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Our earnings release and the slides that accompany this call can be found on the Investor Relations area of our website at www.globalpayments.com. Before we begin, I'd like to remind you that some of the comments made by management during today's conference call contain forward looking statements about, among other matters, expected operating and financial results, These statements are subject to risks, uncertainties and other factors including the impact of economic conditions on our future operations that could cause actual results to differ materially from expectations. Certain risk factors inherent in our business are set forth in file with the SEC, including our most recent 10 ks and subsequent filings. We caution you not to place undue reliance on these statements. Forward looking statements during this call speak only as of the date of this call, and we undertake no obligation to update them. We will also be referring to several non GAAP financial measures, which we believe are more reflective of our ongoing performance. A full reconciliation of the non GAAP financial measures discussed in this call, to the most comparable GAAP measure in accordance with SEC regulations, please see our press release furnished an exhibit to our Form eight ks filed this morning our supplemental materials available on the Investor Relations section of our website.
11m 45s
Joining me on the call is our CEO, Cameron Brady our President and COO, Bob Cortipasse and our CFO, Josh Whipple. Now I'll turn the call over to Cameron.
11m 58s
Thank you, Winnie, and thanks everyone for joining us to discuss our first quarter results and the exciting start to our year. We had a solid first quarter, which is a testament to the resilience of our business model, and our relentless focus on execution. What continues to be a fluid economic environment. Specifically, we delivered over 5% constant currency adjusted net revenue growth excluding dispositions 70 basis points of adjusted operating margin expansion, and 11% constant currency adjusted earnings per share growth compared to the same period in 2024. Notably, both our merchant and issuer businesses saw growth consistent with where we exited 2024, and our overall performance was exactly in line with our expectations. While delivering this performance, we are also aggressively executing against our overarching transformation agenda. Including advancing a significant number of key initiatives. Since launching the program last year, we have successfully simplified and streamlined our organizational structure and operating model, unified our merchant business globally, advanced our technology harmonization program, and increased our overall benefit target by 20% to $600,000,000 Importantly, as we progress our transformation over the next year, are positioning ourselves with a strong foundation to quickly and fully integrate Worldpay. Post closing.
13m 21s
Josh will cover more details on the quarter in a moment, but we plan to spend the majority of our time today discussing our recently announced transactions to divest our Issuer Solutions business, and acquire Worldpay. Since announcing the transactions, many of you have asked about the timing and how it aligns with our refocused strategy and transformation agenda we outlined last September. You have also asked about recent trends in the Worldpay business and how they have progressed their own efforts to improve growth and better position themselves competitively. Further, you asked about how bringing Global Payments and Worldpay together drives opportunities to accelerate growth over time. You also want to understand our plans to integrate this business when their previous integration was not successful. And lastly, you have asked for clarity as to how the transactions we announced align with our plans to prioritize capital returns to shareholders. We plan to touch on all these items today. To start, I want to discuss our conviction that transaction with Worldpay and divestiture of Issuer Solutions will accelerate our transformation, and build an even more durable and differentiated platform for long term success. Let's start with the strategic rationale for what we announced.
14m 33s
We know Worldpay well and have long recognized the complementary nature of our two merchant businesses. We also know firsthand that selling issuer processing solutions into large financial institutions is a very different go to market motion than bringing commerce solutions to merchants of all sizes globally. This is part of the reason we communicated at our investor conference our intent to evaluate options for the issuer business that serve to achieve our strategic objectives and accelerate value realization. To win this unique opportunity to execute these two transactions simultaneously presented itself earlier this year, we've moved quickly and thoughtfully to structure a deal that would yield better outcomes in our standalone transformation journey. And we have high confidence that these transactions will do just that and accelerate our long term strategy. One of the core tenants of our transformation program is to simplify simplify and streamline our business to ensure we have a strong platform for the next decade of growth. Underpinning this is our desire to become a more focused organization, recognizing that we can unlock substantially more value in our business through greater clarity of purpose. This transaction not only sharpens our focus, but also enhances our global scale and cements our position as a leading pure play commerce solutions provider for merchants of all sizes around the world.
15m 57s
It also allows us to concentrate on a simplified business and orient investment exclusively towards merchant solutions. Driving better growth outcomes and improving our ability to win share in the market. And through the combination with Worldpay, we are bringing together highly complementary capabilities and distribution networks. Global Payments brings strength in SMB solutions, leading point of sale technology, and vertical specific software that Worldpay does not have today. Worldpay contributes best in class e commerce and enterprise capabilities managed PayFac solutions, and a presence in attractive geographies where we do not operate currently. Simply put, this combination creates a complete commerce solutions platform with complementary capabilities and extensive distribution across the merchant spectrum. Together, we will accelerate growth and innovation and deliver enhanced client experiences for merchants of all types and sizes. The combined company will also dramatically advance its innovation pipeline pipeline for future success. With capital investment in excess of $1,000,000,000 annually, we will be better positioned than ever to deliver the next generation of capabilities. From point of sale and software and integrated and embedded payments to advanced commerce enablement and global omnichannel solutions. And importantly, since all of our investments will be focused on merchant solutions, we will be able to better amplify their impact across our organization, and drive better returns on invested capital.
17m 29s
We are already actively engaged with our customers, and their feedback has been overwhelmingly positive. Specifically, clients are excited about how complementary the businesses are, and how the combined company will bring expanded capabilities even better service and greater innovation to help power their businesses. This transaction also meaningfully enhances our financial profile. We expect approximately $12,500,000,000 in pro form a adjusted net revenue and $6,500,000,000 in adjusted EBITDA post transaction close. We see clear opportunities to achieve at least $600,000,000 in cost synergies. From aligning our merchant business operations and go to market strategies streamlining technology and infrastructure, and eliminating duplicative corporate and operational support structures. The path to achieving these savings is already identified and they represent low risk opportunities. Well within our reach given our team's significant integration experience. And to be clear, these synergies are fully incremental to the $600,000,000 in benefits we expect to deliver through our operational transformation. Further, we are highly confident in our ability to achieve revenue synergies of at least $200,000,000 by cross selling our software and commerce enablement solutions expanding omni channel capabilities, and deepening penetration in high growth verticals. All while leveraging our combined 6,500,000 merchants worldwide including more than 500,000 enterprise clients.
19m 3s
Together, we have clear line of sight to accelerating both our revenue and earnings growth framework, while also meaningfully expanding our long term commitment to return capital to shareholders. With that background, I'd like to spend a moment on how this transaction aligns with what we outlined at our investor conference. In September, we unveiled a strategy to transform Global Payments into the worldwide partner of choice for commerce solutions. Focused on moving aggressively to position the company for the next phase of its growth journey. As part of this, we unified our merchant business across three product pillars, point of sale and software, integrated and embedded and core payments. Our strategy is squarely focused on the end customer. We have built our business around knowing what merchants need to succeed across more than 100 vertical markets. We know the intricacies of their business and their goals. And we support them with exceptional service from the sales process to onboarding to ongoing support when they need us. The transactions we announced accelerate the transformation we began last year. While also creating a company with unmatched global scale, an industry where scale matters more than ever. Importantly, the acquisition of Worldpay directly supports each of our three merchant pillars.
