Unless stated otherwise or the context otherwise requires, all references to "FIS," "we," the "Company" or the "registrant" are to Fidelity National Information Services, Inc., a Georgia corporation, and its subsidiaries.



The following discussion should be read in conjunction with Item 1. Condensed
Consolidated Financial Statements (Unaudited) and the Notes thereto included
elsewhere in this report. The statements contained in this Form 10-Q or in our
other documents or in oral presentations or other management statements that are
not purely historical are forward-looking statements within the meaning of the
U.S. federal securities laws. Statements that are not historical facts,
including statements about anticipated financial outcomes, including any
earnings guidance or projections of the Company, projected revenue or expense
synergies, business and market conditions, outlook, foreign currency exchange
rates, deleveraging plans, expected dividends and share repurchases, the
Company's sales pipeline and anticipated profitability and growth, as well as
other statements about our expectations, beliefs, intentions, or strategies
regarding the future, or other characterizations of future events or
circumstances, are forward-looking statements. In many cases, forward-looking
statements can be identified by terminology such as "may," "will," "should,"
"expect," "plan," "anticipate," "believe," "estimate," "predict," "potential,"
or "continue," or the negative of these terms and other comparable terminology.
These statements relate to future events and our future results and involve a
number of risks and uncertainties. Forward-looking statements are based on
management's beliefs as well as assumptions made by, and information currently
available to, management.

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

•the outbreak or recurrence of the novel coronavirus and any related variants
("COVID-19") and measures to reduce its spread, including the impact of
governmental or voluntary actions such as business shutdowns and stay-at-home
orders in certain geographies;
•the duration, including any recurrence, of the COVID-19 pandemic and its
impacts, including reductions in consumer and business spending, and instability
of the financial markets in heavily impacted areas across the globe;
•the economic and other impacts of COVID-19 on our clients which affect the
sales of our solutions and services and the implementation of such solutions;
•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;
•changes in general economic, business and political conditions, including those
resulting from COVID-19 or other pandemics, intensified international
hostilities, acts of terrorism, changes in either or both the U.S. and
international lending, capital and financial markets and currency fluctuations;
•the risk that other 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 other synergies anticipated to be realized from
other acquisitions may not be fully realized or may take longer to realize than
expected;
•the risks of doing business internationally;
•the effect of legislative initiatives or proposals, statutory changes,
governmental or other 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, the duration and impact of the COVID-19 pandemic, and other
factors that may be considered relevant by our Board of Directors, including
legal and contractual restrictions;
•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;
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•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 and other sections of our
Annual Report on Form 10-K for the fiscal year ended December 31, 2020, in our
Quarterly Reports on Form 10-Q and in our other filings with the Securities and
Exchange Commission.

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

Overview



FIS is a leading provider of technology solutions for merchants, banks, and
capital markets firms globally. Our employees are dedicated to advancing the way
the world pays, banks and invests by applying our scale, deep expertise and
data-driven insights. We help our clients use technology in innovative ways to
solve business-critical challenges and deliver superior experiences for their
customers. Headquartered in Jacksonville, Florida, FIS is a Fortune 500® company
and is a member of Standard & Poor's 500® Index.

We have grown organically as well as through acquisitions, which have
contributed critical solutions and services that complement or enhance our
existing offerings, diversifying our revenue by client, geography and service
offering, and opening new and profitable adjacent markets that align with our
core solutions' strengths. FIS evaluates possible acquisitions that might
contribute to our growth or performance on an ongoing basis. We also develop new
solutions that enhance our client offerings.

FIS reports its financial performance based on the following segments: Merchant
Solutions ("Merchant"), Banking Solutions ("Banking"), Capital Market Solutions
("Capital Markets") and Corporate and Other. A description of our segments is
included in Note 11 to the consolidated financial statements. Revenue by segment
and the Adjusted EBITDA of our segments are discussed below in Segment Results
of Operations. Amounts in tables below may not sum or calculate due to rounding.

Business Trends and Conditions



Our revenue is primarily derived from a combination of technology and processing
services, 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. The majority of our
international revenue is generated by clients in the U.K., Germany, Australia,
Brazil, Canada, and India. 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 services, in general, are considered critical to our clients'
operations. 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. Sales of software
licenses are typically non-recurring with point-in-time recognition and are less
predictable.

