Thank you for joining us for Global Payments Third Quarter 2022 Earnings Conference Call. Currently, all participants are in a listen-only mode. We will have a question-and-answer session later. Please note that this call is being recorded. I would now like to hand it over to your host, Senior Vice President of Investor Relations, Winnie Smith. Please proceed.

Good morning, and welcome to Global Payments third quarter 2022 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, and statements about the proposed transaction between Global Payments and EVO Payments. These statements are subject to risks, uncertainties, and other factors, including the impact of COVID-19 and 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 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 Jeff Sloan, CEO; Cameron Bready, President and COO; and Josh Whipple, Senior Executive Vice President and CFO. Now I'll turn the call over to Jeff.

Thanks, Winnie. We delivered record results in the third quarter, consistent with the higher end of our September 2021 cycle guidance on a constant currency basis and excluding dispositions, highlighting the resiliency of our business model, and our consistency of execution across market cycles. Importantly, our merchant business again delivered double-digit revenue growth, and our core issuer business continued to produce sequential improvement consistent with our expectations each on a foreign exchange neutral basis. Internal metrics thus far into October suggest continuing solid performance for the fourth quarter, much as September did versus August and August versus July. It's certainly possible that things could change for the worse, given ongoing macroeconomic concerns, but that would require an adverse change that we do not broadly see in the current environment. Notably, we are achieving these results while making substantial progress on our strategic and financing initiatives. We received Hart-Scott-Rodino clearance in the United States for our acquisition of EVO Payments, and divestiture of NetSpend's consumer business. And we have now made regulatory filings in all jurisdictions, foreign and domestic, contemplated by the transactions. We took steps to finance the EVO transaction with a successful $2.5 billion fixed income offering in early August at attractive rates, and we undertook a concurrent long-term extension and enhancement of our revolving credit facility. We also completed our $1.5 billion strategic investment with Silver Lake and associated transactions. We are proud of the company that we keep, and we welcome senior partner, Joe Osnoss from Silver Lake to our Board of Directors. Our issuer business remains on track for continued core growth acceleration into year-end following an acceleration into the third quarter after a robust Q2. Our relationships with many of the most complex and sophisticated institutions globally speak to our competitiveness well into the remainder of this decade. Our issuer conversion pipeline now stands at a record post-merger of 75 million accounts, providing further confidence of our growth trajectory well into the future. What better example than our recent go-live with one of the top 10 commercial banks in the United States, which was a competitive takeaway early after the announcement of our merger. We are delighted that earlier this month, we began onboarding and servicing the bank's new consumer and small business commercial accounts on TS2. We expect this partner to be prepared for the conversion of its existing consumer and commercial accounts early next year. This quarter, we also converted the consumer and commercial portfolios for another large U.S.-based bank as a new customer as well as a large retail portfolio acquired by an existing financial institution partner, both of which were competitive takeaways. And we continue to make great progress with AWS, our preferred issuer technology solutions partner, for unique distribution and cutting-edge technologies. We are pleased to announce that we have reached an LOI with a leading global travel technology company who chose TSYS as an issuer solutions partner for its platform across the U.K. and EU after an extensive RFP process. Once live, this will be our first fintech customer on Prime in the AWS cloud in Europe. We currently have seven letters of intent with institutions worldwide, nearly all of which were achieved through a competitive RFP process and a competitive takeaway. Another seven of our recent LOIs, including five competitive takeaways, have gone to contract since the beginning of 2022 providing further future growth opportunities. Traditional accounts on file increased by $14 million sequentially this quarter, driven by account growth with existing customers as our strategy of aligning with market share winners continues to pay dividends. And transaction volumes grew double digits in Q3, led by commercial card transactions, which increased 25%, highlighting ongoing recovery trends in cross-border corporate travel and the strength of our long-lasting partnerships. At our investor conference last September, we announced B2B as the fourth and newest pillar of our strategy, meaningfully expanding our target addressable markets. As of this quarter, we are now managing NetSpend's B2B assets as a part of our issuer business after successfully aligning MineralTree's capabilities with this segment earlier this year. We are delighted with the momentum we are seeing across our B2B portfolio, which includes technology centered on virtual card solutions, a vast commercial card footprint, massive distribution partnerships with the world's leading financial institutions, data and analytics, market-leading payroll technologies, and access globally to nonbank card rails. Recent B2B highlights include providing virtual commercial account services to banks and fintechs in partnership with Extend, reaching a letter of intent with specialty fintech Even Bolt to enable commercial expense management and integrated payable solutions, and signing a multiyear commercial card agreement with Santander in the United States as a competitive takeaway. We are also pleased to have signed new virtual card services and AP services in wins with two leading U.S. financial institutions. Additionally, MineralTree achieved a number of milestones, including signing a marquee deal with Grupo Bimbo in the U.S. and Canada, one of our largest B2B bookings to date; generating record-breaking virtual card spend in the month of September; and executing a referral agreement with fintech Ramp to cross-sell expense management and card on file capabilities. We're also pleased to have recently enhanced our relationship with Visa to support their branded cards in the payables space. And this is all, of course, before augmenting our B2B capabilities with EVO's leading accounts receivable automation software solutions, including its extensive proprietary integrations to some of the most widely used ERP environments in the market through its paid fabric platform, including SAP, Microsoft, Oracle, Acumatica, and Sage. Moving to Merchant Solutions, we are pleased to announce in partnership with Google that we have partnered with Genuine Parts Company to deliver innovative cloud-based payment solutions for the extensive NAPA Auto Parts domestic distribution network. Leveraging the combined power of Global Payments and Google Cloud, NAPA will streamline Commerce operations for its B2B transactions across the United States. We continue to expand our acquiring relationship with Google in North America following the success of our initial launch in Asia Pacific late last year. Volumes are now building in the U.S. market with Google as a customer, and we expect the ramp to continue throughout this quarter. We also anticipate bringing our partnership with Google to Europe next year. Additionally, we remain on track to launch Phase 2 of Google Run and Grow My Business to help our merchants grow faster by connecting additional Google services to our digital platform this quarter. We yet again delivered solid growth in our e-comm and omni-channel business for the third quarter, well ahead of the markets as we have done all year. We continue to benefit from our unique ability to seamlessly blend the physical and virtual worlds in more markets than our peers. And of course, the pending acquisition of EVO and entry into new geographies like Poland and Germany will enhance our target addressable markets. We are excited to have recently reached an agreement to expand our e-commerce partnership with Gucci, a division of a French multinational corporation, to accept services beyond Europe and into Asia Pacific, where we will deliver a uniform solution and seamless experience virtually for one of the most sophisticated luxury retail brands. Our partnership with Citi via UCP recently went live in Spain, France, and Italy, and we continue to expect to go live in Belgium, Denmark, Finland, Norway, and Sweden prior to year-end. Together, we are currently targeting Citi's largest treasury and trade solutions customers, and are excited to announce Citi recently signed one of the world's top social media platforms and one of the world's top e-commerce markets platforms. In our vertical markets portfolio, we saw a significant return of growth in School Solutions as expected, and this business delivered substantial improvement in the quarter with the lapsing of pandemic subsidies on school lunches. Also, our Xenial business continues to post solid wins in the sports and entertainment areas, with new signings with the Carolina Panthers and the Winnipeg Jets. And our pipeline in this channel remains robust. Lastly, we continue to see strong double-digit growth in our real estate vertical market business, Zego, with our new flexible payments product driving significant demand for our digital solutions. Lastly, I'm delighted to announce that we have launched our merchant referral relationship with Virgin Money in the United Kingdom this quarter and are already realizing strong lead flow and new signings from this partnership. We also remain on track to launch Virgin Money's new pay proposition early next year. We did exactly what we said we would do in the third quarter of 2022. Our core businesses continued their track record of extraordinary growth and are well positioned heading into year-end. Our strategic investments are tracking the plan and our new partnerships are right in line with our expectations. We are very fortunate to be in the position that we are in heading into the final quarter of the year.

