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Global Payments Inc

Global Payments Reports Third Quarter 2024 Results

  • Third quarter 2024 GAAP diluted earnings per share (EPS) of $1.24, a decrease of (11)%, and adjusted EPS of $3.08, an increase of 12%
  • Third quarter 2024 GAAP revenue of $2.60 billion, an increase of 5%, and adjusted net revenue of $2.36 billion, an increase of 6%
  • Reaffirms outlook for 2024
  • Reaches a definitive agreement to sell AdvancedMD
  • Enters into $600 million accelerated share repurchase plan

ATLANTA--(BUSINESS WIRE)--Oct. 30, 2024-- Global Payments Inc. (NYSE: GPN) today announced results for the third quarter ended September 30, 2024.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20241030804195/en/

“We are pleased with our solid financial performance in the third quarter, which reflects strong execution despite ongoing macroeconomic uncertainty,” said Cameron Bready, chief executive officer. “These results highlight the resiliency and durability of our business as we move aggressively to position Global Payments for the next phase of its growth journey as a leader in payments.”

Bready continued, “We are making substantial progress on the broad transformation agenda we detailed at our Investor Conference in September. We have refocused our strategy and are unifying our organization across assets and go-to-market activities, allowing us to unleash our full potential and play to our competitive strengths. I remain confident that our efforts to streamline and simplify our business will unlock substantial value and support sustainable growth well into the future, as we relentlessly pursue our ambition to be the worldwide partner of choice for commerce solutions.”

Bready concluded, “Consistent with these efforts, we have reached a definitive agreement to sell AdvancedMD to Francisco Partners. In connection with this sale, we also established a long-term commercial partnership with AdvancedMD, whereby we will continue to work together to deliver leading payments and commerce enablement solutions to its customers. This transaction further highlights the high quality assets in our portfolio and allows us to enhance value creation for shareholders. We expect this sale to close in the fourth quarter.”

Third Quarter 2024 Summary

  • GAAP revenues were $2.60 billion, compared to $2.48 billion in 2023; diluted earnings per share were $1.24, compared to $1.39 in the prior year; and operating margin was 18.3%, compared to 22.5% in the prior year.
  • Adjusted net revenues increased 6% to $2.36 billion, compared to $2.23 billion in the third quarter of 2023.
  • Adjusted earnings per share increased 12% to $3.08, compared to $2.75 in the third quarter of 2023.
  • Adjusted operating margin expanded 40 basis points to 46.1%.

2024 Outlook

“We are pleased with our financial and operational performance in the third quarter and year-to-date period,” said Josh Whipple, chief financial officer. “Notably, we produced strong adjusted free cash flow in the third quarter and also reduced our net leverage position by nearly a quarter-turn sequentially to 3.3 times, positioning us well to achieve our target by year end.”

Whipple continued, “The company continues to expect adjusted net revenue to be in a range of $9.17 billion to $9.30 billion, reflecting growth of 6% to 7%, and adjusted earnings per share to be in a range of $11.54 to $11.70, reflecting growth of 11% to 12% over 2023. Annual adjusted operating margin for 2024 is still expected to expand by up to 50 basis points.”

Whipple concluded, “Our outlook highlights the consistency of our model and the benefits of our sharpened focus as we execute on our strategic priorities.”

Capital Allocation

Global Payments’ Board of Directors approved a dividend of $0.25 per share payable on December 27, 2024 to shareholders of record as of December 13, 2024. The Board of Directors also approved an increase in the company's share repurchase authorization capacity to $2.5 billion.

Conference Call

Global Payments’ management will host a live audio webcast today, October 30, 2024, at 8:00 a.m. ET to discuss financial results and business highlights. The audio webcast, along with supplemental financial information, can be accessed via the investor relations page of the company’s website at investors.global payments.com. A replay of the audio webcast will be archived on the company's website following the live event.

Non-GAAP Financial Measures

Global Payments supplements revenues, operating income, operating margin and net income and earnings per share determined in accordance with GAAP by providing these measures with certain adjustments (such measures being non-GAAP financial measures) in this earnings release to assist with evaluating our performance. In addition to GAAP measures, management uses these non-GAAP financial measures to focus on the factors the company believes are pertinent to the daily management of our operations.

Global Payments also has provided supplemental non-GAAP information to reflect the divestiture of the consumer portion of our Netspend business, which comprised our former Consumer Solutions segment, which closed in April 2023. Management believes that providing such supplemental financial information should enhance shareholders’ ability to evaluate how the business will be managed going forward.

Reconciliations of each of the non-GAAP financial measures to the most directly comparable GAAP measure are included in the schedules to this release, except for forward-looking measures where a reconciliation to the corresponding GAAP measures is not available due to the variability, complexity and limited visibility of the items that are excluded from the non-GAAP outlook measures.

About Global Payments

Global Payments Inc. (NYSE: GPN) is a leading payments technology company delivering innovative software and services to our customers globally. Our technologies, services and team member expertise allow us to provide a broad range of solutions that enable our customers to operate their businesses more efficiently across a variety of channels around the world.

Headquartered in Georgia with approximately 27,000 team members worldwide, Global Payments is a Fortune 500® company and a member of the S&P 500 with worldwide reach spanning North America, Europe, Asia Pacific and Latin America. For more information, visit company.globalpayments.com and follow Global Payments on X, LinkedIn and Facebook.

