Global Payments Inc. (NYSE:GPN) has announced its financial results for the second quarter of 2024, highlighting a 6% increase in adjusted net revenue to $2.32 billion. The company's Merchant Solutions segment showed an 8% growth with $1.8 billion in adjusted net revenue, while the Issuer Solutions segment saw a 4% increase to $527 million. Significant growth was driven by integrated software and point-of-sale businesses, as well as double-digit growth in software bookings across various vertical markets. The company is optimistic about its growth strategies, including expanding international point-of-sale offerings and focusing on embedded commerce capabilities.
Key Takeaways
- Global Payments reported a 6% increase in adjusted net revenue for Q2 2024.
- Merchant Solutions segment grew by 8%, driven by integrated software and point-of-sale businesses.
- Issuer Solutions segment increased by 4%, with successful large conversions and renewed partnerships.
- The company is expanding internationally, notably launching point-of-sale offerings in Germany.
- Software bookings in vertical markets like education, real estate, and healthcare saw double-digit growth.
- Bob Cortopassi appointed as President and COO.
- Financial performance for the quarter was in line with expectations.
Company Outlook
- Full-year adjusted net revenue expected to range between $9.17 billion and $9.30 billion.
- Focus on gaining market share, freeing up capital for innovation, and delivering sustainable performance.
- Upcoming investor conference on September 24th to detail changes and initiatives.
- Confidence in growth potential of the ISV channel and software's increasing role in payment decisions.
Bearish Highlights
- Foreign exchange rates and the Takepayments acquisition may impact merchant segment outlook.
Bullish Highlights
- Positive momentum in new partner signings and revenue share agreements in the ISV channel.
- Strong attach rates for embedded commerce solutions, enhancing client relationships.
- Ongoing growth and attractive margin profiles in certain aspects of the business.
Misses
- No specific misses were highlighted in the provided context.
Q&A Highlights
- Discussion of the split between discretionary and nondiscretionary volumes in the merchant business.
- ProFac recognized as a significant driver of new ISV signings, catering to smaller ISVs.
- Confirmation of a well-diversified merchant portfolio across various verticals and geographies.
In conclusion, Global Payments' second quarter of 2024 reflects a consistent and positive trajectory in its financial performance. The company is actively pursuing growth through strategic initiatives and market expansion, with a clear focus on streamlining operations and investing in technology to enhance its competitive edge. The upcoming investor conference is anticipated to provide further insights into the company's long-term vision and operational strategies.
InvestingPro Insights
Global Payments Inc.'s (GPN) recent financial results demonstrate a company on the rise, with a 6% increase in adjusted net revenue and significant growth in its Merchant Solutions segment. To add further context to these results, let's delve into some real-time data and insights from InvestingPro.
InvestingPro Data indicates a robust financial profile for GPN, with a market capitalization of $25.42 billion and a Price to Earnings (P/E) ratio of 19.82. Adjusting for the last twelve months as of Q1 2024, the P/E ratio stands at an even more attractive 17.03. This suggests that the company's earnings power is strong relative to its share price. Moreover, the company's gross profit margin remains impressive at 62.36%, indicating efficient operations and a strong pricing strategy.
InvestingPro Tips highlight that analysts are optimistic about GPN's profitability, with net income expected to grow this year. This aligns with the company's positive financial results and indicates potential for continued upward momentum. Additionally, GPN has proven its commitment to shareholder returns, maintaining dividend payments for 24 consecutive years—a testament to its financial stability and disciplined capital allocation.
For readers looking for more in-depth analysis and additional insights, InvestingPro offers numerous tips on GPN, which can be found at https://www.investing.com/pro/GPN. These tips provide valuable information for investors considering GPN as part of their investment portfolio.
In summary, Global Payments Inc. appears to be navigating its growth strategy successfully, with strong financials and a positive outlook from analysts. The company's ability to consistently pay dividends and its potential for increased net income this year are key factors that investors may want to consider.
Full transcript - Global Payments Inc (GPN) Q2 2024:
Operator: Ladies and gentlemen, thank you for standing by and welcome to Global Payments' Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will open the lines for questions-and-answers. [Operator Instructions]. And as a reminder, today's conference will be recorded. At this time, I would like to turn the conference over to your host, Senior Vice President, Investor Relations, Winnie Smith. Please go ahead.
Winnie Smith: Good morning and welcome to Global Payments’ second quarter 2024 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 material available on the Investor Relations section of our website. Joining me on the call is our CEO, Cameron Bready and our CFO, Josh Whipple. Now, I'll turn the call over to Cameron.
