Global Payments Inc (GPN) — Q1 2025 Earnings Call Transcript

Good morning, and welcome to Global Payments first quarter 2025 conference call. Our earnings release and the slides that accompany this call can be found on the Investor Relations area of our website at www.globalpayments.com. Before we begin, I'd like to remind you that some of the comments made by management during today's conference call contain forward-looking statements about, among other matters, expected operating and financial results. These statements are subject to risks, uncertainties, and other factors, including the impact of economic conditions on our future operations, that could cause actual results to differ materially from expectations. Certain risk factors inherent in our business are set forth in filings with the SEC, including our most recent 10-K and subsequent filings. We caution you not to place undue reliance on these statements. Forward-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. For a full reconciliation of the non-GAAP financial measures discussed in this call to the most comparable GAAP measure in accordance with SEC regulations, please see our press release furnished as an exhibit to our Form 8-K filed this morning and our supplemental materials available on the Investor Relations section of our website. Joining me on the call is our CEO, Cameron Bready; our President and COO, Bob Cortopassi; and our CFO, Josh Whipple. Now I'll turn the call over to Cameron.

Thank you, Winnie, and thanks everyone for joining us to discuss our first quarter results and the exciting start to our year. We had a solid first quarter, which is a testament to the resilience of our business model and our relentless focus on execution in what continues to be a fluid economic environment. 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. 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. While delivering this performance, we are also aggressively executing against our overarching transformation agenda, including advancing a significant number of key initiatives. Since launching the program last year, we have successfully simplified and streamlined our 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. Importantly, as we progress our transformation over the next year, we are positioning ourselves with a strong foundation to quickly and fully integrate Worldpay post closing. Josh will cover more 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 Worldpay. 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. You have also asked about recent trends in the Worldpay business and how they have progressed with their own efforts to improve growth and better position themselves competitively. Further, you asked about how bringing Global Payments and Worldpay together drives opportunities to accelerate growth over time. You also want to understand our plans to integrate this business when their previous integration was not successful. Lastly, you have asked for clarity on how the transactions we announced align with our plans to prioritize capital returns to shareholders. We plan to touch on all these items today. To start, I want to discuss our conviction that the transaction with Worldpay and the divestiture of Issuer 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. We know Worldpay well and have long recognized the complementary nature of our two merchant businesses. We also know firsthand that selling issuer processing solutions into large financial institutions is a very different go-to-market motion than bringing commerce solutions to merchants of all sizes globally. This is part of the reason we communicated at our Investor Conference our intent to evaluate options for the Issuer business that serve to achieve our strategic objectives and accelerate value realization. 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. We have high confidence that these transactions will do just that and accelerate our long-term strategy. One of the core tenets of our transformation program is to simplify and streamline our business to ensure we have a strong platform for the next decade of growth. 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. This transaction not only sharpens our focus but also enhances our global scale and cements our position as a leading pure-play commerce solutions provider for merchants of all sizes around the world. It also allows us to concentrate on a simplified business and orient investments exclusively towards Merchant Solutions, driving better growth outcomes and improving our ability to win share in the market. Through the combination with Worldpay, we are bringing together highly complementary capabilities in distribution networks. Global Payments brings strength in SMB solutions, leading point of sale technology, and vertical-specific software that Worldpay does not have today. Worldpay contributes best-in-class e-commerce and enterprise capabilities, managed PayFac solutions, and a presence in attractive geographies where we do not operate currently. Simply put, this combination creates a complete commerce solutions platform with complementary capabilities and extensive distribution across the merchant spectrum. Together, we will accelerate growth and innovation and deliver enhanced client experiences for merchants of all types and sizes. The combined company will also dramatically advance its innovation pipeline for future success. With capital investment in excess of $1 billion annually, we will be better positioned than ever to deliver the next generation of capabilities from point of sale in software and integrated and embedded payments to advanced commerce enablement and global omnichannel solutions. Importantly, since all of our