GPN - Earnings call transcript Q3 2020

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Operator

Ladies and gentlemen thank you for standing by and welcome to Global Payments Third Quarter 2020 Earnings Conference Call. [Operator Instructions] And as a reminder today's conference will be recorded. At this time I would like to turn the conference over to your host Senior Vice President Investor Relations Winnie Smith. Please go ahead.

Winnie Smith

Good and welcome to Global Payments third quarter 2020 conference call.

and like by you call management statements expected I'd the some contain begin about made comments during operating we to that remind of forward-looking Before results. financial today's conference impact could subject expectations. are from on and including economic risks These results of operations to statements and that to COVID-XX future our actual other uncertainties factors the cause our materially conditions differ and inherent our in factors risk XX-K filings. filings most in including the SEC are forth Certain our set with recent subsequent business We reliance caution place these on undue you not to statements.

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

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

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

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

the turn over I'll call Now to Jeff.

Jeff Sloan

markets. we work team the other for customers We we communities dedication to delivered to and margin continue outperformed to each our place difficult post to digital operating in during their growth. drive per substantially Thanks the exceeded in to adjusted differentiated enablement share members and technology revenue, gain targets to our and which earnings third times. most adjusted the and that pandemic our We our quarter relative results put these live share our Each outbreak Winnie. and hard and expectations because we strategy of adjusted net work significantly of thank

results quarter. and in generated we validate of that outbreak We both of level operating expansion the margin beginning the are particularly in timing took pleased at quantum. with These we the the COVID-XX the significant of actions

to growth to earnings a we the delighted quarter are As XXXX. result third have of returned in

for progress meaningful XXXX. providing quarter, into Our in the continued momentum expectations are fourth heading

make cloud business, across and year, of preferred the marquee the venture signing Spain the bank and and attractive in threshold including are sophisticated our Truist most our our provider continue institutions takeaways on two by set goal technology lead entered and States from to of the we and meaningfully pleased October largest in Bank extending to our United of Fargo. the all with expanding an TD March XXXX goals competitive moat. we by worldwide this the this progress deepening strategic while substantial Web CaixaBank XX% for in largest for and market into Amazon collaboration in financial issuer landmark Europe. HSBC, We our Services, sixth CIBC, extending our share during markets business of a including also Year-to-date our relationships most additional in Portugal, Wells some of And pandemic once-in-a-century with with domestic did enablement XX% competitive year-end complex joint XXXX services coming we purchased a

business. to Turning our merchant

sized Our channels. technology-enabled of roughly three consists equally portfolio

Our omnichannel revenue. partner vertical of software nearly and merchant collectively XX% owned markets businesses software represent

hardware in to our markets and of differentiate based many support physically local and omnichannel sales we make virtually offer themselves on unique grew a capabilities significant we sustain of growth we in is of pandemic businesses reach XXX. this strength in into we entertainment. and to technology our quarter XX channel continue. served the consumer quarter the in operational ability our the changing and coming market a to at remaining today prior services tailwind, provide serve third the we operate as countries believe the scale to and as excluding during markets With year in advantage. portion basis scale in will plus of travel the up in mid-teens That particularly in channel competitive higher compared market-leading offerings. are with share on our preferences shift Starting out gains relationship-led Our the the levels continue and an omnichannel ongoing Volumes businesses

large spectrum to each of Laurent, Yves McQueen Saint payment new multiple ability full solutions the spans provide with wins this which Alexander of and seamlessly drove multinationals Fedex Our quarter including geographies.

with payment was we one The strength provide solutions with Taiwan result Uber as for into on to excited United recently our jointly our new Kingdom. Rides unified quarter in relationship across expand We and company global and signed capabilities. partnership PODS Uber America We current are Citi of or Uber of beyond North storage domestic customers in were North a and UCP, now our Australia. multiyear both to America and pursuing solutions we Eats. also with Additionally, live went Canada this a agreement Canada Uber platform commerce the

and that integrated Continental we the quarter and revenue expect portfolio vertical because also launch well enhanced third achieve with scale those for Notable COVID-XX, integrated new like to this allowed as gains over returned pleased and Prior versus partner assets our The agreed unliable partnership offerings, merger with markets in most and UCP equipment additional Europe, payments Global solutions capabilities third focused integrated GPI, auction ProPay. the its strength business as to a our the world, with over partner to of half announce, provider market. growth leading share delivered and production TSYS, with machinery markets. through XX% consistently the to the XXXX. to with with X,XXX private Genius Global, more we provider, automated sales increased terrific on growth new new attractive around to breadth ongoing execution. a we portfolio combined expand include of wins We partnerships quarter, forecast of dealerships XX,XXX partnership large in the our market Through double-digit Sandhills, new our of industrial increasing have XXXX. are the with of than business CDK in Citi, first meaningfully our the budgeted to of software our software ISVs organic the across

We also signed Pentair, for Pentair's solutions field leader a in XX,XXX including in service dealers providers companies. to service plus software independent own addition

our the service by in solutions primary education more and remaining the in XX% software active and our SaaS resilient businesses, in XXXX. K-XX businesses the improvement, current restaurant technology-enabled revenue have environment. we that have our including leading Our our health roughly merchant increased care, more been Even pandemic, in seeing and higher us sequential own quick education gaming for businesses are confidence QSR represent been or impacted of giving

Our and deeper, markets delivering full in more becoming is stack key strategy of we relationships the the richer, with and customers, table continues to serve. value in value-added produce verticals stakes

ordering enterprise Our with in orders has QSR business continued and XX XXXX. solutions, enabled sales in and success greater than delivery more million online its now than Xenial's which $X billion

we United significantly our and sales This Dutch businesses. completed technology suite of now to where all offerings, innovative our our the includes solutions. Long point-of-sale solutions Silver's are all solution solutions from with solutions payment Genius currently Bros, we POS merchant relationship also across have our we products in cloud-based integrated see and fueled John States. our our of by in Xenial TSYS the SaaS expanding locations installing rollout with channels, strong cross-sell our our differentiated performance, We Today, we continue into And lead capabilities. new of and

technology-driven, our For Heartland and business, example, of online leading including new POS software are in our nearly ordering sales solutions. two-thirds

of seen we in third technologies continue strong demand record and to and have complex financial And while we long-standing largest sophisticated the with most not these partnerships sight offerings pandemic. during worldwide. delivered of We focus on Heartland sales for markets, quarter. have new performance institutions our lost the the new some

