# Global Payments (GPN) Financial Model

Free Excel 3-statement financial model and company analysis for Global Payments.

- Canonical: https://finamodel.com/companies/global-payments
- Industry: Payments
- Downloadable model: Yes
- Excel download: https://finamodel.com/company-models/GPN.xlsx

## Model Purpose

This model provides a comprehensive equity valuation and pro-forma scenario analysis for Global Payments Inc., specifically designed to help an equity analyst evaluate the company's 2026 transformation into a pure-play merchant acquirer following the $22.7 billion acquisition of Worldpay and the $13.5 billion divestiture of its Issuer Solutions business.

## Company Overview

Global Payments Inc. is a leading multinational financial technology company that provides payment technology and software solutions to merchants globally. The company enables businesses to accept payments across in-store, online, and mobile channels, leveraging a software-led, embedded commerce strategy.

Historically, the business operated in two primary segments: Merchant Solutions (approximately 75% of 2025 adjusted net revenue) and Issuer Solutions (approximately 25% of 2025 adjusted net revenue). Geographically, North America accounts for roughly 80% of revenue, followed by Europe at 15% and Asia at 5%. The business model is highly scalable and transaction-based, generating revenue primarily through fees charged as a percentage of total payment volume and fixed fees per transaction. Global Payments holds a top-tier competitive position in the global acquiring market, competing directly with Fiserv, Adyen, Stripe, and Block. The company has undergone a massive structural transformation recently; in January 2026, it completed the acquisition of Worldpay for $22.7 billion and simultaneously divested its Issuer Solutions business (TSYS) to FIS for $13.5 billion, repositioning itself entirely as a pure-play merchant solutions provider.

## Revenue Deep Dive



### Merchant Solutions

- **Segment name:** Merchant Solutions
- **Revenue driver formula:** Total Payment Volume (TPV) x Net Revenue Yield (Take Rate) + Software/Subscription Fees
- **Historical growth rate:** 6% to 8% organic constant currency CAGR
- **Key growth levers and headwinds:** Growth is driven by the shift from cash to electronic payments, expansion in vertical-specific software (ISV partnerships), and international penetration (particularly in LATAM and Europe). Headwinds include macroeconomic consumer spending slowdowns and intense pricing competition from digital-first disruptors like Adyen and Stripe.
- **Pricing dynamics:** Highly competitive but sticky. Pricing is typically a mix of basis points on transaction value plus a fixed fee per swipe/click. Software-led merchants exhibit lower price sensitivity and higher retention.
- **Revenue recognition notes:** Revenues are recognised as transactions are processed. The company reports "Adjusted Net Revenue" which excludes gross-up related payments (interchange and assessment fees passed through to networks).
- **Seasonality:** Q4 is typically the strongest quarter due to holiday retail spending, while Q1 is historically the weakest.

### Issuer Solutions (Discontinued Operations post-Jan 2026)

- **Segment name:** Issuer Solutions
- **Revenue driver formula:** Active Accounts on File (AOF) x Revenue per Account + Managed Services Fees
- **Historical growth rate:** 4% to 5% CAGR
- **Key growth levers and headwinds:** Driven by traditional bank outsourcing of credit card processing infrastructure. Headwinds included bank consolidation and the loss of legacy contracts.
- **Pricing dynamics:** Long-term, multi-year contractual agreements with financial institutions, featuring minimum volume commitments and tiered pricing.
- **Revenue recognition notes:** Recognised over time as processing services are rendered.
- **Seasonality:** Relatively stable throughout the year, with slight upticks in Q4 corresponding to higher card usage.

## Cost Structure



### Variable Costs / COGS

- **Line-by-line breakdown:** Cost of Service includes processing costs, network fees, equipment costs (point-of-sale terminals), and customer support operations.
- **Gross margin range:** Not explicitly reported on a GAAP basis due to the blending of operating expenses, but implied gross margins on net revenue typically range from 55% to 60%.
- **Key input costs and commodity exposures:** Cloud hosting fees, network assessment fees, and hardware costs for POS terminals.
- **How COGS scales with revenue:** Highly scalable. Once the processing infrastructure is built, incremental transactions carry near-zero marginal cost, resulting in significant operating leverage.

