Worldpay, Inc. Second Quarter 2018 Results

(unaudited)

(in millions, except share data)

Three Months Ended

June 30, 2018

June 30, 2017 ⁽¹⁾

% Change

Pro Forma ⁽²⁾ 

% Change

Pro Forma ⁽²⁾

Constant Currency

% Change

Net revenue

$

1,006.8

$

530.0

90%

11%

9%

Technology Solutions

401.6

197.2

104%

21%

19%

Merchant Solutions

520.4

251.9

107%

5%

3%

Issuer Solutions

84.8

80.9

5%

2%

2%

Adjusted EBITDA

492.9

256.2

92%

Adj. EBITDA Margin

49.0%

48.3%

GAAP Net (loss) income attributable to Worldpay, Inc.

$

(2.9)

$

68.8

(104)%

GAAP Net (loss) income per diluted share attributable to

Worldpay, Inc.

$

(0.01)

$

0.42

(102)%

Adjusted net income

$

327.1

$

164.7

99%

Adjusted net income per share

$

1.04

$

0.83

25%

⁽¹⁾ 

2017 actuals include Vantiv, Inc. results only.

⁽²⁾

Illustrates what the combined results would have been had the Vantiv, Inc./Worldpay Group plc transaction closed on January 1, 2017.

Worldpay, Inc. Third Quarter and Full-Year Financial Outlook

(in millions, except share data)

Third Quarter Financial Outlook

Full Year Financial Outlook

Three Months Ended September 30,

Year Ended December 31,

2018 Outlook

2017 Actual ⁽²⁾

2018 Outlook ⁽¹⁾

2017 Actual ⁽²⁾

Net revenue

$1,000 - $1,020

$554

$3,880 - $3,930

$2,123

GAAP Net income per diluted share attributable

to Worldpay, Inc.

$0.06 - $0.13

$0.57

($0.06) - $0.12

$0.80

Adjusted net income per share

$1.00 - $1.03

$0.90

$3.93 - $4.00

$3.37

⁽¹⁾

Combined company guidance excludes Worldpay Group plc net revenue and EPS contribution for the period from January 1, 2018 - January 15, 2018, prior to the completion of its previously announced acquisition by Vantiv, Inc. on January 16, 2018. Combined company guidance is based on an assumed exchange rate of U.S. dollar/pound sterling of $1.31.

⁽²⁾

2017 actuals include Vantiv, Inc. results only.

Schedule 1

Worldpay, Inc.

Consolidated Statements of Income

(Unaudited)

(in millions, except share data)

Three Months Ended June 30,

Six Months Ended June 30,

2018

2017

Change

2018

2017

Change

Revenue

$

1,006.8

$

998.7

1%

$

1,857.5

$

1,926.9

(4)%

Network fees and other costs

—

468.7

NM

—

926.8

NM

Net Revenue⁽¹⁾

1,006.8

530.0

90%

1,857.5

1,000.1

86%

Sales and marketing

283.4

168.3

68%

549.4

323.3

70%

Other operating costs

185.5

79.0

135%

340.6

154.9

120%

General and administrative

136.8

50.7

170%

386.9

140.0

176%

Depreciation and amortization

287.9

78.4

267%

495.1

154.5

220%

Income from operations

113.2

153.6

(26)%

85.5

227.4

(62)%

Interest expense—net

(79.9)

(29.7)

169%

(155.1)

(58.9)

163%

Non-operating expense⁽²⁾

(22.0)

(3.4)

547%

(30.6)

(7.5)

308%

Income (loss) before applicable income taxes

11.3

120.5

(91)%

(100.2)

161.0

(162)%

Income tax expense (benefit)

12.8

33.6

(62)%

(0.4)

38.8

(101)%

Net (loss) income

(1.5)

86.9

(102)%

(99.8)

122.2

(182)%

Less: Net income attributable to non-controlling

interests

(1.4)

(18.1)

(92)%

(0.7)

(24.5)

(97)%

Net (loss) income attributable to Worldpay, Inc.

$

(2.9)

$

68.8

(104)%

$

(100.5)

$

97.7

(203)%

Net (loss) income per share attributable to

Worldpay, Inc. Class A common stock:

Basic

$

(0.01)

$

0.43

(102)%

$

(0.35)

$

0.61

(157)%

Diluted ⁽³⁾

$

(0.01)

$

0.42

(102)%

$

(0.35)

$

0.60

(158)%

Shares used in computing net (loss) income per

share of Class A common stock:

Basic

296,204,304

161,266,692

284,868,484

161,072,513

296,204,304

162,510,616

284,868,484

162,483,315

⁽¹⁾

Based on the Company's adoption of Accounting Standard Update 2014-09, Revenue From Contracts With Customers (Topic 606) ("ASC 606") effective January 1, 2018, Network fees and other costs are now netted against Revenue. For the three and six months ended June 30, 2018, Revenue is equivalent to Net revenue as a result of the company's adoption of ASC 606. For the three and six months ended June 30, 2017, Net revenue is equivalent to Revenue less Network fees and other costs.

