GLOBAL PAYMENTS INC 10-Q

ITEM 2—MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and related notes included in Item 1 of Part I of this Quarterly Report and the Management’s Discussion and Analysis of Financial Condition and Results of Operations and consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2024. This discussion and analysis contains forward-looking statements about our plans and expectations of what may happen in the future. Forward-looking statements are based on a number of assumptions and estimates that are inherently subject to significant risks and uncertainties, and our actual results could differ materially from the results anticipated by our forward-looking statements. Executive Overview We are a leading payments technology company delivering innovative software and services to our customers globally. Our technologies, services and team member expertise allow us to provide a broad range of solutions that enable our customers to operate their businesses more efficiently across a variety of channels around the world. We have grown organically, as well as through acquisitions, and continue to invest in new technology solutions, infrastructure to support our growing business and the ongoing consolidation and enhancement of our operating platforms. These investments include new product development and innovation to further enhance and differentiate our suite of technology and 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 business transformation activities, such as combining business operations, streamlining technology infrastructure, eliminating duplicative corporate and operational support structures and realizing scale efficiencies. We also furthered our business strategy through the sale of AdvancedMD, Inc. ("AdvancedMD") completed in December 2024 for approximately $1 billion, subject to certain closing adjustments, and up to $125 million contingent upon the purchaser achieving certain specified returns. AdvancedMD is a provider of software-as-a-service solutions to small-to-medium sized ambulatory physician practices in the United States ("U.S.") and was included in our Merchant Solutions segment prior to disposition. Highlights related to our results of operations for the three months ended March 31, 2025 include the following: • Consolidated revenues were essentially flat at $2,412.1 million and $2,420.2 million for the three months ended March 31, 2025 and 2024, respectively. • Merchant Solutions segment operating income and operating margin for the three months ended March 31, 2025 increased compared to the prior year primarily due to the favorable effect of cost reduction activities. Issuer Solutions segment operating income increased due to the favorable effect of an increase in revenues, while operating margin remained flat. • Consolidated operating income for the three months ended March 31, 2025 included the favorable effects of cost reduction initiatives and a reduction in acquisition and integration expenses, partially offset by expenses related to business transformation activities. 25 Table of Contents Strategy and Business Transformation In 2024, we launched a holistic review of our business to examine our strategy, operations and ability to deliver sustainable performance. We have refreshed our strategy and are focusing our resources, efforts and investments on the areas of the business that will drive the best opportunities for growth. These strategic, organizational and operational transformation activities are expected to continue over the next few years. As we focus on executing and delivering transformation initiatives, we have incurred and anticipate incurring incremental expenses related to the transformation through early 2027, including but not limited to changes to the recoverability of assets. We continue to assess a strategic review of our business portfolio to evaluate potential assets for disposition to further streamline our business and create value for shareholders. We currently expect our transformation initiatives to generate more than $600 million of annual run-rate operating income benefit by the first half of 2027. On April 17, 2025, we entered into definitive agreements to divest our Issuer Solutions business to Fidelity National Information Services, Inc. (“FIS”) as well as acquire 100% of Worldpay Holdco, LLC (“Worldpay”) from FIS and affiliates of GTCR LLC (“GTCR”). Worldpay is an industry leading payments technology and solutions company. Total estimated consideration expected to be received for the divestiture of our Issuer Solutions business consists of (1) approximately $7.5 billion in net cash and (2) FIS’ 45% ownership interest in Worldpay. Total estimated consideration expected to be paid to GTCR for the remaining 55% ownership interest in Worldpay consists of (1) approximately $6.1 billion in cash and (2) 43.3 million shares of Global Payments common stock. As part of the transaction, we obtained $7.7 billion in committed bridge financing. The transactions further simplify Global Payments’ business, positioning the company as a leading pure play