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Global Payments (GPN) Q1 Top Mark on Solid Merchant Solutions

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Global Payments Inc. (GPN - Free Report) reported first-quarter 2022 adjusted earnings per share (EPS) of $2.07, which surpassed the Zacks Consensus Estimate of $2.04. The bottom line also improved 13.7% from $1.82 per share a year ago.

Adjusted net revenues rose 7.7% year over year to $1,952.7 million for the first quarter from $1,812.2 million a year ago. The top line, however, missed the consensus mark of $1,961 million.

The electronics payment processing entity’s strong first-quarter earnings benefited from robust Merchant Solutions’ performance. The ongoing economic recovery aided GPN with a higher number of transactions despite a foreign-exchange volatility linked to the conflict in Ukraine. Higher operating expenses partially offset the positives.

Global Payments Inc. Price, Consensus and EPS Surprise

Global Payments Inc. Price, Consensus and EPS Surprise

Global Payments Inc. price-consensus-eps-surprise-chart | Global Payments Inc. Quote

Operating Performance

Adjusted operating margin of 41.1% improved 50 basis points (bps) year over year for the quarter under review.

Total operating expenses escalated 3.8% year over year to $1,780.3 million due to a 3.4% rise in the cost of service, and 4.3% higher selling, general and administrative costs.

Adjusted operating income rose 9.2% year over year to $802.5 million.

Segmental Performances

Merchant Solutions: Adjusted revenues of this segment advanced 16.3% year over year to $1,337.2 million for the quarter under review. Adjusted operating income of $632.1 million climbed 18.8% year over year on 18% global volume growth.

Issuer Solutions: The segment reported adjusted revenues of $442.5 million, which advanced 0.7% year over year. Adjusted operating income declined 0.6% year over year to $188.7 million for the first quarter.

Business and Consumer Solutions: Adjusted revenues of this segment declined 19.6% year over year to $195.8 million for the quarter under review. Adjusted operating income of $51.1 million decreased 36.8% year over year.

Financial Position (as of Mar 31, 2022)

Global Payments exited the first quarter with cash and cash equivalents of $2,045.3 million, which increased sequentially from $1,979.3 million.

Long-term debt amounted to $11,723.8 million, reflecting an increase from $11,414.8 million at fourth-quarter 2021-end. The current portion of long-term debt was $120.2 million at first-quarter-end.

Shareholders’ equity of $25.2 billion declined sequentially from $25.6 billion.

For the first quarter, net cash provided by operating activities climbed to $630 million from the prior-year comparable figure of $599.4 million.

Capital Deployment

Management approved a quarterly dividend of 25 cents per share, which will be paid out on Jun 24, 2022, to its shareholders of record as of Jun 10, 2022. GPN repurchased shares worth $649.7 million in the first quarter.

2022 Guidance

GPN reiterated adjusted net revenue guidance within $8.42-$8.50 billion for 2022, indicating an increase from the 2021 level of $7.74 billion. Global Payments expects low double-digit growth in Merchant Solutions revenues and mid-single digit growth in Issuer Solutions.

Adjusted EPS is estimated between $9.45 and $9.67, suggesting an increase of 16-19% from the 2021 reported figure of $8.16. GPN expects to convert almost 100% of adjusted net income into adjusted free cash flow.

Global Payments now expects 2022 adjusted operating margin to expand up to 125 basis points from the 2021 level of 41.8%.

Other Companies Expected to Beat Estimates

While GPN, which currently carries a Zacks Rank #3 (Hold), delivered an earnings beat, here are some other companies from the Business Services space worth considering, as our model shows that these too have the right combination of elements to beat on earnings this time around:

Affirm Holdings, Inc. (AFRM - Free Report) has an Earnings ESP of +29.63% and a Zacks Rank of 3 at present.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Affirm Holdings’ bottom line for the to-be-reported quarter indicates a 25% rise from the year-ago quarter’s reported figure. AFRM has witnessed three upward estimate revisions in the past 30 days against none in the opposite direction.

Black Knight, Inc. currently has an Earnings ESP of +3.12% and a Zacks Rank #3.

The Zacks Consensus Estimate for Black Knight’s earnings per share for the to-be-reported quarter indicates a 7.1% rise from the prior-year period’s reading. BKI’s bottom line beat estimates in each of the last four quarters, the average being 6.8%.

Flywire Corp. (FLYW - Free Report) presently has an Earnings ESP of +38.46% and is Zacks #3 Ranked.

The Zacks Consensus Estimate for Flywire’s bottom line in the to-be-reported quarter has improved 40% in the past 60 days. FLYW’s earnings beat estimates in two of the last three quarters and missed the mark once, the average surprise being 113.4%.


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