Ladies and gentlemen, thank you for joining us. Welcome to the Global Payments First Quarter 2023 Earnings Conference Call. All participants are currently in listen-only mode. This conference is being recorded. I would now like to turn the call over to your host, Senior Vice President of Investor Relations, Winnie Smith. Please go ahead, Winnie.

Good morning and welcome to Global Payments first 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 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 are pleased to have delivered our best first quarter in four years, exceeding our expectations to start 2023, despite continuing macro uncertainties. Our ongoing businesses produced adjusted net revenue growth, adjusted operating margin expansion, and adjusted earnings per share growth consistent with our cycle guidance once again. This performance reflects the wisdom of our strategies and our consistent focus on execution. We accomplished these results while also turning the page on our strategic initiatives. First, we are delighted to have closed our acquisition of EVO Payments in late March and we are already off to a strong start. Cameron will provide more details about our integration efforts now underway, but let me preface his comments by saying that we remain as excited about the many opportunities we have together as we were at the time we announced the transaction nine months ago. I am delighted to officially welcome EVO's value team members to the Global Payments family. We are pleased to have also recently completed the divestitures of Netspend's Consumer Assets and our Gaming Solutions business. With the successful execution of these transactions, we are focused on managing our go-forward business composition, with merchant solutions representing approximately 75% of our adjusted net revenue, and issuer solutions including B2B comprising roughly 25%. This platform provides us the ideal set of core capabilities from which to grow for many years to come. Our issuer merchant posted exceptional results for the first quarter. Starting with issuer solutions, our core business again generated substantial sequential financial and operating improvement, achieving high single-digit growth and marking its best quarterly performance in more than five years. It is worth highlighting that our core customer base consists of money center and systemically important financial institutions globally. We believe that we've been the beneficiaries of incremental depository flows from larger institutions, combined with several significant implementations during the quarter, which we expect to provide tailwinds for some time to come. Year-over-year, consumer transaction volumes grew into the double digits. Our commercial card business also continued to perform, with transactions growing nearly 25% in the first quarter as cross-border and domestic corporate travel continued its recovery trajectory. Traditional accounts on file increased by roughly 200 million sequentially, and double-digits from the prior year to a new record due to strong conversion execution of new accounts and growth with existing customers. Our decades-long strategy of aligning with market share winners continues to bear fruit. And I think it's clear at this point that the legacy versus fintech hypothesis from 2021 has now been thoroughly debunked and turned on its head. We are delighted that we successfully converted a significant portion of one of the top 10 commercial banks in the United States in early March. This win was a double competitive takeaway, early after the announcement of our merger. We also completed the conversion of the Postbank portfolio in April. And in collaboration with AWS, we successfully deployed our cloud-based data and analytics platform for a leading financial institution partner in the United States. Finally, we are pleased to have signed multi-year extensions with M&T Bank, as well as another longstanding U.S.-based financial institution partner during the quarter. We currently have nine letters of intent with institutions worldwide, nearly all of which were achieved through a competitive RFP process. Turning to B2B, we continue to drive strong growth with both corporates and financial institutions as we leverage our virtual card, MineralTree automation, and employer solution capabilities. This quarter, we achieved record supplier enrollments as middle-market companies further digitized their payments. It's worth noting that MineralTree delivered normalized growth of roughly 20% for the period and we continue to expect near 30% growth for this business in calendar 2023. We are proud of the resiliency of our merchant business, which delivered double-digit growth, excluding dispositions and the one-week contribution from EVO. This performance was achieved despite incremental macro uncertainties driven by the banking crisis that developed in the latter part of the quarter. Standout for the period again includes our worldwide e-commerce and omni-channel businesses, where growth accelerated into the high teens. Speaking of UCP, we are making great progress in our partnership with Spring by Citi that now spans North America, the UK, and Continental Europe. We are currently live across 14 countries and processing more than 100 million transactions and over $3 billion in volume annually. Based on our pipeline with many of Citi's largest treasury and trade solutions customers, we are on track to more than double our volume together by the end of 2023. We also continue to see strong trends in our integrated business in the U.S., which grew at a mid-teens rate with sustained rates of accelerated growth. We also produced a record quarter for new sales in this channel, demonstrating ongoing strong demand for our solutions. Additionally, vertical markets achieved double-digit growth led by School Solutions, Zego, real estate, and Xenial in quick-service restaurants and stadiums. After announcing our partnership with the Brave last quarter, we are excited to have gone live with our Xenial cloud point-of-sale solutions on April 6, opening day for Truist Park. We also reached an agreement with a leading parks and entertainment company to provide both our Xenial food and beverage solutions, as well as our retail solutions at all of its theme park locations across the United States. Our pipeline remains full across our fixed service restaurant and sports and entertainment businesses. Stay tuned. Outside the United States, our Asia Pacific business produced its best first quarter since 2018 as COVID-related restrictions were lifted at the end of 2022, including in Greater China. We continue to see strong trends in other faster-growth geographies such as Spain and Central Europe, and we are excited to enhance our scale with EVO in these markets. We also had several successful product launches during the quarter in Europe, including our point-of-sale solution in Central Europe, and our tap-on-phone solution in the UK. These all bode well for the cross-sell opportunities with EVO. Before I turn over to Cameron, I'd like to address the announcement of my departure as CEO of Global Payments effective June 1 and the appointment of Cameron Bready as our next CEO. I have known Cameron personally for nine years and he has held the most senior and trusted positions in our company during that time. First, as our CFO and today as our President and COO. Cameron is an outstanding leader and the right person to succeed me. I have every confidence in his and our company's continued future success and will do everything I can to ensure a smooth transition to Cameron over the coming weeks. Now is the right time for us to execute on our succession plans. We recently closed on all three of our strategic transactions and produced our best first quarter in four years with our first beat-and-raise in 18 months. Our businesses are exceptionally healthy. We delivered on a heightened cycle guidance in 2022 and are poised to do the same in 2023, excluding of course dispositions. While challenges undoubtedly remain, we are on a path to return to normalcy as I suggested and hoped for on our February call. When we arrived at Global Payments 13 years ago, we had many strengths, but we lacked direct distribution, scale and e-commerce, a B2B strategy, and had much legacy technology debt to repay. Now, roughly 10 years after I became CEO, we have distinctive software assets owned and partnered, a market-leading e-commerce and omni-channel presence, enhanced exposure to faster growth markets, and sizable B2B assets. We couple distinctive distribution with a solid technology footprint and unique multi-year collaborations with both AWS and Google. Finally and importantly, over the last 9.5 years since we've been running the company, GPN stock has compounded at nearly 16.5% annually, 650 basis points in excess of the S&P 500 index and 300 basis points in excess of our peers, despite all the turmoil over the last three years. Simply put, we've accomplished our goals. I'll now turn the call to Cameron.