investments will be focused on Merchant Solutions, we will be able to amplify their impact across our organization and drive better returns on invested capital. We are already actively engaged with our customers, and their feedback has been overwhelmingly positive. Specifically, clients are excited about how complementary the businesses are and how the combined company will bring expanded capabilities, even better service, and greater innovation to help power their businesses. This transaction also meaningfully enhances our financial profile. We expect approximately $12.5 billion in pro forma adjusted net revenue and $6.5 billion in adjusted EBITDA post transaction close. We see clear opportunities to achieve at least $600 million in cost synergies from aligning our Merchant business operations and go-to-market strategies, streamlining technology and infrastructure, and eliminating duplicative corporate and operational support structures. The path to achieve these savings is already identified and they represent low-risk opportunities, well within our reach given our team's significant integration experience. And to be clear, these synergies are fully incremental to the $600 million in benefits we expect to deliver through our operational transformation. Furthermore, we are highly confident in our ability to achieve revenue synergies of at least $200 million by cross-selling our software and commerce enablement solutions, 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. Together, we have a 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. With that background, I'd like to spend a moment on how this transaction aligns with what we outlined at our Investor Conference. In September, we unveiled a strategy to transform Global Payments into the worldwide partner of choice for commerce solutions, focused on moving aggressively to position the company for the next phase of its growth journey. As part of this, we unified our Merchant business across three product pillars: point of sale and software, integrated and embedded, and core payments. 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 businesses and their goals. We support them with exceptional service from the sales process to onboarding to ongoing support when they need us. 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. Importantly, the acquisition of Worldpay directly supports each of our three merchant pillars, making them stronger, more scalable, more competitive, and more valuable to our clients. Starting with POS and software, we will be able to immediately sell our Genius point-of-sale and other software and commerce enablement solutions into Worldpay's existing SMB merchant base. We will also leverage our existing distribution channels to bring these capabilities to market and achieve better penetration and saturation. In integrated and embedded, Worldpay's Payrix platform enhances our ability to serve software partners, marketplaces, and platforms across more regions and operating models. In core payments, Worldpay brings world-class e-commerce capabilities that enhance our payment acceptance solutions and enable us to deliver seamless omnichannel experiences to merchants of all sizes across our combined footprint. Additionally, Worldpay strengthens our international presence in distribution in existing geographies and expands our footprint to new attractive markets like Japan, France, and the Nordics. We've made substantial progress on our transformation initiatives, and the plans we are pursuing over the next year provide a strong foundation to integrate Worldpay. We have already consolidated our Merchant, Technology, and Operations organizations. These newly defined organizations are focused on driving sales, delivering new products to market while ensuring differentiated service levels and availability. 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. By the time we close the Worldpay transaction, we will have completed the launch of our Genius retail and restaurant point of sale platforms globally, fully revamped the sales organization through our Salesforce of the Future initiative, and we 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. Leveraging our new operating model, Global Payments and Worldpay 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. As a combined company, we will have significant scale, processing nearly $4 trillion in annual volume across 100 billion transactions, significant merchant coverage serving millions of merchants and thousands of platform and software partners, comprehensive capabilities spanning physical card-present environments to global e-commerce and extensive global reach across 175 countries with a sales force of over 4,000 professionals. We will be capable of providing end-to-end service across the entire merchant journey, from onboarding through transaction processing to settlement, reconciliation, and business intelligence, all supported by our global distribution and service infrastructure. We will enhance our managed PayFac capabilities, which will broaden our leading integrated offerings, allowing us to support a wider array of operating models for software, marketplace, and platform partners. Together, Global Payments and Worldpay's singular merchant focus and significant scale will enable us to accelerate innovation to further differentiate and compete. Unlike new entrants 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 scaled processing economics, while delivering enterprise-grade reliability, security, and compliance that stands apart. Now, I'll hand it over to Bob to discuss the Worldpay business, details regarding our revenue synergy opportunities, and more specifics relating to our approach to integration.