20m 20s
Making them stronger, more scalable, more competitive and more valuable to our clients. Starting with POS and software, will be able to immediately sell our Genius point of sale and other software and commerce enablement solutions into Worldpay's existing SMB merchant base. We will also leverage our existing distribution channels to bring these capabilities to [indiscernible] and achieve better penetration and saturation. In Integrated and Embedded, Worldpay's pay rig platform enhances our ability to serve software partners, marketplaces, and platforms across more regions and operating models. In core payments, Worldpay brings world class e commerce capabilities that enhance our payment acceptance solutions and enables us to deliver a seamless omni channel experience to merchants of all sizes across our combined footprint. Additionally, Worldpay strengthens our international presence in distribution in existing geographies and expands our footprint to new attractive markets like Japan, France and The Nordics. We have made substantial progress on our transformation initiatives and the plans we are pursuing over the next year provide a strong foundation in which to integrate Worldpay. We have already consolidated our merchant, technology and operations These newly defined organizations are focused on driving sales, delivering new products to market, while ensuring differentiated service levels and availability.
21m 47s
Importantly, we will approach this integration with a clearly defined operating model. Scalable processes to support execution, an uncompromising strategy regarding how we plan to fully integrate the business and run the combined company. By the time we closed the Worldpay transaction, have completed the launch of our Genius retail and restaurant point of sale platforms globally. Fully revamped the sales organization through our Salesforce of the Future initiative. It will be a far more nimble and agile business with a customer led and product centric mindset focused on speed and quality of product development. Leveraging our new operating model, Global Payments and World pay will be better positioned competitively in the market with a durable business structure increased investment capacity significant runway for growth, an enhanced ability to deliver sustainable performance. As a combined company, we will have significant scale. Processing nearly $4,000,000,000,000 in annual volume across 100,000,000,000 transactions. Significant merchant coverage serving millions of merchants and thousands of platform and software partners comprehensive capability scanning physical card present environments to global e commerce and extensive global reach across 175 countries with a sales force of over 4,000 professionals. We will be capable of providing end to end service across the entire merchant journey.
23m 10s
From onboarding through transaction processing to settlement, reconciliation and business intelligence, and all of this is supported by our global distribution and service infrastructure. We will enhance our managed pay pack capabilities, which will broaden our leading integrated offerings allowing us to support a wider array of operating models for software, marketplace and platform partners. Together Global Payments and Worldpay singular merchant focus and significant scale will enable us to accelerate innovation to further differentiate and compete. Unlike new entrants who often build around narrow solutions, the combined company will offer the full spectrum of highly innovative products powered by best in class technology with scale processing economics while delivering enterprise grade reliability, security and compliance that stands apart. Now, I'll hand it over to Bob to discuss the Worldpay business details regarding our revenue synergy opportunities and more specifics relating to our approach to integration. Bob? Thanks, Cameron. Worldpay has made significant progress and has improved its growth profile under GTCR's ownership. It's also continued to invest meaningfully in its leading capabilities and is delivering strong growth across a highly diversified set of verticals and geographies spanning 175 countries. Worldpay manages its business across three channels today. E commerce and enterprise, platforms and SMB.
24m 38s
In e commerce and enterprise, Worldpay has enhanced its technology and product depth across alternative payment methods, FX solutions, payouts, marketplaces, authorization optimization, analytics and fraud and risk management. Better positioning the business in terms of breadth, and depth in the industry. They're also delivering differentiated capabilities to help enterprises manage payment orchestration in multi acquirer scenarios. Solving for a critical customer need or giving additional insight and opportunities to expand wallet share. Today, this business accounts for 50% of Worldpay's revenue, is delivering growth in the high single digits. Turning to their platforms business through Payrix, Worldpay brings a versatile integrated offering that meets the unique needs of software and platform partners with a modern and flexible service platform. With this offering, Worldpay is having great success attracting high growth partners looking for additional flexibility more control of the customer experience and faster onboarding and implementation relative to more traditional referral models. They are competing well including against newer entrants. This business generates over $300,000,000 in revenue today is growing north of 20%. In total, Worldpay has 1,400 omni channel software partners across a diversified set of verticals including health services, restaurants, automotive, personal and professional services, government, utilities and retail.
26m 19s
Finally, Worldpay's SMB portfolio has improved through a focus on rebuilding sales capacity, including a relaunch of its direct and FI channels under GTCR. The business has historically lacked a robust product suite which we complement nicely by bringing our Genius point of sale offering and leading commerce enablement solutions to the portfolio. To that end, Worldpay provides us with a large installed base of nearly 1,000,000 SMB customers distribution to enhance growth.
26m 53s
As we've discussed, our businesses are highly complementary creating meaningful opportunities to drive revenue synergies and accelerate the growth profile of the combined entity. We've identified annual run rate revenue synergies of at least $200,000,000 that we have high conviction in achieving within three years of closing. Let me walk through a few key areas of focus. First, see a significant opportunity with the e commerce and enterprise capabilities that Worldpay brings. We can extend these capabilities on an omni channel basis to the nearly 40 markets where Global Payments has a strong physical presence and Worldpay is primarily virtual. We bring robust local distribution functionality and service to complement Worldpay's leading digital offerings. And we can extend Worldpay's rich e commerce solutions and capabilities the more than 5,000,000 SMB merchant customers we serve in these markets. Today. The combined business will have leading capabilities to unlock new enterprise and digital native opportunities worldwide. Second, we can bring Global Payments commerce enablement solutions including our Genius point of sale technology to Worldpay's core SMB customer customer base. We will extend our reach with these solutions by leveraging Worldpay's distribution channel including it that buy partnerships with more than 6,000 branches.
28m 23s
Third, there's a significant opportunity in integrated and embedded payments. Pay risk coupled with our existing integrated offerings allows us to serve any software and platform partner across any operating model with best in class tailored solutions that meet the evolving needs of integrated and embedded commerce. We view Payrix as a highly complementary accelerator of our own integrated and embedded roadmap. We have a great deal of confidence in our revenue synergy framework. As mentioned, this is a business that we know well and have assessed multiple times over the years. Allowing us to have a refined thesis and plan for realizing value. We conducted extensive diligence and have a clear view on the opportunities to enhance revenue as a combined business. Further, our combined scale and stature also positions us to have visibility into and address opportunities with partners, networks and clients at a greater level than either business could on a standalone basis. Finally, we recognize the competitive and innovative nature of the industry. Our simplified and dedicated merchant model and combined scale will enable us to accelerate investment in our business to further differentiate and compete putting more than $1,000,000,000 annually in high priority areas supporting our growth.
29m 50s
Specifically, we'll focus our investments on expanding digital native and omnichannel solutions supporting enterprise multinational and marketplace customers continuing to enhance our Genius point of sale features functionality and distribution delivering a premier developer experience with modern embedded capabilities for any operating model. Extending our commerce enablement capabilities including embedded finance, loyalty, payroll and others and building on our best in class service offerings. While we have a proven crack record of integrating large acquisitions delivering on our timelines and exceeding our synergy goals, our transformation better prepares us to execute on a more fulsome integration approach in this transaction. We will not compromise on our unified operating model. Allowing us to focus on fully integrating our two businesses with a single company culture and go to market approach beginning day one. Will align around a common brand and commercialization approach to drive value realization emphasizing revenue growth opportunities while delivering on our expense synergy expectations. At Global Payments, we've already unified our worldwide technology teams and assets into a singular organization. And today, we're leveraging common technology platforms to enable commerce and better experiences for our clients and partners. This includes the orchestration layer we recently acquired which allows us to extend and distribute products more easily across platforms and geographies seamlessly.
