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 – 10.79% × 52,862 = -22,714
The analysis of economic profit from 2018 to 2022 reveals a sustained period of value destruction, as economic profit remained negative throughout the entire timeframe. The most significant deterioration occurred in 2022, where losses expanded substantially due to a collapse in operating profitability.
- Net Operating Profit After Taxes (NOPAT)
- A volatile and ultimately downward trajectory is observed. NOPAT declined from 889 million USD in 2018 to 325 million USD by 2020, followed by a brief recovery to 524 million USD in 2021. However, 2022 witnessed a severe reversal, with NOPAT falling to negative 17,009 million USD.
- Invested Capital and Cost of Capital
- Invested capital experienced a sharp increase between 2018 and 2019, rising from 22,222 million USD to 75,448 million USD, suggesting a significant capital expansion. This level remained relatively stable until 2022, when it decreased to 52,862 million USD. Concurrently, the cost of capital showed a gradual downward trend, decreasing from 12.36% in 2018 to 10.79% in 2022.
- Economic Profit Trend
- Economic profit remained negative for all five years, indicating that the return on invested capital consistently failed to exceed the cost of capital. The deficit widened from negative 1,859 million USD in 2018 to negative 8,893 million USD in 2019, correlating with the spike in invested capital. While a slight recovery was noted in 2021, the economic profit plummeted to negative 22,714 million USD in 2022.
The overall financial trend indicates a failure to translate increased capital investment into sustainable operating gains. The sharp decline in both NOPAT and economic profit in 2022 suggests a significant impairment or extraordinary loss that far outweighed the marginal benefits of a reducing cost of capital.
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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.
The financial performance from 2018 to 2022 is characterized by a period of gradual decline, a short-term recovery, and a subsequent severe collapse in profitability.
- Analysis of Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited a downward trajectory between 2018 and 2020, falling from US$ 889 million to US$ 325 million. A modest recovery was noted in 2021, with the figure rising to US$ 524 million. This recovery was abruptly reversed in 2022, where NOPAT shifted to a substantial negative value of US$ 17,009 million.
- Analysis of Net Earnings
- Net earnings attributable to common stockholders followed a pattern closely aligned with NOPAT. From a peak of US$ 846 million in 2018, earnings declined to US$ 158 million by 2020. Following a recovery to US$ 417 million in 2021, the result shifted to a net loss of US$ 16,720 million in 2022.
- Comparative Profitability and Volatility
- The strong correlation between NOPAT and net earnings suggests that the factors influencing operating profitability were the primary drivers of the bottom-line results. The extreme negative values recorded in 2022 represent a massive departure from the 2018-2021 trend, indicating the occurrence of a significant non-recurring financial event or impairment that heavily impacted the company's economic value.
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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).
A comprehensive review of tax expenditures reveals a significant divergence between accounting provisions and actual cash outflows. Cash operating taxes exhibit an overall growth trajectory, accelerating sharply in the final two years of the observed period.
- Cash Operating Taxes Trend
- Cash operating taxes experienced a decrease from $389 million in 2018 to $290 million in 2019, followed by a sustained upward trend. A substantial surge occurred in 2022, with cash taxes reaching $962 million, representing an increase of approximately 144% from the $381 million reported in 2020.
- Provision for Income Taxes Analysis
- The provision for income taxes remained relatively low during 2019 and 2020, reaching a period low of $96 million. A sharp escalation was recorded in 2021, where the provision rose to $371 million, before stabilizing at $377 million in 2022.
- Variance between Provision and Cash Taxes
- A persistent gap is observed where cash operating taxes exceed the provision for income taxes throughout the entire five-year period. This variance expanded dramatically in 2022, with cash taxes being approximately 2.5 times higher than the recorded tax provision, indicating a significant increase in the cash tax burden relative to accounting expenses.
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Invested Capital
Fidelity National Information Services Inc., invested capital calculation (financing approach)
US$ 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.
The trajectory of invested capital from 2018 to 2022 reflects a period of rapid capital expansion followed by a significant contraction. The most notable shift occurred between 2018 and 2019, where the total capital base more than tripled, after which it remained relatively stable before declining in 2022.
- Total Reported Debt and Leases
- A substantial increase in leverage is observed between 2018 and 2019, with total debt and leases rising from US$ 9,419 million to US$ 20,787 million. Following this initial surge, debt levels exhibited high stability, fluctuating minimally between US$ 20,551 million and US$ 20,877 million from 2019 through 2022.
- Total Stockholders' Equity
- Stockholders' equity experienced the most volatility throughout the period. A sharp escalation occurred in 2019, increasing from US$ 10,215 million to US$ 49,440 million. This level was maintained through 2020 and 2021, before a marked reduction to US$ 27,218 million by December 31, 2022, representing a decrease of approximately 42% from the 2021 balance.
- Invested Capital Analysis
- Invested capital mirrors the combined volatility of debt and equity. The capital base surged from US$ 22,222 million in 2018 to a peak of US$ 75,448 million in 2019. While figures remained plateaued through 2021, a downward trend emerged in 2022, with invested capital falling to US$ 52,862 million. This contraction in 2022 is primarily attributable to the significant decrease in stockholders' equity, as debt levels remained nearly constant.
