The paragraph is an introductory statement for Global Payments' Fourth Quarter and Full Year 2024 Earnings Conference Call. The operator introduces the call and hands it over to Winnie Smith, the Senior Vice President of Investor Relations. She welcomes participants and mentions that the earnings release and presentation slides are available on the company's website. Winnie Smith also notes that management's comments may include forward-looking statements, which involve risks and uncertainties, as detailed in the company's SEC filings. She advises caution in relying on these statements and mentions that non-GAAP financial measures will be discussed, with reconciliations provided in the press release and supplemental materials. Key executives participating in the call include CEO Cameron Bready, President and COO Bob Cortopassi, and CFO Josh Whipple.

In the paragraph, Cameron Bready discusses Global Payments' achievements in 2024, highlighting it as a transformative year for the company. The company undertook a comprehensive transformation agenda, redefining its mission, vision, and values to align with its goal of being a leading partner for commerce solutions. The strategy was refreshed to focus on areas with growth potential, followed by a detailed review of the business to enhance execution and performance. This led to a realignment of the business structure and the creation of an operational transformation program, aiming to optimize assets and drive growth. Throughout this transformation, Global Payments has maintained strong financial performance.

In the fourth quarter, the company achieved 6.5% constant currency growth, with over 7% in the Merchant business and 3% in Issuer business, aligning with their October outlook. For the full year, they saw 6% adjusted net revenue growth, record operating margins, and double-digit earnings per share growth despite FX headwinds. They generated around $3 billion in adjusted free cash flow, returning $1.8 billion to shareholders, aided by divesting AdvancedMD. The Merchant segment's POS and software business showed strong performance, particularly in North America, with a 25% increase in annual recurring revenue from new customers. They plan to expand their POS solutions globally under the Genius brand and have strengthened partnerships, notably by expanding their relationship with a major multinational QSR and Whataburger, to include more technology solutions.

The paragraph outlines the company's recent successes and expansions in various sectors. It highlights reaching an agreement with Kai Tak Sports Park in Hong Kong and renewing a POS partnership with a multinational entertainment company in the UK and Ireland, including implementing loyalty solutions. The company has also established new POS relationships with Newcastle, Birmingham City, Nottingham Forest football clubs, and expanded partnerships with Blackpool and Diamond Baseball Holdings. They plan to deploy their solutions in 32 ballparks by April 2025. In the education sector, sales have increased by over 30% in 2024, with new international contracts and the addition of 113 new K-12 school districts, including the Los Angeles Unified School District.

In 2024, the company achieved significant growth in the real estate sector by acquiring over 800 new property management customers and expanding partnerships with major real estate software providers. In integrated payments, they increased ISV partner signings by 34% and established 165 new international ISV partnerships. The company enhanced its relationship with PayPal to improve the checkout experience, offering more payment options in the U.S. and strengthening embedded commerce solutions. Their core payments division saw substantial progress, including onboarding over 2,000 merchants through a joint venture with Commerzbank in Germany and experiencing double-digit growth in Central Europe, Poland, Greece, and Mexico. Furthermore, their Issuer Solutions division executed 17 customer implementations and achieved a record 885 million traditional accounts on file by year-end.

The paragraph highlights the company's strong growth and progress in its conversion pipeline, client partnerships, and technology modernization initiatives. With over 70 million accounts in the pipeline extending into 2026 and several new and renewed partnerships, including major clients like KeyBanc and Navy Federal Credit Union, the company is well-positioned for future stability. It has completed development on client-facing applications and is on track for a full commercial launch in 2025, with numerous client pilots underway. The company has also achieved cloud authorization certification with Visa and Mastercard and plans to exclusively offer cloud services by the end of 2025. Additionally, it is working on streamlining its operations, as evidenced by the sale of AdvancedMD.

The company is exiting several small, underperforming markets in Asia Pacific as part of its strategic review to narrow its focus and streamline operations, targeting a reduction of $300 million in adjusted net revenue. It successfully acquired CaixaBank's stake in a joint venture with Erste Group and plans to purchase HSBC's stake in a Mexican joint venture, aiming to strengthen its position and increase efficiencies in those regions. The company has restructured its operations under a unified model, consolidating technology teams and operating functions, to enhance its global capabilities and offer cohesive solutions like the Genius point-of-sale brand.

The paragraph outlines the branding and launch plans for Genius's solutions in the restaurant and retail sectors in the U.S., starting in the second quarter. This includes launching restaurant solutions for small- to medium-sized customers and retail solutions for SMBs in May, with further expansions in September, including the Genius Enterprise restaurant solution. International rollout begins in the second half of the year to countries like Canada, Mexico, and the U.K., with additional markets such as Ireland and Spain targeted for early 2026. The company is aligning and converging its technology platforms to offer integrated solutions such as online ordering, accounting, and marketing. This platform unification will facilitate transitions for legacy customers to the new cloud solutions, enhancing cross-sell and upsell possibilities.

The paragraph outlines a company's plan to expand its Genius POS solutions globally by utilizing its distribution channels and preparing its sales teams for future demands. This includes upskilling, retooling, and aligning incentives to boost cross-selling and improve sales and marketing strategies. A new compensation plan has been implemented for U.S. sales teams, with plans to extend it. The company's strategic focus includes offering a full suite of software and commerce solutions and enhancing its Issuer Solutions through strategic partnerships. Furthermore, the company aims to improve efficiency and effectiveness by consolidating its technology teams under unified leadership.

The company is addressing previous inefficiencies by unifying technology development and operations to become more agile and customer-focused. They have acquired a real-time processing platform to enhance product distribution and reduce reliance on third-party providers, initially deploying it in Central Europe and Germany, with plans for broader European implementation. Efforts also include modernizing developer tools with Gen AI, standardizing practices to quicken product development, and reducing code deployment time by nearly 10%. The company expects to benefit from these initiatives in the second half of the year and by year-end, while also using Gen AI to improve customer support and service differentiation.

The company is implementing a new global support center software to enhance call flows, digital engagements, and knowledge management, aiming for full implementation by Q4 2025. This initiative is expected to increase annual operating income by over $600 million by H1 2027, surpassing initial expectations of $500 million. The transformation aligns with efforts to streamline operations, leverage products, and ensure sustainable growth. In 2024, the company saw a 6% increase in adjusted net revenue to $9.15 billion, with a 40 basis point improvement in operating margin, leading to a 11% rise in adjusted earnings per share to $11.55 compared to 2023.

In the fourth quarter, the company reported an adjusted net revenue of $2.29 billion, a 5% increase, or 6.5% on a constant currency basis excluding dispositions. Adjusted operating margin rose 40 basis points to 45.2%, with adjusted earnings per share growing by 11% or 12% on a constant currency basis. The Merchant Solutions segment saw adjusted net revenue of $1.76 billion, reflecting over 7% growth on a constant currency basis. This growth was driven by high demand in the POS and software, as well as integrated and embedded businesses. The company launched a new cloud POS solution for SMB customers, leading to a 35% increase in new POS installations. Additionally, the integrated embedded channel added 76 new ISV partners, including 32 international wins, with significant signings like BookedBy, DRX, and Chamber Nation.

In the fourth quarter, the core payments business experienced mid-single-digit growth on a constant currency basis, with notable double-digit growth in Central Europe, Poland, Greece, and Latin America. The Merchant segment achieved an adjusted operating margin of 48.3%, an increase from the previous year, due to a refocused strategy and completed synergies from acquiring EVO Payments. The Issuer Solutions business reported $542 million in adjusted net revenue, showing 3% growth, driven by consumer card transaction volume increases. Commercial card volumes remained steady, as corporate spending stayed cautious. Traditional accounts increased by 26 million, attributed to growth with existing customers. The company has a strong implementation pipeline and has completed major customer renewals, bolstering confidence in future growth.

