Ladies and gentlemen, thank you for standing by, and welcome to Global Payments' Third Quarter 2025 Earnings Conference Call. [Operator Instructions] And as a reminder, today's conference will be recorded. At this time, I would like to turn the conference over to your host, Head of Investor Relations, Nate Rozof. Please go ahead.

Good morning. Welcome to Global Payments Third Quarter 2025 Conference Call. My name is Nate Rozof, and I'm Head of Investor Relations. Joining me on today's call is our CEO, Cameron Bready; our President and COO, Bob Cortopassi; and our CFO, Josh Whipple. 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. I'd like to remind you that some of the comments made during today's conference call will contain forward-looking statements, including expected operating and financial results, among other matters. These statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For additional information on these factors, please refer to our press release and filings with the SEC. We caution you not to place undue reliance on these statements. Forward-looking statements during this call speak only as of the date of this call, and we undertake no obligation to update them. We will be referring to several non-GAAP financial measures, which we believe are more reflective of our ongoing performance. For a whole reconciliation of the non-GAAP financial measures discussed on 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 other supplemental materials available on the Investor Relations section of our website. With that, I'll turn the call over to our CEO, Cameron Bready. Cameron?

Thanks, Nate, and good morning, everyone. We are pleased to deliver third quarter adjusted results that accelerated sequentially across our key financial metrics. Our team continues to execute at a high level, driving growth and efficiency across the business as we advance our transformation program. Importantly, our year-to-date performance positions us well to deliver on our expectations for the full year, and we are building positive momentum as we prepare for the closing of the Worldpay acquisition. To that end, we recently received approval for our acquisition of Worldpay from the Competition and Markets Authority in the U.K., which is a critical regulatory milestone. Given the strong progress we have made with the regulatory approval process, we now expect to close our acquisition of Worldpay and divestiture of Issuer Solutions in the first quarter of 2026. Naturally, our teams are eager to complete the Worldpay transaction and begin unlocking the compelling opportunities it presents, including accelerating our strategy to transform Global Payments into a pure-play merchant solutions provider with sustainable growth, leading scale, focused investments and meaningful value creation. We are also pleased to have closed the divestiture of our payroll business in September, further simplifying our business and allowing us to return an incremental $500 million of capital to shareholders during the third quarter through an accelerated share repurchase program. Lastly, before turning to the quarter, I'm happy to announce that we partnered with Google to enable Agentic Commerce using the Agent Payments Protocol. It will enable us to provide secure, reliable and interoperable agent commerce for our customers and partners. We are helping our customers and partners to successfully enter this emerging commerce channel by building bridges between protocols to enable our merchants to accept all Agentic payment types. With this and other Agentic AI frameworks, we are…

Thanks, Cameron, and good morning. We're pleased to have reported another solid quarter, highlighted by accelerating revenue growth, healthy margin expansion and strong adjusted free cash flow generation. Importantly, the performance delivered is exactly consistent with the expectations we outlined at the beginning of the year as we continue to execute against our strategy and transformation agenda. Specifically, we delivered adjusted net revenue of $2.43 billion for the third quarter, an increase of 6% from the prior year on a constant currency basis, excluding dispositions. Adjusted operating margins expanded 110 basis points to 45% or 80 basis points, excluding dispositions, resulting from strong execution and benefits from the transformation we began executing last year. The net result was adjusted earnings per share of $3.26, an increase of 12% on a reported basis and 11% on a constant currency basis. Year-to-date, we've generated $2.1 billion in adjusted free cash flow, representing a 96% conversion rate from adjusted net income. Taking a closer look at performance by business. Merchant Solutions produced adjusted net revenue of $1.88 billion for the quarter, reflecting growth of approximately 6% on a constant currency basis, excluding dispositions. This represents a 50 basis point improvement sequentially, consistent with our outlook that we set at the beginning of the year, and the expectations outlined at our investor conference last year. Further, the macroeconomic backdrop remains consistent as we continue to see stable volumes supporting our view that the consumer spending remains resilient. Our POS and software business achieved high single-digit growth, excluding dispositions for the third quarter. We're encouraged by the acceleration in new Genius locations sold having seen a 37% monthly increase since launching in June. We continue to build on this momentum in Q4, we hosted our Genius Dealer and VAR Conference in late September. The conference…

