarding, fee regulation adherence, technology and cyber resilience, anti-money laundering and sanctions.
These various regulatory regimes require compliance in respect of many aspects of our payment services businesses including without limitation corporate governance and oversight functions, capital requirements, liquidity, safeguarding, fee regulation adherence, technology and cyber resilience, anti-money laundering and sanctions. • Anti-Money Laundering.
Depending on the business line, our primary competitors include, but are not limited to, internal technology or software development departments within financial institutions or other large companies, merchant acquirers, global eCommerce providers, global and regional companies providing payment services, third-party payment processors, payment facilitators, embedded payment solution providers, securities exchanges, asset managers, card associations, clearing networks or associations, trust companies, independent computer services firms, companies that develop and deploy software applications, companies owned by global banks selling new competitive solutions, companies that provide customized development, implementation and support services, emerging technology innovators, and business process outsourcing companies.
Depending on the business line, our primary competitors include, but are not limited to, internal technology or software development departments within financial institutions or other large companies, global and regional companies providing payment services, third-party payment processors, payment facilitators, embedded payment solution providers, securities exchanges, asset managers, card associations, clearing networks or associations, trust companies, independent computer services firms, companies that develop and deploy software applications, companies owned by global banks selling competitive solutions, companies that provide customized development, implementation and support services, emerging technology innovators, and business process outsourcing companies.
In addition, FINRA, a self-regulatory organization that is subject to oversight by the SEC, adopts and enforces rules governing the conduct, and examines the activities, of its member firms, including our broker-dealer. State securities regulators and various exchanges, including the New York Stock Exchange, also have regulatory or oversight authority over our broker-dealer.
In addition, FINRA, a self-regulatory organization that is subject to oversight by the SEC, adopts and enforces rules governing the conduct, and examines the activities, of its member firms, including our broker-dealer. State securities regulators and various exchanges, including the New York 9 Table of Contents Stock Exchange, also have regulatory or oversight authority over our broker-dealer.
Our clients across our strategic global markets reach across the size spectrum from large enterprises and financial institutions, including global or multi-national clients, to small businesses and community or regional financial institutions. • Allocate Our Capital and Resources Strategically.
Our clients across our strategic global markets reach across the size spectrum from large banks, financial institutions and other enterprises, including global or multi-national clients, to small community or regional financial institutions and other businesses. • Allocate Our Capital and Resources Strategically.
We have made significant investment in modernizing our platforms and solutions and in moving our server compute into our private cloud located in our strategic data centers, supplemented by public clouds in certain regions, to increase speed of delivery to clients and increase solution availability to industry-best levels. • Global Distribution and Scale.
We have made significant investment in modernizing our platforms and solutions and in moving our server compute into our private cloud located in our strategic data centers, supplemented by public clouds in certain regions, to increase speed of delivery to clients and increase solution availability to industry-best levels. 2 Table of Contents • Global Distribution and Scale.
We intend to continue taking appropriate measures to protect our intellectual property rights, including by legal action when necessary and appropriate. Competition The markets for our solutions are intensely competitive.
We intend to continue taking commercially reasonable measures to protect our intellectual property rights, including by legal action when necessary and appropriate. Competition The markets for our solutions are intensely competitive.
Sales and Marketing Our sales personnel have expertise in particular solutions and markets as well as across our various client segments. We believe that focusing our expertise on clients in specific markets and tailoring integrated solution sets to participants in those markets enables us to better serve our clients and makes our offerings more attractive to prospects.
Sales and Marketing Our sales personnel have expertise in particular solutions, geographic markets and industry verticals as well as across our various client segments. We believe that focusing our expertise on clients in specific markets and tailoring integrated solution sets to participants in those markets enables us to better serve our clients and makes our offerings more attractive to prospects.
We also are focused on ensuring our operating environments safeguard and protect consumer's personal information in compliance with these laws. Our consumer reporting and consumer-facing businesses are subject to CFPB Bulletin 2013-7 (a successor to the former Regulation AA - Unfair Deceptive Acts or Practices), which defines Unfair, Deceptive or Abusive Acts or Practices ("UDAAP").
We also are focused on ensuring our operating environments safeguard and protect consumer's personal information in compliance with these laws. 10 Table of Contents Our consumer reporting and consumer-facing businesses are subject to CFPB Bulletin 2013-7 (a successor to the former Regulation AA - Unfair Deceptive Acts or Practices), which defines Unfair, Deceptive or Abusive Acts or Practices ("UDAAP").
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 6 Table of Contents or sell.
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.
Our applications enable Know Your Customer, new account decisioning and opening, account and transaction management, fraud management and collections. Our risk management solutions use our proprietary risk management models and data sources to assist in detecting fraud and assessing the risk of opening a new account.
Our applications enable Know Your Customer, new account decisioning and opening, account and transaction management, fraud management and collections. Our risk management solutions use our proprietary risk management 4 Table of Contents models and data sources to assist in detecting fraud and assessing the risk of opening a new account.
Our integrated solutions range from card production and activation to processing to an extensive range of fraud management solutions and value-added loyalty programs designed to 4 Table of Contents increase card usage and fee-based revenue for financial institutions and merchants.
Our integrated solutions range from card production and activation to processing to an extensive range of fraud management solutions and value-added loyalty programs designed to increase card usage and fee-based revenue for financial institutions and merchants.
The overhead and leveraged costs relate to corporate marketing, corporate finance and accounting, human resources, legal, compliance 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.
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.
Elements of our cash access and money transmission businesses are registered as a Money Services Business and are subject to various federal, state and international laws governing money transmission, including but not limited to the USA PATRIOT Act and reporting requirements of the Bank Secrecy Act, the U.K.
Elements of our cash access and money transmission businesses are registered as a Money Services Business and are subject to various federal, state and international laws governing money transmission, including but not limited to the USA PATRIOT Act and reporting requirements of the Bank Secrecy Act, as well as various U.S. federal, state and international sanctions requirements.
Acquisitions have 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 organic and inorganic growth initiatives to enhance the long-term value of our business.
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.
We continue to invest in organic growth through internal software development as well as through acquisitions and equity investments that complement and extend our existing solutions and capabilities, providing us with additional solutions to cross-sell to existing clients and to capture the interest of new clients.
We continue to invest in our solution portfolio through internal software development as well as through acquisitions and equity investments that complement and extend our existing solutions and capabilities, providing us with additional solutions to cross-sell to existing clients and to capture the interest of new clients.
In the Asset Finance space, we offer a single, end-to-end leasing platform that helps Auto and Equipment Finance companies manage the entire financing process, supporting origination and pricing, credit decisioning, contract management, servicing and collections. • Trading and Processing .
In the asset finance space, we offer a single, end-to-end leasing platform that helps auto and equipment finance companies manage the entire financing process, supporting origination and pricing, credit decisioning, contract management, servicing and collections. • Treasury and Risk.
Criminal Finances Act, the EU 6th Anti-Money Laundering Directive ('EU 6th AMLD"), the Internal Revenue Code, the Employee Retirement Income Security Act, the Health Insurance Portability and Accountability Act, the Community Reinvestment Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), the Securities Exchange Act of 1934, the Investment Advisors Act of 1940 (the "1940 Act"), anti-corruption laws including the U.S.
Proceeds of Crime Act, the U.K. 7 Table of Contents Criminal Finances Act, the EU 6th Anti-Money Laundering Directive ("EU 6th AMLD"), the Internal Revenue Code, the Employee Retirement Income Security Act, the Health Insurance Portability and Accountability Act, the Community Reinvestment Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), the Securities Exchange Act of 1934, the Investment Advisors Act of 1940 (the "1940 Act"), anti-corruption laws including the U.S.
These solutions improve both investment decision making and operational efficiency while managing risk and increasing transparency. Our investment operations solutions support every stage of the investment process, from research and portfolio management to order and position management, valuation, risk management, corporate actions, reconciliation, investment accounting, transfer agency and client reporting. • Lending .
Our Asset Servicing solutions support every stage of the investment process, from research and portfolio management to order and position management, valuation, risk management, corporate actions, reconciliation, investment accounting, investor accounting, transfer agency and client reporting. Our solutions improve both investment decision making and operational efficiency, while managing risk and increasing transparency across the industry. • Lending .
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. We have grown both organically and through acquisitions.
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.
The Company is subject to, both directly and indirectly, various anti-money laundering laws and regulations such as the Bank Secrecy Act in the United States and the Criminal Finances Act 2017 in the U.K.
The Company is subject to, both directly and indirectly, various anti-money laundering laws and regulations such as the Bank Secrecy Act in the United States and the Money Laundering Regulations and Proceeds of Crime Act in the U.K.
The Company is subject to an increasing number of privacy and data protection laws, regulations and directives globally, including the General Data Protection Regulation (GDPR) in the European Union ("EU"); the California Consumer Privacy Act (CCPA) as amended by the California Privacy Rights Act (CPRA), the Virginia Consumer Data Protection Act (VCDPA), the Colorado Privacy Act (CPA), the Connecticut Personal Data Privacy and Online Monitoring Act (CTDPA), the Utah Consumer Privacy Act, the Gramm-Leach-Bliley Act (GLBA), the Fair Credit Reporting Act (FCRA), and the Health Insurance Portability and Accountability Act (HIPAA) in the United States; the United Kingdom’s General Data Protection Regulation (UK GDPR) and Data Protection Act 2018; the General Personal Data Protection Act (LGPD) in Brazil; the China Personal Information Protection Law (PIPL); and the Japanese Act on the Protection of Personal Information (APPI) (referred to collectively as "Privacy Laws").
The Company is subject to an increasing number of privacy and data protection laws, regulations and directives globally, including the General Data Protection Regulation (GDPR) in the European Union ("EU"); the California Consumer Privacy Act (CCPA) as amended by the California Privacy Rights Act (CPRA), the Virginia Consumer Data Protection Act (VCDPA), the Colorado Privacy Act (CPA), the Connecticut Personal Data Privacy and Online Monitoring Act (CTDPA), the Utah Consumer Privacy Act, the Gramm-Leach-Bliley Act (GLBA), the Fair Credit Reporting Act (FCRA), and the Health Insurance Portability and Accountability Act (HIPAA) in the United States; the United Kingdom’s General Data Protection Regulation (U.K.
Our Corporate Governance Policy and Code of Business Conduct and Ethics are also available on our website and are available in print, free of charge, to any shareholder who mails a request to the Corporate Secretary, Fidelity National Information Services, Inc., 347 Riverside Avenue, Jacksonville, FL 32202 12 Table of Contents USA.
Our Corporate Governance Policy and Code of Business Conduct and Ethics are also available on our website and are available in print, free of charge, to any shareholder who mails a request to the Corporate Secretary, Fidelity National Information Services, Inc., 347 Riverside Avenue, Jacksonville, FL 32202 USA. Other corporate governance-related documents can be found at our website as well.
We typically utilize enterprise license agreements or strive to ensure that either alternative suppliers or transfer rights exist in order to ensure the continuity of supply of third-party technology components used in the development of our software applications and service offerings. As a result, we are not materially dependent upon any third-party technology components.
Where appropriate, we use third-party technology components in the development of our software applications and service offerings. We typically utilize enterprise license agreements or strive to ensure that either alternative suppliers or transfer rights exist in order to ensure the continuity of supply of third-party technology components used in the development of our software applications and service offerings.
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. Our solutions in this segment include the following: • Core Processing and Ancillary Applications.
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. Our solutions in this segment include the following: • Core Processing and Ancillary Applications.
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 and advanced technologies like machine learning, artificial intelligence, and blockchain, as well as open application programming interfaces (APIs) and regulatory technology.
Our long-established relationships with many of these financial and commercial institutions generate significant recurring revenue. We have made, and continue to 5 Table of Contents make, investments in modern platforms, advanced technologies, open APIs, machine learning and artificial intelligence, and regulatory technology to support our Capital Markets clients.
The diversity of our workforce helps us use our collective strengths to innovate and deliver the best solutions for our clients. Our Board of Directors and senior leaders are united in championing inclusion and diversity within our workforce through their leadership in prioritizing equality and diversity in our human resource decision making throughout the Company.
The diversity of our workforce helps us use our collective strengths to innovate and deliver the best solutions for our clients. Our Board of Directors and senior leaders are united in championing inclusion and diversity within our workforce.
Our core processing software applications are designed to run banking processes for our financial institution clients, including deposit and lending systems, customer management, and other central management systems. Clients use these applications to maintain the primary records of their customer accounts.
Our core processing software applications, including deposit and lending, customer management and other central management systems, are designed to run banking processes for our financial institution clients. Clients use these applications to maintain the primary records of their customer accounts. Our diverse selection of market-focused core processing software applications enables FIS to compete effectively in a wide range of markets.
In addition, we intend to offer solutions compatible with new and emerging delivery channels. 7 Table of Contents As part of our research and development process, we evaluate current and emerging technology for compatibility with our existing and future software platforms.
In addition, we intend to offer solutions compatible with new and emerging delivery channels. As part of our research and development process, we evaluate current and emerging technology for compatibility with our existing and future software platforms. To this end, we engage with various hardware and software vendors in the evaluation of various new and existing technologies.
Oversight of the FIS Inclusion & Diversity strategy is led by the Chief Inclusion & Diversity Officer and championed by an Enterprise Inclusion & Diversity Council chaired by the Chief People Officer and includes participation and leadership of senior executives of the Company .
Oversight of the FIS Inclusion & Diversity strategy is led by the Chief Inclusion and Diversity Officer and championed by an Enterprise Inclusion and Diversity Council chaired by the Chief People Officer and includes participation and leadership of senior executives of the Company. Further, the Company sponsors Inclusion Networks, which are led by employees who share common backgrounds and experiences.
The legislative and regulatory landscape for privacy and data protection continues to evolve. 9 Table of Contents Our financial institution clients operating in the U.S. are required to comply with privacy regulations imposed under the GLBA and numerous similar state laws. GLBA and those state laws place restrictions on the use of non-public personal information.
Many of these Privacy Laws place restrictions on the Company's ability to efficiently transfer, access and use personal data across its business. The legislative and regulatory landscape for privacy and data protection continues to evolve. Our financial institution clients operating in the U.S. are required to comply with privacy regulations imposed under the GLBA and numerous similar state laws.
Talent Management Along with our clients and communities, our people are primary stakeholders in our organization, and so we place a strategic priority on developing our talent and fostering a culture aligned with our corporate values and in which colleagues receive the support needed to grow their careers.
The Chief Executive Officer and the Chief People Officer regularly update the Company's Board of Directors on human capital management and inclusion and diversity initiatives. 11 Table of Contents Talent Management Along with our clients and communities, our people are primary stakeholders in our organization, and so we place a strategic priority on developing our talent and fostering a culture aligned with our corporate values and in which colleagues receive the support needed to grow their careers.
