‘We are right in the nexus’ of the buy now, pay later boom
Global Payments CEO Jeffrey Sloan joins Yahoo Finance Live to discuss fourth quarter earnings for the company, innovation, disruptions amid COVID-19, and rising growth in the e-commerce space.
Video Transcript
ALEXIS CHRISTOFOROUS: Just want to turn to Global Payments because that company yesterday announced its best quarterly and yearly performance in the company’s history. It expects another record year in 2022. Joining us now is Global Payments CEO, Jeff Sloan. Geoff, always good to see you, and thanks for being back. Certainly impressive growth last year. I know you made some big commitments in restaurants and health care. Just tell us briefly what drove those results.
JEFFREY SLOAN: Well, Alexis, thanks for having me again. So I think we were on a path toward accelerated pre-pandemic digitization. And to be honest, the last number of years have further accelerated the trajectory we’re already on. So let me give you a couple of examples.
So in 2021, we facilitated something like 300 million omnichannel orders through quick service restaurants, meaning you can order a hamburger from your phone and get it paid– get paid with your face or your thumb and actually get it delivered to where you live or where you work. That’s up substantially, up 50% year over year.
Do the same thing with telemedicine– 2 and 1/2 million teladoc visits last year, up from, you know, really de minimis prior to the pandemic. So we really are the beneficiaries of innovation in the ecosystem. And the disruption that’s come with COVID-19 has really accelerated many of the underlying trends toward electronic payments.
KARINA MITCHELL: And then what are you doing as far as acquisitions and B2B business strategy as well?
JEFFREY SLOAN: We’re really excited about our positioning there. We announced a deposition of Mineral Tree, which is a accounts payable cloud SaaS business in September of ’21 at our investor conference. That integration, and as we reported on yesterday, is going very well. We think at over $600 million of annual revenue, we already have one of the largest B2B businesses around the world.
And we’re getting a lot of market share and traction, doing it in a way that’s very profitable, which is very much distinctive to us. So super pleased about where we are in B2B and I think provides avenues for growth for really the next five to 10 years in our business.
ALEXIS CHRISTOFOROUS: Jeff, you know, during the pandemic, especially, we saw the Buy Now, Pay Later trend really gain momentum. And I’m just wondering how much of that you’re seeing at Global Payments. And also what is the fastest growing segment of your business right now?
JEFFREY SLOAN: It’s a great question, Alexis. So we announced yesterday that we facilitated over 2 billion Buy Now, Pay Later transactions at Global Payments just last year just in ’21. That’s up probably 50% year over year, $31 billion in volume and 15 million virtual cards. So I think we’re right in the nexus of Buy Now, Pay Later. The difference with us is we do it in a responsible, regulated way, where we’re not taking any credit risk. So that’s really up to the financial institutions and the neo banks and the fintechs that really provide that service.
Where we’re seeing the most demand for that, Alexis, is really online. Our e-commerce business that we described yesterday was up 20% year over year and 20% up in the fourth quarter. That trend has continued, as we said yesterday, into– you know, into January. So that’s really where we’re seeing that. You don’t see a lot at the physical point of sale for the pure reason that people don’t want to wait in line and worry about whether it gets approved. It’s much easier to do that online. But that’s one of our biggest businesses, about 30% of the company, and is growing, as I said, very rapidly.
KARINA MITCHELL: And then I want to go back to your business for a second. And, you know, you are considering a sale of Netspend, again, prepaid debit card. Why is now the right time to consider doing that?
JEFFREY SLOAN: So it’s very much along the lines of what we described in our B2B focus. So that business is two halves. B2B, we’re actually going to retain, and that’s about $100, $130 million of revenue in that business. The remainder of Netspend is really business to consumer. That’s a business that we inherited through our merger with TSYS in 2019. We’re really not a direct-to-consumer business. We’re very much a business-to-business kind of company. And as a result, we think the time is right for us to invest further in B2B. And that’s why we’re taking a look at our business at Netspend.
ALEXIS CHRISTOFOROUS: Of course, at the core of all this, Jeff, is keeping these transactions safe and secure. How much are you investing in IP? Do you have proprietary IP that sort of helps you do that and differentiates you from other B2B payments companies?
JEFFREY SLOAN: Well, Alexis, we’re a technology company at our core. We’ll spend this year, between Capex and Opex, something like $1.7 billion in our technology footprint. We spend upwards of nine figures a year just on security alone. So it’s a very big business for us. We have exclusive and unique partnerships with AWS in our issuing business and Google Cloud in our merchant business to ensure that we’re at the very forefront of cloud-based technologies.
We announced a new partnership yesterday with Mastercard to allow you to post payments, check your transactions, make sure they’re all your own online on a real-time basis through the AWS cloud. That project is exclusive with us with Mastercard through the end of this year. So we think we’re really on the forefront of evolution of technology investing in payments.
ALEXIS CHRISTOFOROUS: Well, certainly a great report and some nice guidance as well. Jeff Sloan, CEO of Global Payments, always good to see–