Ladies and gentlemen, thank you for standing by, and welcome to the Global Payments Second Quarter 2022 Earnings Conference Call. [Operator Instructions] And as a reminder, today's conference will be recorded. At this time, I would like to turn the conference over to your host, Senior Vice President, Investor Relations, Winnie Smith. Please go ahead.

Good morning, and welcome to Global Payments second quarter 2022 conference call. Our earnings release and the slides that accompany this call can be found on the Investor Relations area of our website at www.globalpayments.com. Before we begin, I'd like to remind you that some of the comments made by management during today's conference call contain forward-looking statements about, among other matters, expected operating and financial results and statements about the proposed transaction between Global Payments and EVO Payments. These statements are subject to risks, uncertainties and other factors, including the impact of COVID-19 and economic conditions on our future operations that could cause actual results to differ materially from expectations. Certain risk factors inherent in our business are set forth in filings with the SEC, including our most recent 10-K and subsequent filings. We caution you not to place undue reliance on these statements. Forward-looking statements during this call speak only as the date of this call, and we undertake no obligation to update them. We will be also referring to several non-GAAP financial measures, which we believe are more reflective of our ongoing performance. For a full reconciliation of the non-GAAP financial measures discussed in this call to the most comparable GAAP measure in accordance with SEC regulations, please see our press release furnished as an exhibit to our Form 8-K filed this morning and our supplemental materials available on the Investor Relations section of our website. Joining me on the call are Jeff Sloan, CEO; Cameron Bready, President and COO; and Josh Whipple, Senior Executive Vice President and CFO. Now, I'll turn the call over to Jeff.

Thanks, Winnie. We welcome Josh Whipple, our new CFO, to the call today. Josh has been a senior leader at our company for 7.5 years, guiding us through some of the most significant milestones in our history. He's a trusted partner who has played a key role in building a leading technology-enabled software-driven payments business worldwide that Global Payments is today. We also thank Paul Todd for his terrific partnership and the critical role he has played in the successful merger of TSYS and Global Payments over the past 3 years and his 27 years at TSYS. We wish Paul all the best in retirement. We delivered second quarter adjusted results that were the best in our history across our key financial metrics despite the self-evident incremental headwinds. Both our merchant and issuer segments exceeded our expectations on a currency-neutral basis post the divestiture of our Russian business. Importantly, our issuer business generated 400 basis points of sequential revenue improvement on a comparable basis, exactly as we said it would, and our pipeline remains at record levels. And we achieved these results while executing multiple transactions to better align our businesses with our strategy, getting a key new partnership, extending our lead and deepening our competitive moat. First, we're delighted to announce that we've entered into a definitive agreement to acquire EVO Payments, significantly increasing our target addressable markets, enhancing our leadership in integrated payments world-wide, expanding our presence in new geographies, further scaling in existing faster growth markets and augmenting our business-to-business, B2B, software and payment solutions. Specifically, EVO provides us with a new presence in attractive geographies such as Poland, Germany, Chile and Greece. It enhances our scale in existing markets, including Mexico, Spain and the U.K. and of course, the U.S. and Canada. For B2B, EVO brings…

Thanks, Jeff, and good morning, everyone. Our acquisition of EVO aligns perfectly with our overarching strategy, reinforcing our position as the preeminent payments technology company with extensive scale and unmatched global reach. EVO furthers our technology-enabled distribution strategy and integrated payments while significantly enhancing our B2B software and payment solutions. The transaction also expands our exposure to additional faster-growth geographies overseas, and provides greater scale in North America and markets in Europe in which we already operate. As a combined company, we are uniquely positioned to deliver an unmatched suite of distinctive software and payment solutions to our combined customer base of more than 4.5 million merchant locations and over 1,500 financial institutions globally. Today, EVO has over 1,500 technology partners and integrations globally that complement our over 6,000 ISV partners across 70-plus vertical markets. We see significant opportunity to bring further value to EVO's relationships by leveraging our extensive distribution platforms and product portfolio as well as our unique partner integration capabilities. EVO also provides additional avenues for us to distribute our commerce enablement solutions and vertical market software offerings, including our leading point-of-sale software targeted at the restaurant and retail vertical markets. For example, we are already bringing our Vital POS solutions to key international markets where we overlap with EVO, including the U.K., Spain and Central Europe later this year. Additionally, we will be able to capitalize on the distinctive capabilities of our unified commerce platform to provide EVO's enterprise customers with multinational e-commerce and omnichannel solutions, seamlessly blending their physical and virtual requirements across markets and geographies. With our physical presence in over 40 countries globally and ability to transact in over 170 virtually, we are uniquely positioned to significantly expand EVO's value proposition to its existing multinational customers. EVO's accounts receivable automation software and B2B…

