GPN - Earnings call transcript Q3 2018

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to Global Payments 2018 Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will open the lines for questions-and-answers. And as a reminder, today's conference will be recorded. At this time, I would like to turn the conference over to your host, Vice President-Investor Relations, Winnie Smith. ahead. go Please

Winnie Smith

welcome call. and Payments quarter third Good to conference XXXX morning Global

Before filings. you to these results including materially. to our subsequent call to the We XX-K like place uncertainties risks we I'd begin, on in discussed and remind caution which subject and recent by filings, our during risks and uncertainties statements, comments management that today's forward-looking could not conference undue contain are to differ statements. reliance made of SEC any you most These cause actual some

statements as we of Forward-looking during update the this obligations no only call them. and of call speak this to date undertake

Some which ongoing performance. adjusted margin more adjusted of measures our operating non-GAAP adjusted we reflective made adjusted of network such to earnings per fees, believe net and the are share, as net comments refer revenue, revenue plus

please GAAP furnished trended Form most For this our accordance financial with of our to in a full morning are the of of X-K reconciliation highlights, www.globalpaymentsinc.com. regulations, available the our website and other Relations measures to Investor which measure and our in an financial exhibit area see non-GAAP at press comparable filed these both SEC as release

Bready, call Jeff the on me Joining Vice Sloan, Senior CEO; are President Cameron Executive CFO. and

turn the to I'll call Now, Jeff. over

Jeffrey Steven Sloan

Winnie. Thanks,

per in execution highlighting points double-digit adjusted and this to outstanding cycle of share across in are earnings growth expanded end XXXX. XXX set of March globally. the basis in continued year saw the guidance margin again our organic our half adjusted XX% ongoing delighted at report first through operating the of delivered growth We quarter. that the we raised expectations and quarter, strong our We the momentum both high delivered third markets by We

in components progress strategy. three our We all significant of growth a also made

technology capabilities acquisitions to AdvancedMD to in expanded we our our markets. our build successfully as capital deploy the vertical and open with continue portfolio SICOM out own of First, software we attractive

a be our in business is shifting from revenue mix expect technology XXXX. to XX% further XX% nearly our XXXX up result, total toward we and in XXXX, As of XX% enablement, which in

We capabilities software two worldwide the we food markets. with that for currently markets data software largest management, More customers combined back-of-house our globally, we leading restaurant specifically, front-of-house kitchen a us systems, platform. enterprise solution service and that Xenial The creates announce highly the cloud-based, combination capabilities. for medium-sized, small, pleased of enterprise-level procurement and other existing scheduling one recently SICOM's to the technology serve. as acquisition of provide provider leading management well synergistic and SICOM, restaurant are drive-through and are to platform with as our includes payroll solutions offerings end-to-end vertical and and Xenial's adds and middle-of-house vertical closed SICOM analytics, point-of-sales that and a

provide a Asia. food market United to service us base with SICOM by target complete TAM. solutions this a and deliver uniquely XX,XXX in currently solution already Europe, the restaurant vertical is entire worldwide services Sodexo. one-stop into services of in $X.X for to Our the like that addressable leading Americas, QSR customers our entry adds account. solutions The States. countries provides vertical in our ability across XX-plus $X this software billion also for to footprint the Compass enterprise Through to Xenial, as restaurants double Group SICOM now and and a payment a customers over SICOM management markets quick-service billion market, or shop market we the for restaurant positions providing acquisition

in software the for accelerated about vertical. this potential growth excited new very owned are We

recent today. the seeing capture strong to distribution well of period, in as a and penetrate Global great the also are most leading to as opportunity start we AdvancedMD off We're momentum September. do network We of AMD early our XX% beginning capabilities closed not acquisition $X with Payments' AMD's to in leverage the we payment corporate bookings billion

see referrals across position from payroll we business. enhanced opportunities Heartland immediate addition, our and In

the achieved to resilient, and last bookings quarter Finally, confident have and share as months the characteristics. Including continue by revenue record concerns software partners. existing have business widening do. acquire us ACTIVE with as differentiated recurring expand invest vertical of opportunities The logos enhance the target to will largest Further, ACTIVE, we last are new our and continues XX remains it software-driven just we predictable tend aggregate, disintermediation. relatively executed three our the We highly businesses XX% be successfully world. These gap less approach sizable, markets, defensible strategic have global remain distinctive, over we U.S. to broad-based our and to to our to said economy in we market now the from tech-enabled, acquisitions to exposure In of representing businesses in own that payments full. capabilities macroeconomic susceptible gain roughly businesses software our competitors. pipeline would will with legacy enable vertical markets competitive insulated GDP,

approximately constant second March. of pleased net revenue strategy, fees the ecommerce $XXX network million in of represents high-teens our ahead Moving we our leg we currency, mid-teens expect This to and omni-channel in business are growth now discussed solutions we to plus target in organic the report to that XXXX. generate adjusted in

the in ahead $XXX in than this reminder, we card space $XXX networks. so more the in performance and of have the million business lines technology a consistent these with companies XXXX, As many years of produced with doubled and XXXX three million in online fastest-growing

States. XXXX. United the On to are are Europe total across believe revenue a by markets First, this track segmented customers by growing we today. and ecomm is global channel on the or we market represented a We target set these value omni already We customer are on in basis, represented given in we that a market XX% results? channel are overweight more for achieve share than we and small- and this to ecomm/omni that we so relative in, or rapidly of we go market within we Asia-Pacific we proportionately well Continental to stick focusing size that domestic knitting with a distinctive or and looking medium-sized F&B proposition leader are achieve to are the our cross-border. our How to do in

larger hard-to-serve market well Europe. Malaysia, further and across cross-border in and segmented is like the as Second, for Singapore by serve we also as geography Continental corporations acceptance like Taiwan, looking multinational markets customers,

in sales local countries, processing XX provide local XX we with offices, Third, but multinational not and nearly expertise countries. operational and in licenses support and capabilities resources just and also domestic

