Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Economic Profit
Fidelity National Information Services Inc., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2022 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= -17,009 – 10.73% × 52,862 = -22,682
The financial performance from 2018 to 2022 is characterized by a consistent inability to generate positive economic profit, indicating that the returns on invested capital remained below the required cost of capital throughout the period.
- Economic Profit Trends
- Economic profit remained negative across all five years, reflecting a persistent destruction of shareholder value. The deficit expanded sharply from -1,843 million USD in 2018 to -8,838 million USD in 2019. While there was a marginal recovery between 2020 and 2021, the period culminated in a severe decline to -22,682 million USD in 2022.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited a general downward trajectory with extreme volatility in the final year. After declining from 889 million USD in 2018 to a low of 325 million USD in 2020, a slight rebound occurred in 2021. However, 2022 saw a precipitous drop to -17,009 million USD, which served as the primary driver for the collapse in economic profit.
- Invested Capital and Capital Efficiency
- A significant escalation in invested capital occurred in 2019, rising from 22,222 million USD to 75,448 million USD. This substantial increase in the capital base, coupled with declining NOPAT, explains the widening gap in economic profit during that year. Invested capital remained relatively stable through 2021 before decreasing to 52,862 million USD in 2022.
- Cost of Capital
- The cost of capital remained relatively stable, oscillating between 12.48% and 10.73%. A gradual downward trend is observed from 2019 onward, reaching its lowest point in 2022. Despite this reduction in the hurdle rate, the deterioration in operating profitability outweighed any benefit derived from a lower cost of capital.
The overarching pattern reveals a critical disconnect between the scale of invested capital and the resulting operating returns. The dramatic reversal of NOPAT into deep negative territory in 2022 suggests an extraordinary loss or impairment that severely exacerbated the existing trend of negative economic value added.
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Net Operating Profit after Taxes (NOPAT)
Fidelity National Information Services Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for credit losses.
3 Addition of increase (decrease) in deferred revenue.
4 Addition of increase (decrease) in equity equivalents to net earnings (loss) attributable to FIS common stockholders.
5 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 414 × 2.80% = 12
6 2022 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 312 × 21.00% = 65
7 Addition of after taxes interest expense to net earnings (loss) attributable to FIS common stockholders.
8 2022 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 25 × 21.00% = 5
9 Elimination of after taxes investment income.
- Net earnings (loss) attributable to common stockholders
- From 2018 through 2021, net earnings displayed a significant downward trend. Beginning at 846 million USD in 2018, earnings decreased sharply to 298 million USD in 2019 and further to 158 million USD in 2020. A partial recovery occurred in 2021, with net earnings increasing to 417 million USD. However, 2022 saw a dramatic reversal, with net earnings recording a substantial loss amounting to -16,720 million USD, indicating a severe deterioration in profitability during that year.
- Net operating profit after taxes (NOPAT)
- NOPAT followed a pattern similar to net earnings over the same period. Starting at 889 million USD in 2018, NOPAT declined to 578 million USD in 2019 and further to 325 million USD in 2020. An improvement occurred in 2021, with NOPAT rising to 524 million USD. In 2022, NOPAT experienced a significant negative swing, registering a loss of -17,009 million USD, closely mirroring the net earnings loss and highlighting operational challenges impacting the company drastically in that year.
- Overall insights
- The data reveal a weakening profitability trend from 2018 to 2020, followed by some operational recovery in 2021. The extreme losses recorded in 2022 suggest extraordinary events or impairments that severely affected financial performance. Both net earnings and NOPAT demonstrate a high correlation in their trajectory, underscoring consistent operational and financial difficulties particularly in the final year observed.
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Cash Operating Taxes
Fidelity National Information Services Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
- Provision for income taxes
- The provision for income taxes exhibited a notable fluctuation over the analyzed years. Initially, there was a significant decline from 208 million US dollars in 2018 to 100 million in 2019, followed by a slight decrease to 96 million in 2020. However, from 2020 onwards, the provision increased sharply to 371 million in 2021 and slightly further to 377 million in 2022. This pattern indicates a period of reduced tax obligations or accounting adjustments in the middle years, followed by a substantial rise in tax provisions in the most recent years.
- Cash operating taxes
- Cash operating taxes demonstrated a variable upward trend with some fluctuations. The amount decreased from 389 million in 2018 to 290 million in 2019, then rebounded to 381 million in 2020. After 2020, there was a significant increase to 508 million in 2021, and this upward trajectory accelerated sharply to 962 million in 2022. This progression suggests increasing cash tax outflows in recent years, which may reflect growing taxable income or changes in tax payment schedules.
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Invested Capital
Fidelity National Information Services Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of deferred revenue.
5 Addition of equity equivalents to total FIS stockholders’ equity.
6 Removal of accumulated other comprehensive income.
Over the observed period, the total reported debt and leases displayed a significant increase from 2018 to 2019, rising from approximately 9.4 billion to 20.8 billion US dollars. This level remained relatively stable through to 2022, fluctuating slightly but staying near the 20.5 billion mark.
