GLOBAL PAYMENTS INC Q3 FY2024 earnings call

• Hosted first investor conference since 2021 in New York, sharing company update. - Reached definitive agreement to sell AdvancedMD business to Francisco Partners, with a strategic partnership to continue providing solutions. - In Merchant Solutions: POS assets consolidated under Genius brand, investments in impactful assets/verticals, connecting commerce enablement solutions. Integrated embedded saw strong growth in new partners, with notable wins in various verticals. - In Issuer Solutions: Successfully completed implementations, renewed large clients, focused on cloud modernization to enhance market position. - Highlighted support for hurricane relief efforts.

Merchant Solutions achieved adjusted net revenue of $1.84 billion for the third quarter, reflecting 7% growth. This includes POS and software business with low-double-digit growth, 30% new bookings growth for software businesses, and integrated embedded payments business with high-single-digit growth, adding 92 new software partners. Core payments delivered mid-single-digit growth. Issuer Solutions produced adjusted net revenue of $529 million, reflecting 2% growth (3% excluding pay card). They processed nearly 10 billion transactions, a 3% increase year-over-year. Merchant segment delivered an adjusted operating margin of 50%, up 90 basis points.

• Expected reported adjusted net revenue to range from $9.17 billion to $9.30 billion, 6%-7% growth excluding AdvancedMD disposition, now expecting lower end due to software trends in Issuer. - Anticipate annual adjusted operating margin to expand up to 50 basis points for 2024. - Merchant business expected to report adjusted net revenue growth of 9%+ for full-year, with up to 40 basis points of operating margin expansion. - Issuer Solutions expected adjusted net revenue growth in 4% range, with adjusted operating margin expansion up to 30 basis points. - Net interest expense expected ~$500 million, adjusted effective tax rate ~19%. - Adjusted earnings per share full-year range $11.54-$11.70, 11%-12% growth.

• Softer-than-expected volumes, largely commercial card transactions. - Product and project investment delays from FI partners due to macro uncertainty. - Softer trends in pay card business from incremental sequential weakness and employment trends. - Weather impacts (hurricanes) affecting volumes.

Q: Midpoint revenue growth for 2025 and organic growth?

A: Cameron Bready said 5% is organic, targeting mid-single-digit organic growth with flexibility from transformation initiatives.

Q: Fourth quarter exit rate and confidence?

A: Josh Whipple mentioned better trends in October due to lack of weather disruption, expecting fourth quarter to be similar or slightly better than Q3.

Q: Commercial spend softness breadth?

A: Cameron Bready said broad-based softness in commercial spending across T&E and other areas, impacting commercial card volumes and B2B flows.

Q: Capital One Discover merger impact?

A: Cameron Bready said Capital One is a long partner, aware of their merger, expecting positive news longer term but premature to forecast impact.

Q: Merchant segment margin outperformance and full-year guide?

A: Josh Whipple and Cameron Bready said strong execution, better revenue mix, and continued margin improvement led to raising full-year margin guide to up to 40 basis points.

Q: POS and software bookings growth and outlook?

A: Cameron Bready said 30% growth in Q3 bookings reflects strong products, with confidence in ongoing growth though lumpy quarter-over-quarter.

Q: SMB volume growth and macro view?

A: Cameron Bready said SMB volume growth was 5% in Q3, down from 6% in Q2, reflective of broader macro trends and weather impacts, with October showing improvement.