Return on Capital (ROC)
Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company debt and equity structure. It measures business productivity performance.
Return on Invested Capital (ROIC)
Fidelity National Information Services Inc., ROIC 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) | ||||||
| Net operating profit after taxes (NOPAT)1 | (17,009) | 524) | 325) | 578) | 889) | |
| Invested capital2 | 52,862) | 73,331) | 75,049) | 75,448) | 22,222) | |
| Performance Ratio | ||||||
| ROIC3 | -32.18% | 0.72% | 0.43% | 0.77% | 4.00% | |
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Accenture PLC | 23.93% | 25.83% | 26.30% | — | — | |
| Adobe Inc. | 26.93% | 29.44% | 21.67% | — | — | |
| AppLovin Corp. | -3.27% | 0.83% | — | — | — | |
| Cadence Design Systems Inc. | 23.98% | 24.26% | — | — | — | |
| Datadog Inc. | 8.75% | 16.66% | — | — | — | |
| International Business Machines Corp. | -0.61% | 3.86% | — | — | — | |
| Intuit Inc. | 9.30% | 17.64% | — | — | — | |
| Microsoft Corp. | 36.59% | 45.56% | — | — | — | |
| Oracle Corp. | 9.70% | 17.55% | — | — | — | |
| Palantir Technologies Inc. | -7.21% | -14.60% | — | — | — | |
| Palo Alto Networks Inc. | 19.73% | 11.48% | — | — | — | |
| Salesforce Inc. | 5.42% | 8.25% | — | — | — | |
| ServiceNow Inc. | 17.69% | 18.88% | — | — | — | |
| Synopsys Inc. | 17.54% | 11.52% | 11.63% | — | — | |
| Workday Inc. | 6.56% | 1.38% | — | — | — | |
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 Invested capital. See details »
3 2022 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × -17,009 ÷ 52,862 = -32.18%
4 Click competitor name to see calculations.
The return on invested capital (ROIC) experienced a severe and progressive deterioration between 2018 and 2022, falling from a peak of 4.00% to a deeply negative -32.18%. This trajectory indicates a significant decline in the efficiency with which capital was deployed to generate operating profits over the five-year period.
- Net Operating Profit After Taxes (NOPAT)
- A general downward trend is observed in operating profitability. NOPAT decreased from 889 million in 2018 to 325 million by 2020. Although a partial recovery to 524 million occurred in 2021, the 2022 fiscal year was characterized by a drastic reversal, with NOPAT collapsing to a loss of 17,009 million.
- Invested Capital
- The capital base underwent a massive expansion between 2018 and 2019, increasing from 22,222 million to 75,448 million. This elevated level of invested capital remained relatively constant through 2021 before contracting to 52,862 million in 2022.
- ROIC Drivers and Patterns
- The initial collapse in ROIC from 4.00% in 2018 to 0.77% in 2019 was primarily driven by the sudden tripling of invested capital in the absence of operating profit growth. The subsequent marginal stability between 2019 and 2021 reflects a period of low but positive returns on a large capital base. The final decline to -32.18% in 2022 was fundamentally driven by the extreme negative swing in NOPAT, which overwhelmed the reduction in invested capital.
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Decomposition of ROIC
Fidelity National Information Services Inc., decomposition of ROIC
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 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
The return on invested capital (ROIC) demonstrated a sustained downward trajectory from 2018 through 2022, transitioning from a positive 4.00% to a significant negative value of -32.18%. This decline is primarily attributable to a collapse in operating profitability and inconsistent capital efficiency.
- Operating Profit Margin (OPM)
- A severe erosion of profitability is observed, with the operating profit margin falling from 15.31% in 2018 to -110.46% by the end of 2022. While the margin remained positive but suppressed between 2019 and 2021, the extreme negative shift in 2022 represents the dominant factor in the overall degradation of return on capital.
- Turnover of Capital (TO)
- Capital turnover experienced a sharp decline between 2018 and 2019, dropping from 0.38 to 0.14. Although a marginal recovery trend occurred between 2019 and 2022, peaking at 0.27, the turnover ratio remained well below 2018 levels, indicating a diminished ability to generate revenue from the invested capital base compared to the start of the period.
- Effective Cash Tax Rate (CTR) Impact
- The tax adjustment factor exhibited volatility, declining from 69.54% in 2018 to a low of 46.03% in 2020 before rising to 100.00% in 2022. The 100% value in the final period indicates that the effective cash tax rate was zero, a result consistent with the substantial operating losses recorded during that year.
In summary, the decomposition of ROIC reveals that the precipitous decline in returns was driven by a catastrophic failure in operating margins in 2022, compounded by a long-term reduction in capital turnover efficiency that began in 2019.
