Q3 2023 Euronet Worldwide Inc Earnings Call

After the speaker's presentation, there will be a question and answer session to ask a question. During the session you will need a press star one on your telephone you will then hear an automated message advising you that your hand is raised to withdraw your question. Please press star one again.

Please be advised that today's conference is being recorded it is now my pleasure to introduce your host Mr. Scott Awesome General Counsel for you on that worldwide.

Mr. Coffman you may begin.

Alright. Thank you good morning, everyone and welcome to <unk> third quarter 2023 earnings Conference call on this call, we have Mike Brown, our chairman and CEO and Rick Weller our CFO .

Before we begin I need to call your attention to the forward looking statements disclaimer on the second slide of the Powerpoint presentation, we're making today.

<unk> made on this call that concern the earn outs or its management's intentions expectations or predictions of future performance are forward looking statements.

<unk> actual results may vary from those anticipated in these forward looking statements as a result of a number of the factors that are listed on the second part of our presentation.

Listeners should avoid placing undue reliance on these forward looking statements.

As may be required by law.

Or intend to update any forward looking statement and undertakes no duty to any person to provide an update.

In addition, the Powerpoint presentation includes a reconciliation of the non-GAAP financial measures, we'll be using during the call to their most comparable GAAP measures now I will turn the call over to our CFO Rick Weller.

Thank you Scott and good morning, and thank you to everyone. Joining us today I will begin my comments on slide number five for the third quarter. We produced revenues of $1 billion. The first billion dollar quarter in <unk> history, we achieved operating income of $167 million and adjusted EBITDA of 212.

Adjusted EPS was $2 72, compared to $2 74 for the third quarter of 2002, excluding the effects of share repurchases and FX headwinds during the quarter. The business performed in line with our expectations slide.

Slide six presents a summary of our balance sheet compared to the prior year.

As you can see we ended the quarter with more than $1 billion in unrestricted cash and $1 7 billion in debt. The decrease in cash is essentially the share repurchases and working capital changes, partially offset by cash generated from operations and cash return from the Atms slide seven shows.

Our results on an as reported basis, let's go to slide eight and talk about our results on a constant currency basis on slide eight now.

As we discussed in the second quarter of 2023, we saw a divergence in our international transactions compared to the international travel recovery, Mike will provide further comments on this subject a bit later, but we are pleased to have regained some footing at the end of the quarter.

To that end FTE revenue grew 2% operating income and adjusted EBITDA decreased by 15% and 12% respectively. The decreases in adjusted EBITDA and operating income were the result of decreases in our most profitable International cross border transactions, primarily driven by the <unk>.

Line in Croatia due to its switch from the Qunar to the euro at the beginning of this year together with the impact of inflation, which reduced European travel budgets, leading to fewer ATM transactions transaction growth outpaced revenue growth due to continued growth.

In high volume low value transactions in India.

For <unk> revenue grew 1%, while operating income and adjusted EBITDA decreased by 6% and 5% respectively. These results were driven by continued digital media and mobile growth, which was offset by declines in promotional campaigns delivered on behalf of our retail partners when compared to the.

Same period last year.

As you.

As we have discussed in prior quarters. The EP segment experiences fluctuations from these promotional campaigns. We will continue to welcome the opportunity to grow our promotional b to b business, but we have to understand that these promotional campaigns will create some uneven comparisons from time to time.

Excluding our promotional activity for comparison purposes, our core <unk> business revenue grew 11% operating income and adjusted EBITDA grew 17%.

Compared to 2022, highlighting the strength of our core <unk> business finally, <unk> revenue and gross profit per transaction were consistent year over year.

Money transfer third quarter constant currency revenue operating income and adjusted EBITDA growth was the result of 7% growth in U S. Outbound transactions, 10% growth in international originated money transfers, which included 12% growth from.

Americas outside the U S, 8% growth in transfers initiated largely in Europe , and 7% growth in transfers initiated in the middle East and Asia, and 18% growth in <unk> transactions. These transaction growth rates included 20% growth in direct to consumer digital.

Transactions. These growth rates were somewhat tempered by a dislocation of FX rates in the informal market channel, specifically, Bangladesh and Pakistan money transfer revenue per transaction was relatively constant while gross profit per transaction improved year over year.

Moreover, average amount sent by customers remained nearly the same this quarter versus last quarter.

Last year third quarter, and finally as we close.

As was the case in the second quarter the money transfer team posted another quarter of improved operating margins not only improved but the second best quarter operating margins other than the third quarter of 2020. So for all of those that have often asked whether <unk>.

Many transfer could regain its operating margins I know, we consistently expressed the confidence that our money transfer team was committed to margin improvements so net net.

<unk> made commitment delivered.

As I conclude my discussion on the financial results I cannot help but reflect on the strength of our three segments.

First our record consolidated revenue quarter first quarter to exceed $1 billion in revenue second double digit growth from the core ebay.

Business across all metrics.

Third.

Margin expansion and double digit growth exceeding 20% and adjusted EBITDA and operating income in the money transfer segment.

