Market Value Added (MVA)
Market value added (MVA) is the difference between a firm fair value and its invested capital. MVA is a measure of the value a company has created in excess of the resources already committed to the enterprise.
MVA
Fidelity National Information Services Inc., MVA 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 Fair value of debt. See details »
2 Invested capital. See details »
The analysis of Market Value Added (MVA) from 2018 to 2022 reveals a period of extreme volatility characterized by a rapid expansion of both market value and invested capital, followed by a sustained contraction in market valuation.
- Market Value Trends
- A substantial increase in market value occurred between 2018 and 2019, where the valuation rose from 44,157 million US$ to a peak of 118,330 million US$. Following this peak, a consistent downward trajectory was observed over the subsequent three years, with the value declining to 57,058 million US$ by December 31, 2022. This represents a significant reduction in market capitalization from the 2019 high.
- Invested Capital Trajectory
- Invested capital mirrored the initial spike seen in market value, jumping from 22,222 million US$ in 2018 to 75,448 million US$ in 2019. This capital base remained relatively stable through 2021, hovering around the 73,000 to 75,000 million US$ range, before experiencing a notable decrease to 52,862 million US$ in 2022.
- Market Value Added (MVA) Performance
- The MVA reached its zenith in 2019 at 42,882 million US$, indicating that the market valued the organization significantly above its invested capital. However, a sharp deterioration in MVA followed. By 2021, the MVA collapsed to 4,536 million US$, and it further declined slightly to 4,196 million US$ by the end of 2022. The precipitous drop suggests a diminishing premium that investors were willing to pay over the capital invested in the business.
The divergence between the stability of invested capital from 2019 to 2021 and the concurrent decline in market value indicates that the erosion of MVA was driven primarily by a decrease in market sentiment rather than a reduction in the capital base. By 2022, the narrow margin between market value and invested capital suggests that the company's market valuation has nearly converged with its book value of invested capital.
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MVA Spread Ratio
Fidelity National Information Services Inc., MVA 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) | ||||||
| Market value added (MVA)1 | 4,196) | 4,536) | 30,791) | 42,882) | 21,935) | |
| Invested capital2 | 52,862) | 73,331) | 75,049) | 75,448) | 22,222) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 7.94% | 6.19% | 41.03% | 56.84% | 98.71% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Accenture PLC | 442.58% | 739.74% | — | — | — | |
| Adobe Inc. | 658.07% | 1,033.13% | 1,082.99% | — | — | |
| AppLovin Corp. | 60.64% | 260.37% | — | — | — | |
| Cadence Design Systems Inc. | 1,302.22% | 1,110.87% | — | — | — | |
| Datadog Inc. | 1,772.59% | 5,219.74% | — | — | — | |
| International Business Machines Corp. | 60.62% | 55.46% | — | — | — | |
| Intuit Inc. | 406.80% | 1,175.12% | — | — | — | |
| Microsoft Corp. | 956.02% | 1,383.21% | — | — | — | |
| Oracle Corp. | 224.95% | 260.27% | — | — | — | |
| Palantir Technologies Inc. | 488.89% | 829.78% | — | — | — | |
| Palo Alto Networks Inc. | 559.30% | 573.51% | — | — | — | |
| Salesforce Inc. | 150.31% | 270.75% | — | — | — | |
| ServiceNow Inc. | 1,276.86% | 1,798.18% | — | — | — | |
| Synopsys Inc. | 565.55% | 707.79% | 468.10% | — | — | |
| Workday Inc. | 655.74% | 908.31% | — | — | — | |
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 MVA. See details »
2 Invested capital. See details »
3 2022 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 4,196 ÷ 52,862 = 7.94%
4 Click competitor name to see calculations.
The financial data indicates a significant deterioration in value creation efficiency between 2018 and 2022. While there was a temporary increase in absolute market value added early in the period, the subsequent collapse of the MVA spread ratio suggests a diminishing return on invested capital from a market perspective.
- Market Value Added (MVA)
- A volatile trend is observed in MVA, which peaked at 42,882 million USD in 2019 before entering a period of sustained decline. By December 31, 2022, MVA fell to 4,196 million USD, representing a substantial loss of market-perceived value from its peak. The most acute contraction occurred between 2020 and 2021, where value added dropped by approximately 85%.