We also offer a number of solutions that are ancillary to the primary applications listed above, including branch automation, back-office support systems and compliance support. • Digital, including Mobile and Online.
We continue to invest in our core modernization efforts to further differentiate our offerings for the long term. We also offer a number of solutions that are ancillary to the primary applications listed above, including branch automation, back-office support systems and compliance support. • Digital, including Mobile and Online.
Key components of our strategic plans include brand amplification and digital enablement; market and competitive research; voice of the customer and client engagement; thought leadership; integrated go-to-market programs; internal communications and readiness; journalists and social media engagement, industry analyst relations; client events; trade shows; high-touch client programs; demand generation campaigns; account- and deal-based marketing programs; collateral development and management across digital and online channels; and the launch of new products to market.
Key components of our strategic plans include brand amplification and digital enablement; market and competitive research; voice of the customer and client engagement; thought leadership; integrated go-to-market programs; internal communications and readiness; journalists and social media engagement, industry analyst relations; client events; trade shows; high-touch client programs; demand generation campaigns; account- and deal-based marketing programs; collateral development and management across digital and online channels; and the launch of new products to market. 6 Table of Contents Patents, Copyrights, Trademarks and Other Intellectual Property In general, we own the intellectual property and proprietary rights that are necessary to conduct our business and are important to our future success, including trademarks, trade names, trade secrets, copyrights and patents.
Further, the Company sponsors Inclusion Networks, which are led by employees who share common backgrounds and experiences. These groups support their members while promoting the Company's overall goal of fostering an inclusive work environment. Current FIS Inclusion Networks include Women, Asian, Black, Latinx, Disability, LGBTQ+, Rising Professionals, Veterans, and Working Families.
These groups support their members while promoting the Company's overall goal of fostering an inclusive work environment. Current FIS Inclusion Networks include Women, Asian and Pacific Islander, Black, Hispanic and Latinx, Disability, LGBTQ+, Rising Professionals, Veterans, and Working Families.
None of our U.S. workforce currently is unionized. Approximately 11,000 of our employees, primarily in Brazil and Europe, are represented by labor unions or works councils. Health and Safety The health and safety of our employees is a key priority.
None of our U.S. workforce currently is unionized. Approximately 10,000 of our employees, primarily in Brazil and Europe, are represented by labor unions or works councils as of December 31, 2023.
Our strategy to achieve this goal is built on the following pillars: • Build, Buy, or Partner to Add Solutions to Win New Clients and Cross-sell to Existing Clients.
Strategy Our mission is to deliver superior solutions to our clients and to expand our client base to generate sustained revenue and earnings growth for our shareholders. Our strategy to achieve this goal is built on the following pillars: • Build, Buy, or Partner to Add Solutions to Win New Clients and Cross-sell to Existing Clients.
Other corporate governance-related documents can be found at our website as well. However, the information found on our website is not a part of this or any other report.
However, the information found on our website is not a part of this or any other report.
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 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.
We are also subject to review and examination by state and international regulatory authorities under state and foreign laws and rules that regulate many of the same activities that are described above, including electronic data processing, payments and back-office services for financial institutions and the use of consumer information. 8 Table of Contents Our U.S.-based wealth and retirement business holds a charter in the state of Georgia which makes us subject to the regulatory compliance requirements of the Georgia Department of Banking and Finance.
We are also subject to review and examination by state and international regulatory authorities under state and foreign laws and rules that regulate many of the same activities that are described above, including electronic data processing, payments and back-office services for financial institutions and the use of consumer information.
We rely on a combination of contractual restrictions, internal security practices, patents, trade secrets, copyrights and applicable law to establish and protect our software, technology and expertise worldwide. We rely on trademark law to protect our rights in our brands.
We license certain items from third parties under arms-length agreements for varying terms, including some "open source" licenses. We rely on a combination of contractual restrictions, internal security practices, patents, trade secrets, copyrights and applicable law to establish and protect our software, technology and expertise worldwide. We rely on trademark law to protect our rights in our brands.
Third-party software may be used for highly specialized business functions depending on our ability to develop the functionality internally within time and budget constraints. Additionally, third-party software may be used for routine, commonplace functions within a technology platform environment. We work with our clients to determine the appropriate timing and approach to introduce technology or infrastructure changes to our solutions.
As a result, we are not materially dependent upon any third-party technology components. Third-party software may be used for highly specialized business functions depending on our ability to develop the functionality internally within time and budget constraints. Additionally, third-party software may be used for routine, commonplace functions within a technology platform environment.
While these federal, state and international laws are broadly consistent, there may be circumstances where the requirements of a particular jurisdiction conflict with those of other jurisdictions.
While these 8 Table of Contents federal, state and international laws are broadly consistent, there may be circumstances where the requirements of a particular jurisdiction conflict with those of other jurisdictions. As these laws continue to develop and expand, our investment in compliance with these laws continues to grow as does the cost of ongoing compliance. • Sanctions.
As these laws continue to develop and expand, our investment in compliance with these laws continues to grow as does the cost of ongoing compliance. • Sanctions: The Company is subject to certain U.S. federal, state and international economic and trade sanctions programs such as those that are administered by the U.S.
The Company is subject to certain U.S. federal, state and international economic and trade sanctions programs such as those that are administered by the U.S.
FIS' significant expertise in the markets and domains we serve has enabled us to bring to market a broad range of innovative software applications and service offerings.
FIS is a highly respected brand known globally for innovation and thought leadership in the financial services sector. • Extensive Domain Expertise and Portfolio Breadth. FIS' significant expertise in the markets and domains we serve has enabled us to bring to market a broad range of innovative software applications and service offerings.
" 3 Table of Contents Revenue by Segment The table below summarizes our revenue by reporting segment (in millions): 2022 2021 2020 Banking Solutions $ 6,706 $ 6,396 $ 5,944 Merchant Solutions 4,773 4,496 3,767 Capital Market Solutions 2,763 2,624 2,440 Corporate and Other 286 361 401 Total Consolidated Revenue $ 14,528 $ 13,877 $ 12,552 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.
" Revenue by Segment The table below summarizes our revenue by reporting segment (in millions): 2023 2022 2021 Banking Solutions $ 6,733 $ 6,624 $ 6,361 Capital Market Solutions 2,766 2,631 2,495 Corporate and Other 322 464 483 Total Consolidated Revenue $ 9,821 $ 9,719 $ 9,339 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.
All financial institutions must disclose detailed privacy policies to their customers and offer them the opportunity to direct the financial institution not to share information with third parties. The regulations under GLBA, however, permit financial institutions to share information with non-affiliated parties who perform services for the financial institutions.
GLBA and those state laws place restrictions on the use of non-public personal information. All financial institutions must disclose detailed privacy policies to their customers and offer them the opportunity to direct the financial institution not to share information with third parties.
Enactment of new laws and regulations may increasingly affect the operations of our business, directly and indirectly, which could result in substantial regulatory compliance costs, litigation expense, adverse publicity, and/or loss of revenue.
Enactment of new laws and regulations may increasingly affect the operations of our business, directly and indirectly, which could result in substantial regulatory compliance costs, litigation expense, adverse publicity, and/or loss of revenue. Human Capital Management Employee Population As of December 31, 2023, we had more than 60,000 employees, including over 38,000 employees principally employed outside of the U.S.
Criminal Finances Act and the EU 6th AMLD as well as various U.S. federal, state and international sanctions requirements. These businesses may also be subject to certain state and local licensing requirements. The Financial Crimes 10 Table of Contents Enforcement Network, state attorneys general, and other agencies have enforcement responsibility over laws relating to money laundering, currency transmission, and licensing.
These businesses may also be subject to certain state and local licensing requirements. The Financial Crimes Enforcement Network, state attorneys general, and other agencies have enforcement responsibility over laws relating to money laundering, currency transmission, and licensing. In applicable states, we have obtained money transmitter licenses.
Our payment services businesses are also subject to regulation, supervision, and enforcement authority of numerous governmental and regulatory bodies in the jurisdictions in which they operate, which include the CFPB, the DNB in the Netherlands, the METI in Japan, Bank Negara in Malaysia and the FCA and the PSR in the U.K.
Our payment services businesses provide technology services to U.S. financial institutions and are, therefore, subject to oversight and examination by the FFIEC. Our payment services businesses are also subject to regulation, supervision, and enforcement authority of numerous governmental and regulatory bodies in the jurisdictions in which they operate, which include the CFPB and U.S. state regulators.
See "Segment Information" below for additional discussion of our solutions and customers. See also Notes 2, 4 and 21 to the consolidated financial statements for additional information about our revenue. Our consolidated results generally do not reflect pronounced seasonality. However, revenue and margins for each segment may reflect stronger or weaker quarters given the nature of our solutions offered.
The Company recast all prior-period segment information presented to reflect these reclassifications. See "Segment Information" below for additional discussion of our solutions and customers. See also Notes 5 and 22 to the consolidated financial statements for additional information about our segment revenue. Our consolidated results generally do not reflect pronounced seasonality.
As a result, we are also authorized to provide trust services in various additional states subject to additional applicable state regulations. • Payment Services Oversight. Our payment services business is a technology service provider to U.S. financial institutions and is, therefore, subject to oversight and examination by the FFIEC.
Our U.S.-based wealth and retirement business holds a charter in the state of Georgia which makes us subject to the regulatory compliance requirements of the Georgia Department of Banking and Finance. As a result, we are also authorized to provide trust services in various additional states subject to additional applicable state regulations. • Payment Services Oversight.
We are a global leader in many of the markets we serve, supported by a large, knowledgeable talent pool of employees around the world.
We are a global leader in many of the markets we serve, supported by a large, knowledgeable talent pool of employees around the world. Our worldwide presence and global scale enable us to leverage our array of solution offerings, client relationships, and modern infrastructure to drive revenue growth and operating efficiency.
These offerings provide advanced trade life-cycle management, including market making and risk management, cleared derivatives processing, securities processing and securities finance for the broker-dealer community, tax processing, and regulatory compliance, including anti-money laundering (AML) and trade surveillance. • Treasury and Risk.
Our solutions support institutional investors, managers, broker-dealers, asset servicers and transfer agents across all asset classes including private equity, hedge, credit, and traditional. Our trading applications focus on advanced trade life-cycle management, including market making and risk management, cleared derivatives processing, securities processing and securities finance, tax processing, and regulatory compliance, including anti-money laundering (AML) and trade surveillance.
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Item 1. Business Overview FIS is a leading provider of technology solutions for financial institutions and businesses of all sizes and across any industry globally. We enable the movement of commerce by unlocking the financial technology that powers the world's economy.
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Item 1. Business Overview 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. We provide the confidence made possible when reliability meets innovation, helping our clients run, grow and protect their business.
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Our employees are dedicated to advancing the way the world pays, banks and invests through our trusted innovation, system performance and flexible architecture. We help our clients use technology in innovative ways to solve business-critical challenges and deliver superior experiences for their customers.
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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 (such funds, the "Buyer").
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Competitive Strengths We believe our competitive strengths include the following: • Brand. FIS and Worldpay are highly respected brands known globally for innovation and thought leadership in the financial services and merchant sectors. • Extensive Domain Expertise and Portfolio Breadth.
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As of the closing, we retained a non-controlling 45% ownership interest in a new standalone joint venture (the "Joint Venture" or "Worldpay"), which will continue to provide merchant acquiring and related services to businesses of all size and across any industry globally, enabling them to accept, authorize and settle electronic payment transactions.
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Our worldwide presence and global scale enable us to leverage our array of solution offerings, client relationships, and modern infrastructure to drive revenue growth and operating efficiency. 2 Table of Contents Strategy Our mission is to deliver superior solutions to our clients and to expand our client base to generate sustained revenue and earnings growth for our shareholders.
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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 24 to the consolidated financial statements. Competitive Strengths We believe our competitive strengths include the following: • Brand.
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The Merchant business, in particular, is historically subject to seasonal fluctuations in revenue as a result of consumer spending patterns, with Merchant revenue and profitability generally strongest in the fourth quarter and weakest in the first quarter. For information about current trends in market demand, see "Item 7.
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The Worldpay Merchant Solutions business included the former Merchant Solutions segment in addition to a business previously included in the Corporate and Other segment. As a result of the Worldpay Sale, the results of the Worldpay Merchant Solutions business have been recast as discontinued operations for all periods presented. Accordingly, the Company no longer reports the Merchant Solutions segment.
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Management's Discussion and Analysis of Financial Condition and Results of Operations - Business Trends and Conditions .
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The assets and liabilities of the Worldpay Merchant Solutions business disposal group are presented separately on the consolidated balance sheets, and the operating results have been reflected as discontinued operations, for all periods presented. As such, the related results have been excluded from continuing operations and segment results.
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Our diverse selection of market-focused core processing software applications enables FIS to compete effectively in a wide range of markets. We continue to invest in our core modernization efforts to further differentiate our offerings for the long term.
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The consolidated statement of cash flows continues to include cash flows from both continuing and discontinued operations. Cash flows from operating, investing and financing activities for discontinued operations are presented in Note 3 to our consolidated financial statements included herein.
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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 solutions, such as security, fraud prevention, advanced data analytics, foreign currency management and numerous funding options. Merchant serves clients in over 100 countries.
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See Notes 1 and 3 to the consolidated financial statements for further information regarding the Worldpay Merchant Solutions disposal group and its discontinued operations.
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Our Merchant clients are highly diversified, including global enterprises, national retailers and small- to medium-sized businesses ("SMB"). 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. Our solutions in this segment include the following: • SMB.
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In future reports, FIS' share of the net income of the Joint Venture will be reported as equity method investment earnings (loss). 3 Table of Contents 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.
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Our SMB acquiring solutions primarily focus on North American clients with less than $5 million in annual revenue. We offer these clients payment acceptance through our software partners or direct integration. Distributing our merchant acquiring capabilities through a variety of sales channels enables us to serve a diversity of industry verticals and sub-verticals. • Enterprise.
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However, quarterly revenue and margins for each segment may vary based on the timing of recognition of certain non-recurring revenue, including software licenses and termination fees. For information about current trends in market demand, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Business Trends and Conditions .
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Our enterprise acquiring solutions primarily focus on enabling both card-present and omni-channel payment acceptance for North American clients with more than $5 million in annual revenue as well as all international clients. • Global eCommerce. Our global eCommerce solutions primarily provide card-not-present merchant acquiring capabilities to digitally focused merchants that primarily sell their goods and services online.
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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.
