Global Payments Inc. ($GPN)

All right. Guys, we're really happy to have Global Payments here with us today and even happier to have the CEO of the company with Cameron Bready here. This is a company we've covered really for over 15 years, and it's gone through quite a bit of iterations and change, and it's become the biggest -- pretty much the biggest payments company in our country now from a volume standpoint post some acquisitions in terms of merchant acquiring and payment processing for merchants. Really great to have you with us. Thank you for joining.

Thanks for having me.

Like I said, I mean, there's a lot of change going on and a lot just in general for Global Payments, given both divestitures and acquisitions. So if we take a step back and think about the sales revamp, Genius investments, issuer processing divestiture and of course, Worldpay now, maybe where are you spending most of your time right now? And what are some of your key focus points and areas for '26?

Yes. It's a great question. And again, thanks for having me today, and thanks for joining us this afternoon. I would say I'm spending a majority of my time focused on execution. If you just take a big step back, and I think you framed the question well, we've been through a lot as a company. And the last couple of years, I would say, have been pivotal for our business. We've taken decisive action, I think, to make sure that our business is well positioned for the long term, that we're building an organization that can drive sustainable, healthy growth and continue to deliver on all of our sort of expectations for our various constituents, most importantly, driving returns for our shareholders over a longer period of time. In 2024, we launched a transformation program that was really designed to streamline, simplify our business, improve our sales effectiveness. Genius was a big part of that naturally. And we've made substantial progress against that transformation agenda. At its core, it's really unifying our business around a single unified operating model globally, and we continue to bring that forward now into our Worldpay integration activities. And as you highlighted, we catalyzed that transformation last year when we announced the acquisition of Worldpay and the divestiture of our Issuer Solutions business. And we think, obviously, that was a pivotal moment for our company, making the determination that we were better off being a pure-play merchant solutions provider, really doubling down through the acquisition of Worldpay and finding a good value-creative home for our Issuer Solutions business. We take a lot of pride in the transactions we're able to execute. And we think it was the right thing to do for the business strategically for the long term and making sure that we're repositioning the business as a pure-play merchant provider, I think, will be absolutely the right thing for us from a focus standpoint. And I think being a monoline business in an industry that is as competitive as ours with as much demand for investment and growth potential. I think being a monoline focused organization is really healthy and ultimately will be the right strategy for us to pursue. So look, I would say, given the significant sort of decisive bold actions we've taken over the last couple of years, my focus here in the short term is making sure that all of that comes together well, that we continue on the journey that we're on with transformation, that we weave our integration activities into that, that we're positioning the business for long-term sustainable growth and success and really harnessing and unleashing, I think, the full potential of what the combined Global Payments and Worldpay business can bring to the market. And really helping to develop the new global payments that I think will be poised for growth and success for many, many years to come.

Yes. I mean you're putting 2 of the largest payments companies together. So on that note, you mentioned, I know integration planning started even before the deal closed. And so just walk us through what accomplishments you saw pre-close versus what shifted to post close. And I mean there's, what, $600 million in cost synergies expected over a few years, $70 million to $80 million, I think, this year and a couple of hundred million dollars of revenue synergy targets longer term. So just what's been actioned, what milestones should we expect in the next 6 to 12 months? A little more on the integration and the potential to go from just cost integration on synergies, too.