Thanks, Josh. I could not be more proud of our team and the positive impact we are seeing in our business from our transformation. The anticipated closing of the Worldpay acquisition and the concurrent divestiture of Issuer Solutions business early next year represent a pivotal moment in our company's evolution. Far from a departure from our strategy, these actions are a natural extension of it, providing unique opportunities to accelerate our transformation. Together, they will crystallize Global Payments position as a pure-play merchant solution provider and a leading provider of commerce enablement solutions with unmatched global scale in an industry, where scale matters more than ever. We remain intensely focused on driving sustainable growth through a combination of expanded and more effective distribution, a more comprehensive suite of products and solutions and our ability to invest in innovation at scale. With approximately $1 billion in annual capital investment dedicated exclusively to merchant and commerce enablement solutions, we are uniquely positioned to accelerate our product road map and deliver differentiated value to our customers. These transactions also reinforce our transformational objectives to enhance operational efficiency and maximize cash flow. Leveraging our increased scale and realizing meaningful synergies, we expect to generate significantly more levered free cash flow than what would have been achievable absent these strategic actions. And our commitment to disciplined capital allocation remains unchanged. In addition to the $1.2 billion we have already returned from the disposition of assets, we remain on track to return $7.5 billion to shareholders between '25 and '27, while simultaneously delevering to 3x within 18 to 24 months of closing the Worldpay transaction. By 2028, we expect to generate approximately $5 billion in annual levered free cash flow, which is 50% more than it otherwise would have been. This level of cash flow generation will provide us with significant flexibility to continue returning capital to shareholders on a sustained basis, while simultaneously investing in innovation to drive sustainable long-term revenue growth and operating leverage. With that, I'll turn it back to the operator to open the line for questions.

[Operator Instructions] And our first question will come from Dan Dolev with Mizuho.

Cameron, Josh, Nate great results here. It looks like everything is on track and better than expected. I wanted to touch on your comments, Cameron, on free cash flow. I mean the generation is very impressive, and you're pushing probably $9 billion of return right now. So as we get closer to this 2028, how do you think about capital returns given the massive amount of free cash flow that GPN is throwing?

Yes. Dan. Thanks for the kind comments. I would say our philosophy remains very consistent. As you highlighted over the course of the '25 to '27 time frame, we expect to return close to $9 billion. That's $1.2 billion from dispositions that we've made and obviously utilized the proceeds from those to return capital, and we're still targeting $7.5 billion from just cash flow that we're generating in the business is capital returns over that same time frame. As I just commented, we expect to have free cash flow in the neighborhood of $5 billion by the time we get to 2028. And I would say, given where we are today, our priority would remain returning that capital to shareholders. Obviously, we want to be able to continue to invest in the business to drive growth and make sure that we're innovating at the pace that we want to and maintaining our competitiveness in the market, but recognize that our free cash flow expectation is already built in a $1 billion plus of new investment in innovation annually. So we think we have ample free cash flow in 2028 to return a significant amount of capital to shareholders, while still positioning us to be able to invest in the business the way we need to, to drive sustainable long-term growth.

The only thing I would add, Dan, is look, you saw in the quarter, we continue to generate really, really strong free cash flow. Year-to-date, we generated over $2 billion of free cash flow, we converted at 96%. And you also saw that we delevered down to 2.9x. And just given the cash flow profile of this business, we feel very confident that we'll delever back to 3x within 18 to 24 months of closing the Worldpay acquisition. So we feel really good about that.

Our next question comes from Jason Kupferberg with Wells Fargo.