Forward-Looking Statements

Investors are cautioned that some of the statements we use in this release contain forward-looking statements and are made pursuant to the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which are based on current expectations, estimates and projections about the industry and markets in which we operate, and beliefs of and assumptions made by our management, involve risks and uncertainties that could significantly affect the financial condition, results of operations, business plans and the future performance of Global Payments. Actual events or results might differ materially from those expressed or forecasted in these forward-looking statements. Accordingly, we cannot guarantee that our plans and expectations will be achieved. Examples of forward-looking statements include, but are not limited to, statements we make regarding future financial and operating results, including revenue, earnings estimates, liquidity, and deleveraging plans, management’s expectations regarding future plans, objectives and goals; market and growth opportunities; capital available for allocation; the effects of general economic conditions on our business; statements about the benefits of acquisitions or divestitures, such as the proposed sale of AdvancedMD, Inc., including future financial and operating results, and the successful integration of our acquisitions; statements about the completion of anticipated benefits and strategic or operational initiatives; statements regarding our success and timing in developing and introducing new services and expanding our business; and other statements regarding our future financial performance and the company’s plans, objectives, expectations and intentions. Statements can generally be identified as forward-looking because they include words such as “believes,” “anticipates,” “expects,” “intends,” “plan,” “forecast,” “could,” “should,” “will,” “would,” or words of similar meaning. Although we believe that the plans and expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our plans and expectations will be attained, and therefore actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements.

In addition to factors previously disclosed in Global Payments’ reports filed with the SEC and those identified elsewhere in this communication, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: the effects of global economic, political, market, health and social events or other conditions; foreign currency exchange, inflation and rising interest rate risks; difficulties, delays and higher than anticipated costs related to integrating the businesses of acquired companies, including with respect to implementing controls to prevent a material security breach of any internal systems or to successfully manage credit and fraud risks in business units; Global Payments’ ability to complete the proposed sale of AdvancedMD, Inc. on the proposed terms or on the anticipated timeline, or at all; the effect of a security breach or operational failure on our business; failing to comply with the applicable requirements of Visa, Mastercard or other payment networks or card schemes or changes in those requirements; the ability to maintain Visa and Mastercard registration and financial institution sponsorship; the ability to retain, develop and hire key personnel; the diversion of management’s attention from ongoing business operations; the continued availability of capital and financing; increased competition in the markets in which we operate and our ability to increase our market share in existing markets and expand into new markets; our ability to safeguard our data; risks associated with our indebtedness; our ability to meet environmental, social or governance targets, goals and commitments; the potential effect of climate change including natural disasters; the effects of new or changes in current laws, regulations, credit card association rules or other industry standards on us or our partners and customers, including privacy and cybersecurity laws and regulations; and other events beyond our control, and other factors included in the “Risk Factors” section in our most recent Annual Report on Form 10-K and in other documents that we file with the SEC, which are available at https://www.sec.gov.

These cautionary statements qualify all of our forward-looking statements, and you are cautioned not to place undue reliance on these forward-looking statements. Our forward-looking statements speak only as of the date they are made and should not be relied upon as representing our plans and expectations as of any subsequent date. While we may elect to update or revise forward-looking statements at some time in the future, we specifically disclaim any obligation to publicly release the results of any revisions to our forward-looking statements, except as required by law.

SCHEDULE 1

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands, except per share data)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

 

2024

 

 

 

2023

 

 

% Change

 

 

2024

 

 

 

2023

 

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

2,601,552

 

 

$

2,475,691

 

 

5.1

%

 

$

7,590,508

 

 

$

7,220,607

 

 

5.1

%

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Cost of service

 

946,945

 

 

 

915,531

 

 

3.4

%

 

 

2,807,819

 

 

 

2,805,237

 

 

0.1

%

Selling, general and administrative

 

1,179,026

 

 

 

1,001,964

 

 

17.7

%

 

 

3,282,232

 

 

 

3,058,605

 

 

7.3

%

Net loss on business dispositions

 

—

 

 

 

—

 

 

nm

 

 

—

 

 

 

139,095

 

 

nm

 

 

2,125,971

 

 

 

1,917,495

 

 

 

 

 

6,090,051

 

 

 

6,002,937

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

475,581

 

 

 

558,196

 

 

(14.8

)%

 

 

1,500,457

 

 

 

1,217,670

 

 

23.2

%

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

55,338

 

 

 

35,732

 

 

54.9

%

 

 

126,572

 

 

 

74,830

 

 

69.1

%

Interest and other expense

 

(155,905

)

 

 

(176,094

)

 

(11.5

)%

 

 

(477,210

)

 

 

(490,463

)

 

(2.7

)%

 

 

(100,567

)

 

 

(140,362

)

 

 

 

 

(350,638

)

 

 

(415,633

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes and equity in income of equity method investments

 

375,014

 

 

 

417,834

 

 

(10.2

)%

 

 

1,149,819

 

 

 

802,037

 

 

43.4

%

Income tax expense

 

57,378

 

 

 

58,936

 

 

(2.6

)%

 

 

154,593

 

 

 

199,748

 

 

(22.6

)%

Income before equity in income of equity method investments

 

317,636

 

 

 

358,898

 

 

(11.5

)%

 

 

995,226

 

 

 

602,289

 

 

65.2

%

Equity in income of equity method investments, net of tax

 

15,897

 

 

 

17,707

 

 

(10.2

)%

 

 

50,644

 

 

 

54,101

 

 

(6.4

)%

Net income

 

333,533

 

 

 

376,605

 

 

(11.4

)%

 

 

1,045,870

 

 

 

656,390

 

 

59.3

%

Net income attributable to noncontrolling interests

 

(18,408

)

 

 

(14,775

)

 

24.6

%

 

 

(42,678

)

 

 

(31,454

)

 

35.7

%

Net income attributable to Global Payments

$

315,125

 

 

$

361,830

 

 

(12.9

)%

 

$

1,003,192

 

 

$

624,936

 

 

60.5

%

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Global Payments:

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

$

1.24

 

 

$

1.39

 

 

(10.8

)%

 

$

3.93

 

 

$

2.40

 

 

63.8

%

Diluted earnings per share

$

1.24

 

 

$

1.39

 

 

(10.8

)%

 

$

3.92

 

 

$

2.39

 

 

64.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

254,402

 

 

 

260,232

 

 

 

 

 

255,355

 

 

 

260,890

 

 

 

Diluted

 

254,897

 

 

 

260,935

 

 

 

 

 

255,880

 

 

 

261,410

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note: nm = not meaningful.