Cameron Bready: Thanks Winnie and good morning, everyone. Thank you for joining us today. We're pleased with our performance for the second quarter, driven by consistent execution of our strategy focused on being the worldwide partner of choice for commerce solutions. Specifically, we achieved 6% adjusted net revenue growth or 7% excluding the impact of the divestiture of net spends consumer assets, and delivered adjusted earnings per share growth of 12% in the quarter. We also expanded adjusted operating margin of 40 basis points as we continue to drive efficiency in our business, leveraging the scale position we enjoy in our core markets, and realize synergy benefits from the EVO acquisition. There are a number of noteworthy highlights to cover this morning. Starting with merchant solutions, we delivered high single-digit organic growth, largely driven by our differentiated capabilities across our integrated software and point-of-sale businesses as market demand for embedded payments and commerce enablement solutions continues to accelerate. Our integrated business saw double-digit growth in the quarter, aided by continued strong booking trends in business development results, with new ISV partner signings up 30% year-to-date. Our ongoing success in identifying and signing new ISVs in this channel is partly attributable to our progressive payment facilitation solution, or PROFAC, which we launched mid-last year. Active merchants on this solution have increased 40%, and average merchant volumes have improved 60% since the end of 2023. We remain confident in our competitive positioning in this market and are investing in our capabilities to ensure we preserve our leadership position. We continue to focus on differentiating ourselves by one, our ability to meet the specific needs of our partners by leveraging the breadth and depth of our solutions; and two, the expansive additional embedded commerce capabilities we can attach to the underlying payments relationship. With both new and existing integrated partners, we are seeing an improvement in the average annual revenue opportunity with new merchants as we focus on cross-selling commerce enablement solutions. This includes human capital management and payroll, loyalty and marketing, analytics and customer engagement solutions, as well as B2B software. Speaking of B2B, it is worth noting that we continue to see increased demand for our B2B acceptance solutions as we further leverage the PayFabric platform we acquired with EVO. Our proprietary integrations with some of those widely used ERP environments in the market are critical delivering the embedded frictionless automation necessary to improve process efficiencies for our customers. We saw more than a 50% increase in new ISV partnerships leveraging our PayFabric capabilities in the second quarter as more B2B spend shifts to digital channels. In our vertical market businesses we saw double-digit growth in software bookings this quarter with particular strength in education, real estate, and healthcare. Notable wins include a new partnership with the Los Angeles Unified School District, the second largest in the U.S., which will leverage our full suite of capabilities across Point of Sale, MySchoolBucks, Cafeteria Management, as well as our Back-of-House solutions. With this addition we now have partnerships with the three largest school districts in the United States. Our real estate business signed a new partnership with the YES Communities, a leading provider of manufactured housing communities across the United States, and expanded existing relationships with community association solutions company, associated asset management, and commercial and residential real estate service provider Tobin Capital Group. Also this quarter we launched a new residential pay-outs product to streamline and automate the return of security deposits, which we are already successfully cross-selling to customers. We also saw strong growth in our Point of Sale software business this quarter, adding roughly 3,500 new locations. Demand for our Point of Sale and Embedded Commerce Solutions remain strong across the segments of the restaurant and retail verticals we target. Our solutions are designed to grow with the customer's business, leveraging a common technology stack that enables customers to easily add functionality as they expand. This allows us to serve the small end of the SMB market and scale with merchants as they grow, while also addressing the more complex needs of quick service restaurants and sports entertainment venues. To that end we are excited to announce a new partnership with Diamond Baseball Holdings to serve as the official commerce technology partner for its minor league baseball franchises in the United States and Canada. We are currently installed in 13 of these stadiums and we expect to fully roll out our solutions at additional ball parks across Diamond's club portfolio before the 2025 season opens. We also signed new stadium partnerships with multiple UK football clubs, including Newcastle, Birmingham City, and Nottingham Forrest during the quarter. And we are proud to have supported a major professional football championship across multiple stadiums, a Grand Slam tennis tournament, and a major golf tournament with our Point of Sale and payment solutions in Europe this summer. We also went live this quarter with a leading parks and entertainment company and are now providing the food and beverage in retail Point of Sale solutions at its theme park locations in Florida. And we continue to see great momentum in food service management where we are the partner of choice to the three largest players in this space, which serve a 20% improvement in related bookings this quarter. In the restaurant and retail verticals in North America, where our POS software is targeted towards SMB and mid-market customers, in addition to the strong rooftop growth, we achieved a greater than 70% attach rate of our embedded commerce solutions with new customers. It's just one example we are seeing significant demand for loyalty and marketing tools with locations leveraging our customer engagement software, increasing over 100% this quarter compared to the prior year. Additionally, we are pleased with the market reception of our recently released next-generation Point of Sale software, including the improved user interface, our intuitive experience across iOS and Android-based devices, and the mobile first design that drives best in class omnichannel experiences for our merchants and their consumers. While still early days, these new offerings are benefiting our performance and we expect a more meaningful contribution to revenue in 2025 as we gain scale. We also continue to see good momentum expanding our Point of Sale offerings into markets outside of the U.S. It's worth highlighting that we have begun highlighting our Point of Sale offering in Germany and anticipate a full commercial launch next month. We also remain on track to bring our Point of Sale software to key additional international markets, including Mexico, Ireland, Poland, Austria, and Romania, over the next 12 to 15 months. In Germany, our Commerce Bank joint venture, Commerce Global Pay, went live this quarter, and we were off to a fantastic start. While we were just beginning to leverage Commerce Banks' relationships with the roughly 26,000 corporate clients and almost 11 million private and small business customers, we are already seeing strong lead generation and substantial opportunities to further digitize the payment experience while also allowing us to build a scale business in this attractive market. Lastly, we are continuing to see strong demand for our Pan-European solutions. Notably, we are realizing attractive growth in the EV charging sector and recently signed a partnership with a major European energy provider to support the expansion of public charging solutions throughout Central Europe. We also made two small tuck-in acquisitions in Europe this quarter to continue to improve our strategic positioning. The first was the acquisition of Takepayments, a small provider of payment solutions to SMB merchants in the UK. Takepayments serves to meaningfully diversify and expand our direct distribution capability and demand generation solutions as the UK market continues to evolve beyond traditional bank-based referral channels. It also provides attractive opportunities for us to cross-sell our commerce enablement solutions into its customer base. This investment allows us to reorient our distribution approach in the UK market with leading demand-gen capabilities and represents opportune timing as we are starting to see some signs of stability in the UK market more broadly. We have a strong pipeline of new business here with the hospitality and unattended verticals notable bright spots, including our recent win of Virgin's hotel business in the UK. The second acquisition at the end of the quarter was of an early stage technology development company that we were previously partnering with in Europe to drive our terminal on mobile offerings. Given the strong demand we have seen for our terminal on mobile offerings and the expected long-term importance they will play to our point-of-sale plans, it was strategically important for us to bring this technology in-house to unify our offerings globally and to control the entire value stack enabling our solutions. Moving to Issuer Solutions, we continue to see strong execution across our business. We completed two large conversions this quarter, which in combination with existing customer growth, drove a healthy increase in accounts on file sequentially. We also have a near-record implementation pipeline of more than 65 million accounts and seven active LOIs. Further, we are having ongoing success in cross-selling our value-added service solutions and completed 30 product implementations for existing clients this quarter across our fraud, virtual card, and communications platforms. From a macro perspective and similar to what you heard from our FI partners in the networks, we saw a modest deceleration in transaction volumes this quarter, which was largely driven by commercial card activity. We recently renewed our multi-decade issuer relationship with NatWest spanning both its consumer and commercial portfolios, cementing our position with one of the largest and most active clients in Europe. NatWest recently announced its acquisition of Sainsbury Bank further highlighting the importance of our strategy to align ourselves with market share winners. We look forward to opportunities to continue to expand our partnership with them in the future. Additionally, we have now launched our partnership with Outpayce, a leading global travel technology company owned by Amadeus, providing issuer solutions technology for its platforms across Europe. Outpayce is our first fintech customer operating in our AWS cloud environment in Europe, with many other clients in the pipeline. Most importantly, we also continue to make progress on our issuer modernization program and remain on track to complete the development of our client-facing applications this year. We have already initiated customer pilots and continue to expect commercial launch next year. Through modernization, we meaningfully increased our addressable market by broadening our opportunity set to include mid-market and smaller banks in addition to new geographies. Our investments also drive greater enablement capabilities for our clients and allow our leading applications and solutions to be more easily consumable by fintechs who are developing new used cases around cards. Shifting to B2B, we are seeing good trends in new bookings for our AP automation software in our core mid-market segment, while virtual card spend continues to ramp. Additionally, we signed several notable new customers for our employer solutions, including relationships with TERRA Staffing Group and Rainbow Pizza, which operates nearly 50 Domino's locations throughout Texas. We also renewed partnerships with AMC Theatres and Cracker Barrel (NASDAQ:CBRL). Before I turn the call over to Josh, I would like to highlight the appointment of Bob Cortopassi as the President and Chief Operating Officer of Global Payments. Bob is a proven growth-oriented leader and operator as well as a trusted colleague with an exceptional track record of managing key businesses across our organization during his 12-year tenure with the company. Most recently, Bob served as our Senior Executive Vice President and President of International and Vertical Markets for our Merchant Solutions business and previously led our integrated business for nearly a decade. I look forward to partnering with Bob, and I'm confident in the role he will play in our company's continued future success. Josh?
