Q1 2022 International Money Express Inc Earnings Call
[music].
Greetings and welcome to International Money Express first quarter 2022 earnings Conference call.
At this time all participants are in a listen only mode.
Question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
I would now like to turn the conference over to Mr. Mike.
<unk> Vice President of Investor Relations. Thank you Sir.
Good morning, and welcome to our quarterly earnings call I would like to remind everybody that today's call includes forward looking statements, including our updated 2022 guidance and actual results may differ materially from expectations.
For additional information on the Internet.
Brass, which we refer to as intermix or the company.
Please see our SEC filings, including the risk factors described therein.
All forward looking statements on this call are based on assumptions and beliefs as of today.
You should not rely on our forward looking statements as predictions of future events.
Please refer to slide two of our presentation for a description of certain forward looking statements.
The company undertakes no obligation to update such information, except as required by applicable law.
On this conference call, we discuss certain non-GAAP financial measures.
Information required by Reg G under the Securities and Exchange Act for such non-GAAP financial measures is included in the presentation slides our earnings press release, and our annual report on Form 10-K, including reconciliation of certain non-GAAP financial measures to the appropriate GAAP measure.
These can be obtained in the investors section of our website at intermix online Dot com.
Presenting on today's call will be our chairman and Chief Executive Officer, and President, Bob, Let's see and Chief Financial Officer Andreas Bendy.
Also on the call today are Joseph Aguilar, Chief Operating Officer, Randy Nelson, Chief Revenue Officer, and Kris <unk>, Chief Information Officer, Let me now turn the call over to Bob.
Good morning, all and thank you for joining US we appreciate your time and value your interest in <unk> two.
2022 is off to an outstanding start for our company the strength of our first quarter operating results as a demonstration of the powerful connection we have built with our customers through our unique omnichannel suite money transfer services.
The people who rely on intermix no. They can send money home to Latin America, and other areas of the world quickly safely and efficiently.
They know they can complete their money transfers by a variety of methods whether it is through our versatile mobile application or in person for one of our thousands of conveniently located retail locations across the U S and Canada.
As you see on slide three intermix continues to achieve unprecedented double digit growth quarter after quarter year. After year, we're growing by these key measures and metrics uninterrupted by economic ups and downs global Pandemics or geopolitical upheaval Anders will go into greater detail on these impressive quarterly results in a bit later.
On the call.
Moving to slide four we are perfectly positioned to outperform in our sector capitalizing on double digit average annual growth rate in total remittances to Latin America and are steadily increasing share of that business, both digitally and via our retail network.
We are a leading money transfer service in four of the top five Latin American markets, including Mexico, Guatemala, El Salvador Honduras.
These key markets comprised 75% of the money sent to Latin America.
With the anticipated completion of the low National acquisition, we will be a market leader in the top five receiving markets in Latam.
And last canal and a bit.
Our addressable market includes 24 million people born in Latin America.
Or the Caribbean, who live in the United States today, we provide them a valuable service, making it possible for our customers to send money home to loved ones to pay for such essentials as housing food medical expenses and more intermix is an important part of that transfer of funds evidenced on slide five by the impressive 20.
Percent year over year growth in the total number of transactions, we completed during the first quarter.
As shown on slide six in our four core markets Intermix continues to take share and has achieved a 21, 4% market share in those large in key markets in the first quarter of 2022.
We aim to complete each one of these important funds transfers without fail, 100% of the time importantly, we provide those services at locations familiar to our customers close to where they live in a culturally welcoming environment and in their native language. These are all important factors that have contributed to building the consumer trust our Barron our brand.
<unk> achieved resulting in a market leading operating performance.
We have established <unk> as one of the industry's premier remittance services through our targeted improvement investment in new technology and software while at the same time, expanding the critical unprofitable retail side that intermix customers value. So very much the vast majority of our customers preferred to conduct business in person one key reason is.
The trust they place in the familiar agent retail. Additionally, many of our centers do not have the necessary banking relationships to send money online or may be paid in cash or checks that are easily negotiated at a retailer we have not seen much change in these behaviors over the last several years and we don't see these preferences or consumer behavior.
<unk> changing dramatically anytime soon.
The consistent strong growth in intermix enjoys is tied directly to growing consumer demand for the accessible omnichannel approach, we provide on slide seven the 17% growth in the number of Internet customers that we achieved during the first quarter reflects the success of our omni channel strategy, we intend to be there for our customers on.
Offering multiple options to send money, whether it be through our retail network or on our new state of the art mobile application recently launched regardless of their preference we provide the same industry leading customer care.
