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Global Payments Reports First Quarter 2023 Results

Raises 2023 Outlook

Completes EVO Payments Acquisition

Closes Netspend Consumer Divestiture

Executes Sale of Gaming Solutions Business

ATLANTA -- Global Payments Inc. (NYSE: GPN) today announced results for the first quarter ended March 31, 2023.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230501005138/en/

“We are pleased to have delivered our best first quarter in four years, exceeding our expectations to start 2023,” said Jeff Sloan, Chief Executive Officer. “Both of our key businesses posted exceptional results. Our merchant business proved highly resilient as we saw accelerated growth across a number of worldwide markets and ongoing stability despite incremental macroeconomic distractions. And our core issuer business improved 340 basis points sequentially and delivered its highest rate of year-over-year growth in more than five years. This performance reflects the wisdom of our long term strategies and our consistent focus on execution.

“We accomplished these results while turning the page on the strategic initiatives we have been executing over the last 12 plus months. First, we are delighted to have closed our acquisition of EVO Payments in late March, and we are off to a strong start with our integration activities. Second, we are pleased to announce the successful closing of the sale of our Netspend consumer business in late April. Third, we completed the divestiture of the Gaming Solutions business immediately following the end of the first quarter.”

Sloan concluded, “These transactions serve to better align our businesses with our strategy, simplify our portfolio, sharpen our focus on core corporate clients and provide us with enhanced confidence in our growth and margin targets. We are delighted to raise our outlook for the full year following the outstanding financial and operating performance we produced in the first quarter.”

First Quarter 2023 Summary

  • GAAP revenues were $2.29 billion, compared to $2.16 billion in 2022; diluted (loss) earnings per share were $(0.04) compared to $0.87 in the prior year; and operating margin was 2.5% compared to 17.4% in the prior year.
  • Adjusted net revenues increased 5% (7% constant currency) to $2.05 billion, compared to $1.95 billion in 2022; excluding the impact of dispositions and the acquisition of EVO Payments, adjusted net revenue increased 9% on a constant currency basis.
  • Adjusted earnings per share increased 16% (18% constant currency) to $2.40, compared to $2.07 in 2022.
  • Adjusted operating margin expanded 200 basis points to 43.1%.

2023 Outlook

“We are pleased with our strong financial performance in the first quarter, which exceeded our expectations despite ongoing macro concerns,” said Josh Whipple, Senior Executive Vice President and Chief Financial Officer. “Based on our strong performance and continuing momentum, we are raising our guidance for calendar 2023.

“The company now expects adjusted net revenue to be in a range of $8.635 billion to $8.735 billion, reflecting growth of 7% to 8% over 2022 (an increase from 6% to 7% previously), and adjusted earnings per share to be in a range of $10.32 to $10.44, reflecting growth of 11% to 12% over 2022 (up from 10% to 11% previously), or 16% to 17% excluding dispositions. We continue to expect adjusted operating margin for 2023 to expand by up to 120 basis points.”

Whipple concluded, “Our 2023 outlook reflects the now completed execution of all three of our previously announced strategic transactions and assumes a worldwide macroeconomic backdrop that is consistent with the current environment throughout the remainder of the calendar year.”

Capital Allocation

Global Payments’ Board of Directors approved a dividend of $0.25 per share payable June 30, 2023 to shareholders of record as of June 15, 2023.

Conference Call

Global Payments’ management will host a live audio webcast today, May 1, 2023, at 8:00 a.m. EDT to discuss financial results and business highlights. The audio webcast, along with supplemental financial information, can be accessed via the investor relations page of the company’s website at investors.globalpayments.com. A replay of the audio webcast will be archived on the company's website following the live event.

Non-GAAP Financial Measures

Global Payments supplements revenues, operating income, operating margin and net income and earnings per share determined in accordance with GAAP by providing these measures with certain adjustments (such measures being non-GAAP financial measures) in this earnings release to assist with evaluating our performance. In addition to GAAP measures, management uses these non-GAAP financial measures to focus on the factors the company believes are pertinent to the daily management of our operations. The constant currency growth measures adjust for the impact of exchange rates and are calculated using average exchange rates during the comparable period in the prior year.

Global Payments also has provided supplemental non-GAAP information to reflect the divestiture of the consumer portion of the Consumer Solutions segment, which closed in April 2023. Management believes that providing such supplemental financial information should enhance shareholders’ ability to evaluate how the business will be managed going forward.

