Q4 2019 Earnings Call
Greetings and welcome to the Euronet worldwide fourth quarter in full year 2019 earnings conference call.
At this time, all participants' lines are in listen only mode.
Speakers presentation, there will be a question and answer session at this time.
To ask a question during this session you need to press star one on your telephone. Please be advised that today's conference is being recorded and if required any further assistance. Please press star zero.
It's now my pleasure to introduce your host Mr., Jeff Newman Executive Vice President and General Counsel for Euronet worldwide. Thank you Mr. Newman you may begin.
Thank you Chris Good morning, and welcome everyone to Euronets quarterly results conference call will will present, our results for the fourth quarter and full year 2019 on this call.
Mike Brown, our chairman and CEO, Rick Weller, our CFO, Kevin camping Lucky the CEO of are you pay division on the call.
Before we begin I need to call your attention to the forward looking statements claim on the first page of the Powerpoint presentation will be making today.
Statements made on this call that concern euronets lets management's intentions expectations or predictions of future performance are forward looking statements Euronets actual results may vary materially from those anticipate in such forward looking statements as the results of the number of factors that are listed on the first page of our presentation.
You're not does not intend to update these forward looking statements and undertakes no duty to any person to provide any such update under any circumstances.
In addition, the Powerpoint presentation includes a reconciliation of the non-GAAP financial measures will be using during the call to their most comparable GAAP measures now I'll turn the call overdue, our CFO Rick Weller.
Okay.
Thank you, Jeff and thank you to everyone is joining us here today I will begin my comments on slide five.
We delivered fourth quarter revenue of $694 million adjusted operating income of 107 billion and adjusted EBITDA of 142 million.
Our adjusted EPS for the fourth quarter was $1.63, a 19% year over year increase and the seventh consecutive quarter, we'd have delivered double digit adjusted EPS growth.
This strong growth was driven by double digit operating income contributions from our ERP and Epay segment and continued strength in our international remittance business as well as a couple sense of income tax.
The.
Next slide please.
Slide six shows our three year transaction trends by segment.
Yep T. transactions grew 14% driven by expansion of our ATM and point of sale networks in Europe, and Asia, adding including gross.
Our local and international withdrawals and deposit transactions as well as value added transactions on ATM and point of sale terminals, including dynamic currency conversion domestic and international surcharge and foreign currency dispensing.
He paying transactions grew 27% would continue digital media expansion and significant contributions from wallet driven mobile top up transactions in India, which earn a small amount of revenue per transaction compared to our more traditional commission based revenue transactions money.
Okay transfers grew 4% this growth was the result.
Double digit expansion out of our you asked outbound and international originated send partially offset by continued softness in our in try us money transfer business next slide please.
Slide seven presents our results on an as reported basis year over year most of the major currencies, where we operate declined at low to mid single digit rate to normalize the impact of currency fluctuations. We have presented our result as adjusted for currency on the.
Next slide.
Next slide please.
I'm on slide eight now.
Are you can see that for the fourth quarter Ft revenue grew 23% adjusted operating income grew 85% and adjusted EBITDA grew 58%. These very strong double digit growth rates were the result of in 14% increase in ATM and trends.
Actions, new outsourcing agreements and our ability to offer DCC on all cards worldwide.
Adjusted operating income and adjusted EBITDA also included a one time VAT benefit of approximately $8 million.
Even without the bat VAT benefit we still produced a staggering 50% increase than profit expansion and a year over year expansion in operating margin.
He paid fourth quarter revenue grew 4% adjusted operating income grew 17%.
And adjusted EBITDA grew 8%, 18% I'm sorry.
These strong growth rates were the result of continued expansion of our digital media products.
And fast solutions revenue and gross profit per transaction came in a bit as we continued to see a stronger mix of wallet driven mobile top up transactions in India. However, operating margins expanded nicely in fact, a new.
High watermark for the pay quarterly operating margins.
Overall this was an excellent fourth quarter for easy pay.
The fourth quarter was the fifth consecutive quarter and 2019, the second consecutive year, where E Bay has delivered double digit operating income growth.
Money transfer grew 4%.
And adjusted operating.
Income and adjusted EBITDA declined to 7% and 5% respectively.
We continue to see strong double digit growth from our U.S. outbound and international originated remittances, which were offset by constrained growth from our Xsix business stemming from continued economic Brexit uncertainties in the UK.
And softness in intra U.S. transfer business.
Keep in mind that the vast majority of our remittance business is international which continues to grow at nice double digit rate.
This strong growth combined with several exciting developments in the pipeline give us confidence that the money transfer segment will post improving results as we move through the year Twentytwenty.
Next.
Slide 10.
To discuss a few comments on the full year results.