That said many of our customers have begun to explore the option of sending and receiving remittance digitally as shown on slide eight a full 25% of intermix transactions. During the first quarter were either originated are completed digitally which is an important measure as we continue to evolve our omnichannel offering to our consumers.
To underscore our valuable consumer proposition unlike certain competitors, we offered the consumer.
<unk> from which they can choose the most attractive for them.
Of course, an important component of intermix value chain has a strong relationship with the independent agent who manage into facilitates our retail transactions.
Just the size of the importance network for you we work with thousands of independent agents across the country for the first quarter. Our agent network was 10% larger compared to first quarter 2021 simply put the more quality retailers, we add the more transactions we complete by the way. These are the right agents in the right locations carefully.
<unk> added and recruited for their alignment with our core values and commitment to the best in class customer service.
We provide our partner agents with the technical support and capabilities they need to swiftly complete transactions and 20 seconds or less that is the fastest time in the industry. The speed at which intermix transactions are completed as a key differentiator for our busy retailers. It enables them to process more wires more quickly.
Another strong draw for all of our key shareholders as our adherence to compliance protocols, our agents as well as our banking partners rest easily knowing that we have robust safeguards in place to detect and prevent money laundering fraud and other transactions deemed unacceptable.
We continuously invest to take compliance to the next level, which is one of the key reasons, we have long standing business relationships with Premier list of regional and National Banks, who trust and respect the regulatory rigor that we have created we highly value those banking relationships because they underpin our growth given the high volume of <unk>.
Business our agents facility.
Just a word or two on the importance of our partner agents. These are people, we rely on as brand ambassadors for intermix, they choose intermix over other options because of the attributes I've mentioned, we choose them because they embrace our values and are committed as we are to respectful quality customer service.
The key to our success to carefully chosen retail network, we have created sets us apart from our peers.
Turning back Netherland nationality, the acquisition represents a significant step forward in global expansion ambitions acquiring land national and landholdings provides intermix with important geographic diversity, while at the same time strengthening our competitive position in key Latin American countries, where the lion's share of the business is transacted.
Once integrated into our operations by nationality and land holdings will make intermix, a leading remittance provider to Dominican Republic, adding a fifth Latin American country, where inner mix will be a leader as a reminder, Dominican Republic, Mexico, Guatemala, El Salvador, Honduras collectively represent 83% of all the money sent to the <unk>.
<unk> from the U S. In aggregate, we will have more than a 21% share to these five key markets at.
Additionally, the national also enables us to enter the European remittance market for the first time, expanding our global reach from 28 to more than 70 countries through land holdings will requiring I transfers in Europe , which will make it possible intermix customers to send money to Latin America Africa, and Asia from Spain, Italy and Germany.
We believe this is an excellent opportunity for the company and our shareholders and we expect from the National acquisition to close in third quarter. So definitely there is a positive momentum for inner mix put it all together and we are creating significant value for our shareholders achieving consistent strong growth across the board and setting ourselves apart is an undisputed leader.
Leader in the industry with that I will turn it over to Andrew to provide more context around the operating results. We reported this morning.
Thanks, Bob and good morning, everyone. Our record of consistently strong operating results continued unchecked during the first quarter as we fully capitalize on our competitive advantage as an innovator and leader in Fintech and remittances as shown on slide nine year over year revenues for the period were up a strong 21% driven by solid growth.
Nearly all of our key operating metrics, including agent growth customer growth and growth in overall transactions.
GAAP net income for the quarter was $11 7 million up 30% compared with the prior year on an adjusted basis net income increased 26% year over year.
Our strong topline was the key driver, but we also did a nice job being efficient for many angles during the quarter managing down the pace of expense growth, particularly on salaries.
He is an efficient use of a much better price credit line.
We remain focused on effective expense management and economically positive investments in people products and support.
Importantly growth in digitally originated transactions was also a contributor on slide 10 digitally initiated transactions during the period increased a very strong 105% from the same three months period last year helped by the rollout of our new mobile App, we're committed to drive high growth and digital transactions and to guarantee.
We can complete money transfers, however, our customers want and with great customer experience each way.
I want to emphasize that seamlessly facilitating digital money transfers is an increasingly important component of our Omnichannel suite of remittance services that said, we're getting more clarity as time passes on unit economics, driving digital expansion in our industry. Our approach will be to resist the temptation to overspend and digital customer.
Position, we chose instead to prudently scaled digital spend in line with the customer preference, we observed across our Omnichannel network.