Finally, we saw ft returned to a solid footing with respect to international transactions largely back in correlation with Euro controlled travel data in September of 'twenty, three with that I'll turn it over to Mike.

Thank you Rick and thank you everyone for joining us today I'll begin my comments on slide 10, I have got a lot of comments. So please bear with me.

For joining us.

Got to say, it's been a bit brutal walking the decline in our share price. Since we spoke to you in July I think I understand why the market reacted this way, but intellectually it's hard for me to comprehend given given our continuous earnings growth history. So I'd like to take a minute and reflect on the diversity of our earnings.

When I began this business of 100% of our revenue was earned from ATM cash withdrawals today, the same ATM cash withdrawals only account for approximately 35% of our consolidated adjusted EBITDA.

However, it feels like the street is only focused on the 35% of earnings from our ATM dispensing business and not seen are giving us credit and the value of all of you are in that business. This year, 65%, that's right 65% of our adjusted EBITDA will come from product streams other than our ATM business.

Lines, such as Pos acquiring.

<unk> digital distribution dandelion digital money transfer ran in card processing.

It is this diversity, which despite a difficult economic environment in Europe allows us to deliver record revenue record earnings and another year of double digit growth.

During our recent investor discussion as we were discussing the state of the ATM business in Europe , one of our long term investors told me we are with you, Mike, but youre going to have to prove it. So over the course of the next few slides I hope that I will be able to convince you that people are going to continue to use cash and then I hope.

Youll realize the value of our consolidated business. So let's go to slide number 11 to jump straight into some data to support the view that people have not stopped using cash.

Slide 11.

In July we told you about the sudden divergence of our international transactions from the Euro control flight recovery data you can clearly see in this chart from May to June we shared with you that we intuitively believed and still believe a long term very gradual cash to card transaction.

<unk> continues this long term, but subtle transition has been ongoing since I founded the company in 1994. However, the data demonstrates this abrupt change that we saw in June was largely attributable to European Cross border travelers, who were experiencing significant economic challenges.

Resulting in fewer ATM withdrawals, we do not believe that the divergence in our international transactions from Eurocontrol data this summer as an accelerated shift.

And cardholder behavior from cash to card rather European travelers simply had less money to spend on their holiday now let me explain why.

The Orange line on this slide provides the number of international cards used on our Atms in 2023 versus 2019 compared to Euro controls reported data versus 2019, which is the blue line.

You can see for the first five months of this year International cards used on our Atms were tracking nicely ahead of Europe controls recovery levels. However, you can see.

In June actually starting in late May the dramatic change in international card use we told you about in July at that time, we told you that we didn't believe that cardholder behavior would change so dramatically in such a short period and as you can see in September International card use on our Atms was back above.

Eurocontrol recovery levels.

Fans to reason that customers didn't suddenly shift from cards to cash in September just like they didn't suddenly shift from cash to card in June given the recovery in international card use let me walk you through what we've seen in our data now that we are largely through the peak travel season, So let's first.

Ron over to slide the next slide.

Here, we are on slide 12 people have asked us if anything else has changed what are the other variables that too.

Most important factors that popped out that could have impacted consumer behaviors regarding update regarding opt in rates and average withdrawal amount per transaction on this slide you can see the opt in rates for our DCC transactions have remained consistent and perhaps we've even seen greater consistently.

Recently, the graph on the right shows average withdrawals per transaction on a constant currency basis that withdrawal amounts have remained relatively consistent with some of it is somewhat of an upward angle to the trend that little Spike you see there in the second quarter of 2022.

As a result of the Ukrainian War, we believe mostly this data demonstrates that when people are walking up to our Atms. They are completing transactions in line with prior behaviors.

Now with those two factors largely unchanged, let's go to slide 13, and talk about specific cross border cardholder data.

Here on Slide 13, you can see the number of international cards used on our Atms.

By them by month for the years 2019, 2022 and 2023.

The Blue line is 2019, the Gray line is last year in the Orange line is this year, what you'll notice here is that at the beginning of 'twenty. Three there were more international cards used in our machines than in 2022, and even slightly more than 2019.

Again, you can see the trend change beginning in May.

And even widening out a bit in July and August . However, the number of cards used in September came back in line with both previous periods see the Red Oval. This graph again causes you to beg the question why in the summer months that transactions go lower and then return.

To historical trends in the fall, but let's start getting behind that in the next couple of slides so jump to slide 14 plate.

The chart on this slide uses the same international data as the previous slide. However, it isolate are viewed at cards used on our machines that were issued outside of Europe that is folks coming into year. Here you can see that the non European issued cards are used at our Atms.

At a higher level for each month this year versus 2022 and in April actually up this year, we surpassed they'd continue to surpass 2019 level almost a reverse of the trend on this subset of data versus what we.

When we look at the total card data that is the previous slide. Moreover, we even saw an acceleration of card use versus 2019 on this non European subset as we went through September clearly this chart demonstrates that non European travel withdraws have not.

