GPN - Earnings call transcript Q3 2019

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to Global Payments 2019 Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will open the lines for your questions and answers. [Operator Instructions] And as a reminder, today’s conference call be recorded.

would Senior turn Winnie Vice I to call Smith. time, host, your President, this like the to over At Investor Relations; Please go ahead.

Winnie Smith

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

by remind Before begin, some comments conference expected statements I’d contain to operating results. management we you and today’s during financial like of that the forward-looking about call made

actual any on Forward-looking results place uncertainties our most including our SEC statements are filings, We and materially. subject differ undue risks to XX-K to risks subsequent and caution and could to These cause uncertainties these discussed in not filings. recent you statements. reliance

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

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

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

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

Jeff. to over call the turn I’ll Now

Jeffrey Sloan

Thanks, Winnie.

together two premier and company have to the delighted scale technology leaders completed our quarter, landmark industry are at bringing TSYS the We Payments payment with new merger positioning pure-play as Global globally. this

ahead in after this late September expectations. we agreement our X.X of closed just initial on months partnership transformative successfully our We May and well announced XX,

for about future of people organization. execute complementary accelerated payments of corporate more by XX,XXX excited the not alignment cultures to I technology the opportunities strong possible stakeholders. businesses, across the nature made timeline our all of our ability expertise the could our was market an be software and leading and unrivaled highly this on our for Our combined

which consistent highlight Our relationship-led ongoing fueled terrific results by third broad by quarter and business strength our and the momentum based technology underpinned businesses execution. in is being our continued across

In growth, delivered operating XX largest per produced XX%. adjusted the adjusted have margin we revenue basis double-digit of the share undertaken integration, growth again expanded points date by to midst and we earnings of

has grateful very to are this hard We the of brought point. that work colleagues our for us

partner we of And also results worldwide. of for strategy while accomplished most financial the expanding the to simultaneously these our institutions complex be choice

signed partnership end, of across financial partners To our further center that have new to competitive wins leading one the pure-play the validate Desjardins, geographies multiple of co-operative These we group; Canada’s and banks we marquee announce Citi, model. with money are thrilled globally. new payments distinctiveness largest

bank's the based existing acquiring to with to Starting of reached executed and agreement referral XX,XXX its an Desjardins, purchase next Québec merchants for we portfolio to have provide solutions decade. clients exclusive approximately an the partnership

track unrivaled the comprehensive our solutions, Desjardins Payments of of architecture result global decades. selected expertise, direct payment over depth as technology our execution many modern infrastructure, record and of breadth local distribution, Global and a and and

by early this transaction XXXX. close We expect to

We been an were offer to multinational its banking to omnichannel have also acceptance services payment clients excited selected by basis. to Citi to partner on

capitalizes payment and leading differentiates Global competitive Our ability commerce more expertise and industry market our peers to market Payments in to UCP a offer true and on seamlessly our omnichannel platform, highly unified or partnership than solutions physically experience. local provide virtually this

Citi XXXX. by year with to expect end be in We market

and working globe. We look forward with to the to best-in-class customers solutions bring Citi to merchant around Desjardins their

are our very keep. and the marketplace we the the of strategy with We company are winning every of day proud in uniqueness we

luxury omnichannel a retailer, customers agreement to modern global high based online signed several preliminary new with significant MATCHESFASHION with we Eurotel. rapidly tech chain, In hotel and recently our Citi, expanding UK addition including

to UCP. We also expand continue

States now are fully roll and and Canada UK to out will live UCP next Asia-Pacific United in over addition in weeks. the the two We in the

and integrated by driven our growth third across than strong OpenEdge, once market delivered provide integrated to the more markets during vertical and businesses. Turning again, ability truly peers. a our our more vertical geographies quarter, ecosystem to

relationships we is portfolio value customers. full vertical with our track strategy creating consistent more And growth software deeper, key our delivering in own richer maintained in markets the record our of stack and as of value-added our

the the software and markets combination own in the Payments initialing accelerates establishing as significantly omnichannel attractive our Global with merchants capabilities technology-enabled in software-driven both integrated provider TSYS solutions, most Our leading payment mission of globally.

produced basis, quarter. revenue business results the meaningful improved, TSYS acceleration. resulting at On a merchant in for Performance third standalone consistent TSYS

results These cost progress revenue expectations to in significant integration, an expected substantially making close. few on contributing our savings a achieved were increase while weeks just and post

of merchant remains combined further channels the rollout of complementary focused on penetration UCP businesses base. TSYS the strategy to distribution Our customer and cross-sells of adjacent of products,

issuer with recently TSYS' new long-term the business In Riachuelo leading Central addition, America in agreements North in Bank Brazil. solutions Trust retailer completed and

providing expanded Virgin combined Building Nationwide Society Money were contracts And pure-play and Metro existing further validation service. of with competitive our takeaways, Bank. payment These we also

converted expect Walmart behalf of this Most earlier notably, One in we the month. as this issuer accelerate portfolio to solutions successfully Capital business the growth team on

significant and of has our expanded breadth business partnerships X,XXX pipeline relationships. for full opportunities referral a merchant market provide and FI new This the untapped leading combined today issuer

suite. relationships solutions and modernizing platforms, Our globally cross-selling accelerate issuer involves in strategy the its growth product extending to existing

As believe Payments Global next-generation customers of move the services. enhance that we solutions, and development to can cloud-based products

payment wallet month, this a smartphone to business. consumer allows Cash, Netspend new funds partnership of variety spending PXP. customers including to MasterCard the mobile significant whole for solutions Samsung the a a pool with solutions and Turning a re-loadable to into Branded digital use, Earlier opening this provide this Samsung integrate Samsung’s we announced users Pay and budgeting, and solution balance establish including for of business.

