Global Payments’ (GPN) Q3 Sales Beat Is Rejected As Lowered FY22 Guidance Receives The Attention
1:45 pm Monday, October 31st, 2022
Global Payments’ (GPN -6%) sales beat and in-line earnings in Q3 are proving insufficient to keep shares from trading in the red today. The payment technology company, which delivers software and services to around 4.0 mln merchant sites and over 1,300 financial institutions across roughly 170 countries, lowered both its FY22 reported adjusted revs and reported adjusted EPS guidance as FX headwinds gained strength from Q2. GPN now expects FY22 reported adjusted revs of $7.8-7.9 bln, down from $7.9-8.0 bln, and reported adjusted EPS of $9.32-9.55, down from 9.45-9.67.
Despite the lowered FY22 outlook, GPN’s Q3 results still built on a firmer foundation from the prior quarter.
Total sales grew 3.8% yr/yr to $2.29 bln, on a 240 bp expansion in adjusted operating margins to a record 45.2%, leading to solid bottom-line growth of 18% to $2.48.
GPN’s business-to-business (B2B) side of its operations continued to perform nicely, with its Merchant Solutions segment seeing 6.7% sales growth yr/yr to $1.60 bln. The B2B growth is important as it has become one of GPN’s core focuses over the past few years.
For example, last quarter, GPN announced its plans to acquire EVO Payments at $34 per share, a purchase that would help bolster the company’s B2B offerings.
The main takeaway is that despite decent Q3 numbers, adverse FX impacts reducing GPN’s FY22 outlook are taking the steam out of the stock today. The company’s results remind us of Fiserv’s (FISV) Q3 report from last week, which ran into an intense FX headwind, taking a bite out of its FY22 outlook. Nonetheless, we continue to like GPN’s heightened attention on its B2B business, which carries less volatility than the consumer side, especially during an economic downturn.
On a final note, it is worth keeping an eye on GPN competitors Fidelity National Information Services (FIS) and Block (SQ), which both report Q3 earnings on November 3.