SCHEDULE 2

NON-GAAP FINANCIAL MEASURES (UNAUDITED)

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands, except per share data)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

 

2024

 

 

2023

 

% Change

 

 

2024

 

 

2023

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net revenue

$

2,356,931

 

$

2,232,442

 

5.6

%

 

$

6,864,992

 

$

6,484,725

 

5.9

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted operating income

$

1,086,567

 

$

1,019,525

 

6.6

%

 

$

3,086,519

 

$

2,889,017

 

6.8

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income attributable to Global Payments

$

784,987

 

$

718,632

 

9.2

%

 

$

2,200,270

 

$

2,035,200

 

8.1

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted diluted earnings per share attributable to Global Payments

$

3.08

 

$

2.75

 

11.8

%

 

$

8.60

 

$

7.79

 

10.4

%

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Non-GAAP(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net revenue(1)

$

2,356,931

 

$

2,232,442

 

5.6

%

 

$

6,864,992

 

$

6,339,283

 

8.3

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted operating income(1)

$

1,086,567

 

$

1,019,525

 

6.6

%

 

$

3,086,519

 

$

2,815,788

 

9.6

%

----------------------------------------------------------------------------------

(1)

The supplemental non-GAAP information reflects the divestiture of our consumer business which closed in April 2023.

 

 

 

See Schedule 6 and 7 for a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure, Schedule 8 and 9 for a reconciliation of adjusted net revenue and adjusted operating income by segment and supplemental non-GAAP information to the most comparable GAAP measure, and Schedule 10 for a discussion of non-GAAP financial measures.

SCHEDULE 3

SEGMENT INFORMATION (UNAUDITED)

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)

 

 

 

Three Months Ended

 

 

 

 

 

 

September 30, 2024

 

September 30, 2023

 

% Change

 

 

GAAP

 

Non-GAAP

 

GAAP

 

Non-GAAP

 

GAAP

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

1,997,660

 

 

$

1,844,321

 

 

$

1,884,006

 

 

$

1,727,951

 

 

6.0

%

 

6.7

%

Issuer Solutions

 

 

621,130

 

 

 

529,041

 

 

 

607,848

 

 

 

519,736

 

 

2.2

%

 

1.8

%

Intersegment eliminations

 

 

(17,238

)

 

 

(16,431

)

 

 

(16,163

)

 

 

(15,245

)

 

(6.7

)%

 

(7.8

)%

 

 

$

2,601,552

 

 

$

2,356,931

 

 

$

2,475,691

 

 

$

2,232,442

 

 

5.1

%

 

5.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

707,546

 

 

$

921,472

 

 

$

637,864

 

 

$

847,678

 

 

10.9

%

 

8.7

%

Issuer Solutions

 

 

106,045

 

 

 

240,385

 

 

 

113,877

 

 

 

246,643

 

 

(6.9

)%

 

(2.5

)%

Corporate

 

 

(338,010

)

 

 

(75,289

)

 

 

(193,545

)

 

 

(74,797

)

 

(74.6

)%

 

(0.7

)%

 

 

$

475,581

 

 

$

1,086,567

 

 

$

558,196

 

 

$

1,019,525

 

 

(14.8

)%

 

6.6

%

 

 

Nine Months Ended

 

 

 

 

 

 

September 30, 2024

 

September 30, 2023

 

% Change

 

 

GAAP

 

Non-GAAP

 

GAAP

 

Non-GAAP

 

GAAP

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

5,802,780

 

 

$

5,340,324

 

 

$

5,331,909

 

 

$

4,866,484

 

 

8.8

%

 

9.7

%

Issuer Solutions

 

 

1,837,373

 

 

 

1,571,143

 

 

 

1,769,196

 

 

 

1,515,235

 

 

3.9

%

 

3.7

%

Consumer Solutions

 

 

—

 

 

 

—

 

 

 

182,740

 

 

 

163,027

 

 

nm

 

nm

Intersegment Elimination

 

 

(49,645

)

 

 

(46,475

)

 

 

(63,238

)

 

 

(60,021

)

 

21.5

%

 

22.6

%

 

 

$

7,590,508

 

 

$

6,864,992

 

 

$

7,220,607

 

 

$

6,484,725

 

 

5.1

%

 

5.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

1,960,509

 

 

$

2,596,658

 

 

$

1,748,622

 

 

$

2,351,195

 

 

12.1

%

 

10.4

%

Issuer Solutions

 

 

322,517

 

 

 

728,408

 

 

 

292,388

 

 

 

697,796

 

 

10.3

%

 

4.4

%

Consumer Solutions

 

 

—

 

 

 

—

 

 

 

(3,908

)

 

 

73,230

 

 

nm

 

nm

Corporate

 

 

(782,569

)

 

 

(238,548

)

 

 

(680,337

)

 

 

(233,203

)

 

(15.0

)%

 

(2.3

)%

Net loss on business dispositions

 

 

—

 

 

 

—

 

 

 

(139,095

)

 

 

—

 

 

nm

 

nm

 

 

$

1,500,457

 

 

$

3,086,519

 

 

$

1,217,670

 

 

$

2,889,017

 

 

23.2

%

 

6.8

%

----------------------------------------------------------------------------------

See Schedules 8 and 9 for a reconciliation of adjusted net revenue and adjusted operating income by segment to the most comparable GAAP measures and Schedule 10 for a discussion of non-GAAP financial measures.