Josh Whipple: Thanks, Cameron. Our solid finance performance for the second quarter was consistent with our expectations and reflects continued strong execution across our business despite ongoing macroeconomic uncertainty. We delivered adjusted net revenue of $2.32 billion for the quarter, an increase of 6% from the prior year or 7% excluding the impact of the Netspend divestiture. Our reported adjusted net revenue includes a roughly 50 basis point headwind from adverse foreign currency exchange rates relative to the second quarter of 2023. Adjusted operating margin increased 40 basis points to 45.2% and we reported adjusted earnings per share of $2.93, an increase of 12% compared to the same period in 2023. Taking a closer look at performance by segment, Merchant Solutions achieved adjusted net revenue of $1.8 billion for the second quarter, reflecting growth of 8%. This includes less than a point of contribution from the acquisition of Takepayments, which offset the roughly 50 basis point impact from unfavorable foreign currency exchange rates during the period. Our U.S. business delivered high single-digit growth in the quarter as we continued to benefit from our software-centric strategy, with both our integrated payments and point-of-sale businesses delivering double-digit growth for the period. We also saw strength in our vertical markets portfolio with our real estate, higher education, and healthcare solutions being notable bright spots. Outside of the U.S., we achieved mid-single-digit organic growth in Europe with notable strength across our faster-growth geographies, including Poland and Greece. We were also pleased to see trends start to stabilize in the United Kingdom. Separately, our LATAM business realized double-digit growth as we continue to benefit from the strong secular payment trends in Mexico. This performance was partially offset by ongoing weakness in the macroeconomic environment in Asia Pacific. We delivered adjusted operating margin of 48.8% in the Merchant segment, an increase of 30 basis points, reflecting ongoing sequential improvement since completing the acquisition of EVO Payments last year as expected. We were executing against our synergy plans related to the EVO transaction and we remain on track to achieve $135 million in run rate expense synergies within two years, and integration expenses are continuing to trend lower as we have seen over the last several quarters. Issuer Solutions produced adjusted net revenue of $527 million, reflecting growth of over 4%. This includes a roughly 50 basis point impact from unfavorable foreign currency exchange rates during the period. This quarter, we added 8 million traditional accounts on file sequentially or nearly 50 million accounts year-over-year, as we continue to benefit from ongoing execution of our conversion pipeline in addition to account growth with our existing FI customers. We've had an especially busy year with new client implementations. Year-to-date, we have completed nine implementations with over 8 million accounts. I'm especially proud of our team who has delivered these on time and with outstanding quality. We have six more implementations to complete for the remainder of the year. Issuer transactions increased mid-single digits compared to the second quarter of 2023, which was a modest deceleration from the prior quarter. This was largely driven by softer commercial volumes as businesses take a more cautious approach to spending given the overall level of macroeconomic uncertainty. We also saw a slight deceleration in consumer transaction growth sequentially, similar to what was reported by the networks and our FI partners. Focusing on our Issuer B2B portfolio, our AP automation software continued to see healthy growth in the core mid-market segment on a normalized basis in the second quarter. And while our Paycard solution is seeing some headwinds from softer employment trends due to the macro environment, we are encouraged by the active new sales pipeline we have in the business. Issuer Solutions delivered adjusted operating margin of 46.8%, an increase of 10 basis points compared to the prior year as we continue to drive efficiencies in the business. This was achieved despite facing a difficult comparison. As you may recall, issuer margins expanded 300 basis points during the second quarter of 2023 as we pivoted the business to more technology enablement and away from lower-margin managed services offerings. We've now lapped those related margin benefits. From a cash flow standpoint, we produced strong adjusted free cash flow for the quarter of approximately $680 million, which is 25% higher than the prior year period. This also represents a roughly 91% conversion rate of adjusted net income to adjusted free cash flow, up from approximately 80% last year. It is worth noting that adjusted free cash flow this quarter included a relatively small positive adjustment related to settlement timing for the period as the second quarter began -- again, ended on a weekend, as it has for the prior three quarters. With the third quarter ending on a weekday, we expect the larger impact from the settlement prefunding we saw in the back half of last year to reverse. We invested $179 million in capital expenditures during the quarter and continue to expect capital spending to be around $670 million or roughly 7% of revenue in 2024, consistent with our long-term targets. Further, we repurchased approximately 1 million shares for roughly $100 million in the quarter. Our leverage position was just under 3.5 times at the end of the second quarter and we remain on track for our leverage level to be in the low 3s by year-end, consistent with our long-term targets. Our balance sheet remains healthy, and we have approximately $3.6 billion of available liquidity. Our total indebtedness is approximately 97% fixed with a weighted average cost of debt of 3.37%. Turning to the outlook, we are pleased with how our business is positioned as we begin the second half of the year. We continue to expect reported adjusted net revenue to range from $9.17 billion to $9.30 billion, reflecting growth of 6% to 7% over 2023. This now includes an expectation for foreign currency exchange rates to be a headwind of up to 75 basis points in the second half of the year. We still expect annual adjusted operating margin to expand up to 50 basis points for 2024, driven by the benefits to our business mix from our ongoing shift towards technology enablement, partially offset by the lower margin profile of EVO prior to full synergy realization. To provide color at the segment level, we continue to expect our merchant business to report adjusted net revenue growth of 9% plus for the full year. This remains consistent with our prior outlook despite our expectation that unfavorable foreign currency exchange rates will now be a headwind in the back half of the year. We expect these headwinds to be offset by the inclusion of the acquisition of Takepayments that Cameron discussed, which we expect to contribute roughly a point of growth for the second half of the year. We also continue to expect up to 30 basis points of adjusted operating margin expansion for the merchant business in 2024, with expansion improving in the back half compared to the first half performance as EVO synergy realization ramps. Moving to Issuer Solutions, we continue to anticipate adjusted net revenue growth in the 5% to 6% range for the full year compared to 2023. However, given the headwind we now expect from foreign currency exchange rates and the modest deceleration we're seeing in commercial card transactions, we now expect to be at the low end of this range. We still anticipate adjusted operating margin for the issuer business to expand by up to 50 basis points. Moving to a couple of non-operating items. We expect net interest expense to be $500 million this year and for our adjusted effective tax rate to be approximately 19%, which is consistent with our prior outlook. Putting it all together, we continue to expect adjusted earnings per share for the full year to be in the range of $11.54 to $11.70, reflecting growth of 11% to 12% over 2023. And finally, our outlook continues to reflect the potential for a slightly more tempered economic environment in the second half of 2024. Now I'll turn the call back over to Cameron.
