Global Payments aims to streamline its business, and may shed units where it doesn’t have the potential “to be a scale player,” the company’s CEO said Wednesday.

The Atlanta-based company has undertaken a review of operations as CEO Cameron Bready gets his bearings in the top role following his promotion last year in the wake of former CEO Jeff Sloan’s exit.

Bready is intent on reviewing the company’s units and identifying those that might not fit for the future of the business, he said on a webcast Wednesday to discuss the company’s first-quarter results.

Global Payments provides payments software and services for processing transactions to two main customer segments, merchants and financial services providers that issue cards. It has about 27,000 workers worldwide, according to its annual report with the Securities and Exchange Commission in February.

“As I think about sharpening the focus around the strategy, it's really around the areas where perhaps, I think, we're distracted in markets that we're not a scale-player today, and don't have a good path to be a scale-player,” CEO Cameron Bready said in answering an analyst question on a Wednesday webcast to discuss first-quarter earnings.

Earlier in the webcast, Bready described the review that’s underway and gave an update on its progress. “Earlier this year, we began a holistic review of our operating model, organizational structure and internal processes to ensure they are optimized for the company that we are today,” he said. “We anticipate completing our review and developing specific execution plans over the next few months.”

He also discussed the business review on an earlier earnings call in February, saying asset sales could be a part of the outcome.

Global Payments reported first-quarter net income of $313.3 million, compared to a loss in the year-ago period, according to a Wednesday press release from the company. Revenue rose 5.6% to $2.42 billion.

The CEO’s comments follow a Fortune report in March saying the company is considering selling its AdvancedMD business for $3 billion. The report cited unnamed banking and private equity sources.

The unit, which provides cloud-based software to small and mid-sized U.S. ambulatory care doctors’ practices, was acquired in 2018, under Bready’s predecessor. Bready didn’t discuss that report during the Wednesday webcast.

The $3 billion price sounds on point, William Blair analyst, Cristopher Kennedy, said in a Wednesday note to clients, following the Global Payments webcast. Global Payments purchased the unit for $707 million, and the unit has boosted its annual revenue by about 60% to an estimated $200 million over that period, Kennedy’s note said.

Kennedy expects the company’s efforts to “realign the business” and undertake “additional pruning of the portfolio” will simplify the business and improve shareholder returns, he said.

Global Payments competes against larger companies that include Fiserv and Worldpay, and increasingly new digital rivals are also putting pressure on pricing. There is some concern among investors that “merchants could leave (Global Payments) over pricing or for newer solutions,” Robert W. Baird & Co analyst David Koning said in a note to his clients Wednesday regard the earnings results.

Nonetheless, Koning noted that a recent acquisition may be giving Global Payments a boost. The merchant margins have improved, on a year-over-year basis, in the form of smaller declines, since the company purchased Evo Payments in 2022, he said.

By Lynne Marek on May 2, 2024
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