What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-07 compared with 2024-05-01 · 133 added, 84 removed, 199 unchanged (52% of the section changed)

8 unchanged sentences

These investments include new product development and innovation to further enhance and differentiate our suite of technology and cloud-based solutions available to customers, along with migration of certain underlying technology platforms to cloud environments to enhance performance, improve speed to market and drive cost efficiencies.

We also continue to execute on integration and other activities, such as combining business operations, streamlining technology infrastructure, eliminating duplicative corporate and operational support structures and realizing scale efficiencies.

Highlights related to our financial condition at March 31, 2024, and results of operations for the three months then ended, include the following:

• Consolidated revenues for the three months ended March 31, 2024 increased to $2,420.2 million compared to $2,292.4 million for the prior year.

The increase in consolidated revenues was primarily due to an increase in transaction volumes, including from the EVO business acquired in March 2023, partially offset by the effects on revenue of the businesses divested in April 2023.

• Merchant Solutions and Issuer Solutions segment operating income and operating margin for the three months ended March 31, 2024 increased compared to the prior year primarily due to the favorable effect of increases in revenues, since certain fixed costs do not vary with revenues, and continued expense management.

• Consolidated operating income for the three months ended March 31, 2024 included the favorable effects of the increase in revenues as compared to the prior year, lower corporate expenses and the effects of the business divestitures completed in April 2023, partially offset by an increase in amortization of acquired intangibles, primarily related to the acquisition of EVO.

Consolidated operating income for the three months ended March 31, 2023 included the unfavorable effect of the loss on business disposition related to the sale of our consumer business.

We also continue to execute on integration and other business transformation activities, such as combining business operations, streamlining technology infrastructure, eliminating duplicative corporate and operational support structures and realizing scale efficiencies.

Highlights related to our financial condition at June 30, 2024, and results of operations for the three and six months then ended, include the following:

• Consolidated revenues for the three and six months ended June 30, 2024 increased to $2,568.8 million and $4,989.0 million, respectively, compared to $2,452.5 million and $4,744.9 million, respectively, for the prior year.

The increase in consolidated revenues was primarily due to an increase in transaction volumes.

The change for the three months ended June 30, 2024 included the unfavorable effect on revenues of the consumer business divested in April 2023.

For the six months ended June 30, 2024, the effect on revenues from the EVO business acquired in March 2023 was offset by the effect on revenue of the businesses divested in April 2023.

• Merchant Solutions and Issuer Solutions segment operating income and operating margin for the three and six months ended June 30, 2024 increased compared to the prior year primarily due to the favorable effect of increases in revenues, since certain fixed costs do not vary with revenues, and continued expense management.

• Consolidated operating income for the three and six months ended June 30, 2024 included the favorable effects of the increase in revenues as compared to the prior year and lower share-based compensation and acquisition and integration expenses, partially offset by an increase in amortization of acquired intangibles, primarily related to the acquisition of EVO.

Consolidated operating income for the three and six months ended June 30, 2023 included the effects of the gain on the sale of our gaming business and the loss on the sale of our consumer business.

• On February 23, 2024, we issued $2.0 billion in aggregate principal amount of 1.500% convertible unsecured senior notes due March 2031 through a private placement.

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Merchant Solutions and Issuer Solutions.

As described in “Note 3 – Business Disposition” in the notes to the accompanying unaudited consolidated financial statements, during the second quarter of 2023, we completed the sale of the consumer portion of our Netspend business, which comprised our former Consumer Solutions segment.

As described in “Note 3 – Business Dispositions” in the notes to the accompanying unaudited consolidated financial statements, during the second quarter of 2023, we completed the sale of the consumer portion of our Netspend business, which comprised our former Consumer Solutions segment.

Our former Consumer Solutions segment is presented below for periods prior to disposition.

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Business—Business Segments” within our Annual Report on Form 10-K for the year ended December 31, 2023, incorporated herein by reference, and “Note 15—Segment Information” in the notes to the accompanying unaudited consolidated financial statements.

The following table sets forth key selected financial data for the three months ended March 31, 2024 and 2023, this data as a percentage of total revenues and the changes between periods in dollars and as a percentage of the prior-period amount.

The income statement data for the three months ended March 31, 2024 and 2023 is derived from the accompanying unaudited consolidated financial statements included in Part I, Item 1 — Financial Statements.

The following table sets forth key selected financial data for the three months ended June 30, 2024 and 2023, this data as a percentage of total revenues and the changes between periods in dollars and as a percentage of the prior-period amount.

The income statement data for the three months ended June 30, 2024 and 2023 is derived from the accompanying unaudited consolidated financial statements included in Part I, Item 1 — Financial Statements.

Three Months Ended

March 31, 2024 % of Revenues (1)

June 30, 2024 % of Revenues (1)

Three Months Ended

March 31, 2023 % of Revenues (1)

June 30, 2023 % of Revenues (1)

$ Change % Change

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Selling, general and administrative 1,057,661 41.2 % 1,013,514 41.3 % 44,147 4.4 %

Loss on business disposition — — % 244,833 10.7 % (244,833) NM

Gain on business dispositions — — % (105,738) (4.3) % 105,738 NM

Operating expenses $ 1,996,145 77.7 % $ 1,849,728 75.4 % $ 146,417 7.9 %

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Corporate (210,277) (8.2) % (204,136) (8.3) % (6,141) 3.0 %

Loss on business disposition — — % (244,833) (10.7) % 244,833 NM

Gain on business dispositions — — % 105,738 4.3 % (105,738) NM

Operating income $ 572,623 22.3 % $ 602,741 24.6 % $ (30,118) (5.0) %

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Issuer Solutions 18.0 % 16.2 % 1.8 %

Consumer Solutions NM (4.0) % NM

Consumer Solutions — % 4.8 % NM

NM = Not meaningful

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(2) Revenues, consolidated operating expenses, operating income and operating margin reflect the effects of acquired businesses from the respective acquisition dates and the effects of divested businesses through the respective disposal dates.

See “Note 2—Acquisition” and “Note 3—Business Disposition” for further discussion.

Operating income included acquisition and integration expenses of $78.9 million and $101.8 million for the three months ended March 31, 2024 and 2023, respectively, which were primarily included within Corporate expenses.

Consolidated revenues for the three months ended March 31, 2024 increased by 5.6% to $2,420.2 million, compared to $2,292.4 million for the prior year.

The increase in revenues was primarily due to an increase in transaction volumes, including from the EVO business acquired in March 2023, partially offset by the effects on revenue of the businesses divested in April 2023.

See “Note 2—Acquisition” and “Note 3—Business Dispositions” for further discussion.

Operating income included acquisition and integration expenses of $55.7 million and $67.5 million for the three months ended June 30, 2024 and 2023, respectively, which were primarily included within Corporate expenses.

The following table sets forth key selected financial data for the six months ended June 30, 2024 and 2023, this data as a percentage of total revenues and the changes between periods in dollars and as a percentage of the prior-period amount.

The income statement data for the six months ended June 30, 2024 and 2023 is derived from the accompanying unaudited consolidated financial statements included in Part I, Item 1 — Financial Statements.

Six Months Ended

June 30, 2024 % of Revenues (1)

Six Months Ended June 30, 2023 % of Revenues (1)

$ Change % Change

(dollar amounts in thousands)

Revenues (2) :

Merchant Solutions $ 3,805,119 76.3 % $ 3,447,903 72.7 % $ 357,216 10.4 %

Issuer Solutions 1,216,243 24.4 % 1,161,349 24.5 % 54,894 4.7 %

Consumer Solutions — — % 182,740 3.9 % (182,740) NM

Intersegment eliminations (32,407) (0.6) % (47,076) (1.0) % 14,669 (31.2) %

Consolidated revenues $ 4,988,955 100.0 % $ 4,744,916 100.0 % $ 244,039 5.1 %

Consolidated operating expenses (2) :

Cost of service $ 1,860,874 37.3 % $ 1,889,705 39.8 % $ (28,831) (1.5) %

Selling, general and administrative 2,103,206 42.2 % 2,056,641 43.3 % 46,565 2.3 %

Net loss on business dispositions — — % 139,095 2.9 % (139,095) NM

Operating expenses $ 3,964,080 79.5 % $ 4,085,441 86.1 % $ (121,361) (3.0) %

Operating income (loss) (2) :

Merchant Solutions $ 1,252,962 25.1 % $ 1,110,757 23.4 % $ 142,205 12.8 %

Issuer Solutions 216,472 4.3 % 178,511 3.8 % 37,961 21.3 %

Consumer Solutions — — % (3,908) (0.1) % 3,908 NM

Corporate (3)

(444,559) (8.9) % (486,790) (10.3) % 42,231 (8.7) %

Net loss on business dispositions — — % (139,095) (2.9) % 139,095 NM

Operating income $ 1,024,875 20.5 % $ 659,475 13.9 % $ 365,400 55.4 %

Operating margin (2) :

Merchant Solutions 32.9 % 32.2 % 0.7 %

Issuer Solutions 17.8 % 15.4 % 2.4 %

Consumer Solutions — % (2.1) % NM

NM = Not meaningful

(1) Percentage amounts may not sum to the total due to rounding.