Reconciliations of each of the non-GAAP financial measures to the most directly comparable GAAP measure are included in the schedules to this release, except for forward-looking measures where a reconciliation to the corresponding GAAP measures is not available due to the variability, complexity and limited visibility of the items that are excluded from the non-GAAP outlook measures.

About Global Payments

Global Payments Inc. (NYSE: GPN) is a leading payments technology company delivering innovative software and services to our customers globally. Our technologies, services and team member expertise allow us to provide a broad range of solutions that enable our customers to operate their businesses more efficiently across a variety of channels around the world.

Headquartered in Georgia with approximately 27,000 team members worldwide, Global Payments is a Fortune 500® company and a member of the S&P 500 with worldwide reach spanning over 170 countries throughout North America, Europe, Asia Pacific and Latin America. For more information, visit www.globalpayments.com and follow Global Payments on Twitter (@globalpayinc), LinkedIn and Facebook.

Forward-Looking Statements

Investors are cautioned that some of the statements we use in this report contain forward-looking statements and are made pursuant to the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which are based on current expectations, estimates and projections about the industry and markets in which we operate, and beliefs of and assumptions made by our management, involve risks and uncertainties that could significantly affect the financial condition, results of operations, business plans and the future performance of Global Payments. Actual events or results might differ materially from those expressed or forecasted in these forward-looking statements. Accordingly, we cannot guarantee that our plans and expectations will be achieved. Examples of forward-looking statements include, but are not limited to, statements we make regarding guidance and projected financial results for the year 2023; the effects of general economic conditions on our business; statements about the benefits of our acquisitions or divestitures, including future financial and operating results, the company’s plans, objectives, expectations and intentions, and the successful integration of our acquisitions or completion of anticipated benefits or strategic initiatives; our success and timing in developing and introducing new services and expanding our business; and other statements regarding our future financial performance. Although we believe that the plans and expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our plans and expectations will be attained, and therefore actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements.

In addition to factors previously disclosed in Global Payments’ reports filed with the SEC and those identified elsewhere in this communication, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: the effects of global economic, political, market, health and social events or other conditions; foreign currency exchange, continuing inflation and rising interest rate risks; difficulties, delays and higher than anticipated costs related to integrating the businesses of acquired companies, including with respect to implementing controls to prevent a material security breach of any internal systems or to successfully manage credit and fraud risks in business units; the effect of a security breach or operational failure on our business; failing to comply with the applicable requirements of Visa, Mastercard or other payment networks or card schemes or changes in those requirements; the ability to maintain Visa and Mastercard registration and financial institution sponsorship; the ability to retain, develop and hire key personnel; the diversion of management’s attention from ongoing business operations; the continued availability of capital and financing; increased competition in the markets in which we operate and our ability to increase our market share in existing markets and expand into new markets; our ability to safeguard our data; risks associated with our indebtedness; our ability to meet environmental, social or governance targets, goals and commitments; the potential effect of climate change including natural disasters; the effects of new or changes in current laws, regulations, credit card association rules or other industry standards on us or our partners and customers, including privacy and cybersecurity laws and regulations; and other events beyond our control, and other factors included in the “Risk Factors” in our most recent Annual Report on Form 10-K and in other documents that we file with the SEC, which are available at https://www.sec.gov.

These cautionary statements qualify all of our forward-looking statements, and you are cautioned not to place undue reliance on these forward-looking statements. Our forward-looking statements speak only as of the date they are made and should not be relied upon as representing our plans and expectations as of any subsequent date. While we may elect to update or revise forward-looking statements at some time in the future, we specifically disclaim any obligation to publicly release the results of any revisions to our forward-looking statements, except as required by law.