31m 33s
Worldpay has been on its own technology modernization journey. The business is built around a single access API architecture which will be able to meet all of our combined merchants and partners needs with vertical specificity and global capabilities. In addition to standardized reporting, settlements and data feeds. We'll integrate our commerce enablement and broad product offerings with Worldpay's single in single out architecture. Providing for rapid and seamless delivery of innovative solutions to delight their existing customers and partners. At the same time, we'll also embed additional capabilities into our architecture coming from Worldpay's e commerce, risk and fraud, and payment facilitation platforms. In sum, we have a clear view to integration execution leadership resources identified and work streams ready to launch. We're fully prepared to hit the ground running immediately upon close to ensure strong execution. Now, I'll hand it over to Josh. Thanks, Bob. At our Investor Conference in September, we we outlined our medium term outlook. Starting with 2025, forecasted mid single digit adjusted net revenue growth excluding dispositions and 50 basis points of adjusted operating margin expansion. We are pleased that year to date, we are tracking in line with this expectation. We also said that in 2025, we would be focused on executing on our strategy and operational transformation agenda that would in turn position us to drive accelerated growth 2026 and 2027.
33m 12s
Specifically, over these two years, we indicated we had confidence in our ability to deliver sustainable mid to high single digit adjusted net revenue growth, and consistent adjusted operating margin expansion between 50 basis points and 100 basis points per year. I would highlight that our outlook for the merchant business on a standalone basis was and remains consistent with these targets. And the progress we have already made on our transformation initiatives reinforce our confidence in this trajectory today. Turning to Ropay, you just heard from Bob about the strides that have and continue to be made under the ownership of GTCR. We currently expect the Worldpay business to deliver top line growth and margin expansion relatively consistent with the guidance we have provided for Global Payments in 2025 as well as in 2026 and 2027 as it executes against its own initiatives to accelerate growth. This is also consistent with the recent trends they have experienced in their business. They are a solidly mid single digit grower today and on a trajectory to continue to improve that over the next several years. And by combining our two businesses, we expect to drive substantial synergy benefits. Bob just covered the revenue potential we have together including the meaningful cross selling opportunities enabled by highly complementary solutions global scale.
34m 38s
Which we expect will drive at least $200,000,000 of annual run rate revenue synergies over three years. And on the expense side, we have a clear line of sight to approximately $600,000,000 of annual run rate cost synergies that we expect to achieve within three years of closing. Roughly a third of the savings will be derived from consolidating our combined technology infrastructure into a singular focused organization and eliminating duplicative vendor and software spend. Another third of expense savings will come from aligning our business operations including consolidating support infrastructure, streamlining transaction processing environments, and optimizing our global facility footprint. The remaining third of cost synergies will be derived from eliminating duplicative corporate infrastructure which includes realizing economies of scale across corporate and administrative functions. Through these synergies, and the execution of our strategy, we expect to materially transform the long term financial profile of this business while also enhancing our medium term outlook. Specifically, we now have a clear line of sight to accelerate revenue growth in 2026 high single digit growth in 2027. With margin expansion of 100 to 200 basis points in both years which is double our original target of 50 to 100 basis points.
36m 7s
This transaction is also accretive day one, and supports an uplift of our adjusted EPS growth targets to mid teens over the medium term. Compared to our initial target of low teens growth. Importantly, we believe the strong earnings accretion framework is sustainable long term. Turning to capital allocation. The ability to invest in innovation will be significantly greater as we will maintain capital spending at 7% to 8% of adjusted net revenue. That translates to reinvesting more than $1,000,000,000 annually back into the business. And as Cameron mentioned, that is entirely focused on Merchant Solutions after the closing of the transaction. We also continue to expect to return roughly $7,000,000,000 capital to shareholders from 2025 to 2027. Largely consistent with what we outlined at our investor conference last September. Importantly, by 2028, our annual and run rate levered free cash flow and total capital return expectations will be nearly 50% higher than they would have been if we had not executed these transactions. This will provide us greater flexibility to invest in growth and return meaningfully more capital to shareholders. And at the same time, we will be disciplined with regard to leverage and are committed to reducing our net leverage to three times which we expect to achieve within eighteen to twenty four months of closing.
37m 37s
This leverage level supports our investment grade credit ratings long term while still providing ample capacity to invest for the future and drive shareholder value. As you can see, this transaction cements our growth profile. Accelerates profitability, and enhances our long term capital allocation commitments. Ultimately, this is why we have such conviction that the transaction will unlock value for our shareholders.
38m 6s
Now let me quickly provide the highlights of our financial performance for the first quarter. Overall, we continue to execute well and our results were consistent with our expectations despite heightened macroeconomic uncertainty. We delivered adjusted net revenue of $2,200,000,000 reflecting constant currency growth of over 5% excluding dispositions. Specifically, the disposition of AdvancedMD and our exit of certain non core markets in Asia Pacific had an approximately three point impact to overall growth. While unfavorable foreign currency exchange rates were over a point headwind for the quarter. Trends were fairly consistent throughout the quarter. And we saw limited change in consumer spending patterns during the period and into April. With that said, are closely monitoring the ongoing tariff negotiations their potential impact on the global economy. However, I would highlight that we are well diversified business both from geographic vertical market perspectives and across a wide range of discretionary and non discretionary categories. And are well positioned to navigate through the current environment. Adjusted operating margin for the quarter increased 70 basis points or 40 basis points excluding dispositions. The net result was adjusted earnings per share of $2.69 including share based compensation, an increase of 11% on a constant currency basis.
39m 36s
Excluding share based compensation, adjusted earnings per share was $2.82 Taking a closer look at performance by segment.
39m 45s
Merchant Solutions achieved adjusted net revenue of $1,690,000,000 for the first quarter. Reflecting growth of 6% on a constant currency basis. Excluding dispositions. The disposition of AdvancedMD and our exit of certain non core markets in Asia Pacific had approximately four point impact on reported growth in the quarter. Similar to the total company impact, currency was over a point headwind to Merchant Solutions growth. This performance was driven by our POS and software and integrated embedded businesses. Both of which achieved high single digit growth.
40m 23s
Core payments grew mid single digits during the quarter which includes absorbing our exit of certain lines of business and wholesale relationships. As a reminder, this results in lower GAAP revenues and lower residual adjustments to arrive at our adjusted net revenue. We delivered an adjusted operating margin of 47.8% in the Merchant segment. An increase of 80 basis points compared to the prior year. Issuer Solutions adjusted revenues were $529,000,000 an increase of 3% on a constant currency basis. This performance marks a slight improvement sequentially driven by consumer card volumes while commercial card volumes remain consistent as corporates continue to take a more cautious cautious approach to spending. Issuer Solutions delivered an adjusted operating margin of 46.3%. A decrease of 50 basis points compared to the prior year. Driven by the softer commercial volumes and ongoing investments in modernization.