Here on side Slide 10, you can see our 2019 results compared to 2018.
We have previously provided you all of the quarterly details I will not restate them again here. However, I would like to point out that all of our consolidated constant currency results grew at strong double digit year over year rate.
Full year, adjusted EPS was $7.01, a 27% year over year increase this was the seventh consecutive year, we have posted double digit growth in adjusted EPS, which included contributions from each of our three segments.
Now, let's go to slide 14, and talk about the balance sheet.
Skipping over to 14 year.
On a year over year basis, our balance sheet continued to strengthen.
As we noted in our press release, we have revised the presentation of our balance sheet to include three new balance sheet captions entitled ATM cash settlement assets and settlement liabilities obligations.
Including the related cash component of ATM and settlement cash.
We made this change to better align settlement assets with settlement obligations.
We have updated the prior year amounts to conform to the current year presentation.
Unrestricted cash increased as a result of cash generated from operations, partially offset by share repurchases and capital expenditures, including ATM purchases.
The debt increased year over year as a result of the new convertible bonds and euro bonds issued earlier in 2019.
The combination of cash available on our balance sheet and approximately a billion dollars of availability on our revolver.
Yes.
Capital flexibility to drive future growth.
The strength of our balance sheet continues to allow us to be successful in the competitive environment in which we operate.
As I close I think it bears repeating but this was another exceptional year for year end, where we delivered on our strategy to add more products, both physical and digital to more markets around the world.
With that I'll turn it over to Mike.
Thank you Rick and thank you everybody for joining us today I'll begin my comments on slide number 16 first I'll start by repeating what Rick said this was another exceptional year per year in at the seventh consecutive year that we've delivered double digit growth in adjusted EPS. There are not many companies out there.
I can say that they've had such consistently strong growth. This is a testament to our exceptional teams around the world and their focus continued to improve our product for our portfolio our global reach in the technology that enables our payment network.
Let me begin my specific comments regarding this slide 16 by giving you. Several examples of our technology driven successes this quarter.
You will notice that these are wins from all three segments of our business as a result of our cross segment technology platform that spans our entire business.
As it relates to the Rab category on this slide you may have read in our press release from a few weeks ago regarding our rebrand the digitally integrated payments cloud and why we did it.
The digital integrated payment cloud with quite a mouse fall I know I've talked a number of view about this I'm kind of lap that ourselves and although descriptive it didnt fully captured the significance of the solution.
We chose the name ran for our new switch because it represents a new way of doing things I ran a thought that you well per payment switching.
In a similar thought process to that the Rab payment cloud allowed us to create revolutionary product and drives revenue for us and our partners. So the base of our technology is a great switch and the cloud surrounding it really drives our revenue growth and make money for all of our part.
Winner.
The underlying technology remains the same as does the purpose of providing developers with Apiay access the Euronet software technology platform services product network debate dams, Pos our terminal and real money transfer locations and payout.
In Asia, let's start with our first one we signed a global ATM DCC agreement with a very nice bags standard chartered bank to provide pass through ATM DCC across 14 countries in Asia and Africa through a single connection to a proprietary intra.
Bank Inter country network developed by Euronet, specifically for standard chartered bank made possible by our Rev payments cloud.
We also announced last week, our partnership with Amazon pay in India, where we are providing integration and content aggregation services for mobile recharges Bill payments gift card than other offerings the Amazon India.
Through our Rab payment cloud Amazon can now have access to our portfolio of payment vendor through a single apiay connected they are already live with their first biller under this agreement and expect to large several more billers and the coming month.
And as I'm asked from time to time, how does this technology come into play in the cash based part of your in its business.
Well interestingly enough. Our recent Wall Street Journal article I think it was last week perfectly described the current payments environment in which cash in digital payment methods coexist.
In almost all global market, they're both growing this supports our thesis that are powerful technology, an expansive network of assets placed us in a perfect position to expand our digital presence to enable other fintech companies well being a right here at the Nexus.
Between the digital and physical payments experience both of which are growing.
To that end here is an example of two agreements we launched in the quarter that highlight this unique market position.
First we continue to expand our merchant deposit agreement launching a cash deposit network participation agreement with cartilage payment Cardless payout for DHL Courier services, we now have agreements with several banks and hundreds of market that allow customers to make an.
Online purchases and pay for it with cash when the item is delivered to their door. The courier can then deposit the cash at year end ATM as they go through their route to reduce the risk of carrying cash all day long I'd like to highlight that these cash deposits aren't good that sound bite for this presentation.
But that last year, we processed more than 4 billion unit dollars' worth of deposit in just one market last year.
We also implemented a real time payments agreement with Federal Bank in India that allows for real time deposit of cash base remittances to any bank account holder in India through year.
