Ladies and gentlemen, thank you for standing by. Welcome to Global Payments First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] And as a reminder, this conference is being recorded. At this time, I would like to turn the call over to your host, Senior Vice President, Investor Relations, Winnie Smith. Please go ahead, Winnie.

Good morning and welcome to Global Payments first quarter 2023 conference call. Our earnings release and the slides that accompany this call can be found on the Investor Relations area of our website at www.globalpayments.com. Before we begin, I’d like to remind you that some of the comments made by management during today’s conference call contain forward-looking statements about, among other matters, expected operating and financial results. These statements are subject to risks, uncertainties, and other factors, including the impact of economic conditions on our future operations that could cause actual results to differ materially from expectations. Certain risk factors inherent in our business are set forth in filings with the SEC, including our most recent 10-K and subsequent filings. We caution you not to place undue reliance on these statements. Forward-looking statements during this call speaks only as of the date of this call and we undertake no obligation to update them. We will also be referring to several non-GAAP financial measures, which we believe are more reflective of our ongoing performance. For a full reconciliation of the non-GAAP financial measures discussed in this call to the most comparable GAAP measure in accordance with SEC regulations, please see our press release furnished as an exhibit to our Form 8-K filed this morning and our supplemental materials available on the Investor Relations section of our website. Joining me on the call are Jeff Sloan, CEO; Cameron Bready, President and COO; and Josh Whipple, Senior Executive Vice President and CFO. Now, I’ll turn the call over to Jeff.

Thanks, Winnie. We are pleased to have delivered our best first quarter in four years. Exceeding our expectations to start 2023, despite continuing macro uncertainties. Our ongoing businesses produced adjusted net revenue growth, adjusted operating margin expansion, and adjusted earnings per share growth consistent with our cycle guidance once again. This performance reflects the wisdom of our strategies and our consistent focus on execution. We accomplished these results while also turning the page on our strategic initiatives. First, we are delighted to have closed our acquisition of EVO Payments in late March and we are already off to a strong start. Cameron will provide more details our integration efforts now underway, but let me preface his comments by saying that we remain as excited about the many opportunities we have together as we were at the time we announced the transaction nine months ago. I am delighted to officially welcome Eva's value team members to the Global Payments family. We are pleased to have also recently completed the divestitures of Netspend's Consumer Assets and our Gaming Solutions business. With the successful execution of these transactions, we are focused on managing our go forward business composition with merchant solutions representing approximately 75% of our adjusted net revenue, and issuer solutions including B2B, comprising roughly 25%. This platform provides us the ideal set, core capabilities from which to grow, for many years to come. [Our issuer merchant] [ph] posted exceptional results for the first quarter. Starting with issuer solutions, our core business again generated substantial sequential financial and operating improvement, achieving high single digit growth and marking its best quarterly performance in more than five years. It is worth highlighting that our core customer base consists of money center and systemically important financial institutions globally. We believe that we've been the beneficiary…

Thanks Jeff, and good morning. Let me start by acknowledging what an honor and privilege it is for me to be named the next CEO of Global Payments. I'm grateful for the Board's confidence in me leading the company going forward and I look forward to working with all of you in this capacity, continuing what has been a long history of outstanding leadership at Global Payments. On behalf of the 27,000 team members of Global Payments, I also want to thank Jeff for his leadership as CEO over the past decade. The transformation under the business under his stewardship has been remarkable and has shaped the company into the payments technology powerhouse it is today. Further, on a more personal note, I want to express my sincere appreciation for his mentorship and friendship during my time here at Global Payments. Jeff and I worked side by side over my nine years at the company and importantly have been completely aligned on the four-pillared strategy we articulated at our investor conference roughly 18 months ago. We remain committed to this strategy as we endeavor to build the leading technology-enabled software-driven payments business worldwide. Having now closed the acquisition of EVO and the divestitures of our Netspend consumer and Gaming Solutions businesses, we have completed our strategic pivot. I'm delighted to be taking over at a time when our business now reflects the simpler model, more geared towards our corporate customers we've been foreshadowing since August of last year. Over the next month, Jeff and I will work closely to ensure a smooth and orderly transition. I look forward to continuing the company's rich history of investing strategically to drive differentiated growth and value for our shareholders, customers, and team members, while fostering a culture that is second to none and…