 

SCHEDULE 1

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands, except per share data)

 

 

Three Months Ended

 

March 31,

 

 

2023

 

 

 

2022

 

 

% Change

 

 

 

 

 

 

Revenues

$

2,292,447

 

 

$

2,156,254

 

 

6.3

%

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

Cost of service

 

947,753

 

 

 

957,158

 

 

(1.0

)%

Selling, general and administrative

 

1,043,126

 

 

 

823,149

 

 

26.7

%

Loss on business dispositions

 

244,833

 

 

 

 

 

nm

 

 

 

2,235,712

 

 

 

1,780,307

 

 

 

 

 

 

 

 

 

Operating income

 

56,735

 

 

 

375,947

 

 

(84.9

)%

 

 

 

 

 

 

Interest and other income

 

11,153

 

 

 

1,711

 

 

551.8

%

Interest and other expense

 

(122,945

)

 

 

(93,283

)

 

31.8

%

 

 

(111,792

)

 

 

(91,572

)

 

 

 

 

 

 

 

 

(Loss) income before income taxes and equity in income of equity method investments

 

(55,057

)

 

 

284,375

 

 

(119.4

)%

Income tax (benefit) expense

 

(31,399

)

 

 

52,218

 

 

(160.1

)%

(Loss) income before equity in income of equity method investments

 

(23,658

)

 

 

232,157

 

 

(110.2

)%

Equity in income of equity method investments, net of tax

 

19,238

 

 

 

17,479

 

 

10.1

%

Net (loss) income

 

(4,420

)

 

 

249,636

 

 

(101.8

)%

Net income attributable to noncontrolling interests, net of tax

 

(6,621

)

 

 

(4,903

)

 

35.0

%

Net (loss) income attributable to Global Payments

$

(11,041

)

 

$

244,733

 

 

(104.5

)%

 

 

 

 

 

 

(Loss) earnings per share attributable to Global Payments:

 

 

 

 

 

Basic (loss) earnings per share

$

(0.04

)

 

$

0.87

 

 

(104.6

)%

Diluted (loss) earnings per share

$

(0.04

)

 

$

0.87

 

 

(104.6

)%

 

 

 

 

 

 

Weighted-average number of shares outstanding:

 

 

 

 

 

Basic

 

263,115

 

 

 

282,100

 

 

 

Diluted

 

263,115

 

 

 

282,567

 

 

 

 

 

 

 

 

 

Note: nm = not meaningful.

 
 

SCHEDULE 2

NON-GAAP FINANCIAL MEASURES (UNAUDITED)

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands, except per share data)

 

 

Three Months Ended

 

March 31,

 

2023

 

2022

 

% Change

 

 

 

 

 

 

Adjusted net revenue

$

2,049,456

 

$

1,952,654

 

5.0

%

 

 

 

 

 

 

Adjusted operating income

$

882,514

 

$

802,471

 

10.0

%

 

 

 

 

 

 

Adjusted net income attributable to Global Payments

$

631,261

 

$

584,841

 

7.9

%

 

 

 

 

 

 

Adjusted diluted earnings per share attributable to Global Payments

$

2.40

 

$

2.07

 

15.8

%

 

 

 

 

 

 

Supplemental Non-GAAP ⁽¹⁾

 

 

 

 

 

 

 

 

 

 

 

Adjusted net revenue⁽¹⁾

$

1,933,599

 

$

1,794,530

 

7.7

%

 

 

 

 

 

 

Adjusted operating income⁽¹⁾

$

825,196

 

$

764,369

 

8.0

%

________________________

(1)

The supplemental non-GAAP information reflects the divestiture of our consumer business which closed in April 2023.

 

 

 

See Schedule 6 for a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure, Schedule 7 for a reconciliation of adjusted net revenue and adjusted operating income by segment and supplemental non-GAAP information to the most comparable GAAP measure, and Schedule 8 for a discussion of non-GAAP financial measures.

 
 

SCHEDULE 3

SEGMENT INFORMATION (UNAUDITED)

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)

 

 

 

Three Months Ended

 

 

 

 

 

 

March 31, 2023

 

March 31, 2022

 

% Change

 

 

GAAP

 

Non-GAAP

 

GAAP

 

Non-GAAP

 

GAAP

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

1,605,610

 

 

$

1,456,390

 

 

$

1,473,019

 

 

$

1,337,193

 

 

9.0

%

 

8.9

%

Issuer Solutions

 

 

570,907

 

 

 

490,216

 

 

 

537,326

 

 

 

468,368

 

 

6.2

%

 

4.7

%

Consumer Solutions

 

 

143,709

 

 

 

129,242

 

 

 

169,115

 

 

 

169,115

 

 

(15.0

)%

 

(23.6

)%

Intersegment eliminations

 

 

(27,779

)

 

 

(26,392

)

 

 

(23,206

)

 

 

(22,022

)

 

(19.7

)%

 

(19.8

)%

 

 

$

2,292,447

 

 

$

2,049,456

 

