Q2 2022 International Money Express Inc Earnings Call
Thank you for standing by this is the conference operator welcome to the International Money Express Inc. Second quarter 2022 earnings Conference call. As a reminder, all participants are in listen only mode and the conference is being recorded after the presentation there'll be an opportunity to ask questions to join the <unk>.
Thank you you May press Star then one on your telephone keypad should you need assistance during the conference call you may signal, an operator by pressing star and zero.
I would now like to turn the conference over to Mike Gallentine, Vice President of Investor Relations. Please go ahead.
Good morning, and welcome to our quarterly earnings call.
To remind everyone 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 international money Express, which we referred 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 our slide in 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 regulation G. Under the Securities and Exchange Act for such non-GAAP financial measures included in the presentation slides our earnings press release and our annual report on Form 10-K include.
A reconciliation of certain non-GAAP financial measures to the appropriate GAAP measures.
These can be obtained in the investors section on our website at intermix online Dot com.
Presenting on today's call is our chairman and Chief Executive Officer, and President, Bob Lissy, Chief Financial Officer Andre Spendy.
Also on the call today are Joseph Aguilar, Chief Operating Officer, Randy Nelson, Chief revenue Officer and Chris.
Chief Information Officer, Let me now turn the call over to Bob.
Yeah.
Good morning, and thank you for joining us as always we appreciate your interest in intermix. The company's unprecedented growth continued unabated during the second quarter as we set a number of notable performance records and reached some significant milestones.
On slide three during the three months period, we completed a record number of remittances driving record revenues adjusted EBITDA and net income.
I'm proud to report that intermix is selling almost twice as many transactions as we did when we became a public company just four years ago.
What our history of performance excellence in perspective, we have met or beaten EBITDA expectations every quarter. Since we went public 16 out of 16 quarters intermix is delivering sector, leading profitable growth and consistently strong operating results, creating significant value for our shareholders.
As for important milestones on slide four we surpassed 4 million wires in a single month for the first time and make strong volume during mother's day weekend, which is always a significant event in our industry helps us achieve that record we sold 650000 wires during mother's day weekend and 232000 wires a mother's day itself.
Which also were company records, we ramp up every year for mother's day, because we know how important it is for our customers to honor their mothers grandmothers. Another important women in their lives by sending money home.
Our omnichannel strategy, which we articulated several quarters ago is the foundation for our impressive growth.
This strategy enables enables remittance centers to match their preferred way of sending wires home using various payment methods, including conveniently located best in class agents or our state of the art digital platform.
Turning to slide five our network of high quality high volume neighborhood agents is the largest and most established distribution channel.
Our growing network of highly efficient intermix agents has been carefully crafted through a lot of hard work that makes it difficult for new or existing competitors to replicate.
It is a dominant presence in an exceptional baseline for growth.
Expanding our agent network, because the key to the company's long term success and the opportunity ahead is significant.
During the second quarter, the number of intermix aging screw, 11% compared with the same period last year within our agent network. There is a built in opportunity for organic same store growth as agents mature from year, one to year two the average number of wires increases significantly we see the same pattern repeat from year two.
To your three and again going into year four so as you can see our retail business is growing vigorously and profitably. We are confident that that pace of growth we are achieving sustainable over time.
We're expanding the retail side of our business through surgical focused efforts to recreate highly productive retailers and unserved and underserved ZIP codes. This highly targeted recruitment of retailers places our agents conveniently and efficiently where the business is being transacted.
We have identified over 1800 ZIP codes in the U S with populations of 2000 or more foreign born. Hispanic residents were in Intermix agent is not conveniently located we have also identified an additional 1000 ZIP codes, where we do not have an optimal agent presence to support the population of potential customers.
Our market research and experience tells US most of our current and potential customers prefer to do business in person. We believe 90% of <unk> customers are paid in cash or by paper checks and many of these customers are unbanked.
They use our retail channel because it is easy convenient and safe for them to stop at a local retailer on payday to send money directly home to their loved ones.
It is more than just convenience, though it is a matter of trust.
Thanks for not always welcoming our cost effective solution for our customers. So many prefer doing business and their community at retail stores with a merchant they know and are comfortable with our retailers speaks their language and understands our culture.
