Global payments reports fourth quarter and full year 2020 results
Atlanta--(business wire)--global payments inc. (nyse: gpn) today announced results for the fourth quarter and year ended december 31, 2020. “we are pleased to have ended 2020 with continued sequential improvement in the fourth quarter, highlighting the consistency of our execution since the beginning of the pandemic," said jeff sloan, chief executive officer. "we also continue to make significant progress delivering against our strategic objectives, culminating in the announcement today of our new partnership with google to substantially expand the opportunity set for our merchant solutions business. none of this would have been possible without the dedication of our exceptional team members during this challenging period, and we thank them for their commitment to our customers and communities. “our new collaboration with google advances our merchant business competitively by driving incremental revenue and lowering operating costs through a multi-year worldwide go-to-market distribution and product development relationship combined with utilization of cutting edge, transformative cloud native technologies. together we will bring new best-in-class digital products to market worldwide more quickly, and we will further accelerate our culture of market-leading innovation. “our company accomplished a great deal over the last twelve months,” sloan continued. “across our merchant and issuer segments, we have struck significant and unique distribution relationships with two of the world’s largest and most sophisticated technology companies with a combined market capitalization of nearly $3 trillion. together, we will leapfrog legacy means of distribution and redefine how payment technologies for merchants and issuers are sold and consumed in the digital age. “in addition, our netspend business has played a critical role in the disbursement of more than $2.5 billion in stimulus funds to those most in need domestically, in many cases days in advance of traditional and financial technology competitors because of the depth and breadth of our network. we also expanded our target addressable market in 2020 by entering continental europe and leveraging our multinational footprint.” sloan concluded, “these accomplishments would have been meaningful in any year but are especially so given the challenges presented by covid-19. we expect these milestones to deepen our competitive moat and extend ongoing share gains. we exited 2020 in a better position than we entered it.” fourth quarter 2020 summary gaap revenues were $1.93 billion, compared to $1.99 billion in the fourth quarter of 2019; diluted earnings per share were $0.61 compared to $0.34 in the prior year; and operating margin was 13.1%. adjusted net revenues declined 2.9% to $1.75 billion, compared to $1.80 billion in the fourth quarter of 2019. adjusted earnings per share increased 11.1% to $1.80, compared to $1.62 in the fourth quarter of 2019. adjusted operating margin of 41.5% expanded 320 basis points. full year 2020 summary gaap revenues were $7.42 billion, compared to $4.91 billion in 2019; diluted earnings per share were $1.95 compared to $2.16 in the prior year; and operating margin was 12.0%. adjusted net revenues declined 5.2% to $6.75 billion, compared to $7.12 billion in 2019 on a combined basis. adjusted earnings per share increased 2.9% to $6.40, compared to $6.22 in 2019. adjusted operating margin of 39.7% expanded 210 basis points on a combined basis. financial highlights and 2021 outlook “our performance in the fourth quarter and for the full year 2020 exceeded our expectations post covid-19 and highlights our outstanding execution and the resiliency of our business model,” said paul todd, senior executive vice president and chief financial officer. “our technology-enabled payments strategy coupled with the decisive expense actions taken at the onset of the pandemic allowed us to generate substantial adjusted operating margin expansion, adjusted earnings per share growth and strong free cash flow despite the impact of the pandemic on the worldwide economy. “given significant progress with our integration activities, we are again raising our expectations for both revenue and expense synergies within three years from the close of the tsys merger. specifically, we now expect annual run rate revenue synergies to amount to at least $150 million by september 2022, an increase from our prior estimate of $125 million; and we expect annual run rate expense synergies to amount to at least $400 million by september 2022, an increase from our prior estimate of $375 million. “based on our outlook for 2021, we are excited to return to growth across our segments this year. we currently expect full year 2021 adjusted net revenue to be