I wanted to ask on merchant, a 2-part question. The first part is on Genius. I wanted to get a sense of what the complexion of some of these initial wins look like? Are you mostly winning restaurants and retailers that are moving to Genius from a non-cloud solution? Are you getting competitive takeaways from the other cloud providers? And then the second part of the question is just on pricing and the environment there. Last week, one of your competitors talked about rolling back some fees in parts of its SMB merchant base. So I wanted to get your take there. Just on the overall pricing backdrop, are you seeing any more price aggression in the market since last quarter?

Yes, Jason, it's Cameron. Thanks for the question. I'll start and maybe ask Bob to provide a little more color on specifically what we're seeing with Genius. But to maybe answer your question very quickly, I think it's a little bit of all of the above. We're delighted with the progress that we're seeing with Genius. We called out some stats, obviously, in our prepared remarks, but certainly, the momentum we're building around Genius is palpable. I think the reception of the market is highly constructive as it relates to the product, the capabilities, the form factors, in all the feature functionality that we're able to bring to bear through the platform. So as we commented, we're already live in a number of markets internationally. We have plans to bring it to more markets. 90% of our new sales are to new customers, which is really encouraging, and it aligns with our focus, as we've described before, on front book opportunities. We saw new locations increase kind of 20% quarter-over-quarter and a 37% increase, since we launched in June and new ARR, importantly, not only are we selling more locations, but the value of those locations is increasing as well as new ARR is up almost 75%, since we launched in June with an average deal size, it's greater than 50% what it was prior to launching Genius. So I think as it relates to the early sort of proof points around how Genius is resonating with the market, we feel very enthusiastic about the reception we've received and obviously, the momentum we're building. I'll let Bob talk a little bit more about specifically kind of what we're seeing on the wind front.

Yes. Thanks, Cameron. Jason, the way that we think about -- the way that I think about the front book opportunities that we're winning is that the motive competition really varies by geography. And that's less about the intensity of competition or what the product market fit is, and it's more about the maturity of the market sort of inherently. So as you think about where we've got Genius rolled out so far over the last few months, it's primarily North America-based although I think we mentioned that we're live in the U.K. now as well. And across North America, the U.S. is a very different market than Mexico in terms of the penetration of POS technology systems as opposed to kind of legacy payment methods themselves. And that's the primary driver of the source of the wins. When we go head to head in a market like the U.S. that's fairly mature, deep competitive landscape, a lot of established software providers there. We feel very confident about how our software and capabilities stack up against them, and we're winning a lot of those head-to-head battles as well as competitive takeaways. We're also winning in markets where software adoption is less than it is in the United States. And some of those wins are coming from head-to-head and competitive takeaways. Some of those are coming from people, who are leaning into a full POS software stack to manage their business for the first time. But regardless of geography of distribution method, whether that's dealers or direct and regardless of kind of who the competition is, today, I wouldn't say that there's 1 spot we're winning in a spot that we're concerned, we feel really strongly about our opportunity to win when we get in deals. You didn't ask this, and…

And Jason, I want to circle back on the second part of your sneaky 2-part question there. So on the pricing environment, what I would say is it remains fairly constructive. And our philosophy, I think, from a pricing standpoint, really hasn't changed. We want to price our services and solutions given the level of value and capability we're bringing to our clients. We don't strive to be the low-cost provider in the market, and we want to be paid fairly and appropriately for the level of value and service that we think we can deliver. So we're not leading with price. But obviously, we must be price competitive and we are price competitive for our solutions. I think the reference that you made was really as it relates to more of a back book pricing sort of action as opposed to front book opportunities. And as I said, we're always price competitive as we think about sort of new front book opportunities in the business. The last thing I would just leave you with is with the Worldpay, obviously, acquisition and the significant scale that we will bring to the competitive landscape as we move forward, I don't worry about being price competitive really with anybody. We want to make sure we're differentiating our capabilities based on the future functionality and level of service that we bring. And we'll always be price competitive, but we think we bring something distinctive from a functionality and service standpoint, and we want to be paid fairly and appropriately for that.