### Operating Expenses

- **R&D:** Not broken out separately; technology and development costs are embedded within Cost of Service and SG&A. The company capitalises significant software development costs.
- **SG&A:** Includes sales force commissions, marketing, and administrative overhead. Sales commissions are a major component, scaling with new merchant acquisition.
- **Depreciation & Amortisation:** Extremely high (historically 10% to 15% of GAAP revenue) due to the amortisation of acquired intangibles from serial acquisitions (TSYS, EVO Payments, Worldpay).
- **Stock-Based Compensation:** Typically runs at 2% to 3% of adjusted net revenue.
- **Restructuring / one-time charges:** Frequent and material, given the company's history of transformational M&A and subsequent integration programmes.

### Margin Profile

- **Gross margin, EBITDA margin, operating margin, net margin:** Adjusted operating margin expanded to 44.2% in 2025. GAAP operating margins are significantly lower (typically 20% to 25%) due to acquisition-related amortisation.
- **Margin trend:** Expanding. Management targets 50 to 150 basis points of adjusted operating margin expansion annually, driven by synergy realisation from acquisitions and operating leverage.
- **Segment-level margins:** Merchant Solutions historically operated at roughly 48% to 50% adjusted operating margin, while Issuer Solutions operated at roughly 44% to 46%.

## Balance Sheet Structure

- **Total assets:** $53.3 billion at the end of 2025 (inflated by cash held for the January 2026 Worldpay close).
- **Key asset categories:** Goodwill, acquired intangible assets, settlement assets, and capitalised software.
- **Goodwill & intangibles as % of total assets:** Typically exceeds 60% of total assets due to the roll-up strategy (TSYS, EVO, Worldpay).
- **Working capital profile:**
  - **Days Sales Outstanding (DSO):** 25 to 35 days.
  - **Days Inventory Outstanding (DIO):** Minimal (only POS hardware).
  - **Days Payable Outstanding (DPO):** 30 to 40 days.
  - **Net working capital as % of revenue:** Heavily distorted by settlement assets and obligations. Core operating working capital is slightly negative, providing a modest source of cash as the business grows.
- **PP&E:** Asset-light. PP&E consists mostly of corporate offices, data centre equipment, and POS terminals leased to merchants.
- **Right-of-use assets / operating leases:** Material but manageable, primarily related to office space and data centres.

## Capital Expenditure & Investment

- **Capex as % of revenue:** 5.0% to 6.0% of adjusted net revenue.
- **Maintenance capex vs. growth capex:** Approximately 30% maintenance (hardware, basic IT) and 70% growth (capitalised software development for new payment gateways and ISV integrations).
- **Major capex programmes underway or planned:** Integration of Worldpay technology stacks and migration to cloud-based processing environments.
- **Capitalised software / development costs:** Highly material. A significant portion of the technology team's compensation is capitalised rather than expensed.
- **M&A pattern:** Transformational acquirer. The company executes multi-billion dollar deals every few years (TSYS in 2019, EVO in 2023, Worldpay in 2026) alongside continuous bolt-on acquisitions in vertical software.
- **Typical acquisition multiple paid:** 12x to 16x forward EBITDA for payment processors; higher for vertical software assets.

## Debt & Capital Structure

- **Total debt:** $21.4 billion at the end of 2025 ($19.5 billion long-term, $1.9 billion current).
- **Debt/EBITDA ratio:** Spikes above 4.0x immediately following major acquisitions, with management targeting rapid deleveraging to approximately 3.0x within 18 to 24 months.
- **Credit rating:** Investment grade (typically BBB- / Baa3), which management is highly committed to maintaining.
- **Key debt instruments:** Senior unsecured notes, term loans, and a large revolving credit facility.
- **Maturity profile:** Staggered, but with significant near-term maturities related to the bridge financing for the Worldpay acquisition.
- **Interest rate profile:** Approximately 94% fixed (via swaps and fixed-rate notes) with a weighted average cost of debt historically around 3.5% to 4.5%.
- **Covenants:** Standard leverage and interest coverage ratios tied to the credit facility.
- **Share repurchase programme:** Highly active. The board authorised a $2.5 billion programme in early 2026, including a $550 million accelerated share repurchase plan.
- **Dividend policy:** Modest payout. The dividend is $0.25 per share quarterly ($1.00 annually), representing a yield of roughly 1.0% to 1.5%.