Thanks, Jeff and good morning. Let me start by acknowledging what an honor and privilege it is for me to be named the next CEO of Global Payments. I'm grateful for the Board's confidence in me leading the company going forward, and I look forward to working with all of you in this capacity, continuing what has been a long history of outstanding leadership at Global Payments. On behalf of the 27,000 team members of Global Payments, I also want to thank Jeff for his leadership as CEO over the past decade. The transformation of the business under his stewardship has been remarkable and has shaped the company into the payments technology powerhouse it is today. Further, on a more personal note, I want to express my sincere appreciation for his mentorship and friendship during my time here at Global Payments. Jeff and I worked side by side over my nine years at the company and importantly have been completely aligned on the four-pillared strategy we articulated at our investor conference roughly 18 months ago. We remain committed to this strategy as we endeavor to build the leading technology-enabled software-driven payments business worldwide. Having now closed the acquisition of EVO and the divestitures of our Netspend consumer and gaming solutions businesses, we have completed our strategic pivot. I'm delighted to be taking over at a time when our business reflects a simpler model, more geared towards our corporate customers, as we've been foreshadowing since August of last year. Over the next month, Jeff and I will work closely to ensure a smooth and orderly transition. I look forward to continuing the company's rich history of investing strategically to drive differentiated growth and value for our shareholders, customers, and team members while fostering a culture that is second to none and enhancing our corporate citizenship in the communities in which we live and work around the globe. With that, I would like to echo Jeff’s remarks welcoming EVO team members to Global Payments. While we are still in the early days, we have made substantial progress on our integration and remain enthusiastic about the synergy opportunities available. Since announcing the transaction in August, we have had ample time to formulate integration plans and prepare for day one, allowing us to truly hit the ground running. We have established a robust leadership and governance structure, as we do with all of our acquisitions, which has resulted in a smooth transition and enabled us to implement early actions that align with our targets. I'm pleased to report that we currently have executable plans to achieve the run rate EBITDA synergy target of at least $125 million within two years that we committed to at the time of the announcement. The substantial expense synergy opportunities are expected to come primarily from aligning our business operations and go-to-market strategies, streamlining technology infrastructure, eliminating duplicative corporate and operational support structures, and realizing scale efficiencies. As always, we remain focused on sizing expense synergy expectations with an eye towards ensuring that we maintain momentum in the combined business and that it is well-positioned to continue to grow and expand in the future. Regarding the potential revenue enhancements, I will start by reiterating that as one company, we are uniquely positioned to deliver an unmatched suite of distinctive software and payment solutions to our combined customer base globally. More specifically, I would highlight three broad categories that we believe provide us with ample run rate to drive revenue synergies from the acquisition. First, we see significant opportunity to bring further value to EVO's relationships by leveraging our extensive distribution platforms in product portfolio, as well as our unique partner integration capabilities. This includes our point-of-sale technologies, commerce enablement solutions, and vertical market software offerings. As one example, we are bringing our point-of-sale software to key international markets where we overlap with EVO, including the UK, Spain, and Central Europe. We plan to cross-sell our point-of-sale software into EVO's customer base in these geographies, as well as bring these capabilities to EVO markets where we do not overlap today, including Mexico, Ireland, Poland, and Greece. Second, we expect to capitalize on our ability to provide EVO's multinational customers e-commerce and omni-channel solutions across markets and geographies, seamlessly blending their physical and virtual requirements. With our combined physical presence in over 40 countries globally, and the ability to transact in over 170 virtually, we can significantly expand EVO's value proposition to its existing customers. We have already initiated discussion with some of EVO's largest multinational clients to explore opportunities to support them in additional markets around the world. Third, EVO's accounts receivable automation software and B2B payment solutions augment our existing accounts payable automation and other capabilities, rounding out our full suite of B2B offerings. Together with EVO, we are well-positioned to further grow and scale our B2B portfolio, particularly on the acceptance side, which includes leveraging EVO's extensive proprietary integrations to some of the most widely used ERP environments in the marketplace through its Pay Fabric platform. We could not be more excited about the many opportunities we have together with EVO, given its alignment with our overarching strategy, further reinforcing our position as the preeminent payments technology company with extensive scale and unmatched global reach. Josh?