India is real time payments system.
Both of these agreements highlight our ability to use our powerful technology to provide digital option in cash preferred economy.
These are just a few examples of our technology achievements and I will highlight more as we move through this segment discussion and finally as an update on Iran. Our deployment of ran in Mozambique is on track and this quarter. We expanded that same agreement to include prepaid functionality. We continue to receive strong interest after our Nova.
Number technology conference in Bangkok, and hope to provide additional updates in the coming quarters. So while it now let's move onto slide number 20, and we'll talk about ft for a few months.
Slide 20 are ft team delivered another exceptional year during the fourth quarter, we launched an ATM network participation agreement and value added service agreement with Attica Bank in brief whereby advocate customers can use euronets ATM under similar terms to their own bank we enabled eight.
I am cash recycling and Cardless direct deposit for commercial bank of said Alon Interlocken. In addition to these launches we signed a Pos switching agreement with cosmetic Deutsche Telekom group in Greece, and a DCC agreement with yes bank one of India's largest private sector bank.
We also renewed several agreements during the quarter, including our ATM network participation agreement with BNP Paribas group in Ukraine, and ATM driving in switching agreement with Oriental Bank of Commerce, and a new pie Indias real time payment system Gateway service agreement for Indian overseas.
Bank next slide please.
Slide 21.
During the quarter, we signed several no agreements in Asia, We signed an issuer processing agreement with PT Bank are tough in Indonesia, and a cloud based multi factor authorization agreement with Cargills Bank control locked up in Indonesia, We signed an agreement what bank Central Asia the countries will.
Largest private bank to offer DCC on their network up more of that 17000 ATM.
We also signed an agreement with Ebix cash in India to provide multicurrency and Forex prepaid card.
Euronet through Brad will be hosting need cards on our card management system authorizing transactions against the balances on the card switching transact at the visa and Mastercard as well as handling reconciliation and settlement for these transaction.
Finally, we finished the quarter with 46000 active ATM up 14% year over year increase.
During the quarter, we added more than 900 high value ATM.
While we de installed 170 at your cash and seasonally the activated 30 640 ATM.
We acquired assets, we acquired a small ATM outsourcing network with about 1800, ATM, which will not be dilutive to our earnings in 2020.
For the full year, we deployed more than 4200 ATM ahead of our 30 504000 goal for 2019.
You also recall that about 12 to 18 months ago, we're beginning to see more ATM outsourcing opportunity.
And during the year, we added almost 1800 outsource ATM and in addition to that acquired another 1800.
Consistent with our strategy our total ATM count now is more than 50000 and between the deployed an outsourced ATM. We added in 2019 as well as the 1800 eight games. We acquired we will enter 2020 with more than 7000 additional time.
Value ATM, then we started the year in 2019.
Given our proven ability to deploy ATM and the expansive opportunities that we continue to see both inside and outside of Europe. We expect that we can add more than 4000 ATM is again in 2020.
With strong double digit growth across all metrics. It was another outstanding year for that F. 18, now, let's move to slide number 25, and we will talk about fee paying.
Slide 25, I'm extremely proud to be paid success and the continued transformation of their business into a leading global digital media content and SAP solutions provider. Their success is reflected in the result, and their fifth consecutive quarter and second.
As of year, where they have delivered double digit operating income growth. This transformation has resulted in gross profit from digital media, which made up 76% of pace growth profit in the quarter and 72% for the entire year versus 69% in the prior year 2008.
I mean.
During the quarter, we launched applecare plot as a monthly recurring payment subscription service. This agreement gives customers a more affordable option for applecare and drive attachment to Apple hardware through target pointed sale terminal in New Zealand, we bought presently we brought present card and.
Out rather than getting it from a third party present card is New Zealand, leading open loop prepaid card and this will allow us to offer more product the more merchant.
And then in Brazil, we added a catalog of digital media content through pin on receipt across an independent network of 56000 merchants across the country and we expanded additional content like Blizzard gaming and Nintendo E shop to new countries next slide please slide 26.
In addition to these launches we signed several agreements that will launch in the coming quarters. These include an agreement with safe to pay and alternative payments company in Australia, where we signed an agreement to and we also signed an agreement to distribute gaming products through Amazon.
We also signed an agreement to distribute Microsoft office through an optimum a leading online retailer of software to individuals and businesses in France and as you can see there's a lot of exciting things happening in the Epay segment and it bears repeating that this was a great fourth quarter and a strong finish to us.
Transformative year for our Epay segment now, let's move on to Slide 30, and we'll talk about that need paid thanks I mean the.
Reassess money transfer our money transfer network now reaches almost 400000 locations across 160 countries.
