Global Payments Inc.

Ladies and gentlemen, thank you for standing by. Welcome to Global Payments' first quarter 2023 earnings conference call. At this time, all participants are in listen-only mode. Later, we'll open up the lines for questions and answers. If you should require operator assistance during the call, please press star, then zero. As a reminder, this conference is being recorded. At this time, I'd like to turn the conference over to your host, Senior Vice President, Investor Relations, Winnie Smith. Please go ahead, Winnie.

Good morning, and welcome to Global Payments' first quarter 2023 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 contained forward-looking statements about, among other matters, expected operating and financial results. These statements are subject to risks, uncertainties, and other factors, including the impact of 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 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 of the date of this call, and we undertake no obligation to update them. We will also be 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-K 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 Jack.

Thanks, Wendy. We are pleased to have delivered our best first quarter in four years, exceeding our expectations to start 2023 despite continuing macro uncertainties. Our ongoing businesses produced adjusted net revenue growth, adjusted operating margin expansion, and adjusted earnings per share growth, consistent with our cycle guidance once again. This performance reflects the wisdom of our strategies and our consistent focus on execution. We accomplished these results while also turning the page on our strategic initiatives. First, we are delighted to have closed our acquisition of EVO payments in late March, and we are already off to a strong start. Cameron will provide more details on our integration efforts now underway, but let me preface his comments by saying that we remain as excited about the many opportunities we have together as we were at the time we announced the transaction nine months ago. I am delighted to officially welcome EVO's Value Team members to the Global Payments family. We are pleased to have also recently completed the divestitures of NetSpend's consumer assets and our gaming solutions business. With the successful execution of these transactions, we are focused on managing our go-forward business composition with merchant solutions representing approximately 75% of our adjusted net revenue and issuer solutions, including B2B, comprising roughly 25%. This platform provides us the ideal set of core capabilities from which to grow for many years to come. Both issuer and merchant posted exceptional results for the first quarter. Starting with issuer solutions, our core business again generated substantial sequential financial and operating improvement, achieving high single-digit growth and marking its best quarterly performance in more than five years. It is worth highlighting that our core customer base consists of money center and systemically important financial institutions globally. We believe that we've been the beneficiary of incremental depository flows for larger institutions, combined with several significant implementations during the quarter, which we expect to provide tailwinds for some time to come. Year over year, consumer transaction volumes grew into the double digits. Our commercial card business also continued to perform, with transactions growing nearly 25% in the first quarter, as cross-border and domestic corporate travel continued its recovery trajectory. Traditional accounts on file increased by roughly 20 million sequentially and double digits from the prior year to a new record due to strong conversion execution of new accounts and growth with existing customers. Our decades-long strategy of aligning with market share winners continues to bear fruit. And I think it's clear at this point that the legacy versus FinTech hypothesis from 2021 has now been thoroughly debunked and turned on its head. We are delighted that we successfully converted a significant portion of one of the top 10 commercial banks in the United States in early March. This win was a double competitive takeaway early after the announcement of our merger. We also completed the conversion of the post-bank portfolio in April. And in collaboration with AWS, we successfully deployed our cloud-based data and analytics platform for a leading financial institution partner in the United States. Finally, we are pleased to have signed multi-year extensions with M&T Bank, as well as another longstanding US-based FI partner during the quarter. We currently have nine letters of intent with institutions worldwide, nearly all of which were achieved through a competitive RFP process. Turning to B2B, we continue to drive strong growth with both corporates and financial institutions as we leverage our virtual card, mineral tree AP automation, and employer solution capabilities. This quarter we achieved record supplier enrollments as middle market companies further digitized their payments. It's worth noting that MineralTree delivered normalized growth of roughly 20% for the period, and we continue to expect near 30% growth for this business in calendar 2023. We are proud of the resiliency of our merchant business, which delivered double-digit growth excluding dispositions and a one-week contribution from EVO. This performance was achieved despite incremental macro uncertainties driven by the banking crisis that developed in the latter part of the quarter. Standouts for the period again include our worldwide e-commerce and omnichannel businesses, with growth accelerating to the high teens. Speaking of UCP, we are making great progress in our partnership with Spring by City that now spans North America, the UK, and continental Europe. We are currently live across 14 countries and run rating at more than 100 million transactions and over $3 billion in volume annually. And based on our pipeline with many of Citi's largest treasury and trade solutions customers, we are on track to more than double our volume together by the end of 2023. We also continue to see strong trends in our integrated business in the U.S., which grew at a mid-teens rate with sustained rates of accelerated growth. We also produced a record quarter for new sales in this channel, demonstrating ongoing strong demand for our solutions. Additionally, Vertical Markets achieved double-digit growth, led by School Solutions, Zego and Real Estate, and Xenial and Quick Service restaurants and stadiums. After announcing our partnership with the Braves last quarter, we are excited to have gone live with our Xenial Cloud point-of-sale solutions on April 6th, opening day for Truist Park. And we are pleased to have reached an agreement with the leading parks and entertainment company to provide both our Xenial food and beverage solutions, as well as our retail solutions, at all of its theme park locations across the United States. Our pipeline remains full across our service restaurant and sports and entertainment businesses. Stay tuned. Outside the United States, our Asia-Pacific business produced its best first quarter since 2018 as COVID-related restrictions were lifted at the end of 2022, including in Greater China. We continue to see strong trends in other factor growth geographies such as Spain and Central Europe, and we are excited to enhance our scale with Evo in these markets. We also had several successful product launches during the quarter in Europe, including our point-of-sale solution in Central Europe and our tap-on-phone solution in the UK. These all bode well for the cross-sell opportunities with Evo. Before I turn it over to Cameron, I'd like to address the announcement of my departure as CEO of Global Payments effective June 1st and the appointment of Cameron Brady as our next CEO. I've known Cameron personally for nine years and he's held the most senior and trusted positions in our company during that time. First as our CFO and today as our president and COO. Cameron is an outstanding leader and the right person to succeed me. I have every confidence in his and our company's continued future success and will do everything I can to ensure a smooth transition in Cameron over the coming weeks. Now is the right time for us to execute on our succession plans. We recently closed on all three of our strategic transactions and we produced our best first quarter in four years with our first beaten raise in 18 months. Our businesses are exceptionally healthy. We delivered on a heightened cycle guidance in 2022 and are poised to do the same in 2023 excluding, of course, dispositions. While challenges undoubtedly remain, we are on a path to return to normalcy, as I suggested and hoped for on our February call. When we arrived at global payments 13 years ago, we had many strengths, but we lacked direct distribution, scale in e-commerce, a B2B strategy, and we had much legacy technology debt to repay. Now, roughly 10 years after I became CEO, we have distinctive software assets owned and partnered a market-leading e-com and omnichannel presence, enhanced exposure to faster growth markets, and sizable B2B assets. We couple distinctive distribution with a solid technology footprint and unique multi-year collaborations with both AWS and Google. Finally and importantly, over the last nine and a half years since we've been running the company, GPN stock has compounded at nearly 16.5% annually, 650 basis points in excess of the S&P 500 index, and 300 basis points in excess of our peers, despite all the turmoil over the last three years. Simply put, we've accomplished our goals. I'll now turn the call to Cameron.