Thanks, Jeff. We are pleased with our strong financial performance in the third quarter, which was consistent with our expectations despite ongoing macro concerns. Specifically, we delivered adjusted net revenue of $2.06 billion, an increase of 6% from the prior year on a constant currency basis. Excluding the impact of our exit from Russia and the NetSpend consumer assets which are classified as held for sale, adjusted net revenue was $1.93 billion, an increase of 9% on a constant currency basis. Adjusted operating margin for the quarter improved 240 basis points to a record 45.2%. The net result was adjusted earnings per share of $2.48, an increase of 18% from the prior year on a constant currency basis, which includes absorbing the impact of the exit of our Russia business during Q2. This performance highlights outstanding execution of our differentiated technology-enabled strategy. Taking a closer look at our performance by segment, Merchant Solutions achieved adjusted net revenue of $1.45 billion for the third quarter, a 10% improvement on a constant currency basis and approximately 11%, excluding the impact of Russia. We delivered an adjusted operating margin of 50% in this segment, an increase of 80 basis points year-on-year on a foreign exchange neutral basis. Our combined U.S. Payments and Payroll business delivered another strong quarter led by our integrated channel which again reported mid-teens growth. And we continue to see strong momentum in our POS software solutions, which grew nearly 30% this quarter on top of over 70% growth in Q3 of 2021, as well as our HCM and payroll business, which grew mid-teens in the quarter. Our worldwide e-commerce and omni-channel businesses also delivered growth in the teens on a constant currency basis this quarter as we continue to see strong demand for our omni-channel solutions across our business. And our vertical market solutions again achieved double-digit growth compared to the prior year, led by strength in our School Solutions business and Zego, while bookings trends remain solid across the portfolio. Outside the U.S., despite ongoing headwinds from adverse foreign currency exchange rates and continued COVID-related restrictions in parts of Asia Pacific, the overall macro backdrop remains relatively stable, and we continue to gain share. Specifically, we continue to see strong revenue improvement in key faster-growth geographies, including Spain, Central Europe, and Southeast Asia as we are seeing significant demand for our differentiated capabilities outside the U.S. that are well aligned with shifting customer needs coming out of the pandemic. Turning to Issuer Solutions, this business delivered $489 million in adjusted net revenue, which is a 6% improvement on a constant currency basis from the third quarter of 2021, including NetSpend's B2B assets in both periods. Excluding the impact of B2B, Issuer Solutions core growth accelerated 20 basis points from the second quarter and was consistent with our long-term targets as we anticipated. Our transaction and account on file revenue grew high single digits and was consistent with the second quarter performance. As Jeff mentioned, our commercial card transactions increased 25%, with growth improving throughout the period. Issuer adjusted operating margin of 46.4% increased 310 basis points from the prior year, fueled by accelerating growth and also by our focus on driving efficiencies in the business. We are pleased that our issuer team signed two new partners and one contract extension during the quarter. Additionally, as Jeff mentioned, our pipeline remains at record levels as we continue to see good sales activity in all markets for new clients and cross-sell opportunities. This includes the growing list of opportunities we have in collaboration with AWS. Overall, the outstanding results we delivered across our merchant and issuer businesses this quarter serves as a proof point of the wisdom of our strategy and resiliency of our model, while we also continue to remain significant financial flexibility. From a cash flow standpoint, we delivered $640 million of adjusted free cash flow for the quarter after investing $139 million in capital expenditures. We continue to expect capital expenditures to be roughly $600 million for the full year. On the capital allocation front, we repurchased 6.9 million of our shares for approximately $890 million during the period. Our balance sheet remains extremely healthy, and we ended September with roughly $3.5 billion of liquidity and leverage of 3.1x on a net debt basis. We made substantial progress on our strategic priorities this quarter, including the related financing initiatives. In August, we successfully completed a $2.5 billion senior unsecured notes offering with a blended yield of 5.5% and an average duration of 14.5 years. It's worth noting that the rates achieved in this offering are well below current market rates. We also completed the $1.5 billion strategic investment in the form of privately placed convertible senior notes with Silver Lake with a 1% coupon. As is customary with convertible instruments, we executed a cap call transaction that significantly raised the effective conversion premium to approximately $230 per share. We are delighted to have Silver Lake as a new partner. Our capital structure consists of 100% fixed rates currently. We used the proceeds from these offerings to pay down our existing term loan and the outstanding balance on our revolving credit facility. And we simultaneously closed a new $5.75 billion revolving credit facility that provides us with ample financial flexibility. Following the completion of the EVO and NetSpend consumer transactions, which we continue to anticipate closing by the end of the first quarter, we expect our net leverage to be approximately 3.9x. We expect to return to current leverage levels by year-end calendar 2023 while maintaining our current investment-grade ratings. Turning to the outlook for the remainder of 2022, given the underlying trends we are seeing, our expectations for the core business remain unchanged from our August call. We continue to expect full year constant currency adjusted net revenue growth of 10% to 11% over 2021, excluding the impact of dispositions. On a reported basis, we now expect foreign currency to be roughly a 300 basis point headwind to adjusted net revenue growth for 2022 or an incremental 100 basis points relative to the outlook we provided in August. Including these incremental FX headwinds, the reclassification of NetSpend's consumer assets to held for sale and the exit of our Russia business, we expect to report adjusted net revenue in a range of $7.8 billion to $7.9 billion for 2022. We are increasing our expectations for adjusted operating margin expansion to up to 170 basis points for the full year as compared to our prior outlook of up to 150 basis points. Lastly, consistent with our prior outlook, we continue to expect adjusted earnings per share on a constant currency basis to be in a range of $9.53 to $9.75, reflecting growth of 17% to 20% over 2021. We now expect FX headwinds to impact adjusted earnings per share by roughly $0.30 for the full year, an increase of an additional approximately $0.13 from our Q2 call in early August. As a result, we now expect to report adjusted earnings per share in a range of $9.32 to $9.55, albeit at the low end of the range given our exit from Russia and the sheer magnitude of the foreign currency impacts we are absorbing. In summary, we are very pleased with our third quarter performance. Our merchant segment led by our technology-enabled strategy continues to excel, and underlying trends in the business remain strong. Together with the record pipeline, successes of our modernization efforts, and enhanced B2B focus in our issuer segment, we are well positioned for the future. And with that, I'll turn the call back over to Jeff.