Our next question will come from Adam Frisch with Evercore ISI.

Cameron, I'm going to have a very unsneaky 2-parter here for you. If you could just provide some color on the primary components of the organic growth number and specifically call out some pricing increases to the back book, which are channel checks have suggested some pretty significant ones in recent months. And then the second one on the sales force expansion, super interesting. What kind of companies are you sourcing from the most and where do you see the most opportunity?

Yes, Adam, I'll take the first part and I may ask Bob to jump in on the second part just in terms of where we're sourcing kind of new sales professionals and the success we've seen on that front. I would say there's nothing sort of out of the ordinary in terms of organic growth for the business in this quarter. We're continuing to see much of that driven from new sales productivity. And actually, as we've called out, we're seeing better productivity from a new sales standpoint and better results from a new sales standpoint in the quarter, which obviously is a little bit of a tailwind to the overall growth in the business. And then secondly, obviously, we're seeing fairly stable same-store sales trends across the business as well, which are the 2 biggest drivers, obviously, our organic growth and the performance we're seeing in the business. As it relates to pricing, we're continuing to exercise the same philosophy that we've had over a long period of time, as I mentioned in my answer to the earlier question, we focus on pricing our services and solutions based on the value of the services and capabilities that we're bringing to our client base. What we have been doing through our transformation is looking to harmonize all of our pricing sort of structures across all the different portfolios that we've acquired over a long period of time. So as part of that, obviously, we are looking to harmonize kind of the pricing structures and capabilities that we're utilizing to make sure that we're getting paid fairly and appropriately for the level of value and service that we're delivering. But I would say on the pricing front, there was certainly nothing unusual in the quarter as it relates to how we think about pricing our solutions and actions that we may take from a back book perspective, as we're looking to harmonize those pricing structures kind of across our portfolios.

Yes. And in terms of where we're sourcing kind of sales talent and the pipeline for that, I would say, again, it's very broad. Obviously, we're targeting software salespeople, who've got experience doing that motion. Whether they're coming from fintech or whether they're coming from other types of kind of core business management software. But I think the differentiating point here, as you think about kind of a legacy sales rep and a new sales rep, if you will, is that this is a much more consultative sale process than sort of commodity purchasing. Some people, particularly younger folks want to be able to interact digitally and acquire through that sort of methodology, but not everybody feels comfortable fully articulating their needs, understanding the complexities that may be associated with large-scale implementations and rollouts, and we find it very constructive to have consultative sales talent and sales engineers, certainly as the enterprise space to come alongside them and be able to deliver those capabilities at scale for both SMBs as well as enterprise clients.

Our next question will come from Dave Koning with Baird.

Nice job across the board. And I guess, my question, Genius, you talked a lot about new sales to new clients, but the back book, about 10%, it sounds like sales are coming through. I'm wondering what's the, I guess, experience so far with attrition in yield when you do move the back book? And if that's good, are you going to more aggressively kind of push into that?

Yes. Thanks, Dave. We talked about this a number of times, and I think our strategy is relatively consistent, and that is to be in front of our customers and leverage the relationships that we have, ensure that they're aware of the capabilities that Genius brings to bear and be prepared to help them migrate at a time that is comfortable and convenient for them to do so. As a reminder, Genius is not a new from the ground up brand new technology stack, much of Genius core capabilities comes from existing solutions that we already had in the market. So as we think about customer migrations, in many cases, this isn't really a migration per se. This is simply unlocking the incremental capabilities that we've built over the past 18 months or so as we've been working to bring Genius to market across the globe. The second thing related to sort of yield and average revenue per customer, as Cameron mentioned, the overall deal size is increasing. A little bit of that has to do with the sorts of customers that we're able to target with Genius as a solution, but part of it is also about the breadth of capabilities we have to monetize. We have to provide to deliver incremental value to those clients. So as we think about a migration experience, there is not any meaningful price compression associated with that. I would say it's neutral to slightly enhanced given the take rate on some of the incremental capabilities. As we think about the strategy against the back book, look, there's a time and a place for that. But as I mentioned earlier on one of the responses about mind share, we're very focused on getting Genius in front of as many prospective clients as possible, and establishing a footprint so that all of you on this call, when you walk into anywhere you do business in your normal life, you begin to see more and more of the Genius brands. So we're very aggressively focused on front book opportunities. We're prepared and we're here for our back book clients as they migrate. And in most cases, as I mentioned, that's not a full-scale data conversion, migration that's simply unlocking incremental capabilities on the new unified platform.