CIBC, to have These institutions, Canada we acceptance Fifth, Swatch, some to for customers most the expand global our have moat. the in higher across distinctive geographies delivering partnerships faster-growth of penetration demanding us HSBC, and our Erste and provide of investments produce markets, and some market-leading CaixaBank, economies. access solutions and substantial including enabling National leverage that facilitators the to with us rates Philippine leading also scaling Bank, businesses to Fourth, like partnerships Bank ZARA, fortunate made complex, Islands. to to these worldwide, localized list competitive fees lower largest payments brands LVMH, (XX:XX:XX) Bank technology digital preeminent Our of a catalyze technologies by we're includes of technology-savvy and globally.

next-generation market months SaaS making by our lead platform the production. next developing to offerings to additional the unified our When continue to our and to seamlessly years. XX offerings our which systems, expect over omni-channel ability omni-channel nearly in to are differentiate to technology in modular combined our countries, continue already with enhancements coming We further cloud-based over XX processing support we expect the

Kong, With unique meaningfully free We're future enabled a transform that, Hong The faster our and and ecommerce geographies to key ecomm the And today for and margin technologies expand third combination peers XXXX. achieved record we and high-technology well in transformation and and provide are partnered faster-growing software, were growth Spain, The our revenue globally. forward beyond markets this and closely omni on pure relationship digits. to our as make growth. while the innovative our in our the continuing term growth trends, XXXX Mexico of to continue peers. HSBC Philippines achieved quarter trajectory we like cash software turn call legacy of is has owned, to to the into services again rates in final driving near The footprint our Cameron. I'll markets, to flow, industry-leading substantial partnerships, in expansion strategy align look our our continue and into more Singapore, have strong revenue and we market-leading extend us Central investments with to and business outgrow where to with distinctive We secular double entering accelerate to element we businesses, as over sustained our and Europe, to momentum. expand organic and to

Cameron M. Bready

everyone. have growth third Total strategies. adjusted our our for vertical good of and expanded footprint. XX% strategic strategy to results AdvancedMD quarter XXX in of market continued while very achieved operating our $X.XX. revenue to exceptional expanding growth strength company key plus two driven Adjusted network consistent per XX%, of share organic increase versus also and by prior performance, Jeff, meaningfully We're morning, billion, channels to points quarter fees acquisitions, Thanks, and adjusted across and delivered an We execution pleased financial XX% successfully year's. basis another increased net was payment and closing the margin the these earnings SICOM, software-driven $X.XXX

our organic the consistently a at past in to or our above success the years. the top-line over also growth, of earnings several cycle high for future and and expansion deliver guidance, while growth, end ability remains growth investing Our hallmark business execute margin

acquisition of Adjusted our for grew negative segment margin to of XXX-basis-point points third the million adverse from quarter, North includes XX.X%, despite to an approximately operating plus expanded revenue $XXX XX% XXX foreign America currency fees impact exchange performance, which basis our to net adjusted in adjusted rates. September which and transaction headwind the and revenue in network the of business. for excess Turning We time. benefit currency contributed the from at pressure continue forecast increased portfolio AdvancedMD in successfully AdvancedMD. technology-enabled provided scale with our foreign that to in net line closed from North America growth modest margins on X, we the

million also ACTIVE net X. on contributed September anniversaried revenues the the a third closing we Network As ACTIVE $XX Network reminder, of quarter. approximately in adjusted

delivered end has again high business it distribution this year. organic our growth the direct at each of as quarter normalized low-double-digit targeted U.S. range, Our

as declined wholesale our quarter, this pivot teens guidance away rate this businesses emphasize expectations and with actively from in our channel. at Our line high business and revenue we distribution continue to the direct

rates. Canadian dollars. U.S. in grew business by currency more although that offset exchange was This declining resulted foreign adverse Our low-single-digits Canada currency, in than low-single-digits local in

the in high-single-digits network Europe, on good drove share XX% to revenue again fees a adjusted execution approximately net and constant-currency as or once performance. grew Moving solid XX% The basis. gains plus grew UK

faster of currency, Europe mid-teens Our markets economy in contribute and of new favorable growth introduction to also and Central and in our partnership in stable Spain Erste growth delivered in by driven markets. joint strength Likewise, continue the venture CaixaBank. local with in benefits the secular to mid-teens trends growth, the reflecting underlying the from region. European our a grew top-line meaningfully products services our

the combine in operating primarily Europe the reinvestment business teens Lastly, XX.X%, unique strong our currency in we continue pan-European foreign performance to our in the online impacts grew driven of business. ability Adjusted our top ecommerce physical points the and to line and the and to brick-and-mortar by partially scale in omni-channel translation capabilities. market, offset XX continued margin solutions basis expanded leveraging as high by

currency. eWAY currency again of organic in XXX of despite and exchange XX.X%, by delivered adjusted Finally, margins XX% Local and of constant-currency currency and growth across growth we points Asia-Pacific, basis strong local double-digit on adverse Kong, to a good strong strength region the to net growth our primarily Ezidebit in see as Asia the Philippines. Malaysia, in momentum driven rates. foreign key expanded revenue growth broad-based fees continued basis. was operating in result the markets, once network Hong including approximately plus reported a or XX% Singapore impact Adjusted negative

core our business, line deliver for and disciplined businesses totaled strong the us allowed top quarter Our reflects to the excluding cash This approximately million free acquisition $XX consistently ability growth costs. of investment in quarter. integration to in continued across $XXX adjusted capital which the third flow margin generate expansion drive million, and

a capital in the support reinvestment from standpoint priority growth highest remains to including Our M&A. business our deployment initiatives,

existing $XXX the closed of million SICOM using revolving September we highlighted, in our we the We facility. As credit financed AdvancedMD on this acquisition $XXX earlier of of cash acquisition these and million month. a and hand transactions combination

forma strong pro sight level the line flow our X of of a to currently given the times, these result provides targeted times our a As comfortable range X.X leverage business. profile generation a stands acquisitions, of to X.X at clear approximately cash that

to of organic position The continue improved able of basis offering which October pay to end, pursue $XXX a balances B. We initiatives also loan that powder credit to best-in-class were at execution facility. LIBOR maintain points, a loan To our strategic down our to we were forward. plus term sufficient on for dry current million our in and our going again, with B Once we used rating. inorganic liquidity outstanding proceeds the XXX execute this rate credit revolving term