Cameron Bready: Thank you, Josh. Moving forward, we remain committed to sharpening our strategic focus and simplifying our business to position Global Payments as the partner of choice for Commerce Solutions in the markets that we believe have the highest potential. We are finalizing the review of our business that began earlier this year. That work has involved a thoughtful and methodical assessment of our assets, which has helped us to identify meaningful opportunities to better align our organization to drive sustainable growth. Over the last two decades, we have built one of the leading global payments technology companies. As we move into the next phase of growth, we are simplifying our portfolio and streamlining our operations to deliver product-led customer-centric solutions, while continuing to emphasize service as a key differentiator for our business. Ultimately, we expect executing on these initiatives will allow us to gain share, free up capital to invest in innovation, and deliver sustainable performance through the cycle. We look forward to providing you with more details on the changes we are making at our investor conference to be held on Tuesday, September 24th in New York City. Winnie?
Winnie Smith: Thanks, Cameron. 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'll now go to questions.
Operator: [Operator Instructions]. And your first question comes from the line of Ramsey El-Assal from Barclays (LON:BARC). Your line is open.
Ramsey El-Assal: Thanks for taking my question. Given the sort of unstable macro environment, could you give us your latest thoughts with the inclusion of EVO and everything else you've got going on in your business about the split between discretionary and nondiscretionary volumes in merchant, how much of the portfolio is exposed to credit versus debit and things like that?
Cameron Bready: Okay Ramsey, good morning. It's Cameron. I'll maybe comment on that. Look, my own perspective on the discretionary, nondiscretionary split is, it's a bit arbitrary these days. I think what's discretionary to one person, maybe nondiscretionary to another and vice versa. I think we've always looked at our portfolio as being very well diversified across what have been traditionally considered discretionary and nondiscretionary verticals. And I think even post EVO we're still in a position where as I look at the mix of business we have today, I think we're very well diversified. We're very well diversified geographically, I think around the globe. We're very well diversified across vertical markets. We're very well diversified kind of across revenue streams as well. So as I think about the overall mix of the business, particularly against the backdrop of, again, a somewhat uncertain macro environment, I remain very confident in the resilience and durability of the model that we've built, largely on the back of a business that's pretty well diversified, again, across different types of payments businesses with our merchant and issuer mix as well as different verticals, different geographies, etcetera. So I think the mix of business we have is good, and it positions us well for whatever macro environment we may face as we continue to move forward.
Ramsey El-Assal: Thanks and a follow-up for me. You called out ProFac as being an important driver of new ISV signings. Can you comment a little more on how ProFac increases the sort of ISV TAM for you guys, what types of clients are you now signing with ProFac that you weren't before, is it just merchant -- sort of client size or is there some other axis to look at it on?
Cameron Bready: Yes, it's a good question, Ramsey. The way I think about the ProFac business is it largely fills a need in the market for clients who need some payment facilitation capabilities, largely around the onboarding experience that, that delivers to merchants and some of the funding flexibility that comes through payment facilitation capabilities. But they are not scaled enough to be able to take on all the responsibilities of being a payment facility, particularly as it relates to underwriting, risk management, etcetera. So it fills a nice niche in the market for, I would say, on average, probably smaller ISVs that need some payment facilitation capabilities, but really aren't in a position to take on all the burdens of that themselves. And I think that's sort of middle of the ground solution that we've been able to offer, has been very well received by the market, and it does kind of open up a new area where I think before we had not been as successful in signing kind of ISV partners. So I think what I'm most pleased about as it relates to the integrated business is, obviously, the ongoing sort of consistent growth that we're seeing in that channel, but the -- and continued investment in capabilities to make sure that we sustain our leadership position in that market and our ability to sort of tailor our offerings to meet specific needs of ISV customers in the marketplace to compete very effectively against other solution providers.
Ramsey El-Assal: Perfect, thanks.
Operator: Your next question comes from the line of Jason Kupferberg of Bank of America (NYSE:BAC). Your line is open.
Jason Kupferberg: Thank you guys, good morning. I wanted to ask about merchant volume growth to start. So it came in at 6%. I think organically, that was maybe a tick down of a couple of points, if I'm not mistaken. Can you talk a little bit about what maybe drove that decal, I'm guessing leap year was probably worth a point, but also looked like there was a little bit of decoupling of the volume versus the revenue growth that had kind of been on top of each other for a period of time, so I don't know if that was mix related, appreciate any thoughts on that?
Cameron Bready: Yes, I'll make a couple of comments. I would say it declined sequentially about a point. If you look at our sort of revenue ex-Takepayments, it was up roughly kind of 7.5% organically, year-over-year, volume is up 6%. Last quarter, it was I think, 8% and 7%. So generally, I would say, a pretty consistent trend that we've seen sequentially Q1 and Q2. I think to your point, leap year probably had a little bit of an impact. The macro, obviously, other networks and competitors have reported and generally seeing the same trends as it relates to the overall volume environment and macro environment more broadly. So I don't think that's really unique to us. Takepayments delivers on the balance -- slightly more revenue than it does volume contribution. So I think net-net, we're sort of still within a point of each other as it relates to organic revenue growth and volume that we saw in the business.