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Our platforms enable both domestic and international capabilities, providing a customizable and scalable solution to our clients with best-in-class authorization rates. 5 Table of Contents On February 13, 2023, we announced our plans to spin off the Merchant business ("Spin-Co"), with the intention to create a new, publicly traded company.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

92 edited+51 added−68 removed86 unchanged
Biggest changeThe 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 international hostilities, including the Russia-Ukraine war, 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 of losses in the event of defaults by merchants (or other parties) to which we extend credit in our card settlement operations or in respect of any chargeback liability, either of which could adversely impact liquidity and results of operations; • 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; 27 Table of Contents • 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 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; • uncertainties as to the timing of the potential separation of the Merchant Solutions business or whether it will be completed; • risks associated with the impact, timing or terms of the proposed spin-off; • risks associated with the expected benefits and costs of the proposed spin-off, including the risk that the expected benefits of the proposed spin-off will not be realized within the expected timeframe, in full or at all, and the risk that conditions to the proposed spin-off will not be satisfied and/or that the proposed spin-off will not be completed within the expected timeframe, on the expected terms or at all; • the expected qualification of the proposed spin-off as a tax-free transaction for U.S. federal income tax purposes, including whether or not an IRS ruling will be obtained; • the risk that any consents or approvals required in connection with the proposed spin-off will not be received or obtained within the expected timeframe, on the expected terms or at all; • risks associated with expected financing transactions undertaken in connection with the proposed spin-off and risks associated with indebtedness incurred in connection with the proposed spin-off, including the potential inability to access or reduced access to the capital markets or increased cost of borrowings, including as a result of a credit rating downgrade; • the risk that dis-synergy costs, costs of restructuring transactions and other costs incurred in connection with the proposed spin-off will exceed our estimates or otherwise adversely affect our business or operations; • the impact of the proposed spin-off on our businesses and the risk that the proposed spin-off may be more difficult, time-consuming or costly than expected, including the impact on our resources, systems, procedures and controls, diversion of management’s attention and the impact on relationships with customers, governmental authorities, suppliers, employees and other business counterparties; • the reaction of current and potential customers to communications from us or regulators regarding information security, risk management, internal audit or other matters; • the risk that policies and resulting actions of the current administration in the U.S. may result in additional regulations and executive orders, as well as additional regulatory and tax costs; • 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 merchants or bad actors; and • other risks detailed elsewhere in the " Risk Factors " section and other sections of this report and in our other filings with the SEC. 28 Table of Contents Other unknown or unpredictable factors also could have a material adverse effect on our business, financial condition, results of operations and prospects.
Biggest changeThe 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; 25 Table of Contents • 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; • the risk that policies and resulting actions of the current administration in the U.S. may result in additional regulations and executive orders, as well as additional regulatory and tax costs; • 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 " section and other sections of this report and in our other filings with the SEC.
We cannot be certain that any of these third parties will be able to continue providing these services to effectively meet our evolving needs.
We cannot be certain that any of these third parties will be able to continue providing these services to meet our evolving needs effectively.
Complying with varying jurisdictional requirements could increase the costs and complexity of compliance and associated recordkeeping costs or require us to change our business practices in a manner adverse to our business and incur additional costs.
Complying with varying jurisdictional requirements could increase the costs and complexity of compliance and associated recordkeeping costs or require us to change our business practices in a manner adverse to our business and to incur additional costs.
A material weakness in our internal control over financial reporting could adversely impact our ability to provide timely and accurate financial information. If we are unable to report financial information timely and accurately or to maintain effective disclosure controls and procedures, our business, financial condition and results of operations could be adversely affected.
A material weakness in our internal control over financial reporting could adversely impact our ability to provide timely and accurate financial information. If we are unable to report financial information timely and accurately or to maintain effective disclosure controls and procedures, our business, financial condition or results of operations could be adversely affected.
This level of debt or any increase in our debt level could adversely affect our business, financial condition, operating results and operational flexibility, including the following: (i) the debt level may cause us to have difficulty borrowing money in the future for working capital, capital expenditures, acquisitions or other purposes; (ii) our debt level may limit operational flexibility and our ability to pursue business opportunities and implement certain business strategies; (iii) some of our debt has a variable rate of interest, which exposes us to the risk of increased interest rates; (iv) we have a higher level of debt than some of our competitors or potential competitors, which may cause a competitive disadvantage and may reduce flexibility in responding to changing business and economic conditions, including increased competition and vulnerability to general adverse economic and industry conditions ; (v) there are significant maturities on our debt that we may not be able to repay at maturity or that may be refinanced at higher rates; and (vi) if we fail to satisfy our obligations under our outstanding debt or fail to comply with the financial or other restrictive covenants contained in the indenture governing our senior notes, or our credit facility, an event of default could result that could cause all of our debt to become due and payable.
Our level of debt or any increase in our debt level could adversely affect our business, financial condition, operating results and operational flexibility, including the following: (i) the debt level may cause us to have difficulty borrowing money in the future for working capital, capital expenditures, acquisitions or other purposes; (ii) our debt level may limit operational flexibility and our ability to pursue business opportunities and implement certain business strategies; (iii) some of our debt has a variable rate of interest, which exposes us to the risk of increased interest rates; (iv) we have a higher level of debt than some of our competitors or potential competitors, which may cause a competitive disadvantage and may reduce flexibility in responding to changing business and economic conditions, including increased competition and vulnerability to general adverse economic and industry conditions ; (v) there are significant maturities on our debt that we may not be able to repay at maturity or that may be refinanced at higher rates; and (vi) if we fail to satisfy our obligations under our outstanding debt or fail to comply with the financial or other restrictive covenants contained in the indenture governing our senior notes, or our credit facility, an event of default could result that could cause all of our debt to become due and payable.
Our business and financial results could be adversely affected due to a variety of factors, including the following: • changes in a specific country or region's political and cultural climate or economic condition, including change in governmental regime; • unexpected or unfavorable changes in foreign laws, regulatory requirements and related interpretations; • difficulty of effective enforcement of contractual provisions in local jurisdictions; • inadequate intellectual property protection in foreign countries; • trade-protection measures, import or export licensing requirements such as Export Administration Regulations promulgated by the U.S.
Our business, financial condition or results of operations could be adversely affected due to a variety of factors, including the following: • changes in a specific country or region's political and cultural climate or economic condition, including change in governmental regime; • unexpected or unfavorable changes in foreign laws, regulatory requirements and related interpretations; • difficulty of effective enforcement of contractual provisions in local jurisdictions; • inadequate intellectual property protection in foreign countries; • trade-protection measures, import or export licensing requirements such as Export Administration Regulations promulgated by the U.S.
Item 1A. Risk Factors In addition to the normal risks of business, we are subject to significant risks and uncertainties, including those listed below and others described elsewhere in this Annual Report on Form 10-K. Any of the risks described herein could result in a significant adverse effect on our results of operations and financial condition.
Item 1A. Risk Factors In addition to the normal risks of business, we are subject to significant risks and uncertainties, including those listed below and others described elsewhere in this Annual Report on Form 10-K. Any of the risks described herein could result in a significant adverse effect on our business, financial condition or results of operations.
It is also possible that larger financial institutions resulting from consolidations would have greater leverage in negotiating terms or could decide to perform in-house some or all of the services we currently provide or could provide. Any of these developments could have an adverse effect on our business, results of operations and financial condition.
It is also possible that larger financial institutions resulting from consolidations would have greater leverage in negotiating terms or could decide to perform in-house some or all of the services we currently provide or could provide. Any of these developments could have an adverse effect on our business, financial condition or results of operations.
Effective patent, trademark, service mark, copyright, and trade secret protection may not be available in every country in which our applications and services are made available online. Misappropriation of our intellectual property or potential litigation concerning such matters could have an adverse effect on our results of operations or financial condition.
Effective patent, trademark, service mark, copyright, and trade secret protection may not be available in every country in which our applications and services are made available online. Misappropriation of our intellectual property or potential litigation concerning such matters could have an adverse effect on our business, financial condition or results of operations.
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 or guidance, 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.
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 or outlook, 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.
Rising interest rates could increase our borrowing costs. Our exposure to market risk for changes in interest rates relates to our short-term commercial paper borrowings, Revolving Credit Facility and interest rate derivatives. In the future, we may have additional borrowings under existing or new variable-rate debt. Increases in interest rates on variable-rate debt would increase our interest expense.
Rising interest rates could increase our borrowing costs. Our exposure to market risk for changes in interest rates relates to our short-term commercial paper borrowings and Revolving Credit Facility. In the future, we may have additional borrowings under existing or new variable-rate debt. Increases in interest rates on variable-rate debt would increase our interest expense.
If we fail to comply with relevant regulations, then we risk reputational damage, potential civil and criminal sanctions, fines or other action imposed by regulatory or governmental authorities, including the potential suspension or revocation of the permission-based regulatory licenses which authorize the Company to provide core services to customers.
If we fail to comply with relevant laws or regulations, then we risk reputational damage, potential civil and criminal sanctions, fines or other action imposed by regulatory or governmental authorities, including the potential suspension or revocation of the permission-based regulatory licenses which authorize the Company to provide core services to customers.
If we are unable to achieve the financial goals set by Future Forward, or if our efforts as part of Future Forward result in unintended disruptions to our business, our business, financial condition and results of operations could be adversely affected.
If we are unable to achieve the financial goals set by Future Forward, or if our efforts as part of Future Forward result in unintended disruptions to our business, our business, financial condition or results of operations could be adversely affected.
Failure to obtain new clients or renew client contracts on favorable terms could adversely affect results of operations and financial condition. We may face pricing pressure in obtaining and retaining our clients.
Failure to obtain new clients or renew client contracts on favorable terms could adversely affect our business, financial condition or results of operations. We may face pricing pressure in obtaining and retaining our clients.
Detecting, investigating and resolving actual or alleged violations can be extensive and require a significant diversion of time, resources and attention from senior management. Further, we cannot assure that any such investigation will successfully uncover all relevant facts and circumstances. Any violation of the FCPA, the U.K.
Detecting, investigating and resolving actual or alleged violations can be an extensive process and require a significant diversion of time, resources and attention from senior management. Further, we cannot assure that any such investigation will successfully uncover all relevant facts and circumstances. Any violation of the FCPA, the U.K.
If our vendors, or in certain cases vendors of our customers, fail to meet their obligations, provide poor or untimely service, or we are unable to make alternative arrangements for the provision of these services, then we may in turn fail to provide our services or to meet our obligations to our customers, and our business, financial condition and operating results could be adversely affected.
If our vendors, or in certain cases vendors of our customers, fail to meet their obligations, provide poor or untimely service, or we are unable to make alternative arrangements for the provision of these services, then we may in turn fail to provide our services or to meet our obligations to our customers, and our business, financial condition or results of operations could be adversely affected.
Some of our operations are in countries where the effects of a widespread illness could be magnified due to health care systems that are less well-developed than in the U.S. The occurrence of any of these events could have an adverse effect on our business results and financial condition.
Some of our operations are in countries where the effects of a widespread illness could be magnified due to health care systems that are less well-developed than in the U.S. The occurrence of any of these events could have an adverse effect on our business, financial condition or results of operations.
Any one or more of the foregoing could have an adverse effect on our business, financial condition and results of operations.
Any one or more of the foregoing could have an adverse effect on our business, financial condition or results of operations.
Bribery Act or other applicable anti-bribery or anti-corruption laws could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, and criminal or civil sanctions, penalties and fines, any of which could adversely affect our business, results of operations or financial condition. We have businesses in emerging markets that may experience significant economic volatility.
Bribery Act or other applicable anti-bribery or anti-corruption laws could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, and criminal or civil sanctions, penalties and fines, any of which could adversely affect our business, financial condition or results of operations. 20 Table of Contents We have businesses in emerging markets that may experience significant economic volatility.
Further, requirements of these regulations have resulted, and could further result, in changes in our business practices, our clients' business practices and those of other marketplace participants that may alter the delivery of services to 16 Table of Contents consumers, which have impacted, and could further impact, the demand for our solutions and services as well as alter the types or volume of transactions that we process on behalf of our clients.
Further, requirements of these regulations have resulted, and could further result, in changes in our business practices, our clients' business practices and those of other marketplace participants that may alter the delivery of services to consumers, which have impacted, and could further impact, the demand for our solutions and services as well as alter the types or volume of transactions that we process on behalf of our clients.
Bribery Act and similar applicable laws generally prohibit companies, as well as their officers, directors, employees and third-party intermediaries, business partners and agents, from making improper payments or providing other improper things of value to government officials or other persons for the purpose of obtaining or retaining 21 Table of Contents business abroad or otherwise obtaining favorable treatment.
Bribery Act and similar applicable laws generally prohibit companies, as well as their officers, directors, employees and third-party intermediaries, business partners and agents, from making improper payments or providing other improper things of value to government officials or other persons for the purpose of obtaining or retaining business abroad or otherwise obtaining favorable treatment.
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. Item 1B. Unresolved Staff Comments None.
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. 26 Table of Contents Item 1B. Unresolved Staff Comments None.
If worldwide or U.S. economic conditions continue to decline significantly with negative impacts to bank spending and consumer behavior, or if other business or market changes impact our outlook, then the remaining carrying amount of our goodwill and other intangible assets may no longer be recoverable, and we may be required to record a further impairment charge, which would have a negative impact on our results of operations.
If worldwide or U.S. economic conditions decline significantly with prolonged negative impacts to bank spending and consumer behavior, or if other business or market changes significantly impact our outlook, then the remaining carrying amount of our goodwill and other intangible assets may no longer be recoverable, and we may be required to record an impairment charge, which would have a negative impact on our results of operations.
If our applications or services are found to infringe the proprietary rights of others, then we may be required to change our business practices and may also become subject to significant costs and monetary penalties. 19 Table of Contents As our information technology applications and services develop, we are increasingly subject to infringement claims.
If our applications or services are found to infringe the proprietary rights of others, then we may be required to change our business practices and may also become subject to significant costs and monetary penalties. As our information technology applications and services develop, we are increasingly subject to infringement claims.
Regulations affecting the brokerage industry may change, which could adversely affect our financial results. We are exposed to certain risks relating to the execution services provided by our brokerage operations to our customers and counterparties, which include other broker-dealers, active traders, hedge funds, asset managers, and other institutional and non-institutional clients.
Regulations affecting the brokerage industry may change, which could adversely affect our business, financial condition or results of operations. We are exposed to certain risks relating to the execution services provided by our brokerage operations to our customers and counterparties, which include other broker-dealers, active traders, hedge funds, asset managers, and other institutional and non-institutional clients.
We have utilized and expect to continue to 26 Table of Contents utilize foreign currency forward contracts and other hedges on a limited basis in an effort to mitigate currency risk, but we cannot assure that such hedging arrangements will be effective or will remain available to us on acceptable terms, or at all.