to interest rates. to a million notional In addition, floating hedge rate $XXX into we amount recently new our entered swap exposure further

end of our the the portfolio of and continue end of to interest we be by XX% implement by we rate XXXX. XXXX XX% As hedging nearly roughly hedged debt to strategy, expect our

our momentum us fourth pressure ahead, track performance financial our again quarter consistent on has despite currency we Looking coupled the foreign to see deliver execution, in business, exchange yet with rates. from strong in the

to we're billion, XXXX, network plus over reflecting expectation XX% adjusted growth raise $X.XX range XXXX. billion delighted $X.XX For to to fees net revenue a of of our

fourth our basis to to be quarter Further, fourth we relative adjusted a year-over-year expectations. approximately year to adjusted We for XXX currency of network revenues million foreign net for $XX SICOM plus XXX the of $XX half the of to back offsets the the million expect net revenues to expect specifically, to which fees AdvancedMD contribute headwinds essentially for points. and FX quarter, original headwind

In addition, with expectations again wholesale this line we will for our growth, anticipate in we our achieve organic channel. while North similar to a at business direct U.S. to which business double-digit is our American expect decline – QX,

M&A the to and acquisitions. unchanged now be be XX% Pro the year, increase unfavorable to translation the recent fourth forma basis the despite of operating adjusted to For financing, outlook, prior the pressure full from impacts expect modest expense from expand continue to foreign our by our net $XXX points, interest year-to-date our all we of tax to earnings up for margin quarter in significant will the XX% the in bringing XXX our it currency proud we of third of we expect sequentially XXXX we quarter, over approximately for to to range rate million the now our XX%. anticipate for share expect year. in XXXX. we full $X.XX effective per We together, cannot forecast for to adjusted XXXX Further, $X.XX, in and period. growth reflecting more XX% performance quarter Putting expect

to and cycle in With our Jeff. meet in we're we now the As back start out had and we remain the to technology-enabled worldwide our look established or turn at be the business to March. advance Likewise, software-driven forward that, about the the increased ability to as call exceed close in we excited strategy year. we targets we I'll as momentum a over to guidance position the expectations XXXX, of XXXX beyond, we the pleased exceed

Jeffrey Steven Sloan

Cameron. Thanks,

in at the look March, let's As we facts. said

of compound record last of while This results. margins in any generating operating three the revenue without delivered reported have XXXX proof is annual all and and cash The margin and many and accelerating flow in growth. to consistency expanding years, cash model the as free adjusted income free financial sustained cases We no while, of done exception. annually EPS was the and XX%-plus flow engineering delivering revenue flow, is the and all and growth over through

partnerships which be round are come. capital, We technologies deliver be on good that The be materialize, fourth the about our revenue XXXX, best that will accelerate, we more to there is persists excited plainly already day and now and will that across XXXX that will don't will yet today that rather we to we achievements. that one beyond. not will and out to third The back our our expect Winnie. on the an call will expand, XXXX. have on into momentum faith that it one market-leading, could the building will our now turn quarter, heading durable, one stewards trajectory quarter margins or we day day synergies I into outstanding be of You those take through will now will our businesses continued we commitments day are one

Winnie Smith

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

Operator

Thank you.

with Mihalos George from comes question first Cowen. Our

open. Your is line

George Mihalos

Great. Good morning, guys.

what there. the in Just to Jeff, again of that's coming maybe given we've us SICOM time peers you some Global that of all has on obviously, wanted got more vertical the just the aggressively competitive about advantage ask, it? and a of acquisition now in vertical is refresh that big Can spent sort focusing from you for lot talking competition the restaurant your

Jeffrey Steven Sloan

Yeah. question. Thanks, the George. I appreciate

primary have of the think have market. is I solution spectrum the So, vertical entire an cloud-based enterprise-level restaurant the that technology across end-to-end advantage we we

it's think strategy. consistent technology-enabled software-driven our with very I So payment

about If production the have with have front-of-house you customers have point-of-sale; we of then solutions; SICOM, back-of-house and we A interacting and the a combination so Software-as-a-Service drive-through; course, order of and and we're and management the we middle-of-house SaaS franchisors is we're or basis, at solutions this, analytics lot think on data Xenial like on solutions, today. and like a franchisees. market of for and in in

as footprint restaurant business. know, multinational have, we a is our the on thing given other The you perspective

present globe Americas, Europe XX in with Asia-Pacific. those As enterprise the the we're countries we and now solutions our announced in in prepared remarks, around

also Software-as-a-Service a and you delivering the all geographic a depth we're that depth of the in technology I markets the breadth the it's back, it's I were our in selling if We breadth and of these recurring just Xenial into a that deeper So, coverage you that basis, described. with to SICOM and that we're production and on step going number the to know, scope are think take they we delighted and primarily with competitors Heartland are these George, businesses, see types announce gone of today. that and have and of as now into in But markets. already solutions intended were Commerce,

that that to software already gratifying attractive restaurants, is see in be really we're but So vertical think today. there it's think an place folks I to market

Cameron M. Bready

SaaS-driven. everything quick-service solutions It's down George. think I to that Hey, some also small the all can that tailored units The that names multi-shop of it's needs you enterprise-level restaurant of the the we're of targeting a have again the we up Again, largest so the of customer, of, to to Cameron. all or medium-sized the to can be thing add only whether all enterprise-level would small customer needing geared customers, that all that's way market is single-shop customer, to customers. from specific specific way segment

middle front, a depth have we by as well merchant across small of So down to enterprise from breadth back segmented and and the size solutions operator. of single-shop

George Mihalos

thanks. great, revenue the on from basis us could And you for for size both contribution, what margin a just a if perspective perspective That's an and just quick Cameron, as will follow-up, annual be. SICOM

Cameron M. Bready

Yeah. Sure, George.