That said, we're seeing a growing number of intermix customers turning to their smartphones or other electronic devices to wire money home as they choose alternative benefits provided by using our state of the art mobile App. We launched earlier this year. The App combines the best features of choice and ease of use for example customers.
Can select between the best transaction fee speed of delivery, our exchange rate to suit their preferences.
Paying ahead of the consumer demand for digital remains channels is another of our key strategic priorities demonstrating.
Demonstrating that commitment to expand our digital capabilities on slide six we recently added a senior level executive to our leadership team to help build this important part of our business.
Marcello Theodora joined our company as our Chief Digital officer coming to Us from XP incorporated where he was the EVP and head of business units focused on the company's digital and card products before that he was the global head of digital products and solutions for Mastercard worldwide.
We're fortunate to have Marcellus expertise on board, we will rely on him to oversee our digital initiatives and further develop our card products, including our general purpose Reloadable card the challenge for our.
Customers, though is not access to technology. It is being on bank and our G. P. R. Card is designed to provide an alternative to bridge that gap Marcello will take the lead and empowering our consumers to participate in e-commerce economy, providing with more opportunities for inclusion he will be building, our digital business on an innovative and highly scalable.
Technology that already sets us apart from our peers.
<unk> World Class customer service is another point of differentiation for intermix, whether our customers are wiring money in person are using our digital platform. They know they can rely on us to help them complete their transactions easily safely and efficiently backing that commitment to customer service as our call centers, we have 600.
Highly trained customer service reps on staff, who are available to help our retail agents and our customers on a moment's notice it routinely takes us five seconds or less to answer the phone with a live person with the customer.
Or an agent calls.
Even on mother's day, while some competitors were apologizing for excessive hold times due to the increased volume with some old times running as much as 20 minutes or more we continue to answer our phones in five seconds or less.
That is important to our partner agents in thousands of retail locations across the country, who value how quickly and efficiently. They can deliver service to their customers. It is also important to our customers who are venturing onto digital platform to complete transactions on their own.
If they have an issue they can call and in seconds be talking to a person who speaks their native language with this emphasis on service, we put the customer in charge.
It's a powerful combination are best in class technology combined with our best in class customer service delivers the highest level of service to our customers in the remittance space.
Okay.
Turning to our global expansion efforts on slide seven let me give you an update on the Nash now acquisition, we're working through the necessary regulatory approvals at the state and country level, we expect to close the transaction during the third quarter. We will let you know as soon as the deal is completed.
With the completion of the transaction intermix will be a market leader in all top five Latin American Caribbean markets, adding the Dominican Republic to the list the Dr. Along with Mexico, Guatemala, El Salvador, Honduras collectively represent 83% of all money sent to the region from the U S in aggregate will.
More than a 21% market share in these five key markets.
Acquiring land nationality and land holdings will also enable us to enter the European remittance market for the first time, expanding our global reach from 28 to more than 70 countries.
In summary, we expect intermix to continue to grow faster than the high growth market in which we compete we will continue to win with our retail and online business because we have developed through our Metro girl approach. The most productive agent retail network in the industry.
Complemented by industry, leading technology and outstanding customer service there.
There continues to be significant positive momentum for intermix, and our shareholders with that I will turn the call over to Andrew spending our chief financial officer to provide more context around the strong results. We reported this morning.
Thanks, Bob and good morning, everyone. The positive second quarter results. We reported this morning affirmed a clear competitive advantage, we've created for air Max and Max stands out as an innovator and leader in the Fintech and remittance sectors. Thanks to our efficient business management and intelligent investments in people products and technologies were delivering.
<unk> strong results in sustainable growth as we expand the companys footprint in the U S and globally.
Building off yet another quarter of strong agent growth that Bob mentioned earlier on slide eight you can see the number of unique active intermix customers grew 15% in the second quarter.
The growth in customers in turn generated a record 12 million remittance transactions, 18% more than a year ago Kantar.
Contributing to the growth in total remittances on slide nine was a 170% increase in digitally originated transactions as customer acceptance of our new mobile App continued at a triple digit pace.
26% of our transactions were sent or received digitally during the second quarter, demonstrating our commitment to omnichannel and meeting the needs of our customers. However, they choose to transact and with exceptional customer service.