 

$

2,156,254

 

 

$

1,952,654

 

 

6.3

%

 

5.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

507,210

 

 

$

688,281

 

 

$

444,530

 

 

$

632,117

 

 

14.1

%

 

8.9

%

Issuer Solutions

 

 

82,810

 

 

 

215,241

 

 

 

69,142

 

 

 

201,752

 

 

19.8

%

 

6.7

%

Consumer Solutions

 

 

(5,798

)

 

 

57,317

 

 

 

22,618

 

 

 

38,102

 

 

(125.6

)%

 

50.4

%

Corporate

 

 

(282,654

)

 

 

(78,326

)

 

 

(160,343

)

 

 

(69,500

)

 

(76.3

)%

 

(12.7

)%

Loss on business dispositions

 

 

(244,833

)

 

 

 

 

 

 

 

 

 

 

nm

 

 

nm

 

 

 

$

56,735

 

 

$

882,514

 

 

$

375,947

 

 

$

802,471

 

 

(84.9

)%

 

10.0

%

________________________

See Schedule 7 for a reconciliation of adjusted net revenue and adjusted operating income by segment to the most comparable GAAP measures and Schedule 8 for a discussion of non-GAAP financial measures.

 

Note: Amounts may not sum due to rounding.

 

Note: nm = not meaningful.

 

SCHEDULE 4

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands, except share data)

 

 

March 31, 2023

 

December 31, 2022

 

 

 

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

2,001,671

 

 

$

1,997,566

 

Accounts receivable, net

 

1,067,174

 

 

 

998,332

 

Settlement processing assets

 

1,575,515

 

 

 

2,519,114

 

Current assets held for sale

 

163,285

 

 

 

138,815

 

Prepaid expenses and other current assets

 

787,409

 

 

 

660,321

 

Total current assets

 

5,595,054

 

 

 

6,314,148

 

Goodwill

 

26,850,666

 

 

 

23,320,736

 

Other intangible assets, net

 

10,587,887

 

 

 

9,658,374

 

Property and equipment, net

 

2,023,463

 

 

 

1,838,809

 

Deferred income taxes

 

58,321

 

 

 

37,907

 

Noncurrent assets held for sale

 

1,058,649

 

 

 

1,295,799

 

Other noncurrent assets

 

2,464,604

 

 

 

2,343,241

 

Total assets

$

48,638,644

 

 

$

44,809,014

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

Current liabilities:

 

 

 

Settlement lines of credit

$

482,339

 

 

$

747,111

 

Current portion of long-term debt

 

1,185,365

 

 

 

1,169,330

 

Accounts payable and accrued liabilities

 

2,514,616

 

 

 

2,442,560

 

Settlement processing obligations

 

1,799,999

 

 

 

2,413,799

 

Current liabilities held for sale

 

101,091

 

 

 

125,891

 

Total current liabilities

 

6,083,410

 

 

 

6,898,691

 

Long-term debt

 

16,534,074

 

 

 

12,289,248

 

Deferred income taxes

 

2,434,230

 

 

 

2,428,412

 

Noncurrent liabilities held for sale

 

4,691

 

 

 

4,478

 

Other noncurrent liabilities

 

699,410

 

 

 

647,975

 

Total liabilities

 

25,755,815

 

 

 

22,268,804

 

Commitments and contingencies

 

 

 

Redeemable noncontrolling interests

 

556,070

 

 

 

 

Equity:

 

 

 

Preferred stock, no par value; 5,000,000 shares authorized and none issued

 

 

 

 

 

Common stock, no par value; 400,000,000 shares authorized at March 31, 2023 and December 31, 2022; 261,770,665 issued and outstanding at March 31, 2023 and 263,081,872 issued and outstanding at December 31, 2022

 

 

 

 

 

Paid-in capital

 

19,839,506

 

 

 

19,978,095

 

Retained earnings

 

2,654,589

 

 

 

2,731,380

 

Accumulated other comprehensive loss

 

(410,817

)

 

 

(405,969

)

Total Global Payments shareholders’ equity

 

22,083,278

 

 

 

22,303,506

 

Nonredeemable noncontrolling interests

 

243,481

 

 

 

236,704

 

Total equity

 

22,326,759

 

 

 

22,540,210

 

Total liabilities, redeemable noncontrolling interests and equity

$

48,638,644

 

 

$

44,809,014

 