in a range of $7.50 billion to $7.60 billion, representing growth of 11% to 13%. consistent with the target we provided on our third quarter call, we expect adjusted earnings per share to be in a range of $7.75 to $8.05, reflecting growth of 21% to 26% over 2020 despite the adverse impact of additional lock-downs and social distancing protocols in a number of our markets since late october. this outlook presumes we continue on a path toward recovery worldwide over the course of the year.” todd concluded, “we have also returned to our traditional capital allocation priorities, and our board of directors has approved an increase to our share repurchase authorization to $1.5 billion. as part of that program, we intend to execute an accelerated share repurchase program for $500 million in the coming days.” capital allocation global payments’ board of directors approved a dividend of $0.195 per share payable march 26, 2021 to shareholders of record as of march 12, 2021 and also approved an increase to the existing authorization for the company's share repurchase program, raising the total available authorization to $1.5 billion. conference call global payments’ management will host a live audio webcast today, february 8, 2021, at 8:00 a.m. et to discuss financial results and business highlights. all interested parties may access the audio webcast via the investor relations page of the company’s website at investors.globalpaymentsinc.com. a replay of the audio webcast will be archived on the company's website following the live event. non-gaap financial measures global payments supplements revenues, income, operating income, operating margin and earnings per share determined in accordance with gaap by providing these measures with certain adjustments (such measures being non-gaap financial measures) in this earnings release to assist with evaluating our performance. in addition to gaap measures, management uses these non-gaap financial measures to focus on the factors the company believes are pertinent to the daily management of our operations. reconciliations of the non-gaap measures to the most directly comparable gaap measure are included in the schedules to this release. about global payments global payments inc. (nyse: gpn) is a leading pure play payments technology company delivering innovative software and services to our customers globally. our technologies, services and employee expertise enable us to provide a broad range of solutions that allow our customers to operate their businesses more efficiently across a variety of channels around the world. headquartered in georgia with nearly 24,000 employees worldwide, global payments is a member of the s&p 500 with worldwide reach spanning over 100 countries throughout north america, europe, asia pacific and latin america. for more information, visit www.globalpaymentsinc.com and follow global payments on twitter (@globalpayinc), linkedin and facebook. forward-looking statements investors are cautioned that some of the statements we use in this report contain forward-looking statements and are made pursuant to the "safe-harbor" provisions of the private securities litigation reform act of 1995. these forward-looking statements, which are based on current expectations, estimates and projections about the industry and markets in which we operate, and beliefs of and assumptions made by our management, involve risks, uncertainties and assumptions that could significantly affect the financial condition, results of operations, business plans and the future performance of global payments. actual events or results might differ materially from those expressed or forecasted in these forward-looking statements. accordingly, we cannot guarantee that our plans and expectations will be achieved. examples of forward-looking statements include, but are not limited to, statements we make regarding guidance and projected financial results for the year 2021; the effects of the covid-19 pandemic on our business, including estimates of the effects of the pandemic on our revenues, financial operating results and liquidity; the effects of actions taken by us in response to the pandemic; capital expenditures and share repurchases, including the ability of global payments to complete the anticipated accelerated share repurchase transaction; the anticipated benefits of the merger with tsys (the “merger’), including the combined company’s plans, objectives, expectations and intentions; timing and completion of anticipated benefits of strategic initiatives, including the commercial success of our partnership with google; our success and timing in developing and introducing new services; and future financial and operating results. although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained, and therefore actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. in addition to factors previously disclosed in global payments’ reports filed with the sec and those identified elsewhere in this communication, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: the effects and duration of global economic, political, market, health and social events or other conditions, including the effects and duration of the covid-19 pandemic; regulatory measures or voluntary actions, including continued or prolonged social distancing, shelter-in-place orders, operating restrictions on nonessential businesses and similar measures imposed or undertaken in an effort to combat the spread of the covid-19 pandemic; management’s assumptions and projections used in their estimates of the timing and severity of the effects of the covid-19 pandemic on our future revenues, results of operations and liquidity; our ability to meet our liquidity needs in light of the effects of the covid-19 pandemic; the outcome of any legal proceedings that may be instituted against our directors; difficulties, delays and higher than anticipated costs related to integrating the businesses of global payments and tsys, including with respect to implementing systems to prevent a material security breach of any internal systems or to successfully manage credit and fraud risks in business units; failing to fully realize anticipated cost savings and other anticipated benefits of the merger when expected or at all; business disruptions from the merger integration that may harm our business, including current plans and operations; failing to comply with the applicable requirements of visa, mastercard or other payment networks or card schemes or changes in those requirements; the ability to maintain visa and mastercard registration and financial institution sponsorship; the ability to retain and hire key personnel; the diversion of management’s attention from ongoing business operations; the continued availability of capital and financing; the business, economic and political conditions in the markets in which we operate; increased competition in the markets in which we operate and our ability to increase our market share in existing markets and expand into new markets; our ability to safeguard our data; risks associated with our indebtedness, foreign currency exchange and interest rate risks; the effects of new or changes in current laws, regulations, credit card association rules or other industry standards, including privacy and cybersecurity laws and regulations; and events beyond our control, such as acts of terrorism, and other factors included in the “risk factors” in our annual report on form 10-k for the year ended december 31, 2019, and in other documents that we file with the sec, which are available at https://www.sec.gov. any forward-looking statements speak only as of the date of this communication or as of the date they were made, and we undertake no obligation to update forward-looking statements, except as required by law. schedule 1 consolidated statements of income (unaudited) global payments inc. and subsidiaries (in thousands, except per share data) three months ended december 31, years ended december 31, 2020 2019 % change 2020 2019 % change revenues $ 1,930,193 $ 1,987,760 (2.9) % $ 7,423,558 $ 4,911,892 51.1 % operating expenses: cost of service 922,195 1,041,136 (11.4) % 3,650,727 2,073,803 76.0 % selling, general and administrative 756,017 750,462 0.7 % 2,878,878 2,046,672 40.7 % 1,678,212 1,791,598 (6.3) % 6,529,605 4,120,475 58.5 % operating income 251,981 196,162 28.5 % 893,953 791,417 13.0 % interest and other income 8,275 11,068 (25.2) % 43,551 31,413 38.6 % interest and other expense (85,073) (84,047) 1.2 % (343,548) (304,905) 12.7 % (76,798) (72,979) 5.2 % (299,997) (273,492) 9.7 % income before income taxes and equity in income of equity method investments 175,183 123,183 42.2 % 593,956 517,925 14.7 % income tax expense 17,981 22,423 (19.8) % 77,153 62,190 24.1 % income before equity in income of equity method investments 157,202 100,760 56.0 % 516,803 455,735 13.4 % equity in income of equity method investments, net of tax 27,616 13,541 103.9 % 88,297 13,541 552.1 % net income 184,818 114,301 61.7 % 605,100 469,276 28.9 % net income attributable to noncontrolling interests, net of income tax (2,175) (11,531) (81.1) % (20,580) (38,663) (46.8) % net income attributable to global payments $ 182,643 $ 102,770 77.7 % $ 584,520 $ 430,613 35.7 % earnings per share attributable to global payments: basic $ 0.61 $ 0.34 79.4 % $ 1.95 $ 2.17 (10.1) % diluted $ 0.61 $ 0.34 79.4 % $ 1.95 $ 2.16 (9.7) % weighted-average number of shares outstanding: basic 299,106 300,528 299,222 198,298 diluted 300,493 302,342 300,516 199,134 schedule 2 non-gaap financial measures (unaudited) global payments