Thanks, Josh. We delivered record performance again in the third quarter as we have throughout 2022. Underlying fundamentals across businesses remain broadly healthy. While macroeconomic concerns abound, we do not see significant broad-based evidence of softness in the trends that we have experienced to-date or in the bookings and implementation pipelines that we have the good fortune to enjoy currently. And with the dissipation of the pandemic, we are now back to typical financial and operating levels. Despite the background noise, we continue to make significant progress on our strategic and financial initiatives in the third quarter. The acquisition of EVO and the disposition of NetSpend's consumer assets remain squarely on track with our expectations. Our debt capital raise in early August was well timed and executed. Our balance sheet remains strong, and our new partnership with Silver Lake is off to a terrific start. These transformative transactions will serve to accelerate our strategy and provide us with enhanced confidence in our increased growth and margin targets over the cycle. Upon the expected closing of these deals in early 2023, Merchant Solutions will represent approximately 75% of our adjusted net revenue, with Issuer Solutions, including B2B, comprising roughly 25%. We have multiple levers in each segment to continue to gain share over the cycle with a simpler model, more geared toward our corporate customers with enhanced growth and margin prospects. Happy Halloween, everyone.

Thanks, Jeff. 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.

Our first question comes from Darrin Peller with Wolfe Research. Please proceed with your question.

Let's start with the merchant side. When we look at the various factors and drivers, your growth is in line or slightly better than Visa's reported 11% volume. Could you provide more details on what is fueling this strength and what aspects are likely to be sustainable? Moving beyond macroeconomic conditions, what specific elements are performing well versus those that aren't in that segment? Additionally, could you confirm if you have noticed any changes in consumer behavior?

