Summary
Global Payments Inc. (GPN) reported its second-quarter 2018 financial results, showing a significant increase in profitability year-over-year, despite a decline in reported revenues. The company adopted a new revenue accounting standard (ASC 606) effective January 1, 2018, which impacted the presentation of revenues and expenses by netting certain third-party fees. When adjusted for this accounting change, revenues showed strong organic growth. Net income attributable to Global Payments increased substantially, driven by improved operating income and effective expense management. Diluted earnings per share also saw a marked improvement compared to the prior year's period. The company continues to execute its growth strategy, including acquisitions, and remains focused on expanding its software-driven payment solutions. Recent refinancing activities have optimized its credit facility terms and interest rates. The balance sheet reflects a robust liquidity position, with significant cash and cash equivalents, and manageable debt levels. Management expressed confidence in its ability to meet future financial obligations and pursue strategic growth initiatives. Looking ahead, GPN announced its intention to acquire AdvancedMD, Inc., a move aimed at expanding its presence in the healthcare vertical. This strategic acquisition, expected to close in the fourth quarter of 2018, underscores the company's commitment to entering new, high-growth markets and leveraging its software capabilities. The company is also managing interest rate risk through hedging activities and is well-positioned to navigate the evolving payments landscape.
Financial Highlights
52 data points| Revenue | $833.16M |
| Cost of Revenue | $264.54M |
| Gross Profit | $568.62M |
| SG&A Expenses | $377.88M |
| Operating Expenses | $642.43M |
| Operating Income | $190.74M |
| Interest Expense | $48.10M |
| Net Income | $109.07M |
| EPS (Basic) | $0.69 |
| EPS (Diluted) | $0.68 |
| Shares Outstanding (Basic) | 159.00M |
| Shares Outstanding (Diluted) | 159.68M |
Key Highlights
- 1Reported revenues decreased by 13.4% for the quarter and 13.5% for the six months ended June 30, 2018, primarily due to the adoption of ASC 606, which changed revenue presentation.
- 2Excluding the ASC 606 impact, revenues saw strong organic growth of 15.8% for the quarter and 14.8% for the six months, driven by acquisitions and organic expansion.
- 3Operating income increased significantly by 44.7% for the quarter and 46.5% for the six months, reflecting improved operational efficiency and expense management.
- 4Net income attributable to Global Payments rose by 63.0% for the quarter to $109.1 million and by 73.3% for the six months to $200.5 million, demonstrating robust profitability.
- 5Diluted Earnings Per Share (EPS) improved to $0.68 for the quarter and $1.25 for the six months, up from $0.44 and $0.75 respectively in the prior year.
- 6The company announced plans to acquire AdvancedMD, Inc. for approximately $700 million, aiming to expand its software-driven payments strategy into the healthcare sector.
- 7Total assets decreased to $12.3 billion as of June 30, 2018, from $13.0 billion as of December 31, 2017, largely due to reductions in settlement processing assets and long-term debt.