4. Global Payments Inc. (NYSE:GPN)
Forward Price-to-Earnings Ratio: 8.42
Number of Hedge Fund Holders: 66
Global Payments Inc. (NYSE:GPN) is a financial technology company that provides payment technology and services to merchants, issuers, and consumers, including payment processing, merchant acquiring, and issuing. Its services enable businesses to accept payments in various channels, such as in-store, online, and mobile.
The company closed Q2 2024 with $2.32 billion in revenue, up 5.51% from the year-ago period. The earnings per share were $2.93. Merchant solutions grew 8%. The acquisition of Takepayments contributed less than a point to these results, offsetting the negative impact of unfavorable foreign currency exchange rates. Issuer solutions were also up 4%.
Merchant Solutions grew due to differentiated capabilities in integrated software and point-of-sale. The integrated business saw double-digit growth, driven by strong bookings and new ISV partner signings (up 30% year-to-date). The PROFAC solution has increased active merchants by 40% and average merchant volumes by 60% since late 2023.
The company is seeing increased demand for B2B acceptance solutions, driven by PayFabric platform. There was over 50% growth in new ISV partnerships leveraging PayFabric. In vertical markets, there was double-digit growth in software bookings, with particular strength in education, real estate, and healthcare. A notable win is a new partnership with the Los Angeles Unified School District.
It’s strategically expanding its international presence, with significant progress in the European market, including key partnerships in the EV charging sector and acquisitions to strengthen distribution capabilities in the UK.
Global Payments Inc. (NYSE:GPN) is a well-established player in the payments technology industry. The company is poised for growth with its diversified revenue streams, technology investments, and global expansion efforts making it a strong investment in the payments technology space.
TimesSquare Capital U.S. Mid Cap Growth Strategy stated the following regarding Global Payments Inc. (NYSE:GPN) in its Q2 2024 investor letter:
“In the Financials sector we tend to avoid banks that face credit deterioration or rising deposit costs, preferring either asset managers or specialized insurance companies. At the start of the year, we reinitiated a position in the payment processor Global Payments Inc. (NYSE:GPN). We viewed positively the installation of a new CEO who was its CFO and is well regarded by us. Global renewed its focus on merchant acquisition and card issuance, and its valuation became more attractive. However, we misjudged the lingering effects of a weaker macroeconomic environment on some of Global’s lower margin operations, which delayed the expected business pivot to merchant activities. With a lack of clarity about where the bottom might be, and its shares trading below where we projected a potential downside, we exited the position that was down -26% while held during the quarter.”
