Global Payments’ Heartland Merger On Track, Executives Say

The $4.3 billion merger of Global Payments Inc. and Heartland Payment Systems Inc. appears to be paying off.

Atlanta-based Global Payments released its fiscal fourth-quarter and year-end results Thursday. For the year, which ended May 31, total revenue of $2.9 billion was up 4.5% from $2.8 billion in the prior year. Quarterly revenue of $747.1 million was up 5.7% from $706.5 million in the 2015 fourth quarter.

“We are very pleased with the early results at Heartland,” Jeffrey S. Sloan, Global Payments chief executive, said during a conference call with analysts Thursday discussing the company’s fiscal fourth-quarter and year-end results. “We have successfully completed our first 90-day objectives,” he said, which included a reduction in positions, closing some facilities, and cutting expenses. Global Payments declined to comment on the job cuts and office closings. Currently, the company says it has more than 8,500 employees. In December, when the Global Payments-Heartland merger was announced, Global Payments said it had approximately 4,500 employees.

Global Payments noted other achievements post-merger. It acquired a direct sales force, which it lacked. “There’s a lot of room for growth in terms of headcount adds and coverage we’ll see in coming quarters,” said David Mangum, president and chief operating officer.

The Heartland sales force is preparing for cross-border sales, Mangum said, starting in Canada. Its focus will include selling products from OpenEdge, the Global Payments integrated payments unit. Already, the company has 30 integrated software vendors and value-added resellers signed up in Canada. In December, Global Payments said it had more than 2,000 such partners globally.

In percentage terms, Global Payments expects growth in the mid to high-teens from its OpenEdge suite of products, Mangum said.

This emphasis on direct sales means the focus has shifted from the processor’s independent sales organizations that resell Global Payments’ products. “With the pivot we made to direct distribution, that is the focus of our business going forward. We’ll continue to focus on our ISO partners as well,” Sloan said.

Another benefit of the Heartland deal is that it has brought an e-commerce product into the Global Payments mix, said Cameron M. Bready, executive vice president and chief financial officer. “We signed a record number of Heartland e-commerce customers in June,” Bready said.

Global Payments also said that is has not experienced delays associated with the EMV rollout. “We have no backlog in our infrastructure in the integrated or direct channel,” Magnum said.

Analysts also asked about the potential impact of Britain’s vote to leave the European Union, or “Brexit.”

While the company anticipated the outcome, it was not the preferred one, Sloan said. Global Payments deferred adding some jobs and products following the vote. It has plans in place should the situation change, he said. U.K. revenue accounts for a single-digit percentage of its overall revenue, he noted.

For fiscal 2016, North America revenue was $2.1 billion, compared with $631.9 million from Europe and $213.6 million from the Asia-Pacific region.

In other Global Payments news, the company announced it is changing its fiscal year to one that ends December 31. The switch is being made to make it easier to compare the company’s performance with its competitors, the company said.