expansion. of consists as at product Netspend consists and extensions Netspend international at into as strategy BXB segments, select PXP differentiated Our well

announced offerings Samsung, building and like to are product scale solutions we addition to the Netspend's PXP currently enhance dramatically In BXB the of scope recently offerings.

expand help Paycard payroll Netspend's expect Heartland's offering. to we products Domestically,

cases also for additional is restaurants, markets, in one which as the America. business, largest vertical well of We our largest as use in among in our see gaming Paycard North

Netspend new in Finally, can on Payments' outside markets, we based States we existing order. into bring United short Global believe acquiring partnerships the

for weeks the progress us just and our substantial we The revenue now our synergies. partnership, have both raise confidence made a short few provides in we since expectations expense with finalized to

achieve of goals even announced we intend next basis, we any in initiated actions XXXX. do if additional were to we not benefits XXXX in on already generate $XXX to excess we to integration Importantly, meaning our annualized we the accretion actions and, of May, course, of expect we believe million more can expense an have year, in undertake that

opportunities you of provide highlight the synergy the me revenue achieving details give a clear goals. let planned will Cameron towards us on specific our our with but sight a line few targets that moment, updated a already in of

First, the and including well our and to go-to-market underway ProPay, in are XXXX. our and efforts Bio start Genius cross-selling vertical organizations well as software US as strategy solutions analytics subscription-based and the engagement products TSYS, and align merchant to in we expect

and of and capabilities capabilities the we web-based value-added disbursement Sales like Specifically, Heartland. to ProPay products Select multiple expect provide

Data groundwork internationally of legacy to products and additional POS, Final also laying outside and begin to the customers geographies the We’re States. Genius can deliver TSYS' enable we so ProPay products like United like

are we our preliminary Second, global across three in opportunities on already partners continents TSYS. with discussions for bank existing processing engaged issuer

closer domestically the capability is cross-border and have just like believe ready home to geographies for we processing Central Ireland, that We and returned market and United Canada. Kingdom, from Spain Europe in Europe,

processing customer possibilities is can of referral core the the By These authentication FIs are and private close internally in as which merchant TSYS Payments. our emulate now addition issuer law marrying of capabilities, of to strong acquiring virtual with across to we existing the the provide well as from retailers Global land relationship loop, Europe. many opportunities aspects

Third new already for relationships customers, merchant in larger Netspend restaurant PXP and new well its partners. and has referral working our geographies. BXC as among actively Netspend and gaming proved is fertile including new on as ground for opportunities capabilities distribution BXB,

found our value the drive excited with have and shareholders. We more not to about be for partners opportunities significant could true customers, partner TSYS a employees, creation and future

fortunate in I'll call are in we today. the With to position grateful and turn that, are the to We be over Cam.

Cameron Bready

Thanks everyone.

of to the in Before merger as TSYS I I date. Paul It successfully all new you Officer begin, that last largest to thrilled Financial to this with We transaction in with of role our and capacity. quarter, years this has to our serve Global Payments. Chief the to five welcome like would finalize my work privilege were for been

our And payments progress as on significant businesses. two the Jeff of mentioned, pure-play already we’re integration leading making

the in relentless performance we on our this focus while a execution. financial strong producing testament Importantly, quarter, to continued accomplished third

to fees reflects which billion adjusted basis. versus network from of increased an performance was the company was XX share TSYS' third results and XX, the or Total reflecting plus adjusted year. basis a constant share margin on operating the XX% prior for Naturally per expanded approximately our Adjusted quarter adjusted third revenue XX.X% quarter points growth XX% currency basis. to earnings $X.XX XX% net of earnings $X.XX impact on September neutral per

start the highlights impacts standalone quarter. of for to the Global the turning financial the covering Payments me Before let merger, by

a network XX% reflecting fees versus or Global margins Payments billion, revenue XX% TSYS on XX.X%. And by Excluding XXXX of to constant currency basis points basis. net plus XXX over produced operating adjusted expanded adjusted of growth $X.XXX

of network adjusted basis period. net reflecting growth was fees prior for a XX% $XXX In on Payments plus over the million, North stand-alone year revenue America, Global

XXX by in strong businesses execution points the technology expanded segment. consistent basis margin North in operating driven to enabled and our Adjusted across America XX.X%, growth

led US business. by low growth businesses digit vertical markets direct normalized organic delivered our double in distribution this again Our strength integrated and quarter

software OpenEdge while low high-teens consistent own organic outline our growth our to growth targets. portfolio Specifically continued with double-digit produced deliver

reflecting organic saw business. our US high consistent this led We execution also relationship single in channel, growth digit in

in quarter. basis Our local dollar business digits impacting low the points XXX the currency approximately for by Canadian Canadian results single with weakness reported grew in

pleased announce which we growth partnership avenues expect in noted, new for are will we Jeff very Desjardins forward. As this our new to market in today Canada, provide going with

Lastly, quarter. declined consistent our mid-teens the with our business wholesale expectations for

Moving headwind to Payments remain currency in revenue currency a local approximately for XX% during the reported foreign on fees meaningful Europe, a rates Global network X% exchange net grew period. adjusted basis as stand-alone or plus

strength each benefit continue our grew Central in basis. local Europe, Spain teens currency of on businesses We a well into which the from to and in

was UK In which delivered the ahead mid-single-digit second and the macro-environment a quarter uncertainties we accelerated Brexit. soft of continuing growth, the surrounding expectations and our organic from despite sequentially

in live our to forward of pan-European completing we look UK platform. e-com the the business, strong weeks, differentiated globally we European our We phase omni-channel when will we capabilities UCP solutions in go our which support further enhanced as expect delivered again for next and continued the rollout Our growth unified commerce of over few next omni momentum offering.