It's Cameron, I'll jump in, and I'll ask Jeff and Josh to add any color they'd like to. So what I would say is if you look across the data, the volume data, in particular, in our merchant business, we're seeing very good sort of stability and strength kind of across most of our sectors. And I think what's particularly, I think, gratifying to me is when you look at our performance, which, to your point, is better than the networks and our peers, that's without the benefit of the significant travel rebound that I think is propping up volume numbers for other people. As we've talked about many, many times, we don't really participate widely in travel and entertainment. And as a result of that, we're not really seeing the strength of the recovery coming in those channels, which I know is driving a good portion of volume growth kind of across the sector. So I'm really pleased with the volume growth we're able to produce, notwithstanding the fact we're not really exposed to that segment of the market is the first point I would make. The second thing I would comment on is we're seeing, I think, largely what others are seeing in the marketplace. Consumers are focused more and more on experiences. Hospitality continues to be good in our space. Obviously, retail is not quite as good as it was during the pandemic time as people have pivoted away from goods to more services and experiences. And I think you're seeing sort of volume trends in our portfolio that generally align with that overall macro trend. The last thing I'd say and kind of to the end of your question, given the diversity that we have across our portfolio and how well positioned we are, I'd say, across 70-plus vertical markets from an exposure perspective. I think we feel pretty confident that the stability and strength and volume growth that we've seen over the last several quarters is sustainable as we move forward in time. So, we feel as if we're kind of operating now in a normal environment. And the results that you saw in Q3 kind of reflect normal operating expectations for the merchant segment more broadly. And the last comment I'll make and sorry, before I turn it over to Jeff, is just. We are still dealing with pockets of weakness around the globe as well. So I'm again pleased with the overall performance, notwithstanding the fact that we're still seeing COVID-related impacts in Asia Pacific. Obviously, the Greater China markets continue to struggle with periodic lockdowns and travel restrictions, et cetera, as it relates to their desire to have sort of a zero COVID policy. And of course, we're seeing a touch of macro impact in the U.K., although a relatively small portion of our business. I think it's hard not to notice obviously, the impacts in the U.K. stemming from a variety of overall macro factors there. And certainly, that has weighed on the performance slightly as well. But if you look at everything in aggregate, again, very pleased with the overall sort of revenue growth and volume performance we've seen across the portfolio.

Yes. Darrin, it's Jeff. I'd just add to what Cameron said. We see the same thing on the Assure business. So if you look at the report today, 4.2% constant currency kind of core issuer ex the B2B assets growth and acceleration versus the second quarter and consistent with what we expected. You've seen pretty steady growth in accounts on file in transaction growth and authorizations and value-added services. I think we had 14 million accounts in the quarter. We have a record implementation pipeline post merger. Of 75 million accounts that does not include Caixa. We're tracking the same metrics on the issuing side, as Cameron mentioned, on the merchant side. The only thing I'd say is on the cross-border side, commercial cards, as we said in the slide show, was up 25% transactionally in the third quarter in September was also as a month, a really good month for commercial cards. So where we do that exposure, I think it's tracking very consistently with the networks and what Cameron described in merchant.

I have a quick follow-up, and perhaps this is more for you, Josh, regarding the financial side. When we examine the quarter, there were adjustments made to determine the core results. I understand there's bridge financing that you added back. However, regarding guidance, you're mentioning FX adjusted figures, but also indicating that FX contributed around 400 or 500 basis points. Please correct me if I'm mistaken, but could you clarify what the reported outlook is for the year, particularly in terms of any other adjustments?

Yes, absolutely, Thanks, Darren. So as I said in my prepared remarks, we said for the year is a total of 300 basis points of FX headwinds. And what I would say is, our expectation for the core business remains exactly the same. Constant currency adjusted net revenue growth of 10% to 11% and then answers your question. Constant currency adjusted earnings of 17% to 20%. If you look in our press release, Schedule 10, we've given each of the components where you can go ahead and break that out. But hopefully, that's helpful and answers your question.

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

I just wanted to start with a question on the pending acquisition and divestiture as we think ahead to the close of both of those in Q1. I think last quarter you said that the EVO earnings would offset the lost earnings from NetSpend consumer. But I just wanted to clarify, is that comment based on full run rate synergies being achieved at EVO? I'm just trying to understand whether in 2023, there's any net dilution here or not?

Yes, thanks. When considering NetSpend and EVO together, it essentially functions as an asset swap where they balance each other out. Therefore, we anticipate it will be neutral regarding overall accretion or dilution.

Jason, the only thing I'd add to that is you are correct. The commentary we provided last quarter at full run rate synergies, EVO transaction and NetSpend transaction do offset each other as an accretion dilution matter. They're roughly neutral. So that does obviously assume we get to full run rate synergies on the EVO transaction. I'd say it's really too early to comment on 2023. We'll obviously provide more color as we get into the early part of the year, and we have better line of sight on the timing of it close. As you can imagine, to Josh's point, the timing of close of each of the individual transactions will drive kind of the outlook for 2023. But if we think about the long-term trajectory of the business, swapping out the consumer business for EVO, a business with better revenue growth potential, better margin profile, and obviously a strong kind of earnings contributor over time when we get to full run rate synergies, we feel like it's a very good better positioning of the business for lack of a better term for the long run.

Okay. Understood. And then just as a follow-up, I think you've steadily raised margin guidance this year, each quarter to a level that's well above your cycle guidance. I think you've gotten a little bit of benefit from exiting Russia, but I just wanted to understand a little bit more of the underlying drivers you would point to that are driving the outperformance? And then if you can just make a quick comment on Q4 growth expectations for issuer?

Yes, I'll start, Jason, it's Josh and Cameron to comment as well. So I think the fundamental driver of expanded margins is better transactional underlying performance. I know you know how our model is constructed, but the more software we sell, the more transactions we do, you look at the 11% revenue growth, the 11% volume growth. We announced today in the merchant segment, you look at the acceleration of the issuer segment, up 4.2% core versus 4%. And in the second quarter, Josh will content on the guide, but we expect an increase in the fourth quarter. When you see those things going up, those things all come in at a very high incremental margin at the end of the day. So, I would say the fundamental operating performance of the company is what's really driving the expanded margin throughout the year and as we head into the fourth quarter. Josh, you want to talk a little bit about the fourth quarter guidance.

