Investors in Global Payments received quite a shock last Friday when the company revealed that it was the victim of a large-scale data breach. GPN made several announcements and held a conference call in combination with its quarterly earnings release.
The data breach is being investigated by law enforcement authorities, while Global Payments has hired forensic technology experts to determine what went wrong. For these reasons, the company is not revealing details at this time. It says that the data stolen was limited in scope, primarily account numbers, and nothing in the way of cardholder names, addresses, or Social Security numbers. Global Payments is continuing to process transactions and take on new business. It has also had its highest-level security designation taken away by Visa, and MasterCard will probably do the same. There will be some investigational and remedial costs, but Global doesn’t believe that there will be lasting damage. We will continue to assess new developments.
In the February quarter, revenue increased 17% and adjusted EPS grew 16%. Margins declined in North America due to heavy competition in Canada and the mix of business in the U.S. Profit softness in North America was more than compensated for by strong international business. The company expects comparable growth in the fourth quarter, excluding costs related to the data breach.
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