inc. and subsidiaries (in thousands, except per share data) three months ended december 31, years ended december 31, 2020 2019 % change 2020 2019 % change adjusted net revenue $ 1,752,369 $ 1,803,902 (2.9)% $ 6,748,023 $ 4,587,601 47.1% adjusted operating income $ 726,714 $ 690,224 5.3% $ 2,681,311 $ 1,821,302 47.2% adjusted net income attributable to global payments $ 540,523 $ 488,618 10.6% $ 1,922,439 $ 1,238,653 55.2% adjusted diluted earnings per share attributable to global payments 1.80 $ 1.62 11.1% $ 6.40 $ 6.22 2.9% non-gaap information for 2019 on combined basis(1): adjusted net revenue $ 6,748,023 $ 7,120,505 (5.2) % adjusted operating income $ 2,681,311 $ 2,676,075 0.2 % (1) schedule 3 segment information (unaudited) global payments inc. and subsidiaries (in thousands) three months ended december 31, 2020 december 31, 2019 % change gaap non-gaap gaap non-gaap gaap non-gaap revenues: merchant solutions $ 1,227,550 $ 1,112,269 $ 1,285,940 $ 1,160,963 (4.5) % (4.2) % issuer solutions 520,239 457,005 518,532 459,004 0.3 % (0.4) % business and consumer solutions 204,731 204,731 199,544 199,544 2.6 % 2.6 % intersegment elimination (22,327) (21,636) (16,256) (15,609) (37.3) % (38.6) % $ 1,930,193 $ 1,752,369 $ 1,987,760 $ 1,803,902 (2.9) % (2.9) % operating income: merchant solutions $ 338,529 $ 528,067 $ 308,649 $ 522,460 9.7 % 1.1 % issuer solutions 89,520 204,200 69,252 184,735 29.3 % 10.5 % business and consumer solutions 28,271 49,433 16,108 42,812 75.5 % 15.5 % corporate (204,339) (54,986) (197,847) (59,783) (3.3) % 8.0 % $ 251,981 $ 726,714 $ 196,162 $ 690,224 28.5 % 5.3 % years ended december 31, 2020 december 31, 2019 % change gaap non-gaap gaap non-gaap(1) gaap non-gaap revenues: merchant solutions $ 4,688,335 $ 4,244,681 $ 4,098,580 $ 4,594,064 14.4 % (7.6) % issuer solutions 1,981,435 1,746,570 604,654 1,780,057 nm (1.9) % business and consumer solutions 829,505 829,505 227,440 805,344 nm 3.0 % intersegment elimination (75,717) (72,733) (18,782) (58,960) nm (23.4) % $ 7,423,558 $ 6,748,023 $ 4,911,892 $ 7,120,505 51.1 % (5.2) % operating income: merchant solutions $ 1,162,741 $ 1,932,256 $ 1,148,975 $ 2,078,655 1.2 % (7.0) % issuer solutions 277,651 743,650 82,172 668,448 nm 11.3 % business and consumer solutions 138,630 224,276 19,473 184,038 nm 21.9 % corporate (685,069) (218,871) (459,203) (255,066) (49.2) % 14.2 % $ 893,953 $ 2,681,311 $ 791,417 $ 2,676,075 13.0 % 0.2 % (1) schedule 4 consolidated balance sheets (unaudited) global payments inc. and subsidiaries (in thousands, except share data) december 31, 2020 2019 assets current assets: cash and cash equivalents $ 1,945,868 $ 1,678,273 accounts receivable, net 794,172 895,232 settlement processing assets 1,230,853 1,353,778 prepaid expenses and other current assets 621,467 439,165 total current assets 4,592,360 4,366,448 goodwill 23,871,451 23,759,740 other intangible assets, net 12,015,883 13,154,655 property and equipment, net 1,578,532 1,382,802 deferred income taxes 7,627 6,292 other noncurrent assets 2,135,692 1,810,225 total assets $ 44,201,545 $ 44,480,162 liabilities and equity current liabilities: settlement lines of credit $ 358,698 $ 463,237 current portion of long-term debt 827,357 35,137 accounts payable and accrued liabilities 2,061,384 1,822,166 settlement processing obligations 1,301,652 1,258,806 total current liabilities 4,549,091 3,579,346 long-term debt 8,466,407 9,090,364 deferred income taxes 2,948,390 3,145,641 other noncurrent liabilities 750,613 609,822 total liabilities 16,714,501 16,425,173 commitments and contingencies 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 december 31, 2020 and 2019; 298,332,458 shares issued and outstanding at december 31, 2020 and 300,225,590 shares issued and outstanding at december 31, 2019 — — paid-in capital 24,963,769 25,833,307 retained earnings 2,570,874 2,333,011 accumulated other comprehensive loss (202,273) (310,571) total global payments shareholders’ equity 27,332,370 27,855,747 noncontrolling interests 154,674 199,242 total equity 27,487,044 28,054,989 total liabilities and equity $ 44,201,545 $ 44,480,162 schedule 5 consolidated statements of cash flows (unaudited) global payments inc. and subsidiaries (in thousands) years ended december 31, 2020 2019 cash flows from operating activities: net income $ 605,100 $ 469,276 adjustments to reconcile net income to net cash provided by operating activities: depreciation and amortization of property and equipment 357,529 211,200 amortization of acquired intangibles 1,256,911 667,135 amortization of capitalized contract costs 78,147 66,086 share-based compensation expense 148,792 89,634 provision for operating losses and bad debts 126,712 100,188 noncash lease expense 98,592 52,612 deferred income taxes (166,224) (108,309) equity in income of equity