GLOBAL PAYMENTS THIRD QUARTER 2026 EARNINGS CALL - GLOBAL PAYMENTS INC

Explicit Guidance:

• Full-Year 2026 Revenue: Reaffirmed normalized constant currency adjusted net revenue growth of 4% to 5%, excluding dispositions.
• Full-Year 2026 Margins: Expect normalized adjusted operating margin expansion of approximately 150 basis points, reaching 42.5% (implied from Q3 baseline).
• Full-Year 2026 EPS: Reaffirmed adjusted earnings per share of $13.60 to $13.80, representing 11% to 13% growth.
• Full-Year 2026 Currency: Expect currency exchange rates to have roughly no impact on reported growth for the full year.
• Full-Year 2026 Cash Flow: Expect adjusted free cash flow conversion rate (net income to FCF) of approximately 90%.
• Capital Returns 2026: Expect to return > $2 billion to shareholders via buybacks and dividends; total year-to-date returns exceed $1.4 billion.
• Capital Returns (Cumulative): On track to return approximately $7.5 billion cumulatively over the 2025 to 2027 timeframe.
• Investment Outlay: Expect to invest approximately $1 billion (approx. 8% of adjusted net revenue) in the business in 2026.
• Capital Returns 2027: Expect to return approximately $4 billion in 2027, completing the $7.5 billion three-year commitment.
• Capital Allocation 2027: Committed to achieving 3.0x net leverage by the end of 2027.
• Synergy Run Rate: Raised annualized run rate expense synergy target from $600 million to $650 million by the end of 2028.
• Q4 2026 Outlook: Expect second-half revenue growth to average approximately 4.5% overall, with FX neutral.

Business-Segment Outlook:

• SMB Segment:
  • Genius Platform: Bookings more than doubled year-over-year in Q3; expects continued ramp in Q1 2027 with franchisee rollout for CKE (approx. 300 locations).
  • Geographic Expansion: Launching Genius MobilePay in the Philippines and across several European markets over the next few quarters; expanding small business offering in Mexico via financial institution partners; launched in Czech Republic for tax compliance.
  • Distribution: Rolled out Genius to 30 strategic bank partners (WorldPay FI channel) in October; expanding to ISOs and agents as the next distribution phase post-2026.
  • Vertical Growth: Expanding into convenience stores; new loyalty solution for restaurants; integration with TouchNet for higher education.
• Enterprise Segment:
  • Volume/Capacity: Expects no recurrence of the 200 basis points volume benefit from load testing experienced in Q3.
  • Travel Headwind: Assumes impact of Middle East conflict on travel customers continues through remainder of 2026; expects this headwind to anniversary in Q1 2027.
  • Growth Drivers: Focus on modular value-added services (VAS), particularly in EMEA; strong commercial momentum with 23% YoY bookings growth year-to-date.
  • New Markets: Regulatory approval from Bank of Thailand clears path for new client go-lives (e.g., Sentara hotels); pilot of Alipay Plus completed in London.
  • Performance: AI-powered "Revenue Boost" solution ready for broader deployment across Europe and Asia Pacific following North American pilot in October.
• Platforms Segment:
  • Partner Acquisition: Signed 52 new software partners in Q3 ahead of plan; reduced time-to-revenue for new partners by ~33% vs 2025.
  • Productivity: AI automation reduced partner setup time from weeks to minutes; zero-touch underwriting now generally available for PayRix.
  • Growth: Value-added services revenue grew 22%; embedded payments volume grew 16% in Q3.
  • International: Strong momentum in UK, Australia, and New Zealand; expanding real-time payments and dynamic payouts globally.
• Technology Architecture:
  • Target Architecture Model (TAM): Rapidly advancing to future state architecture to reduce complexity, accelerate time-to-market, and improve cross-selling; progress expected over the next 12-24 months.
  • Integration: Expect to see milestones of expanding single-entry capabilities and "one portal" experiences across geographies and customer archetypes over the next 12-24 months.

