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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to             

Commission file number: 001-16111

GLOBAL PAYMENTS INC.

(Exact name of registrant as specified in charter)

Georgia	58-2567903
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3550 Lenox Road, Atlanta, Georgia	30326
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (770) 829-8000

Securities registered pursuant to Section 12(b) of the Act
Title of each class	Trading symbol	Name of exchange on which registered
Common stock, no par value	GPN	New York Stock Exchange
4.875% Senior Notes due 2031	GPN31A	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑   No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

The number of shares of the issuer’s common stock, no par value, outstanding as of April 26, 2023 was 261,953,137.

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GLOBAL PAYMENTS INC.

FORM 10-Q

For the quarterly period ended March 31, 2023

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION
ITEM 1.	Unaudited Consolidated Statements of Income for the three months ended March 31, 2023 and 2022	4
	Unaudited Consolidated Statements of Comprehensive Income for the three months ended March 31, 2023 and 2022	5
	Consolidated Balance Sheets at March 31, 2023 (unaudited) and December 31, 2022	6
	Unaudited Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022	7
	Unaudited Consolidated Statements of Changes in Equity for the three months ended March 31, 2023 and 2022	8
	Notes to Unaudited Consolidated Financial Statements	9
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	35
ITEM 4.	Controls and Procedures	36
PART II - OTHER INFORMATION
ITEM 1.	Legal Proceedings	37
ITEM 1A.	Risk Factors	37
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
ITEM 6.	Exhibits	39
	Signatures	40

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PART I - FINANCIAL INFORMATION

ITEM 1—FINANCIAL STATEMENTS

GLOBAL PAYMENTS INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

	Three Months Ended
	March 31, 2023		March 31, 2022
Revenues	$	2,292,447	$	2,156,254
Operating expenses:
Cost of service	947,753		957,158
Selling, general and administrative	1,043,126		823,149
Loss on business dispositions	244,833		—
	2,235,712		1,780,307
Operating income	56,735		375,947
Interest and other income	11,153		1,711
Interest and other expense	(122,945)		(93,283)
	(111,792)		(91,572)
(Loss) income before income taxes and equity in income of equity method investments	(55,057)		284,375
Income tax (benefit) expense	(31,399)		52,218
(Loss) income before equity in income of equity method investments	(23,658)		232,157
Equity in income of equity method investments, net of tax	19,238		17,479
Net (loss) income	(4,420)		249,636
Net income attributable to noncontrolling interests, net of tax	(6,621)		(4,903)
Net (loss) income attributable to Global Payments	$	(11,041)	$	244,733
(Loss) earnings per share attributable to Global Payments:
Basic (loss) earnings per share	$	(0.04)	$	0.87
Diluted (loss) earnings per share	$	(0.04)	$	0.87

See Notes to Unaudited Consolidated Financial Statements.

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GLOBAL PAYMENTS INC.

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

	Three Months Ended
	March 31, 2023		March 31, 2022
Net (loss) income	$	(4,420)	$	249,636
Other comprehensive income (loss):
Foreign currency translation adjustments	37,450		(32,960)
Income tax (expense) benefit related to foreign currency translation adjustments	(187)		670
Net unrealized (losses) gains on hedging activities	(48,051)		8,934
Reclassification of net unrealized losses on hedging activities to interest expense	1,386		9,445
Income tax benefit (expense) related to hedging activities	10,950		(4,456)
Other, net of tax	(22)		—
Other comprehensive income (loss)	1,526		(18,367)
Comprehensive (loss) income	(2,894)		231,269
Comprehensive (income) loss attributable to noncontrolling interests	(12,995)		441
Comprehensive (loss) income attributable to Global Payments	$	(15,889)	$	231,710

See Notes to Unaudited Consolidated Financial Statements.