So, combining basis thereafter our expect $XXX we this existing to around a roughly businesses margins from in as synergies operations, with realize accretive overall platforms. we're SICOM to and Xenial the to combine two margins consistent the then existing and low-double-digits. a with XXXX revenue margins million, be expect we XXXX be corporate given we growing From margin business that in standpoint, on to for able

George Mihalos

Thanks, quarter. guys. Congrats on the

Jeffrey Steven Sloan

George. Thanks,

Cameron M. Bready

George. Thanks,

Operator

Our Darrin Wolfe Peller next with question from Research. comes

Your open. line is

Darrin Peller

first can want quarter. start Thanks, job the I you help on guys. off us... just Nice if to

Jeffrey Steven Sloan

Thanks, Darrin.

Darrin Peller

guys hear happened be what great. I'd curious in Maybe I (XX:XX:XX) be business. it's going more teens, underneath terms little – know with core by whether of gaming. other more little the And just in high which like a expected. the granularity education keeps extremely more that, color down mean, seems on the and well. I granularity it to on will But thanks. direct a outside vertical, just direct Obviously, you Yeah, were of

Cameron M. Bready

And Cameron. it's the first all, Darrin, of Sure. for comments. thanks Yeah.

what QX, probably say one So, saw as I in in you QX. quarters consistent like it's the in we would business. we've quarter, best And with that recall, of this strong growth very seen U.S. direct the

would organic I quite QX better close from So, standpoint. an say growth fairly frankly than to QX,

the owned as down we low-double-digit well as the our a nice vertical of So it obviously model through if our to you in that That's we're in integrated business. again U.S. low-double-digits, course continues markets growth with that vertical seen obviously markets target partnership assets and tailwind software constituent grew in of OpenEdge, have business that for today. obviously the with combination the into in break this a delighted provide channel. for distinctive its we're parts, the and do year we've momentum and We growth

consistent our the traditional it high-single-digit grew at you QX. If we QX and saw distribution look U.S. relationship-led with direct in more level platform, again, again

combine you $XX.X channels think (XX:XX:XX) QX. (XX:XX:XX) versus $XX billion $XX.X billion, in around two billion the again, So direct I and quarter U.S. third those in ballpark growth was that in

in for we end area the expectations same our and of that right saw So the again channel. at QX that in high

As year. the of a the know, good Jeff for ACTIVE direct from close. his And remarks, the consistent million grew with remarks, had AdvancedMD my the to $XX last month I in Jeff target as prepared high-single-digit number expectation noted contributed its strong for we or low-double-digit channels. relative noted It provided quarter. QX at you low-double-digits in about as – U.S. prepared we to

really around when right good corner the of momentum which kind of us every the seen break consistent course U.S. well. very course without So, the and throughout performing into getting of higher quarter, XXXX, third positions in think XXXX the down Again, we individual as channels fourth quarter. nicely I business end you those expectations going as the of we've is channel, the for in it think at our any into

Darrin Peller

mix, just right? better quick think in They then, model. your mean, in I great being have terms And ISOs margins. I degree, to That's the margin may mix think than follow-up better driving detail. our there of expansion your the in right. obviously I expected? margin. on than you came a still, All some it's And else particularly guys What that's is down is even being to helpful

Cameron M. Bready

a Darrin. Yeah, great it's question,

the So, the well I is exact business. point. say, margin good But disciplined as and would think expense a the mix biggest you're is we're seeing that the I on biggest driver. mix really obviously standpoint execution I right in as thing think The management from

You're vertical right a in business the business being high-teens, the well. business standpoint from in again, that about pointing particularly investments the quarter. North rest margin out now growing that the seen in margins ISO a wholesale we're making and into we of the quarter and also from benefits business XXX is delivered basis America obviously that's as more the benefit really currency margin in notwithstanding margins us, say expansion, I create this notwithstanding back thing would declining markets our points those the reform. than declining, tax we've a nice to of integrated nice the the business the And higher-margin margins from tailwind portfolios for quickly

we thing if headwinds. think I we're that out there's that quarter despite margin would So, call those delighted about, I the expansion one particularly two specifically experienced it's this

Darrin Peller

Thank All right. you. That's great, guys.

Cameron M. Bready

Thanks, Darrin.

Operator

comes Kwok KBW. next question Our with Steven from

Your open. line is

Steven Kwok

to on would in-house offerings? be or Great. acquisition perhaps could Would Jeff, omni-channel questions. you or a that around done look your you my enhancements to comments with a all making good tuck-in one? Thanks taking elaborate the supplement Thanks. for this

Jeffrey Steven Sloan

Steven. Thanks, Yes.

the of that business. is update and we one quarter omni ecommerce an our traditionally So, kind on of give this course,

as is we're delighted the that quarter in high-teens growth with remarks, my As year expect and prepared I business, for the we the said guidance high-teens for the implies. in which

been being and the thing it quarter with for and a results enhancement no API that as out are we're where on Those the go will The basis rolling where is obviously those you to for rolling a market into globally. the a API well be out in-house now, world year. So, the no more done and we've terminal even Global describing is XXXX. markets single simpler at first generates all but around Payments with complete single you have matter today basis interface really are throughout a I'd both solution in the rolled rolled we say being that globally, we're omni-channel looking making a on are matter

Those as So, results today. the the other reported hub run able generate that we've and that describing. that in our already through the enhanced been enterprise we are rate the are to-date as year being further well technologies expectations we've we've to for our been and have

So, expect some very potential we as continue for into for head to would now business new to have and a as I gain we're XXXX. it's share And you we matter. tell competitive pitching been sophisticated counterparties. large

I today. we're think already market leading

terms I think this XXXX – in growing driver's is really this going to these going of us throughout out roll when things the seat put in put us business really internally forward.