During the quarter, we launched 22, new correspondents in 20 countries, including new mobile wallet services in Kenya, Uganda, Burundi, Zimbabwe Croatian the Democratic Republic of cargo.
I think it is important here to pause and to explain the significance of these new mobile wallet services.
Over the last several years, we have placed a significant focus on building a great physical network, which we have now grown to over 400000 locations and it's the second largest in the world and it remains true that about 90% of remittances are still collected in cash so we will not.
Take our eye off the physical ball. However, other forms of remittance delivery are increasing in popularity, including bank and mobile wallet deposit and similar to growing our physical network. We have also been focusing on these digital delivery method to build a network for the next 20 years.
We have now grown our reach to more than 3.2 billion bank accounts globally with the ability to deliver cash to more than 30 mobile wallet, which we believe may very well be the largest digital money transfer pay off network in the world.
Moreover, over 20% of Rias International outbound volume as the positive it into an account and this is a rias fastest growing payment method.
In fact, including the Xcede business cross border volumes initiated or terminated on a digital abide or into an account represented 59% of our total money transfer segment volume.
And our success as a result of building a better payout network, both physical and digital that is really fueling our growth. In addition to these launches we signed an agreement with 21 other new correspondents across 18 countries, which we will launch in the coming quarter.
As you may have seen in the recent press release Walmart has selected Ria as a second provider of Walmart to world to offer us outbound international money transfer services at Walmart locations in the U.S. and Puerto Rico.
We're pleased to have that third expansion of our relationship with Walmart, including payout for us domestic and international inbound remittances, which we signed last year. We are excited to have Walmart to world powered by Ria available at all locations across the us as of last.
Got a in fact and.
And look forward to working with Wal Mart to provide their customers with excellent FX rates product assortment and outstanding service.
During the quarter. We also signed three important new agent agreements all of which were competitive wins.
In Belgium, we signed the Belgian postal service or be posts to offer rias money transfer services on an exclusive basis across its more than 600 post offices in partner locations and in Austria, you'll see a press release shortly announcing that Ria has signed bank 19.
Nine Austrian post new banking and financial entity to provide its customers with rias domestic and international money transfer services to its network of over 750 bank branches and partner location.
In both of these countries. The post offices have long been the preferred destinations by customers for money transfer services and Maria is pleased to be able to provide its outstanding product to their important customer basis.
We also signed an agreement with Travelex North America to offer money transfer and Bill payment services at approximately 200 retail locations at airport and other high traffic locations across the us.
As I mentioned these all three of these were competitive wins and demonstrate the Ria is making important traction unlocking the large surface retail and post office channel, which has largely been dominated by two other providers for decades.
Finally, we've reached a four year partnership.
With the at the letter code in Madrid football team that 10 times Spanish Lynn good champion, becoming the clubs new backup shirt sponsor.
The Spanish football Lee Lean get is a renowned associated football league with a rich history and we expect this partnership to provide exceptional brand awareness around the world relating to attract annual viewership of approximately 3 billion people to its football match.
And at the Leduc, though has nearly 300 million fan.
Fan followers around the World. Most importantly athletic has a diverse and renowned roster of players from markets that aligned with our customer base and activation of our sponsorship activities should provide ria with tremendous exposure and a closer relationship with our customers as we put more.
Focused on building Rias brand awareness.
We have experienced a few transitory challenges in the money transfer segment in 2019, However, our strong double digit international remittance growth underscores the strength of our money transfer business, which we believe will return to stronger growth patterns as we move through 2000.
Good morning, and let's not forget that Ria owns roughly 5% of the planet International remittance market share growing at strong double digit rates. If we could just down 10% of this huge market, we would double that business that is very excited.
Now, let's move on to slide number 31, and will wrap up the court.
We finished the year strong.
Fourth quarter, adjusted EPS of $1.63, and a 19% year over year increase.
We continue to develop and launch leading SaaS solutions that solve problems for our business partners and bridge the gap between digital payments and cash preferred customers consumers.
50 continued to deliver exceptional double digit growth rates, while continuing to invest an ATM network expansion around the world.
Page double digit earnings growth resulted from continued digital media growth and leading Ed SaaS solutions and money transfer continued to deliver strong double digit growth in international roaming.
The generation of free cash flow continues to strengthen our balance sheet.
And as we wrap up I'd like to brag again on our full year results, we achieved full year adjusted EPS of $7.01, a 27% year over year increase and the seventh consecutive year. We have achieved double digit earnings growth. This is a significant accomplishment made possible by our powerful technology.
We have ran in Rav that allows us to add more product and more devices around the world, but also powered products and payment for some of the biggest fintech and retail players in the world as you can see from all of the technology highlights. We're just getting started.