 
 

SCHEDULE 5

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)

 

 

Three Months Ended

 

March 31, 2023

 

March 31, 2022

 

 

 

 

Cash flows from operating activities:

 

 

 

Net (loss) income

$

(4,420

)

 

$

249,636

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization of property and equipment

 

105,983

 

 

 

99,665

 

Amortization of acquired intangibles

 

301,267

 

 

 

329,007

 

Amortization of capitalized contract costs

 

29,336

 

 

 

25,906

 

Share-based compensation expense

 

89,566

 

 

 

38,399

 

Provision for operating losses and credit losses

 

29,859

 

 

 

28,523

 

Noncash lease expense

 

15,810

 

 

 

21,555

 

Deferred income taxes

 

(160,040

)

 

 

(80,841

)

Equity in income of equity method investments, net of tax

 

(19,238

)

 

 

(17,479

)

Facilities exit charges

 

5,164

 

 

 

 

Loss on business dispositions

 

244,833

 

 

 

 

Other, net

 

10,521

 

 

 

12,149

 

Changes in operating assets and liabilities, net of the effects of business combinations:

 

 

 

Accounts receivable

 

30,767

 

 

 

(34,191

)

Settlement processing assets and obligations, net

 

248,710

 

 

 

48,198

 

Prepaid expenses and other assets

 

(119,479

)

 

 

(115,904

)

Accounts payable and other liabilities

 

(209,113

)

 

 

25,377

 

Net cash provided by operating activities

 

599,526

 

 

 

630,000

 

Cash flows from investing activities:

 

 

 

Business combinations and other acquisitions, net of cash and restricted cash acquired

 

(4,046,785

)

 

 

(4,726

)

Capital expenditures

 

(162,195

)

 

 

(156,102

)

Other, net

 

2,187

 

 

 

5

 

Net cash used in investing activities

 

(4,206,793

)

 

 

(160,823

)

Cash flows from financing activities:

 

 

 

Net (repayments of) borrowings from settlement lines of credit

 

(281,411

)

 

 

16,497

 

Net borrowings from commercial paper notes

 

1,048,620

 

 

 

 

Proceeds from long-term debt

 

4,708,140

 

 

 

1,529,157

 

Repayments of long-term debt

 

(1,555,954

)

 

 

(1,176,496

)

Payments of debt issuance costs

 

(11,593

)

 

 

(1,706

)

Repurchases of common stock

 

(202,785

)

 

 

(649,654

)

Proceeds from stock issued under share-based compensation plans

 

6,103

 

 

 

7,940

 

Common stock repurchased - share-based compensation plans

 

(28,323

)

 

 

(26,295

)

Distributions to noncontrolling interests

 

(6,218

)

 

 

(5,534

)

Dividends paid

 

(65,750

)

 

 

(70,243

)

Net cash provided by (used in) financing activities

 

3,610,829

 

 

 

(376,334

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

18,584

 

 

 

(36,147

)

Increase in cash, cash equivalents and restricted cash

 

22,146

 

 

 

56,696

 

Cash, cash equivalents and restricted cash, beginning of the period

 

2,215,606

 

 

 

2,123,023

 

Cash, cash equivalents and restricted cash, end of the period

$

2,237,752

 

 

$

2,179,719

 

 
 

SCHEDULE 6

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES (UNAUDITED)

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands, except per share data)

 

 

 

Three Months Ended March 31, 2023

 

 

GAAP

 

Net Revenue

Adjustments(1)

 

Earnings

Adjustments(2)

 

Income

Taxes on

Adjustments(3)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

2,292,447

 

 

$

(242,991

)

 

$

 

$

 

 

$

2,049,456

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

56,735

 

 

$

(13,938

)

 

$

839,716

 

$

 

 

$

882,514

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income attributable to Global Payments

 

$

(11,041

)

 

$

(13,938

)

 

$

837,575

 

$

(181,335

)

 

$

631,261

 

 

 

 

 

 

 

 

 

 

 

Diluted (loss) earnings per share attributable to Global Payments

 

$

(0.04

)

 

 

 

 

 

 

 

$

2.40

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding (4)

 

 

263,115

 

 

 

 

 

 

 

 

 

263,386

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2022

 

 

GAAP

 

Net Revenue

Adjustments(1)

 

Earnings

Adjustments(2)

 