We have utilized and expect to continue to utilize foreign currency forward contracts and other hedges on a limited basis in an effort to mitigate currency risk, but we cannot assure that such hedging arrangements will be effective or will remain available to us on acceptable terms, or at all.
Risks Related to Our Indebtedness Our existing debt levels and future levels under existing facilities and debt service requirements may adversely affect FIS, including our financial condition or business flexibility, and prevent us from fulfilling our obligations under our outstanding indebtedness. As of December 31, 2022, we had total debt of approximately $20.1 billion.
Risks Related to Our Indebtedness Our existing debt levels and future levels under existing facilities and debt service requirements may adversely affect FIS, including our financial condition or business flexibility, and prevent us from fulfilling our obligations under our outstanding indebtedness. As of December 31, 2023, we had total debt of approximately $19.1 billion.
At December 31, 2022, the Company had outstanding approximately €5.8 billion aggregate principal amount of Euro-denominated senior notes, approximately €1.9 billion aggregate principal amount of Euro-denominated commercial paper and approximately £0.9 billion aggregate principal amount of GBP-denominated senior notes, or the combined equivalent of approximately $9.3 billion aggregate principal amount.
At December 31, 2023, the Company had outstanding approximately €4.5 billion aggregate principal amount of Euro-denominated senior notes, approximately €1.9 billion aggregate principal amount of Euro-denominated commercial paper and approximately £0.9 billion aggregate principal amount of GBP-denominated senior notes, or the combined equivalent of approximately $8.3 billion aggregate principal amount.
Our global operations are susceptible to global events, including threats or acts of war, such as the Russia-Ukraine war, threats or acts of terrorism, international conflicts, political instability and natural disasters. We are also susceptible to a widespread outbreak of an illness or other health issue, such as the ongoing COVID-19 pandemic.
Our global operations are susceptible to global events, including threats or acts of war, such as the Russia-Ukraine war and the Israel-Hamas conflict, threats or acts of terrorism, international conflicts, political instability and natural disasters. We are also susceptible to a widespread outbreak of an illness or other health issue, such as the COVID-19 pandemic.
These risks include the following: • difficulty in evaluating potential acquisitions, including the risk that our due diligence does not identify or fully assess valuation issues, potential liabilities or other acquisition risks; • difficulty and expense in integrating newly acquired businesses and operations, including combining solution and service offerings, and in entering into new markets in which we are not experienced, in an efficient and cost-effective manner while maintaining adequate standards, controls and procedures, and the risk that we encounter significant unanticipated costs or other problems associated with integration; • difficulty and expense in consolidating and rationalizing IT infrastructure and integrating acquired software; • challenges in achieving strategic objectives, cost savings and other benefits expected from acquisitions; • risk that our markets do not evolve as anticipated and that the strategic acquisitions and divestitures do not prove to be those needed to be successful in those markets; • risk that acquired systems expose us to cybersecurity and other data security risks; • costs to reach appropriate standards to protect against cybersecurity and other data security risks or timeline to achieve such standards may exceed those estimated in diligence; • risk that acquired companies are subject to new regulatory regimes or oversight where we have limited experience that may result in additional compliance costs and potential regulatory penalties; • risk that we assume or retain, or that companies we have acquired have assumed or retained or otherwise become subject to, significant liabilities that exceed the limitations of any applicable indemnification provisions or the financial resources of any indemnifying parties; • risk that indemnification related to businesses divested or spun-off that we may be required to provide or otherwise bear may be significant and could negatively impact our business; • risk of exposure to potential liabilities arising out of applicable state and federal fraudulent conveyance laws and legal distribution requirements from spin-offs in which we or companies we have acquired were involved; • risk that we may be responsible for U.S. federal income tax liabilities related to acquisitions or divestitures; • risk that we are not able to complete strategic divestitures on satisfactory terms and conditions, including non-competition arrangements applicable to certain of our business lines, or within expected time frames; • potential loss of key employees or customers of the businesses acquired or to be divested; and • risk of diverting the attention of senior management from our existing operations. 24 Table of Contents We have substantial goodwill and other intangible assets recorded as a result of acquisitions, and a severe or extended economic downturn could cause these assets to become impaired, requiring write-downs that would reduce our operating income.
These risks include the following: • difficulty in evaluating potential acquisitions, including the risk that our due diligence does not identify or fully assess valuation issues, potential liabilities or other acquisition risks; • difficulty and expense in integrating newly acquired businesses and operations, including combining solution and service offerings, and in entering into new markets in which we are not experienced, in an efficient and cost-effective manner while maintaining adequate standards, controls and procedures, and the risk that we encounter significant unanticipated costs or other problems associated with integration; • difficulty and expense in consolidating and rationalizing IT infrastructure and integrating acquired software; • challenges in achieving strategic objectives, cost savings and other benefits expected from acquisitions; • risk that our markets do not evolve as anticipated and that the strategic acquisitions and divestitures do not prove to be those needed to be successful in those markets; • risk that acquired systems expose us to cybersecurity and other data security risks; • costs to reach appropriate standards to protect against cybersecurity and other data security risks or timeline to achieve such standards may exceed those estimated in diligence; • risk that acquired companies are subject to new regulatory regimes or oversight where we have limited experience that may result in additional compliance costs and potential regulatory penalties; • risk that we assume or retain, or that companies we have acquired have assumed or retained or otherwise become subject to, significant liabilities that exceed the limitations of any applicable indemnification provisions or the financial resources of any indemnifying parties; • risk that indemnification related to businesses divested or spun-off that we may be required to provide or otherwise bear may be significant and could negatively impact our business; • risk of exposure to potential liabilities arising out of applicable state and federal fraudulent conveyance laws and legal distribution requirements from spin-offs in which we or companies we have acquired were involved; 23 Table of Contents • risk that we may be responsible for U.S. federal income tax liabilities related to acquisitions or divestitures; • risk that we are not able to complete strategic divestitures on satisfactory terms and conditions, including non-competition arrangements applicable to certain of our business lines, or within expected time frames; • potential loss of key employees or customers of the businesses acquired or to be divested; and • risk of diverting the attention of senior management from our existing operations.
We face direct competition from third parties, and because many of our larger potential clients have historically developed their key applications in-house and therefore view their system requirements from a make-versus-buy perspective, we also often compete against our potential clients' in-house capacities.
Some of our competitors have substantial resources. We face direct competition from third parties, and because many of our larger potential clients have historically developed their key applications in-house and therefore view their system requirements from a make-versus-buy perspective, we also often compete against our potential clients' in-house capacities.
In addition, we rely on various financial institutions to provide Automated Clearing House ("ACH") services in support of funds settlement for certain of our solutions. An inability to obtain such ACH services in the future could have a material adverse effect on our business, financial position and results of operations.
In addition, we rely on various financial institutions to provide Automated Clearing House ("ACH") services in support of funds settlement for certain of our solutions. An inability to obtain such ACH services in the future could have a material adverse effect on our business, financial condition or results of operations.
Competition for such technical personnel is intense, as is the competition for senior management to lead these efforts, and our failure to hire and retain talented personnel could have a material adverse effect on our business, operating results and financial condition.
Competition for such technical personnel is intense, as is the competition for senior management to lead these efforts, and our failure to hire and retain talented personnel could have a material adverse effect on our business, financial condition or results of operations.
We also have business operations that store, process or transmit consumer information or have direct relationships with consumers that are obligated to comply with regulations, including, but not limited to, the FCRA, the Federal Fair Debt Collection Practices Act and applicable privacy requirements.
We also have business operations that store, process or transmit consumer information or have direct relationships with consumers that are obligated to comply with regulations, including, but not limited to, the FCRA, the Federal Fair Debt Collection Practices Act and applicable privacy requirements and are subject to examination and oversight by the CFPB.
If consumers transact less on cards issued by our clients or reduce digital banking services, and we are not able to adapt to offer our clients alternative technologies, then our revenue and related earnings could be adversely affected. Misappropriation of our intellectual property and proprietary rights or a finding that our patents are invalid could impair our competitive position.
If consumers reduce digital banking services, and we are not able to adapt to offer our clients alternative technologies, then our revenue and related earnings could be adversely affected. Misappropriation of our intellectual property and proprietary rights or a finding that our patents are invalid could impair our competitive position.
Dollar (our reporting currency), and our results of operations and, in some cases, cash flows, could be adversely affected in a material manner by movements in foreign currency exchange rates. These risks could cause an adverse effect on the business, financial position and results of operations of the Company.
Dollar (our reporting currency), and our results of operations and, in some cases, cash flows, could be adversely affected in a material manner by movements in foreign currency exchange rates. These risks could cause an adverse effect on our business, financial condition or results of operations.
As a provider of services to financial institutions and a provider of card processing services, FIS is bound by the same limitations on disclosure of the information FIS receives from clients as apply to the clients themselves.
As a provider of services to financial institutions and businesses, FIS is bound by many of the same limitations on disclosure of the information FIS receives from clients as apply to the clients themselves.
If any of these circumstances remain in effect for an extended period of time, there could be a material adverse effect on our financial results.
If any of these circumstances remain in effect for an extended period of time, there could be a material adverse effect on our business, financial condition or results of operations.
Our clients are subject to a number of government regulations and industry standards with which our solutions must comply. Our clients must ensure that our solutions and related services work within the extensive and evolving regulatory and industry requirements applicable to them.
Our clients are subject to many, varied and evolving government regulations and industry standards with which our solutions must comply. Our clients must ensure that our solutions and related services work within the extensive and evolving regulatory and industry requirements applicable to them.
In the U.K., our Merchant business, as well as our Platform Securities and broker-dealer businesses, are regulated by the FCA and are also subject to further regulatory capital requirements.
In the U.K., our Platform Securities and broker-dealer businesses are regulated by the FCA and are also subject to further regulatory capital requirements.
Further, the loss of this leadership may have an adverse impact on senior management's ability to provide effective oversight and strategic direction for all key functions within the Company, which could impact our future business, operating results and financial condition. We are the subject of various legal proceedings that could have an adverse effect on our revenue and profitability.
Further, the loss of this leadership may have an adverse impact on senior management's ability to provide effective oversight and strategic direction for all key functions within the Company, which could impact our future business, financial condition or results of operations. 21 Table of Contents We are the subject of various legal proceedings that could have an adverse effect on us.
FIS is a highly regulated entity and is subject to a myriad of complex, evolving regulations, including cybersecurity regulations.
FIS is a highly regulated entity and is subject to a myriad of complex, evolving regulations and standards, including cybersecurity and privacy laws, regulations and industry standards.
Our business and operating results could be adversely affected if we experience business interruptions, errors or failure in connection with our or third-party information technology and communication systems and other software and hardware used in connection with our business, if we experience defects or design errors in the software solutions we offer, or more generally, if the third-party vendors we rely upon are unwilling or unable to provide the services we need to effectively operate our business.
This reduction in revenue could adversely affect our business, financial condition or results of operations. 14 Table of Contents Our business, financial condition or results of operations could be adversely affected if we experience business interruptions, errors or failure in connection with our or third-party information technology and communication systems and other software and hardware used in connection with our business, if we experience defects or design errors in the software solutions we offer, or more generally, if the third-party vendors we rely upon are unwilling or unable to provide the services we need to operate our business effectively.
Although we currently have substantial available cash flows in excess of the projected debt service requirements on our existing Euro and GBP-denominated debt, we cannot assure that we will be always be able to continue generating earnings in Euros and GBP in amounts sufficient, taking into account the funding requirements and other needs of our business, to make payments of interest and/or repayment of principal on our Euro and GBP senior debt, or to permit us to economically borrow in those currencies if needed to refinance our existing Euro and GBP debt.
We expect to reduce the aggregate principal amount of our Euro- and GBP-denominated debt in 2024 as we retire debt with a portion of the proceeds of the Worldpay Sale. 24 Table of Contents Although we currently have substantial available cash flows in excess of the projected debt service requirements on our existing Euro and GBP-denominated debt, we cannot assure that we will always be able to continue generating earnings in Euros and GBP in amounts sufficient, taking into account the funding requirements and other needs of our business, to make payments of interest and/or repayment of principal on our Euro and GBP senior debt, or to permit us to economically borrow in those currencies if needed to refinance our existing Euro and GBP debt.
The Company is also subject to ongoing supervision by regulatory and governmental bodies across the world, including economic and conduct regulators, such as OFAC, Fin CEN, the FCA and PSR in the U.K., the DNB in the Netherlands, and regulatory and governmental bodies responsible for issuing anti-money laundering, anti-bribery, and global economic sanctions regulations.
The Company is also subject to ongoing supervision by regulatory and governmental bodies across the world, including economic and conduct regulators, such as OFAC, BIS, FinCEN in the U.S., the FCA and OFSI in the U.K., and regulatory and governmental bodies responsible for issuing anti-money laundering, anti-bribery, and global economic sanctions and export control regulations.
Any claims, whether with or without merit, could (i) be expensive and time-consuming to defend; (ii) result in an injunction or other equitable relief which could cause us to cease making, licensing or using applications that incorporate the challenged intellectual property; (iii) require us to redesign our applications, if feasible; (iv) divert management's attention and resources; and (v) require us to enter into royalty or licensing agreements in order to obtain the right to use necessary technologies or pay damages resulting from any infringing use.
Any claims, whether with or without merit, could (i) be expensive and time-consuming to defend; (ii) result in an injunction or other equitable relief which could cause us to cease making, licensing or using applications that incorporate the challenged intellectual property; (iii) require us to redesign our applications, if feasible; (iv) divert management's attention and resources; and (v) require us to enter into royalty or licensing agreements in order to obtain the right to use necessary technologies or pay damages resulting from any infringing use. 18 Table of Contents Some of our solutions contain "open source" software, and any failure to comply with the terms of one or more of these open source licenses could adversely affect our business.
We will continue to monitor the fair value of our reporting units and other intangible assets as well as our market capitalization and the impact of any economic downturn on our business to determine if there is any further impairment in future periods.
We will continue to monitor the fair value of our reporting units and other intangible assets as well as our market capitalization and the impact of any prolonged economic downturn on our business to determine the likelihood of impairment.
There can be no assurance that we will be able to compete successfully against current or future competitors or that the competitive pressures we face in the markets in which we operate will not materially adversely affect our business, financial condition, and results of operations. In the Merchant business, our competitors include financial institutions and well-established payment processing companies.
There can be no assurance that we will be able to compete successfully against current or future competitors or that the 13 Table of Contents competitive pressures we face in the markets in which we operate will not materially adversely affect our business, financial condition, or results of operations.
Furthermore, if one of our clients for which we facilitate settlement suffers a fraudulent event due to a deficiency in their controls, then we may suffer a financial loss if the client does not have sufficient capital to cover the loss.