Thanks, Cameron. We're pleased with our strong financial performance in the second quarter, which exceeded our expectations despite ongoing macro concerns, the exit of our Russian business and incremental headwinds from adverse foreign currency exchange rates. Specifically, we delivered adjusted net revenue of $2.06 billion, an increase of 6% from the prior year and 8% growth on a constant currency basis. Excluding the NetSpend consumer assets, which will now be held as available for sale, adjusted net revenue grew 11% on a constant currency basis. Adjusted operating income increased 14% on a constant currency basis and 17% excluding NetSpend consumer assets. Adjusted operating margin for the quarter was 43.8%, a 200 basis point improvement from the second quarter of 2021 or approximately 250 basis points, excluding the impact of acquisitions. Excluding the Netspend consumer assets, adjusted operating margin was 45.3%. The net result was adjusted earnings per share of $2.36, an increase of 16% from the prior year or 19% on a constant currency basis. Taking a closer look at our performance by segment. Merchant Solutions achieved adjusted net revenue of $1.43 billion for the second quarter, an 11% improvement from the prior year or 14% on a constant currency basis. ahead of our expectations despite our exit from our Russian business in the quarter. Notably, we delivered an adjusted operating margin of 50.2% in this segment, an increase of 170 basis points year-on-year. Our combined U.S. payments and payroll and integrated business delivered another strong quarter, led by our integrated channel, which again reported mid-teens growth. We also continue to see strong momentum in our POS software solutions, which grew roughly 40% this quarter, and our HCM and payroll business, which grew 20%. Our worldwide e-commerce and omnichannel business delivered constant currency growth in the mid-teens this quarter, well…

Thanks, Josh. We effectively previewed the new Global Payments at our investor conference this past September. In those 3-plus hours and 70-plus pages, the 4 key pillars of our go-forward strategy were set forth in detail. Software, owned and partner; omnichannel dominance, exposure to faster growth markets and B2B at scale. I think it's clear now with today's announcements why we are keen then to raise our cycle guidance. We have 2 primary businesses going forward, each of which is growing at attractive rates with enhanced margin characteristics. Organic and of course, inorganic opportunities in each abound with further runway for ample growth. Upon the closings of these transactions, we expect to derive 3/4 of our adjusted net revenue from merchant and 1/4 from issuer and B2B. We have multiple levers in each segment to continue to gain share over the cycle, a simpler model, more geared toward our corporate customers with enhanced growth and margin prospects. In what better way to evidence that confidence in our strategy and the durability of our growth prospects than to have honor of Silver Lake as part of these plans. As we highlighted repeatedly last September, Global Payments is well positioned to maintain and enhance its disruptive path as a partner of choice across our markets. SLP, the most respected global technology investor agrees. Winnie?

Thanks, Jeff. [Operator Instructions] Operator, we will now go to questions.

[Operator Instructions] Your first question comes from the line of Darrin Peller.

Congratulations on all these. Look, I want to start off I just want to start strategically, when we think about the combination of the businesses now going forward and really much cleaner without the -- without that Netspend side of the business. You historically had been a very software-led strategy where you would grow with software acquisition some acquisitions or partnerships. I know EVO has a great track record internationally with different geographies doing JVs. So can you just touch on what you think the focus of the business is going to be going forward now? I mean is it a little of both? Or do you see more emphasis being on one versus the other in terms of international reach and JVs and really dovetailing on that expertise?