Thanks, Cameron. We are pleased with our strong financial performance in the first quarter, which exceeded our expectations despite ongoing macro concerns, highlighting the strength and durability of our business. Specifically, we delivered adjusted net revenue of $2.05 billion, an increase of 6.5% from the same period in the prior year on a constant currency basis. Excluding the impact of disposition, and roughly one week of contribution from EVO, adjusted net revenue increased 9% on a constant currency basis. Adjusted operating margin for the quarter increased 200 basis points to 43.1%. The net result was adjusted earnings per share of $2.40, an increase of 18% on a constant currency basis, compared to the same period in 2022. Taking a closer look at performance by segment, merchant solutions achieved adjusted net revenue of $1.46 billion for the first quarter with constant currency growth of 10%, excluding dispositions and the contribution from EVO. This performance was led by the ongoing strength of our technology-enabled businesses, while we benefited from the recovery in Asia Pacific as COVID restrictions eased across Greater China markets. We also saw consistent double-digit growth from our vertical market, point-of-sale, and payroll businesses. This strength was partially offset by ongoing headwinds from adverse foreign currency exchange rates along with macro softness in limited geographies, including the UK. We delivered an adjusted operating margin of 47.3% in the segment, consistent with last year. Excluding the impact of EVO’s closure in March, adjusted operating margin expanded 25 basis points and was in line with our expectations. We are pleased with the fundamental performance of our issuer solutions business in the first quarter, which produced adjusted net revenue of $490 million, reflecting growth of 7.2% on a constant currency basis. Notably, core issuer grew high single digits this quarter, excluding the impact of foreign exchange, which was over a 300 basis point acceleration sequentially. As Jeff highlighted, traditional accounts on file increased by approximately $20 million sequentially driven by strong account growth from our major consumer portfolio customers, as well as several portfolio conversions we successfully completed during the period. Transactions also grew double digits compared to the first quarter of 2022, with strong contributions coming from both commercial and consumer card transactions. Finally, we delivered adjusted operating margins of 43.9%, an increase of 80 basis points from the prior year fueled by our accelerated growth. As for adjusted free cash flow, consistent with the prior period, we converted approximately 80% of adjusted earnings into adjusted free cash flow. We continue to target converting roughly 100% of adjusted earnings for the full year, excluding the impact of the timing change related to the recognition of research and development tax credits. We expect our adjusted free cash flow conversion for the year to follow a similar trajectory as 2022. We invested $162 million in capital expenditures during the quarter and continue to expect capital spending to be around $630 million in 2023, consistent with our long-term targets. This quarter, we repurchased approximately 2.1 million of our shares for roughly $200 million, which was executed prior to the closing of our acquisition of EVO payments on March 24. To help fund the EVO transaction, in early March, we successfully priced an inaugural European debt offering at a fixed rate coupon of 4.875% due in 2031. With this transaction, we continue to evolve our capital structure to align with our global operations and gain access to a broader investor base and new sources of capital. Separately, in January, we established a $2 billion commercial paper program. The CP program is supported by our revolving credit agreement. At the end of the quarter, we had approximately $1 billion of commercial paper outstanding. We currently have in excess of $3 billion of available liquidity. Following the aforementioned capital markets transactions and drawing on the revolver to close EVO, our total indebtedness is approximately 90% fixed, with a weighted average cost of debt of 3.8%. We are also delighted to have closed both the divestiture of Netspend's consumer assets and the sale of the Gaming Solutions business in April. Following all of these transactions, our balance sheet remains healthy and our leverage position is roughly 3.8x currently. We continue to expect to return to a similar leverage level to where we ended 2022 by year-end 2023, while maintaining existing investment grade ratings. We are pleased with how our business is positioned following our first quarter performance and we are raising our financial outlook for the year. We now expect reported adjusted net revenue range from $8.635 billion to $8.735 billion, reflecting growth of 7% to 8% over 2022, an increase from 6% to 7% previously. We continue to forecast annual adjusted operating margin to expand by up to 120 basis points for 2023. As a reminder, this is above our cycle guidance for margin expansion of 50 basis points to 75 basis points annually, driven by benefits to our business mix from our ongoing shift towards technology enablement and the divestiture of Netspend, partially offset by the lower margin profile of EVO prior to full synergy realization. To provide color at the segment level, we continue anticipating our merchant segment to report adjusted net revenue growth of roughly 15% to 16% for the full year, but now expect to be toward the higher end of that range. We continue to expect more than 100 basis points of adjusted operating margin expansion from the existing Global Payments merchant business, excluding dispositions in 2023, which again is ahead of our cycle guide. We expect this expansion will be more than offset beginning in the second quarter with the absorption of the lower margin profile of EVO Payments. We anticipate this impact to be mitigated by synergy realization as the year progresses. As a result, we are forecasting margin contraction in the second and third quarters and then margin expansion in Q4 as synergies ramp up for our merchant business. The net result will be a modest decline in our total merchant business reported adjusted operating margin for the year, consistent with our prior guidance. Moving to Issuer Solutions, we now expect to deliver adjusted net revenue growth in the 5% to 6% range, up from 4.5% to 5.5% previously for the full year, compared to 2022. This outlook reflects our better than expected performance in the first quarter and the benefit we anticipate from our conversion pipeline. Specifically, we now expect core issuer to grow above 5% and continue to expect MineralTree and Netspend B2B businesses to grow low double-digits. We anticipate adjusted operating margin for the issuer business to expand by up to 60 basis points consistent with our prior outlook as we benefit from the natural operating leverage in the business. In terms of quarterly phasing, there are two continuing items to note. First, while we expect foreign exchange rates to be roughly neutral for the full year, we still anticipate a currency headwind to adjusted net revenue of up to 100 basis points in the second quarter. Second, we expect the successful closing of the sale of Netspend at the end of April to add roughly $25 million of incremental revenue for the second quarter versus our prior expectation with no change to our expected earnings per share dilution impact for the year. Moving to a couple of non-operating items, we expect net interest expense to be roughly $550 million, a modest $10 million increase from our prior guide in light of yield curve movements. Our adjusted effective tax rate is expected to be in the range of 19% to 19.5%, consistent with our prior guidance. For modeling purposes, we continue to assume excess cash is used to pay down indebtedness in 2023 until we return to our targeted leverage levels for the end of the year with minimal share repurchases until then. Putting it all together, we now expect adjusted earnings per share for the full year to be in the range of $10.32 to $10.44, reflecting growth of 11% to 12% over 2022, up from 10% to 11% previously. Excluding dispositions, adjusted earnings per share growth is expected to be 16% to 17% for 2023. This is consistent with our updated 2021 cycle guide, despite incremental adverse changes in the macro environment since then. Our first quarter results represent roughly $0.05 adjusted earnings per share beat relative to our internal forecast. Our raised guidance for calendar 2023 essentially rolls the beat plus a couple of cents for the year in light of the uncertainties of the current environment. Similar to what you've heard from others, we saw strength across our markets in January and February, which moderated somewhat in a number of our businesses in March. Our issuer business did not experience any discernible moderation as our large money center bank customers benefited from the regional banking crisis that developed in March. Trends in this business continue to remain resilient through April and similar to March levels of activity. Our updated outlook today presumes a worldwide macroeconomic backdrop that is consistent with the current environment throughout the remainder of calendar year 2023. And with that, I'll turn the call back over to Jeff.