 

Note: Amounts may not sum due to rounding.

 

Note: nm = not meaningful.

SCHEDULE 4

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands, except share data)

 

 

September 30, 2024

 

December 31, 2023

 

 

 

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

2,941,940

 

 

$

2,088,887

 

Accounts receivable, net

 

1,150,840

 

 

 

1,120,078

 

Settlement processing assets

 

3,020,936

 

 

 

4,097,417

 

Prepaid expenses and other current assets

 

787,366

 

 

 

767,377

 

Total current assets

 

7,901,082

 

 

 

8,073,759

 

Goodwill

 

26,959,567

 

 

 

26,743,523

 

Other intangible assets, net

 

9,318,535

 

 

 

10,168,046

 

Property and equipment, net

 

2,334,574

 

 

 

2,190,005

 

Deferred income taxes

 

80,714

 

 

 

111,712

 

Notes receivable

 

756,620

 

 

 

713,123

 

Other noncurrent assets

 

2,634,753

 

 

 

2,570,018

 

Total assets

$

49,985,845

 

 

$

50,570,186

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

Current liabilities:

 

 

 

Settlement lines of credit

$

788,052

 

 

$

981,244

 

Current portion of long-term debt

 

1,552,863

 

 

 

620,585

 

Accounts payable and accrued liabilities

 

2,730,189

 

 

 

2,824,979

 

Settlement processing obligations

 

3,457,773

 

 

 

3,698,921

 

Total current liabilities

 

8,528,877

 

 

 

8,125,729

 

Long-term debt

 

15,215,847

 

 

 

15,692,297

 

Deferred income taxes

 

1,948,610

 

 

 

2,242,105

 

Other noncurrent liabilities

 

672,902

 

 

 

722,540

 

Total liabilities

 

26,366,236

 

 

 

26,782,671

 

Commitments and contingencies

 

 

 

Redeemable noncontrolling interests

 

156,630

 

 

 

507,965

 

Equity:

 

 

 

Preferred stock, no par value; 5,000,000 shares authorized and none issued

 

—

 

 

 

—

 

Common stock, no par value; 400,000,000 shares authorized at September 30, 2024 and December 31, 2023; 254,401,583 issued and outstanding at September 30, 2024 and 260,382,746 issued and outstanding at December 31, 2023

 

—

 

 

 

—

 

Paid-in capital

 

18,810,835

 

 

 

19,800,953

 

Retained earnings

 

4,269,896

 

 

 

3,457,182

 

Accumulated other comprehensive loss

 

(269,338

)

 

 

(258,925

)

Total Global Payments shareholders’ equity

 

22,811,393

 

 

 

22,999,210

 

Nonredeemable noncontrolling interests

 

651,586

 

 

 

280,340

 

Total equity

 

23,462,979

 

 

 

23,279,550

 

Total liabilities, redeemable noncontrolling interests and equity

$

49,985,845

 

 

$

50,570,186

 

SCHEDULE 5

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)

 

Nine Months Ended

 

September 30, 2024

 

September 30, 2023

 

 

 

 

Cash flows from operating activities:

 

 

 

Net income

$

1,045,870

 

 

$

656,390

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization of property and equipment

 

368,905

 

 

 

342,025

 

Amortization of acquired intangibles

 

1,036,768

 

 

 

986,026

 

Amortization of capitalized contract costs

 

102,926

 

 

 

90,463

 

Share-based compensation expense

 

134,361

 

 

 

173,325

 

Provision for operating losses and credit losses

 

60,677

 

 

 

84,154

 

Noncash lease expense

 

44,205

 

 

 

49,805

 

Deferred income taxes

 

(251,652

)

 

 

(407,767

)

Paid-in-kind interest capitalized to principal of notes receivable

 

(54,743

)

 

 

(29,113

)

Equity in income of equity method investments, net of tax

 

(50,644

)

 

 

(54,101

)

Technology asset charge

 

55,808

 

 

 

—

 

Net loss on business dispositions

 

—

 

 

 

139,095

 

Other, net

 

22,869

 

 

 

36,715

 

Changes in operating assets and liabilities, net of the effects of business combinations:

 

 

 

Accounts receivable

 

(39,204

)

 

 

(51,490

)

Settlement processing assets and obligations, net

 

789,702

 

 

 

(29,857

)

Prepaid expenses and other assets

 

(167,511

)

 

 

(266,923

)

Accounts payable and other liabilities

 

(219,081

)

 

 

(127,456

)

Net cash provided by operating activities

 

2,879,256

 

 

 

1,591,291

 

Cash flows from investing activities:

 

 

 

Business combinations and other acquisitions, net of cash and restricted cash acquired

 

(373,790

)

 

 

(4,099,766

)

Capital expenditures

 

(490,913

)

 

 

(500,795

)

Issuance of notes receivable

 

—

 

 

 

(50,000

)

Repayment of notes receivable

 

—

 

 

 

50,000

 

Net cash from sales of businesses

 

—

 

 

 

478,695

 

Proceeds from sale of investments

 

18,076

 

 

 

—

 

Other, net

 

6

 

 

 

2,187

 

Net cash used in investing activities

 

(846,621

)

 

 

(4,119,679

)

Cash flows from financing activities:

 

 

 

Net repayments of settlement lines of credit

 

(184,454

)

 

 

(33,328

)