Well, Darrin, it's Jeff. I'll start, and I'll ask Cameron to comment, too. So I would say our outlook on M&A and our target and our pipeline really hasn't changed. We look at, as you said, vertical market software companies, but we've always looked for new geographies and deeper penetration to existing attractive markets concurrently. So as we said in our prepared remarks, doing that and managing our balance sheet effectively are not mutually exclusive. The other nice thing about kind of where we are is that we deliver fast enough. So if you close early in '23, we're actually back at the same leverage ratio by December '23, that we are sitting here in August of '22. So we have a ton of financial firepower. I'd also add that we'd be buying back stock between now and then, too. So we have plenty of capability and flexibility to affect our strategies. But no, it doesn't really change our priorities. We'll continue to look at software companies will continue to look at new geographies. We'll continue to look at further penetration of existing geographies. It just so happens that EVO fits on many of the things that I just outlined. Cameron, do you want to add anything?

Yes, Darrin, it's Cameron. I'll just add a few things. One, if you think about EVO through the lens of our strategy, I'd say, first and foremost, roughly 40% of the business today is technology-enabled. So very much aligned with our view around driving growth in our business through enablement of technology around the globe with software as the leader in that overarching strategy is the first point I would make. The second is a key element of our strategy is having exposure to faster growth markets around the world that helped to drive top line rates of growth that are superior but also gives us an opportunity to bring new technologies to those markets to drive, again, even better rates of growth in markets with strong secular growth trend. And clearly, EVO fits the bill from that perspective as well. And then I would say, third, it does bring us software, particularly in the B2B space, AR automation software and B2B payments capabilities that nicely augment what we already have and allow us to continue to build out a technology-enabled distribution strategy around B2B payments. So it aligns very nicely with the B2C technology-enabled strategy we've been building for many years. So I think EVO in totality really complements many aspects of our strategy today and aligned very nicely with the business we've been trying to build over the last decade.

That's really helpful. Just as my follow-up, I just want to hone in on the B2B strategy now. This obviously does give you a lot more assets and connectivity with ERP systems for the B2B. So if you could just characterize what you see as the real differentiating way you're going to go to market from a B2B standpoint and really what that can contribute to the business medium to longer term, that would be great.

Yes. Darrin, it's Jeff. Great question, I'll start and I'll ask Cameron to comment again, too. So first, let me complement Jim and EVO for building just an absolutely rock-solid and terrific business overall, but specifically in light of your question on B2B business. So we are extremely impressed during our diligence with the team and the culture of EVO, but for these purposes in particular, the B2B assets. So if you back up, Darrin, to MineralTree, which we closed last October, we were looking for an accounts receivable software business to complement the MineralTree accounts payable business, which, as I mentioned in my prepared remarks, is running ahead of schedule on breakeven. I think 30%, as Ry said, year-over-year in the quarter just ended June. So we couldn't be more pleased with that. If you think about where we're positioned post TSYS, now post MineralTree, post EVO, so when it ultimately closes, we think we have among the most complete at scale worldwide B2B businesses of anybody out there. But I mean probably something like 2/3 $1 billion of revenue coming from B2B, and we're doing it profitably with commercial card, virtual card issuance were TSYS that's $50 million of those a year, and I think $30 billion of volume pay card. And the other thing we said today is we were successful in not just investing NetSpend's consumer assets, but also in retaining Netspend's B2B assets. So Paycard, EWA parts of those not as I said, effective July 1, we'll have now moved over to issuer to the issuer segment. So I think Jim and EVO really bring us the missing link, as I said, which is we have our own receivables businesses, but we don't have the native integrations and ERP that Jen is so smartly built over the last period of time. And in combination with middle trend everything else we have, I really think positions us distinctively.

Yes. Darrin, it's Cameron. Maybe just a couple of other tactical points. I can't really emphasize enough the value proposition associated with the proprietary ERP integrations and how that will accelerate our B2B strategy. We're very successful at selling B2B acceptance today without those integrations with those integrations and the accompanying AR software. I think our go-to-market strategy around B2B payment acceptance is meaningfully accelerated, and we're very excited about that. Secondly, and this goes back to a couple of my comments back at the investor conference, when we're able to integrate full AP automation with money in, money out solutions to Jeff point earlier, we have a comprehensive, complete sort of B2B payment offering we can bring largely to the mid-market and going up to the enterprise market. I don't think anyone else in the industry can really touch. so I think it really does highly complement what it is we're trying to do as a go-to-market strategy from B2B with the integrations again being a key emphasis of the value proposition that EVO brings to Global Payments.

Your next question comes from the line of Bryan Keane.

I guess my question is just why now? Obviously, EVO and GPN have been very familiar with each other, both you guys are in the Atlanta headquarters, and obviously, Jim was a former executive at GPN. So just thinking about the timing of this deal and how it came about the GPN approach EVO?

Yes, Bryan, it's Jeff. I'll start. So what I would say is obviously a lot more to come from Jim when they file their proxies, so I don't want to jump ahead of that. But I would just say on my side, look, I've been trying. It took me this long to actually get it over the finish line. I said in the context of the TSYS merger, Bryan, a number of years ago, I tried that one for 20 years spending 2 different careers. So maybe I'm just kind of a laggard at what I do, and it takes me a long time to get things over the finish line. But certainly, it's not for a lack of effort. Maybe it's for lack of accomplishment. But listen, we've known, as you've said, the management team and Jim, in particular, over EVO. They've obviously been a customer of bars for a long time. I've been at Global, myself, 12.5 years and obviously, been a customer that holds duration is too large. So couldn't have a better partner really than those guys and could have a better leadership team than the one Jim has assemble then we obviously, as Cameron said, [indiscernible] strategy in the tech-enabled side and especially as we just mentioned, in response to Darrin's question, the B2B side. So we've been trying this. It's nice that the stars aligned from Jim's point of view and EVO’s point of view in mind and Global. I would say, as we thought about it, we think that now is a great time to do this, and I'll tell you why. First, we think that our expectations for what this business is going to do reflect the current macroeconomic and FX environment. That's reflected in the terms that we announced today. And 30 per dollars a share, we're paying roughly 10x calendar '23. EBITDA with the synergies fully loaded into it. Prior deals that we've done and other people have done in the marketplace are at 11x and 12x just by way of comparison. And look, as a strategic buyer for Jim and for us, a strategic transaction, our synergies don't vary by the macroeconomic climate. We're going to have those synergies kind of in any environment. So I'm really good at the end of the day, that's something that certainly I at Global Payments have been pursuing for many years that we were able to bring it to fruition. I would just tell you that the 2 teams have at least gelled all together. We've been partners for a very long period of time. We couldn't be more delighted with our ability to announce this today.

And Bryan, it's Cameron. I'll just add one other point to that, which is, look, we're about to reach the third anniversary of our merger with TSYS. So the timing is right for us as well. We're ready to take this on as an integration matter. Our teams are excited about the opportunity, particularly what it does to our European business. Essentially, we'll have roughly $1 billion European business now going forward and obviously, the scale and additional capabilities it brings to us in markets like the U.S., Mexico, U.K., where we also have large businesses today. I think the team is delighted to have the opportunity. So the timing works for us well as an execution matter.

No, it's an exciting combination. Let me just ask one quick follow-up on the results. On Merchant Solutions, I noticed point-of-sale software growth up 40% year-over-year. Can you talk a little bit about the competitive landscape there? And if you guys are gaining share there because sometimes, I don't know if that business gets high in enough that you guys seem to be doing quite well in the point-of-sale software.