commerce solutions provider for merchants of all sizes with global scale. The transactions are expected to close in the first half of 2026, subject to regulatory approvals and other customary closing conditions. We will evaluate if the disposal group meets the criteria to be classified as held for sale in the quarter ending June 30, 2025, which could result in the recognition of a loss for financial reporting purposes. Macroeconomic Effects and Other Global Conditions We are exposed to general economic conditions, including the effects of currency fluctuations, inflation, rising interest rates, tariff increases, global trade relations, international tensions, higher rates of unemployment, and other conditions that affect the overall level of consumer, business and government spending, which could negatively affect our financial performance. When adverse macroeconomic conditions arise, we evaluate where we may be able to implement cost-saving measures, including those related to headcount and discretionary expenses. We may also experience the effects of heightened geopolitical and economic instability or increased difficulty of conducting business in a country or region due to actual or potential political or military conflict or action. We recognize the uncertainty of the macroeconomic environment and cannot predict what impacts the current uncertainty or any developments will have on the economy and our customers. Certain of our operations are conducted in foreign currencies. Consequently, a portion of our revenues and expenses has been and may continue to be affected by fluctuations in foreign currency exchange rates. A strengthening of the U.S. dollar or other significant fluctuations in foreign currency exchange rates could result in an adverse effect on our future financial results; however, we are unable to predict the extent of the potential effect on our financial results. We have sought to reduce our interest rate risk through the issuance of fixed rate debt in place of variable rate debt and through interest rate swap hedging arrangements that convert a significant portion of the eligible variable rate borrowings under our revolving credit facility to a fixed rate. However, inflationary pressure or interest rate fluctuations could adversely affect our business and financial performance as a result of higher costs and/or lower consumer spending. In addition, continued inflation or a rise in interest rates could have an adverse effect on our future financial results and the recoverability of assets. However, as the future magnitude, duration and effects of these conditions are difficult to predict, we are unable to project the extent of the potential effect on our financial results. 26 Table of Contents We regularly maintain cash balances with financial institutions in excess of the Federal Deposit Insurance Corporation insurance limit or the equivalent outside the U.S. A disruption in financial markets could impair our banking partners, which could affect our ability to access our cash or cash equivalents, our ability to provide settlement services or our customers' ability to access their existing cash to fulfill their payment obligations to us. The occurrence of these events could negatively affect our business, financial condition and results of operations. For a further discussion of trends, uncertainties and other factors that could affect our future operating results, see the section entitled “Risk Factors” in Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2024 and subsequent filings we make with the SEC, including this Quarterly Report on Form 10-Q, and the section entitled "Forward-Looking Statements" in this Quarterly Report on Form 10-Q. Results of Operations We operate in two reportable segments: Merchant Solutions and Issuer Solutions. For further information about our reportable segments, see “Item 1. Business—Business Segments” within our Annual Report on Form 10-K for the year ended December 31, 2024, incorporated herein by reference, and “Note 14—Segment Information” in the notes to the accompanying unaudited consolidated financial statements included in Part I, Item 1 — Financial Statements. Key Drivers of our Results of Operations Our revenues for both of our segments are dependent upon the volume of payment transactions we process, cardholder accounts on file and other factors (referred to herein as "transaction volume"). As the majority of our services are priced as a percentage of transaction value or specified fee per unit or transaction, many under multi-year customer arrangements, our revenues generally grow period-over-period in line with the rate of increase in transaction volume. Our operating expenses consist primarily of amortization of intangible assets, the cost of the technology to provide services to our customers and our people costs to support the operations. Many of those costs do not vary directly with the level of payment transactions we process for our customers, generating operating leverage. As revenues increase, operating income and operating margin (operating income as a percentage of revenues) generally increase. We also grow our business through strategic acquisitions of similar businesses. Our revenues increase from the transaction volume from the customers of the acquired businesses. As we integrate the businesses, we also are able to improve operating income and operating margin by generating synergies to lower the cost base of those businesses. 