FIDELITY NATIONAL INFORMATION SERVICES, INC. Unless stated otherwise or the context otherwise requires, all references to
"FIS," "we," the "Company" or the "registrant" are to
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 theU.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 ("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; •the duration, including any recurrence, of the COVID-19 pandemic and its impacts, including the impact of an economic recession in certain markets, 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 theU.S. and international lending, capital and financial markets and currency fluctuations; •the risk that the Worldpay transaction will not provide the expected benefits or that we will not be able to achieve the revenue synergies anticipated; •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; •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; •the reaction of current and potential customers to communications from us or regulators regarding information security, risk management, internal audit or other matters; 20
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•the risk that policies and resulting actions of the current administration in theU.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 theU.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 endedDecember 31, 2020 , in our Quarterly Reports on Form 10-Q and in our other filings with theSecurities 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 inJacksonville, Florida , FIS is a Fortune 500® company and is a member ofStandard & 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 solution's 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.
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 theU.S. The majority of our international revenue is generated by clients in theU.K. ,Germany ,Australia ,France ,Canada ,Brazil andIndia . 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 also 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 first quarter of 2021 lessened due to the gradual opening of markets, especially where accelerated by the accessibility and effective rollout of vaccines. In certain locations, where government lockdowns and shelter-in-place orders have been tightened, particularly in certain areas ofEurope andBrazil , reduced consumer spending continues to adversely impact our Merchant payments volume and related transaction revenue. In addition, certain 21
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discretionary spending verticals, including travel, airlines and restaurants, continue to be impacted, although the impact has lessened due to the gradual opening of markets with access to vaccines. As the impact of COVID-19 lessens in certain areas with access to vaccines, including theU.S. , consumer spending and sales of our solutions have increased. We have continued to prioritize investments in solutions that help address the needs of our clients in order to increase the Company's potential to resume strong revenue growth following the pandemic. Additionally, we are continuing to take several actions to manage discretionary expenses, including reducing office space and prohibiting most travel, as well as accelerating automation and functional alignment across the organization. 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, although there is risk that increased government lockdown orders could adversely impact credit extensions and chargebacks in affected areas. We are 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-month period endedMarch 31, 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 outsourcing 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 approximately 76% of our server compute, primarily inNorth America , to our FIS cloud located in our strategic data centers, and our goal is to increase that percentage to 80% by the end of 2021. 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, eventually at lesser cost. Concurrently, we have continued to consolidate our data centers, generating a savings for the Company of approximately$245 million in run-rate annual expense since the program's inception in mid-2016. We plan to close and consolidate approximately five more data centers by the end of 2021, which should result in additional run-rate annual expense reduction of approximately$5 million . 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 continues to carefully monitor the effects of the ongoing COVID-19 pandemic
as conditions continue to evolve. 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. 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 (including
restricting employee travel, developing social distancing plans for our
employees and cancelling physical participation in meetings, events and
conferences), 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. Where government lockdowns have prohibited or
slowed down certain functions at specific locations, FIS has outfitted employees
to provide services from home or transferred work to other locations. The
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majority of our employees remain in a work-from-home status and have been effectively outfitted to continue to provide all necessary services to our clients. We continued this work-from-home status in most locations since the impact of the pandemic began inmid-March 2020 through the end of the first quarter of 2021, as the safety of our employees is a top priority. We recently began a limited opening of offices in certain locations where the COVD-19 infection rates have been significantly reduced. 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 theU.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 as a whole is 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, and 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. Due to the COVID-19 pandemic, our merchant processing revenue has been adversely impacted, particularly in the discretionary spending areas of travel, airlines and restaurants, although it has improved in the first quarter of 2021 in locations where the vaccine rollout has been more accessible and more effectively rolled out. We expect 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 will continue to increase in areas where the vaccine rollout effectively continues. Following the Worldpay acquisition completed onJuly 31, 2019 , we are focused on completing post-merger integration to achieve potential incremental revenue opportunities and expense efficiencies created by the combination of the two companies. We have a history of successfully integrating the operations and technology platforms of acquired companies, including winding down legacy environments and consolidating platforms from other acquisitions into our environment. Based on prior integration experience, we developed integration plans to achieve the potential benefits created by the Worldpay acquisition. As of the end of the first quarter of 2021, our achievement of revenue synergies 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 by 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 expect to continue to achieve additional expense synergies during 2021.
We continue to see demand for innovative solutions in the payments market that will deliver faster, more convenient payment solutions in mobile channels, internet applications and cards. The payment processing industry is adopting new
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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. We have found that the COVID-19 pandemic
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.
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 endedDecember 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-month periods endedMarch 31, 2021 and 2020 Three months ended March 31, 2021 2020 $ Change % Change (In millions) Revenue$ 3,223 $ 3,078 $ 145 5 % Cost of revenue (2,118) (2,089) (29) 1 Gross profit 1,105 989 116 12 Gross profit margin 34 % 32 % Selling, general and administrative expenses (1,006) (881) (125) 14 Operating income 99 108 (9) (8) Operating margin 3 % 4 % Revenue Revenue increased primarily due to increased Merchant CNP volumes, increased demand for our newly developed offerings in Banking, and strong new sales driving Capital Markets managed services and other recurring revenue growth during the first quarter of 2021. Revenue also benefited from a favorable foreign currency impact, which was primarily related to a weakerU.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
Gross profit increased primarily due to the revenue variances noted above. Gross profit margin increased primarily due to revenue growth and continued expense management.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased primarily due to accelerated stock compensation expense 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, as well as higher incentive compensation expense during the first quarter of 2021. These increases were partially offset by lower discretionary spending during the COVID-19 pandemic.
