The paragraph introduces Global Payments' Third Quarter 2024 Earnings Conference Call, with all participants initially in listen-only mode. The host, Winnie Smith, Senior Vice President of Investor Relations, directs participants to their website for the earnings release and slides. She notes that management will make forward-looking statements subject to risks and uncertainties, cautioning against undue reliance on these statements. The company outlines the use of non-GAAP financial measures and provides resources for reconciliation with GAAP measures on their website and through a recent Form 8-K filing.

The paragraph discusses a call where Cameron Bready, the CEO, provides an update on the company's progress and future plans. They recently held their first investor conference since 2021 in New York, highlighting their leadership in software and payments. The company aims to streamline its strategy, unify teams, and enhance its capabilities to drive growth and deliver value. They are committed to a shareholder-first capital allocation strategy and are actively working on a transformation agenda. This includes the sale of their AdvancedMD business to Francisco Partners, which aligns with their goal to simplify operations and boost capital returns for shareholders.

In the third quarter, the company achieved 6% growth in adjusted net revenue, a 40 basis point increase in adjusted operating margin, and a 12% rise in adjusted earnings per share compared to the same period in 2023, thanks to effective strategy execution amidst a challenging macro environment. The merchant solutions segment saw a 7% growth in adjusted net revenue, driven by POS and software, and integrated solutions. New POS account growth was strong, especially in North America, with a 23% increase in sales through the direct channel. The company secured a new kiosk and menu board agreement with Whataburger and experienced strong food service management momentum, with bookings up 25%. They launched POS offerings in Germany and plan further expansion to international markets. The education business also performed well, with new and expanded partnerships with Brown University, the University of British Columbia, and Swansea University.

The paragraph highlights significant achievements and strategic initiatives of a company in expanding its market presence and growth. The company has secured its eighth university win in the U.K. and Ireland and signed a major partnership in the U.S., emphasizing its success in the market with its POS and software solutions. Key transformation initiatives include consolidating POS assets under the Genius brand for global extension, focusing investments on impactful assets and verticals for growth, and integrating commerce enablement solutions into POS environments. The company is also experiencing strong growth with new partners, showcasing its capacity to provide desired technology and solutions.

In the recent quarter, the company achieved notable successes in North America, including partnerships with ClearDent in the dental sector and Art Center Canvas in education. Internationally, over 40 ISV partnerships were signed across regions like the UK, Asia Pacific, Australia, and LatAm. The company's strategy focuses on flexible operating models that include peer referrals and payments facilitation, aiming to provide dynamic solutions. They are extending their US commercialization strategy internationally to grow their ISV partnerships and are simplifying onboarding to enhance partner and customer experiences. The company is leveraging embedded commerce capabilities to offer more features and services, creating additional revenue opportunities. Additionally, significant growth in new partner signings in core payments is improving their distribution and revenue prospects.

The paragraph outlines the company's recent international expansion and growth efforts. In the U.K., they have improved direct distribution and demand generation, gaining new merchants. In Germany, a joint venture with Commerce Bank has added over 1,000 merchants. Across Europe, significant partnerships have been secured, including with Sky TV. In Latin America, particularly Mexico, the company is experiencing strong growth with key partnerships and double-digit revenue increases. The company is focusing on expanding wallet share and client engagement through various commerce solutions, targeting markets where they can quickly achieve leadership. They are leveraging global financial institution partnerships to support international growth and are diversifying distribution to align with long-term trends. Their aim is to deepen client relationships, provide premium services, and enhance lifetime customer value, with core payments serving as a channel for advancing their POS and integrated businesses.

The paragraph discusses the company's strategic transformation to better utilize its distribution channels, including sales teams and partnerships. As part of this strategic realignment, they decided to divest the AdvancedMD business due to its misalignment with their focus, citing healthcare market's specific investment needs and regulatory complexities. Despite AdvancedMD's success, it doesn't fit the new strategic direction, particularly after merging with Thesis, which enhanced their healthcare exposure and risked channel conflict. They have agreed to a strategic partnership with AdvancedMD for integrated services, expressing gratitude to its team. Lastly, they shift focus to their satisfaction with the execution of their Issuer Solutions.