27 Table of Contents The following table sets forth key selected financial data for the three months ended March 31, 2025 and 2024, certain 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, 2025 and 2024 is derived from the accompanying unaudited consolidated financial statements. Three Months Ended March 31, 2025 % of Revenue (1) Three Months Ended March 31, 2024 % of Revenue (1) Change % Change (dollar amounts in thousands) Revenues (2) : Merchant Solutions $ 1,808,687 75.0 % $ 1,834,094 75.8 % $ (25,407) (1.4) % Issuer Solutions 620,730 25.7 % 602,735 24.9 % 17,995 3.0 % Intersegment eliminations (17,319) (0.7) % (16,642) (0.7) % (677) 4.1 % Consolidated revenues $ 2,412,098 100.0 % $ 2,420,187 100.0 % $ (8,089) (0.3) % Operating expenses (2) : Cost of service: Merchant Solutions $ 488,865 $ 499,055 $ (10,190) (2.0) % Issuer Solutions 444,808 434,201 10,607 2.4 % Intersegment eliminations (12,478) (10,866) (1,612) 14.8 % Consolidated cost of service $ 921,195 38.2 % $ 922,390 38.1 % $ (1,195) (0.1) % Selling, general and administrative: Merchant Solutions $ 705,720 $ 754,601 $ (48,881) (6.5) % Issuer Solutions 66,604 62,437 4,167 6.7 % Corporate 256,528 234,283 22,245 9.5 % Intersegment eliminations (4,841) (5,776) 935 (16.2) % Consolidated selling, general and administrative $ 1,024,011 42.5 % $ 1,045,545 43.2 % $ (21,534) (2.1) % Gain on business disposition (3,993) — (3,993) NM Consolidated operating expenses $ 1,941,213 80.5 % $ 1,967,935 81.3 % $ (26,722) (1.4) % Operating income (loss) (2) : Merchant Solutions $ 614,102 $ 580,438 $ 33,664 5.8 % Issuer Solutions 109,318 106,097 3,221 3.0 % Corporate (256,528) (234,283) (22,245) 9.5 % Gain on business disposition 3,993 — 3,993 NM Consolidated operating income $ 470,885 19.5 % $ 452,252 18.7 % $ 18,633 4.1 % Operating margin (2) : Merchant Solutions 34.0 % 31.6 % 2.4 % Issuer Solutions 17.6 % 17.6 % — % NM = Not meaningful (1) Percentage amounts may not sum to the total due to rounding. (2) Revenues, operating expenses, operating income and operating margin reflect the effects of disposed businesses through the respective disposal dates. See “Note 2—Business Dispositions” for further discussion. 28 Table of Contents Operating income included acquisition and integration expenses of $28.4 million and $78.9 million for the three months ended March 31, 2025 and 2024, respectively, which were primarily included within Corporate selling, general and administrative expenses. During the three months ended March 31, 2025, Corporate expenses also reflected costs of $66.3 million associated with our business transformation initiative. Revenues Consolidated revenues were essentially flat at $2,412.1 million and $2,420.2 million for the three months ended March 31, 2025 and 2024, respectively. Merchant Solutions Segment. Revenues from our Merchant Solutions segment for the three months ended March 31, 2025 decreased by $25.4 million, or 1.4%, to $1,808.7 million from $1,834.1 million in the prior year. The decrease included an approximate $20 million unfavorable effect of foreign currency exchange fluctuations. Revenues in our integrated and embedded service line increased $45.9 million, or 6.1%, as payments continue to transition to more embedded and digital native environments. Revenues in our POS/software service line declined $31.0 million, or 8.2%; however, without the effect of the AdvancedMD business disposed of in December 2024, revenues increased approximately 8%, driven by growth in software subscription fees. Revenues in our core payments service line declined $40.3 million, or 5.8%, as a result of an unfavorable effect of foreign currency exchange fluctuations and a reduced emphasis on our wholesale business. Issuer Solutions Segment. Revenues from our Issuer Solutions segment for the three months ended March 31, 2025 increased by $18.0 million, or 3.0%, to $620.7 million from $602.7 million in the prior year. The increase in segment revenues was primarily due to the $23.8 million effect of higher transaction volume driven by cardholder activity. Operating Expenses Cost of Service. Cost of service for the three months ended March 31, 2025 decreased by $1.2 million, or 0.1%, to $921.2 million from $922.4 million in the prior year. Cost of service as a percentage of revenues was 38.2% for the three months ended March 31, 2025, compared to 38.1% in the prior year. Merchant Solutions Segment. Cost of service from our Merchant Solutions segment for the three months ended March 31, 2025 decreased by $10.2 million, or 2.0%, to $488.9 million from $499.1 million in the prior year. Cost of service as a percentage of segment revenues decreased to 27.0% for the three months ended March 31, 2025 from 27.2% in the