We market are renewed decade, merchant United in for announce have comes that that delighted a we to Kingdom This entered HSBC over with relationship little our after services. the a joint venture. our with we

with and in of relationships Canada CIBC Spain in referral and new CaixaBank, closely merchant right Canada, Portugal. partnership a our expansion XXXX. partnership the HSBC followed executed early Europe in IPO in a recently Extended also with with our began that agreement We in with before CIBC

to increasing our have Comercia, early XX% October stake XX%. are ownership closed thrilled in the We on of additional an agreement purchase to to

Our expands venture exclusive now joint the through referral relationship XXXX, years initial XX date. after

We are humbled place by the every us, day. confidence our partners that in

collaboration quarter for Regarding customers cloud-based business, with Amazon AWS announced an we three size, our or platform preference. go-to-market game This for Services Web is to industry-leading processing location or a processing regardless transformational issuer a of provide changer reasons. issuer last

to financial worldwide. and playing technologies, the levels previously only of available to entrants leading-edge all by First, bringing it new retailers field sizes institutions

while geographic market assets our Second, footprint unique expanding technologies attract and transforming market force our it addressable our triples sales entrants, our basis. with to dramatically a globally AWS' on target distribution extending by new

Third, environment. and in customers to frictionless it commerce our experiences brings their by safe consumers benefits a significant enabling digital

is fruit. already AWS with collaboration bearing Our

a to in pleased be first a cloud-based institution currently are joined boarded We customer solution announce our our financial Asia, with takeaway, legacy XXXX. in competitive to in competitor

business recently have in with a basis. domestic cloud Europe awarded financial on also new a been We large institution

Our underway on issuer technology track. now fully transformation is and

are months, with currently XX to are pandemic pipeline to competitive to international continue solutions markets. cloud and have will and gains share good our North the in of America of native which of capitalize the on unique business. takeaways. occurring full collaboration, we Each midst of implementation seven We the through we have a we financial with XX have XX we last the intent institutions market right letters now deep competitive our our gain As and had fortune across broad In AWS. issuer wins in share have worldwide, prior

is, agreements course, executed Wells including quarter Bank, addition to All TD that and of in this Fargo of with Europe. we in significant renewal past this Advanzia

with secured its an We Banco announce Canadian consumer that as finalized that with to pleased accounts. we extensions also we Bank Popular credit Arvest with have Puerto Scotiabank have long-term convert card to as and Rico agreement loan in well and are

single-digit longer consumer third and macroeconomic segment management record achieving a to and benefiting business stimulus. environment growth, with utilizing shift customers Our substantially business also our remaining expense solutions operating the This us after products. which drove since quarter and active in merger. execution well and The on challenging we April focus and revenues by margins, of delivered business the portfolio cashless disciplined across expanded more high the consumer is

solution just beginning locations As of rapid are with disbursement for adoption the example, TIPs of customer the since five-fold of seeing number pandemic. of a we us our one using

MoneyToPay franchise are develop to stadium working with venture processing a first leveraging We relationship cashless Football sponsorship MLS October strategic expands ecosystem brand Continental and market also account signed Club, on in include on closed with with the Austin also our joint to We the addressable the for Europe payment team while target new and a Xst, opportunities. we which newest the new our time.

we of no revenue we better The offer our time opportunities business have the for partners at in the new CaixaBank validates venture types and believe significant TSYS segment also combination growth We in future. the merger. of the this synergies anticipated will

the priorities to allocation capital Finally, employed M&A. our now enabled underlying last traditional the return us has focus of select our to years, shareholders over strength that return businesses and capital we've seven towards the

the We in in have we in today. be to put March COVID on of would beginning hold the that difficult we was are outbreak. those position It the imagine initiatives at

capital forward activity the subject a environment As of and markets course outlook. look we going to result more for

Now over Paul. to

Paul Todd

net just second I'm again a XX% Adjusted our growth revenue financial XXXX. strategy. reflecting driven year the was exceeded quarter Adjusted Thanks prior X%, by on net billion, quarter a for improvement our strong achieved Jeff. once was technology this that basis quarter. from to of down proud of expectations we differentiated enabled revenue performance meaningful execution $X.XX the over the extremely compared combined of the

and $X.XX continue and Importantly, bonuses from the we share our expectations. our to third our the compares result durability per synergies an include increased adjusted accrual of of impressive took prior the track as address our margin of of exceeded to XXX impact operating pandemic for realization in related the $X.XX for quarter results outcome performance resiliency the an to The net the which we for XX.X% basis which merger, an earnings plan. the ahead of nonexecutive These to points cost the broad benefited substantially to that impressive actions the year as model. adjusted period, was quarter, highlights expense

quarter. segment, our be service to billion quarter, in Merchant revenue we basis to offset of top improvement around team year initiatives delivered roughly decline deliver pleased our an are achieved segment, a to customers. improvement the the the of the to the reward points from of of standard from significant and the in on macro a of position X% second a We who prior our world margin the adjusted highest continue we cost an $X.XX this underlying than our basis line combined members begin Solutions strength In as operating more from business to headwinds for XX.X% third and our environment. adjusted Notably, net mix XX

enabled Our was again of delivering quarter portfolio year-over-year businesses basis. technology resilient in on the with our relatively growth once several a third combined

year scale payments omnichannel delivered volumes or leading on record as integrated net platform and of revenue to UCP combined new global in partner pace continues ecosystem a unified scope commerce mid-teens business value to with this our our the while adjusted the grew another quarter e-commerce T&E proposition growth worldwide for including Also production. our deliver excluding has on basis, Specifically customers. resonate unique our

portfolio remained revenue and As for adjusted a once third bright growth producing the our own bookings software AdvancedMD during quarter. strong delivering spot, record net again

relationship-led businesses. our to Moving

We volumes Once payment share highlighted these the execution this to and businesses have Jeff continued around very geographies again evidenced as realized gains this solid the strong sequential we in remained by to are quarter realized. sales improvement have and quarter earlier pleased new performance across world. recover

basis. Solutions. revenue the $XXX third for a in representing from Issuer We decline to Turning year adjusted X.X% a period delivered on quarter, combined the prior net million

mid the set new and a continue As and benefits on services the value-added transaction our including file in model traditional accounts grow pricing record bundled for products single-digits volumes quarter, and to are recovering, performance.