Yes, it's a great question. Obviously, a big focus for us, as I mentioned, in the short term. So as I step back and think about sort of the pre-close period, much of that time was really focused on a couple of things. One is just creating the blueprint for what we wanted the new Global Payments to look like. And that's really centered around operating model, how do we align the businesses or of the go-to-market matter, how do we want to operate and run this large combined sort of global business. Secondly, we're very focused on establishing the first couple of layers of leadership. We thought it was very important when we got to close that organizationally, we had the first 2 layers of leadership well defined, announced to the organization in place and ready to execute from day 1. And then third, we are very focused on developing executable plans to go after the revenue opportunities and the expense synergies that you highlighted in the question itself. And I would say, as it relates to the integration, our focus from day 1 has always been on positioning the business for long-term sustainable growth and success. Our North Star from an integration perspective is driving the best growth outcomes we can for the business. I can get more expense synergies, but I'm really focused on making sure that we're striking the right balance between attacking the expense synergy opportunity that exists in the business, but making sure the business is positioned for growth and success for the future. So as we've told the entire organization time and time again, the North Star from an integration perspective is growth. It's not maximizing expense synergies for the business. And I think we're well positioned to be able to deliver on that. And we have executable plans in place to go after the entirety of the $600 million of expense synergies over the next 3 years as well as the growth opportunities that we have called out. Now that we're at close, execution started from day 1. And I'm proud of the progress that we've already made in the business. We expect to deliver $70 million to $80 million of expense synergies this year. We have our organizational alignment in process. So we're down to probably the third and fourth, fifth layers of leadership. And by midyear, the entire organization will be aligned around our new leadership structure, operating model, organization around the globe, which I think positions us well as we move forward in time. And we'll continue to move forward from here kind of relentlessly focused on executing against the revenue and expense synergies that we have in front of us. The other big focus for 2026 is laying the groundwork and foundations to deliver on the revenue synergies that are going to take a little more time and a little more investment to deliver. So the bigger opportunities around growth come, I think, in '27 and more so in '28 as we're able to make investments to align the 2 businesses, allow capabilities to be more ubiquitously deployed across Heritage Global Payments and Heritage Worldpay businesses and unlock some of the growth potential that I think exists in putting the 2 businesses together. But a lot of the groundwork that will give rise to those opportunities a year, 2 years out will start this year.

It's only -- it hasn't even been 2 months since you closed. But I mean in terms of it, it feels like you're seeing a lot longer right. And in terms of what you're seeing, you feel pretty good about that.

Yes, I feel better about it today than I did when we announced the transaction. I think seeing the 2 businesses come together and we really start to execute together over the last couple of months has only increased my confidence, number one, it was the right thing to do. And I think the opportunity that the combined business presents for the long term.

I think your leadership team is going to look about half legacy Worldpay folks and half Global Payments more or less. And you can correct me if I'm wrong, but I'm just curious if you think you have the right structure and right management team set up pro forma for this deal and how the culture is impacted by this?

Yes. I think it's 2 great questions. So first of all, on the leadership team, I'm absolutely thrilled with the leadership team we have in place, not just at the executive leadership level, but the leadership team we're putting in place 2, 3, 4 layers down in the organization. Look, it's a big company, 26,000 people. And I think getting the leadership structure right is one of the most important things that we're doing as part of our integration efforts. And I think if you go down 3 or 4 layers in the organization, it's almost exactly 50% Worldpay heritage individuals and 50% Global Payments heritage leaders in the combined organization. And we didn't mandate that. That is just the way it's kind of worked out as we've worked through the leadership structure working down through the organization. And I would say the quality of talent we've been able to put together in the combined organization is immense. Anytime you can take 2 large multibillion-dollar acquiring businesses and take the best talent from both of them and put them together now to run this new Global Payments. It's an enormous opportunity, I think, to really elevate the level of talent that runs our business every single day. And I'm seeing that play out as we put the leadership structures in place. And really thrilled with what we've seen thus far in terms of the decisions that have been made around the people leaders in a variety of different areas of the business, particularly around the commercial side of the business, go-to-market and the product side of the business, the capabilities of the combined organization are incredibly exciting. On the culture front, I would start by saying our cultures are very similar. We speak the same language. Interestingly, we have a lot of shared experiences, good and bad on both sides of the business. And I think from a foundational perspective, our cultures are very, very similar. I would challenge you, if I threw in a room of 100 Global Payments and Worldpay people and you didn't know them, you'd be very challenged to point to who came from which side of the business. But I think culture doesn't just happen. It's something that you need to be very, very deliberate about. And from day 1, we've been very focused on aligning the new Global Payments around a common culture that we want to represent the new company. Now aspects of that mission, vision, values, behaviors, everything that underlies our culture are really drawn from what both Worldpay and Global Payments brought to the new company. So it feels very familiar, I think, to all of our team members. But from day 1, we established a new mission vision values for the organization. Those are clear underpinnings of the culture that we want to have. And I think people are, by and large, excited about the culture of the new business and what we're striving to achieve as a company.

$4 trillion in TPV you guys have now. It's a big number, just a high percentage of total PCE really when you think about the markets you operate in, in probably have one of the best pictures of what consumers are doing out there. So give us an update. What are you seeing in terms of consumer spending trends? Maybe help break it down as much by category?

Yes. I think general consistency kind of across the board is the way I would describe it. So the trends that we really saw exiting 2025 have, by and large, persisted into 2026. The consumer remains very stable and resilient. I think as we look across the board, the level of resiliency I think we've seen across consumer spending, I have to admit, it's been a little surprising. Even recently. I thought it would be -- yes, I thought it would be different even over the last probably year I thought it would be different. But the consumer remains very, very resilient and the stable trends that we saw kind of exiting the year persisted through the first part of 2026. There's been some weather-related activity here and there, but I think that's, by and large, kind of normalized itself as you look across the first couple of months of 2026. I think as you look beyond that, it's largely driven by, look, the labor market. And if I'm keenly focused on one thing from a macro perspective, it's really the labor market, particularly here in the U.S. And wage growth has been good. It's been supportive to consumer spending. We want to see those trends continue. We're obviously monitoring unemployment rates and layoffs. But by and large, the labor market has remained relatively constructive and the wage growth that we're seeing, not just across the higher end, but across all levels of the consumer segmentation of the market continues to be quite good. Obviously, more recently, geopolitical matters may throw a little bit of a wrinkle into the macro environment more broadly. I think time will tell. Obviously, we're watching oil prices and the potential trickle-down effect that might have on inflation and how consumers react to just a more uncertain geopolitical environment. And then, of course, for us, in particular, there's a little bit of modest headwind because we serve 12 of the largest Middle Eastern airlines. They are great clients for ours and every flagship that you could think of that flies in and out of that region are generally going to be clients for us. So closed airspace in the Middle East isn't ideal. So I would expect a little bit of a modest headwind in Q1 and potentially Q2 depending on how long it persists for our business, but I mean, pretty minimal impact on earnings and cash flow, just given the size and diversity of the business more broadly. But certainly, on the margin, I would prefer that not to be happening for a variety of different reasons, including what it means for our clients.

Right. Hopefully, that's transient. All right. Let's shift gears a little bit just because, I mean, look, your stock is trading at a level that obviously implies questions still about the industry, more broadly, competitive dynamics. You guys have done a good job investing in a new product and new go-to-market and Genius is one of the major pillars of that, right? So I mean, some good KPIs recently, POS locations up 25% in fourth quarter for Genius, new signed partners up 19%. Maybe just give us a quick update on the traction there. I think this is one of the major themes that could really drive multiple expansion if you succeed with a differentiated point of sale in the market. And so help us understand what you're seeing.

Yes. I think, look, we're very proud of what we've been able to accomplish with Genius. And if you don't mind, I'm going to take 2 seconds, just to rewind the clock. It's been less than a year since we rolled Genius out. So the amount of progress that we've made over the course of what amounts to probably 10 months now is pretty remarkable in my humble opinion. We've launched across different vertical markets, restaurant, retail, campuses, age-restricted, professional services, field services, et cetera. We've launched across geographies, U.S., U.K., Canada, Mexico, Austria, Germany, and we've got more markets coming. And we've launched across distribution channels, our direct. We're launching it into our wholesale channel. We're introducing it into the FI channel. We're seeing enormous receptivity to it, which,, again, we're incredibly proud of, and we have a lot of ambitious plans for Genius as we move forward in time. So in terms of what we've been able to accomplish with Genius in a really short period of time, reorienting our entire POS sort of go-to-market around a single new platform that we think is highly competitive, differentiated in many ways relative to other POS environments in the marketplace today. I'm incredibly proud of the team and the progress that we've made. Getting back to the specifics of your questions, I think the trends that we saw coming out of 2025 have largely persisted as we've headed into 2026. We're continuing to see very strong adoption rates. We're continuing to see our sellers have a lot of success and market receptivity with new sales. We're continuing to see sort of the level of new rooftops grow at consistent rates relative to the exit rates from 2025. So everything that we kind of hope to see as it relates to Genius getting better penetration and saturation into the market is continuing to happen. We've launched a pretty large-scale awareness campaign. I think when we have a swing at bat, I think we perform really well. We just need to have more swings at bat, and some of that is just around the awareness of Genius itself. So it's not a brand -- it's a new brand, and it's not a brand that is well known as some of our competitors in the market. So we're putting some emphasis behind making sure that there's good brand awareness around Genius so that when we have an app at bat, we have a good opportunity to win new business. But everything that we hope to see from the platform and product we're seeing in the market in terms of how it is allowing us to compete, how we're able to win new share, attachment rates for payments, new rooftop growth, et cetera. So all the trends continue to perform pretty consistently with what we saw exiting the year and gives us a lot of optimism that we're on the right track. And as we continue to move forward in time, Genius is going to be a flagship product that helps drive the growth in the business for many years to come.