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GLOBAL PAYMENTS INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	March 31, 2023		December 31, 2022
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	2,001,671	$	1,997,566
Accounts receivable, net	1,067,174		998,332
Settlement processing assets	1,575,515		2,519,114
Current assets held for sale	163,285		138,815
Prepaid expenses and other current assets	787,409		660,321
Total current assets	5,595,054		6,314,148
Goodwill	26,850,666		23,320,736
Other intangible assets, net	10,587,887		9,658,374
Property and equipment, net	2,023,463		1,838,809
Deferred income taxes	58,321		37,907
Noncurrent assets held for sale	1,058,649		1,295,799
Other noncurrent assets	2,464,604		2,343,241
Total assets	$	48,638,644	$	44,809,014
LIABILITIES AND EQUITY
Current liabilities:
Settlement lines of credit	$	482,339	$	747,111
Current portion of long-term debt	1,185,365		1,169,330
Accounts payable and accrued liabilities	2,514,616		2,442,560
Settlement processing obligations	1,799,999		2,413,799
Current liabilities held for sale	101,091		125,891
Total current liabilities	6,083,410		6,898,691
Long-term debt	16,534,074		12,289,248
Deferred income taxes	2,434,230		2,428,412
Noncurrent liabilities held for sale	4,691		4,478
Other noncurrent liabilities	699,410		647,975
Total liabilities	25,755,815		22,268,804
Commitments and contingencies
Redeemable noncontrolling interests	556,070		—
Equity:
Preferred stock, no par value; 5,000,000 shares authorized and none issued	—		—
Common stock, no par value; 400,000,000 shares authorized at March 31, 2023 and December 31, 2022; 261,770,665 issued and outstanding at March 31, 2023 and 263,081,872 issued and outstanding at December 31, 2022	—		—
Paid-in capital	19,839,506		19,978,095
Retained earnings	2,654,589		2,731,380
Accumulated other comprehensive loss	(410,817)		(405,969)
Total Global Payments shareholders’ equity	22,083,278		22,303,506
Nonredeemable noncontrolling interests	243,481		236,704
Total equity	22,326,759		22,540,210
Total liabilities, redeemable noncontrolling interests and equity	$	48,638,644	$	44,809,014

See Notes to Unaudited Consolidated Financial Statements.

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GLOBAL PAYMENTS INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Three Months Ended
	March 31, 2023		March 31, 2022
Cash flows from operating activities:
Net (loss) income	$	(4,420)	$	249,636
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment	105,983		99,665
Amortization of acquired intangibles	301,267		329,007
Amortization of capitalized contract costs	29,336		25,906
Share-based compensation expense	89,566		38,399
Provision for operating losses and credit losses	29,859		28,523
Noncash lease expense	15,810		21,555
Deferred income taxes	(160,040)		(80,841)
Equity in income of equity method investments, net of tax	(19,238)		(17,479)
Facilities exit charges	5,164		—
Loss on business dispositions	244,833		—
Other, net	10,521		12,149
Changes in operating assets and liabilities, net of the effects of business combinations:
Accounts receivable	30,767		(34,191)
Settlement processing assets and obligations, net	248,710		48,198
Prepaid expenses and other assets	(119,479)		(115,904)
Accounts payable and other liabilities	(209,113)		25,377
Net cash provided by operating activities	599,526		630,000
Cash flows from investing activities:
Business combinations and other acquisitions, net of cash and restricted cash acquired	(4,046,785)		(4,726)
Capital expenditures	(162,195)		(156,102)
Other, net	2,187		5
Net cash used in investing activities	(4,206,793)		(160,823)
Cash flows from financing activities:
Net (repayments of) borrowings from settlement lines of credit	(281,411)		16,497
Net borrowings from commercial paper notes	1,048,620		—
Proceeds from long-term debt	4,708,140		1,529,157
Repayments of long-term debt	(1,555,954)		(1,176,496)
Payments of debt issuance costs	(11,593)		(1,706)
Repurchases of common stock	(202,785)		(649,654)
Proceeds from stock issued under share-based compensation plans	6,103		7,940
Common stock repurchased - share-based compensation plans	(28,323)		(26,295)
Distributions to noncontrolling interests	(6,218)		(5,534)
Dividends paid	(65,750)		(70,243)
Net cash provided by (used in) financing activities	3,610,829		(376,334)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	18,584		(36,147)
Increase in cash, cash equivalents and restricted cash	22,146		56,696
Cash, cash equivalents and restricted cash, beginning of the period	2,215,606		2,123,023
Cash, cash equivalents and restricted cash, end of the period	$	2,237,752	$	2,179,719

    

See Notes to Unaudited Consolidated Financial Statements.

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GLOBAL PAYMENTS INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

 (in thousands, except per share data)

	Number of Shares	Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Global Payments Shareholders’ Equity		NonredeemableNoncontrolling Interests		Total Equity
Balance at December 31, 2022	263,082	$	19,978,095	$	2,731,380	$	(405,969)	$	22,303,506	$	236,704	$	22,540,210
Net (loss) income				(11,041)				(11,041)		6,621		(4,420)
Other comprehensive income (loss)						(4,848)		(4,848)		6,374		1,526
Stock issued under share-based compensation plans	1,014	6,103						6,103				6,103
Common stock repurchased - share-based compensation plans	(266)	(30,189)						(30,189)				(30,189)
Share-based compensation expense		89,566						89,566				89,566
Issuance of share-based awards in connection with a business combination		2,484						2,484				2,484
Repurchases of common stock	(2,059)	(206,553)						(206,553)				(206,553)
Distributions to noncontrolling interest								—		(6,218)		(6,218)
Cash dividends declared ($0.25 per common share)				(65,750)				(65,750)				(65,750)
Balance at March 31, 2023	261,771	$	19,839,506	$	2,654,589	$	(410,817)	$	22,083,278	$	243,481	$	22,326,759

