Global Payments Inc. (GPN) Earnings

Management highlights

- **WorldPay Integration Milestones** • Completed operating model design and established full leadership structure, creating a more streamlined, agile organization with clearer accountability • Finalized target architecture for the combined technology environment, providing a blueprint for platform consolidation, reduced complexity, and improved long-term operating leverage • Aligned the commercial organization around the three new operating segments (SMB, Enterprise, Platforms) to simplify execution and better serve customers - **SMB & Genius Product Progress** • Investments in go-to-market transformation delivered a 30% increase in new merchant locations per quota-carrying sales professional year-to-date, and a >25% sequential increase in Genius bookings in Q2 • New Genius customer yields increased 75% year-over-year, demonstrating customer willingness to pay for the product's value; new Genius locations grew over 50% year-over-year • New AI-powered Genius product launches include an edge AI handheld device with noise-resistant voice ordering, and a natural language AI reporting tool that delivers operational insights • The product drove a nearly 60% uplift in Google branded search, lowering long-term customer acquisition costs; expansion is underway with bank partners including Desjardins in Canada, with 30 large U.S. bank partners set to begin selling Genius in Q4 2026 - **Enterprise Segment Growth** • Year-to-date bookings grew 10% year-over-year, with notable new wins including Shangri-La Hotels, IG Group, BingX, and an expanded exclusive U.S. payment partnership with Domino's Pizza • Approximately one-third of signed but not live enterprise clients went live in Q2 2026, including Aldi, Morsons, and Careem in the UAE • Card-not-present e-commerce revenue grew low double digits, with value-added services driving a yield tailwind for the segment - **Platforms Segment Growth** • 48 new partners signed in Q2, over half of which are international, diversified across B2B, healthcare, hospitality, and retail verticals • Extended and expanded the partnership with Explorer, enabling the software provider's international expansion via Global Payments' scale and capabilities • Embedded payments continues to see double-digit volume growth, with value-added services (fraud, dynamic payouts, working capital) growing 25% year-over-year - **AI Innovation & New Commerce Opportunities** • AI is deployed across products and internal workflows to accelerate innovation, reduce development time, and improve customer experiences • AI-powered revenue boost solution now delivers an incremental 50 basis point increase in payment approval rates, on top of $2 billion in annual approval uplift • Multiple agentic commerce pilots are underway with leading AI platforms and large global retailers, co-creating secure new commerce experiences - **Capital Allocation** • Returned ~$550 million to shareholders in Q2 via accelerated share repurchases and open market repurchases; the company is now more than halfway to its full-year 2026 commitment of returning over $2 billion to shareholders • Ended Q2 with net leverage just below 3.5x, with over 90% of debt fixed-rate at a weighted average cost of ~4%

Guidance

• Full year 2026 adjusted EPS guidance is revised downward to $13.60 to $13.80, representing 11% to 13% year-over-year growth, due to the persistent negative impact of the Middle East conflict on the travel portfolio that lasted longer than initially anticipated • The updated guidance assumes the Middle East conflict impact will continue through the remainder of 2026; it expects 4% to 5% constant currency adjusted net revenue growth for the full year, with approximately 4.5% growth expected in the second half of 2026 • Full year adjusted operating margin is still expected to expand 150 basis points year-over-year, with 200 basis points of margin expansion in the second half reaching ~43% margin, driven by WorldPay integration synergies and operating leverage • The recent strengthening of the U.S. dollar is now expected to result in roughly zero impact from currency exchange on full year 2026 reported growth • Full year 2026 adjusted net income to adjusted free cash flow conversion is still expected to exceed 90%, with $1 billion in planned capital investment in the business for the full year • Capital return plans remain unchanged: the company still expects to return over $2 billion to shareholders in 2026, and remains committed to reaching a 3x net leverage target by the end of 2027 • Management confirmed confidence that 2027 will be an accelerating growth year compared to 2026, as the Middle East headwind laps and contributions from Genius ramp up and WorldPay revenue synergies incrementally add to growth