XX.X% margin XXX pressure operating currency offset basis and Adjusted expanded Europe benefits to as scale execution headwinds. consistent points from in foreign

Turning a constant Global on to X% network Reported plus fee Pacific. currency basis. adjusted net revenue Payments or growth was for X% stand-alone approximately Asia

Excluding the region. ongoing Hong impacted local low consistent Kong where Pacific we business have overall Asia currency protest, our growth in the for with delivered our been double-digit by target

of rates. improved relative currency outstanding and the and disruptions in exchange margin operating from as to execution Adjusted headwind XX.X% offset Hong expense prior slightly Kong both discipline year foreign

XX close $XXX of $XX final TSYS adjusted operating adjusted plus days million contributed of of net September of XX, revenue for and network the income fees September. merger the Following on our million

legacy the quarter, target. third end expansion growth with produced quarter, consistent high currency XX largely while basis the margin of point above for second business previous to the XX was revenue TSYS the constant Overall, TSYS'

quarter issuer government legacy business the target moving the longer its single-digits second high deactivation the in a range. grew solutions digit TSYS value-added the business line single term longer business the legacy mid-single accelerated the services back solutions merchant and Normalized for of in from its for TSYS term product, quarter. Growth targeted of with exit into the

the consistent Finally, revenue quarter. performance for with business largely was consumer second the solutions legacy TSYS

to three TSYS in accelerate quarter fourth revenue expect growth businesses. all across the We legacy

third solid capitalize to our quarter on in merchant and the begin as go-to-market we solutions align opportunities. the U.S. business performance we're on In cross-selling building strategies

In sight the quarter. Capital the solutions issuer portfolio the the improve earlier One fourth of Walmart growth this business, entering month us line of to conversion provides

outlook from offerings digital for Lastly, wins partnership consumer to the including come momentum as of business, our expand building more we in benefits our our realize and and Samsung product a solutions the in distribution renewals, remainder with moment. year recent we're the on

capital we a structure credit to interest is our facility August, successfully improves forward. In now structure, closed rate Turning unsecured capital new the notes complete senior in going we combination and with $X July, priced weighted now in combined meaningfully offering. billion average our largely

announced terms anticipated the we with when more our we favorable than In we partnership achieved TSYS are May. in fact

ratings with closing, In our for end combined both of we leverage from at our business quarter. the and addition the the X.X investment-grade Pro expectations. approximately credit was S&P received final forma Moody's, times consistent at

This business cash our the leveraged advance strategy free and as strong flow priorities. position to the coupled generation allocation capital with capacity our Payments execute our with new expected Global in to continue on invest significant we provides

As for the plus to growth $X.XX XXXX. in $X.XX company outlook billion from XX% the network XXXX, adjusted over range to expect revenue billion now fees combined for to of we reflecting net XX%

$X.XX, growth adjusted expect $X.XX of We XX% XX% reflecting in range of XXXX. also share earnings to to over per a

up merger, the basis the to of anticipate Inclusive of operating year. expansion we full date now TSYS of margin for XX adjusted points from the

business legacy business, period. Global lower reducing expansion its full mix, for is margin that Payments' margin the TSYS' Given profile thereby expectations of than year

basis, on margin for forecasted exceeded a expansion period. the year said, That target standalone to is TSYS full its

addition on a be expected operating ahead points XXX well for basis In Global of to to historical basis Payments margin is our stand-alone up adjusted target. for expansion XXXX, now

the last substantial to in with accelerate savings on beyond. we've confidence pleased ability growth deliver closing cost since and increased the and and our TSYS with have very made progress next We’re revenue over years three partnership our month

benefits we're more as than Jeff And our run the based for million are to revenue In work to completed already rate target revenue our years. within date, fact, $XXX three underway. on initiatives enhancement detailed, increasing

are expense synergies, actions and that target for ahead implemented year additional As one identified already running have sources for of currently we optimization. our have expense

expense total million more than As to basis an years. three a run annual result, expected $XXX increasing our we're within also savings rate on

the significant TSYS merger And bolsters have progress specifically, integration momentum at more our our the future. accretion of the time have made on with in in in expectations coupled we the the The May. we business announcement we've confidence for

We mid-single-digit share per now year-end at in target. equal, based a earnings else in in expectation share the stand-alone would in XX% outlook to accretion expect Naturally, more for XX% our being growth adjusted call we least which will XXXX, XXXX range detailed imply February. mid-$X on all during

Before expected to concluding an our reporting provide update business. today, I want go-forward on the for

operate TSYS three merchant solutions consumer operating structure, combined newly solutions, anticipate includes best reporting business center this We First, and legacy named reflects also as the with which consumer strategy we we expanded based how finalize our for and channel this on solutions, expect business issuer our going forward. segments: and business believe differentiated payment reporting or align model. the structure we our will

going of SEC metric an the adjusted feedback filings that net network revenue excluding on expect our revenue out the based came fees. our public of from basis a fees addition net use on Second, the report plus customary review network forward of of to we regarding adjusted

the economics requested performance, useful plus consistent how the believe SEC insight company its measures we into with revenue of assesses use. provide the in a network manner we and has our adjusted fees Although, discontinue net business

a with As reflected fees TSYS the addition of report network historically. without in how consistent result, has the this item we future,

be To pro consistent this information historical this change, the facilitate forma combined presentation. business for reporting we'll providing periods financial for with

historical basis. a Global be to metric course, in net addition on plus net each adjusted built revenue Payments pro and network fees revenue will Of information the reports adjusted period, this forma

not advantages forward coming be and our we and We excited transitioning on about and all continued to on our be for components the leadership payments updating position will conventions. measure the progress to future fourth under quarters. We you as in both you we build competitive look to necessary performance more quarter in provide the will the methodology this could