James compared with pre Covid times net net with this data suggests more customers are using cards versus cash than in the past the answer no now let's go on to European travelers on the next slide Slide 15.

Here on slide 15, you'll see the same international card data as the previous two slides this time isolating.

As a subset the European issued cards used cross border on our Atms that is folks traveling within Europe , but outside their home country again in 2023, it started better or similar to 2019 and 2022 and in May the card usage fell below those period.

It.

As we ended the third quarter.

As we ended the third quarter, what you can see is that despite the lower used during the summer months. During September the number of European issued cards used used cross border came back and to almost parity with both 2019 and 2020 to see that Red Oval again.

Let's start contrast, when looking at the international data for European Cross border cards versus non European cards, together with a return to near parity in September make clear that this was not an abrupt change in consumer behavior.

Rather than economically driven contraction on ATM withdrawals, given that approximately 80% of our international transactions come from European travelers. This significantly impacted our expectations for a more robust tourism recovery.

Why is it that we would see dramatically different behaviors from European card users versus users from outside of Europe , Let's go to the next slide to explore.

Slide number 16 presents charts from several different third party sources that provide additional insight into European economic data that could impact consumer behavior. You may remember last quarter that we referred to a consumer survey that was co funded by the EU and the European Travel Commission and.

That survey travelers noted that due to the wind due to a winter of high energy costs and a year of high inflation Europeans had less disposable income for their vacation. This year instead of skipping their vacation altogether. The survey respondents noted that they would travel to more affordable destinations.

<unk> fewer nights away spend less on food tours, and trinkets and that certain respondents would travel to destinations outside of Europe , or maybe even travel after the peak season in order to find cheaper flights and accommodations it.

It is also important to note that when a person travels to Europe from abroad. For example, approximately four 5% of Americans travel to Europe annually. They are likely more affluent and it is likely a significant trip that they had planned and saved four per months or even years in advance. So they are prepared.

Spend money, while they are there on the contrary for 70% to 75% of European These are annual summer vacations that can easily be modified.

Depending on their financial situation.

In fact, two thirds of consumer survey respondents indicated that they would spend less on their vacations. This year 2023.

The data on this slide gives a clear picture of the economic factors that would explain why a European who earns an average income would have less disposable money to spend on a summer vacation. This year for example.

Mortgage interest rates have doubled over the past 12 months for the 15% to 20% of Europeans, who have a mortgage food prices are up 10% energy prices have doubled and inflation averaged 8% over the last 12 months on top of double digit inflation rates the year prior with living cost increases of this.

<unk> you might ask me why we only saw a lower double digit break and transaction trends during the months of June July and August .

While we can never be certain why someone did not use our ATM. We are confident that the consumer trends discussed above have impacted how Europeans approach their vacations this year, but all travelers coming from outside of Europe used our network more than ever.

Slide please.

So on slide number 17, I'll conclude my trend comments with how I started our data shows that there has not been an accelerated shift in consumer behavior from cash to card, but rather the changes in the European economy, causing European consumers to spend laughed at ship their travel plan to less.

Constantly destinations are later in the season. While this is good news for the long term potential of <unk>, we expect that in the near term higher interest rates. The ongoing conflict in Ukraine and continued inflationary pressures will limit the rapid recovery of European spending pattern with that in mind, Let me tell you why.

We still believe in the long term growth trends of the ATM business.

First we believe there is more room for expansion in parts of our existing markets and enter new market. These new markets outside of Europe have shown us excellent opportunities and based on pre Covid transaction levels produced profit levels, well exceeding our existing ATM fleet in Europe .

Number two there's been a widespread consolidation of banks across Europe , which has resulted in bank branches closing and in turn fewer Atms. So our existing network will hold more market share.

Third the card schemes have increased interchange rates in markets like Poland, Czech Romania in France, and have allowed surcharge in Spain, Greece, and Austria similar changes.

We will continue to offer more revenue opportunities across our existing estate.

Finally, we have seen some easing of the inflationary pressures. This September we don't expect that to translate into an immediate increase in transaction levels, though.

With that in mind, we will take a hard look at the profitability of our ATM fleet you may see in the coming quarters at the Atms arent produce that that Atms that arent producing an acceptable return on capital will be removed and redeployed.

At new more profitable site or deployed altogether in a new market.

This means that we may not need to purchase as many new Atms to add to our existing fleet, but we intend to ultimately be more profitable by replacing these underperforming sites with new more profitable locations. In fact, we have already identified approximately $20 million in cost savings for <unk>.

Next year.

Now that we have discussed the promising future of our ATM business, let's move on to a more complete discussion of the EFT segment.

The accomplishments of this quarter remember ft is more than just an ATM business. So next slide please.

We continue to expand and diversify our ft product portfolio with new products and markets by the way. We're on slide number 18, we are very pleased with our Pos acquiring business that grew in adjusted EBITDA, 25% compared to the third quarter of 2020 to further our Pos.

Wiring business has doubled in the 18 months since we since the acquisition on the heels of this success in Greece, we expanded our Pos acquiring to Spain, and Portugal, and added 3100, new merchants to our network.

