GLOBAL PAYMENTS INC (GPN)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 was steady: adjusted EPS $2.69 (+9% YoY CC) on adjusted net revenue $2.20B (+5% CC ex-dispositions), with adjusted operating margin expanding 70 bps YoY to 42.4% and 2025 outlook reaffirmed (5–6% CC adj. net revenue growth ex-dispositions; 10–11% CC adj. EPS growth) .
• Versus S&P Global consensus, adjusted EPS was a modest miss by ~$0.03 ($2.69 vs $2.72*) while adjusted net revenue was a slight beat ($2.205B vs $2.197B*) (Values retrieved from S&P Global). Actuals: .
• Management emphasized the Worldpay acquisition and Issuer Solutions divestiture as accelerants to a pure-play merchant strategy with identified cost synergies of ~$600M and at least $200M revenue synergies, while reiterating confidence in integration preparedness and the “Genius” POS platform launch in May .
• Capital return and balance sheet remained supportive (Q1 buybacks ~$446M; dividend $0.25/share; net leverage <3.2x), positioning the stock for medium-term catalysts around transformation execution, Genius adoption, FX headwinds easing, and deal milestones .

What Went Well and What Went Wrong

What Went Well

• Solid constant-currency growth and margin expansion: CC adjusted net revenue +5% ex-dispositions; adjusted operating margin +70 bps to 42.4% .
• Strategy and transformation progress: CEO highlighted operational transformation, unified tech organization, and readiness for Worldpay integration; “we are more confident than ever” in steps toward being the partner of choice for commerce solutions .
• Segment execution: Merchant Solutions achieved 6% CC growth ex-dispositions and 80 bps adjusted operating margin expansion to 47.8% in Q1; Issuer Solutions grew ~3% CC with 50 bps margin expansion (management commentary) .

What Went Wrong

• Small EPS shortfall vs consensus despite YoY growth; adjusted EPS $2.69 vs $2.72* (Values retrieved from S&P Global). Actual $2.69: .
• Reported (GAAP) revenue was flat YoY (-0.3%) given dispositions and FX (~>1 pt headwind), with dispositions a ~3-pt drag on adjusted net revenue growth (management commentary) .
• Sequential adjusted margin stepped down (42.4% in Q1 vs 45.2% in Q4), reflecting typical seasonality and timing of initiatives despite YoY expansion .

Financial Results

Headline metrics (oldest → newest)

Q1 2025 vs S&P Global consensus

Values marked with * are from S&P Global consensus (Values retrieved from S&P Global).

Segment breakdown (non-GAAP where noted)

KPIs and cash/returns (Q1 2025)

Non-GAAP adjustments (Q1 2025 highlights): Amortization of acquired intangibles $329.3M; SG&A adjustments include transformation ($66.3M), modernization ($9.3M), acquisition/integration/separation ($28.4M), legal matter ($18.3M), other items; elimination of $4.0M gain on disposition; non-GAAP now includes share-based comp with prior periods recast .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO: “We delivered solid financial results… despite incremental economic uncertainty… [and] made meaningful progress on our operational transformation initiatives” .
• On Worldpay: “We… become a pure play merchant solutions provider… with significantly expanded capabilities… and greater market access… to unlock long-term value for our shareholders” .
• CFO: “We continue to expect… CC adjusted net revenue growth… 5% to 6% ex-dispositions… and CC adjusted EPS growth… 10% to 11%… Annual adjusted operating margin… expand 50 bps” .
• Segment color: Merchant CC ex-dispositions +6% with 47.8% adjusted margin; Issuer CC +3% with 46.3% margin; adjusted FCF ~$512M (77% conversion) .

Q&A Highlights

• Genius rollout strategy: initial “pull-based” front-book focus; back-book migrations at customer pace; no forced conversions; minimal attrition risk anticipated given enhanced capability set .
• Worldpay growth and capital returns: Worldpay growth principally organic; company still plans substantial buybacks in 2026–27 while deleveraging to ~3x within 18–24 months post close .
• Orchestration layer importance: simplifies client experience (single integration), accelerates product deployment across platforms/geos, and enables AI/ML by flattening access to data without massive platform consolidations .
• Portfolio pruning: targeting ~$500–$600M revenue dispositions over 2 years; ~$300M completed; “a little bit more to come” .
• Macro: consumer stable; assumption for 2025 outlook is a stable macro with modest back-half acceleration from initiatives and renewals .

Estimates Context

• EPS: Q1 adjusted EPS $2.69 vs S&P Global consensus $2.72* (miss ~$0.03). Drivers: FX (>1 pt headwind), dispositions (~3 pts) weighed on reported growth; YoY margin expansion partially offset impacts .
• Adjusted net revenue: $2.205B vs S&P Global consensus $2.197B* (slight beat). Company reiterated FY guide, trimmed FX headwind to just over ~100 bps for the year .
  Values marked with * are from S&P Global consensus (Values retrieved from S&P Global).

Key Takeaways for Investors

• Reaffirmed FY guide amid macro volatility suggests durable demand and execution; watch for FX headwind improvement to provide incremental tailwind in 2H .
• Genius POS launch is a near-term catalyst for Merchant growth and mix-shift; early uptake and cross-sell into Worldpay’s SMB base post-close are medium-term upside levers .
• Worldpay/Issuer transactions sharpen focus and could accelerate revenue growth and margin expansion via $600M cost and $200M+ revenue synergies; integration preparedness appears advanced .
• Margin backdrop remains constructive (YoY expansion in Q1) though sequential seasonality persists; sustained execution on transformation should support FY ~50 bps expansion ex-dispositions .
• Cash generation and capital returns remain strong (77% FCF conversion; $446M buybacks; dividend maintained), with leverage trending toward ~3x by YE 2025, preserving optionality .
• Risks to monitor: integration/delivery risk on Worldpay, macro/tariffs, FX variability, and pacing of further dispositions .