On slide 10, this record activity in the second quarter resulted in a 22% increase in the principal amount transferred over $5 billion for the three month period. The average mens Mt continued to grow by 3% versus a year ago to $447 per transaction.
With the strategy of capturing share through efficiency technology and service. The company has continued to grow faster than the markets in which we compete we now have a 22% share in our primary four markets, which account for 75% of all the money transferred from the U S to Latin America to reiterate those markets are.
Mexico, Guatemala, Honduras, and El Salvador, and as Bob mentioned earlier Lanoxin now it brings us us brings to US primary market number five and will make us a market leader in the countries, representing 83% of the U S outbound money transfers to Latin America.
As shown on slide 11 agent growth customer growth and increased sense size, all contributed to a 17% growth in revenue, which reached $137 million during the second quarter.
We continue to be laser focused on unit economics, and our cost structure, leveraging our growth to efficiently manage banking and payer fees on a per transaction basis. Additionally, argo digitally is to pace our spend around our app and online offerings to match or stay ahead of customer acceptance.
For our markets, we believe in rational unit economics, and keeping a tight pulse on consumer behavior. So we prudently allocate our spend wherever we believe the economics best supported.
As a result of the strong topline growth and ongoing operational improvements second quarter net income grew 21% to 16 million lower depreciation amortization and interest expense also contributed to improved net income for the quarter. Additionally, as in the press release the quarter also benefited from an $800000.
Fund for state business and occupancy tax.
Turning to slide 12, adjusted EBITDA increased 19% to $28 million and adjusted net income increased 20% to $18 million. Both of these measures benefit from rate of revenue growth operating efficiencies and strong cost management.
Turning to the balance sheet on slide 13, Intermix continues to be an efficient operator and strong generator of cash. The company ended the second quarter of 2022 with $114 6 million in cash and an undrawn revolver position of $150 million, we always underscore that these positions cycle a lot.
Depending on the day of the week of the close but anyway, you slice. It we sit in a great liquidity position the balance sheet is in excellent shape.
Net free cash generated our internal measure, which removes balance sheet cyclicality remains strong with over 60% of EBITDA converted to cash.
Turning to our buyback program, we accelerated the buyback pace in Q2, and repurchased 504000 shares for $10 million that brings our total since we launched the program to $1 1 million shares for $19 million, we've been acquiring Opportunistically and then the average price of $17 95.
<unk> per share the program has been an excellent use of inter next capital we have about $21 million left under the existing board approval for the program.
We're also looking forward to deploying capital to close the law National acquisition in Q3, which we expect to do with cash on hand.
When the acquisition closes we will provide more color on the price and how the acquisition will impact the company. We're excited about the acquisition and how it will strengthen our market leading position in Latin America, while opening the door for us in Europe , We expect a positive return on this investment for our shareholders.
As you saw in the press release, we have adjusted our full year guidance upward based on the strength of our second quarter results combined with the operating efficiencies we've achieved.
As you see on slide 14, we're raising our guidance for the year. We now expect revenue to be in the 542 million to $551 million range.
Net income of 60 million to 61 million adjusted.
Adjusted net income of $68 million to $69 million and adjusted EBITDA in the $104 million to $106 million range. So great momentum for intermix and for its shareholders with that I'll turn it over to the operator for questions.
Thank you.
We will now begin the question and answer session to join the question queue you May press.
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Our first question comes from David Scharf of JMP Securities. Please go ahead.
Okay.
Great.
Good morning, everybody. Thanks for taking my questions.
Hey.
Bob I was wondering if you can give us an update.
You know, particularly as it relates to you know.
The the runway of growth that you highlighted at newer agents is is there a a vintage analysis.
In terms of you know what percentage of your installed agents are both under 24 months old in under 12 months old just sort of give us a sense of.
How much near term organic opportunity there is there.
Yeah, My my David I'm going to turn it over to Randy to answer Cutler.
Sure Yeah, Hi, good morning, David Yes, we look at our agents in terms of cobalt and we know at any point in time, we've got a trailing 12, new agents versus the same store agents and it's right around.
15% of our agent base would be new and with that is increasing each month each quarter as we have put additional resources, primarily in the western United States to help us build out the infrastructure there.