41m 28s
We have a total of 15,000,000 traditional accounts on file this quarter, executing two large portfolio implementations for existing customers. We also executed four multiyear renewals during the period. From a cash flow standpoint, we produced solid adjusted free cash flow for the quarter of approximately $512,000,000 representing a roughly 77% conversion rate of adjusted net income to adjusted free cash flow. We expect our adjusted free cash flow conversion for the year to follow a similar trajectory as 2024 as we benefit from seasonality resulting in a higher conversion rate as the year progresses. As a reminder, this quarter, we changed the presentation of cash flows for settlement assets and obligations. And certain funds held for customers. Moving to changes in these items from operating to financing cash flows. We invested $128,000,000 in capital expenditures during the quarter.
42m 28s
And we continue to target capital spending of $780,000,000 for the year. Which is 8% of adjusted net revenue. Our net leverage position was under 3.2 times at the end of the first quarter. We executed share repurchases of approximately $450,000,000 in the quarter. Our balance sheet remains extremely healthy and we ended the period with approximately $3,800,000,000 of available liquidity. Our total indebtedness is 94% fixed with a weighted average cost of debt of 3.5%. Turning to the outlook for 2025. We are reaffirming our outlook for adjusted net revenue adjusted operating margin, adjusted earnings per share. Specifically, we currently expect constant currency adjusted net revenue growth of five to 6% over 2024, excluding dispositions. We continue to expect dispositions will impact reported adjusted net revenue by over 300 basis points. We now expect a headwind from foreign currency exchange rates to be just over 100 basis points for the year. Roughly 50 basis points lower the 175 basis point impact we guided to previously. Given the recent weakening of the U. S. Dollar. We expect the impact to be relatively consistent across our merchant and issuer businesses.
43m 54s
We're forecasting annual adjusted operating margin to expand approximately 50 basis points for 2025, excluding the effect of dispositions. At the segment level, continue to expect our merchant business to deliver adjusted net revenue growth of roughly 6% on a constant currency basis excluding dispositions for the full year. We still expect roughly 50 basis points of adjusted operating margin expansion for this business excluding dispositions in 2025. Moving to Issuer Solutions. We continue to anticipate adjusted net revenue growth in the roughly 4% range on constant currency basis for the full year compared to 2024. We expect adjusted operating margin for the Issuer business to expand by approximately 50 basis points in 2025. In terms of quarterly phasing, we still expect modestly higher growth in the second half relative to the first half of the year our transformation initiatives ramp. And as we lap the renewal cycle with many of our large issuer customers and see increased benefits from conversion activity over the course of twenty twenty five. We continue to anticipate adjusted free cash flow conversion will be greater than 90% for the full year. Regarding capital allocation, as we communicated when we announced the Worldpay and Issuer Solutions transaction, we are focused on being 3.5 times net levered at close.
45m 20s
But we remain opportunistic with regards to share repurchases over the balance of the year. And if we execute additional divestitures, the proceeds will continue to be used to enhance shareholder returns. And finally, we still expect to be approximately three times net levered at the end of twenty twenty five.
45m 42s
Putting it all together, we continue to expect adjusted earnings per share growth of 10% to 11% for the full year on a constant currency basis. We expect adjusted EPS growth to be consistent the quarterly phasing dynamics I highlighted. And with that, I'll turn the call back over to Cameron.
46m 3s
Thanks, Chad. I hope you now have a clear appreciation for why we are so incredibly excited about the Worldpay acquisition and how the announced transactions will sharpen our strategic focus accelerate our transformation and meaningfully enhance our financial profile and ability to deliver sustainable performance. Importantly, this aligns exactly with the approach we outlined for unlocking at our investor conference last September. At the end of the day, the divestiture of Issuer Solutions and acquisition of Worldpay represents a unique opportunity to catalyze our transformation in a more significant way. Supporting our efforts to streamline and simplify our business to accelerate longer term growth, and value creation. Worldpay could not be a better fit for our merchant business and our strategy. Is a highly complementary business that expands our global footprint, broadens our product base, enhances our go to market diversifies our business across an SMB and enterprise customer base, and overall makes us a stronger and more durable solutions provider built for the long run. And our transformation agenda provides the ideal foundation for the combined business, going forward. Over the next year, while we are working to close the transaction, we will continue to progress the key transformation initiatives that serve to make us a more nimble and agile organization with a product led customer centric mindset.
47m 22s
While also preparing to execute on the Worldpay integration. We have high conviction in and line of sight to the cost savings as well as the revenue synergies from the acquisition. Particularly from enhancement opportunities fueled by our complementary solutions and scale. We will approach this integration differently than we have in the past. An uncompromising plan for aligning our operating model fully unifying our businesses, and value realization. We are exiting the quarter on a strong footing, have confidence in our 2025 and medium term outlook. I want to thank our entire team for their hard work and dedication to our clients and business. We could not be more excited about the combination of Global Payments and Worldpay and look forward to bringing this transaction to close. This combination enhances our competitive strengths, opens new opportunities and accelerates our growth trajectory. While maximizing value creation and amplifying our capital return expectations.
48m 20s
Before we begin our question and answer session, I'd like to ask everyone to limit their questions to one with one follow-up to accommodate everyone in the queue. Thank you. Operator, we will now go to questions.
48m 33s
Thank you. Our first question comes from the line of Jason Kupferberg with Bank of America. Please proceed with your question.
49m
Good morning, guys. Thank you. So I wanted to ask ask one on the standalone business and then one on the pro form a business. On the standalone side, we've got the Genius product launch teed up here obviously. Just a couple of weeks away. Can you talk about the rollout plan in terms of let's call it pull versus push? We know that Genius is going to ultimately replace quite a few legacy platforms, but how are you going to lean into the rollout in terms of front book versus back book? And then how you're thinking about managing potential back book attrition risk in conjunction with Genius conversion? Jason, thanks. It's Cameron. I'll start and then ask Bob to maybe dig in with a few more specifics. So look, as you can imagine, we're particularly excited about the rollout of Genius coming out here in a couple of weeks and obviously over the balance of the year. We put a lot of time energy and investment into bringing this to life. And obviously, it's a core underpinning and where we want to drive the business longer term and supports a lot of the growth expectations that we have for the business.
49m 59s
I would say in the short term, our focus, predominantly on the front book. I think we're building a lot of excitement around the release of the product early sort of demonstrations with dealers, some specific clients, obviously there's a lot of excitement and I think around the capabilities that we're bringing to market through the platform. In the short term, it's largely going to be making sure that we're attacking the opportunity we see on the front book Over time naturally, we want to continue to work the back book as well. Naturally, as clients are ready to make a transition, we'll be there to support them and we're investing in pathways to make it easy to convert from existing legacy environments that we operate today to the new Genius platform certainly in the short to medium term, it's largely a front book focus and then over time, we're going to continue to work the back book Interestingly and not to weave too much into Worldpay as well, obviously we have an amazing front book opportunity leveraging Worldpay distribution as well. So once we get to close, one of our early plans will be to light up Genius to be able to distribute it quickly through their distribution platforms.
51m 3s
And then of course, we have a good back book opportunity there with their $1,000,000 existing SMB merchants as well. So that's kind of the near term focus how we think about front and back book I'll turn it over to Bob maybe to provide a little more specificity around our specific plans and approach.