investments, net of tax (88,297) (13,541) other, net (13,665) 12,971 changes in operating assets and liabilities, net of the effects of business combinations: accounts receivable 55,986 (115,528) settlement processing assets and obligations, net 125,852 213,701 prepaid expenses and other assets (270,965) (159,056) accounts payable and other liabilities (320) (95,091) net cash provided by operating activities 2,314,150 1,391,278 cash flows from investing activities: business combinations and other acquisitions, net of cash acquired (160,801) (644,622) restricted cash from business combinations 119,372 — capital expenditures (436,236) (307,868) other, net 39,323 35,404 net cash used in investing activities (438,342) (917,086) cash flows from financing activities: net borrowings from settlement lines of credit (133,282) (236,473) proceeds from long-term debt 2,401,147 7,203,903 repayments of long-term debt (2,342,072) (6,484,689) payments of debt issuance costs (8,075) (43,599) repurchases of common stock (631,148) (311,383) proceeds from stock issued under share-based compensation plans 66,142 24,514 common stock repurchased - share-based compensation plans (61,243) (62,577) distributions to noncontrolling interests (26,199) (31,632) preacquisition dividends paid to former tsys shareholders — (23,240) dividends paid (233,216) (63,498) purchase of subsidiary shares from noncontrolling interest (578,196) — net cash (used in) financing activities (1,546,142) (28,674) effect of exchange rate changes on cash, cash equivalents and restricted cash 81,832 21,877 increase in cash, cash equivalents and restricted cash 411,498 467,395 cash, cash equivalents and restricted cash, beginning of the period 1,678,273 1,210,878 cash, cash equivalents and restricted cash, end of the period $ 2,089,771 $ 1,678,273 schedule 6 reconciliation of non-gaap financial measures to gaap measures (unaudited) global payments inc. and subsidiaries (in thousands, except per share data) three months ended december 31, 2020 gaap net revenue adjustment(1) earnings adjustments(2) income taxes on adjustments(3) non-gaap revenues $ 1,930,193 $ (177,824) $ — $ — $ 1,752,369 operating income $ 251,981 $ 2,378 $ 472,355 $ — $ 726,714 net income attributable to global payments $ 182,643 $ 2,378 $ 460,250 $ (104,748) $ 540,523 diluted earnings per share attributable to global payments $ 0.61 $ 1.80 diluted weighted average shares outstanding 300,493 300,493 three months ended december 31, 2019 gaap net revenue adjustment(1) earnings adjustments(2) income taxes on adjustments(3) non-gaap revenues $ 1,987,760 $ (183,858) $ — $ — $ 1,803,902 operating income $ 196,162 $ 2,708 $ 491,354 $ — $ 690,224 net income attributable to global payments $ 102,770 $ 2,708 $ 485,041 $ (101,901) $ 488,618 diluted earnings per share attributable to global payments $ 0.34 $ 1.62 diluted weighted average shares outstanding 302,342 302,342 (1) (2) (3) schedule 7 reconciliation of non-gaap financial measures to gaap measures (unaudited) global payments inc. and subsidiaries (in thousands, except per share data) year ended december 31, 2020 gaap net revenue adjustment(1) earnings adjustments(2) income taxes on adjustments(3) non-gaap revenues $ 7,423,558 $ (675,535) $ — $ — $ 6,748,023 operating income $ 893,953 $ 10,517 $ 1,776,841 $ — $ 2,681,311 net income attributable to global payments $ 584,520 $ 10,517 $ 1,720,973 $ (393,571) $ 1,922,439 diluted earnings per share attributable to global payments $ 1.95 $ 6.40 diluted weighted average shares outstanding 300,516 300,516 year ended december 31, 2019 gaap net revenue adjustment(1) earnings adjustments(2) income taxes on adjustments(3) non-gaap revenues $ 4,911,892 $ (324,291) $ — $ — $ 4,587,601 operating income $ 791,417 $ 15,351 $ 1,014,534 $ — $ 1,821,302 net income attributable to global payments $ 430,613 $ 15,351 $ 1,036,550 $ (243,861) $ 1,238,653 diluted earnings per share attributable to global payments $ 2.16 $ 6.22 diluted weighted average shares outstanding 199,134 199,134 (1) (2) (3) schedule 8 reconciliation of segment non-gaap financial measures to gaap measures (unaudited) global payments inc. and subsidiaries (in thousands) three months ended december 31, 2020 gaap net revenue adjustments(1) earnings adjustments(2) non-gaap revenues: merchant solutions $ 1,227,550 $ (115,281) $ — $ 1,112,269 issuer solutions 520,239 (63,234) — 457,005 business and consumer solutions 204,731 — — 204,731 intersegment elimination (22,327) 691 — (21,636) $ 1,930,193 $ (177,824) $ — $ 1,752,369 operating income: merchant solutions $ 338,529 $ 361 $ 189,177 $ 528,067 issuer solutions 89,520 2,017 112,663 204,200 business and consumer solutions 28,271 — 21,162 49,433 corporate (204,339) — 149,353 (54,986) $ 251,981 $ 2,378 $ 472,355 $ 726,714 three months ended