Global Payments Inc.

Ladies and gentlemen, thank you for standing by, and welcome to Global Payments' fourth quarter and full year 2020 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will open the lines for questions and answers. If you should require assistance during this call, please press star, then zero. And as a reminder, today's conference will be recorded. At this time, I would like to turn the conference over to your host, Senior Vice President, Investor Relations, Winnie Smith. Please go ahead.

Good morning and welcome to Global Payments' fourth quarter and full year 2020 conference call. Before we begin, I'd like to remind you that some of the comments made by management during today's conference call contain forward-looking statements about expected operating and financial results. These statements are subject to risks, uncertainties, and other factors, including the impact of COVID-19 and economic conditions on our future operations that could cause actual results to differ materially from our expectations. Certain risk factors inherent in our business are set forth in filings with the SEC, including our most recent 10-K and subsequent filings. We caution you not to place undue reliance on these statements. Forward-looking statements during this call speak only as of the date of this call, and we undertake no obligation to update them. Some of the comments made refer to non-GAAP financial measures, such as adjusted net revenue, adjusted operating margin, and adjusted earnings per share, which we believe are more reflective of our ongoing performance. For a full reconciliation of these, and other non-GAAP financial measures to the most comparable GAAP measure in accordance with SEC regulation, please see our press release furnace as an exhibit to our Form 8K filed this morning and our attended financial highlights, both of which are available in the investor relations area of our website at www.globalpaymentinc.com. Joining me on the call are Jeff Sloan, CEO, Cameron Brady, President and COO, and Paul Todd, Senior Executive Vice President and CFO. Now I'll turn the call over to Jeff.