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

Jeffrey Sloan

significant excited Cam. momentum our Thanks, achieved in Desjardins the Citi We wins be with could our about recently FIs large we the payments pure-play not more like business. business have and and validate

our strategic for and model. unrivaled area adjacency Multiple our our the not Payments of successes privacy the exclusive payments focus confirm are us; and wisdom competitive recent processes just business an in the focus expertise. are of of

the our competitive strategy. deepen we each and element mode our of TSYS, ecosystem our With of confirm value across

most We exposure with enhanced omnichannel reach, capabilities, software-driven comprehensive solutions market to have globally and full faster growth the broadest geographies. the

This providing we most Global XXXX for beyond. the We truly had the Payments. and best exciting employees very have the part industry customers leading best technologies new attractive to positioned is time innovation global very very experiences the the Together, with the of deliver remain Winnie? of an as in are we and growth our best be markets. forefront into at to

Winnie Smith

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

Operator

Our first Instructions] comes [Operator question David Koning of Baird. from

is open. line Your

David Koning

Yeah. Hey, Great job. guys.

Jeffrey Sloan

Dave. Thanks,

Cameron Bready

Dave. Thanks,

David Koning

headwinds I first sure just to I revenue XXXX, of it well, Yeah. given guess we you off? synergies $XXX of out guess, make right part on I the the accelerating run laid I mean all, in the then TSYS, should and rate we year extremely TSYS, already other just expect I synergy falling am this just understand And understand want QX? about cost million some to of

Jeffrey Sloan

to and Jeff. start its it I'll Paul. Dave Yes, turn over Cameron off and I'll

question. answer the to yes your So, is first

you as about I asked. combined excited certainly company, we're to at what the TSYS we very address think looked what

We are portfolio that We XX in growth an really Capital including pointed of our the of fourth out conversion the close just entering the after merger. with Walmart the expectation TSYS quarter days reasons revenue One. of in accelerated the

heading really XXXX we TSYS. where are about good we with So, feel into

the in see We business. merchant overlap and mean also direct is one which TSYS area - Global of I did between

we merchant fourth an performance quarter the alluded merchant see As that acceleration in improving think in the in the other to And quarter. already. I did Cameron third Cameron see pointed in thing out, we

a So, it in, rate on us bit lot we the Cameron think revenue relates quarter good the a we're of as Dave place I to you question? currently it And think comment at in into little in to the really a synergies TSYS gives run quarter. XXXX. heading we're fourth might in want Dave's confidence

Cameron Bready

I’ll David, Yes, quickly. jump in there

combined the to ramp very obviously, good with expect XXXX already head into realizing to opportunities business making we progress some particularly are and cross-sell our we as those on continue We tactical in merchant beyond. and businesses

and certainly little gives aren’t that confidence TSYS the a continue target they for single numbers but we can in providing in to of and head we into beyond merchant Now, this accelerate dramatic, that growth us business upon digit period. XXXX as be the maintain tailwind that a going future in within merchant it business high are point even and build at to hopefully, the that nice bit

we do I in into we feel particular. that in have think TSYS then the XXXX heading QX momentum about and on So the very into further business good

million in want is $XXX expense million we $XXX rate clear, To your Obviously so synergies in I synergies actions the be what not we’ve be of expense is question QX, the to clear XXXX. script, to that that. last of to just address taken in just about about run $XXX said million that explicitly

take of May. we actions or year that first merger of million ownership acquisition for full The expense announced TSYS $XXX which savings the target back XXXX, in realize the expense was generate for paid of energies our today we we will when and in the

David Koning

that? mean, sounds or I Canada And follow-up, that more just the Canada cool. the substantial? size as is business of you. that pretty acquisition something XX% something of my Thank roughly What Great. that is the then

Cameron Bready

partner where a Québec, a our in area base have We're XX,XXX opportunity customers merchants which Yeah. It's Canada very obviously has great more presence effective presence. much thrilled to in of about Desjardins Canada. gives market significant in and question adds an strong the been Dave. to has Desjardins It is to and us existing of a with very the certainly

them. So we’re too glad to partner be able with to

to it neighborhood is it's north little of next I probably adjusted think of the million of business, fees so $XX to going million. Canadian a our or contribution about which $XXX As relates just plus to year you add know financial net network existing revenue in

nice think market growth obviously, and up avenues I addition, bolt-on new for our to it's So a forward. overall Canadian nice business opens us in that for going

David Koning

guys. Thanks, Great.

Cameron Bready

Thanks.

Operator

Thank you.

of question next comes JPMorgan. from Huang Our Tien-tsin

open. line is Your

Tien-tsin Huang

you results. Thank so Good. much

as recast for a merchant other should you the components the think just side of on defined sense merchant Just better the pieces versus maybe about help is percent can growth all of we tech get what how with us want enabled TSYS? now to

Jeffrey Sloan

Tien-Tsin. It's start. Jeff. Yes, I’ll

as same stand it So it's Global essentially alone. was percentage the at combined business for the

this comment is The we just up to ask back in May that I'll total. for XX% the I Paul a reason second. think the set in combined announcement

for at integrated The which OpenEdge. pieces is reason business, to for TSYS was Cayenne, Global that very That of similar opportunity very overlap, think two was really pieces similar OpenEdge. which One two great a areas were merchant had I is Payments. completely adjacent that is to

very businesses similar The Heartland to an other relationship-based as And e-commerce course is very one semi-integrated which transfer of well transfers, as similar which Global both as has well Payments. at asset. as

to actually be on the just a lot think the you so looks to add I it honest want XX%. it's side about merchant way Global anything? Paul Payments did the So