## Cash Flow Characteristics

- **Operating cash flow conversion:** Strong. OCF was $2.7 billion in 2025.
- **Free cash flow margin:** Adjusted free cash flow typically represents 20% to 25% of adjusted net revenue.
- **Major non-cash items that bridge net income to OCF:** Massive D&A (from acquired intangibles) and stock-based compensation.
- **Working capital cash flow impact:** Settlement timing can cause massive quarter-to-quarter swings in OCF, but these net out over the full year.
- **Capex intensity:** Low to moderate (5% to 6% of revenue), but capitalised software is a significant cash drain not reflected in operating expenses.
- **Cash tax rate vs. GAAP effective tax rate:** Cash taxes are typically lower than the GAAP statutory rate due to the tax deductibility of goodwill amortisation from certain asset purchases.

## Sheet Structure

1. **Assumptions**: Hardcoded drivers for macroeconomic inputs, segment growth rates, margin targets, and capital allocation policies.
2. **Pro-Forma M&A Adjustments**: A dedicated sheet to model the January 2026 structural changes. It must subtract the Issuer Solutions business (revenue, costs, assets) and add the Worldpay business to create a clean 2026 base.
3. **Income Statement**: GAAP consolidated income statement, followed by a reconciliation to Adjusted Net Revenue, Adjusted Operating Income, and Adjusted EPS.
4. **Revenue Build**: Detailed build for Merchant Solutions (TPV, Take Rate, ISV software fees) and a stub/discontinued line for Issuer Solutions.
5. **Operating Expenses**: Build for Cost of Service, SG&A, D&A (split between organic and acquisition-related), and SBC.
6. **Balance Sheet**: Standard assets and liabilities, with specific breakouts for Settlement Assets, Settlement Obligations, Goodwill, and Acquired Intangibles.
7. **Cash Flow Statement**: OCF, Capex, Capitalised Software, M&A cash flows, Debt issuance/repayment, and Share repurchases.
8. **Debt Schedule**: Tranche-by-tranche build of term loans and senior notes, calculating interest expense and tracking maturities.
9. **Working Capital Schedule**: DSO, DPO, and the specific mechanics of settlement asset/liability timing.
10. **DCF Valuation**: Unlevered free cash flow build, WACC calculation, terminal value, and implied share price.

## Key Financial Relationships

1. "Merchant Adjusted Net Revenue = Total Payment Volume x Net Take Rate"
2. "Adjusted Net Revenue = GAAP Revenue - Gross-up Related Payments (Interchange/Network Fees)"
3. "Adjusted Operating Income = Adjusted Net Revenue - Adjusted Cost of Service - Adjusted SG&A"
4. "Adjusted Operating Margin = Adjusted Operating Income / Adjusted Net Revenue"
5. "GAAP D&A = Organic D&A + Acquisition-Related Intangible Amortisation"
6. "Adjusted Net Income = GAAP Net Income + Acquisition Amortisation + SBC + Restructuring Costs - Tax Impact of Adjustments"
7. "Adjusted EPS = Adjusted Net Income / Diluted Shares Outstanding"
8. "Free Cash Flow = Operating Cash Flow - PP&E Capex - Capitalised Software Development Costs"
9. "Ending Settlement Assets = Beginning Settlement Assets + Change in Settlement Timing" (Must exactly mirror Settlement Obligations in the long run).
10. "Interest Expense = Average Debt Balance x Weighted Average Interest Rate"
11. "Share Count Reduction = Share Repurchase Spend / Average Share Price"
12. "Pro-Forma 2026 Revenue = 2025 Merchant Revenue + Worldpay Revenue - Issuer Solutions Revenue"

