Global Payments Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Transformation and Acquisitions: Anticipated closing of Worldpay acquisition and divestiture of Issuer Solutions in Q1 2026, with regulatory approval received in the UK. Closed payroll business divestiture, returned $500M via accelerated share repurchase.
• Genius Rollout: 90% of Genius sales to new customers, launched in enterprise and higher education (e.g., Prudential Center, University of Illinois), new handheld device launched, and expansion into UK, Austria, Germany, etc.
• Integrated and Embedded Business: Added 60 new partners globally, expanded partnership with PayPal, and added an outside sales force for complex verticals.
• Core Payments: Notable wins in global markets, renewed Verizon Wireless, and launched a new merchant dashboard for cross-selling value-added services.
• Technology and AI: Unified orchestration platform, AI used to generate 1M lines of code, saving manual coding time.
• Sales Force Transformation: Implemented new compensation plan, added 500 field sellers, consolidated CRM systems, and deployed sales intelligence tools.

Segment Performance

• Merchant Solutions: Adjusted net revenue of $1.88 billion for the quarter, with ~6% constant currency growth excluding dispositions. POS and software achieved high single-digit growth. Genius saw 90% of sales to new customers, new locations up >20% QoQ, monthly recurring revenue from new sales up 75% June-Sept, and average deal size doubled.
• Integrated and Embedded Payments: Delivered high single-digit growth, added nearly 60 new partners globally, with about half outside North America.
• Core Payments: Experienced mid-single-digit growth, with international markets (Central Europe, Asia Pacific) showing high single-digit constant currency revenue growth.
• Issuer Solutions: Generated adjusted net revenue of $562 million, ~5% constant currency growth, added 16 million traditional accounts on file, and completed 2 implementations.

Guidance

• Full-year 2025 constant currency adjusted net revenue growth 5%-6% excluding dispositions, with dispositions impacting reported growth by ~400bps. Q4 foreign currency tailwind ~50bps. Adjusted operating margin to expand >50bps excluding dispositions.
• Merchant business expected ~6% constant currency growth, Issuer Solutions ~4% constant currency growth. Adjusted free cash flow conversion >90%, net leverage target 3x. Adjusted EPS growth at the high end of the 10%-11% range.

Risks

• Regulatory risks related to acquisitions.
• Market competition impacting pricing and market share.
• Integration challenges with Worldpay acquisition.

Question and Answer

• Q: Dan Dolev asks about capital returns. A: Cameron and Josh discuss capital return plans, targeting $9B return by 2027, with free cash flow expected to reach $5B by 2028.
• Q: Jason Kupferberg asks about Genius wins and pricing. A: Cameron and Bob talk about Genius wins from new and existing customers, and pricing strategy focusing on value.
• Q: Adam Frisch asks about organic growth and sales force. A: Cameron and Bob discuss organic growth drivers, and sales force sourcing from software sales backgrounds.
• Q: Dave Koning asks about Genius back book attrition. A: Robert talks about leveraging existing relationships and incremental capabilities with Genius.
• Q: Bryan Keane asks about competitor pricing. A: Cameron focuses on own execution, not commenting on competitors.
• Q: Andrew Schmidt asks about Merchant Solutions organic growth into 2026. A: Cameron and Josh discuss drivers like Genius, sales effectiveness, and Worldpay integration.
• Q: Darrin Peller asks about volume growth and Worldpay SMB integration. A: Cameron talks about Genius driving volume, and Worldpay SMB integration complementing distribution.