Thanks, Cameron. Worldpay has made significant progress and has improved its growth profile under GTCR's ownership. It's also continued to invest meaningfully in its leading capabilities and is delivering strong growth across a highly diversified set of verticals and geographies spanning 175 countries. Worldpay manages its business across three channels today: e-commerce and enterprise, platforms, and SMB. In e-commerce and enterprise, Worldpay has enhanced its technology and product depth across alternative payment methods, FX solutions, payouts, marketplaces, authorization optimization, analytics, and fraud and risk management, better positioning the business in terms of breadth and depth in the industry. They're also delivering differentiated capabilities to help enterprises manage payment orchestration in multi-acquirer scenarios, solving for a critical customer need while giving additional insight and opportunities to expand wallet share. Today, this business accounts for 50% of Worldpay's revenue and is delivering growth in the high-single digits. Turning to their platforms business through Payrix, Worldpay brings a versatile integrated offering that meets the unique needs of software and platform partners with a modern and flexible service platform. With this offering, Worldpay is having great success attracting high-growth partners looking for additional flexibility, more control over the customer experience, and faster onboarding and implementation relative to more traditional referral models. They are competing well, including against newer entrants. This business generates over $300 million in revenue today and is growing north of 20%. In total, Worldpay has 1,400 omnichannel software partners across a diversified set of verticals, including health services, restaurants, automotive, personal and professional services, government, utilities, and retail. Finally, Worldpay's SMB portfolio has improved through a focus on rebuilding sales capacity, including a relaunch of its direct and financial institution channels under GTCR. 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. To that end, Worldpay provides us with a large installed base of nearly 1 million SMB customers for distribution to enhance growth. 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. 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. First, we see a significant opportunity with the e-commerce and enterprise capabilities that Worldpay brings. We can extend these capabilities on an omnichannel basis to the nearly 40 markets where Global Payments has a strong physical presence and Worldpay is primarily virtual. We bring robust local distribution, functionality, and service to complement Worldpay's leading digital offerings. We can also extend Worldpay's rich e-commerce solutions and capabilities to the more than 5 million SMB merchant customers we serve in these markets today. The combined business will have leading capabilities to unlock new enterprise and digital-native opportunities worldwide. Second, we can bring Global Payments commerce enablement solutions, including our Genius point-of-sale technology to Worldpay's core SMB customer base. We will extend our reach with these solutions by leveraging Worldpay's distribution channels, including its financial institution partnerships with more than 6,000 branches. Third, there is a significant opportunity in integrated and embedded payments. 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. We view Payrix as a highly complementary accelerator of our own integrated and embedded roadmap. 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. We've conducted extensive diligence and have a clear view on the opportunities to enhance revenue as a combined business. 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. Finally, we recognize the competitive and innovative nature of the industry. 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 $1 billion annually in high-priority areas supporting our growth. Specifically, we'll focus our investments on expanding digital-native and omnichannel solutions supporting enterprise, multinational, and marketplace customers, continuing to enhance our Genius point-of-sale features, functionality, and distribution, delivering a premier developer experience with modern embedded capabilities for any operating model, extending our commerce enablement capabilities, including embedded finance, loyalty, payroll, and others, and building on our best-in-class service offerings. While we have a proven track record of integrating large acquisitions and delivering on our timelines and exceeding our synergy goals, our transformation better prepares us to execute on a more fulsome integration approach in this transaction. We will not compromise on our unified operating model, allowing us to focus on fully integrating our two businesses with a single company culture and go-to-market approach beginning day one. 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. At Global Payments, we've already unified our worldwide technology teams and assets into a singular organization. And today, we're leveraging common technology platforms to enable commerce and better experiences for our clients and partners. This includes the orchestration layer we recently acquired, which allows us to extend and distribute products more easily across platforms and geographies seamlessly. Worldpay has been on its own technology modernization journey. 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 feeds. We'll integrate our commerce enablement and broad product offerings with Worldpay's single-in, single-out architecture, providing for rapid and seamless delivery of innovative solutions to delight their existing customers and partners. In sum, we have a clear view to integration execution, leadership resources identified, and work streams ready to launch. We're fully prepared to hit the ground running immediately upon close to ensure strong execution. Now, I'll hand it over to Josh.