Our next question comes from Bryan Keane with Citi.

Solid results here. Cameron, I just want to ask you a little bit more directly about that peer that we talked about that reduced the guidance. In particular, they talked about short-term revenues that were unsustainable and driving higher revenues and margins. Is that something that's common practice in the industry? Can you maybe talk a little bit about the yields that you see versus volume? You guys have been pretty consistent on that. And then any kind of ability for you guys to competitively take away some business as a result of that?

Yes, Bryan, thanks for the question. Look, it's hard for me to comment too much on another company or another competitor. I certainly don't have perfect visibility into everything that's happening with their business. I'm really intensely focused on the things we're doing and how we're executing as a business. I wouldn't say that the things that they called out were common in sort of practices. I mean, I think much of the commentary, particularly around merchant related to one specific international market and some idiosyncratic sort of issues there that were propping up kind of growth by virtue of FX rates and inflation, et cetera. So as I look at kind of the business more broadly, as I said before, I'm really focused on the things that we're doing, and I can't get too far down the path in terms of commenting on someone else. To that end, I would tell you, I'm really pleased with what we're seeing in our business and how effective our transformation is in terms of positioning us for a better sustainable growth and value-creation future as a business. And I'm really pleased with the momentum we're building in the business. We've been at our transformation journey now for about 15 months, and I'm really pleased again with the little success that we've seen and the direction of travel as it relates to all the key initiatives that we have really been investing against over that period of time. We reoriented our operating model to make sure that we are well positioned for the growth future that I described before. We've had terrific success with Genius, which we spend a lot of time talking about today. Our sales effectiveness initiatives are progressing really well, and we're seeing a lot of positive trends coming out…

Our next question will come from Andrew Schmidt with KeyBanc Capital Markets.

Good to see the consistent results here. Maybe we could ask just about Merchant Services or Merchant Solutions organic growth. It looks like the exit rate pretty consistent with what you guys had outlined previously, slightly above 6%. Maybe talk about just the progression into 2026. And whether any thinking has changed there, particularly in terms of drivers? I know POS and software is obviously a big driver, Salesforce is a big driver and a number of things going on. But just -- maybe just if you think about just the progression into 2026 and some of the key drivers, that would be great.

Yes, I'll start. I'll maybe ask Josh to add a little bit of commentary as well. I think, look, 2026 is right around the quarter. So the drivers as we think about the business organically heading into 2026 are really centered around the things that you just described. Obviously, Genius continues to be a very significant focal point for us in terms of driving growth in our business. We have incremental market expansion opportunities in 2026 that we're looking to deliver. Obviously, we continue to build momentum in the markets where we've already rolled it out, and we're seeing strong progress on that front. And then, of course, our initiatives around sales effectiveness, the incremental sales force professionals we're looking to hire and bring to bear on the market. Their ability to be productive more quickly and obviously drive a level of productivity that's superior than what we've been able to see historically under our old sort of plans, I think, gives us a lot of optimism around the direction of travel, relates to organic growth heading into 2026. So I don't think the underlying theme as it relates to how the business is positioned heading into next year have really changed. And I would just note also that they're very consistent with what we called out at our investor conference a little over a year ago. Obviously, as we highlighted on the call today, we're poised to close the Worldpay transaction early in 2026. And I think as we look at the combination of the 2 business heading into next year, we're obviously comfortable with the direction of travel of the Global Payments business, and we're very comfortable with the direction of travel of the Worldpay business in terms of their organic growth as we look to wrap-up '25 and head into '26. And the outlook for the combined business next year, I would just ask you to reflect on what we shared in Q1 of this year around the medium-term outlook for the combined business, that remains kind of our outlook as we sit here today for the combined business as we get into 2026.