Yes, absolutely. So I think the question was with regard to issuer. And look, throughout the year, we've seen a really nice trend in the issuer business, 1Q to 2Q, obviously, and then 2Q to 3Q, we saw 20 basis points of growth there. And what I would say is based on the internal metrics that we're seeing now would suggest that through the first month of the quarter, that things are consistent with regard to what we saw in September, which Jeff had mentioned just a moment ago. So, we feel very, very good about the trends of the underlying business with an issuer, and we expect to see those trends continue into the fourth quarter.

And Jason, it's Cameron. I'll just add one final point to that, and it's just reiterating something that we've said relatively consistently. We're very focused in the business on profitable growth, right? We really do emphasize making sure that we're growing in a way that has flowed through to profitability that allows us to continue to expand margin, the mix of our business, particularly in merchant towards more technology enablement, software, et cetera, to Jeff's earlier comment, positions us well to continue to drive obviously attractive margin expansion in the business. But it's all sort of premised on a belief that we want to focus on profitable growth, and we're not just booking kind of revenue growth for the sake of booking revenue growth, but it's flowing through and driving profitability for the business.

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

Just wanted to make sure we knew kind of maybe percentage of revenue of some of the areas, the pockets of weakness, Asia Pacific, U.K., maybe Canada, just so we have that in our models.

Yes, Brian, it's Cameron. I'll jump in. So, we've talked about U.K. before. It's about 5% of the merchant business, roughly 3% of the total company revenue Canada is roughly the same size. It's actually slightly larger than the U.K. market, but again, going to be in that sort of a little over 5% range and again, 3% on the total company. Asia Pacific, it's more pockets of Asia Pacific. So it's probably 1/3 of that size for the U.K. and Canada, where we're seeing a little bit of weakness, given the COVID-related restrictions and lockdown. So I would say not material and Brian, we've talked about for a long time. We don't need every market, every geography, every channel to perform perfectly for us to hit the expectations that we have for the business. And I think this is a really good sort of example of that. The performance in the quarter was very much in line with the expectations we have for our overall business, 11% constant currency revenue growth, excluding Russia, which again, is very good growth in that portfolio, notwithstanding again, not everything is going perfectly in every market around the globe. So that's our expectation as we move forward. We'll continue to see pockets of areas that may create challenges, but we feel poised to continue to produce growth consistent with our cycle guidance for the merchant segment.

Yes. No, definitely, you can see that in the volumes. And then maybe, Jeff, just as you think about the macro, if it does deteriorate, I know a common question you get and we get is. What kind of contingencies do you have in place to potentially protect EPS growth if the macro would deteriorate further?

Yes, that's a great question, Brian. Our history demonstrates that we can operate effectively in tougher macro environments than the current one. A notable example is early in the pandemic when we swiftly implemented $400 million in annualized cost savings within a few weeks, $200 million of which became permanent. This occurred about six to nine months after we finalized the TSYS merger. As we have announced, we expect to close the EVO merger in the first quarter of 2023. Even in challenging conditions, we can expedite synergy realization during deals. Regarding EVO, we initially projected $125 million in annualized expense synergies, with a third of that expected to be realized in the first year. We have the flexibility to adjust and accelerate these synergies as needed. Our track record shows we consistently exceed our cost synergy expectations, as seen with both the TSYS and Heartland mergers. As mentioned in our remarks today, the internal metrics from the first three weeks of October look promising, with no broad evidence of macroeconomic impact. However, we have multiple strategies to meet our expectations for 2023 and beyond, and our history shows how we've successfully navigated these challenges.

Thank you. Our next question comes from the line of James Faucette with Morgan Stanley. Please proceed with your question.

I want to follow up on Brian's question there on EVO and you mentioned the synergy potential. As you've kind of started to look more closely at that business, can you talk about like what are the puts and takes that at least at this stage, think could come from that could move those synergies around? And what are you finding there that maybe is encouraging you to feel like a little bit optimistic in terms of potential to do more there than you've outlined?

Yes, it's Jeff. I'll start, and I'll ask Cameron to comment, too. It's a very good question. So now we're through the HSR regulatory period here in the United States, which is really the primary hurdle for us to proceed. We're starting our integration activities imminently. So obviously, we continue to do more work. What I would say is, for sure, the B2B assets, as we said, at the time of the announcement of the transaction on August 1, we think are highly attractive. I have spent time with Jim, who's done an excellent job at EVO, reviewing their B2B business, particularly meeting with their software developers in Anaheim and a bunch of their operating businesses in Tampa and elsewhere. I'm more bullish now even than I was on August 1 about opportunities in the B2B. As you know, Global Payments ex-EVO for the time being, has very aggressive targets and what we think we can do with our B2B business. We expect that business to grow MineralTree in particular, 20% plus the calendar year that we're in today. In 2022, and that's before the addition of EVO's assets. So, I was very impressed with where they are. On the development and software side, I think Jim and the team in Anaheim and elsewhere have done a terrific job and very excited about the opportunity to combine go-to-market strategies and realize additional revenues in combination with B2B. Cameron, you want to talk for detail?