## Cross-Sheet Dependencies

- The **Pro-Forma M&A Adjustments** sheet is the critical foundation; it feeds the **Revenue Build**, **Operating Expenses**, and **Balance Sheet** to establish the 2026 starting point.
- The **Revenue Build** feeds the top line of the **Income Statement**.
- The **Income Statement** generates Net Income, which anchors the top of the **Cash Flow Statement**.
- The **Cash Flow Statement** determines the cash available for debt paydown or share repurchases, feeding the **Debt Schedule** and **Assumptions** (share count).
- The **Debt Schedule** calculates interest expense, which flows back to the **Income Statement** (creating a circular reference that must be managed with a toggle).
- The **Working Capital Schedule** calculates changes in operating assets/liabilities, feeding the **Cash Flow Statement**.

## Sign Convention

- **Revenues, Assets, and Equity:** Positive.
- **Expenses and Liabilities:** Positive in their specific build schedules, but subtracted in aggregation formulas (e.g., Gross Profit = Revenue - COGS).
- **Cash Flow Statement:** Inflows (net income, D&A, increase in liabilities) are positive. Outflows (capex, dividends, debt repayment, increase in assets) are negative.
- **Contra-accounts:** Accumulated depreciation and treasury stock are entered as negative numbers on the balance sheet.

## Things Most Likely to Go Wrong

1. "Failing to model the 2026 structural shift correctly: The model must remove $2.16 billion of 2025 Issuer Solutions revenue and add Worldpay financials to avoid massive year-over-year distortion."
2. "Confusing GAAP Revenue with Adjusted Net Revenue: The company passes through billions in interchange fees. Valuations and margins must be based on Adjusted Net Revenue."
3. "Mishandling settlement assets and obligations: These line items can swing by billions of dollars at quarter-end due to the timing of weekends and bank holidays. They must be modelled to offset each other."
4. "Ignoring capitalised software: The company capitalises a large portion of its R&D. If this is not subtracted from OCF, Free Cash Flow will be dangerously overstated."
5. "Underestimating acquisition-related amortisation: GAAP earnings are heavily depressed by the amortisation of intangibles from TSYS, EVO, and Worldpay. Adjusted EPS is the correct metric for P/E valuation."
6. "Double-counting share repurchases: The company announced a $550 million accelerated share repurchase in early 2026. This must be modelled as an immediate reduction in share count, not spread evenly across the year."
7. "Miscalculating interest expense post-M&A: The $22.7 billion Worldpay acquisition significantly alters the debt stack. The model must reflect the new debt tranches and current interest rates."
8. "Stock-based compensation runs at roughly 2% to 3% of revenue; excluding it from 'adjusted' figures flatters margins, so the DCF must treat SBC as a real economic cost."

## Validation Checks

1. "Adjusted Operating Margin should expand by 50 to 150 basis points annually, landing in the 45.0% to 46.5% range post-2026."
2. "Adjusted Free Cash Flow conversion must remain between 90% and 100% of Adjusted Net Income."
3. "Capex (including capitalised software) should consistently track at 5.0% to 6.0% of Adjusted Net Revenue."
4. "Debt/EBITDA should spike in 2026 due to the Worldpay deal but must trend downward toward the company's 3.0x target by 2028."
5. "Balance sheet must balance: Total Assets = Total Liabilities + Equity in every period, including the pro-forma M&A adjustment period."
6. "Constant currency organic revenue growth for the Merchant segment should not exceed 8% without triggering a flag, as this is the top end of management's historical guidance."
7. "The effective tax rate on adjusted earnings should remain between 18% and 20%."
8. "Dividend payout ratio should remain extremely low (under 10% of adjusted net income), as capital return is heavily skewed toward share repurchases."