Steven Kwok

this Thanks. And question. actually fits right next into my

and could ecommerce landscape on both space. you competitive talk Just if the around the offline – about

your morning Thanks. looking to into and they One this Canada that up a number signed expand announced merchants. has ecommerce peers of are of

Jeffrey Steven Sloan

Yeah, sure.

the created in that anatomy, in an of vertical geographies of just all not ecommerce course, are all our world. to competitive, the around but in any So, intensely businesses we're markets in and

go a you we remarks, kind to of my really of number Steven, ways. If compete in prepared back, distinctive

midsized focused to in the Great is where business growth businesses or border. made and SMBs it's a those over very and go omni years SMBs example we're ecomm part several Canada. or First, our within the small looking of primarily a in in domestic attractive headway Canada really on omni-channel meaningful market it to cross last

of posted materials North the and the some in believe can in we're today to over-represented relative ecommerce we the those that website see omni-channel America, of our on markets. You Canada we size including in

corporates including folks provide multinational that look In those go cases, list really with global many The second to those markets one I harder to in comments. who gave us are looking there's services in. a can is the thing I'd prepared my two say in we or markets in only that of compete serve. we're to

globally and doing have I in much renewal the businesses it quality globally. themselves, it's where that great America world omni A had with payment outside testament facilitator with globally what of example Global really particularity ecommerce our point, to we've really is markets, the a Payments. and of think our to a they're and also of of the do We harder Steven, Asia, very PayPal business, Europe healthy my a recent business around North and they in it's served

tribute and it's think quality the extensibility I technology So, the our geographic to our a of markets. of really

Steven Kwok

for my taking Thanks Right. questions.

Jeffrey Steven Sloan

you. Thank

Operator

you. Thank

Our Greene Glenn with Oppenheimer. next question comes from

open. is line Your

Glenn Greene

Thanks. Good morning.

So, just...

Cameron M. Bready

Hey, Glenn.

Glenn Greene

sort could of to growth, if SICOM synergy potential revenue but should ...want synergy cross be you more sort we any there's you of acquisition. thinking the know organic time I go double-digit cross the or about? about sale over and talk sort potential broadly low or back to about talked the

Jeffrey Steven Sloan

Glenn, Hey, Cameron sure and add will Yeah. is to I'll Jeff. start this. I'm this

So, you cards, really things, which the Xenial good Xenial business but really application. is is in vertical where Heartland the of mobile Commerce particularly restaurant about think gift in market, customer royalty offers lot management, if a

in product So, ordering of your pick by with Those not your offering. hamburger really are to terms generally it SICOM on that is your way in phone, up. things of and paying thumb going

at SICOM of with the SICOM sell house, globally. into is be So, most the George number bringing that's house, one. Number solutions house those two obvious customer the would the solutions I to of middle beginning the which think primarily probably are cross front described into back of Xenial the cross initially call and of base, and to delivering Xenial Xenial I the sell base the cross solutions sell

attraction already way the by base I is bring in Global as prepared SICOM where was Payments revenue. Xenial existing doubles other and payments. more historically that businesses, And essentially by that of would United those Glenn, ability while a catalyze my are in growth remarks, is markets markets, and present then, present cross SICOM another XX in and say pure SICOM, The mentioned to lastly, Xenial is I real XX,XXX locations. software our into less restaurant among lot payments-related States things another sell, outside So, much

our U.S. example some and in Burger Our the and of States in to XX ability SICOM top has go Juice, revenue but of Canada like chains SICOM Jamba similar core kind QSRs United the large we're King, States four the Tim of about cross Horton's into outside to the the United Glenn, in very for is Global AdvancedMD. Payments cetera, ability as of et excited the what part base payments announced, that to very into synergy sell part another are

three that the focused those term. we're the most in near on So, are

Glenn Greene

to on $XX think Okay, you then, Cameron, about and clarification a $XX And acquisitions of adding get has just quarter sort that? a the FX. context great. constant million organic guidance of million being at made in revenue changed I'm you the just to fourth of by I full-year the offset expectations go at, trying Can the all? comment sort growth currency of through What forward incremental the in it's

Cameron M. Bready

a that's question. Glenn, great Yeah,

growth currency increased. expectations constant have So, the think I organic

look at if So, it, you the, call a point. roughly

year the we into provided half back that that the $XX fourth at we now So, originally coming look quarter, today, of we to million in guide the roughly $XX you the the expect we've FX in new to if anticipated contribute the year. headwind offsets acquisitions relative to expect what the million that

So, original we've that about get and puts from the headwind, the would if back guidance out would coming point have suggests into – of adding I end would at a of the sort FX which anticipated guide. you of year of kind beginning organic to acquisition forth than growth kind the look high you year, say towards we again set original number I the say a the at the of the at stripping you that better

Glenn Greene

Thanks. great. Okay,

Jeffrey Steven Sloan

Glenn. Thanks,

Cameron M. Bready

Thanks, Glenn.

Operator

comes with Our Mizuho. from Tom McCrohan next question

Your line is open.

Thomas McCrohan

to Hi, do if verticals be? have verticals other revenue the they might what guys. and to into other you so enabled, target for To XX% get get software

Jeffrey Steven Sloan

as So, other we get of criteria. comment attractiveness to to back clearly have but a Tom, number vertical don't go can we across I if you think markets some the into start, well. way is about markets, prepared Cameron vertical and I'll think my Tom, of of comments,

billion addressable of first and side, restaurants, the year. SICOM the as a service for Compass is In Sodexo, thing market? to where example, food big in revenue the market to the the acquisition, In that healthcare is what's think billions $X.X case year. try is the billion coming number we of we we the well. growing think In (XX:XX) AdvancedMD of a that's opportunity? of it's $X the The target we case the How think vertical case,

own the So, your we've software managed. your we're businesses. do government before at of more at exposure step not we've paying to in about for But we've terms I post the obvious United that we've We most real we're but in clearly deals in and you property a are we deals and to paying done an enumerated are estate, online, look insurance before. characteristics that Two if vertical online markets a don't to example, the fees the looked we sizable little generally are as you the or GDP. XX%, it, U.S fees to bit get that fees there taxes and directly more have and are comments, government back in see Tom, of other both States I association already that are and business now that think my think need talked quarter ones of that opportunities, attractive about many markets prepared as condo your follow of

Thomas McCrohan

Great – channel the omni. devices. a out and much break thanks and how on going us today ecommerce the of a as ecommerce mobile way follow-up update there omni from and to just is over for that and revenue Is giving

Cameron M. Bready

We Tom. detail don't that have of today, level Cameron. It's

specific from So, amount devices. coming directly I you can't give a that's mobile

coming with our what's We portals. to combination be combination be about we think to ecomm traditional the where the capabilities – merchant traditional going well. ecomm that's it's between more mobile and or don't business, as brick-and-mortar capabilities mobile provide we offerings online ecomm a customers, both omni-channel based going through further it as to our disaggregate So, of Web of

Thomas McCrohan

Okay. Thank you.