Operating Income and Operating Margin
The change in operating income resulted from the revenue and cost variances noted above. The operating margin during 2021 was negatively impacted by the increase in selling, general, and administrative expenses noted above.
Total Other Income (Expense), Net
Three months ended March 31,
2021 2020 $ Change % Change
Other income (expense): (In millions)
Interest expense, net $ (74) $ (80) $ 6 (8) %
Other income (expense), net (493) (39) (454) 1164 %
Total other income (expense), net $ (567) $ (119) (448) 376 %
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
quarter.
Other income (expense), net for three months ended March 31, 2021 , primarily
represents 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. This
loss was partially offset by fair value adjustments on certain non-operating
assets and liabilities and foreign currency transaction remeasurement gains.
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Other income (expense), net for the three months endedMarch 31, 2020 , includes foreign currency transaction remeasurement losses and a fair value adjustment on convertible Visa Inc. Series B preferred stock and related contingent value rights liability acquired from Worldpay.
Provision (Benefit) for Income Taxes
Three months ended March 31,
2021 2020 $ Change % Change
(In millions)
Provision (benefit) for income taxes $ (97) $ (30) $ (67) 223 %
Effective tax rate 21 % 273 %
The decrease in the effective tax rate is primarily due to the difference in pre-tax earnings relative to the benefit for income taxes.
Segment Results of Operations - Comparisons of three-month periods ended
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 endedDecember 31, 2020 , and recast all prior-period segment information presented. 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 purchase accounting adjustments, and acquisition, integration and certain other costs. 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 March 31, $ Change % Change 2021 vs 2021 vs 2021 2020 2020 2020 (In millions) Revenue $ 966$ 935 $ 31 3 % Adjusted EBITDA $ 451$ 423 28 7 Adjusted EBITDA margin 46.7 % 45.2 % Adjusted EBITDA margin basis points change 150 Revenue increased primarily from strong CNP volumes, excluding travel and airlines, contributing 5% as well as from a favorable foreign currency impact of 2%, which was primarily related to a weakerU.S. Dollar versus the British Pound Sterling. Revenue was adversely impacted by the COVID-19 pandemic including depressed volumes in theU.K. and within our travel, airlines and restaurant verticals. The increase in adjusted EBITDA primarily resulted from revenue drivers listed above. The increase in adjusted EBITDA margin was due to a higher-margin revenue mix and continued expense management. 26
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Banking Solutions
Three months ended March 31, $ Change % Change
2021 vs 2021 vs
2021 2020 2020 2020
(In millions)
Revenue $ 1,540 $ 1,444 $ 96 7 %
Adjusted EBITDA $ 667 $ 612 55 9
Adjusted EBITDA margin 43.3 % 42.4 %
Adjusted EBITDA margin basis points change 90
Revenue increased primarily due to increased demand for our newly developed offerings, such as modern banking platform and pandemic-related programs.
Adjusted EBITDA increased primarily due to the revenue variances noted above.
Adjusted EBITDA margin increased primarily due to revenue growth and continued
expense management.
Capital Market Solutions
Three months ended March 31, $ Change % Change
2021 vs 2021 vs
2021 2020 2020 2020
(In millions)
Revenue $ 625 $ 597 $ 28 5 %
Adjusted EBITDA $ 288 $ 267 21 8
Adjusted EBITDA margin 46.1 % 44.7 %
Adjusted EBITDA margin basis points change 140
Revenue increased primarily due to strong new sales driving managed services and
other recurring revenue and professional services growth across the product
portfolio. Revenue also benefited from a favorable foreign currency impact
contributing 2%, which primarily related to a weaker U.S. Dollar versus the Euro
and the British Pound Sterling. Revenue was adversely impacted by the timing of
license renewals compared to prior year contributing approximately (1%).
Adjusted EBITDA increased primarily due to the revenue impacts mentioned above.
Adjusted EBITDA margin increased primarily due to revenue growth and continued
expense management.
Corporate and Other
Three months ended March 31, $ Change % Change
2021 vs 2021 vs
2021 2020 2020 2020
(In millions)
Revenue $ 92 $ 102 $ (10) (10) %
Adjusted EBITDA $ (98) $ (55) (43) 78
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.
Revenue decreased primarily due to client attrition in certain of our non-strategic businesses.
Adjusted EBITDA decreased primarily due to the revenue impact mentioned above as well as higher incentive compensation expense compared to prior year.
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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, theU.S. commercial paper program and the Euro-commercial paper program discussed in Note 5 to the consolidated financial statements. As ofMarch 31, 2021 , the Company had$4,165 million of available liquidity, including$1,039 million of cash and cash equivalents and$3,126 million of capacity available under its Revolving Credit Facility. Approximately$508 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$19.4 billion , with an effective weighted average interest rate of 1.0%. The Company's liquidity continued to improve in the first quarter 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.
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. 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, 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 regular quarterly dividend of$0.39 per common share is payable onJune 25, 2021 , to shareholders of record as of the close of business onJune 11, 2021 . InJanuary 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, approximately 97 million shares remain available for repurchase as ofMarch 31, 2021 . Cash Flows from Operations Cash flows from operations were$836 million and$383 million for the three-month periods endedMarch 31, 2021 and 2020, respectively. Our net cash provided by operating activities consists primarily of net earnings (loss), adjusted to add back depreciation and amortization. Cash flows from operations increased$453 million in the 2021 period primarily due to settlement timing, partially offset by working capital.
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$298 million and$306 million in capital expenditures (excluding other financing obligations for certain hardware and software) during the three-month periods endedMarch 31, 2021 and 2020, respectively. We expect to continue investing in property and equipment, purchased software and internally developed software to support our business.
We used
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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 three months endedMarch 31, 2021 , in comparison to the table included in our Annual Report on Form 10-K for the year endedDecember 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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