Thanks, Cameron. We are pleased with our strong financial performance in the first quarter, which exceeded our expectations despite ongoing macro concerns, highlighting the strength and durability of our business. Specifically, we delivered adjusted net revenue of $2.05 billion, an increase of 6.5% from the same period in the prior year on a constant currency basis. Excluding the impact of disposition, and roughly one-week of contribution from EVO, adjusted net revenue increased 9% on a constant currency basis. Adjusted operating margin for the quarter increased 200 basis points to 43.1%. The net result was adjusted earnings per share of $2.40, an increase of 18% on a constant currency basis, compared to the same period in 2022. Taking a closer look at performance by segment, merchant solutions achieved adjusted net revenue of $1.46 billion for the first quarter with constant currency growth of 10%, excluding dispositions and the contribution from EVO. This performance was led by the ongoing strength of our technology-enabled businesses, while we benefited from the recovery in Asia Pacific as COVID restrictions eased across Greater China markets. We also saw consistent double-digit growth from our vertical market, POS, and payroll businesses. This strength was partially offset by ongoing headwinds from adverse foreign currency exchange rates. Along with macro softness in limited geographies, including the UK. We delivered an adjusted operating margin of 47.3% in the segment, consistent with last year. Excluding the impact of EVO’s close in March, adjusted operating margin expanded 25 basis points and was in-line with our expectations. We are pleased with the fundamental performance of our issuer solutions business in the first quarter, which produced adjusted net revenue of $490 million, reflecting growth of 7.2% on a constant currency basis. Notably, core issuer grew high-single-digits this quarter, excluding the impact of FX, which was…

Thanks Josh. I couldn't be more proud of what we've achieved as a management team together over the last near decade with more than 27,000 team members across 40 plus countries. I'm also very pleased with our long history of [management’s debt] [ph] and succession planning. Cameron is only the third CEO of Global Payments in nearly a quarter century. He has my complete confidence and I look forward to working with him closely to affect a smooth transition over the coming weeks. I personally thank all our team members for what they do for us every day, as well as our millions of customers and thousands of partners and shareholders and the trust you've put in us and in me over the last 13 years. The future is bright at Global Payments. Winnie?

Thanks, Jeff. Before we begin our question-and-answer session, I'd like to ask everyone to limit their questions to one with one follow-up to accommodate everyone in the queue. Thank you. Operator, we will now go to questions.

Thank you. [Operator Instructions] Our first question today is coming from Ashwin Shirvaikar from Citi. Your line is now live.

Thank you and congratulations on the good quarter. And Jeff, happy for you. It's been a pleasure. Cameron congratulations on the promotion. Let me let me start with the merchant if you could, kind of provide a more detailed geographical walk through as you consider macro and other factors, U.S., and the Americas now includes couple of new geographies for you. Europe, including the EVO footprint, how should we think of, sort of normalized growth rate and Asia Pac recovery as well, if you could sort of unpack that for us, that would be great?

Hey, Ashwin. It's Cameron. Why don't I go ahead and start, I'll ask Jeff to chime in with any other color he'd like to provide as well. So, I think if you look at the overall backdrop for the merchant business, I think we feel pretty good about obviously our performance in the first quarter and how we're positioned for the full-year. As evidenced by obviously a reiteration guide and an increase so to speak up to the high-end of our growth expectation for the merchant business for the full-year. Starting here at home and in the U.S., we continue to see good trends, kind of across the business. I think like others who have reported already, January and February were very strong months us. We obviously saw a little bit of a pullback in March and we see April, kind of looking similar to March right now. So, assuming a relatively consistent macro based on where we are today for the balance of the year, I think our U.S. business is really well-positioned to grow nicely over the course of the year and obviously it's the biggest component of our portfolio. So, as it goes generally the rest of the merchant business goes. So, I think we feel very good about where we are in the U.S. [We and] [ph] EVO into that conversation really by saying the B2B portfolio that EVO has today, the capabilities they bring us across acceptance with AR automation solutions integrated into the largest center ERP Solutions in the U.S. for mid-market type enterprises is a really powerful addition to the portfolio of assets we have in the U.S. And obviously there's a lot that we think we can do with that over the course of time. So, more to come on that. I…