COVID-19's impact to our financial results in the third quarter of 2021 lessened
as compared to prior periods due to the continued reopening of markets,
especially where reopening is accelerated by the accessibility and effective
rollout of vaccines. In certain locations, where government lockdowns and
shelter-in-place orders remain or have been tightened, particularly in
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certain areas of Europe and Brazil, reduced consumer spending continues to
adversely impact our Merchant payments volume and related transaction revenue.
In addition, certain discretionary spending verticals, including cross-border
travel and airlines, continue to be impacted, although the impact has lessened.

We extended higher-than-usual levels of credit to our merchant clients during
2020 as part of funds settlement in connection with payments to their customers,
for, among other things, refunds for cancelled trips as cases of COVID-19 spread
across the globe. The level of credit extended to our merchant clients has since
normalized. We are potentially exposed to losses if our merchant customers are
unable to repay the credit we have extended or to fund their liability for
chargebacks due to closure, insolvency, bankruptcy or other reasons. Our
potential liability for chargebacks did not have a material impact on our
liquidity for the three- and nine-month periods ended September 30, 2021, and we
continue to monitor for impact on our liquidity, results of operations and
financial condition.

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

Over the last five years, we have moved over 80% of our server compute,
primarily in North America, to our FIS cloud located in our strategic data
centers. This allows us to further enhance security for our clients' data and
increases the flexibility and speed with which we can provide solutions and
services to our clients, at lesser cost. We have also completed our data center
consolidation program, generating a savings for the Company of over $250 million
in run-rate annual expense since the program's inception in mid-2016.

Following the successful modernization of our IT infrastructure and
consolidation of our data centers, we are now accelerating the modernization of
our applications and integration of our technology platforms through our
Platform initiatives. Our Platform initiatives primarily include enabling
clients to easily consume the breadth of our capabilities using microservices as
well as process automation and consolidation of technology platforms to speed
new solution and service innovation over approximately the next three years.

We continue to invest in modernization, innovation and integrated solutions and
services 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.
Our internal efforts in research and development activities have related
primarily to the modernization of our proprietary core systems in each of our
segments, design and development of next-generation digital and innovative
solutions and development of processing systems and related software
applications and risk management platforms. We have increased our investments in
these areas in each of the last three years. Our innovation efforts have
recently resulted in bringing to market our Modern Banking Platform that is
among the first cloud-native core banking solutions. 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.

In addition, we are investing in the development of new solutions and venture opportunities by establishing FIS Impact Ventures. This group prioritizes development of, and investment in, next-generation technology and innovation.



FIS continues to carefully monitor the effects of the ongoing COVID-19 pandemic
as conditions continue to evolve in different parts of the world. Since the
beginning of the pandemic, the Company has taken several actions to protect its
employees while maintaining business continuity, including implementing its
comprehensive Pandemic Plan. When the COVID-19 variants impacted India in the
second quarter, we rolled out several benefits to help our employees there,
including providing vaccines to over 15,000 employees and dependents. The
Pandemic Plan includes site-specific plans as well as travel restrictions,
medical response protocols, work-from-home strategies and enhanced cleaning
within our locations. As a critical infrastructure provider for the global
economy, FIS continues to operate around the world to serve our clients.

The spread of COVID-19 has caused us to modify our business practices, and we
may take further actions as may be required by government authorities or as we
determine are in the best interests of our employees, clients and business
partners. While FIS has outfitted employees to provide services from home or
transferred work to other locations, we recently began a limited reopening of
offices in certain locations where the COVD-19 infection rates have been
significantly reduced. In many locations, a hybrid work status will allow
employees to work from home and the office.
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Consumer preference continues to shift from traditional branch banking services
to digital banking solutions, and our clients seek to provide a single
integrated banking experience through their branch, mobile, internet and voice
banking channels. The COVID-19 pandemic has resulted in accelerating
digitization of banking and payment services by requiring, in many cases, banks
and bank customers to transact through digital channels. We have been providing
our large regional banking customers in the U.S. with Digital One, an integrated
digital banking platform, and are now adding functionality and offering Digital
One to our community bank clients to provide a consistent, omnichannel
experience for consumers of banking services across self-service channels like
mobile banking and online banking, as well as supporting channels for bank staff
operating in bank branches and contact centers. The uniform customer experience
extends to support a broad range of financial services including opening new
accounts, servicing of existing accounts, money movement, and personal financial
management, as well as other consumer, small business and commercial banking
capabilities. Digital One is integrated into several of the core banking
platforms offered by FIS and is also offered to customers of non-FIS core
banking systems.