Yes, Andrew, the only thing I'd add is, I think if you go back to the beginning of the year, we're doing exactly what we said we were going to do. You go back in the first 3 quarters, the shaping of merchant is right in line with what we see acceleration in the back half, and that's primarily related to the transformation initiatives as Cameron and Bob called out around Genius and sales effectiveness. And then to Cameron's point, we gave our medium-term outlook for '26 and '27 for the pro forma business on our Q1 call. So I would point you back to that where you can see kind of what we're expecting for the business in 2026.

Our next question comes from Darrin Peller with Wolfe Research.

Look, when we see some of these data points like the sales revamp showing us increases on deal counts and even the Genius stats are obviously strong, looking at some of these with 90% sales to new customers, increases, et cetera. I guess our question would just be when we would start to see that play out in volume growth? I know it's early now in some of these initiatives, but your 5% growth rate, I would like to see that show some traction and acceleration. Do you expect acceleration in volume growth, specifically the KPI you've been disclosing in the same manner as we go into next year as a result of these initiatives? And then sort of related, but a follow-up would be the Worldpay SMB segment, I know is an area that you should be able to really capitalize your Genius program with post close. And so just how are you thinking about integrating that, rationalizing the 2 SMB go-to-market organizations and the uplift potential that we can see in volume overall as a result of that as well.

Yes, Darrin, good question. So on the first question, we did see, obviously, volume uplift from Q2 to Q3. And obviously, that's reflected in the metrics and the disclosures we provided today. But I think the longer answer to your question is, of course, over time, as we continue to make progress with Genius, we expect to be able to drive incremental uplift in volume all else being equal across what's happening in the macro environment. As you can imagine, a lot of different factors sort of shape the ultimate sort of volume growth we see in the business. But certainly, we are seeing new sales of Genius driving incremental volume to the business, which is obviously driving overall volume trajectory in the right direction. And obviously, as we continue to move forward and make progress against expanding our footprint with Genius to Bob's point, growing mind share around Genius and having more success with front book opportunities, we expect that to continue to drive margin opportunity -- excuse me, volume opportunity and growth in volume in the business over a period of time. I think as it relates to the Worldpay opportunity, certainly, we think the overlap and complementary nature of the distribution platforms in SMB is really attractive. Today, Worldpay really lacks a product suite that we have that's really geared towards serving the SMB segment of the market. And we think that our ability to leverage that product suite across our existing distribution channels is going to be really powerful. The other thing I would say is their distribution platforms, again, are largely complementary to what we do today. Their FI channel is, again, incremental largely to what we do from a distribution standpoint. Their wholesale relationships are largely complementary to the relationships that we have. They don't have a significant direct sales force in the U.S., they do in the U.K. But the FI channel and the wholesale channels in the U.S. are very much complementary to our distribution channel. So our ability to leverage those channels to get greater breadth and depth of product expansion into the marketplace across SMBs, I think, is a really powerful part of the proposition of putting Worldpay and Global Payments together, and we're excited to be able to bring those distribution channels to life as a combined business going forward.

Thank you. This does conclude the Q&A portion of today's program. So I'd like to turn the call back over to the speakers for any closing or additional remarks.

Well, on behalf of Global Payments, thank you very much for joining us today, and I wish everyone a very happy Tuesday. Thanks for your interest in our company.

Thank you, ladies and gentlemen. This does conclude today's program, and we appreciate your participation. You may disconnect at any time.