In the reported quarter, the company experienced solid but slightly slower bookings in its core mid-market segment for AP automation solutions, impacted by macro trends. The Paycard business faced challenges due to softer hiring trends, negatively affecting growth. Issuer Solutions saw a sequential improvement in operating margins due to better volumes but experienced a slight decline compared to the previous year, attributed to past strong margin expansion and ongoing investments in modernization. The company generated strong adjusted free cash flow of $814 million for the quarter (110% conversion rate) and $2.7 billion for the year (95% conversion rate). Capital expenditures were $184 million for the quarter and $675 million for the year, in line with guidance. The net leverage position improved to 3.2x, aligning with long-term targets. During the quarter, $500 million in senior notes were repaid, and $650 million was returned to shareholders through share repurchases, totaling $1.5 billion for the year or 5% of outstanding shares. The balance sheet remained strong, ending with $3.8 billion in available liquidity.

The company’s total debt is fully fixed with an average cost of 3.36%. Looking ahead to 2025, they expect a constant currency adjusted net revenue growth of 5% to 6% for 2024, excluding the impact of dispositions, which are expected to reduce reported adjusted net revenue by over 300 basis points. They project a 50 basis points increase in annual adjusted operating margin for 2025, excluding dispositions. The Merchant business is expected to achieve a 6% growth in adjusted net revenue and a 50 basis points margin expansion, while the Issuer Solutions segment anticipates a 4% growth and a similar margin increase. Growth is expected to be more robust in the second half of 2025 as transformation initiatives and customer renewals progress. Non-operating expectations include a net interest expense of $500 million, an adjusted effective tax rate of 19%, and capital expenditures of approximately $780 million, or 8% of revenue, aligning with their earlier outlook.

The company expects its adjusted free cash flow conversion to exceed 90% for the year and plans to return about $2 billion to shareholders, including a $250 million accelerated share repurchase. Additional divestiture proceeds in 2025 will enhance shareholder returns, and the company aims to reduce its debt. Adjusted earnings per share are anticipated to grow by 10-11% in constant currency, consistent with prior guidance. Currency fluctuations are expected to negatively impact revenue and earnings due to a stronger U.S. dollar. The company will include share-based compensation expenses in adjusted results starting in the first quarter to align with peers and will update its reporting structure accordingly, though this won’t alter growth projections. Lastly, changes in cash flow presentation for settlement assets and obligations will shift from operating to financing cash flows.

The paragraph outlines the company's satisfaction with its ongoing transformation progress, emphasizing the focus on simplifying operations, strengthening core businesses, and returning capital to shareholders. The discussion highlights accomplishments made over the past year and the expectation to complete much of the transformation by 2025, which will facilitate growth and achievement of medium-term financial goals. The company believes it is well-positioned to leverage its strengths, focus on attractive opportunities, and deliver solutions efficiently across channels. The commitment to enhancing shareholder value includes targeted returns of $7.5 billion over the next three years. The segment concludes with the transition to a Q&A session led by Darrin Peller from Wolfe Research, who starts by inquiring about the early progress on the company's initiatives.

In the paragraph, Cameron Bready discusses the early positive outcomes of the company's transformation efforts, highlighting increased collaboration within the organization, particularly in the Merchant Solutions segment. This collaboration has led to a more unified operating model and has helped teams discover and unlock product and capability opportunities across different markets. While still in the early stages, these efforts have shown promising results, leading to some initial successes.

The paragraph discusses the ongoing transformation efforts aimed at harmonizing operating and technology environments within a business. This process has revealed greater opportunities for efficiency and scale than initially expected, enhancing operating income and client experiences. By standardizing tools and software development processes, the technology team is becoming more effective in supporting business needs and accelerating product delivery. While the transformation involves significant effort and can be disruptive, the progress and early results are positive, reflecting the hard work being done across the organization.

The paragraph discusses the anticipated timing and impact of business initiatives on revenue, particularly in the Merchant and Issuer segments. Darrin Peller and Cameron Bready discuss expectations for 2025, noting that benefits from these initiatives, including a new point-of-sale system and changes to the sales force, are expected to start materializing in the latter half of 2025. They mention a potential modest deceleration in the first half of the year due to these organizational changes. Also, Jason Kupferberg from Bank of America inquires about the Merchant segment's 6% growth guidance for the year, excluding currency and disposition effects.