## Key Assumptions (Default Values)

| Assumption | Default Value | Unit | Rationale |
|---|---|---|---|
| Merchant Solutions Organic TPV Growth | 6.5 | % | Mid-point of management's historical 6-8% growth guidance |
| Adjusted Operating Margin (2026) | 45.7 | % | 2025 base of 44.2% plus management guidance of ~150 bps expansion |
| Capex & Cap Software / Adj. Net Revenue | 5.5 | % | Historical average required to maintain tech stack and POS terminals |
| Effective Tax Rate (Adjusted) | 19.0 | % | Blended global tax rate based on recent historical filings |
| Weighted Average Cost of Debt | 4.5 | % | Reflects the 94% fixed rate profile and recent rate environment |
| 2026 Share Repurchase Spend | 2,500 | $ Millions | Matches the board authorisation announced in February 2026 |
| Annual Dividend per Share | 1.00 | $ | Maintained at $0.25 quarterly per management policy |
| Target Net Leverage (Debt/EBITDA) | 3.0 | x | Stated management target for capital structure |
| WACC | 8.5 | % | Standard cost of capital for a large-cap, investment-grade payments processor |
| Terminal Growth Rate | 2.5 | % | Aligns with long-term global GDP and inflation expectations |
| DSO (Days Sales Outstanding) | 30 | Days | Historical average for merchant acquiring receivables |
| DPO (Days Payable Outstanding) | 35 | Days | Historical average for vendor and network payables |

## Data Sources & Benchmarks

- **Filings:** SEC EDGAR (Global Payments Inc. CIK: 0001123360), specifically the 2025 Form 10-K and Q4 2025 Earnings Release.
- **Investor Relations:** investors.globalpayments.com (for trended financial highlight spreadsheets and M&A presentation decks).
- **Key Peers:** Fiserv (FI), Block (SQ), Adyen (ADYEN), PayPal (PYPL).
- **Industry Data:** Nilson Report (for global payment volume and market share data), Edgar, Dunn & Company (for merchant acquiring benchmarks).
- **Consensus Estimates:** FactSet or Bloomberg for forward-looking EPS and revenue consensus to validate the 2026 pro-forma baseline.

## Sources

- Global Payments Q4 and Full Year 2025 Earnings Release (February 18, 2026)
- Global Payments 2025 Annual Report on Form 10-K
- Global Payments Investor Relations Presentations (2025/2026 Strategic Update)
- SEC EDGAR Database (https://www.sec.gov/edgar/searchedgar/companysearch)

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## Frequently asked questions

### What does Global Payments Inc. do?

Global Payments Inc. is a leading multinational financial technology company that provides payment technology and software solutions to merchants globally. The company enables businesses to accept payments across in-store, online, and mobile channels, leveraging a software-led, embedded commerce strategy.

### How does Global Payments generate revenue?

Global Payments operates a highly scalable and transaction-based business model. Revenue is primarily generated through fees charged as a percentage of total payment volume and fixed fees per transaction.

### What are the key revenue growth and margin assumptions in the Global Payments financial model?

The financial model for Global Payments assumes a revenue growth rate of approximately 10.7%. Key margin assumptions include COGS as a percentage of revenue at about 41.2% and Selling, General, and Administrative expenses at roughly 42.4% of revenue.

### What is Global Payments' capital expenditure strategy?

Global Payments' capital expenditure typically ranges from 5.0% to 6.0% of adjusted net revenue, with approximately 70% allocated to growth initiatives like capitalised software development. The company also engages in transformational M&A, executing multi-billion dollar deals every few years.

### What is the purpose of the Global Payments equity valuation model?

The Global Payments equity valuation model provides a comprehensive equity valuation and pro-forma scenario analysis. It is specifically designed to help equity analysts evaluate the company's 2026 transformation into a pure-play merchant acquirer following significant acquisitions and divestitures.

### Can I download an Excel financial model for Global Payments (GPN)?

Yes, an Excel financial model for Global Payments (GPN) is available for download. This model offers a forecast horizon from FY2026 through FY2030, allowing for detailed financial analysis.

[Interactive forecast calculator](https://finamodel.com/companies/global-payments/forecast)