In France, we signed an exciting agreement with a supermarket chain of Super you to deploy urinate Atms in a 150 Super you locations. This was a competitive win with the potential to increase our network significantly based on joint marketing and sales plan.

In addition, we have a new relationship with Eurobank, which was formed from the merger between direct direct Belgrade Bank and Eurobank, Serbia to provide ATM acquiring services.

The March bank.

Now, let's discuss the state of our ATM network. Please move to slide number 19.

During the quarter, we added 532 urine at owned Atms 425, new outsourcing machines, and we winterized 851, Atms as we wound down the peak travel season, we ended the quarter with 51496 activate them with.

We previously mentioned that we intend to deploy 3000 to 3500 machines at the new locations by the end of 2023, while we are on track to achieve this we will continue to monitor the profitability of our existing Atms and we will de install unprofitable sites. So on a net basis.

Additions may not reach 3000, but expect our profitability to improve.

Now, let's go on to slide number 20.

We'll talk about APAC.

Our <unk> team continues to make strides in diversifying our product portfolio and expanding our content distribution to new markets and retailers a notable achievement as the expansion of our Sony Digital code server technology platform, a service developed and managed by Ipe to facilitate the digital distribute.

Can a playstation codes for Sony originally catering to the U S and Latin American markets. This platform has now extended its reach into Europe and Asia. This expansion presents exciting opportunities for global scale transaction and digital content distribution.

Over we're proud to announce a meaningful expansion of <unk> proprietary prepaid card are present cards are now available in India on the route network and in New Zealand digital channels. This visa card can be used for online purchases as well as loaded to Apple pay and Google pay wallets and used for purchases.

In stores, where these wallets are accepted.

These launches further solidify our presence in these markets and underscores our commitment to expanding our digital content distribution capabilities worldwide.

We signed a new agreement with crunchy role and anime in entertainment subsidiary of Sony to utilize <unk> conductor platform more specifically Sony is leveraging our conductor platform to manage their entire prepaid distribution operation for crunchy role, including Penn.

Code creation S SKU management asset management and connectivity to the global retail distribution by leveraging <unk> technology stack crunchy role gains.

Considerable cost savings and operational efficiency. This is an exciting ebay SaaS solution that enables sony to make bath.

Make a fast and substantial market launch I am pleased that excluding the impact of last year's promotional campaign revenue the underlying core <unk> business grew at double digit rates. We are pleased to have this momentum as we head into what is typically our strongest quarter now let's move on to slide number 21, and we'll talk.

About money transfer.

Our money transfer network has now expanded to cover 540000 locations.

<unk> to approximately $4 billion bank accounts, and $1 9 billion wallet accounts across a 194 countries and territories.

I think it is worth repeating the network in the money transfer business is somewhat akin to product the more product you have to offer customers. The more business you can do.

Year to date, we have launched 68 correspondent agreement. This is the same number of corresponding agreement that we launched for the entirety of last year 2022.

In addition to these achievements were proud to announce the successful launch of 28, new correspondents in 21 countries and the signing of 26 agreements in 23 countries, notably our collaborations with <unk> Bank in the Solomon Islands, and similar commercial bank have now given us a new presence in the Pacific.

Islands, reflecting our commitment to strategic expansion.

The strong growth in our bank account and mobile wallet networks drove 34% transaction growth and principal transferred to bank and wallet accounts, which now represent 38% of total cross border principal transfer our account deposit network has been a long term focus of ours over.

The last decade, and it enables ria to produce strong double digit CAGR growth and account deposit transactions and principal transfer to over that period to put it in some perspective by the end of 2019 account deposit volumes or 23% of our total principal transferred.

<unk> to 38% this quarter Ria had the foresight to build this network of the future and the network is unlocking growth opportunities not only for rehab business, but also for dandelions customers.

Let's remember what the real value of money transfer is to get the money in whatever way the customer wants it from digital wallets to physical locations, our money transfer business can meet the diverse needs of our customers.

Given the positive activity on this page, we expect to see these growth rates to persist through the remainder of 2023 now let's proceed to the next slide and delve into our payment platforms products commencing with dandelions and.

And don't forget data line as part of money transfer.

Throughout the quarter, our data line customers continued to harness the power of our money transfer network. Our existing customers now utilized 141 of <unk> is 194 network countries. This strong growth is attributable to our networks ongoing enhancement, particularly in terms of mobile wallet coverage.

<unk>, which spans one 9 billion wallet account dandelion customers today are primarily using our payment rails for family remittance power.

However, now with the successful launch of HSBC Bank and the signing of equity Bank. We are successfully stepped into the huge 156 trillion dollar cross border payments market served by banks around the world as I said, we signed an agreement with equity bank, the largest bank in Kenya and a lead.

<unk> banking group in the.

Easter in Eastern and Central Africa equity Bank is our first Standalone banking partner in Africa for our <unk> Cross border payments, while getting these two banks through the sales process of this disruptive greenfield product I can sense the momentum beginning to build we signed several agreements this quarter included an agreement.