See “Note 2—Acquisition” and “Note 3—Business Dispositions” for further discussion.

Operating income included acquisition and integration expenses of $134.6 million and $169.3 million for the six months ended June 30, 2024 and 2023, respectively, which were primarily included within Corporate expenses.

Consolidated revenues for the three and six months ended June 30, 2024 increased by 4.7% and 5.1%, respectively, to $2,568.8 million and $4,989.0 million, respectively, compared to $2,452.5 million and $4,744.9 million, respectively, for the prior year.

The increase in revenues was primarily due to an increase in transaction volumes.

The change for the three months ended June 30, 2024 included the unfavorable effect on revenues of the consumer business divested in April 2023.

For the six months ended June 30, 2024, the effect on revenues from the EVO business acquired in March 2023 was offset by the effect on revenue of the businesses divested in April 2023.

Merchant Solutions Segment.

Revenues from our Merchant Solutions segment for the three months ended March 31, 2024 increased by 14.2% to $1,834.1 million, compared to $1,605.6 million for the prior year.

The increase in revenues was primarily due to an increase in transaction volumes, including from the EVO business, and growth in subscription and software revenue.

Revenues from our Merchant Solutions segment for the three and six months ended June 30, 2024 increased by 7.0% and 10.4%, respectively, to $1,971.0 million and $3,805.1 million, respectively, compared to $1,842.3 million and $3,447.9 million, respectively, for the prior year.

The increase in revenues was primarily due to an increase in transaction volumes and growth in subscription and software revenue.

The increase in transaction volumes for the six months ended June 30, 2024 also included the effect of the EVO business acquired in March 2023.

Issuer Solutions Segment.

Revenues from our Issuer Solutions segment for the three months ended March 31, 2024 increased by 5.6% to $602.7 million, compared to $570.9 million for the prior year.

Revenues from our Issuer Solutions segment for the three and six months ended June 30, 2024 increased by 3.9% and 4.7%, respectively, to $613.5 million and $1,216.2 million, respectively, compared to $590.4 million and $1,161.3 million, respectively, for the prior year.

The increase in revenues was primarily due to an increase in transaction volumes.

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Cost of Service.

Cost of service for the three months ended March 31, 2024 was $922.4 million, compared to $947.8 million for the prior year.

Cost of service as a percentage of revenues decreased to 38.1% for the three months ended March 31, 2024, compared to 41.3% for the prior year.

The decrease in cost of service was primarily due to continued prudent expense management and the elimination of costs related to the businesses divested in 2023.

Cost of service for the three and six months ended June 30, 2024 was $938.5 million and $1,860.9 million, respectively, compared to $942.0 million and $1,889.7 million, respectively, for the prior year.

Cost of service as a percentage of revenues decreased to 36.5% and 37.3%, respectively, for the three and six months ended June 30, 2024, compared to 38.4% and 39.8%, respectively, for the prior year.

The decrease in cost of service was primarily due to the elimination of costs related to the businesses divested in 2023.

These favorable effects were partially offset by the inclusion of costs for the EVO business, including the related amortization of acquired intangibles.

Cost of service included amortization of acquired intangibles of $343.2 million and $301.3 million for the three months ended March 31, 2024 and 2023, respectively.

Cost of service included amortization of acquired intangibles of $345.9 million and $344.4 million for the three months ended June 30, 2024 and 2023, respectively.

Cost of service included amortization of acquired intangibles of $689.2 million and $645.7 million for the six months ended June 30, 2024 and 2023, respectively.

The decrease in cost of service as a percentage of revenues also reflects the favorable effect of the increase in revenues, since certain fixed costs do not vary with revenues.

Selling, General and Administrative Expenses .

Selling, general and administrative expenses for the three months ended March 31, 2024 were $1,045.5 million, compared to $1,043.1 million for the prior year.

Selling, general and administrative expenses as a percentage of revenues was 43.2% for the three months ended March 31, 2024, compared to 45.5% for the prior year.

Higher variable selling and other costs related to the increase in revenues and the inclusion of costs for the EVO business were offset by the elimination of costs related to the businesses divested in 2023, lower acquisition and integration expenses and a decrease in share-based compensation expense.

The change in selling, general and administrative expenses as a percentage of revenues also reflects the favorable effect of the increase in revenues, since certain fixed costs do not vary with revenues.

Selling, general and administrative expenses included acquisition and integration expenses of $78.9 million and $101.4 million for the three months ended March 31, 2024 and 2023, respectively.

Share-based compensation expense was $40.1 million and $89.6 million for the three months ended March 31, 2024 and 2023, respectively.

Corporate expenses for the three months ended March 31, 2024 were $234.3 million, compared to $282.7 million for the prior year.

The decrease for the three months ended March 31, 2024 was primarily due to the decrease in acquisition and integration and share-based compensation expenses as described above.

Selling, general and administrative expenses for the three and six months ended June 30, 2024 were $1,057.7 million and $2,103.2 million, respectively, compared to $1,013.5 million and $2,056.6 million, respectively, for the prior year.

Selling, general and administrative expenses as a percentage of revenues was 41.2% and 42.2%, respectively, for the three and six months ended June 30, 2024, compared to 41.3% and 43.3%, respectively, for the prior year.

Higher variable selling and other costs related to the increase in revenues and the inclusion of costs for the EVO business were partially offset by the elimination of costs related to the businesses divested in 2023 and lower share-based compensation and acquisition and integration expenses in the current year.

The decrease in selling, general and administrative expenses as a percentage of revenues also reflects the favorable effect of the increase in revenues, since certain fixed costs do not vary with revenues.

Selling, general and administrative expenses included acquisition and integration expenses of $55.7 million and $67.5 million for the three months ended June 30, 2024 and 2023, respectively, and $134.6 million and $169.3 million for the six months ended June 30, 2024 and 2023, respectively.

Share-based compensation expense was $43.2 million and $47.1 million for the three months ended June 30, 2024 and 2023, respectively, and $83.4 million and $136.7 million for the six months ended June 30, 2024 and 2023, respectively.

Corporate expenses for the three and six months ended June 30, 2024 were $210.3 million and $444.6 million, respectively, compared to $204.1 million and $486.8 million, respectively, for the prior year.

For the three and six months

ended June 30, 2024, corporate expenses were favorably affected by the decrease in acquisition and integration and share-based compensation expenses as described above.

Corporate expenses for the three months ended June 30, 2024 also included higher professional services costs as compared to the prior year.

Operating Income and Operating Margin

Consolidated operating income for the three months ended March 31, 2024 was $452.3 million, compared to $56.7 million for the prior year.

Operating margin for the three months ended March 31, 2024 was 18.7%, compared to 2.5% for the prior year.

Consolidated operating income and operating margin for the three months ended March 31, 2024 compared to the prior year included the favorable effects of the increase in revenues, since certain fixed costs do not vary with revenues, prudent expense management and lower acquisition and integration and share-based compensation expenses as described above.

Consolidated operating income for the three and six months ended June 30, 2024 was $572.6 million and $1,024.9 million, respectively, compared to $602.7 million and $659.5 million, respectively, for the prior year.

Operating margin for the three and six months ended June 30, 2024 was 22.3% and 20.5%, respectively, compared to 24.6% and 13.9%, respectively, for the prior year.

Consolidated operating income and operating margin for the three and six months ended June 30, 2024 compared to the prior year included the favorable effects of the increase in revenues, since certain fixed costs do not vary with revenues, prudent expense management and lower acquisition and integration and share-based compensation expenses as described above.

These effects were partially offset by higher amortization of acquired intangibles as described above.

Consolidated operating income and operating margin for the three months ended March 31, 2023 included the effects of the $244.8 million loss on business disposition related to the sale of our consumer business.

Consolidated operating income and operating margin for the three months ended June 30, 2023 included the effects of the $104.1 million gain on the sale of our gaming business.

Consolidated operating income for the six months ended June 30, 2023 also included the effects of the $243.2 million net loss on the sale of our consumer business.

Segment Operating Income and Operating Margin

In our Merchant Solutions segment, operating income for the three months ended March 31, 2024 increased compared to the prior year primarily due to the favorable effects of the increase in revenues, since certain fixed costs do not vary with revenues, and continued expense management.

In our Merchant Solutions segment, operating income and operating margin for the three and six months ended June 30, 2024 increased compared to the prior year primarily due to the favorable effects of the increase in revenues, since certain fixed costs do not vary with revenues, and continued expense management.