Segment performance

Global Payments restructured its business into three core operating segments following the WorldPay acquisition, plus a non-core Other revenue category: 1. **SMB Segment**: Serves businesses with under $50 million in annualized volume, providing payment, software, and commerce solutions. Generated adjusted net revenue of $1.51 billion in Q2 2026, with 4% normalized year-over-year growth (excluding dispositions) and 4% volume growth. It contributed 51% of total core operating segment adjusted net revenue. Adjusted operating income was $891 million, with a 59% contribution margin. 2. **Enterprise Segment**: Serves large multinational clients with over $50 million in annualized volume, providing complex payment processing and value-added services. Generated adjusted net revenue of $838 million in Q2 2026, with 7% normalized year-over-year growth (excluding a 400 basis point headwind from the Middle East conflict) and 4% volume growth. It contributed 28% of total core operating segment adjusted net revenue. Card-not-present e-commerce revenue grew low double digits. Adjusted operating income was $653 million, with a 78% contribution margin. 3. **Platforms Segment**: Offers embedded payment solutions through software partners, PayFacs, and marketplaces across verticals. Generated adjusted net revenue of $628 million in Q2 2026, with 7% normalized year-over-year growth and 10% volume growth driven by embedded payments expansion. It contributed 21% of total core operating segment adjusted net revenue. Value-added services revenue grew 25% year-over-year. Adjusted operating income was $284 million, with a 45% contribution margin. Total adjusted net revenue for the company in Q2 2026 was $3.16 billion, with 4% normalized growth excluding dispositions.

Risks & headwinds

• Prolonged conflict in the Middle East has created a persistent negative headwind to the company's travel portfolio, creating a 100 basis point headwind to Q2 2026 revenue, and a 400 basis point headwind specifically for the Enterprise segment; the uncertain duration and intensity of the conflict creates variability to full year results • A small segment of non-core businesses and legacy winding-down portfolios (included in the Other revenue category) will continue to create a drag on overall aggregate revenue growth until these portfolios are fully exited • Soft macroeconomic conditions in the UK market are creating modest softness in SMB segment results, concentrated in the former WorldPay portfolio • Integration and separation activities related to the WorldPay acquisition carry one-time integration and separation costs, which will gradually decline over time but impact current period results • General macroeconomic uncertainty and changes in consumer spending could impact future revenue and volume growth across segments

Analyst Q&A

• Q: What are the key assumptions behind the revised 2026 guidance? /

  A: Management states the guidance assumes the Middle East conflict headwind will persist through the end of 2026, with travel capacity and forward bookings remaining below pre-conflict levels, and a continued mix shift toward lower-yield short-haul routes. The guidance factors in continued stable consumer spending matching Q2 trends, includes updated FX assumptions following recent U.S. dollar strengthening, and still assumes full year 150 basis points of margin expansion from WorldPay integration synergies. The impact overall is modest, and the company's $2 billion 2026 capital return plan remains fully on track.

• Q: Can you explain the yield dynamics across each segment, and will Genius lift SMB yields over time? /

  A: For Enterprise, revenue growth outpaces volume growth because it has high double-digit growth in higher-yield card-not-present e-commerce, combined with slower GDP-like growth in card-present, plus a tailwind from growing value-added services penetration. For Platforms, volume growth outpaces revenue growth due to a secular mix shift toward lower-yield managed PayFac and PayFac offerings compared to traditional integrator referrals, and revenue growth will gradually rise as this mix shift matures. For SMB, Genius is still a modest contributor today, but existing data already shows Genius delivers higher yields, so it will lift segment yields over time as adoption scales.

• Q: What is the intermediate-term growth outlook for each segment, and what are the key growth drivers for SMB? /

  A: Enterprise grew 7% in Q2 even after a 400 basis point Middle East headwind, implying underlying low double-digit growth, with further modest acceleration expected in the second half as 10% year-to-date booked new clients go live. Platforms grew 7% in Q2, with embedded payments (now 20% of the segment) growing 20%, so slight acceleration is expected as embedded payments continues to scale. SMB grew 4% in Q2, with strong early growth from Genius (launched just over a year ago) which remains in early innings, and mid-single-digit growth is expected for the intermediate term.

• Q: What milestones for Genius rollout can investors track over the next 12 months, particularly for the former WorldPay SMB portfolio? /

  A: Management confirms early demand trends for Genius remain very positive, and it has large ambitions for the product, which is still a very modest revenue contributor today. Over time, the company expects effectively 100% of new front-book SMB sales in the U.S. will be Genius, with global geographies evolving to this model gradually. More detailed disclosure on Genius' revenue contribution and growth targets will be provided as the product scales further over the next 12 to 18 months.

• Q: Will back-book SMB conversion become a material growth driver for Genius? /

  A: Management confirms there is a large existing back-book of SMB customers that can convert to Genius, and the product's new hardware and expanded functionality are attractive to existing customers, leading to voluntary opt-in upgrades. There is no forced mass conversion or platform retirement schedule for legacy solutions; back-book conversion will proceed at a measured voluntary pace, and the near-term primary focus is on growing new front-book sales across geographies and distribution channels.