In efforts for to XX.X% Adjusted represents on is basis. on our combined travel strong card to portfolio business, from segment approximately compared our efficiencies operating benefit quarter being by and limited growth margin fact, very the basis basis segment issuer a prior the to single-digit XXX combined our commercial expanded excluding which XX% corporate for continue drive of year delivered impacted this issued a in business. the we a points as to low

segment the a absence impressive of benefit third Finally, prior $XXX than million, in the stimulus. X% our strong outcome environment dollar in Netspend quarter of volume, which adjusted for trends result and representing quarter Solutions revenue more increased to Consumer net gross record Business growth incremental the and from from of delivered light an XX% year. the continues in of

utilizing pleased shift channel Netspend our cashless remain customers as as well. we are seeing that and for products are We are active purchases to a this spending in

We to has efficiencies the powerful XX% Global levers mitigate products the over in past faced The streamline from multiple points are made we and segment greater XXX particularly this the trends our DDA the and business. to to operational this costs growth XX.X% headwinds combination margin year drive operating of pleased pandemic. benefit TSYS by us Payments have prior have with with as provided improved we active we the account from Adjusted from for efforts with increasing basis year.

ahead and the our cost one progress estimate from synergy we I increased year plan. to run mentioned up integration, three We confidence are raise $XXX of the at to rate since for have marks annual have just track our been continues It expectations. we has synergies This time over our million. of which great our to million third expense our closed making we previous merger the again $XXX from within merger estimate least on years

the which additional our savings least expense to merger is We synergies TSYS $XXX rate related run remain incremental annual to million million the annual $XXX also revenue to deliver the synergies. pandemic, in confident ability in in run at and rate

venture and billion on in of roughly CaixaBank. the we $XXX healthy return basis. priorities. is our approximately $X generated to capital and our allocation business We CapEx purchase our with stake adjusted funding net free back are liquidity position XX% with able additional our roughly We essentially in times today, here million of a joint ended roughly of to million flow quarter, quarter $XXX leverage sit we X.X debt into the an business. We As a cash this of reinvested

strength, executing increased to acquisition liquidity merger of our repurchase balance opportunities. we our announce share our to while pleased authorization we against the full Given and Board strong has Directors continue of and pipeline are billion, that sheet $X.XX

While this and guidance expansion the we margin us we have are to with earnings expect at share XXXX. not time, providing strong growth heading for quarter momentum providing currently per into fourth

targeting a normal we XXXX, per of Additionally, are earnings more assuming share currently adjusted to the see we year. roughly for progress in recovery $X and next continues environment

in to We allow back gains call leadership turn software while are the should continue into payments, with grateful And industry market scaling of our well meaningful the us and our proliferation that Jeff. in share future. global the technology for over drive to I'll to

Jeff Sloan

as we This digital but very the pandemic. remarkable accomplishments. a I it name our few the year all face proud just in and thus XXX-year accomplished AWS, far crossing will have the a macroeconomic more we in a CaixaBank on initiatives. am that enablement is of environment, execute XXXX, strategic the threshold, regardless of a all XX% notable of be to noteworthy of

Our such complex the strategies. partnerships with as world with validation with provide and such wisdom as further technology AWS of HSBC, some CaixaBank CIBC new institutions of in market-leading our collaborations differentiated and of most combined the the largest companies distinctive

create are shareholders. We competitive goals software-driven advance our Winnie? significant moat we value our the long-term about our upon enthusiastic widen to to as continue building future, advantages for technology-enabled to our and

Winnie Smith

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

Operator

you. Thank

Darrin, line open. the Wolfe is of Darrin your from Research. comes line question first Your with Peller

Darrin Peller

the that can hold you top business you think strategy Thanks. on to with can points thanks, top give Hey, us – really versus the in and capabilities Jeff, of levels you terms want data then the your showing filling be acquisitions in any And and of own kind just use business you're any just merchant start off obviously around right. bookings trends fill new on its would funnel pretty great. up really on of well. guys. already how to to the attrition out what's technologies All hold I

Jeff Sloan

strategy I'm your to has first Darrin. last years stool It's legs we company and start. to the comment the Cameron to I'll your changed and owned our question legs Jeff exposure say that can have include stool. growth number on of software, and But not and businesses Paul listen Thanks, that and over probably faster Those second partnered question. three and the sure to is market. the on include omnichannel e-commerce

today here his we've position in So the in where I'd much probably one are is We're say particularly three this sit mentioned would been that all much look into today. than healthier April. we we fall comments pleased Paul a healthy but in pretty or really back prepared of that buckets. we course more at as about we those guessed deals ever or of March And have

a Paul on a there basis have was day of said, net As $X never liquidity. and billion X.X times we

is some of obviously But M&A course pretty capital the markets. on of depends some Our stability in full. pipeline that

increasing today our Board announcement our about saw you thankfully So repurchase share our authorization.

the we we're against well I continue have though think being pipeline said those capitalized best been. where time Having that investment to markets given execute is to opportunities. us our pursue performance and the and the For

I our now set our Day XX% Darrin. place and about coming merchant talking saw happy XXXX. We've as this really in that a as from crossed target that trends in our you in is business not which in Investor would well we're digital say comments. strategy in think XXXX has something last started I actually of prepared our And the release and So We probably XXXX. we threshold changed our

that For the crossed the third end of this threshold quarter. year we in

do us. those of I see think were And conditions So acquisitions market fall subject that's I well to they if that working really lines additional to been on for really three would probably changing. we buckets. don't