That's very useful. Thank you very much. And then sticking with merchant, the adjusted rev growth was greater than volume growth, I think, probably for the first time in a couple of years. What's driving that? Is that value-add services? Is there, sort of different business model with, like, more subscription revenue or something like that or do you expect that to sustain?

Yes, it's really mix, Ashwin more than anything else. Our vertical market businesses, which are predominantly software driven had a strong quarter, which obviously contributes a little bit more to the top line then it does to the volume related metrics. But you're talking a few tens of basis points difference between the two, one rounded up, one rounded down. That's kind of the difference. So, I wouldn't put too much weight to the 11 versus the 10. It's going to fluctuate sometimes it will be on top of each other, sometimes volume may be a little bit better, sometimes revenue growth may be a little bit better. I think what we step back and look at fundamentally is, are those two moving in correlation to each other and is that gap relatively minimal, 10 to 11 is very tight versus others in the marketplace. So, I think fundamentally looking at the underlying volume growth of the business, we're very happy with how things are trending and obviously the revenue demonstrates that as well.

Understood. Congratulations again. Thank you.

Thanks, Ashwin.

Your next question is coming from Darrin Peller from Wolfe Research. Your line is now live.

Hey, guys. Thanks. First of all, Jeff and Cameron, congrats to both of you on the transition. Jeff, if it's possible to give us a sense of where you – you know the timing and why now and maybe a little more in your thought process of what's to come for you, as well as what you're most excited about when you look at GPN going forward? Just curious if you can give a little more color on the change.

Darren, it's Jeff. Thanks for saying that. Let me just start by saying Cameron and I have worked close together for nine years and probably in his judgment, it's nine years too late. Probably where I start, but look, I would say, as we said in the press release and our prepared remarks that look, we just posted the best first quarter since 2019. We talked about in February hoping that we were in an environment of normalcy. I think we're there today. We've got our first real beat-and-raise in 18 months. And then really importantly, Darrin, we've said publicly for 12 months that we're focused on closing EVO, closing Netspend, closing the sale on Gaming Solutions, but not surprising you, those probably started like 18 months ago, right. And it's like the last 12 months to 14 months that really kind of ramped up. So, just sticking for me, I mean, Board and I agreed that I think with these important strategic transactions behind us, I just would thank Cameron for putting up with me for all this period of time, until we got these things done. And then I'd also say, it's important. I talked about the return to normalcy, but I want to make sure we have a stable macroeconomic environment and really this is the first period since probably 2019 that we've had, do any kind of real stability, normalcy our businesses are operating at very good levels. So, I think the timing is right and I'll quite really be sitting on a beach that [indiscernible]. Darrin, if you’re ever in [South part] [ph], just come visit me.

Thanks, Jeff. Well, congrats again. I guess my quick follow-up would just be on thinking about pricing in the industry, we've now seen – I know you talked a lot, Cameron, you just talked a little more about value-added services and mix and it being pretty tight, but we see now between Pfizer and just across the industry, these as well showing pricing changes. And so after having seen quite a bit of cost inflation for a couple of years, we would think there could be some opportunity on the price front. Any comment on that or any thoughts?