And as Bob said, most importantly that as new agents move from the trailing 12 and to same store agents 13 months in and more of their volume will double in between months 13 to 24, and then once 24 to 36 get a nice bump again, so we really get.
About three years of nice growth from the agents that we are.
Yes.
Got it got it.
We have increased our activity.
We put more people in the field is what we call <unk>.
Additional sales executives, which are people not dedicated to a specific district.
Adding to and filling those empty or underserved and Unserved Zip codes.
We expect that that investment, which we've been making which has been easily sort of manage through our upturn. So youre still seeing is continuing to grow that bottom line EBITDA net income, even though we've invested in more people in the field and the seeds from that really don't start to blossom for two or three quarters as those age.
<unk> start to ramp up and then again that volume almost doubles in year, two and it grows again in year three so there's an investment that's there that we expect to reap the benefits in future quarters that we've been making this year so far.
Got it so so so just to be clear the 15% that you noted Randy there those are agents that are.
Basically one through 12 months, it's before they've reached that kind of 13% to 24 weeks at that Bob just noted see such a big ramp yeah.
Yeah, Yeah. So the way we look at it as new agents or agents that have been with US 12 months or less and I just did the math right now it looks like about 20% of our agent base has been with us less than 20%, Oh, sorry, less than one year 12 months.
Okay got it got it.
And related to that I mean, you're you're obviously very you know it's a it's a high touch model in terms of the agent relationship and communication monitoring.
Are they you know.
Do you get feedback from them.
Bout.
On the ground, what they're seeing is the sources of growth.
I mean, you know do.
Do they communicate specifically, perhaps what other vendors because obviously, there's no exclusivity.
What other remittance competitors youre, primarily taking share from at their locations or is it entirely foot traffic.
And any color that the agents are actually providing us so we could better understand how you're outpacing industry growth so much.
I think theres a couple of things one is that you know.
As you know the industry has passed and continues to grow. So there is growth there our best source, though for who's doing well and who's not doing so well tends to be more of the payers because thats not yet any anecdotal it's universal they deal with all of the all of the <unk> and they have a sense about who's growing and who is.
Not.
There are companies, we wont name names in both the smaller folks who are struggle and then we know some of the larger companies who have their model. You know we've seen has not necessarily yielded growth over the years know that growth doesn't come exactly one for one.
Now the market leader.
Some people would think of it the yellow and black does a lot of business in big box stores and that business as I've always said has moved away from box Big box stores year. After year after year. So it's not necessarily that we take it directly from say a western union at retail.
People are leaving the big box stores and they are coming into the convenient locations in the neighborhoods, where we've done an excellent job of executing because we understand the number of foreign born said live by each ZIP code. So in doing that we have that weighting agent the best agent possible for us in that neighborhood.
We do that whole selection process to make sure we have the best agents and onsite business review all of those things are what contributes to our outsized performance, but I would say you know who's who's losing in terms of market share. There are some people that are bigger than US you know overall bigger companies anyway, and there is some of the smaller guys that are struggling.
It's not universal Theres, some smaller guys that are doing pretty well, but it's not universal that it's all coming from the large providers public providers and all going to the small guys or vice versa.
Got it and you know maybe last kind of follow up to a different topic I'd be remiss if I didn't.
I ask you about.
Future capital action plans I know Theres still.
Capacity left under your existing authorization, but more broadly.
You know it and I think this was.
You know it was sparked in my mind, because I think it was mentioned in the press release about as scheduled debt repayments.
And you know setting aside the high free cash flow conversion, 60% of EBITDA.
You know your your balance sheet, even after this acquisition as you know.
Under Levered I mean, its negative net debt effectively and.
Is there a target debt to EBITDA ratio that you think a business like this.
You know she could and should support on a sustainable basis, and maybe related to that I have to believe that your revolver covenants habit.
A ratio like that defined and I'm wondering if so you know what that limit is if that that gives us any window into ultimately.
How much debt for you now.
Capital actions above and beyond EBITDA or potential.
Yeah, David This is Andrew so I'll I'll take that one.
I would say that we don't have a target I think that we feel that all comfort to move to utilize to the debt portion of the balance sheet a bit more.
