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Global Payments (GPN) Q2 Earnings Top Estimates, Fall Y/Y

Zacks Equity Research

Global Payments Inc. GPN second-quarter 2020 earnings of $1.31 per share beat the Zacks Consensus Estimate by 14.91%. However, the bottom line was down 13% year over year.

Adjusted net revenues declined 14% year over year to $1.521 billion but the top line surpassed the Zacks Consensus Estimate of $1.41 billion.

Adjusted operating margin was 37%, down 40 basis points year over year.

Global Payments Inc. Price, Consensus and EPS Surprise

Global Payments Inc. Price, Consensus and EPS Surprise
Global Payments Inc. Price, Consensus and EPS Surprise

Global Payments Inc. price-consensus-eps-surprise-chart | Global Payments Inc. Quote

Segmental Strength

Merchant Solutions: Adjusted revenues of $905.7 million decreased 21.3% year over year. Operating income of $371.5 million fell 28.8% year over year.

Issuer Solutions: Adjusted net revenues plus network fees of $414 million dipped 5.4% year over year. Operating income of $177.1 million increased 11.3% year over year.

Business and Consumer Solution: This segment was formed after the acquisition of Total System. It reported adjusted net revenues plus network fees of $216.7 million, up 10.5% year over year. Operating income was $70.1 million, up 45.4% year over year.

Balance Sheet Position (as of Jun 30, 2020)

Total cash and cash equivalents were $1.83 billion, up 8.8% from the level as of Dec 31, 2019.

Long-term debt was $8.4 billion, down 7.2% from the level at 2019 end.

Net cash provided by operating activities for the first six months was $960.3 million, up 288% year over year.

Dividend Announcement

The company approved a dividend of 19.5 cents per share, payable Sep 24, 2020 to its shareholders of record as of Sep 10.

Business Update

The company forged a relationship with Amazon Web Services (AWS) to be its preferred cloud provider for its issuer business.

The company also expanded its alliance with the long-standing partner CaixaBank by agreeing to meaningfully increase its ownership in their joint venture as well as extend their partnership through 2040.

The company also undertook cost-control initiatives via which it expects to deliver an incremental $400 million of savings over the next 12 months.

Zacks Rank and Performances of Other Industry Players

Global Payments carries a Zacks Rank #3 (Hold), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other companies in the same space that already reported June-quarter earnings so far, the bottom-line results of Mastercard Incorporated  MA, American Express Co. AXP and Visa Inc. V beat the respective Zacks Consensus Estimate by 18.26%, 123.1% and 3.92%, respectively.

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