Global Payments Inc. EBITDA surged on 51.9% and Revenue surged on 51.1%
02/08/2021 • About Global Payments Inc. (
$GPN) • By InTwits
Global Payments Inc. reported 2020 financial results today. Here are the key drivers of the company's long term financial model:
- Global Payments Inc. is a fast growth stock: 2020 revenue growth was 51.1%, 5 year revenue CAGR was 21.8% at 2020 ROIC 2.2%
- Global Payments Inc. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.2%. At the same time it's in pair with industry average of 3.5%
- CAPEX is quite volatile: $436m in 2020, $308m in 2019, $213m in 2018, $182m in 2017, $92m in 2016
- The company has potentially unprofitable business model: ROIC is 2.2%
- It operates with high leverage: Net Debt/EBITDA is 3.1x while industry average is 1.7x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 51.1%. Revenue growth showed slowdown in 20Q4 - it was -2.9% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.6 pp from 16.2% to 19.8% in 2020.
Gross Margin decreased on 7.0 pp from 57.8% to 50.8% in 2020. SG&A as a % of Revenue decreased on 2.9 pp from 41.7% to 38.8% in 2020.
Net Income margin decreased slightly on 0.89 pp from 8.8% to 7.9% in 2020. During the last 5 years Net Income margin topped in 2018 at 13.4% and was declining since that time.
Investments (CAPEX, working capital and M&A)
In 2020 the company had CAPEX/Revenue of 5.9%. The company's CAPEX/Revenue increased slightly on 1.3 pp from 4.6% in 2017 to 5.9% in 2020. Average CAPEX/Revenue for the last three years was 6.2%. During the last 5 years CAPEX as a % of Revenue topped in 2018 at 6.3% and was declining since that time.
Return on investment
The company operates at low ROIC (2.2%) and ROE (2.1%). ROIC decreased slightly on 0.90 pp from 3.1% to 2.2% in 2020. ROE decreased slightly on 0.59 pp from 2.7% to 2.1% in 2020. ROIC declined at -1.3 pp per annum in the last 5 years. ROE followed a declining trend at -4.0 pp per annum in the last 5 years.
Leverage (Debt)
Debt level is 3.1x Net Debt / EBITDA and 3.9x Debt / EBITDA. Net Debt / EBITDA dropped on 1.7x from 4.8x to 3.1x in 2020. Debt increased slightly on 1.3% while cash surged on 15.9%.
Global Payments Inc. has no short term refinancing risk: cash is higher than short term debt (150.9%).
Valuation and dividends
Global Payments Inc.'s trades at EV/EBITDA 25.8x and P/E 102.1x.
Management team
The company's CEO is Jeffrey Steven Sloan. Jeffrey Steven Sloan has 7 years tenure with the company. The company's CFO is Paul Michael Todd. Paul Michael Todd has 1 year tenure at the company.
Financial and operational results
FY ended 12/31/2020
Global Payments Inc. ($GPN) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 2,898 | 3,975 | 3,366 | 4,912 | 7,424 | 51.1% |
| Gross Profit | 1,751 | 2,047 | 2,271 | 2,838 | 3,773 | 32.9% |
| SG&A | 1,326 | 1,488 | 1,534 | 2,047 | 2,879 | 40.7% |
| EBITDA | 613 | 1,010 | 1,260 | 1,737 | 2,637 | 51.9% |