Net borrowings from (repayments of) commercial paper notes

 

(1,367,859

)

 

 

1,896,513

 

Proceeds from long-term debt

 

7,637,904

 

 

 

8,861,129

 

Repayments of long-term debt

 

(5,802,954

)

 

 

(7,628,854

)

Payments of debt issuance costs

 

(33,056

)

 

 

(12,735

)

Repurchases of common stock

 

(900,047

)

 

 

(418,271

)

Proceeds from stock issued under share-based compensation plans

 

33,531

 

 

 

51,085

 

Common stock repurchased - share-based compensation plans

 

(53,780

)

 

 

(37,236

)

Distributions to noncontrolling interests

 

(29,356

)

 

 

(24,315

)

Contributions from noncontrolling interests

 

2,116

 

 

 

—

 

Payment of deferred consideration in business combination

 

(6,390

)

 

 

—

 

Purchase of capped calls related to issuance of convertible notes

 

(256,250

)

 

 

—

 

Dividends paid

 

(190,478

)

 

 

(195,611

)

Net cash provided by (used in) financing activities

 

(1,151,073

)

 

 

2,458,377

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

1,078

 

 

 

(35,730

)

Increase (decrease) in cash, cash equivalents and restricted cash

 

882,640

 

 

 

(105,741

)

Cash, cash equivalents and restricted cash, beginning of the period

 

2,256,875

 

 

 

2,215,606

 

Cash, cash equivalents and restricted cash, end of the period

$

3,139,515

 

 

$

2,109,865

 

SCHEDULE 6

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES (UNAUDITED)

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands, except per share data)

 

 

 

Three Months Ended September 30, 2024

 

 

GAAP

 

Net Revenue Adjustments(1)

 

Earnings Adjustments(2)

 

Income

Taxes on Adjustments(3)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

2,601,552

 

$

(244,621

)

 

$

—

 

$

—

 

 

$

2,356,931

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

475,581

 

$

986

 

 

$

610,000

 

$

—

 

 

$

1,086,567

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Global Payments

 

$

315,125

 

$

986

 

 

$

591,467

 

$

(122,591

)

 

$

784,987

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to Global Payments

 

$

1.24

 

 

 

 

 

 

 

$

3.08

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

 

254,897

 

 

 

 

 

 

 

 

254,897

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2023

 

 

GAAP

 

Net Revenue Adjustments(1)

 

Earnings Adjustments(2)

 

Income

Taxes on Adjustments(3)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

2,475,691

 

$

(243,249

)

 

$

—

 

$

—

 

 

$

2,232,442

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

558,196

 

$

541

 

 

$

460,787

 

$

—

 

 

$

1,019,525

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Global Payments

 

$

361,830

 

$

541

 

 

$

464,389

 

$

(108,128

)

 

$

718,632

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to Global Payments

 

$

1.39

 

 

 

 

 

 

 

$

2.75

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

 

260,935

 

 

 

 

 

 

 

 

260,935

----------------------------------------------------------------------------------

(1)

Includes adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain lines of business to reflect economic benefits to the company. For the three months ended September 30, 2024 and 2023, net revenue adjustments also included $1.0 million and $0.5 million, respectively, to eliminate the effect of acquisition accounting fair value adjustments for software-related contract liabilities associated with acquired businesses.

 

 

(2)

For the three months ended September 30, 2024, earnings adjustments to operating income included $347.1 million in cost of services (COS) and $262.9 million in selling, general and administrative expenses (SG&A). Adjustments to COS included amortization of acquired intangibles of $347.6 million and other items of $(0.5) million. Adjustments to SG&A included share-based compensation expense of $51.0 million, acquisition, integration and separation expenses of $45.8 million, employee termination benefits of $40.9 million, charges for business transformation activities of $59.2 million, charges of $55.8 million for technology assets that will no longer be utilized under a revised technology architecture development strategy, and other items of $10.2 million.

 

 

 

For the three months ended September 30, 2023, earnings adjustments to operating income included $340.8 million in COS and $120.0 million in SG&A. Adjustments to COS included amortization of acquired intangibles of $340.4 million and other items of $0.4 million. Adjustments to SG&A included share-based compensation expense of $36.6 million, acquisition, integration and separation expenses of $75.1 million, facilities exit charges of $3.7 million, and other items of $4.6 million.

 

 

(3)

Income taxes on adjustments reflect the tax effect of earnings adjustments to income before income taxes. The tax rate used in determining the tax impact of earnings adjustments is either the jurisdictional statutory rate in effect at the time of the adjustment or the jurisdictional expected annual effective tax rate for the period, depending on the nature and timing of the adjustment. In addition, for the three months ended September 30, 2023, income taxes on adjustments include the removal of tax expense related to business dispositions.

 

 

 

See "Non-GAAP Financial Measures" discussion on Schedule 10.

 

 

 

Note: Amounts may not sum due to rounding.