The total stockholders’ equity exhibited a sharp growth from 2018 to 2019, more than quadrupling from just over 10.2 billion to nearly 49.4 billion US dollars. However, this equity value began to decline gradually after 2019, decreasing to approximately 47.3 billion in 2021, before falling more substantially to around 27.2 billion by the end of 2022.
Invested capital followed a somewhat similar trend as the debt figures, showing a substantial rise from 22.2 billion in 2018 to a peak of 75.4 billion in 2019. Following that peak, invested capital remained relatively steady around 73.3 to 75.0 billion through 2020 and 2021 but then saw a marked decrease to approximately 52.8 billion in 2022.
Overall, the data suggest a period of significant capital expansion and leverage increase around 2019, followed by a phase of declining equity and invested capital starting in 2021 and continuing through 2022. This pattern may indicate strategic changes in capital structure or operational adjustments during the latter years of the period analyzed.
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Cost of Capital
Fidelity National Information Services Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 38,192) | 38,192) | ÷ | 56,870) | = | 0.67 | 0.67 | × | 14.98% | = | 10.06% | ||
| Debt3 | 18,264) | 18,264) | ÷ | 56,870) | = | 0.32 | 0.32 | × | 2.60% × (1 – 21.00%) | = | 0.66% | ||
| Operating lease liability4 | 414) | 414) | ÷ | 56,870) | = | 0.01 | 0.01 | × | 2.80% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 56,870) | 1.00 | 10.73% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 56,235) | 56,235) | ÷ | 77,682) | = | 0.72 | 0.72 | × | 14.98% | = | 10.84% | ||
| Debt3 | 20,923) | 20,923) | ÷ | 77,682) | = | 0.27 | 0.27 | × | 0.90% × (1 – 21.00%) | = | 0.19% | ||
| Operating lease liability4 | 524) | 524) | ÷ | 77,682) | = | 0.01 | 0.01 | × | 3.00% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 77,682) | 1.00 | 11.05% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 83,393) | 83,393) | ÷ | 105,653) | = | 0.79 | 0.79 | × | 14.98% | = | 11.82% | ||
| Debt3 | 21,655) | 21,655) | ÷ | 105,653) | = | 0.20 | 0.20 | × | 1.70% × (1 – 21.00%) | = | 0.28% | ||
| Operating lease liability4 | 605) | 605) | ÷ | 105,653) | = | 0.01 | 0.01 | × | 3.20% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 105,653) | 1.00 | 12.11% | ||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 96,627) | 96,627) | ÷ | 118,314) | = | 0.82 | 0.82 | × | 14.98% | = | 12.23% | ||
| Debt3 | 21,092) | 21,092) | ÷ | 118,314) | = | 0.18 | 0.18 | × | 1.66% × (1 – 21.00%) | = | 0.23% | ||
| Operating lease liability4 | 595) | 595) | ÷ | 118,314) | = | 0.01 | 0.01 | × | 3.70% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 118,314) | 1.00 | 12.48% | ||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 34,591) | 34,591) | ÷ | 44,150) | = | 0.78 | 0.78 | × | 14.98% | = | 11.73% | ||
| Debt3 | 9,125) | 9,125) | ÷ | 44,150) | = | 0.21 | 0.21 | × | 3.28% × (1 – 21.00%) | = | 0.54% | ||
| Operating lease liability4 | 434) | 434) | ÷ | 44,150) | = | 0.01 | 0.01 | × | 3.28% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 44,150) | 1.00 | 12.29% | ||||||||||
Based on: 10-K (reporting date: 2018-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Fidelity National Information Services Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (22,682) | (7,578) | (8,764) | (8,838) | (1,843) | |
| Invested capital2 | 52,862) | 73,331) | 75,049) | 75,448) | 22,222) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -42.91% | -10.33% | -11.68% | -11.71% | -8.29% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Accenture PLC | 3.89% | 5.71% | 6.31% | — | — | |
| Adobe Inc. | 6.46% | 8.84% | 1.12% | — | — | |
| AppLovin Corp. | -26.78% | -30.15% | — | — | — | |
| Cadence Design Systems Inc. | 6.58% | 6.80% | — | — | — | |
| Datadog Inc. | -11.83% | -4.01% | — | — | — | |
| International Business Machines Corp. | -11.28% | -6.14% | — | — | — | |
| Intuit Inc. | -7.53% | 0.10% | — | — | — | |
| Microsoft Corp. | 18.50% | 27.54% | — | — | — | |
| Oracle Corp. | -7.70% | 0.51% | — | — | — | |
| Palantir Technologies Inc. | -32.80% | -40.26% | — | — | — | |
| Palo Alto Networks Inc. | 3.50% | -5.19% | — | — | — | |
| Salesforce Inc. | -14.64% | -12.49% | — | — | — | |
| ServiceNow Inc. | 0.73% | 1.95% | — | — | — | |
| Synopsys Inc. | -0.88% | -6.91% | -6.71% | — | — | |
| Workday Inc. | -14.12% | -19.37% | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2022 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -22,682 ÷ 52,862 = -42.91%
4 Click competitor name to see calculations.
An analysis of the economic value added metrics indicates a consistent failure to generate positive economic profit from 2018 through 2022. The company operated with a negative economic spread throughout the entire period, suggesting that the returns on invested capital remained below the required cost of capital, resulting in a persistent erosion of shareholder value.
- Economic Profit Trends
- Economic profit exhibited a severe downward trajectory. While the loss stood at US$ 1,843 million in 2018, it expanded significantly to US$ 8,838 million in 2019. This level of loss remained relatively stable through 2021, before a substantial collapse occurred in 2022, where economic profit reached a low of negative US$ 22,682 million.
- Invested Capital Dynamics
- A dramatic expansion of the capital base occurred between 2018 and 2019, with invested capital increasing from US$ 22,222 million to US$ 75,448 million. This figure remained consistent through 2021, fluctuating slightly. However, by the end of 2022, invested capital decreased to US$ 52,862 million, indicating a reduction in the capital employed in the business.
- Economic Spread Ratio Analysis
- The economic spread ratio remained negative across all five years, highlighting a chronic inability to cover the cost of capital. The ratio declined from -8.29% in 2018 to a range between -10.33% and -11.71% from 2019 to 2021. The most critical deterioration is observed in 2022, where the ratio plummeted to -42.91%. This sharp decline in the spread ratio, occurring simultaneously with a reduction in invested capital and a spike in economic losses, indicates a severe decline in capital efficiency and value creation during the final year of the observed period.
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Economic Profit Margin
Fidelity National Information Services Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (22,682) | (7,578) | (8,764) | (8,838) | (1,843) | |
| Revenue | 14,528) | 13,877) | 12,552) | 10,333) | 8,423) | |
| Add: Increase (decrease) in deferred revenue | (1) | 14) | 71) | 63) | (76) | |
| Adjusted revenue | 14,527) | 13,891) | 12,623) | 10,396) | 8,347) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -156.14% | -54.55% | -69.43% | -85.01% | -22.08% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Accenture PLC | 1.87% | 2.93% | 3.21% | — | — | |
| Adobe Inc. | 7.53% | 11.02% | 1.61% | — | — | |
| AppLovin Corp. | -50.15% | -60.37% | — | — | — | |
| Cadence Design Systems Inc. | 6.57% | 6.90% | — | — | — | |
| Datadog Inc. | -8.19% | -3.19% | — | — | — | |
| International Business Machines Corp. | -19.53% | -11.67% | — | — | — | |
| Intuit Inc. | -14.50% | 0.13% | — | — | — | |
| Microsoft Corp. | 17.73% | 22.86% | — | — | — | |
| Oracle Corp. | -14.14% | 1.01% | — | — | — | |
| Palantir Technologies Inc. | -55.03% | -66.31% | — | — | — | |
| Palo Alto Networks Inc. | 4.08% | -6.99% | — | — | — | |
| Salesforce Inc. | -40.63% | -28.65% | — | — | — | |
| ServiceNow Inc. | 0.59% | 1.69% | — | — | — | |
| Synopsys Inc. | -1.24% | -10.99% | -11.52% | — | — | |
| Workday Inc. | -19.14% | -25.28% | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 Economic profit. See details »
2 2022 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenue
= 100 × -22,682 ÷ 14,527 = -156.14%
3 Click competitor name to see calculations.
The financial performance from 2018 to 2022 is characterized by consistent revenue growth coupled with persistent and expanding economic losses, indicating a failure to generate positive economic value throughout the period.
- Revenue Trajectory
- Adjusted revenue demonstrated a steady upward trend, increasing from 8,347 million US$ in 2018 to 14,527 million US$ by 2022. This represents a consistent expansion of the top line over the five-year interval.
- Economic Profit Trends
- Economic profit remained negative throughout the entire analyzed period, signaling that net operating profit after tax was insufficient to cover the cost of capital. A significant deterioration occurred between 2018 and 2019, with losses increasing from 1,843 million US$ to 8,838 million US$. While a marginal recovery was observed between 2020 and 2021, where losses narrowed to 7,578 million US$, the 2022 fiscal year experienced a severe decline, with economic profit dropping to 22,682 million US$.
- Economic Profit Margin Analysis
- The economic profit margin exhibited extreme volatility and deep negative values. The margin widened from -22.08% in 2018 to -85.01% in 2019. Despite a period of relative improvement reaching -54.55% in 2021, the margin collapsed to -156.14% in 2022. The widening gap between rising adjusted revenue and the plummeting economic profit margin suggests that the capital charges or operational costs associated with growth significantly outweighed the generated returns.
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