| EBIT | 425 | 559 | 737 | | | |
| Interest expence | 109 | 174 | 196 | | | |
| Tax | 71 | -101 | 77 | | | |
| Net Income | 272 | 468 | 452 | 431 | 585 | 35.7% |
| Stock Based Compensation | 31 | 39 | 58 | | | |
Balance Sheet
|
|---|
| Cash | 1,163 | 1,336 | 1,211 | 1,678 | 1,946 | 15.9% |
| Accounts Receivable | 275 | 302 | 348 | | | |
| Short Term Debt | 570 | 735 | 816 | 587 | 1,290 | 119.7% |
| Long Term Debt | 4,261 | 4,559 | 5,015 | 9,488 | 8,914 | -6.0% |
Cash flow
|
|---|
| Capex | 92 | 182 | 213 | 308 | 436 | 41.7% |
| Dividends | 5 | 7 | 6 | | | |
| Acquisitions | 2,034 | 563 | 1,260 | | | |
Ratios
|
|---|
| Revenue growth | 4.5% | 37.2% | -15.3% | 45.9% | 51.1% | |
| EBITDA growth | 3.2% | 64.8% | 24.7% | 37.8% | 51.9% | |
|
|---|
| Gross Margin | 60.4% | 51.5% | 67.5% | 57.8% | 50.8% | -7.0% |
| EBITDA Margin | 21.1% | 25.4% | 37.4% | 35.4% | 35.5% | 0.2% |
| EBIT Margin | 14.7% | 14.1% | 21.9% | | |
| SG&A, % of revenue | 45.7% | 37.4% | 45.6% | 41.7% | 38.8% | -2.9% |
| SBC, % of revenue | 1.1% | 1.0% | 1.7% | | |
| Net Income Margin | 9.4% | 11.8% | 13.4% | 8.8% | 7.9% | -0.9% |
| CAPEX, % of revenue | 3.2% | 4.6% | 6.3% | 6.3% | 5.9% | -0.4% |
|
|---|
| ROIC | 7.3% | 6.2% | 7.2% | 3.1% | 2.2% | -0.9% |
| ROE | 16.0% | 14.6% | 11.6% | 2.7% | 2.1% | -0.6% |
| Net Debt/EBITDA | 6.0x | 3.9x | 3.7x | 4.8x | 3.1x | -1.7x |
| Interest coverage ratio (ICR) | 3.9x | 3.2x | 3.8x | | |
| Interest expence / Average debt | 2.2% | 3.4% | 3.5% | | | |
People
|
|---|
| Insider ownership | 0.7% | 0.7% | 0.7% | | | |
| Employees | 8,995 | 10,000 | 11,000 | | | |
| Revenue/Employee, th. $ | 322 | 398 | 306 | | | |
Global Payments Inc. ($GPN) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 1,904 | 1,672 | 1,918 | 1,930 | | 115.6% | 78.8% | 73.4% | -2.9% |
| EBITDA | 642 | 510 | 697 | 659 | | 77.6% | 34.9% | 94.9% | 5.5% |
| Net Income | 144 | 37 | 221 | 183 | | 27.8% | -69.0% | 132.5% | 77.7% |
Balance Sheet
|
|---|
| Cash | 1,800 | 1,826 | 2,221 | 1,946 | | 40.9% | 74.2% | 4.4% | 15.9% |
| Short Term Debt | 446 | 1,273 | 1,271 | 1,290 | | -45.1% | 38.1% | 89.9% | 119.7% |
| Long Term Debt | 9,636 | 8,440 | 8,437 | 8,914 | | 78.4% | 61.5% | -10.3% | -6.0% |
Ratios
|
|---|
| Gross Margin | 50.9% | 46.5% | 53.0% | 52.2% | | -14.5% | -21.1% | -8.3% | 4.6% |
| EBITDA Margin | 33.7% | 30.5% | 36.4% | 34.1% | | -7.2% | -9.9% | 4.0% | 2.7% |
| Net Income Margin | 7.5% | 2.2% | 11.5% | 9.5% | | -5.2% | -10.6% | 2.9% | 4.3% |
Peers in Data Processing & Outsourced Services
Below you can find Global Payments Inc. benchmarking vs. other companies in Data Processing & Outsourced Services industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Square, Inc. ($SQ) | - | 29.6% | 49.0% | 42.9% | 101.5% |
| Fiserv, Inc. ($FISV) | - | 3.5% | 2.2% | 74.9% | 45.8% |
| NIC Inc. ($EGOV) | - | 5.8% | 2.5% | 2.7% | 30.0% |
| StoneCo Ltd ($STNE) | - | 74.3% | 106.0% | 63.1% | 28.9% |