prior year. The decline in cost of service is in line with the decline in revenue for the period. The disposition of AdvancedMD had the effect of reducing cost of service as a percentage of revenues by 0.3% for the three months ended March 31, 2024. Issuer Solutions Segment. Cost of service from our Issuer Solutions segment for the three months ended March 31, 2025 increased by $10.6 million, or 2.4%, to $444.8 million from $434.2 million in the prior year primarily due to costs that vary with revenues. Cost of service as a percentage of segment revenues decreased to 71.7% for the three months ended March 31, 2025 from 72.0% in the prior year primarily as a result of costs that do not vary with revenues, including the effects of amortization and depreciation as discussed below, generating operating leverage. Amortization of Acquired Intangible Assets. The most significant component of our cost of service is amortization of acquired intangibles, which was $329.3 million and $343.2 million, or approximately 36% and 37% of cost of service, for the three months ended March 31, 2025 and 2024, respectively. These costs generally do not vary in proportion to changes in revenues, but rather are most significantly affected by acquisition activities. 29 Table of Contents Selling, General and Administrative Expenses. Selling, general and administrative expenses for the three months ended March 31, 2025 decreased by $21.5 million, or 2.1%, to $1,024.0 million from $1,045.5 million in the prior year. Selling, general and administrative expenses as a percentage of revenues was 42.5% for the three months ended March 31, 2025, compared to 43.2% in the prior year. Merchant Solutions Segment. Selling, general and administrative expenses from our Merchant Solutions segment for the three months ended March 31, 2025 decreased by $48.9 million, or 6.5%, to $705.7 million from $754.6 million in the prior year. Selling, general and administrative expenses as a percentage of segment revenues was 39.0% for the three months ended March 31, 2025, compared to 41.1% in the prior year. The primary driver of the reduction in selling, general and administrative expenses for the three months ended March 31, 2025 was lower compensation and benefits expenses as a result of certain actions taken in 2024 to align our workforce to our new operating model. Issuer Solutions Segment. Selling, general and administrative expenses from our Issuer Solutions segment for the three months ended March 31, 2025 increased by $4.2 million, or 6.7%, to $66.6 million from $62.4 million in the prior year. Selling, general and administrative expenses as a percentage of segment revenues was 10.7% for the three months ended March 31, 2025, compared to 10.4% in the prior year, primarily due to higher labor and technology related costs. Corporate. Corporate expenses for the three months ended March 31, 2025 increased by $22.2 million, or 9.5%, to $256.5 million from $234.3 million in the prior year. The higher amount of corporate expenses was primarily driven by $66.3 million incurred in the three months ended March 31, 2025 associated with our business transformation initiative announced in the third quarter of 2024, partially offset by lower acquisition and integration expenses of $50.5 million. Operating Income and Operating Margin Consolidated operating income for the three months ended March 31, 2025 was $470.9 million, compared to $452.3 million in the prior year. Consolidated operating margin for the three months ended March 31, 2025 was 19.5%, compared to 18.7% in the prior year. • Consolidated operating income reflected higher corporate costs, as described above, which had an unfavorable effect on operating margin of approximately 1.0% for the three months ended March 31, 2025; • Merchant Solutions segment operating income increased $33.7 million and operating margin increased 2.4% primarily due t o the favorable effect of cost reduction initiatives as a result of certain actions taken in 2024 to align our workforce to our new operating model. In addition, the three months ended March 31, 2024 included operating income of $10.5 million related to the disposed AdvancedMD business, which had the effect of increasing operating margin by 0.5% for the three months ended March 31, 2024; and • Issuer Solutions segment operating income increased $3.2 million primarily due to the favorable effect of the increase in revenues, while operating margin remained flat at 17.6%. Other Income and Expense, Net Interest and other income for the three months ended March 31, 2025 increased $3.5 million to $39.4 million, compared to $35.9 million for the prior year, primarily due to an increase in available cash within our investment pool. Interest and other expense for the three months ended March 31, 2025 decreased $5.0 million to $157.1 million, compared to $162.1 million for the prior year, primarily due to a decrease in our average outstanding borrowings and lower average interest rates on outstanding borrowings. Income Tax Expense For the three months ended March 31, 2025 and 2024, our effective income tax rate was 16.6% and 5.9%, respectively. The increase in the effective income tax rate was primarily due to a one-time favorable effect of a change in the valuation allowance related to certain foreign tax credit carryforwards in the three months ended March 31, 2024. 30 Table of Contents Various foreign taxing jurisdictions enacted local legislation formally adopting the Global Anti-Base Erosion Model Rules ("Pillar Two"), which generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development ("OECD") Pillar Two Framework. The effective dates were generally January 1, 2024, and January 1, 2025, for different aspects of the rules and vary by jurisdiction. Additional jurisdictions are expected to implement the model rules under local law in the future, with varying effective dates. The Pillar Two directive did not have a material effect on our financial statements for the three months ended March 31, 2025, and we are continuing to evaluate the potential effect on future periods of the Pillar Two implementation, pending legislative adoption by additional individual countries and the ongoing issuance of additional administrative guidance by the OECD. Net Income Attributable to Global Payments Net income attributable to Global Payments was $305.7 million for the three months ended March 31, 2025, compared to $313.3 million for the prior year, reflecting the changes noted above. Diluted Earnings per Share Diluted earnings per share was $1.24 for the three months ended March 31, 2025, compared to $1.22 for the prior year. Diluted earnings per share for the three months ended March 31, 2025 reflects the changes in net income noted above as well as a 10.4 million decrease in diluted weighted-average number of shares outstanding to 247.2 million shares for the three months ended March 31, 2025, compared to 257.6 million shares for the prior year. Liquidity and Capital Resources We have numerous sources of capital, including cash on hand and cash flows generated from operations as well as various sources of financing. In the ordinary course of our business, a significant portion of our liquidity comes from operating cash flows and borrowings, including the capacity under our revolving credit facility. Our capital allocation priorities are to pay dividends, to repurchase shares of our common stock, to pursue acquisitions that meet our corporate objectives, to make planned capital investments in our business and to pay principal and interest on our outstanding debt. Our significant contractual cash requirements also include ongoing payments for lease liabilities and contractual obligations related to service arrangements with suppliers for fixed or minimum amounts, which primarily relate to software, technology infrastructure and related services. Commitments under our borrowing arrangements are further described in "Note 5—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." For additional information regarding our other cash commitments and contractual obligations, see "Note 7—Leases" and “Note 19—Commitments and Contingencies” in our Annual Report on Form 10-K for the year ended December 31, 2024. Our capital plan objectives are to support our operational needs and strategic plan for long-term growth while optimizing our cost of capital and financial position. To supplement cash from operating activities, we use a combination of bank financing, such as borrowings under our credit facilities, commercial paper program and senior note issuances, for general corporate purposes and to fund acquisitions. Our commercial paper program provides a cost effective means of addressing our short-term liquidity needs and is backstopped by our credit agreement, in that the amount of commercial paper notes outstanding cannot exceed the undrawn portion of our revolving credit facility. Finally, specialized lines of credit are also used in certain of our markets to fund merchant settlement prior to receipt of funds from the card networks. We regularly evaluate our liquidity and capital position relative to cash requirements, and we may elect to raise additional funds in the future through the issuance of debt or equity or by other means. Accumulated cash balances are invested in high-quality, marketable short-term instruments. 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. 31 Table of Contents At March 31, 2025, we had cash and cash equivalents totalin g $2,896.0 million . Of this amount, we considered $816.9 million to be available for general purposes, of which $62.6 million is undistributed foreign earnings considered to be indefinitely reinvested outside the U.S. The avail able cash of $816.9 million d oes not include the following: (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. Settlement-related cash balances are not restricted in their use; 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. 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 $252.3 million as of March 31, 2025, representing amounts under legal restriction, 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 $555.1 million a nd $529.6 million for the three months ended March 31, 2025 and 2024, respectively, which reflect net income adjusted for noncash items, including depreciation, amortization and the provision for credit losses, and changes in operating assets and liabilities. Cash flows from operating activities increased 5% from the prior year in spite of a decrease in net income in the current year period primarily due to a noncash tax valuation allowance in the prior year period. We used net cash in investing activities of $173.1 million and $148.0 million during the three months ended March 31, 2025 and 2024, respectively. Cash used for investing activities primarily represents cash used to fund acquisitions and capital expenditures. During the three months ended March 31, 2025 and 2024, we used cash of $49.9 million and $2.6 million, respectively, for acquisitions. We made capital expenditures of $127.6 million and $145.4 million during the three months ended March 31, 2025 and 2024, 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. These investments also include new product development and innovation to further enhance and differentiate our suite of technology and cloud-based solutions available to customers. We expect to continue to make capital investments in the business, and we anticipate capital expenditures to be approximately $800 million during the year ending December 31, 2025. 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 5—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 changes in funds held from customers, changes in settlement processing assets and liabilities, common stock repurchase programs and share-based compensation programs, cash distributions made to our shareholders and cash contributions from and distributions to noncontrolling interests. Net cash used in financing activities was $31.5 million and $276.7 million for the three months ended March 31, 2025 and 2024, respectively. Proceeds from long-term debt we re $1,551.0 million an d $4,609.0 million for the three months ended March 31, 2025 and 2024, respectively. Repayments of long-term debt we re $2,546.6 million and $2,628.5 million for the three months ended March 31, 2025 and 2024, 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. Changes in settlement processing assets and obligations, net were a source of cash of $479.2 million and a use of cash of $24.7 million for the three months ended March 31, 2025 and 2024, respectively. The change in cash from settlement processing assets and liabilities was due primarily to transaction volume and the timing of month-end. During the three months ended March 31, 2025 and 2024, we had net borrowings o f $867.6 million and net repayments of $1,093.0 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. See section "Long-Term Debt and Lines of Credit" below for further discussion of our recent debt transactions. 32 Table of Contents 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, 2025 and 2024, we had net borrow ings of $223.2 million and $133.2 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 ("ASR") programs. During the three months ended March 31, 2025 and 2024, we us ed $446.3 million and $800.0 million, respectively, to repurchase and retire 4,218,350 and 6,061,999 shares of our common stock, respectively. The share repurchase activity for the three months ended March 31, 2025 included the repurchase of 2,449,366 shares at an average price of $102.07 per share under an ASR agreement we entered into on February 13, 2025 with a financial institution to repurchase an aggregate of $250.0 million of our common stock during the ASR program purchase period. This ASR program was completed on March 11, 2025. 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. 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, 2025, the remaining amount available under our share repurchase program was $1,405.7 million. We paid dividends to our common shareholders of $61.1 million and $63.6 million during the three months ended March 31, 2025 and 2024, respectively. We also made distributions to noncontrolling interests of $10.3 million a nd $4.7 million during the three months ended March 31, 2025 and 2024, respectively. On April 24, 2025, our board of directors declared a dividend of $0.25 per share payable on June 27, 2025 to common shareholders of record as of June 13, 2025. Long-Term Debt and Lines of Credit Senior Notes We have $10.2 billion in aggregate principal amount of senior unsecured notes outstanding as of March 31, 2025, which mature at various dates ranging from March 2026 to August 2052. Interest on the senior notes is payable annually or semi-annually at various dates. Each series of the senior notes is redeemable, at our option, in whole or in part, at any time and from time to time at the redemption prices set forth in the related indenture. Convertible Notes 1.500% Convertible Notes due March 1, 2031 We have $2.0 billion in aggregate principal amount of 1.500% convertible unsecured senior notes due March 2031, which were issued in 2024 through a private placement. The net proceeds from this offering were approximately $1.97 billion reflecting debt issuance costs of $33.5 million, which were capitalized and reflected as a reduction of the related carrying amount of the convertible notes in our consolidated balance sheets. Interest on the convertible notes is payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2024, to the holders of record on the preceding February 15 and August 15, respectively. In connection with the issuance of the notes, we entered into privately negotiated capped call transactions with certain of the initial purchasers of the notes and other financial institutions to cover, subject to customary adjustments, the number of shares of common stock initially underlying the notes. The economic effect of the capped call transactions is to hedge the potential dilutive effect upon the conversion of the notes, or offset our cash obligation if the cash settlement option is elected, for amounts in excess of the principal amount of converted notes subject to a cap. The price of the capped call transactions was $228.90 per share. The capped call transactions met 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 statement of changes in equity for the three months ended March 31, 2024, net of applicable income taxes. 33 Table of Contents 1.000% Convertible Notes due August 15, 2029 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. Interest on the convertible notes is payable semi-annually in arrears on February 15 and August 15 of each year, beginning on February 15, 2023, to the holders of record on the preceding February 1 and August 1, respectively. The convertible notes mature on August 15, 2029, subject to earlier conversion or repurchase. The notes, which are currently convertible, are presented within long-term debt in our consolidated balance sheets based on our intent and ability to refinance on a long-term basis should a conversion event occur. Revolving Credit Facility Our credit agreement with Bank of America, N.A., as administrative agent, and a syndicate of financial institutions, as lenders and other agents, provides for an unsubordinated unsecured $5.75 billion revolving credit facility that matures in August 2027. We may issue standby letters of credit of up to $250.0 million in the aggregate under the revolving credit facility. Outstanding letters of credit under the revolving credit facility reduce the amount of borrowings available to us. The amounts available to borrow under the revolving credit facility are also determined by a financial leverage covenant. As of March 31, 2025, there were borrowings of $1.5 billion outstanding under the revolving credit facility with an interest rate of 5.8%, and the total available commitments under the revolving credit facility were $3.3 billion. Commercial Paper We have a $2.0 billion commercial paper program under which we may issue senior unsecured commercial paper notes with maturities of up to 397 days from the date of issue. The commercial paper program is backstopped by our credit agreement, in that the amount of commercial paper notes outstanding cannot exceed the undrawn portion of our revolving credit facility. As such, we could draw on the revolving credit facility to repay commercial paper notes that cannot be rolled over or refinanced with similar debt. Commercial paper notes are expected to be issued at a discount from par, or they may bear interest, each at commercial paper market rates dictated by market conditions at the time of their issuance. 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, 2025, we had net borrowings under our commercial paper program of $868.8 million outstanding, presented within long-term debt in our consolidated balance sheet based on our intent and ability to continually refinance on a long-term basis, with a weighted average annual interest rate of 5.0%. Compliance with Covenants The convertible notes include customary covenants and events of default for convertible notes of this type. 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. As of March 31, 2025, the required leverage ratio was 4.00 to 1.00, and the required interest coverage ratio was 3.00 to 1.00. The required leverage ratio will step-down to 3.75 to 1.00 as of June 30, 2025. We were in compliance with all applicable covenants as of March 31, 2025. 34 Table of Contents Settlement Lines of Credit In various markets where we do business, we have specialized lines of credit that are restricted for use in funding settlement. The settlement lines of credit generally have variable interest rates, are subject to annual review and are denominated in local currency but may, in some cases, facilitate borrowings in multiple currencies. For certain of our lines of credit, the available credit is increased by the amount of cash we have on deposit in specific accounts with the lender. Accordingly, the amount of the outstanding lines of credit may exceed the stated credit limit. As of March 31, 2025, a total of $47.1 million of cash on deposit was used to determine the available credit. As of March 31, 2025, we had $728.0 million outstanding under these lines of credit with