Global Payments Reports Third Quarter 2020 Results

Staff Report

Friday, October 30th, 2020

Global Payments Inc. today announced results for the third quarter ended September 30, 2020.

“We are pleased with our results for the third quarter, which demonstrate substantial ongoing improvement across our markets and significant margin expansion for each of our segments," said Jeff Sloan, Chief Executive Officer. "These results validate the actions we took at the start of the pandemic to position our businesses and return to growth. We are grateful to our team members for their extraordinary commitments to our customers, to each other and to the communities in which they live and work during this difficult time.

“We have made meaningful progress strategically this year, with an emphasis on driving further digital growth. We are delighted with our collaboration with Amazon Web Services, our preferred cloud provider of issuer technologies, a relationship that is already generating significant momentum since our August announcement; the acquisition of an incremental stake in our joint venture with CaixaBank in October, bringing our ownership to 80%; and the ongoing mix shift of our revenues toward technology enablement, where we recently crossed the 60% target that we set in March 2018, ahead of our plan.”

Sloan concluded, “We accomplished these goals during the pandemic while also extending relationships with some of the largest, most sophisticated and complex worldwide financial institutions including HSBC Group in Europe and CIBC in Canada for merchant services, as well as by taking share in card issuing services through partnerships with market leaders in technology and financial services. As a result of our strong performance through the third quarter, we are returning to our traditional capital priorities, including share repurchases.”

Third Quarter 2020 Summary

  • GAAP revenues were $1.918 billion, compared to $1.106 billion in the third quarter of 2019; diluted earnings per share were $0.74 compared to $0.54 in the prior year; and operating margin was 15.1%.

  • Adjusted net revenues declined 4% to $1.746 billion, compared to $1.820 billion in the third quarter of 2019 on a combined basis.

  • Adjusted earnings per share increased 1% to $1.71, compared to $1.70 in the third quarter of 2019.

  • Adjusted operating margin of 41.1% expanded 250 basis points on a combined basis.

Financial Highlights

“We delivered solid financial performance for the third quarter, enabled by the continued recovery across our markets, our attractive business mix and ongoing outstanding execution,” said Paul Todd, Senior Executive Vice President and Chief Financial Officer. “Importantly, the immediate and significant cost actions we took in response to the pandemic drove strong adjusted operating margin expansion this quarter, and we are pleased to have delivered adjusted earnings per share growth from the prior year period.

“Based on progress on our integration activities, we are raising our expectations for annual run rate expense synergies from the TSYS merger to $375 million, an increase from our prior estimate of $350 million. We also remain on track to deliver at least $125 million in annual run rate revenue synergies and $400 million in additional annual run rate expense savings related to the pandemic, which is incremental to the TSYS merger cost synergies.”

Todd concluded, “The extraordinary health of our business, including our strong cash flows and investment grade balance sheet, has served us well during this period. We are pleased to announce that our Board of Directors has increased our share repurchase authorization to $1.25 billion, and we look forward to re-commencing the return of capital to our shareholders and managing our pipeline.”