Jeffrey Steven Sloan

Tom. Thanks,

Cameron M. Bready

Tom. Thanks

Operator

next Our with Ashwin Citi. comes from question Shirvaikar

is open. Your line

Ashwin Shirvaikar

the Thanks. quarter. Hi, Cameron. Congratulations Hi, on Jeff.

Jeffrey Steven Sloan

Ashwin. Thanks,

Cameron M. Bready

Ashwin. Thanks,

Ashwin Shirvaikar

ability time. So which far, I question make over the the run from software doubt multiple evolve the ability the I few sense. very much term three though get to so in larger short people software kind common ownership work of not is investors about make to acquisition made, about that you've The stacks acquisitions your they and think, but it's

So, could year have talk learned a on sort running may the of to of of and from comment that maybe that you things you ACTIVE? some

Jeffrey Steven Sloan

Sure.

happy know join will Cameron start, I Ashwin. So, And certainly to in. I'm

we've years, of day, the or revenue months acquired growth. So, sustained metric and business over it's doing business to period we're we think over at whether the is acquired software produce omni-channel eWAY, that most the an a or the I the accelerated how or that like years on end it's the important ecommerce last ability whether over the Realex XX of like three or Ezidebit

It's it contribution. is I So, think margin a better XX revenue important number acceleration a terms out. upward, has few a changed permanently the most in out point, does business look can one what to out thing of your look years months' not, what does quarter, you make and building it that earnings

I been think to to that, do be able honest. we've

more and days, in of and view deals. of the We're ACTIVE Europe transaction If remarks, that to transaction to I is you we've closed, look out a mentioned levels been go we ago in at high But acquisitions year in only APT our revenue I in our what with years to year limited growth. four I a rates. numbers that's ACTIVE, able prepared after accelerate year my there but think closed our coming mentioned all half years ecommerce as back in of deliver. in at couple which early months record and that very maintain since testament running at AdvancedMD our bookings booking of to these at ability of period that are a Asia-Pacific, It's time and a look recent a to years in ago, three ago and if six some PayPros, from and date and to acquisitions integrated you and those also

Well, think A of providing know the starting time course, customers town and said of metrics example there these outside end the good primary folks And put at States AdvancedMD good an I is which States. you and some the leave we've to the where what that Salt the high. of just we're in guys United seeing you and that's metric great the good I at personnel on place in don't we're about of view you because and that numbers at, folks I what at those at that the the the they're the we're doing back closing what channel, look what the but expertise I I think accelerating look the means sales, What like is not think things day, mean? do. of good I I'm productivity, couple United to that think that's It I partnerships, particularly and we step retention At But the at? just you not you all I providing. benefit retention tell. as compliance, I healthcare, What and those that, deals can good much further how Lake aside technologist hall now. of will what if months that of particularly went you're ago by is, the and That's at not at in does what listen, really do technologist, a flourish. and to really look on criteria in regulatory, environment infrastructure, done. we're like So, and we're think with if way we're good management software not of

our You value I ability what of bring look good for in can lies. payroll you're residences that there over of I ability and ability and knowledge don't of own. close bring. because the AdvancedMD believe at But by what hear local we and points the up the in you markets years stuff we to example, up in growing we bring partner to asking can that's payments that Heartland physician gone. our know way we're can quickly. of Those excited and last healthcare a things solutions, to acquiring lot vertical of record and you just In our of And get have that to me, really to the generally six – more see enhancements track our is very businesses news sales revenue we're to by And more get was Glenn the operate about think, market, doing, AdvancedMD help are the we you to follow what think, to rate people case on where terms which that's pie. how people demarcation Ashwin, where the are. that's that software like XX% of

Cameron M. Bready

Ashwin, it's that couple Cameron. I a to would as well. add comments just just of maybe

quality we're So, is the management continue to team. running the been largely We deliberate just in if the businesses very We management buy our Jeff leading those we to buy. to as they've you terms where think of us think approach, fit we M&A entire of about type We assets very reasons businesses successfully, acquisitions. want run for our teams the cultural strong buy described.

needs and and where ensure whatever So, those we core a forward strategy the to they in on develop had that them they and and verticals going run in of leading businesses developed in they're that our that to software remain the edge continue the core they specific today. in market edge meet more platforms invest contemporary the continue keep to market businesses

including business software businesses compliance areas capability et looking to services, described, where services get scale with. begin look assets cetera. infrastructure activities, through drive to offshore traditional scale technology more support leveraging big other of to we out R&D we're how to a as So, as provide corporate well. Jeff We And that's part also just these of at other ACTIVE's the can approach it

more we're So, businesses to the of that to own as to resources within opposed our the parties outsourcing doing individually in-house do it or each themselves. development having third either through

build and to create what So, the which that (XX:XX) investment revenue largely themselves do solutions is the growth. provided products but set business, to line the opportunities right the described in we software continue to drive the and the those environment businesses the top in scale find we

Ashwin Shirvaikar

question, any comprehensive. of I that's other this very why the is with not XXXX? follow-up, guess No, here. there into one Got to regards should lot Is carry reason strength underlying it. we

Cameron M. Bready

would absolutely not. say I No,

we full the amount have business into terms end in momentum good. some October, and our about prepared a here at QX. have of good covered the and in I the good beyond going where here we about XXXX feel in certainly today earlier XXXX we provided sit and where the end of basis. comments, beyond. in I look year we we those in we'll of would foreshadowed as And be for up And very full XXXX, we exceed back the heading reflects how very think the my XXXX As confidence I of think We're consistent thought very forward think meet to March, it tremendous but guidance very a I guidance we frankly, into cycle with this sort year of positioned the still feel have we've we're in or expectations to momentum quite for sitting we feel for

Ashwin Shirvaikar

in a hear. to weeks. couple Good Great. you See

Cameron M. Bready

Thanks, Ashwin. Great.