Yes, Bryan, it's Cameron. I'll maybe start and ask Jeff to chime in if you'd like to have anything else. I think we have very competitive market-leading offerings in the POS software space. We're really delighted with the progress we've made in that business. That 40% growth rate in the quarter is probably off of 50% to 60$ last year. So we continue to scale that business nicely with our full suite of kind of retail and restaurant POS capabilities that stem from, again, all the way down to the very small end of the market up to the higher end of the mid-market, even into the low enterprise space with the capabilities that we have. We also launched this quarter, what we call our retail and restaurant Essentials Package, which we're really excited about because it basically brings some of the vertical fluency that exists in the upper end of the market that we have with our retail and restaurant product today, down to the lower end of the market. So they get the benefits of verticalization, but a simpler solution that they can grow and scale with over time into our core retail and restaurant offering. And I think that's going to drive even additional tailwinds on in our POS business going forward. So look, we think we're very well positioned in the competitive landscape. Obviously, it's a landscape that has a lot of intense competitors and quality products that we have to business on ourselves against. But I think our distribution capabilities, the scale we have in the business, the feature functionality, we're able to bring to retail and restaurant customers, coupled with the service offerings that we have I think, really positions us well to continue to grow nicely in that space, and it will be a tailwind for the overall business going forward. And the last thing I would say is somewhat unique about us is our ability to bring those capabilities to markets outside of the U.S. I talked about that in my prepared remarks, but we're bringing a lot of our POS software solutions into Canada, the U.K., Central Europe, Spain, and we'll look to do that further in EVO markets as well, driving further distinction and differentiation in those international markets, again, creating more tailwinds for growth in our overall POS opportunities.

Your next question comes from the line of Dave Koning.

And maybe -- so I guess a couple of numbers questions. First of all, is the $125 million of synergies, does that all fall to the EBIT line? And maybe talk to what revenue and expense synergies kind of are in there?

Yes, Dave, it's Cameron. I'll start there, and I'll ask Josh to jump in as well with any other comments he'd like to add. So I would say, first and foremost, yes, we talked about the EBITDA synergies being $125 million, that will flow through to EBIT. There's no sort of acute gains being played around D&A. Those are all EBIT savings as well as EBITDA savings for the business. Look, there's a lot of opportunities on the revenue side. I talked about this extensively in the script, I think overlaying our vast distribution capabilities with EVO business is very attractive. The ability to bring our commerce enablement solution, vertical market software POS capabilities into EVO's existing base of customers. I think is very attractive, cross-selling UCP to EVO's enterprise customers for multinational acquiring, I think, is an attractive opportunity. And of course, EVO's B2B solutions and what that does to our own B2B strategy and go-to-market positioning is incredibly attractive as a revenue growth matter. And then, of course, there's a significant amount of overlap in our businesses. So when we look at an opportunity like EVO, there is obviously synergy opportunities and aligning go-to-market strategies in harmonizing our sales and distribution platforms. Clearly, technology will be a significant source of synergy benefits as we put the 2 businesses together, the operating environment, the customer service environments, the ability to leverage our captive offshore in the Philippines and some of what we've been able to do from a servicing perspective to gain scale. I think all of that drives a significant amount of synergy opportunity in the deal I would say that our levels are at or more attractive even than we've seen in the Heartland transaction and the TSYS transaction historically. So we feel very good about the number. I have a lot of confidence in our ability to deliver it over the 2-year time horizon we outlined in the call earlier today and are anxious to get started.

And then just a second one on numbers. It looked to us like both revenue and EPS guidance were raised a bit and I think that seems like it still has to include the NetSpend numbers in it. I know you said discontinued ops, but does the guidance still include net spend for the rest of this year?

Yes. So what I would say, look, on a constant currency basis, our guide hasn't changed. Our expected growth is still 10% to 11%, which is consistent with our prior outlook. We expect full year adjusted net revenue before dispositions to be $8.48 billion to $8.55 billion, which I commented on in my prepared remarks, after removing the Russia merchant business as well as the second half figures for B and C consumer, we estimate that constant currency revenue would be approximately $8.08 billion to $8.15 billion, and then further, if we adjust to include 200 to 250 basis points of FX headwind for the year, we expect reported revenue to be in the range of $7.9 billion to $8 billion for calendar year 2022, which I mentioned in my prepared remarks, that you can see in our Schedule of our press release.