Right. So now you have the product. You've always had pretty good distribution around the world, but you're also adding sales, right? I mean you've added about 200 so far, and your goal is, I think, 500 incremental for sales for the year. Maybe help us understand what you're looking for from productivity measurement in terms of results and how we should have confidence this could help drive acceleration.

Yes. If I'm candid, I think our old sort of sales model was a little long in the tooth, particularly around the compensation programs and the structure around it, it needed reinvestment. And it needed reinvestment around the tooling, the capabilities sort of the marketing that will drive better leads into the channel. And we needed to refresh, I think, the talent to some degree in the sales force as well. We've redesigned the entire compensation program. We've obviously made significant investments in technology tooling capabilities to help drive productivity for our sellers. And now we're investing in incremental sellers. And I think what we've seen thus far is, one, the new program structure, the investments we're making behind sales effectiveness is allowing us to attract a higher caliber seller. We're hiring sellers that are coming out of other software sales environments. We're hiring sellers that are coming out of other POS selling environments from some of our competitors. We're hiring sellers that I think are tremendously excited about the product we can bring to market, how it competes feature by feature relative to others in the space as well as the investment in the resources and the scale we can put behind it. So early trends from our efforts to bring new sellers in. I think we're up above 200 now. We hope to be at that 500 level by, call it, midyear or slightly thereafter. We've seen new seller attrition decrease dramatically, probably north of 25% for the cohorts that have achieved 90 days with us, new seller retention is up 50%, which is excellent. We're seeing time to first deal down by 38 days, like 70%. And we're seeing sort of a sort of 50-plus percent increase in deal size, which reflects a couple of things. One is, I think the effectiveness of our sellers to be able to cross-sell, add more value into the selling relationship with the client, which is obviously a very positive trend for the business. So, so far, so good. It's something that we're being very careful. We're not just adding quantity. We're adding quality through this process. And so we're being very deliberate about who we bring into the organization, and we want to see and make sure that we're continuing to scale as we bring incremental new sellers into the environment. But really pleased with the progress thus far. Most importantly, again, the quality of the resources and the sellers we've been able to bring in. And they're largely focused across U.S., Mexico and Canada and again, largely focused on selling Genius.

Okay. So I mean, look, you have the product with Genius, you have the sales and go-to-market and distribution, clearly, you have synergy opportunities. How about AI? I mean is that something that could derail the excitement of the story in terms of you having all the pieces? Or is that an opportunity?

