Global Payments(GPN) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For the full year 2024, adjusted net revenue was $9.15 billion, a 6% increase from the prior year, with a slight headwind from currency and the AdvancedMD disposition [46] - Adjusted operating margin for the full year improved by 40 basis points to 45%, resulting in adjusted earnings per share of$ 11.55, an 11% increase compared to 2023 [46][57] - In Q4, adjusted net revenue was $2.29 billion, a 5% increase, with a constant currency growth of approximately 6.5% [47] Business Line Data and Key Metrics Changes - Merchant Solutions achieved adjusted net revenue of$ 1.76 billion for Q4, reflecting growth of 6% or more than 7% on a constant currency basis [47] - The POS and software business saw a 35% increase in new POS rooftops in Q4, driven by new software bundles and the Genius rebranding [48] - Issuer Solutions produced adjusted net revenue of $542 million for Q4, reflecting 3% growth on a constant currency basis, driven by improved transaction volumes [53] Market Data and Key Metrics Changes - Central Europe, Poland, Greece, and Latin America achieved double-digit growth in 2024, benefiting from strong secular payment trends [51] - The company added 26 million traditional accounts on file in Q4, largely driven by growth with existing customers [54] - The education business saw new sales with university customers increase by more than 30% in 2024 [15] Company Strategy and Development Direction - The company launched a broad transformation agenda to focus on areas with the most attractive growth opportunities [8] - A significant operational transformation program was initiated to streamline and simplify the business structure [25] - The company aims to unify its Merchant Solutions business under the Genius brand, with plans for global rollout starting in 2025 [31] Management's Comments on Operating Environment and Future Outlook - Management expects a stable macro environment for 2025, with continued stable labor trends and decreasing inflation [96] - The company anticipates adjusted net revenue growth of 5% to 6% for 2025, excluding dispositions, with a forecast for adjusted operating margin expansion [59][60] - Management is confident in the growth outlook for the Issuer business, supported by a strong implementation pipeline and modernization efforts [122] Other Important Information - The company generated approximately$ 3 billion of adjusted free cash flow in 2024 and returned $1.8 billion to shareholders [11] - The net leverage position decreased to 3.2x at the end of Q4, consistent with long-term targets [57] - The company plans to return approximately$ 2 billion to shareholders in 2025, including an accelerated share repurchase plan [63] Q&A Session Summary Question: Early evidence of progress on initiatives - Management noted early evidence of collaboration and operational efficiencies from the transformation initiatives, with expectations for revenue benefits to materialize in the second half of 2025 [77][83] Question: Clarification on Merchant growth guidance - The company expects approximately 0.5% contribution from acquisitions to the Merchant growth guidance, with minimal impact from the orchestration platform acquisition [88] Question: Macro backdrop in guidance - Management forecasts a stable macro environment for 2025, with some uncertainty regarding future economic policies [96][98] Question: Impact of winding down enterprise customer contracts - The process has begun, with some impacts already absorbed in the guidance for 2025 [100][103] Question: Update on Issuer segment trends - The company expects modest improvement in the Issuer segment throughout 2025, with a strong pipeline of projects and renewed contracts [119][122]