And we expect the first quarter adjusted EPS to be approximately 95 cents, assuming caught consistent foreign exchange rates and share price and finally beyond the first quarter of 2020, we expect each of the three segments to grow op income for the full year 2020 at the lower end of the double digit range.
Reflecting continued expansion and leverages the business.
Our ERP division benefited nicely in 2019, as we were able to expand DCC into international transactions across the globe.
As a result ft benefited from a significant one time step up and operating income.
Looking forward, we expect growth that is more in line with the deployment of ATM is especially as we take into account further investments in geographical expansion and as you know we're looking for a couple of wildcard ran an outsourcing deals that are difficult to predict their timing and contribution to the bottom line.
Hi.
But talking to potential customers. These wild cards are real.
Our pay business posted double digit op income growth now for two signet consecutive year and together with the continued addition to more digital media around the world. We expect 2020 to be our third sequential year of double digit operating income growth.
As for money transfer, we're pleased to see strong double digit growth in our international remittances, which provide some shelter from the intra us transaction softness and to a lesser extent the Malays stemming from Brexit uncertainty. Nonetheless, we are focusing on leveraging the international remittance strength as well as implementing.
Recent large surface retail wins these should pre it proved to be a game changer for us over the next several years. So net net we expect all three segments to grow at lower double digit rate contributing to our eighth consecutive year of double digit adjusted EPS growth with that we would be.
Happy to take questions operator will you please visit.
Certainly and.
And as a reminder to ask a question we need to press star one when your telephone.
To address your question. Please press the pound key we stand Boeing composite culinary roster.
And our first question comes from the line of Andrew Jeffrey with Suntrust. Your line is now open.
Hi, Good morning, guys. Appreciate you taking the question.
Rob.
Mike.
When you look at money transfer.
There are obviously some call out.
Interim headwinds I Wonder if you could talk a little bit about.
How much sort of you think you you control your your own destiny in other words.
Your you've had some pretty good agent growth some nice wins.
Expansion of the network and then there is the.
Sort of global migration patterns, how much how much do you think is is sort of growth in euro in that specific drivers versus.
The market as a whole at this point.
Well I mean, when you're calling.
For certainly when you look at international Remittances, you can take the world bank numbers than they grow between three and 4% a year and you know we've got.
Good double digit kind of low teens growth that leads for the last dozen years. So thats. The reason our market share continues to grow and whats exciting to me is if we're growing you know what four times faster than than the market means our market share wells continue to increase we only have 5% of it now.
So you know I look at it as there is 95% to go.
And.
Our if if we can can continue to grow at these rates. So with an international volumes you know, we could get to that 10% market share and another boost that we're going to get here starting last Friday as we have 100% of the Walmart locations now doing international remittance with us.
Using their Walmart to world product that's powered by Ria.
So and then you add the to post offices and the travel lags and all these other things that will be implementing throughout the year I think we're going to continue to see a nice strong growth and this is I don't know what you call. It not self inflicted but you know we're the ones who causes us to happen. We closed these deals we were.
One competitively we took these deals away from our competitors and our market share is going to grow on account of that.
Okay I appreciate it and then.
Also notable commentary around the.
Focus on digital and account based remittances.
What gives you an advantage do you think versus some of the disruptive players in the market sort of cloud native solutions are they predominately taking share from from banks or what but I think yes, I think for I think predominantly from banks.
I mean, our technology gives us that difference that's why a number of these these.
Techie kind of new Fintech players have used us for their payout because there's no way theyre going to be able to connect up to 3.2 billion bank accounts.
To all these wallets and everything as far as payout goes.
But we couldn't we can provide that to them unto ourselves and we also have the cash component I mean, even if you happen to be.
Little bit more well heeled immigrant into a come into a country. You've got a bank account you can use of mobile wallet or one of these fintech players to spend your money or maybe use real money transfer dot com, our XE to do that at the end of the day a lot of times you need to terminate that that.
Money transfer into cash and that's the one thing we can we can hit it both ways. We are truly at Nexus of both digital and physical payments.
We're the only guy in town really who has that.
Got it appreciate it thank you.
Thank you and our next question comes from the line of Rayna Kumar with Evercore ISI. Your line is now open.
Hi, good morning.
Right.
Yes.
The Walmart I'd requirements do you expect the money transfer topline growth to return back to low double digit growth that you've done historically.
Yes, so right now we have we havent quite lapped it I mean, what really happened was they started those I'd requirements in the last half of 2018, but they really didnt have a significant impact if you might remember.
And our January quarter of 2019, we had we thought this a tiny bit mini mentioned it in the fourth quarter of 18 and 19 January I think we mentioned, we thought maybe a 3% kind of headwind or something like that but by the time I've got to the second quarter, we could really see it so I would say.