Furthermore, if one of our clients for which we facilitate settlement suffers a fraudulent event due to a deficiency in their controls, then we may suffer a financial loss if the client does not have sufficient capital to cover the loss. Our business is subject to the risks of international operations, including movements in foreign currency exchange rates.
If FIS fails to comply with these regulations and industry security requirements, it could be exposed to damages from legal actions from clients and/or their customers, governmental proceedings, governmental notice requirements, and the imposition of significant fines or prohibitions on card processing services.
If FIS fails to comply with these regulations and industry security requirements, including those imposed by the payment card industry through its digital security standards and other rules, it could be exposed to damages from legal actions from clients and/or their customers, governmental proceedings, governmental notice requirements, and the imposition of significant fines or prohibitions on providing services.
We may not realize the anticipated strategic, financial, operational or other benefits from the planned spin-off of our Merchant business within the expected timeframe, in full or at all, and there can be no assurance that the costs or revenue or expense dis-synergies of the spin-off (including costs of related restructuring or financing transactions) will not exceed anticipated amounts.
We may not realize the anticipated strategic, financial, operational or other benefits from the sale within the expected timeframe, in full or at all, and there can be no assurance that the costs or revenue or expense dis-synergies of the sale will not ultimately exceed anticipated amounts.
As a result, we may suffer losses that are disproportionately large compared to the relatively modest profit contributions of our brokerage operations. Moreover, the legislative and regulatory landscape continues to evolve, and we expect that it may cover alternative payment types, including digital currency. Any failure to comply with such laws could expose us to liability and/or reputational damage.
As a result, we may suffer losses that are disproportionately large compared to the relatively modest profit contributions of our brokerage operations. Moreover, the legislative and regulatory landscape continues to evolve, and we expect that it may cover alternative payment types, including digital/crypto currency.
Although we attempt to limit our potential liability through controls, including system redundancies, security controls, application development and testing controls, and disclaimers and limitation-of-liability provisions in our license and client agreements, we cannot be certain that these measures will always be successful in preventing disruption or limiting our liability. 15 Table of Contents Further, most of the solutions we offer are very complex software systems that are regularly updated.
Although we attempt to limit our potential liability through controls, including system redundancies, security controls, application development and testing controls, and disclaimers and limitation-of-liability provisions in our license and client agreements, we cannot be certain that these measures will always be successful in preventing disruption or limiting our liability.
The international operations of FIS represented approximately 24% of our total 2022 revenue and are largely conducted in currencies other than the U.S. Dollar, including the British Pound Sterling, Euro, Brazilian Real, Australian Dollar and Indian Rupee. FIS continues to expand its international presence by offering merchant acquiring services, including eCommerce, outside of the U.S.
The international operations of FIS represented approximately 22% of our total 2023 revenue and are largely conducted in currencies other than the U.S. Dollar, including the British Pound Sterling, Euro, Brazilian Real, Swedish Krona, Australian 19 Table of Contents Dollar and Indian Rupee. FIS continues to expand its international presence.
In addition, if more restrictive privacy laws, rules or industry security requirements are adopted in the future on the federal or state level, or by a specific industry body, they could have an adverse impact on FIS through increased costs or restrictions on business processes.
In addition, if more restrictive privacy laws, data protection rules or industry security requirements are adopted in the future on the federal or state level, or by a non-U.S. jurisdiction in or from which we serve clients, or by a specific industry body, those changes could have an adverse impact on FIS through increased costs or by imposing changes or inefficiencies on business processes.
For more detail, see "Item 1. Business , Competition." Global economic, political and other conditions, including business cycles and consumer confidence, as well as geopolitical conflicts, may adversely affect our clients or trends in consumer spending, which may adversely impact the demand for our services and our revenue and profitability.
Global economic, political and other conditions, including business cycles and consumer confidence, as well as geopolitical conflicts, may adversely affect our clients or trends in consumer spending, which may adversely impact the demand for our services and our revenue and profitability. A significant portion of our revenue is derived from transaction processing fees.
If we are not successful in these efforts, we could lose clients, or our clients could lose customers, and we could have difficulty attracting new clients for our solutions.
If we are not successful in these efforts, we could lose clients, or our clients could lose customers, and we could have difficulty attracting new clients for our solutions. Any of these developments could have an adverse impact on our future revenue and/or business prospects.
An unfavorable outcome to a tax audit could result in higher tax expense and could negatively impact our effective tax rate, financial position, results of operations and cash flows in the current and/or future periods. Unfavorable future tax law changes could result in negative impacts.
Our tax returns and positions are subject to review and audit by federal, state, local and international taxing authorities. An unfavorable outcome to a tax audit could result in higher tax expense and could negatively impact our effective tax rate, financial position, results of operations and cash flows in the current and/or future periods.
Some of our solutions contain "open source" software, and any failure to comply with the terms of one or more of these open source licenses could adversely affect our business. We use a limited amount of software licensed by its authors or other third parties under so-called "open source" licenses and may continue to use such software in the future.
We use a limited amount of software licensed by its authors or other third parties under so-called "open source" licenses and may continue to use such software in the future.
Constantly evolving global privacy, data protection and cybersecurity laws require the Company to adopt new business practices, update contractual provisions in existing and new contracts, and constantly update our global Privacy and Data Protection Program and our global Information Security Program, which may require transitional and incremental expenses and may impact our future operating results.
Elimination of regulatory requirements could also adversely affect the sales of our solutions designed to help clients comply with complex regulatory environments. 17 Table of Contents Constantly evolving global privacy, data protection and cybersecurity laws require the Company to adopt new business practices, update contractual provisions in existing and new contracts, and constantly update our global Privacy and Data Protection Program and our global Information Security Program, which may require transitional and incremental expenses and may impact our future operating results.
A significant portion of our revenue is derived from transaction processing fees. The global transaction processing industries depend heavily upon the overall level of consumer, business and government spending.
The global transaction processing industries depend heavily upon the overall level of consumer, business and government spending.
In addition, certain financial institutions that experienced negative operating results, including some of our clients, have failed. These consolidations and failures reduce our number of potential clients and may reduce our number of existing clients, which could adversely affect our revenue, even if the events do not reduce the aggregate activities of the consolidated entities.
These consolidations, including those spurred by failures, reduce our number of potential clients and may reduce our number of existing clients, which could adversely affect our revenue, even if the events do not reduce the aggregate activities of the consolidated entities.
Risks Related to Our Business and Operations Security breaches, privacy breaches, cyber attacks, or our failure to comply with information security laws or regulations or industry security requirements, could harm our business by disrupting delivery of services and damaging the reputation of FIS and could result in a breach of one or more client contracts.
Risks Related to Our Business and Operations Security breaches, privacy breaches, cyberattacks, unintentional disclosures of confidential information, third-party breaches, or a failure to comply with information security laws or regulations, contractual provisions or industry security requirements by FIS, or our vendors, or technology partners, could harm our business by disrupting delivery of services, damaging our reputation and resulting in a breach of one or more client contracts or regulatory investigations, enforcement actions or fines.
As of December 31, 2022, goodwill aggregated to $34.3 billion, or 54% of total assets, and intangible assets aggregated to $9.0 billion, or 14% of total assets.
As of December 31, 2023, goodwill aggregated to $17.0 billion, or 31% of total assets, and intangible assets aggregated to $1.8 billion, or 3% of total assets.
These changes could result in increased costs of compliance, as well as fines or penalties. One of our subsidiaries is an SEC-registered broker-dealer in the U.S. and is subject to the financial and operational rules of FINRA, and others are authorized by the FCA to conduct certain regulated business in the U.K.
One of our subsidiaries is an SEC-registered broker-dealer in the U.S. and is subject to the financial and operational rules of FINRA, and others are authorized by the FCA to conduct certain regulated business in the U.K. Our transfer agent business is also regulated by the SEC and other regulators around the world.
In our development of updates and enhancements to our software solutions, we may make a major design error that makes the solution operate incorrectly or less efficiently.
If errors or defects are discovered in current or future solutions, then we may not be able to correct them in a timely manner, if at all. In our development of updates and enhancements to our software solutions, we may make a major design error that makes the solution operate incorrectly or less efficiently.
Such information is necessary to support our clients' transaction processing and to conduct our check authorization and collection businesses. The uninterrupted operation of information systems, as well as the confidentiality of the customer/consumer information that resides on such systems, is critical to the successful operation of FIS.
The uninterrupted operation of information systems operated by FIS and others, as well as the confidentiality of the customer/consumer information that resides on such systems, is critical to the successful operation of FIS.
We are unable to predict whether or when high profile card payment or digital banking security breaches will occur and if they occur, whether consumers will transact less on their payment cards or reduce their digital banking service.
High profile digital banking security breaches could impact consumer payment behavior patterns in the future and reduce our transaction volumes. We are unable to predict whether or when high profile digital banking security breaches will occur and if they occur, whether consumers will reduce their digital banking service.
A material weakness in our internal controls could have a material adverse effect on us. Effective internal controls are necessary for us to provide reasonable assurance with respect to our financial reports and to adequately mitigate risk of fraud.
Effective internal controls are necessary for us to provide reasonable assurance with respect to our financial reports and to adequately mitigate risk of fraud. If we cannot provide reasonable assurance with respect to our financial reports and adequately mitigate risk of fraud, our reputation and operating results could be harmed.
We may not be able to achieve the cost savings target of our Future Forward program. We recently announced an initiative, initially branded as our Enterprise Transformation Program and now branded as Future Forward, intended to achieve significant cost savings across the enterprise.
We may not be able to achieve the cost savings target of our Future Forward program. One of the goals of our ongoing Future Forward initiative is to achieve significant cost savings across the enterprise.
Our primary exposure to movements in foreign currency exchange rates relates to foreign currencies in Europe, including the U.K., Brazil, Australia and India. The U.S. Dollar value of our net investments in foreign operations, the periodic conversion of foreign-denominated earnings to the U.S.
Our primary exposure to movements in foreign currency exchange rates relates to the British Pound Sterling, Euro, Brazilian Real, Swedish Krona, Australian Dollar and Indian Rupee. The U.S. Dollar value of our net investments in foreign operations, the periodic conversion of foreign-denominated earnings to the U.S.
Compliance with these laws and regulations may require us to change our technology for information security, operational infrastructure, policies, and procedures, which could be time-consuming and costly. High profile payment card industry or digital banking security breaches could impact consumer payment behavior patterns in the future and reduce our card payment transaction volumes.
Compliance with these laws and regulations may require us to change our technology for information security, operational infrastructure, policies, and procedures, which could be time-consuming and costly and may result in additional regulatory burdens for the Company.
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.
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.
We are involved in various litigation matters in the ordinary course of business, including in some instances class-action cases and patent infringement litigation. If we are unsuccessful in our defense of litigation matters, we may be forced to pay damages and/or change our business practices, any of which could have an adverse effect on our business and results of operations.
If we are unsuccessful in our defense of litigation matters, we may be forced to pay damages and/or change our business practices, any of which could have an adverse effect on our business, financial condition or results of operations. Unfavorable resolution of tax contingencies or unfavorable future tax law changes could adversely affect our tax expense.
If we cannot provide reasonable assurance with respect to our financial reports and adequately mitigate risk of fraud, our reputation and operating results could be harmed. Internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention 23 Table of Contents or overriding of controls, or fraud.
Internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud. Therefore, even effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements.
In addition, tax-law amendments in the U.S. and other jurisdictions could significantly impact how U.S. multinational corporations are taxed. Although we cannot predict whether or in what form such legislation will pass, if enacted it could have an adverse effect on our business and financial results.
Although we cannot predict whether or in what form such legislation will pass, if enacted it could have an adverse effect on our business and financial results. A material weakness in our internal controls could have a material adverse effect on us.
Any of these developments could have an adverse impact on our future revenue and/or business prospects. 13 Table of Contents We operate in a competitive business environment; if we are unable to compete effectively, our results of operations and financial condition may be adversely affected. The market for our solutions is intensely competitive.
We operate in a competitive business environment; if we are unable to compete effectively, our business, financial condition or results of operations may be adversely affected. The market for our solutions is intensely competitive. Our competitors in Banking and Capital Markets vary in size and in the scope and breadth of the solutions and services they offer.
In addition, the direct and indirect effects of geopolitical conflicts, such as the Russia-Ukraine war, have adversely affected, and worsening or future conflicts could materially adversely affect, global economic activity and transaction processing volumes. 14 Table of Contents When there is a slowdown or downturn in the economy, a drop in stock market levels or trading volumes, or an event that disrupts the financial markets, our business and financial results may suffer for a number of reasons.
When there is a slowdown or downturn in the economy, a drop in stock market levels or trading volumes, or an event that disrupts the financial markets, our business and financial results may suffer for a number of reasons.
During 2022, we began to experience lengthening sales cycles, particularly in Banking Solutions and Capital Markets, which we believe resulted from economic uncertainty and which has had, and is expected to continue to have, an adverse effect on our results of operations.
Lengthening sales cycles observed in 2022, particularly for large Banking transactions with a total contract value in excess of $50 million, persisted during most of 2023, which we believe resulted from economic uncertainty, and have had, and may continue to have, an adverse effect on our results of operations.
In addition, many of the risks associated with usage of open source cannot be eliminated, and could, if not properly addressed, adversely affect our business. Lack of system integrity, fraudulent payments, credit quality, and undetected errors related to funds settlement or the availability of clearing services could result in a financial loss.
In addition, many of the risks associated with usage of open source cannot be eliminated, and could, if not properly addressed, adversely affect our business.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties FIS' corporate headquarters is located at 347 Riverside Avenue, Jacksonville, Florida. In addition, FIS owns or leases support centers, data processing facilities and other facilities at approximately 110 locations. We believe our facilities and equipment are generally well maintained and are in good operating condition.
Biggest changeItem 2. Properties FIS' corporate headquarters is located at 347 Riverside Avenue, Jacksonville, Florida. In addition, FIS owns or leases support centers, data processing facilities and other facilities at approximately 80 locations. We believe our facilities and equipment are generally well maintained and are in good operating condition.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWhen assessing reasonably possible and probable outcomes, the Company bases decisions on the assessment of the ultimate outcome following all appeals. Legal fees associated with defending litigation matters are expensed as incurred. See Note 16 to the consolidated financial statements for information about certain legal matters and indemnifications and warranties. Item 4. Mine Safety Disclosures Not applicable. PART II
Biggest changeWhen assessing reasonably possible and probable outcomes, the Company bases decisions on the assessment of the ultimate outcome following all appeals. Legal fees associated with defending litigation matters are expensed as incurred. See Note 17 to the consolidated financial statements for information about certain legal matters and indemnifications and warranties. Item 4. Mine Safety Disclosures Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph assumes that the value of the investment in our common stock and in each index (including reinvestment of dividends) was $100 on December 31, 2017, and tracks it through December 31, 2022. 12/17 12/18 12/19 12/20 12/21 12/22 30 Table of Contents Fidelity National Information Services, Inc. 100 110.32 151.33 155.50 121.45 77.18 S&P 500 100 95.62 125.72 148.85 191.58 156.89 S&P Composite 1500 Data Processing & Outsourced Services 100 113.64 164.31 204.73 197.48 164.76 The stock price performance included in this graph is not necessarily indicative of future stock price performance.