With <unk> <unk>.

<unk> digital money transfer business in North America, Europe , and the U K. In addition, we signed an agreement with flash payment and innovative Fintech company based in Australia, specializing and providing payments and FX services to SMA.

Finally, we have reached an agreement with one of the world's leading PDP payments platforms, we're being intentionally tight lipped as this partner at partner is focused on competitive positioning but wanted you to know and have a little flavor of what's coming in the pipeline with.

With the addition of these partners this quarter data line has further broadened its geographic diversity, we have now signed a partner in each of our key target verticals banks Fintech MSB and PSP. This is a great achievement for such a new product offering so let's go on to the.

Next slide and we will briefly give you an update on ran and ran development.

And don't forget ran falls under the EFT segment of our business when reported with our <unk> technology. We are witnessing a notable shift towards real time payments and settlement, reflecting the industry's changing landscape as an example in the U S.

It would be the fed now service, which launched in July of this year ran enables banks in the U S to connect to the real time fed now payments rails the.

<unk> team is pursuing numerous real time payment opportunities like these with fed now in the U S and with other switches worldwide. During the quarter. We proudly signed several agreements among them is our contract with Airtel payments bank. The banking arm of Airtel, India's second largest telecom company, we will provide the bank with.

Our debit card issuing platform and process transactions from a from the SaaS infrastructure of our private cloud. In addition, we secured a contract with NIM of digital Unicorn Cross border payments company based in Singapore that has a global that has a global presence to provide our SaaS mulch.

The currency prepaid solution from our private cloud, we signed an agreement with Zenith Bank and award winning digital bank from Puerto Rico that makes U S bank accounts available internationally without the need to be a U S citizen or resident Zane. This is the first bank to launch a single visa infinite debit card towards.

Global audience ran as providing the issuing processing platform SaaS infrastructure and expertise to deliver the solution and as an update to the Mozambique agreement. We told you about three years ago, we have signed an agreement this quarter to enhance.

To add enhanced bill payment transactions showcasing how we can continue to generate additional revenue from existing <unk> clients.

As we conclude our discussion on ran you can see that we have a lot of positive momentum our pipeline of Ren signed deals is on a consistent growth trajectory and we anticipate that these agreements will contribute approximately $140 million in revenue over the next six years. We continue the continued strong interest.

And I ran technology worldwide is encouraging and we expect to see significant contribution as we rollout more deals in the coming quarters.

Please move onto slide number 24.

I would like to spend a few minutes talking about how we plan to reformat our guidance communications going forward.

As you can see in slide number 24, <unk> has a long history of producing compounded annualized double digit earnings growth yet the market has recognized less than half the earnings growth in our share price.

You can see here that the S&P over the last 10 years has grown earnings seven 2%.

<unk> to <unk> 13, 5% for the S&P, 72% seven 2% compounded annualized earnings growth their share price on average is up 137% comparatively youre in at 13, 5% compounded annualized earning growth has only increased.

59% increase twice the earnings at less than half the value increase sure seems like some things wrong something is missing or something is not understood. We're not getting credit for our consistently stronger earnings growth maybe were too complex to that end we set.

It out to see if there might be a better way to talk about our growth expectation.

On slide number 25.

On this slide we found that for more complex companies keeping it simple made a difference in the market value recognition. We found that in these cases when companies simplified their guidance future share price significantly improved. We believe this is a result of focusing on the most important driver of value creation.

Consistently making money rather than being evaluated against eight metrics, where we might meet or exceed expectations on seven of the eight including earnings. The most important one but miss on one of the other ones and the share price suffers.

At the end of the day, that's the value depend on getting eight out of eight ride our delivered constant and consistent earnings growth as you can see from your <unk> over the years, we have consistently produced double digit compounded earnings growth. Despite a range of challenges such as the 60% decrease in the Polish.

Visa Mastercard interchange rate in 2010, or the next year, where Germany changes local debit card rate structure or the U S. Financial crisis of 2008 are the India cash the monetization or even the most recent COVID-19 experience through it all it's not only did <unk> survive, but we.

Produce compounded annualized double digit earnings growth and how did we do it next slide please.

We did it by building a very well diversified business, which includes diversity of product geography channels and customer basis, and a consistent executive leadership team. We also recognize that while this diversity is a huge strength to urinate. It also causes a business to be much more comp.

<unk> to understand then as simple company with only one product or one segment to that and as I mentioned earlier, we found that companies that struggled with complexity overcame with simplicity beginning in 2024, we will reformat our guidance communications from providing quarterly.

We will no longer provide specific number targets, but rather a simple annual adjusted EBITA, sorry, EPS growth rate.

And while we are committed to producing 10% to 15% earnings growth for 2024, you can bet that we will be student deliver a heck of a lot more as we have in the past.

We will continue to provide detailed segment reporting and all of our actual result, as we close out the year, we will provide an adjusted EPS expectation for the fourth quarter of $1 75 per share, which will round out the year with another year of double digit earnings growth we.

We appreciate that this re formatted approach to performance expectations will be viewed by some as making their work more challenging while at the same time viewed it as others by simplifying their work.

So if you look at the analysts' consensus adjusted EPS for <unk> next year, you will see it is within this 10% to 15% committed range. Moreover, if you make some macro adjustment to the consensus number for next year for benefit of our recent share repurchases and the impact the negative.

<unk> changes since the reporting of most analysts' estimates you will see a pro forma consensus that would be at the top of our range. We are comfortable with that range. We look forward to your continued support as we close this year and look forward to another quarter and another year of double digit earnings growth and let's go to.

Slide 27, and we will wrap it up.

As I conclude my remarks, I trust that our analysis of travel data answered your questions on whether there was an abrupt shift from cash to card.

Be clear our data shows that the <unk> business has not experienced an abrupt shift from cash to card during 2023, but rather European travelers, specifically spent less money on discretionary purchases well on vacations due to inflationary pressures as I mentioned earlier, we are more than.

Simply a cash business, we are a diversified business with multiple segments producing future growth opportunity as you may remember two thirds of our business grew during COVID-19.

As I reflect on our recent quarter I look forward with optimism for many reasons first we delivered a record consolidated revenue quarter eclipsing $1 billion in quarterly revenue for the first time in our history.

Second our core <unk> business grew double digits across all metrics in the third quarter of 2023 compared to 2022.

Third our money transfer business grew adjusted EBITDA and op income by more than 20% regaining its operating margin rhythm.

And my final point, our ATM transaction data was back in sync sync with Euro controlled travel data in September of 2023, there are reasons for future optimism, let's discuss our expectations for the remainder of 2023 and 2020 for going forward in 2024, we will no longer.

Longer per bore provide quarterly EPS segment revenue and margin expectations, we will shift to a simple expectation of annual adjusted EPS growth range for 2024, we expect.

Adjusted EPS and earnings growth to be in that 10% to 15% range.

And we expect to produce an adjusted EPS of $1 75, and we will finish in Q4, and we will finish 2023 with yet another year of double digit earnings growth with that I'll be happy to take questions.

I talked a long time today, so we have a little bit less time than usual, so I would like to limit.

Each of the questions each of the questioners to just one question a piece.

Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.

Okay.

Our first question is going to come from the line of Peter Heckmann with D. A Davidson. Your line is open. Please go ahead.

Hey, good morning, Thanks for taking my question lots of information today, and I think you've presented a good case.

In terms of how we think about.

I missed it.

Get the transcript, but in terms of kind of the repositioning of the current ATM footprint. How are you thinking about that Europe versus Asia Pacific Maybe Northern Africa.

And I guess.

Do you expect like wage inflation to create some normalization of withdrawal transaction activity.

In next year's third quarter.

So.

This years.

Inflationary pressures and so forth I think kind of a shock to people that we've got some data that shows that.

Third of the home mortgages, where adjusted with inflation this year because they don't do long mortgages. So we think that a lot of what happened. This year was a bit of a shock and continued on the inflationary pressures of last year.

There are some sources that we have one of our biggest retailers expect more purchasing power next summer so that could be good because virtually every country. Now has raised the wages of all of its citizens. All the union that have kind of forced that issue like you are seeing here in the U S. So we're kind of cautiously optimistic.

More.

Money to be money in People's pockets next year, but despite that we're going to make sure that we get rid of Atms that aren't profitable for us and Europe , but those other <unk>.

<unk> the expansion markets outside of Europe .

Already our profitable and getting more profitable as we get more into their season. These guys over there at least our or our past data shows that they are over twice as.

As profitable as our ATM locations in Europe . So we will continue to expand into these four countries, which as a reminder, our Malaysia Philippines.

Morocco, and Egypt, and we have several other countries that we believe that we can open in the next year that would be a similar kind of personality you might say, so we're going to continue to do that and continue to expand.

Okay.

Okay.

And by the way for everybody. We will go up maybe five or so minutes longer on this call because I talked to the Dod alone.

Thank you and one moment for our next question.

And our next question is going to come from the line of Andrew Schmidt with Citi Global markets. Your line is open. Please go ahead.

The stuff here.

I wanted to go to slide 10 in which you talked about the adjusted EBITDA by segment fully understanding the.

The simplicity that youre trying to put in I do think it's important to kind of talk about.

Relative growth rates here, just as you think about the long term and it's good to see the ft. Other breakout, which I think contains your your digital initiatives.

How should we think about just the growth of these.

Other more digital items versus the growth of <unk>.

FTE Atms over the longer term from an adjusted EBITDA perspective, I think that might be helpful for folks. Thanks, a lot guys.

Yeah.

Well as we've said.

First of all we.

We're not going to like dissect ourselves and give a number for each but as we've said in the past these other digital and.

Endeavors are really growing fast so they're going to miss this.

<unk>.

<unk> 35, if you if you fast forward that its going to be a different couple of numbers.

Because you just as.

As we mentioned just in this call we've watched our pls acquiring business.

