Global Payments(GPN)2021-11-06 15:34Financial Data and Key Metrics Changes - The company reported a volume growth of 15% compared to Q3 2020, with revenue growing 14% on a currency-neutral basis, adjusted EBITDA increasing by 25%, and margin expanding by 341 basis points to 38% [10][53][56] - Adjusted net income for the quarter increased by 44% to 0.27 [58] - Free cash flow for Q3 increased by 33% to $40 million, resulting in a free cash flow conversion ratio of 77% [60] Business Line Data and Key Metrics Changes - In the Americas, constant currency revenue increased by 12% year-over-year, driven by a 15% volume growth [40][57] - European constant currency revenue increased by 16% year-over-year, with volumes up 16% compared to 2020 and 22% compared to 2019 [25][57] - The tech-enabled channel in Mexico saw revenue growth of 40% this year, now representing approximately 20% of the Mexican business [45] Market Data and Key Metrics Changes - European markets are experiencing broad growth across most industry verticals, including travel and hospitality, with expectations for acceleration in 2022 [24] - In Chile, the company expanded its merchant portfolio to over 5,000 customers since commencing operations [17] - The UK and Ireland business now represents 22% of European revenue, up from 8% in 2017, with year-to-date revenue growth exceeding 30% [32] Company Strategy and Development Direction - The company is focused on expanding its tech-enabled referral network and integrated payment solutions to capture the global shift towards software at the point of sale [13][19] - There is a commitment to continue growing through investments in sales distribution, new product launches, and M&A activities [19] - The company anticipates strong momentum amid global economic recovery, expecting to generate solid top-line and bottom-line growth [20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the macroeconomic environment in 2022, with expectations for continued growth driven by cash-to-card tailwinds and increased cross-border activity [140][141] - The company is well-positioned to deliver high teens revenue growth as it expands its merchant portfolio through product capabilities and robust referral networks [36] - Management noted that the pandemic's impact is receding, allowing for continued business growth [19] Other Important Information - The company welcomed Nikki Harland to its Board of Directors, highlighting her leadership skills and merchant experience [21] - The company completed refinancing of its Term Loan B and revolving credit facility, lowering interest costs and retaining flexibility for future M&A opportunities [61][62] Q&A Session Summary Question: DCC opportunity and distribution by country - The majority of the DCC opportunity is expected to come from Poland, with additional growth anticipated in Spain [70][72] Question: Impact of alternative payments and M&A outlook - Management noted that while there is interest in bank-to-bank transfers, it is still early days and not expected to have a material impact in the near term [75][78] - There is optimism regarding M&A opportunities as travel resumes and discussions increase [88] Question: Volume consistency and macro surprises - October volumes were sequentially stronger than September, with no significant macro surprises reported [92][94] Question: Margin philosophy going into 2022 - The company aims to operate efficiently, with reduced expenses expected to be permanent, and no significant pressure on margins anticipated [96][100] Question: Growth outlook and competitive positioning - The company is confident in its growth model, focusing on B2B and ISV businesses, which are expected to drive future growth [110][130] Question: Revenue generation from Bci and Pago Facil - Revenue from Bci and Pago Facil was relatively immaterial in the quarter, with significant merchant boarding starting in the second half of September [149]