	Number of Shares	Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Global Payments Shareholders’ Equity		Nonredeemable Noncontrolling Interests		Total Equity
Balance at December 31, 2021	284,750	$	22,880,261	$	2,982,122	$	(234,182)	$	25,628,201	$	241,216	$	25,869,417
Net income				244,733				244,733		4,903		249,636
Other comprehensive loss						(13,023)		(13,023)		(5,344)		(18,367)
Stock issued under share-based compensation plans	1,395	7,940						7,940				7,940
Common stock repurchased - share-based compensation plans	(195)	(26,789)						(26,789)				(26,789)
Share-based compensation expense		38,399						38,399				38,399
Repurchases of common stock	(4,516)	(561,725)		(87,929)				(649,654)				(649,654)
Distributions to noncontrolling interest								—		(5,534)		(5,534)
Cash dividends declared ($0.25 per common share)				(70,243)				(70,243)				(70,243)
Balance at March 31, 2022	281,434	$	22,338,086	$	3,068,683	$	(247,205)	$	25,159,564	$	235,241	$	25,394,805

See Notes to Unaudited Consolidated Financial Statements.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business, consolidation and presentation - 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 operate in three reportable segments: Merchant Solutions, Issuer Solutions and Consumer Solutions, which are described in "Note 15—Segment Information." Global Payments Inc. and its consolidated subsidiaries are referred to herein collectively as "Global Payments," the "Company," "we," "our" or "us," unless the context requires otherwise.

These unaudited consolidated financial statements include our accounts and those of our majority-owned subsidiaries, and all intercompany balances and transactions have been eliminated in consolidation. These unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The consolidated balance sheet as of December 31, 2022 was derived from the audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 but does not include all disclosures required by GAAP for annual financial statements.

In the opinion of our management, all known adjustments necessary for a fair presentation of the results of the interim periods have been made. These adjustments consist of normal recurring accruals and estimates that affect the carrying amount of assets and liabilities. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022.

Use of estimates - The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reported period. Actual results could differ materially from those estimates. In particular, uncertainty resulting from global events and other macroeconomic conditions are difficult to predict at this time, and the ultimate effect could result in additional charges related to the recoverability of assets, including financial assets, long-lived assets and goodwill and other losses. These unaudited consolidated financial statements reflect the financial statement effects based upon management’s estimates and assumptions utilizing the most currently available information.

NOTE 2—ACQUISITION

EVO Payments, Inc.

On March 24, 2023, we acquired all of the outstanding common stock of EVO Payments, Inc. (“EVO”). EVO is a leading payment technology and services provider, offering an array of payment solutions to merchants ranging from small and middle market enterprises to multinational companies and organizations across the Americas and Europe. The acquisition aligns with our technology-enabled payments strategy, expands our geographic presence and augments our business-to-business software and payment solutions business.

Total purchase consideration was $4.3 billion, which consisted of the following (in thousands):

Cash paid to EVO shareholders (1)	$	3,273,951
Cash paid for equity awards attributable to purchase consideration (2)	58,510
Value of replacement awards attributable to purchase consideration (3)	2,484
Total purchase consideration transferred to EVO shareholders	3,334,945
Repayment of EVO's unsecured revolving credit facility (including accrued interest and fees)	665,557
Payment of certain acquiree transaction costs and other liabilities on behalf of EVO (4)	269,118
Total purchase consideration	$	4,269,620

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(1) Holders of EVO common stock, convertible preferred stock and common units received $34 for each share of EVO common stock held at the effective time of the transaction.

(2) Pursuant to the merger agreement, we cash settled vested options and certain unvested equity awards of EVO equity award holders.

(3) Pursuant to the merger agreement, we granted equity awards for approximately 0.3 million shares of Global Payments common stock to certain EVO equity awards holders. Each such replacement award is subject to the same terms and conditions (including vesting and exercisability or payment terms) that applied to the corresponding EVO equity award. We apportioned the fair value of the replacement awards between purchase consideration and amounts to be recognized in periods following the acquisition as share-based compensation expense over the requisite service period of the replacement awards.

(4) Certain acquiree transaction costs and liabilities, including amounts outstanding under EVO’s tax receivable agreement, were required to be repaid by us upon consummation of the acquisition.

The cash portion of the purchase consideration was funded through cash on hand and borrowings from our revolving credit facility.