Thanks, Bob. At our Investor Conference in September, we outlined our medium-term outlook. Starting with 2025, we forecasted mid-single-digit adjusted net revenue growth, excluding dispositions, and 50 basis points of adjusted operating margin expansion. We are pleased that year-to-date, we are tracking in line with this expectation. We also said that in 2025, we would be focused on executing our strategy and operational transformation agenda that would, in turn, position us to drive accelerated growth in 2026 and 2027. Specifically, over these two years, we indicated we had confidence in our ability to deliver sustainable mid- to high-single-digit adjusted net revenue growth and consistent adjusted operating margin expansion between 50 basis points and 100 basis points per year. 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 reinforces our confidence in this trajectory today. Turning to Worldpay, you just heard from Bob about the strides that have and continue to be made under the ownership of GTCR. We currently expect the Worldpay 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. This is also consistent with the recent trends they have experienced in their business. They are a solidly mid-single-digit grower today and on a trajectory to continue to improve that over the next several years. By combining our two businesses, we expect to drive substantial synergy benefits. Bob just covered the revenue potential we have together, including the meaningful cross-selling opportunities enabled by our highly complementary solutions and global scale, which we expect will drive at least $200 million of annual run rate revenue synergies over three years. On the expense side, we have a clear line of sight to approximately $600 million of annual run rate cost synergies that we expect to achieve within three years of closing. 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. 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. The remaining third of cost synergies will be derived from eliminating duplicative corporate infrastructure, which includes realizing economies of scale across corporate and administrative functions. 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. Specifically, we now have a clear line of sight to accelerate revenue growth in 2026 and high single-digit growth in 2027 with margin expansion of 100 basis points to 200 basis points in both years, which is double our original target of 50 basis points to 100 basis points. This transaction is also accretive 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. Importantly, we believe this strong earnings accretion framework is sustainable long term. Turning to capital allocation. The ability to invest in innovation will be significantly greater as we will maintain capital spending at 7% to 8% of adjusted net revenue. That translates to reinvesting more than $1 billion annually back into the business. As Cameron mentioned, that is entirely focused on Merchant Solutions after the closing of the transaction. 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. 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. This will provide us greater flexibility to invest in growth and return meaningfully more capital to shareholders. At the same time, we will be disciplined with regard to leverage and are committed to reducing our net leverage to 3 times, which we expect to achieve within 18 to 24 months of closing. 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. As you can see, this transaction cements our growth profile, accelerates profitability, and enhances our long-term capital allocation commitments. Ultimately, this is why we have such conviction that the transaction will unlock value for our shareholders. Now, let me quickly provide the highlights of our financial performance for the first quarter. Overall, we continue to execute well, and our results were consistent with our expectations despite heightened macroeconomic uncertainty. We delivered adjusted net revenue of $2.2 billion, reflecting constant currency growth of over 5%, excluding dispositions. Specifically, the disposition of AdvancedMD and our exit of certain non-core markets in Asia Pacific had an approximately 3-point impact on overall growth, while unfavorable foreign currency exchange rates were over a point headwind for the quarter. Trends 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 are closely monitoring the ongoing tariff negotiations and their potential impact on the global economy. However, I would highlight that we are a well-diversified business, both from geographic and vertical market perspectives, and across a wide range of discretionary and non-discretionary categories, and are well-positioned to navigate through the current environment. Adjusted operating margin for the quarter increased 70 basis points or 40 basis points excluding dispositions. The net result was adjusted earnings per share of $2.69, including share-based compensation, an increase of 11% on a constant currency basis. Excluding share-based compensation, adjusted earnings per share was $2.82. Taking a closer look at performance by segment. Merchant Solutions achieved adjusted net revenue of $1.69 billion for the first quarter, reflecting growth of 6% on a constant currency basis, excluding dispositions. The disposition of AdvancedMD and our exit of certain non-core markets in Asia Pacific had an approximately 4-point impact on reported growth in the quarter. Similar to the total company impact, currency was over 1-point headwind to Merchant Solutions' growth. This performance was driven by our POS and software and integrated and embedded businesses, both of which achieved high-single-digit growth. Core payments grew mid-single digits during the quarter, which includes absorbing our exit of certain lines of business and wholesale relationships. As a reminder, this results in lower GAAP revenues and lower residual adjustments to arrive at our adjusted net revenue. We delivered an adjusted operating margin of 47.8% in the Merchant segment, an increase of 80 basis points compared to the prior year. Issuer Solutions' adjusted revenues were $529 million, an increase of 3% on a constant currency basis. 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. Issuer Solutions delivered an adjusted operating margin of 46.3%, a decrease of 50 basis points compared to the prior year, driven by the softer commercial volumes and ongoing investments in modernization. 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. From a cash flow standpoint, we produced solid adjusted free cash flow for the quarter of approximately $512 million, representing a roughly 77% conversion rate of adjusted net income to adjusted free cash flow. 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. As a reminder, this quarter, we changed the presentation of cash flows for settlement assets and obligations and certain funds held for customers, moving these items from operating to financing cash flows. We invested $128 million in capital expenditures during the quarter, and we continue to target capital spending of $780 million for the year, which is 8% of adjusted net revenue. Our net leverage position was under 3.2 times at the end of the first quarter. We executed share repurchases of approximately $450 million in the quarter. Our balance sheet remains extremely healthy and we ended the period with approximately $3.8 billion of available liquidity. Our total indebtedness is 94% fixed with a weighted average cost of debt of 3.5%. Turning to the outlook for 2025. We are reaffirming our outlook for adjusted net revenue, adjusted operating margin, and adjusted earnings per share. Specifically, we currently expect constant currency adjusted net revenue growth of 5% to 6% over 2024, excluding dispositions. We continue to expect dispositions will impact reported adjusted net revenue by over 300 basis points. We now expect the headwind from foreign currency exchange rates to be just over 100 basis points for the year, roughly 50 basis points lower than the 175 basis point impact we guided to previously, given the recent weakening of the US dollar. We expect the impact to be relatively consistent across our Merchant and Issuer businesses. We are forecasting annual adjusted operating margin to expand approximately 50 basis points for 2025, excluding the effect of dispositions. 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. We still expect roughly 50 basis points of adjusted operating margin expansion for this business, excluding dispositions in 2025. Moving to Issuer Solutions. We continue to anticipate adjusted net revenue growth in the roughly 4% range on a constant currency basis for the full year compared to 2024. We expect adjusted operating margin for the Issuer business to expand by approximately 50 basis points in 2025. In terms of quarterly phasing, we still expect modestly higher growth in the second half relative to the first half of the year as our transformation initiatives ramp and 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. We continue to anticipate adjusted free cash flow conversion will be greater than 90% for the full year. Regarding capital allocation. As we communicated when we announced the Worldpay and Issuer Solutions transaction, we are focused on being 3.5 times net levered at close, but we'll remain opportunistic with regards to share repurchases over the balance of the year. And if we execute additional divestitures, the proceeds will continue to be used to enhance shareholder returns. Finally, we still expect to be approximately 3 times net levered at the end of 2025. Putting it all together, we continue to expect adjusted earnings per share growth of 10% to 11% for the full year on a constant currency basis. We expect adjusted EPS growth to be consistent with the quarterly phasing dynamics I highlighted. And with that, I'll turn the call back over to Cameron.

Thanks, Josh. I hope you now have a clear appreciation for why we are so excited about the Worldpay 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. Importantly, this aligns exactly with the approach we outlined for unlocking value at our Investor Conference last September. At the end of the day, the divestiture of Issuer Solutions and acquisition of Worldpay represents 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. Worldpay could not be a better fit for our Merchant business and our strategy. It is a highly complementary business that expands our global footprint, broadens our product base, enhances our go-to-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. Our transformation agenda provides the ideal foundation for the combined business going forward. 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 Worldpay integration. We have high conviction in and line of sight to the cost savings as well as the revenue synergies from the acquisition, particularly from enhancement opportunities fueled by our complementary solutions and scale. 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. We are exiting the quarter on a strong footing and have confidence in our 2025 and medium-term outlook. I want to thank our entire team for their hard work and dedication to our clients and business. We could not be more excited about the combination of Global Payments and Worldpay and look forward to bringing this transaction to close. This combination enhances our competitive strengths, opens new opportunities, and accelerates our growth trajectory while maximizing value creation and amplifying our capital return expectations.

Before we begin our question-and-answer session, I'd like to ask everyone to limit their questions to one with one follow-up to accommodate everyone in the queue. Thank you. Operator, we will now go to questions.

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 launch teed-up here, obviously, just a couple of weeks away. Can you talk about the rollout plan in terms of, let's call it, pull versus push? We know that 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? And then, how you're thinking about managing potential back book attrition risk in conjunction with Genius conversion?

Yeah, Jason, thanks. It's Cameron. I'll start and then ask Bob to maybe dig in with a few more specifics. 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. Obviously, it's a core underpinning of where we want to drive the business longer term and supports a lot of the growth expectations 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, early demonstrations with dealers, and specific clients. Obviously, there's a lot of excitement and energy around the capabilities that we're bringing to market through the platform. 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. 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 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. Interestingly, and not to weave too much into Worldpay as well, obviously, we have an amazing front-book opportunity leveraging Worldpay distribution as well. So, once we get to close, one of our early plans will be to light up Genius to be able to distribute it quickly through their distribution platforms. Of course, we have a good back-book 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 back book, but I'll turn it over to Bob maybe to provide a little more specificity around our specific plans and approach.

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 pull versus push versus front book and back book, although they're related. I think that we view the initial rollout as a pull-based offering primarily, and largely that is going to come from front-book opportunities. We also have back-book clients who are very excited about the opportunity to move to Genius, and we're providing pathways for them to do that. The back book, obviously, is going to sort of happen at the 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 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. 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 attrit relative specifically to the Genius rollout. This provides nothing but good news for them. It's more capabilities, it's a more modern platform, there's new hardware that's been designed bespoke to meet some key customer needs, market needs, and support the software well. 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.

Very helpful. And then, my kind of pro forma Worldpay question, really just two pieces there. One, can you clarify if the improved revenue growth at Worldpay over the past year has been all organic? And then, can you just touch on kind of your specific share buyback assumptions for both 2026 and 2027? I'm just looking at that mid-teens EPS growth rate. I'm wondering if that same growth rate applies to both years or is that more of a CAGR, just as we think about the need to kind of delever at least year one post-close? Thanks.

Yeah, Jason, very good questions. I'll maybe take the first and turn it over to Josh to provide a little more detail on the share repurchase expectations for '26 and '27 and how we think about that in the context of delevering as well. But as it relates to Worldpay, it's purely organic. Obviously, over the course of the last couple of years, they've made significant investments in their e-com and enterprise business. 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 complementary to what we do as a company, and certainly one of the aspects of the business that we find most attractive. So, they continue to invest meaningfully, I think creating broader technology and product depth across their alternative payment methods, FX solutions, payout marketplaces, authorization optimization, the laundry list of things that they put capital behind that help driving, I think, better outcomes for them organically in that business is pretty impressive. 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. We also talked about what they're seeing with the Payrix asset from a managed PayFac perspective, that's obviously been an important driver for growth for the business overall. So, as we said in our prepared remarks, they're solidly a mid-single-digit grower today on a nice trajectory going forward. Obviously, they support our overarching plans as it relates to growth expectations, accelerating in '26 and '27, obviously, getting to that high-single-digit level in '27 as we talked about on the call this morning. With that, I'll turn it over to Josh to maybe cover the second part of your question.

