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Global Payments (GPN) Q2 Earnings Beat on Transaction Growth
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Global Payments Inc. (GPN - Free Report) reported second-quarter 2024 adjusted earnings per share (EPS) of $2.93, which beat the Zacks Consensus Estimate of $2.91. The bottom line rose 11.8% year over year.
Adjusted net revenues improved 5.5% year over year to $2.32 billion. The top line surpassed the consensus mark of $2.31 billion.
The strong quarterly results were aided by growth in transaction volumes and a rise in traditional accounts in the Issuer Solutions segment. A decline in interest and other expenses also favored the second-quarter results. However, a rise in operating expenses partially offset the results.
Global Payments Inc. Price, Consensus and EPS Surprise
Adjusted operating income of $1.1 billion increased 6.4% year over year in the quarter under review and beat our estimate of $1 billion. Adjusted operating margin improved 40 basis points (bps) year over year to 45.2%.
Total operating expenses of $2 billion increased 7.9% year over year in the second quarter. The increase was due to higher selling, general and administrative expenses, and losses incurred on business dispositions in the year-ago period. The metric lagged our estimate of $2.1 billion. Interest and other expenses declined 16.9% year over year to $159.2 million and lagged our estimate of $167.5 million.
Segmental Performances
Merchant Solutions: The segment recorded adjusted revenues of $1.81 billion in the second quarter, which rose 7.8% year over year. The figure surpassed our estimate of $1.79 billion. The year-over-year growth resulted from double-digit growth in the ISV channel, more than 20% growth in the LATAM region, and volume growth of 6%.
The unit’s adjusted operating income increased 8.5% year over year to $884.8 million and beat our estimate of $868.2 million.
Issuer Solutions: Adjusted revenues were $526.5 million in the segment, which grew 4.2% year over year in the quarter under review but missed the Zacks Consensus Estimate of $535.6 million. The unit benefited on the back of a rise in traditional accounts on file and rising transactions.
Adjusted operating income improved 4.5% year over year to $246.6 million, lower than our estimate of $253.1 million.
Financial Position (as of Jun 30, 2024)
Global Payments exited the second quarter with cash and cash equivalents of $2.1 billion, which remained flat from $2.1 billion at 2023-end.
Total assets of $50.8 billion climbed from $50.6 billion at 2023-end.
Long-term debt amounted to $15.6 billion, down from $15.7 billion at 2023-end. The current portion of long-term debt totaled $1.6 billion at the second-quarter end.
Total equity of $23 billion declined from $23.3 billion at 2023-end.
GPN generated operating cash flows of $1.15 billion in the first half of 2024, which declined 1% year over year.
Capital Deployment Update
The company bought back shares worth $900 million in the first half of 2024.
It declared a quarterly dividend of 25 cents per share, which will be paid out on Sep 27, 2024, to its shareholders of record as of Sep 13.
2024 Outlook Reiterated
Adjusted net revenues are anticipated to lie within $9.17-$9.30 billion, which indicates an improvement of 6-7% from the 2023 figure of $8.7 billion.
Adjusted net revenue growth in the Merchant Solutions segment is estimated to witness year-over-year growth of more than 9% in 2024 from the 2023 figure of $6.5 billion. The Issuer Solutions segment’s adjusted net revenues are forecasted to be between 5% and 6% from the 2023 figure of $2 billion.
Adjusted EPS is anticipated to be between $11.54 and $11.70 in 2024, which suggests 11-12% growth from the 2023 figure of $10.42. GPN expects to convert almost 100% of adjusted net income into adjusted free cash flow.
The annual adjusted operating margin is expected to increase up to 50 bps in 2024. The metric in both segments is projected to witness an increase of up to 30 bps and 50 bps, respectively.
Zacks Rank
Global Payments currently carries a Zacks Rank #4 (Sell).
Here are some companies from the broader Business Services space that have already reported earnings this season.
Visa Inc. (V - Free Report) reported strong third-quarter fiscal 2024 earnings, which benefited from expanding processed transactions and cross-border volume. Its earnings per share of $2.42 outpaced the Zacks Consensus Estimate by a penny. The bottom line rose 12% year over year.
Concerns regarding cooling consumer spending growth, especially in high-ticket and discretionary items, are likely to keep the stock under pressure.
American Express Company (AXP - Free Report) posted robust second-quarter 2024 earnings, driven by rising net interest income and growth in the customer base of Millennials and Gen-Z, driving growth in the U.S. Consumer Services Billed business.
The company’s second-quarter earnings per share of $3.49 beat the Zacks Consensus Estimate by 8.4%. The bottom line climbed 20.8% year over year.
FirstCash Holdings, Inc. (FCFS - Free Report) reported adjusted earnings of $1.37 per share, which beat the consensus mark of $1.36. Over the last four quarters, it beat earnings estimates each time, with an average surprise of 8.1%.
FirstCash posted revenues of $831 million in the reported quarter. The Zacks Consensus Estimate for earnings for the next quarter suggests 2.6% year-over-year growth.