Double its profit over the last 18 to 24 months so.

But thats just one little segment, we're just going to hold people to the thought that as a combined entity. That's the key we get money from all different directions as a combined entity, we expect to grow 10% to 15% compounded growth rate year over year.

Also.

Debt.

That.

That smaller wedge of the EFT segment remember scarcely five years ago that wasn't in there.

In 2019 at one <unk>.

So.

I think that really kind of speaks to the.

To the fact that that piece, we would expect is probably going to have a more accelerated growth there but.

I think it's also reflective of how we've continued to diversify the business and put a lot more.

The digital.

Processing in the framework.

So again, just recognize that five years ago that piece was not a not an element on the page.

And in 2019, the Ft business was just basically all Atms in Europe , and it contributed 58% of our EBITDA in 2019, so big Jake.

Got it very helpful. Thank you guys.

Thank you and one moment, while we move to our next question.

And our next question will come from the line of Chris Kennedy with William Blair. Your line is open. Please go ahead.

Yes. Good morning, Thanks for taking the question just to follow up on that last one if you look at the <unk> business and how that business has the business mix has changed over time.

You talked about.

Margin profile for the <unk> segment going forward.

Yes, well.

As we said we're going to refrain from William.

Getting a different data points out there to be measured by but but.

Certainly with respect to comparisons against today's numbers, we would expect that to improve because as Mike said.

We're taking a look at at the profitability of every one of our Atms with with some new transactional data we've already identified a big pile of cost that that will take out of the picture and these these other digital products.

We will have very high margins on them. So that will continue to expand that so.

Certainly against the numbers, we see today I would expect to see that those those will be expanding but.

I don't want to start putting another number out there to to be measured against because.

All of the detailed measuring really is is kind of eclipsing the fundamental contribution and I think you'll look at that chart. There is why is it that the S&P for 7% growth.

<unk> a more than two times value. Then we are the production of the money that we make year in and year out is just simply not valued and we believe may be part of it is that.

You deliver on seven items you Miss on one in the market wants to beat you up so.

I appreciate your question, but we're going to try to be pretty consistent on really focusing on our earnings and cash production here.

Understood. Thank you so much thank you.

Great.

Thank you and one moment, while we move to our next question.

Our next question is going to come from the line of Darrin Peller with Wolfe Research. Your line is open. Please go ahead.

Hey, guys.

It's obviously good to see the data you showed on the card usage international card usage trending in the right.

Wei.

Yes, I'm just a bit surprised we're not seeing the transaction growth rates pick up to the same degree of the ATM transaction growth follows suit yet maybe maybe it's just early so I'd love to hear a little more thoughts on what you think the disconnect could be there but.

Second part of that question, just Piraeus versus the core ECM transactions, what we should expect.

And then lastly, when you think of guidance. This is all the same question basically so it's not it shouldn't take too long.

Do you think of guidance again, the transaction growth in ATM.

You can get to your 10% to 15% just given how much cash you generate right buying back stock et cetera, but when I think about that.

Embedded ox opportunity on transaction growth do you guys have a lot. There do you expect that to be strong and embedded or is that really not built in.

Well first of all we just saw when you look at the <unk>.

The transactions occur in a given quarter like Q3, the bulk of that will come in July and August .

Well less of them come in September and then less in October and we saw that kick up in September . So it's just too early to see that.

Make its way through the entire quarter. So thats why you don't see so much this quarter and it's just a timing kind of thing and.

So I think that was your first question I'm trying to remember what your second question was Rick do you remember.

I'm just trying to think about next year, you guys are giving us a 10% to 15% guide on EPS I would think there should be a lot of levers to get there without even transaction.

And we think was even taking.

The negative FX headwinds plus the share repurchases plus what everybody else has on their page right now it looks like we're at the upper end of that range, but I want to tell you that's our range.

And that's all we'll say, but our goal will be to.

Better that everybody in our company is focused we really love. The fact that from 2010 to 2019 for 10 years in a row, we never grew at less than a 20.

20% growth rate over prior year those were the good times, we'd love to have those back, but we're just giving everybody a guidance now 10% to 15% and when we beat it then we'll all be happy.

Okay. Thanks, Mike.

Thank you and one moment as we move on to our next question.

Okay.

And our next question is going to come from the line of Andrew Jeffrey with Trust Securities. Your line is open. Please go ahead.

Pardon me.

<unk>.

I appreciate it.

To simplify everything I think that makes makes a ton of sense.

Mike I want to shift gears, a little bit and ask you about money transfer.

You've done a really nice job building out the agent network and you mentioned the growth in.

Deposits into connected accounts can you talk a little bit about the slowdown we've seen in the last 12 months in your digital transaction growth and whether that's just sort of law of large numbers of normalization and how you position yourself versus some of the digital only competition in the market that has.

<unk> maintained significantly faster digital growth and kind of just how you think about the competitive positioning of the business overall I guess.

Yes.

I think we've done a pretty good job, but it has slowed a little bit and we're taking a harder look at that on ways that we might be able to accelerate that.