Yes, Darren. I think our perspective around pricing really hasn't changed and the philosophy that we have has been pretty consistent for many years now. We try to price our services to reflect the level of value and capability that we're bringing to the market, which we do think in many ways is differentiated from our competitors. Think we were very hard to try to optimize our pricing and have for again the past several years to make sure that we’re constantly looking at, sort of the price points and how we're packaging a variety of different value-added services and capabilities we can bring along with obviously the pure payment acceptance solutions that we offer to the marketplace. So, our perspective is look, I think overall more people are being, I'd say, on the more aggressive side, perhaps for lack of a better term with their pricing strategies more recently. I think that bodes well as it relates to the competitive landscape and particularly how we try to position our business over a long period of time. So, nothing unusual coming from us as a pricing matter. I would say, it's more of the same, looking at portfolio optimization and pricing strategies again to try to reflect the value and service that we bring to the customer, but obviously in the backdrop with other people doing that makes it a little bit easier for those to stick. It is probably the point I would make into that.

Great. Nice job on the quarter guys. Congrats again. Thanks.

Thanks, Darrin.

Thanks, Darrin.

Thank you. Your next question is coming from James Faucette from Morgan Stanley. Your line is now live.

Great. Thank you very much and want to add my congratulations to both, you, Jeff and Cameron. Wanted to follow-up on Darrin's question there about timing and maybe Cameron with a few key things now accomplished and closed, how are you thinking about strategically next steps, especially given you're still in very good capital position and is it still time to keep looking at doing other acquisitions or does your prioritization change to integration and incorporating everything that – the recent acquisitions, including EVO Payments brings?

Yes, James. Great question. So, I would say first and foremost, Jeff and I have pretty much been locked at the [head] [ph] for the last nine years. So, you shouldn't expect a radical deviation in strategy. And quite the contrary, you should expect a continued focus on the four-pillar strategy we articulated 18 months ago at our investor conference. I'm very much 100% behind that strategy. Jeff and I worked closely to kind of build that strategy together over many years, and I absolutely think it's the right strategy for us as a business matter going forward. So, my highest priority will continue to be to execute against that strategy as we move forward. I think from a capital allocation perspective and priority perspective, as Josh highlighted in his prepared remarks, we're very focused on getting back to our targeted leverage ratio by the end of this year, that is a priority of the capital allocation matter, as well as make sure that we integrate EVO effectively over that same period of time. We have a saying here that we like to do the things we've already committed to well before we try to take on the next thing. So, I think as it relates to the next, call it, nine months, our focus is clearly going to be on getting leverage back to the targeted level, integrating EVO effectively, making sure that that's off to a good start. And then as a go-forward matter, I think our capital allocation priorities will remain relatively unchanged. We're going to continue to try to strike the right balance between obviously investing to grow the business. Our priority is finding ways to invest in the business to grow and expand our footprint to support the various pillars of the strategy that we're pursuing and find ways to augment that through inorganic activities, as well as organic investment in the business. And absent meaningful opportunities to do that in a way that drives value and returns for our shareholders, we'll look to return capital as we have over a long period of time. So, I don't think the overall philosophy or approach to capital allocation is going to change dramatically. I think it's going to be more of the same, and I think more of the same will be very good for our shareholders over a long period of time.

Got it. Got it. And then just revisiting a little bit the outlook is that when you came into the year, your planning assumption had been really no slowdown or economic recession. We've seen a little bit of a slowdown in consumer spending, as you mentioned, in late March and through April. And it seemed like at least some of the qualitative commentary was a little more cautious [really or] [ph] through the year in-spite of the guidance increase. How are you thinking about the macro conditions now versus three months ago? And has there been much change there? Thanks.

Yes. So, I'll go ahead and take that. So, as we thought about the guide, the outlook assumes the macro backdrop, as I said in my prepared remarks, is consistent with the current environment. And really, there's really two primary changes to the guide. What I would say is, the first change is the outperformance that we saw in Q1, which was approximately 40 million from a revenue perspective and EPS was about $0.05 or $0.06 better relative to our internal forecast. And then secondly, it's the $25 million that we expect to or that we received from Netspend in the month of April. Other than that, nothing has really changed relative to our guide that we went through on the February call and laid out specifically – very specifically by quarters.