These favorable effects were partially offset by incremental expenses related to continued investment in products, innovation and our technology environments.

In addition, the inclusion of the EVO business had an unfavorable effect on the Merchant Solutions operating margin for the three months ended March 31, 2024 as compared to the prior year.

In our Issuer Solutions segment, operating income and operating margin for the three months ended March 31, 2024 increased compared to the prior year primarily due to the favorable effect of the increase in revenues, since certain fixed costs do not vary with revenues, and continued expense management.

In our Issuer Solutions segment, operating income and operating margin for the three and six months ended June 30, 2024 increased compared to the prior year primarily due to the favorable effect of the increase in revenues, since certain fixed costs do not vary with revenues, and continued expense management.

Other Income/Expense, Net

Interest and other income for the three months ended March 31, 2024 increased to $35.9 million, compared to $11.2 million for the prior year, primarily due to interest income associated with the seller financing notes that were issued in connection with the sale of our consumer business in the second quarter of 2023.

Interest and other expense for the three months ended March 31, 2024 increased to $162.1 million, compared to $122.9 million for the prior year, primarily due to an increase in our average outstanding borrowings along with higher average interest rates on outstanding borrowings.

Income Tax Expense (Benefit)

For the three months ended March 31, 2024, our effective income tax rate of 5.9% included the favorable effects of a change in the assessment of the need for a valuation allowance related to certain foreign tax credit carryforwards, foreign interest income not subject to tax, tax credits and the foreign-derived intangible income deduction.

For the three months ended March 31, 2023, we reported a tax benefit of 57.0%.

The tax rate for the three months ended March 31, 2023 included the favorable effects of foreign interest income not subject to tax, tax credits and the foreign-derived intangible income deduction.

In addition, during the three months ended March 31, 2023, we recognized a tax benefit on the loss on business disposition at the applicable tax rate, whereas the earnings other than this discrete item were tax effected at the lower estimated annual effective tax rate.

Interest and other income for the three and six months ended June 30, 2024 increased to $35.3 million and $71.2 million, respectively, compared to $27.9 million and $39.1 million, respectively, for the prior year, primarily due to interest income associated with the seller financing notes that were issued in connection with the sale of our consumer and gaming businesses in the second quarter of 2023.

Interest and other expense for the three and six months ended June 30, 2024 was $159.2 million and $321.3 million, respectively, compared to $191.4 million and $314.4 million, respectively, for the prior year.

For the three months ended June 30, 2024, the decrease in interest and other expense was primarily due to lower average interest rates on outstanding borrowings.

For the six months ended June 30, 2024, the increase in interest and other expense was primarily due to an increase in our average outstanding borrowings.

In addition, interest and other expense for the three and six months ended June 30, 2023 included a noncash charge of $18.2 million for the estimated future credit losses on the new seller financing notes receivable.

Income Tax Expense

For the three and six months ended June 30, 2024, our effective income tax rates of 17.3% and 12.5%, respectively, included the favorable effects of foreign interest income not subject to tax, tax credits and the foreign-derived intangible income deduction.

In addition, for the six months ended June 30, 2024, our effective income tax rate included the favorable effect of a change in the assessment of the need for a valuation allowance related to certain foreign tax credit carryforwards.

For the three and six months ended June 30, 2023, we reported a tax expense of 39.2% and 36.7%, respectively, of the reported income before taxes.

During the three and six months ended June 30, 2023, we recognized a gain on the dispositions of our consumer and gaming businesses for income tax reporting purposes, while a net loss on the dispositions was recognized for financial reporting purposes.

These effects were partially offset by the favorable effect on the rate of foreign interest income not subject to tax, tax credits and the foreign-derived intangible income deduction.

In December 2022, the EU Member States formally adopted the Pillar Two Directive, which generally provides for a global minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development Pillar Two Framework.

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We do not expect the Pillar Two Directive to have any significant effect on our financial statements.

Net Income (loss) Attributable to Global Payments

Net income attributable to Global Payments was $313.3 million for the three months ended March 31, 2024 compared to net loss of $11.0 million for the prior year, reflecting the changes noted above.

Diluted Earnings (Loss) per Share

Diluted earnings per share was $1.22 for the three months ended March 31, 2024 compared to diluted loss per share of $0.04 for the prior year.

Diluted earnings per share for the three months ended March 31, 2024 reflects the changes in net income.