The provisional estimated acquisition-date fair values of major classes of assets acquired and liabilities assumed as of March 31, 2023, including a reconciliation to the total purchase consideration, were as follows (in thousands):

Cash and cash equivalents	$	324,859
Accounts receivable	105,680
Settlement processing assets	125,061
Deferred income tax assets	15,464
Property and equipment	83,540
Identifiable intangible assets	1,208,400
Other assets	157,166
Accounts payable and accrued liabilities	(277,800)
Settlement lines of credit	(11,371)
Settlement processing obligations	(199,161)
Deferred income tax liabilities	(168,098)
Other liabilities	(58,089)
Total identifiable net assets	1,305,651
Redeemable noncontrolling interests	(556,070)
Goodwill	3,520,039
Total purchase consideration	$	4,269,620

As of March 31, 2023, we considered these amounts to be provisional because we were still in the process of gathering and reviewing information to support the valuations of the assets acquired, liabilities assumed and related tax positions. Goodwill arising from the acquisition was included in the Merchant Solutions segment as of March 31, 2023 and was attributable to expected growth opportunities, potential synergies from combining the acquired business into our existing business and an assembled workforce. We expect that a portion of the goodwill from this acquisition will be deductible for income tax purposes. Due to the timing of the acquisition, we are still in the process of assigning goodwill to our reporting units.

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The following table reflects the provisional estimated fair values of the identified intangible assets of EVO and their respective weighted-average estimated amortization periods:

	Estimated Fair Value		Weighted-Average Estimated Amortization Periods
	(in thousands)		(years)
Customer-related intangible assets	$	641,000	10
Contract-based intangible assets	423,000		12
Acquired technologies	138,400		7
Trademarks and trade names	6,000		2
Total estimated identifiable intangible assets	$	1,208,400	10

The revenue and earnings of EVO from the acquisition date through March 31, 2023 were not material, nor were the historical revenue and earnings of EVO material for the purpose of presenting pro forma information. In addition, transaction costs associated with this business combination were not material.

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NOTE 3—BUSINESS DISPOSITIONS

Businesses Held for Sale

Consumer Business. On April 26, 2023, we completed the sale of the consumer portion of our Netspend business, which comprised our Consumer Solutions segment, for approximately $1 billion, subject to final closing adjustments. In connection with the sale, we provided seller financing consisting of a first lien seven-year secured term loan facility in an aggregate principal amount of $350 million bearing interest at a fixed annual rate of 9% and a second lien twenty-five year secured term loan facility in an aggregate principal amount of $325 million bearing interest at a fixed annual rate of 13%. In addition, we provided the purchasers a first lien five-year $50 million secured revolving facility available from the date of closing of the sale.

The assets and liabilities of our consumer business were classified as held for sale and the disposal group was reported at fair value less costs to sell in our consolidated balance sheets as of March 31, 2023 and December 31, 2022. We recognized a loss on business dispositions in our consolidated statement of income of $244.8 million during the three months ended March 31, 2023 to reduce the carrying amount of the disposal group to estimated fair value less costs to sell. The loss during the three months ended March 31, 2023 included the effects of incremental negotiated closing adjustments, changes in the estimated fair value of the seller financing and the effects of the final tax structure of the transaction.

Gaming Business. On April 1, 2023, we completed the sale of our gaming business for approximately $400 million, including seller financing consisting of a 7-year unsecured promissory note in an aggregate principal amount of $32 million bearing interest at a fixed annual rate of 11%, and subject to final closing adjustments. The assets and liabilities of our gaming business were classified as held for sale in our consolidated balance sheets as of March 31, 2023 and December 31, 2022. We expect to recognize a gain on the sale of approximately $100 million in the second quarter of 2023.

Assets and Liabilities Held for Sale. The major classes of assets presented as held for sale in the consolidated balance sheet as of March 31, 2023 include cash of $88.7 million, accounts receivable of $16.1 million, other current assets of $58.4 million, goodwill of $529.5 million, other intangible assets of $717.9 million, property and equipment of $82.3 million, other noncurrent assets of $45.6 million and an asset group valuation allowance of $316.7 million. The major classes of liabilities presented as held for sale in the consolidated balance sheet as of March 31, 2023 include accounts payable and accrued liabilities of $101.1 million and other noncurrent liabilities of $4.7 million.

The major classes of assets presented as held for sale in the consolidated balance sheet as of December 31, 2022, include cash of $70.6 million, accounts receivable of $18.4 million, other current assets of $42.3 million, goodwill of $529.5 million, other intangible assets of $717.9 million, property and equipment of $82.9 million, other noncurrent assets of $44.9 million and an asset group valuation allowance of $71.9 million. The major classes of liabilities presented as held for sale in the consolidated balance sheet as of December 31, 2022 include accounts payable and accrued liabilities of $125.9 million and other noncurrent liabilities of $4.5 million.

