Q1 2025 Global Payments Inc Earnings Call
The Fault in Our Stars Thanks for watching!
Speaker Change: Ladies and gentlemen, thank you for standing by and welcome to Global Payments 1st quarter 2025 earnings conference call.
Speaker Change: At this time, all participants are no listen only mode. Later we will open the lines for questions and answers. If you should require operator assistance during this call, please press star, then zero, and as a reminder, today's conference will be recorded.
Speaker Change: At this time, I'd like to turn the conference over to your host, Senior Vice President, Investor Relations, Winnie Smith. Please go ahead.
Speaker Change: Before we begin, I'd like to remind you that some of the comments made by management during today's conference call contained board looking statements about among other matters, expected operating and financial results.
Speaker Change: Certain risk factors inherent in our business are set forth in filings with the FEC including our most recent 10K and subsequent filings.
Speaker Change: We caution you not to place undue reliance on these statements. Ford looking statements during this call speak only as of the date of this call and we undertake no obligation to update them.
We will also be referring to several non-GAAP financial measures.
which we believe are more reflective of our ongoing performance. [inaudible]
Speaker Change: For a full reconciliation of the non-GAAP financial measures discussed in this call, to the most comparable gap measure, in accordance with FEC regulations, please see our press release first as an exhibit to our four May K-Files this morning, and our supplemental material available on the investor relations section of our website.
Speaker Change: Joining me on the call is our CEO Cameron Brady, our president and CEO Bob Cortopassi, and our CFO , Josh Whipple. Now, I'll turn the call over to Cameron.
Cameron Brady: Thank you, Winnie, and thanks everyone for joining us to discuss our first quarter results in the exciting start to our year.
Cameron Brady: We had a solid first quarter, which is a testament to the resilience of our business model and our relentless focus on execution and what continues to be a fluid economic environment. This is the end of the day, the end of the day.
Cameron Brady: Specifically, we delivered over 5% constant currency adjusted net revenue growth, excluding dispositions, 70 basis points of adjusted operating margin expansion, and 11% constant currency adjusted earnings per share growth compared to the same period in 2024.
Cameron Brady: Notably, both our merchant and issuer businesses saw growth consistent with where we exited 2024, and our overall performance was exactly in line with our expectations.
Cameron Brady: While delivering this performance, we are also aggressively executing against our overarching transformation agenda, including advancing a significant number of key initiatives.
Cameron Brady: Since launching the program last year, we have successfully simplified and streamlined organizational structure and operating model, unified our merchant business globally, advanced our technology harmonization program, and increased our overall benefit target by 20% to $600 million.
Cameron Brady: Importantly, as we progress our transformation over the next year, we're positioning ourselves with a strong foundation to quickly and fully integrate world pay post closing.
Cameron Brady: Joshua Kevermore details on the quarter in a moment, but we plan to spend the majority of our time today discussing our recently announced transactions to divest our issuer solutions business and acquire a world pay.
Cameron Brady: Since announcing the transactions, many of you have asked about the timing and how it aligns with our refocused strategy and transformation agenda we outlined last September
Cameron Brady: He have also asked about recent trends in the world-paid business and how they have progressed their own efforts to improve growth and better position themselves competitively . . .
Cameron Brady: Further, you asked about how bringing global payments and world pay together drives opportunities to accelerate growth over time.
Cameron Brady: You also want to understand our plans to integrate this business when their previous integration was not successful
Cameron Brady: Lastly, you have asked for clarity of how the transactions we announced align with our plans to prioritize capital returns to shareholders.
We plan to touch on all of these items today.
Cameron Brady: To start, I want to discuss our conviction that the transaction with WhirlPay and the vestiture of issue or solutions will accelerate our transformation and build an even more durable and differentiated platform for long term success.
Let's start with the strategic rationale for what we announced.
Cameron Brady: We know world pay well and have long recognized the complimentary nature of our two merchant businesses.
Cameron Brady: We also know firsthand that selling issue or processing solutions into large financial institutions is a very different go-to-market motion than bringing commerce solutions to merchants of all sizes globally.
Cameron Brady: This is part of the reason we communicated our investor conference, our intent to evaluate options for the issue of business, that serve to achieve our strategic objectives and accelerate value realization. [inaudible]
Cameron Brady: So when this unique opportunity to execute these two transactions simultaneously presented itself earlier this year, we've moved quickly and thoughtfully to structure a deal that would yield better outcomes in our standalone transformation journey.
Cameron Brady: and we have high confidence that these transactions will do just that and accelerate our long-term strategy.
Cameron Brady: One of the core tenants of our transformation program is to simplify and streamline our business to ensure we have a strong platform for the next decade of growth.
Cameron Brady: Underpinning this is our desire to become a more focused organization, recognizing that we can unlock substantially more value in our business through greater clarity of purpose.
Cameron Brady: This transaction not only sharpens our focus, but also enhances our global scale and cement our position as a leading pure play, commerce solution to provider for merchants of all sizes around the world.
Cameron Brady: It also allows us to concentrate on a simplified business and oriented investment exclusively towards merchant solutions.
Cameron Brady: Driving better growth outcomes and improving our ability to win share in the market.
Cameron Brady: And through the combination with World Pay, we are bringing together highly complementary capabilities in distribution networks.
Cameron Brady: Global Payments bring strength in SMB solutions, leading point of sale technology, and vertical specific software that World Page does not have today.
Cameron Brady: World Take contributes best in class e-commerce and enterprise capabilities, managed pay fax solutions, and a presence in attractive geographies where we do not operate currently. Thank you very much.
Cameron Brady: Simply put, this combination creates a complete commerce solutions platform with complementary capabilities and extensive distribution across the merchant spectrum.
Cameron Brady: Together we will accelerate growth and innovation in deliver enhanced client experiences from merchants of all types and sizes [inaudible]
Cameron Brady: The combined company will also dramatically advance its innovation pipeline for future success.
Cameron Brady: With capital investment and excess of $1 billion annually, we will be better positioned than ever to deliver the next generation of capabilities. From Point of Sale and Software and Integrated and Embedded Payments, to Advanced Commerce Enablement in Global Omni Channel Solutions.
Cameron Brady: And importantly, since all of our investments will be focused on merchant solutions, we will be able to better amplify their impact across our organization and drive better returns on invested capital.
Cameron Brady: We are already actively engaged with our customers, and their feedback has been overwhelmingly positive . . .
Cameron Brady: Specifically, clients are excited about how complimentary the businesses are and how the combined company will bring extended capabilities, even better service and greater innovation to help power their businesses.
Cameron Brady: This transaction also meaningfully enhances our financial profile. We expect approximately $12.5 billion in pro-forma-adjusted net revenue in $6.5 billion in adjusted EBITDA, post-transaction close.
Cameron Brady: We see clear opportunities to achieve at least $600 million in cost energies, from aligning our merchant business operations and go-to-market strategies, streamlining technology and infrastructure, and eliminating duplicative corporate and operational support structures.
Cameron Brady: The path to achieve these savings is already identified, and they represent low risk opportunities.
Well within our reach given our team significant integration experience.
Cameron Brady: And to be clear, these synergies are fully incremental to the $600 million in benefits we expect to deliver through our operational transformation.
Cameron Brady: Further, we are highly confident in our ability to achieve revenue synergies of at least $200 million by cross-selling our software and conference enablement solutions.
Cameron Brady: Expanding omnichannel capabilities and deepening penetration in high growth verticals all while leveraging our combined 6.5 million merchants worldwide including more than 500,000 enterprise clients
Cameron Brady: Together, we have clear line of sight to accelerating both our revenue and earnings growth framework, while also meaningfully expanding our long-term commitment to return capital to shareholders.
Cameron Brady: With that background, I'd like to send a moment on how this transaction aligns with what we outlined at our investor conference.
Cameron Brady: In September , we unveiled a strategy to transform global payments into the worldwide partner of choice for commerce solutions
Cameron Brady: focused on moving aggressively to position the company for the next phase of its growth journey.
Cameron Brady: As part of this, we unified our merchant business across three product dealers, point of sale on software, integrated and embedded, and core payments.
Cameron Brady: Our strategy is squarely focused on the end customer. We have built our business around knowing what merchants need to succeed across more than 100 vertical markets.
We know the intricacies of their business and their goals [inaudible]
Cameron Brady: and we support them with exceptional service from the sales process to onboarding to ongoing support when they need us.
Cameron Brady: The transactions we announced accelerate the transformation we began last year while also creating a company with unmatched global scale in an industry where scale matters more than ever.
Cameron Brady: Importantly, the acquisition of World Pay directly supports each of our three merchant pillars, making them stronger, more scalable, more competitive and more valuable to our clients. Thank you very much.
Cameron Brady: Starting with POS and software, we will be able to immediately sell our genius point of sale and other software and commerce enablements solutions into world page existing SMB merchant phase.
Cameron Brady: We also leverage our existing distribution channels to bring these capabilities to market and it's a better penetration and saturation . . .
Cameron Brady: and Integrated and Embedded, World Pace Payrix platform enhances our ability to serve software partners, marketplaces, and platforms across more regions and operating models. [inaudible]
Cameron Brady: And in court payments, world pay brings world class e-commerce capabilities that enhance our payment acceptance solutions and enable us to deliver seamless on the channel experience to merchants of all sizes across our combined footprint. All right.
Cameron Brady: Additionally, World Pay strengthens our international presence in distribution and existing geographies and expands our footprint to new attractive markets like Japan, France and the Nordics. [inaudible]
Cameron Brady: We've made substantial progress on our transformation initiatives, and the plans we are pursuing over the next year provide a strong foundation in which the integrate world pay [inaudible]
We have already consolidated our merchant technology and operations organizations . . .
Cameron Brady: These newly defined organizations are focused on driving sales, delivering new products to market, long sharing differentiated service levels and availability.
Cameron Brady: Importantly, we will approach this integration with a clearly defined operating model, scalable processes to support execution and an uncompromising strategy regarding how we plan to fully integrate the business and run the combined company.
Cameron Brady: By the time we close the World Pay Transaction, we have completed the launch of our genius retail and restaurant point of sale platforms globally
Cameron Brady: fully revamped the sales organization through our Salesforce of the future initiative. It will be a far more nimble and agile business with a customer led and product centric mindset focused on speed and quality of product development. Thank you very much.
Cameron Brady: Weverging our new operating model, Global Payments and World Pay will be better positioned competitively in the market with a durable business structure, increased investment capacity, significant runway for growth, and an enhanced ability to deliver sustainable performance.
Cameron Brady: As a combined company, we will have significant scale, processing nearly four trillion dollars in annual volume across a hundred billion transactions.
Cameron Brady: Significant Merchant Coverage, serving millions of merchants and thousands of platform and software partners [inaudible]
Cameron Brady: Comprehensive Capability, Scanning Physical Card, Present Environments to Global E Commerce, an extensive global reach across 175 countries with the sales force of over 4,000 professionals.
Cameron Brady: We'll be capable of providing end-and-service across the entire merchant journey. From on-boarding through transaction processing to settlement, reconciliation, and business intelligence.
Cameron Brady: And all of this is supported by our global distribution and service infrastructure.
Cameron Brady: We will enhance our managed payback capabilities, which will broaden our leading integrated offerings allowing us to support a wider array of operating models for software, marketplace, and platform partners.
Cameron Brady: Together, Global Payments and World Pay, Singer, Merchant Focus, and Significant Scale will enable us to accelerate innovation to further differentiate and compete.
Cameron Brady: Unlike new interns who often build around narrow solutions, the combined company will offer the full spectrum of highly innovative products powered by best-in-class technology with scale processing economics while delivering enterprise-grade reliability security and compliance that stands apart.
Cameron Brady: Now I'll hand it over to Bob to discuss the world-paid business, details regarding our revenue synergy opportunities, and more specifics relating to our approach to integration.
Bob?
Bob Portapassi: Thanks Cameron. World Pay has made significant progress and has improved its growth profile under GTCR's ownership.
Bob Portapassi: It's also continued to invest meaningfully in its leading capabilities and its delivering strong growth across a highly diversified set of verticals and geographies spanning 175 countries.
Bob Portapassi: World Pay manages its business across three channels today, e-commerce and enterprise, platforms, and SMB.
Bob Portapassi: In e-commerce and enterprise, we'll pay as enhanced its technology and product depth across alternative payment methods, FX solutions, payouts, marketplaces, authorization optimization, analytics and fraud and risk management.
Bob Portapassi: Better positioning the business in terms of breadth and depth in the industry [inaudible]
Bob Portapassi: They're also delivering differentiated capabilities to help enterprises manage payment orchestration in multi acquirer scenarios, solving for a critical customer need, or giving additional insight and opportunities to expand wallet share. [inaudible]
Bob Portapassi: Today, this business accounts for 50% of world pays revenue and is delivering growth in the high single digits.
Bob Portapassi: Turning to their platforms business through payrics, will pay brings a versatile integrated offering that meets the unique needs of software and platform partners with a modern and flexible service platform.
Bob Portapassi: With its offering, world pay is having great success attracting high growth partners looking for additional flexibility, more control of the customer experience, and faster onboarding and implementation relative to more traditional referral models. [inaudible]
They are competing well, including against newer entrants. [inaudible]
Bob Portapassi: This business generates over $300 million in revenue today and is growing north of 20 percent.
Bob Portapassi: In total, World Pay has 1,400 Omni-channel software partners across a diversified set of individuals including health services, restaurants, automotive, personal and professional services, government, utilities, and retail.
Bob Portapassi: Finally, World Pay's SMB portfolio has improved through a focus on rebuilding sales capacity, including a relaunch of its direct and FI channels under GTCR.
Speaker Change: The business has historically lacked a robust product suite which we complement nicely by bringing our genius point of sale offering and leading commerce enablement solutions to the portfolio.
Speaker Change: To that end, we'll pay provide just with a large installed base of nearly 1 million SMB customers for distribution to enhance growth.
Speaker Change: As we've discussed, our businesses are highly complementary, creating meaningful opportunities to drive revenue synergies and accelerate the growth profile of the combined entity [inaudible]
Speaker Change: We've identified annual run rate revenue synergies of at least $200 million that we have high conviction in achieving within three years of closing.
Let me walk through a few key areas of focus. [inaudible]
Speaker Change: First, we see a significant opportunity with the e-commerce and enterprise capabilities that World Pay Brains.
Speaker Change: We can extend these capabilities on an omnichannel basis to the nearly 40 markets where Global Payments has a strong physical presence and will pay as primarily virtual.
Speaker Change: We bring robust local distribution, functionality, and service to complement World Pay's leading digital offerings.
Speaker Change: And we can extend world pays rich e-commerce solutions and capabilities to the more than five million SMB merchant customers we serve in these markets today.
Speaker Change: The combined business will have leading capabilities to unlock new enterprise and digital native opportunities worldwide.
Speaker Change: Second, we can bring global payments commerce enablement solutions, including our genius point of sale technology to world-based core SMB customer base.
Speaker Change: We will extend our reach with these solutions by leveraging world-paced distribution channels, including its F.I. partnerships with more than 6,000 branches.
Thank you for watching.
Third, there's a significant opportunity in Integrated and Embedded Payments.
Speaker Change: Payrix, coupled with our existing integrated offerings, allows us to serve any software and platform partner across any operating model with best in class tailored solutions that meet the evolving needs of integrated and embedded commerce.
Speaker Change: We view pay rich as our I leaked complimentary accelerator of our own integrated and embedded road map.
Speaker Change: We have a great deal of confidence in our revenue synergy framework. As mentioned this is a business that we know well and have assessed multiple times over the years, allowing us to have a refined thesis and plan for realizing value. [inaudible]
Speaker Change: We conducted extensive diligence and have a clear view on the opportunities to enhance revenue as a combined business.
Speaker Change: Further, our combined scale and stature also positions us to have visibility into and address opportunities with partners, networks and clients at a greater level than either business could on a standalone basis.
Speaker Change: Finally, we recognize the competitive and innovative nature of the industry [inaudible]
Speaker Change: Our simplified and dedicated merchant model and combined scale will enable us to accelerate investment in our business to further differentiate and compete, putting more than a billion dollars annually in high priority areas supporting our growth.
Speaker Change: Specifically, we'll focus our investments on expanding digital native and army channel solutions supporting enterprise multinational and marketplace customers.
Speaker Change: Delivering a premier developer experience with modern embedded capabilities for any operate.
Speaker Change: Extending our commerce enablement capabilities, including embedded finance, loyalty, payroll, and others.
and building it on our best-in-class service offering. [inaudible]
Speaker Change: While we have a proven crack record of integrating large acquisitions, delivering on our timelines and exceeding our synergy goals, our transformation better prepares us to execute on a more awesome integration approach in this transaction.
We will not compromise on our unified operating model.
Speaker Change: Allowing it to focus on fully integrating our two businesses with a single company culture and go to market approach beginning day one. [inaudible]
Speaker Change: We will align around a common brand and commercialization approach to drive value realization, emphasizing revenue growth opportunities while delivering on our expense synergy expectations.
Speaker Change: At Global Payments, we've already unified our worldwide technology teams and assets into a singular organization.
Speaker Change: Today, we're leveraging common technology platforms to enable commerce and better experiences for our clients and partners.
Speaker Change: This includes the orchestration layer we recently acquired, which allows us to extend and distribute products more easily across platforms and geography seamlessly.
World Pay has been on its own technology modernization journey. [inaudible]
Speaker Change: The business is built around a single access API architecture which will be able to meet all of our combined merchants and partners needs with vertical specificity and global capabilities in addition to standardized reporting settlements and data fees.
Speaker Change: We'll integrate our commerce enablement and broad product offerings with will pay single-in, single-out architecture.
Speaker Change: Providing for rapid and seamless delivery of innovative solutions to the life there existing customers and partners in the future.
Speaker Change: At the same time, we'll also embed additional capabilities into our architecture, coming from World Pay's e-commerce, risk and fraud, and payment facilitation platforms.
and some with a clear view to integration execution.
Leadership Resources, Identified, and Workstreams Ready to Launch
Speaker Change: We're slowly prepared to hit the ground running immediately upon close to ensure strong
Now, all handed over to Josh.
Thanks, Bob.
Speaker Change: At our investor conference in September , we outlined our medium-term outlook .
Speaker Change: Starting with 2025, we forecast admit single digit adjusted net revenue growth, excluding dispositions, and 50 basis points of adjusted operating margin expansion.
Speaker Change: We're pleased that you're today. We are tracking in line with this expectation . . .
Speaker Change: We also said that in 2025, we would be focused on executing on our strategy and operational transformation agenda that would in turn position us to drive accelerated growth in 2026 and 2027.
Speaker Change: Specifically, over these two years, we indicated we had confidence in our ability to deliver sustainable bid to high single digit adjusted in that revenue growth and consistent adjusted operating margin expansion between 50 basis points and 100 basis points per year.
Speaker Change: I would highlight that our outlook for the merchant business on a standalone basis was and remains consistent with these targets. And the progress we have already made on our transformation initiatives reinforce our confidence in this trajectory today. Thank you very much.
Bob Portapassi: Frank Rope, you just heard from Bob about the strides that have and continue to be made under the ownership of GTCR.
Bob Portapassi: We currently expect the World Pay business to deliver top line growth and margin expansion relatively consistent with the guidance we have provided for Global Payments in 2025 as well as in 2026 and 2027 as it executes against its own initiatives to accelerate growth.
Bob Portapassi: This is also consistent with the recent trends they have experienced in their business [inaudible]
Bob Portapassi: They are a solidly mid single digit grower today and on a trajectory to continue to improve that over the next several years. And by combining our two businesses, we expect to drive substantial synergy benefits. [inaudible]
Bob Portapassi: Bob just covered the revenue potential we have together, including the meaningful cross selling opportunities enabled by our highly complimentary solutions and global scale, which we expect will drive at least $200 million of annual run rate revenue synergies over three years. [inaudible]
Bob Portapassi: And on the expense side, we have a clear line of sight to approximately 600 million of annual run rate cost energies that we expect to achieve within three years of closing.
Bob Portapassi: Roughly, a third of the savings will be derived from consolidating our combined technology infrastructure into a singular focused organization and eliminating duplicative vendor and software spend
Bob Portapassi: Another third of expense savings will come from aligning our business operations including consolidating support infrastructure, streamlining transaction processing environments, and optimizing our global facility footprint.
Bob Portapassi: The remaining third of cost energies will be derived from eliminating duplicative corporate infrastructure, which includes realizing economies of scale across corporate and administrative functions.
Bob Portapassi: Through these synergies and the execution of our strategy we expect to materially transform the long-term financial profile of this business while also enhancing our medium-term outlook.
Bob Portapassi: Specifically, we now have a clearer line of sight to accelerate revenue growth in 2026.
Bob Portapassi: and High Single Digit Growth in 2027, with margin expansion of 100 to 200 basis points in both years, which is double our original target of 50 to 100 basis points.
Bob Portapassi: This transaction is also a creative day one and supports an uplift of our adjusted EPS growth targets to mid-teens over the medium-term compared to our initial target of low-teens growth.
Crane Decapitan Allocation .
Bob Portapassi: The ability to invest in innovation will be significantly greater as we will maintain capital spending at seven to eight percent of adjusted net revenue. That translates to reinvesting more than one billion annually back into the business. And as Cameron mentioned, that is entirely focused on merchant solutions after the closing of the transaction. Thank you very much.
Bob Portapassi: We also continue to expect to return roughly $7 billion in capital to shareholders from 2025 to 2027 largely consistent with what we outlined at our investor conference last September .
Bob Portapassi: Importantly, by 2028, our annual and run rate levered free cash flow and total capital return expectations will be nearly 50% higher than they would have been if we had not executed these transactions.
Bob Portapassi: This will provide us greater flexibility to invest in growth and return meaningfully more capital to shareholders.
Bob Portapassi: And at the same time, we will be disciplined with regard to leverage and are committed to reducing our net leverage to three times, which we expect to achieve within 18 to 24 months of closing.
Bob Portapassi: This leverage level supports our investment grade credit ratings long term while still providing ample capacity to invest for the future and drive shareholder value.
Bob Portapassi: As you can see, this transaction cements our growth profile, accelerates profitability and enhances our long-term capital allocation commitments [inaudible]
Bob Portapassi: Ultimately, this is why we have such conviction that the transaction will unlock value for our shareholders.
Bob Portapassi: Overall, we continue to execute well, and our results were consistent with our expectations despite heightened macro economic uncertainty. Thank you.
Bob Portapassi: We delivered a Justin Net revenue of $2.2 billion, reflecting constant currency growth of over 5% excluding dispositions.
Bob Portapassi: Specifically, the disposition of advanced MDA and our exit of certain non-core markets in Asia Pacific had an approximately three-point impact to overall growth, while unfavorable foreign currency exchange rates were over a point headwind for the quarter.
Bob Portapassi: Brent were fairly consistent throughout the quarter, and we saw a limited change in consumer spending patterns during the period and into April . With that said, we're closely monitoring the ongoing tariff negotiations and their potential impact on the global economy.
Bob Portapassi: However, I would highlight that we are well-diversified business both from geographic and virtual market perspectives and across a wider range of discretionary and non-discretionary categories, our well-position to navigate through the current environment.
Bob Portapassi: Adjusted operating margin for the quarter, increased 70 basis points, or 40 basis points excluding dispositions.
Bob Portapassi: The net result was adjusted earnings for share of $2.69, including share-based compensation, an increase of 11% on a constant currency basis.
Bob Portapassi: Excluding Sharebase Compensation, Adjusted Erings for Share, was $2.82 Says,
Bob Portapassi: Taking a closer look at performance by segment, merchant solutions achieved adjusting that revenue of $1.69 billion for the first quarter, reflecting growth of 6% on a constant currency basis, excluding dispositions. [inaudible]
Bob Portapassi: The disposition of advanced MD and our exit of certain non-core markets in Asia Pacific had an approximately four point impact on reporting growth in the quarter.