SCHEDULE 7

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES (UNAUDITED)

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands, except per share data)

 

 

 

Nine Months Ended September 30, 2024

 

 

GAAP

 

Net Revenue Adjustments(1)

 

Earnings Adjustments(2)

 

Income
Taxes on Adjustments(3)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

7,590,508

 

$

(725,516

)

 

$

—

 

$

—

 

 

$

6,864,992

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

1,500,457

 

$

1,878

 

 

$

1,584,184

 

$

—

 

 

$

3,086,519

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Global Payments

 

$

1,003,192

 

$

1,878

 

 

$

1,559,406

 

$

(364,206

)

 

$

2,200,270

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to Global Payments

 

$

3.92

 

 

 

 

 

 

 

$

8.60

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

 

255,880

 

 

 

 

 

 

 

 

255,880

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2023

 

 

GAAP

 

Net Revenue Adjustments(1)

 

Earnings Adjustments(2)

 

Income
Taxes on Adjustments(3)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

7,220,607

 

$

(735,882

)

 

$

—

 

$

—

 

 

$

6,484,725

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

1,217,670

 

$

(18,100

)

 

$

1,689,447

 

$

—

 

 

$

2,889,017

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Global Payments

 

$

624,936

 

$

(18,100

)

 

$

1,707,746

 

$

(279,382

)

 

$

2,035,200

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to Global Payments

 

$

2.39

 

 

 

 

 

 

 

$

7.79

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

 

261,410

 

 

 

 

 

 

 

 

261,410

----------------------------------------------------------------------------------

(1)

Includes adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain lines of business to reflect economic benefits to the company. For nine months ended September 30, 2024 and 2023, net revenue adjustments also included $1.9 million and $1.6 million, respectively, to eliminate the effect of acquisition accounting fair value adjustments for software-related contract liabilities associated with acquired businesses. Adjustments for the nine months ended September 30, 2023 also included a $19.7 million adjustment to exclude revenues that were associated with certain excluded expenses of our consumer business, which was divested in April 2023.

 

 

(2)

For the nine months ended September 30, 2024, earnings adjustments to operating income included $1,036.3 million in COS and $547.9 million in SG&A. Adjustments to COS included amortization of acquired intangibles of $1,036.8 million and other items of $(0.5) million. Adjustments to SG&A included share-based compensation expense of $134.4 million, acquisition, integration and separation expenses of $180.4 million, employee termination benefits of $75.9 million, charges for business transformation activities of $59.2 million, charges of $55.8 million for technology assets that will no longer be utilized under a revised technology architecture development strategy, and other items of $42.2 million.

 

 

 

For the nine months ended September 30, 2023, earnings adjustments to operating income included $988.7 million in COS and $561.6 million in SG&A. Adjustments to COS included amortization of acquired intangibles of $986.0 million and other items of $2.7 million. Adjustments to SG&A included share-based compensation expense of $173.3 million, acquisition, integration and separation expenses of $336.4 million, facilities exit charges of $15.0 million, employee termination benefits of $31.5 million, and other items of $5.4 million. Earnings adjustments to operating income also included the $139.1 million loss on business dispositions.

 

 

 

Acquisition, integration and separation expenses for the nine months ended September 30, 2023 included $93.6 million related to our divested consumer business. These incremental expenses, which include card and marketing expenses, compensation and benefit expenses, and other expenses, were incurred as a result of contractual obligations with the purchasers of the consumer business and do not reflect the manner in which the company would have operated the business and would not have otherwise been incurred absent the transaction.

 

 

 

For the nine months ended September 30, 2023, earnings adjustments to net income also included an allowance for current expected credit losses (CECL) of $18.2 million within interest and other expense related to the seller financing issued in connection with the business dispositions.

 

 

(3)

Income taxes on adjustments reflect the tax effect of earnings adjustments to income before income taxes. The tax rate used in determining the tax impact of earnings adjustments is either the jurisdictional statutory rate in effect at the time of the adjustment or the jurisdictional expected annual effective tax rate for the period, depending on the nature and timing of the adjustment. In addition, for the three months ended September 30, 2023, income taxes on adjustments include the removal of tax expense related to business dispositions.

 

 

 

See "Non-GAAP Financial Measures" discussion on Schedule 10.

 

 

 

Note: Amounts may not sum due to rounding.

SCHEDULE 8

RECONCILIATION OF SEGMENT NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES (UNAUDITED)

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)

 

 

 

Three Months Ended September 30, 2024

 

 

GAAP

 

Net Revenue
Adjustments (1)

 

Earnings
Adjustments(2)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

1,997,660

 

 

$

(153,339

)

 

$

—

 

$

1,844,321

 

Issuer Solutions

 

 

621,130

 

 

 

(92,089

)

 

 

—

 

 

529,041

 

Intersegment eliminations

 

 

(17,238

)

 

 

807

 

 

 

—

 

 

(16,431

)

 

 

$

2,601,552

 

 

$

(244,621

)

 

$

—

 

$

2,356,931

 

 

 

 

 

 

 

 

 

 

Operating income (loss):

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

707,546

 

 

$

560

 

 

$

213,365

 

$

921,472

 

Issuer Solutions

 

 

106,045

 

 

 

426

 

 

 

133,914

 

 

240,385

 

Corporate

 

 

(338,010

)

 

 

—

 

 

 

262,721

 

 

(75,289

)

 

 

$

475,581

 

 

$

986

 

 

$

610,000

 

$

1,086,567

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2023

 

 

GAAP

 

Net Revenue
Adjustments (1)

 

Earnings
Adjustments(2)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

1,884,006

 

 

$

(156,055

)

 

$

—

 

$

1,727,951

 

Issuer Solutions

 

 

607,848

 

 

 

(88,112

)

 

 

—

 

 

519,736

 

Intersegment eliminations

 

 

(16,163

)

 

 

918

 

 

 

—

 

 

(15,245

)

 

 

$

2,475,691

 

 

$

(243,249

)

 

$

—

 

$

2,232,442

 

 

 

 

 

 

 

 

 

 

Operating income (loss):

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

637,864

 

 

$

1

 

 

$

209,813

 

$

847,678

 

Issuer Solutions

 

 

113,877

 

 

 

540

 

 

 

132,226

 

 

246,643

 

Corporate

 

 

(193,545

)

 

 

—

 

 

 

118,748

 

 

(74,797

)

 

 

$

558,196

 

 

$

541

 

 

$

460,787

 

$

1,019,525

 

------------------------------------------------------------------------------------------

(1)

Includes adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain lines of business to reflect economic benefits to the company. For the three months ended September 30, 2024 and 2023, net revenue adjustments also included $1.0 million and $0.5 million, respectively, to eliminate the effect of acquisition accounting fair value adjustments for software-related contract liabilities associated with acquired businesses.