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NOTE 4—REVENUES

The following tables present a disaggregation of our revenues from contracts with customers by geography for each of our reportable segments for the three months ended March 31, 2023 and 2022 and have been recast to align with the change in the presentation of segment information during 2022 as further described in “Note 15—Segment Information:”

	Three Months Ended March 31, 2023
	Merchant Solutions		Issuer Solutions		Consumer Solutions		Intersegment Eliminations		Total
	(in thousands)
Americas	$	1,365,894	$	443,345	$	143,709	$	(17,321)	$	1,935,627
Europe	176,098		117,104		—		—		293,202
Asia Pacific	63,618		10,458		—		(10,458)		63,618
	$	1,605,610	$	570,907	$	143,709	$	(27,779)	$	2,292,447

	Three Months Ended March 31, 2022
	Merchant Solutions		Issuer Solutions		Consumer Solutions		Intersegment Eliminations		Total
	(in thousands)
Americas	$	1,242,620	$	406,728	$	169,115	$	(14,619)	$	1,803,844
Europe	174,055		122,011		—		—		296,066
Asia Pacific	56,344		8,587		—		(8,587)		56,344
	$	1,473,019	$	537,326	$	169,115	$	(23,206)	$	2,156,254

The following table presents a disaggregation of our Merchant Solutions segment revenues by distribution channel for the three months ended March 31, 2023 and 2022:

	Three Months Ended
	March 31, 2023		March 31, 2022
	(in thousands)
Relationship-led	$	795,680	$	752,214
Technology-enabled	809,930		720,805
	$	1,605,610	$	1,473,019

ASC Topic 606, Revenues from Contracts with Customers ("ASC 606") requires that we determine for each customer arrangement whether revenue should be recognized at a point in time or over time. For the three months ended March 31, 2023 and 2022, substantially all of our revenues were recognized over time.

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Supplemental balance sheet information related to contracts from customers as of March 31, 2023 and December 31, 2022 was as follows:

	Balance Sheet Location	March 31, 2023		December 31, 2022
		(in thousands)
Assets:
Capitalized costs to obtain customer contracts, net	Other noncurrent assets	$	332,417	$	329,785
Capitalized costs to fulfill customer contracts, net	Other noncurrent assets	$	166,497	$	152,520
Liabilities:
Contract liabilities, net (current)	Accounts payable and accrued liabilities	$	223,675	$	226,254
Contract liabilities, net (noncurrent)	Other noncurrent liabilities	$	50,180	$	45,613

Net contract assets were not material at March 31, 2023 or at December 31, 2022. Revenue recognized for the three months ended March 31, 2023 and 2022 from contract liability balances at the beginning of each period was $83.7 million and $84.1 million, respectively.

ASC 606 requires disclosure of the aggregate amount of the transaction price allocated to unsatisfied performance obligations. The purpose of this disclosure is to provide additional information about the amounts and expected timing of revenue to be recognized from the remaining performance obligations in our existing contracts. The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at March 31, 2023. However, as permitted, we have elected to exclude from this disclosure any contracts with an original duration of one year or less and any variable consideration that meets specified criteria. Accordingly, the total amount of unsatisfied or partially unsatisfied performance obligations related to processing services is significantly higher than the amounts disclosed in the table below (in thousands):

Year Ending December 31,
2023	$	801,521
2024	844,665
2025	695,525
2026	569,521
2027	428,345
2028	196,636
2029 and thereafter	304,716
Total	$	3,840,929

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NOTE 5—GOODWILL AND OTHER INTANGIBLE ASSETS

As of March 31, 2023 and December 31, 2022, goodwill and other intangible assets consisted of the following:

	March 31, 2023		December 31, 2022
	(in thousands)
Goodwill	$	26,850,666	$	23,320,736
Other intangible assets:
Customer-related intangible assets	$	10,188,001	$	9,524,922
Acquired technologies	3,004,005		2,863,731
Contract-based intangible assets	2,169,122		1,741,321
Trademarks and trade names	1,074,058		1,067,745
	16,435,186		15,197,719
Less accumulated amortization:
Customer-related intangible assets	3,329,392		3,155,838
Acquired technologies	1,778,936		1,692,762
Contract-based intangible assets	216,279		197,478
Trademarks and trade names	522,692		493,267
	5,847,299		5,539,345
	$	10,587,887	$	9,658,374

The following table sets forth the changes by reportable segment in the carrying amount of goodwill for the three months ended March 31, 2023:

	Merchant Solutions		Issuer Solutions		Consumer Solutions		Total
	(in thousands)
Balance at December 31, 2022	$	13,816,945	$	9,503,791	$	—	$	23,320,736
Goodwill acquired	3,520,039		—		—		3,520,039
Effect of foreign currency translation	5,187		4,940		—		10,127
Measurement period adjustments	(236)		—		—		(236)
Balance at March 31, 2023	$	17,341,935	$	9,508,731	$	—	$	26,850,666

Accumulated impairment losses for goodwill as of March 31, 2023 and December 31, 2022 were $833.1 million, of which $475.1 million related to the held for sale consumer business.