Our full lapping will probably come after the second quarter of this year.
So what happened was I think as.
You know as more and more people.
You know went in to try to make those money transfers they.
You know, we just we just got more kind of word of mouth and it slowed things down so that and thats just on that intra us.
Piece of the business not on our international money transfer.
Got it that makes sense, so kind of look at look at full lapping probably pretty close by the end of the second quarter.
And once you pass the second quarter did you get back to the low double digit growth after that.
We hope so certainly.
Okay.
Then just moving on to the key business you acquired 1795.
I see in your press release, you're saying, it's not going to be dilutive.
For the full year, but for the first quarter are there any upfront cost that would make a diluted and then ramp up now throughout the year no no no.
We are good.
And just finally on pay.
4% topline growth in the fourth quarter.
Lower than what you did in the second third quarter, which is 7% can you just talk about the drivers to that slowed down and how should we what do we think of as a sustainable type topline growth rate for Easypay.
Throughout 2020.
Yes, Hey arena.
The in the third quarter, we add a little bit more revenue that was what we would say recognized on a gross revenue basis. There's a few products that you know remain recall in our business that we recognized as revenue rather that on a commission basis, and so that came into our into our third quarter.
But if you take a look at our our gross profit and this will come out in our Q, but but our gross profit.
Which is after you kind of sort out the noise of the.
Of the gross versus net if you will grew nicely on a double digit basis, which again reflects the continuation of the deployment of digital media product that's out there.
What the the that this high volume of we say low value.
Transactions out of India happens to be one that's on the other side of the coin that that the revenue equals roughly the gross margin and so.
So the the 4% number that you saw in the fourth quarter is really more of an anomaly of gross versus net on on some of that recognition, but if you look at that gross profit, you'll see that improved double digit year over year, which contributed to that double digit year over year operating profit growth.
Got it is very helpful. CK one last question in there.
The fourth quarter. Your adjusted EBITDA margin expanded strong 360 basis point is that could that continue into 2020, and what were the drivers to that expansion.
Well I don't I don't think youre going to see that similar kind of expansion.
That will continue because we really benefited from.
And let me let me just make sure when you referenced that number there are you talking about easypay specifically.
I'm talking about your this whole foods business adjusted out and Thats, what I thought there because I I didn't think we had that on ebay, but I just better checked my number there with you but on the consolidated remember we we had the real.
Benefit as Mike said, the onetime lift from DCC around the world that really came into that number.
Hi nicely. So so that lifted the number you know I don't expect to see those similar kinds of of expansions on a year over year basis, but but we should be able to continue forward on a run rate if you will.
Great. Thank you.
Thank you and our next question comes from the line of Mike Grondahl with North Northland Capital Im sorry, with some securities. Your line is no.
Yes, thanks, and good morning, guys.
On the 1700 95.
When you acquired.
Can you tell us roughly where those are.
And do the metrics on those compare to your core.
Well, Mike were being a little guarded on saying where they are what we kind of find is as when we plan to flag around the world. We see other little competitor flags pop up around them and so we've we until we kind of really get our.
Get our feet on underneath us on this one here and and start unfolding. The rest of our strategy will be a little careful was saying where that is I think it's fair to say, it's other than in Europe, and it's consistent with what we've been talking about in the past about.
Glow going more globally with with the ATM.
I would tell you that they are consistent with the high value.
Tim that we operate to that big.
And and we expect that as we integrate the business and bring it in line with our technology and things like gas then we'll be able to improve that so that it is accretive to our bottom line there as Mike said, it's not going to be diluted the too.
They are higher value ATM, they position us quite nicely to go after another important market and so kind of stay tune but.
But we are excited about this other 1800, we brought into the into the fold.
Great.
Then.
On the money transfer business.
It seems like Xcede, because brags was a little bit slower.
Clearly.
You asked the interim market because of the dollar.
So what percent is Hep C and the us into business of the whole just try to get a feel for what percent of that is kind of dragging you down.
Kind in grenade math the third when you add the two together.
Got it.
Okay.
Thanks, a lot guys.
Right.
Thank you and our next question comes from the line of Darrin Peller with Wolfe Research. Your line is open.
Alright, thanks, guys.
When I look at the FCC segment. The you have a couple of things happening this year, you're going to anniversary the DCC fees going into effect for visa and then you're also going after the required to show more disclosures.
First of all in the anniversary can you give us a sense of what you would expect topline growth profile in that segment to be after you anniversary DCC.
And then have you prepare just to answer the question on these disclosures do you feel comfortable that you're prepared properly in the impact will be pretty limited.
Yes, I think so it's basically first of April that you have the full anniversary.
We have.
Test that a number of.
Scenarios with respect to the new disclosures that are required.