The paragraph discusses the financial guidance related to acquisitions, EPS (earnings per share), and macroeconomic conditions. Joshua Whipple explains that the acquisition of takepayments is expected to contribute about 0.5% to Merchant's inorganic growth this year, while another acquisition, ZMS, will have a minimal impact. EPS growth is projected in the 10% to 11% range, with $170 million in stock-based compensation included in the models. A 175 basis point headwind from currency effects is anticipated for the EPS line. Cameron Bready adds that the guidance assumes a stable macroeconomic environment for 2025, similar to the conditions at the end of the previous year.

The paragraph discusses the macroeconomic environment, highlighting stable labor trends and reduced, though not fully controlled, inflation. Wage growth remains strong, contributing to a stable consumer backdrop. However, uncertainty exists regarding potential economic policy changes following the U.S. post-election period, which could impact the macro environment. The speaker expects stability through 2025, with early 2025 trends similar to the previous year's fourth quarter. The conversation then shifts to the winding down of certain enterprise customer contracts, particularly in wholesale, which the company is gradually implementing and absorbing into their financial guidance. This is partly due to inherited wholesale relationships that may not be economically beneficial.

The paragraph discusses a company's strategic shift away from certain multinational and cross-border commerce activities, particularly those involving wholesale or indirect financial institution relationships, as they feel these are distracting. They plan to exit some of these relationships by 2025, as indicated in their guidance, affecting their medium-term outlook. In a follow-up, Tien-Tsin Huang from JPMorgan asks about the potential financial impact of the company's operational transformation, which is expected to yield increasing benefits mostly starting from 2026, with a full benefit anticipated by 2028. Joshua Whipple confirms that anticipated outcomes for 2025 remain consistent, with increased operational income benefits expected from 2026 onward.

Cameron Bready discusses the company's strategy of streamlining operations by buying out certain joint ventures and exiting specific markets where they lack scale. In Europe, reducing the number of joint ventures simplifies operations, as seen with CaixaBank and the Erste JV. In Mexico, merging businesses post-HSBC exit allows for a more cohesive operation with strong local partners like Banamex and HSBC. In Asia, they remain committed to their joint venture with Bank of the Philippine Islands due to good scale and growth potential. However, they plan to exit other Asian markets where they fully own the business but lack scale, redirecting resources to more promising opportunities.

In the paragraph, David Koning compliments the company's improved quality of earnings, highlighting better cash flow leverage and lower add-backs. However, there's a brief issue with the call as they lose connection with David, prompting the operator to move to the next question from James Faucette of Morgan Stanley. James asks about the Issuer segment and trends for fiscal 2025, specifically regarding commercial card and Paycard. Joshua Whipple responds, noting that Issuer revenues are expected to align with Q1 levels, with modest improvements anticipated as benefits from conversion activities and contract renewals unfold. He mentions strong growth trends, with conversions and accounts on file increasing, and expresses optimism about the Issuer business for 2025. Cameron Bready adds that commercial trends in Q4 were consistent with Q3, and expects similar performance in 2025.

The article paragraph discusses expectations for commercial volumes and spending, highlighting that businesses are anticipated to remain cautious with their expenditure. It mentions a normalization in project activity with large financial institution customers and a promising pipeline of projects for 2025. The outlook for the Issuer business is positive, with 15 of the top 20 clients renewed on multiyear agreements and successful modernization efforts. By the end of 2025, the company plans to offer exclusively cloud-based solutions for client-facing applications, which is expected to boost revenue growth. The stability and trajectory of the business up to and including 2025 are promising due to these modernization and transformation efforts. James Faucette acknowledges this outlook and inquires about the ISV channel, specifically regarding partner growth, churn, and revenue pricing in 2025 and 2026. Cameron Bready responds to these queries, with the potential for Bob to add his insights.

The paragraph discusses the company's strong position in the integrated business market. Due to its extensive experience and operational capabilities, the company is able to tailor solutions for software partners more effectively than its competitors, leading to favorable but not necessarily the highest revenue-sharing agreements. The company differentiates itself by enhancing revenue opportunities through commerce enablement solutions, resulting in stable business relationships and successful integration of past acquisitions. Cameron believes this approach continues to yield benefits, and Robert Cortopassi is also mentioned as potentially adding further insights.