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Global Payments (GPN) Q2 Earnings Beat on Transaction Growth
Global Payments Inc. (GPN - Free Report) reported second-quarter 2024 adjusted earnings per share (EPS) of $2.93, which beat the Zacks Consensus Estimate of $2.91. The bottom line rose 11.8% year over year.
Adjusted net revenues improved 5.5% year over year to $2.32 billion. The top line surpassed the consensus mark of $2.31 billion.
The strong quarterly results were aided by growth in transaction volumes and a rise in traditional accounts in the Issuer Solutions segment. A decline in interest and other expenses also favored the second-quarter results. However, a rise in operating expenses partially offset the results.
Global Payments Inc. Price, Consensus and EPS Surprise
Global Payments Inc. price-consensus-eps-surprise-chart | Global Payments Inc. Quote
Operating Performance
Adjusted operating income of $1.1 billion increased 6.4% year over year in the quarter under review and beat our estimate of $1 billion. Adjusted operating margin improved 40 basis points (bps) year over year to 45.2%.
Total operating expenses of $2 billion increased 7.9% year over year in the second quarter. The increase was due to higher selling, general and administrative expenses, and losses incurred on business dispositions in the year-ago period. The metric lagged our estimate of $2.1 billion. Interest and other expenses declined 16.9% year over year to $159.2 million and lagged our estimate of $167.5 million.
Segmental Performances
Merchant Solutions: The segment recorded adjusted revenues of $1.81 billion in the second quarter, which rose 7.8% year over year. The figure surpassed our estimate of $1.79 billion. The year-over-year growth resulted from double-digit growth in the ISV channel, more than 20% growth in the LATAM region, and volume growth of 6%.
The unit’s adjusted operating income increased 8.5% year over year to $884.8 million and beat our estimate of $868.2 million.
Issuer Solutions: Adjusted revenues were $526.5 million in the segment, which grew 4.2% year over year in the quarter under review but missed the Zacks Consensus Estimate of $535.6 million. The unit benefited on the back of a rise in traditional accounts on file and rising transactions.
Adjusted operating income improved 4.5% year over year to $246.6 million, lower than our estimate of $253.1 million.
Financial Position (as of Jun 30, 2024)
Global Payments exited the second quarter with cash and cash equivalents of $2.1 billion, which remained flat from $2.1 billion at 2023-end.
Total assets of $50.8 billion climbed from $50.6 billion at 2023-end.
Long-term debt amounted to $15.6 billion, down from $15.7 billion at 2023-end. The current portion of long-term debt totaled $1.6 billion at the second-quarter end.
Total equity of $23 billion declined from $23.3 billion at 2023-end.
GPN generated operating cash flows of $1.15 billion in the first half of 2024, which declined 1% year over year.
Capital Deployment Update
The company bought back shares worth $900 million in the first half of 2024.
It declared a quarterly dividend of 25 cents per share, which will be paid out on Sep 27, 2024, to its shareholders of record as of Sep 13.
2024 Outlook Reiterated
Adjusted net revenues are anticipated to lie within $9.17-$9.30 billion, which indicates an improvement of 6-7% from the 2023 figure of $8.7 billion.
Adjusted net revenue growth in the Merchant Solutions segment is estimated to witness year-over-year growth of more than 9% in 2024 from the 2023 figure of $6.5 billion. The Issuer Solutions segment’s adjusted net revenues are forecasted to be between 5% and 6% from the 2023 figure of $2 billion.
Adjusted EPS is anticipated to be between $11.54 and $11.70 in 2024, which suggests 11-12% growth from the 2023 figure of $10.42. GPN expects to convert almost 100% of adjusted net income into adjusted free cash flow.
The annual adjusted operating margin is expected to increase up to 50 bps in 2024. The metric in both segments is projected to witness an increase of up to 30 bps and 50 bps, respectively.
Zacks Rank
Global Payments currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Players
Here are some companies from the broader Business Services space that have already reported earnings this season.
Visa Inc. (V - Free Report) reported strong third-quarter fiscal 2024 earnings, which benefited from expanding processed transactions and cross-border volume. Its earnings per share of $2.42 outpaced the Zacks Consensus Estimate by a penny. The bottom line rose 12% year over year.
Concerns regarding cooling consumer spending growth, especially in high-ticket and discretionary items, are likely to keep the stock under pressure.
American Express Company (AXP - Free Report) posted robust second-quarter 2024 earnings, driven by rising net interest income and growth in the customer base of Millennials and Gen-Z, driving growth in the U.S. Consumer Services Billed business.
The company’s second-quarter earnings per share of $3.49 beat the Zacks Consensus Estimate by 8.4%. The bottom line climbed 20.8% year over year.
FirstCash Holdings, Inc. (FCFS - Free Report) reported adjusted earnings of $1.37 per share, which beat the consensus mark of $1.36. Over the last four quarters, it beat earnings estimates each time, with an average surprise of 8.1%.
FirstCash posted revenues of $831 million in the reported quarter. The Zacks Consensus Estimate for earnings for the next quarter suggests 2.6% year-over-year growth.