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NOTE 6—LONG-TERM DEBT AND LINES OF CREDIT

As of March 31, 2023 and December 31, 2022, long-term debt consisted of the following:

	March 31, 2023		December 31, 2022
	(in thousands)
3.750% senior notes due June 1, 2023	$	550,845	$	552,113
4.000% senior notes due June 1, 2023	551,099		552,747
1.500% senior notes due November 15, 2024	498,409		498,164
2.650% senior notes due February 15, 2025	996,907		996,485
1.200% senior notes due March 1, 2026	1,094,411		1,093,932
4.800% senior notes due April 1, 2026	783,899		786,724
2.150% senior notes due January 15, 2027	745,258		744,945
4.950% senior notes due August 15, 2027	495,708		495,463
4.450% senior notes due June 1, 2028	472,702		473,800
3.200% senior notes due August 15, 2029	1,239,983		1,239,588
5.300% senior notes due August 15, 2029	495,537		495,362
2.900% senior notes due May 15, 2030	991,659		991,367
2.900% senior notes due November 15, 2031	742,765		742,555
5.400% senior notes due August 15, 2032	742,291		742,085
4.150% senior notes due August 15, 2049	740,592		740,503
5.950% senior notes due August 15, 2052	738,277		738,177
4.875% senior notes due March 17, 2031	857,064		—
1.000% convertible notes due August 15, 2029	1,447,292		1,445,225
Revolving credit facility	2,323,000		—
Commercial paper notes	1,048,620		—
Finance lease liabilities	30,871		32,435
Other borrowings	132,250		96,908
Total long-term debt	17,719,439		13,458,578
Less current portion	1,185,365		1,169,330
Long-term debt, excluding current portion	$	16,534,074	$	12,289,248

The carrying amounts of our senior notes and convertible notes in the table above are presented net of unamortized discount and unamortized debt issuance costs, as applicable. At March 31, 2023, the unamortized discount on senior notes and convertible notes was $51.8 million, and unamortized debt issuance costs on senior notes and convertible notes were $89.2 million. At December 31, 2022, the unamortized discount on senior notes and convertible notes was $50.8 million and unamortized debt issuance costs on senior notes and convertible notes were $85.4 million. The portion of unamortized debt issuance costs related to revolving credit facilities is included in other noncurrent assets. At March 31, 2023 and December 31, 2022, unamortized debt issuance costs on the unsecured revolving credit facility were $22.3 million and $23.5 million, respectively.

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At March 31, 2023, future maturities of long-term debt (excluding finance lease liabilities) are as follows by year (in thousands):

Year Ending December 31,
2023	$	1,147,502
2024	554,394
2025	1,009,577
2026	1,860,108
2027	4,635,269
2028	450,000
2029 and thereafter	8,117,160
Total	$	17,774,010

Senior Notes

On March 17, 2023, we issued €800 million aggregate principal amount of 4.875% senior unsecured notes due March 2031 and received net proceeds of €790.6 million, or $843.6 million based on the exchange rate on the issuance date. We issued the senior notes at a discount of $2.8 million, and we incurred debt issuance costs of $7.2 million, including underwriting fees, professional services fees and registration fees, which were capitalized and reflected as a reduction of the related carrying amount of the notes in our consolidated balance sheet at March 31, 2023. Interest on the senior unsecured notes is payable annually in arrears on March 17 of each year, commencing March 17, 2024. The notes are unsecured and unsubordinated indebtedness and rank equally in right of payment with all of our other outstanding unsecured and unsubordinated indebtedness. The net proceeds from the offering were used for general corporate purposes.

Commercial Paper

In January 2023, we established 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. 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, 2023, we had net borrowings under our commercial paper program of $1,048.6 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 5.87%. The commercial program is backstopped by our revolving 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.

Fair Value of Long-Term Debt

As of March 31, 2023, our senior notes had a total carrying amount of $12.7 billion and an estimated fair value of $11.8 billion. The estimated fair value of our senior notes was based on quoted market prices in an active market and is considered to be a Level 1 measurement of the valuation hierarchy.

As of March 31, 2023, our convertible notes had a total carrying amount of $1.4 billion and an estimated fair value of $1.5 billion. The estimated fair value of our convertible notes was based on a lattice pricing model and is considered to be a Level 3 measurement of the valuation hierarchy.

The fair value of other long-term debt approximated its carrying amount at March 31, 2023.

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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. The required leverage ratio was increased to 4.50 to 1.00 as a result of the qualifying acquisition of EVO, which will remain in effect for up to eight consecutive quarters with a gradual step-down to 3.75 to 1.00, and the required interest coverage ratio is 3.00 to 1.00. We were in compliance with all applicable covenants as of March 31, 2023.

