Global Payments CEO: Real estate digital trends are in Zego’s and Global Payments' favor

Jeff Sloan, Global Payments CEO, joins Yahoo Finance’s Alexis Christoforous and Kristin Myers to discuss the company’s earnings and acquisition of real estate software company Zego.

Video transcript

ALEXIS CHRISTOFOROUS: The payments technology company Global Payments is breaking into the real estate industry with its latest acquisition, buying the property management software company Zego in an all-cash deal valued at $925 million. The announcement comes the same day that Global Payments posted strong earnings with a return to growth in the first quarter. Revenue was up 5% from a year ago to top $1.8 billion. Joining us now is Global Payments CEO Jeff Sloan. Jeff, I want to talk about earnings in a minute. But first, to this buyout of Zego, what was it about this company that attracted you to them? And why get into the real estate industry now?

JEFF SLOAN: Well, Alexis, we've been looking for some time to get into the real estate technology vertical market. Real estate's one of the largest target addressable markets that we have here in the United States. We estimate it's about $6 and 1/2 billion of annual revenue opportunity. The ability to take software and payments and digital commerce and to make a better consumer and landlord experience in the real estate vertical market is something that Global Payments is all about. So to ease the friction that's only been accelerated by some underlying trends in the pandemic is what we're trying to solve for, and we think Zego does just that.

KRISTIN MYERS: I want to ask you about that. What are you expecting going forward, especially as we've been seeing the real estate market just completely on fire throughout the pandemic? So many folks trying to buy, but now those sky high prices then pushing people right back to that rental market.

JEFF SLOAN: Well, one of the nice things about Zego is it really is focused squarely on the rental market. So this is a company that last year during the height of the pandemic grew well into double digits organically with very attractive margins. I'd also say in the context of safer commerce, where people really don't want to go to their landlord agents, write a physical check, fill out an order if something is broken, all that can be done digitally through your phone in the context of Zego, which provides a fantastic avenue for growth. So I think all the trends here are very much in Zego's and Global Payments's favor.

ALEXIS CHRISTOFOROUS: I want to talk about these earnings that you just posted this morning, Jeff, beating on both the top and bottom line, return to growth. And yet, the stock is down more than 3%. It's got to be a little frustrating to be a CEO where you beat by that much. And guidance-- some are saying that maybe the guidance wasn't as high as it was supposed to be. What would you say to investors right now?

JEFF SLOAN: Well, listen, we're here for the long term. So over the last 7 and 1/2 years that we've run the company, the stock is up 8 and 1/2 times. So I'd say our track record is pretty good. I'd say if you look at where we've come from, last year, we were up 18%, topping the S&P, in, obviously, a pandemic impacted year. As you just rightly said, we're now reinvesting back into our business in the form of strategic investments like Zego and [INAUDIBLE] business, while we've been repurchasing about a billion dollars of stock over the last six months.

So today, when Apple and Amazon are down 4% and 3% respectively, I can tell you when the VIX is up. And there's really a risk-off approach. I can tell you that's going to be a tough day for anybody. But in terms of our performance over time, we couldn't be more delighted. And to be honest, that's really been the feedback from our shareholders today.

KRISTIN MYERS: Now, Jeff, I want to ask you about cryptocurrency. We're seeing Dogecoin surging today, however, a sell-off in Bitcoin and in Ether. And Bitcoin particularly has been looked to as this Global Payments solution. What are you anticipating between Global Payments and cryptocurrency going forward?

JEFF SLOAN: So we've enabled the acceptance of Bitcoin and digital currencies on our platforms really since 2016. So we've been at this a long time. I would tell you there just isn't a lot of consumer and merchant demand to pay that way at the point of sale today. To use a really good example, if you look at the volatility, for example, in both the currencies that you mentioned, but let's just take Bitcoin, when you swing 500 basis points a day, it's very hard to go into a grocery store, for example, that operates on 100 basis points of margin and say they should take that risk as a form of payment.

So we're open-minded. We've enabled it for a long time. There isn't a lot of demand today. That can change over time. But that's not something we're hearing from our customers.

ALEXIS CHRISTOFOROUS: And Jeff, I'm curious. I mean, now you're in this real estate vertical with the buyout of Zego. Are you looking at any other verticals and any other acquisitions ideas that you can share with us for the rest of the year?

JEFF SLOAN: Yeah, absolutely, Alexis. As I said on the call this morning, our pipeline remains full. We look at a lot of additional software opportunities just like Zego. To be honest, let's just start with real estate, where they are. I'd like to get bigger in the real estate vertical market. As we said this morning on our call, we think that Zego is only 3% penetrated into the payments opportunity just in real estate. So I think doing more things in real estate would be a terrific idea. So look for us to do more over the coming months in our next report in August.

ALEXIS CHRISTOFOROUS: All right, we'll be looking forward to it. Jeff Sloan, CEO of Global Payments, thanks as always.