No, I think it's an accelerant to the story in many ways. I think about our investments in AI and our approach to AI kind of crossed 3 paradigms. One is -- and I'm sure you can't go a day without hearing about agentic commerce. I would say sitting here today, it's very nascent, right? Look, the amount of agentic commerce happening today is largely centered around agentic discovery leading to a consumer making a traditional purchase. And that's great. And I actually -- for the foreseeable future, I think that's going to continue to be the lion's share of how AI drives commerce in our ecosystems. But over time, you will see more autonomous activity by agents themselves acting on behalf of consumers. And that's where agentic commerce, I think, most particularly in the retail space will really start to come to life. So given the massive position we have in digital native environments, the massive scale we have, we are at the forefront of everything that's happening from an agentic commerce standpoint. We've been a part of every major protocol that's been released and announced across Google, OpenAI, et cetera. Mastercard made an announcement this morning that we're involved with around really making sure you can verify intent when an agent acts on behalf of a consumer. That's really important in creating a trust ecosystem around agentic commerce. And I think the tools and capabilities that we bring to agentic commerce create real opportunity for our business long term. I'm not a big believer agentic commerce is going to replace everything that happens from a commerce standpoint, but it becomes a new channel that our clients are going to want to participate in. And I think given the leadership position we have in the industry, it's important for us to be at the forefront of everything that's happening from a agentic commerce perspective, and we're doing that today, and we'll continue to do that as it evolves over the course of time. So you'll see us play a very prominent role in shaping what the future of agentic commerce looks like, establishing the rules and trust frameworks and credentials and authentication and verification necessary to make that ecosystem work in a ubiquitous way for both the protocols, the agents and payment providers like ourselves. There's also the opportunity to augment our capabilities with AI. So we're investing in AI behind our authentication rates, chargeback management, fraud, disputes, et cetera. There's lots of ways AI is already increasing. I think, the capabilities of our own products and solutions that we're selling into the market today, and we're able to drive differential outcomes, differentiated outcomes for our clients, and that has real value that we've been able to articulate to them, and it's increasing the demand for a lot of our value-added services. We're also investing in AI to support products like Genius that we spent a lot of time talking about. We're investing in AI to help do reputation management for our clients within Genius. They can do review management, they can respond to review. We're developing a native -- we have developed and are deploying a native language AI agent that sits inside of Genius that SMB clients can speak to help understand trends in their business in native voice, which we think is going to be a very powerful feature of the Genius platform. And then, of course, this is a business that has an enormous amount of operating technology environments to support us day in and day out. There's huge opportunities to deploy AI to drive efficiency in our business, everything from how we do software development, how we are increasing productivity of our developers, increasing cycle times, speed to market for new product, product velocity, everything to how do we do settlement account reconciliations on the back end, et cetera. There's enormous opportunities, particularly as we're bringing Worldpay and Global Payments together to leverage AI to support the integration, streamline processes and repeatable work that happens inside of the business every single day that are going to drive real efficiencies and increased scale in the business over the long term. And we're investing, I would say, heavily across all 3 of those paradigms as we move forward because it's a transformational opportunity around AI. Yes, there's an enormous amount of hype, but there's also an enormous amount of real benefit that can be deployed in a large business like ours, and we're seeking to do that.

Right. That makes sense. So you seem like you have a lot of the pieces in place. Your valuation is obviously attractive to yourself in the sense of the buyback that you're talking about. You authorized a $2.5 billion buyback, $550 million ASR recently and then you're targeting $7.5 billion of capital return in the next couple of years through '27. That's 30% of your market cap. Just help us understand the balance now where the share price is between buybacks or deleveraging or even M&A down the road when you have a 3x leverage ratio. Just help us understand where your head is on that.

Yes, I think it's fairly straightforward. Certainly, in the near term, we're very focused on striking the right balance between delevering and returning capital to shareholders. We target to be at our 3x leverage ratio by the end of 2027. And over that period of time, we expect to be able to return cumulatively from '25 to '27, the $7.5 billion that you highlighted earlier. And we've targeted this year, we said we'll return a little north of 2 and the balance then would come in 2027. And by the time you get to 2028, this is a business that will produce levered free cash flow of about $5 billion annually. So we have enormous capital capacity in the business as we move forward to continue to invest in growth, continue to return capital to shareholders. And obviously, we think we'll be well rewarded for that, and we'll see the multiple move and expand over time as we continue to execute on integration. But sitting here today, there's no better investment than ourselves. Given the confidence we have in the future of the business, all the things that we're doing, returning that capital to shareholders, I think it's the best thing that we can do to drive value for our shareholders. I also think while we're in a period of integration, we're very focused on integration, and we're investing all the areas that we need to in the business. We're going to invest over $1 billion this year in new innovation, new product capability within our business. So we're investing plenty in the business. We're very focused on integration. And during this period, we're going to return capital to shareholders. And when we get to 2028, we'll look at the horizon to see what the best opportunities are to deploy capital to create value for the long term.

Great. You guided 5% growth for the year. You said you prudently started off below 5% in the first half, I think above 5% for the second half of the year in terms of the trajectory. What underpins the acceleration? First of all, that growth rate itself would be better than what's in your stock right now. So just the conviction in that sustainability and the address. Given the market dynamics we're seeing, what are you seeing in the market that gives you confidence in the acceleration of it?