James, just to add some color to the math that Josh went through. We're looking at current volumes and transactions in April. So that already reflects, to your point, and I think Josh said this in his prepared remarks, what you've heard from Visa and Mastercard and some of the other folks. So, I think that incorporates the current environment. Yet despite that, we've been able to raise our outlook a little bit better than the beat internally, as Josh described. So, we're very comfortable with where we are. And as I mentioned a minute ago, too, in my prepared remarks, particularly in the issuer business, we're the beneficiaries of the tailwinds coming from some of the consolidation from regional banks into the money center and SIFIs. [Indiscernible] JPM announcement today with First Republic, I would just say that our issuer business, in particular, hasn't seen any discernable moderation. Obviously, we pointed to acceleration today in our outlook, and that very much reflects [current] [ph] events. As I mentioned a minute ago, our trends through April sitting here today from a KPI point of [indiscernible] are very strong, right? And that's before some of the more recent consolidation. So, it may not be great for the broader macroeconomic environment, but certainly, the trend toward larger FIs globally is nothing but good news for our issuer business.

That’s great. Thanks for all the detail.

Thanks, James.

Thank you. Your next question is coming from Jason Kupferberg from Bank of America. Your line is now live.

Good morning. Congrats to everybody. And just wanted to ask about kind of quarterly revenue and margin cadence for the last three quarters of the year. I know last quarter you laid out a pretty detailed outlook by quarter. And just wanted to see if there's any little tweaks there so that we get the quarterly modeling right. For example, I think in merchant, we had talked about organic, kind of being in that 9% to 10% range pretty consistent each quarter, but if you can just go through some of those quarterly pieces, that would be helpful? Thank you.

Yes, absolutely. Look, what I would say is, February, we gave you very specific quarterly growth rates on revenue and earnings per share. And I would say, Q2 through Q4, nothing has really changed. So, if you go back to the earnings presentation that we put out there, we said adjusted net revenue reported 5% to 6% Q2, 8% to 9% in Q3. And four, we did obviously raise – we did raise the overall outlook to 7% to 8% based on the performance that we saw in Q1 and which I just outlined. And then from a margin perspective, look, we saw a really good margin expansion in Q1 of 200 basis points, exactly what we said we would do. And from Q2 through Q4, we expect 100 basis points margin expansion, which we laid out on the February call. And then from an EPS perspective, again, we're right in that 9% to 10% range for Q2 through Q4, which we outlined in February. So again, nothing has changed as it relates to Q2 through Q4 relative to what we discussed on the February call.

Good to hear. Okay. And just as a follow-up. In merchant, I think in the past, you guys have talked about the portfolio, at least on the acquiring side, putting software on the side, roughly half discretionary, half more non-discretionary spending. Is that still the right breakdown post EVO closing? And if you can just talk about what you're seeing in terms of relative growth rates between the discretionary and the non-discretionary spending volumes in merchant?

Yes, Jason, it's Cameron, I'll jump in there. I would say that overall split holds roughly pretty well post-EVO. Obviously, I don't think at this stage we've kind of aggregated all the different geographies around the globe in terms of what the volume mix is across every single vertical that they have exposure to, but given the size of EVO relative to our existing merchant footprint globally, it's not going to move the needle a great deal one way or the other even if their split is slightly different. I would say, and I'll use the U.S. as kind of example, you sort of saw the trend around retail sales in the U.S., which is really food and kind of retail more broadly. In the first quarter, January was very strong and February slowed down relative to January. And March, kind of slowed down relative to February, but I would say, overall, from a spending perspective, we continue to see spending skewed towards more services in experiences and less, sort of retail goods and food to some degree. So, a little better trends in the non-discretionary categories that we are heavy in, particularly as it relates to services, health care, et cetera, and a little lighter trends in the traditional, kind of retail, food and beverage, et cetera. But overall, the portfolios, I think, came together pretty well. I don't think the trends we're seeing in our business are any different than what you heard from Visa and MasterCard as it relates to March and April activity, more broadly, which we've talked about already. But I like, obviously, the diversification we have across nearly 70 different vertical markets. I like the split and sort of weightings that we have across discretionary, non-discretionary categories. So, I think we're well-positioned, obviously, for the macro environment as it continues to evolve through the balance of the year.