I would say that our comfort levels.
Above two and a half times, probably start to wind down a bit. So that gives you. Some goalposts to work with you know I think that we don't we don't have a lot of appetite above that or we're getting near the three range, but that's.
That's where we stand right now, but we don't have any hard and fast targets.
Perfect. That's very helpful. Thank you so much.
I mean, I think we will push the debt.
In a way that we didn't have a great use for that right. Now you know we're funding our growth very easily as I said, we've made a strong investment in making a big investment in our digital and card. We've made a strong investment at our retail more people out in the field, we continue to look at.
And be vigilant towards potential acquisitions, we felt like <unk> was a perfect acquisition for us there could be others.
It's our intent to find more but we won't do is just buy things that could not necessarily be helpful to our shareholders. Just because we have cash in our pockets so that that we won't do them.
Understood. Thank you.
Yeah.
Our next question comes from Mike Grondahl of Northland Securities. Please go ahead.
Hey, guys.
Thanks, and congrats on the on the results.
Could you give us an update on the sales force maybe the number.
Of sales people out in the field compared to a year ago.
And then.
You know you talked a bit about new agents and whatnot, how does the pipeline look.
You know that the next three to six months for you know kind of continued growth in agents.
Yeah, Hey, Mike gets Randy good morning Lee.
Last year Q2, we probably ran a sales team feet on this yeah feet on the street about low <unk>, maybe 41 42 sales folks this year positions probably mid fifties.
Now we run.
We've always got a few vacant positions of course, but that.
Allocated head count probably low 40 as compared to mid fifties this year.
With respect to your question about pipeline, we anticipate it's going to be very similar to the rest of the year as to what we've seen in the first part of the first half of this year I think Bob mentioned, we had a record breaking quarter in terms of number of new retail locations that we added to the network in Q2.
And we anticipate we'll see similar type of results in the back half of the year.
Great great.
And then maybe.
Maybe just two more.
M D.
Did you have you seen.
Any decline in average send amount.
Or just really.
Any effect due to inflation.
Inflation higher gas prices kind of on your end consumer are you seeing.
Yeah. Mike. This is this is Andrew.
What it.
What did we get the inflation question a lot you know I think that you have to think about who our consumer is in the typical consumer is somebody who's come to the U S.
To live very efficiently and work and generate as much as they can to send home to their families and eventually return to a better economic situation. So.
That cohort has benefited you know very much from an outsize growth of wages, particularly to the that consumer base. So we've seen that I think that's part of what's bolstered the growth and remittance and.
When you think about the inflation side from a cost perspective to these consumers theyre not as exposed to maybe gasoline and and and and energy prices as the typical American consumer that definitely not as exposed to the the overall goods like the stuff like basketball goals bucket that's an.
<unk>, but you know as we have seen that that number start to taper that growth start to taper a bit.
In Q2, so we were only up about 3% year over year, I think youre starting to see some impact of that come through but we are still growing.
And we'll just continue to keep an eye on it.
I wouldn't say, it's something that has that.
Worried that we're going to see a drastic shift in and principles I sent.
Got it thank you.
Okay.
Our next question comes from Alex Mark Graf of Keybanc capital markets. Please go ahead.
Hey team. Thanks for taking the questions just a couple from me first.
Could you expand a little bit on some of the.
Near term priorities with the addition of Marcellus just kind of what specifically do you see is the most high value activities to tackle.
Yes.
There'll be the same level of activities that we've been I think no one in the industry. I know you folks have a high opinion of <unk>, but they continue to sort of sync like Iraq and.
We're not going to participate in a behavior that will continue to have us lose on a unit economics basis relative to each transaction our minds. So I think the first company that really understands how to master online the way, we mastered retail and I don't suggest that we've done that yet, but that's what we will be spending time.
To do and.
And in that today, regardless of the customer acquisition costs, which are extremely high the unit economics, just do not provide for an opportunity to do well with that business and so we will continue to work at that but we will work at that in a way that's reasonable insane. So that we can deliver profitability on the online business. The other thing is Marcia.
<unk> brings a huge amount of experience he worked with Mastercard for years, and we still believe there's a huge opportunity for our card products, particularly in the Hispanic community and in the Hispanic community may be even those folks that are not in the remittance business don't send money back home they can be second and third generation, but they still not <unk>.