Bob Portapassi: Similar to the total company impact, currency was over a point headwind to merchant solutions growth.
Bob Portapassi: which includes absorbing our exit of certain lines of business and wholesale relationships.
Bob Portapassi: As a reminder, this results in lower gap revenues and lower residual adjustments to arrive at our adjusted net revenue.
Bob Portapassi: We delivered an adjusted operating margin of 47.8% in the merchant segment.
Bob Portapassi: An increase of 80 basis points compared to the prior year.
Bob Portapassi: issuer solutions, adjusted revenues were $529 million, an increase of 3% on a constant currency basis.
Bob Portapassi: This performance marks a slight improvement sequentially driven by consumer card volumes, while commercial card volumes remain consistent as corporates continue to take a more cautious approach to spending.
Azure Solution, Delivered and Adjusted Operating Margin of 46.3% [inaudible]
Bob Portapassi: A decrease of 50 basis points compared to the prior year driven by the softer commercial volumes and ongoing investments in modernization.
Bob Portapassi: We added a total of 15 million traditional accounts on file this quarter executing two large portfolio implementations for existing customers.
We also executed four multi-year renewals during the period.
Bob Portapassi: From a cash flow standpoint, we produced solid adjusted free cash flow for the quarter of approximately $500 and $12 million, representing a roughly 77% conversion rate of adjusted net income to adjusted free cash flow.
Bob Portapassi: We expect our adjusted free cash flow conversion for the year to follow a similar trajectory as 2024, as we benefit from seasonality resulting in a higher conversion rate as the year progresses.
Bob Portapassi: As a reminder, this quarter we changed the presentation of cash flows for settlement assets and obligations and certain funds held for customers.
Bob Portapassi: Moving to changes in these items from operating to financing cash flows.
Bob Portapassi: We invested $128 million in capital expenditures during the quarter and we continue to target capital spending of $700 and $80 million for the year.
which is 8% of adjusted net revenue. [inaudible]
Bob Portapassi: On that leverage position was under 3.2 times at the end of the first quarter. We executed share the repurchases of approximately $450 million in the quarter.
Bob Portapassi: Our balance sheet remains extremely healthy, and we ended the period with approximately 3.8 billion dollars of available liquidity.
Bob Portapassi: Our total indebtedness is 94% fixed with a weighted average cost of debt of 3.5% [inaudible]
Bob Portapassi: Turning to the outlook for 2025, we are reaffirming our outlook for adjusted net revenue, adjusted operating margin, and adjusted earnings for share. Specifically, we currently expect constant currency adjusted net revenue growth of 5 to 6% over 2024, excluding dispositions.
Bob Portapassi: We continue to expect this position to pull impact reported. Adjust the net revenue by over 300 basis points.
Bob Portapassi: We now expect the headwind from four currency exchange rates to be just over a hundred basis points for the year. Roughly 50 basis points lower than the 175 basis point impact we got it to previously given the recent weakening of the US dollar. [inaudible]
Bob Portapassi: We expect the impact to be relatively consistent across our emerging and issuer businesses.
Bob Portapassi: We're forecasting annual Adjusted Operating Margin to expand approximately 50 basis points for 2025, excluding the effect of Dispositions.
Bob Portapassi: At the segment level, we continue to expect our merchant business to deliver adjusted net revenue growth of roughly 6% on a constant currency basis excluding dispositions for the full year.
Bob Portapassi: We still expect roughly 50 basis points of adjusted operating margin expansion for this business, excluding dispositions in 2025
Moving to Issuer Solutions.
Bob Portapassi: In terms of quarterly phasing, we still expect a modestly higher growth in the second half relative to the first half of the year as our transformation initiative is ramped as we lap the renewal cycle with many of our large issuer customers and see increased benefits from conversion activity over the course of 2025.
Bob Portapassi: We continue to anticipate adjusted free cash flow conversion will be greater than 90% for the full year.
Bob Portapassi: Regarding capital allocation, as we communicated when we announced the world pay and insure solutions transaction, we are focused on being three and a half times net levered at close, but we remain opportunistic with regards to share repurchases over the balance of the year.
Bob Portapassi: And if we execute additional divestitures, the proceeds will continue to be used to enhance shareholder returns.
Bob Portapassi: And finally, we still expect to be approximately three times net leverage at the end of 2025.
Bob Portapassi: Putting it all together, we continue to expect adjusted earnings for share of growth of 10% to 11% for the full year on a constant currency basis.
Bob Portapassi: We expect adjusted EBS growth to be consistent with the quarterly phasing dynamics I highlighted.
Cameron Brady: And with that, I'll turn the call back over to Cameron.
Cameron Brady: Thanks, Chiod. I hope you now have a clear appreciation for why we are so incredibly excited about the World Pay acquisition and how the announced transactions will sharpen our strategic focus, accelerate our transformation, and meaningfully enhance our financial profile and ability to deliver sustainable performance. [inaudible]
Cameron Brady: Importantly, this aligns exactly with the Approach We Outline for Unlocking Value at our Investor Conference last September .
Cameron Brady: At the end of the day, the Investiture of Issuer Solutions and Acquisition of World Pay represent a unique opportunity to catalyze our transformation in a more significant way. While supporting our efforts to streamline and simplify our business to accelerate longer-term growth and value creation. The Investiture of Issuer Solutions and Acquisition of World Pay
Cameron Brady: We'll take it not be a better fit for our merchant business and our strategy [inaudible]
Cameron Brady: It is a highly complimentary business that expands our global footprint, broadens our product base, enhances our good market, diversifies our business across an SMB and enterprise customer base, and overall makes us a stronger and more durable commerce solutions provider built for the long run. Thank you very much.
Cameron Brady: In our Transformation Agenda provides the Ideal Foundation for the Combined Business going forward.
Cameron Brady: Over the next year, while we are working to close the transaction, we will continue to progress the key transformation initiatives that serve to make us a more nimble and agile organization with a product led customer-centric mindset while also preparing to execute on the world pay integration. .
Cameron Brady: We have eye conviction in and line aside to the cost savings as well as the revenue synergies from the acquisition, particularly from enhancement opportunities fueled by our complimentary solutions and scale.
Cameron Brady: We will approach this integration differently than we have in the past with an uncompromising plan for aligning our operating model, fully unifying our businesses, and value realization.
Cameron Brady: We are egging in the quarter on a strong footing and have confidence in our 2025 and medium-term outlook.
Cameron Brady: We could not be more excited about the combination of Global Payments and World Pay and look forward to bringing this transaction to close.
Cameron Brady: Discombination enhances our competitive strengths, opens new opportunities, and accelerates our growth trajectory, while maximizing value creation and amplifying our capital return expectations. Thank you.
Cameron Brady: Before we begin our question and answer session, I'd like to ask everyone to limit their questions to one with one follow-up who will accommodate everyone in the queue. Thank you. Operator, we will now go to questions.
Cameron Brady: Thank you. If you'd like to ask a question, please press star 1 under telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: Our first question comes from the line of Jason Kupferberg with Bank of America, please proceed with your question.
Jason Kupferberg: Good morning, guys. Thank you. So I wanted to ask one on the standalone business and then one on the pro forma business. On the standalone side, we've got the genius product launched to you up here, obviously, just a couple of weeks away. Can you talk about the rollout plan in terms of, you know, let's call it pull versus push? We know the genius is going to ultimately replace quite a few legacy platforms, but how are you going to lean into the rollout in terms of front book versus back book? Okay.
Jason Kupferberg: and then how you're thinking about managing potential back book attrition risk in conjunction with Genius Conversion.
Thank you.
Jason Kupferberg: Yeah, Jason, thanks. It's Cameron, I'll start and then ask Bob to maybe dig in with a few more specifics. So look as you can imagine, we're particularly excited about the rollout of genius coming out here in a couple of weeks and obviously over the balance of the year. We put a lot of time and energy and investment into bringing this to life.