Paul Todd

mix that get just ago. was quarter would TSYS right has from just is our legacy one business Yes. fact third integrated roughly business or there. thing integrated at piece of direct of grown third a going The the see the which in a that high comments in business legacy an XX%, only we do say is year around that so so back the the of direct That I and standpoint underpins kind watermark

Cameron Bready

it's And Tien-tsin XX% just globally. you relationship particular, contribution about it's the I’ll XX% combined enabled to in roughly of merchant business the XX% if and its about business Cameron think add about its the total technology business for now.

just of talked of we deal combining gives integrated announced billion south TSYS $X we us revenue. Global Payment de when about as So with

omnichannel so in just revenue. south We $X we of billion million e-com or software have and roughly talked of portfolio. $XXX our of And revenue about

on a global merchant half to close being up ends basis. of business the that overall So

Tien-tsin Huang

sure the on that a mentioned; mentioned And want you right. comments pipeline I or you there? issuer Okay. have side? side, anything That’s you. pipeline. the full there’s the make How just then and front, dealers any the and know. you bank a on merchant on even to about software ISVs to as bookings know of on going we Thank get activity on good lot I side with on

Cameron Bready

Yes, I’ll the a pipeline talk little about side bit merchant on Tien-tsin.

As medium-sized be you know small focus tends to our businesses. to

So when which it's think say the than is the little tends issuer very bit large pipeline we good. both the about businesses, for be a more obviously businesses to business momentum our would different in FI-focused. of But I

business, high I As a strong we important which over bit teens in talked performed. Paul think has our commented a which on obviously Payments for existing of the certainly last grew the couple color reflects about our the which years high OpenEdge of in Global business last partners over quarter of gave the integrated TSYS customers effectiveness little that growth payments of over obviously, that watermark several story partner to We is been good new years growth time. an customers course part and the at converting our of how

think we heading year. one we the of from our I positive new will XXXX ACTIVE tailwind see of that thing in across be some received news had to strong very bookings second a business largest customers into would a about into nice well. The franchisees product XXXX rollout strong for heading its SICOM growth a which momentum a quarter and as strong across software its having has and say of recently own AdvancedMD businesses, very in continue base

in relationship the good side, saw on execution strong high single-digit the quarter, And that consistent growth channel. we in

attrition the decent and growth us the roughly for in remain see new the quarter good constant to giving very XXXX into sales obviously, again momentum and sales same-store heading continue X.X% We business, rates timeframe.

Central largely So, trends. in with performance basis, would accelerated business, Erste seen say US, in our the venture an we’ve certainly performed all-in-all the improved strong Europe the joint really by Spain and driven very on of in better as across organic And, course, quarter-over-quarter I UK. slightly merchant well well. European quarter the growth

in consistent that's grew softness within completely market. is expectation with double-digits given our Ex-Hong only low that The again point we Kong, really Kong there. obviously, environment of Hong which the expected, Asia for

a good is the the P&L. we We've So Asia notwithstanding had up Kong. feel obviously holding how macro site absorb the as to in matter rest of Hong about disruptions in

Jeffrey Sloan

Yeah.

Just had an on. the area. on legacy just TSYS merchant We level revenue all-time net of in I’ll the standpoint, record solutions add

integrated Our grew with indirect growth side. some get the the from strong legacy range. TSYS, legacy business integrated - double-digit did accretive in We

So Global on merchant much a similar quarter to the Cameron's legacy great just side, a from standpoint. it's comments

Tien-tsin Huang

Thank to Glad you. hear.

Jeffrey Sloan

Thanks Tien-tsin.

Cameron Bready

Tien-tsin. Thanks

Operator

you. Thank

Evercore comes question David ISI. from next Our Togut of

open. Your line is

David Togut

side, you. is see results raise Thank TSYS Perhaps going to-date? than What the cost to TSYS take actions on God starting about process morning. talked you specifically better targets. the merger million early Good already to having in XXXX. see on the you the strong and the expected taken the just nice synergy to achieve $XXX out the of cost out take about

Cameron Bready

We've say have I’ll to its in Jeff before. if down a been things. this right? ask One and would add. first all, start Dave, and both path anything chime Paul they is, Cameron. experience, to of couple of I

strong M&A from very have standpoint. We experience an

lot Heartland a and done with the process Heartland. in lessons of integrating learned think time same with valuable of that well. of the merging We TSYS they've And over as acquisitions in the point has I done

think bring our planning I and working structure given the start upon that our around with the businesses look to start I of us actions schedule merger the we got expense as think two ahead together. these obviously drive very we has process and model May. itself obviously the put we an that to ability strong take relationship process governance to intend And early announcing We in to

that So I and have collaboratively ability together. to we the really think experience work it's our

brought have forefront we within to us I that very as our how we work companies very a the very the has bring look collaboratively of to merchant can how ideas find the common allowed we in together think businesses savings our in business bring good can to manner, together. cultures a way efficient

amongst go operating finding momentum relates implement ways leadership model efficiencies to business great and as in market to team have model. as drive particular, the In in work strategy our we target obviously it to architecture and the to target our we combined merchant

feel we we very our So said as call the on the of around on for $XXX rate enough and materialize earlier continue And good the next we about line and target allow are. we’ve already XXXX XXXX mentioned synergies to where as look expectations will of run million increase synergies obviously had good sight whole. we We year taken the do we XXXX. to on expense actions in more to those Q&A, to and feel to

