Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Global Payments Inc (GPN, Financial) reported a 6% increase in adjusted net revenue for the third quarter, demonstrating solid financial performance.
- The company achieved a 12% growth in adjusted earnings per share compared to the same period in 2023, indicating strong profitability.
- Merchant Solutions segment delivered 7% adjusted net revenue growth, driven by POS and software, and integrated and embedded businesses.
- The company successfully added nearly 10,000 new POS locations year-to-date, showcasing strong expansion in its point-of-sale offerings.
- Global Payments Inc (GPN) announced a definitive agreement to sell its AdvancedMD business, exemplifying its commitment to streamline operations and focus on core strategic areas.
Negative Points
- Issuer Solutions segment experienced softer than expected volumes, largely due to a decline in commercial card transactions.
- The company faced macroeconomic headwinds, impacting its issuer business and leading to a slightly lower revenue growth outlook for the full year.
- Global Payments Inc (GPN) saw a moderation in SMB volumes, growing only 5% for the third quarter, partly due to lower same-store sales.
- The company is undergoing significant restructuring and transformation initiatives, which may lead to short-term disruptions and challenges.
- There were delays in product and project investments from financial institution partners, reflecting cautious spending in the current macroeconomic environment.
Q & A Highlights
Q: Can you elaborate on the confidence in the 2025 outlook and the restructuring initiatives?
A: Cameron Bready, CEO: We have a lot of confidence in our medium-term guide shared last month. The initiatives in our transformation pipeline are poised to drive accelerated growth as we work through 2025 into 2026 and 2027. We believe we have enough cushion in our revenue expectations to allow flexibility for necessary strategic actions while returning significant capital to shareholders and delivering double-digit EPS growth. We are already seeing internal benefits from our efforts, which will materialize more fully in our results as we progress through time, especially in the latter half of 2025 and into 2026.
Q: Can you provide details on the sale of AdvancedMD and its impact on revenue and margins?
A: Josh Whipple, CFO: AdvancedMD was forecasted to generate around $250 to $260 million in revenue for 2024. The sale is expected to secure a high 10s multiple on a cash EBITDA basis, with EBITDA margins around 30%. The revenue from AdvancedMD will largely stay with us due to the commercial relationship, and the sale aligns with our strategy to divest non-core assets.
Q: How is the sales realignment and point-of-sale brand consolidation progressing?
A: Cameron Bready, CEO: There is positive receptivity to the Genius Brands, and internal excitement about aligning our POS capabilities under a common platform and brand. We are in early stages, with a lot of work ahead to align various brands. The consolidation will likely impact performance more in 2025 as we work through these efforts, but we are excited about the potential for growth, especially in retail.
Q: What are the underlying performance drivers for issuer growth, and do you have visibility into improvement?
A: Cameron Bready, CEO: We have a strong pipeline of conversion opportunities and have renegotiated contracts with 15 of our top 20 customers, providing good visibility into future revenue. While the macro environment is challenging, we expect to see improvement as we continue our modernization journey and execute on our pipeline of opportunities.
Q: Can you discuss the potential impact of the Capital One and Discover merger on Global Payments?
A: Cameron Bready, CEO: Capital One is a long-standing partner, and we recently renewed our agreement with them. We expect the merger with Discover to be successful and view it as positive for our business. However, it is premature to forecast specific impacts until the regulatory process is complete.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