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Operating Profit Margin (OPM)
Fidelity National Information Services Inc., OPM 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) | ||||||
| Net operating profit after taxes (NOPAT)1 | (17,009) | 524) | 325) | 578) | 889) | |
| Add: Cash operating taxes2 | 962) | 508) | 381) | 290) | 389) | |
| Net operating profit before taxes (NOPBT) | (16,046) | 1,033) | 706) | 868) | 1,278) | |
| 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) | |
| Profitability Ratio | ||||||
| OPM3 | -110.46% | 7.43% | 5.60% | 8.35% | 15.31% | |
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Accenture PLC | 15.48% | 16.65% | 16.59% | — | — | |
| Adobe Inc. | 36.56% | 40.89% | 34.42% | — | — | |
| AppLovin Corp. | -1.60% | 5.23% | — | — | — | |
| Cadence Design Systems Inc. | 32.28% | 28.51% | — | — | — | |
| Datadog Inc. | 6.57% | 13.48% | — | — | — | |
| International Business Machines Corp. | 3.11% | 11.04% | — | — | — | |
| Intuit Inc. | 21.00% | 28.02% | — | — | — | |
| Microsoft Corp. | 43.28% | 43.49% | — | — | — | |
| Oracle Corp. | 24.11% | 40.03% | — | — | — | |
| Palantir Technologies Inc. | -8.42% | -23.57% | — | — | — | |
| Palo Alto Networks Inc. | 23.90% | 16.95% | — | — | — | |
| Salesforce Inc. | 16.42% | 20.31% | — | — | — | |
| ServiceNow Inc. | 14.87% | 17.20% | — | — | — | |
| Synopsys Inc. | 27.91% | 22.47% | 22.28% | — | — | |
| Workday Inc. | 8.82% | 2.23% | — | — | — | |
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 NOPAT. See details »
2 Cash operating taxes. See details »
3 2022 Calculation
OPM = 100 × NOPBT ÷ Adjusted revenue
= 100 × -16,046 ÷ 14,527 = -110.46%
4 Click competitor name to see calculations.
Between 2018 and 2022, a significant divergence is observed between revenue growth and operating profitability. While adjusted revenue exhibited a consistent upward trajectory, the operating profit margin experienced volatility followed by a severe contraction.
- Revenue Growth Trends
- Adjusted revenue increased steadily every year of the analyzed period, rising from US$ 8,347 million in 2018 to US$ 14,527 million in 2022. This indicates a consistent expansion of the company's top-line scale.
- Operating Profitability and Margin Compression
- Despite the growth in revenue, net operating profit before taxes (NOPBT) trended downward between 2018 and 2020, falling from US$ 1,278 million to US$ 706 million. Consequently, the operating profit margin compressed from 15.31% in 2018 to a low of 5.60% in 2020. A brief recovery was noted in 2021, where NOPBT rose to US$ 1,033 million and the margin improved to 7.43%.
- 2022 Fiscal Performance Anomaly
- A sharp decline in operating performance occurred in 2022. Despite achieving the highest adjusted revenue of the period at US$ 14,527 million, the company recorded a substantial NOPBT loss of US$ 16,046 million. This resulted in a negative operating profit margin of -110.46%, indicating that operating expenses significantly exceeded total revenue for that fiscal year.
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Turnover of Capital (TO)
Fidelity National Information Services Inc., TO 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) | ||||||
| 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) | |
| Invested capital1 | 52,862) | 73,331) | 75,049) | 75,448) | 22,222) | |
| Efficiency Ratio | ||||||
| TO2 | 0.27 | 0.19 | 0.17 | 0.14 | 0.38 | |
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Accenture PLC | 2.08 | 1.95 | 1.97 | — | — | |
| Adobe Inc. | 0.86 | 0.80 | 0.70 | — | — | |
| AppLovin Corp. | 0.53 | 0.50 | — | — | — | |
| Cadence Design Systems Inc. | 1.00 | 0.98 | — | — | — | |
| Datadog Inc. | 1.45 | 1.26 | — | — | — | |
| International Business Machines Corp. | 0.58 | 0.53 | — | — | — | |
| Intuit Inc. | 0.52 | 0.79 | — | — | — | |
| Microsoft Corp. | 1.04 | 1.20 | — | — | — | |
| Oracle Corp. | 0.54 | 0.51 | — | — | — | |
| Palantir Technologies Inc. | 0.60 | 0.61 | — | — | — | |
| Palo Alto Networks Inc. | 0.86 | 0.74 | — | — | — | |
| Salesforce Inc. | 0.36 | 0.44 | — | — | — | |
| ServiceNow Inc. | 1.24 | 1.16 | — | — | — | |
| Synopsys Inc. | 0.71 | 0.63 | 0.58 | — | — | |
| Workday Inc. | 0.74 | 0.77 | — | — | — | |
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 Invested capital. See details »
2 2022 Calculation
TO = Adjusted revenue ÷ Invested capital
= 14,527 ÷ 52,862 = 0.27
3 Click competitor name to see calculations.
The financial performance between 2018 and 2022 is characterized by a consistent expansion in revenue contrasted with significant volatility in the invested capital base, which directly impacted the efficiency of capital utilization as measured by the turnover ratio.