You know we're optimistic that we think we won't see significant impact will see a slight impact to our to our business.
You know the nice thing is that most of our business now is in Europe, and the banks themselves keep charging their own customers higher and higher fees to not do DCC. So I mean, all the banks are trying to figure out how to take more money out of the pockets of their customers So were cautiously.
Optimistic that we won't see anything significant and then what you'll see is kind of what Rick said, we're planning on built throwing out a lot more ATM. This year 4000, plus and you'll probably see our you know our profits.
Go commensurate with them.
Okay.
And then I guess when I think about the segment's growth rate again, we look at a more on a stack basis than what I think some one of the other questions was alluding to but on the stack basis. It was over 10% growth look what actually accelerated so some of it was just compares but look when we think it's a very tough segments of model given given the lumpiness in the types of revenue coming in if you can give us any more directly.
And on how the topline should trend there through the year.
And then really factoring and where do we think about you guys have signed in announced a lot a really big brands, whether its amazon or traveler others incremental deals.
How do we think about those flowing through the numbers.
Yes.
Well first of all you've got to implement them, so well when we announce when we announce.
The example in money transfer we add a couple of.
The two post offices for example in we just started we just lit up although the walmarts for international here last Friday. So so it takes a while for all this stuff to happen.
But you're right any pay you know every hit there I don't think we have a magic bullet single thing Easypay is superior technology that lets us do lots and lots of smaller deals that add up to something pretty potent.
So lots of Bbs kind of like a shotgun as opposed to our rifle shot to continue to improve our business and we really don't look at our business again in terms of revenue because revenue you get a certainly you get all all messed up when you try to consolidate that altogether as Rick mentioned.
With respect to pay it depends on of its a gross or net deal on typical distribution of cards and so forth we only keep.
20% of the gross revenue before we even have $1 of expense. So we kind of look at it let's just keep bringing in more op profit every one of our executives are focused on that and then Dan back to your original question about you know about the FTC segment, let's not forget that though the world.
As a lot bigger than Europe, and now that we've got the CCC change. It allows us to go after many many more markets and youre going to see a lot of that's starting to happen. This year, we had one market last year that we added two.
Outside of Europe, but I hope to have.
Several more this year and its and that's really exciting because.
The market for DCC outside of Europe, maybe twice the size of Europe's.
So we're still have a lot of growth potential in Europe, and then to think that there might be twice that much more out there that had its totally virgin turf that's exciting.
Thanks, guys.
Thank you and our next question comes from a lot of Andrew Smith with Citi. Your line is now open.
Hey, guys. Thanks for taking my questions first question on the T. segment, just wanted to clarify the the onetime benefit there.
With that I just want to just confirm that that is in your adjusted results if EBITDA and EPS and then whether that was included in the initial outlook.
Yes, yes to both I mean, there's a little bit of it that I would say was fair to say that was not included in the original outlook.
But we obviously knew what was going on with that.
Particular part of our business.
But.
It was included in the numbers as as we reported them.
Got it thank you for that and then.
The first quarter EPS outlook.
Looks like there's a little delta relative to street expectations.
What do you have just comment on some of the drivers there whether there's incremental investment maybe lower to assumptions around money transfer just a little bit more in depth about the assumptions in the first quarter guide would be helpful. I. Thank.
Well, it's it's probably always hard to really compare well, we have as an outlook compared to the.
Some of the models of the street here, but from let's say, a relet relative relatively macro kind of point of view.
I think you point on one is that certainly some of the investment as we continue to add ATM.
Into the business.
Those are our expense driven ATM until they that they really are our productive in the tourist kind of season.
And then.
I think as Mike had mentioned there when we're talking about the the money transfer.
We have seen that.
In try us domestic stuff.
The decline had stepped up a little bit and so clearly we we think that that will have a continuation or carry forward effect into the first quarter. So.
Those are really probably the you know the two items in there is is the continued additions of ATM now that first quarter is as we've said before becomes more and more pronounced in terms of its seasonal impacts and then.
And then some of the carryover effects on the on the in try us in the Brexit as we go through the quarter, because don't forget Andrew that too.
You know Weve winterize, we're almost 4000 ATM now all that means is we're not delivering cash to them, but most all of their other expenses are still ongoing so as you put more and more of these ATM than to these into these very seasonal the kinds of areas, particularly where you've got a winter isom, you're just going to have a.
Bigger drag on that first quarter every single year. So.
And let's not forget to I mean, it pages crushed it in the fourth quarter, but that's because a lot the gift card. There. So a lot of their products are sold you know what the Christmas time Raj and so forth will then you get the natural seasonality drop off in the first quarter and I think people keep forgetting that we have a very sees.
Animal business.
