Global Payments (GPN) Q1 2025 Earnings Call May 06, 2025 07:30 AM ET Company Participants Winnie Smith - SVP, IRCameron Bready - Director & CEORobert Cortopassi - President & COOJosh Whipple - Senior Executive Vice President and Chief Financial OfficerAdam Frisch - Senior Managing Director - EquitiesRyan Campbell - VP - Equity ResearchTimothy Chiodo - Managing Director Conference Call Participants Jason Kupferberg - Senior Equity Research AnalystTien-tsin Huang - Senior AnalystDavid Koning - Senior Research ...

1Q 2025 earnings May 6, 2025 +5% Adjusted net revenue growth1 +70 bps Forward-looking statements This presentation may contain certain forward-looking statements within the meaning of the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which are based on current expectations, estimates and projections about the industry and markets in which we operate, and beliefs of and assumptions made by our management, involve risks, uncertainties and a ...

Core Viewpoint - Global Payments (GPN) is expected to report quarterly earnings of $2.68 per share, reflecting a 3.5% increase year-over-year, with revenues projected at $2.2 billion, a 0.7% increase compared to the previous year [1]. Earnings Estimates - Over the last 30 days, the consensus EPS estimate has been revised downward by 2.2%, indicating a collective reassessment by analysts [2]. - Changes in earnings estimates are crucial for predicting investor reactions, as empirical studies show a strong correlation between earnings estimate revisions and short-term stock performance [3]. Revenue Projections - Analysts estimate 'Non-GAAP Revenues - Merchant Solutions' at $1.68 billion, a year-over-year change of +0.1% [5]. - 'Non-GAAP Revenues - Issuer Solutions' is projected to reach $528.21 million, indicating a +2.4% change year-over-year [5]. - The average estimate for 'Revenues - Issuer Solutions' is $607.50 million, suggesting a +0.8% change year-over-year [5]. Geographic Revenue Insights - 'Revenues - Merchant Solutions' is estimated at $1.82 billion, reflecting a -0.5% change year-over-year [6]. - 'Geographic Revenue - Europe' is forecasted to be $399.04 million, indicating a +3.7% change year-over-year [6]. - 'Geographic Revenue - Americas' is expected to reach $1.95 billion, showing a -1.4% change from the prior year [6]. - 'Geographic Revenue - Asia Pacific' is projected at $60.09 million, indicating a -0.4% change year-over-year [7]. Operating Income Estimates - The consensus for 'Non-GAAP Operating Income - Merchant Solutions' stands at $802.11 million, compared to $790.41 million reported in the same quarter last year [7]. - 'Non-GAAP Operating Income - Issuer Solutions' is estimated at $246.04 million, up from $241.40 million in the previous year [8]. - 'Operating Income - Merchant Solutions' is expected to be $599.26 million, compared to $580.44 million reported last year [8]. - 'Operating Income - Issuer Solutions' is projected at $109.78 million, compared to $106.10 million in the same quarter last year [9]. Stock Performance - Shares of Global Payments have declined by -23.4% over the past month, contrasting with the Zacks S&P 500 composite's -0.7% change [9].

Core Viewpoint - The market anticipates Global Payments (GPN) will report a year-over-year increase in earnings driven by higher revenues for the quarter ended March 2025, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - The consensus estimate for quarterly earnings is $2.68 per share, reflecting a year-over-year increase of 3.5%, while revenues are projected to be $2.2 billion, up 0.7% from the previous year [3]. Estimate Revisions - Over the last 30 days, the consensus EPS estimate has been revised down by 1.95%, indicating a reassessment by analysts regarding the company's earnings outlook [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that the Most Accurate Estimate is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -1.11%, which indicates a bearish sentiment among analysts [10][11]. Historical Performance - In the last reported quarter, Global Payments was expected to earn $2.96 per share but delivered $2.95, resulting in a surprise of -0.34%. Over the past four quarters, the company has beaten consensus EPS estimates twice [12][13]. Investment Considerations - Despite the negative Earnings ESP and a Zacks Rank of 3, which complicates predictions for an earnings beat, investors are advised to consider other factors influencing stock performance ahead of the earnings release [11][16].

Wall Street saw a rebound in risk appetite on Thursday ahead of the long Easter weekend, as President Donald Trump signaled positive momentum in trade negotiations.Speaking ahead of a scheduled meeting with Italian Prime Minister Giorgia Meloni, Trump expressed strong confidence in reaching a trade agreement with the European Union. He also hinted at progress with China, stating, "We will make a good deal with China." Meanwhile, U.S. Treasury Secretary Scott Bessent noted that trade talks with Japan are mov ...