Certainly fully banked by U S. Banks. So we think there's a huge opportunity for our <unk> through our retailers net spend has done a great job in others of managing through the big box stores their card product and through check cashiers, but that hasnt really touch the Hispanic community well. So we think that's a huge opportunity for us today, we've made really good progress.
<unk> related to our payroll card, but our G. P. R card will be one of the top priorities in terms of getting that card out in the hands of consumers as quickly as possible so to be focused on.
Really building the online business, but building it in a key way that hasn't been done so far with a word called profitability.
And then secondly building that GTR part and I think those are two really interesting verticals for us moving forward.
Got it and then perhaps one for Randy just kind of expanding on the commentary around.
New agent growth any way to kind of describe that the contribution of the new agents in the Western States. I know you all had talked about kind of hitting their stride in the west at the analyst day earlier. This year just I don't know if you can take it a step further and provide some more color around that commentary, but I'm. Just curious if you can maybe translate that.
Around contribution to growth from new agents in the west versus.
Some of the kind of core regions in the U S.
Yeah, well I'll I'll.
Answered the question this way of the the new resources that we've added to the team that Bob referred to the.
Our regional sales executives two thirds of those incremental heads have been added in the western U S. So as they start to hit their stride and activate new agents, primarily in unserved or Unserved ZIP codes, we'll see that contribution from that team in the west are opposed to the.
Our resources in the east so.
We and we've already started to see the contribution they've been making this year and it will continue to to.
To grow the back half of the year.
Yeah.
Okay I appreciate the color. Thank you.
Thank you.
Once again, if you have a question. Please press Star then one.
Our next question comes from Timothy Chiodo of Credit Suisse. Please go ahead.
Great. Thank you I wanted to talk a little bit about your underlying customer and the recession resistance inherent in the model.
I believe that most of the customers sending their remains as we've talked in the past there in industries, such as agriculture, construction services, meaning restaurants hotels et cetera. During the last recession, the remittances were impacted.
Pretty meaningfully into Mexico, but at the same time. This is a very different recession right. There was a housing downturn. So maybe you could just talk a little bit about how sort of the recession resistance or the stability of the model through any potential.
Recession, clearly youre not seeing anything in our results now which is great.
Well.
Which may be even more important we didn't see much in our results through the last recession. The macro numbers could have been very weak and we certainly battled through those.
But from 2009 through 2015, the industry virtually did not grow much at all and we more than tripled our business. So a lot of that was taking share in a lot of it was because some of the competitors have kind of pulled back and they felt the recession and they started to D. So just to take pick the investment away from.
Retail and away from the things that we're really their lifeblood it isn't it isn't dissimilar to what happened during <unk>.
Covid when Covid first struck we've reinvested and made sure we had our full team out in the field a lot of our competitors pull back and as you recall through Covid, we never had one single quarter, where we actually shrunk year over year, our second quarter was mild growth or modest growth in that for sure.
But no quarter was one where we actually fell off so we first of all we think it's an approach. We do think we have a different way of handling that we think our precision related to the marketplace and our nimbleness.
And our somewhat of our aggressiveness to exploit the way other people will react to a downturn, but I think additionally, we do a lot of business not necessarily in urban centers and urban centers or were those customers will work and service related industries, which will have the most kind of impact as there is a downturn, we do a lot of biz.
In this scenario and agricultural and we do a lot of business with with our consumers who are working in.
You know construction related so they may not be building, new homes, new home development, but it could be putting decks in the backyard or working in landscaping things that sometimes actually do better in a recession because people don't necessarily buy a new home, but they do and picks up their homes. So we feel pretty good about the core business, we have a really large sector.
Or are consumers that are in agricultural and we think thats really resist and completely to recession and again if housing starts in the construction industry stays strong that is really the two headed beast for us. Their service is also sort of there, but we're not as.
And we're not as dependent on urban consumers as we are in rural consumers generally and that really bolsters us related to the agricultural and in sometimes even the housing sort of starts and construction workers.
Okay.
Excellent I appreciate that context, thank you Bob.
Okay welcome.
