10-QPeriod: Q2 FY2022

GLOBAL PAYMENTS INC Quarterly Report for Q2 Ended Jun 30, 2022

Filed August 1, 2022For Securities:GPN

Summary

Global Payments Inc. reported a net loss of $673.0 million for the three months ended June 30, 2022, a significant decline from a net income of $263.6 million in the same period last year. This downturn was largely driven by a substantial goodwill impairment charge of $833.1 million related to the Business and Consumer Solutions reporting unit and a $127.2 million loss on the sale of its Russian Merchant Solutions business. Despite the net loss, consolidated revenues showed growth, increasing by 6.7% to $2.3 billion for the quarter, primarily attributed to increased transaction volumes from customer base growth and a continued economic recovery. The Merchant Solutions segment demonstrated robust revenue growth of 10.9%. However, the Business and Consumer Solutions segment saw a revenue decline of 17.5%, impacted by the non-recurrence of stimulus payments from the prior year. The company also announced a definitive agreement to sell its consumer business for $1 billion, expected to close by Q1 2023.

Financial Highlights

50 data points
Beta

Revenue

$2.28B

57.8% Gross Margin

Net Income

-$673.00M

-29.5% Net Margin

EPS (Diluted)

$-2.42

Total Assets

$44.18B

Cash & Equivalents

$1.93B

Free Cash Flow

$568.13M

Financial Statements
Beta
Revenue$2.28B
Cost of Revenue$962.30M
Gross Profit$1.32B
SG&A Expenses$863.18M
Operating Expenses$2.81B
Operating Income-$529.86M
Interest Expense$97.10M
Net Income-$673.00M
EPS (Basic)$-2.42
EPS (Diluted)$-2.42
Shares Outstanding (Basic)278.18M
Shares Outstanding (Diluted)278.18M

Key Highlights

  • 1Reported a net loss of $673.0 million for Q2 2022, compared to a net income of $263.6 million in Q2 2021.
  • 2Recorded a significant goodwill impairment charge of $833.1 million in the Business and Consumer Solutions segment.
  • 3Recognized a loss of $127.2 million from the sale of its Russian Merchant Solutions business.
  • 4Consolidated revenues increased by 6.7% year-over-year to $2.3 billion, driven by higher transaction volumes.
  • 5Merchant Solutions segment revenue grew by 10.9% to $1.6 billion.
  • 6Entered into a definitive agreement to sell its consumer business for $1 billion, expected to close by Q1 2023.
  • 7Announced the proposed acquisition of EVO Payments, Inc. for approximately $3.4 billion, signaling future growth strategy.

Frequently Asked Questions

The primary reason for the net loss of $673.0 million in the three months ended June 30, 2022, was a substantial goodwill impairment charge of $833.1 million and a loss of $127.2 million recognized from the sale of the Russian Merchant Solutions business. These non-recurring charges significantly impacted the profitability for the period.

The company is strategically divesting the consumer portion of its Business and Consumer Solutions segment, having entered into a definitive agreement to sell it for $1 billion. This move is intended to streamline operations and focus on core strengths.

Consolidated revenues increased by 6.7% driven by growth in transaction volumes, customer base expansion, and the ongoing economic recovery. The Merchant Solutions segment showed strong performance. While the Business and Consumer Solutions segment was impacted by the non-recurrence of prior year stimulus payments, the company's strategic initiatives, including the proposed acquisition of EVO Payments, suggest a continued focus on growth within its core payment technology services.

Two major subsequent events are the agreement to acquire EVO Payments, Inc. for approximately $3.4 billion, which is expected to expand its geographic presence and B2B solutions, and the issuance of $1.5 billion in convertible senior notes. These indicate a strategic focus on expansion and potential capital structure changes.