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

FIS is a global leader in the merchant solutions industry, with differentiated
solutions throughout the payments market, including capabilities in global
eCommerce, integrated payments, enterprise payments and data security solutions
in business-to-business ("B2B") payments. These solutions bring advanced
payments technologies at each stage of the transaction life cycle. We have a
broad solution portfolio, enabling us to significantly expand our merchant
acquiring solutions, including our capabilities in the growing eCommerce and
integrated payment segments of the market, which are in demand among our
merchant clients as they look for ways to integrate technology into their
business models.

As the impact of the COVID-19 pandemic lessens with the continuing reopening of
markets, our merchant processing revenue has improved significantly as consumer
spending increased, particularly in areas where the vaccine has been more
accessible and more effectively rolled out. Certain areas of spending continue
to lag behind pre-COVID 19 levels, such as cross-border travel and airlines, and
our merchant processing revenues continue to be adversely affected in those
areas. We expect that revenue will continue to be adversely impacted until the
economic effects of the pandemic, including those caused by government, company
and public travel restrictions, subside around the world but that revenue should
continue to increase in areas where the vaccine rollout effectively continues.

As of the end of the third quarter of 2021, our achievement of revenue synergies
from the Worldpay acquisition remains on track to meet or exceed our current
targets, driven by successful cross-sell of our heritage FIS solutions into
heritage Worldpay clients and leveraging our heritage Worldpay sales and
distribution teams, expanding on our existing relationships with financial
institutions to establish merchant referral agreements and optimizing our
network routing capabilities. We have also exceeded our original target for
expense synergies, as we have successfully integrated organizational structures,
reduced corporate overhead and achieved cost savings within our operating
environment, and we expect to continue to achieve additional expense synergies
during 2021.

We continue to see demand in the payments market for innovative solutions that
will deliver faster, more convenient payment options in mobile channels,
internet applications, in-store cards, and the growing area of cryptocurrency.
The payment processing industry is adopting new technologies, developing new
solutions and services, evolving new business models and being affected by new
market entrants and by an evolving regulatory environment. As merchants and
financial institutions respond to these changes by seeking services 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. To facilitate this expansion, we believe that
payment processors will need to enhance their technology platforms so they can
deliver these capabilities and differentiate their offerings from other
providers. The COVID-19 pandemic
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has accelerated digitization of payment services by requiring, in many cases, businesses and consumers to transact through digital channels.



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

Globally, attacks on information technology systems continue to grow in
frequency, complexity and sophistication. This is a trend we expect to continue.
Such attacks have become a point of focus for individuals, businesses and
governmental entities. The objectives of these attacks include, among other
things, gaining unauthorized access to systems to facilitate financial fraud,
disrupt operations, cause denial of service events, corrupt data, and steal
non-public information. These circumstances present both a threat and an
opportunity for FIS. As part of our business, we electronically receive,
process, store and transmit a wide range of confidential information, including
sensitive customer information and personal consumer data. We also operate
payment, cash access and prepaid card systems.

FIS remains focused on making strategic investments in information security to
protect our clients and our information systems. These investments include both
capital expenditures and operating expense related to hardware, software,
personnel and consulting services. We also participate in industry and
governmental initiatives to improve information security for our clients.
Through the expertise we have gained with this ongoing focus and involvement, we
have developed fraud, security, risk management and compliance solutions to
target this growth opportunity in the financial services industry.

During the third quarter of 2021, we became aware that a particular vendor's
point-of-sale devices, used by merchants to accept card payments, were
initiating connections to destinations not listed in the vendor's supplied
documentation. We questioned the vendor about this issue and did not receive
answers we consider satisfactory. While we are not aware of any evidence that
data processed by the devices have in fact been compromised, we determined that
we would no longer participate in the deployment of this vendor's devices and
that we would assist our merchant customers actively processing through our
acquiring platform in replacing these devices, at our expense. This replacement
is expected to be completed in 2022, and the aggregate costs of acquiring and
installing the devices are not expected to be material to our results of
operations or financial condition. We do not believe that this incident has
affected the security of our information systems.