Yes. Dave, it's Jeff. I would just add, our reported earnings that we expect to report, we essentially kept the original range, to be honest, although we stressed, we probably would be toward the lower end in light of the things that Josh mentioned. But the way to think about it, Dave, I think, is, I think you're right from an earnings point of view because we're getting to the original range that we guided to in February, Dave, and we're absorbing just another $0.11 just from May to today and it was probably another $0.05 or $0.10 or whatever the math was in the first quarter, Dave. So I would say the way I look at it on earnings, in particular, is what you said, which is we're taking actions, which is why Dave the margin is up. So we've raised for the second quarter in a row our margin expectations. So Josh layout the revenue formulation, but certainly from a reported earnings formulation, Dave, we're essentially absorbing all the FX. We're absorbing Russia, and yet we're still in the same range from February.

Yes. That's clear.

I can tell you as a management team, Dave, I view that as raising it, but you can have your own conclusion.

Sounds great.

Your next question comes from the line of Ramsey El-Assal.

I had a question on the merchant segment. Margins outperformed our model quite a bit, and yields did as well. Maybe you could take both of those things and sequence and talk about the drivers of margin expansion in the quarter, the sustainability of those drivers as well as what we should expect for yields as we move through the back half of the year?

Ramsey, it's Cameron. I'll start and ask Jeff or Josh, to jump in with any other additional commentary. So I would say a couple of things on the margin front. Obviously, I think it reflects continued very strong execution of the business. I'm really proud of our teams around the globe. We've been able to continue to drive, I think, higher levels of incremental margin in the business, which has created an overall tailwind, I think, for margin expansion. I think the second thing we've seen is recovery in markets that have slightly lower margin profiles that have been a nice tailwind to margin expansion as well. Asia Pacific is a good example of that. It grew double digits on a constant currency basis, again this quarter. Obviously, the Asia Pacific region continues to struggle with COVID, but we do see some tailwinds to growth there, which I think creates some overall tailwinds to growth in margin overall. And I would say, lastly, to your question around yields, I think it continues to be a bit of a mix conversation. As our vertical market businesses continue to recover, you'll see that the yield has drifted up a little bit. That's what we forecasted previously, and I think we commented on the fact that we would anticipate that having as we work through 2022. So I think if you look at the business today, excluding Russia, we grew top line. On constant currency basis, about 15%, volume grew about 15%. So that delta between revenue growth and volume was really negligible, showing kind of a better yield environment, some of that due to overall mix in the business, some of it due to vertical markets recovering or continuing to recover to some degree as well.

And a follow-up for me. Can you comment on what you're seeing sort of most recently in your kind of quarter-to-date volumes? And just also give us your thoughts on the potential for recessionary impact on numbers? Are you seeing any signs of consumer spending weakening and what you're seeing in your own book? Or what is your view there?

Sure, Ramsey, I'll start again. It's Cameron. I think July continues to trend in line with our expectations, relatively consistent, I would say, with what we've seen in June and May sort of time frame. I think the consumer continues to be in a relatively healthy place like you, and I'm sure everyone else on the phone, we watch that very, very closely. But we continue to see, I'd say, good volume trends in the business, very stable, very consistent with what we'd expect. No real sign sitting here today of any material weakness kind of on the consumer front. I think we're still in this period. Obviously, there's a lot of activity during the summer months. I think there's been a lot of pent-up demand for consumers to get out and about and engage more in experiences and maybe less so in goods. And we'll see how that trends kind of through the balance of the year given the overall macro environment we're operating in. But I think we continue to be relatively I'd say, comfortable with how we see volumes progressing through July relative to our expectations.