 

 

(2)

For the three months ended September 30, 2024, earnings adjustments to operating income included $347.1 million in COS and $262.9 million in SG&A. Adjustments to COS included amortization of acquired intangibles of $347.6 million and other items of $(0.5) million. Adjustments to SG&A included share-based compensation expense of $51.0 million, acquisition, integration and separation expenses of $45.8 million, employee termination benefits of $40.9 million, charges for business transformation activities of $59.2 million, charges of $55.8 million for technology assets that will no longer be utilized under a revised technology architecture development strategy, and other items of $10.2 million.

 

 

 

For the three months ended September 30, 2023, earnings adjustments to operating income included $340.8 million COS and $120.0 million in SG&A. Adjustments to COS included amortization of acquired intangibles of $340.4 million and other items of $0.4 million. Adjustments to SG&A included share-based compensation expense of $36.6 million, acquisition, integration and separation expenses of $75.1 million, facilities exit charges of $3.7 million, and other items of $4.6 million.

 

 

 

See "Non-GAAP Financial Measures" discussion on Schedule 10.

 

 

 

Note: Amounts may not sum due to rounding.

SCHEDULE 9

RECONCILIATION OF SEGMENT NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES (UNAUDITED)

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In thousands)

 

 

 

Nine Months Ended September 30, 2024

 

 

 

 

 

 

GAAP

 

Net Revenue
Adjustments (1)

 

Earnings
Adjustments(2)

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

5,802,780

 

 

$

(462,456

)

 

$

—

 

$

5,340,324

 

 

 

 

 

Issuer Solutions

 

 

1,837,373

 

 

 

(266,230

)

 

 

—

 

 

1,571,143

 

 

 

 

 

Intersegment eliminations

 

 

(49,645

)

 

 

3,170

 

 

 

—

 

 

(46,475

)

 

 

 

 

 

 

$

7,590,508

 

 

$

(725,516

)

 

$

—

 

$

6,864,992

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

1,960,509

 

 

$

560

 

 

$

635,589

 

$

2,596,658

 

 

 

 

 

Issuer Solutions

 

 

322,517

 

 

 

1,317

 

 

 

404,574

 

 

728,408

 

 

 

 

 

Corporate

 

 

(782,569

)

 

 

—

 

 

 

544,021

 

 

(238,548

)

 

 

 

 

 

 

$

1,500,457

 

 

$

1,878

 

 

$

1,584,184

 

$

3,086,519

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2023

 

 

GAAP

 

Net Revenue
Adjustments(1)

 

Earnings
Adjustments(2)

 

Non-GAAP

 

Consumer
Business (3)

 

Supplemental
Non-GAAP (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

5,331,909

 

 

$

(465,425

)

 

$

—

 

$

4,866,484

 

 

$

—

 

 

$

4,866,484

 

Issuer Solutions

 

 

1,769,196

 

 

 

(253,961

)

 

 

—

 

 

1,515,235

 

 

 

—

 

 

 

1,515,235

 

Consumer Solutions

 

 

182,740

 

 

 

(19,713

)

 

 

—

 

 

163,027

 

 

 

(163,027

)

 

 

—

 

Intersegment eliminations

 

 

(63,238

)

 

 

3,217

 

 

 

—

 

 

(60,021

)

 

 

17,585

 

 

 

(42,436

)

 

 

$

7,220,607

 

 

$

(735,882

)

 

$

—

 

$

6,484,725

 

 

$

(145,442

)

 

$

6,339,283

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Merchant Solutions

 

$

1,748,622

 

 

$

23

 

 

$

602,550

 

$

2,351,195

 

 

$

—

 

 

$

2,351,195

 

Issuer Solutions

 

 

292,388

 

 

 

1,590

 

 

 

403,818

 

 

697,796

 

 

 

—

 

 

 

697,796

 

Consumer Solutions

 

 

(3,908

)

 

 

(19,713

)

 

 

96,851

 

 

73,230

 

 

 

(73,230

)

 

 

—

 

Corporate

 

 

(680,337

)

 

 

—

 

 

 

447,134

 

 

(233,203

)

 

 

—

 

 

 

(233,203

)

Net loss on business dispositions

 

 

(139,095

)

 

 

—

 

 

 

139,095

 

 

—

 

 

 

—

 

 

 

—

 

 

 

$

1,217,670

 

 

$

(18,100

)

 

$

1,689,447

 

$

2,889,017

 

 

$

(73,230

)

 

$

2,815,788

 

----------------------------------------------------------------------------------

(1)

Includes adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain lines of business to reflect economic benefits to the company. For nine months ended September 30, 2024 and 2023, net revenue adjustments also included $1.9 million and $1.6 million, respectively, to eliminate the effect of acquisition accounting fair value adjustments for software-related contract liabilities associated with acquired businesses. Adjustments for the nine months ended September 30, 2023 also included a $19.7 million adjustment to exclude revenues that were associated with certain excluded expenses of our consumer business, which was divested in April 2023.

 

 

(2)

For the nine months ended September 30, 2024, earnings adjustments to operating income included $1,036.3 million in COS and $547.9 million in SG&A. Adjustments to COS included amortization of acquired intangibles of $1,036.8 million and other items of $(0.5) million. Adjustments to SG&A included share-based compensation expense of $134.4 million, acquisition, integration and separation expenses of $180.4 million, employee termination benefits of $75.9 million, charges for business transformation activities of $59.2 million, charges of $55.8 million for technology assets that will no longer be utilized under a revised technology architecture development strategy, and other items of $42.2 million.