Jeffrey Sloan

we knew just the would And company of additive is well. both kind putting that said that a to of the only provide was we and legacy add Both that companies our businesses and long standpoint at legacy expertise of David two I them that from the we complementary legacy the very had that we each of history each this of time knowing synergy at together. going tailwinds knew nature perspective, the companies the a TSYS other had deal Yeah. from thing

of that and of And our a commentary after was so the close, starting that of post at time to fruition we point. that came kind deal, got the

David Togut

revenue transaction? your business which as follow-up. the And go-to-market when you curious in on business Jeff a Appreciate announce you've was merchant both definitely early just call I EBIT. than Europe and significantly issuer came experience we TSYS' better big out had and Europe any expected in cash just a processing that. about combining am

Jeffrey Sloan

great Yes. that’s a point. Dave

than expected remarks ago. as the just back combined even was we combined I receptivity say matured management the So in I partnership better of clearly prepared a weeks were couple team in there, May. I would for mentioned the the

David, where we on Europe most and in saw and the in when TSYS' saw in Europe, in issuing of the when merchant customers and of the customers a there. announced large we first lot transaction team Payments we place, the the large side Troy side I Global

and the and absolutely I think processing for I in is prepared I domestic ready prepared remarks. as listed remarks my said in market, cross-border the markets the onus

Canada, here home to closer we this course announced morning. Of Desjardins in just

singled presence relative we script the are or basis than Europe, company [ph] a there on think the why do So have too. I which in for in combined same right I is on I this Canada think a morning, we out merchant the opportunities even the combined-ish

land as that say is the would now in also Global as PSDX mid-September I Europe. mentioned strong penetration and I of customer

– been the pushed implementation. regulators months to have joined of XX in took back that's terms While the terms of

a that's and that we couple we think discussed matching can partners get that I for in authentication of good services the good of news weeks issuing us. in do acquiring ago. all also to There's and omnichannel e-commerce in sorts Europe with our hands capabilities news

some of And ago. opportunities facilitation using wallet weeks more that bigger actually thought haven’t couple a issuing of is become which but consumer there capabilities we new really a of who the about in Europe of TSYS something and loud as are acquirer are the side I digital around and issuer such the haven't even a from brands brands were some payment enabled I TSYS considered enabling to David certainly on there that has heard already and in mechanism when retail May, clear on

back today, to even said in say least new optimistic sizable than I reiterate we the number come FIs us and mentioned on I Global what a of and or think was who've where Asia moving also I'm to call opportunities in Payments, at partners we issuer what in about I has So, are have more here in May TSYS about one in July one side. the and pass. asked Europe, sitting Cameron I at I'd those would August fact, which was David,

those were couple in of conversations large weeks Europe we and had These a ago. financial when again were are institutions

So, on the heading. we're where combined pretty and optimistic business

David Togut

much. so Thanks Congratulations.

Jeffrey Sloan

David. Thanks,

Cameron Bready

Dave. Thanks,

Operator

Thank you.

comes next from UBS. Eric of Wasserstrom question Our

open. is line Your

Eric Wasserstrom

solutions Jeff of I interpreting you Thanks commentary that the very that entity going made to the consumer the I in around kind was combined Netspend. of important forward. strategically and indicating a renewed much. particular business was

correct us strategy? broader interpretation how you're Is integration that or fits simply just it insight giving into a into more the

Jeffrey Sloan

said. Yes, when think Eric I you correct you're

we were diligence on optimistic business when that say doing that just then. were we in me Let May,

just us. know and of at we segments very I partner attractive looked of being view. a it's I So, would TSYS for different say don't that a point each as that the

prepared particularly non-US think But Netspend a products. And remarks. opportunities, strategy reinforce have one, it, as other the And view certainly we competitor. differentiated us roll in listing public just versus having as in prepaid we those I Europe tried out in the there I to - to the view number

that I And I is and think in that right relatively those for geographies the tuned on in market would stay order. short

listed out is Paycard particular big channel. and the the you Xenial I cases two are Global I two, Cameron a lot related very think restaurants Heartland synergies of my those as I’ve in prepared mentioned but There's used of SICOM, think a that at there for remarks, know is Netspend. services of restaurant us. a for as Number of Payments and differentiator for Netspend. surge coming do revenue in and presence,

And of gaming Global well you've and but betting the - in where the called brands gaming the with the prepaid applicability basis ones out regulatory sports have Payments only changes distinctive combined and in in seen, on place doing they light in we’re also not Netspend. as this, as that the we particularly, a prepaid, business,

So I Eric something grow continuation opportunities enhance that laid And May. business and we to out to continue have think of sight thesis excited and pure we we a of about. the that's market the in of we're it's actually very line think

not specific businesses our I’d also say assess of them. Netspend, not businesses, all we one for that's And any of of continually. our all to

for open-minded we're higher everything value. So, and we're shareholder doing, if on a obviously we're there's think that very use we all focused better

International but think we adding we of that the to businesses, our in it. But into very we of a add applicability, lot Solutions focus particular, on question, this light to by in say that intend I of have all value and we adding strong in BXB, would have a thesis by Consumer ability

Eric Wasserstrom

if more synergies to for delineated on what three an areas can give them, you may they you’re one of attribution anticipate primary you you Thank that for - those relate of you And three follow-up Of the where but today, just that. I us incremental the underscoring buckets? us the synergies. the with to respect

Cameron Bready

areas, probably the an synergies buckets. realize I wouldn't it's seen three I'll particular I'd matter. we transaction better a expect in. they're to between Eric across say primary to point expense opportunity roughly any No. want the from se. the We've three Cameron. little of item all jump per split

significant driver we increase one million call overall that articulated that not on of the today. $XX There’s

little where primary there things here So three of and to transaction. and synergies areas realize it's expect it's the we from probably across the all

Jeffrey Sloan

Eric, make would you that. When it's to a make deal assumptions. Jeff. you just I add

are when detail. before what experiences all said You see can you Cameron things those are. make May, the assumptions but These in

But the we now have have the detail. We now plans.

level. the conservative we're So we those news at and a much assumptions is higher happy think be proved to run rate

Eric Wasserstrom

Thanks very much.