So question? a second want you to about Cameron, talk do little the

Cameron Bready

I can since touch our business. that. the thing a second pandemic have focus merchant tell I'll sure. new of our the sales. going businesses with on And good during Darrin, to Heartland that midst we really third you say sales period starts in the of had the would sequentially been across XX% I'm new in of double-digits would represents year-over-year, sales do business. that North to and Again, XX% America, that new performance exceptional. the is new production the things period morning. up about record one focused quarter, tried control I the history the we that on But strongest Yes, up versus sales the on quarter. that performance

prepared Our the integrated year in as we budget the tracking noted our business comments pandemic. to is notwithstanding for

XXXX, optimistic XX% is touched AdvancedMD. production of overall particular as momentum XXXX integrated continuing throughout our is tracking In that campuses sales year-over-year. bookings channel. In it's into of enterprise ever partner And up up we're the level were heading despite we pandemic. midst we year-over-year. saw Their higher In being a I SaaS We partner closed the on pandemic. been strength saw new QX in strong a year-over-year. our would as bookings And with at That's new Xenial, and new the a obviously education New XX% consistent about business. are in a the number business. theme business, vertical pipeline say markets, XX% during our up we pretty in have QSR the

well. me that – with QX. sales pleased in they're year-over-year, quarter saw new we're So year-to-date, year-over-year excuse XX% up up performance the as Canada XX% or in

us for that strength continued overall, on and market the in Asia, heels on touch In briefly. largely partnership in with again, the just I'll our Europe to of bear Canadian which strong new Desjardins, continues market. So free

they've operating their the notwithstanding performance been in. strong, think I very has environment been

us. Spain Spain that X% are Spain again then performance up wins continues strength year-over-year. in year-over-year. be Domestic solid strong volumes U.K. Asia, see new had X%, some significant in markets. for And this a has of business been continues in with going pace back comments, overall just but bit sales and the very executed throughout of I would But Asia is my market sales new in up, in The particularly QX. exceptionally particular given new all opening impact those be new We quarter as sales how to well. soft the in and good. performer particularly that Obviously, in to sales to the pleased the the the pandemic. we've remain pleased a we Midtown overall with pandemic are New with. has macro say we're bookings

Darrin Peller

That's sounds Great technology you mean it detail. really and it I'll but guys. overall helpful, like I this it at have like leave offerings enabling. – sounds the is

or You than type guys potentially based the of you're just to you maybe can have share on gain Is been the out or line of degree versus differentiation that some before. could pandemic larger out of seeing the banks in that you a come larger fair there?

Jeff Sloan

Yes.

obviously kind combined right as we're better, I market multiples the on which than I a numbers. and – these think just you numbers certainly at Visa Mastercard view our Darrin, basis look are of and opinion those

pretty look businesses, that every of these So our it business. in think that, with for much share thesis one merchant supports rapidly gaining purposes we're our our that, especially at as I we

us is alluded that the you about great in said numbers I Cameron indicators the really business. exactly So make to, bookings the of right. addition think good which trajectory that And what are to feel leading

Darrin Peller

Yeah. thanks It's All fair to say. right, guys.

Jeff Sloan

Darrin. Thanks,

Cameron Bready

Thanks, Darrin.

Operator

Koning of your line line is Baird. Dave the Dave, question next comes with open. Your from

Dave Koning

and nice Thanks Hi. job.

Jeff Sloan

Dave. Thanks

Dave Koning

But -- in know you maybe that trends you quarter? I could down -- into how especially maybe, October? up X% that review improve in did monthly merchant setting And is did throughout the maybe year-over-year. And Yeah.

Paul Todd

Yeah.

insight. credit sequential a monthly So stabilization like October yesterday. can of from saw more volumes see volumes of merchant better. relative we're in some far. the and came And good and said improvement had volumes volumes. standpoint in that, both growth kind recently our back now continue trends the continuing we little maybe And the we've started for those lot several that the seen Visa here to kind I'll a Visa to obviously give a most Cameron, weeks And the monthly looked start. we trending third But Yeah, to so of from and so, that time have quarter, that, positively that decoupling

trends them. add obviously So you the to quarter. The yeah, performance the results that? we've the to kind from the financial be how financial relative And Cameron, to do of to those positive. continue want described flow-through for

Cameron Bready

things. just I couple of a Yeah. would add

I think at results, the quarter. throughout continued QX obviously look you improvements if

the to think We see I little has the pandemic, our last as are I indication businesses well. been most important heavily gaming obviously the the during business the obviously a that by as and been September, September. lower of been has been And is, that's merchant business think market vertical it that schools our down as and insurance published recovery, largely where relates seen the sporting in trending with where couple of One ways. we've pace largely shut begun exit active pandemic. impacted data better to months to couple impacted, at have if for industry where you over consistent I heavily business closed, our the exclude events have casino pretty look slow. of has think a bit October it's than But rate

If in exclude those, business you was merchant the for flat, or our point quarter so. the U.S. down roughly a

that for Asia And flat, flat. is -- September the So call I essentially quarter. roughly

momentum, heading we that have October second we quarter. a business. good strong where over obviously sequential the in I were into improvement, that's So in think And

again, North grind closely as the with over a pandemic. we've heading are world slight seen merchant encouraging, to seen recovery of XX% matter entire which certainly September. XXXX. continues positive. the think America we thus far business, the it to struggle are trends monitoring the improvement So, trends relates But as is October I that is as higher the a continue into as we've to We're obviously

Dave Koning

should the quick of just in bit kind could and seasonality from the bit is still to we a down to come seasonality, merchant playing kind decouple Thanks be a merchants, all of in follow-up. little out Great. and or QX revenues we little for margins given and recovery that bit. the Normally of it? a synergies, sequentially a of But that's have normal

Paul Todd

Yeah. No.

the improvement, environment from the some from sequential we're think the in side cost that standpoint, on taking. see quarter actually both that I normalcy. the margin And a we're we particularly of would standpoint in, given actions and decoupling a margin revenue

of given that this year, the hold kind kind necessarily pandemic. seasonality So, normal of doesn't

Dave Koning

Sounds great. Hey thanks guys.