Income

Taxes on

Adjustments(3)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

2,156,254

 

 

$

(203,600

)

 

$

 

$

 

 

$

1,952,654

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

375,947

 

 

$

3,612

 

 

$

422,913

 

$

 

 

$

802,471

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Global Payments

 

$

244,733

 

 

$

3,612

 

 

$

423,578

 

$

(87,082

)

 

$

584,841

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to Global Payments

 

$

0.87

 

 

 

 

 

 

 

 

$

2.07

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

 

282,567

 

 

 

 

 

 

 

 

 

282,567

________________________

(1)

Includes adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain lines of business to reflect economic benefits to the company. For the three months ended March 31, 2023 and 2022, net revenue adjustments also included $0.4 million and $3.6 million, respectively, to eliminate the effect of acquisition accounting fair value adjustments for software-related contract liabilities associated with acquired businesses. Adjustments for the three months ended March 31, 2023 also included a $14.5 million adjustment to exclude revenues that were associated with certain excluded expenses of our consumer business, which was classified as assets held for sale on our balance sheet, as noted in footnote 2 below.

 

 

(2)

For the three months ended March 31, 2023, earnings adjustments to operating income included $303.6 million in cost of services (COS) and $291.3 million in selling, general and administrative expenses (SG&A). Adjustments to COS included amortization of acquired intangibles of $301.3 million and other items of $2.3 million. Adjustments to SG&A included share-based compensation expense of $89.6 million, acquisition, integration and separation expenses of $174.8 million, facilities exit charges of $7.7 million, and employee termination charges of $19.2 million.

 

 

 

Acquisition, integration and separation expenses for the three months ended March 31, 2023 included $74.2 million related to the divestiture of our consumer business, which was classified as assets held for sale on our balance sheet. These incremental expenses, which include card and marketing expenses, compensation and benefit expenses, and other expenses, were incurred as a result of contractual obligations with the purchasers of the consumer business and do not reflect the manner in which the Company would have operated the business and would not have otherwise been incurred absent the transaction.

 

 

 

For the three months ended March 31, 2023, earnings adjustments to operating income also included the $244.8 million loss on business dispositions.

 

 

 

For the three months ended March 31, 2022, earnings adjustments to operating income included $329.2 million in COS and $93.7 million in SG&A. Adjustments to COS represent amortization of acquired intangibles of $329.0 million and other items of $0.2 million. Adjustments to SG&A include share-based compensation expense of $38.4 million, acquisition and integration expenses of $51.0 million and other items of $4.3 million.

 

 

(3)

Income taxes on adjustments reflect the tax effect of earnings adjustments to income before income taxes. The tax rate used in determining the tax impact of earnings adjustments is either the jurisdictional statutory rate in effect at the time of the adjustment or the jurisdictional expected annual effective tax rate for the period, depending on the nature and timing of the adjustment.

 

 

(4)

Includes 270,957 dilutive shares for non-GAAP. All awards are antidilutive for GAAP due to reporting a net loss.

 

 

 

See "Non-GAAP Financial Measures" discussion on Schedule 8.

 

 

 

Note: Amounts may not sum due to rounding.

 
 

SCHEDULE 7

RECONCILIATION OF SEGMENT NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES (UNAUDITED)

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)

 

 

 

Three Months Ended March 31, 2023

 

 

GAAP

 

Net Revenue

Adjustments (1)

 

Earnings

Adjustments(2)

 

Non-GAAP

 

Consumer

Business (3)

 

Supplemental

Non-GAAP (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

1,605,610

 

 

$

(149,220

)

 

$

 

$

1,456,390

 

 

$

 

 

$

1,456,390

 

Issuer Solutions

 

 

570,907

 

 

 

(80,691

)

 

 

 

 

490,216

 

 

 

 

 

 

490,216

 

Consumer Solutions

 

 

143,709

 

 

 

(14,467

)

 

 

 

 

129,242

 

 

 

(129,242

)

 

 

 

Intersegment eliminations

 

 

(27,779

)

 

 

1,387

 

 

 

 

 

(26,392

)

 

 

13,385

 

 

 

(13,007

)

 

 

$

2,292,447

 

 

$

(242,991

)

 

$

 

$

2,049,456

 

 

$

(115,857

)

 

$

1,933,599

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

507,210

 

 

$

13

 

 

$

181,058

 

$

688,281

 

 

$

 

 

