10-QPeriod: Q3 FY2021

GLOBAL PAYMENTS INC Quarterly Report for Q3 Ended Sep 30, 2021

Filed November 2, 2021For Securities:GPN

Summary

GLOBAL PAYMENTS INC. (GPN) reported robust financial results for the third quarter and first nine months of 2021, demonstrating significant growth and recovery from the prior year's COVID-19 impacted period. Total revenues increased by 14.8% for the quarter and 15.2% for the nine months, driven by increased transaction volumes as economies reopened and digital payment adoption accelerated. This revenue growth translated into substantial improvements in profitability, with operating income rising by 37.8% for the quarter and 61.7% for the nine months, leading to improved operating margins. The company continued to execute its strategy through a significant acquisition of Zego, a real estate technology company, for approximately $933 million, expanding its footprint into a new vertical. Furthermore, GPN actively managed its capital structure, issuing $1.1 billion in senior unsecured notes and repurchasing shares, underscoring a commitment to both growth initiatives and shareholder returns. The company's strong performance across its segments, particularly Merchant Solutions, highlights its resilience and ability to capitalize on market trends.

Financial Highlights

51 data points
Beta

Revenue

$2.20B

57.1% Gross Margin

Net Income

$296.74M

13.5% Net Margin

EPS (Diluted)

$1.01

Total Assets

$45.75B

Cash & Equivalents

$2.35B

Free Cash Flow

$917.97M

Financial Statements
Beta
Revenue$2.20B
Cost of Revenue$944.17M
Gross Profit$1.26B
SG&A Expenses$858.08M
Operating Expenses$1.80B
Operating Income$400.08M
Interest Expense$82.30M
Net Income$296.74M
EPS (Basic)$1.02
EPS (Diluted)$1.01
Shares Outstanding (Basic)291.50M
Shares Outstanding (Diluted)292.51M

Key Highlights

  • 1Revenues for the third quarter of 2021 increased by 14.8% to $2.20 billion, and for the first nine months by 15.2% to $6.33 billion, driven by economic recovery and digital payment growth.
  • 2Operating income saw significant growth, up 37.8% to $400.1 million for the quarter and 61.7% to $1.04 billion for the nine months, with operating margins improving to 18.2% and 16.4%, respectively.
  • 3Acquisition of Zego, a real estate technology company, for $933 million was completed on June 10, 2021, aligning with the company's software-driven strategy and market expansion.
  • 4The company issued $1.1 billion in 1.200% senior unsecured notes due March 2026 to refinance existing debt and for general corporate purposes.
  • 5Merchant Solutions segment revenues grew by 20.3% year-over-year for the quarter and 21.1% for the nine months, showcasing strong performance in its core business.
  • 6Net income attributable to Global Payments increased to $296.7 million for the quarter and $757.0 million for the nine months, up from $221.0 million and $401.9 million in the prior year.
  • 7Diluted EPS grew to $1.01 for the quarter and $2.56 for the nine months, an increase from $0.74 and $1.34 in the prior year, reflecting improved profitability and a reduced share count.

Frequently Asked Questions

The increase in revenues was primarily driven by the continued economic recovery as COVID-19 restrictions eased, leading to higher transaction volumes. Additionally, the acceleration in the use of digital payment solutions contributed significantly. This top-line growth, combined with favorable effects from Merger-related cost synergies and improved operating leverage, led to a substantial increase in operating income and improved operating margins.

The acquisition of Zego, a real estate technology company, for approximately $933 million on June 10, 2021, is strategically important as it aligns with Global Payments' technology-enabled, software-driven strategy. It expands the company's business into a new vertical market (real estate technology) and is expected to contribute to future growth and synergies.

Global Payments actively manages its debt and capital structure. In February 2021, the company issued $1.1 billion of 1.200% senior unsecured notes due March 2026, using the proceeds to redeem higher-interest notes and repay revolving credit facility debt. The company also has ongoing share repurchase programs, demonstrating a balanced approach to capital allocation for growth and shareholder returns while maintaining compliance with financial covenants.

While the company acknowledges the continued impact of COVID-19, it notes signs of economic recovery and increased transaction volumes. Management is actively monitoring the situation, but the ultimate impact remains uncertain. The company has taken steps to preserve capital and maintain financial flexibility, and believes its current liquidity and borrowing capacity are sufficient for its operational and strategic needs.