Jeffrey Steven Sloan

Ashwin. Thanks,

Operator

comes question from America Bank next with Kupferberg Lynch. Merrill Our of Jason

is Your open. line

Jason Kupferberg

start just XXXX I ask question to guys. morning, good Thanks. a the Hey, the contribution here. to wanted we as acquisitions project on follow-up

on perhaps said I adjusted basis? XXXX about revs. million EPS we an in guess, range? modeling $XXX about thinking should that in SICOM accretion, AMD, million thinking start $XXX-ish And We're you any EPS on I the then, color for think how

Cameron M. Bready

Cameron. It's Jason. Sure,

So, color. correction one of bit then a quick little and

$XXX So, as contribute this them said AdvancedMD, million expect and we it QX relates to next I to year... on our call, think we

Jason Kupferberg

Oh, next year?

Cameron M. Bready

...under ASC XXX.

Jason Kupferberg

Okay.

Sorry.

I think that was...

Cameron M. Bready

So...

Jason Kupferberg

Okay.

Cameron M. Bready

not which business when yet million AdvancedMD. their ASC been around If it on XXX $XXX (XX:XX) of wouldn't have impact so they adopted for them, acquired we had

SICOM You're million. around at $XXX right that

of bit around little margins. color a Just

margins As little we will we XXXX. merge business expect again, as accretive to corporate of kind And be pressure business. kind begin as our we margins of From and to accretive be to before, we and scale standpoint, expansive earnings more into modestly obviously scale in to margin. to corporate XXXX, we be estimates to and – it that of of with expect come margin modestly as an it it expect XXXX in kind of XXXX to that XXXX, corporate would our to existing we we at expect own AdvancedMD, business beyond above we headwind And in for XXXX a or margins heading bit heading synergies. realize a to be combination kind expect margins kind based we SICOM, internal so thereafter. our accretive be or expect to on I Xenial into Both of business around to EPS in mentioned SICOM expectations. at XXXX the be

Jason Kupferberg

North the what had the that we organic do it wanted specific in business. America for the you check clean whole of North America for number of QX? if a low constant on entirety in to in QX, was And a just growth Okay. so I currency include of as business well QX X%s a the number kind as have kind across

Cameron M. Bready

Yeah, sure.

it's organic ballpark, a normalized very it North growth was in around QX. America The wholesale was that for difference around than in X.X% total for currency and for bigger was similar. QX, constant So, QX largely drag in in being X% so QX

Jason Kupferberg

Exactly.

Okay.

Cameron M. Bready

If QX in so a roughly you right QX, and that exclude wholesale, ballpark. consistent North on a American grew amount basis a in north XX%, constant-currency little in XX% pretty of

Jason Kupferberg

you. great. That's Okay. Thank

Jeffrey Steven Sloan

Thanks, Jason.

Operator

Our next question comes from Susquehanna. Friedman with James

Your line is open.

James Eric Friedman

Jamie Susquehanna. It's at morning. Good Hi.

Jeffrey Steven Sloan

Hello.

Cameron M. Bready

Good morning, Jamie.

James Eric Friedman

in you're want one question. Cameron. over-indexed as then, just one two had markets that's for I'll characterize just And ask prepared ecommerce. and advantages you over-indexed, Jeff, your one command ask yourself I remarks, where wondering commented you you Cameron, when for Jeff you in on to what the you not how like to I'm SMBs? would upfront, my index the for you. characterize SMB, and border you being one cross-border they're on cross And So, if you exclusively are typically with Thank border. cross helpful. border. thank regard the that other cross the opportunity slides, for they're about you But but on heavier

Jeffrey Steven Sloan

market. Jeff. share it's the Jamie, the Yeah, I'll of relative on start

at think all get to think is. there our really – if look we're such regions, asked because get footprint you I three the what slides, in we our we So, points one we that of of wanted overweight do ecomm/omni those out

itself, in you of point. that's our of implies our for all kind one see than greater ecomm/omni the So, say, regions, markets three in the have on share market I of would every one can we – of a slides, our business reporting

and is further, we're in point it overweight second make you ecomm/omni I'd particularly Asia-Pacific we if that's down The break thing. think a Europe, really though and good

because why our Now, breadth I franchise. is it's case? the of of geographic that the think And

based of had If there you markets in of of like Jamie, we not each in in do XX markets. think number all and things I provide Asia-Pacific, the the listed some, the Malaysia not of always I quality markets processing, a remarks Philippines, globally. But are it's that some commodity Singapore, Jamie, one we're markets that tremendous in those providers we the also in are those my services it's about competitive. on-site prepared providing providing is those mentioned but support in just

native bank years it winning that one an in a Taiwan. example, multinational, in largest were who a was very but and of ago and on who world, The the for of was I won't So, that other mention one us ended a is, bid Taiwan. did people large entity, that RFP it the to couple up and

Now, would to in Because really why provide. service be? that that's hard market hard a a really

our that market mean really that a and and think relationship good with one context businesses we've the to those of that why we're what we're overweight largest mean facilitators that's that as we're And The doesn't will I also the ecomm/omni don't does very we in So, we have be the we two aren't it why renewal. a that an markets because true in we Asia-Pacific like PayPal multi-nationally. when in course, to a payment in markets be the it That have doesn't service competitive. would feel hard It mentioned in in-depth very got good we in the of And service. in markets, in the example are that's of reason of very to mean thing hard we're our do, odds but be Europe. that same some to good world. one

comment by also to our markets our you If our physical that in Central omni-channel a double-digit why of years, acceptance helping basis, Continental are the border? drive who SEPA for had, you overweight a There those of about in an cross in those not in purposes – think that, which but growth market conversations physical lot we've XX we part, Europe. a and doing Cameron these in on in in Jamie, and markets single presence Europe think Cameron, want solutions is on the particular really were the and just provide in ecomm view people the of described footprint, not we're SEPA second markets. way to the is EU over