Drilling down into other topline drivers, we're continuing to build out our valuable network of retail agents across the country with an added focus on locations and communities and states and the west of the U S.
<unk> been focused on increasing agent productivity and efficiency rolling out the new Intermix direct agency software late last year, and adding field sales support personnel to accommodate the new territories, we're adding it's important to remember that we do not compete on price for our customers quality dependability and choice are more important than being the least.
Expensive.
On slide 11. These efforts drove the double digit growth in customers and transactions and 30% more principal sent totaling more than $4 billion for the quarter.
Also worth noting that the contributions from emerging market countries were up over 28% during the quarter as seen on slide 12, and an indication of our ambitions to significantly and consistently outpaced the underlying growth rates in these markets aside from the peak of the pandemic impact we are consistently growing at 20 to 30 and <unk> 40.
Percent every quarter in emerging markets.
On slide 13 first quarter, adjusted EBITDA increased 23% to almost $21 million with margins up over 18% a nice steady margin expansion over prior year comparator is.
Turning now to the balance sheet on slide 14, Intermix continues to be an efficient operator and strong generator of cash we ended the quarter with $157 million in cash and an undrawn revolver capacity of $150 million, we always underscore that the cash balance fluctuates based on day of the week after the quarter end, but any way.
Or any day you look at the balance sheet is in great shape.
Looking at capital allocation, our preferred use of cash always is to reinvest in the business to accelerate growth, which we had been doing and will continue to do so and our earnings already reflect that we also consider inorganic growth opportunities that have a positive risk adjusted rate of return and as discussed earlier, we plan to close <unk> in the <unk>.
Third quarter of this year for new client close with <unk>.
Sean.
As for the deal we haven't disclosed terms at this point, so we won't share what the impact on casualty for now we believe though that this is an excellent use of cash to grow the business and will strengthen our market leading position in Latin America as well as open the door for us in Europe , We expect a very positive return on this investment for our shareholders.
As for other uses of cash we continue to believe that there is value in our common stock at these levels and that a repurchase program makes good sense with the deal now under SBA and clarity on our medium term cash needs, we expect to accelerate the pace of buyback activity versus what you would have seen in previous quarters. During the first quarter the company.
Purchased approximately 244000 shares of our common stock for a total of $3 6 million.
From its inception in <unk> last year. The company has repurchased approximately 566000 shares at a weighted average price of $16 24.
As noted in the press release, we have adjusted our full year guidance upward based on the strength of our first quarter results combined with the exceptional operating efficiencies we've achieved while our revenue forecast remains unchanged.
Below that line moves up as we continue to reap the benefits of a company DNA, that's laser focused on efficiency.
As shown on slide 15 to reiterate we still expect revenue to be in the 537 million to $546 million range, but for net income, we expect $59 million to $60 5 million adjusted net income of 67 to $68 5 million and adjusted EBITDA in the 101 five.
$5 million to $104 million range overall, intermix is creating significant value for shareholders, particularly for those who appreciate the value of solid sustainable and consistent growth in revenue and earnings along with great cash generation and a capex light business model. We are confident in our unbroken record of double digit growth in <unk>.
To build on it we are in an excellent position to take advantage of the market opportunities by delivering on the promise of our unique and differentiated omnichannel model with that let me turn the call back to the operator for questions.
Okay.
Thank you, Sir ladies and gentlemen at this time, we'll be conducting a question and answer session.
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These what we call for questions.
Our first question is from David Scharf in.
In <unk> Securities. Please go ahead.
Great. Good morning, everyone and thanks for taking my questions.
Bob.
If you can kind of take a step back and.
You may have addressed this.
Investor Day, a few months ago, but.
Given how strong the market share gains have been.
If you can.
Maybe just bring us up to speed on.
What youre seeing competitively, we obviously tend to hear a lot about.
The big Global players Moneygram, and Western Union, which you really don't compete with much.
Or the all digital entrants like Italy in a wise, but.
As far as the companies that often have a terminal behind the checkout counter at many of the agents you're located in.
Thank you.
Transfer Max.
Can you talk a little bit about <unk>.
Whether there is.
Anything we ought to be aware of that's occurring in some of these primary competitors.
Either strength or weakness and broadly speaking.
What kind of price movements youre seeing out of them lately. Thank you.
I think I would start out with first of all that the market or at least.
A lot of the investment community has a misconception about how strongly retail continues to grow.
There is more dollars being added in absolute dollars at retail year over year. This quarter last quarter next quarter. Then there is a digital so first of all there's a vibrant retail market.