Yeah, thanks, Jason. So, look, at Investor Conference, we talked about returning $7.5 billion of capital to shareholders over '25 to '27. As we said when we announced the transaction, we still expect to go ahead and deliver over $7 billion in capital to shareholders during that time period. Specifically, as it relates to '26 and '27, we expect to go ahead and return well over $2 billion in share repurchase in '26 and over $3 billion in '27. We expect to go ahead and be solidly in that mid-single-digit EPS growth range post-closing of the transaction.

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 3 times leverage in 18 months 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 increased our capital returns by roughly 10% versus our standalone plan. As you look at '28, as Josh highlighted in his prepared remarks, we see a nearly 50% increase in our capacity to return capital by the time we get to that exit '28 timeframe. So obviously, very bullish and ambitious regarding our ability to continue to return meaningful amounts of capital to shareholders. We think the transactions we're executing position us well to be able to accelerate and increase that over time.

We have actually increased our capital returns by roughly 10% compared to our standalone plan. Looking ahead to 2028, as Josh mentioned in his prepared remarks, we project a nearly 50% increase in our capacity to return capital by the time we reach that exit timeframe. We are very optimistic and ambitious about our ability to keep returning significant amounts of capital to shareholders. We believe the transactions we are undertaking position us well to accelerate and enhance that over time.

We need to dial back in?

Yes, we can.

Yes, we can hear you.

We're ready for our next question, operator.

Good morning, everyone. Thank you for reviewing the benefits of the deal once more. One comment that resonated with me was from Bob regarding the acquired orchestration layer. I would like to understand its significance as we consider reducing client disruption and influencing which platforms remain viable. I’m interested in how this impacts the risk factors associated with the deal.

Yeah, Tien-Tsin, it's Cameron. 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, 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. 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. They also want consolidated reporting, settlement, and information coming out of the back end. What happens in the middle is largely irrelevant to them. That's for us to manage. The orchestration capabilities that we've acquired and continue to build over time, and interestingly Worldpay is on a very similar path in terms of how they're setting up their architecture, 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. Additionally, we're taking the complexity out of the situation for them and equipping them on the back-end with reporting, settlement, analytics, and the capabilities that come out, 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, but most importantly, delivering clients the experience that they're looking for from us without having to burden them with obviously everything that happens in between within our own technology environments. I'll let Bob maybe drill into a little bit more of the specifics around how we go about doing that.

Yeah. I think Cameron covered it really well from the client perspective. The only other thing, Tien-Tsin, that I'd highlight is 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 Agentic AI, where you need access to data to drive those sort of robotics, the AI and machine learning capabilities, all of those through the orchestration layer allow you to span the entire breadth of platforms that you've got, all of the data 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 a single database by having orchestration capabilities even at that middle tier that we're operating sort of silently to the customers. Thus, it accelerates our ability to deliver a product or a capability across all platforms, all regions, all customer segments very rapidly. As we think about integrating Worldpay with Global Payments, as Cameron mentioned, they've already been on a modernization journey of their own to create a single entry and a single exit 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 any of us have seen in years past.

Okay, that's good to know. Thanks for explaining that. I would like to ask a quick follow-up about the overall outlook on Global Payments regarding dispositions. I know some subscale geographies in Asia were mentioned. Is there still more to address there, or are you mostly finished with that considering the focus on the upcoming deal? Thank you.

Yeah, it's a great question, Tien-Tsin. And at the Investor Conference in September, we highlighted that we're targeting somewhere in the neighborhood of $500 million to $600 million of revenue dispositions over the next couple of years as we work to continue to streamline and simplify our business. 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 that still remains kind of in our plans as we look to streamline the portfolio around the business that we want to operate as a go-forward matter. I think the fair expectation is there's likely a little bit more to come on that front. Obviously, the work we've done to date has been impactful in trying to simplify the business and focus on areas where we are a scale player with the right capability to drive better growth outcomes longer term.

Thank you for the update, everyone.

Thanks, Tien-Tsin.

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 of things here. Can you provide an update on the stage that you're at with regard to the rebrand on the technology side? How much of the original integration initiative is complete and what's left to do? And then, Bob, if you could speak to where you are in the sales force reorg both within GPN and where you are with what you're doing to secure the Worldpay sales resources? And then, I have a quick follow-up. Thanks.

Yeah, Adam, thanks for the question. I'll start and then turn it over to Bob to cover some more details, particularly the second part of your question. But as it relates to the rebrand exercise, we're continuing to march forward to align global payments around a common brand internally and externally. Certainly, the Genius platform, aligning all of our point-of-sale around the Genius platform brand is a core element of that. As we talked about earlier, we're watching that sort of officially '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 to align as much of Global Payments around a common brand as we can leading up to the Worldpay 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 bringing the two businesses together. I'll let Bob maybe cover the progress that we've made on the Salesforce of the Future initiative, and where that stands in its evolution.