⁽²⁾

Non-operating expense during the six months ended June 30, 2018 primarily consists of expenses relating to the Company's financing arrangements entered into in connection with the Legacy Worldpay acquisition, repricing of the Company's debt in June 2018 and the change in fair value of the Mercury tax receivable agreement ("TRA"), partially offset by a gain on the settlement of a deal contingent forward entered into in connection with the Company's acquisition of Legacy Worldpay. Non-operating expenses for the six months ended June 30, 2017 primarily relates to the change in fair value of the Mercury TRA.

⁽³⁾

Due to our structure as a C corporation and Worldpay Holding's structure as a pass-through entity for tax purposes, the numerator in the diluted net income per share calculation is adjusted to reflect the Company's income tax expense at an expected effective tax rate assuming the conversion of the Class B units of Worldpay Holding into shares of our Class A common stock. During the three and six months ended June 30, 2018, approximately 15.0 million and 15.1 million, respectively, weighted average Class B units of Worldpay Holding were excluded in computing diluted net income per share because including them would have an antidilutive effect.  Additionally, during the three and six months ended June 30, 2017, approximately 35.0 million weighted-average dilutive Class B units of Worldpay Holding were excluded in computing diluted net income per share because including them would have an antidilutive effect. As the Class B units of Worldpay Holding were not included, the numerator used in the calculation of diluted net income per share was equal to the numerator used in the calculation of basic net income per share for the three and six months ended June 30, 2018 and 2017, respectively.  Additionally, due to the net loss for the three and six months ended June 30, 2018, any remaining potentially dilutive securities were also excluded from the denominator in computing dilutive net income per share.

Three Months Ended June 30,

Six Months Ended June 30,

2018

2017

2018

2017

(Loss) income before applicable income taxes

$

—

$

—

$

—

$

—

Taxes

—

—

—

—

Net (loss) income

$

(2.9)

$

68.8

$

(100.5)

$

97.7

Diluted shares

296,204,304

162,510,616

284,868,484

162,483,315

Diluted EPS

$

(0.01)

$

0.42

$

(0.35)

$

0.60

Schedule 2

Worldpay, Inc.

Adjusted Net Income

(Unaudited)

(in millions, except share data)

Three Months Ended

June 30,

June 30,

June 30,

June 30,

2018

2017

% Change

2018

2017

% Change

Net (loss) income before applicable

income taxes

$

11.3

$

120.5

(91)%

$

(100.2)

$

161.0

(162)%

Non-GAAP Adjustments:

Transition, acquisition and integration costs^{(1) (2)}

52.8

13.3

297%

230.2

62.8

267%

Share-based compensation⁽²⁾

39.0

10.9

258%

56.2

21.5

161%

Intangible amortization^{(2) (3)}

252.7

54.3

365%

425.5

106.2

301%

Non-operating expense⁽⁴⁾

22.0

3.4

547%

30.6

7.5

308%

  Non-GAAP adjusted income

  before applicable income taxes

377.8

202.4

87%

642.3

359.0

79%

Less: Adjustments

Adjusted tax expense⁽⁵⁾

50.3

37.2

35%

77.8

58.9

32%

Adjusted tax rate

13%

18%

12%

16%

Other ⁽⁶⁾

0.4

0.5

(20)%

0.7

0.7

—%

Adjusted net income

$

327.1

$

164.7

99%

$

563.8

$

299.4

88%

Adjusted net income per share

$

1.04

$

0.83

25%

$

1.87

$

1.52

23%

Adjusted shares outstanding⁽⁷⁾

313,431,291

197,553,442

302,127,796

197,526,141

⁽¹⁾

Represents acquisition and integration costs incurred in connection with our acquisitions, charges related to employee terminations and other transition activities. Included in Transition, acquisition and integration costs in the six months ended June 30, 2017 is a $38 million charge to G&A related to a settlement agreement stemming from legacy litigation of an acquired company.

⁽²⁾

Below are the adjustments to Other operating costs, General and administrative and Depreciation and amortization.