51m 19s
Yeah, thanks, Cameron. Thanks, Jason. Great question. I think the only thing I would add is to go back to the way that you framed it originally around pull versus push. Versus front book and back book, although they're related, I think that we view the initial rollout as a poll based offering primarily. And largely that is going to come from front book opportunities, but we also have back book clients who are very excited about the opportunity to move to Genius and we're providing pathways for them to do that. The back book obviously is going to sort of happen at customers' own pace. As I've mentioned before, including on the last quarter's call, we don't have plans at this point for any sort of a nuclear conversion, experience with clients. We're not forcing people off of the platform that they're operating today. So we're we're there for them as they're ready to migrate on their own sort of timetable. The other part around attrition, I think, look, I don't want to be arrogant about this, but I see very little reason for customers to want to attrite relative specifically to the Genius rollout. This provides nothing but good news for them.
52m 29s
It's more capabilities. It's a more modern platform. There's new hardware that's been designed bespoke to meet some key customer needs, market needs and support the software well. So there's nothing but good things in it for them, and we're not forcing them, as I mentioned, off of their legacy solutions until they're ready to go.
52m 50s
Very helpful. And then my kind of pro form a Worldpay question, really just two pieces there. One, can you clarify if the improved revenue growth at Worldpay over the past year has been all organic? And then can you just touch on kind of your specific share buyback assumptions for both 2026 and 2027. I'm just looking at that mid teens EPS growth rate and wondering if that same growth rate applies to both years or is that more of a CAGR just as we think about the need to kind of delever at least year one post close? Thanks. Yes, Jason, very good questions. I'll maybe take the first and turn it over to Josh to provide a little more detail on the share repurchase expectations for 2026 and 2027 and how we think about that in the context of delevering as well. As it relates to Worldpay, it's purely organic. Obviously, over the course of the last couple of years, they've made significant investments in their e com and enterprise business. We're seeing very good fundamental growth trends in that business that obviously excite us. That's 50% of their business today and obviously highly complementary to what we do as a company and certainly one of the aspects of the business that we find most attractive.
53m 58s
So they continue to invest meaningfully and I think creating broader tech technology and product depth across our alternative payment methods, FX solutions, payout marketplaces, authorization optimization, the laundry list of things that they put capital behind that are help driving, I think better outcomes for them organically in that business is is pretty impressive. And certainly the new sales trajectory that we see in that part the business is also encouraging as we think about future growth potential for the business. We also talked about what they're seeing with the PayRicks asset from a managed PayFac perspective. That's obviously been an important driver for growth for the business overall. So as we said in our prepared remarks, they're solidly a mid single digit grower today on a nice trajectory going forward. And obviously, they support our overarching plans as it relates to growth expectations accelerating in 'twenty six and 'twenty seven. Obviously getting to that high single digit level in 'twenty seven as we talked about on the call, this morning. With that, I'll turn it over to Josh to maybe cover the second part of your question.
54m 57s
Yes, thanks Jason. So look at investor conference we talked about returning $7,500,000,000 of capital to shareholders over 25% to '27 And as we said when we announced the transaction, we still expect to go ahead and deliver over $7,000,000,000 in capital to shareholders And during that time period.
55m 17s
Specifically, as it relates to 'twenty six and 'twenty seven, we expect to go ahead and return well over 2,000,000,000 in share repo in 2026 and and over $3,000,000,000 in 'twenty seven. And and we expect to go ahead and be solidly in that mid single digit EPS growth range post closing of the transaction.
55m 41s
And Jason, maybe just to put a fine point on a couple of those comments. So as we think about leverage, obviously, we're targeting to get back to that three times leverage in eighteen to twenty four months as we talked about. We can do that while also sort of continuing with our capital return plans Interestingly, in 'twenty six and 'twenty seven, we actually increased our capital returns by roughly 10%. Versus our standalone plan. And if you look at '28, as Josh highlighted in his prepared remarks, we see a nearly 50% increase in our capacity to return capital by the time we get to that exit '28 sort of timeframe. Obviously very bullish and ambitious as it relates to our ability to continue to return meaningful amounts of capital to shareholders. And obviously, we think the transactions we're executing position us well to be able to accelerate and increase that over time.
56m 27s
Yes. And the other Sorry, it seems we're having some technical difficulties. Please stand by.
We're ready for our next ready for our next question, operator.
58m 6s
Thank you. Our next question comes from the line of Tien Tsin Huang JPMorgan. Please proceed with your question.
58m 17s
Hi, good morning everyone. Thanks for going through all of the merits of deal again. The one comment that stood out to me, think it was from Bob talking about the acquired orchestration layer. I'm curious how important that is as we're thinking about minimizing client disruption and helping dictate what platforms survive or minimize some of the platform decision making, I'm sure you'll be taking going. I'm just curious how important that is and how that changes the risk equation on the deal? Yes, Tien Tsin, it's Cameron. I'll start and since I'm not a technologist, I'll let Bob do most of the heavy lifting. But as I step back and think about it from a big picture perspective, we really focus on it through the lens of the client. What's important to the client and what's important to them is easy access. They want one single integration to be able to light up any product and capability and solution that we can bring to bear on the market. And they also want consolidated reporting, settlement, information coming out of the back end. What happens in the middle is largely irrelevant to them. That's us for us to manage.
59m 21s
With the orchestration capabilities that we've acquired and continue to build over time and interesting world pays a very similar path in terms of how they're setting up their architecture. We're providing clients with exactly what they're looking for, easy access into our environment, single integration and being able to access any product and solution that we can bring to bear on the market effectively and then taking the complexity out of the situation for them and arming them on the back end with reporting, settlement analytics, the capabilities that come out the backside that make their lives easier from an execution and operating perspective. So orchestration capabilities that we've acquired are critical I think, to accelerating our ability to integrate and bring new product and capability to market. But most importantly, delivering clients the experience that they're looking for from us without having to burden them with obviously everything that happens in between within our own technology environments. I'll let Bob maybe drill into a little bit more of the specifics around how we go about doing that.
1h 21s
Yes, I think Cameron covered it really well from the client perspective. The only other thing Tien Tsin that I'd highlight is this is an amplifier to really everything we're doing around the tech, the platforms, the product. It flattens the entire internal architecture at least virtually. So when you think about leveraging things like AI or AgenTik AI, where you need access to data to drive those sort of robotics, the AI and machine learning capabilities. All of those through the orchestration layer allow you to span the entire breadth of platforms that you've got, all of the data that's residing in different places in your architecture without forcing you into some big consolidation exercise to build a giant data lake or consolidate platforms, you get all of the same benefit of being on a single platform with a single database by having Orchestra capabilities, even at that middle middle tier that we're operating sort of silently to the customers. So it accelerates our ability to deliver a product or a capability across all platforms all regions, all customer segments very rapidly. As we think about integrating Worldpay with Global Payments, as Cameron mentioned, they've already been on a modernization journey of their own.
1h 1m 44s
To create a single entry and a single exit into their platforms, both in terms of integrating into their capabilities as well as the reporting and management infrastructure on back end. So when you bring those two together, this is a much simpler, much quicker sort of technology integration roadmap than really any of us have seen in years past.
1h 2m 5s
Okay. No, that's good to know. Thanks for going through that. I don't know if it's okay to ask a follow-up ask a quick one, if that's okay. Just Just on the outlook on Global Payments overall in terms of dispositions and some of the Asia subscale geographies were addressed. Is there still more to go there? Are you mostly done at this point given focus on the upcoming deal? Thank you.