Critical Accounting Policies and Estimates



There have been no significant changes to our critical accounting policies as
disclosed in our Annual Report on Form 10-K for the year ended December 31,
2020. For discussion regarding the impact of the COVID-19 pandemic on our
critical and significant accounting estimates subject to risk and uncertainties,
see Notes 1, 3 and 7 to the consolidated financial statements.

Transactions with Related Parties

See Note 9 to the consolidated financial statements for a description of transactions with related parties.


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Consolidated Results of Operations - Comparisons of three- and nine-month periods ended September 30, 2021 and 2020


                                                   Three months ended September 30,                                           Nine months ended September 30,
                                                                             $                %                                                         $                %
                                       2021                2020           Change            Change                2021                2020           Change            Change
                                                   (In millions)                                                              (In millions)
Revenue                           $     3,507           $ 3,197          $  310                 10  %       $     10,205           $ 9,236          $  969                 10  %
Cost of revenue                        (2,178)           (2,104)            (74)                 4                (6,431)           (6,238)           (193)                 3
Gross profit                            1,329             1,093             236                 22                 3,774             2,998             776                 26
Gross profit margin                        38   %            34  %                                                    37   %            32  %
Selling, general and
administrative expenses                  (989)             (862)           (127)                15                (2,972)           (2,613)           (359)                14
Asset impairments                        (202)                -            (202)              NM                    (202)                -            (202)              NM
Operating income                  $       138           $   231             (93)               (40)         $        600           $   385             215                 56
Operating margin                            4   %             7  %                                                     6   %             4  %



NM = Not meaningful

Revenue

Revenue for the three and nine months ended September 30, 2021, increased
primarily due to the continued global economic recovery from the pandemic
leading to increased Merchant volumes, increased demand for our newly developed
offerings in Banking, and strong new sales driving Capital Markets managed
services and other recurring revenue growth. Revenue also benefited from a
favorable foreign currency impact, which was primarily related to a weaker U.S.
Dollar versus the Euro and the British Pound Sterling. See Segment Results of
Operations below for more detailed explanation.

Cost of Revenue, Gross Profit and Gross Profit Margin



Cost of revenue and gross profit for the three and nine months ended
September 30, 2021, increased primarily due to the revenue variances noted
above. Gross profit margin for the three and nine months ended September 30,
2021, increased primarily due to revenue growth, a positive shift in revenue mix
and continued expense management. This increase was partially offset by $102
million of incremental amortization expense associated with shortened estimated
useful lives and accelerated amortization methods for certain software and
deferred contract cost assets driven by the Company's Platform initiatives.

Selling, General and Administrative Expenses



Selling, general and administrative expenses for the three and nine months ended
September 30, 2021, increased primarily due to higher compensation expense,
including incentive compensation and, for the nine months ended September 30,
2021, accelerated stock compensation expense recorded during the first quarter
of 2021 associated with the establishment of the Qualified Retirement Equity
Program that modified our existing stock compensation plans as described in Note
8 to the consolidated financial statements. These increases were partially
offset by lower discretionary spending during the COVID-19 pandemic.

Asset Impairments



During the three and nine months ended September 30, 2021, the Company recorded
$202 million of asset impairments for certain software and deferred contract
cost assets driven by the Company's Platform initiatives.

Operating Income and Operating Margin



The change in operating income for the three and nine months ended September 30,
2021, resulted from the revenue and cost variances noted above. The operating
margin for the three months ended September 30, 2021, decreased primarily due to
the asset impairments, accelerated amortization expense, and higher compensation
expense, partially offset by a positive shift in revenue mix and continued
expense management discussed above as compared to prior year. The operating
margin for the nine months ended September 30, 2021, increased primarily due to
a positive shift in revenue mix and continued expense
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management, partially offset by asset impairments, accelerated amortization expense, and higher compensation expense discussed above as compared to prior year.