The marketplaces business led by some of the public players.
Other than us.
Continued to contract because they've grown in the tall, they haven't necessarily been able to compete at retail so.
Channeled their efforts and channel the emphasis and the intention of the investment community on digital that's great. We do too we wanted to digital is going to be a big part of our business. That's why we consider ourselves to be omnichannel.
But there is still a strong strong marketing retail and so first of all don't think about the market and retail is melting ice cube, where contract against growth. It's bigger in absolute terms year over year bigger in absolute dollars and growth that is happening at digital, particularly when we talk about Latin America now.
Now you've seen the numbers from some of the other public companies and you see that they do although we don't compete directly with some of them because they are more in the big boxes.
They still are contributing share back to the market they are growing slower than the market. So that is still a factor.
And then when you get to retail we've done a great job.
What we've always done there is not a big change what we've always done is we've been a value added provider that is.
Processed transactions faster with the best technology at retail.
Answers their customer service line and four seconds as the best banking relationships and carefully orchestrates. The addition of every retailer ZIP code by Zip code.
So it doesn't matter to us much what the competition does competition will come and go competition will flurry up in discount heavily competition will and we cannot be we cannot be influenced by that too strongly it's not that we're living in a bubble, but we have to stay focused on our mission, which is a value added.
Provider very targeted to where our consumers need our services and that continues to play out in a very strong market overall with double digit growth, whereas still the retail market is much stronger than people thing, whereas the we're in that market. The the key public companies have.
Struggled.
There are still some of the small guys, who are doing well I'd say theres, probably some small guys are growing pretty well because the market is growing well I think we're doing better than any of them in terms of percentage of growth and certainly in market share, but it's a strong market and retail still jumping. This led by the numbers you might see from other public companies.
Got it.
Helpful.
And maybe just as a follow up sweep switching gears on the <unk>.
Products front.
I know.
A payroll card.
Getting a GPI card in the hands of employers.
Pay your centers onto that card has been.
In the works for a number of years it sounded like.
A couple of months ago, you said that you were really sort of gaining some traction at least in terms of sort of the role executing on the rollout can you provide just an update.
What's your expectations are for that product.
Yes, I mean, and I'll, let him Randy will comment more on it Randy Nelson.
<unk>.
We continue to move forward with the product we think it's Scott.
Great utility for both the employer, who may be faced with writing checks, sometimes even paying viewpoint cash.
Very cumbersome, taking them in town and maybe cash their checks because these are a lot of times of.
Visa workers.
Also for the workers themselves that now have options. We're one of the only companies that take a card a debit.
Debit card at retail so where we are.
Putting up these kinds of.
Employers with the card, we're making sure also that our retailers take a car to retail so that our consumer who may still even though theyre now neo banks might still choose to go into a retail setting still have that choice. So we think it's going well.
There is a lot of retailers to go to and there is mostly retailmenot retailers, but a lot of employers who go to most of them. So as employers are not people that employ 10000 or 100000 people. So it's a numbers game and it's a matter of having people out there just like we did at retail and building that network of employers. So Randy I don't know if theres anything you.
Add to that sure I would just add that Bob is exactly right. We're in those early stages of building out the infrastructure.
This past quarter, we added more employee earth to our network than any other previous quarter fourth quarter of last year was the second.
Highest month in terms of adding employers to our network of employers who offer the car to their employees. So as we build out the number of employers that offer our car to their employees and use it as the pay payroll vehicle.
Of course puts more hand more cards in the hands of employees as they use the card for their purchases we start generating revenue so.
We're learning a lot we've made some great contacts with industry leaders our reputation is very is being.
Very well received.
Employers are hearing more about us they like the one two punch that we bring not only is.
Payroll vehicle for them, that's more efficient and less expensive than what they've used with paper checks, but also the convenience of money transfer offering to their employees employees. So that's going really really well and.
Secondly, it's important to understand that the GTR card. The general purpose Reloadable card is now being tested at our corporate stores with the anticipation of rolling that out to our retail here soon.
Great. Thank you very much guys.
Thank you.
Next question is from Mark Palmer of BTG. Please go ahead.
Yes, good morning, and congratulations on a great quarter.
<unk>.
In the first months and for that matter of quarters. After the COVID-19 outbreak.
It became apparent that principal sizes on transactions were above normal.
Yes.
There was some thought that that might normalize over time.
But we continue to see principal sizes be larger than what we had seen prior to the pandemic.
Wanted to get your updated thoughts on what may be driving this the sustainability of it.
How it relates to what's going on on the ground with your customers.
Yes, we're seeing again continued principal amounts that would have been higher than what we would've seen in the past, but yet now as we get into months even years of this we start to look at it as potentially a new normal amount.
<unk>.
In the past when principal amounts have gone up they usually have not come back down they've plateaued and from there they.
They kind of stay at that level. So I don't know that we're expecting them to come back down and we've done some work in terms of projections from a conservative perspective, what if they do but we don't necessarily think they do they will I think when you look at the overall economic of the United States today.
Is it really high inflationary time right. So everything is costing more and people are probably also our workers are making more.
They work from for a landscaper if they work for whomever they work for and because they are just more money in the system.
I think initially we thought that part of it was just the stability of our workforce because they were mostly essential workers and that there was a lot more hardship in places like Mexico, and Guatemala, where the economy had not come back as quickly, but now it's just continues to sustain itself.
We look at it is probably a new normal.
And.
Again, we've kind of allowed for if it doesn't stay there how we adjust to that but we're not expecting a big pullback in terms of principle now ultimately what happens is.
We're getting to a place now where we are beginning to lap the higher principal amounts, meaning that when we look at them. It's not like now that the principal amount will be up.
Several percentage points from last year, it will be more even if you sustain it because we're beginning to lap periods, where we had a high principal amount last year, but again.
Pretty comfortable with it today based on what we're seeing.
And we've always been.
Versus the market higher principle amount provider.
There's a lot of reasons for that we think.
Some of them are our pricing why some of them are security wise, but we expect that.
We would expect stability and where those are today, but we are also from a conservative perspective from a budgeting perspective have plan for the possibility of them returning down a few percentage points back to where they were pre pandemic.
Thank you and just one more question.
We saw of course, the increase in your guidance for adjusted EBITDA, reflecting the efficiencies that you're realizing.
At the same time, you reiterated on the topline.
<unk>.
Everything seems to be.
Very strong in terms of the company's operating performance.
Was the reiteration simply conservatism based on macroeconomic factors and whatnot.
Are you feeling relative to the range are you feeling better about the top end of that range as a consequence of the quarter.
Yes, no I would say I'll answer the second question first I think that.
We've edged a little closer towards the top end of the range based on the first quarter's performance.
But overall.
The efficiency, we think we really can count on.
We did with agency commissions, how we did on processing costs, how we manage the opex and the hiring within the business. Those are a lot more may be in our control.
So I'd say, we still feel good about revenue and after another quarters under our belt, we'll look at it again.
Yes, and I think your first question can tie back to that a little bit Mark is that.
With the principal piece right not being certain that as part of our conservatism because that is a big part of that that revenue growth.
So it's a little bit conservative at this point.
But but we think thats the right thing to do we're very certain about the bottom line is we continue we've always been really efficient.
And we continue to have those efficiencies I.
I don't want the marketplace to think that that in any way would be indicative of a less of an investment in the business because we've been investing heavily been adding folks, particularly in areas that can contribute to our new businesses like our online business like our card business. So we continue to invest there but because.
Our percentage growth of.
Now our business is big enough that a percentage growth in revenue of 20% really goes a long way towards being able to add additional people and invest in the business and still drive and leverage that bottom line. That's what we've been able to do but to Andrew at this point I think.
We will revisit it after this quarter and see where we stand but right now after just one quarter, we chose to be.
Stand on the on the revenue piece and move up the EBITDA and net income base right now.
Very good thank you.
Okay.
Thank you very much.
Ladies and gentlemen, just a reminder, if you wish to ask a question. Please press star.
One.
Our next question is from Mike Grondahl of Northland Securities. Please go ahead.
Hey, guys good morning.
First question is maybe just digging a.
Little bit deeper on inflation gas prices.
You talked a little bit about average sand, but.
But maybe specifically did you see anything softer March April versus maybe the prior months.
Okay.
Yes.
There has been some choppiness.
In the growth and we can't talk about April now, but when we talk about the first quarter.
There's been there was some choppiness we felt most of that was related to some of the policies put in place by the by the main bank in Mexico by the fed in Mexico, where they trying to stabilize the pace a little bit and when that happened we saw.
A slowdown people kind of waiting right because the peso when we talk about when the peso becomes weak people think it is on sale well when the other thing happens and if there is that the peso strengthen people will hold back a little bit. So we saw a little bit of choppiness at different points in the quarter.
But.
We didn't we're not seeing anything thats happening.
Roughly related to inflation, yet I wouldn't expect too because inflation has been something thats been going on for more than a year now right. It's been gradually building and so I think we're seeing that in and.
In all aspects of of life today, so in terms of economically so.
That's really the only impact that we can really draw is that monetary policy that was set by the by the by the fed in Mexico with stabilizing the peso.
Got it and then.
Secondly.
I think your agent growth I know you don't disclose the number of agents.
<unk> growth.
Am I correct in thinking at 10%.
Growth has accelerated a little bit.
Over the last year or two.
Can you kind of comment just kind of on your outlook.
10% growth.
You can do in 2020 or kind of how do you feel about agent growth going forward.
Well remember, what we talked about in the in the.
In the release that we did earlier in the earnings release was 10% of our agents are up 10% year over year. So it doesn't mean, we're adding 10% more agents in the quarter. It means that if we had 1000 each.
Year and first quarter now we have 1100 right. So we're adding about 10%.
Puts and takes agents.
Leave agents that are added we have about 10% more agents.
We did last year on the pace at which we're adding though and ill have Randy comment a little bit on that has accelerated we've invested a lot more in particularly the western states. We have more salespeople that are freelancers out there, adding retailers and that's been a mission of ours as you know and now.
With the resources to be able to do it and we've been executing against that so we will expect to be adding more retailers as time goes on throughout this year.
Yes, Mike gets Randy Youll recall that a quarter or two ago. We mentioned that we were adding really about 20% more folks that are out just helping us add new locations activating new locations.
They we started hiring that team group growth in fourth quarter last year, we've seen some of them ramping up in terms of getting their stride, but the past two quarters Youre exactly right. We have seen more agent activations than previously in our history and we anticipate that will continue throughout <unk>.
This year for sure.
Got it and he may be lastly, guys.
Why national the acquisition can you disclose what trailing revenues were or 2021 revenues.
I know youre not disclosing the price you're paying for it but just what revenues they did last year.
Yes, Mike were not disclosing that at this point the only thing we are disclosing is the market share that it is going to help us achieve in the Dominican Republic, which has 20 plus.
No not at this time.
And keep in mind this is.
Again in a cash purchase.
Cash sitting on the balance sheet, that's not being used today, that's going to be used to really productive use.
We think what nationality is going to be a big opportunity for us in that.
It's the fifth country that will have one of the leading shares in so now you have Mexico, Guatemala, El Salvador, Honduras, and Dominican Republic, then aggregate that will be a 'twenty one share of pattern puts us and those are 83% of all the money, leaving the U S to Latin America goes to those five countries.
Lee I think it gives us a really strong concentration in the northeast, which has been strong for us, but their retail locations retail locations that they personally own versus agent third party agents are not a good thing unless they're highly productive well they have a lot of really highly productive branch locations that are really going to be linchpins.
For us and a lot of ways in the northeast.
And then lastly, it opens up the European corridor for Us and I think that.
There is an opportunity in Europe . Once you have a European license, it's portable throughout the year Union today, Theyre in Spain, Italy, and Germany, but we think there's opportunities in other countries and we also think that Europe may have even a bigger opportunity because of the corridor, which since two.
Because of the nature of stability in the banking status of the consumer spending.
Bigger online potential so that European corridor that we open up with.
I transfer business could give us an opportunity to even do more business from an online perspective than it may even at retail. So we think theres a lot of really valuable things that it brings.
It's a little bit of a diamond in the rough it's a business that we think it's got with our sort of leveraging of that business. The way we have done other things.
Creating a sort of the efficiencies that we have in our business has the opportunity to add tremendous value overtime for our shareholders.
It sounds very strategic thank you.
Okay.
Thank you very much.
Question is from Alex Kurtz of Keybanc capital markets. Please go ahead.
Hey, guys nice to speak with you and thanks for all the commentary this morning.
Macro uncertainty is certainly top of mind for a lot of investors.
Can you speak a bit about the resiliency of the remittance market in recessionary periods. If you just look at industry data would suggest that relatively defensive sub sector financial services would just appreciate any thoughts you have there and then related to that David.
David you spoke to this a bit but just curious kind of what you're watching.
From a macro data point perspective to gauge the health of your unique customer base.
So we've seen.
I came to intermix and began in the middle of a recession one of the biggest downturn during 2008, the residual that was coming into 2009, and we've been able to continue to grow the business throughout all of that remittances is a pretty resilient business generally.
It had a few down years, but it kind of held its own it didn't have big big downturns during the recession remember a lot of the people that we service are doing things like picking crops in California.