Market and Competitive Outlook:

• Agentic Commerce: Anticipating the emergence of "agentic commerce" as a new channel; positioning as a merchant advocate and defining standards via the Payments Tech Council for Google's Universal Commerce Protocol (UCP).
• Economic Impact: Expect agentic commerce to drive both incremental volume and value-added services (identity, fraud, intent verification); trust is the primary gating factor for adoption.
• Innovation Roadmap: Piloting AI-powered drive-through vision/order routing with large QSR clients; launching Genius AI (agentic assistant) and AI First Genius handheld for in-device AI processing.
• Product Strategy: Maintaining modular, acquisition-agnostic approach to counter "walled garden" competitors; curating open ecosystems with best-of-breed partners.
• AI Integration: AI expected to be an increasingly important driver of productivity, enabling structural margin expansion over time through automation in underwriting (reducing review time from 1 hour to 10 minutes), treasury, and sales.

Macro / Industry Outlook:

• Economic Environment: Assumes stable macro environment and resilient consumer spending trends for the remainder of 2026.
• Middle East Conflict: Assumes ongoing negative impact on travel portfolio; expects volumes to remain below pre-conflict levels through Q4 2026.
• Currency: Expects no impact from FX on 2026 full-year growth; anticipates FX to be broadly neutral in the second half of the year.
• Network Trends: SMB volume deceleration aligns with broader network trends (e.g., Visa down 140 bps, MasterCard down 50 bps sequentially); attributes some mix shift to lower-yielding international markets.
• Regulatory: Successfully launched in Czech Republic to meet new tax reporting requirements.

Strategic Initiatives:

• WorldPay Integration: Integration tracking ahead of plans; consolidation of corporate apps, HR, finance, and facilities ongoing; management layers reduced.
• Organizational Structure: Fully organized around SMB, Enterprise, and Platforms segments; 2,400 leaders selected via "best-of-both" approach.
• Capital Allocation: Focused on maintaining investment-grade credit ratings; balancing $1 billion annual investment against $2 billion+ annual shareholder returns.
• Product Launches:
  • Genius World Conference: Hosted inaugural event in August with 1,000 attendees.
  • AI Tools: "Genius AI" launched as agentic assistant; AI-powered drive-through vision piloting with QSRs.
  • New Capabilities: Real-time payments generally available on dynamic payouts; cross-selling fraud prevention, debit routing, and account updaters.
• M&A/Partnerships: 52 new software partners signed in Q3; strategic expansions into Brazil (CACTO), South Korea (Ex-Im Pay), UK/Australia (LatPay), and Norway (ZTL).

Risks and Headwinds to Outlook:

• Geopolitical Conflict: Continued conflict in the Middle East impacting travel volumes (Enterprise segment); impact expected to persist through 2026 and lap in Q1 2027.
• Market Uncertainty: Outlook assumes stable macro conditions; any deterioration in consumer spending could affect growth rates.
• Integration Execution: Synergy realization depends on continued progress in technology architecture modernization and organizational integration.
• Adoption Risks: Success of "agentic commerce" and "Genius" depends on market acceptance and overcoming trust barriers.
• One-Time Costs: Elevated cash taxes and one-time integration costs in 2026 (e.g., gain on sale of issuer) are non-recurring; 2027 cash flow expected to improve.

Management Tone on the Future:

• Confidence Level: High confidence in long-term opportunity, citing "clear strategy," "durable business model," and "disciplined execution."
• Strategic Clarity: Emphasizes a "different company" with "greater clarity of focus" post-WorldPay combination; describes the strategy as the "path to get there."
• Growth Narrative: Views AI and agentic commerce as "enablers" for everything; expects AI to drive "structural opportunity for margin expansion."
• Commitment: Reiterated commitment to $7.5 billion capital return and 3.0x leverage target by end of 2027; "very focused" on executing the outlined strategy despite market rumors.

Miscellaneous:

• Rumors: Management declined to comment on market rumors regarding a potential take-private transaction, stating focus remains on executing the current strategy.
• Q4 Specifics: Expects Domino's Canada POS rollout to be fully complete in Q4; anticipates strong sequential trends in Genius and embedded payments.