Total Other Income (Expense), Net


                                            Three months ended September 30,                                           Nine months ended September 30,
                                                                     $                 %                                                       $                 %
                                2021               2020            Change            Change               2021               2020            Change            Change
Other income (expense):                     (In millions)                                                             (In millions)

Interest expense, net $ (46) $ (84) $ 38

             (45) %       $       (169)         $ (252)         $    83                (33) %
Other income (expense),
net                                 110              (4)             114               NM                     (58)             31              (89)              NM
Total other income
(expense), net             $         64          $  (88)             152               NM            $       (227)         $ (221)              (6)                 3  %



NM = Not meaningful

The decrease in interest expense, net is primarily due to lower outstanding debt
and lower weighted average interest rate on the outstanding debt throughout the
three and nine months ended September 30, 2021.

Other income (expense), net for the three and nine months ended September 30,
2021, includes net gains on equity security investments without readily
determinable fair values of $126 million and $214 million, respectively (see
Note 3 to the consolidated financial statements). For the nine months ended
September 30, 2021, other income (expense), net also includes gain on the sale
of our equity ownership interest in Cardinal Holdings of approximately $225
million 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 foregoing loss resulted from the debt refinancing
activity we undertook in the first quarter of 2021 (see Note 5 to the
consolidated financial statements), which will substantially reduce our ongoing
interest expense. Other income (expense), net for these periods 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 three and nine months ended September 30,
2020, primarily includes the fair value adjustment on certain assets and
liabilities offset by foreign currency transaction remeasurement losses and the
settlement recorded for the Reliance Trust claims, which is further described in
Note 7 to the consolidated financial statements.

Provision (Benefit) for Income Taxes


                                         Three months ended September 30,                                        Nine months ended September 30,
                                                                $                 %                                                      $                 %
                             2021             2020           Change            Change                2021              2020           Change            Change
                                        (In millions)                                                           (In millions)
Provision (benefit) for
income taxes             $     41           $  121          $  (80)              NM             $      246           $   94          $  152

NM


Effective tax rate             20   %           85  %                                                   66   %           57  %



NM = Not meaningful



The effective tax rate for the three months ended September 30, 2020, includes a
one-time net remeasurement of certain deferred tax liabilities due to the
increase in the U.K. corporate statutory tax rate from 17% to 19% enacted on
July 22, 2020, causing a decrease in the effective tax rate for the three months
ended September 30, 2021, when compared to the 2020 three-month period. The
increase in the effective tax rate for the nine months ended September 30, 2021,
is primarily due to 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 - Comparisons of three- and nine-month periods ended September 30, 2021 and 2020



FIS reports its financial performance based on the following segments: Merchant
Solutions, Banking Solutions, Capital
Market Solutions, and Corporate and Other. The Company reclassified certain
non-strategic businesses from Merchant Solutions, Banking Solutions, and Capital
Market Solutions into Corporate and Other during the year ended December 31,
2020, and recast all prior-period segment information presented.
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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.
This measure is reported to the chief operating decision maker for purposes of
making decisions about allocating resources to the segments and assessing their
performance. For this reason, Adjusted EBITDA, as it relates to our segments, is
presented in conformity with FASB ASC Topic 280, Segment Reporting. The
non-operational items affecting the segment profit measure generally include the
amortization of purchase accounting adjustments as well as acquisition,
integration and certain other costs and asset impairments. Adjusted EBITDA also
excludes incremental and direct costs resulting from the COVID-19 pandemic.
These costs and adjustments are recorded in the Corporate and Other segment for
the periods discussed below. Adjusted EBITDA for the respective segments
excludes the foregoing costs and adjustments. Financial information, including
details of Adjusted EBITDA, for each of our segments is set forth in Note 11 to
the consolidated financial statements.

Merchant Solutions
                                             Three months ended September 30,                                           Nine months ended September 30,
                                                                       $                %                                                        $                %
                                 2021                2020           Change            Change               2021                2020           Change            Change
                                             (In millions)                                                             (In millions)
Revenue                     $     1,161           $ 1,017          $  144                 14  %       $     3,303           $ 2,764          $  539                 20  %
Adjusted EBITDA             $       600           $   487             113                 23          $     1,639           $ 1,241             398                 32
Adjusted EBITDA margin             51.7   %          47.9  %                                                 49.6   %          44.9  %
Adjusted EBITDA margin
basis points change                 380                                                                       470



Three months ended September 30:



Revenue increased primarily due to easing lockdown restrictions and the
continued global economic recovery from the pandemic. Third quarter revenue
increased due to higher card-present volumes contributing 12% to growth and
card-not-present volumes contributing 5% to growth, which were offset (4%)
primarily due to lower volumes from the shifted timing of the U.S. tax filing
deadline from the second to the third quarter of 2020. Revenue also benefited
from a favorable foreign currency impact contributing 1% to growth and was
primarily related to a weaker 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 revenue growth, higher-margin revenue mix and continued expense management.

