Global Payments Q3 2023 Earnings Call Transcript

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by and welcome to Global Payments Third Quarter 2023 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, Senior Vice President, Investor Relations, Winnie Smith. Please go ahead.

[Winnie Smith, Senior Vice President, Investor Relations at Global Payments]

Good morning and welcome to Global Payments third 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 speak 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 Cameron Bready, President and CEO; and Josh Whipple, Senior Executive Vice President and CFO.

Now I'll turn the call over to Cameron.

[Cameron Bready, President and Chief Executive Officer at Global Payments]

Thanks, Winnie, and good morning, everyone. Thank you for joining us today. We delivered strong third quarter results that were ahead of our expectation despite what continues to be an uncertain macroeconomic environment and a much stronger dollar than forecasted when we provided our outlook back in August. I am very proud of this performance and our teams globally for their ongoing consistency of execution. On a consolidated basis, we reported 9% adjusted net revenue growth and adjusted earnings per share growth of 11% for the quarter. This includes a roughly 700 basis point headwind to adjusted earnings per share growth from the divestiture of Netspend's consumer assets, which we completed last quarter. We also expanded adjusted operating margins by 50 basis points.

Focusing first on our Merchant Solution segment, we again delivered strong organic growth in the third quarter consistent with our second quarter performance, driven by ongoing momentum in our technology enabled offerings, which collectively represent roughly 65% of our total merchant adjusted net revenues. Our software centric businesses across our partnered, owned and POS strategies continue to drive a meaningful share of growth in the business. Starting with our integrated business, we achieved strong growth and record new bookings again this quarter signing 16 new integrated partners, a 33% increase from the prior year. These booking trends underscore confidence in our ability to maintain consistent growth in this business going forward as our differentiated capabilities continue to resonate with the ISP market.

Our new Progressive Payment facilitation or ProFac model is a prime example of our leadership in this channel. We signed six new ProFac partners in the third quarter and have more than 20 additional opportunities in the pipeline reflecting strong demand for this new offering. We also saw a strong double-digit performance in booking trends this quarter across our own vertical market software businesses. Zego, our newest addition to this business continues to see solid demand for its solutions with bookings growth of 15% in the quarter.

Notably, Zego also expanded the scope of existing partnerships to include additional payment solutions with global real estate management firm, Harbor Group, and multifamily management company, Respond, while furthering its expansion in the student housing vertical by signing an additional partner, Domus Student Living. An active network had one of its best booking quarters since the pandemic, including new partnerships with YMCA of Vancouver, Alterra Mountain Company, the New York Triathlon and the Sydney Half Marathon. Additionally, our university business, TouchNet, signed a new partnership with Langara College in Vancouver and extended the relationship with the Texas State University System.

As for our POS software business, we again delivered 20% plus growth in this channel as we continue to see strong demand for our solutions and benefit from releases of new product enhancements. Collectively, adjusted net revenue for our POS business is approaching $400 million annually and is one of the fastest growing channels of our business. Today, we offer complete cloud based POS software in commerce enablement platforms targeting three distinct segments of the market with solutions that are purpose built for key verticals, primarily restaurant and retail.

We focus on these verticals for several reasons. One, they are large addressable markets. Two, they are international in scope and three, because more and more payment decisions are being made in connection with the point of sale in these markets. Our POS solutions are used by over 80,000 merchant locations globally enabling businesses of all sizes from SMBs to enterprise customers to run and grow more effectively. Our products easily scale from simpler solutions for a single location to complex environments for large merchants with multi-unit and multinational requirements. Across our POS platforms, we seamlessly combine software, hardware and payments for in-person mobile and online environments providing for great customer experiences and we deliver all this and customize configurations that specifically address the unique software and payment requirements of our customers.

Our solutions are designed to grow with the customer's business. We leverage a common technology stack that enable customers to easily add functionality as they expand. This allows us to serve the small end of the SMB market and scale with merchants increasing software revenue along the way. Importantly, this differentiates us from many of our competitors who attempt to address small and large and general and vertically specific used cases with the same single offering, and we couple our complete commerce enablement solutions with distinctive distribution and full local service and support that is unrivalled in the market.

Our entry level product or general purpose cloud based point of sale solution is branded GP Pause. This offering provides a highly competitive starter solution for SMB customers who want a simple and intuitive system with a robust feature set. GP Pause delivers an expansive set of mobile POS capabilities and commerce enablement tools. These features can be tailored to the specific requirements of the merchant business on the vertical market and geographies they serve. Importantly, GP Pause is essentially self-service from beginning to end. From onboarding to full configuration of the functionality, a merchant can easily enable our software and begin accepting payments in less than 24 hours.

We offer GP Pause globally through a variety of regional and wholesale distribution channels. In the last year, we successfully launched our GP Pause technology in numerous international markets, including Canada, the U.K., Spain and Central Europe and expect to further expand to Poland, Germany and Ireland over the next 12 to 24 months. We couple our innovative GP Pause solution with local presence and support capabilities as well as our long standing FI partnerships in these markets, a powerful combination our competitors simply cannot replicate.

In North America, we have distinct, vertically specific restaurant and retail focused cloud based POS solutions, Heartland Restaurant and Heartland Retail. We leverage our Heartland direct channel to target SMB and mid-market customers with these solutions, typically those serving two to 20 locations but can scale to customers with significantly more locations. The vertically fluent capabilities we offer customers include mobile POS and Pin on Glass solutions, guest and table management, order and kitchen management, pricing matrices, discounting functionality, cash discount programs, predictive analytics, AI driven marketing and loyalty programs and human capital management and payroll solutions. And we deliver this seamlessly as a cohesive commerce enablement platform all from the point of sale.

Our solutions also offer open architecture and have integrations with dozens of software partners, which allows our customers to enable various delivery services, accounting applications, inventory management software and other disruptive technologies, again, all accessible at the point of sale. We have two primary distribution channels for these solutions in North America. The first is our local dealer network representing nearly every major metro market in the U.S. and Canada where we have over 300 partners who provide sales, support and service.

The second is our local sales professionals across the U.S. and Canada who are solution-oriented domain experts and serve as relationship partners to our customers. We have seen strong growth in our Heartland POS software solutions and expect the momentum to continue on the heels of the launch of our next generation offerings in early 2024, which will deliver an improved user interface and more intuitive experiences across our iOS and Android based solutions. Our Next Gen POS is also designed to be mobile first allowing for a best-in-class omnichannel experience.