december 31, 2019 gaap net revenue adjustments(1) earnings adjustments(2) non-gaap revenues: merchant solutions $ 1,285,940 $ (124,977) $ — $ 1,160,963 issuer solutions 518,532 (59,528) — 459,004 business and consumer solutions 199,544 — — 199,544 intersegment elimination (16,256) 647 — (15,609) $ 1,987,760 $ (183,858) $ — $ 1,803,902 operating income: merchant solutions $ 308,649 $ 131 $ 213,680 $ 522,460 issuer solutions 69,252 2,577 112,906 184,735 business and consumer solutions 16,108 — 26,704 42,812 corporate (197,847) — 138,064 (59,783) $ 196,162 $ 2,708 $ 491,354 $ 690,224 (1) (2) schedule 9 reconciliation of segment non-gaap financial measures to gaap measures (unaudited) global payments inc. and subsidiaries (in thousands) year ended december 31, 2020 gaap net revenue adjustment(2) earnings adjustments(3) non-gaap revenues: merchant solutions $ 4,688,335 $ (443,654) $ — $ 4,244,681 issuer solutions 1,981,435 (234,865) — 1,746,570 business and consumer solutions 829,505 — — 829,505 intersegment elimination (75,717) 2,984 — (72,733) $ 7,423,558 $ (675,535) $ — $ 6,748,023 operating income: merchant solutions $ 1,162,741 $ 1,194 $ 768,321 $ 1,932,256 issuer solutions 277,651 9,323 456,676 743,650 business and consumer solutions 138,630 — 85,646 224,276 corporate (685,069) — 466,198 (218,871) $ 893,953 $ 10,517 $ 1,776,841 $ 2,681,311 year ended december 31, 2019 gaap tsys(1) net revenue adjustment(2) earnings adjustments(3) non-gaap revenues: merchant solutions $ 4,098,580 $ 1,017,489 $ (522,005) $ — $ 4,594,064 issuer solutions 604,654 1,398,326 (222,923) — 1,780,057 business and consumer solutions 227,440 577,904 — — 805,344 intersegment elimination (18,782) (42,794) 2,616 — (58,960) $ 4,911,892 $ 2,950,925 $ (742,312) $ — $ 7,120,505 operating income: merchant solutions $ 1,148,975 $ 239,796 $ 12,774 $ 677,110 $ 2,078,655 issuer solutions 82,172 452,688 2,577 131,011 668,448 business and consumer solutions 19,473 95,826 — 68,739 184,038 corporate (459,203) (231,018) — 435,155 (255,066) $ 791,417 $ 557,292 $ 15,351 $ 1,312,015 $ 2,676,075 (1) (2) (3) schedule 10 outlook summary (unaudited) global payments inc. and subsidiaries (in billions, except per share data) 2020 2021 outlook % change revenues: gaap revenues $7.42 $8.18 to $8.28 10% to 12% adjustments(1) (0.67) (0.68) adjusted net revenue $6.75 $7.50 to $7.60 11% to 13% earnings per share: gaap diluted eps $1.95 $3.42 to $3.72 75% to 91% adjustments(2) 4.45 4.33 adjusted diluted eps $6.40 $7.75 to $8.05 21% to 26% (1) (2) non-gaap financial measures global payments supplements revenues, income, operating income, operating margin and eps determined in accordance with u.s. gaap by providing these measures with certain adjustments (such measures being non-gaap financial measures) in this document to assist with evaluating our performance. in addition to gaap measures, management uses these non-gaap financial measures to focus on the factors the company believes are pertinent to the daily management of our operations. management believes adjusted net revenue more closely reflects the economic benefits to the company's core business and allows for better comparisons with industry peers. management uses these non-gaap financial measures, together with other metrics, to set goals for and measure the performance of the business and to determine incentive compensation. adjusted net revenue, adjusted operating income, adjusted operating margin, adjusted net income and adjusted eps should be considered in addition to, and not as substitutes for, revenues, operating income, net income and eps determined in accordance with gaap. the non-gaap financial measures reflect management's judgment of particular items, and may not be comparable to similarly titled measures reported by other companies. adjusted net revenue excludes gross-up related payments associated with certain lines of business to reflect economic benefits to the company. on a gaap basis, these payments are presented gross in both revenues and operating expenses. adjusted operating income, adjusted net income and adjusted eps exclude acquisition-related amortization expense, share-based compensation expense, acquisition and integration expense and certain other items, such as unusual, direct and discrete costs due to the global pandemic, specific to each reporting period as more fully described in the accompanying reconciliations in schedules 6 and 7. adjusted operating margin is derived by dividing adjusted operating income by adjusted net revenue. the tax rate used in determining the income tax impact of earnings adjustments is either the jurisdictional statutory rate in effect at the time of the adjustment or the jurisdictional expected annual effective tax rate for the period, depending on the nature and timing of the adjustment.