But we've also heard through and you'll probably see this start to bear out over the next quarter or two there is some slowdown everywhere I mean, the reality is.

The $800 billion family remittance market only about 35% of it is done digitally so that.

Most people come into a new country, and Theyre kind of cash based citizens or <unk>.

Workers, just like they were in their old country.

No.

That's one of the assets that we have is we're both bricks and mortar and digital and so if you got 35% of that.

The market is digital at some point in time after all of this.

Market share gets acquired you start to Bang up against the ceiling and then I think youll see us and others, probably do that but we've got some some new tricks up our sleeve that we hope will reaccelerate that as we go forward.

Okay. Appreciate it thanks.

Thank you and one moment for our next question.

Our next question is going to come from the line of Mike Grondahl with Northland Securities. Your line is open. Please go ahead.

Hey, guys. Thanks for all the data on the ATM business.

You talked about redeploying some of that ATM fleet.

$20 million of cost saves next year.

Roughly are you talking 500, Atms that need to be moved 3000, just kind of trying to get a feel for how many you've identified or what you think you need.

To move.

Well there's over 1000.

But we'll just have to see what the final numbers are.

And we need to take into consideration there are some other changes in the works.

Mike.

For example, some countries are considering raising their domestic interchange fees.

Countries are thinking about doing surcharge. So you don't want to be you don't want to pull in ATM, that's making a little bit of money that could make a lot of money with those changes. So we're going to be careful but we have already identified some acs I think at the end of the day, we just want eft's profit to growth.

And I think that's more important to you that how many Atms we have out there.

Fair enough fair enough. Thanks.

Thank you and one moment for our next question.

Okay.

Our next question is going to come from the line of Ken <unk> with Autonomous Research. Your line is open. Please go ahead.

Okay.

Hey, good morning, Mike and Eric Thanks for all the detail here and thanks for taking the question.

The high value transactions, obviously, you had a nice rebound in September and it sounds like some of this is just European travelers to lean there.

Summer vacation from June July to a less costly September . So I guess is the expectation that you had this kind of jump. This pop in that from here you have a slower recovery because I'm not sure. If people are taking their summer trip in.

In the fourth quarter.

And then I guess more broadly like what gives you the confidence that this isn't just another head fake that you're going to track eurocontrol trends more closely going forward.

Well I think the most obvious thing as you look at people other than European and we beat the number every month. This year, so anybody traveling to Europe from outside is using Atms more than they ever have youre right. Our challenge right now is the economics within Europe and so the question is.

How do you beat it.

I think you beat it by continuing to expand into into Virgin.

Territory.

Certainly these new markets outside of Europe are just killer markets I mean, they just make lots of money, we will continue to do that and.

That gives us and then we will find any of those Atms that we believe are not profitable enough, we'll take those out and use them instead of buying new capex machines and put them into the spots that we have we have several markets in Europe for instance, that we're opening up or are starting to expand with them.

For example, France, and Belgium, and Albania that are three.

France is not a new market for us the other two are.

But it's well under serve really.

We mentioned that we got that contract in France for 150 ATM.

There are more tourists that come to France than to any other country in the world.

There are still spots that we believe that we can make money and thats where were going to redeploy these atms that we pulled out.

Okay, great. Thanks, Mike.

Thank you and one moment as we move to our next question.

And our last question is going to come from the line of Charles Nabhan with Stephens. Your line is open. Please go ahead.

Good morning, and thank you for taking my question. Most of my questions have been asked already but I wanted to get your perspective on capital allocation.

The $1 billion in cash on hand, and you've been pretty active buying back shares but M&A has also been a small part of the strategy and I think you did the Philippines deal last year. So I'm curious, how you're thinking about that balance going forward.

The redeployment of ATM strategy.

Changes anything with respect to going out and acquiring acquiring etfs like you've done in the past.

Actually really nothing will have changed my preference is always an acquisition you saw what we did with the Piraeus Bank merchant acquiring business. That's now called <unk> Youre in that merchant acquiring that maybe has basically doubled its profit in less than two years. Those are the gifts that keep on giving so we really love that kind of.

We will look at purchasing repurchasing shares if the market is treating us poorly like we did in this last quarter.

But really whether youre pulling them out so let's say these atms caused to $11000. Each we used to buy call. It 3000 to 3500, so that's like $40 million in Capex, we will.

Maybe we only need to spend half that this coming year and it does give us more cash, but it's not enough really to move the needle. So we will just continue down our same path as we have.

In the past and there were we're actually.

Actively evaluating a number of companies right now that could be acquisition candidates, but were pretty tough when we look at these things.

We do thorough due diligence that a lot of times find skeletons in the closet that we have to walk away, but we're always look at that.

People, we love deal.

If I can do that I will.

But we'll just have to see what pops up.

Got it. Thank you very much I appreciate the color.

And thank you everybody for taking your time with US today I really appreciate it look forward to talking to you. After Q4 is complete thank.

Thank you very much.

This concludes today's conference call. Thank you for participating you may now disconnect.

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