$

688,281

 

Issuer Solutions

 

 

82,810

 

 

 

516

 

 

 

131,915

 

 

215,241

 

 

 

 

 

 

215,241

 

Consumer Solutions

 

 

(5,798

)

 

 

(14,467

)

 

 

77,582

 

 

57,317

 

 

 

(57,317

)

 

 

 

Corporate

 

 

(282,654

)

 

 

 

 

 

204,328

 

 

(78,326

)

 

 

 

 

 

(78,326

)

Loss on business dispositions

 

 

(244,833

)

 

 

 

 

 

244,833

 

 

 

 

 

 

 

 

 

 

 

$

56,735

 

 

$

(13,938

)

 

$

839,716

 

$

882,514

 

 

$

(57,317

)

 

$

825,196

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2022

 

 

GAAP

 

Net Revenue

Adjustments (1)

 

Earnings

Adjustments(2)

 

Non-GAAP

 

Consumer

Business (3)

 

Supplemental

Non-GAAP (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

1,473,019

 

 

$

(135,826

)

 

$

 

$

1,337,193

 

 

$

 

 

$

1,337,193

 

Issuer Solutions

 

 

537,326

 

 

 

(68,958

)

 

 

 

 

468,368

 

 

 

 

 

 

468,368

 

Consumer Solutions

 

 

169,115

 

 

 

 

 

 

 

 

169,115

 

 

 

(169,115

)

 

 

 

Intersegment eliminations

 

 

(23,206

)

 

 

1,184

 

 

 

 

 

(22,022

)

 

 

10,991

 

 

 

(11,031

)

 

 

$

2,156,254

 

 

$

(203,600

)

 

$

 

$

1,952,654

 

 

$

(158,124

)

 

$

1,794,530

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

444,530

 

 

$

80

 

 

$

187,508

 

$

632,117

 

 

$

 

 

$

632,117

 

Issuer Solutions

 

 

69,142

 

 

 

3,532

 

 

 

129,078

 

 

201,752

 

 

 

 

 

 

201,752

 

Consumer Solutions

 

 

22,618

 

 

 

 

 

 

15,484

 

 

38,102

 

 

 

(38,102

)

 

 

 

Corporate

 

 

(160,343

)

 

 

 

 

 

90,843

 

 

(69,500

)

 

 

 

 

 

(69,500

)

 

 

$

375,947

 

 

$

3,612

 

 

$

422,913

 

$

802,471

 

 

$

(38,102

)

 

$

764,369

 

________________________

(1)

Includes adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain lines of business to reflect economic benefits to the company. For the three months ended March 31, 2023 and 2022, net revenue adjustments also included $0.4 million and $3.6 million, respectively, to eliminate the effect of acquisition accounting fair value adjustments for software-related contract liabilities associated with acquired businesses. Adjustments for the three months ended March 31, 2023 also included a $14.5 million adjustment to exclude revenues that were associated with certain excluded expenses of our consumer business, which was classified as assets held for sale on our balance sheet, as noted in footnote 2 below.

 

 

(2)

For the three months ended March 31, 2023, earnings adjustments to operating income included $303.6 million in COS and $291.3 million in SG&A. Adjustments to COS included amortization of acquired intangibles of $301.3 million and other items of $2.3 million. Adjustments to SG&A included share-based compensation expense of $89.6 million, acquisition, integration and separation expenses of $174.8 million, facilities exit charges of $7.7 million, and employee termination charges of $19.2 million.

 

 

 

Acquisition, integration and separation expenses for the three months ended March 31, 2023 included $74.2 million related to the divestiture of our consumer business, which was classified as assets held for sale on our balance sheet. These incremental expenses, which include card and marketing expenses, compensation and benefit expenses, and other expenses, were incurred as a result of contractual obligations with the purchasers of the consumer business and do not reflect the manner in which the Company would have operated the business and would not have otherwise been incurred absent the transaction.

 

 

 

For the three months ended March 31, 2022, earnings adjustments to operating income included $329.2 million in COS and $93.7 million in SG&A. Adjustments to COS represent amortization of acquired intangibles of $329.0 million and other items of $0.2 million. Adjustments to SG&A include share-based compensation expense of $38.4 million, acquisition and integration expenses of $51.0 million and other items of $4.3 million.

 

 

(3)

The supplemental non-GAAP information excludes the results of the consumer business that was divested in April 2023.

