10-QPeriod: Q3 FY2017

GLOBAL PAYMENTS INC Quarterly Report for Q3 Ended Sep 30, 2017

Filed November 8, 2017For Securities:GPN

Summary

Global Payments Inc. (GPN) reported a significant increase in revenue and profitability for the third quarter and the first nine months of 2017 compared to the prior year. For the three months ended September 30, 2017, revenue grew 9.1% to $1.04 billion, and net income attributable to Global Payments more than doubled to $110.7 million. Diluted EPS increased to $0.71 from $0.36. The first nine months of 2017 saw a 20.7% revenue increase to $2.92 billion and a 27.5% rise in net income attributable to Global Payments to $226.5 million, with diluted EPS improving to $1.47 from $1.23. These strong results were driven by organic growth across all segments and the impact of the Heartland merger, along with improved operating margins. The company also completed the acquisition of ACTIVE Network in September 2017, further expanding its reach in software-driven payment solutions.

Financial Highlights

51 data points
Beta

Revenue

$1.04B

52.5% Gross Margin

Net Income

$110.74M

10.7% Net Margin

EPS (Diluted)

$0.71

Total Assets

$12.28B

Cash & Equivalents

$1.19B

Free Cash Flow

$92.06M

Financial Statements
Beta
Revenue$1.04B
Cost of Revenue$493.88M
Gross Profit$545.02M
SG&A Expenses$372.55M
Operating Expenses$866.44M
Operating Income$172.47M
Interest Expense$41.00M
Net Income$110.74M
EPS (Basic)$0.72
EPS (Diluted)$0.71
Shares Outstanding (Basic)154.56M
Shares Outstanding (Diluted)155.40M

Key Highlights

  • 1Consolidated revenues increased by 9.1% to $1.04 billion for Q3 2017 and by 20.7% to $2.92 billion for the nine months ended September 30, 2017, compared to the prior year periods.
  • 2Net income attributable to Global Payments more than doubled to $110.7 million for Q3 2017, up from $55.5 million in the prior year.
  • 3Diluted earnings per share (EPS) for Q3 2017 rose to $0.71, a significant increase from $0.36 in the prior year. For the nine months, diluted EPS improved to $1.47 from $1.23.
  • 4Operating income increased substantially by 43.3% to $172.5 million for Q3 2017 and by 48.2% to $409.3 million for the nine months ended September 30, 2017.
  • 5The company completed the acquisition of ACTIVE Network on September 1, 2017, a strategic move into enterprise software solutions.
  • 6Operating margins improved significantly, with the consolidated operating margin increasing to 16.6% in Q3 2017 from 12.6% in the prior year.
  • 7Total assets grew to $12.28 billion as of September 30, 2017, up from $10.66 billion at year-end 2016, largely due to acquisitions.

Frequently Asked Questions

Revenue growth in Q3 2017 was driven by organic growth across all operating segments (North America, Europe, and Asia-Pacific) and favorable currency fluctuations. The nine-month period's revenue growth was significantly boosted by the merger with Heartland Payment Systems.

Profitability saw substantial improvement. Net income attributable to Global Payments more than doubled to $110.7 million, and diluted EPS increased to $0.71. This was supported by strong revenue growth and improved operating margins.

The company completed the acquisition of ACTIVE Network on September 1, 2017, which provides cloud-based enterprise software solutions. The significant merger with Heartland Payment Systems was completed in April 2016.

As of September 30, 2017, Global Payments had $1.19 billion in cash and cash equivalents. The company has a robust credit facility with a total capacity of $5.2 billion, amended in May 2017. The company was in compliance with all debt covenants and indicated that its current cash and borrowing capacity are sufficient for its foreseeable needs.