- Adjusted Revenue Trends
- A sustained upward trajectory is observed in adjusted revenue, which grew from US$ 8,347 million in 2018 to US$ 14,527 million in 2022. The most significant growth occurred between 2018 and 2020, followed by a more moderate increase in the 2021 and 2022 fiscal years.
- Invested Capital Volatility
- Invested capital exhibited a sharp increase in 2019, rising from US$ 22,222 million to US$ 75,448 million. This capital level remained relatively stable through 2021 before experiencing a notable contraction to US$ 52,862 million by the end of 2022.
- Turnover of Capital (TO) Performance
- The turnover of capital ratio plummeted from 0.38 in 2018 to 0.14 in 2019, a direct result of the substantial increase in invested capital outpacing revenue growth. Following this trough, a gradual recovery trend is evident, with the ratio improving to 0.17 in 2020 and 0.19 in 2021. By 2022, the ratio increased to 0.27, driven by the dual effect of continued revenue growth and a significant reduction in the capital base.
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Effective Cash Tax Rate (CTR)
Fidelity National Information Services Inc., CTR 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) | ||||||
| Net operating profit after taxes (NOPAT)1 | (17,009) | 524) | 325) | 578) | 889) | |
| Add: Cash operating taxes2 | 962) | 508) | 381) | 290) | 389) | |
| Net operating profit before taxes (NOPBT) | (16,046) | 1,033) | 706) | 868) | 1,278) | |
| Tax Rate | ||||||
| CTR3 | — | 49.21% | 53.97% | 33.45% | 30.46% | |
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| Accenture PLC | 25.55% | 20.47% | 19.34% | — | — | |
| Adobe Inc. | 14.22% | 10.28% | 9.63% | — | — | |
| AppLovin Corp. | — | 68.18% | — | — | — | |
| Cadence Design Systems Inc. | 25.88% | 13.59% | — | — | — | |
| Datadog Inc. | 7.98% | 1.83% | — | — | — | |
| International Business Machines Corp. | 133.97% | 33.45% | — | — | — | |
| Intuit Inc. | 14.74% | 20.15% | — | — | — | |
| Microsoft Corp. | 18.98% | 13.05% | — | — | — | |
| Oracle Corp. | 26.20% | 13.28% | — | — | — | |
| Palantir Technologies Inc. | — | — | — | — | — | |
| Palo Alto Networks Inc. | 3.82% | 8.83% | — | — | — | |
| Salesforce Inc. | 8.32% | 6.83% | — | — | — | |
| ServiceNow Inc. | 4.41% | 5.03% | — | — | — | |
| Synopsys Inc. | 11.45% | 18.39% | 10.36% | — | — | |
| Workday Inc. | -0.77% | 19.25% | — | — | — | |
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 Cash operating taxes. See details »
3 2022 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 962 ÷ -16,046 = —
4 Click competitor name to see calculations.
An analysis of cash tax obligations relative to net operating profit before taxes reveals a period of increasing tax volatility and a significant divergence in financial performance toward the end of the observed period.
- Cash Operating Taxes Trend
- Cash tax payments exhibited a general upward trajectory over the five-year period, rising from 389 million USD in 2018 to 962 million USD in 2022. The most pronounced increase occurred between 2021 and 2022, where cash tax outflows nearly doubled.
- Net Operating Profit Before Taxes (NOPBT) Performance
- NOPBT displayed significant instability, decreasing from 1,278 million USD in 2018 to 706 million USD in 2020. Although a recovery to 1,033 million USD was noted in 2021, the metric experienced a severe collapse in 2022, reaching a negative value of 16,046 million USD.
- Effective Cash Tax Rate (CTR) Analysis
- The CTR trended upward from 30.46% in 2018 to a peak of 53.97% in 2020, before slightly moderating to 49.21% in 2021. The absence of a CTR for 2022 is a direct result of the negative NOPBT, which renders the standard ratio calculation inapplicable.
- Operational Divergence
- A critical divergence is observed in 2022, where cash operating taxes reached a five-year high despite the recording of a massive operating loss. This indicates that cash tax outflows were decoupled from current-year operating profitability, potentially driven by non-deductible items or the settlement of prior-year obligations.
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