additional capacity to fund settlement of $1,981.0 million. During the three months ended March 31, 2025, the maximum and average outstanding balances under these lines of credit were $871.8 million and $404.0 million, respectively. The weighted-average interest rate on these borrowings was 5.29% at March 31, 2025. Subsequent Event - Committed Bridge Financing As discussed in further detail above in Strategy and Business Transformation, in connection with our entry into a definitive agreement to acquire Worldpay on April 17, 2025, we obtained $7.7 billion in committed bridge financing and plan to issue debt between signing and closing which will be used to replace the bridge commitment and refinance Worldpay’s outstanding debt. Effect of New Accounting Pronouncements and Recently Issued Accounting Pronouncements Not Yet Adopted From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standards setting bodies that may affect our current and/or future financial statements. See "Note 1—Basis of Presentation and Summary of Significant Accounting Policies" in the notes to the accompanying unaudited consolidated financial statements for a discussion of recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted. Forward-Looking Statements Some of the statements we use in this report, and in some of the documents we incorporate by reference in this report, contain forward-looking statements concerning our business operations, economic performance and financial condition, including, but not limited to, statements we make regarding our business strategy and means to implement the strategy; measures of future results of operations, such as revenues, expenses, operating margins, income tax rates and earnings per share; other operating metrics such as shares outstanding and capital expenditures, liquidity, deleveraging plans and capital available for allocation; statements we make regarding guidance and projected financial results for the year 2025; the effects of general economic conditions on our business; statements about the benefits of our acquisitions or dispositions such as our proposed acquisition of Worldpay and divestiture of our Issuer Solutions business, including future financial and operating results and the successful integration of acquisitions; our ability to timely complete the acquisition of Worldpay and divestiture of our Issuer Solutions business, including receiving all required regulatory approvals in connection with the transactions; statements about the completion of anticipated benefits or strategic or operational initiatives; statements regarding our success and timing in developing and introducing new services and expanding our business; and other statements regarding our future financial performance and our plans, objectives, expectations and intentions. You can sometimes identify forward-looking statements by our use of the words "believes," "anticipates," "expects," "intends," "plan," "forecast," "guidance" and similar expressions. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. 35 Table of Contents Although we believe that the plans and expectations reflected in or suggested by our forward-looking statements are reasonable, those statements are based on a number of assumptions, estimates, projections or plans that are inherently subject to significant risks, uncertainties and contingencies, many of which are beyond our control, cannot be foreseen and reflect future business decisions. Accordingly, we cannot guarantee that our plans and expectations will be achieved. Our actual revenues, revenue growth rates and margins, and other results of operations could differ materially from those anticipated in our forward-looking statements as a result of many known and unknown factors, many of which are beyond our ability to predict or control. Important factors that may otherwise cause actual events or results to differ materially from those anticipated by such forward-looking statements or historical performance include, among others, those discussed in "Item 1A - Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2024, as well as in the other information appearing in this report and other filings we make with the SEC, including this Quarterly Report on Form 10-Q, which we advise you to review. These cautionary statements qualify all of our forward-looking statements, and you are cautioned not to place undue reliance on these forward-looking statements. Our forward-looking statements speak only as of the date they are made and should not be relied upon as representing our plans and expectations as of any subsequent date. While we may elect to update or revise forward-looking statements at some time in the future, we specifically disclaim any obligation to publicly release the results of any revisions to our forward-looking statements, except as required by law. ITEM 3—QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK For a discussion of our exposure to market risk, refer to Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk," contained in our Annual Report on Form 10-K for the year ended December 31, 2024.