Paul Todd

Dave. Thanks,

Cameron Bready

Thanks, Dave.

Operator

comes of Barclays. question is line from El-Assal with Ramsey Ramsey, Your next the your open. line

Ramsey El-Assal

what thoughts the of your latest synergies Difficulty] or on [Technical from on timing challenges realization coming your prioritization merger of and any of out the kind of the synergies impact coming and opportunities are revenue of thoughts merger? sort revenue realization pending, the

Jeff Sloan

missed the synergy revenue to How from what standpoint push it we're our that's first to are, think seeing your of relates side. Yeah we we expectations the question. as on what merger pacing? part And continue But Ramsey, I forward. a

cross-sell, by say time our across about would as of with also today. I of rate expectation as be of that obviously number we've base those Heartland TSYS the engagement successful pleased into had for discussions FI But solution from versa, having to the initiatives business. revenue by on revenue of the merger. our ability we the very base optimistic to outside Heartland business. years issuer as evidenced unique we the at are of those impact great from has our the lastly, merchant in be optimization that synergies ability issuing our of coming our pandemic. analytics well. of closing we pandemic relationships business, of U.S. focused in opportunities, the merchant-FI realize our to on Obviously have now come some continues a new to of And run seen, blend to them, So synergy number of least we're the deliver that relates annual A then today of re-iterance the track can those standpoint, capabilities relatively our we and to with on a that solutions some really partly progress a focus as of Those progressing. what $XXX we're we early We've to into We've capabilities distinctive well. Canada we're million it would cross-selling ProPay positive And channel. business platform to in our the are now acquiring months. merchant three that that the I relationships. those impacts original launched Tactically partnerships solutions the bringing making to on headway as in in the customer TSYS markets synergies cross-selling to get There's issuing on well pace we're I existing today the pacing We're of conversations remain of better bullish, and those and synergies notwithstanding revenue out number expectations of longer leveraging brought to also the lot outside as fruitful introduced our We're tail continue are and our progress to are consistent synergies, A well. be outside continue obviously optimistic vital on into say of Canada. the plus, We've from of characterize to could we'll U.S. conversations. reasonably the our and transaction And issuing Europe, announce the marketplace. news that very very relationships existing U.S. think would where vice

we're all the we're I So say, in delighted all, would with progress making.

synergy to merger beginning the we're seeing synergies early at combination. ability optimistic continue I'm was is it today as the targets. success than track the And I our more We of to drive to revenue say, from well positive. I relates against the would very those

Ramsey El-Assal

ask a That's they'll this what just and realization? going be the potential great great. quarter leverage flowing it on might quarter incremental to in One as follow-up the about beat the Just Is compare of be quarter margins. online? this on drivers to margin color see. and back from from was mentioned about the synergies quarter just business any terrific. to what of next operating you the quarter? us to commentary more helpful? obviously expansion the Can the in I beat talk quarter. Is next we're The next how drivers will to the outperformance this – wanted That's comes me. You see

Paul Todd

kind optimization it Paul. from would both the it's Yeah. Sure. Ramsey, as I synergies. of characterize better

target $XXX about, our talked we raised we to synergy million. As

front. so clearly pandemic, So we coming getting revenue as of relative the just is margins of $XXX we the better and general, we're in seeing are than incremental that of the incremental rate We incremental come because achieved through. expense down planned, revenue, a locked higher in synergies rate base. realization And at had we to cost originally we're on kind million seeing benefit the takeouts kind of the that run

the segment, really the the remarks, higher drivers. as would quarter the would would excess accrual for specifically of incremental relates fourth would bonuses. to revenue been quarter those we say, it's margin say, and aside three used expansion at had there the have kind the referenced there would've margin about talking I merchant mentioned expansion had set the expansion this So incremental when and it some also we in not margin non-executive I this of prepared to I I

So, basis actually actually better realized. we than points on a the core XXX fundamental that basis even margin was performance

Ramsey El-Assal

for question. Thanks Perfect. so much taking my

Paul Todd

Thank you.

Operator

Our next of line Bank. is line Deutsche Bryan, Bryan with open. the Keane your from question comes

Bryan Keane

trying would at. I guess and of trying on between In understand I'm your guys higher. kind follow-up to looking that at cost rate it about versus you scale growth asset take even people would lot Thanks. growth There's look or your a pipeline. to just preference a of what a Jeff synergy a supplement deals particular, speculate wanted the asked I to M&A

those between Just preference on assets? thoughts any two of types a

Jeff Sloan

It's your Jeff. Hey, Bryan question. thanks for

start directly. and kind backwards question then more So to just every kind let of criteria address with of work me I'll that, your deal, apply the always we to

financial vary mergers actually So, markets tell currently country acquisitions the returns, that also time and things that may and capital meet hurdle look strategic said at tell. as some and we in cultural and new risk the which on volatility that And includes look you persist return when would risk, very surprisingly hurdles. I we see three based fit that, and look we will we for at reflect geographic the we those fit, at you will not financial few not of time, or may all

increment I March capital States. started. just on is on really a in of focus I price our on Paul COVID given at what when announcement allocation the authorization deals said current As back opportunity. stock the put coming hold share I most now out buy a compelling return in levels, said and pipeline we our most we today I'd initially which a repurchase, what just minute Hence, is said of our of ago, is, believe said now in focus also United say as of our another the corollary

pricing our country macroeconomic about and the So you at risk to market, the anyone of shouldn't United risk, everything surprise a be States if criteria look is drop the XX% risk, unless else, largely within think regional you listed it which environments and about company. focus is that

So that probably shouldn't anybody. surprise

the term scale we relates them. still versus it unlikely What you do our tell it's United something I end with the think of both pipeline outside As assets, immediate to look the is day is the would that though I growth at of States. in

repurchase. would at I Within processing to But do expect both if us States, the software here, looking traditional well United as we're nothing as changes more assets. from assets

that's And will facts. prices, inorganic should candid as You to change. But obviously the investment. change opinions at the and be less our these subject facts