Jason Kupferberg: Okay. That's helpful. And then on merchant margins, up 30 bps in the quarter, that was a bit better. I think in the guide, the guide was for flat wondering what drove that and maybe if you can just speak to kind of your confidence level in the full year guide, I know we're still talking about up to 30 bps. But do we feel like the probability of getting all the way to 30 is higher based on where we are in the year and what you see in front of you in terms of the incremental cost synergies from EVO?
Cameron Bready: Yes. Jason, it's a good question. Maybe I'll start and I'll ask Josh to jump in. I would just say, overall, we're very pleased with the margin expansion we saw in the merchant business. And I would just note that despite absorbing Takepayments, it comes in at roughly half of our margin today. So yes, we did perform a little bit better than we expected in the second quarter from a margin expansion perspective in the merchant business. I think it largely reflects kind of continued strong execution and obviously, some of the growth trends we're seeing in aspects of the business that have attractive margin profiles for us. So I think overall, really pleased with the outcome there, as I said, and we grew it 30 basis points site absorbing Takepayments that comes in and again, about half of that margin. The last point I would make is we're still targeting 30 basis points for the year, our language is up to 30, but just to be very clear, we're targeting 30 for the year. And I'll let Josh maybe comment a little bit about what we see in the back half.
Josh Whipple: Yes, Jason. So as we think about merchant margins, what I would say is that with the EVO integration, we continue to see synergies flow in. As I mentioned, I think last quarter, in 2023, we realized 25% of the $135 million. And this year, we expect to go ahead and realize 50%. And as it relates to the back half of the year, we expect merchant margins to be approximately expand 50 basis points, and that gives you kind of the up 30 basis points for the full year. So we're pretty pleased with how healthy the margin expansion looks like for the overall merchant business.
Jason Kupferberg: Okay. And I assume that would skew a little bit towards Q4 versus Q3 just as we think about cadence, is that fair just as synergy is built?
Josh Whipple: Yes, that's fair.
Jason Kupferberg: Thanks.
Operator: Your next question comes from the line of James Faucette from Morgan Stanley (NYSE:MS). Your line is open.
James Faucette: Great, thank you very much. I wanted to touch on the ISV channel. It seemed like you had made some good progress and that kind of thing. I'm wondering if you can talk a little bit about how we should be thinking about the growth potential there and what dynamics in that segment may be different than what you see in the rest of your merchant business generally?
Cameron Bready: Yes. I think it's a fair question. And I'll just start by saying, look, that's where the market is going. We've talked for many years about the intersection of software and payments. And obviously, we've worked very hard to position our business at that intersection because more and more, we see merchant clients, particularly in the SMB space that we serve, making payments decisions largely based on sort of the underlying software technology that they're using to run their business. And obviously, that is true in restaurant and retail where point-of-sale is now kind of the mode of competition for payment acceptance in those key vertical markets from a consumer spend standpoint, excuse me, struggling to get that out. But we also see it across other vertical markets as well, which is why, obviously, we've been leaning into our integrated strategy over the course of many years. We've leaned into our vertical market software strategy over the course of many years. And obviously, we're investing more in point-of-sale capabilities because that's where the market is going. So we think about long-term trends, obviously, particularly within SMB, as I mentioned before, it's all geared around payment decisions being made through the software that these businesses are using to kind of run their business day in and day out and making sure we're well positioned either with our ISV partners or through our own software to continue to benefit from those trends as a core part of how we think about our strategy in the merchant business going forward.
James Faucette: Got it. Appreciate that. And then in the press release, you talked about looking for efficiencies and the like. And clearly, that's something you're probably always in. But is there anything incremental that you're looking at in the second half of the year and how much are you thinking about that, if at all, to contribute to the margin targets -- and margin improvement targets you have for this year and how should we think about any spillover into 2025? Thanks a lot.
Cameron Bready: Yes. It's a really good question, and let me start just by saying, obviously, we have our Investor Conference coming up in September, which we're very much looking forward to. And we're going to lay all this out, I think, in what some might describe as excruciating detail at that point in time. But as I step back and think about it, we see pretty meaningful opportunities to streamline and simplify our business internally. And we think that those opportunities are going to unlock a fair amount of value that we're going to be able to redeploy in our business to continue to invest in growth-oriented initiatives as well as continue to improve returns in our business and certainly returns on invested capital in our business. So these are meaningful enough opportunities that we certainly think they're worth pursuing, and we intend to lay all of that out for you in the September Investor Conference. As it relates to 2024, none of that is really reflected in our 2024 outlook. I would say the back half of the year the margin expansion targets are largely geared towards what's happening in the business today. And most of the expectations, as it relates to sort of the opportunities we see to streamline, simplify and unlock value, those are sort of 2025 and beyond kind of benefits that we would expect to be able to realize. And again, we'll share more of those details as we get to our investor conference.
Operator: Your next question comes from the line of Darrin Peller from Wolfe Research. Your line is open.
Darrin Peller: Thanks guys, nice job on the quarter. I want to touch on the underlying driver of the merchant business because -- so Cameron, if you could just maybe revisit and break it down by obviously, the ISV business, the verticals, the software business you have and then maybe just the -- businesses in terms of the growth and the margin profile that's contributing, just noticing that margins obviously outperformed in the merchant side in the quarter, even despite what you said, which is Takepayments coming on as I think diluted margin, you were able to offset that and outperform on margins. So I guess we'd love to hear more about what's driving the strength in the merchant side of the business to sustain and the margin profile of each of those businesses that's allowing you to be?