Yeah, Adam. So, if you'll remember, as we talked about this a couple of times, the Salesperson of the Future initiative that we had stacked, they start with aligning the sales teams, and that work is done. We've got single leadership by region of the sales force that is going to market in a unified way. We've got segmentation around enterprise and SMB. In the SMB channel, we've organized around America and Rest of World, covering our direct sales, indirect sales, and FI partnerships. That work is complete and has been complete for at least a quarter. The second major component was aligning around compensation and incentive structures to ensure that we're rewarding our salespeople well and driving the right behaviors. That work is also complete. The third leg of the stool was around capabilities and force multipliers for our sales team: consolidated CRM, sales training, upskilling around selling software, and expanding our sales teams in certain areas. All of those initiatives are well underway. We're encouraged by what we're seeing so far. Our salespeople are excited about access to new capabilities to sell into the markets they were already operating in. Our sales teams are excited about the new incentive plan and structure that allows them to earn more as they bundle sell and provide more holistic solutions to customers. We feel really good about this. March was the best sales month of the quarter, and we see a strong pipeline in terms of the marketing lead funnel and the opportunities that are actively being worked by our team. In terms of securing the Worldpay sales resources, there’s good news as well. Looking at all three segments of the Worldpay business, whether it's enterprise and e-com, platforms integrated business, or core SMB business, every one of them sold more and improved its growth trajectory into '24. We see them operating a more successful and effective sales force than they have in the past. Salespeople care about having strong solutions that they can feel good about representing that meet their needs in the market and having a strong earning potential. I think both of those are addressed as part of this transaction.

The only thing I would add is that the Worldpay business and their distribution channels are very much complementary to what we bring to market today, both from a product and distribution perspective. We think the distribution is additive across the two businesses. We're not worried about retaining distribution capabilities, as we don’t see really areas where we overlap to a large degree today.

Right. 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 and that of Worldpay to the extent that you have that insight into that? How much came from organic volume growth in new services, and how much came from pricing increases? Thanks, guys.

Yeah, thanks, Adam. So, I'll address that. Just given the characteristics of the pro forma business, we have great conviction in the targets that we established for our medium-term outlook. Specifically, we expect our top-line growth to accelerate in 2026 and be in that high-single-digit range in 2027. As we talked about, as we think about our medium-term outlook, we expect our adjusted operating margins to expand 100 basis points to 200 basis points. This will translate into growth into that mid-teen. 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. Importantly, in '28, pro forma for the transactions, we will increase our free cash flow by approximately $5 billion, which is 50% higher than what we expected on a standalone basis, and allow us to return more than $4 billion to shareholders in '28, which is also 50% higher while maintaining that 3 times leverage point. So, the combined businesses will absolutely accelerate the growth profile of the business, give us more scale, and allow us to return more capital to shareholders.

If you look at the underlying revenue growth expectations, we're seeing strong new sales production, which is driving growth in both businesses. We're seeing stable underlying same-store sales trends across both businesses. Pricing remains a component of the overall calculus to drive revenue growth, but for both of the underlying businesses, it's relatively modest and generally in line with past practices for pricing optimization overall. I'd say we have healthy underlying trends overall, and obviously gives us confidence with the outlooks that we provided today, both for Global Payments standalone as well as where we see the combined business growing post-close.

Our top-line growth and margin expansion is relatively consistent with the guidance provided for Global in '25, '26, and '27, and those are the trends we've been seeing.

Hi, this is Ryan on for Ramsey. Thanks for squeezing me in for the question today. You touched on it briefly, but could you provide some additional color on how Global Payments can handle recessionary pressures, especially now as a pure-play merchant business? How is this different from the past? Thank you.

It's Cameron. I'll cover that. As I step back and think about the business today in the context of the business we're running, I think we're well situated to manage effectively through any sort of macroeconomic environment. We have demonstrated a track record of being able to do that. Today, we have a Merchant business that's highly diversified across geographic and vertical markets, both discretionary and non-discretionary. So, I think we're well-prepared to manage effectively and drive financial outcomes through whatever sort of cyclical macroenvironment we're in. The Issuer business is also durable and provides a little insulation. In terms of the pro forma business post-transaction closing, we think we're equally well-prepared to handle any macroenvironment. The Worldpay business has characteristics that are more defensive, particularly their exposure to big-box retail and grocery, which are durable, regardless of the macro environment. The sheer size, scale, scope, and diversification of the business geographically across vertical markets positions the pro forma business well to navigate any downturn expected. We feel good about our business composition, increased scale, and financial strength and flexibility on a pro forma basis.

That's great. Thanks. And congrats on the quarter.

Thank you.

Yeah. Hey, guys. Nice job. I guess my question is about 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 deceleration. Can you describe did you take a little share, and what dynamics might be playing out in your business that might be a little different from the industry?