Okay. Appreciate the thoughts.

Thanks, Jason.

Thank you. Next question today is coming from Ramsey El-Assal from Barclays. Your line is now live.

Hi, there. Thanks so much for taking my question. I will add my congratulations as well to both of you. I wanted to ask if you could provide a little bit more commentary on the timing of the revenue synergies with EVO. When do those start flowing in? Is there any work that needs to be done in order to unlock those and how long might that take?

Yes, Ramsey, it's a great question. I tried in my opening comments to give a little bit of color on the types of revenue synergies that we're pursuing with EVO. Naturally, all of those involve some level of investment. I wish more than anything else we could flip a switch and start distributing our products and capabilities through their distribution pipes overnight or bring some of our capabilities to markets that they operate in today that don't have them, but as you can imagine, there's a significant amount of work to stand those up, to integrate those environments into different platforms that EVO operates under to make sure that we have distribution to support, obviously, the product that we're bringing to market, et cetera. [Indiscernible] EVO multinational customers up in new markets on different platforms takes time as well. So, there's a lot of work that goes into driving, kind of the revenue synergy potential that we see in the EVO business over a longer period of time. That's why near term, much of the emphasis we talk about as it relates to synergies is really around the expense side. That's much more actionable in the short to medium-term. We have clear line of sight to the 125 million expense synergies that we highlighted earlier today. And obviously, that drives a meaningful amount, obviously, of the accretion that we expect from the EVO deal in years one, two and three. I think revenue synergies create nice tailwinds, kind of as we get into the outer years. We certainly think we can add a point or two on top of EVO's existing kind of run rate revenue north of 600 million. So, you're talking at least 10 million to probably 15 million of revenue synergies from the EVO business once we're able to get up and running with respect to the various levels of revenue synergy activities that I talked about earlier in my prepared remarks. So, we see good potential to drive incremental revenue in that business. I think increasing their revenue growth by a point or two on top of what they're already doing is a good target for that business. And obviously, we're very confident over a period of time that we'll deliver on that, if not more, once we're able to light up all those opportunities.

Got it. Okay. And one follow-up for me. Could you give us an update on value-added services and how that part of your business is evolving? I'm just curious how important value-added services have become to things like either new sales or retention? And how like attach rates are trending?

Yes. I would say, it's an incredibly important part of our strategy, as we talked about back at our investor conference a little over a year and half ago. I think as I look at it, there's clearly an element of attracting new merchants to our portfolio by virtue of the breadth and depth of capabilities that we bring. I think there is a retention element in terms of being able to deliver more product and capability and differentiation to our customers by virtue of the value-added services we're able to offer. And I think thirdly, on the integrated side, we've seen great success in retaining partners and bringing in new partners at what I would consider to be relatively attractive referral rates largely based on the portfolio capability that we can bring to bear on their customer base. So, we offer much more than the pure payment experience that a lot of integrated providers are able to offer their customers. I think the breadth of value-added service we can bring is a differentiator in terms of working with our integrated partners, and it's been a big reason we continue to see the strength in that business that we have over the last many quarters. So, it's an increasingly important part of the value proposition that we're delivering to our customers. It's an important part of the growth profile over a longer-term period. And again, I think we've done a very good job of utilizing the capabilities we have to drive differentiation and distinction in the market. And it's even more important as we look at markets outside of the U.S. Bringing some of the capabilities that we have in the U.S. to markets like Central Europe to the U.K., Spain, et cetera, drives even greater levels of differentiation relative to what others in those markets can offer today and they've been a significant tailwind for those businesses as well. So, long-term, it's an important part of our strategy. It's why we spent so much time talking about it at the investor conference, and it's something we're going to continue to build on as we move forward in time.