Nine months ended September 30:



Revenue increased primarily due to easing lockdown restrictions and the
continued global economic recovery from the pandemic. For the first nine months,
revenue increased due to higher card-present volumes contributing 13% to growth
and card-not-present volumes contributing 4% to growth. Revenue also benefited
from a favorable foreign currency impact contributing 3% to growth and was
primarily related to a weaker 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 revenue growth, higher-margin revenue mix and continued expense management.


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Banking Solutions
                                             Three months ended September 30,                                           Nine months ended September 30,
                                                                       $                %                                                        $                %
                                 2021                2020           Change            Change               2021                2020           Change            Change
                                             (In millions)                                                             (In millions)
Revenue                     $     1,610           $ 1,488          $  122                  8  %       $     4,729           $ 4,394          $  335                  8  %
Adjusted EBITDA             $       742           $   649              93                 14          $     2,129           $ 1,868          $  261                 14
Adjusted EBITDA margin             46.1   %          43.6  %                                                 45.0   %          42.5  %
Adjusted EBITDA margin
basis points change                 250                                                                       250


Three months ended September 30:



Revenue increased primarily due to recurring revenue contributing 5% to growth,
driven by strong new sales, including newly developed offerings, and increased
volumes due to the continued global economic recovery from the pandemic.
Non-recurring revenue also contributed 3% to growth, primarily due to the timing
of termination fees.

Adjusted EBITDA increased primarily due to the revenue impacts noted above. Adjusted EBITDA margin increased primarily due to higher-margin revenue mix and continued expense management.

Nine months ended September 30:



Revenue increased primarily due to recurring revenue contributing 5% to growth,
driven by strong new sales, including newly developed offerings, and increased
volumes due to the continued global economic recovery from the pandemic.
Non-recurring revenue also contributed 2% to growth primarily due to the timing
of termination fees. Revenue also benefited from a favorable foreign currency
impact contributing 1% to growth and was primarily related to a weaker U.S.
Dollar versus the British Pound Sterling and the Euro.

Adjusted EBITDA increased primarily due to the revenue impacts noted above. Adjusted EBITDA margin increased primarily due to higher-margin revenue mix and continued expense management.



Capital Market Solutions
                                             Three months ended September 30,                                          Nine months ended September 30,
                                                                     $                 %                                                        $                %
                                 2021              2020            Change            Change               2021                2020           Change            Change
                                             (In millions)                                                            (In millions)
Revenue                     $      654           $  587          $    67                 11  %       $     1,908           $ 1,777          $  131                  7  %
Adjusted EBITDA             $      316           $  265               51                 20          $       897           $   801              96                 12
Adjusted EBITDA margin            48.4   %         45.1  %                                                  47.0   %          45.1  %
Adjusted EBITDA margin
basis points change                330                                                                       190


Three months ended September 30:



Revenue increased primarily due to recurring revenue contributing 4% to growth
from strong new sales driving outsourced solutions and services. Non-recurring
revenue also contributed 6% driven by strong deal execution in the quarter and
favorable renewal timing. Revenue also benefited from a favorable foreign
currency impact contributing 1% to growth and was primarily related to a weaker
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 higher-margin revenue mix and continued expense management.

Nine months ended September 30:



Revenue increased primarily due to recurring revenue contributing 3% and
non-recurring revenue contributing 3% to growth driven by strong new sales
driving outsourced solutions and services. The growth of recurring revenue led
to an increase in professional services revenue, with much of the services being
delivered in a virtual capacity given the ongoing COVID-19
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pandemic. Revenue also benefited from a favorable foreign currency impact contributing 1% to growth and was primarily related to a weaker U.S. Dollar versus the British Pound Sterling and the Euro.



Adjusted EBITDA increased primarily due to the revenue impacts noted above.
Adjusted EBITDA margin increased primarily due to higher-margin revenue mix and
continued expense management.

Corporate and Other
                                            Three months ended September 30,                                        Nine months ended September 30,
                                                                    $                %                                                      $                %
                                2021              2020           Change            Change               2021              2020           Change            Change
                                            (In millions)                                                          (In millions)
Revenue                     $       82          $  105          $  (23)               (21) %       $       265          $  301          $  (36)               (12) %
Adjusted EBITDA             $      (73)         $  (44)            (29)                66          $      (253)         $ (149)           (104)                70


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

Three and nine months ended September 30:

Revenue decreased primarily due to client attrition in our non-strategic businesses.

Adjusted EBITDA decreased primarily due to the revenue impact noted above as well as higher compensation expense compared to prior year.

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. 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 5 to the
consolidated financial statements.

As of September 30, 2021, the Company had $3,381 million of available liquidity,
including $1,390 million of cash and cash equivalents and $1,991 million of
capacity available under its Revolving Credit Facility. Approximately $686
million of cash and cash equivalents is held by our foreign entities. The
majority of our cash and cash equivalents represents net deposits-in-transit at
the balance sheet dates and relates to daily settlement activity and regulatory
requirements. Debt outstanding totaled $19.8 billion, with an effective weighted
average interest rate of 0.9%.

The Company's liquidity has improved during 2021 as compared to at the onset of
the pandemic. However, our liquidity could be impacted if economic conditions
deteriorate or as a result of governmental measures that might be imposed in
response to the COVID-19 pandemic or any recurrence or related variants thereof.

The Company remains committed to reducing its leverage incurred in the Worldpay acquisition while ensuring ample liquidity and expects to reach its target leverage by the end of 2021.



We expect that cash and cash equivalents plus cash flows from operations over
the next 12 months will be sufficient to fund our operating cash requirements,
capital expenditures and mandatory debt service payments.

We currently expect to continue to pay quarterly dividends, and we recently
announced an intent to increase our dividend payout ratio over the next several
years. However, 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 (including potential mergers and acquisitions), results
of operations, financial condition, cash requirements, future prospects, the
duration and impact of the COVID-19 pandemic, and other factors that may be
considered relevant by our Board of Directors, including legal and contractual
restrictions. Additionally, the payment of cash dividends may be limited by
covenants in certain debt agreements. A
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regular quarterly dividend of $0.39 per common share is payable on December 27, 2021, to shareholders of record as of the close of business on December 13, 2021.



In January 2021, our Board of Directors approved a new share repurchase program
under which it authorized the Company to repurchase up to 100 million shares of
our common stock at management's discretion from time to time on the open market
or in privately negotiated transactions and through Rule 10b5-1 plans. The new
share repurchase program has no expiration date and may be suspended for
periods, amended or discontinued at any time. Under the new share repurchase
program, the Company repurchased approximately $1.2 billion in shares during the
third quarter and approximately 85 million shares remain available for
repurchase as of September 30, 2021.

Cash Flows from Operations



Cash flows from operations were $3,697 million and $3,024 million for the
nine-month periods ended September 30, 2021 and 2020, respectively. Our net cash
provided by operating activities consists primarily of net earnings, adjusted to
add back depreciation and amortization. Cash flows from operations increased
$673 million in the 2021 period primarily due to the continued global economic
recovery from the pandemic, partially offset by working capital timing.

Capital Expenditures and Other Investing Activities



Our principal capital expenditures are for software (purchased and internally
developed) and additions to property and equipment. We invested approximately
$877 million and $838 million in capital expenditures (excluding other financing
obligations for certain hardware and software) during the nine-month periods
ended September 30, 2021 and 2020, respectively. We expect to continue investing
in property and equipment, purchased software and internally developed software
to support our business.

We received approximately $367 million of cash during the nine months ended
September 30, 2021, for the net proceeds from the sale of our equity ownership
interest in Cardinal Holdings. We used $469 million of cash (net of cash
acquired) during the nine months ended September 30, 2020, primarily for the
Virtus acquisition completed on January 2, 2020.

Financing

For more information regarding the Company's debt and financing activity see Note 5 to the consolidated financial statements.

Contractual Obligations



There were no material changes in our contractual obligations through the nine
months ended September 30, 2021, in comparison to the table included in our
Annual Report on Form 10-K for the year ended December 31, 2020, except as
disclosed in Note 5 to the consolidated financial statements.
Off-Balance Sheet Arrangements
FIS does not have any material off-balance sheet arrangements.

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

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