Thanks, Winnie. We delivered fourth quarter and full year results that exceeded our expectations because of our focus on technology enablement coupled with ongoing excellence in execution. Our fourth quarter results demonstrated continued sequential improvement despite the impact of a more challenging macroeconomic environment in a number of our markets for much of the period. None of this would have been possible without the dedication of our exceptional team members during this difficult time. And we thank them for their commitment to our customers, to each other, and to our communities. We are very pleased to have delivered substantial margin improvement for the fourth quarter, while also setting aside funds to pay partial cash bonuses to our non-executive team members. Because of the actions we took early in the pandemic and our consistency in execution, we were able to deliver double-digit earnings per share growth in the fourth quarter, positioning us well heading into 2021. We believe that we exited 2020 in a better position than we entered it. We also accomplished a great deal over the last 12 months. Specifically, we signed Truist Financial Corporation, the sixth largest commercial bank in the United States, a competitive win twice over. entered a new collaboration with AWS, our preferred provider of issuer cloud services, to launch a unique go-to-market distribution strategy coupled with transformative cloud-native technologies. Expanded and extended our partnership with CaixaBank by increasing ownership of our joint venture and executing a new referral agreement through 2040. Renewed agreements with a number of the most complex and sophisticated financial institutions globally including TD Bank in North America, HSBC in Europe, and CIBC in Canada, assisted in the rapid distribution of more than $2.5 billion in stimulus funds for our NetSpend customers days faster than other financial technology participants, and announced today a new partnership with Google to deliver innovative and seamless digital services to all manner of merchants worldwide. Our collaboration with Google substantially advances our merchant business, by driving incremental revenue and lowering operating costs to a worldwide go-to-market distribution relationship and co-innovation agreement focused on transformative cloud-native technologies. Together, we will bring new best-in-class digital products to market on a global basis more quickly, and we will further catalyze our culture of market-leading innovation. Cameron will provide more detail on Google in a minute, but it's worth noting that in the last six months, we have struck significant and unique distribution relationships with two of the world's largest and most respected technology companies with a combined market capitalization of nearly $3 trillion. This is a first for the payments technology industry. And we did this in the midst of a once-in-a-century pandemic while delivering adjusted earnings per share growth and gaining market share. These collaborations also are consistent with our long-held distinctive strategies to drive digital penetration, Our business is a combination of two halves, distinctive distribution and cutting-edge technologies. AWS and Google enhance both parts of the equation. Together, we will leapfrog legacy analog means of distribution and redefine how payment solutions and services are sold and consumed in the digital age for our issuing and merchant businesses. We already have reached the threshold of 60% of our business coming from technology enablement. a goal we set in March 2018 for year-end 2020 and achieved early last July. And roughly 25% of our business is now related to our e-commerce and omnichannel initiatives. But together with AWS and Google, we expect to do more by driving further technology enablement and omnichannel penetration as legs at the stool for future growth. I cannot think of two better partners to catalyze further migration of our issuing and merchant businesses cloud native technologies and expand our competitive mode. These partnerships provide proof points at the momentum we have entering 2021 and will accelerate the transformation of our businesses for years to come. Just a reminder of the composition of the businesses driving our growth. Starting with our merchant business, which is two thirds of our company, our technology enabled portfolio consists of three roughly equally sized channels. Our omni-channel, partnered software, and owned software and vertical markets businesses collectively represent nearly 60% of merchant-adjusted net revenue. Our relationship-led businesses make up the remaining portion and continue to differentiate themselves in the markets we serve based on the strength of our technologies. Our omni-channel businesses delivered accelerated sequential growth for the fourth quarter of 2020, again excluding travel and entertainment. As we said at the beginning of the pandemic, we continue to see and expect ongoing sustained share shifts toward omnichannel acceptance brought forward three to five years by COVID-19. We launched our Unified Commerce, or UCP, cloud POS solution this quarter, which connects any commerce software to our wireless payment terminals through our API to help merchants more easily unify their in-person and online payment experiences. Our city partnership also continues to expand worldwide, and we expect new city customers on UCP to include one of the leading global food companies, one of the preeminent global beverage brands, and one of the largest multinational auto manufacturing companies across multiple continents. And, of course, with today's announcement, we also expect Google to become a UCP partner. Additionally, we signed an agreement with Texas Instruments across Taiwan, the Philippines, and India And we expect to expand our relationship to additional geographies later this year. We also reached an agreement with Wolverine to consolidate their UK and European acquiring across 32 countries. And we have now successfully launched with both UberRise and UberEats in our Asia Pacific region. Moving to global payments integrated, which drives another nearly 20% of our merchant adjusted net revenue, we generated growth for the fourth quarter and for the full year. because of the unrivaled breadth of our partnership portfolio in the most attractive vertical markets. The strength of our combined integrated offerings allowed us to exceed our budgeted new sales forecast for calendar 2020, with new partner production increasing 171% versus 2019. Our own software businesses represent the remaining roughly 20% of our merchant adjusted net revenue, and our leading SaaS solutions in healthcare, higher education, and quick service restaurants, or QSRs, have been more resilient in the current environment. To that end, our advanced MD business delivered a record performance in 2020, achieving double-digit revenue and bookings growth. And our higher education business produced one of its finest years to date. Lastly, our enterprise QSR business continued its success with Xenio's Cloud POS and Omni solutions, enabling over 100 million transactions and $1.5 million in sales for the year. In addition to serving 26 of the top 50 QSR brands, we are also pleased to announce the signing of Denny's for cloud-based SaaS solutions, extending our addressable market to the fast casual category. Today, we lead with technology and innovative solutions across all of our merchant businesses. This includes our relationship-led channels, where we continue to see strong new sales performance fueled by our suite of differentiated products and solutions, for example, our U.S. business is seeing significant uptake of its SaaS point-of-sale solutions with adjusted net revenue and new sales both exceeding 20% growth in 2020. One recent notable win is with the Milwaukee Bucks, where we'll be deploying our cloud-based POS solution across merchandise stores and outlets in the arena. Issuer is the next largest segment of our business. In August 2020, we announced a transformational go-to-market collaboration with AWS, to provide an industry-leading cloud-based issuer processing platform for customers regardless of size, location, or processing preference. We currently have one LOI and three other mid- to late-stage opportunities together with AWS that we are actively working. And we now believe that the win in Asia in a similar large market from a legacy competitor that we have already secured with AWS will likely expand to several markets across Asia over time. We continue to capitalize on the broad and deep pipeline we have the good fortune to have in our issuer business. We currently have 11 letters of intent with financial institutions worldwide, six of which are competitive takeaways. In the last 18 months, we have had 36 competitive wins across North America and international markets. And our customers continue to win in the marketplace, a key element of our issuers' strategy to align with market leaders. During the first quarter of 2021, we will complete the first phase of the conversion of over 4 million accounts from a competitor for one of our largest customers. In Germany, we have successfully expanded our longstanding and successful partnership with Deutsche Bank, our largest client in the DAS region. We are pleased to announce that TESIS has been selected in a competitive process as Deutsche Bank's partner of choice for their scheme-branded card portfolios across all brands, including Deutsche Bank and PostBank. We are also proud to have signed a new multi-year agreement with Marlette Funding, owner and operator of the Best Egg lending platform, for the processing of a new consumer credit card product, which will launch in the second quarter of this year. We are pleased to have secured long-term extensions in multiple geographies, with President's Choice, a subsidiary of Loblaws, and Canadian Tire Financial Services, both large retailers in Canada, Scotiabank in Central America, Bank of Ireland, and Banco Invex in Mexico. Finally, our business and consumer segment delivered another quarter of solid growth as we continue to pivot our strategic focus to digitization, international expansion, and business-to-business opportunities. That shift is underway without any compromise in execution as we also achieved adjusted net revenue in excess of $200 million for the first time in a fourth quarter. The move toward cashless solutions is benefiting the portfolio with customers remaining active longer and utilizing our products more online. I am proud that NetSpend has once again facilitated the rapid distribution of stimulus funds to customers and played an important role during this most challenging period. Since late December, we have processed more than 1 billion deposits accounting for just over $1 billion in stimulus payments to American consumers dispersed by the IRS. And this was done days in advance of many of our traditional financial institutions and financial technology peers. In combination with the 2020 stimulus payments, we will have dispersed more than $2.5 billion in aid to customers through the first quarter of 2021. I think it's fair to ask how our business has been able to deliver results that are orders of magnitude better than our markets. Our strategic focus on the diversity of our business mix has enabled us to gain share. We are diverse across channels, geographies, software ownership and partnerships, vertical markets, and new and durable partnerships. We are diverse by design. We've coupled that diversity with a long track record of execution consistency, years of sustained technology investment, and the unmatched global experience of our long-tenured team. Now I'll turn the call over to Cameron to provide more detail on our new partnership with Google. Cameron?