Three Months Ended June 30, 2018

Three Months Ended June 30, 2017

Transition,

Acquisition &

Integration

Share-Based

Compensation

Amortization

of Intangible

Assets

Transition,

Acquisition &

Integration

Share-Based

Compensation

Amortization

of Intangible

Assets

Other operating costs

$

27.0

$

—

$

—

$

5.0

$

—

$

—

General and

administrative

25.8

39.0

—

8.3

10.9

—

Depreciation and

amortization

—

—

252.7

—

—

54.3

Total adjustments

$

52.8

$

39.0

$

252.7

$

13.3

$

10.9

$

54.3

Six Months Ended June 30, 2018

Six Months Ended June 30, 2017

Transition,

Acquisition &

Integration

Share-Based

Compensation

Amortization

of Intangible

Assets

Transition,

Acquisition &

Integration

Share-Based

Compensation

Amortization

of Intangible

Assets

Other operating costs

$

37.2

$

—

$

—

$

8.2

$

—

$

—

General and

administrative

193.0

56.2

—

54.6

21.5

—

Depreciation and

amortization

—

—

425.5

—

—

106.2

Total adjustments

$

230.2

$

56.2

$

425.5

$

62.8

$

21.5

$

106.2

⁽³⁾

Represents amortization of intangible assets acquired through business combinations and customer portfolio and related asset acquisitions.

⁽⁴⁾

See note 2 in Schedule 1.

⁽⁵⁾

Represents adjusted income tax expense to reflect an effective tax rate of 19.8% for 2018 and 34% for 2017, assuming the conversion of the Class B units of Worldpay Holding into shares of Class A common stock, including the tax effect of adjustments described above. Adjusted tax expense includes tax benefits due to the amortization of intangible assets and other tax attributes resulting from or acquired with our acquisitions, and to the tax basis step up associated with our separation from Fifth Third Bank and to the purchase or exchange of Class B units of Worldpay Holding, net of payment obligations under tax receivable agreements. The effective tax rate is expected to remain at 19.8% for the remainder of 2018.

⁽⁶⁾

Represents the non-controlling interest, net of adjusted income tax expense discussed in (5) above, associated with a consolidated joint venture.

⁽⁷⁾

The adjusted shares outstanding includes 15.0 million and 15.1 million for the three and six months ended June 30, 2018, respectively, of weighted average Class B units of Worldpay Holding and other potentially dilutive securities that are excluded from the GAAP dilutive net income per share calculation for the three and six months ended June 30, 2018 because including them would have an antidilutive effect. The adjusted shares outstanding includes 35.0 million for the three and six months ended June 30, 2017, respectively, of weighted average Class B units of Worldpay Holding that are excluded from the GAAP dilutive net income per share for the three and six months ended June 30, 2017, because including them would have an antidilutive effect.

Schedule 3

Worldpay, Inc.

Segment Information

(Unaudited)

(in millions)

Technology Solutions

Three Months Ended June 30,

2018

2017

% Change

Revenue

$

401.6

$

307.6

31%

Network fees and other costs

—

110.4

NM

Net revenue⁽¹⁾

401.6

197.2

104%

Sales and marketing

98.1

69.5

41%

Segment profit

$

303.5

$

127.7

138%

Six Months Ended June 30,

2018

2017

% Change

Revenue

$

738.0

$

579.5

27%

Network fees and other costs

—

220.1

NM

Net revenue⁽¹⁾

738.0

359.4

105%

Sales and marketing

194.0

129.7

50%

Segment profit

$

544.0

$

229.7

137%

Merchant Solutions

Three Months Ended June 30,

2018

2017

% Change

Revenue

$

520.4

$

579.1

(10)%

Network fees and other costs

—

327.2

NM

Net revenue⁽¹⁾

520.4

251.9

107%

Sales and marketing

179.0

93.1

92%

Segment profit

$

341.4

$

158.8

115%

Six Months Ended June 30,

2018

2017

% Change

Revenue

$

952.6

$

1,119.2

(15)%

Network fees and other costs

—

643.6

NM

Net revenue⁽¹⁾

952.6

475.6

100%

Sales and marketing

342.8

181.9

88%

Segment profit

$

609.8

$

293.7

108%

Issuer Solutions

Three Months Ended June 30,

2018

2017

% Change

Revenue

$

84.8

$

112.0

(24)%

Network fees and other costs

—

31.1

NM

Net revenue⁽¹⁾

84.8

80.9

5%

Sales and marketing

6.3

5.7

11%

Segment profit

$

78.5

$

75.2

4%

Six Months Ended June 30,

2018

2017

% Change

Revenue

$

166.9

$

228.2

(27)%

Network fees and other costs

—

63.1

NM

Net revenue⁽¹⁾

166.9

165.1

1%

Sales and marketing

12.6

11.7

8%

Segment profit

$

154.3

$

153.4

1%

⁽¹⁾

Based on the Company's adoption of ASC 606 effective January 1, 2018, Network fees and other costs are now netted against Revenue. For the three and six months ended June 30, 2018, Revenue is equivalent to Net revenue as a result of the company's adoption of ASC 606. For the three and six months ended June 30, 2017, Net revenue is equivalent to Revenue less Network fees and other costs.

