Specialist
Former director at Global Payments Inc
Agenda
- Global Payments’ (NYSE: GPN) operating environment and key considerations for ongoing performance
- Emerging trends in payment processing and merchant acquiring industries and their impact on competitive dynamics
- Puts and takes of the Evo Payments acquisition focusing on integration and cross-sell opportunities
- Competitive assessment vs incumbent peers such as FIS (NYSE: FIS) and Fiserv (NASDAQ: FISV) and tech-forward new entrants such as Toast
- 3-5-year performance outlook with scenario analysis
Questions
1.
Can you give an overview of Global Payments’ operating environment, highlighting 2-3 key trends or drivers we should monitor?
2.
How should we balance our view of Global Payments’ strategy of acquiring different software vendors as additional channels to facilitate payment volumes?
3.
Where do you see the merchant acquiring market heading in terms of where ISOs [independent sales organisations] might transfer over to these software solutions, or where their presence might be a little more resilient?
4.
In which of Global Payments’ verticals do you see the most accretive margin opportunities?
5.
Could you elaborate on merchant relationships with payfacs [payment facilitators] and front-end processors, since they’re encroaching on the merchant accounts and taking a greater share of that acquirer or processor spread? Is there any way Global Payments can meaningfully regain these spreads, or will the company’s strategy be directed more towards maximising scale on the back end?
6.
Do you think Global Payments would attempt to make more meaningful direct competition with payfacs in the longer term, or do you see this as more of a symbiotic relationship?
7.
What’s your read on Global Payments’ agreement to acquire Evo Payments? How might this benefit the company’s competitive positioning and strategy for B2B payments as a whole?
8.
How does the Evo Payments acquisition benefit Global Payments’ positioning in the cross-border piece? From what I understand, the B2B cross-border piece is significantly difficult, especially at the enterprise level when you have so many different localities to deal with. What are some puts and takes for management to achieve this strategy?
9.
How should we think about the cross-sell opportunities with the Evo deal? Where could we see the most adoption from additional Global Payments business solutions services for some Evo clients and vice versa?
10.
A lawsuit was issued for the Evo Payments acquisition on the grounds that management acted in a way that wasn’t maximising shareholder value. Do you feel this is worth monitoring, or is it fairly common among acquisitions of this size?
11.
How accretive would an acquisition such as Evo Payments be to Global Payments’ business solutions margin, in a sense of owning the accounts receivable-accounts payable loop and then cross-selling it into the additional services?
12.
How significantly should we weight the expansion of integrations with major ERP [enterprise resource planning] software vendors such as Sage, Oracle and SAP through the acquisition? Do you think it will be meaningful in terms of attracting or retaining B2B solutions and customers?
13.
Do you think international expansion is a lower strategic priority compared to deepening vertical penetration or developing more product solutions in different segments?
14.
Should we factor in any of the anomalies we’re seeing in the Fx market in terms of our performance outlook for Global Payments? Is there a situation where the company benefits or is negatively impacted by the dollar’s increasing value vs the decreasing value of other basket currencies?
15.
Do you have any additional thoughts on further M&A from Global Payments or specific targets and verticals the company might look at? How should we think about multiples in these segments?
16.
What do you feel is missing or unrefined from Global Payments’ end-to-end payment stack?
17.
Do you imagine a scenario where Global Payments might look to acquire NCR’s hospitality business given the structural challenges the latter is facing? I could see somewhat easy integrations in terms of the legacy technology that both companies use, as well as increasing footprint in the hospitality space and maybe the enterprise-size clients as well.
18.
How are you thinking about the competitive landscape that Global Payments is facing? What do you make of general market share trends for the company over the next few years? The common narrative suggests that incumbent players will lose market share to newer tech-forward entrants because they can’t pivot their technology solutions in a way that keeps it dynamic. What’s your take on that?
19.
Are there specific verticals where you feel Global Payments might be more at risk of losing market share than others?
20.
If Global Payments is losing market share, who’s gaining it?
21.
What would be the building blocks to address the onboarding lag you mentioned?
22.
Who would you highlight as the biggest market share winners or losers over the next 1-3 years and what are your assumptions behind this?
23.
Is there anything further to highlight about Global Payments that we haven’t discussed? Do you have any contrarian views to share?
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