Yes. Randy, it's Jeff. I'd say the same thing is true on the issuing side. We continue to see really strong volumes in issuing in July. We see really good commercial card. I think we actually disclosed it in the slide, 35% commercial car growth in the second quarter and look for those of us, and I would say those trends and expectations are very similar to what you heard out of Visa, Mastercard, Pfizer last week. So really pleased with Live, where we are. I've been in on the road. The last kind of couple of months in the U.S., in Canada, in the U.K., twice by the way, and in Continental Europe. And let's be honest, the airports, the restaurants, the hotels, the streets are packed. So you don't even me to tell you that things are in a healthy place.

Your next question comes from the line of Robert Napoli.

Congratulations on the acquisition of EVO. You've got a good asset and back together with there, Jeff. Good to see. Just on MineralTree, I guess maybe a follow-up on the B2B business. You called out 30% growth on MineralTree and now that you have the AR assets as well. First of all, is that 30% organic. And what are you seeing you've been able to cross-sell mineral free into your commercial card customer base?

Yes, Bob, it's Jeff. I'll start. It's a great question. So yes, the 30% in military is comparable year-over-year. So that's an organic revenue comparison. As I mentioned in my prepared remarks, it's also now at EBITDA breakeven, which we've been able to grow the revenue substantially while significantly improving the profitability. So no surprise to you on your second question that one of our targets is a revenue synergy matter. When we did MineralTree was to cross-sell that into what's now post EVO 1,500 FIs, but like 1,300 or whatever, 1350, whatever the math is today. The pipeline is very deep there. We're very pleased about how the business is executing. We actually brought someone at the end of June to whom MineralTree net reports who's running all of our issuer B2B functionality is terrific and is off to a great start. I'd also say there's a ton of overlap, not just in the FI base but in the merchant base with Cameron's businesses. So no surprise, Bob, that we've been cross-selling into things like the enterprise QSR space. You would imagine that BURGER KING and those types of folks actually procure on. You would think about AdvancedMD, for example, in health care, you think about TouchNet in the higher ed and university. Those are all really good targets for cross-selling. So we're very excited about the revenue opportunities in that business. Cameron, you want to add anything?

No, I think I covered the well. The only other comment I would add is, just like we see meaningful opportunities in some of our own software businesses, we see a lot of opportunities with our partners as well, sort of working to integrate MineralTree into their existing software suite of solutions across the 6,000 ISV partners that we work with today. So meaningful cross-sell opportunities. I think when we can marry that with AR software as well, that's going to open up even more doors for us and provide more opportunities to drive faster rates of growth across the entire B2B channel.

And then a follow-up just on the operating margin expansion, much better than your guidance than what we had expected in an inflationary environment where it should be tougher to do that. I know you just called out, Jeff, great execution, but can you maybe give a little more color on how you’ve been able to expand margins in this environment? A –Jeff Sloan: Yes, Bob, it’s a great question. So I would say, in our business, those things are derivatives of revenue growth. So if you look at what we report and what Josh said this morning, if you’re growing like-for-like revenue, and I think x net spend is something like 11% constant currency revenue growth at Netspend, a lot of that is going to fall to the bottom line because our business is all about how we generate incremental rates of revenue growth. So it’s not surprising to me that we outperformed, maybe double-digit kind of core revenue growth. The second thing I would say, and Cameron touched on this a minute ago is our vertical market software businesses. So for a while that pandemic, we were kind of coming into a recovery in those businesses. As we alluded to in our November call last year, and obviously, our February call, Bob, of this year, those have now returned to comparative growth. So there are a tailwind in the merchant segment that Cameron just mentioned, not a headwind. Not surprisingly, Bob, software businesses come in at a high margin. So our ability to really capitalize on the rates of rebound, I think it was something like 20% or thereabout growth in the second quarter for a brutal market software business in aggregate. Well, you talk about rule of kind of fording in software, we’ll probably rule up 50 and in some cases, well at 60. So not surprising a lot of that stuff is going to drop to the bottom line. A –Cameron Bready: Yes, Bob. The only thing I would add to that is that we’ve always been highly, highly focused on profitable growth in our business. We don’t give our solutions away for nothing. We believe in the value proposition that we deliver to our customers. More and more, we’re leading with technology, obviously, what drives higher margins in the business and better outcomes. And I think there’s really no better representation of that between the alignment and volume growth we see in the business and top line revenue growth. Obviously, we continue to focus very heavily on driving profitable growth in the business and margin expansion is 1 of the core elements that we’re highlighting as a management team.

