10-QPeriod: Q1 FY2019

GLOBAL PAYMENTS INC Quarterly Report for Q1 Ended Mar 31, 2019

Filed May 2, 2019For Securities:GPN

Summary

Global Payments Inc. (GPN) reported strong financial results for the first quarter of 2019, demonstrating significant revenue and net income growth compared to the prior year. Total revenues increased by 11.1% to $883.0 million, driven primarily by contributions from acquisitions made in 2018, particularly in the North America segment. The company also saw a notable improvement in operating income, which rose by 27.7% to $199.5 million, leading to an expanded operating margin of 22.6% from 19.6% in the same period last year. Net income attributable to Global Payments grew by 23.0% to $112.3 million, translating to a substantial increase in diluted earnings per share from $0.57 to $0.71. The company's strategic acquisitions, such as AdvancedMD and SICOM, are effectively integrated and contributing positively to top-line growth. Despite an increase in cost of services, the company managed to decrease selling, general, and administrative expenses as a percentage of revenue, indicating improved operational efficiency. Global Payments continues to execute its growth strategy through both organic expansion and strategic M&A activities.

Financial Highlights

52 data points
Beta

Revenue

$883.04M

65.4% Gross Margin

Net Income

$112.34M

12.7% Net Margin

EPS (Diluted)

$0.71

Total Assets

$14.75B

Cash & Equivalents

$1.28B

Free Cash Flow

$229.73M

Financial Statements
Beta
Revenue$883.04M
Cost of Revenue$305.23M
Gross Profit$577.81M
SG&A Expenses$378.32M
Operating Expenses$683.55M
Operating Income$199.49M
Interest Expense$55.40M
Net Income$112.34M
EPS (Basic)$0.71
EPS (Diluted)$0.71
Shares Outstanding (Basic)157.52M
Shares Outstanding (Diluted)158.02M

Key Highlights

  • 1Consolidated revenues increased by 11.1% year-over-year to $883.0 million, primarily driven by acquisitions.
  • 2Operating income grew by 27.7% to $199.5 million, expanding the operating margin to 22.6% from 19.6% in Q1 2018.
  • 3Net income attributable to Global Payments rose by 23.0% to $112.3 million.
  • 4Diluted earnings per share (EPS) increased significantly to $0.71 from $0.57 in the prior year's comparable period.
  • 5Acquisitions of AdvancedMD and SICOM in 2018 are contributing positively to revenue growth, especially in the North America segment.
  • 6Selling, general and administrative expenses decreased by 2.1% and as a percentage of revenue to 42.8% from 48.6%, indicating improved efficiency.
  • 7The company repurchased approximately $158 million of its common stock during the quarter.

Frequently Asked Questions

Revenue growth was primarily driven by the contributions from acquisitions made in 2018, specifically AdvancedMD and SICOM. The North America segment showed particularly strong growth of 14.2%, bolstered by these acquisitions.

Profitability improved significantly. Operating income increased by 27.7% to $199.5 million, leading to an expanded operating margin of 22.6%. Net income attributable to Global Payments also grew by 23.0% to $112.3 million, and diluted EPS rose to $0.71 from $0.57.

Global Payments continues to pursue an active acquisition strategy to expand its global operations, scale, and competitiveness. The company believes that further acquisitions and joint ventures are key to entering new markets and strengthening its position in existing ones. The successful integration of recent acquisitions like AdvancedMD and SICOM demonstrates the effectiveness of this strategy.

The company demonstrated improved expense management. While the cost of service increased due to amortization of acquired intangibles and business growth, selling, general, and administrative expenses decreased by 2.1% and represented a lower percentage of total revenue (42.8% vs. 48.6%). This indicates a focus on operational efficiency.