Not something that theres going to be less out there if there's a recession people still eat oranges, and radishes and strawberries and all the other things.
They also are people that work in other essential businesses that continue to be relatively strong one of the fact, one of the things we always look at because we consider the agricultural component very stable in our industry.
As construction and housing starts so when that starts to get a little weaker we will see the industry a bit weaker and it requires a little more diligence on our part a little bit different strategy on our part to continue to grow during the downturn.
We're not seeing that at this point as you know I am sure. There is a pretty strong housing market today and those people that.
We are also staying in their homes are doing a lot of home renovations things like that that had been really helping I think and booing are our consumers our ultimate consumers by getting more work.
We look at the macro factors.
I know this isn't going to sit well with wall Street, but I think macro factors are kind of for people who can't compete.
We find a way to drive wires no matter whats happening.
<unk> six to <unk> field, and we'll shoot it out with the $45 42.
We will do what we need to do and if the market gets tough will get tougher and that's what we do we've done we've proven our business has gone from a business that was $40 million in revenue.
To now over $1 billion in revenue and it wasn't always doing really great growth times from 2008 until 2000.
<unk> 15, the market was essentially flat.
Our business grew dramatically during that period. So it is about having a value added proposition at retail a strategic approach to the market.
Combining those things and staying resolute and not being sort of affected by every wind that blows every which way every day, it's great to stay in tune with that but what we don't want to do is create our own sort of method and their own reason for failure by looking at those things so, whereas we look.
At them, we think there's just so much opportunity for us we think that the lack of understanding by the greater marketplace, particularly some of the investment community and particularly a lot of the analyst community that don't understand that retail grows.
And adds more dollars I encourage you to take a look at how that retail grows faster and adds more dollars and billions of dollars being spent than.
And then digital does today.
In an absolute sense to got a small number and you grow by a certain number its going to be a bigger percentage, so very broad vibrant and strong retail market and even if that slows down the opportunity that exists for us in the western states that we are executing against where we are still very strong and have a great franchise, but we arent anything like.
The leader that we are in most of eastern states.
It's really going to offset any downturn from our perspective, we feel really strongly in one of the things that also happens in these downturns, we see it every time as some of the weaker guys start to get even weaker when I talk about the weaker guidance I'm not talking about big public companies, who haven't performed.
Not performing or being weak are two different things.
I'm talking about small guys that are really struggled to make their payroll when things get tough it gets tougher and some of them go by the wayside some of them are not able to perform so we feel good about our chances and our ability for form no matter. If it's a strong market or if it's a market that downturn, we'd much rather have a strong market, but we.
We will do well, even if the market slows down.
Great I appreciate the thorough thoughts there maybe.
Maybe just last question for me.
Maybe just provide a quick update on some of the newer inbound and outbound markets being Africa Asia and Canada.
Maybe two to three years and on each of those just kind of curious how you would describe.
<unk> behaviour and go to market success in those regions.
Are there any more pieces to put in place here do you feel like that those regions are kind of fully built out other than maybe adding agent locations.
Yeah.
Sure sure this is Randy.
Markets that youre, referring to really are in the very infancy stages for us and we haven't built out any retail.
Our locations around Asia, or the eight well the Filipino where the Vietnamese markets were really just partnering.
Line with those offerings at this point in time Africa have we've seen some child the entire industry has seen some challenges to Africa over the last year and a half the central bank of Nigeria and made some changes that has really impacted the way consumers are sending money to Nigeria and now so we're working through that we're working through a.
<unk> in Nigeria that will make us more competitive.
But for the time being that the Asia opportunity continues to be online and we're working through the Africa opportunity.
Great. Thank you.
Yes.
Thank you very much ladies.
Our last question is from Thiago <unk> of Credit Suisse. Please go ahead.
Great. Thank you and good morning, a lot of the topics I wanted to cover have been addressed and quite well, but I just wanted to double down on slide 12, which is the emerging market's contribution to growth. So really strong growth in transaction in Q1 and on top of a tough comp and you just mentioned some of the prospects ahead for that.
Dominican Republic, and also gave some context around.
Some of the other emerging markets, but maybe you can just recap for everyone again, just the overall share in those markets relative to your core markets just to demonstrate.
How much runway there is there and if youre able to execute on the same track record that you've got in the core markets.
Bright prospects ahead.
So I just want to make sure I understand your question. The question being what are the other market opportunities. If they were to attain the same kind of market share that we have in our core.
Sure.
Surely a part of it maybe if you could just talk about what your share is in those markets in aggregate relative to the car, which would be suggestive of the runway.
