Global Payments (GPN) Q2 Earnings Top Estimates, Fall Y/Y

Global Payments Inc. GPN second-quarter 2020 earnings of $1.31 per share beat the Zacks Consensus Estimate by 14.91%. However, the bottom line was down 13% year over year.

Adjusted net revenues declined 14% year over year to $1.521 billion but the top line surpassed the Zacks Consensus Estimate of $1.41 billion.

Adjusted operating margin was 37%, down 40 basis points year over year.

Global Payments Inc. Price, Consensus and EPS Surprise

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

Segmental Strength

Merchant Solutions: Adjusted revenues of $905.7 million decreased 21.3% year over year. Operating income of $371.5 million fell 28.8% year over year.

Issuer Solutions: Adjusted net revenues plus network fees of $414 million dipped 5.4% year over year. Operating income of $177.1 million increased 11.3% year over year.

Business and Consumer Solution: This segment was formed after the acquisition of Total System. It reported adjusted net revenues plus network fees of $216.7 million, up 10.5% year over year. Operating income was $70.1 million, up 45.4% year over year.

Balance Sheet Position (as of Jun 30, 2020)

Total cash and cash equivalents were $1.83 billion, up 8.8% from the level as of Dec 31, 2019.

Long-term debt was $8.4 billion, down 7.2% from the level at 2019 end.

Net cash provided by operating activities for the first six months was $960.3 million, up 288% year over year.

Dividend Announcement

The company approved a dividend of 19.5 cents per share, payable Sep 24, 2020 to its shareholders of record as of Sep 10.

Business Update

The company forged a relationship with Amazon Web Services (AWS) to be its preferred cloud provider for its issuer business.

The company also expanded its alliance with the long-standing partner CaixaBank by agreeing to meaningfully increase its ownership in their joint venture as well as extend their partnership through 2040.

The company also undertook cost-control initiatives via which it expects to deliver an incremental $400 million of savings over the next 12 months.

Zacks Rank and Performances of Other Industry Players

Global Payments carries a Zacks Rank #3 (Hold), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other companies in the same space that already reported June-quarter earnings so far, the bottom-line results of Mastercard Incorporated  MA, American Express Co. AXP and Visa Inc. V beat the respective Zacks Consensus Estimate by 18.26%, 123.1% and 3.92%, respectively.

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