Biggest changeThe graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from 12/31/2018 to 12/31/2023. 29 Table of Contents 12/18 12/19 12/20 12/21 12/22 12/23 Fidelity National Information Services, Inc. 100.00 137.17 140.96 110.09 69.96 64.24 S&P 500 100.00 131.49 155.68 200.37 164.08 207.21 S&P Supercap Data Processing & Outsourced Services 100.00 144.59 180.16 173.78 144.99 171.36 The stock price performance included in this graph is not necessarily indicative of future stock price performance.
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, 29 Table of Contents and other factors that may be considered relevant by our Board of Directors, including legal and contractual restrictions.
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.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock trades on the New York Stock Exchange under the ticker symbol "FIS." As of January 31, 2023, there were approximately 10,020 shareholders of record of our common stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock trades on the New York Stock Exchange under the ticker symbol "FIS." As of January 31, 2024, there were approximately 9,580 shareholders of record of our common stock.
In January 2023, the Board of Directors approved a quarterly dividend of $0.52 per share beginning with the first quarter of 2023. A regular quarterly dividend of $0.52 per common share is payable on March 24, 2023, to shareholders of record as of the close of business on March 10, 2023.
In February 2024, the Board of Directors approved a quarterly dividend of $0.36 per share beginning with the first quarter of 2024. A regular quarterly dividend of $0.36 per common share is payable on March 22, 2024, to shareholders of record as of the close of business on March 8, 2024.
The share repurchase program has no expiration date and may be suspended for periods, amended or discontinued at any time. Under the share repurchase program, the Company repurchased approximately 21 million shares for an aggregate of $1.8 billion in 2022 and approximately 15 million shares for an aggregate of $2.0 billion during 2021.
Under the share repurchase program, the Company repurchased approximately 9 million shares for an aggregate of $0.5 billion in 2023, approximately 21 million shares for an aggregate of $1.8 billion in 2022, and approximately 15 million shares for an aggregate of $2.0 billion during 2021. Approximately 55 million shares remain available for repurchase as of December 31, 2023.
We currently expect to continue to pay quarterly dividends at a target payout ratio consistent with our previously announced capital allocation strategy.
We currently expect to continue to pay quarterly dividends at a target payout ratio consistent with our capital allocation strategy (without regard to net earnings (loss) attributable to the non-controlling interest that the Company retained in Worldpay post-separation).
Removed
Approximately 64 million shares remain available for repurchase as of December 31, 2022. The graph below compares the cumulative 5-year total return of holders of Fidelity National Information Services, Inc.'s common stock with the cumulative total returns of the S&P 500 index and S&P Composite 1500 Data Processing & Outsourced Services index.
Added
The share repurchase program has no expiration date and 28 Table of Contents may be suspended for periods, amended or discontinued at any time.
Added
The following table summarizes the shares repurchased by the Company during the three-month period ended December 31, 2023, and the number of shares remaining authorized for repurchase by the Company: Maximum number of shares that Total cost of shares may yet be purchased as part of purchased under Total number of publicly announced the plans or shares purchased Average price plans or programs programs Period (in millions) paid per share (in millions) (in millions) October 1-31, 2023 — $ — $ — 64.5 November 1-30, 2023 6.4 $ 54.43 347.0 58.2 December 1-31, 2023 2.7 $ 59.40 162.9 55.4 9.1 $ 509.9 The graph below compares Fidelity National Information Services, Inc.'s cumulative 5-year total shareholder return on common stock with the cumulative total returns of the S&P 500 index and the S&P Supercap Data Processing & Outsourced Services index.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

70 edited+54 added−62 removed30 unchanged
Biggest changeThe calculations above assume that (a) applicable margins and commitment fees remain constant; (b) all floating-rate debt is priced at the rates in effect as of December 31, 2022; (c) no refinancing occurs at debt maturity; (d) only mandatory debt repayments are made; (e) no new hedging transactions are effected; and (f) there are no currency effects. 2.
Biggest changeThe following table summarizes FIS' other significant contractual obligations and commitments as of December 31, 2023 (in millions): Payments Due in Less than 1-3 3-5 More than Total 1 Year Years Years 5 Years Interest (1) $ 3,617 $ 558 $ 607 $ 502 $ 1,950 Purchase commitments (2) 868 466 393 9 — Interest rate swap net coupons (3) 778 127 217 217 217 Total $ 5,263 $ 1,151 $ 1,217 $ 728 $ 2,167 40 Table of Contents (1) The amounts above include the impact of accounting hedges and assume that (a) applicable margins and commitment fees remain constant; (b) variable-rates in effect as of December 31, 2023, remain constant; (c) no refinancing occurs at debt maturity; (d) only mandatory debt repayments are made; (e) no new hedging transactions are effected; and (f) there are no future currency effects.
Goodwill impairment assessments require a significant amount of management judgment, and a meaningful change in one or more of the underlying forecasts, estimates, or assumptions used in testing goodwill for impairment could result in a material impact on the Company's results of operations and financial position.
Goodwill impairment assessments require a significant amount of management judgment, and a meaningful change in one or more of the underlying forecasts, estimates, or assumptions used in testing goodwill for impairment could result in a material impact on the Company's financial position or results of operations.
The majority of our international revenue is generated by clients in the U.K., Germany, Australia, Brazil and Canada. 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.
The majority of our international revenue is generated by clients in the U.K., Germany, Canada, Brazil, Australia 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.
The forecasted revenue and EBITDA margins used in the discounted cash flow models are critical estimates in determining the fair value of customer relationships and developed technology software assets as these estimates are influenced by many factors including historical financial information and management’s expectation for future operating results as a combined company.
The forecasted revenue and margins used in the discounted cash flow models are critical estimates in determining the fair value of customer relationships and developed technology software assets as these estimates are influenced by many factors including historical financial information and management’s expectation for future operating results as a combined company.
Assumptions for customer relationship asset valuations typically include forecasted revenue attributable to existing customer contracts and relationships, estimated annual attrition, forecasted EBITDA margin, and estimated weighted average cost of capital and discount rates.
Assumptions for customer relationship asset valuations typically include forecasted revenue attributable to existing customer contracts and relationships, estimated annual attrition, forecasted margin, and estimated weighted average cost of capital and discount rates.
As merchants and 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 ("CNP") 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.
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.
For our Banking and Capital Markets reporting units, for which previous third-party valuations have historically indicated substantial excess of fair value over carrying amounts, our 2020 qualitative annual assessment concluded that it remained more likely than not that the fair value of each of the reporting units continued to exceed their respective carrying amounts.
For our Banking and Capital Markets reporting units, for which previous third-party valuations have historically indicated substantial excess of fair value over carrying amounts, our 2021 qualitative annual assessment concluded that it remained more likely than not that the fair value of each of the reporting units continued to exceed their respective carrying amounts.
Revenue was also negatively impacted by unfavorable foreign currency movements, which contributed (2%) to growth primarily related to a stronger U.S. Dollar versus the British Pound Sterling. Adjusted EBITDA increased primarily due to the revenue impacts noted above. Adjusted EBITDA margin increased primarily due to continued expense management and operating leverage.
Revenue was also negatively impacted by unfavorable foreign currency movements, which contributed (2%) to total segment growth primarily related to a stronger U.S. Dollar versus the British Pound Sterling. Adjusted EBITDA increased primarily due to the revenue impacts noted above. Adjusted EBITDA margin increased primarily due to continued expense management and operating leverage.
Business Trends and Conditions Our revenue is primarily derived from a combination of technology and processing solutions, transaction 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.
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.
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 organically and through investment opportunities in companies building complementary technologies in the financial services space.
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.
We have been providing our large regional banking customers in the U.S. with Digital One, an integrated digital banking platfor m, 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.
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.
We assess the solutions and services 33 Table of Contents promised in our contracts with customers and identify 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.
We assess the solutions and services promised in our contracts with customers and identify 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.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The following section discusses management's view of the financial condition and results of operations of FIS and its consolidated subsidiaries as of December 31, 2022 and 2021, and for the years ended December 31, 2022, 2021 and 2020, unless otherwise noted.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The following section discusses management's view of the financial condition and results of operations of FIS and its consolidated subsidiaries as of December 31, 2023 and 2022, and for the years ended December 31, 2023, 2022 and 2021, unless otherwise noted.
When a quantitative assessment is triggered or elected, we typically engage third-party valuation specialists to assist us in determining the fair value of the reporting unit based on the weighted average of two valuation techniques: an income approach (also known as the discounted cash flow method) and a market approach.
When a quantitative assessment is triggered or elected, we typically engage third-party valuation specialists to assist us in determining the fair value of the reporting unit based on the weighted average of two valuation techniques: an income approach 33 Table of Contents (also known as the discounted cash flow method) and a market approach.
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), 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.
Adjusted EBITDA is defined as net earnings (loss) before net interest expense, net other income (expense), income tax provision (benefit), 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.
Financing For more information regarding the Company's debt and financing activity, see "Risk Factors—Risks Related to Our Indebtedness" in Item 1A and "Quantitative and Qualitative Disclosures About Market Risk—Interest Rate Risk" in Item 7A of this Annual Report and Notes 12 and 13 to the consolidated financial statements.
For information regarding the Company's debt and financing activity, see "Risk Factors—Risks Related to Our Indebtedness" in Item 1A and "Quantitative and Qualitative Disclosures About Market Risk—Interest Rate Risk" in Item 7A of this Annual Report and Notes 13 and 14 to the consolidated financial statements.
We expect to continue our practice of investing 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.
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.
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.
Conversely, we may lose revenue if we are providing solutions to both entities, or if a client of ours is 31 Table of Contents involved in a consolidation and our solutions are not chosen to support the newly combined entity.
For 2021, we again 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.
For 2023, 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.
Liquidity and Capital Resources Cash Requirements Our ongoing cash requirements include operating expenses, income taxes, tax receivable obligations, mandatory debt service payments, capital expenditures, stockholder dividends, regulatory requirements, working capital and timing differences in settlement-related assets and liabilities and may include discretionary debt repayments, share repurchases and business acquisitions.
Liquidity and Capital Resources Cash Requirements Our principal ongoing cash requirements include operating expenses, income taxes, mandatory 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.
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.
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.
Our internal efforts in research and development activities have related primarily to the modernization of our proprietar y 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.
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.
Recurring revenue contributed 4% to growth, primarily due to the ramp-up of several large contracts. Professional services revenue contributed 1% to growth, and non-recurring revenue contributed 1% to growth. Revenue was negatively impacted by foreign currency movements, which contributed (1%) to growth primarily related to a stronger U.S. Dollar versus the Euro and the British Pound Sterling.
Recurring revenue contributed 5% to total segment growth, primarily due to the ramp-up of several large contracts. Revenue was negatively impacted by foreign 37 Table of Contents currency movements, which contributed (1%) to total segment growth primarily related to a stronger U.S. Dollar versus the Euro and the British Pound Sterling.
FIS reports its financial performance based on the following segments: Banking Solutions, Merchant Solutions, Capital Market Solutions, and Corporate and Other.
Segment Results of Operations FIS reports its financial performance based on the following segments: Banking Solutions, Capital Market Solutions, and Corporate and Other.
The effective tax rate for 2021 includes the one-time net remeasurement of certain deferred tax liabilities due to the increase in the U.K. corporate statutory tax rate from 19% to 25% effective April 1, 2023, enacted on June 10, 2021. Segment Results of Operations This section generally discusses fiscal year 2022 compared to 2021.
The effective tax rate for 2021 includes the one-time net remeasurement of certain deferred tax liabilities due to the increase in the U.K. corporate statutory tax rate from 19% to 25% effective April 1, 2023, enacted on June 10, 2021.
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 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.
Cash flows from operations decreased $871 million in 2022 and increased $368 million in 2021. The 2022 decrease in cash flows from operations is primarily due to a decrease in net earnings and settlement timing, partially offset by working capital.
The 2023 increase in cash flows from operations is primarily due to working capital improvements, partially offset by settlement timing. The 2022 decrease in cash flows from operations is primarily due to a decrease in net earnings and settlement timing, partially offset by working capital.
Cost of Revenue, Gross Profit and Gross Profit Margin Cost of revenue increased due to the revenue variances noted above and cost inflation, partially offset by lower intangible asset amortization resulting primarily from foreign currency movements. Gross profit increased primarily due to revenue variances noted above.
Cost of revenue for the year ended December 31, 2022, increased due to the revenue variances noted above and cost inflation, partially offset by lower intangible asset amortization resulting primarily from foreign currency movements. Gross profit increased primarily due to revenue variances noted above. Gross profit margin was essentially flat when comparing 2022 to 2021.
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 12 to the consolidated financial statements.
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 13 to the consolidated financial statements, in addition to the net proceeds from the Worldpay Sale which closed on January 31, 2024.
We also experienced increased wages and benefits costs compared to 2021, 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. We experienced increases in non-labor-related costs compared to 2021 as well.
We also experienced, and continue to experience, higher rates of inflation in these 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.
Recent Accounting Pronouncements No new accounting pronouncement adopted, issued or effective during the fiscal year had or is expected to have a material impact on our consolidated financial statements or disclosures.
Recent Accounting Pronouncements Recently Adopted Accounting Guidance No new accounting pronouncement adopted or effective during the fiscal year had or is expected to have material impact on our consolidated financial statements or disclosures. Recent Accounting Guidance Not Yet Adopted See Note 2 (u) to the consolidated financial statements for information on recent accounting guidance not yet adopted.
Sales of software licenses are typically non-recurring with point-in-time recognition and are less predictable. The U.S. and Europe, the two largest geographic areas for our businesses, are experiencing slower economic growth and higher rates of inflation than in recent years.
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. The U.S. and Europe, the two largest geographic areas for our businesses, are experiencing slower economic growth than in previous years.
In November 2022, we launched an enterprise-wide efficiency program, Future Forward, with a focus on streamlining operations, accelerating time to market of new solutions and improving profitability and cash flow.
FIS and Worldpay also entered into additional agreements as described in Note 24 to the consolidated financial statements. In November 2022, we launched an enterprise-wide efficiency program, Future Forward, with a focus on streamlining operations, accelerating time to market of new solutions and improving profitability and cash flow.