- Invested Capital
- Invested capital experienced a sharp increase from 22,222 million USD in 2018 to 75,448 million USD in 2019. This capital base remained relatively stable through 2021, fluctuating between 73,331 million USD and 75,448 million USD, before decreasing to 52,862 million USD by the end of 2022.
- MVA Spread Ratio
- The MVA spread ratio exhibits a consistent and severe downward trajectory. Starting at 98.71% in 2018, the ratio declined to 56.84% in 2019 and 41.03% in 2020. A precipitous drop is noted in 2021, with the ratio falling to 6.19%, followed by a marginal recovery to 7.94% in 2022. This trend indicates that the market's valuation of the company's ability to generate returns above its cost of capital has weakened significantly relative to the total capital employed.
The divergence between the surge in invested capital in 2019 and the subsequent crash in the MVA spread ratio suggests that the capital expansion did not yield the expected market value gains. The collapse of the spread ratio to single digits by 2021 reflects a period where the market value added became nearly negligible compared to the scale of the invested capital base.
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MVA Margin
Fidelity National Information Services Inc., MVA 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) | ||||||
| Market value added (MVA)1 | 4,196) | 4,536) | 30,791) | 42,882) | 21,935) | |
| 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 | ||||||
| MVA margin2 | 28.88% | 32.65% | 243.93% | 412.48% | 262.79% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Accenture PLC | 213.17% | 379.26% | — | — | — | |
| Adobe Inc. | 766.46% | 1,287.44% | 1,554.19% | — | — | |
| AppLovin Corp. | 113.54% | 521.30% | — | — | — | |
| Cadence Design Systems Inc. | 1,299.21% | 1,128.47% | — | — | — | |
| Datadog Inc. | 1,226.04% | 4,145.45% | — | — | — | |
| International Business Machines Corp. | 105.00% | 105.45% | — | — | — | |
| Intuit Inc. | 782.89% | 1,489.94% | — | — | — | |
| Microsoft Corp. | 916.17% | 1,148.11% | — | — | — | |
| Oracle Corp. | 412.88% | 514.72% | — | — | — | |
| Palantir Technologies Inc. | 820.15% | 1,366.76% | — | — | — | |
| Palo Alto Networks Inc. | 651.61% | 771.73% | — | — | — | |
| Salesforce Inc. | 417.33% | 620.94% | — | — | — | |
| ServiceNow Inc. | 1,026.11% | 1,555.49% | — | — | — | |
| Synopsys Inc. | 796.87% | 1,126.17% | 803.94% | — | — | |
| Workday Inc. | 888.92% | 1,185.07% | — | — | — | |
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 MVA. See details »
2 2022 Calculation
MVA margin = 100 × MVA ÷ Adjusted revenue
= 100 × 4,196 ÷ 14,527 = 28.88%
3 Click competitor name to see calculations.
An analysis of the financial performance between 2018 and 2022 reveals a significant divergence between operational growth and market valuation. While adjusted revenue maintained a consistent upward trajectory throughout the five-year period, the Market Value Added (MVA) and the corresponding MVA margin experienced a period of rapid expansion followed by a severe contraction.
- Market Value Added (MVA) Trends
- MVA exhibited substantial volatility, peaking in 2019 at 42,882 million US dollars, a nearly 95% increase from the 2018 value of 21,935 million US dollars. However, this peak was followed by a sustained decline. A moderate decrease occurred in 2020, which transitioned into a sharp collapse by 2021, where the value fell to 4,536 million US dollars. By the end of 2022, the MVA further declined to 4,196 million US dollars, representing a total reduction of approximately 90% from its 2019 high.
- Adjusted Revenue Growth
- In contrast to the volatility of the market valuation, adjusted revenue demonstrated stable and uninterrupted growth. Revenue increased from 8,347 million US dollars in 2018 to 14,527 million US dollars in 2022. This represents a compounded growth pattern, with the most significant absolute increases occurring between 2019 and 2020.
- MVA Margin Analysis
- The MVA margin, which measures the relationship between market value added and adjusted revenue, mirrors the trajectory of the MVA. The margin reached a peak of 412.48% in 2019, indicating a high premium placed on the company's value relative to its revenue. This figure contracted to 243.93% in 2020 and plummeted to 32.65% in 2021. The margin ended the period at 28.88% in 2022. The simultaneous increase in revenue and decrease in MVA margin indicates that the market's valuation of the company's value creation efficiency diminished significantly despite the expansion of the top-line revenue.
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