Monday , July 13, 2020

Global Payments Touts Differentiated Strategy as Worldpay Reports Strong First-Quarter Results

The big merchant processors Global Payments Inc. and merger candidate Worldpay Inc. reported healthy first-quarter results Thursday.

North America performed especially well for Atlanta-based Global Payments, generating $678.4 million in revenues, up 14% from $594 million in 2018’s first quarter. In contrast, European revenues slipped 0.3% to $142.9 million while revenues from the Asia-Pacific region increased 7% to $61.7 million.

Global’s North America segment benefitted in part from the strong U.S. dollar. But the region delivered strong results in U.S. integrated-payments and Global’s direct-sales merchant-acquiring operation, which grew in the high-single-digits range, chief financial officer Cameron M. Bready said on a morning conference call with analysts. In contrast, revenues from the U.S. wholesale business, which uses independent sales organizations to sell Global’s services, fell in the high teens year-over-year. That was “consistent with expectations,” Bready said, as Global continues to tilt toward software-based services linked with payment processing, and its direct-sales operation.

Sloan: “The recent competitive environment really validates the technology-enabled strategy that we’ve adopted in the last five-plus years.”

In Canada, where Global is a big acquirer, revenues grew in the low single digits when measured in local currency, but they declined in the low single digits on a constant-currency basis because of the recent weakness of the Canadian dollar compared with the U.S. dollar.

Global’s net income jumped 23% to $112.3 million from $91.4 million a year earlier on total revenues of $883 million, up 11% from $833.1 million.

Chief executive Jeffrey S. Sloan highlighted Global’s big presence in the restaurant industry, which includes mobile and point-of-sale hardware along with payment and business-management applications for everything from food trucks to big national chains, including Burger King, Taco Bell, Tim Hortons, and Wendy’s.

“Merchants in this market are increasingly looking for a single platform to manage every aspect of their growing businesses with zero friction, and increasingly in the cloud and on a SaaS [software-as-a-service] basis,” Sloan said.

Later, in response to an analyst’s question about his take on 2019’s industry mergers and the growth of tech-oriented players such as Square and Adyen, Sloan said they amount to an endorsement of what Global’s been doing—diversifying into software-based services married with payments, and expanding around the world. Global now operates in 32 countries and is about to enter Austria with a bank partner.

“The recent competitive environment really validates the technology-enabled strategy that we’ve adopted in the last five-plus years,” Sloan said, adding shortly afterward that “some of the [merger] transactions … are for folks who have a lesser-differentiated strategy than we do in a very commoditized market.”

One of the companies the analyst mentioned, suburban Cincinnati-based Worldpay, today reported first-quarter revenues of $970 million, up 14% from $850.7 million in the prior-year period.

“We delivered exceptional results, reflecting consistent business fundamentals and strong new sales performance,” Charles Drucker, Worldpay’s chairman and CEO, said in a statement. Worldpay did not have a conference call due to its pending acquisition by Fidelity National Information Services Inc. (FIS).

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