See Note 2 to the consolidated financial statements for a more detailed description of the significant accounting policies that have been followed in preparing our consolidated financial statements.
See Note 2 to the consolidated financial statements for a more detailed description of the significant accounting policies that have been followed in preparing our consolidated financial statements. Revenue Recognition Application of GAAP related to the measurement and recognition of revenue requires us to make judgments and estimates.
The majority of our domestic cash and cash equivalents relates to settlement payables and net deposits-in-transit, which are typically settled within a few business days. Debt outstanding totaled $20.1 billion, with an effective weighted average interest rate of 2.6%.
Approximately $9 million of cash and cash equivalents is held by our foreign entities, including amounts related to regulatory requirements. The majority of our domestic cash and cash equivalents relates to settlement payables and net deposits-in-transit, which are typically settled within a few business days. Debt outstanding totaled $19.1 billion, with an effective weighted average interest rate of 3.5%.
Adjusted EBITDA for the respective segments excludes the 38 Table of Contents foregoing costs and adjustments. Financial information, including details of Adjusted EBITDA, for each of our segments is set forth in Note 21 to the consolidated financial statements.
Financial information, including details of Adjusted EBITDA, for each of our segments is set forth in Note 22 to the consolidated financial statements.
Given the nature of our varied businesses, the magnitude of future effects of slower economic growth, including elongated sales cycles, and of inflation are difficult to predict, although they have had and are expected to continue to have an adverse effect on our results of operations.
The magnitude of future effects of slower economic growth, 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.
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 mandatory debt service payments for the next 12 months and the foreseeable future. 40 Table of Contents In January 2023, the Board of Directors approved a quarterly dividend of $0.52 per share beginning with the first quarter of 2023.
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 mandatory debt service payments for the next 12 months and the foreseeable future.
The 2021 period included accelerated stock compensation expense recorded associated with the establishment of the Qualified Retirement Equity Program that modified our existing stock compensation plans as described in Note 17 to the consolidated financial statements.
Selling, general and administrative expenses for the year ended December 31, 2022, increased primarily due to higher compensation and acquisition-related expenses. The 2021 period included accelerated stock compensation expense recorded associated with the establishment of the Qualified Retirement Equity Program that modified our existing stock compensation plans as described in Note 18 to the consolidated financial statements.
Over the longer term, we 31 Table of Contents expect improvements in revenue growth and margins in response to improving economic conditions and planned management actions, including our Future Forward program discussed below. On February 13, 2023, we announced plans to spin off our Merchant Solutions business.
Over the longer term, we are targeting improvements in revenue growth and margins to the extent of improving economic conditions and in response to planned management actions, including our Future Forward program discussed below.
For 2022, we performed a quantitative annual assessment which again concluded that the fair values of these reporting units substantially exceeded 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.
For 2022, we performed a quantitative annual assessment which again concluded that the fair values of these reporting units substantially exceeded their respective carrying amounts.
We continue to assist financial institutions in migrating to outsourced integrated technology solutions to improve their profitability and address increasing and ongoing regulatory requirements.
We continue to expect cash savings exiting 2024 of $1.0 billion, of which over 75 percent represents run-rate cash savings. 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.
Our annual impairment test may first consider qualitative factors to determine whether it is more likely than not that a reporting unit's carrying amount exceeds its fair value. Qualitative factors include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance and events affecting the reporting unit or Company as a whole, including a sustained decrease in stock price.
Qualitative factors include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance and events affecting the reporting unit or Company as a whole, including a sustained decrease in stock price.
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. 32 Table of Contents 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.
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.
In 2022, the strengthening of the U.S. dollar had, and, to the degree it continues to strengthen, is expected to continue to have, a negative impact on our revenue and earnings, and rising interest rates had, and are expected to continue to have, a negative impact on our earnings.
Rising interest rates have had, and may continue to have, a negative impact on our interest expense; however, planned debt reduction is expected to decrease our total interest expense. In 2022, the strengthening of the U.S. dollar had a negative impact on our revenue and earnings, while in 2023, impacts of foreign currency fluctuations were slightly favorable.
The share repurchase program has no expiration date and may be suspended for periods, amended or discontinued at any time. Under the share repurchase program, the Company repurchased approximately 21 million shares for an aggregate of $1.8 billion in 2022 and approximately 15 million shares for an aggregate of $2.0 billion during 2021.
Under the share repurchase program, the Company repurchased approximately 9 million shares for an aggregate of $0.5 billion in 2023, 21 million shares for an aggregate of $1.8 billion in 2022 and approximately 15 million shares for an aggregate of $2.0 billion during 2021. Approximately 55 million shares remain available for repurchase as of December 31, 2023.
Through the expertise we have gained with this ongoing focus and investment, we have developed and offer fraud, security, risk management and compliance solutions to target the growth opportunity in the financial services industry. Critical Accounting Policies and Estimates The accounting policies and estimates described below are those we consider critical in preparing our consolidated financial statements.
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.
Goodwill Impairment The Company assesses goodwill for impairment by reporting unit on an annual basis during the fourth quarter or more frequently if circumstances indicate potential impairment. 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.
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.
Revenue was negatively impacted by unfavorable foreign currency movements, primarily related to a stronger U.S. Dollar versus the British Pound Sterling and Euro. See "Segment Results of Operations" below for more detailed explanation.
Revenue for the year ended December 31, 2022, increased primarily due to strong recurring revenue growth in the Banking and Capital Markets segments. Revenue was negatively impacted by unfavorable foreign currency movements, primarily related to a stronger U.S. Dollar versus the British Pound Sterling and Euro.
In 2022, we began to experience lengthening sales cycles in Banking and Capital Markets, particularly across large transactions with a total contract value in excess of $50 million.
Lengthening sales cycles observed in 2022, particularly for large Banking transactions with a total contract value in excess of $50 million, persisted during most of 2023, which we believe resulted from economic uncertainty.
Although we continue to evaluate the optimal capital structure for our Merchant business following the proposed spin-off, we intend to maintain investment grade debt ratings for FIS. The spin-off will also result in significant one-time costs that we will be required to fund.
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.
Cash Flows from Operations Cash flows from operations were $3,939 million, $4,810 million and $4,442 million in 2022, 2021 and 2020, respectively. 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.
We now intend to repurchase approximately at least $3.5 billion of our shares outstanding by year end 2024. 39 Table of Contents 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.
Adjusted EBITDA decreased as a result of the revenue impacts noted above, and higher corporate costs were more than offset by foreign currency movements impacting corporate and infrastructure expenses related to a stronger U.S. Dollar versus the British Pound Sterling and Indian Rupee.
Adjusted EBITDA increased due to lower corporate costs as compared to prior year. Adjusted EBITDA was positively impacted by favorable foreign currency movements related to a stronger U.S. Dollar versus the British Pound Sterling and Indian Rupee.
For more details, see "Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates—Goodwill Impairments." For the year ended December 31, 2022, the Company also recorded $121 million of impairments related to real estate, a non-strategic business and certain software assets.
Asset Impairments The year ended December 31, 2023, included impairments primarily related to the termination of certain internally developed software projects. For the year ended December 31, 2022, the Company also recorded impairments related to real estate, a non-strategic business and certain software assets.
We invested approximately $1,390 million, $1,251 million and $1,129 million in capital expenditures (excluding other financing obligations for certain hardware and software) during 2022, 2021 and 2020, respectively. We expect to continue investing in property and equipment, purchased software and internally developed software to support our business.
Inclusive of discontinued operations, we invested approximately $1,122 million, $1,390 million and $1,251 million in capital expenditures (excluding other financing obligations for certain hardware and software) during 2023, 2022 and 2021, respectively (see Note 3 to the consolidated financial statements for capital expenditures from discontinued operations).
Contractual Obligations FIS' long-term contractual obligations generally include its long-term debt, interest on long-term debt, lease payments on certain of its property and equipment and payments for certain purchase commitments and other obligations. See Notes 12, 14 and 16 to the consolidated financial statements for information on our long-term debt, operating leases and Tax Receivable Agreement obligations, respectively.
Contractual Obligations FIS' long-term contractual obligations generally include its long-term debt, interest on long-term debt including the impact of accounting hedges, net coupon payments on undesignated interest rate swaps, lease payments on certain of its property and equipment and payments for certain purchase commitments and other obligations.
As of December 31, 2022, the Company had $3,653 million of available liquidity, including $2,188 million of cash and cash equivalents and $1,465 million of capacity available under its Revolving Credit Facility. Approximately $1,491 million of cash and cash equivalents is held by our foreign entities, including amounts related to regulatory requirements.
As of December 31, 2023, the Company had $3,053 million of available liquidity, including $440 million of cash and cash equivalents, exclusive of discontinued operations, and $2,613 million of capacity available under its Revolving Credit Facility and Incremental Revolving Credit Facility.
In 2022, we received approximately $726 million of net cash reflected as investing activities due to the settlement of existing cross-currency interest rate swaps. See Note 13 to the consolidated financial statements. In 2021, we received approximately $367 million of cash for the net proceeds from the sale of our equity ownership interest in Cardinal Holdings.
In 2021, we received approximately $367 million of cash for the net proceeds from the sale of our equity ownership interest in Cardinal Holdings. 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.
The 2021 increase in cash flows from operations is primarily due to an increase in net earnings, partially offset by working capital and settlement timing. Capital Expenditures and Other Investing Activities Our principal capital expenditures are for software (purchased and internally developed) and additions to property and equipment.
Cash Flows from Investing Our principal investing activity relates to capital expenditures for software (purchased and internally developed) and property and equipment.
Globally, attacks on information technology systems, such as those operated by FIS, continue to grow in frequency, complexity and sophistication. This is a trend we expect to continue. These circumstances present both a threat and an opportunity for FIS. We maintain significant focus on and investment in information security that is designed to mitigate threats to our systems and solutions.
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.
Corporate and Other also includes operations from certain non-strategic businesses. Revenue decreased primarily due to divestitures of non-strategic businesses in 2022 as well as client attrition in our non-strategic businesses.
Adjusted EBITDA decreased as a result of the revenue impacts noted above, as well as higher corporate expenses as compared to the prior year period. 38 Table of Contents Year ended December 31, 2022, compared to 2021: Revenue in the Corporate and Other segment decreased 4% for the year ended December 31, 2023, primarily due to divestitures of non-strategic businesses in 2022 as well as client attrition in our non-strategic businesses.
For 2021, Other income (expense), net includes a gain on the sale of our equity ownership interest in Cardinal Holdings of approximately $225 million (see Note 18 to the consolidated financial statements) and a loss on extinguishment of debt of approximately $528 million relating to tender premiums, make-whole amounts, and fees; the write-off of unamortized bond discounts and debt issuance costs; and losses on related derivative instruments.
The $113 million net change in Other income (expense), net during the year ended December 31, 2022, related primarily to several events that were recorded in the results for the year ended December 31, 2021, and were not repeated in 2022, including a loss on extinguishment of debt of approximately $(528) million (as discussed in Note 13 to the consolidated financial statements), partially offset by a gain on the sale of our equity ownership interest in Cardinal Holdings of approximately $225 million (as discussed in Note 19 to the consolidated financial statements) and a gain of $174 million related to fair value adjustments on equity security investments.
The operating margin during 2022 included higher asset impairments partially offset by lower intangible asset amortization compared to the prior-year period. 37 Table of Contents Total Other Income (Expense), Net Year ended December 31, 2022 2021 $ Change % Change Other income (expense): (In millions) Interest expense, net $ (275) $ (214) $ (61) 29 % Other income (expense), net 63 (52) 115 NM Total other income (expense), net $ (212) $ (266) 54 (20) The increase in interest expense, net is primarily due to increased interest expense on senior notes refinanced in 2022 and our variable rate instruments.
The increase in interest expense, net during the year ended December 31, 2022, was primarily due to increased interest expense on senior notes refinanced in 2022 and our variable-rate instruments.
During 2021, the Company recorded $202 million of asset impairments for certain software and deferred contract cost assets driven by the Company's platform modernization. Operating Income and Operating Margin The annual change in operating income resulted from the revenue and cost variances noted above.
Operating Income and Operating Margin The annual change in operating income and operating margin for the year ended December 31, 2023 and 2022 resulted from the revenue and cost variances noted above.
A regular quarterly dividend of $0.52 per common share is payable on March 24, 2023, to shareholders of record as of the close of business on March 10, 2023. We currently expect to continue to pay quarterly dividends at a target payout ratio consistent with our previously announced capital allocation strategy.
In February 2024, the Board of Directors approved a quarterly dividend of $0.36 per share beginning with the first quarter of 2024. A regular quarterly dividend of $0.36 per common share is payable on March 22, 2024, to shareholders of record as of the close of business on March 8, 2024.
Year ended December 31, 2022 2021 $ Change % Change (In millions) Revenue $ 14,528 $ 13,877 $ 651 5 % Cost of revenue (8,820) (8,682) (138) 2 Gross profit 5,708 5,195 513 10 Gross profit margin 39 % 37 % Selling, general and administrative expenses (4,118) (3,938) (180) 5 Asset impairments (17,709) (202) (17,507) NM Operating income (loss) (16,119) 1,055 (17,174) NM Operating margin NM 8 % Revenue Revenue increased primarily due to the ramp-up of new client wins in Banking, increased Merchant volumes and strong new sales in Capital Markets driving recurring revenue growth.
Consolidated Results of Operations Year ended December 31, $ Change % Change 2023 vs 2022 vs 2023 vs 2022 vs 2023 2022 2021 2022 2021 2022 2021 (In millions) Revenue $ 9,821 $ 9,719 $ 9,339 $ 102 $ 380 1 % 4 % Cost of revenue (6,145) (6,216) (5,990) 71 (226) (1) 4 Gross profit 3,676 3,503 3,349 173 154 5 5 Gross profit margin 37 % 36 % 36 % Selling, general and administrative expenses (2,096) (2,182) (2,115) 86 (67) (4) 3 Asset impairments (113) (103) (194) (10) 91 NM NM Operating income 1,467 1,218 1,040 249 178 20 17 Operating margin 15 % 13 % 11 % Revenue Revenue for the year ended December 31, 2023, increased primarily due to strong recurring revenue growth in the Banking and Capital Markets segments.
In 2022, we also recorded a goodwill impairment charge of $17.6 billion related to the Merchant Solutions reporting unit. The impairment reflects our intermediate-term expectation of lower growth in the segment, particularly related to the SMB sub-segment. See " Goodwill Impairment " in our Critical Accounting Policies and Note 6 to the consolidated financial statements for further details.