Thanks, Josh. I couldn't be more proud of what we've achieved as a management team together over the last near decade with more than 27,000 team members across 40 plus countries. I'm also very pleased with our long history of management’s debt and succession planning. Cameron is only the third CEO of Global Payments in nearly a quarter century. He has my complete confidence and I look forward to working with him closely to affect a smooth transition over the coming weeks. I personally thank all our team members for what they do for us every day, as well as our millions of customers and thousands of partners and shareholders for the trust you've put in us and in me over the last 13 years. The future is bright at Global Payments. Winnie?

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.

Thank you. Our first question today is coming from Ashwin Shirvaikar from Citi. Your line is now live.

Thank you and congratulations on the good quarter. And Jeff, happy for you; it's been a pleasure. Cameron, congratulations on the promotion. Let me start with the merchant if you could, kind of provide a more detailed geographic walkthrough as you consider macro and other factors, U.S., and the Americas now includes a couple of new geographies for you. Europe, including the EVO footprint, how should we think of sort of normalized growth rate and Asia Pacific recovery as well? If you could sort of unpack that for us, that would be great.

Hey, Ashwin. It's Cameron. Why don't I go ahead and start? I'll ask Jeff to chime in with any other color he'd like to provide as well. So, I think if you look at the overall backdrop for the merchant business, we feel pretty good about obviously our performance in the first quarter and how we're positioned for the full year. As evidenced by obviously a reiteration guide and an increase to the high end of our growth expectation for the merchant business for the full year. Starting here at home in the U.S., we continue to see good trends across the business. Like others who have reported already, January and February were very strong months for us. We obviously saw a little bit of a pullback in March, and we see April looking similar to March right now. So, assuming a relatively consistent macro based on where we are today for the balance of the year, I think our U.S. business is really well-positioned to grow nicely over the course of the year, and obviously it's the biggest component of our portfolio. So, as it goes, generally the rest of the merchant business goes. So, I think we feel very good about where we are in the U.S. EVO comes into that conversation really by saying that the B2B portfolio that EVO has today, the capabilities they bring us across acceptance with AR automation solutions integrated into the largest ERP solutions in the U.S. for mid-market type enterprises is a really powerful addition to the portfolio of assets we have in the U.S. And obviously, there's a lot that we think we can do with that over the course of time. So, more to come on that. I think Europe is overall a good story. Obviously, a mix of various geographies there. We continue to see very strong trends in Central Europe and Spain. Obviously, two important markets for us, EVO will add to that with the addition of Poland and Greece, both of which again are strong secular markets with good long-term growth fundamentals that we're very attracted to now through the acquisition of EVO. Obviously, the UK remains soft; their GDP was effectively flat for the first quarter, continuing a consistent trend coming off the back half of last year as the implications of Brexit really take hold, as well as sky-high inflation in that market. So, the UK remains a little bit of a headwind for us, but I think as we look at Europe overall, we're obviously pretty excited about the long-term prospects there. And then lastly, in Asia Pacific, as Jeff highlighted in his prepared remarks, we had our best first quarter in Asia since 2018. We saw mid-to-high teens growth as we finally got re-openings across really all of the Asia Pacific markets in which we operate. We're starting to see more intra-Asia cross-border activity, which is good for our business yet to see meaningful inter-Asia cross-border, but obviously that's the next leg of the stool as Asia fully reopens and we get back to full normality in that market. So, I think as we step back and look at the merchant business, we accelerated a point sequentially versus the fourth quarter from a top line growth standpoint before factoring in the addition of EVO for roughly one week of the quarter. So, we feel very good about the trends coming off the quarter and remain poised, I think, for the balance of the year to achieve the updated guidance that we provided this morning.