Completing our suite of POS capabilities, we have solutions for specific vertical enterprise customers, which have the most complex requirements in operation and technical environments. At this end of the market, we offer our Xenial Cloud POS enterprise solution offering scalable, secure and real time services for the world's largest quick service restaurants, food service management companies and sports and entertainment venues. The Xenial POS ecosystem provides an API first approach to in-house and partner integrations for the most sophisticated enterprise customers.

Whether supporting a multi-lane drive-through QSR or a large sports arena, Xenial provides the complete technology stack required to run these operations all fully integrated at the point of sale. This includes dynamic digital menu boards, kiosk and mobile ordering solutions, kitchen management solutions, AI based drive-through solutions and customer engagement to name a few. And we are proud that Xenial is also leading the way in delivering the drive through of the future technology for its enterprise QSR customers. We are proud to serve 26 of the top 50 QSR brands with our technology on a global basis.

With respect to entertainment venues, Xenial operates the food and beverage suite and retail environments for some of the most complex stadiums in the world. In these environments, food service management providers rely on our technology to deliver best-in-class customer and fan experiences. We currently serve almost 100 stadium and event venues with our solutions globally. We went in the market by solving complexity for our customers, whether that is multi-unit requirements or multinational expansion or the convergence of physical and virtual environments.

From delivering core feature functionality required by small merchants by a mobile solution to providing greater levels of functionality in a simple register to a full featured software platform, we provide our customers with the ideal point of sale technology tailored to their specific needs. And we couple our best-in-class commerce enablement capabilities with more distinctive and diversified distribution streams and service at scale worldwide that our competitors really can't match. As a result, we remain very enthusiastic about the growth prospects for our POS business globally moving forw2ard.

Speaking of our global reach, it is worth noting that we achieved strong double-digit growth in Spain and throughout Central Europe in the quarter, while Poland, Greece and Ireland which we entered via our acquisition of EVO were also bright spots in Europe. We're also excited to announce a new agreement with the International Parking Group to support payments for its Smart Parking Solutions on an omnichannel basis across the U.K. and Ireland as well as the U.S. and Canada. In Asia-Pacific, we are thrilled to have recently signed a new partnership with Marriott International and will begin offering seamless omnichannel solutions this quarter in select hotel locations across the region.

Turning to Issuer. We achieved mid single-digit growth consistent with our expectations and longer-term targets once again this quarter. Transaction growth remained strong throughout the quarter led by our commercial business highlighting ongoing improvements in cross-border corporate travel. Traditional accounts on file increased by approximately 11 million sequentially as we continue to benefit from strong growth with our existing large financial institution clients and the ongoing execution of our conversion pipeline.

This quarter, we successfully completed conversions of two new portfolios acquired by large existing FI partners through M&A further supporting our strategy of aligning with market share winners. Further, we recently completed the migration of the first wave of accounts for a leading U.S. retailer for one of our largest partners as part of a co-branded relationship. And early this month, we migrated CAD, the credit card joint venture between Scotiabank and Chile's largest retailer, Cencosud, representing our first issuer customer in the market.

We are also pleased to have reached a new issuer processing agreement with a leading U.S. bank during the third quarter. This FI is a long-standing Global Payments merchant partner and the strength of our relationship provided the foundation for expansion of our partnership to include our leading Issuer Technology Solutions. Notably, this partner will also leverage our next-gen analytics platform via the AWS Cloud as we continue to see great progress with clients enabling our modernized services. We also signed a multiyear extension with two large-standing FI partners during the third quarter.

Shifting to B2B, we continue to drive strong growth with both corporates and financial institutions as we leverage our capabilities across software-driven workflow automation solutions, money in and money out funds flow capabilities and our broad suite of employer solutions. Starting with workflow automation, MineralTree subscription bookings for its AP automation software increased an impressive 86% year-over-year this quarter. We are also pleased to have successfully integrated EVO's PayFabric software into our merchant business, which provides our new and existing U.S. customer greater AR automation capabilities.

Regarding B2B funds flows, as we discussed last quarter, virtual card option continues to expand contributing to the strong growth in commercial transactions. We're also seeing an acceleration in virtual cards being tokenized and provisioned in mobile wallets, which is further catalyzing growth. Additionally, our B2B bookings in Merchant Solutions doubled in the third quarter relative to the prior year, while new merchant B2B payments volume increased by more than 50% from last year as we continue to progress the EVO integration and harmonize our go-to-market strategy.

Moving to Employer Solutions. Our PayCard business signed a new partnership with hospitality staffing firm, Exclusive Services, and renewed its existing relationship with Flynn Restaurant Group, the largest restaurant group in the U.S. We also achieved a new EWA partnership with KFC franchisee JRC Restaurants. Lastly, our software-driven human capital management and payroll solutions business delivered growth of more than 20% in the third quarter. B2B offers an attractive growth opportunity for our business and represents a core element of our strategy going forward. As we continue to unify our offerings in this space and refine our strategy, we expect to continue to capture share and accelerate growth in B2B over the long-term.

With that, I'll turn the call over to Josh.

[Josh Whipple, Senior Executive Vice President and Chief Financial Officer at Global Payments]

Thanks, Cameron. We are pleased with the continued strong financial performance we delivered in the third quarter and for the year-to-date period, which exceeded our expectations despite absorbing a roughly $10 million adjusted net revenue headwind from foreign currency exchange rates relative to our expectations when we guided in early August. Specifically, we delivered adjusted net revenue of $2.23 billion, an increase of 9% and from the same period in the prior year. Excluding the impact of dispositions, adjusted net revenue increased 17%.

Adjusted operating margin for the quarter increased 50 basis points to 45.7%. Excluding the impact of our acquisition of EVO payments and dispositions, adjusted operating margin increased 90 basis points highlighting ongoing consistent execution across our businesses. The net result was adjusted earnings per share of $2.75, an increase of 11% compared to the same period in 2022 or 18% excluding the impact of dispositions. This includes a roughly 1 point headwind from adverse foreign currency exchange rates relative to when we updated guidance on our second quarter earnings conference call.