Bob Portapassi: And obviously it's a core underpinning and where we want to drive the business longer term and supports a lot of the growth expectations that we have for the business. I would say in the short term, our focus is predominantly on the front book. I think we're building a lot of excitement around the release of the product.
Bob Portapassi: Early sort of demonstrations with dealers, some specific clients, obviously there's a lot of excitement and I think energy around the capabilities that we're bringing to market through the platform.
Bob Portapassi: So in the short term, it's largely going to be making sure that we're attacking the opportunity we see on the front book [inaudible]
Bob Portapassi: Over time, naturally, we want to continue to work the back book as well. Naturally, as clients are ready to make a transition we'll be there to support them and we're investing in pathways to make it easy to convert from existing legacy environments that we operate today. Thank you.
Bob Portapassi: to the new genius platform, but certainly in the short to medium term it's largely a front book focus and then over time we're going to continue to work the back book.
Bob Portapassi: Interestingly, and not too weak too much into the world pay as well, obviously we have an amazing front book opportunity leveraging world pay distribution as well. So once we get to close one of our early.
Bob Portapassi: Planes will be to light up genius to be able to distribute it quickly through their distribution platforms and then of course we have a good backbook opportunity there with their 1 million existing kind of SMB merchants as well. So that's kind of the near term focus how we think about front and backbook but I'll turn it over to Bob maybe to provide a little more specificity around our specific plans and approach. Thank you very much.
Bob Portapassi: Yeah, thanks Cameron, thanks Jason, great question. I think the only thing I would add is to go back to the way that you framed it originally around pole versus push
Bob Portapassi: versus FrontBook and BackBook, although they're related, I think that we view the initial rollout as a poll-based offering primarily, and largely that is going to come from FrontBook opportunities, but we also have BackBook clients who are very excited about the opportunity to move to Genius, and we're providing pathways.
for them to do that.
Bob Portapassi: The back book obviously is going to sort of happen at customer's own pace. As I've mentioned before, including on the last quarter's call, we don't have plans at this point for any sort of a nuclear conversion experience with clients. We're not forcing people. [inaudible]
Bob Portapassi: off of the platform that they're operating today. So we're there for them as they're ready to migrate on their own sort of timetable.
Bob Portapassi: The other part around attrition, I think, look, I don't want to be arrogant about this, but I see very little reason for customers to want to attritt relative specifically to the genius rollout. This provides nothing but good news for them. [inaudible]
Bob Portapassi: It's more capabilities. It's a more modern platform. There's new hardware that's been designed to spoke to meet some key customer needs, market needs and support the software well. [inaudible]
Bob Portapassi: So there's nothing but good things in it for them and we're not forcing them, as I mentioned, off of their legacy solutions until they're ready to go . . .
Jason Kupferberg: Very helpful. And then my kind of performer world pay question, really just two pieces there. One, can you clarify if the improved revenue growth at world pay over the past year? Has been all organic? And then can you just touch on kind of your specific share buyback assumptions for both? [inaudible]
Jason Kupferberg: 2026 and 2027. I'm just looking at that mid-teen DPS growth rate and wondering if that same growth rate applies to both years, or is that more of a keger, just as we think about the need to kind of de-lever at least year one post-close. Thanks.
Speaker Change: Jason, very good questions, all maybe take the first and turn it over to Josh to provide a little more detail on the share we purchased expectations for 26 and 27 and how we think about that in the context of delivering as well. But as it relates to the world pay, it's purely organic, you know obviously over the course of the last couple of years they've made significant investments in their e-com and enterprise business.
Speaker Change: We're seeing very good fundamental growth trends in that business that obviously excite us that's 50% of their business today and obviously highly complimentary to what we do.
Speaker Change: as a company and certainly one of the aspects of the business that we find most attractive. So, they continue to invest meaningfully in I think creating, you know, broader technology and product depth across their alternative payment methods, FX solutions, payout, marketplaces.
Speaker Change: Authorization Optimization, the laundry list of things that they put capital behind their help driving I think better outcomes for them organically in that business is pretty impressive. And certainly the new sales trajectory that we see in that part of the business is also encouraging as we think about future growth potential for the business. .
Speaker Change: We also talked about what they're seeing with the pay-rich asset from a managed pay-factor perspective. That's obviously been an important driver for growth for the business overall .
Speaker Change: So as we said in our prepare remarks, you know, they're solidly amid single digit grower today on a nice trajectory going forward and obviously they support our overarching plans as it relates to growth applications accelerating in 26 and 27, you know, obviously getting to that high single digit level in 27 as we talked about on the call this morning. [inaudible]
Speaker Change: With that, I'll turn it over to Josh, and maybe cover the second part of your question. Yeah, thanks Jason. So, you know, I had an investor conference we talked about, you know, returning, you know, seven and a half billion of capital, you know, to shareholders over, you know, 25 to 27. And, you know, as we said, when we announced the transaction, we still expect to go ahead and deliver, you know, over, you know, seven billion in capital to to shareholders and [inaudible]
Speaker Change: During that time period, specifically other relates to 26 and 27.
Speaker Change: We expected to go ahead and return well over 2 billion in Share Revo and 26 and over 3 billion in 27.
Speaker Change: And so, and we expect to go ahead and be in, you know, solidly in that, that mid, you know, single-digit EPS growth range, you know, post-closing of the transaction.
Speaker Change: Thank you Jason, maybe just put a fine point on a couple of those comments so as we think about leverage obviously we're targeting to get back to that three times leverage in 18 to 24 months as we talked about we can do that while also sort of continuing with our capital return plans interestingly in 26 and 27 we actually increase our capital returns by roughly 10 percent [inaudible]
Speaker Change: versus our standalone plan. And if you look at 28 as Josh highlighted in his prepared remarks, we see a nearly 50% increase in our capacity.
Speaker Change: to return capital by the time we get to that exit 28 sort of time frame. So obviously very bullish and ambitious underweights to our ability to continue to return meaningful amounts of capital to shareholders. Golders.
Speaker Change: And obviously, we think the transactions were executing position as well to be able to accelerate and increase that over time. Yeah, and the other global point that I...
Sorry, it seems we're having some technical difficulties. Please stand by.
This is the operator, can you hear me?
Yes, we can hear you. Okay, I'm sorry, please continue [inaudible]
Speaker Change: You're connected. We're ready for our next. We're ready for our next question. Operating. Thank you.
Speaker Change: Our next question comes from the line of Tenjin Hoang with JP Morgan, please proceed with your question.
Tianjin Huang: Hi, good morning, everyone. Thanks for going through all of the merits of the deal again. The one comment that stood out to me, I think it was from Bob talking about the acquired orchestration layer. I'm curious how important that is as we're thinking about. [inaudible]
Speaker Change: Minimizing client disruption and helping dictate what platform survive or minimize some of the platform decision making. I'm sure you'll be taking it. I'm just curious how important that is and how that changes the risk equation on the deal.
Speaker Change: He had ginger in his camera and I'll start, and since I'm not a technologist, I'll let Bob do most of the heavy lifting. But look, as I step back and think about it from a big picture perspective, you know, we really focus on it through the lens of the client. What's important to the client and what's important to them is easy access. [inaudible]
Speaker Change: They want one single integration to be able to light up any product and capability and solution that we can bring to bear on the market. And they also want consolidated reporting settlement information coming out of the backend. What happens in the middle is largely irrelevant to them. That's us for us to manage. So let's go ahead and see what happens.
Speaker Change: and what the orchestration capabilities that we've acquired and continue to build over time and interesting world pays on a very similar path in terms of how they're setting up their architecture. Sure.
Speaker Change: We're providing clients with exactly what they're looking for, easy access into our environment, single integration and being able to access any product and solution that we can bring to bear on the market effectively.
Speaker Change: and then taking the complexity out of the situation for them and arming them on the back end with reporting settlement analytics, the capabilities that come out.
Speaker Change: The backside that make their lives easier from an execution and operating perspective. So the orchestration capabilities that we've acquired are critical, I think to accelerating our ability to integrate and bring new product and capability to market. Good.