That's very useful. Thank you very much. And then sticking with merchant, the adjusted revenue growth was greater than volume growth, I think probably for the first time in a couple of years. What's driving that? Is that value-add services? Is there, sort of different business model with, like, more subscription revenue or something like that or do you expect that to sustain?

Yes, it's really mix, Ashwin, more than anything else. Our vertical market businesses, which are predominantly software-driven had a strong quarter, which obviously contributes a little bit more to the top line than it does to the volume-related metrics. But you're talking a few tens of basis points difference between the two, one rounded up, one rounded down. That's kind of the difference. So, I wouldn't put too much weight on the 11 versus the 10. It's going to fluctuate; sometimes it will be on top of each other, sometimes volume may be a little bit better, sometimes revenue growth may be a little bit better. I think what we step back and look at fundamentally is, are those two moving in correlation to each other and is that gap relatively minimal? 10 to 11 is very tight versus others in the marketplace. So, I think fundamentally looking at the underlying volume growth of the business, we're very happy with how things are trending and obviously the revenue demonstrates that as well.

Understood. Congratulations again. Thank you.

Thanks, Ashwin.

Your next question is coming from Darrin Peller from Wolfe Research. Your line is now live.

Hey, guys. Thanks. First of all, Jeff and Cameron, congrats to both of you on the transition. Jeff, if it's possible to give us a sense of where you — you know the timing and why now and maybe a little more in your thought process of what's to come for you, as well as what you're most excited about when you look at GPN going forward? Just curious if you can give a little more color on the change.

Darrin, it's Jeff. Thanks for saying that. Let me just start by saying Cameron and I have worked closely together for nine years, and probably in his judgment, it's nine years too late. Probably where I start, but look, I would say, as we said in the press release and our prepared remarks that look, we just posted the best first quarter since 2019. We talked about in February hoping that we were in an environment of normalcy. I think we're there today. We've got our first real beat-and-raise in 18 months. And then really importantly, Darrin, we’ve said publicly for 12 months that we're focused on closing EVO, closing Netspend, closing the sale on Gaming Solutions, but not surprisingly, those probably started like 18 months ago, right. It's like the last 12 months to 14 months that really kind of ramped up. So, just sticking for me, I mean the board and I agreed that I think with these important strategic transactions behind us, I just would thank Cameron for putting up with me for all this period of time until we got these things done. And then I'd also say, it's important. I talked about the return to normalcy, but I want to make sure we have a stable macroeconomic environment, and really, this is the first period since probably 2019 that we've had any kind of real stability or normalcy; our businesses are operating at very good levels. So, I think the timing is right and I'll quite literally be sitting on a beach that (indiscernible). Darrin, if you’re ever in South Florida, just come visit me.

Thanks, Jeff. Well, congrats again. I guess my quick follow-up would just be on thinking about pricing in the industry. We've now seen – I know you talked a lot, Cameron, you just talked a little more about value-added services and mix and it being pretty tight, but we see now between Pfizer and just across the industry, these as well showing pricing changes. And so after having seen quite a bit of cost inflation for a couple of years, we would think there could be some opportunity on the price front. Any comment on that or any thoughts?

Yes, Darren. I think our perspective around pricing really hasn't changed, and the philosophy that we have has been pretty consistent for many years now. We try to price our services to reflect the level of value and capability that we're bringing to the market, which we do think in many ways is differentiated from our competitors. I think we work very hard to try to optimize our pricing and have for again, the past several years to make sure that we’re constantly looking at the price points and how we're packaging a variety of different value-added services and capabilities we can bring along with obviously the pure payment acceptance solutions that we offer to the marketplace. So, our perspective is, look, I think overall more people are being, I'd say, on the more aggressive side, perhaps for lack of a better term with their pricing strategies more recently. I think that bodes well as it relates to the competitive landscape and particularly how we try to position our business over a long period of time. So, nothing unusual coming from us as a pricing matter. I would say, it's more of the same, looking at portfolio optimization and pricing strategies to reflect the value and service that we bring to the customer, but obviously in the backdrop with other people doing that makes it a little bit easier for those to stick. It is probably the point I would make into that.

Great. Nice job on the quarter, guys. Congrats again. Thanks.

Thanks, Darrin.

Thanks, Darrin.

Thank you. Your next question is coming from James Faucette from Morgan Stanley. Your line is now live.

Great. Thank you very much, and want to add my congratulations to both you, Jeff and Cameron. Wanted to follow up on Darrin's question there about timing and maybe Cameron, with a few key things now accomplished and closed, how are you thinking about strategically next steps, especially given you're still in a very good capital position, and is it still time to keep looking at doing other acquisitions or does your prioritization change to integration and incorporating everything that the recent acquisitions, including EVO Payments brings?

Yes, James. Great question. I would say first and foremost, Jeff and I have pretty much been locked at the hip for the last nine years. So, you shouldn't expect a radical deviation in strategy. Quite the contrary, you should expect a continued focus on the four-pillar strategy we articulated 18 months ago at our investor conference. I'm very much 100% behind that strategy. Jeff and I worked closely to build that strategy together over many years, and I absolutely think it's the right strategy for us as a business matter going forward. So, my highest priority will continue to be to execute against that strategy as we move forward. I think from a capital allocation perspective and priority perspective, as Josh highlighted in his prepared remarks, we're very focused on getting back to our targeted leverage ratio by the end of this year; that is a priority on the capital allocation matter, as well as making sure that we integrate EVO effectively over that same period of time. We have a saying here that we like to do the things we've already committed to well before we try to take on the next thing. So, I think as it relates to the next, call it, nine months, our focus is clearly going to be on getting leverage back to the targeted level, integrating EVO effectively, making sure that's off to a good start. And then as a going-forward matter, I think our capital allocation priorities will remain relatively unchanged. We're going to continue to try to strike the right balance between obviously investing to grow the business. Our priority is finding ways to invest in the business to grow and expand our footprint to support the various pillars of the strategy that we're pursuing and find ways to augment that through inorganic activities, as well as organic investment in the business. Absent meaningful opportunities to do that in a way that drives value and returns for our shareholders, we'll look to return capital as we have over a long period of time. So, I don't think the overall philosophy or approach to capital allocation is going to change dramatically; I think it's going to be more of the same, and I think more of the same will be very good for our shareholders over a long period of time.