Cameron Bready: Yes, maybe I'll start and I'll ask Josh to share a few perspectives as well. And I'll maybe hedge my comments a little bit Darrin, just by saying a lot of this is good fodder for our conversation as we get into September, and we sort of frame up the business the way we think about it as a go-forward matter. But clearly, you laid out a few key sort of things that probably are worth spending a little time on this morning. So as we think about the business today, obviously, we, as I mentioned before, are very focused on the merchant business positioning as it relates to the intersection of software and payments. We continue to think that is the future of the SMB space and the markets that are core to us today, most specifically the U.S., and that's going to continue to be the trend of evolution in markets outside of the U.S. over a longer period of time. So our ISV strategy, our own software strategy, and maybe most particularly, just given the relevance of retail and restaurant from a consumer spend perspective to our business, our point-of-sale software strategies are really core to where we want to drive the business over a longer period of time. Those are healthy technology-led businesses. They are continuing to grow, and they're continuing to scale, and they're continuing to contribute to the overall margin expansion we're seeing in the business. So I think that as we step back and think about sort of where are we going, it's largely driven by our investments in those areas, our ability to continue to differentiate through technology, and obviously generate margins and scale those businesses in a way that contribute to the overall rate of margin expansion for our business. As we think about more traditional payments markets, they may not grow at the same pace as our technology-enabled or software-oriented businesses, but they generally have stable growth rates and they have higher margins. Those margins may not drive the same sort of margin expansion for our business overall, but they contribute a lot of cash that obviously allows us to invest in the more growth orienting -- oriented and margin expanding sort of elements of the business so that we can get to that overall mix of margins that we're targeting and margin expansion that we're targeting for the business. And then, of course, there is markets internationally that we're growing nicely as well. We're continuing to scale our businesses as well, and that is contributing to sort of margin expansion in our overall kind of emerging business. And then lastly, I would just say, we benefit from being a large-scale player. Obviously, we are able to spread those fixed costs across a large global scaled merchant acquiring businesses. And as we think about the business going forward, and I talked about this before, we're very focused on ensuring that we're sort of leaning into markets where we are a scale player today or have clear line of sight to becoming a scale player in markets that were not a scale player today, and we don't have clear line of sight to becoming a scale player over time. I think we need to think hard about whether we should be in those markets, and that's been a big part of what we've been looking at as part of our strategic review. So more to come on that in September. But I think, hopefully, that gives you some sense as to how we think about it at a macro perspective.
Darrin Peller: Well, that's really helpful. Can I just ask one quick follow-up on financials for a minute. The free cash did come in strong -- better as we had hoped. I think you had about 81% or 80% to 81% conversion of GAAP versus it looks like 90% plus adjusted conversion. And I know a lot of it is timing dynamics on working capital. So just revisit that for a minute and just maybe reiterate if you still feel good about the timing, working capital dynamics helping improve as we keep going through the year and even better from these levels?
Josh Whipple: Yes, Darrin, we fully expect to go ahead and convert out of the 100% this year, less obviously the R&D tax credit, which is about 5 points. But I think that the big change that you saw on a year-over-year basis is the growth in the business and operating income, lower interest expense and a change in working capital. But again, this is something that we continue to go ahead and manage very, very closely, and we feel confident with regard to our initial guide of 100% conversion, excluding the R&D tax credit for the full year.
Cameron Bready: And Darrin, it's Cameron. I'll just add a couple of things. We provided a little more sort of granularity around our reporting of adjusted free cash flow that we think will be helpful. We've broken out customer deposits, and we have provided a little bit of historical data as it relates to taxes that we paid around gains from the dispositions of Netspend and our gaming business, which I think is just helpful for historical context. But as we think about the go forward, we're highly focused on free cash flow. And obviously, our conversion rates in the business and improving our quality of earnings and our quality of adjusted free cash flow, and I think you start to see that play out in Q2, and we were really pleased with the overall result.
Darrin Peller: It’s really helpful Cameron. Thanks guys, thanks so much.
Operator: Your next question comes from the line of Andrew Schmidt from Citi. Your line is open.
Andrew Schmidt: Hey Cameron, he Josh, good results here. Thanks for taking my questions. Just speaking of the legacy parts of the business, could you just talk about the direct sales channel, where that's targeted today, sales efficiency, and the strategy there in terms of just the direct sales efforts? Thanks a lot guys.
Cameron Bready: Yes. Good morning and maybe I'll just start by saying the term legacy sort of makes the hairs on the back of my neck stand up a little bit. We don't think about the business in that context. We have what we would characterize as sort of more traditional go-to-market strategies in our business, and you called out specifically our direct distribution here in the U.S. market. We've been working for some time, and I think we're accelerating our investments and plans to really start to reorient that distribution as much as possible towards selling more technology-enabled solutions. So we have opened up our integrated business more and allowed our direct distribution channels to begin to sell integrated and we're leaning into that. We are building by really reorienting a portion of our direct distribution channel today to developing a point-of-sale software sales team that is focused on selling point-of-sale software solutions directly into the market. But as it relates to the overall direct distribution channel, it remains a very productive channel. They continue to drive year-over-year growth in new bookings. They continue to be very effective in terms of selling traditional payment capabilities into the market, more of what they're selling today, obviously, our omnichannel solutions and had some more complexity associated with them versus selling traditional bricks on a counter, which is where the business was kind of back in the mid to late teens. But as time progresses, we are very focused on continuing to reorient distribution around where we see the best growth opportunities in the business, and that's clearly around our technology-enabled strategies, but the ISV channel and directly selling our software capabilities where we think we can build direct distribution teams around that. So that's really the future of the business, and we'll continue to invest against reorienting distribution in that manner over a longer period of time.
Andrew Schmidt: Got it, thank you Cameron. I hear you on the word legacy. That makes a lot of sense. Just on the outlook for the merchant segment, obviously, layering Takepayments, it sounds like a little bit more of a moderate macro assumption there. Is there anything else, is it just moderated macro or are there any other puts and takes to consider in the outlook? Thanks a lot guys.
Cameron Bready: I'd say the main take is just FX. We kind of went into the year expecting FX to be a little bit better in the back half of the year than we're currently forecasting. It's obviously very volatile. And as I've said many times, if I could predict what FX rates are going to be, yes, I probably wouldn't be sitting in the seat, might be doing more leisurely things. But be that as it may, we currently expect FX in the back half of the year to largely offset the contribution from Takepayments. So hopefully, we're wrong on that assumption, but I think that's a prudent assumption for the time being, and that's kind of what we baked into the outlook. So I think beyond that, the rest of the puts and takes are relatively small and on the margin. So obviously, confident in reiterating and reaffirming the guide today. And I'll just let Josh provide a little bit more context as well.
Josh Whipple: Yes. So I think as you think about the second half of the year, we still expect margin growth in the 7% to 8% range. And as Cameron, you mentioned this includes roughly a point of contribution from Takepayments, which will largely offset FX. And then for the full year, we still expect merchant revenue be in the 9% plus range. So we feel pretty good about that.
Andrew Schmidt: Got it, thank you guys very much.
Operator: Your next question comes from the line of Vasu Govil from KBW. Your line is open.