| Fidelity National Information Services, Inc. ($FIS) | - | -1.8% | -2.8% | 22.7% | 21.5% |
| |
|---|
| Median (39 companies) | 6.7% | 10.1% | 7.5% | 8.9% | -3.3% |
|---|
| Global Payments Inc. ($GPN) | - | 37.2% | -15.3% | 45.9% | 51.1% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Verra Mobility Corp ($VRRM) | - | 97.4% | 97.5% | 95.7% | 91.5% |
| EVO Payments, Inc. ($EVOP) | - | - | - | 80.2% | 80.8% |
| StoneCo Ltd ($STNE) | 69.7% | 70.8% | 79.5% | 83.4% | 76.8% |
| WEX Inc. ($WEX) | 54.7% | 58.8% | 63.3% | 61.7% | 56.8% |
| Sabre Corporation ($SABR) | 32.2% | 30.1% | 27.8% | 56.6% | 56.6% |
| |
|---|
| Median (31 companies) | 39.2% | 38.9% | 40.9% | 40.3% | 36.5% |
|---|
| Global Payments Inc. ($GPN) | 60.4% | 51.5% | 67.5% | 57.8% | 50.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Visa Inc. ($V) | 55.6% | 69.2% | 65.8% | 68.1% | 68.5% |
| Mastercard Incorporated ($MA) | 56.9% | 56.5% | 51.8% | 60.9% | 56.6% |
| FleetCor Technologies, Inc. ($FLT) | 52.0% | 50.8% | 55.9% | 57.6% | 52.2% |
| StoneCo Ltd ($STNE) | 31.4% | 26.0% | 53.0% | 62.4% | 52.1% |
| Black Knight, Inc. ($BKI) | 43.0% | 44.6% | 43.3% | 46.0% | 44.9% |
| |
|---|
| Median (38 companies) | 21.3% | 20.6% | 19.2% | 21.7% | 18.2% |
|---|
| Global Payments Inc. ($GPN) | 21.1% | 25.4% | 37.4% | 35.4% | 35.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| PagSeguro Digital Ltd. ($PAGS) | 6.4% | 4.3% | 1.4% | 5.8% | 22.3% |
| StoneCo Ltd ($STNE) | 7.2% | 18.4% | 8.9% | 12.9% | 11.2% |
| Cardtronics plc ($CATM) | 9.9% | 9.6% | 8.0% | 9.3% | 8.3% |
| Verra Mobility Corp ($VRRM) | - | 11.5% | 7.2% | 6.6% | 6.2% |
| Fiserv, Inc. ($FISV) | 5.3% | 5.0% | 6.2% | 7.1% | 6.1% |
| |
|---|
| Median (38 companies) | 3.2% | 2.9% | 3.0% | 3.0% | 3.0% |
|---|
| Global Payments Inc. ($GPN) | 3.2% | 4.6% | 6.3% | 6.3% | 5.9% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Mastercard Incorporated ($MA) | 57.5% | 60.6% | 64.7% | 72.7% | 47.6% |
| International Money Express, Inc. ($IMXI) | -1.3% | -1.4% | 12.1% | 36.0% | 31.4% |
| NIC Inc. ($EGOV) | 63.1% | 52.1% | 39.3% | 26.5% | 30.8% |
| Visa Inc. ($V) | 18.1% | 21.9% | 23.0% | 27.2% | 23.2% |
| Western Union Company (The) ($WU) | 10.7% | 11.9% | 27.8% | 21.5% | 22.1% |
| |
|---|
| Median (39 companies) | 11.7% | 10.7% | 12.1% | 8.3% | 6.4% |
|---|
| Global Payments Inc. ($GPN) | 7.3% | 6.2% | 7.2% | 3.1% | 2.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| WEX Inc. ($WEX) | 6.7x | 4.4x | 3.1x | 3.4x | 12.1x |
| Exela Technologies Inc ($XELAU) | 8.1x | - | 9.7x | - | 10.7x |
| Alliance Data Systems Corporation ($ADS) | 10.7x | 10.1x | 9.0x | 11.7x | 9.2x |
| Verra Mobility Corp ($VRRM) | - | 10.7x | 6.9x | 3.5x | 4.7x |
| GreenSky, Inc. ($GSKY) | -1.5x | -1.5x | 0.5x | 1.5x | 4.6x |
| |
|---|
| Median (35 companies) | 1.3x | 2.3x | 2.0x | 2.1x | 1.9x |
|---|
| Global Payments Inc. ($GPN) | 6.0x | 3.9x | 3.7x | 4.8x | 3.1x |