Yes, James, it's Cameron. I'll add a couple of other comments. I would say, in addition to B2B on the revenue side, I think we're particularly excited about the prospects of bringing our product particularly our commerce enablement solutions to EVO's international markets into the U.S. portfolio as well. But certainly, internationally, EVO's done a great job sort of building payment businesses in these markets, but their product set is very payments oriented. And I think we have a significant opportunity to augment what they're doing in market today, particularly in markets where we don't operate by bringing our commerce enablement solutions, some of our other products and solutions, particularly on the software side to those markets. So we see very strong, I think, revenue opportunities coming from that. And then secondly, more on the expense side, obviously, we have very much duplication in markets where we overlap. So U.K., Spain, Mexico. And then that gives us and certainly here in the U.S. market, of course, across the integrated channel and then EVO's more traditional merchant business. Those areas are obviously going to provide meaningful opportunities for expense as we rationalize technology, operating environments, go-to-market strategies across those overlapping businesses. So I would say sitting here today, we have high confidence in the synergy targets that we provided. Certainly, I think there's more revenue upside there that we can tap into as we progress in time and we bring the businesses together, but certainly feel very good about our ability to achieve the 125. And in keeping with past practice, we're hopeful we'll find opportunities to even exceed that as we bring the two businesses together over the next few years.

That's a nice transition, gentlemen. I have a follow-up question. Although it might not be as key a topic now as it was about a year ago, I would appreciate any update on how you see your position developing in the BNPL ecosystem. Are you noticing more BNPL integrations with Global aimed at driving scale, rather than providers trying to onboard merchants individually? More generally, do you still have a positive outlook on Global's role in the ecosystem as time progresses? Any updates would be appreciated.

Yes, James, it's Jeff. I'll start and ask Cameron to join too. I'll speak to the issuer side first. So we've made a tremendous amount of progress on the issuer side in BNPL. And I think given our advantages with the 1,500 financial institutions pre-EVO, that we have relationships with today, our perspective is providing BNPL technologies and services to regulated responsible BNPL providers who are used to extending credit and provide AML and KYC is absolutely the right thing to do. We have a number of customer implementations underway, particularly outside the United States, in the United Kingdom for the BNPL, and the take-up rate from our FI traditional clients and issuer has been very high. In fact, I would say, I don't think we've ever had, as we said in the slide, so more of an implementation pipeline post-merger in issuer. And I don't think the funnel of opportunities beyond that in terms of what we're pursuing, which includes BNPL has never been greater. So, I think our strategy all along of aligning with market share winners and the most successful traditional financial institutions as well as fintechs, including in particular in BNPL has been absolutely the right thing to do. We're seeing a lot of traction in that area on the issuer side. Cameron, do you want to comment on the things we're doing in merchant?

Yes, certainly. On the merchant side, we launched our BNPL as a service solution earlier this year in the first quarter. That allows our merchants to tap into whatever BNPL provider they want to work with through our rails. So end of day, as we talked about over a period of time, BNPL ultimately is just another alternative payment mechanism. Our objective is to provide our merchants the opportunity to utilize us for all of their payment requirements, to make sure that we have the rails to tap into whatever BNPL providers are in the marketplace. We're providing consolidated settlement reporting, data analytics, and all the value-added services we're able to provide to our merchants, and we're doing that today. Not surprisingly, and to your point, we are seeing plan for that, obviously slow in light of just what's transpired over the course of this year. But again, we've done what we said we would do, which would position ourselves to be able to provide BNPL as a service, tap into all the major BNPL providers in the marketplace today and allow our customers to have choice, our clients to have choice around who they work with to the extent they want to offer BNPL capabilities to their consumers on any given day. So, I feel good about how we're positioned strategically there. We're not in the business of taking sort of credit risk from consumers. So, it's not a service we're providing on our own balance sheet, but we're providing the technology and the value-added services or our customers are looking for, excuse to be able to work with any BNPL provider they choose to.

I'd also add to your last point there, James, if you look at our e-comm omni numbers, which we reported again this morning, those remain in line or ahead of the market as represented by the e-comm omni numbers for Visa and MasterCard is now 30% roughly of the revenue of our company. So, we've been in line/accelerating/multiples of where the market's been growing. We wouldn't be in those positions if we didn't have a hypercompetitive offering via the UCP, which we've been talking about, I think, for four years plus now. So, we feel really good about where that business is. Obviously, BNPL is a piece of that business, but we're very pleased with the continual growth in our card-not-present business as measured by our performance relative to the market.

Thank you. Our next question comes from the line of Jamie Friedman with Susquehanna. Please proceed with your question.

Congratulations. I would like to inquire about the issuer. You mentioned a 25% growth in transactions on the commercial side. Is this related to comparisons? Is it a result of the strategy, or does it reflect the types of accounts you are onboarding? Any insights you could share about the commercial aspect would be appreciated.

Yes, Jamie, it's Jeff. So, I think it's really related to just that fantastic business in the commercial card area. So as it relates to the comparison, we've seen sequential improvement throughout most of 2022, very similar to what you saw from the card networks in the commercial card area as corporate cross-border travel, which is really what commercial is for us for a bunch of large issuers really recovers. The other thing I would say is, 25% as an average, we got a bunch of people on the corporate side who are growing 50% north of that, right? So well, that's the aggregate of a lot of financial institution issuers. We have some issuers, money center banks who are growing at multiples of that number today. So that business remains very healthy. I would also add that, that is part of the AWS modernization efforts. So that applies not just the TS2 and consumer, but also to commercial card. There's two elements to that. One is the technologies that we're developing in commercial card. You may remember that Citi earlier this year, Citigroup, signed an eight-year extension with us in the commercial business to the end of this decade really. And I think part of the confidence that large smart institutions like that have in us is the modernization efforts we're undertaking. The second thing I would say, as we announced this morning and also throughout the year, is diversifying the revenue stream into fintechs. So, I think we announced today in our B2B businesses and the commercial part for us is really a core part, and in some cases, the entry way into B2B, we announced today deals with Ramp deals with Extend as we think about expanding beyond traditional financial institutions, which has obviously been terrific for us into fintechs and start-ups. I think B2B in commercial card is a really good place to do that and leveraging the relationship, the unique relationship we have with AWS, as well as the cutting-edge technologies we're building there is showing in the results that we've been producing the last couple of quarters in commercial cards. So it's really not the comparison so much as it is ongoing strength and recovery in the corporate travel marketplace.