 

 

 

For the nine months ended September 30, 2023, earnings adjustments to operating income included $988.7 million in COS and $561.6 million in SG&A. Adjustments to COS included amortization of acquired intangibles of $986.0 million and other items of $2.7 million. Adjustments to SG&A included share-based compensation expense of $173.3 million, acquisition, integration and separation expenses of $336.4 million, facilities exit charges of $15.0 million, employee termination benefits charges of $31.5 million, and other items of $5.4 million. Earnings adjustments to operating income also included the $139.1 million loss on business dispositions.

 

 

 

Acquisition, integration and separation expenses for the nine months ended September 30, 2023 included $93.6 million related to our divested consumer business. These incremental expenses, which include card and marketing expenses, compensation and benefit expenses, and other expenses, were incurred as a result of contractual obligations with the purchasers of the consumer business and do not reflect the manner in which the company would have operated the business and would not have otherwise been incurred absent the transaction.

 

 

(3)

The supplemental non-GAAP information excludes the results of the consumer business that was divested in April 2023.

 

 

 

See "Non-GAAP Financial Measures" discussion on Schedule 10.

 

 

 

Note: Amounts may not sum due to rounding.

SCHEDULE 10

OUTLOOK SUMMARY (UNAUDITED)

GLOBAL PAYMENTS INC. AND SUBSIDIARIES

(In millions, except per share data)

 

 

 

 

2023

 

 

2024 Outlook

 

Growth

Revenues:

 

 

 

 

 

 

GAAP revenues

 

$

9,654

 

 

$10,130 to $10,260

 

 

5% to 6%

Adjustments(1)

 

 

(983

)

 

(960

)

 

 

Adjusted net revenue

 

$

8,671

 

 

$9,170 to $9,300

 

 

6% to 7%

 

 

 

 

 

 

 

Earnings Per Share:

 

 

 

 

 

 

GAAP diluted EPS

 

$

3.77

 

 

$5.41 to $5.57

 

 

nm

Adjustments(2)

 

 

6.65

 

 

6.13

 

 

 

Adjusted EPS

 

$

10.42

 

 

$11.54 to $11.70

 

 

11% to 12%

(1)

Includes adjustments to revenues for gross-up related payments (included in operating expenses) associated with certain lines of business to reflect economic benefit to the company. Amounts also included adjustments to eliminate the effect of acquisition accounting fair value adjustments for software-related contract liabilities associated with acquired businesses, as well as adjustments to exclude revenues that were associated with certain excluded expenses of our consumer business which was classified as assets held for sale on our balance sheet.

 

 

(2)

Adjustments to 2023 GAAP diluted EPS included the removal of 1) software-related contract liability adjustments described above of $0.01, 2) acquisition related amortization expense of $3.88, 3) share-based compensation expense of $0.62, 4) acquisition, integration, and separation expense of $1.22, 5) facilities exit charges of $0.05, 6) equity method investment earnings from our interest in a private equity investment fund of $0.02, 7) discrete tax items of $0.28, 8) gain/loss on business dispositions of $0.40, 9) other income and expense of $0.06, 10) other items of $0.11, and 11) the effect of noncontrolling interests and income taxes, as applicable.

 

 

 

Note: nm = not meaningful.

NON-GAAP FINANCIAL MEASURES

Global Payments supplements revenues, operating income, operating margin and net income, and earnings per share (EPS) determined in accordance with U.S. GAAP by providing these measures with certain adjustments (such measures being non-GAAP financial measures) in this document to assist with evaluating our performance. In addition to GAAP measures, management uses these non-GAAP financial measures to focus on the factors the company believes are pertinent to the daily management of our operations. Management uses these non-GAAP financial measures, together with other metrics, to set goals for and measure the performance of the business and to determine incentive compensation. Adjusted net revenue, adjusted operating income, adjusted operating margin, adjusted EPS and adjusted free cash flow should be considered in addition to, and not as substitutes for, revenues, operating income, EPS and net operating cash flows determined in accordance with GAAP. The non-GAAP financial measures reflect management's judgment of particular items, and may not be comparable to similarly titled measures reported by other companies.

Adjusted net revenue excludes gross-up related payments associated with certain lines of business to reflect economic benefits to the company. On a GAAP basis, these payments are presented gross in both revenues and operating expenses. Management believes adjusted net revenue more closely reflects the economic benefits to the company's core business and allows for better comparisons with industry peers.

Adjusted operating income, adjusted net income and adjusted EPS exclude acquisition-related amortization expense, share-based compensation expense, acquisition, integration and separation expense, gain or losses in business divestitures, business transformation activities, and certain other items specific to each reporting period as more fully described in the accompanying reconciliations in Schedules 6 and 7. The tax rate used in determining the income tax impact of earnings adjustments is either the jurisdictional statutory rate in effect at the time of the adjustment or the jurisdictional expected annual effective tax rate for the period, depending on the nature and timing of the adjustment.

Adjusted operating margin is derived by dividing adjusted operating income by adjusted net revenue.

The supplemental non-GAAP information excludes the results of the consumer business that was divested in April 2023. Management believes that providing such supplemental financial information should enhance shareholders’ ability to evaluate how the business will be managed going forward.

Investor contact:
investor.relations@globalpay.com
Winnie Smith
770-829-8478

Media contact:
media.relations@globalpay.com
Emily Edmonds
770-829-8755

Source: Global Payments Inc.