Bob Portapassi: But most importantly, delivering clients the experience that they're looking for from us without having to burden them with, you know, obviously the everything that happens in between, you know, within our own technology environments. All that Bob maybe drill into a little bit more of the specifics around how we go about doing that. [inaudible]
Bob Portapassi: Yeah, I think Cameron covered it really well from the client perspective. The only other thing to engine that I'd highlight is
Speaker Change: This is an amplifier to really everything that we're doing around the tech, the platforms, the product. It flattens the entire internal architecture, at least virtually. So when you think about leveraging things like AI or agentech AI, where you need access to data to drive those sort of robotics, the AI and machine learning capabilities. [inaudible] very, very, very, very,
Speaker Change: All of those through the orchestration layer allow you to span the entire breadth of platforms that you've got all of the data that's residing in different places in your architecture without forcing you into some big consolidation exercise to build a giant data lake or to consolidate platforms you get all of the same benefit of being on a single platform with single database by having orchestration capabilities even at that middle middle table.
here that we're operating sort of silently to the customers.
Speaker Change: So it accelerates our ability to deliver a product or a capability across all platforms.
All Regions, all customer segments .
Speaker Change: Very rapidly, and as we think about integrating world pay with global payments, as Cameron mentioned, they've already been on a modernization journey of their own to create a single entry in a single exit. [inaudible]
Speaker Change: into their platforms, both in terms of integrating into their capabilities, as well as the reporting and management infrastructure on the back end. So when you bring those two together, this is a much simpler, much quicker sort of technology integration roadmap than really any of us have seen in years past. [inaudible]
Speaker Change: Okay, no, that's good to know. Thanks for going through that. I know that's okay to ask a follow-up, ask a quick one if that's okay, just...
Tingen: Yeah, it's a great question to Indian. At the investor conference of September we highlighted that we're targeting somewhere in the neighborhood of 500 to 600 million sort of revenue dispositions over the next couple of years as we work to continue to streamline and simplify our business.
Tingen: Today, we've done about 300 million, so we have a little bit to go to get to that target that we had outlined previously and
Tingen: That still remains kind of in our plans as we look to to streamline the portfolio around the business that we want to operate as a go-forward matter so
Tingen: I think the fair expectation is there's likely a little bit more to come on that front, but obviously the work we've done today I think has been impactful and obviously trying to simplify the business and focus on areas where we are scale player with the right capability to drive better growth outcomes longer term.
Thank you for the update everyone.
Faith in it.
Tingen: Thank you. Our next question comes from the line of Adam Frisch with Evercore RSI. Please proceed with your question.
Speaker Change: Hey, thanks guys. With the genius platform rolling out in the next couple of weeks, I just wanted to get an update on a couple things here.
Speaker Change: Integration Initiative is complete and what's left to do. And then Bob, if you could speak to where you are in the Salesforce, where you are both within G-Pen, and where you are with what you're doing to secure the World Pay Sales Resources, and then I have a quick follow up. Thanks.
Speaker Change: Yeah, Adam, thanks for the question. I'll start and turn over to Bob to cover some more details in particular the second part of your question, but as it relates to the sort of rebrand exercise. [inaudible]
Speaker Change: You know, we're continuing in March forward to lying global payments around a common brand, you know internally and externally and certainly the genius platform aligning all of our point of sale around the genius platform brand. Thank you very much again.
Speaker Change: In Jake War element of that, as we talked about earlier, we're launching that sort of officially quote unquote [inaudible]
Speaker Change: in a couple of weeks and then are working to align all of our existing product capabilities in the POS space around that genius brand that's going to be happening over the balance of the year. The goal is obviously to align as much a global payment around a common brand as we can, leading up to the world pay closing at which time we'll have a common brand also for the combined business as a go forward matter. That's important to us as we think about immediately sort of bringing the two businesses together. The goal is to align as much a global payment around a common brand as we can, leading up to the world pay closing at which time we'll have a common brand.
Bob Portapassi: I'll let Bob maybe cover the progress that we've made on the sales force of the future initiative and where that stands and its evolution.
Bob Portapassi: Yeah, Adam. So if you'll remember, as we talked about this a couple times, the sales person of the future initiatives that we had stacked. [inaudible]
Bob Portapassi: They start with aligning the sales teams and that work is done.
We've got a single leadership by region of the Salesforce. [inaudible]
Bob Portapassi: that's going to market in a unified way. We've got segmentation around enterprise and SMB, where we still play in enterprise and army to an extent. In the SMB channel, we've organized around in America's and rest of world, and that covers our direct sales, our indirect sales, our FI partnerships. [inaudible]
Bob Portapassi: to ensure that we're rewarding our sales people well and we're driving the right behaviors.
Bob Portapassi: That work is also complete. And then the third leg of the stool was really around capabilities and force multipliers for our sales team. Things like consolidated CRM, sales training, upskilling around the ability to sell software, not just traditional payments. [inaudible]
Bob Portapassi: expanding our sales teams in certain areas, and all of those initiatives are well underway, and I think we're very encouraged by what we're seeing so far. Our sales people are very excited about access to new capabilities to sell into the markets where they were already operating. Thank you very much.
Bob Portapassi: Art Seal teams are excited about the new incentive plan and structure that allows them to
Bob Portapassi: To get multipliers in their plan and earn more is a bundle cell and provide more holistic solutions to the customers that they're working with.
Bob Portapassi: So, you know, we feel really good about this. We mentioned there might be some bumps in the road and we definitely have had challenges to work through over the past six to nine months as we've been on this journey, but we feel really good about progress. And as we exit Q1, March was really the best, the best sales month of the quarter and we see a strong pipeline. [inaudible] Thank you very much for joining us today.
Bob Portapassi: both in terms of the marketing and lead tunnel, as well as the opportunities that are actively being worked by our team. As it relates to world pay,
Bob Portapassi: I think there's great news there as well. If you look at all three segments of the World Pay Business, whether it's the enterprise and e-commerce, the platforms, integrated business, or the kind of chorus and B business, every one of them.
Bob Portapassi: Sold more and are on an improved growth trajectory from 23 into 24 and then from 24 into 25 so we see them operating a more successful and a more effective sales force than they have in the past. And so we see them operating a more successful and a more effective sales force than they have in the past.
Bob Portapassi: In terms of securing the teams, look, I mean, I've been in this business for a really long time and what salespeople care about are having
Bob Portapassi: Strong solutions that they can show up and feel good about representing to their clients that meet their needs in the market.
Bob Portapassi: and earning potential that allows them to be rewarded for their efforts. And I think both of those,
are addressed as part of this transaction. More Fulsome capabilities. What is?
Bob Portapassi: A Ritual Award in Compensation Program, and really the opportunity to grow with a business that's got a footprint around the globe with lots of different customer demographics and lots of products that span the spectrum from SMB to enterprise and vertical software.
Speaker Change: And Adam, the only thing I would add to that is, as we talked about many times, world pay business and their distribution channels are very much complimentary to what we bring to market today.
Speaker Change: I'm a product as well as distribution perspective. So we think the distribution is additive across the two businesses. We're not worried about sort of retaining distribution capabilities because again we don't see really areas where we overlap, you know with two large degrees today. Right.
Speaker Change: Okay, great color there. If I could just squeeze in one more because revenue growth is obviously so important to the current and the go forward. Can you provide some color on the components of your revenue growth?
Speaker Change: and that of world pay to the extent that you have, that insight into that, how much came from organic volume growth and new services, and how much came from pricing increases? Thanks, guys.
Speaker Change: Yeah, thanks Adam. First of all, I'll address that. Look, you know, Adam, you're just given the characteristics of the pro form of business. We have, you know, great conviction in the targets, you know, that we established for a medium term outlook, you know, specifically, you know, we expect our top line growth to accelerate in 2026 and to be in that high. Thank you.
Speaker Change: Single Digit Range in 2027. And as we talked about, you know, as we think about our medium-term outlook, we expect our just operating margins to expand 100 to 200 basis points, which [inaudible]
Speaker Change: We're translating to grow into that mid-teens, so I think it's also important to note that on the combined business, we'll generate more than 4 billion of adjusted free cash flow annually versus the 3 billion we were targeting on a standalone basis, which we talked about. And then importantly, I think in 28, your portfolio for transactions will increase our free cash flow by approximately 5 billion, which is 50% higher than what we expected on a standalone basis in which it will allow us to return more than 4 billion to share holders in 2018.
