Global Payments Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the Global Payments second quarter 2022 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 an 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' second quarter 2022 conference call. Our earnings release and the slides that accompany this call can be found on the investor relations area of our website at www.globalpayments.com. 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, among other matters, expected operating and financial results. and statements about the proposed transaction between global payments and EVO payments. 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 expectations. Certain risk factors inherent in our business are set forth in filing for 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 the date of this call, and we undertake no obligation to update them. We will be also referring to several non-GAAP financial measures, which we believe are more reflective of our ongoing performance. For a full reconciliation of the non-GAAP financial measures discussed in this call to the most comparable GAAP measure, In accordance with SEC regulations, please see our press release furnished as an exhibit to our Form 8 file this morning and our supplemental materials available on the Investor Relations section of our website. Joining me on the call are Jeff Sloan, CEO, Cameron Brady, President and COO, and Josh Whipple, Senior Executive Vice President and CFO. Now, I'll turn the call over to Jeff.

Thanks, Whitney. We welcome Josh Whipple, our new CFO, to the call today. Josh has been a senior leader at our company for seven and a half years, guiding us through some of the most significant milestones in our history. He's a trusted partner who has played a key role in building the leading technology-enabled, software-driven payments business worldwide that Global Payments is today. We also thank Paul Todd for his terrific partnership and the critical role he has played in the successful merger of TESIS and Global Payments, over the past three years and his 27 years at TSYS. We wish Paul all the best in retirement. We delivered second quarter adjusted results that were the best in our history across our key financial metrics despite the self-evident incremental headwinds. Both our merchant and issuer segments exceeded our expectations on a currency neutral basis post the divestiture of our Russian business. Importantly, Our issuer business generated 400 basis points of sequential revenue improvement on a comparable basis, exactly as we said it would, and our pipeline remains at record levels. And we achieved these results while executing multiple transactions to better align our businesses with our strategy, getting a key new partnership, extending our lead, and deepening our competitive mode. First, we're delighted to announce that we've entered into a definitive agreement to acquire Evo Payments. significantly increasing our target addressable markets, enhancing our leadership and integrated payments worldwide, expanding our presence in new geographies, further scaling in existing faster growth markets, and augmenting our business-to-business B2B software and payment solutions. Specifically, Evo provides us with a new presence in attractive geographies such as Poland, Germany, Chile, and Greece, and enhances our scale in existing markets, including Mexico, Spain, and the UK. And of course, the U.S. and Canada. For B2B, Evo brings us key technology partners and integrations, including with many of the largest enterprise ERP solutions. And it adds leading accounts receivable software capabilities to complement our B2B and accounts payable offerings, which we significantly augmented with our successful acquisition of MineralTree last fall. At our investor conference last September, we announced B2B as the fourth and newest pillar of our strategy, meaningfully expanding our target addressable markets to include a segment that remains substantially under-penetrated, providing tremendous opportunities for future growth. As we said then, we have the technology and distribution assets we need to compete effectively in B2B post-Artesis merger and already positioned as one of the largest B2B companies globally at scale. This includes technology centered on virtual card solutions, A vast commercial card footprint, massive distribution partnerships with the world's leading financial institutions, data and analytics, market-leading payroll technologies, and access globally to non-card-based rails. Our acquisition of MineralTree last October provided us with a leading cloud SaaS accounts payable business, which grew 30% in the second quarter and is now operating at EBITDA break-even ahead of plans. We've been on the lookout for an accounts receivables business corollary to complete our B2B go-to-market offerings. We believe that Evo now provides that missing link. Cameron will provide more details on the tremendous value creation opportunity in combining Evo with global payments. But let me start by expressing how delighted I am to welcome Evo team members to global payments. The transaction is expected to close no later than the first quarter of 2023. subject to regulatory, and of course, EVO shareholder approvals. Second, we are thrilled to announce Silver Lake, the global leader in technology investing, has committed a $1.5 billion strategic investment in global payments in the form of convertible unsecured senior notes. As an expression of their confidence in our long-term leadership role in digital payments and sustainability of our growth, This amount is by far the largest commitment in Silver Lake's long, distinguished history. Silver Lake has an outstanding track record of successful investments in technology-driven companies, and we are humbled by their confidence in us as the winner in the digital payments ecosystem over the cycle. This new partnership serves as further proof of the distinctiveness of our model, wisdom of our strategy, and position as a leading driver and beneficiary of innovation in payments. A senior partner from Silver Lake will join the Global Payments Board of Directors. We are very proud of the company that we keep. Third, we reached a definitive agreement to sell NetSpend's consumer portfolio to Searchlight Capital and REV Worldwide for $1 billion to further align our businesses with our strategy, while simultaneously enhancing our organic growth and margin characteristics. As we said at the time we announced the strategic review in February, NetSpend's direct-to-consumer portfolio is an attractive set of solutions with a favorable profile, but there is limited overlap between its customer base and our traditional corporate clients. As expected, we will retain NetSpend's B2B assets, which delivered strong mid-teens normalized growth in the second quarter, and will be included in our issuer solutions segment beginning with our third quarter. We're very proud of all that our valued team members in NetSpend have accomplished as part of global payments and we have every confidence this business is well positioned for the future under new ownership. We expect this transaction to close by the end of the first quarter of 2023, subject to regulatory approvals. The completion of these important transactions provides us with heightened confidence in the raised cycle guidance for revenue margin and earnings that we provided at our investor conference last September. Post the acquisition of Evo and NetSpend SAIL, Merchant solutions will then represent approximately 75% of our adjusted net revenue, with issuer solutions, including NetSpend's B2B assets, comprising roughly 25%. The future is indeed bright. Cameron?