Global Payments Q3 Earnings Miss Estimates on Higher Costs

Global Payments Inc. GPN reported third-quarter 2024 adjusted earnings per share (EPS) of $3.08, which missed the Zacks Consensus Estimate of $3.11. The bottom line rose 12% year over year.Adjusted net revenues improved 5.8% year over year to $2.36 billion. The top line missed the consensus mark of $2.38 billion.The weaker-than-expected quarterly results were caused by rising selling, general and administrative expenses, and cost of service. However, a rise in traditional accounts in the Issuer Solutions segment. Booking growth and expansion of the partner network partially offset the results.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.Global Payments Inc. Price, Consensus and EPS Surprise Global Payments Inc. price-consensus-eps-surprise-chart | Global Payments Inc. QuoteOperating PerformanceAdjusted operating income of $1.1 billion increased 6.6% year over year in the quarter under review but marginally missed our estimate of $1.11 billion. Adjusted operating margin improved 40 basis points (bps) year over year to 46.1%.Total operating expenses of $2.1 billion increased 10.9% year over year in the third quarter. The increase was due to higher selling, general and administrative expenses, and cost of service. The metric came in higher than our estimate of $1.3 billion. Interest and other expenses declined 11.5% year over year to $155.9 million and lagged our estimate of $163.6 million.Segmental PerformancesMerchant Solutions: The segment recorded adjusted revenues of $1.84 billion in the third quarter, which rose 6.7% year over year. The figure lagged our estimate of $1.85 billion. The year-over-year growth resulted from 30% booking growth, new POS locations and an expanding partner network.The unit’s adjusted operating income increased 8.7% year over year to $921.5 million and beat our estimate of $906.2 million.Issuer Solutions: Adjusted revenues were $529 million in the segment, which grew 6.7% year over year in the quarter under review but missed the Zacks Consensus Estimate of $549.2 million. The unit benefited from the rise in traditional accounts on file and rising transactions.Adjusted operating income deteriorated 2.5% year over year to $240.4 million, lower than our estimate of $258.7 million.Financial Position (as of Sept 30, 2024)Global Payments exited the third quarter with cash and cash equivalents of $2.9 billion, which remained flat from $2.1 billion at 2023-end.Total assets of $50 billion declined from $50.6 billion at 2023-end.Long-term debt amounted to $15.2 billion, down from $15.7 billion at 2023-end. The current portion of long-term debt totaled $1.6 billion at the third-quarter end.Total equity of $23.5 billion increased from $23.3 billion at 2023-end.GPN generated operating cash flows of $2.9 billion in the first nine months of 2024, which surged 80.9% year over year.Capital Deployment UpdateThe company entered into a $600 million accelerated share repurchase program.It declared a quarterly dividend of 25 cents per share, which will be paid out on Dec. 27, 2024, to its shareholders of record as of Dec. 13.Divestiture UpdateGPN entered a definitive agreement to sell AdvancedMD to Fransisco Partners for $1.125 billion. The sale is expected to close by the fourth quarter.2024 Outlook ReiteratedAdjusted net revenues are anticipated to lie within $9.17-$9.30 billion, which indicates an improvement of 6-7% from the 2023 figure of $8.7 billion.Adjusted net revenue growth in the Merchant Solutions segment is estimated to witness year-over-year growth of more than 9% in 2024 from the 2023 figure of $6.5 billion. The Issuer Solutions segment’s adjusted net revenues are forecasted to grow approximately 4% from the 2023 figure of $2 billion.Adjusted EPS is anticipated to be between $11.54 and $11.70 in 2024, which suggests 11-12% growth from the 2023 figure of $10.42. GPN expects to convert almost 100% of adjusted net income into adjusted free cash flow.The annual adjusted operating margin is expected to increase up to 50 bps in 2024. The metric in both segments is projected to witness an increase of up to 40 bps and 30 bps, respectively.Zacks RankGlobal Payments currently carries a Zacks Rank #3 (Hold).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Performance of Other PlayersHere are some companies from the broader Business Services space that have already reported earnings this season.American Express Company AXP reported third-quarter 2024 EPS of $3.49, which beat the Zacks Consensus Estimate by 6.7%. The bottom line climbed 6% year over year.Total revenues net of interest expense amounted to $16.6 billion, which marginally missed the Zacks Consensus Estimate. However, the top line improved 8.2% year over year in the quarter under review.The Western Union Company WU reported third-quarter 2024 adjusted EPS of 46 cents, which surpassed the Zacks Consensus Estimate by 4.6%. The bottom line advanced 7% year over year.However, total revenues declined 6% on a reported basis to $1.04 billion due to a fall in contributions from Iraq, partly offset by a well-performing Branded Digital business. Additionally, the top line beat the Zacks Consensus Estimate by 0.4%.Fiserv, Inc. FI has reported mixed third-quarter 2024 results, wherein earnings surpassed the Zacks Consensus Estimate, while revenues missed the mark.FI’s adjusted earnings per share (excluding $1.3 from non-recurring items) of $2.3 beat the consensus mark by 2.2% and gained 17.4% year over year. Adjusted revenues of $4.9 billion missed the consensus estimate by a slight margin but rose a tad on a year-over-year basis.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report American Express Company (AXP): Free Stock Analysis Report The Western Union Company (WU): Free Stock Analysis Report Global Payments Inc. (GPN): Free Stock Analysis Report Fiserv, Inc. (FI): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks