Global Payments Credits EVO And ‘Profacs’ for Robust Second-Quarter Merchant Results

Merchant volume is surging ahead for Global Payments Inc. as the big processor looks to further acquisitions following its absorption of EVO Payments Inc. in March and pursues a strategy of signing up companies it calls “profacs,” or payments facilitators that rely on Global for key functions like merchant underwriting and chargeback management.

The Atlanta-based company reported early Tuesday its merchant revenue climbed 17% year-over-year in the quarter ended June 30, to $1.68 billion. That came as merchant volume rose 20%, double the rate notched in the first quarter and the biggest increase since the first quarter of 2022. Helping drive the surge was Global’s full absorption EVO Payments, a processor it acquired for $4 billion in a deal that closed in March. Organic growth in merchant volume—growth apart from acquisitions—was 9%, the company said.

“The performance for the quarter was ahead of our expectations,” Cameron Bready told equity analysts on an early-morning call. Bready, formerly chief operating officer, took over as CEO June 1 on the departure of Jeff Sloan, who had held the title for 10 years.

But Bready also credited a strategy Global has pursued in which it offers payment facilitators a range of back-office services. Payfacs, or payment facilitators, are independent companies that enable other firms to sign up merchants on the payfac’s merchant account. Once aligned with Globals’ back-office services, these entities become what the company calls profacs.

“We’re seeing a lot of traction” with the profac strategy, Bready said. “The profac gets the benefit of the payfac model but none of the [administrative] pain that comes along with the model. It’s going to continue to grow in popularity in the market.”

Global, which also supports financial institutions in card issuing, saw that part of its business record $505 million in adjusted net revenue for the quarter. That was up 5% year-over-year on a constant-currency basis. The unit’s net operating margin of 46.7%, however, nearly matched the merchant division’s 48.5%.

Having absorbed EVO, however, Global is now hunting for more acquisitions. “I want to use [mergers and acquisitions} to support all the pillars of our strategy,” Bready said. Then, in a nod to the economies of scale such deals can bring, he added, “M&A is a lever we can use, it’s a scale business.”

Overall, Global recorded $2.2 billion in revenue for the quarter, up 7% year-over-year, or 15% with “dispositions” excluded. Net income totaled $685.3 million, up 4%.