X.X see leverage got own. on and I we'll of firepower absent the Should shedding to we that $X businesses. we would here distinct of it, sitting billion do revisit on in as strategies. The we of proceeds, and in to question want today, have your need Paul to said think then of us say today. use additional plenty mention access well which do do our our capital, what to net the assets have execute we to we thing, don't for other response we're obviously I financial to the But need times proceeds composition our particularly of we is, a capitalized at don't use to liquidity I

Bryan Keane

Well, And a for that's that helpful. as color. just Thanks super follow-up. quick

it well the if could issuer, for, were there Solutions business, of like Issuer a where comments the came make the thinking so and you outlook and it's and some little looking On in seems ahead we just much. there? about Thanks bit pipeline kind of trending

Jeff Sloan

sure can Yeah. also, Paul but contribute start. Bryan, just me I'll I'm let start.

So pipeline spot travel better his real commercial significant as it's improvement, I growth full. ex which pretty said is sequentially related remarks. return corporate is would the quarter Paul described bright as card, you the our say, third to prepared in in Look, a largely

prepared which in of pipeline. the deals said remarks, we've competitive months are Seven XX last wins. think I takeaways, competitive XX our in XX our in

executing. at pleased we're look to be how and not hard it's So, really that with

a of bear had win someone some us, first our legacy to really AWS from collaboration, that's mentioned XXXX. joint fruit. in environment which And initially, in starting takeaway these to and a our provider we from We've else going someone unique coming Asia, into competitive cloud-based is

So, we is. a bit everybody base is there our strategy little different now we're have a than customer And to market doing. from validation how else as

marry that, institutions And go and great look it's servicing the most with technology financial globally. strategy bearing the if gaining which is folks to that are -- in it's exclusion and is after complex go So market own the of the AWS, their fruit, you reason largest who in Issuer, with base, after at we marry our folks market to those that share place like that not we but that the to reason market everything the else, right. in are

So are further to see time as additional I them. when has that they have with successful share successful. our don't about for picking up portfolios, and think gain gain share we other CapX we're made, to partners And you announcements, example, folks that than look over

why our focus it that's is. is So where

on the of business. that some we're Obviously So, depends in that macro. pretty optimistic

do in market embedded at the the to out was As numbers last last night, the it's or I Visa can math the business rates times whatever think and but math, Paul commentary commentary, in and our Mastercard -- his someone growth you than Visa, mean pointed better I look was night. the Mastercard six

minus minus XX% T&E ex and wherever or there time and XX%. in compares low-single-digit whatever last card growth, done that it was minus the So whatever revenue two to minus T&E XX% minus with was. they've commercial X% But and

goes services want market stuff in winning. do show the And differentiation, analytics on of value-added have I you and that represent length value is fraud Paul, obviously comment issuing. like loyalty on we think play and the think I unique our that clearly, we to So, the to it businesses that? the

Paul Todd

thing quarter and growth Yeah. see to in that business is continued is that, that just are standpoint. would top happening in speaks just in Yeah, I this getting the get there in we modernization managing to points recovery in. XXX an about. Jeff to I the all that we're investing then expansion environment the efficiencies, from volumes we're doing environment a is the going talked we're And we're as that of finally, base line margin where would with we're the just good other say say this business very cost basis how

for hitting So, side pipeline, the future. the investing of to business three the of growth from the kind levers new wins, then of the top base really business and all position the the the line, efficiency, cost

Bryan Keane

progress. the it. Got and Thanks on much so congrats

Paul Todd

Thanks, Bryan.

Operator

of with Your David next question Evercore line is David, the comes Togut open. ISI. line from your

David Togut

that to morning. on particularly HSBC Thank in previously? you now. the and the reestablishment to these going Good I'm of of do why la Caixa. JV forward on curious, XX% things Europe, And both does la you of JV you. control initiatives see up the the couldn't move allow initiatives do major Caixa Good to

Jeff Sloan

will Dave, and comment Cameron as well. it's I'm sure Jeff. I'll start Yeah.

are So current listen, in environment. the well performing really those both businesses

you our themselves and the to have out nature market. Visa in parse of markets to I for the the business proxies of think relative the or in Europe particular Mastercard's nature

a near business Western very a cross driver markets, And and have growing business growth of the absolutely have our particularly those that and revenue border markets. Spain component So, Portugal, the of domestic basis and and our and thinking are on relatively of say, Caixa piece is Europe which there you nowhere domestic is about business in a businesses in in a piece our is while year-over-year, to I'm or Mastercard. those and heavy our is Visa U.K. small

capture Cameron leaps networks markets we bounds, from growing HSBC in proxy, year-over-year invest, the we're example, view, some bookings growing Caixa. they're about growing We've question businesses. of Using basis. more partners ability ahead your answer for absolutely to markets. have and new of those Spain, the those point of in domestic our those had results in terms sales well Businesses in into we're on So, in and in as in good really where share our October my fantastic totals to a and of business. talked a

time actually So, to those in I think to partners. businesses it's and invest continue a fantastic support for our us

Cameron Bready

don't we've that in I have business in Dave. fashion. don't our of XX for I worked our bad a years a with form certainly over that time HSBC, And with some someone existence partner. fantastic to a a extend the ever agree the relationship or with market, entirety to in U.K. they're I Yeah. there's ton I say a add. think would like partner

well new what together from a and that to have initiatives We move standpoint with worked for And even align have to extend forward very into broaden we avenues years, strategy digital time. delighted in is existing our are and it relationship, opportunity the engagement our extensively in a as we've of market. that number

with executed So, we're not them. that be we to have more could pleased --

Europe. are excuse in to I domestic As Spain it Jeff's agree me, the completely Portugal of Spain, with attractive and comments. Spain relates two markets in -- or most

the some October in As reintroduction I combat or spread. previously, that volume Spain in even to the impact quarter to mentioned continued returned coronavirus restrictions to of and growth has domestically with

of and through merger business. will Caixa yield So returns better for as of overall think joint be more the opportunities in we owning term we're think we as incremental well with Spain performance that as venture, its to look there'll longer And to that certainly, obviously Bankia, continues investment. us about expand with I think the delighted

as a as the do again at that opportunity for has And valuation has in that that it. successful that any Spain further invest with the forecast as been the clearly sit here underpinned valuation forecast valuation that's certainly We're that we venture we're ours in Caixa time in we jumped So an been the today. and you underpinned to today. the have joint to outperforming in environment reflects opportunity business

David Togut

Understood.