Thank you for that, Jeff. There's a lot of useful information on Slide 6 regarding issuers. Can you explain why you are excluding Caixa? I thought you mentioned in your prepared remarks that you were excluding Caixa. If I misunderstood that, I apologize. What is the reasoning behind this decision?

Yes, it's Jeff again, Jamie. Caixa is not included in that number because we are about to finalize the contract soon. So until it is placed in the implementation queue, it's treated as an implementation number. We plan to onboard it relatively soon. The letter of intent was signed earlier this year. Once it is scheduled for conversion, we will add it. If you include that number, Jamie, it would increase the pipeline accounts on file to over $100 million against a base business totaling around $700 million. This gives you an idea of the potential growth opportunity in the issuer business over the next couple of years. I expect that to materialize in 2023. However, I did not anticipate having it reflected in the third quarter because the contract is set to be signed soon.

Thank you. Our next question comes from the line of John Davis with Raymond James. Please proceed with your question.

Just wanted to touch on the margins here. I think, very consistent, elevated. You're raising margin guidance every quarter this year despite a lot of your peers kind of doing the opposite. And so Jeff, is this pull forward are you being a little bit more aggressive ahead of what could be a macro slowdown? Are these just opportunities in the business that you're seeing kind of top line better operating leverage? Just trying to just understand whether or not this is kind of a pull forward from the expense base or if we can expect kind of similar to cycle guidance going forward in '23 and beyond?

Yes, John, it's Jeff. It's not a pull forward. I mean, as I said, in response to a couple of questions ago. The fundamental driver of margin improvement is terrific growth. So when you look at the things that are driving the growth of Merchant as Cameron alluded to, our software businesses are higher-margin businesses that are technology-enabled as those grow faster than market rates, which we reported again this morning, that is going to drive outsized margin performance. And I think that's what you're seeing in merchant, which had 50-plus percent margins for the second time in a row this quarter. On the issuer side, it's a very healthy growth profile on Issuer. I think Josh alluded to this. It was 4% core constant currency in the second quarter, now 4.2%. As Josh said, our expectations for north of that in the quarter we're in right now based on the metrics through the third week of October. So when you have businesses that are probably 80% plus incremental margins relative to a 40% average margin number growing at above market rates, you're going to drive better margin returns. That's the fundamental thing. The second thing I would say, as you alluded to is, look, we pride ourselves on execution. We've got a long time here making or exceeding our margin targets. So we are appropriately cautious throughout the back half of this year heading into next year. But no, our expectations, EVO remained for normal margin enhancement heading into next year, I think EVO and the disposition of NetSpend provide opportunities for accelerated margins when we get there. But I think for the time being, it's really driven by 11% fundamental growth in merchants, 6% fundamental growth in issuer if we keep doing that, we're going to keep expanding margins.

And then just as a follow-up. I think you've commented either in the prepared remarks or response to a question that you expect the MineralTree to grow 20-plus percent. Maybe just spend a second to help us understand how MineralTree will fit with the B2B assets. You said you're more excited about EVO's B2B business, but obviously, that's questions we get a lot is just the B2B strategy going forward. So maybe just how MineralTree specifically fits with what EVO has in B2B, that would be helpful.

Yes, John, it's Cameron. I’ll go ahead and give my input and then ask Jeff to add any additional comments. When considering the B2B strategy, I think it's important to break it down into its components. Ultimately, our goal is to create a fully integrated B2B offering centered around software that enables us to deliver accounts payable and accounts receivable solutions, primarily for mid-market customers and potentially for enterprise customers as we aim to expand into that segment. As a foundational element of this strategy, MineralTree plays a crucial role in supporting our accounts payable software automation. In addition, EVO will enhance what we have with MineralTree by providing essential accounts receivable software capabilities, along with integrations into major ERP providers. Our B2B strategy mirrors our approach on the merchant side; it will be fundamentally driven by software focused on both accounts payable and accounts receivable solutions. Alongside this, we will offer comprehensive solutions for managing money in and out for our B2B customers, enabling them to accept payments on the merchant side and process payments on the accounts payable side. All these offerings will be available as microservices, individual solutions, or as a complete integrated package. One of the most appealing aspects of EVO, as we've discussed previously, is the AR automation software they contribute to our global payments, which aligns well with the overarching B2B strategy we are working to establish.

John, I'll just add to what Cameron said, so this is in our prepared remarks this morning, but I want to highlight it. So one of the largest software deals that MineralTree's ever recorded, Grupo Bimbo was just done in October, which is something we called out the quarter we're in. Obviously, that's terrific news. We've also gone very on ground in the cross-selling of our virtual card business into our traditional financial institution base. On the Issuer side, I gave you a few examples, in our prepared remarks, too. So Cameron's absolutely right in terms of go-to-market. There's tons of opportunities and low-hanging fruit on the TSYS issuing side, leveraging the 50 million-plus virtual cards we do every year and the 30 billion plus in volumes we do already in virtual cards. So we feel really good about where that business is headed. And our focus is to continue to build momentum in B2B heading into '23. And then obviously, EVO, as Cameron alluded to, brings us a whole another universe of opportunities. So very pleased with where we are. I'm really excited about the trajectory into '23.

