Global Payments pushes patience for its restructuring

Global Payments contends its restructuring is showing signs of progress, but noted the benefits will become more apparent in the coming months.

"It's hard work and we don't want to lose sight of that," said Cameron Bready, CEO of Global Payments, during Thursday's earnings call. "There's a lot of change and it's disruptive at times."

For the quarter ending December 31, Global Payments reported net income of $567 million, up 57% from the prior year, net revenue of $2.29 billion, up 6.5% from the prior year and adjusted earnings per share of $2.95, up 6%. EPS and revenue were just shy of Zacks Investment Research analyst projections of $2.96 per share and $2.32 billion. Global Payments' merchant business' net revenue was 1.8 billion, up 7%, and its card issuer business' net revenue was $2.1 billion, up  3% over the prior year's fourth quarter.

For the full year 2024, net revenue was $9.15 billion, up 6% from 2023 and adjusted EPS  was $11.55, up 11% from 2023. The company's 2025 outlook is for adjusted EPS growth in a range of 10% to 11%. Global Payments' stock declined about 5% on Thursday. 

The company forecasted a stable macroeconomic environment for 2025, with relatively stable labor trends and lower inflation. Breadey did not directly reference the Trump administration's government cost-cutting or tariffs.  

"There's some level of uncertainty as it relates to the post-election period in the U.S.," Bready said. 

A new strategy

Like rival payment firms including PayPal, which is investing in AI-powered payment technology and Block, which reorganized its corporate structure around development tasks rather than lines of business, Global Payments is changing how it builds and sells products. It's also redirecting resources to focus on broadening relationships with core business categories such as small businesses, restaurants and entertainment venues.

The Atlanta-based Global Payments in late 2024 said it would reorganize its management and product development process to launch new products faster. The company cut an undisclosed number of jobs and improved collaboration between departments.

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"There were opportunities that some parts of the company didn't know we had," Bready said. Global Payments will launch its expanded Genius retail payments and merchant service platform, over the course of 2025.

Genius, which is partly new payment technology and partly a reorganization of more than a dozen existing products, will deploy in the U.S. in May and internationally later in 2025. Bready said Genius is not a "de novo" project, saying adopting Genius would not require a lot of work for merchants. 

Analysts at William Blair suggested Global Payments will struggle against its technology-forward rivals on the merchant side of its business. 

"Global Payments will struggle to materially accelerate its merchant segment organic revenue growth in the face of stiff competition from software-integrated leaders," William Blair's research note said, adding its issuer segment is better shielded from competition and could be an acquisition target. "We increasingly see fintech comprising structural growth companies and those unlikely to see significant multiple expansion. We put Global Payments in the latter category."

End of the Tunnel

Under analyst questioning on Thursday, Bready said the impact of the company's changes should start to show up in its earnings reports later in 2025.

"We're accommodating a bit of disruption in the business but that's largely in the first half," Bready said. "As we get to the back half of the year, we'll see some of the benefits materialize."

Analysts were initially skeptical of Global Payments' new strategy following an investor day in September, though sentiment started to turn about a month later after Global Payments announced it would sell AdvancedMD to Francisco Partners for $1.3 billion, unloading a medical software firm with a business model that was outside of Global Payments core focus on payments. Global Payments in the past two year has also sold its gaming division to Parthenon Capital Partners for $415 million and the prepaid card firm NetSpend to Rev Worldwide for $1 billion. 

The push to pull back from certain lines of businesses is ongoing, with Global Payments saying it is looking to exit some wholesale merchant acquiring arrangements the company inherited from EVO, a payment processor Global Payments acquired in 2023. 

It's also tweaking its international strategy and plans to leave some markets, particularly in Asia, where it does not see a path to compete at scale. 

"Some of the economics there don't work for us," Bready said. 

Global Payments is adding resources in some areas. In late 2024 it acquired New York-based point of sale technology firm Yazara for an undisclosed amount. And Global Payments is investing in generative AI as a way to streamline customer service, particularly with service calls, mirroring a trend among payment companies that are using emerging forms of machine learning to improve call center automation, customer engagement and internal workflows.

The company's pivot is expected to release more than $600 million in annual run-rate operating income by the first half of 2027, better than its initial target of $500 million. 

"Global Payments demonstrated strong financial and operational progress in Q4 2024, underpinned by its transformation agenda. The raised operational income benefit target of $600 million by 2027 reflects management's confidence in execution," said an analyst note from Seeking Alpha.  "The company is well-positioned for growth with its Genius brand rollout and enhanced efficiency from divestitures and joint venture acquisitions. While macroeconomic risks and transformation-related disruptions remain, robust cash flow generation and shareholder returns underscore a solid outlook for 2025."