I could. quick if as Just a follow-up,

XX both number and important You with financial institutions made previously in of LOIs the the globally. quarter the a announcements current

AWS win partnership, this or the help us in which You've XXXX dimension might guidance but got recognizing you giving to revenue the think framework give it? or about Truist mean which what aren't Can with earlier us this maybe XXXX growth some year. for companies announced you earnings this environment,

Paul Todd

Yes.

So this David, is Paul.

right of with our per share little that a bit thinking earnings a on $X. to of you XXXX think relates gave to we our as target roughly have now budgeting framework think adjusted process it we I the about

we're And next year. about currently so how that's thinking

year overall in of you normal now. dynamics much indicator All thinking operating relates things of planning like cycle best right what our that those assuming of mentioned look as more next that kind of can of you the kind it that's as to and we're just obviously give the year next we are in a But to might more normalized environment. kind

Jeff Sloan

confidence the continues amount gives we product is have the think to that just the I new from that a play as the servicing us will the tremendous obviously impact gives I financial standpoint, The add time. of what executing And produce. underlying in the results momentum of lot recovery business out. that and we to confidence the in thing it out eventually I momentum heading will as macro a Dave, how business. would around we is. is virus But and the it of in the as is it only just relates obviously a business the bear over where directionally the macro the to underlying is sales it And that think macro us have we're

David Togut

much. very Thanks Understood.

Jeff Sloan

Thanks Dave.

Operator

Citi. Your next Shirvaikar line question with Ashwin of comes the from

line is open. your Ashwin,

Ashwin Shirvaikar

full in conversion timers impressive should cash What income free forward? Congratulations are Hey here. adjusted your Jeff, dwell something you. Thank And almost start there actually quarter. going that Hi, I $X.X guys in on to there quite cash comments quite we didn't Good help? -- flow net the year? that with want you on Cameron. Paul. this the billion on free one any look for to comments flow

Paul Todd

Yes.

this -- Paul. Ashwin is So yes

adjusted to kind convert XXX% free and our always roughly relates we goal third right the were we've into had at -- earnings of cash goal of quarter. it As as flow that for to

And We timing it forward out there's And but nothing have look on of billion really basis job to rate specifically $X.X timing unique to billion out. flow is run you always any flow relates we're of zone. the we're relates of to. it of from call the a things As of items to quarter $X that if that last quarters we've that right said that a timing kind kind would full that in I kind free point the cash producing a look yes kind playing three of in and year in quarter, standpoint. over I the been against as that kind

wouldn't else it there. And so, mean anything

a isn't there for still -- the But We continue would anything a efficient to basic of that in way we've expenditures point about. from kind capital in of I very obviously than quarter. manage the to talked our sort of while investing onetime unique growth initiatives standpoint

Ashwin Shirvaikar

Got Okay. it.

given committed to good competitive wins the future? have to wins commentary on merchants out continue. revenues? on commentary that being can the Are promise time of Any pushed strategic forward lines? institutions they very the to urgency? it's So even hear converting Any for these Are financial implications that pull of maybe pace sort

Paul Todd

really have is I But dealing of from down of on kind would to a that -- might client of patent always get those anything each there of say longest converted is either up has changing a kind is of from a able opportunities. slowing overall happens issuing the dynamic conversion dynamic say isn't would there standpoint those particular bring different cycle or into opportunities theme the realization you're an particularly that the play those the when Ashwin at kind pace one pipeline Obviously full. revenue. of relatively I just speeding our Yes always standpoint of conversion which any kind being with clients. or of normalized side to realization

acceleration full new into any being of so of But at opportunities. dynamic unique there delaying nature. with are paced that isn't around opportunities pipeline those kind play that And or

Ashwin Shirvaikar

I And to visibility would imagine. translate would that good

Paul Todd

Yes.

Ashwin Shirvaikar

Thank you. you. Got

Paul Todd

Thanks.

Operator

the comes your question next with Kupferberg of Your from of is open. Jason America. Jason, line line Bank

Jason Kupferberg

assumes hoping little said comment a behind I'd just Thanks, about next year. follow-up $X expectations good but are outline targeting thought I of just the of a macro I could normalized the on environment, for target. morning that maybe more that guys. some more you the was I EPS around you embedded know, bit that

flexibility cost of get there? the to example, it For to deployment? you some capital would amount drive takeout have also if even Does assume meaningful more necessary

Paul Todd

Yes.

with the environment relative we next we'll in So we're revenue Do to The several one play through this Jason, lot I cost budget realization of right unique set pandemic. cost to months year. dynamics assumptions, relative a that side the as plans yes. of of other then, we itself have than we're to the on various cost operating that plans. really and a is process and those out obviously and going are the under got have operating environment. And through the like kind And that This obviously, with is of seek that you base need environment then, what obviously we that that revenue our wrapped the answer kind process we budgeting in this does given the always a cost we have obviously, more opportunities? it dynamics operating in. at the set different of and in now, initiatives. when all in any There's looks to yes, scenarios all yes, a more set And of we're play overall kind in of is, we're the would that and what like. overall the plays obviously than the cost state picture additional mean, cycle looks play, always But revenue And different dynamics give of balancing color to to side. opportunities what we I that this our of wouldn't every play relates of pandemic budgeting of the year have a

Cameron Bready

it only restrictions it I add particularly doesn't Jason, is or obviously it we that the recovery would significant saw a to certainly, And earlier around shutdowns as that as that thing Cameron. commerce retrenchment, it this to relates path assumes to meaningful run this obviously relates The year. is continues. anticipate