Vasundhara Govil: Hi, thanks for taking my question. I guess, Cameron, you talked about the good momentum you were seeing in new partner signings in the ISV channel. I was just curious if revenue share agreements or economics related to those new partners, how they have evolved over historical trends, just any color on that would be helpful?
Cameron Bready: Yes. I mean, I've said -- good morning. I have said over the last couple of years, we've obviously seen rev share sort of drift up over the course of time as you've seen more competition in the integrated space. But I'd say over the last year to 18 months, we've seen probably a more constructive competitive environment than we had seen in the previous 12 to 24 months. Just as cost of capital has come up and sort of competitors need to be a little bit more rational with their own economics and how they approach these relationships, I think the competitive environment from a rev share perspective has been fairly constructive, certainly for the last year or so. And our expectation is it will remain fairly constructive over a period of time. And our experience is, if you have the right solutions, the right capabilities, you can partner with ISVs in the right way. You need to be competitive from a rev share perspective but you don't necessarily have to be at the high watermark of rev shares. And we still see competitors offering fairly aggressive rev shares in some circumstances, but that's typically where they don't have a lot to offer the ISV outside of that sort of pure payments relationship. And one of the ways we've been able to differentiate ourselves is obviously the breadth and depth of capabilities that we think we bring across traditional integrated payment facilitation and the middle of the road sort of ProFac model that we have but also the breadth and depth of commerce enablement, embedded commerce solutions that we can deliver, which enriches the experience for us and the ISV, broadens the base of revenue that we're able to share on a rev share basis, and I think makes the overall partnership and relationship more constructive for them and obviously more constructive for us. And that's a big part of why we've been able to remain, I think, fairly well positioned competitively from a rev share perspective without always, again, having to meet the high watermark that may be out there around a pure rev share on payments alone.
Vasundhara Govil: That's helpful. And we're, obviously, all very looking forward to the Investor Day, sort of any preview into what type of additional disclosure or new KPIs perhaps that we could expect at the Investor Day?
Cameron Bready: Yes, it's been pretty -- it's a fair question, and I've been pretty transparent. I think last quarter and obviously, this quarter, I'll just reiterate, we're obviously very focused on providing a full sort of update on where we see the business going and it is a strategic matter going forward. Where we're going to focus our attention, our efforts and our investments and a big part, I think, of any strategy is also what does that mean you're not going to do. And so we look forward to giving a pretty fulsome update around our strategy and where we see the business going forward, how we're going to frame up the business kind of around that strategy, the critical initiatives that we are pursuing to continue to advance that strategy and execute against it. And then, of course, the KPIs and metrics that we're looking at to judge our own performance as to how we are gaining ground against the key initiatives that we think are important to achieving the strategy that we have. So all that we would expect to be able to frame up for you at our investor conference, and then that will be coupled with a conversation around our efforts to continue to streamline and simplify our business and how we are organizing ourselves internally, some of the moves we are making to ensure we have the most nimble, agile business we can, that we remain very customer-centric in our product approach. We continue to build differentiated products and capabilities that we think compete favorably in the market. And then we're able to then couple that with further differentiation around the service experience that our clients are able to enjoy from us. And so we look forward to being able to share more around that streamlining and simplifying effort and what we think then that will unlock from a value creation standpoint, and how we'll redeploy that in some areas that we want to invest in the business, but also how that will flow through to drive better returns as we look forward in time, all against the backdrop of our efforts to, I think, again, simplify our business, improve our quality of earnings, be very focused on free cash flow generation and driving better return on capital in our business as we move forward.
Vasundhara Govil: Thank you very much.
Operator: Your next question comes from the line of Bryan Bergin from TD (TSX:TD) Cowen. Your line is open.
Bryan Bergin: Hi, good morning, thank you. I wanted to ask on the embedded commerce success. It really sounds like that's clicked here, specifically calling out the 70% plus attach of those solutions with new customers. Can you just dig in a bit more on the drivers of that success, are there aspects of the selling strategy that have evolved to really drive this?
Cameron Bready: Yes, it's a really good question. I think what we've generally seen is we've done a better job of finding ways and encouraging our sales professionals to find opportunity to attach other value-added services to the pure payment experience with our clients. As I mentioned in my response to the integrated question, clearly that has been attractive to our integrated partners. A lot of the commerce enablement or embedded commerce solutions we can deliver really resonate with them. It makes their own software more competitive in the marketplace. It gives them another channel, I think, to help differentiate their solutions. And obviously, it improves kind of the rev shares and revenue opportunity that they see through the partnership with us. So a lot of our ISV partners are very focused on continuing to lean into our embedded commerce solutions and finding ways to distribute those through their channels in partnership with us. And on the direct side, again, we're seeing much the same. I called out specifically around Point of Sale, what we're seeing very strong attach rates for customer loyalty, particularly for our card-linked loyalty solutions, around our Point-of-Sale businesses. But we're also seeing, again, good strong attach rates around the cross-selling efforts for human capital management and payroll. So I would say across the board, a strategy that we really set out to pursue a few years ago around finding more ways to wrap value around the payment experience, which is really where we started, have continued to evolve in more of this and better commerce strategy and our ability to attach more commerce enablement solutions around pure payment capabilities we're delivering to clients and it's just further enriching the relationships that we have with our clients. It's making us more relevant to them. It's allowing us to differentiate better in the marketplace. And I think, again, it will be a core part of how we think about driving our strategy as we move forward in time. And I think, obviously, a big focus for us is where are the areas that we want to invest from a commerce enablement or embedded commerce solution to continue to drive that richer experience and more differentiated offering relative to where our competitors are.
Bryan Bergin: Okay, that's helpful. And then good improvement on free cash flow here in the quarter. I guess following what you've earmarked for debt reduction, as you consider use of the cash, do you expect to maintain this kind of level of repo in the second half, are you balancing that against anything else near-term M&A pipeline that might be attractive?
Josh Whipple: No, look, we're very focused on getting back to our 3 times targeted leverage point in the back half of the year. We expect to go ahead and pay down close to $1 billion in debt just from free cash flow. So we'll continue to go ahead and delever to the balance of the year, and we expect to get right back to that low 3 mark that we talked about previously.
Bryan Bergin: Alright, thanks.
Operator: Your next question comes from the line of Dave Koning from Baird. Your line is open.
David Koning: Yeah, hey guys. Thank you and nice job. One other way to -- and one way to ask the margin question for many quarters until EVO, you were generating kind of 50% to 65% incremental margin on revenue growth and then it stepped down to like the 40s, which made sense. And now this quarter, it stepped back into the range, one of the best incrementals in many quarters. Is that 50% to 65% the right way to kind of think about it longer term?
