Sunday , May 19, 2019

Celebrating a Record 2018, Global Payments Vows to Ride Integrated Payments to Even Bigger Results

Global Payments Inc. on Wednesday credited a technology-centered strategy it has developed over the past six years for record results in 2018. Chief executive Jeff Sloan also pointed to the increasing investments required of payments providers as a leading cause of industry consolidation, in particular the pending merger of industry giants Fiserv Inc. and First Data Corp.

Global Payments reported the highest revenues in its 51-year history and pointed to strong momentum particularly in the fourth quarter of 2018. “It was a fantastic 2018,” Sloan told stock analysts during the company’s conference call to discuss its fourth-quarter and full-year 2018 results. Adjusted net revenue, including network fees, reached $1.04 billion for the quarter, up 12% year-over-year. For the year, these revenues totaled $3.97 billion, a 15% increase over 2017.

Explaining the growth, Sloan pointed to investments Global Payments has made in recent years in technology providers as well as in the independent software vendor (ISV) market. Last year alone, the company shelled out $490 million for Sicom Systems Inc., a provider of management software for restaurant chains, and $700 million for Advanced MD, which sells practice-management software to medical practices. Sicom, in particular, furthers Global Payments’s concentration on the hospitality market by doubling the number of restaurant locations to more than 50,000. “We’re really please about Sicom. Restaurants are one of our largest vertical markets,” said Sloan.

Sloan: “2019 will be a year of reaping what we have sown.”

Meanwhile, Global Payments’s OpenEdge unit, which manages its ISV channel, “signed a record number of ISV partners in 2018,” Sloan said, including companies specializing in software for government units and nonprofits. “These are all examples of competitive wins for OpenEdge.”

Atlanta-based Global Payments started out in 1967 as National Data Corp. It changed its name to Global Payments in 2000 and began branching out from traditional merchant acquiring in 2012 with investments in integrated payments, particularly with ISVs, which build payment functionality into business-management software systems.

Now the payments industry’s increasing dependence on technology investments is likely driving processors toward mergers and acquisitions to keep up with market demand, Sloan added, pointing to the recently announced agreement by Fiserv to acquire Global Payments rival First Data for $22 billion in stock.

“What’s really selling globally is technology-enhanced solutions,” he said. “These trends will come here to the United States, so getting additional scale makes sense for others that haven’t been able to make those investments.” The Fiserv-First Data deal “really validates our focus on technology-enhanced distribution,” he added. “It’s a validation of the investments we’ve made over the last five years.”

More technology partnerships and acquisitions are on the horizon for Global Payments, Sloan said. “There’s no limit on the pipeline potential we’re seeing,” he told the analysts. “Software is the leading strategy.” That sentiment is reflected in the company’s projections for 2019. It expects adjusted net revenue plus network fees to reach a range between $4.43 billion and $4.49 billion, up from 12% to 13% over 2018.

“2017 was a year of integration. 2018 was a year of investment. 2019 will be a year of reaping what we have sown,” said Sloan.

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