1h 2m 30s
Yes, it's a great question Tien Tsin. At the Investor Conference of September, we highlighted that we're targeting somewhere in the neighborhood of 500,000,000 to 600,000,000 of sort of revenue dispositions over the next couple of years as we work to continue to streamline and simplify our business. Today, we've done about $300,000,000 So we have a little bit to go to get to that target that we had outlined previously. And that still remains kind of in our plans as we look to streamline the portfolio around the business that we want to operate as a go forward matter. So, think the fair expectation is there's likely a little bit more to come on that front. But obviously the work we've done to date I think has been and obviously trying to simplify the business and focus on areas where we are scale player with the right capability to drive better growth outcomes longer term.
1h 3m 14s
Thank you for the update everyone.
1h 3m 16s
Thanks, Thank you. Our next question comes from the line of Adam Frisch with Evercore ISI. Please proceed with your question.
1h 3m 26s
Hey, thanks guys. With the Genius platform rolling out in the next couple of weeks, I just wanted to get an update on a couple of things here. Can you provide an update on the stage that you're at with regard to the the rebrand on the technology side? How much of the original integration initiative is complete and what's left to do? Then Bob, if you could speak to where you are in the sales force reorg both within GPEN? And where you are with what you're doing to secure the Worldpay sales resources? And then I have a quick follow-up. Thanks.
1h 3m 57s
Yes, Adam, thanks for the question. I'll start and turn it over to Bob to cover some more details in particular the second part of your question. But as it relates to the sort of rebrand exercise, we're continuing to march forward to align Global Payments around a common brand internally and externally and certainly the Genius platform aligning all of our point of sale around the Genius platform brand is a core element of that. As we talked about earlier, we're launching that officially in a couple of weeks and then are working to align all of our existing product capabilities in the POS space around that Genius brand. That's going to be happening over the balance of the year. The goal is obviously to align as much of Global Payments around a common brand as we can. Leading up to the Worldpay closing at which time we'll have a common brand also for the combined business as a go forward matter. That's important to us as we think about immediately sort of bringing the two businesses together I'll let Bob maybe cover the progress that we've made on the sales force of the future initiative and where that stands and its evolution.
1h 5m
Yeah, Adam. So if you'll remember, as we talked about this a couple of times, the sales person of the future initiatives that we had stacked they start with aligning the sales teams. And that work is done. We've got single leadership by region of the sales force, that's going to market in a unified way. We've got segmentation around enterprise and SMB, where we still play in and omni to an extent. In the SMB channel, we've organized around in Americas and rest of world. And that covers our direct sales, our indirect sales, our FI partnerships, all of that. That work is complete, and that's been complete for at least a quarter or so. The second major component was aligning around compensation and incentive structures. To ensure that we're rewarding our salespeople well and we're driving the right behaviors. That work is also complete. And then the third leg of the stool was really around capabilities and force multipliers for our sales team, things like consolidated CRM, sales training, upskilling around the ability to sell software, not just traditional payments. Expanding our sales teams in certain areas, And all of those initiatives are well underway. And I think we're very encouraged by what we're seeing so far.
1h 6m 21s
Our salespeople are very excited about access to new capabilities to sell into the markets where they were already operating. Our sales teams are excited about the new incentive plan and structure that allows them to to get multipliers in their plan and earn more as they bundle sell and provide more holistic solutions to the customers that they're working with. So we feel really good about this. We mentioned there might be some bumps in the road, and we definitely have had challenges to work through. Over the past six to nine months as we've been on this journey. But we feel really good about progress. And as we exit Q1, March was really the best sales month of the quarter and we see a strong pipeline both in terms of the marketing and lead funnel as well as as the opportunities that are actively being worked by our team. As it relates to Worldpay, I think there's great news there as well. If you look at all three segments of the Worldpay business, whether it's the enterprise and e com, the platforms integrated business or the kind of core SMB business, every one of them sold more and are on an improved growth trajectory from 'twenty three into 'twenty four and then from 'twenty four into 'twenty five.
1h 7m 35s
So we see them operating a more successful and a more effective sales force than they have in the past. In terms of securing the teams, look, I've been in this business for a really long time and what salespeople care about are having strong solutions that they can show up and feel good about representing to their clients that meet their needs in the market. And earning potential that allows them to be rewarded for their efforts. And I think both of those are addressed as part of this transaction. More fulsome capabilities, a rich reward and compensation program and really the opportunity to grow with a business that's got a footprint around the globe with lots of different customer demographics and lots of products that span the spectrum from SMB to enterprise and vertical software.
1h 8m 23s
And Adam, the only thing I would add to that is, as we've talked about many times, Worldpay business and their distribution channels are very much complementary to what we bring to market today from a product as well as distribution perspective. So we think the distribution is additive across the two businesses. We're not worried about sort of retaining distribution capabilities because, again, we don't see really areas where we overlap to a large degree today.
1h 8m 50s
Right. Okay. Great color there. If I could just squeeze in one more because revenue growth is obviously so important to the current and the go forward. Can you provide some color on the components of your revenue growth and that of Worldpay to the extent that you have that insight into that? How much came from organic volume growth in new services and how much came from pricing increases? Thanks guys.
1h 9m 13s
Yes. Thanks, Adam. So I'll address that. Look, Adam, just given the characteristics of the pro form a business we have great conviction in the targets that we established for our medium term outlook. Specifically, we expect our top line growth to accelerate in 2026 and to be in that high single digit range in 2027. And as we talked about, as we think about our medium term outlook, we expect our adjusted operating margins to expand 100 to 200 basis points, which will translate into growth into mid teens. So I think it's also important to note that on the combined business, we'll generate more than $4,000,000,000 of adjusted free cash flow annually versus the $3,000,000,000 we were targeting on a standalone basis, which we talk about. And then importantly, I think in '28, pro form a for transactions will increase our free cash flow by approximately $5,000,000,000 which is 50% higher than what we expected on a stand alone basis and which will allow us to return more than $4,000,000,000 to shareholders in 'twenty eight, which also 50% higher, so while also maintaining that 3x leverage point. So look, the combined basis the combined businesses will have absolutely go ahead and accelerate the growth profile of the business, give us more scale and allow us to go ahead and return more capital to shareholders.
1h 10m 29s
And Adam, the only thing I would add to that is you just look at the underlying revenue growth expectations, it's really organic across both of the businesses. We're seeing strong sort of new sales production, which obviously is driving a good amount of growth in both businesses. We're seeing stable, I'd say underlying same store sales trends across both of the businesses. And obviously pricing remains and pricing optimization always remains a component of the overall calculus to driving revenue growth in the business. But I would say for both of the underlying businesses, it's relatively modest and generally in line with kind of past practices around how we think about pricing optimization overall. So think good healthy underlying trends overall and obviously gives confidence with the outlooks that we provided today both for Global Payments standalone as well as where we see the combined business growing post close. And the only other thing I'd say is what we said, Adam, is is our top line growth and margin expansion is relatively consistent. With the guidance that we provided for Global in 'twenty five and in 'twenty six and 'twenty seven. And are the trends that we've been seeing in the business.
1h 11m 36s
Thank you.
1h 11m 37s
Our next question comes from the line of Ramsey El Assal with Barclays. Please proceed with your question.