 

 

 

See "Non-GAAP Financial Measures" discussion on Schedule 8.

 

 

 

Note: Amounts may not sum due to rounding.

 
 

SCHEDULE 8

OUTLOOK SUMMARY (UNAUDITED)

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In millions, except per share data)

 

 

 

 

2022

 

 

2023 Outlook

 

Growth

Revenues:

 

 

 

 

 

 

GAAP revenues

 

$

8,976

 

 

$9,625 to $9,725

 

 

7% to 8%

Adjustments(1)

 

 

(884

)

 

(990

)

 

 

Adjusted net revenue

 

$

8,092

 

 

$8,635 to $8,735

 

 

7% to 8%

 

 

 

 

 

 

 

Earnings Per Share:

 

 

 

 

 

 

GAAP diluted EPS

 

$

0.40

 

 

$4.31 to $4.43

 

 

nm

Adjustments(2)

 

 

8.92

 

 

6.01

 

 

 

Adjusted EPS

 

$

9.32

 

 

$10.32 to $10.44

 

 

11% to 12%

(1)

Includes adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain lines of business to reflect economic benefit to the company. Amounts also included adjustments to eliminate the effect of acquisition accounting fair value adjustments for software-related contract liabilities associated with acquired businesses, as well as adjustments to exclude revenues that were associated with certain excluded expenses of our consumer business which was classified as assets held for sale on our balance sheet.

 

 

(2)

Adjustments to 2022 GAAP diluted EPS included the removal of 1) software-related contract liability adjustments described above of $0.02, 2) acquisition related amortization expense of $3.53, 3) share-based compensation expense of $0.46, 4) acquisition, integration, and separation expense of $1.00, 5) facilities exit charges of $0.13, 6) other items of $0.06, 7) equity method investment earnings from our interest in a private equity investment fund of $(0.06), 8) discrete tax items of $0.01, 9) goodwill impairment charge in connection with the strategic review of the former Business and Consumer Solutions segment and sale of the consumer business of $3.02, 10) loss on business dispositions of $0.70, 11) other income and expense of $0.05, and 12) the effect of noncontrolling interests and income taxes, as applicable.

 

 

Note: nm = not meaningful.

NON-GAAP FINANCIAL MEASURES

Global Payments supplements revenues, operating income, operating margin and net income and earnings per share (EPS) determined in accordance with U.S. GAAP by providing these measures with certain adjustments (such measures being non-GAAP financial measures) in this document to assist with evaluating our performance. In addition to GAAP measures, management uses these non-GAAP financial measures to focus on the factors the company believes are pertinent to the daily management of our operations. Management believes adjusted net revenue more closely reflects the economic benefits to the company's core business and allows for better comparisons with industry peers. Management uses these non-GAAP financial measures, together with other metrics, to set goals for and measure the performance of the business and to determine incentive compensation.

Adjusted net revenue, adjusted operating income, adjusted operating margin, adjusted net income and adjusted EPS should be considered in addition to, and not as substitutes for, revenues, operating income, net income and earnings per share determined in accordance with GAAP. The non-GAAP financial measures reflect management's judgment of particular items, and may not be comparable to similarly titled measures reported by other companies. Adjusted net revenue excludes gross-up related payments associated with certain lines of business to reflect economic benefits to the company. On a GAAP basis, these payments are presented gross in both revenues and operating expenses. Adjusted operating income, adjusted net income and adjusted EPS exclude acquisition-related amortization expense, share-based compensation expense, acquisition, integration and separation expense, gain or losses on business divestitures, and certain other items specific to each reporting period as more fully described in the accompanying reconciliations in Schedules 6 to 7. Adjusted operating margin is derived by dividing adjusted operating income by adjusted net revenue. The constant currency growth measures adjust for the impact of exchange rates and are calculated using average exchange rates during the comparable period in the prior year. The tax rate used in determining the income tax impact of earnings adjustments is either the jurisdictional statutory rate in effect at the time of the adjustment or the jurisdictional expected annual effective tax rate for the period, depending on the nature and timing of the adjustment.

The supplemental non-GAAP information excludes the results of the consumer business that was divested in April 2023. Management believes that providing such supplemental financial information should enhance shareholders’ ability to evaluate how the business will be managed going forward.

Global Payments Inc. (NYSE: GPN) announced results for the first quarter ended March 31, 2023.

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