Though its U.S. payments processing business is slowing, Global Payments Inc. said its foreign operations are doing well.
"We have seen some softness domestically," Paul R. Garcia, Global Payments' chairman, president, and chief executive, said in a conference call with analysts Thursday to discuss results for its first fiscal quarter, which ended Aug. 31. "The good news is softness, for us … still means pretty significant growth."
The Atlanta company said its revenue for the quarter rose 30% from a year earlier, to $405.8 million. Net income rose 32%, to $57.5 million.
Global Payments also raised its guidance for this fiscal year. It now expects full-year revenue to grow 29% to 32% from the previous year, to a range of $1.64 billion to $1.68 billion. In July it said it expected to report revenue of $1.62 billion to $1.675 billion.
It now expects diluted earnings per share to rise 20% to 24% this fiscal year, to a range of $2.37 to $2.45. Its July guidance called for earnings of $2.20 to $2.30.
Mr. Garcia said that Global Payments is "rich with nondiscretionary channels like education, health care, and the like," where people are not cutting their spending.
He also said his company is acting on the opportunities it sees abroad. Last month its Asian joint venture with HSBC Holdings PLC closed a deal to buy HSBC's merchant acquiring business in the Philippines. Global Payments owns 56% of the venture, Global Payments Asia-Pacific Ltd., which was started in 2006 in Hong Kong.
In June, Global Payments bought a 51% stake in HSBC's U.K. merchant acquiring business to form another joint venture, HSBC Merchant Services.
In the United States, Mr. Garcia said, the troubles plaguing large banking companies could present opportunities for his company.
Washington Mutual Inc., whose banking operation was acquired last month by JPMorgan Chase & Co., and Wachovia Corp., which said Friday it would sell itself to Wells Fargo & Co. (pulling out of an earlier agreement with Citigroup Inc.) both "have referral agreements with our competitors," he said, and the transactions could reshape these arrangements.
"These are interesting times right now, and I think that there are opportunities that will present themselves," Mr. Garcia said.
Tien-tsin Huang, an analyst at JPMorgan Securities Inc., wrote in a research note Friday that Global Payments' shares are a "safe haven," and have been boosted in particular by its recent acquisitions.
During the quarter the U.K. joint venture was more beneficial than the company had suggested on an earnings call in July, he wrote. Global Payments' "built-in growth from recent acquisitions" makes it "well positioned to navigate tough … trends."
Thomas C. McCrohan, an analyst at Janney Montgomery Scott LLC, wrote in a research note published Friday that the weakening of the U.S. processing market "was clearly evident this quarter, and is expected to continue."
Nonetheless, Global Payments is doing well, he wrote.
In July, Mr. McCrohan lowered his rating of Global Payments' stock to "neutral," from "buy," citing reduced margins but predicting that the issue would be somewhat offset by its U.K. joint venture. In his Friday note, he called the fiscal first-quarter results a "positive earnings surprise."
Brian Riley, a research director at TowerGroup, an independent research firm owned by MasterCard Inc., said in an interview that foreign business is helping Global Payments overcome issues in the United States. "They're not just locked themselves to a particular market."
Bank takeovers could open up opportunities, he said. However, "there's still a lot to sort out."
