10-QPeriod: Q2 FY2021

GLOBAL PAYMENTS INC Quarterly Report for Q2 Ended Jun 30, 2021

Filed August 2, 2021For Securities:GPN

Summary

Global Payments Inc. (GPN) reported a strong second quarter of 2021, demonstrating significant recovery and growth compared to the prior year, which was impacted by the COVID-19 pandemic. Total revenues surged by 27.8% year-over-year to $2.14 billion for the quarter and by 15.4% to $4.13 billion for the first six months. This growth was largely driven by an increase in transaction volumes as COVID-19 restrictions eased and economic activity resumed. Profitability also saw substantial improvement, with operating income reaching $362.6 million for the quarter, a 237% increase from the previous year, and $637.8 million for the six-month period, up 81.4%. This enhanced profitability is attributed to higher revenues, effective cost synergies from the TSYS merger, and improved operating margins across all segments. The company also successfully completed the acquisition of Zego for approximately $933 million, further aligning with its strategy to expand into new vertical markets with technology-enabled solutions.

Financial Highlights

51 data points
Beta

Revenue

$2.14B

56.2% Gross Margin

Net Income

$263.59M

12.3% Net Margin

EPS (Diluted)

$0.89

Total Assets

$45.15B

Cash & Equivalents

$1.80B

Free Cash Flow

$510.24M

Financial Statements
Beta
Revenue$2.14B
Cost of Revenue$936.31M
Gross Profit$1.20B
SG&A Expenses$838.57M
Operating Expenses$1.77B
Operating Income$362.56M
Interest Expense$79.00M
Net Income$263.59M
EPS (Basic)$0.89
EPS (Diluted)$0.89
Shares Outstanding (Basic)294.91M
Shares Outstanding (Diluted)296.14M

Key Highlights

  • 1Consolidated revenues increased by 27.8% to $2.14 billion for Q2 2021 and 15.4% to $4.13 billion for the first six months of 2021, indicating a strong post-COVID recovery.
  • 2Operating income more than tripled year-over-year to $362.6 million for Q2 2021 and increased by 81.4% to $637.8 million for the first six months, driven by revenue growth and merger synergies.
  • 3The company acquired Zego for approximately $933 million, expanding its presence into the real estate technology sector and furthering its software-driven strategy.
  • 4Net income attributable to Global Payments significantly improved, reaching $263.6 million for Q2 2021 and $460.3 million for the six-month period, a substantial increase from $37.3 million and $180.9 million, respectively, in the prior year.
  • 5Diluted Earnings Per Share (EPS) rose to $0.89 in Q2 2021 from $0.12 in the prior year, reflecting improved profitability and a decrease in the weighted-average number of shares outstanding.
  • 6The company maintained compliance with its debt covenants, demonstrating sound financial management amidst strategic growth initiatives.
  • 7Global Payments Inc. announced an increase to its existing share repurchase program authorization to $1.5 billion, signaling confidence in its financial position and commitment to returning value to shareholders.

Frequently Asked Questions

The primary driver behind the substantial increase in revenues and operating income for Q2 2021 is the recovery in transaction volumes as COVID-19 related restrictions eased globally. This led to increased economic activity, benefiting all of Global Payments' segments. Additionally, realized cost synergies from the TSYS merger contributed positively to operating income and margins.

The acquisition of Zego, a real estate technology company, aligns with Global Payments' strategy to focus on technology-enabled, software-driven solutions. This acquisition allows the company to expand its business into a new vertical market (property management) and leverage its expertise to offer comprehensive resident experience management and digital commerce solutions.

Global Payments expects a continued recovery throughout 2021, although the pace of global recovery may be affected by further developments related to COVID-19. The company has taken steps to preserve capital and maintain financial flexibility. They anticipate capital expenditures to return to pre-COVID-19 levels and continue making significant investments in the business.

Global Payments has sufficient liquidity from operating cash flows and borrowing capacity under its credit facilities to meet its operational and strategic needs. The company recently issued new senior unsecured notes and used the proceeds to refinance existing debt and for general corporate purposes. They remain compliant with all debt covenants and have a substantial share repurchase program in place, indicating a balanced approach to capital management and shareholder returns.