Your next question comes from the line of Jamie Friedman.

Congratulations on the numbers and the transactions. I wanted to Yes, makes a lot of sense. I want to ask about Netspend's B2B exposure. Jeff, you mentioned in your prepared remarks about Pay card. But can you remind us what that does and roughly the size of it, if you have it?

Yes, of course, Jamie. So we actually -- I think Paul said this at the time we announced in February, our strategic review. But it's about $100 million, $110 million of revenue. In fact, in the schedules we produce today, I'm going to say it's schedule to, we actually gave supplemental kind of pro formas as to what it would look like. And you also see that throughout. So you actually see what issuer with Pay card and B2B from Netspend and it looks like, and you see what we're selling without it in there. But I'll just quote you for memory, having looked at those schedules quite a bit, it's something like $100 million, $110 million Jamie, of yearly revenue in that business. It's mostly Pay card, but there's also earn wage access and some banking as a service businesses in that business, too. And I think as I said in the prepared remarks, it grew mid-teens on a normalized basis in the second quarter. The reason I say normalized is you had some like stimulus effects kind of last year, Jamie. So you have a little bit of the second quarter, there were still signals coming from the federal government. But mid-teens is what it's grown at. And it's a natural corollary to the assets that we have in issuer B2B, which is to say, virtual card, commercial card, the assets we have in Cameron's business in merchant, in Heartland with payroll. So it's a very nice corollary to those businesses.

Got it. And then my second one was about issuer, nice acceleration here. Just wondering what -- and what's contemplated for the rest of the year in issuer, if you could get us oriented with that.

Yes. It's Jeff. I'll start, and then I'll turn it over to Josh. So as I said in my prepared remarks, Jamie, right on track with what we expected. Ex-MineralTree, it was 4% constant currency growth, which is what we're tracking, obviously, with MineralTree, we printed 6. So super happy about where it came out. We think we're on a really good track there. As I said last quarter, we have a record pipeline accounts on file and transactions and commercial all accelerated in the second quarter. And based on what we said about volumes and everything else, I think you're going to see that in the third quarter, too, relative to the second quarter. Josh, want to give a little more color on the rest of the year.

Yes. Sure, Jamie. So I think if you think -- if you go back to the first quarter, ex-MineralTree, we saw margins expand 50 basis points. And then for the second quarter, we also saw margins expand 60 basis points Ex-MineralTree. And for the back half of the year, we're expecting to see further margin expansion, strong operating leverage, expense management. So we see that accelerating. And then I think it goes back to Jeff's comment around operating leverage. We've seen a nice -- very strong trend from the first quarter to the second quarter from a revenue perspective, and we expect that to go ahead and continue into the third and fourth quarter, which will also contribute to margin.

And Jamie, I would just say in terms of outlook for that business, and I think Josh is exactly right about what we're managing to, most of my trips, especially overseas and outside the U.S. to Canada and to Europe, were with FIs on the issuing side, Jamie, and also obviously, with some of the fintechs on the AWS side. Look, I would say our strategy there is exactly right. The cloud sells, AWS sells, we were worried we first started this, to say, hey, look, what's the path for regulated institutions to move to the cloud. That might have been true 3 years ago when we first started this. I can tell you that's not true now. So now we have a record pipeline, but kind of the shadow pipeline, which is my view as to what the receptivity and where we are has really never been better. So we're in a fortunate position to have abundance of opportunities. We obviously need to wrestle to the ground and bring those to fruition. But I think the future for that business, particularly the B2B assets in it is really bright. Well, thanks, Jamie. On behalf of Global Payments, thank you for joining us this morning.

This concludes today's conference call. You may now disconnect.