So, on pace it's pace not we're on assuming of assumes, recovery. continuing today. It the sort heroic we're of

Jason Kupferberg

Okay.

historically, acquisitions guys accretive that, M&A, clear have more on I to think follow-up you be mean a been at I to pretty year just And least need EPS. but Okay. one breakeven, adjusted likely

would revenue So, EPS And is lot a do you accretion? case? if actually that a dilutes deal growth, organic the it you that gives still one of your even year

Jeff Sloan

answer no, Yes. It's the Jeff. Jason, we do that. not is will

X.X long-term years So, we at time and ago now. rearticulated the reaffirmed model that of our our very TSYS we're partnership on focused with about

no, growth. a don't push further see So, organic that doing rate dilutive I boulder to up to the hill. us deals sense are of a revenue make It doesn't any

success to of our pleased to with substantially very We're business the very be invested strategy. XX% we've that technology-enabled. think, get I

results, differentiated see there backwards better in see networks last night. You don't multiples that. on which than going are us I

Jason Kupferberg

Okay. Thank you.

Jeff Sloan

Thanks.

Operator

comes Truist Securities. from question Jeffrey open. is line Andrew with your line final Your the Andrew, of

Andrew Jeffrey

you Thank tremendous change, whether you. amount key in a which excuse you a seems I QR like you've Appreciate lot there's order the morning. technology-enabled end here. the hospitality wonder, a me tech if time Good of about software differentiator. with Jeff, could -- think ahead code. delivery down it spent at businesses, the a of drill talking where your is I it's little bit

from vertical about your could whom cetera? in flesh a think taking gains, bit competitive maybe growth the little Xenial share comments wonder, advantage I where that just you of including Genius. you couple share, a made integration if et is you're out You volume of

Jeff Sloan

and Cameron sure start comment as well. I'll I'm will Yes. Andrew

So listen, pleased very our with we're Xenial business.

period. referenced, you did we is I gave think well online As today most the additional of volume billion as out disclosure coming recent in $XX million business that business how performing. that as $X about We of orders

think SaaS in commented quarter. on recent the in that sales business increase in I Cameron XX% most

stack more about where step pleased is. back back anybody if you of for there's So, vertical a us that that the But we don't capabilities but he you competitive full who's we're business. got I detail, give that the business you landscape. very can second, tie in think overall do

business. today, with filled pipeline Our is that in Andrew cross-sells

today So, Popeyes Long RBI Bros, and mentioned in calls. the with Dutch folks John et inspire we we mentioned our King, previous NENs We've mentioned Silver's Burger brands. focused mentioned cetera. We've that

it and are think we're call who do seeing, of exchange that the see never safer But are look rightful of a are we we've while bit us today everything saying, lot the which payments payments are with changed that, I'm that doing to commerce. six say, I enormous we so, RFP, obviously this sure of companies. businesses you RFP has good who with restaurant we've these in because need little for their is primarily QSR very I pipeline. strategy else that and or and that can been that future, they're and the us They news now they not shop is you're at a valuation others payments coming competitors, which it folks being the in includes we and including but is a customers and have what got go-to-market of And looking So, distinctive getting that of or of in business. from I we and that's future, ours And that us either to top level of unique last think the business And competitive XX includes would safer commerce. us. to both day, all don't QSR RFPs with them. pipeline XX have and months the is our their the Andrew brand-new us takeaways, brands businesses

are business. brands, includes guys just includes us but portion of who brand-new it their for also customers So, a of

working detail? think we're be that the do strategy about cross-sell I we're So in of some Cameron, want a bit sub little really you and in. is to very position talk that fortunate to

Cameron Bready

And Sure. happy be I'll to.

the market [ph], important particularly segment than do markets. Bryan maybe think I it's to we as other restaurant always in vertical more here

comment end, integration that success Xenial. well payments positioned the I opens enterprise the cross-selling Cayan with and the I that think really avenue So, channel. we're the seeing we're up Xenial obviously at for with will described how Jeff with into

payment you had as think strategy. no that we're for payment we business couple up of opening by SICOM in acquired overarching business. our the avenue obviously I integrating ago know in cross-sell significant with a consistent new which Cayan is years legacy And volume a real

down version solution. which year-over-year. As Heartland we restaurant towards through sequentially we're software not to business, geared solution of -- the mid-market XX% just a small as which introduced as end significant more the base I our end seeing quarter market. we're see delighted our really restaurant end more pleased the point-of-sale traditional from seeing with as small the for mid-market mid-market. success we lastly what we solution we the of in be capabilities we software market our through merchant channel a the solutions as the would We're the of at the were the move progress this product our broadly. Heartland uptake point-of-sale small registered of the particularly as That We're Sales software system good end with the in small that and channel. of into the that into And the QX well ordering omnichannel attack of characterize uptake continuing service our with being online then that in channel into up market, in integrate of sell XX% our as could restaurant is

to think and capability, better solutions we vertical take that of continue I I in So share think result as win of the market, we we that of across that, the channel. to and better segments better spectrum have continue a product, all across restaurant

Andrew Jeffrey

on business. quick Issuer then That's follow-up And right. the All color. one helpful

takeaways You mentioned a flips? from number of discuss or internal you are existing vendors competitive wins. just Could those --

Jeff Sloan

they're Andrew. this announced morning. our We be they with we that will said former the Yes, script largely

in-sourcing Canada Scotiabank in model. was an So,

outsourcing. and is actually that in-sourcing conversion So

in as from from is remarks, I also But in the incumbent. AWS flip takeaway XX takeaways prepared seven and legacy out. mentioned a are from Asia of in a new a existing that's the providers. than And that competitive the with So, one other

majority vast be Scotiabank the So, exception. the will are but takeaways,

Andrew Jeffrey

Thank you. Great.

Jeff Sloan

Payments, this On you us joining very of very behalf much thank much. for morning. Thanks Global

Operator

gentlemen, call. this today's and conference Ladies concludes

disconnect. now may You

Global Payments (GPN) 29 Oct 202020 Q3 Earnings call transcript