Jeffrey Sloan

you. Thank

Operator

Thank you.

from Ramsey next El-Assal comes Our Barclays. of question

Your open. line is

Ramsey El-Assal

for know taking about have out we capital structure to I thinking attractive the question. a in wanted What deal right this be timing? ask did Thanks environment. pretty you I and my should terms M&A of now.

what looking types it And more future also it is up deals M&A transformative of we be should for? your something frame of take or you're tuck-ins? the of in Could series activity? How

Jeffrey Sloan

for I strategic from just would view think on speaking changed. company our point Yes, hasn't say I the Ramsey. a of focus It's M&A Jeff. really combined

at we’re looking We're terms types at, So expansions. end the consolidations. of of scale geographic looking at looking we're deals market in that

business that a today for more solution. a market we course, in Desjardins already software of more And heard is looking we're vertical that which described, we're market partnership and in. You

relates that hasn't I much. changed all really So company, think the it strategy to combined as

I to pipeline of good the would obviously to feel say view, where the we From sitting is make We’re obviously going sure. point we pipeline a But timing want be. is, about pretty here opportunistic. today, where

think a balance the happy is sheet place. I very

X.X us a to capability. As Cameron of leverage give alluded lot times

this lowest else. is three. as as question I managerial much I think think But anything as were deals three all the as that among announced among its leverage about it

to number make out that externally stuff that of we're next we've We and all the those in that and even months sure meet going exceed to laid the want internally expectations.

once And of our in legs this capital were are the I place, an be feel right we there sea tracking think balance won’t availability or sheet. they issue and

have we those have have think we today. we I

we're really of good in say, very trajectory, where hey, managerially good good in about Instead a we're really a place, we are. we're

markets stay execution XXXX, head open path our in, certainly or the capital So that it's into if favorable we're and on I we certainly business. accelerates as continues think for a

Ramsey El-Assal

and different That’s A is helpful. know wholesale for a an your of slightly part there. know business on follow-up declining. your Legacy quick strategy small I business which I Global increasingly had Thanks. TSYS

approaches, how that the basis? viewing in I go-forward a And you curious kind am of are just terms those business of two harmonization of in

Cameron Bready

that the what sort is a is strategy obviously together it's really point our It's historically. Ram, very bought and about merchant a say your businesses way TSYS at than as of lot question. the wholesale to I And We Cameron. Global Yeah. time spent of has we Payments, different good talking topic. approached two direct would channel

to I merchant try to a given that play wholesale think size I start would today, for combined overall And combined we're a it for for business, organization a has very certainly to it's have small merchant TSYS know grown wholesale I the role the there's historically, us overall it room a continue don't of think saying we'll as by to business. business. but aggressively there's grow perhaps the as the in operating part of business. as

we'll the of to and towards resources I well we We business a extraordinarily to in customers going without to have that grow of serve to continue that channel deploying historically. we lot want maintain lot think And look that and putting have think trying partners it as forward. I resources a

business the future. think we’re trying you I of a a where resources overall deploying again, core grow the be to without can in part business, being of part merchant the

Ramsey El-Assal

Got it. Thanks much. so

Jeffrey Sloan

Thank you.

Operator

Markets. of RBC comes Our Perlin next Capital question from Dan

Your line open. is

Dan Perlin

I - clear question pretty on I going result. announcement and think about Great dual today. guys. target as kind to relationship. I'm the a wondering this original I headquarter we just synergy back you're of Hey, guess had the And talking

you road? long-term use about synergy cost to there repurchasing we in contemplated some any is about? are thinking that that the down But other Or for location, further the is opportunity thinking that could be the second

Jeffrey Sloan

No, Jeff. Dan. Its

We headquarters fully Columbus. which we're are at the said to dual in Atlanta on and is dead-set we what of committed announcement time the

area probably a We Columbus. or members in X,XXX the basis team X,XXX Greater in combined fantastic have have We X,XXX. on Atlanta

So, of the Columbus really is the heart company.

of course, merchant end more overlap view before from issuer rather where business also really of deal the the two really in we point of of first don't that's is the did the the segment. At on the competitive companies a the the day, Columbus, heart place

So, in what to committed important we're as the and well is is be an incredibly communities the part our team live which we're what said. very members an going will Columbus to today and company we work. fully committed as we forward of and there

Dan Perlin

mean Got to quarter, just that it. the like bit just the seems reacceleration company deal a around is second clarify I'm closed? this mean it the I you merchant. in I just little That's TSYS wondering distracted regained other especially as was coming the quarter it in on know to wanted merchant. in focus I great. into I addition things mentioned,

bigger a of just of, And saw little on reinvigorated bit a kind then that the quarter and of line which better were involved second in products the being were side you was that disappointing? or put a sight so the was selling place those was people TSYS there kind post, strategy

Paul Todd

Yeah.

of quarter, our of second as part acceleration kind the able that's as number challenges to have the a so we've of of kind second quarter. been we some comp overall did year-over-year for bring tailwind as we've relates kind teams I just say nice kind as it So, would deal the it to to of together. relates been and had

second some - a leader performance underlying effect in did XQ we had leader did some a kind which which quarter challenge did We performance, But second also quarter from a our obviously albeit our from of core lose in in underlying lose also there. have headwinds standpoint. good comp

we glad mentioned, accelerated in XQ. a But legacy are position in that business on meaningfully that QX. as Cameron further be where to expecting in acceleration And we’re