Got it. Got it. And then just revisiting a little bit the outlook is that when you came into the year, your planning assumption had been really no slowdown or economic recession. We've seen a little bit of a slowdown in consumer spending, as you mentioned, in late March and through April. And it seemed like at least some of the qualitative commentary was a little more cautious through the year despite the guidance increase. How are you thinking about the macro conditions now versus three months ago? And has there been much change there? Thanks.

Yes. So, as we thought about the guidance, the outlook assumes the macro backdrop, as I said in my prepared remarks, is consistent with the current environment. And really, there are two primary changes to the guide. What I would say is, the first change is the outperformance that we saw in Q1, which was approximately $40 million from a revenue perspective, and EPS was about $0.05 or $0.06 better relative to our internal forecast. And then secondly, it's the $25 million that we expect to or that we received from Netspend in the month of April. Other than that, nothing has really changed relative to our guide that we went through on the February call and laid out specifically by quarters.

James, just to add some color to the math that Josh went through. We're looking at current volumes and transactions in April, so that already reflects, to your point, and I think Josh said this in his prepared remarks, what you've heard from Visa and Mastercard and some of the other folks. So, I think that incorporates the current environment. Yet despite that, we've been able to raise our outlook a little bit better than the beat internally, as Josh described. So, we're very comfortable with where we are. And as I mentioned a minute ago, too, particularly in the issuer business, we're the beneficiaries of the tailwinds coming from some of the consolidation from regional banks into the money center and SIFIs. The JPM announcement today with First Republic, I would just say that our issuer business, in particular, hasn't seen any discernible moderation. Obviously, we pointed to acceleration today in our outlook, and that reflects current events. As I mentioned a minute ago, our trends through April from a KPI perspective are very strong, right? And that's before some of the more recent consolidation. So, it may not be great for the broader macroeconomic environment, but certainly, the trend toward larger FIs globally is nothing but good news for our issuer business.

That’s great. Thanks for all the detail.

Thanks, James.

Thank you. Your next question is coming from Jason Kupferberg from Bank of America. Your line is now live.

Good morning. Congrats to everybody. And just wanted to ask about kind of quarterly revenue and margin cadence for the last three quarters of the year. I know last quarter you laid out a pretty detailed outlook by quarter. Just wanted to see if there's any little tweaks there so that we get the quarterly modeling right. For example, I think in merchant, we had talked about organic, kind of being in that 9% to 10% range pretty consistent each quarter, but if you can just go through some of those quarterly pieces, that would be helpful. Thank you.

Yes, absolutely. Look, what I would say is, February, we gave you very specific quarterly growth rates on revenue and earnings per share. I would say Q2 through Q4, nothing has really changed. So if you go back to the earnings presentation that we put out there, we said adjusted net revenue reported 5% to 6% in Q2, 8% to 9% in Q3. And four, we did obviously raise — we did raise the overall outlook to 7% to 8% based on the performance that we saw in Q1, which I just outlined. Then from a margin perspective, look, we saw good margin expansion in Q1 of 200 basis points exactly what we said we would do. From Q2 through Q4, we expect 100 basis points margin expansion, which we laid out on the February call. From an EPS perspective, again, we're right in that 9% to 10% range for Q2 through Q4, which we outlined in February. So again, nothing has changed as it relates to Q2 through Q4 relative to what we discussed on the February call.

Good to hear. Okay, and just as a follow-up. In merchant, I think in the past, you guys have talked about the portfolio, at least on the acquiring side, putting software on the side, roughly half discretionary, half more non-discretionary spending. Is that still the right breakdown post-EVO closing? If you can just talk about what you're seeing in terms of relative growth rates between discretionary and non-discretionary spending volumes in merchant?

Yes, Jason, it's Cameron. I'll jump in there. I would say that overall split holds roughly pretty well post-EVO. Obviously, I don't think at this stage we've aggregated all the different geographies around the globe in terms of what the volume mix is across every single vertical that they have exposure to, but given the size of EVO relative to our existing merchant footprint globally, it's not going to move the needle a great deal one way or the other even if their split is slightly different. I would say, and I'll use the U.S. as a kind of example, you sort of saw the trend around retail sales in the U.S., which is really food and retail more broadly. In the first quarter, January was very strong and February slowed down relative to January. March, kind of slowed down relative to February, but I would say overall, from a spending perspective, we continue to see spending skewed towards more services in experiences and less retail goods and food to some degree. So, a little better trends in the non-discretionary categories that we are heavy in, particularly as it relates to services, health care, etc., and lighter trends in the traditional retail, food and beverage, etc. But overall, the portfolios, I think, came together pretty well. I don't think the trends we're seeing in our business are any different than what you heard from Visa and MasterCard as it relates to March and April activity more broadly, which we've talked about already. But I like, obviously, the diversification we have across nearly 70 different vertical markets. I like the split and weightings we have across discretionary and non-discretionary categories. So, I think we're well-positioned, obviously, for the macro environment as it continues to evolve through the balance of the year.