Well first of all keep let's keep in mind.
Youre not going to win.
In Latin America by sending lots of ours to Bolivia.
Okay. We can talk about Bolivia, we can talk about <unk>.
Countries like that Argentina.
But there are tiny fragment of the business. That's why we talk about that 83% of the business is driven by those countries that we talked about Mexico, Guatemala, El Salvador, Honduras, and the Dominican Republic.
Columbia would be the next biggest and when when Colombia market share, which today, we're relatively small single digits, but Colombia, we have some initiatives working in Colombia. If you added back to the mix you are getting close to 90% of the money probably high 80%, 88% of all the money Center Latin America, So thats, where youll see a lot of our focus after that.
Ecuador.
Theres Peru.
<unk>, but.
Probably have three or four other countries that are really going to get you pretty close to a 100% there arent a lot of.
People coming from certain countries to.
To the U S to work and send money back home. So we're doing this very strategically and we haven't left anything out in a way because we just left it out we did it because it was the best application of our resources to drive the business today, if we could spend a dollar to go get a wire.
First place, we could spend a dollar to get a wire still Mexico Theres no market like Mexico Theres no place in the world that <unk>.
$40 billion plus from one country to another.
At a margin that's in there for us not for a lot of the small guys, but really really hefty and two times as big as some of the low end markets. So you.
You'll still see us driving Mexico, Youll still see us driving Guatemala.
We those emerging markets are going to be a nice add on but it's kind of like you've got a really good store in Ecuador, and Peru in countries like that are putting a nice wanting in front right. It's really not going to change a lot about the store. It can make it look a little more welcoming but our business will be driven by those core countries now when you.
Aggregate all of that when you aggregate those incremental countries in Latin America in aggregate the opportunity in the continent of Africa, and you start thinking about our opportunities as they grow from Canada and then also from current period.
He was in Europe , along with the U S to other countries in the Asia area for instance, possibly places like India and the Philippines that are predominantly online markets. Now you have some other interesting opportunities that we're very much focused on and we'll we'll look to as we get our arms around that <unk>.
<unk> now I transfer business in Europe . So we think that there is a lot of fuel there in terms of growth, but a lot of that will probably be even be online, which the market will love even more so.
I wanted to be really clear that.
The big opportunity still remains even though we have a 21 per share in Mexico.
Picked up a four 5% more share in Mexico, that's going to be more valuable than taking Ecuador, do a 20% share partly because of the size of Mexico, probably because of the profitability, but also because we know that's doable when we look at the share we have of Mexico.
And many of our states in the U S. If we projected or anything even close to that and some of the states out west which were growing at a market rate that's faster than the market is growing then Mexico could we could end up with a 25 share or more to Mexico, a 35 share of more to Guatemala, I'm not projecting that I'm not guiding that but I.
I'm, saying those are the possibilities and those are highly profitable markets.
And they are big markets, Guatemala, 9 billion market all of Africa is probably from the U S is not much bigger than Guatemala from the U S. Now again as we open up the corridor from Canada, and we open up the quarters from Europe .
Yes.
Continental Africa becomes bigger.
The Asian continent becomes bigger, particularly as I said, Philippines, and India. So we will continue to kind of look at it that way, but I think there is tremendous opportunity in a number of areas both at retail and online and the difference between the guys that are that are that are still.
Into pleasing.
The market.
From the outside looking in believes that this is all about online.
Yes.
They're pushing things right. What we're saying is the opposite were saying Hey, if we go to Europe , one where in Europe , and one that the business in Europe , we know that the consumers in Europe are going to be more likely that in the U S to prefer online, particularly to those particular markets. So we want to serve the consumers' needs rather than.
Then forced the consumer into the.
The product, we Havent stock, which is online maybe in some People's cases, we give the consumer that Omnichannel choice and that's really the beauty of what we'll be doing not only in the U S. But as we continue to build out Canada.
Our business to Europe , and mesh that with the <unk> transfer business.
Yes.
Excellent. Thank you for all that context points well taken on the relative sizing.
Okay.
Okay.
Okay. Thank you very much.
Ladies and gentlemen.
A question answer session and I would like to hand, the conference back to Mr. Probably see for closing comments.
Thank you all again for joining us and for the great questions. We appreciate your interest in the company and your support and we'll speak to you all very soon have a great day.
Thank you very much.
Ladies and gentlemen that concludes today's conference.
Disconnect your lines at this time, thank you for your participation.
Yes.
Okay.