Cameron M. Bready

on the Jamie. which region I depends it's question. think Yeah, a in we're operating. And good It really

here cross border. capabilities not merchants small small in in U.S. of naturally merchant is some, who will market. a There brick-and-mortar the amount to to to there of kind U.S. sell it online the So, the but medium-sized location going be tremendous medium-sized the space, to want omni-channel were in predominantly our today using and be

small the what increase you market. designed around levels, obviously see an frankly to the EU designed of that's move lowering the merchant the you barriers is to accomplish As accomplish. EU towards to level the at partially Europe, even do because activity and for begin It's in particularly commerce SEPA to is cross-border medium-sized

do to basis, a selling merchants cross-border you Pan-European higher we do volume small medium-sized to with medium-sized our obviously cross see omni-channel merchants a markets and smaller those border more of on well. have as in So levels basis on

mixed of bit bag. little a a is Asia

border markets, particularly between see the, markets, cross do call Chinese-centric certain it, activity. You more

Macao, medium-sized So, within merchants basis, be an cross Whereas Kong, well. to whether markets domestically to we're and between other Taiwan, see it's Mainland it's serving China, going omni-channel border more activities. more going as small on you're where Hong oriented to

bit in. you little it that a given we're around operating a globe. think a bit of It's hopefully different little mixed color the we geographies gives about bag the just of as So,

obviously for we can noted, seamless the our to around all the provide mortar, acceptance sale ability XX blur border. obviously it's ecomm omni about between solutions and markets multinational and at level, customers. Jeff brick of lines As cross up globe the and those physical in a the where to point It's

James Eric Friedman

Great. Cameron, Jeff, thank you very much.

Cameron M. Bready

you, Thank Jamie.

Jeffrey Steven Sloan

Great to see Jamie. Thanks, you.

Operator

from with Markets. comes question Capital RBC Perlin last Our Dan

Your line is open.

Daniel R. Perlin

that Europe a of market. to versus then, Thanks, around ask I seeing. that you're given UK down moment. sustainable of for how reconcile just guys. Europe, of around wondering market all can and this ago, of talked about gains, little secondly I'm underlying on in kind gains? You the a sure and what make what's a bit just and share didn't fully lot I up just wanted hear I kind the on share more as of rhetoric more is and demand a And bit a trying a to XXXX. function kind we this is think I'm but second about kind

Daniel R. Perlin

Cameron Hey, jump I'm Dan. Jeff. in. and start It's will sure I'll

market Point share So, blank, gains. Kingdom. it you're I it's that think start me Europe, depends in in just but with the on let United

in of look growth this in consistent numbers or zero whatever copy, and probably store at on you you if those at at you in growth a at numbers the any Cameron's year you year, the going numbers If UK, our the GDP back if be quarters look day. sales tend through look one the if least Visa, to three next UK, or at are metric, Mastercard same UK, look in given the Dan,

I growth quarter single-digit think said Cameron his another for so, us. prepared in it's remarks, And high

have So, to there size in us relative a way our taking a business to as number describing semi-integrated true very doubt share is market technology That's with been in there there's that's and big another business. and augmented my so in integrated omni of has I beneficial that of we're years, place midsize that's with just why been no But the to share as solutions doubt our the for with no UK, and it's small by to us. well is on market. particular, for of mind gains. leading say, would the leading focus ecomm technology.

I you think our if and in back Czech across of the a things. more look Spain, four across I'm JV Erste now up broadly and markets that and Europe, thinking bunch Continental Europe, in Republic is

Spain than no you better a say, have thank in across could is and I'd partner I think Europe CaixaBank. First, there

his a chalk eight and are. we've I grow to the the that that the with now growth XXX% probably been nearly – that across really reported for out north rates that As years in in in business Caixa continues business of how called commentary, Europe. Cameron what partnership market XX% Caixa, for partner to good is of up to

think Continental true with I is thing the Europe. to same prudent in be Erste Bank

chalked Of course, other Spain in Continental perhaps better Europe, have class, and to DCC (XX:XX) more and than better because path demographics Until an in look some obviously or terms again, Czech all markets than rate at gains. to faster And ecomm Spain of Continental you at in recently, there. up share receptivity existence of newer growth. rising slice the you businesses just Europe. down technologically market middle growing technologies the Republic, when however in UK, our the look the are those markets you look Dan, further I you of Nonetheless, is at omni that it, our

Cameron M. Bready

covers to Yeah. well. think pretty I add Not lot it of a that color there,

couple a is market in actually UK, largely contactless. growth seeing particular debit On the would I points data of mention. you're Just other

Jeffrey Steven Sloan

Yes.

Cameron M. Bready

growth that is the market UK. not much There in

obviously, the the that at expansion attributable achieve, to market. able it's domestic as ecomm Jeff to as of So, omni as share performance market clearly well And in and Pan-European a been if in capabilities our I continued gains basis. that we've pretty you highlighted, look think on

it quarter last Spain, mid-teens not I of summer growth where as was thing is off nearly other as again, frankly. was summer tourism would call out the quite Spain. The this strong

seen year. what down kind up quarter Spain well. I we was in very impressive Central And summed year-over-year domestically So, Spain oriented performance quite than Tourism think saw to this domestic better we've is so this quarter XXXX, relative that a in Europe even trends while. really of

that our ability platforms has in that but complete are trends, see revenue and benefits scale products coming from new that now only migrations to the markets starting to I think growth better having now with bring the technology services joint on our venture. we're not secular to operating end into also our

Brexit think I that well, very very what activities, I tell feel time positioned So, for we're from market. the but how into Obviously, will good again, about positioned we think in as we head XXXX Europe. manifests

Daniel R. Perlin

you. Thank Great.

Jeffrey Steven Sloan

Dan. Thanks,

Jeffrey Steven Sloan

of morning. your you for interest this thank Global behalf our Payments, company in On

Operator

this and concludes participation. Have thanks Ladies for conference, your gentlemen, today's wonderful a day.

Global Payments (GPN) 30 Oct 182018 Q3 Earnings call transcript