Okay. Appreciate the thoughts.

Thanks, Jason.

Thank you. Next question today is coming from Ramsey El-Assal from Barclays. Your line is now live.

Hi, there. Thanks so much for taking my question. I will add my congratulations as well to both of you. I wanted to ask if you could provide a little bit more commentary on the timing of the revenue synergies with EVO. When do those start flowing in? Is there any work that needs to be done in order to unlock those and how long might that take?

Yes, Ramsey, it's a great question. I tried to provide some context in my opening comments regarding the types of revenue synergies we're targeting with EVO. All of these synergies will require some level of investment. Ideally, we could quickly distribute our products and capabilities through their channels or introduce some of our offerings to their markets that currently lack them, but there's a substantial amount of work involved in setting this up, integrating these environments with the various platforms that EVO operates, and ensuring that we have the necessary distribution support for the products we're launching. Moreover, gaining access to EVO's multinational customers in new markets with different platforms takes time. Therefore, driving the revenue synergy potential in the EVO business will require significant effort over an extended period. This is why, in the short term, our focus on synergies is primarily on the expense side, which is much more actionable in the near to medium term. We have a clear path to achieving the $125 million in expense synergies mentioned earlier. This will significantly contribute to the accretion we expect from the EVO deal in the first three years. While revenue synergies will provide positive momentum as we move into later years, we believe we can add a point or two to EVO's existing run rate revenue of over $600 million. We're estimating at least $10 million to $15 million in revenue synergies from the EVO business once we begin to implement the various revenue synergy activities I discussed earlier. Thus, we believe there's strong potential to enhance revenue in that segment, and increasing their growth by one or two points on top of their current performance is a realistic target. We are confident that over time, we will achieve this goal, if not exceed it, once we fully activate these opportunities.

Got it. Okay. And one follow-up for me. Could you give us an update on value-added services and how that part of your business is evolving? I'm just curious how important value-added services have become to things like either new sales or retention? And how attach rates are trending?

Yes. I would say it's an incredibly important part of our strategy, as we talked about back at our investor conference a little over a year and half ago. I think as I look at it, there's clearly an element of attracting new merchants to our portfolio by virtue of the breadth and depth of capabilities that we bring. I think there is a retention element in terms of being able to deliver more product and capability and differentiation to our customers by virtue of the value-added services we're able to offer. I think thirdly, on the integrated side, we've seen great success in retaining partners and bringing in new partners at what I would consider to be relatively attractive referral rates, largely based on the portfolio capability that we can bring to bear on their customer base. We offer much more than the pure payment experience that a lot of integrated providers are able to offer their customers. I think the breadth of value-added services we can bring is a differentiator in terms of working with our integrated partners, and it's been a big reason we continue to see the strength in that business that we have over the last many quarters. So, it's an increasingly important part of the value proposition that we're delivering to our customers. It's an important part of the growth profile over a longer-term period. Again, I think we've done a very good job of utilizing the capabilities we have to drive differentiation and distinction in the market. It's even more important as we look at markets outside of the U.S. Bringing some of the capabilities that we have in the U.S. to markets like Central Europe, the UK, Spain, etc., drives even greater levels of differentiation relative to what others in those markets can offer today and they’ve been a significant tailwind for those businesses as well. So, long-term, it's an important part of our strategy. It's why we spent so much time talking about it at the investor conference, and it's something we're going to continue to build on as we move forward in time.

Thank you so much.

Thanks, Ramsey.

Thank you. Your next question is coming from Bryan Keane from Deutsche Bank. Your line is now live.

Hi, guys. Good morning, and congratulations, of course, to both of you. Just thinking about the merchant margins, they were up 80 basis points, I think, last year, and they came in more flat in the quarter. Anything to call out in the quarter in particular and even before we integrate EVO just thinking about organic margin expansion opportunities in the merchant segment?

Yes, Bryan, it's Cameron. I'll just start at a macro level, and I'll let Josh maybe jump in if he has any additional color to add. I would say we've got to look at margin profile in Q1 ex-EVO because EVO comes in at a lower margin profile than our core business. So, in Q1, we expanded margins ex-EVO by around 25 basis points. That's pretty consistent with where we ended up in Q4. As you can imagine, the mix probably impacts that more than anything else; we've got mix movement. As the vertical market businesses continue to perform well and recover in some of those verticals relative to what they experienced during the pandemic, that tends to come in at a lower margin profile, which from a mix standpoint, weighs on the overall margin expansion we're seeing in the business. But I would say for Q1, we delivered margin expansion for the merchant business ex-EVO exactly on top of our plans. I will remind you, those margins are at, sort of north of 47%. So, as we think about margin expansion in the business over a longer period of time, when we're already at margins of 47%, 48% in that business, it’s obvious, as we look at margin expansion for the company overall, more of that will be driven through gaining better scale across our corporate functions and obviously continue to see those expenses as a percentage of revenue not grow at the same pace. Then secondly, obviously, in the issuer business, that has a little more runway, I think, around margin expansion over the near to medium term. So, merchant was exactly what we expected for the quarter. We still expect the same expectation for the full year, as Josh articulated in his prepared remarks around merchant margins. As we bring EVO in, it comes in at a lower margin profile. As we continue to build synergies over time, we'll get back to pre-EVO levels, and then, of course, look to expand from there.