Our final question is a follow up from Mike Grondahl of Northland Securities. Please go ahead.
Yes, thanks, guys.
Bob.
Question for you.
You know roughly a year and a half or two years ago.
Or even a little bit more you guys started investing in the digital side.
And what well others were going kind of crazy with their digital spend you took a real measured.
Cautious approach and your retail business was growing like a weed you didn't throw away dollars to get you know poor unit economics, if you will.
And I think the biggest thing you mentioned a year and a half ago was just the the attack was.
You know a lot to get those customers a lot of marketing spend social media et cetera.
You have seen any narrowing of that CAC in the last year and a half I mean is it is it.
Still really wide to your retail business or I'm, just trying to get a sense. If there's been any yeah. I mean, I think I think there's two things right. One is let's split it sort of reset the expectation, whereas the digital business has grown to Latin America, and Thats, where were focused doesn't mean, we don't service other countries and certainly with the national business.
<unk> will be.
Clean many more countries, particularly outbound from Europe , but when you talk about our bread and butter today that business, even though the percentages of online has grown faster than retail the absolute dollars of retail have grown much faster over the last 10 years five years than they have at online. So there is still as of March.
At retail that adds more absolute dollars than the market that adds absolute dollars in terms of the digital business. So that's number one so when you have that you say gosh. There is there is a huge business already at retail it's been de emphasized by some of the major players and its bigger already to start and it's added.
More consumers with less focus on it. So we still think that that business is really easier lower hanging fruit than the digital business, having said that we're an omnichannel provider, we coined that phrase you no I.
I don't know probably six quarters ago, four to six quarters ago, maybe eight quarters ago, and others have kind of begun to use it now, but we wanted to provide every option to the consumer than they may want. So on this side of the border we have digital and its growing for us at triple digits, It's still a relatively small piece of our business, but it's you know it.
It is certainly growing significantly and it's and it's a real business now we also have the ability to do transactions in retail, but we have the ability to capture transactions in retail also through debit card.
The other side, we pay out over the counter we payout directly to bank accounts, we payout through mobile wallets, we pay out through Atms, we're exploring other ways to payout so our business isn't a forced the consumer into any option and to me one of consumer is very costly to drive to any particular option.
It seems to indicate to me that theres, not a pent up volume or business waiting there right.
It's not hard to sell coal bottles of water in Miami at a festival in August Hot chocolate might move a little slower. So we are really going to go where there's an opportunity to sell cold water and that's in retail at the same time, we're an omnichannel provider. We recognize that there is an increasing number of people that become bank, where part of leading some of them to be.
Banked our payroll card putting in the hands of consumers. Those consumers are now in some cases going to retail and using that debit card, but in some cases, they're going online and using their debit card. So from our perspective Thats. The way we see it we think theres been a lot of misinformation in the market about the cost leanness of handling of retail trans.
Action, when we put up a retailer.
In our business that retailer breaks even for us in about seven months, it's nothing like that online you just don't get a payback on that consumer relative to the cap. Even if you have a cap that drives down to a much lower percentage than it is today, even at $40, which I would think most companies probably don't have that cash.
If you are making a couple of dollars of why are you need 20 wires from that individual if he since 10 times a year two years and retail I understand we're looking at a retailer versus a consumer but after six or seven months now we paid for that and by the way we paid for them in terms of Capex. That's just not opex. That's everything so it still is a really great way for us to continue to.
Grow to continue to be relevant and gain share as we continue to do in the marketplace. As we continue no. One is in here and this business is turning its back on we spend probably a.
It just as much time focused on our card product in our mind as we do on our retail business, but our investment today is in our retail business because the return on that is so much higher and we're obviously trying to drive a return on investment and a short middle and long term for our for our investors and.
And we think that's the right the right approach. This omnichannel approach that we've taken.
Great, Yeah, you're clearly executing well and thanks for that insight.
Yeah.
Yeah.
This if theres no other questions. We have any other questions. Operator. This concludes the question and answer session I would like to turn the conference back over to Bob Lewis for any closing remarks.
Thank you all for joining US we appreciate you joining.
Joining us for the call today.
And we look forward to talking to you all soon and hopefully reporting continued great results talk to you soon.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
Okay.
Hum.
Mhm.
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