Net Income Attributable to Global Payments

Net income attributable to Global Payments was $374.8 million and $688.1 million, respectively, for the three and six months ended June 30, 2024 compared to $274.1 million and $263.1 million, respectively, for the prior year, reflecting the changes noted above.

Diluted Earnings per Share

Diluted earnings per share was $1.47 and $2.68, respectively, for the three and six months ended June 30, 2024 compared to $1.05 and $1.00, respectively, for the prior year.

Diluted earnings per share for the three and six months ended June 30, 2024 reflects the changes in net income.

Liquidity and Capital Resources

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We believe that our current and projected sources of liquidity will be sufficient to meet our projected liquidity requirements associated with our operations for the near and long term.

At March 31, 2024, we had cash and cash equivalents totaling $2,167.6 million.

At June 30, 2024, we had cash and cash equivalents totaling $2,097.2 million.

Of this amount, we considered $751.8 million to be available for general purposes, of which $62.9 million is undistributed foreign earnings considered to be indefinitely reinvested outside the United States.

The available cash of $751.8 million does not include the following:

(i) settlement-related cash balances, (ii) funds held as collateral for merchant losses ("Merchant Reserves") and (iii) funds held for customers.

(i) settlement-related cash balances, (ii) funds held as collateral for merchant losses ("Merchant Reserves") and (iii) certain funds held for customers.

Settlement-related cash balances represent funds that we hold when the incoming amount from the card networks precedes the funding obligation to the merchant.

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however, these funds are generally paid out in satisfaction of settlement processing obligations the following day.

Merchant Reserves serve as collateral to minimize contingent liabilities associated with any losses that may occur under the merchant's agreement.

Reserves serve as collateral to minimize contingent liabilities associated with any losses that may occur under the merchant's agreement.

While this cash is not restricted in its use, we believe that designating this cash as a Merchant Reserve strengthens our fiduciary standing with our member sponsors.

Funds held for customers, which are not restricted in their use, include amounts collected before the corresponding obligation is due to be settled to or at the direction of our customers.

We also had restricted cash of $159.4 million as of March 31, 2024, representing amounts deposited by customers for prepaid card transactions and funds held as a liquidity reserve.

We also had restricted cash of $190.0 million as of June 30, 2024, representing amounts deposited by customers for prepaid card transactions and funds held as a liquidity reserve.

These balances are subject to local regulatory restrictions requiring appropriate segregation and restriction in their use.

Operating activities provided net cash of $416.3 million and $599.5 million for the three months ended March 31, 2024 and 2023, respectively, which reflect net income adjusted for noncash items, including depreciation, amortization and the provision for credit losses, charges associated with the net loss on business disposition and facility exit charges, and changes in operating assets and liabilities.

The decrease in cash flows from operating activities from the prior year was due to fluctuations in operating results and related assets and liabilities that are affected primarily by timing of month-end and transaction volume, including changes in settlement processing assets and obligations and accounts payable and other liability balances.

We used net cash in investing activities of $148.0 million and $4,206.8 million during the three months ended March 31, 2024 and 2023, respectively.

Operating activities provided net cash of $1,153.2 million and $1,164.5 million for the six months ended June 30, 2024 and 2023, respectively, which reflect net income adjusted for noncash items, including depreciation, amortization, the provision for credit losses and charges associated with the net loss on business dispositions, and changes in operating assets and liabilities.

The decrease in cash flows from operating activities from the prior year was due to assets and liabilities that are affected primarily by timing of month-end and transaction volume, including changes in settlement processing assets and obligations and accounts payable and other liability balances.

We used net cash in investing activities of $697.3 million and $4,001.5 million during the six months ended June 30, 2024 and 2023, respectively.

Cash used for investing activities primarily represents cash used to fund acquisitions, net of cash and restricted cash acquired, and capital expenditures.

During the three months ended March 31, 2024 and 2023, we used cash of $2.6 million and $4,046.8 million, respectively, for acquisitions.

We made capital expenditures of $145.4 million and $162.2 million during the three months ended March 31, 2024 and 2023, respectively.

During the six months ended June 30, 2024 and 2023, we used cash of $372.7 million and $4,101.4 million, respectively, for acquisitions.

We made capital expenditures of $324.7 million and $331.0 million during the six months ended June 30, 2024 and 2023, respectively.

These investments include software and hardware to support the development of new technologies, infrastructure to support our growing business and the consolidation and enhancement of our operating platforms.

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We expect to continue to make significant capital investments in the business, and we anticipate capital expenditures to grow at a similar rate as our revenue growth during the year ending December 31, 2024.

Additionally, investing cash flows for the six months ended June 30, 2023 includes the net effect on cash from the sale of our consumer and gaming businesses and the issuance of a $50 million secured revolving credit facility available from the date of the sale to the purchasers of the consumer business, which was subsequently repaid in the third quarter of 2023.

Financing activities include borrowings and repayments made under our various debt arrangements, as well as borrowings and repayments made under specialized lines of credit to fund daily settlement activities.

Our borrowing arrangements are further described in "Note 6—Long-Term Debt and Lines of Credit" in the notes to the accompanying unaudited consolidated financial statements and below under "Long-Term Debt and Lines of Credit." Financing activities also include cash flows associated with common stock repurchase programs and share-based compensation programs, cash distributions made to our shareholders and cash contributions from and distributions to noncontrolling interests.

We used net cash in financing activities of $163.4 million during the three months ended March 31, 2024, and financing activities provided net cash of $3,610.8 million during the three months ended March 31, 2023.

Proceeds from long-term debt were $4,609.0 million and $4,708.1 million for the three months ended March 31, 2024 and 2023, respectively.

Repayments of long-term debt were $2,628.5 million and $1,556.0 million for the three months ended March 31, 2024 and 2023, respectively.

We used net cash in financing activities of $372.0 million during the six months ended June 30, 2024, and financing activities provided net cash of $2,701.3 million during the six months ended June 30, 2024.

Proceeds from long-term debt were $6,289.0 million and $7,359.2 million for the six months ended June 30, 2024 and 2023, respectively.

Repayments of long-term debt were $4,430.1 million and $5,673.7 million for the six months ended June 30, 2024 and 2023, respectively.

Proceeds from and repayments of long-term debt consist of borrowings and repayments that we make with available cash, from time-to-time, under our revolving credit facility, as well as scheduled principal repayments we make on our senior notes, finance leases and other vendor financing arrangements.

During the three months ended March 31, 2024 and 2023, we had net repayments of $1,093.0 million and net borrowings of $1,048.6 million, respectively, under our commercial paper program.

During the six months ended June 30, 2024 and 2023, we had net repayments of $936.5 million and net borrowings of $1,841.7 million, respectively, under our commercial paper program.

Furthermore, in connection with the issuance of convertible notes in February 2024, we paid $256.3 million to purchase privately negotiated capped call transactions to hedge the potential dilutive effect upon conversion of the notes, or offset our cash obligation if the cash settlement option were to be elected.

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Activity under our settlement lines of credit is affected primarily by timing of month-end and transaction volume.

During the three months ended March 31, 2024 and 2023, we had net borrowings of $133.2 million and net repayments of $281.4 million, respectively, under our settlement lines of credit.

During the six months ended June 30, 2024 and 2023, we had net borrowings of $55.4 million and net repayments of $233.1 million, respectively, under our settlement lines of credit.

We repurchase our common stock mainly through open market repurchase plans and, at times, through accelerated share repurchase programs.

During the three months ended March 31, 2024 and 2023, we used $800.0 million and $202.8 million, respectively, to repurchase shares of our common stock.

The share repurchase activity for the three months ended March 31, 2024 included the repurchase of 1,414,759 shares using a portion of the net proceeds from our offering of 1.500% convertible unsecured senior notes due March 2031 through privately negotiated transactions with purchasers of notes in the offering, or one of their respective affiliates.

During the six months ended June 30, 2024 and 2023, we used $900.0 million and $418.3 million, respectively, to repurchase shares of our common stock.

The share repurchase activity for the six months ended June 30, 2024 included the repurchase of 1,414,759 shares using a portion of the net proceeds from our offering of 1.500% convertible unsecured senior notes due March 2031 through privately negotiated transactions with purchasers of notes in the offering, or one of their respective affiliates.

The purchase price per share of the common stock repurchased in such transactions equaled the closing price of the common stock on February 20, 2024, which was $130.80 per share.

As of March 31, 2024, the remaining amount available under our share repurchase program was $1,471.9 million.

We paid dividends to our common shareholders in the amounts of $63.6 million and $65.8 million during the three months ended March 31, 2024 and 2023, respectively.

We made distributions to noncontrolling interests in the amount of $4.7 million and $6.2 million during the three months ended March 31, 2024 and 2023, respectively.

As of June 30, 2024, the remaining amount available under our share repurchase program was $1,371.9 million.