In this paragraph, the company outlines recent accomplishments, including the successful implementation of five projects, cloud conversion for a global financial institution, and cross-selling over 200 agreements. They have a strong implementation pipeline with over 65 million accounts and renewed two major client contracts, adding stability. Despite these achievements, they faced challenges this quarter due to lower-than-expected transaction volumes, cautious spending by FI partners, and weaker trends in their pay card business. Nonetheless, they believe they are well-positioned to manage these headwinds and continue their transformation journey focused on cloud modernization to strengthen their market leadership.

The paragraph outlines the company's focus on delivering cloud-native products and services across various market segments to enhance speed, agility, and compliance. They aim to differentiate through tailored commerce solutions with API-enabled options to support diverse clients, including community banks and fintechs. The company's cloud solutions allow for efficient geographic expansion, and they plan to complete client applications this year with a commercial launch expected in 2025. The company will exclusively sell cloud solutions next year to promote broader adoption. It also expresses condolences for the impact of Hurricanes Helene and Milton on the Southeast region, where they operate, and mentions their support for relief efforts. Josh Whipple reports a 6% increase in adjusted net revenue to $2.36 billion for the third quarter, with an improved adjusted operating margin of 46.1%.

The paragraph reports on financial performance and segment growth, highlighting a 12% increase in adjusted earnings per share and a 7% growth in Merchant Solutions' adjusted net revenue in the third quarter. Key growth areas include low-double-digit growth in POS and software, 30% growth in new software business bookings, and double-digit growth in education. The integrated embedded payments business saw high-single-digit growth, with an increase of 60% in new software partners and ISV partner signings. Core payments grew mid-single-digits, driven by strong U.S. performance, offset by weaker trends in Europe and Asia Pacific.

In the recent quarter, the company added 250 new core payments partners, a 60% increase from the previous year, to expand its distribution channels. SMB merchant volumes grew 5%, slightly down from the previous quarter due to lower same-store sales and September's weather disruptions. The merchant segment achieved a 50% adjusted operating margin, boosted by the EVO Payments acquisition. Issuer Solutions generated $529 million in adjusted net revenue, with a 2% or 3% growth excluding pay card business, and processed 10 billion transactions, a 3% increase from the prior year, although growth is slowing. Consumer and commercial card volumes have decelerated, and certain banks are delaying investments amidst broader softness, notably affecting regional and smaller partners. Despite these challenges, the company remains strong, adding 30 million traditional accounts this quarter, driven by five conversions.

Year-to-date, the company completed 13 implementations and added 55 million traditional accounts, boosting confidence for the fourth quarter and medium-term outlook. While the mid-market segment for AP Automation Solutions shows healthy bookings, there is a cautious trend among AP customers reducing suppliers and spend. The pay card business saw a growth decline due to weaker employment trends. Issuer Solutions' adjusted operating margin dropped by 210 basis points to 45.4% as previous margin expansions have lapsed, and macro pressures prevail. The company generated strong adjusted free cash flow of $722 million but noted an adjustment for $847 million due to settlement timing differences.

The company invested $166 million in capital expenditures during the quarter and expects to spend around $670 million, or 7% of revenue, in 2024. Net leverage decreased to 3.3 times, aiming for low-3s by year-end. With $4.4 billion in liquidity, the company's total fixed indebtedness carries a 3.3% cost. A deal to sell AdvancedMD for $1.125 billion is expected to close by year-end, with up to $700 million to be returned to shareholders. An accelerated share repurchase plan of $600 million is underway, with additional open market purchases planned. The company is also divesting non-core assets and exiting certain international markets. The board approved increasing the share repurchase capacity to $2.5 billion, targeting $7.5 billion returns to shareholders over three years, with the current $600 million ASR being additional.

The company remains optimistic about buying back shares due to confidence in its strategy and long-term growth. The year-to-date performance underscores the strength of their model as they focus on strategic priorities. They project adjusted net revenue for the year to be between $9.17 billion and $9.30 billion, a 6% to 7% growth over 2023, though likely at the lower end due to macroeconomic challenges affecting the Issuer business. They expect the annual adjusted operating margin to grow by up to 50 basis points in 2024. The merchant business is expected to achieve a net revenue growth of over 9% and a 40 basis point operating margin expansion. The Issuer Solutions segment anticipates a 4% revenue growth, slightly lower than before, with a 30 basis point margin increase. Net interest expense is projected to be around $500 million, with an adjusted tax rate of 19%. Overall, adjusted earnings per share are expected to grow by 11% to 12%, ranging from $11.54 to $11.70, but likely toward the lower end due to macroeconomic factors.

Cameron Bready discusses the significant achievements of the company over the past six months, highlighting a refined strategy focused on competitive markets, a streamlined organizational structure, and a unified global operating model. He emphasizes the transformation aimed at enhancing growth, client experiences, and market solutions, with an agenda set for completion in 2025 to achieve benefits by 2026. Cameron expresses confidence in meeting financial targets and creating value for stakeholders. Winnie Smith then opens the floor for a Q&A session, asking participants to limit their questions to one primary and one follow-up for efficiency. The first question is from Will Nance of Goldman Sachs.

The paragraph discusses the company's confidence in addressing restructuring initiatives for 2025, as well as their medium-term outlook through 2027. Cameron Bready expresses confidence in achieving the projected mid-single-digit revenue growth for 2025, providing a sufficient cushion to execute key transformation initiatives. This positioning is intended to drive long-term growth while returning substantial capital to shareholders and achieving double-digit earnings per share growth. Bready highlights the balanced approach taken for 2025 and invites Josh to further comment on restructuring efforts.

The paragraph discusses a company's strategic plan to balance shareholder returns and business transformation, aiming for compounded growth in earnings per share. They express confidence in their medium-term outlook for 2025 and anticipate revenue acceleration by 2026. Josh Whipple mentions restructuring efforts expected to yield over $500 million in operating income benefits by early 2027, with associated charges impacting the next six to seven quarters. Will Nance seeks clarification on the sale of AdvancedMD, a significant component of the software portfolio, asking about its revenue contribution and margin profile. Josh Whipple acknowledges the query without providing extensive details in this segment.

The paragraph discusses AMD's financial outlook, forecasting revenue of $250 million to $260 million for 2024, with most revenue coming from payments outside of AdvancedMDs. The company has secured a high-teens cash EBITDA multiple for this asset, considered a premium value, and their cash EBITDA is roughly $70 million. Will Nance and Cameron Bready acknowledge these details. Bryan Bergin from TD Cowen inquires about the sales realignment and the point of sale brand consolidation, asking about early feedback, execution, and any potential client churn. Cameron Bready responds that there is positive feedback and excitement about aligning the POS capabilities under the Genius brand, which unifies their go-to-market approach globally.

The paragraph discusses the company's current efforts and future plans regarding point of sale (POS) systems. They have numerous POS brands and aim to consolidate them into a single platform under the "Genius" brand, a process expected to be more visible by 2025. While this consolidation is not reflected in the Q3 performance, the POS business had a strong bookings quarter regardless. The company sees significant opportunities in both the restaurant and retail markets, with particular excitement about less competitive niches in retail. Overall, there is enthusiasm and optimism about scaling the business through these efforts. Bryan Bergin then shifts the discussion to considerations involving issuer-related factors that might be out of the company’s control.

In the paragraph, Cameron Bready discusses the growth drivers for Issuer business, expressing satisfaction with the team's execution and a strong pipeline of conversion opportunities, with over 65 million accounts. They have converted many accounts in Q3, positively impacting Q4 and positioning the company well for 2025. While they have limited control over the macro environment and commercial spend, they are exposed to the commercial market. They have renegotiated contracts with 15 of their top 20 customers, providing revenue visibility for the next few years. With good visibility into 2025 and 2026 performance expectations, Bready anticipates the business will align with mid-term guidance and expects acceleration into 2027 and beyond as they advance in their modernization journey. The paragraph ends with Bryan Bergin thanking Cameron, then the operator moves on to a question from Bryan Keane of Deutsche Bank about AdvancedMD's revenue growth.

The paragraph discusses a company's strategy to divest $500 million to $600 million of revenue from assets and businesses that don't align with its refreshed strategy. AdvancedMD was the first step in this process. The company plans to partner with Francisco Partners to support growth in AdvancedMD through payments and commerce solutions. While the company doesn't disclose further details on future divestments, it sees them as potentially value-enhancing with proceeds to be returned to shareholders. Additionally, core payments continue to perform steadily despite economic challenges.

The paragraph discusses expected changes in core revenue growth from mid- to low-single-digits for the upcoming year, primarily due to macroeconomic factors and adjustments within the company. Cameron Bready highlights the impact of the broader economic environment and the company's decision to stop certain activities and exit some lines of business. Additionally, there will be a realignment of distribution activities, such as changes to the compensation program for the FI partner channel, which might temporarily slow new production but aims to better align incentives with business outcomes.

The paragraph discusses the company's expectations for revenue and growth, particularly for 2025. The company anticipates a mid-single-digit organic revenue growth rate, around 5%, as they exit $500 million to $600 million of revenue through divestitures, such as the sale of AdvancedMD. This organic growth figure doesn't include impacts from these divestitures. Additionally, they aim for double-digit earnings growth, which will benefit from the proceeds of any asset sales. The focus is on organic growth numbers for the medium-term guidance.

The paragraph discusses the confidence in maintaining a steady fourth quarter exit rate, similar to the third quarter, despite potential disruptions from a salesforce pivot, rebranding, and macroeconomic challenges. Dan Perlin questions the feasibility of this steady rate, considering these factors. In response, Josh Whipple explains that while additional disruptions in Q4 are not expected, the company has seen improvement in October due to less weather-related disruption and favorable trends compared to September. This improvement is partly due to the absence of significant storms and reduced foreign exchange headwinds, allowing for a consistent performance with Q3, possibly even slightly better.

The paragraph discusses expectations for business performance heading into the fourth quarter and 2025. There is optimism about slightly improved revenue growth compared to the third quarter, with organic growth expected to be around 6%, up from 5%. Looking towards 2025, despite potential negatives such as macroeconomic factors and business transformation disruptions, there is confidence in achieving mid-single-digit growth. Cameron Bready highlights ongoing work on transformation initiatives as part of their strategy moving forward.

The paragraph discusses the company's ongoing transformation initiatives, emphasizing that many of these efforts are expected to positively impact business performance by 2025, particularly in the latter half. The company is implementing around 600 initiatives with varying timeframes for execution. They anticipate delivering double-digit earnings per share growth and returning $2 billion to shareholders in 2025, while also laying the groundwork for significant growth in 2026 and 2027. The strategies allow flexibility in achieving these goals, despite potential disruptions during the transformation process.

The paragraph discusses the company's plans for capital return and leverage management. It mentions an accelerated share repurchase of $600 million for the current year, with additional share purchases in the open market, aiming to reduce leverage to low-3 times by year-end. For the next year, the company plans to repurchase approximately $2 billion worth of shares while maintaining leverage around 3 times. They aim to return $7.5 billion to shareholders over the medium term, with contributions from AdvancedMD. By the end of 2024, the company expects to meet its targeted leverage ratio, having reduced leverage from Q2 to Q3 to 3.3 times.

In the paragraph, the discussion centers around the company's financial strategy, highlighting a commitment to return up to 33% of its market cap to shareholders over the next few years through capital returns. The conversation shifts to current commercial spending, where there's broad caution among businesses due to the macroeconomic environment. This caution is reflecting weaker travel and entertainment (T&E) volumes and reduced transaction flows in their B2B business, indicating a general softness in commercial activity.

The paragraph discusses the current state and future opportunities within a company's commercial market segment in the U.S. They note a general slowdown in business spending but haven't lost any customers, indicating the market's overall flow volume is affecting results. The conversation shifts to a commercial agreement with AdvancedMD, where the company remains the exclusive payment provider. There are opportunities to increase payment penetration, as they are not fully penetrated yet. They've made progress by integrating an embedded payment offering and plan to continue cross-selling and pursuing growth, especially as AdvancedMD adds new customers.

The paragraph discusses the impact of various factors on merchant growth for a company during a specific quarter. Trevor Williams asks about the decline in growth from the second to the third quarter, and Cameron Bready responds by acknowledging a roughly one-point decrease. He attributes this to weather impacts and some macroeconomic softness, which was evident even before the weather issues in September. Bready notes that other companies have reported similar trends. He states that organic growth was about 6% in the third quarter, down from a little over 7% in the second quarter. For the fourth quarter, they anticipate slightly better results, expecting fewer weather-related impacts and reduced foreign exchange headwinds.

The paragraph is a dialogue between Trevor Williams and Cameron Bready, discussing the impact of the Capital One and Discover merger on their business relationship. Cameron expresses a positive outlook on the merger, noting a strong existing partnership with Capital One and the integration of their ecosystem but emphasizes it's too early to predict the impact due to ongoing regulatory processes. The conversation then shifts to Jason Kupferberg asking about a 90 basis point improvement in merchant segment margins, which was better than expected, leading to a slight increase in the full-year forecast.

In the paragraph, Josh Whipple explains that the Q3 performance exceeded initial expectations due to a better revenue mix, strong execution, and synergies. They expect consistent margin expansion in Q4, aiming for a 50 basis point increase, and have raised their full-year margin expectation for merchants to 40 basis points. Cameron Bready adds that strong execution and growth in attractive business areas are contributing to margin expansion, particularly after integrating EVO. They are on track to meet the higher full-year expectations. Jason Kupferberg notes that point of sale and software bookings rose 30% in the quarter, compared to a 10% increase on an LTM basis mentioned at Investor Day.

In the paragraph, Cameron Bready discusses the variability in performance for their point of sale and vertical market software businesses, acknowledging the lumpiness in quarterly bookings. Despite the fluctuations, Bready expresses confidence in their products and solutions, which have shown strong double-digit bookings growth, citing a 12% increase on a Last Twelve Months (LTM) basis. He underscores that a consistent double-digit growth would indicate healthy commercial productivity. The goal is to achieve sustained growth that will drive merchant acceleration in 2026 and 2027. Jason Kupferberg and James Faucette both contribute to the discussion with follow-up questions, highlighting interest in the specifics of the point-of-sale strategy.

Cameron Bready discusses the rollout and potential challenges of transitioning to a consolidated platform for point of sale (POS) systems. He notes that while bookings may show variability from quarter to quarter, overall business performance is expected to remain consistent. The goal is to integrate the best capabilities from various POS environments into a unified platform for global markets, balancing growth and business scaling. Legacy platforms will eventually be phased out in favor of new consolidated ones. This transition and its impact are reflected in the business outlook for 2025 to 2027.

The paragraph discusses future performance expectations and recent trends in SMB (Small and Medium Business) volume growth. It highlights that the company expects improved performance in 2026 and 2027 due to strategic realignment and platform updates. In terms of SMB growth, the current volume increase is 5%, down from 6% the previous quarter. This slight decline is attributed to broader economic conditions and specific weather-related impacts. However, there is an indication of improvement in October compared to September. The overall commercial activity reflects larger businesses' spending patterns, influenced by macroeconomic uncertainties.

The paragraph features a discussion about SMB volume trends which reflect broader market patterns both in the U.S. and internationally. James Faucette thanks Cameron Bready for his insights. Cameron then thanks participants on behalf of Global Payments and wishes them a good day. The operator concludes by thanking participants and instructing them on how to disconnect.

This summary was generated with AI and may contain some inaccuracies.