Interest Expense

Interest expense was $119.0 million and $89.3 million for the three months ended March 31, 2023 and 2022, respectively.

NOTE 7—DERIVATIVES AND HEDGING INSTRUMENTS

Net Investment Hedge

We have designated our Euro-denominated senior notes as a hedge of our net investment in our Euro-denominated operations. The purpose of the net investment hedge is to reduce the volatility of our net investment in our Euro-denominated operations due to changes in foreign currency exchange rates.

Investments in foreign operations with functional currencies other than the reporting currency are subject to foreign currency risk as the assets and liabilities of these subsidiaries are translated into the reporting currency at the period-end rate of exchange with the resulting foreign currency translation adjustment presented as a component of other comprehensive income and included in accumulated comprehensive income within equity in our consolidated balance sheets. Net investment hedge accounting offers protection from this risk, and the foreign currency remeasurement gains and losses associated with the Euro-denominated senior notes are presented within the same components of other comprehensive income and accumulated comprehensive income.

As of March 31, 2023, an aggregate €800 million related to our Euro-denominated senior notes due March 2031 was designated as a net investment hedge of our investment in Euro-denominated operations. We recognized a loss of $18.2 million within foreign currency translation adjustments in other comprehensive income in our consolidated statement of comprehensive income during the three months ended March 31, 2023.    

Interest Rate Swaps

We have interest rate swap agreements with financial institutions to hedge changes in cash flows attributable to interest rate risk on a portion of our variable-rate debt instruments. In the first quarter of 2023, we entered into new interest rate swap agreements with an aggregate notional amount of $1.5 billion to convert eligible borrowings under our revolving credit facility from a floating term Secured Overnight Financing Rate to a fixed rate. Net amounts to be received or paid under the swap agreements are reflected as adjustments to interest expense. Since we have designated the interest rate swap agreements as cash flow hedges, unrealized gains or losses resulting from adjusting the swaps to fair value are recorded as components of other comprehensive income. The fair values of our interest rate swaps were determined based on the present value of the estimated future net cash flows using implied rates in the applicable yield curve as of the valuation date. These derivative instruments were classified within Level 2 of the valuation hierarchy.

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The table below presents information about our interest rate swaps, designated as cash flow hedges, included in the consolidated balance sheets:

					Fair Values
Derivative Financial Instruments	Balance Sheet Location	Weighted-Average Fixed Rate of Interest at March 31, 2023		Range of Maturity Dates at March 31, 2023	March 31, 2023		December 31, 2022
					(in thousands)
Interest rate swaps (Notional of $1.5 billion at March 31, 2023)	Other noncurrent liabilities	4.26	%	April 17, 2027 - August 17, 2027	$	46,403	$	—

The table below presents the effects of our interest rate swaps on the consolidated statements of income and statements of comprehensive income for the three months ended March 31, 2023 and 2022:

	Three Months Ended
	March 31, 2023		March 31, 2022
	(in thousands)
Net unrealized (losses) gains recognized in other comprehensive income (loss)	$	(48,051)	$	8,934
Net unrealized losses reclassified out of other comprehensive income (loss) to interest expense	$	1,386	$	9,445

As of March 31, 2023, the amount of net unrealized losses in accumulated other comprehensive loss related to our interest rate swaps that is expected to be reclassified into interest expense during the next 12 months was $0.4 million.

NOTE 8—INCOME TAX

For the three months ended March 31, 2023, we reported a tax benefit in excess of the U.S. statutory tax rate. The tax benefit included the favorable effect of foreign interest income not subject to tax, tax credits and the foreign-derived intangible income deduction. In addition, the tax benefit on the loss on business dispositions was tax effected at the applicable tax rate, whereas the earnings other than this discrete item were tax effected at the lower estimated annual effective tax rate.

Our effective income tax rate for the three months ended March 31, 2022 was 18.4%. Our effective income tax rates for the three months ended March 31, 2022 differed from the U.S. statutory rate primarily as a result of foreign interest income not subject to tax, tax credits and the foreign-derived intangible income deduction.

On August 16, 2022, the U.S. government enacted the Inflation Reduction Act into law, which, among other things, implements a 15% corporate alternative minimum tax based on global adjusted financial statement income and a 1% excise tax on share repurchases effective beginning January 1, 2023. We do not expect the corporate alternative minimum tax will have a material effect on our reported results, cash flows or financial position. During the three months ended March 31, 2023, we reflected excise taxes of $2.3 million within equity as part of the price of common stock repurchased during the period.