June 30, 2018

December 31, 2017

Assets

Current assets:

Cash and cash equivalents

$

367.7

$

126.5

Accounts receivable—net

1,577.6

986.6

Merchant float

1,873.2

—

Settlement assets

1,991.7

142.0

Prepaid expenses

81.0

33.5

Other

540.4

84.0

  Total current assets

6,431.6

1,372.6

  Customer incentives

69.2

68.4

  Property, equipment and software—net

1,032.2

473.7

  Intangible assets—net

3,505.9

678.5

  Goodwill

14,820.1

4,173.0

  Deferred taxes

793.0

739.5

  Proceeds from senior unsecured notes

—

1,135.2

  Other assets

69.8

26.1

Total assets

$

26,721.8

$

8,667.0

Liabilities and equity

Current liabilities:

Accounts payable and accrued expenses

$

1,112.8

$

631.9

Settlement obligations

4,561.6

816.2

Current portion of notes payable

226.6

107.9

Current portion of tax receivable agreement obligations

143.9

245.5

Deferred income

26.2

18.9

Current maturities of capital lease obligations

29.9

8.0

Other

613.0

6.0

  Total current liabilities

6,714.0

1,834.4

Long-term liabilities:

Notes payable

7,860.9

5,586.4

Tax receivable agreement obligations

589.7

535.0

Capital lease obligations

26.8

4.5

Deferred taxes

546.4

65.6

Other

109.4

40.5

  Total long-term liabilities

9,133.2

6,232.0

Total liabilities

15,847.2

8,066.4

Commitments and contingencies

Equity:

Total equity ⁽¹⁾

10,874.6

600.6

Total liabilities and equity

$

26,721.8

$

8,667.0

_________________________

⁽¹⁾

 Includes equity attributable to non-controlling interests.

Schedule 5

Worldpay, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(in millions)

Six Months Ended

June 30, 2018

June 30, 2017

Operating Activities:

Net (loss) income

$

(99.8)

$

122.2

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization expense

495.1

154.5

Amortization of customer incentives

12.6

13.0

Amortization and write-off of debt issuance costs

72.9

2.3

Realized gain on foreign currency forward

(35.9)

—

Share-based compensation expense

56.2

21.5

Deferred tax expense

27.3

40.5

Tax receivable agreements non-cash items

(6.4)

(9.2)

Other

1.2

1.2

Change in operating assets and liabilities:

Accounts receivable

(50.3)

65.6

Net settlement assets and obligations

105.7

40.8

Customer incentives

(14.8)

(13.6)

Prepaid and other assets

(18.6)

(34.0)

Accounts payable and accrued expenses

(159.6)

28.6

Other liabilities

(6.8)

(15.2)

  Net cash provided by operating activities

378.8

418.2

Investing Activities:

Purchases of property and equipment

(103.1)

(58.9)

Acquisition of customer portfolios and related assets and other

(51.1)

(19.6)

Purchase of interest rate caps

(8.1)

Proceeds from foreign currency forward

71.5

—

Cash acquired (used) in acquisitions, net of cash used

1,405.8

(531.5)

Net cash provided by (used in) investing activities

1,315.0

(610.0)

Financing Activities:

Proceeds from issuance of long-term debt

2,951.8

—

Borrowings on revolving credit facility

2,598.0

3,051.0

Repayment of revolving credit facility

(2,823.0)

(2,693.0)

Repayment of debt and capital lease obligations

(2,590.3)

(70.2)

Payment of debt issuance costs

(91.1)

(1.1)

Proceeds from issuance of Class A common stock under employee stock plans

14.9

10.1

Repurchase of Class A common stock (to satisfy tax withholding obligations)

(11.7)

(5.7)

Settlement of certain tax receivable agreements

(85.3)

(61.3)

Payments under tax receivable agreements

(55.3)

(46.5)

Distributions to non-controlling interests

(6.4)

(10.7)

Net cash (used in) provided by financing activities

(98.4)

172.6

Net increase (decrease) in cash and cash equivalents

1,595.4

(19.2)

Cash and cash equivalents—Beginning of period

1,272.2

139.1

Effect of exchange rate changes on cash

(139.2)

—

Cash and cash equivalents—End of period

$

2,728.4

$

119.9

Cash Payments:

Interest

$

149.3

$

56.6

Income taxes

6.2

21.0

Schedule 6

Worldpay, Inc.

Reconciliation of GAAP Net Income to Adjusted EBITDA

(Unaudited)

(in millions)