Yeah, Dave, thanks for the question. Overall, we saw 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 grow through that, notwithstanding a little bit of a headwind year-over-year from that. The trends are probably relatively consistent with what others saw in the marketplace, but we're pleased with the underlying momentum we have in Q1 and how it sets us up for Q2 and beyond. We did see pockets internationally that showed more strength than we anticipated heading into the quarter, which is good news for us and sets us up well for Q2 and the balance of the year. We feel good about where the business is overall, the progress on transformation, and how that drives better outcomes. Thanks, Dave.

Great. Thank you for taking the question. I want to talk a little bit about the Genius product investment from a dollars perspective. If you could go over how much investment has gone into the Genius product over the past few years, just so we can compare to some of the investment that we see with others like Toast or Square? Additionally, how that investment might change ahead as you have the increased capacity to invest behind the product?

It's Cameron. Over the course of time, we've been investing heavily in multiple POS platforms across the business. There's been no lack of investment in our POS capabilities and the feature functionality we're embedding into those environments and the products we're bringing to clients. The challenge has been more around amplifying that investment across the business and really focusing that investment on singular platforms where we're building capabilities once. As I think about investment, we've been investing in our POS. We believe strongly in the capabilities we have. The focus will be harmonizing that investment into single platforms to bring all capability to market more effectively. As I think about our competitive feature functionality, we have a highly competitive offering in the market. It's about harmonizing that investment into single platforms globally. Bob, I don't know if you want to add anything.

Only one thing. The last six to nine months have been about harmonizing platforms, and there's still some work to do over the next couple of quarters. However, mid- to long-term, we see this as an accelerator of innovation without having to change the number of dollars invested into the platforms. If you must expend fewer dollars across fewer platforms, you'll accelerate innovation. Pro forma, as you think about combining with Worldpay and the $1 billion available to invest, this remains one of our top growth areas and areas of investment as we bring the two businesses together.

Tim, Bob touches on a good point. The combination of Global Payments and Worldpay gives us significant investment capacity in the business that allows us to amplify that investment and accelerate outcomes around innovation and product capabilities to market while leveraging the scale of processing volume that comes with our combination, which is quite powerful. This ability to blend innovation and scale drives better long-term outcomes for our business. Thanks, Tim.

Hi, Cameron, Bob, Josh. Thanks for taking my questions this morning. I wanted to go back to something you said a moment ago, Cameron. A, obviously, you said two important elements of the transaction are scale, and then innovation and scale are the obvious point. If you could put a finer point on how you manage product across SMB and enterprise, and how we get to that faster product innovation, a few more details there would be extremely helpful. Thank you.

It's a really great question, Andrew. I'm glad you asked it. I'm going to paint a bigger picture. If I think about long term, what was our thought process in doing this deal? Where do we see the industry heading? What is important to us regarding putting the two businesses together? A few key themes I want to highlight which relate to your question. First, the expectations for enterprise and SMB customers are going to converge over time. Larger enterprise business capabilities are going to be demanded by SMBs. Second, digital-native commerce will continue to grow. We need best-in-class tools to support that globally. Third, embedded commerce models will evolve. Having broader tools for software partners is critical. These trends highlight the strategic imperatives for the combined business, positioning us to drive growth outcomes and value creation for shareholders. Blending product and capability across all merchant segments is critical. As we integrate our solutions, we’ll deliver the capabilities enterprise and SMB customers require, and maintaining efficiency and productivity in product management will support faster innovation.

As far as we think about product, we have centralized product management and oversight over those, whether you're in SMB or enterprise. We've defined roles that are market-facing focused on verticals. Having product teams close to verticals that can react quickly is vital. Enterprise capabilities that are currently available are what's needed in the mid-market and will be for the SMB segment shortly. We've effectively offered enterprise functionality in a user-friendly manner before. We can quickly bring enterprise functionality down to SMBs to add value quickly.

Super helpful. Very thoughtful response. And I completely agree in terms of the convergence and democratization opportunity we've seen over time in payments. If I could ask just one quick follow-up, just a macro question. It was good to see the reiteration of the cadence for better performance in the back half. Can you talk about what's embedded? Is there sensitivity? I know you typically bake some macro volatility into the outlook, but if you could put a finer point on that, that would be helpful for everyone. Thanks so much.

So look, similar to what you've heard, we saw the consumer remains resilient. We assume spending trends remain consistent with what we saw coming out of the quarter and continue into April. The macro backdrop has created some uncertainty, but we're assuming a stable macro environment throughout the year.

All right. Thank you, Josh.

Thanks, Andrew.

Thanks, Andrew. We’ll conclude our call this morning, and I want to thank everybody for joining us, particularly for getting up early. 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. We look forward to updating you on progress and bringing these transformational transactions to close and integrating Worldpay to unlock the potential of this combination as we continue to drive the evolution of commerce worldwide. Thank you for your interest in Global Payments, and we look forward to following up over the next several days. Have a great day, everyone.