Thank you so much.

Thank you.

Thank you. Your next question is coming from Bryan Keane from Deutsche Bank. Your line is now live.

Hi, guys. Good morning and congratulations, of course, to both of you guys. Just thinking about the merchant margins, they were up 80 basis points, I think, last year, and they came in more flat in the quarter. Anything to call out in the quarter in particular and even before we integrate EVO just thinking about organic margin expansion opportunities in the merchant segment?

Yes, Bryan, it's Cameron. I'll just start at a macro level, and I'll let Josh maybe jump in if he has any additional color to add. I would say, we got to look at margin profile in Q1 ex-EVO because EVO comes in at a lower margin profile than our core business. So, in Q1, we expanded margins ex-EVO by around 25 basis points. That's pretty consistent with where we ended up in Q4. As you can imagine, mix probably impacts that more than anything else, that we've got mix movement. As the vertical market businesses continue to perform well and recover in some of those verticals relative to what they experienced during the pandemic, that tends to come in at a lower margin profile, which from a mix matter, kind of ways to the overall margin expansion we're seeing in the business. But I would say, for Q1, we delivered margin expansion for the merchant business ex-EVO exactly on top of our plans. And I'll remind you, those margins are at, sort of north of 47%. So, as we think about margin expansion in the business over a longer period of time, when we're already at margins of 47%, 48% in that business, obviously, as we look at margin expansion for the company overall, more of that will be driven through gaining better scale across our corporate functions and obviously continue to see those expenses as a percentage of revenue not grow at the same pace. And then secondly, obviously, in the issuer business that has a little more runway, I think, around margin expansion over the near to medium-term. So, merchant was exactly what we expected for the quarter. We still expect the same expectation for the full-year, as Josh articulated in his prepared remarks around merchant margins. As we bring EVO in, it comes in at a lower margin profile. As we continue to build synergies over time, we'll get back to kind of pre-EVO levels and then, of course, look to expand from there.

Yes. The only thing I would add is that as it relates to Q2 and Q3, we'll see some margin contraction, as Cameron mentioned, by bringing in EVO, which is coming in at a lower profile, and then we'll start to see some margin expansion in Q4. And then the net result of this will just be a modest decline in merchant margins for the full-year, which is, again, consistent with the guide that we outlined on the February call.

Got it. No, that's really helpful. And then just as a follow-up, just thinking about the trends in issuer. I know you guys raised the Issuer segment revenue growth for the year, but the trends, obviously, you're pointing in your favor towards the movement towards assets towards larger banks, and I think it was 9 LOIs. So, just thinking even about longer-term, are you guys feeling a little bit more positive about maybe the issuer outlook even beyond 2023 as a result of some of these trends?

Bryan, it's Jeff. I couldn't be more positive about where we are in Issuer. I mean I think this is the fourth quarter in a row of significant sequential acceleration in the rate of growth of that business. B2B has been part of it now for probably nine months or something, and that provides another leg of growth. And I think I said last quarter added like 50 basis points or something of incremental growth relative to the Core Issuer business. So yes, I would say not in the nine RFP number or other things that are going on in terms of large financial institutions looking to select either new providers, their first time with providers. I think we're very well-positioned there. As I said on the call in February that the cloud sells, right? So, when we first started this, we weren't sure number of years ago in the receptivity. Now, you walk into a meeting and it's kind of table stakes. And I think with AWS, we're in a very strong position. So, very excited about where we are. And these are the things that I've been talking about for a year and half kind of rolling in, and I think as difficult as maybe for the broader macro economy, even today's announcement of JPM, yes, that's good news, right? So, I think the more we see toward money center and SIFI, I think the more confidence we have in the tailwinds over the next number of periods. And those aren't going to reverse themselves immediately, so I think you've got a very nice tailwind heading into the next period of time.

Okay, great. Congrats again.

Thanks, Bryan.

Thanks, Bryan.