Thank you. Our next question comes from the line of Bob Napoli with William Blair. Please proceed with your question.

Jeff, you've consistently been at the forefront of innovations in the payments industry. As you assess the global landscape today, it's increasingly interconnected. Considering this, which areas of fintech excite you the most? There's still a significant amount of venture capital activity, although it may have slowed a bit. Are you focusing on specific geographic regions or areas like fraud prevention? Does this relate to embedded payments or integrated payments? I'd love to hear your thoughts on the areas of fintech innovation that have you most enthusiastic.

Yes, Bob, I won't belabor the B2B topic because I think we spent a lot of time on this call talking about our B2B strategies and how we do stand-alone and also with EVO, but just to start at the top, I mean, I think B2B is a big driver of our future growth expectations; we talked about last year, about a year ago in our September '21 Investor Day. The second thing I would say is what we call commerce enablement, really on the merchant side of the house, which I know Cameron has touched on. If you look at our recent announcements, with a bunch of stadiums, Mercedes-Benz is probably the most notable. But as we alluded to in the script, more are coming kind of imminently probably before our next call. What's really driving that, Bob, at the end of the day, is the seamless combination of software, digital, mobile in the way that consumers want to be treated. So we've talked about this, I think, in our Investor Day, but pre-pandemic, maybe people got paper tickets, maybe people were okay getting a parking pass, maybe people are okay taking a stub at the parking lot in the stadium, maybe people are right, touching something at the counter and inserting their card. If that's table stakes, I think, for all that stuff to be done digitally; maybe that was going to happen anyway. But as we said repeatedly in '20 and '21, I think the pandemic probably accelerated that migration by three to five years, and that's what we're seeing. So when we're going into RFPs now with stadiums, and we won, obviously, a lot of them, more will come, but just take Mercedes-Benz more recently as one example. All that stuff now is done digitally, meaning your ticket's on your phone, your parking pass is digital also on your phone. When you order something, you can do that from your phone too, it can be delivered to your seat. You can do it from a kiosk, you can pick it up in a locker. No one wants to touch anything anymore. Another great example of this, we call that commerce enablement, which means it's less about what the point-of-sale device is and more about the consumer experience. Then if you look at something like real estate, and I think Josh and I alluded to Zego today and its performance, same thing. If you go back, Bob, kind of pre-pandemic, people would show up at the landlord's office with their check. If they had a repair ticket to fill out, they fill it down on paper, hand it in. If they wanted their car, they hand in a parking ticket. We don't want those stuff anymore. No one wants to touch those things. It's all done on your phone. When you sign up for a new apartment, it's all done electronically. When there's a repair thing, you do it on your iPad when you want your car; you kind of press a button on your phone. So when we think about commerce enablement and the opportunity to seamlessly combine what we've built here, which is software as well as payments as well as a digital environment as well as wallets as well as e-com omni, we think there are only a couple of people in the world who can really provide those services. And I think the rate of our pros growth or implementation provides all the evidence you need to see as to how those undertakings are going.

And Bob, it's Cameron. I want to emphasize the importance of expanding our capabilities to markets outside of the U.S., which you mentioned in your question. This expansion sets us apart. We're in the process of introducing all the innovations Jeff described to international markets, including our point-of-sale software solutions with integrated analytics and customer intelligence. We're also bringing our embedded finance offerings abroad. A key aspect of our strategy is owning the underlying software capabilities, which gives us the control to export them to international markets, helping us stand out as these markets evolve. This positioning is unique for Global Payments, and we are particularly excited about it.

I'd also say, Bob, just to circle back to complete the question. On the issuer side, the cloud sales. So look, when we announced the deal, the unique partnership we have with AWS 2 and 1/4 kind of years ago now. We are very excited, but probably uncertain about the timeline, the path of migration, traditional financial institutions; we're not uncertain about that anymore. I mean, I think now that the world has reopened, I think I've been in Europe, three times for work along with Gaylon in the last few months and that with most of the top financial institutions in the United States, in Canada, and most of Western Europe. As I mentioned a minute ago, in addition to the $75 million accounts and implementation for accounts on file, I don't think we've ever had the bucket of opportunities that we have today on the issuer side. And every one of those RFPs comes in and says we want 100% cloud kind of the first day. So I would just say in terms of other areas of focus on the issuing side beyond B2B and both on what we've already described, I think the cloud sales and in particular, I think the AWS cloud sales.

Maybe I can follow up on that. You mentioned several takeaways. How much of that is influenced by the cloud, considering you have significant pricing power and high incremental margins? What seems to be driving the acceleration in takeaways on the issuer side?

Yes, I think it's really, Bob, led by technology. So we really have a technology and product-centric first view of the world. I also think we have excellent people both on the sales and support side and we hear that consistently from our financial institution partners. So listen, as it relates to pricing, I think as with all things in life, you have to be competitive. These are big, smart, sophisticated institutions that run our fees. But at the end of the day, I think it's really driven by the product stack and the technology stack. And I think public cloud or table stakes now in that environment, also dovetails very nicely with our go-to-market on the B2B side, which is also obviously with MineralTree, very cloud-centric. So I think we've got all the elements of successful offering, and it's nice to see the investments we've made over a period of years play out in terms of wins and conversions. Thanks, Bob. On behalf of Global Payments, thanks for your interest in us this morning. And again, happy Halloween, everyone.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.