Speaker Change: A, which is also 50 percent higher. So while also maintaining that three times leverage point. So look, the combined basic, the combined businesses will absolutely go ahead and accelerate the growth profile. You know, of the business, give us more scale and allow us to go and return more capital to shareholders. Thank you very much.
Speaker Change: And Adam, the only thing I would add to that is you just look at the underlying revenue growth expectations, you know, it's really organic across both of the businesses. We're seeing strong sort of new sales production which obviously is driving a good amount of growth in both businesses. We're seeing you know, stable, I'd say underlying same store sales trends across both of the businesses. [inaudible]
Speaker Change: And obviously pricing remains, you know, and pricing optimization always remains a component of the overall sort of calculus to driving revenue growth in the business, but I would say for both of the underlying businesses, it's relatively modest and generally in line with kind of past practices around how we think about pricing optimization overall. So.
Speaker Change: I think good, healthy underlying trends overall and obviously gives us confidence with the outlooks that we've provided today both for Global Payments stand alone as well as where we see the combined business growing post close.
Speaker Change: The only other thing I'd say is what we said out of it is our top line growth, margin expansion is relatively consistent with the guidance that we've provided for Global on 25 and in 26 and 27 and those are the trends that we've been seeing in the business.
Speaker Change: Thank you. Our next question comes from the line of Ramsey Ellis Al with Barclays. Please proceed with your question.
Speaker Change: This is Ryan on Thorens. He thinks we're squeezing in for a question today. He touched on it briefly, but could provide some additional color on how a Global Payment can handle recessionary pressures, especially now as a pure play of merchant business has been different from the past. Thank you.
Speaker Change: Yeah, it's Cameron. Oh, I'll maybe cover that. So look, as I step back and think about the business today and then think about the perform of business, which again, we expect that to close sometime in the first half of 2026. So certainly as we think about the short term, we're really thinking about in the context of the business for running today.
Speaker Change: You know, we think we're well situated to be able to manage effectively through any sort of macroeconomic environment. I think we have a demonstrated track record being able to do that.
Speaker Change: We have a business today on the merchant side that's highly diversified across geographic markets, highly diversified across vertical markets as it relates to consumer discretionary and non-discretionary verticals.
Speaker Change: So the relates to the core mix of our merchant business today. Again, I think we're well prepared to be able to manage effectively and drive good financial outcomes through whatever sort of cyclical macro environment we may be in. Obviously, the issuer business is a durable business as well. And in the short term, obviously continues to be a part of our company and provides a little bit of insulation. Thank you very much.
Speaker Change: As we think about the platform of business post-closing of the transactions, we think we're, you know, as equally well prepared to be able to manage any macro environment . . .
Speaker Change: Obviously, there are characteristics of the world pay business that I think are a little more defensive, particularly the relates to their exposure to big box retail, grocery, etc. That are very durable despite, you know, what underlying macro environment you may find yourself in. Thank you very much.
Speaker Change: In the sheer size scale scope and diversification of the business geographically again across vertical markets.
Speaker Change: Again, things obviously positions, I think, a pro form of business to be very, I think resilience, to be able to manage through any sort of downturn in the economy that we may or may not see over time. So, we feel good about the composition of the business, the increased scale and obviously financial strength and flexibility that we'll have on a pro form of basis. Thank you.
Speaker Change: I think gives us a lot of confidence that the modern we're building for the long-term is best to be able to manage through any sort of economic environment and drive long-term value creation for shareholders.
That's great, thanks, and congrats on the court.
Thank you [inaudible]
Speaker Change: Thank you. Our next question comes from Line of Dave Koning with Baird. Please proceed with your question.
Dave Koenig: Yeah, hey guys, nice job. And I guess my question, SMB volume held up remarkably well. I think you put in there 6% this quarter. I think it was 6% also last quarter in a market where I think all your competitors and industry data showed diesel. Maybe, could you describe a little, maybe, did you take a little share of what dynamics might be playing out in your business that might be a little different than the industry? Okay.
Dave Koenig: Yeah, Dave, thanks for the question. Look, I think overall we saw relatively stable trends kind of Q4 to Q1. Obviously, you have a little bit of a leap year impact in Q1, but we were able to kind of grow through that, notwithstanding a little bit of a headwind, kind of year over year from that. So, look, in the rounding is probably relatively consistent, I would say, versus what others saw in the marketplace more broadly, but we're obviously pleased with kind of the underlying momentum that we have in the first quarter and how that sets us up as we head into Q2 and beyond. We didn't see. [inaudible]
Hawkins Internationally, the Chota Whittemore Strang.
Dave Koenig: then, you know, we might have anticipated kind of heading into the quarter, which is good news for us and kind of sets us up well. [inaudible]
Dave Koenig: We think as we head into Q2 and for the balance of the years I've mentioned before but overall look we feel very [inaudible]
Dave Koenig: Very good about where the business is, we feel good about the progress we're making on transformation and how that's arriving sort of better outcomes, particularly as the go to market matter as Bob highlighted earlier. You're in.
Dave Koenig: I think the momentum we have coming out of the quarter, again, is positive and certainly consistent with the expectations we had for the year and it gives us confidence around the things that we're doing and continuing deliver results as we go forward.
No, that's great. Thanks, guys.
Thanks David.
Speaker Change: Thank you. Our next question comes from the line of Timothy Chiodo with UBS. Please receive with your questions.
Timothy Chiodo: Great, thanks for taking the question. I want to talk a little bit about the genius
Timothy Chiodo: Product Investment from a dollars perspective. You can just go a little bit about over the past few years, how much investment has gone into the genius product just so we can compare to some of the investment that we see to others, whether it be toast or square, and a little bit about how that might change ahead as you have the increased capacity to invest behind the product.
Cameron Brady: Yeah, it's James Cameron, I'll start, and maybe I'll have to put on a little bit more color as well. Look, as I step back and think about it in a broader context.
Cameron Brady: I think over the course of time we've been investing heavily in multiple sort of POS platforms across the business and we talked a little bit about this that our investor conference back in September So there's been no lack of investment in I think our POS capabilities capabilities
Cameron Brady: the feature functionality we're embedding into those environments and the products that we're bringing to our clients.
Cameron Brady: I think where the challenge probably has been for us more specifically is just around the ability to amplify that investment.
Cameron Brady: You know, more broadly across our business and really focus that investment on singular platform where we're building capabilities once . . .
Cameron Brady: We're amplifying them more broadly and we're able to bring them to market more effectively to drive better outcomes for us as a growth matter and drive better outcomes for our clients over the long term. So as I think about investment in the business, you know, we've been investing well in our POS. [inaudible]
Cameron Brady: We believe very strongly in the feature functionality and capabilities that we have, the focus of investment over the last six to nine months, and we'll be going forward is harmonizing that investment into single platforms. [inaudible]
Cameron Brady: that allow us to bring all of the capability that we've been able to build over a longer period of time to market in easily accessible retail and restaurant platforms.
Cameron Brady: to serve all the different markets around the globe where we want to be able to bring the genius platform to bear. And that's really a focus from an investment perspective. We think we have highly competitive feature functionality that competes with. [inaudible]
Cameron Brady: All the best to breed sort of POS solutions in the market. Now it's harmonizing that investment, harmonizing those features and capabilities and driving again to single platforms that support our ambitions from a POS perspective globally.
Bob Portapassi: Bob, I don't know if you had anything to that. Only one thing, and I think Cameron hinted at this, but the reality is we see this as an accelerator incident.
Speaker Change: The last six to nine months have been about harmonizing platforms, and they're still a little bit of that work certainly to do in the next couple of quarters but over the mid to long term. [inaudible]
Speaker Change: We see this as an accelerator of innovation without meaningfully having to change [inaudible]
Speaker Change: The raw number of dollars that we're investing into the platforms, if you have to cut it five ways versus cut it one way, you immediately get an acceleration in the pace of investment in innovation. And I would just say, you know, performance, you think about combining with the world paid business with a billion dollars to invest more than a billion to invest back in the business, this is one of the top. [inaudible]
Speaker Change: Growth Areas for us, it's one of the top innovation areas, and it's going to remain one of the top investment areas for the business as we bring the two businesses together. Thank you very much.