Cameron Bready: Yes. I think that's probably a fair way to continue to think about it. We talked over the course of the last few quarters just around the acquisition of EVO and obviously, that rebased margin is lower, and we had a fair amount of work to do. I would think to shore up the EVO environment to make sure that it was operating at our standards, particularly in markets that we didn't overlap with EVO, where we're having to rely on their technology. And that was somewhat offsetting the synergy benefits that we were realizing over that period as well. But as we move forward, I think Q2 is really represented by and large of kind of where we see the business as we move forward. We still have some more synergies to realize around EVO, and we're still investing, obviously, in the business as well. But we were pleased with that 30 basis points of margin expansion in the second quarter. We're targeting 30 basis points for the full year. As we talked about before, as Josh mentioned, that reflects a little bit of uptick in the back half, just to get the overall to 30 basis points for the full year. And I think then that gives us kind of a good jumping off point heading into 2025 and kind of really reflects where the business is going. I'd also note, Dave, and I know you appreciate this, we've had that conversation directly. Our margin profile is now close to 50% in merchant. So it is, on average, a little easier to expand margins 50 to 70 basis points a year when you're in the low 40s than it is when you're not in 40s. So that math is not lost on you, I know. But as we think about the business, we're very, very focused on continuing to drive margin expansion in the merchant segment. And I think we're well positioned to do that. And I think Q2 just sort of gives you a demonstration of our ability to do that. But more importantly, it's reflecting what we said was going to happen over the last several quarters. As we continue to execute against synergies, as we've made the investments we need to make to share technology environments, we're getting the business sequentially continually back to sort of par post EVO and now we're seeing expansion. And obviously, we're pleased with that outcome.
David Koning: Yes. Great, thanks. And maybe just one follow-up. Quality of earnings you highlighted several times. Merger and integration costs around the lowest in five years this quarter. Does that continue to go down and maybe when are we going to be at a point of just no more add-backs?
Josh Whipple: Yes. Look, Dave, so I think we've shown a real positive trend as it relates to realized integration expenses over the last three to four quarters, and they've continued to go ahead and trend lower as we said they would. And if you think about it, we're now about year and half into the integration. We said that of EVO and we said that we would complete that two years out, which would be in the March of 2025 timeframe where we'd expect to go ahead and achieve $135 million in run rate synergies. So again, I would -- I think you can fully expect the integration expenses to continue to go ahead and trend lower through the balance of the year as we get closer to that time period that we called out when we initially announced the transaction. And I also would say, if you look at our quality of earnings, they have continued to go ahead and improve. And again, our GAAP relative to adjusted is over 50% in this quarter, and we would continue to expect that to accrete higher.
David Koning: Great, thank you.
Operator: Our last question comes from the line of Tien-Tsin Huang from J.P. Morgan. Your line is open.
Tien-Tsin Huang: Hey, good morning. It's really encouraging to see the merchant volume spread here stay positive. I think a couple of points. So anything unusual there and do you expect that favorable spread to continue in second half, it looks -- sounds like the software side and integrated side has grown double-digit and so my guess is yes but wanted to hear from you?
Cameron Bready: Yeah, I think we did, Tien-Tsin and thanks for the question. Obviously, we have talked a lot about Point of Sale. We are seeing good momentum in Point of Sale. Point of Sale drive is a different revenue stream, four hours versus jut the fear of payment experience and obviously that is somewhat contributing to what we're seeing on the revenue side versus what we're seeing kind of on the volume side. I think our goal as we continue to move forward in time as always want those two things to be correlated. But obviously, as we continue to invest in Point of Sale, we continue to invest in embedded commerce solutions, we continue to invest in areas to further differentiate ourselves beyond the pure payment economics, many of those revenue streams aren't purely tied to volume. So we're hopeful we continue to see sort of continued growth in revenue that may outpace volume but I don't want those two trends to become uncorrelated over time because when we're selling those capabilities, it's generally driving a payment experience as well, and we hope to see volume continue to drive forward from that point also.
Tien-Tsin Huang: Perfect, thank you for that. And then just on the issuing side, Cameron, I'm just curious on the pipeline front. There's a lot going on with the litigation being pushed out. And I know Visa (NYSE:V) announced a few new things like Flex (NASDAQ:FLEX) Credentials. I'm just curious if you're seeing any demand change or activity with respect to issuer either conversions or de novo activity?
Cameron Bready: Yes. I would say, Tien-Tsin, certainly in the short to medium term, we feel good about how we're positioned with that business. We're executing really well. The things we can control in that business are generally progressing very nicely. We've got 65 million kind of accounts on file in our conversion pipeline. We've got seven LOIs that we're working to convert to full contracts right now. We are seeing new opportunities emerge. We called out Amadeus this quarter, as it relates to being the first kind of customer or fintech customer in Europe, leveraging our cloud-based in AWS capabilities. So we feel good about the further expansion of that product set as we move forward as well. So we are seeing, I would say, good momentum on the commercial and sales side of the business. And we've got good metrics to demonstrate that in the short to medium term. We're well positioned to continue to grow that business at a very stable level. I think long term, it's largely our ability to grow and accelerate growth in that business is tied to what we're doing around modernization. And as I called out in my script today, we are very much tracking towards completing development of the customer-facing sort of applications by the end of this year. We're in pilot with a number of customers already. And obviously, I think that positions us to be in market with those solutions in 2025. And I think that clearly is important to kind of unlocking new opportunities for that business, not only across sort of the segments of the FI channel that we can support in different geographies around the globe that we can attack. But I think more importantly, some of the more developing used cases that we're seeing around cards that I think require our capabilities to be consumed a little bit differently than they've been able to be consumed historically, that's something we're going to be able to deliver through our modernization investment. So better enablement capabilities for our clients, more consumability of our, sort of, I think, market-leading solutions. I think that really will go a long way to kind of unlocking some of the used cases that I think you were alluding to in your question, and we're excited, obviously, to be able to start bringing that about as we get into 2025 and beyond.
Tien-Tsin Huang: Got it, that’s good update, see you in September.
Cameron Bready: Thanks, Tien-Tsin. Well, on behalf of Global Payments, thank you very much for joining us this morning. I hope everyone has a great day. I appreciate your interest in our company.
Operator: That does conclude our conference for today. Thank you for participating. You may all disconnect.
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