Acquisition and Divestiture - Global Payments announced the divestiture of its Issuer Solutions business for $13.5 billion and the acquisition of Worldpay for a net purchase price of $22.7 billion, reflecting an 8.5x adjusted EBITDA multiple for Worldpay[2] - The acquisition will enhance Global Payments' capabilities to serve over 6 million customers and enable approximately 94 billion transactions annually[4] - The acquisition of Worldpay is seen as a strategic move to simplify Global Payments' business model and enhance its financial profile[5] Financial Projections - The combined company is expected to achieve pro forma adjusted net revenue of approximately $12.5 billion and adjusted EBITDA of approximately $6.5 billion, processing $3.7 trillion in payment volume globally[3] - Global Payments expects adjusted earnings per share for Q1 2025 to be $2.69, reflecting a growth of approximately 10% on a constant currency basis[19] - The company reaffirmed its full-year 2025 outlook for adjusted net revenue, adjusted operating margin, and adjusted earnings per share[20] Synergies and Cost Management - The transaction is anticipated to generate annual run-rate cost synergies of $600 million and revenue synergies of at least $200 million over three years post-closing[13] - Global Payments plans to issue $7.7 billion of debt to finance the acquisition, with an expected net leverage of approximately 3.5x at closing[15][17] Regulatory and Closing Conditions - The transaction is expected to close in the first half of 2026, subject to regulatory approvals[18] - The company faces uncertainties related to regulatory approvals and the ability to meet closing conditions for the transaction[29] Risks and Challenges - Risks include potential difficulties in integrating Worldpay's business and realizing anticipated cost savings from the transaction[29] - There are concerns about maintaining key personnel and potential business disruptions resulting from the transaction[29] - The company is exposed to macroeconomic pressures, including inflation and rising interest rates, which could impact future performance[29] - Increased competition in existing markets and challenges in expanding into new markets are significant risks[29] - The company must comply with Visa and Mastercard requirements, which could affect its operations[29] Forward-Looking Statements - Management's expectations regarding future plans and objectives are subject to change pending finalization of Q1 2025 results[29] - Forward-looking statements are based on current estimates and may differ materially from actual results[29] - The company disclaims any obligation to publicly release updates to forward-looking statements, except as required by law[29]

Sale of Industry-Leading Payments Technology and Solutions Company Marks an Important Milestone in GTCR's Strategic Transformation in Partnership with Leaders Strategy™ CEO Charles Drucker CHICAGO, April 17, 2025 /PRNewswire/ -- GTCR, a leading private equity firm, announced today the signing of a definitive agreement to sell Worldpay (the "Company"), a global leader in merchant acquiring and payments processing, to Global Payments (NYSE: GPN) for $24.25 billion as part of a transformative three-way transa ...

Core Insights - Global Payments (GPN) has shown a total revenue of $2.29 billion for the quarter ending December 2024, reflecting a 4.7% increase year-over-year [4] - The company's international operations are crucial for assessing its financial resilience and growth prospects, particularly in a tightly interconnected global economy [2][3] International Revenue Performance - Europe contributed $449.34 million, accounting for 19.63% of total revenue, surpassing the consensus estimate of $437.09 million by 2.8% [5] - Asia Pacific generated $70.92 million, representing 3.10% of total revenue, exceeding the projected $66.23 million by 7.09% [6] - The previous quarter's contributions from Europe and Asia Pacific were $462.95 million (19.64%) and $66.68 million (2.83%), respectively, while the year-ago quarter figures were $406.03 million (18.57%) and $69.44 million (3.18%) [5][6] Revenue Forecasts - Analysts project GPN's revenues for the ongoing fiscal quarter to be $2.21 billion, a 1.4% increase from the previous year, with Europe and Asia Pacific expected to contribute $420.71 million (19%) and $62.42 million (2.8%) respectively [7] - For the entire year, total revenue is forecasted at $9.37 billion, a 2.3% improvement from the previous year, with Europe contributing $1.77 billion (18.9%) and Asia Pacific $263.01 million (2.8%) [8] Market Dependency and Trends - GPN's reliance on international markets for revenue presents both opportunities and challenges, making the monitoring of overseas revenue trends essential for predicting future performance [9] - Wall Street analysts are closely tracking these trends, especially in light of increasing international interdependencies and geopolitical tensions [10]