Thank you. Our final question today is coming from Vasu Govil from KBW. Your line is now live.

Thank you very much and congratulations to you both, I want to add that as well. My first question is for you, Jeff. I think you mentioned MineralTree grew 20% in the quarter and you're expecting it to grow 30% for the year. So, I just wanted some color on what, sort of going to drive that acceleration. And if you could also give us more broadly an update on the cross-sell efforts you are seeing for that piece of the business into your merchant base?

Yeah, it's a great question, Vasu. So, we really couldn't be more excited about where we are in B2B. And by the way, I know you have that neural treatment. Of course, EVO has now rolled into from the end of March. So, obviously, that's an incremental tailwind to, kind of what we're doing. So look, I think the answer to your question is, there is a long and deep pipeline that we've been selling over at military for quite some time. The person running our business now, started last summer, I think it was right around July 1, so he's been very busy building that pipeline. We're seeing the benefit of that now. We're also seeing a very substantial benefit from cross-sell of virtual card, where TSYS is one of the largest virtual card providers on the planet into our core business, and that's growing at rates well north pf 20%. So, I just think, Vasu, to answer your question, it's the mathematics of selling recurring cloud SaaS business, the deeper the pipeline is, the more it rolls in. It's obviously very visible on the cross-sell and attach rate from virtual cards into the core on the software sale is very high. So, it's really just the mathematics of what we built. In terms of notables, I think we [said those] [ph], to be honest, on the February call, I think we talked about U.S. Bank, I think we talked about Citizens. Those are obviously two notable wins. And I expect over the balance of the year Cameron and Josh and team will be describing more. But we couldn't be more pleased with where that business is and its trajectory and, look, increasing the rate of growth from 20% to 30% or a 50% increase, I think, is evidence of our confidence in it.

That's great. And then just my follow-up on just the macro backdrop. I know you guys are sort of assuming that macro stays stable from here. But I think the risk of a recession is probably higher today than it was three months ago. So, just can you talk about the sensitivity in both the merchant and issuer revenue as to the extent we do see a slowdown and also cost levers that you might have? Thank you very much.

Yes, I'll start, Vasu, and then I'll ask Josh to comment. So, let me just start by saying, kind of what we've assumed. So, we've assumed where we are today, I guess, May 1, I was going to say April, but today is May 1, so we're taking the current environment meeting today. So, to answer your question, just initially, the macro level, we're not looking back to where we were on our February 10 call, we're actually going with what the current trends are today. And I think we said as it relates to the issuer business, we obviously have the KPIs through the vast majority [of April] [ph] on there, as we said in our prepared remarks, we don't see any discernible moderation in what we're doing. So, we don't assume things get better, we don't assume things [indiscernible] where the way they were 2, 3 months ago in February, rather we're taking kind of where they are today, and obviously, our raised outlook for today reflects the current environment. Cameron, you want to comment on merchant a bit, and Josh, you, too?

Yes, Vasu, it's Cameron. I think I mentioned this before. Obviously, to Jeff's point earlier, we saw strong trends in January, February. March kind of slowed down a little bit relative to that. And April has been more of the same relative to what we saw in March. So, that's the expectation we kind of have as we look towards the balance of the year. As I said, kind of many times in the past, we don't need perfection for the balance of the year relative to our current outlook to obviously achieve the expectations that we've set forth today. So, I think we feel good about how we're positioned to deliver on the overall guide that we've shared. And obviously, that can withstand, I would say, relatively we're seeing slight deviations, I'd say, in the overall macro environment that we're anticipating for the balance of the year. If things fall off precipitously, then obviously we'll revisit it. If things obviously improve more than we anticipate, obviously, that creates some upside opportunity. So, I think we feel good about, obviously, how the business is positioned for the balance of the year. The guide, I think, today reflects that. And we're looking forward to continue to execute against that.

Great. Thank you very much.

Thanks, Vasu.

On behalf of Global Payments, thank you for your interest in us and for joining us this morning.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.