Taking a closer look at performance by segment. Merchant Solutions reported adjusted net revenue of $1.73 billion for the third quarter, a 19% improvement from the prior year or 9% growth excluding the impact of EVO and dispositions. As Cameron highlighted, this performance was led by the ongoing strength of our technology-enabled businesses while we also benefited from double-digit growth in faster growth markets, including Spain and Central Europe. This was partially offset by ongoing macro softness in limited geographies, including the U.K. where the economic environment remains challenging and in Canada where GDP growth is hovering around zero. We delivered an adjusted operating margin of 49.1% in this segment consistent with our expectations. This represented a decline of 90 basis points due to the acquisition of EVO. However, excluding the impact of EVO and dispositions, adjusted operating margin increased 40 basis points.

Our Issuer Solutions produced adjusted net revenue of $520 million, reflecting 6% growth. The core issuer business also grew mid single-digits this quarter, driven by ongoing strength in volume-based revenue. As Cameron highlighted, we added approximately 11 million traditional accounts on file sequentially. This equates to an increase of more than 60 million accounts year-over-year as we continue to see healthy account growth with our large FI customers and benefit from the ongoing execution of our conversion pipeline.

Transactions grew high single-digits compared to the third quarter of 2022 led by commercial card transactions, which increased to mid-teens. This was partially offset by slower growth in managed and output services as we continue to focus our Issuer business on more technology enablement. Our Issuer team executed four conversions since the beginning of the third quarter and have successfully completed 11 conversions since the beginning of the year. We have also signed two new contracts and completed 10 renewals year-to-date and currently have seven active LOIs in addition to nearly 20 mid to late-stage opportunities in the pipeline.

Shifting to our issuer B2B portfolio. These businesses delivered double-digit growth this quarter led by MineralTree which achieved 20% growth in its targeted mid-market segment, while PayCard accelerated nicely as the business is beginning to lap more difficult employment comparisons that were a drag on year-over-year performance during the first half of 2023. Finally, Issuer Solutions delivered adjusted operating margin of 47.5%, an increase of 110 basis points from the prior year fueled by solid top line growth and are continuing to focus on driving efficiencies in the business.

From a cash flow standpoint, we produced adjusted free cash flow for the quarter of $733 million, representing 102% conversion rate of adjusted net income to adjusted free cash flow despite a modest increase in capital spending this quarter. We continue to target converting roughly 100% of adjusted earnings to adjusted free cash flow for the full year excluding roughly 5 point impact of the timing change to recognizing research and development tax credits. We also continue to expect capital investment to be approximately $630 million in 2023 consistent with our prior outlook. Year-to-date, we have reduced outstanding debt by more than $1.1 billion and our leverage position was 3.5 times at the end of the quarter consistent with our expectations. We remain on track to return to a leverage level consistent with our long-term targets in the low 3s by year-end.

Our balance sheet remains healthy and we have $3 billion of available liquidity. Further, our total indebtedness is approximately 88% fixed with a weighted average cost of debt of 3.85%. We are pleased with how our business is positioned following our performance for the first nine months of 2023. We continue to forecast adjusted net revenue for the full year to range from $8.660 billion to $8.735 billion, reflecting growth of 7% to 8% over 2022. Given the roughly $40 million headwind to adjusted net revenue we have seen from adverse foreign currency exchange rates relative to our prior guidance, we now expect to be in the lower half of this range, absent an improvement in rates.

Moving to margins. We continue to forecast annual adjusted operating margin to expand by up to 120 basis points for 2023. We remain on track to realize approximately $35 million in cost synergies from the EVO acquisition this year. To provide color at the segment level, we continue to anticipate our merchant segment to report adjusted net revenue growth of approximately 16% for the full year consistent with our prior forecast despite absorbing the aforementioned FX headwinds. We continue to expect a nominal decline in reported adjusted operating margin for the Merchant business for the full year due to the EVO acquisition.

Moving to Issuer Solutions. We continue to expect issuer to grow in the 5% to 6% range on a constant currency basis. However, if the recent U.S. dollar strengthening persists, we would expect to be closer to the low end of that range on a reported basis. We anticipate adjusted operating margin for the issuer business to expand by more than 60 basis points for the year as we benefit from natural operating leverage in the business.

Turning to a couple of non-operating items. We expect net interest expense to be roughly $540 million and for our adjusted effective tax rate to be approximately 19%. For modeling purposes, we continue to assume excess cash is used to pay down indebtedness during the fourth quarter. Putting it all together, we now expect adjusted earnings per share for the full year to be in the range of $10.39 to $10.45, reflecting growth of approximately 11% to 12% over 2022. Excluding dispositions, adjusted earnings per share growth is expected to be roughly 17% for 2023. This guidance includes almost 1 point of headwind to adjusted earnings per share given the significant strengthening of the U.S. dollar that was not reflected in our prior outlook.

Similar to what you've heard from others, October trends were consistent with what we saw in the third quarter. While our base case outlook today presumes spending trends and macroeconomic backdrop relatively consistent with what we are seeing currently, our guidance accommodates for a range of scenarios, including a more tempered economic environment given continued uncertainty.

And with that, I'll turn the call back over to Cameron.

[Cameron Bready, President and Chief Executive Officer at Global Payments]

Thanks, Josh. We continue to see strong momentum in our business and consumer spending has remained resilient over the course of the year. Although labor trends remain quite strong, we are monitoring the impact of rising rates resulting from monetary policy decisions globally, elevated inflation and of course geopolitical risk from the ongoing situation in Europe and recent events in the Middle East. We are confident we have built a better and more durable business model, which positions us well to manage through any environment if the current backdrop changes.

I am pleased with all that we have accomplished this quarter and for the first nine months of 2023 as we continue to advance our strategy and maintain strong execution throughout the business. We have the very best team members providing the very best experiences for our customers with the very best technologies in the most attractive markets globally. Together, we are positioned to deliver strong operating and financial performance while remaining at the forefront of innovation.

Winnie?

[Winnie Smith, Senior Vice President, Investor Relations at Global Payments]

Thanks, Cameron. 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.

Questions and Answers

[Operator]

[Operator Instructions] Our first question comes from the line of Ramsey El-Assal with Barclays. Please proceed with your questions.

[Ramsey El-Assal, Analyst at Barclays]

Hi. Thank you so much for taking my question this morning and thanks for the deeper dive on your POS and software solutions. I thought that was very helpful. Could you give us your latest thoughts kind of with the inclusion of EVO about the split between discretionary and non-discretionary volumes in your merchant business? Are you seeing any changes there in terms of spending patterns? How should we kind of try to think through that?

[Cameron Bready, President and Chief Executive Officer at Global Payments]

Yeah, Ramsey, it's Cameron. Good morning and thanks for your comments. I'll kick it off and I'll ask Josh to add any color that he would like to. So if you look across the portfolio today, I would characterize the business mix we have, it's pretty well diversified across discretionary and non-discretionary verticals. Without putting a specific point estimate on each, it's roughly split evenly between discretionary and non-discretionary. I think today, we're probably exposed to over 70 different vertical markets and we have good diversification again across the overall merchant business domestically here in the U.S. and in our international markets as well.

I think if you look at the overall economy today, we are seeing better trends in the non-discretionary categories. I would say, however, we are seeing vertical markets like restaurants continue to hold up well. And certainly, it's an experience-driven economy as we sit here today. So certainly, areas that are more focused on providing experience to the consumer are trending better than what you see across broad-based retail. But by and large, I'd say as we said in our prepared remarks, the overall level of consumer spending I think remains pretty resilient across the board.

[Ramsey El-Assal, Analyst at Barclays]

Got it. And a quick follow-up from me. If the Fed ends up lowering debit interchange, would you guys benefit from that a bit at least in that part of your business where you have a more blended pricing approach rather than a cost plus model?

[Cameron Bready, President and Chief Executive Officer at Global Payments]

Yeah. I think my perspective on that, Ramsey, is any time the cost of acceptance goes down for our customers, it's a good thing for our business. So certainly, lowering the cost of interchange for our merchant customers is a positive for the business. Generally, much of our portfolio is passed through pricing, so interchange plus pricing where those benefits would immediately get passed on to merchant customers. And what we've generally seen over time is where it's not, the market will sort of compete away that benefit over a period of time. So there may be a short-term sort of blip around it. But generally, what we see is that benefit to interchange would ultimately get competed away in the market over some period of time.

[Ramsey El-Assal, Analyst at Barclays]

Got it. Thank you very much.

[Operator]

Thank you. Our next question comes from the line of Darrin Peller with Wolfe Research. Please proceed with your questions.

[Darrin Peller, Analyst at Wolfe Research]

Hey, guys. Thanks. It's great to see the consistency on the 9% growth in the Merchant side. If we could just dial into that a little bit more and just give us a sense on what the best drivers of that consistent strength have been? And then, Cameron, just when we think about the spread between volume and revenue growth, once again it's still very, very narrow. You guys -- I think putting aside the organic, just the reported was only 1 point apart similar to last quarter's. And so again, it just reminds us of whether there's more opportunity to yield on pricing or on -- if we could expect to see on value-added service or anything else on that front?

[Cameron Bready, President and Chief Executive Officer at Global Payments]

Yeah, Darrin, good questions both. So I would say the drivers continue to be what we've talked about throughout the course of the year. Our technology-enabled businesses continue to perform really well. They are at the tip of the spear for growth in the business. I'll highlight our POS, which obviously we spent a lot of our time in our prepared remarks talking about today. We continue to see very good momentum, 20% plus growth in that channel again this quarter. And again, we're very enthusiastic about the future of that, particularly as we begin to roll out B2 of our restaurant and retail platform through the Heartland channel as we get into 2024.

So we're very bullish on the outlook for that business over a longer period of time. Integrated continues to be a very strong performer as well, consistent growth this quarter as to what we saw in the Q2 time frame. And again, our vertical market businesses continue to grow in the low double-digit pace as we continue to see good strong demand for our software solutions and continue to monetize payment flows around that pretty effectively. So I think if you step back and look at the business, the themes are very consistent kind of Q2 to Q3 and we expect that to be the same as we get into Q4.

I think as it relates to the second part of your question and I think much of what you're seeing kind of flowing through right now is really the impact of EVO to some degree because they really just sold payments. So their revenue is more directly tied obviously to just the level of payment volumes in the business. As we bring more value-added services to the business, as we sell more software on our own Global Payments channels, obviously, we think there's opportunities for more elevated growth in revenue relative to the growth of volume that we see through the business over time.

So I think that long-term macro trend remains in effect. But certainly, there are investments that we're going to need to make in the business to be able to deploy a lot of the value-added services, software capabilities we have through the EVO channels, which will be a tailwind to kind of driving that revenue growth. It may be decoupling slightly from the overall level of volume growth that we see in the business, but I've said many times, I want those two trends to obviously correlate very highly. I think they should correlate highly.

Our goal with software is to monetize payments. So as we're doing that, we should see uplift in payment volume even as we're selling more software in the business. So I wouldn't expect radical departures, but obviously to your point, there is opportunity I think to continue to drive more non-volume-based revenue growth in the business and you should see that play out over a period of time.

[Darrin Peller, Analyst at Wolfe Research]

That's really great to hear. And then just very quickly on the win you mentioned on the issuer side. Obviously that comes on top of a number of the adds you've had, which has been great. But any color on what really drove that? I think you talked about a partner and a large partner in the U.S. in the FI channel. But again, what's adding -- what's really driving that win?

[Cameron Bready, President and Chief Executive Officer at Global Payments]

Yeah. I think -- look, I think in the issuer business, it really boils down to the feature rich capabilities that we bring to bear on that market that really are distinctive relative to what other competitors can provide. And it also aligns with our strategy of picking market winners and trying to grow with market winners. There's a lot of business we can do in the issuer space. I would say historically, we've really tried to focus our efforts and lean into those relationships with partners that have good strategies in the market where they're growing and winning. So obviously, as they succeed with their own business strategies, we obviously benefit from that as we look to grow and scale our issuer business as well. So I think it's just a combination of having fantastic capabilities, feature-rich functionality and a good strategy of aligning ourselves with market winners that we see continue to play out in that business.

[Darrin Peller, Analyst at Wolfe Research]

And it's good to see the AWS partnership play out there, too. Guys, thanks a lot and nice quarter.

[Cameron Bready, President and Chief Executive Officer at Global Payments]

Thank, Darrin.

[Operator]

Thank you. Our next question comes from the line of Ashwin Shirvaikar with Citi. Please proceed with your questions.

[Ashwin Shirvaikar, Analyst at Smith Barney Citigroup]

Hey, congratulations on the quarter and the consistency. Appreciate it. I guess, I wanted to ask, Cameron, just given your commentary up top with regards to the POS stack and software and such, what is the appetite for tech heavy solutions across the globe? We kind of know what the appetite is here in North America, but are you finding incremental interest in that higher penetration in parts of Europe, because I think that's the other part of the European volume comments that you had. So appreciate any comment you have there.

[Cameron Bready, President and Chief Executive Officer at Global Payments]

Yeah, Ashwin, it's Cameron. The comment I would make is as we've seen in the U.S. over the course of time, the mode of competition around restaurant and retail for payments is really driven by the point-of-sale technology and those trends are beginning to play out. They're certainly in an earlier stage in markets outside of the U.S., but they're clearly starting to play out outside of the U.S. as well. So as mentioned in my prepared remarks, a big part of our POS strategy is leveraging the capabilities that we have here in the U.S. market and being able to extend those into markets outside of the U.S. We talked about bringing the GP POS Solution to Canada. We brought it to the U.K., Spain, Central Europe.

We're going to bring it to Poland, Ireland and Greece over the next 12 to 24 months, obviously EVO markets as well. We're going to bring it into Mexico through our obviously recent acquisition of EVO's business in Mexico. We think there's great opportunities to grow and scale our POS business there as well. So as we see the strategy for the business, obviously, there's fantastic opportunities here in the U.S. to continue to grow, but there's even better, more active opportunities kind of outside the U.S. where the competitive landscape is different. And obviously, we think we're well positioned through a combination of great distribution, local presence and support to be able to grow POS businesses at a pretty healthy pace for a long period of time.

[Ashwin Shirvaikar, Analyst at Smith Barney Citigroup]

Understood. And then I do have to sort of go back to the stock 9 times earnings. Use of capital at these levels does become sort of interesting question, because I would imagine you need to have a very high return bar on an acquisition or any kind of M&A to prefer that to buying back your own stock. How are you thinking just heading into 2024 when you kind of hit your leverage targets and such about capital return and use of capital?

[Cameron Bready, President and Chief Executive Officer at Global Payments]

Yeah, Ashwin, it's Cameron. I'll start and I'll ask Josh to chime in with his perspective as well. So obviously, no one is more frustrated with the multiple than I am. I think the dislocation we've seen particularly around payment stocks is rather unwarranted notwithstanding the uncertainty that exists in the overall macroeconomic environment. That being said, I think your point is exactly right. We're very value oriented. And as we think about getting back to kind of more normal capital allocation heading into 2024, given our leverage ratio is going to be at our target by the end of the year, obviously, we're very focused on driving value for our shareholders. And obviously, at this multiple I think M&A, it's going to have to be pretty compelling from a return perspective to be able to compete with the risk-adjusted returns of buying back our stock at these multiples.

So obviously, there's still a good amount of time between now and as we get into 2024 and we hope certainly the multiple landscape changes for the better over that period of time. But as I said at the outset, we're going to be very focused on driving returns for our shareholders. And I think we've done a good job of that over the course of time with a balanced capital allocation strategy. And I would like to continue to have that going forward, but that presupposes we can find M&A opportunities that really fit our criteria strategically, fit culturally and obviously drive the kind of returns that we think our shareholders expect and certainly, those are competitive with buying back stock. So Josh, I don't know if you want to add anything.

[Josh Whipple, Senior Executive Vice President and Chief Financial Officer at Global Payments]

Yeah. So Ashwin, great question. I think as you think about the balance of the year here, we're focused on paying down debt that's as Cameron mentioned. I think as we go into 2024, we'll get back on a normal capital allocation strategy where we'll focus on balancing reinvestment in the business and returning capital to shareholders. What I would say is that from an overall M&A perspective, I would say, our pipeline is very, very full. We're continuing to go ahead and build that pipeline. But there is a balance as it relates to returns, a balance between M&A and buying back our own stock. So that's something that we'll closely monitor and at these levels, it's something that we'll focus on.

[Ashwin Shirvaikar, Analyst at Smith Barney Citigroup]

Thank you.

[Cameron Bready, President and Chief Executive Officer at Global Payments]

Thanks, Ashwin.

[Operator]

Thank you. Our next question comes from the line of Jason Kupferberg with Bank of America. Please proceed with your questions.

[Jason Kupferberg, Analyst at Bank of America]

Good morning, guys. Wanted to start on the merchant side of things. Can you tell us what the organic volume growth in the quarter was relative to the 9% revenue growth there and for Q4, are you thinking a similar organic revenue growth rate as the 9% you saw in Q3? Thanks.

[Cameron Bready, President and Chief Executive Officer at Global Payments]

Yeah. Good morning, Jason. Both great questions. So the organic "volume growth" same as last quarter that's high single-digit 9% kind of number, again, aligning with the overall rate of revenue growth we saw in the Global Payments business ex EVO, ex dispositions. And I would tell you, when we talk about consistency of execution, I can't give you probably any better example between what we've seen in Q2, Q3 and what our expectations are for Q4. So we saw 9% growth kind of ex-EVO, ex-dispositions in Q2, same thing in Q3. That is our forecast for Q4. The differences obviously between Q3 and Q4 are really the fact that we saw more FX tailwinds.

Even though it was less than we anticipated back in August, we did have FX tailwinds in the quarter. And obviously, seasonally, EVO contributes a little bit more revenue in Q3 just tracking with the overall seasonal profile of their business, which is consistent about Global Payments merchant business as well. So in Q4, we're expecting a little bit less FX tailwind. It's a slight tailwind, very slight based on current expectations. And EVO obviously contributes a little bit less in Q3 just given the seasonal trends of the business. But look, when I talk about consistency of execution that's exactly what I'm driving at, which is that sort of consistency we've seen from Q2, Q3 and what our expectations are now for Q4 as well.

[Jason Kupferberg, Analyst at Bank of America]

Okay. And on the issuer side, I wanted to come back to that new U.S. client that you mentioned having won that was already working with you on the merchant side of the business. Any color you can just give us in terms of accounts on file? Is this a needle mover for you and when do you expect to convert that new win?

[Cameron Bready, President and Chief Executive Officer at Global Payments]

It's a good account. It's not certainly a top five in the U.S., but it is a good account. I can't give you more specifics at this point around number of accounts on file, etc. But it's an attractive win for us because I think it does demonstrate the strength of having issuer and acquiring capabilities under one roof. Obviously, we've seen many instances where we've been able to leverage issuer customers into obviously the Global Payments relationship. Virgin Money is a good example of that. We've seen good instances where we've been able to leverage Global Payments relationships internationally into issuer customers.

Tice [Phonetic] is a good example of that. It's nice now to have an example here domestically when we've been able to leverage a Global Payments relationship on the FI side into a new issuer opportunity as well. So it is -- needle mover may be a bit strong, but it is a nice win. It's one we're really proud of. It's a great customer and a great partner and obviously continues to add to that pipeline of new opportunities to support growth in the issuer business over a longer period of time.

[Jason Kupferberg, Analyst at Bank of America]

Thanks, Cameron.

[Cameron Bready, President and Chief Executive Officer at Global Payments]

Thanks, Jason.

[Operator]

Thank you. Our next question comes from the line of Dan Perlin with RBC Capital Markets. Please proceed with your questions.

[Dan Perlin, Analyst at RBC Capital Markets]

Thanks. Good morning. I wanted to just touch base on the comment that you had in and around kind of temporary economic environment. I'm wondering what -- kind of what areas in particular you're most concerned about, I know you called out U.K. and Canada, but I'm just wondering, are there other areas that you have your eye on that we need to be focused on that could turn quickly.

[Cameron Bready, President and Chief Executive Officer at Global Payments]

Yeah. Good question, Dan. I'll start and ask Josh to chime in as well. So I think those comments were really with respect to obviously our guide being able to accommodate a macro environment that is probably less constructive than what we've seen over the course of Q3 and what we've seen in October. I called out in my prepared remarks the things that we're obviously focused on globally as it relates to the macroeconomic environment. Clearly, the impact on monetary policy decision, increases in rates and how that manifests itself through the various economies we operate in around the globe is something that we continue to monitor very closely.

Inflation remains stubborn, although we had a pretty decent print in Europe this morning. Overall, inflation still is trending kind of above expectations for most federal banks around the globe and obviously that's something that we continue to monitor obviously closely tied to monetary policy and what decisions may be made over the coming months. And then certainly, on the geopolitical front, we continue to monitor and watch the situation in Europe that has extended now well over a year and obviously, the recent events in the Middle East, which are horrific as it relates to the terrorist attacks to Israel and then the resulting obviously war that is now developing in that region. Those are things that we're monitoring very, very closely.

Obviously, as Josh said in his comments, October trends looked just like Q3, which is a positive I think from our perspective. But there is uncertainty out there and part of our job is to monitor that uncertainty and make sure we're positioning the business appropriately in light of what we see from a macroeconomic perspective. Josh, I don't know if you'd add anything to that?

[Josh Whipple, Senior Executive Vice President and Chief Financial Officer at Global Payments]

No. I would just reiterate that what we're seeing in October is very similar to what we saw in Q3 and Q2. So we feel pretty good about what we're seeing currently. But as Cameron highlighted, there are risks out there, the geopolitical stress. The consumer loan repayment that's obviously impacting things and then there's inflation and tighter credit policy as well. So again, it's our tempered outlook I think is appropriate just given some of the macro backdrop that we're currently faced with.

[Dan Perlin, Analyst at RBC Capital Markets]

No. That's helpful. Just a quick follow-up, I don't know maybe it's kind of a bigger picture question, but when you think about your ability to drive non-cyclical growth so to speak in an environment where the consumer may weaken. Like how do you think about your ability to be able to manage that and balance it? Non-cyclical in this case could also be just like share gain or the new rollout of POS or things of that nature, I'm just trying to kind of gauge the ability for you to manage that. Thank you.

[Cameron Bready, President and Chief Executive Officer at Global Payments]

Yeah. Look, I think as we talked about for a long period of time, I think we built a model that is fairly durable and resilient and able to grow throughout different macroeconomic environments. So obviously, I think as we think about the future and what the macro may hold, I think we have a lot of confidence that there are growth drivers in this business that can sustain attractive levels of growth even if the underlying GDP growth and consumer spending levels are lower than kind of what we've seen over the course of 2023. Unless we find ourselves in a pandemic like situation we saw in 2020 or a severe recession/depression, I think through most normal macroeconomic environment, this model is built to grow.

The rates of growth may evolve over those different cycles. But by and large, between share gains, software, new product capability that we're able to bring to market, secular growth trends we see in markets not tied to GDP growth, but tied to digital payment adoptions continue to be tailwinds for the business overall. So I think with that backdrop, we're pretty confident that obviously we've got a model that will grow at attractive rates notwithstanding what the macro may be. But that's obviously something we work very hard to make sure we've got a resilient business model that can ride through different cycles over a longer period of time.

[Josh Whipple, Senior Executive Vice President and Chief Financial Officer at Global Payments]

And the only other thing I would add is that from a macro perspective, if you think about our business, it's incredibly versatile. As Cameron mentioned earlier, we do business across 70 different verticals. We have a physical presence in 41 countries around the globe and do business in 170 different markets. So I think the diversification of our business really creates that durability and stability that we're seeing in the current run.

[Dan Perlin, Analyst at RBC Capital Markets]

That's great. Thank you both.

[Cameron Bready, President and Chief Executive Officer at Global Payments]

Thanks, Dan.

[Operator]

Thank you. Our next question comes from the line of Trevor Williams with Jefferies. Please proceed with your questions.

[Trevor Williams, Analyst at Jefferies Financial Group]

Thanks a lot. Good morning. Yeah, I want to follow up on issuer. It's good to see the core growth acceleration there. Cameron, with the on-boardings you called out, some of the visibility into the conversion pipeline, just how durable are you expecting the growth in that segment to be if there does end up being some softening in more of the volume-based revenue at some point? Just a refresh on how you view the macro sensitivity of that segment would be helpful. Thanks.