Speaker Change: And I think if I could just add to that, Tim, I think Bob touches on a really good point and it's one of the elements of the transaction that we're most excited about which is what disability to blend innovation and scale [inaudible]
Speaker Change: Obviously, the combination of Global Payments and World Pay gives us significant more investment capacity in the business but more importantly allows us to amplify that investment in to accelerate outcomes around innovation. Thank you very much again.
Speaker Change: Speaker functionality, product capability, we can bring to market and marrying that with a level of scale that's really I think impressive. [inaudible]
Speaker Change: and hard to wrap your head around just in terms of the sheer scale benefits that come from $4 trillion of the processing volume annually over 100 billion transactions. So that combination, I think, is really powerful and as we think about where the market is going over the long term, the ability to blend innovation in scale in this way, I think it's going to drive certainly better outcomes for our business long term.
Great, thank you both, Cameron and Bob, appreciate the answers.
Thanks, Tim.
Speaker Change: Thank you. Ladies and gentlemen, our final question this morning comes from the line of Andrew Schmidt with City. Please proceed with your question.
Andrew Schmidt: Hi Cameron, Bob Josh, thanks for taking my questions this morning. I wanted it to go back to maybe something you said a moment ago Cameron, you know obviously you know you said two important elements of the transactional scale and then innovation and scale. Thank you very much.
Speaker Change: is the obvious point and then innovation obviously with the transformation plus the ability to invest more is pretty compelling. But if you could put a finer point in how you manage product across SMD and enterprise and how we get to that faster product innovation, few more details there would be extremely helpful. Thank you so much.
Speaker Change: Yeah, it's a really great question, Andrew. I'm glad you asked it. I'm going to paint maybe a bigger picture for you, and I must bob to jump in with some more specifics.
Speaker Change: But if I step back and think about long term, in the context of doing this deal, what was our thought process? Where do we see the industry heading and what was important to us as we thought about putting the two businesses together? There's a few key themes that I certainly want to highlight and I think it really relates to the question you're asking.
Speaker Change: You know, first and foremost is, look, I think the expectations for enterprise and SMB customers are going to converge over time [inaudible]
Speaker Change: You know, there are capabilities today that are largely only available to larger enterprise businesses that SMBs are going to want to avail themselves of and there's going to be more demand for those so the ability to blend. I think product and capability across enterprise and SMB is a really critical strategic driver for the business long term. [inaudible]
Secondly, I think digital native commerce will continue to accelerate [inaudible]
Speaker Change: and obviously having the best in class tools to be able to support digital native commerce globally.
Speaker Change: He's really critical to how we want to be able to position the business.
Speaker Change: having the types of effects, authorization rate, optimization capabilities, alternative payment mechanisms.
Speaker Change: All the things that sort of are as digital-nated, clients are looking for that are feature-rich solutions that world pays able to bring to market. I think what important for us as we move forward as digital commerce continues to grow and we want to be able to scale those capabilities down into more of the SMB space as well.
And the third key trend I would highlight is
Speaker Change: embedded commerce models will further evolve and I think having a broader set of tools to be able to manage whatever software platform marketplace partners are looking for with operating models that are highly tailored to meet their specific needs go to market strategies and product sets.
Speaker Change: I think is really critical. So as we step back and thought about, where's the industry going longer term?
Speaker Change: You know, and what are the key trends we want to position ourselves around? The world pay transaction enhances, I think, our ability to be able to attack in a positive way of course, you know, these trends that we see developing over time and better positions as business long term. [inaudible]
Speaker Change: to be able to drive better growth outcomes, better value creation for our shareholders, etc. So,
Speaker Change: But the ability to blend our solutions to be able to bring product and capability across the full spectrum of merchants enterprise SMB is critical.
Speaker Change: The ability to better serve digital native is that continues to be a market trend that we think will continue to accelerate over time is critical. [inaudible]
Speaker Change: in the ability to be able to serve any type of software platform partner with any operating model with all the tools and capabilities they need to grow and scale their business is critical and
Speaker Change: You know, we're certainly very pleased with how the perform of business is going to be situated to attack those trends for the long term and obviously it was a core part of how we thought about the as we thought about the business.
Bob Portapassi: And I think it's really relevant to your question regarding innovation, investment, product capability, etc. Because it was an important underlying thesis for putting the two businesses together. Bob, do you want to talk a little bit more just about how we think about managing that? Certainly as a standalone business day, but more importantly as a combined company. Thank you very much.
Bob Portapassi: Yeah, Andrew, I think the way that we think about product today, there are there are [inaudible]
Bob Portapassi: Technology Stacks, Platforms, et cetera, that are common and provide common capabilities whether you're an SMB, whether you're an enterprise, whether you're in an integrated and embedded or a platform style business, and we have centralized product management oversight over those. [inaudible]
Bob Portapassi: There are also things that are specific to a vertical, sometimes capabilities that are specific to a geography of a geography.
Bob Portapassi: and we want to be able to react quickly to the market, pivot quickly and innovate quickly. And so we have product capabilities that are close to those verticals and those geographies. [inaudible]
Bob Portapassi: Whether they're SMD or enterprise or whether you slice it a different way, what might be specific to an education vertical could be different than what you need in a health services vertical. And so we have product people and capabilities very close to the market. [inaudible]
Jason Kupferberg: I want to I guess double click really really quickly on a point that Cameron made about you know enterprise capabilities coming down market . . .
Speaker Change: I've been in this business in software and payments for 30 years and one consistent theme is that what the enterprise players get today is what the mid market wants tomorrow and SMB wants next week.
If you rewind the clock 15, 16, 17 years ago,
Speaker Change: Visa had a fantastic account-update or feature that took cards on file and refresh them when they became stale. When somebody lost the card or it was stolen, it was reissued, and they had about 100 customers worldwide who were using it.
Speaker Change: because it was hard to integrate, it was expensive to operate, and we built a service that democratized that for the small and did market.
Speaker Change: that made it something that they could consume. That's the same sort of approach that we're taking with Enterprise Digital Native Capabilities Today, as the world becomes more and more on the channel as we talked about it investor day and since. [inaudible] I'm sorry, I'm sorry
Speaker Change: It's important not just for digital native businesses, but for all businesses to have a digital online presence. And we think world-paced capabilities accelerate our ability and enhance our ability to deliver that not only at the enterprise level but also throughout the entire stack of merchant demographics. Thanks.
Speaker Change: You know, some macro-evolatility into the outlook, but you can put a finer point on that, that'd be helpful for everyone. Thanks so much.
Speaker Change: Yeah, Andrew, this is Josh. So, look, I think, you know, similar to kind of what you've heard from others, you know, that we saw the consumer continues to remain resilient. And, you know, as it relates to the overall outlook, we are assuming that that spending trends remain very, very consistent to kind of what we. [inaudible]
Speaker Change: I saw coming out of the corridor and we'll continue to see in April what the macro backdrop is obviously created a little bit more uncertainty but right now we're assuming a stable macro through the balances of the year.
Alright, thank you, Josh.
Thanks, Andrew. Thanks, Andrew.
Speaker Change: And with that, we'll conclude our call for this morning. I do want to thank everybody for joining us, particularly joining us early. So thank you for getting up early to be with us today. We apologize for running a bit long this morning, but as you can tell, we had a good deal that we wanted to share with you and to make sure that we got across in our call today.
Speaker Change: We look forward to continuing to update you on progress as we bring these transformational transactions to close .
Speaker Change: And importantly, we also look forward to a seamless integration of World Pay and unlocking the full potential of this combination as we continue to drive the evolution of commerce worldwide. So thank you again for your interest in Global Payments and we look forward to following up with you over the next several days. Have a great day everyone. Thank you very much.
Speaker Change: Thank you. This concludes today's conference. You may disconnect your line at this time. Thank you for your participation.