1h 11m 44s
This is Ryan on for Ramsey. Thanks for squeezing in for the question today. You touched on it briefly, but could you provide some additional color on how Global Payments can handle recessionary pressures, especially now as a pure play merchant business? How is this different from the past? Thank you.
1h 12m 1s
Yes, it's Cameron. I'll maybe cover that. So look, as I step back and think about the business today and then think about the pro form a business, which again, we expect that to close sometime in the first half of twenty twenty six. So certainly think about the short term, we're really thinking about in the context of the business we're running today, We think we're well situated to be able to manage through any sort of macroeconomic environment. Think we have a demonstrated track record of being able to do that. We have a business today on the merchant side that's highly diversified across geographic markets. Highly diversified across vertical markets as it relates to consumer discretionary and non discretionary verticals. As it relates to the core mix of our merchant business today, again, I think we're well prepared to be able to manage effectively and drive good financial outcomes through whatever sort of cyclical macro environment we may be in. Obviously, the issuer business is durable business as well, and it in the short term obviously continues to be a part of our company and provides a little bit of insulation. We think about the pro form a business post closing of the transaction, we think we're as equally well prepared to be able to manage any macro environment.
1h 13m 8s
Environment. Obviously, there are characteristics of the Worldpay business that I think are a little more defensive particularly as it relates to their exposure to big box retail grocery etcetera that are very durable despite what underlying macro environment you may find yourself in. And the sheer size, scale, scope and diversification of the business again across vertical markets, Again, things obviously positions, I think, a pro form a business. To be very I think, resilient to be able to manage through any sort of downturn in the economy that we may or may not see over time. So we feel good about the composition of the business, the increased scale and obviously financial strength flexibility that we'll have on a pro form a basis. I think, us a lot of confidence that the model we're building for the long term is best to be able to manage through any sort of economic environment and drive long term value creation for shareholders.
1h 14m 1s
That's great. Thanks and congrats on the quarter.
1h 14m 4s
Thank you.
1h 14m 7s
Thank you. Our next question comes from the line of Dave Koning with Baird. Please proceed with your question.
1h 14m 12s
Yes. Hey guys, nice job. And I guess my question SMB volume held up remarkably well. I think you put in there 6% this quarter. I think it was 6% also last quarter in a market where I think all your competitors and industry data showed decel. Maybe could you describe a little maybe did you take a little share what dynamics might be playing out in your business that might be a little different than the industry?
1h 14m 35s
Yes, Dave, thanks for the question. Look, I think overall, we saw a stable trends kind of Q4 to Q1. Obviously, you have a little bit of a leap year impact in Q1, but we were able to kind of grow through that notwithstanding a little bit of a headwind kind of year over year from that. So, look, the rounding, it's probably relatively consistent, I would say. Versus what others saw in the marketplace more broadly. But we're obviously pleased with kind of the underlying momentum that we have in the first quarter and how that sets up as we head into Q2 and beyond. We did see pockets internationally that showed a little more strength. Than we might have anticipated kind of heading into the quarter, which is good news for us and sets us up well We think as we head into Q2 and for the balance of the year, as I meant to before. But overall, look, we feel very very good about where the business is. We feel good about the progress we're making on transformation and how that driving better outcomes, particularly as a go to market matter, as Bob highlighted earlier. And I think the momentum we have coming out of the quarter, again, is positive.
1h 15m 34s
Certainly consistent with the expectations we had for the year. And gives us confidence around the things that we're doing and continuing to deliver results as we go forward.
1h 15m 44s
No, that's great. Thanks guys.
1h 15m 48s
Thanks Dave.
1h 15m 49s
Thank you. Our next question comes from the line of Timothy Chiodo with UBS. Please proceed with your question.
1h 15m 56s
Great. Thank you for taking the question. I want to talk a little bit about the Genius product investment from a dollars perspective. If you could just go a little bit about over the past year or few years, how much has gone into the Genius product just so we could compare to some of the investment that we see at others, whether it be Toast or Square? And a little bit about how that [indiscernible] change ahead as you have the increased capacity to invest behind the product?
1h 16m 25s
Jim, it's Cameron. I'll start and maybe ask Bob put out a little bit more color as well. Look, as I step back and think about it, in broader context, I think over the course of time, we have been investing heavily in multiple sort of POS platforms across the business. And we talked a little bit about this at our investor conference back in September. So has been no lack of investment in, I think our POS capabilities, the feature functionality we're embedding into those environments and the products that we're bringing to to our clients, I think where the challenge probably has been for us more specifically is just around the ability to amplify that investment. More broadly across our business and really focus that on singular platforms where we're building capabilities once we're amplifying them more broadly and we're able to bring them to market more effectively to drive better outcomes for us as a growth matter and to drive better outcomes for our clients over the long term. So as I think about investment in the business, we've been investing well in our POS We believe very strongly in the feature functionality and capabilities that we have.
1h 17m 28s
The focus of investment over the last six to nine months and we'll be going forward is harmonizing that investment into single platforms that allow us to bring all of the capability that we've been able to build over a longer period of time to market in easily accessible retail and restaurant platforms serve all the different markets around the globe where we want to be able to bring the genius platform to bear that's really a focus from an investment perspective. We think we have highly competitive feature functionality that competes with all of the best of breed sort of POS solutions in the market. Now it's harmonizing that investment, harmonizing those features and capabilities and driving again to single platform that support our ambitions from a POS perspective globally. Bob, I don't know if you would add anything to that.
1h 18m 14s
Only one thing and I think Cameron hinted at this, but the reality is we see this as an accelerator. Last six to nine months has been about harmonizing platforms and there's still a little bit of that work certainly to do in the next couple of quarters. But over the mid to long term, we see this as an accelerator of innovation without meaningfully having to change the raw number of dollars that we're investing into the platforms. If you have to cut it five ways versus cut it one way, you immediately get an acceleration in the pace of investment in innovation. I would just say, form a, as you think about combining with the world pay business with $1,000,000,000 to invest more than 1,000,000,000 to invest back in the business. This is one of the top growth areas for us. It's one of the top innovation areas. And it's going to remain one of the top investment areas for the business we bring the two businesses together.
1h 19m 7s
And I think if I could just add to that, Tim, I think Bob touches on a really good and it's one of the elements of the transaction that we're most excited about, which is look, this ability to blend innovation and scale. Obviously, the combination of Global Payments and Worldpay gives us significant more investment capacity in the business, but more importantly allows us to amplify that investment in to accelerate outcomes around innovation, feature functionality, product capability we can bring to market and marrying that with a level of scale that's really think, impressive and hard to wrap your head around just in terms of the sheer scale benefits that come from $4,000,000,000,000 of process annually over 100,000,000,000 transactions. So that combination, I think, is really powerful. And as we think about where the market is going over the long term, the ability to blend innovation and scale in this way, I think, is going to drive certainly better outcomes for our business long term.
1h 20m 4s
Great. Thank you both, Cameron and Bob. Appreciate the answers. Thanks Tim.
1h 20m 9s
Thanks Tim.
1h 20m 12s
Thank you. Ladies and gentlemen, our final question this morning comes from the line of Andrew Schmidt with Citi. Please proceed with your question.