Cameron Bready

aligned in across here businesses integrated our add leadership The go-to-market only thing market Dan we’ve our already teams our US the I across US would channels the is in relationship that market. to

combined a Our those go-to-market TSYS together. key company feel overall very together leadership how putting are now integrated We into early and about of come organizations we've as executing teams is a the as how team those in leaders those channels. in go-to-market days in motion good fully the

and in opportunity clearly good there. is as the about work pipeline certainly, as to and momentum I our more have in feel to Q&A feel strategies, product obviously more align forward environment build beyond. XXXX have the like our to opportunity we operating and momentum technology the earlier highlighted our there's So, more the environment, We as we continue to business to together, go we

Dan Perlin

guys. Thank you, great. That’s

Jeffrey Sloan

Thanks.

Operator

Thanks.

comes Darrin Our of Research. from question next Wolfe Peller

open. is line Your

Darrin Peller

for money it opportunities not relatively back somewhat been side, were that some on XXXX the coming actually there's if just Heartland side. the SMB on underpriced. that we on least guys, does Thanks, hear still it at side legacy like sound you has better. stable pricing did And I let’s call TSYS actually have know

to one software your buying key are others end do compare we trend, in. But enabling around as in which underscores I on Companies paybacks. is more the of well? when that you that strategy the hearing are guess of seeing we other their the So own

what synergies? guidance And around an into about in opportunity upside there your is on and more you opportunity just your there? Thanks. priced the of talk really And pricing

Cameron Bready

Darren. start, Cameron. I'll It’s Yes.

as we Global operate of Legacy pricing over TSYS TSYS there think time the may Payments opportunity and look across some channels the portfolio do rationalize I at So course the we that be across to collectively.

by driving across really about business. combining basis. products and merchant think aspect opportunity, a revenue it's wouldn’t that's we of synergies the the merchant collective I into that suggest business, meaningful our cross-sell how about revenue our the existing and capabilities talk we When enhancements

Obviously, the platform the part it of dives Vital brings into US terms POS in that which and attractive products Genius the your relates question paybacks of capabilities ProPay, course of channel very some think I solutions, as in us the enhanced to and in market. second TSYS

cross-selling expect payroll opportunities, we synergies existing TSYS are revenue two to of the our those of really into most businesses the customers. base around combining particular bringing So from drive

the business. attractive payroll of I’ll - relates avenue as course raised. capabilities you to of the our some customers maybe Paycard you that other conversation for to think then a respond revenue base we bringing the brings, business we across of merchant the very International Jeff growth existing Obviously, provide ask solutions for Netspend to it long-term in overall opportunities creates for the enhancements think markets, let these payback

Jeffrey Sloan

goes way. We kind deal did the our ISOs in be we APT kind I of X.X say, of would August XXXX. seen that Darrin So, advent any on of this not bar to honest had back ago really businesses just to years of and any meaningful the

significant in are us drove toward distribution. own to need think the model or what restaurant. those of difference where on entire worry own focused element of paypacks markets was we software lots like makes a ISOs of the it We about Part more

not had venial are to even So Cameron the in we position today. year be for have expect good SICOM, example commented on year which we XXXX. better would has in and We trended a in a

we hardware, know full functionality, the If software, States and wouldn't drive XX didn't be top the able to we wallet serve stop. the digital in of have through XX QSRs, just United over XXX,XXX

price, think reduced need I competition of So, you what all to – of which less commodities might and things not possible selling do lowest that rather from sell you've the that by payments just means just to been those was or mode is driven strategically I view. that point in at more interesting means businesses the processing paypack and those our

why a slightly is you have think is our trend that conference that's hear the thesis I way. different think to nice we the do that strategically. though on It’s what important we heard coming

Darrin Peller

that mean, congrats to city what partnership. just going to didn’t just more I Okay. exactly on want is explain guys the, there, what executing you the I quick Citi understand up of one you’re historically merchant follow is be just That's use helpful it really because I the referral, just, I about? a bank referral deal bank maybe mean I think, all model much as but

Jeffrey Sloan

Sure, it on to that year deal, called talking it’s can omnichannel UCP as basis. the specific for we've now, unified specifically, an It's about specific been new initiative I to commerce so referral to multinational relates That’s probably customers product essence, offering a so in you about that's think Spring Jeff. but the a do it am that. to happy Citi, by as about

obviously, fantastic smart partner exciting is very then this very, number a what’s one, two, so and So, number the a about consumer very Citi sophisticated is, and services.

So, fortunate we're to best and they care position when looked about, they distribution the basis the omnichannel they very landscape out got selected us. that in who's capability market asked very technology a and on an the be that in in

So geographies Citi I an largest, in think you initiative. as should customers service high difficult value to spring it something their of physical, position virtual as for part most very in both add, and the provide think important that's to we're multinational complicated to area very in to be most the that's about fortunate that

So the our is omnichannel can exceptionality in markets of most technologies, competitive I validation just of think and the you which is particularly, further business. of one have, that that ecommerce

Darrin Peller

great. That's guys. Thanks,

Jeffrey Sloan

And in us Happy in payments, On behalf very Thanks Halloween. a have you - joining joining for and Darrin. thank global morning your of much thank this us you for interest us. everybody

Operator

participating. you Ladies for and today's conference gentlemen, this call. concludes Thank

disconnect. now may You

Global Payments (GPN) 31 Oct 192019 Q3 Earnings call transcript