Yes. Certainly, all the investments we continue to make behind Genius, sales effectiveness, et cetera, those continue to improve, obviously, our effectiveness from a selling standpoint, which will improve growth rates for the business over time. Secondly, as we bring the 2 businesses together, I think our guide is kind of accommodated for the fact you're bringing 2 large multibillion-dollar businesses together. We want to get our go-to-market activities aligned. We're working on brand alignment, unifying around the Global Payments brand. There's a lot of things that we're doing here over the course of 2026 that I think position the business well for the long term. And I think the approach that we took to the guide was prudent. We had some tough comps in the first half of the year. And as we continue to build momentum around integration activities, transformation activities, we certainly have a lot of confidence in the ability to accelerate on the back half and exit the year certainly north of that 5%, which obviously, I think, sets us up well as we head into '27 and '28 to get to an overarching growth rate that's kind of in that mid- to high single-digit range, which is what we aspire to achieve as a business.

Okay. In terms of trends recently, it sounds like other than just the nuance of an airline here and there, I mean, still on track?

Very stable. Yes, as I said before, the consumer remains very stable. I saw some data from BofA yesterday that would suggest consumer spending in February is pretty good, probably a little bit of bounce back. Yes. Some of the weather issues have probably impacted January on the margin. Now, the only thing that I'm focused on in the short term is just what are the implications of this sort of conflict in the Middle East on our client base in that region. And as I said, that's modest, but it is something that we're watching.

Okay. Free cash flow. I mean, you had $891 million of free cash in the fourth quarter, 100% conversion from on an adjusted basis from a year and then 90% plus expected for '26. You guys are expecting $4 billion in free cash in '27 and I think $5 billion in 2028. Think about that relative to a $20 billion plus market cap, right? I mean -- it's pretty big numbers. So just help us understand what's going to drive that acceleration, that pickup on free cash. And also, I guess, we get a question a lot about the adjustments, right? I mean, in terms of GAAP versus non-GAAP free cash, given your transformation and given all the integration. When do we expect those things -- those 2 to narrow?

Yes. I think they'll just continue to narrow naturally over time. As we continue to progress our transformation and we continue to progress our integration activities, there will definitely be a narrowing of our GAAP free cash flow to our adjusted free cash flow, particularly as you get into '27, '28 and beyond. So look, if I'm honest, one of the downsides of doing a large transaction as is you do end up with a lot of onetime expenses that cuts against the grain a little bit around our direction of travel for Global Payments stand-alone and continuing to narrow our GAAP to non-GAAP free cash flow in particular. But we called that out very explicitly irrespective of the onetime costs that we're incurring to support our transformation and integration activities. We're still returning this massive amount of capital to shareholders in the short to medium term. So the cash flow characteristics of the business are enormously strong. And obviously, as we continue to move forward in time, they only improve. And the growth conversation, I know is incredibly important. We are obviously very focused on driving growth. But to some degree, whether it grows 4%, 5%, 6% really doesn't matter in the grand scheme of things. It doesn't move cash flow meaningfully at all. So the cash characteristics of the business are just enormously powerful. And I think you'll see that play out in terms of the return plans that we have over the next couple of years while deleveraging that I think will set us up well as we continue to move forward.

You also have 150 bps of margin expansion expected with about $70 million to $80 million of synergies in there. But I mean, how much of that is just operating leverage in the business? How do you get there?

Yes. There's a decent amount of operating leverage in the business. It's sometimes really hard to discretely quantify how much is coming from transformation because those things are really designed to help create more operating leverage in the business and help create better incremental margins in the business versus how much is coming from pure integration. But I think if you try to parse it, there's probably 20-plus basis points coming from just operating leverage, some coming from transformation, net of investments that we're still making back into the business. And as we said, there's about $70 million, $80 million of operating income benefit flowing through from pure integration-related activities this year. And look, we think that trend will continue as we get into 2027 and 2028. Obviously, as we're continuing to realize integration synergy benefits, we'll continue to see nice margin tailwinds. But the combination of, obviously, the growth opportunities we have in the business, the success we're seeing with Genius sales effectiveness, the deployment of more AI capabilities the operating leverage we have in the business for the long term beyond integration, I think, remains enormously strong.

Great. Well, a lot of exciting things happening right now. And so with that, guys, anyone have any questions, happy to take maybe 1 or 2. I think we have time for maybe 1 or 2. All right. Well, why don't we leave it there then.

Okay. Excellent.

Cameron, thank you so much for joining us, guys. I'm trying up on stage next at 1:45. So in about 7 minutes. Cameron, thank you so much.

Thanks.