We paid dividends to our common shareholders in the amounts of $127.0 million and $130.6 million during the six months ended June 30, 2024 and 2023, respectively.

We made distributions to noncontrolling interests in the amount of $10.9 million and $17.3 million during the six months ended June 30, 2024 and 2023, respectively.

Long-Term Debt and Lines of Credit

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The capped call transactions meet the accounting criteria to be reflected in stockholders’ equity and not accounted for as derivatives.

The cost of $256.3 million incurred in connection with the capped call transactions was reflected as a reduction to paid-in-capital in our consolidated balance sheet at March 31, 2024 net of applicable income taxes.

The cost of $256.3 million incurred in connection with the capped call transactions was reflected as a reduction to paid-in-capital in our consolidated balance sheet as of June 30, 2024, net of applicable income taxes.

We also have $1.5 billion in aggregate principal amount of 1.000% convertible notes due August 2029, which were issued during 2022 in a private placement pursuant to an investment agreement with Silver Lake Partners.

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The amounts available to borrow under the revolving credit facility are also determined by a financial leverage covenant.

As of March 31, 2024, there were borrowings of $1,598.0 million outstanding under the revolving credit facility, and the total available commitments under the revolving credit facility were $3.4 billion.

As of June 30, 2024, there were borrowings of $1.5 billion outstanding under the revolving credit facility with an interest rate of 6.80%, and the total available commitments under the revolving credit facility were $3.6 billion.

Commercial Paper

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The proceeds from issuances of commercial paper notes will be used primarily for general corporate purposes but may also be used for acquisitions, to pay dividends, for debt refinancing or for other purposes.

As of March 31, 2024 , we ha d net borrowings under our commercial paper program of $275.0 million outstanding with a weighted average annual interest rate of 6.01%.

As of June 30, 2024 , we ha d net borrowings under our commercial paper program of $431.6 million outstanding with a weighted average annual interest rate of 6.03%.

Compliance with Covenants

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The revolving credit agreement contains customary affirmative covenants and restrictive covenants, including, among others, financial covenants based on net leverage and interest coverage ratios, and customary events of default.

The required leverage ratio was increased to 4.50 to 1.00 as a result of the acquisition of EVO, and will gradually step-down over eight quarters to the original required ratio of 3.75 to 1.00.

As of March 31, 2024, the required leverage ratio was 4.25 to 1.00, and the required interest coverage ratio was 3.00 to 1.00.

We were in compliance with all applicable covenants as of March 31, 2024.

The required leverage ratio was increased as a result of the acquisition of EVO, and will gradually step-down over eight quarters to the original required ratio of 3.75 to 1.00.

As of June 30, 2024, the required leverage ratio was 4.25 to 1.00, and the required interest coverage ratio was 3.00 to 1.00.

We were in compliance with all applicable covenants as of June 30, 2024.

Settlement Lines of Credit

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Accordingly, the amount of the outstanding lines of credit may exceed the stated credit limit.

As of March 31, 2024, a total of $82.5 million of cash on deposit was used to determine the available credit.

As of March 31, 2024, we had $1,095.9 million outstanding under these lines of credit with additional capacity to fund settlement of $1,294.1 million.

During the three months ended March 31, 2024, the maximum and average outstanding balances under these lines of credit were $1,197.1 million and $504.4 million, respectively.

The weighted-average interest rate on these borrowings was 5.91% at March 31, 2024.

As of June 30, 2024, a total of $79.9 million of cash on deposit was used to determine the available credit.

As of June 30, 2024, we had $1,010.0 million outstanding under these lines of credit with additional capacity to fund settlement of $2,245.0 million.

During the three months ended June 30, 2024, the maximum and average outstanding balances under these lines of credit were $1,283.4 million and $506.9 million, respectively.

The weighted-average interest rate on these borrowings was 5.82% at June 30, 2024.

See "Note 6—Long-Term Debt and Lines of Credit" in the notes to the accompanying unaudited consolidated financial statements for further information about our borrowing agreements.

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the effects of general economic conditions on our business;

statements about the benefits of our acquisitions or divestitures, including future financial and operating results and the completion and expected timing of our acquisitions or completion of anticipated benefits or strategic initiatives;

our success and timing in developing and introducing new services and expanding our business;

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the ability to maintain Visa and Mastercard registration and financial institution sponsorship;

the ability to retain, develop and hire key personnel;

the ability to retain, develop and hire

key personnel;

the diversion of management’s attention from ongoing business operations;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis