Global Payments Inc. GPN reported fourth-quarter 2024 adjusted earnings per share (EPS) of $2.95, which missed the Zacks Consensus Estimate by a whisker. The bottom line rose 11.3% year over year.

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Adjusted net revenues improved 4.7% year over year to $2.29 billion. However, the top line missed the consensus mark of $2.31 billion.

The weaker-than-expected quarterly results were caused by rising cost of service. However, a rise in traditional accounts in the Issuer Solutions segment, booking growth and expansion of the partner network partially offset the results.

Global Payments Inc. Price, Consensus and EPS Surprise

Global Payments Inc. price-consensus-eps-surprise-chart | Global Payments Inc. Quote

Operating Performance

Adjusted operating income of $1.03 billion increased 5.7% year over year in the quarter under review but marginally missed our estimate of $1.06 billion. Adjusted operating margin improved 40 basis points (bps) year over year to 45.2%.

Total operating expenses of $1.7 billion decreased 13.1% year over year in the fourth quarter. The decrease was due to lower selling, general and administrative expenses, partially offset by higher cost of service. The metric came in lower than our estimate of $1.9 billion. Interest and other expenses declined 7.6% year over year to $156.8 million and lagged our estimate of $175.7 million.

Segmental Performances

Merchant Solutions: The segment recorded adjusted revenues of $1.76 billion in the fourth quarter, which rose 5.5% year over year. The figure lagged our estimate of $1.79 billion. The year-over-year growth resulted from booking growth, new POS locations and an expanding partner network.

The unit’s adjusted operating income increased 6.9% year over year to $852 million but missed our estimate of $866.9 million.

Issuer Solutions: Adjusted revenues were $542.1 million in the segment, which grew 2.2% year over year in the quarter under review but missed the Zacks Consensus Estimate of $550.7 million. The unit benefited from the rise in traditional accounts on file and rising transactions.

Adjusted operating income improved 1.4% year over year to $254.4 million, lower than our estimate of $260.9 million.

Financial Position (as of Dec. 31, 2024)

Global Payments exited the fourth quarter with cash and cash equivalents of $2.5 billion, which increased from $2.1 billion at 2023-end.

Total assets of $46.9 billion declined from $50.6 billion at 2023-end.

Long-term debt amounted to $15.2 billion, down from $15.7 billion at 2023-end. The current portion of long-term debt totaled $1.1 billion at the fourth-quarter end.

Total equity of $22.9 billion decreased from $23.3 billion at 2023-end.

GPN generated operating cash flows of $3.5 billion in 2024, which surged 57.1% year over year.

Capital Deployment Update

The company entered into a $250 million accelerated share repurchase program. GPN repurchased shares worth $1.6 billion in 2024.

The company declared a quarterly dividend of 25 cents per share, which will be paid out on March 28, 2025, to its shareholders of record as of March 14.

Divestiture Update

GPN completed the sale of AdvancedMD to Fransisco Partners in the fourth quarter.

Full-year Update

Net revenue grew 6% year over year to $9.2 billion in 2024. Adjusted operating margin improved 40 basis points in 2024. Adjusted EPS registered growth of 11% year over year to $11.55 in 2024.

2025 Outlook

Adjusted net revenue growth on a constant currency basis is expected to be between 5% and 6% in 2025.

Adjusted EPS growth is anticipated to be between 10% and 11% growth in 2025. GPN expects to convert almost 90% of adjusted net income into adjusted free cash flow.

The annual adjusted operating margin is expected to increase up to 50 bps in 2025. It also expects to return $2 billion to shareholders in 2025.

Zacks Rank

Global Payments currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Business Services Sector Releases

Of the other Business Services sector industry players that have reported December-quarter results so far, the bottom-line results of Mastercard Incorporated MA, Visa Inc. V and Trane Technologies plc TT beat the Zacks Consensus Estimate.

Mastercard reported fourth-quarter 2024 adjusted earnings of $3.82 per share, which surpassed the Zacks Consensus Estimate by 3.8%. The bottom line improved 20% year over year. Net revenues of the leading technology company in the global payments industry advanced 14% year over year to $7.5 billion. The top line beat the consensus mark by 1.4%. Gross dollar volume increased 12% on a local-currency basis to $2.6 trillion. Cross-border volumes rose 20% on a local currency basis. 

Switched transactions improved 11% year over year to 42.2 billion. Value-added services and solutions’ net revenues of $3.1 billion advanced 16% year over year. Mastercard’s clients issued 3.5 billion Mastercard and Maestro-branded cards as of Dec. 31, 2024. Adjusted operating income was $4.22 billion, which grew 15% year over year. Adjusted operating margin improved 10 bps year over year to 56.3%.

Visa’s first-quarter fiscal 2025 EPS of $2.75 outpaced the Zacks Consensus Estimate of $2.66 by 3.4%. The bottom line increased 14% year over year. Net revenues of $9.5 billion improved 10% year over year. The top line beat the consensus mark by 1.8%. Visa's payments volume increased 9% year over year on a constant-dollar basis in the fiscal first quarter. Processed transactions (implying transactions processed by Visa) grew 11% year over year to 63.8 billion. 

On a constant-dollar basis, the cross-border volume of Visa rose 16% year over year. Excluding transactions within Europe, its cross-border volume (that boosts a company’s international transaction revenues) also rose 16% year over year on a constant-dollar basis. Service revenues increased 8% year over year to $4.2 billion in the December quarter. Data processing revenues of $4.75 billion grew 9% year over year. International transaction revenues rose 14% year over year to $3.44 billion. 

Trane Technologies reported fourth-quarter 2024 adjusted EPS of $2.61, which surpassed the Zacks Consensus Estimate by 2.8% and increased 20.3% year over year. Revenues of $4.9 billion beat the consensus mark by 2.2% and rose 10.2% year over year on a reported basis and organically. Bookings were up 11% year over year on a reported basis and organically. The Americas segment’s revenues of $3.8 billion increased 12.2% year over year on a reported basis and organically. Bookings were up 1% on a reported basis and organically to $3.7 billion.

The Europe, Middle East and Africa segment’s revenues were $690.3 million, up 5% year over year on a reported basis and 7% organically. Bookings were up 8% year over year on a reported basis and 9% organically to $614.8 million. Revenues from the Asia Pacific segment were up 1% year over year on a reported basis and organically to $381.2 million.