Particularly in the F D and E.
Ebay segment.
So lets like nothing going wrong in particular, it's just kind of life in the January quarter.
Yep Yep makes sense seasonally low quarter.
Got it.
And then think Slas question on capital allocation and appreciate the criminal disclosure on the balance sheet in terms of just the available cash.
Have your priorities for.
For use of cash change at all.
Just with the.
Favorable literally cash position has come up.
Just how you're thinking about priorities and then what's the M&A pipeline might look like.
Well really nothing has changed since maybe the last time, we talk to you. We're always looking at acquisitions, we did pick up those 1800 18 months without a nice little one.
We are always Logan and if you look over the last five years. The only two places we spend our cash is to buyback stock if the market tends to dislocate and or acquisition. So that those are the two places that we will spend our money and we continued to get a bigger and bigger.
Award, Jeff I get that means we can do a bigger more transformational deal.
Out of every quarter, but we still haven't found one that.
Meets our criteria and has the return on investment that we'd like.
You guys are actively looking for something any oh, we I mean I.
I mean, why not we've got all this cash in the bank. We've got over 1 billion dollars' worth of of potential. So we're we're always looking at where you know acquisitions that where we could get there one plus our one gives us three and its you know the as you may know or see in the market is so.
Sometimes the price for some of the quality of assets is beyond what we think is reasonable and practical. So so it's just having the discipline to sort through what they are the alignment with our strategy and something that will give shareholders a good return on investment.
We can we could always complete acquisitions that made no sense.
But but we hopefully do a little better on our discipline.
Understood and just just or find a little further I, probably can't go into specificity, but any broad areas that you're looking at or that you would look at for just transform and transformative type acquisition.
Well no, but what you know what I think the theme of this this call was the cross divisional solutions that we have and that continue to push our growth. So anything that can you know.
Can strengthen our position as being really.
The best company out there at the Nexus of digital plus cash.
Our cash to digital those would be places that we look yes, we can really kind of leverage the the.
The other parts of our assets we've had many transactions that that we've talked about where where we really bring to a partner business partner a a lot of different assets out there even if it's even if it's as simple as the Amazon announcement, where.
Where we can make this array of additional product and services available to them. They can use them easy apiay integrations to come into our business and start offering more so to the extent that we would see an acquisition again that fits in line with our strategy that can leverage this the scope of assets than that.
It seems to where one and one is greater than two.
Understood Thats helpful. Thank you guys.
Thank you and our next question comes from the line of Peter Heckmann with David Your line is now.
Hey, good morning, everyone.
A follow up looks like this.
Sprint T mobile deal maybe finally approved.
I think any impacts there on the pay side, if they sunset that some of their prepaid vans and other U.S. as any huge market for you, but I think sprint historically had been a decent size customer. It can you handicap that yet.
Yeah. This is Kevin so remember there's two parts to that there's the T. Mobile sprint acquisition has to close and then the divestiture of boost.
Dish and dish was a customer of ours prior to the announcement.
There were very close to them in terms of providing solutions and doing things with them.
And where where frankly quite excited about the opportunity.
Two expands our relationship.
Because they're not in the mobile business as of yet I think there's a there's a there'll be an dependency on on partners to help them with the business and our early discussions with them are exciting so I just.
To summarize our I'm excited about what it potentially means for you pay North America.
Because you're getting a highly motivated buyer who has lots of ideas about what they want to do with the business going forward and that could only be good for us.
Okay, great. Thanks, Kevin and then.
Rick maybe just following up on Walmart to World just to remind us about how you're thinking about the ramp there and how you differentiate in that situation against the other branded player.
Well the the differentiation I think comes on on several fronts as we've got to as Mike said earlier, we've got a wonderful payout network, we have that that stocked with with whether its physical pay out or or digital pay out.
We have provided a wonderful.
Walmart to Walmart us domestic products. So customers are very familiar with with that type of of flat rate product.
Great customer convenience.
And so we will continue and as as Walmart does with its its product positioning its everyday low pricing. So we think that will fall right in line there and so.
It's it's everyday given customer choice.
And we backed that up with a great service with great FX rates.
In terms of the ramp.
I would I.
I would anticipate that that it'll be a steady ramp as we go through the process here.
The first part was to get deployed at the stores.
The next part is to make sure that.
The proper signage and branding and stuff like that is available in the stores.
And so I would expect that it will be it'll be a moderate ramp as we go throughout the year and we expose that product to the customers and they they vote with choice.
Got it thanks much.
All right I think that will be our last question for the day I want to thank everyone for joining that than I look forward to talking to you in about 90 days. Thank you very much.
Ladies and gentlemen.
This concludes today's conference call. Thank you for participating you may now disconnect.
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