Slowing growth trends affecting our discontinued operations observed over the second half of 2022, reflecting both slower economic growth, particularly in the U.K., and competitive pressures, continued over the course of 2023. In 2022, we recorded a goodwill impairment charge of $17.6 billion related to the held-for-sale reporting unit, reflecting our intermediate-term growth expectations.
The foregoing loss resulted from the debt refinancing activity we undertook in the first quarter of 2021 (see Note 12 to the consolidated financial statements), which substantially reduced our ongoing interest expense. Other income (expense), net also includes fair value adjustments on certain other non-operating assets and liabilities and foreign currency transaction remeasurement gains.
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 35 Table of Contents on certain non-operating assets and liabilities, including certain derivatives as further described in Note 14 to the consolidated financial statements.
Merchant Solutions Years ended December 31, $ Change % Change 2022 vs 2022 vs 2022 2021 2021 2021 (In millions) Revenue $ 4,773 $ 4,496 $ 277 6 % Adjusted EBITDA $ 2,258 $ 2,262 (4) — Adjusted EBITDA margin 47.3 % 50.3 % Adjusted EBITDA margin basis points change (300) Revenue increased primarily due to the ongoing global economic recovery from the COVID-19 pandemic.
Banking Solutions Years ended December 31, $ Change % Change 2023 vs 2022 vs 2023 vs 2022 vs 2023 2022 2021 2022 2021 2022 2021 (In millions) Revenue $ 6,733 $ 6,624 $ 6,361 $ 109 $ 263 2 % 4 % Adjusted EBITDA $ 2,928 $ 2,882 $ 2,894 46 (12) 2 — Adjusted EBITDA margin 43.5 % 43.5 % 45.5 % Adjusted EBITDA margin basis points change — (200) Year ended December 31, 2023, compared to 2022: Revenue in our Banking segment increased 2% for the year ended December 31, 2023.
Provision (Benefit) for Income Taxes Year ended December 31, 2022 2021 $ Change % Change (In millions) Provision (benefit) for income taxes $ 377 $ 371 $ 6 NM Effective tax rate (2) % 47 % The effective tax rate for 2022 includes the impact of the entire tax effect of the goodwill impairment charge included in pre-tax earnings due to the book basis in excess of tax basis of the goodwill impaired in Merchant Solutions.
Provision (Benefit) for Income Taxes Year ended December 31, $ Change % Change 2023 vs 2022 vs 2023 vs 2022 vs 2023 2022 2021 2022 2021 2022 2021 (In millions) Provision (benefit) for income taxes $ 157 $ 325 $ 403 $ (168) $ (78) NM NM Effective tax rate 24 % 35 % 56 % The decrease in the effective tax rate for the year ended December 31, 2023, was predominately driven by the decrease in GAAP pre-tax earnings.
Removed
Although Merchant has a lesser percentage of multi-year contracts, substantially all of our Merchant revenue is recurring, derived from transaction processing fees that fluctuate with the number or value of transactions processed, among other variable measures associated with consumer activity. Professional services revenue is typically non-recurring, though recognition often occurs over time rather than at a point in time.
Added
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 resulted in 2023 revenue growth being slower than in 2022, and 2023 net earnings declined compared to 2022.
Removed
The Merchant segment posted revenue growth of 6% in 2022 compared to the prior year, net of (3%) growth impact of unfavorable foreign currency movements, with a deceleration over the second half of the year, particularly in the fourth quarter. The slowing growth primarily reflects a decline in SMB sub-segment revenues, attributable to slower economic growth and competitive pressures.
Added
In the second quarter of 2023, we recorded an additional $6.8 billion goodwill impairment, reflective of the price at which we agreed to sell a majority interest in the Worldpay Merchant Solutions business to Buyer as discussed further below. See Note 3 to the consolidated financial statements for further details on the goodwill impairments.
Removed
Additionally, our Enterprise sub-segment was negatively impacted by a decline in U.K.- derived revenue, principally reflecting softer economic conditions in the region. We anticipate these trends to continue into 2023. In addition, the war in Ukraine has negatively affected, and as long as it continues will continue to negatively affect, our Merchant business.
Added
Also as discussed in Note 3, the Company recorded a $1.9 billion valuation allowance against the assets held for sale in the disposal group, primarily as a result of the exclusion of certain deferred tax liabilities that were not transferring to the Joint Venture in the Worldpay Sale.
Removed
As a result of the factors noted above, for the Company as a whole, we expect 2023 revenue growth will be substantially slower than 2022, and we expect to experience margin compression in 2023 as compared to 2022.
Added
As of January 31, 2024, the closing date of the Worldpay Sale, the assets held for sale, net of the valuation 30 Table of Contents allowance, and the liabilities held for sale were derecognized, and any additional gain or loss on sale will be recorded in our discontinued operations for the first quarter of 2024.
Removed
The planned separation is intended to create two independent, publicly traded companies with enhanced strategic and operational focus and to enable more tailored capital allocation and investment decisions to unlock growth.
Added
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeFor comparison purposes, based on the outstanding balance of our variable-rate debt as of December 31, 2021, and calculated in the same manner as set forth above, an increase of 100 basis points in the weighted-average interest rate would have increased our annual interest expense by approximately $78 million. 42 Table of Contents As of December 31, 2022, the following interest rate swaps converting the interest rate exposure on certain of our senior notes from fixed to variable were outstanding (in millions): Weighted Weighted Notional Amount by Average Average Currency Maturities Receive Rate Pay Rate $ 1,854 2029 - 2031 2.74 % 6.26 % £ 925 2029 - 2031 3.00 % 5.88 % € 500 2024 1.10 % 2.26 % By entering into the aforementioned swap agreements, we have assumed risks associated with variable interest rates based upon LIBOR, or Daily Compounded SONIA as applicable based on the phase-out of LIBOR rates, or Euribor.
Biggest changeFor comparison purposes, based on the outstanding balance of our variable-rate debt as of December 31, 2022, and calculated in the same manner as set forth above, an increase of 100 basis points in the weighted-average interest rate would have increased our annual interest expense by approximately $75 million.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Market Risk We are exposed to market risks primarily from changes in interest rates and foreign currency exchange rates. We periodically use certain derivative financial instruments, including interest rate swaps and foreign currency forward contracts, to manage interest rate and foreign currency risk.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Market Risk We are exposed to market risks primarily from changes in interest rates and foreign currency exchange rates. We periodically use certain derivative financial instruments, including interest rate swaps, cross-currency interest rate swaps and foreign currency forward contracts, to manage interest rate and foreign currency risk.
We do not use derivatives for trading purposes, to generate income or to engage in speculative activity. Interest Rate Risk In addition to existing cash balances and cash provided by operating activities, we use fixed-rate and variable-rate debt to finance our operations. We are exposed to interest rate risk on these debt obligations and related interest rate swaps.
We do not use derivatives for trading purposes, to generate income or to engage in speculative activity. Interest Rate Risk In addition to existing cash balances and cash provided by operating activities, we use fixed-rate and variable-rate debt to finance our operations. We are exposed to interest rate risk on these debt obligations.
The major currencies to which our revenue is exposed are the British Pound Sterling, Euro, Brazilian Real, Australian Dollar and Indian Rupee.
The major currencies to which our revenue is exposed are the British Pound Sterling, Euro, Brazilian Real, Swedish Krona, Australian Dollar and Indian Rupee.
A 100 basis-point increase in the weighted-average interest rate on our variable-rate debt would have increased our 2022 annual interest expense by $75 million. We performed the foregoing sensitivity analysis based solely on the outstanding balance of our variable-rate debt as of December 31, 2022.
A 100 basis-point increase in the weighted-average interest rate on our variable-rate debt would have increased our 2023 annual interest expense by $49 million. We performed the foregoing sensitivity analysis based solely on the outstanding balance of our variable-rate debt as of December 31, 2023.
The fair value of our senior notes was approximately $14.8 billion as of December 31, 2022. The potential reduction in fair value of the senior notes from a hypothetical 10 percent increase in market interest rates would not be material to the overall fair value of the debt.
The fair value of our senior notes was approximately $13.7 billion as of December 31, 2023. The potential reduction in fair value of the senior notes from a hypothetical 10 percent increase in market interest rates would not be material to the overall fair value of the debt.
The Company also utilizes foreign currency-denominated debt and cross-currency interest rate swaps designated as net investment hedges in order to reduce the volatility of the net investment value of certain of its Euro and Pound Sterling functional subsidiaries (see Note 13 to the consolidated financial statements). 43 Table of Contents
The Company also utilizes foreign currency-denominated debt and cross-currency interest rate swaps designated as net investment hedges in order to reduce the volatility of the net investment value of certain of its Euro and Pound Sterling functional subsidiaries and utilizes cross-currency interest rate swaps designated as fair value hedges in order to mitigate the impact of foreign currency risk associated with our foreign currency-denominated debt (see Note 14 to the consolidated financial statements). 42 Table of Contents
Our fixed-rate senior notes (as included in Note 12 to the consolidated financial statements) represent the majority of our fixed-rate long-term debt obligations as of December 31, 2022. The carrying value, excluding the fair value of the interest rate swaps described below and unamortized discounts, of our senior notes was $16.7 billion as of December 31, 2022.
Our fixed-rate senior notes (as included in Note 13 to the consolidated financial statements) represent the majority of our fixed-rate long-term debt obligations as of December 31, 2023. The carrying value, excluding the fair value basis adjustments due to interest rate swaps described below and unamortized discounts, of our senior notes was $14.8 billion as of December 31, 2023.
A 10% movement in average exchange rates for these currencies (assuming a simultaneous and immediate 10% change in all of such rates for the relevant period) would have resulted in the following increase or decrease in our reported revenue for the years ended December 31, 2022, 2021 and 2020 (in millions): Currency 2022 2021 2020 Pound Sterling $ 178 $ 177 $ 141 Euro 31 34 35 Real 15 14 12 Rupee 9 11 10 Australian Dollar 10 8 7 Total increase or decrease $ 243 $ 244 $ 205 While our results of operations have been impacted by the effects of currency fluctuations, our international operations' revenue and expenses are generally denominated in local currency, which reduces our economic exposure to foreign exchange risk in those jurisdictions.
A 10% movement in average exchange rates for these currencies (assuming a simultaneous and immediate 10% change in all of such rates for the relevant period) would have resulted in the following increase or decrease in our reported revenue for the years ended December 31, 2023, 2022 and 2021 (in millions): Currency 2023 2022 2021 Pound Sterling $ 43 $ 42 $ 41 Euro 25 26 28 Real 14 15 14 Swedish Krona 10 7 7 Rupee 6 9 11 Australian Dollar 7 7 6 Total increase or decrease $ 105 $ 106 $ 107 While our results of operations have been impacted by the effects of currency fluctuations, our international operations' revenue and expenses are generally denominated in local currency, which reduces our economic exposure to foreign exchange risk in those jurisdictions.
Changes in foreign currency exchange rates affect translations of revenue denominated in currencies other than the U.S. Dollar. During the years ended December 31, 2022, 2021 and 2020, we generated approximately $2,820 million, $2,833 million and $2,432 million, respectively, in revenue denominated in currencies other than the U.S. Dollar.
Changes in foreign currency exchange rates affect translations of revenue denominated in currencies other than the U.S. Dollar. During the years ended December 31, 2023, 2022 and 2021, we generated approximately $1,261 million, $1,288 million and $1,330 million, respectively, in revenue denominated in currencies other than the U.S. Dollar.
Foreign Currency Risk We are exposed to foreign currency risks that arise from normal business operations. These risks include the translation of local currency balances of foreign subsidiaries, transaction gains and losses associated with intercompany loans with foreign subsidiaries and transactions denominated in currencies other than a location's functional currency.
These risks include the translation of local currency balances of foreign subsidiaries, transaction gains and losses associated with intercompany loans with foreign subsidiaries and transactions denominated in currencies other than a location's functional currency.
Our variable-rate risk principally relates to borrowings under our U.S. commercial paper program, Euro-commercial paper program, and Revolving Credit Facility (as included in Note 12 to the consolidated financial statements) and the notional amounts of our interest rate swaps designated as fair value hedges (collectively, "variable-rate debt").
Our variable-rate risk principally relates to borrowings under our U.S. commercial paper program, Euro-commercial paper program, Revolving Credit Facility and Incremental Revolving Credit Facility (as included in Note 13 to the consolidated financial statements) (collectively, "variable-rate debt").
At December 31, 2022, our weighted-average cost of debt was 2.6% with a weighted-average maturity of 5.7 years; 65% of our debt was fixed rate, and the remaining 35% was variable-rate debt, inclusive of fair value adjustments of interest rate swaps.
At December 31, 2023, our weighted-average cost of debt was 3.5% with a weighted-average maturity of 5.2 years; 77% of our debt was fixed rate, and the remaining 23% was variable-rate debt, inclusive of fair value basis adjustments due to interest rate swaps.
We do periodically enter into foreign currency forward contracts to hedge foreign currency exposure to intercompany loans and other balance sheet items.
We do periodically enter into foreign currency forward contracts to hedge foreign currency exposure to intercompany loans, other balance sheet items or expected foreign currency cash flows resulting from forecasted transactions.
Changes in the overall level of interest rates affect the interest expense that we recognize. We designated the interest rate swaps as fair value hedges for accounting purposes as described in Note 13 to the consolidated financial statements.
The de-designation of the fixed-to-variable interest rate swaps resulted in final fair value basis adjustments that are amortized into interest expense over the remaining periods to maturity of the respective debt as described in Note 14 to the consolidated financial statements.
Removed
A 100 basis-point increase in the 3-month USD LIBOR rate, Daily Compounded SONIA rate (previously 6-month GBP LIBOR rate), and 3-month Euribor rate, as applicable, for the interest rate swaps outstanding as of December 31, 2022 and 2021, would increase our annual interest expense by approximately $35 million and $37 million, respectively.
Added
As of December 31, 2023, the notional amounts of our fixed-to-variable interest rate swaps no longer contribute to interest rate risk, as described further below.
Added
During the quarter ended September 30, 2023, the Company de-designated its fixed-to-variable interest rate swaps as fair value hedges for accounting purposes and entered into offsetting variable-to-fixed interest rate swaps.
Added
The Company accounts for the de-designated fixed-to-variable and offsetting variable-to-fixed interest rate swaps as economic hedges; as such, 41 Table of Contents 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 that we recognize, eliminating our variable-rate risk on our fixed-to-variable interest rate swaps.
Added
The fair value basis adjustments recorded as a decrease of the long-term debt totaled $594 million, net of amortization, as of December 31, 2023, with $41 million amortized as interest expense for the year ending December 31, 2023. Foreign Currency Risk We are exposed to foreign currency risks that arise from normal business operations.

Other FIS 10-K year-over-year comparisons