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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 | × | 15.07% | = | 10.12% | ||
| 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 | 10.79% | ||||||||||
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 | × | 15.07% | = | 10.91% | ||
| 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 | 11.11% | ||||||||||
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 | × | 15.07% | = | 11.89% | ||
| 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 | 12.18% | ||||||||||
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 | × | 15.07% | = | 12.30% | ||
| 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 | 12.55% | ||||||||||
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 | × | 15.07% | = | 11.80% | ||
| 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 | 12.36% | ||||||||||
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 | (22,714) | (7,625) | (8,817) | (8,893) | (1,859) | |
| Invested capital2 | 52,862) | 73,331) | 75,049) | 75,448) | 22,222) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -42.97% | -10.40% | -11.75% | -11.79% | -8.36% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Accenture PLC | 3.99% | 5.81% | 6.41% | — | — | |
| Adobe Inc. | 6.58% | 8.97% | 1.25% | — | — | |
| AppLovin Corp. | -26.37% | -29.58% | — | — | — | |
| Cadence Design Systems Inc. | 6.59% | 6.80% | — | — | — | |
| Datadog Inc. | -11.70% | -3.88% | — | — | — | |
| International Business Machines Corp. | -11.36% | -6.21% | — | — | — | |
| Intuit Inc. | -7.52% | 0.11% | — | — | — | |
| Microsoft Corp. | 18.54% | 27.58% | — | — | — | |
| Oracle Corp. | -7.56% | 0.65% | — | — | — | |
| Palantir Technologies Inc. | -32.50% | -39.96% | — | — | — | |
| Palo Alto Networks Inc. | 3.53% | -5.17% | — | — | — | |
| Salesforce Inc. | -14.50% | -12.36% | — | — | — | |
| ServiceNow Inc. | 0.73% | 1.94% | — | — | — | |
| Synopsys Inc. | -0.84% | -6.86% | -6.67% | — | — | |
| Workday Inc. | -13.98% | -19.23% | — | — | — | |
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 × -22,714 ÷ 52,862 = -42.97%
4 Click competitor name to see calculations.
The financial performance from 2018 to 2022 is characterized by persistent negative economic profit and a deteriorating economic spread ratio, indicating a consistent failure to generate returns above the cost of capital. The period is marked by significant volatility in invested capital and a severe decline in economic efficiency during the final year of the analyzed period.
- Economic Profit Trends
- Economic profit remained negative throughout the five-year period, exhibiting a substantial decline from -1,859 million USD in 2018 to -8,893 million USD in 2019. Although a marginal improvement was observed between 2020 and 2021, the metric deteriorated sharply in 2022, reaching a period low of -22,714 million USD.
- Invested Capital Fluctuations
- A significant expansion in invested capital occurred between 2018 and 2019, where the value rose from 22,222 million USD to 75,448 million USD. This capital base remained relatively stable through 2021 before experiencing a notable contraction to 52,862 million USD by the end of 2022.
- Economic Spread Ratio Analysis
- The economic spread ratio remained negative across all reported years, signaling that the return on invested capital did not meet the required cost of capital. The ratio fluctuated between -8.36% and -11.79% from 2018 to 2021, but collapsed to -42.97% in 2022. This precipitous drop was driven by the combination of a widening economic loss and a reduced invested capital base, which compounded the negative spread.
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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 | (22,714) | (7,625) | (8,817) | (8,893) | (1,859) | |
| 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 | -156.36% | -54.89% | -69.84% | -85.54% | -22.27% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Accenture PLC | 1.92% | 2.98% | 3.26% | — | — | |
| Adobe Inc. | 7.67% | 11.17% | 1.79% | — | — | |
| AppLovin Corp. | -49.38% | -59.23% | — | — | — | |
| Cadence Design Systems Inc. | 6.57% | 6.91% | — | — | — | |
| Datadog Inc. | -8.10% | -3.08% | — | — | — | |
| International Business Machines Corp. | -19.67% | -11.82% | — | — | — | |
| Intuit Inc. | -14.48% | 0.14% | — | — | — | |
| Microsoft Corp. | 17.77% | 22.89% | — | — | — | |
| Oracle Corp. | -13.87% | 1.29% | — | — | — | |
| Palantir Technologies Inc. | -54.53% | -65.82% | — | — | — | |
| Palo Alto Networks Inc. | 4.11% | -6.95% | — | — | — | |
| Salesforce Inc. | -40.27% | -28.34% | — | — | — | |
| ServiceNow Inc. | 0.58% | 1.68% | — | — | — | |
| Synopsys Inc. | -1.18% | -10.92% | -11.45% | — | — | |
| Workday Inc. | -18.95% | -25.09% | — | — | — | |
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 × -22,714 ÷ 14,527 = -156.36%
3 Click competitor name to see calculations.
An analysis of the financial performance between 2018 and 2022 reveals a significant divergence between top-line revenue growth and the creation of economic value. While adjusted revenue grew consistently throughout the period, economic profit remained negative, indicating that the company failed to generate returns above its cost of capital.
- Adjusted Revenue Growth
- A steady upward trajectory is observed in adjusted revenue, which increased from 8,347 million USD in 2018 to 14,527 million USD by 2022. This represents a consistent expansion of the operational scale over the five-year period.
- Economic Profit Trends
- Economic profit remained consistently negative, signaling a persistent destruction of shareholder value. A sharp decline occurred between 2018 and 2019, where losses widened from -1,859 million USD to -8,893 million USD. Following a period of relative stability between 2019 and 2021, a severe deterioration was recorded in 2022, with economic profit falling to -22,714 million USD.
- Economic Profit Margin Volatility
- The economic profit margin exhibited extreme volatility and a general downward trend. The margin deteriorated from -22.27% in 2018 to -85.54% in 2019. Although a modest recovery was noted between 2020 and 2021, reaching -54.89%, this trend was reversed in 2022. The margin reached a critical low of -156.36%, suggesting that the cost of capital far exceeded the operating returns generated relative to the revenue base.
The overall data suggests that revenue growth was insufficient to offset the costs of capital or operational inefficiencies, culminating in a substantial increase in economic losses by the end of the analyzed period.
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