[Cameron Bready, President and Chief Executive Officer at Global Payments]

Yeah, it's a good question, Trevor. I think obviously, as a sensitivity matter, the issuer business is less macro sensitive than the merchant business kind of by definition and given the revenue construct of that business and how we go to market from a commercial standpoint. So I do think there's arguably greater durability, obviously less upside of course as we've seen through different cycles with the issuer business, but more downside protection, more durability through softer macro environments in the issuer business. I would say, look, we target that mid single-digit growth level in that business given where we are currently. I think we feel good about the prospects of continuing to deliver on that level of growth in the business over the short to medium term.

Naturally, the investments we're making in that business are designed to drive higher levers of growth in the business over a longer period of time. So as we continue to execute on our modernization program, we continue to nativize existing core feature functionality and capability in the AWS cloud environment and we continue to obviously sell that and bring more customers into our issuer environment. Our hope is that we can obviously improve the outlook from a growth perspective in that business over a long period of time. But sitting here today, I think the execution that we've seen, the pipeline that we have, the underlying trends we're seeing in the business gives us confidence around the ability to kind of sustain that mid single-digit growth level heading into the next couple of years.

[Trevor Williams, Analyst at Jefferies Financial Group]

That's great. Thanks. And then, Josh, for the fourth quarter, could you help just put a finer point on margin expectations by segment. I think previously, you've been saying Merchant should be up slightly year-over-year on a reported basis. Issuer, you were above the high 46% range you guys had alluded to for the back half. So anything more specifically for how we should be thinking about margins at the segment level for Q4 would be helpful. Thanks.

[Josh Whipple, Senior Executive Vice President and Chief Financial Officer at Global Payments]

Yeah. Let me start with Merchants. So if you go back in Q2, Merchant margins were down about 170 basis points. And then we saw some -- we saw improvement obviously going into Q3 where it was down 90 basis points as we go ahead and continue to ramp in synergies. And for Q4, we expect it to be roughly flat margins for Merchant. And as we said before, we expect a modest decline for the full year in Merchant. Issuer, year-to-date, we've seen margins expand 170 basis points, really a great trajectory. If you go back to Q1, 80 basis points of expansion, 300 basis points of expansion in Q2 and then 110 basis points of expansion in Q3.

And if you recall on the Q2 call, I said that issuer margins would be in the high 46% range and we delivered margins of 47.5% in the issuer business and we expect those to be similar in Q4. And so I would say issuer margins will be more than 60 basis points for the overall full year. So that's kind of how we're thinking about the overall margin profile of the business. And as we -- as I said in my prepared remarks, we reiterated total company margins of up to 120 basis points for the full year.

[Trevor Williams, Analyst at Jefferies Financial Group]

Got it. Thanks.

[Operator]

Thank you. Our next question comes from the line of Bryan Keane with Deutsche Bank. Please proceed with your questions.

[Bryan Keane, Analyst at Deutsche Bank Aktiengesellschaft]

Hi, guys. Good morning. I wanted to ask inside of Merchant, just thinking about retention, how's retention trending? And then bookings, what the outlook is there? Do you think there's any -- I'm trying to think if there's any weakness potential if we get into more of an economic decline or bookings kind of is a separate issue versus the economy?

[Cameron Bready, President and Chief Executive Officer at Global Payments]

Yeah, Bryan, it's Cameron. I'll kind of kick it off. I would say maybe just to your latter point first, I do generally think about bookings as a little bit separate from the overall macro environment largely because we're not focused on that small end of the market that's going to be more impacted, I would say, by the overall macro as it relates to small business creation and new business development. We're more focused on, I would say, the upper S in the mid-market opportunities where those businesses by and large are going to be less impacted by the macro environment so to speak from a formation standpoint.

So I think as it relates to the overall booking trends we're seeing kind of across the business, we remain very pleased with the level of performance. We called out a couple of highlights on the call this morning around the Zego booking trends that we've seen. Obviously, our POS bookings remain very strong as well. So overall, across the Merchant business, bookings are in the double-digits, which gives us good visibility around new business that's going to be coming into obviously our environments over the course of the coming months as we install those merchants or install those software customers into the business.

So I think the outlook as it relates to obviously new business remains very strong as we sit here today and retention levels remain very consistent. We've seen very stable trends around retention kind of through the course of 2023. Even as I think businesses have become more attuned to the cost side of their business with inflationary pressures and whatnot, we've been able to sustain consistent levels of retention in the business, which obviously sets up for why we've been able to see such a consistent level of revenue performance over the course of the year as well.

[Bryan Keane, Analyst at Deutsche Bank Aktiengesellschaft]

Got it. That's helpful. And maybe for Josh, just trying to get the EVO revenue contribution for the quarter and maybe for the full year. I know there's some FX there, but thinking about that $490 million number we were thinking about, does that change due to some of the FX? And thanks and congrats.

[Josh Whipple, Senior Executive Vice President and Chief Financial Officer at Global Payments]

Yeah. So Bryan for the quarter, EVO was approximately $165 million. There's obviously -- seasonally that's a higher quarter for EVO and we're still trending right around that $490 million of adjusted net revenue for the Merchant business that we talked about on the prior call.

[Cameron Bready, President and Chief Executive Officer at Global Payments]

And just to put a little finer point on that, it's $475 million for Q2 through Q4. Obviously, we had $15 million we called out in Q1 that we had from revenue from EVO from closing just slightly before the quarter end and Q1 of this year. So for Q2 to Q4, it's still $475 million. We've been able to offset some of the FX headwinds obviously in EVO's business with a little bit better business performance. So we're still forecasting overall contribution this year of $490 million.

[Bryan Keane, Analyst at Deutsche Bank Aktiengesellschaft]

That's great. Thanks so much.

[Cameron Bready, President and Chief Executive Officer at Global Payments]

Thanks, Bryan.

[Operator]

Thank you. Our next question comes from the line of Will Nance with Goldman Sachs. Please proceed with your questions.

[Will Nance, Analyst at The Goldman Sachs Group]

Hey, guys. Appreciate you taking the questions. I wanted to ask about some of the new clients you mentioned for the ProFac pipeline. I wonder if you can make some kind of high-level statements about the profile of the customers that you're seeing. I guess, what types of ISVs have been attracted to the product and are they currently monetizing payments in any way and maybe you could talk about their motivations for thinking about making a switch. Thanks.

[Cameron Bready, President and Chief Executive Officer at Global Payments]

Yeah, Will, it's Cameron. It's a very good question. And I think much of this sort of reflects back on the comments that I made in our Q2 call as to what attracts ISVs to this particular model. And as I described at that time, it's all the benefits really of payment facilitation without level the pain, I would say, being a payments company. And I think the types of ISVs and partners that we see attracted to this particular model and this is spanning a number of different vertical markets. Most ISVs today have monetized payments in some form or fashion, some better than others of course.

But I think it's, again, typically ISVs that have some specific boarding requirements and need more control over the boarding experience itself and have some specific funding requirements as well to kind of support the customer base that they target in the marketplace. And so these are ISVs that otherwise might be good candidates for payment facilitation, but in many cases kind of lack the scale, lack the payments expertise to be able to become a true registered payment facilitation entity. So as we talked about at the time, we think this ProFac model kind of hits a sweet spot in the market around obviously demand for payment facilitation capabilities and tools.

But obviously, there's only a subset of ISVs that I think really have the scale and capability to become registered payment facilitation entities over a period of time and to do that very successfully and monetize payments at a very high level. So as we called out on the prepared remarks, obviously, six wins in the quarter for that new solution. We've got over 20 in the pipeline now that are very attractive opportunities for us, ISVs of all different sizes, all different vertical markets. The commonality is really around that boarding experience that they're looking for as well as specific funding requirements they may have and an understanding that it's difficult for software companies to become payments companies. And obviously, the ProFac model tries to solve for that and I think it does it very well.

[Will Nance, Analyst at The Goldman Sachs Group]

Got it. Appreciate that. And then just maybe a follow-up question on some of the October trends. It sounds like you guys are funding to relatively consistent consumer spending trends. I think we're four for four of large cap payments companies making similar comments. And I think particularly the networks have still put out numbers calling out a deceleration from September to October and I think there's some abstracts around why that's happening. But just maybe you could kind of talk to your perspective of what do you think is kind of causing that disconnect and should investors be more focused on the slight tick down or the relatively consistent commentary heading into the remainder of the year? Thanks.

[Cameron Bready, President and Chief Executive Officer at Global Payments]

Yeah. It's a good question, Will and we tried to call out over a long period of time. There's never going to be sort of exact correlation between any particular acquirer, sort of mix of business and what the networks represent. The networks represent the market more broadly at least as it relates to the brands that they serve in the marketplace. So there's always going to be differences between their fundamental performance and what we're seeing in our business. I think as it relates to our volume, we've seen consistent trends kind of Q3 through October.

As we called out in our prepared remarks today, there's reasons that the networks may be saying something different in their business. They've got travel comps than we may have in our business and generally, they may have more fuel exposure in their business than we have in our business. So I think that's one thing that they called out as a reason for volume slightly ticking down in October relative to Q3 performance in their underlying businesses. So there's always going to be some degree of difference between what we're seeing in underlying trends and what the networks may be seeing as well.

[Will Nance, Analyst at The Goldman Sachs Group]

Very helpful and encouraging. Thanks for taking the questions and that's all for today.

[Cameron Bready, President and Chief Executive Officer at Global Payments]

Thanks, Will.

[Operator]

Thank you. Our final question this morning comes from the line of Tien-Tsin Huang with J.P. Morgan. Please proceed with your question.

[Tien-Tsin Huang, Analyst at J.P. Morgan]

Hi. Thanks. I'll keep it quick. I appreciate the time. Just on the point of sale software front, I appreciate all the disclosures there. Can you just remind us how big the sales force is? Do you have a geographic coverage that you want? I know it's complementary to your dealer network. And then also just I'm assuming that the sales force is trained and compensated to sell these value-added services like payroll at this point, they're in a good productive place. That's all I had. Thank you.

[Cameron Bready, President and Chief Executive Officer at Global Payments]

Yeah, really good question, Tien-Tsin. So as we called out in our prepared remarks earlier, in the U.S. market, we go to market through a dealer channel, which is about 300 dealers that cover most of the major markets across the U.S. and Canada as well. And then we have somewhere in the neighborhood of, call it, 1,700 sales professionals who either can sell POS directly or refer POS sales into a specialist who can sell that. So we've tried different combinations as go-to-market from a sales and distribution matter around selling more software.

We typically have gone to what I would call somewhat a hybrid model where we do certify certain RMs to be able to sell POS capabilities. They have to be certified to sell those into the marketplace. But we allow all of our sales professionals and we compensate them of course as well to refer business into those specialists as well. So that relationship I think whether it's payroll or whether it's point of sale, I think that distribution model has served us well. And I think generally, it's a good model for us to continue to leverage as we move forward, which means we have lots of distribution obviously to be able to push product through in North America.

In markets outside of the U.S., I would say the point of sale system that we talked about GP POS is a little simpler solution. It's easier to sell. It's less complex. So generally, we can push that through the various distribution channels that we have as well as through FI partner distribution as well in international markets in which we operate. So there's really good distribution I think capability for us being able to sell our point of sale capabilities over time. Obviously, a more sophisticated sale is going to require a more specific specialist who focuses exclusively on POS sales. We're at the smaller end of the market. Most of our sales professionals are going to be able to sell our GP POS solution.

[Tien-Tsin Huang, Analyst at J.P. Morgan]

That's perfect. Thank you. Appreciate it.

[Cameron Bready, President and Chief Executive Officer at Global Payments]

Thanks Tien-Tsin. And that concludes our call for this morning. I want to take a moment just to thank you for your interest in Global Payments, and thank you for joining us today. I hope everyone has a happy Halloween. Take care.

[Operator]

[Operator Closing Remarks]

Participants

Corporate Executives

• Winnie Smith, Senior Vice President, Investor Relations
• Cameron Bready, President and Chief Executive Officer
• Josh Whipple, Senior Executive Vice President and Chief Financial Officer

Analysts

• Ramsey El-Assal, Barclays PLC
• Darrin Peller, Wolfe Research
• Ashwin Shirvaikar, Smith Barney Citigroup
• Jason Kupferberg, Bank of America Co.
• Dan Perlin, RBC Capital Markets
• Trevor Williams, Jefferies Financial Group Inc.
• Bryan Keane, Deutsche Bank Aktiengesellschaft
• Will Nance, The Goldman Sachs Group, Inc.
• Tien-Tsin Huang, J.P. Morgan