Financial Performance - Consolidated revenues for the year ended December 31, 2024 increased to $10,105.9 million, compared to $9,654.4 million for the prior year, primarily due to growth in transaction volume [228]. - Consolidated revenues for the year ended December 31, 2024 increased by $451.5 million, or 4.7%, to $10,105.9 million from $9,654.4 million in the prior year [257]. - Merchant Solutions segment revenues increased by $536.9 million, or 7.5%, to $7,688.7 million, primarily due to a $479.5 million increase in transaction volume and a $189.3 million contribution from the acquisition of EVO [258]. - Issuer Solutions segment revenues increased by $84.8 million, or 3.5%, to $2,483.7 million, driven by a $74.3 million increase in transaction volume [259]. - Consolidated operating income for the year ended December 31, 2024 was $2,333.6 million, representing a 36.0% increase from $1,716.4 million in the prior year [254]. - Operating income rose to $2,333,605,000 in 2024, up 36% from $1,716,386,000 in 2023 [379]. - Net income attributable to Global Payments increased to $1,570.4 million from $986.2 million in the prior year, with Merchant Solutions segment operating income rising by $267.7 million [279]. - Net income attributable to Global Payments increased to $1,570,365,000 in 2024, compared to $986,233,000 in 2023, reflecting a 59.3% growth [379]. - Basic earnings per share reached $6.18 in 2024, a significant increase from $3.78 in 2023 [379]. Business Transactions - The sale of AdvancedMD, Inc. in December 2024 was completed for approximately $1 billion, with a recognized gain of $273.1 million during the year [228]. - The company completed the sale of the consumer portion of its Netspend business in Q2 2023, impacting its Consumer Solutions segment [224]. - The Consumer Solutions segment reported no revenues for the year ended December 31, 2024, following the disposal of the consumer business in April 2023 [259]. - The company recognized net losses of $243.6 million on the consumer business disposition during the years ended December 31, 2023, and $71.9 million in 2022 [337]. - The company reported a net loss on business dispositions of $273,134,000 in 2024, compared to a gain of $136,744,000 in 2023 [379]. Operating Expenses and Income - Operating income for the year ended December 31, 2024 included lower acquisition and integration expenses and share-based compensation expense [228]. - Selling, general and administrative expenses increased by $211.5 million, or 5.2%, to $4,285.3 million, with expenses as a percentage of revenues at 42.4% [265]. - Corporate expenses increased by $96.9 million, or 10.8%, to $994.9 million, driven by costs associated with business transformation initiatives and employee termination benefits [269]. - The operating income included a $273.1 million gain on the sale of AdvancedMD, which positively impacted operating margin by approximately 4.1%, while higher corporate costs negatively affected the margin by about 2.5% [271]. Cash Flow and Capital Management - Cash and cash equivalents totaled $2,538.4 million as of December 31, 2024, with $1,067.5 million available for general purposes [285]. - Operating activities generated net cash of $3,532.7 million for the year ended December 31, 2024, up from $2,248.7 million in the prior year [287]. - Cash used in investing activities was $173.9 million, significantly lower than $4,361.1 million in the prior year, with $487.1 million allocated for acquisitions [288]. - The company repurchased $1,552.0 million worth of common stock during the year ended December 31, 2024, retiring 12.7 million shares [292]. - The board of directors approved an increase in the share repurchase program authorization to $2.5 billion, with $1,850.0 million remaining as of December 31, 2024 [293]. - Dividends paid to common shareholders amounted to $252.8 million for the year ended December 31, 2024, compared to $260.4 million in the prior year [294]. Debt and Financing - The company has issued $2.0 billion in aggregate principal amount of 1.500% convertible senior notes due March 2031 [228]. - Issued €800 million of 4.875% senior unsecured notes due March 2031, net proceeds of €790.6 million used for general corporate purposes [297]. - Issued $2.5 billion of senior unsecured notes with varying maturities and interest rates, net proceeds used to refinance debt and for acquisition-related expenses [298]. - Issued $2.0 billion of senior unsecured notes with interest rates ranging from 1.500% to 2.900%, proceeds used to repay prior credit facility debt [299]. - Entered into a $5.75 billion revolving credit facility maturing in August 2027, with capitalized debt issuance costs of $12.3 million [313]. - As of December 31, 2024, the company had $1,500.0 million in borrowings outstanding under the revolving credit facility with an interest rate of 5.86% [315]. - The total available commitments under the revolving credit facility were $3.7 billion as of December 31, 2024 [315]. - The company has a $2.0 billion commercial paper program, which is backstopped by the revolving credit agreement [316]. - The company had interest rate swaps with a total notional amount of $1.5 billion to hedge changes in cash flows attributable to interest rate risk on a portion of its variable-rate debt instruments [354]. Market and Industry Outlook - The payments technology industry is expected to continue growing due to wider merchant acceptance and increased use of digital payment solutions [233]. - The company anticipates continued expansion into new markets and additional acquisitions to improve competitiveness [232]. - The company is focusing on technology modernization and innovation to support the development of new and emerging technologies [234]. Internal Controls and Compliance - The company maintained effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) [371]. - The determination of performance obligations for Issuer Solutions revenue contracts was identified as a critical audit matter due to the judgment required in evaluating contract terms [365]. - The company’s tax return positions are fully supportable, but unrecognized tax benefits existing at December 31, 2024, would affect the provision for income taxes in the future if recognized [343]. Revenue Recognition - The company recognizes revenue for payment services based on a daily basis, reflecting the services performed each day [411]. - Customer contracts may include subscription-based SaaS arrangements, with revenue recognized over time on a ratable basis over the contract term [421]. - The company measures revenues for its services on a daily basis, directly ascribing variable fees to the distinct day of service [418].

4Q and full year 2024 earnings Use of Non-GAAP Financial Measures This presentation will reference certain non-GAAP financial information. Reconciliation of each non-GAAP financial measure to the most directly comparable GAAP measure is included in the Appendix to this presentation and the Investor Relations section of our website at www.globalpayments.com, except for forward-looking measures where a reconciliation to the corresponding GAAP measures is not available due to the variability, complexity and li ...