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NOTE 9—REDEEMABLE NONCONTROLLING INTERESTS

Through the acquisition of EVO, we have certain redeemable noncontrolling interests related to the portion of equity in our consolidated subsidiaries in Poland, Chile, and Greece, not attributable, directly or indirectly, to us, that is redeemable upon the occurrence of an event that is not solely within our control.

We own 66% of our subsidiary in Poland. Under the shareholders agreement, the holder of the remaining 34% of the shares has the option to compel us to purchase the shares held by the minority shareholder at a price per share based on the fair value of the shares. The option expires on January 1, 2024. We own 50.1% of our subsidiary in Chile. Under the shareholders agreement, the holder of the remaining 49.9% of the shares has the option to compel us to purchase those shares at a price per share based on the fair value of the shares. The option has no expiration date. We own 51% of our subsidiary in Greece. Under the shareholders agreement, the holder of the remaining 49% of the shares has the option, under certain limited circumstances, to compel us to purchase those shares at a price set forth in the agreement. In addition, beginning December 2025, the minority shareholder has the option to compel us to purchase those shares at a price per share based on the fair value of the shares. The options have no expiration date.

Because the exercise of each of these redemption options is not solely within our control, the redeemable noncontrolling interests are presented in the mezzanine section between total liabilities and shareholders’ equity, as temporary equity, in our consolidated balance sheet as of March 31, 2023. We adjust the redeemable noncontrolling interests at each balance sheet date to reflect our estimate of the maximum redemption amounts with changes recognized as an adjustment to paid-in capital within equity in our consolidated balance sheets. Such estimates are based on projected operating performance of each subsidiary, and the key assumptions used in estimating the fair value include, but are not limited to, revenue growth rates and weighted-average cost of capital.

Redeemable noncontrolling interests are carried at fair value on a recurring basis and are classified within Level 3 of the valuation hierarchy. The estimated fair value of the redeemable noncontrolling interests was $556.1 million as of the date of the acquisition of EVO and as of March 31, 2023.

NOTE 10—SHAREHOLDERS’ EQUITY

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, 2023 and 2022, we repurchased and retired 2,058,902 and 4,515,626 shares of our common stock, respectively, at a cost, including commissions and applicable excise taxes, of $206.6 million and $649.7 million, or $100.33 and $143.95 per share, respectively. As of March 31, 2023, the remaining amount available under our share repurchase program was $1,295.7 million.

On April 27, 2023, our board of directors declared a dividend of $0.25 per share payable on June 30, 2023 to common shareholders of record as of June 15, 2023.

NOTE 11—SHARE-BASED AWARDS AND STOCK OPTIONS

The following table summarizes share-based compensation expense and the related income tax benefit recognized for our share-based awards and stock options:

	Three Months Ended
	March 31, 2023		March 31, 2022
	(in thousands)
Share-based compensation expense	$	89,566	$	38,399
Income tax benefit	$	9,417	$	9,679

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Share-Based Awards

The following table summarizes the changes in unvested restricted stock and performance awards for the three months ended March 31, 2023:

	Shares	Weighted-Average Grant-Date Fair Value
	(in thousands)
Unvested at December 31, 2022	2,145	$159.04
Replacement awards	202	98.44
Granted	1,170	113.00
Vested	(753)	167.81
Forfeited	(33)	151.02
Unvested at March 31, 2023	2,731	$132.21

The total fair value of restricted stock and performance awards vested during the three months ended March 31, 2023 and March 31, 2022 was $126.5 million and $93.3 million, respectively.

For restricted stock and performance awards, we recognized compensation expense of $75.2 million and $35.1 million during the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, there was $265.4 million of unrecognized compensation expense related to unvested restricted stock and performance awards that we expect to recognize over a weighted-average period of 2.3 years.

Stock Options

The following table summarizes stock option activity for the three months ended March 31, 2023: 

	Options	Weighted-Average Exercise Price	Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
	(in thousands)		(years)	(in millions)
Outstanding at December 31, 2022	1,139	$111.75	5.4	$17.3
Replacement awards	142	98.44
Granted	195	113.12
Outstanding at March 31, 2023	1,476	$110.65	5.9	$20.9
Options vested and exercisable at March 31, 2023	1,019	$107.00	4.7	$20.9

We recognized compensation expense for stock options of $12.7 million and $1.8 million during the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, we had $4.4 million of unrecognized compensation expense related to unvested stock options that we expect to recognize over a weighted-average period of 2.3 years.

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The weighted-average grant-date fair value of stock options granted, including replacement awards granted in connection with the EVO acquisition, during the three months ended March 31, 2023 and 2022 was $47.08 and $48.88, respectively. Fair value was estimated on the date of grant using the Black-Scholes valuation model with the following weighted-average assumptions:

	Three Months Ended
	March 31, 2023	March 31, 2022
Risk-free interest rate	3.86%	1.87%
Expected volatility	45%