Yes. The only thing I would add is that as it relates to Q2 and Q3, we'll see some margin contraction, as Cameron mentioned, by bringing in EVO, which is coming in at a lower profile. Then we'll start to see some margin expansion in Q4. The net result of this will just be a modest decline in merchant margins for the full year, which is again consistent with the guide that we outlined on the February call.

Got it. No, that's really helpful. And then just as a follow-up, just thinking about the trends in issuer. I know you guys raised the issuer segment revenue growth for the year, but the trends, obviously, you're pointing in your favor towards the movement towards assets towards larger banks, and I think it was 9 letters of intent. So, just thinking even about longer-term, are you guys feeling a little bit more positive about maybe the issuer outlook even beyond 2023 as a result of some of these trends?

Bryan, it's Jeff. I couldn't be more positive about where we are in Issuer. I mean I think this is the fourth quarter in a row of significant sequential acceleration in the rate of growth of that business. B2B has been part of it now for probably nine months or something, and that provides another leg of growth. I think I said last quarter added like 50 basis points or something of incremental growth relative to the core issuer business. So yes, I would say, not in the nine RFP number or other things that are going on in terms of large financial institutions looking to select either new providers or their first time with providers. I think we're very well-positioned there. As I said on the call in February that the cloud sells. When we first started this, we weren't sure number of years ago in the receptivity. Now you walk into a meeting and it's kind of table stakes. I think with AWS, we're in a very strong position. So, very excited about where we are. These are the things that I've been talking about for a year and a half kind of rolling in. I think as difficult as maybe for the broader macro economy, even today's announcement of JPM, yes, that's good news, right? I think the more we see toward money center and SIFI, the more confidence we have in the tailwinds over the next number of periods. Those aren't going to reverse themselves immediately, so I think you've got a very nice tailwind heading into the next period of time.

Okay, great. Congrats again.

Thanks, Bryan.

Thanks, Bryan.

Thank you. Our final question today is coming from Vasu Govil from KBW. Your line is now live.

Thank you very much, and congratulations to you both. I want to add that as well. My first question is for you, Jeff. I think you mentioned MineralTree grew 20% in the quarter and you're expecting it to grow 30% for the year. So, I just wanted some color on what’s driving that acceleration. And if you could also give us more broadly an update on the cross-sell efforts you are seeing for that piece of the business into your merchant base?

Yeah, it's a great question, Vasu. So, we really couldn't be more excited about where we are in B2B. By the way, I know you have that neural treatment because of EVO rolling in from the end of March. So, obviously, that's an incremental tailwind to what we're doing. So, look, I think the answer to your question is that there is a long and deep pipeline that we've been selling over at MineralTree for quite some time. The person running our business now started last summer, I think it was right around July 1, so he's been very busy building that pipeline. We're seeing the benefit of that now. We're also seeing a very substantial benefit from the cross-sell of the virtual card where TSYS is one of the largest virtual card providers on the planet into our core business, and that's growing at rates well north of 20%. So, just to answer your question, it's the mathematics of selling recurring cloud SaaS business; the deeper the pipeline is, the more it rolls in. It's obviously very visible on the cross-sell and attach rate from virtual cards into the core on the software sale is very high. So, it's really just the mathematics of what we've built. In terms of notables, I think we said those to be honest on the February call. I think we talked about U.S. Bank; I think we talked about Citizens. Those are obviously two notable wins. I expect over the balance of the year Cameron and Josh and team will be describing more. But we couldn't be more pleased with where that business is and its trajectory, and look, increasing the rate of growth from 20% to 30% or a 50% increase, I think, is evidence of our confidence in it.

That's great. And then just my follow-up on just the macro backdrop. I know you guys are sort of assuming that macro stays stable from here. But I think the risk of a recession is probably higher today than it was three months ago. So, just can you talk about the sensitivity in both the merchant and issuer revenue as to the extent we do see a slowdown and also cost levers that you might have? Thank you very much.

Yes, I'll start, Vasu, and then I'll ask Josh to comment. So, let me just start by saying kind of what we've assumed. So, we've assumed where we are today, I guess May 1; I was going to say April, but today is May 1, so we’re taking the current environment meeting today. To answer your question, just initially, the macro level, we're not looking back to where we were on our February 10 call; we're actually going with what the current trends are today. I think we said as it relates to the issuer business, we obviously have the KPIs through the vast majority of April on there; as we said in our prepared remarks, we don’t see any discernible moderation in what we’re doing. So we don’t assume things get better, we don’t assume things revert to the way they were 2-3 months ago in February; rather, we're taking kind of where they are today, and obviously, our raised outlook reflects the current environment. Cameron, you want to comment on merchant a bit, and Josh, you too?

Yes, Vasu, it's Cameron. I think I mentioned this before. Obviously, to Jeff's point earlier, we saw strong trends in January and February. March kind of slowed down a little bit relative to that, and April has been more of the same relative to what we saw in March. So, that's the expectation we kind of have as we look towards the balance of the year. Many times in the past, we don't need perfection for the balance of the year relative to our current outlook to obviously achieve the expectations that we've set forth today. I think we feel good about how we're positioned to deliver on the overall guide that we've shared. Obviously, that can withstand slight deviations in the overall macro environment that we're anticipating for the balance of the year. If things fall off precipitously, then obviously we'll revisit it. If things obviously improve more than we anticipate, obviously that creates some upside opportunity. So, I think we feel good about how the business is positioned for the balance of the year. The guide, I think, today reflects that, and we're looking forward to continue to execute against that.

Great. Thank you very much.

Thanks, Vasu.

On behalf of Global Payments, thank you for your interest in us and for joining us this morning.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.