1h 20m 19s
Hi, Cameron, Bob, Josh. Thanks for taking my questions this morning. I wanted to go back to maybe something you said a moment ago, Cameron. Obviously, you said two important elements the transaction are scale and then innovation and scale. Is the obvious point and then innovation obviously with the transformation plus the ability to invest more is pretty compelling. But if you could put a finer point in how you manage product across SMB and enterprise and how we get to that faster product innovation, a few more details there would be extremely helpful. Thank you so much.
1h 20m 53s
Yes, it's a really great question, Andrew. I'm glad you asked it. I'm going to paint maybe a bigger picture for you and I'll ask Bob to jump in with some more specific But if I step back and think about long term, in the context of doing this deal, what was our thought process? Where do we see the industry heading? And what was important to as we thought about putting the two businesses together? There's a few key themes that I certainly want to highlight and I think it really relates to the question you're asking. First and foremost is, look, I think the expectations for enterprise and SMB customers are going to converge over time. There are capabilities today that are largely only available to larger enterprise businesses that SMBs are going to want to avail themselves of and there's going to be more demand for those. So the ability to blend I think product and capability across enterprise and SMB is a really critical strategic driver for the business long term. Secondly, I think digital native commerce will continue to accelerate. And obviously having the best in class tools to be able to support digital native commerce globally is really critical to how we want to be able to position the business.
1h 21m 57s
Having the types of FX, authorization rate optimization capabilities, alternative payment mechanisms, all of the things that sort of large digital native clients are looking for that are feature rich solutions that Worldpay is able to bring to market I think will important for us as we move forward as digital commerce continues to grow and we want to be able scale those capabilities down into more of the SMB space as well. And the third key trend I would highlight is embedded commerce models will further evolve. And I think having a broader set of tools to be able to manage whatever software marketplace partners are looking for with operating models that are highly tailored to meet their specific needs, go to market strategies and product sets, I think is really critical. So as we step back and thought about where is the industry going longer term, and what are the key trends we want to position ourselves around, the Worldpay transaction enhances, I think, our ability to be able to attack in a positive way, of course, these trends that we see developing over time and better positions us business long term be able to drive better growth outcomes, better value creation for our shareholders, etcetera.
1h 23m 6s
So with the ability to blend our solutions to be able to bring product and capability across the full spectrum of merchants enterprise SMB is critical. The ability to better serve digital native as that continues to be a a market trend that we've think will continue to accelerate over time is critical. And the ability to be able to serve any type of software platform partner with any operating model with all the tools and capabilities they need to grow and scale their business is critical and we're certainly very pleased with how the pro form a business is going to be situated to attract those trends for the long term. And obviously, it was a core part of how we thought about the how we thought about the business. I think it's really relevant to your question regarding innovation investment product capability, etcetera, because it was important underlying thesis for putting the two business businesses together. Bob, do you want to talk a little bit more just about how we think about managing that? Certainly, a standalone business today, but more importantly as a combined company? Yes, Andrew, I think the way that we think about product today, are technology stacks, platforms, etcetera, that are common and provide common capabilities whether you're an SMB, whether you're an enterprise, whether you're in an integrated and embedded or a platform style business.
1h 24m 22s
And we have centralized product management and oversight over those. There are also things that are specific to a vertical, sometimes capabilities that are specific to a geography. And we want to be able to react quickly to the market, pivot quickly and innovate quickly. And so we have product capabilities that are close to those verticals and those geographies, whether they're SMB or enterprise or whether you slice it a different way what might be specific to an education could be different than what you need in a health services vertical? [indiscernible] product people and capabilities very close to the market. I want to, I guess, double click really quickly on a point that Cameron made about enterprise capabilities coming down market. I've been in this business in software and payments for thirty years and one consistent theme is that what the enterprise players get today, is what the mid market wants tomorrow and SMB wants next week. And if if you bear with me on a quick story, this is part of the DNA at Global Payments is bringing complicated enterprise functionality down to consumable and easy to use feature functionality for SMBs. If you rewind the clock fifteen, sixteen, seventeen years ago, 100 customers worldwide who were using it because it was hard to integrate, it was expensive to operate.
1h 25m 59s
And we built a service that democratized that for the small and mid market.
1h 26m 4s
That made it something that they could consume That's the same sort of approach that we're taking with enterprise digital native capabilities today. As the world becomes more and more omni channel as we talked about at Investor Day and since, it's important not just for digital native businesses, but for all businesses to have a digital online presence we think Worldpay's capabilities accelerate our ability and enhance our ability to deliver that, not only at the enterprise level, but also throughout the entire stack of merchant demographics.
1h 26m 37s
Super helpful. Very thoughtful response. And completely agree in terms of the convergence and democratization opportunity we've seen over time in payments that will continue to play out. If I could ask just one quick follow-up just to blocking and tackling macro question. It was really good to see the sort of reiteration of the sort of the cadence this year in terms of better performance in the back half. Can you just talk about just the classic kind of macro question terms of what's embedded? Is there sensitivity? I know you typically bake some some macro volatility into the outlook, but if you could put a finer point on that, that would be helpful for everyone. Thanks so much.
1h 27m 14s
Yes. Andrew, this is Josh. So look, I think to kind of what you've heard from others, we saw the consumer continues to remain resilient. And as it relates to the overall outlook, we are assuming that that spending trends remain very, very consistent to kind of what we have saw coming out of the quarter and we'll continue to see in April.
1h 27m 33s
Look, the the macro backdrop has obviously created a little bit more uncertainty, but But right now, we're assuming a stable macro through the balance of the year.
1h 27m 47s
Thanks, Andrew. Thanks, Andrew. And with that, we'll conclude our call for this morning. I do want to thank everybody for joining us particularly joining us early. So thank you for getting up early to be with us today. We apologize for running a bit long this morning, but as you can tell, we had a good deal that we wanted to share with you and to make sure that we got across in our call today. We look forward to continuing to update you on progress as we bring these transformational transactions to close. And importantly, we also look forward to a seamless integration of Worldpay and unlocking the full potential of this combination as we continue to drive the evolution of commerce worldwide. So thank you again for your interest in Global Payments and we look forward to following up with you over the next several days. Have a great day, everyone.
1h 28m 28s
Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
Key Insights
Global Payments reported strong Q1 results with over 5% constant currency adjusted net revenue growth (excluding dispositions), 70 basis points of adjusted operating margin expansion, and 11% constant currency adjusted EPS growth versus the prior year.
The company is executing a major transformation, including the divestiture of its Issuer Solutions business and the acquisition of Worldpay, aiming to create a focused, global merchant solutions provider with enhanced scale, product breadth, and distribution.
Post-transaction, Global Payments expects approximately $12.5B in pro forma adjusted net revenue and $6.5B in adjusted EBITDA, with at least $600M in cost synergies and $200M in revenue synergies identified within three years of closing.
The medium-term financial outlook includes reaffirmed 2025 guidance: 5-6% constant currency adjusted net revenue growth (excluding dispositions), ~50 basis points of adjusted operating margin expansion, and 10-11% adjusted EPS growth; for 2026-2027, the company targets sustainable mid-to-high single-digit revenue growth and 100-200 basis points of annual margin expansion.
Capital allocation priorities include maintaining 7-8% of adjusted net revenue as capital spending (over $1B annually), returning ~$7B to shareholders from 2025-2027, and reducing net leverage to 3x within 18-24 months post-close, with free cash flow and capital return capacity expected to be nearly 50% higher by 2028 compared to the standalone plan.