The paragraph discusses the evolving nature of partnerships with ISVs, fintechs, and financial institutions, highlighting a shift from traditional integration models to more customer experience-focused approaches. These partners aim to differentiate themselves and add value beyond just payment acceptance. The company has been working over the past decade and plans to accelerate efforts in late 2024 and into 2025 to provide easily consumable and integrative solutions, allowing partners to enter the market without needing custom programs for each integration. This strategy is well-received and positions the company well against competitors while supporting existing partnerships. The transition to a new POS platform is mentioned with a focus on client feedback and expectations regarding churn as they launch the Genius platform in the latter half of the year. Harrison Vivas from TD Cowen seeks more details on this POS transition.

In the paragraph, Cameron Bready discusses the positive early feedback from various partners on their Genius restaurant and retail platforms. He shares optimism about the potential for growth and the impact of consolidating capabilities from their existing POS platforms into the Genius brand. This initiative is aimed at enhancing their business, winning new market opportunities, and achieving better growth outcomes. Robert Cortopassi then addresses the challenge of managing attrition and potential churn as they transition merchants to the new platforms.

The paragraph discusses the company's competitive environment and strategy for maintaining and expanding customer relationships. They emphasize their strong existing relationships, built on past solutions and differentiated service experiences, which position them as the go-to choice for customers planning their next phase of technology growth. The company highlights the natural upgrade path for many of their current customers to new solutions, often without the need for data conversion or new hardware. They feel confident about retaining these customers while also attracting new ones. Additionally, there is a brief mention of potential asset sales, specifically the exit from some underperforming businesses in the APAC region, and potential future actions in this regard.

In the paragraph, Cameron Bready discusses the company's strategy regarding the divestment of certain assets and their focus on becoming a scale player in relevant markets. He mentions that they have already divested assets worth over $300 million towards their target of $500 million to $600 million, which was outlined at their investor conference. Bready emphasizes evaluating businesses based on whether they can grow meaningfully and if they have the potential to become a scale player. Furthermore, he considers whether businesses are better off as part of Global Payments or if they can operate independently without disruption. Some businesses are still being assessed, and updates will be provided when more information is available.

In the paragraph, Cameron Bready addresses a question about expected performance ranges for the year, explicitly stating that both the first and second halves of the year will fall within the 5% to 6% growth range. He clarifies that the first half might be at the lower end of the range while the second half could be at the higher end, but overall, the year should stay within the projected range. Joshua Whipple adds that there will be a slight acceleration in the second half, setting a positive trajectory for entering 2026.

The paragraph discusses a company's anticipation of a slight slowdown in the first half due to transformation activities like restructuring the sales force, altering compensation, and consolidating markets. However, they expect acceleration in the latter half and beyond. Cameron Bready expresses confidence in the business outlook and notes improved visibility compared to September. The company has seen positive early results from its transformation efforts, encouraging continued optimism.

The paragraph discusses the significant efforts and challenges faced by the Global Payments teams as they undergo organizational changes aimed at improving long-term business outcomes. Despite the stress and workload, the teams have admirably adapted to these changes. The speaker expresses confidence in achieving desired outcomes, highlighting the visibility and excitement around generating benefits through operational transformation initiatives. The response is part of a dialogue, where the final question from Vasu Govil of KBW asks for clarification on the improved growth guidance for 2025, noting a slight increase from previous expectations. Cameron Bready acknowledges the point raised and is set to provide a response.

The paragraph discusses the company's slightly better-than-expected performance compared to its medium-term outlook from September, attributed to successful operational transformations. As the company moves towards 2025, it has increased confidence in managing change without disrupting growth, aiming for improved outcomes by 2026 and 2027. In response to a question about technology modernization in the Issuer business, it is stated that the transition to cloud-based applications will expand the Total Addressable Market (TAM), enabling the company to serve smaller financial institutions and enter new markets more efficiently, ultimately impacting revenue positively over time.

The paragraph discusses the company's efforts to modernize its platform to make its services more accessible to fintechs and other entities. This modernization aims to unlock growth opportunities by expanding into new markets and segments, ultimately increasing the company’s revenue potential. The company is confident in its superior features and issuer capabilities. The paragraph concludes with the end of the company’s Q4 earnings call, thanking participants for their attendance.

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