Q2 2024 Euronet Worldwide Inc Earnings Call

Greetings, and welcome to the Euronet Worldwide Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session.

Operator: Earnings Conference. At this time, all participants are in a listen-only mode.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is, For all your questions, please press star 1 1 again. Please be advised that today's conference is being recorded. It is now my pleasure to introduce your host. Mr. Adam Goddard, General Counsel for Euronet Worldwide. Thank you. Mr. Goddard, you may be dismissed.

To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again.

Please be advised that today's conference is being recorded.

Speaker Change: It is now my pleasure to introduce your host, Mr. Adam Goddard, General Counsel for Euronet Worldwide. Thank you. Mr. Goddard, you may begin.

Adam Goddard: Thank you. Good morning, everyone. Welcome to Euronet's second quarter 2024 earnings conference. On today's call, we have Mike Brown, our Chairman and CEO, and Rick Weller, our CFO. Before we begin, I would like to call your attention to the forward-looking statements disclaimer on the second slide of the PowerPoint presentation we will be making. Statements made on this call that concern Euronet's or its management's intentions, expectations, or predictions of future performance are forward-looking statements.

Speaker Change: Thank you. Good morning, everyone, and welcome to Euronet's second quarter 2024 earnings conference call.

Speaker Change: On today's call, we have Mike Brown, our Chairman and CEO , and Rick Weller, our CFO .

Adam Goddard: Euronet's actual results may vary materially from those anticipated in these forward-looking statements as a result of a number of factors, including those listed on the second slide of our presentation. In addition, the PowerPoint presentation includes a reconciliation of the non-GAAP financial measures we'll be using during the call to the most comparable GAAP measures. Now, I'll turn the call over to our CFO, Rick Weller. Thanks, Adam.

Speaker Change: Before we begin, I would like to call your attention to the forward-looking statements disclaimer on the second slide of the PowerPoint presentation we will be making today.

Speaker Change: Statements made on this call that concern Euronet's or its management's intentions, expectations, or predictions of future performance are forward-looking statements.

Speaker Change: Euronet's actual results may vary materially from those anticipated in these forward-looking statements as a result of a number of factors, including those listed on the second slide of our presentation.

Speaker Change: In addition, the PowerPoint presentation includes a reconciliation of the non-GAAP financial measures we'll be using during the call to the most comparable GAAP measures.

Rick L. Weller: I will begin with my comments on slide five. We delivered a record quarter, the second quarter, on all key consolidated P&L line items. We delivered revenue of $986 million, adjusted operating income of $134 million, adjusted EBITDA of $178 million, and adjusted EPS of $2.25. Leading the way for these results was EFT, which saw double-digit, constant currency growth on all financial measures. For ePay, results were similar to the prior year, and money transfer delivered constant currency revenue growth of 8% for the quarter, with a modest increase in operating income on a constant currency basis.

Speaker Change: Now, I'll turn the call over to our CFO , Rick Weller.

Rick L. Weller: Thanks, Adam. I will begin with my comments on slide 5.

Rick L. Weller: We delivered a record second quarter on all key consolidated P&L line items.

Rick L. Weller: We delivered revenue of $986 million, adjusted operating income of $134 million, adjusted EBITDA of $178 million, and adjusted EPS of $2.25.

Speaker Change: Leading the way for these results was EFT with double-digit, constant currency growth on all financial measures.

Speaker Change: For ePay, results were similar to the prior year, and money transfer delivered constant currency revenue growth of 8% for the quarter, with a modest increase in operating income on a constant currency basis.

Rick L. Weller: Our quarterly adjusted EPS was up 11% over the prior year, and when considering the first six months of this year, it's up about 16.5% over the prior year. You can see we are well on track to meet our earnings guidance range we've shared with you and lining up for an opportunity to exceed the range. Moreover, this quarter, we continued our track record of producing strong free cash flows by producing more than $80 million. And because we didn't have any larger pending acquisitions or other requirements for the free cash flow, we repurchased $114 million of our shares, or about 2% of the shares outstanding.

Speaker Change: Our quarterly adjusted EPS was up 11% over the prior year, and when considering the first six months of this year, it's up about 16.5% over the prior year.

Speaker Change: You can see we are well on track to meet our earnings guidance range we've shared with you and lining up for an opportunity to exceed the range.

Speaker Change: Moreover, this quarter, we continued our track record of producing strong free cash flows, producing more than $80 million.

Speaker Change: And because we didn't have any larger pending acquisitions or other requirements for the free cash flow, we repurchased $114 million of our shares, or about 2% of the shares outstanding.

Rick L. Weller: Given the timing of the repurchases, there was only a marginal benefit to the second quarter adjusted EPS, but we know this repurchase will improve earnings per share by 2% for future periods. It also points out, I'll also point out, that our consolidated operating margins expanded by about 90 basis points over the prior year, and we expect to see continued expansion through the second half of the year. Slide 6.

Speaker Change: Given the timing of the repurchases, there was only a marginal benefit to the second quarter adjusted EPS, but we know this repurchase will improve earnings per share by 2% for future periods.

Speaker Change: It also points out

Speaker Change: I'll also point out that our consolidated operating margins expanded by about 90 basis points over the prior year, and we expect to see continued expansion through the second half of the year.

Rick L. Weller: On slide 6, we present a summary of our balance sheet compared to the prior quarter. As you can see, we ended the quarter with $1.27 billion in unrestricted cash and debt of $2.27 billion. The increase in cash is largely due to cash generated from operations of more than $80 million in the second quarter, offset by stock repurchases, and a minor impact from the completion of the MEPS ATM network acquisition. Our next slide has as-reported numbers for the segment. But let's go to slide 8, where we present the results neutralized for FX translation. I'm on slide 8 now.

Speaker Change: Slide six. On slide six we present a summary of our balance sheet compared to the prior quarter.

Speaker Change: As you can see, we ended the quarter with $1.27 billion in unrestricted cash and debt of $2.27 billion.

Speaker Change: The increase in cash is largely due to cash generated from operations

Speaker Change: of more than $80 million in the second quarter, offset by stock repurchases, and a minor impact from the completion of the MEPS ATM network acquisition.

Speaker Change: Our next slide has as-reported numbers for the segments, but let's go to slide 8, where we present the results neutralized for FX translations.

Rick L. Weller: On a constant currency basis, the EFT segment revenue grew 10%, adjusted operating income grew 24%, and adjusted EBITDA grew 20%. The strong results in EFT were made possible due to continued improvement in travel trends across Europe, strong performance from our merchant services business, expansion into new markets, and the rationalization of our ATM estate, together with effective expense management. Both revenue and effective cost management contributed to a nearly 300 basis point operating margin expansion in EFT. The ePay results were similar to the prior year across all measures, while the core ePay content distribution business grew 10% across the same range of metrics.

Speaker Change: I'm on slide eight now.

Speaker Change: On a constant currency basis, the EFT segment revenue grew 10%, adjusted operating income grew 24%, and adjusted EBITDA grew 20%.

Speaker Change: The strong results in the EFT were made possible due to continued improvement in travel trends across Europe , strong performance from our merchant services business, expansion into new markets, and the rationalization of our ATM estate, together with effective expense management.

Speaker Change: Both revenue and effective cost management contributed to nearly 300 basis point operating margin expansion in EFT.

Speaker Change: The ePay results were similar to the prior year across all measures, while the core ePay content distribution business grew 10% across the same range of metrics.

Rick L. Weller: As has been the case over the last couple of years, the timing of ePay's customers' promotional activity can create unevenness in quarterly results. For example, in the second quarter of last year 2023, we had strong promotional activity that did not recur in this year's second quarter. However, we have a nice pipeline of promotional activity that we expect to execute during the remainder of the year, with more weight on the fourth quarter, which coincides with seasonal sales in the ePay business.

Speaker Change: As has been the case over the last couple of years, the timing of ePay's customer's promotional activity

Speaker Change: can create unevenness in quarterly results.

Speaker Change: In the second quarter of last year of 2023, we had strong promotional activity that did not recur in this year's second quarter.

Speaker Change: However, we have a nice pipeline of promotional activity that we expect to execute during the remainder of the year, with more weight on the fourth quarter, which coincides with seasonal sales in the ePay business.

Rick L. Weller: So while these second-quarter results show muted growth for the quarter, we continue to believe that ePay will produce mid to upper single-digit operating income growth. And depending on consumer demand, we could see a path to double-digit operating income growth year over year. Money transfer revenue grew 8%. Operating income grew 2%, and adjusted EBITDA declined 1%.

Speaker Change: So, while these second quarter results show muted growth for the quarter, we continue to believe that ePay will produce mid to upper single-digit operating income growth.

Speaker Change: And depending on consumer demand, we could see a path to double-digit operating income growth year over year.

Speaker Change: Money transfer revenue grew 8%, operating income grew 2%, and adjusted EBITDA declined 1.

Rick L. Weller: The 8% growth in constant currency revenue was primarily driven by near double-digit growth in cross-border transactions, offset by a decrease in intra-US transactions. Direct-to-consumer digital transaction growth accelerated to 24%, highlighting the benefit of some increased spend on marketing and promotional campaigns in the quarter. Based on the success of these campaigns to acquire long-term customers and our increasing confidence in delivering strong double-digit consolidated earnings growth for the full year of 2024, we made a choice to increase this marketing and promotional spend by about $3.9 million during the quarter. Had we not made this $3.9 million promotional and advertising investment, money transfer operating income would have expanded year over year, producing operating margins similar to the prior year.

Speaker Change: The 8% growth in constant currency revenue was primarily driven by near double-digit growth in cross-border transactions offset by a decrease in intra-U.S. transactions.

Unknown Executive: Direct to consumer, digital transaction growth accelerated to 24 percent, highlighting the benefit of some increased spend on marketing and promotional campaigns in the quarter.

Speaker Change: Direct-to-consumer digital transaction growth accelerated to 24% highlighting the benefit of some increased spend on marketing and promotional campaigns in the quarter.

Rick Weller: Based on the success of these campaigns, to acquire long-term customers and our increasing confidence in delivering strong double digits, consolidated earnings growth for the full year of 2024, we made a choice to increase this marketing and promotional spend by about $3.9 million during the quarter. Had we not made this $3.9 million promotional and advertising investment, money transfer operating income would have expanded year over year, producing operating margins similar to the prior year. We will continue to have a somewhat higher level of spend on marketing and promotion, but we expect to see operating profit margin expansion over the second half of the year, producing full year operating margins near or similar to 2023.

Speaker Change: based on the success of these campaigns.

Speaker Change: to acquire long-term customers.

Speaker Change: and our increasing confidence in delivering strong double-digit consolidated earnings growth for the full year of 2024.

Speaker Change: We made a choice to increase this marketing and promotional spend.

Speaker Change: by about $3.9 million during the quarter.

Speaker Change: Had we not made this $3.9 million promotional and advertising investment, money transfer operating income would have expanded year over year, producing operating margins similar to the prior year.

Rick L. Weller: We will continue to have a somewhat higher level of spend on marketing and promotion, but we expect to see operating profit margin expansion over the second half of the year, resulting in full year operating margins near or similar to 2023. Overall, we are very pleased that we have delivered two quarters of double-digit growth. These growth rates, inclusive of some timing differences in ePay and the flexibility to spend some investment to make some investments for future digital growth and money transfer, give us even more confidence in our ability to deliver earnings growth in the 10 to 15 percent year-over-year range. And you can rest assured that we are always working to deliver results beyond that range. With that, I'll turn it over to Mike. Thank you, Rick, and thank you, everyone, for joining us today.

Speaker Change: We will continue to have a somewhat higher level of spend on marketing and promotion, but we expect to see operating profit margin expansion over the second half of the year.

Speaker Change: Producing full year operating margins near or similar to 2023.

Rick Weller: Overall, we are very pleased that we have delivered two quarters of double-digit growth. These growth rates, inclusive of some timing differences in e-pay and the flexibility to spend some investment to make some investments for future digital growth and money transfer, give us even more confidence in our ability to deliver earnings growth in the 10 to 15 percent year-over-year range, and you can rest assured that we are always working to deliver results beyond that range.

Speaker Change: Overall, we are very pleased that we have delivered two quarters of double-digit growth.

Speaker Change: These growth rates, inclusive of some timing differences in ePay,

Speaker Change: and the flexibility to spend some investment.

Speaker Change: To make some investments for future digital growth and money transfer, give us even more confidence in our ability to deliver earnings growth in the 10-15% year-over-year range.

Speaker Change: And you can rest assured that we are always working to deliver results beyond that range. 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 number 10.

Michael Brown: With that, I'll turn it over to Mike. Thank you, Rick, and thank you everyone for joining us today.

Michael J. Brown: I'll begin my comments on slide 10. As you can see, looking at the green trend line, that little dotted one on the chart, we continue on our path of double-digit earnings, reflecting the consistency of the consolidated annual earnings results. As I have reflected on these results, I think they provide an opportunity to highlight the success that we have delivered, diversifying and expanding the business across all three segments, fully accepting that this diversification may result in fluctuations in the timing of when each segment delivers its contribution to the annual consolidated results, and EFT Prior to COVID, our financial results were largely tied to how many people traveled in Europe during the summer months.

Michael Brown: I'll begin my comment on slide number 10. As you can see, looking at the green trend line, that little dotted one on the chart, we continue on our path of double-digit earnings, reflecting the consistency of the consolidated annual earnings results. As I have reflected on these results, I think they provide an opportunity to highlight the success that we have delivered diversifying and expanding the business across all three segments, fully accepting that this diversification may result in fluctuations on the timing of when each segment delivers its contribution to the annual consolidated results.

Michael J. Brown: As you can see, looking at the green trend line, that little dotted one on the chart, we continue on our path of double-digit earnings, reflecting the consistency of the consolidated annual earnings results.

Michael J. Brown: As I have reflected on these results, I think they provide an opportunity to highlight the success that we have delivered diversifying and expanding the business across all three segments.

Michael J. Brown: Fully accepting that this diversification may result in fluctuations on the timing of when each segment delivers its contribution to the annual consolidated results.

Rick Weller: Any FT prior to COVID are financial results were largely tied to how many people traveled in Europe during the summer months. While the travelers are still important to our annual results, we are seeing the diversifications of our revenue and earnings contributions from non-tourist-related ATM transactions in Europe, from ATM transactions in new markets outside of Europe, and POS transactions in our merchant acquiring business, and the benefit of new acquisitions such as Infantium. Any pay, the growth of our core business has remained strong, as Rick said, growing our core 10% this quarter over the same period last year.

Michael J. Brown: And EFT, prior to COVID, our financial results were largely tied to how many people traveled in Europe during the summer months.

Michael J. Brown: While the Travellers are still important to our annual results, we are seeing the diversification of our revenue and earnings contributions from non-tourist related ATM transactions in Europe, from ATM transactions in new markets outside of Europe, and POS transactions in our merchant acquiring business, and the benefit of new acquisitions such as Infintium. In ePay, the growth of our core business has remained strong.

Michael J. Brown: While the Travelers are still important to our annual results, we are seeing the diversifications

Michael J. Brown: of our revenue and earnings contributions from non-tourist-related ATM transactions in Europe .

Michael J. Brown: from ATM transactions in new markets outside of Europe and POS transactions in our merchant acquiring business and the benefit of new acquisitions such as Infintium.

Michael J. Brown: As Rick said, growing our core business by 10% this quarter over the same period last year. We continue to grow this core business with new products and new market expansion. We have also found success outside of the core business in running promotional campaigns for some of our large retailers and by making investments in our internal software to productize and sell it to external customers. These promotional campaigns are not always consistent from year to year, let alone quarter to quarter, but our top line, bottom line, and free cash flows have all benefited from our success in managing these promotions.

Michael J. Brown: In ePay, the growth of our core business has remained strong, as Rick said, growing our core 10% this quarter over the same period last year.

Rick Weller: We continue to grow this core business with new products and new market expansion. We have also found success outside of the core business in running promotional campaigns for some of our large retailers and by making investments in our internal software to product ties and sell it to external customers. These promotional campaigns are not always consistent from year to year, let alone quarter to quarter, but our top line, bottom line, and free cash flows have all benefited from our success in managing these promotions. and in money transfer, we have continued to expand our network, expand our customer base, expand the types of payments available to our customers, and expand our channels to get the new customers.

Rick L. Weller: We continue to grow this core business with new products and new market expansion. We have also found success outside of the core business in running promotional campaigns for some of our large retailers and by making investments in our internal software to productize and sell it to external customers.

Rick L. Weller: These promotional campaigns are not always consistent from year to year, let alone quarter to quarter, but our top line, bottom line, and free cash flows have all benefited from our success in managing these promotions.

Michael J. Brown: And in money transfer, we have continued to expand our network, expand our customer base, expand the types of payments available to our customers, and expand our channels to get to new customers. The continued growth of the business has provided us with an opportunity to choose when to invest in certain advertising and promotional spending to drive future growth. Additionally, we have added two products, Wren and Dandelion, and both have significant pipelines for long-term future growth. As we go through the highlights, you will see a consistent theme.

Rick L. Weller: And in money transfer, we have continued to expand our network, expand our customer base, expand the types of payments available to our customers, and expand our channels to get to new customers.

Rick Weller: The continued growth in the business has provided us with an opportunity to choose when to invest in certain advertising and promotional spending to drive future growth. Additionally, we have added two products, Ran and Dandelion, and both have significant pipelines for long-term future growth. As we go through the highlights, you will see a consistent theme. Our focus remains on taking advantage of key growth opportunities in each of the three segments. Having now delivered double-digit growth rates across each of the first two quarters, and knowing the opportunities that remain for the second half of the year, I remain confident that we will deliver very strong results for the full year 2024, as this chart illustrates the momentum continues.

Rick L. Weller: The continued growth in the business has provided us with an opportunity to choose when to invest in certain advertising and promotional spending to drive future growth.

Rick L. Weller: Additionally, we have added two products, Wren and Dandelion, and both have significant pipelines for long-term future growth.

Michael J. Brown: Our focus remains on taking advantage of key growth opportunities in each of the three segments. Having now delivered double-digit growth rates across each of the first two quarters and knowing the opportunities that remain for the second half of the year, I remain confident that we will deliver very strong results for the full year 2024. As this chart illustrates, the momentum continues. Now, let's go on to slide number 11, and I'll give you the updates for each of our three segments.

Rick L. Weller: As we go through the highlights, you'll see a consistent theme.

Rick L. Weller: Our focus remains on taking advantage of key growth opportunities in each of the three segments.

Rick L. Weller: Having now delivered double-digit growth rates across each of the first two quarters, and knowing the opportunities that remain for the second half of the year, I remain confident that we will deliver very strong results for the full year 2024.

Michael Brown: Now let's go on to slide number 11, and I'll give you the updates for each of our three segments, and we'll start as usual with EFT. During the second quarter, EFT delivered double-digit growth across all metrics. The double-digit growth was made possible by improvements in tourism in Europe, expansion into new markets, and the growth of our merchant services business. Finally, because I know you will ask, we continue to see increases in tourism in Europe compared to 2023. Europe control reported tourism increase from about 29% recovery rate last year, 2023 compared to 2019 to an expected 95% this year, 2024, representing a 5% year-over-year increase.

Rick L. Weller: As this chart illustrates, the momentum continues. Now let's go on to slide number 11 and I'll give you the updates for each of our three segments. And we'll start, as usual, with EFT.

Michael J. Brown: And we'll start, as usual, with EFT. During the second quarter, EFT delivered double-digit growth across all metrics. The double-digit growth was made possible by improvements in tourism in Europe, expansion into new markets, and the growth of our emergent services business. Finally, because I know you will ask, we will continue to see increases in tourism in Europe compared to 2023. Eurocontrol reported tourism increased from about 90% recovery rate last year, 2023, compared to 2019, to an expected 95% this year, 2024, representing a 5% year-over-year increase. Our results through the second quarter were generally in line with Eurocontrol data.

Rick L. Weller: During the second quarter, EFT delivered double-digit growth across all metrics. The double-digit growth was made possible by improvements in tourism in Europe , expansion into new markets, and the growth of our emergent services business.

Rick L. Weller: Finally, because I know you will ask, we continue to see increases in tourism in Europe compared to 2023.

Rick L. Weller: Eurocontrol reported tourism increase from about 90% recovery rate last year, 2023.

Rick L. Weller: compared to 2019 to an expected 95% this year, 2024, representing a 5% year-over-year increase. Our results through the second quarter were generally in line with the Euro control data.

Rick Weller: Our results through the second quarter were generally in line with the Euro-controlled data. To highlight the success of our expansion strategy, adjusted EFT compared to the prior year, second quarter grew 60% across four areas. Merchants services, EFT Malaysia, EFT Philippines, and EFT North America. Each of these businesses was new to your internet within the last few years through either expansion into new markets organically, or the acquisition in the case of merchant services. In the last 12 months, EFT has launched ATMs in three new markets: Albania, Belgium, and Mexico, and closed two strategic acquisitions in Finitum and Singapore and the acquisition of those 800 ATMs in Malaysia.

Michael J. Brown: To highlight the success of our expansion strategy, adjusted EBITDA compared to the prior year's second quarter grew 60% across four areas, Merchant Services, EFT Malaysia, EFT Philippines, and EFT North America. Each of these businesses was new to Euronet within the last few years through either expansion into new markets organically or acquisition, in the case of Merchant Services. In the last 12 months, EFT has launched ATMs in three new markets, Albania, Belgium, and Mexico, and closed two strategic acquisitions, Infinitum in Singapore and the acquisition of those 800 ATMs in Malaysia.

Rick L. Weller: To highlight the success of our expansion strategy, adjusted EBITDA compared to the prior year's second quarter grew 60%.

Speaker Change: across four areas. Merchant Services, EFT Malaysia, EFT Philippines, and EFT North America. Each of these businesses was new to Euronet within the last few years.

Speaker Change: through either expansion into new markets organically or the acquisition in the case of merchant services.

Speaker Change: In the last 12 months, EFT has launched ATMs in three new markets, Albania, Belgium, and Mexico, and closed two strategic acquisitions.

Speaker Change: Infinitum in Singapore and the acquisition of those 800 ATMs in Malaysia. In addition to these acquisitions

Michael J. Brown: In addition to these acquisitions, EFT has two markets scheduled for launch in the second half of 2024 and two more in the works for 2025. Furthermore, beyond expansion into the new markets, EFT has several revenue expansion opportunities for the existing estate of ATMs in Europe. An example of these expansion opportunities is, first, we rolled out domestic direct access fees in Denmark, Norway, and Malta in the second quarter. We are beginning to pilot the rollout of access fees in the Czech Republic, Cyprus, the Netherlands, and Romania, and we plan to launch access fees in three more markets in the fourth quarter. In all, ten markets will have domestic access fees by the end of 2024.

Rick Weller: In addition to these acquisitions, EFT has two markets scheduled for launch in the second half of 2024 and two more in the works for 2025. Beyond expansion into the new markets, EFT has several revenue expansion opportunities for the existing estate of ATMs in Europe. An example of these expansion opportunities include, first, we rolled out domestic direct access fees in Denmark, Norway, and Malta in the second quarter. We're beginning to pilot the roll out of access fees in the Czech Republic, Cyprus, the Netherlands, and Romania, and we plan to launch access fees in three more markets in the fourth quarter.

Speaker Change: EFT has two markets scheduled for launch in the second half of 2024 and two more in the works for 2025. Beyond expansion into the new markets, EFT has several revenue expansion opportunities for the existing estate of ATMs in Europe .

Speaker Change: An example of these expansion opportunities include, first, we rolled out domestic direct excess fees in Denmark, Norway, and Malta in the second quarter.

Speaker Change: We are beginning to pilot the rollout of access fees in the Czech Republic, Cyprus, the Netherlands, and Romania, and we plan to launch access fees in three more markets in the fourth quarter. In all, ten markets will have domestic access fees by the end of 2024.

Rick Weller: In all, 10 markets will have domestic access fees by the end of 2024. Second, we launched international access fees in one country in the second quarter, and we plan to launch seven to eight in the second half of the year. And third, over the last few years, MasterCard and Visa increased domestic interchange in quite a few markets.

Michael J. Brown: Second, we launched international access fees in one country in the second quarter, and we plan to launch seven to eight in the second half of the year. And third, over the last few years, MasterCard and Visa have increased domestic interchange in quite a few markets. As an example, domestic interchange increased in the Netherlands by 60% and in Romania by 100%.

Speaker Change: Second, we launched international access fees in one country in the second quarter and we plan to launch seven to eight in the second half of the year. And third, over the last few years, MasterCard and Visa increased domestic interchange in quite a few markets.

Speaker Change: As an example, domestic interchange increased in the Netherlands by 60 percent and in Romania by 100 percent. These interchange rates have come into sharp focus over the last couple of years as banks demand increases to match their cost increases.

Michael J. Brown: These interchange rates have come into sharp focus over the last couple of years as banks demand increases to match their cost increases. As a result, we expect this trend to continue in more countries in the future. The EFT discussion would not be complete without mentioning our Merchant Services business. Our Merchant Services business has added over 15,000 new merchants in each of the last three quarters.

Speaker Change: As a result, we expect this trend to continue to more countries in the future.

Speaker Change: The EFT discussion would not be complete without mentioning our Merchant Services business. Our Merchant Services business has added over 15,000 new merchants in each of the last three quarters and we have a pipeline of additional opportunities for further expansion.

Michael J. Brown: And we have a pipeline of additional opportunities for further expansion. In addition to these revenue opportunities, we also expanded our outsourcing business. In Poland, we signed an ATM outsourcing agreement with Aliar Bank for 120 ATM recyclers capable of receiving deposits and dispensing cash. AlierBank is the eighth largest bank in Poland with over 1.3 million customers, and this agreement further expands both our ATM cash withdrawal and deposit returns in Poland.

Speaker Change: In addition to these revenue opportunities, we also expanded our outsourcing business.

Speaker Change: In Poland, we signed an ATM outsourcing agreement with Aliar Bank for 120 ATM recyclers capable of receiving deposits and dispensing cash.

Speaker Change: AlierBank is the eighth largest bank in Poland with over 1.3 million customers and this agreement further expands both our leading ATM cash withdrawal and deposit returns in Poland.

Michael J. Brown: In addition to this outsourcing agreement, we remain on track to add between 3,000 and 3,500 ATMs in 2024. Furthermore, we have removed certain unprofitable ATMs. This, coupled with the ability to add access fees, will continue to improve our margins. Our strategy remains simple and has proven to be successful.

Speaker Change: In addition to this outsourcing agreement, we remain on track to add between 3,000 and 3,500 ATMs in 2024.

Speaker Change: Further, we have removed certain unprofitable ATMs. This, coupled with the ability to add access fees, will continue to improve our margins. Our strategy remains simple and has proven to be successful.

Michael J. Brown: We continue to grow the business through the launch of new countries, more products, more convenience, and strategic acquisitions. However, as we reflect on the EFT quarter, we should point out that a number of these growth drivers are not dependent on tourism. Now let's go to slide 12, and we'll discuss RAN, the best in the industry technology platform that runs our EFT business. During the second quarter, we continued to execute our go-to-market strategy for REN.

Speaker Change: We continue to grow the business through the launch of new countries, more products, more convenience, and strategic acquisitions.

Speaker Change: As we reflect on the EFT quarter, we should point out that a number of these growth drivers are not dependent on tourism. Now let's go to slide 12 and we'll discuss RAN, the best in industry technology platform that runs our EFT business.

Michael J. Brown: For those of you who may be new, REN is a proven product we trust to run our own payment processing business and a product we sell into the market with many different uses. Remember, in the first quarter, I introduced Infintium, a company we acquired in Singapore to complement REN. Infintium is a market leader providing risk management and payment authentication services to prevent fraud in e-commerce or card-not-present transactions.

Speaker Change: During the second quarter, we continued to execute our go-to-market strategy for REN. For those of you who may be new, REN is a proven product we trust to run our own payment processing business and a product we sell into the market with many different uses.

Speaker Change: Remember, in the first quarter, I introduced Infintium, a company we acquired in Singapore to complement REN.

Speaker Change: Infintium is a market leader providing risk management and payment authentication services to prevent fraud and e-commerce or card not present transactions.

Michael J. Brown: While Infintium is already contributing, we are excited about how this product pairs with REN to offer a more complete solution for online acquirers and merchants that require a modern cloud-native online payment gateway. Now, let's discuss Rand Market Wins in the second quarter. During the quarter, we signed a software license agreement for a card management system with ICICI Bank Limited in India. If you know India, you know ICICI. It is the third largest bank in India.

Speaker Change: While Infintium is already contributing, we are excited about how this product pairs with REN to offer a more complete solution for online acquirers and merchants that require a modern cloud-native online payment gateway.

Speaker Change: Now let's discuss Rand Market Wins in the second quarter. During the quarter, we signed a software license agreement for a card management system with ICICI Bank Limited in India. If you know India, you know ICICI. It is the third largest bank in India.

Michael J. Brown: In Brazil, we signed a payment processing agreement with Omnipro. The company is the chosen provider of Alelo, Brazil's largest employee benefits card program serving 12 million customers. We are excited about the future of RAN, and we will continue to enhance the product offering through continued development and strategic acquisitions like Infinty. Now, let's recap our EFT segment. Man, what a quarter.

Speaker Change: In Brazil, we signed a payment processing agreement with OmniPro.

Speaker Change: The company is the chosen provider.

Speaker Change: Alelo, Brazil's largest employee benefits card program serving 12 million customers.

Speaker Change: We are excited about the future of RAN and we will continue to enhance the product offering through continued development and strategic acquisitions like Infintium.

Michael J. Brown: What are the drivers of this business? First, the strength of this segment is our REN platform. Second, we continue to grow our merchant services business, which grew adjusted, even up 32 percent compared to the prior year and added over 15,000 new merchants. Third, we have continued to grow our ATM network through acquisition, expansion into new countries, and simply adding ATMs to existing markets. Lastly, we have started to expand revenue by adding domestic and international access fees at existing ATMs to optimize our profit margins while maintaining transaction volume.

Speaker Change: Let's recap our EFT segment. Man, what a quarter!

Speaker Change: What are the drivers of this business? First, the strength of this segment is our REN platform. Second, we continue to grow our merchant services business, which grew adjusted, even up 32%, compared to the prior year, and added over 15,000 new merchants.

Speaker Change: Third, we have continued to grow our ATM network through acquisition, expansion into new countries, and simply adding ATMs to existing markets.

Speaker Change: Lastly, we have started to expand revenue by adding domestic and international access fees at existing ATMs to optimize our profit margins while maintaining transaction volumes.

Michael J. Brown: As we conclude our discussion of EFT, let me remind you that we achieved double-digit growth across all financial metrics in the second quarter and operating income growth of 24%. The quarterly results, the pipeline opportunities, and the tourism recovery data make it hard not to be excited about EFT in the coming quarters. Now we'll go to the next slide.

Speaker Change: As we conclude our discussion of EFT, let me remind you, we achieved double-digit growth across all financial metrics in the second quarter and operating income growth of 24%.

Speaker Change: The quarterly results, the pipeline opportunities, and the tourism recovery data make it hard not to be excited about EFT in the coming quarters. Now we'll go to the next slide. As I begin my comments on ePay, I want to repeat for you what Rick discussed earlier.

Michael J. Brown: As I begin my comments on ePay, I want to repeat for you what Rick discussed earlier. Our core ePay business grew revenue, operating income, and adjusted EBITDA by 10%, excluding contributions from customer promotional activity in the prior year. ePay has a strong pipeline of promotional activities for the remainder of 2024. We delivered gross profit growth. In most geographic markets, including digital channels, payment processing, Prezi, which is our branded OpenLoop prepaid debit card, and core content in existing and new retail, simply put, unevenness and unevenness in the timing of our promotions business resulted in flat year-over-year segment results.

Speaker Change: Our core ePay business grew revenue, operating income, and adjusted EBITDA by 10%, excluding contributions from customer promotional activity in the prior year.

Speaker Change: EPAY has a strong pipeline of promotional activities for the remainder of 2024. We delivered gross profit growth.

Speaker Change: In most geographic markets, including digital channels, payment processing, Prezi, which is our branded OpenLoop prepaid debit card, and core content in existing and new retail.

Speaker Change: Simply put, unevenness and unevenness in the timing of our promotions business resulted in flat year-over-year segment results.

Michael J. Brown: We believe that it makes a lot of sense to continue leveraging our assets to generate free cash flows. I understand that the market prefers more consistent and predictable results, but I would encourage you to think beyond a quarter and consider the full year. I want to provide a quick update on two of our own product offerings, Conductor and Skylight. During the second quarter, we signed an agreement to issue Google Workspace on the Conductor platform to be sold across both online and physical retailers.

Speaker Change: We believe that it makes a lot of sense to continue leveraging our assets to generate free cash flows. I understand that the market prefers more consistent and predictable results, but I would encourage you to think beyond a quarter and consider the full year.

Speaker Change: I want to provide a quick update of two of our own product offerings, Conductor and Skylight. During the second quarter, we signed an agreement to issue Google Workspace on the Conductor platform to be sold across both online and physical retailers.

Michael J. Brown: Moreover, we have a pipeline of opportunities we are pursuing for Skylight, so stay tuned for future updates there. We have also signed an agreement to provide our extensive retail network to Transport Canberra for the MyWay project in Australia. The MyWay card is a form of electronic ticketing used for public transport, including light rail and buses.

Speaker Change: Moreover, we have a pipeline of opportunities we are pursuing for Skylight, so stay tuned for future updates there.

Speaker Change: We also signed an agreement to provide our extensive retail network to Transport Canberra for the MyWay project in Australia. The MyWay card is a form of electronic ticketing used for public transport, including light rail and buses.

Michael J. Brown: Customers can recharge their MyWay card at any of our participating retail locations. Now, we want to highlight some of the agreements that we launched during the quarter. In Belgium, we launched branded payment content with Aldi. In the UK, we launched B2B distribution of Sony PlayStation and MetaQuest gift cards. In Turkey, we launched branded payment distribution through Migros, one of Turkey's largest supermarket chains, along with gaming content on Binagame, a leading gaming website.

Speaker Change: Customers can recharge their MyWay card at any of our participating retail locations.

Speaker Change: And now we want to highlight some of the agreements that we launched during the quarter.

Speaker Change: In Belgium, we launched branded payment content with Aldi. In the UK, we launched B2B distribution of Sony PlayStation.

Speaker Change: and the META-CWEP.

Speaker Change: Gift Cards. In Turkey, we launched branded payment distribution through Migros, one of Turkey's largest supermarket chains.

Speaker Change: along with gaming content.

Michael J. Brown: In Germany, we launched B2B content distribution with TILA, a rewards and incentives platform. And lastly, we launched Xbox Game Pass distribution on Paytm and FamPay in India. And as you can see, ePay is more than just a content distributor. It is a diverse business with a strong pipeline of opportunity. While some of these new products will take some time to make an impact on the segment results, I remain confident that ePay will continue to produce strong growth into the future. Now, let's move on to slide number 14, and we'll talk about money transfer. Slide 14.

Speaker Change: into Binagame, a leading gaming website. In Germany, we launched B2B content distribution with Tila, a rewards and incentives platform. And lastly, we launched Xbox Game Pass distribution on Paytm and FamPay in India.

Speaker Change: And as you can see, ePay is more than just a content distributor. It is a diverse business with a strong pipeline of opportunity.

Speaker Change: While some of these new products will take some time to make an impact on the segment results, I remain confident that ePay will continue to produce

Michael J. Brown: In money transfer, we have developed the world's most strategic payments network for both consumers and businesses. We didn't become the second largest player in the world overnight by accident. We have consistently diversified our business, including who we sell to, the products we sell, and the channels through which we sell our products. Our money transfer business is so much more than the immigrant money transfer business that we acquired in 2007. To understand what drives money transfer, you need to understand the who, the what, and the how.

Speaker Change: Strong growth into the future. Now let's move on to slide number 14 and we'll talk about money transfer

Speaker Change: Slide 14. In money transfer, we have developed the world's most strategic payments network for both consumers and businesses.

Speaker Change: We didn't become the second largest player in the world overnight by accident. We have consistently diversified our business, including who we sell to, the product we sell, and the channels through which we sell our products.

Speaker Change: Our money transfer business is so much more than the immigrant money transfer business that we acquired in 2007.

Speaker Change: To understand what drives money transfer, you need to understand the who, the what, and the how. Who buys from our money transfer segment, what do we sell, and how do we sell it?

Michael J. Brown: Who buys from our money transfer segment, what do we sell, and how do we sell it? Over the years, we have been successful expanding the who of who buys from us. When we acquired RIA, it was largely a U.S.-based immigrant remittance business providing cross-border payments to family members in Latin American countries.

Speaker Change: Over the years, we have been successful expanding the Who.

Speaker Change: on Who Buys From Us. When we acquired RIA, it was largely a U.S.-based immigrant remittance business providing cross-border payments to family members in Latin American countries.

Michael J. Brown: We expanded the network globally through the acquisition of XE. We expanded that customer base to high-network-worth individuals and small to medium-sized businesses. We then further leveraged our network expansion through fintech and financial institutions. While we still sell cross-border payment transactions, we have expanded from simple remittance payments to family members to include payments to a broad array of cross-border payments ranging from general business payments, worker payments, cross-border payroll, and online purchase settlements. The question of what is is simple.

Speaker Change: We expanded the network globally through the acquisition of XE. We expanded that customer base to high network worth individuals and small to medium sized businesses.

Speaker Change: We then further leveraged our network expansion through fintech and financial institutions.

Speaker Change: While we still sell cross-border payment transactions, we have expanded from simple remittance payments

Speaker Change: to family members to include payments to a broad array of cross-border payments ranging from general business payments, worker payments, cross-border payroll, and online purchase settlements.

Michael J. Brown: We sell the movement of money or payment from point A to point B. Our network gives our customers access to send money to 198 countries and territories by the way of nearly 600,000 correspondent locations, 4 billion bank accounts, and 2 billion wallet accounts. Finally, how do we sell? We started with 42,000 physical bricks and mortar locations.

Speaker Change: The question of what is simple. We sell the movement of money or payment from point A to point B.

Speaker Change: Our network gives our customers access to send money to 198 countries and territories by the way of nearly 600,000 correspondent locations, 4 billion bank accounts and 2 billion wallet accounts.

Speaker Change: Finally, how do we sell? We started with 42,000 physical bricks-and-mortar locations 17 years ago and expanded that to digital send options through our apps and web channels and expanded to banks and fintech through APIs.

Michael J. Brown: 17 years ago, and we expanded that to digital send options through our apps and web channels and expanded to banks and fintech through API. Today, we have a multi-brand strategy helping us find growth outside of our traditional core. By leveraging our XE brand to penetrate adjacent high-income consumer markets and small to medium-sized businesses, we are expanding our total addressable market. In addition, our capabilities combine with evolving market trends, and Needs is positioning Dandelion Payments, our payment as a service brand, as a preferred partner for banks and fintechs who are trying to close the gap in global reach. The World Bank estimates that the remittance market will grow by 2.3% in 2024.

Speaker Change: Today we have a multi-brand strategy helping us find growth outside of our traditional core.

Speaker Change: By leveraging our XE brand to penetrate adjacent high-income consumer markets and small to medium-sized businesses, we are expanding our total addressable market. In addition, our capabilities combine with evolving market trends.

Speaker Change: and Needs are positioning Dandelion Payments, our payment-as-a-service brand, as a preferred partner for banks and fintechs who are trying to close the gap in global reach.

Speaker Change: The World Bank has estimated that the remittance market will grow by 2.3% in 2024. In prior quarters, you've heard me talk about how we have been growing three times faster than the market.

Michael J. Brown: In prior quarters, you've heard me talk about how we have been growing three times faster than the market. We continue to outperform the market and take market share. Our transactions grew by 9% in the first quarter and by 11% in the most recent quarter. You can do the math.

Speaker Change: We continue to outperform the market and take market share. Our transactions grew by 9% in the first quarter and by 11% in the most recent quarter. You can do the math. That is over four times faster than the market growth rate.

Michael J. Brown: That is over four times faster than the market growth rate. I am often asked whether I believe that this growth can continue. My answer is a resounding yes.

Speaker Change: I am often asked whether I believe that this growth can continue. My answer is a resounding yes. As I've said many times, this is a huge market. And we only have 7% of it. So there's still plenty of market share to gain.

Michael J. Brown: As I've said many times, this is a huge market, and we only have 7% of it. So there is still plenty of market share to gain. We can continue to outpace the market by continuing our geographical expansion of our network, both on the send and receive side of the transaction, by continuing to enhance the usability of our network with more use cases for remittances, and by continuing to compete for larger customers in the marketplace that are competitors that we never have to defend. And finally, by continuing to make investments in digital expansion. So what about our digital channel? A lot of people ask that question.

Speaker Change: We can continue to outpace the market by continuing our geographical expansion of our network both on the send and receive side of the transactions, by continuing to enhance the usability of our network with more use cases for remittances.

Speaker Change: and by continuing to compete for larger customers in the marketplace that are competitors that never had to defend and finally by continuing to make investments in digital expansion.

Michael J. Brown: Our digital channel has become increasingly important as emerging markets continue to modernize, creating increased financial inclusion and expanded use cases, leading to demand for digital send and receive payment methods. While others have struggled to modernize their payments infrastructure, our strategic enhancements and digital capabilities have positioned us to embrace these market trends. Our digital transactions growth accelerated to 24% compared to last year, and our new customer acquisition grew to 44%. We now have a digital presence in 24 countries, and we'll be adding a new market in the coming weeks.

Speaker Change: So what about our digital channel? A lot of people ask that.

Speaker Change: Our digital channel has become increasingly important as emerging markets continue to modernize creating increased financial inclusion and expanded use cases leading to demand for digital send and receive payment methods.

Speaker Change: While others have struggled to modernize their payments infrastructure, our strategic enhancements and digital capabilities have positioned us to embrace these market trends.

Speaker Change: Our digital transactions growth accelerated to 24% compared to last year, and our new customer acquisition grew to 44%.

Speaker Change: We now have digital presence in 24 countries and we'll be adding a new market in the coming weeks.

Michael J. Brown: Our execution of these strategies is highlighted by the market wins included on the slide. Some of the more significant ones include: during the quarter, our core business signed 16 new correspondent agreements across 14 countries, 21 new correspondents in 15 countries, and we launched them. These launches include a partnership with Banco Activo in Venezuela, augmenting real-time bank deposit capabilities to all bank accounts in the country. Remittances in Venezuela exceed $4 billion, which is more than 5% of their GDP, and are received by around 29% of Venezuelan households, according to the Remittance Industry Observatory.

Speaker Change: Our execution of these strategies are highlighted by the market wins included on the slide.

Speaker Change: Some of the more significant ones include, during the quarter, our core business signed 16 new correspondent agreements across 14 countries, 21 new correspondents in 15 countries.

Speaker Change: and we launched them.

Speaker Change: These launches include, we launched a partnership.

Speaker Change: with Banco Activo in Venezuela, augmenting real-time bank deposit capabilities to all bank accounts in the country. Remittances in Venezuela exceed $4 billion, which is more than 5% of their GDP.

Speaker Change: and are received by around 29% of the Venezuelan households according to the Remittance Industry Observatory.

Michael J. Brown: We launched our partnership with Al Fardan Exchange in the UAE, which connects us with one of the largest exchange houses in the region. According to Nomad, the UAE is the second largest remittance sending market in the world. We launched a partnership with Almula in Kuwait, the 10th largest send market in the world according to Nomad. Almula International Exchange Company is the largest exchange house in the country. Lastly, we signed an agreement with WeChat in China. A lot of you have probably heard of WeChat.

Speaker Change: We launched our partnership with Al Fardan Exchange in UAE, which connects us with one of the largest exchange houses in the region.

Speaker Change: According to Nomad, the UAE was the second largest remit and send market in the world. We launched a partnership with Almula in Kuwait, the tenth largest send market in the world, according to Nomad. Almula International Exchange Company is the largest exchange house in the country.

Michael J. Brown: WeChat is one of the largest mobile wallets in the world, and China is the third largest remittance receiving market in the world. As we head into the second half of 2024 with momentum and optimism, we are confident that our strategic investments will drive future growth. We have a lot of opportunities in the money transfer pipeline, including our scale and continued investment in new capabilities, new use cases, new geographies, and continued expansion of our real-time payments, which will drive our growth. Now, let's turn to the next slide, and we'll talk about our dandelion network.

Speaker Change: Lastly, we signed an agreement with WeChat in China. A lot of you have probably heard of WeChat. WeChat is one of the largest mobile wallets in the world, and China is the third largest remittance received market.

Speaker Change: in the world.

Speaker Change: As we head into the second half of 2024 with momentum and optimism, we are confident that our strategic investments will drive future growth.

Speaker Change: We have a lot of opportunities in the money transfer pipeline, including our scale and continued investment in new capabilities, new use cases, new geographies, and continued expansion of our real-time payments, which will drive our growth.

Michael J. Brown: Throughout the second quarter, we continue to win in the marketplace. Technology, connectivity, and global banking are evolving quickly, and they are shifting market needs. Our global payment network is positioned to meet those needs, not just for today, but for the future. Simply put, dandelion's capabilities are unmatched by any single competitor.

Speaker Change: Now let's turn to the next slide and we'll talk about our dandelion network.

Speaker Change: Throughout the second quarter, we continue to win in the marketplace. Technology, connectivity, and global banking are evolving quickly, and it is shifting market needs.

Speaker Change: Our global payment network is positioned to meet those needs, not just for today, but for the future.

Michael J. Brown: It is the heart of our money transfer segment, and it has enabled us to outpace the market growth in our RIA and XE products. Dandelion's existing client base continues to expand their use of Dandelion rails, including HSBC, which grew transactions by 170% sequentially just since Q1 of this year. In addition to the strong demand that we have seen from our existing clients during the quarter, we also signed agreements with Wire Barley, a leading South Korean fintech and digital money transfer company, with LightNet, a high-growth Singapore-based payment service provider serving consumers and businesses, and Sokin, a UK-based company that processes cross-border payments for small businesses.

Speaker Change: Simply put, dandelion capabilities are unmatched by any single competitor. It is the heart of our money transfer segment and it has enabled us to outpace the market growth in our RIA and XE products.

Speaker Change: Dandelion's existing client base continues to expand their use of Dandelion Rails, including HSBC, which grew transactions by 170% sequentially just since Q1 of this year.

Speaker Change: In addition to the strong demand that we have seen from our existing clients during the quarter, we also signed agreements with Wire Barley, a leading South Korean fintech and digital money transfer company.

Speaker Change: with LightNet, a high-growth Singapore-based payment service provider serving consumers and businesses, and Silken, a UK-based company which processes cross-border payments for small businesses.

Michael J. Brown: Moreover, in the second quarter of 2024, we also launched FlashPayments, an innovative Australia-based fintech that provides payments and FX services to SMEs, as well as ArcaPay, a payments company based in Lithuania, which supports SMEs in Europe for import-related and business-critical payments. I also see a robust pipeline that I look forward to updating you on as soon as we close those deals. To wrap up our money transfer segment, our growth trajectory is healthy and profitable, and we are well positioned to capture market opportunities with our expanding pipeline. Now, let's wrap up this quarter.

Speaker Change: Moreover, in the second quarter of 2024, we also launched FlashPayments, an innovative Australia-based fintech that provides payments and FX services to SMEs.

Speaker Change: as well as ArchiPay, a payments company based in Lithuania, which supports SMEs in Europe for the import-related and business-critical payments.

Speaker Change: I also see a robust pipeline that I look forward to updating you on as soon as we close those deals.

Speaker Change: To wrap up our money transfer segment, our growth trajectory is healthy, profitable, and we are well-positioned to capture market opportunities with our expanding pipeline. Now let's wrap up the quarter. Go on to the last slide.

Michael J. Brown: I can't emphasize enough my excitement about the growth our teams continue to deliver. Another record-breaking quarter, and as I mentioned earlier, one of our strengths is the diversity of our three segments. While we continue to strive for double-digit growth in each of the individual segments, our goal is to deliver consolidated double-digit growth results for the company. This quarter, EFT was the biggest contributor to our growth.

Speaker Change: I can't, I can't emphasize enough my excitement about the growth our teams continue to deliver. Another record-breaking quarter, and as I mentioned earlier, one of our strengths is the diversity of our three segments.

Speaker Change: While we continue to strive for double-digit growth in each of the individual segments, our goal is to deliver consolidated double-digit growth results for the company.

Speaker Change: This quarter, EFT was the biggest contributor to our growth. However, we have a strong pipeline of opportunities for all three segments to grow in the future.

Michael J. Brown: However, we have a strong pipeline of opportunities for all three segments to grow in the future. As we turn to the second half of 2024, what has driven our growth and what will continue to fuel that growth for the remainder of 2024 and beyond? Our strategy for growth is proven, and we have executed that strategy for the last 30 years.

Speaker Change: As we turn to the second half of 2024, what has driven our growth and what will continue to fuel that growth for the remainder of 2024 and beyond.

Speaker Change: Our strategy for growth is proven, and we have executed that strategy for the last 30 years. We will continue to take advantage of market opportunities.

Michael J. Brown: We will continue to take advantage of market opportunities and execute by making strategic investments like the MEPS investment in Malaysia, expanding into new countries like we did this quarter in Albania, growing and expanding our existing businesses like we have with our Merchant Services business, adding access fees to certain domestic and international transactions, closing deals in our pipeline of opportunities in all three segments, by adding new correspondence in the money transfer business, by continuing to grow our ATM outsourcing arrangement, by adding ePay content and digital to As I conclude my remarks, I want to repeat, we look forward to the second half of 2024 with a pipeline of opportunities to drive our results.

Speaker Change: and execute by making strategic investments like the MEPS investment in Malaysia, expanding into new countries like we did this quarter in Albania, growing and expanding our existing businesses like we have with our merchant services business.

Speaker Change: Adding access fees to certain domestic and international transactions.

Speaker Change: Closing deals in our pipeline of opportunities in all three segments.

Speaker Change: By adding new correspondence in the money transfer business, by continuing to grow our ATM outsourcing arrangements, by adding ePay content to both digital and physical channels.

Speaker Change: and making good capital allocation with a focus on growth, acquisition, and share repurchase as appropriate. As I conclude my remarks, I want to repeat, we look forward to the second half of 2024 with a pipeline of opportunities to drive our results.

Michael J. Brown: Our management team's proven history of delivering these opportunities is great, and we continue to be optimistic about the remainder of 2024. And for 2024, we affirm and remain consistent with our expectations that earnings will grow in the 10 to 15 percent range. And, of course, you know us; we are driving to be beyond that range. With that, we'll be happy to take questions. Operator, please assist. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Speaker Change: Our management team's proven history of delivering these opportunities is great. We continue to be optimistic about the remainder of 2024.

Speaker Change: And for 2024, we affirm and remain consistent with our expectations that earnings will grow in the 10-15% range, and of course, you know us, we are driving to be beyond that range.

Speaker Change: With that, we'll be happy to take questions. Operator, please assist. Operator As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced.

Operator: Please stand by while we compile the Q&A. Our first question comes from Andrew Schmidt. City Global Markets. Your line is now open, and you've got to understand the money transfer business is hyper-competitive, always has been. We really haven't seen much difference. You can see that our revenues per transaction or margins per transaction really haven't changed over the last couple of years. So even though we hear about competition, we really haven't felt it. And maybe one of the reasons for that is that we're growing four times faster than the market. I don't know.

Speaker Change: To withdraw your question, please press star 11 again.

Speaker Change: Please stand by while we compile the Q&A roster.

Michael J. Brown: So with respect, I don't see much change there. With respect to your second question of where do we spend the money, most of that was digital. You saw that our digital growth was 24% over the prior year, with 44% growth in our new customer acquisition. We've realized that our marketing is working. We've got actually a new set of executives been working on that over the last few quarters, and we see the results. So we thought that it would be worth making additional investment, mostly in digital. Perfect. Thank you for that, Mike.

Speaker Change: Our first question comes from Andrew Schmidt with Citi Global Markets. Your line is now open. Andrew Schmidt Hey, Mike. Hey, Rick. Thanks for taking my questions and I appreciate all the comments.

Andrew Garth Schmidt: So I just want to start off with money transfer. Good to see the continued share gains there. Maybe you could just discuss what you're seeing in the competitive environment. I've heard there's been some more positive market structure changes.

Speaker Change: in the U.S.

Speaker Change: Maybe you could put some points on that. And then, just more broadly, on the marketing expense...

Speaker Change: [inaudible]

Speaker Change: where that's being deployed, whether it sounds like it's digital, but it's confirmed as digital versus retail, and then the expectation for the remainder of the year there. Thanks a lot.

Speaker Change: Well, with respect to the competitive dynamics of the industry, you've got to understand the money transfer businesses.

Speaker Change: is hyper competitive, always has been. We really haven't seen much difference. You can see that our revenues per transaction or margins per transaction really haven't changed over the last couple of years.

Speaker Change: So even though we hear about competition, we really haven't felt it, and maybe one of the reasons for that is we're growing four times faster than the market. I don't know.

Speaker Change: You know, so with respect, I don't, I don't see much change there.

Speaker Change: With respect to your second question of where do we spend the money most of that was digital You saw that our digital growth was 24% over prior year with 44%

Speaker Change: growth in our new customer acquisition.

Speaker Change: We've realized that our marketing is working, we've got actually a new set of executives been working on that over the last few quarters. We see the results, so we thought that would be worth making additional investment. So mostly in digital.

Michael J. Brown: And then, maybe on the EFT segment, I appreciate the comments about the travel recovery, but if you could put a finer point on how the tourist ATM performance came in relative to your expectations. I know last year, we had some fluctuations in transactions. I'm wondering if trends are what you've had and any early observations in the third quarter. Yeah. So, last year, we didn't miss transactions. We missed spend per head, okay?

Speaker Change: Perfect. Thank you for that, Mike. And then, maybe on the EFT segment, I appreciate the comments about the travel recovery, but if you could put a finer point on

Speaker Change: How the Tourist ATM performance came in.

Speaker Change: Relative to your expectations, I know last year we had some fluctuations in transactions.

Michael J. Brown: And so, this year, it looks like it came in about where we thought it would. And as far as this whole travel recovery and everything, I think that's pretty much, you know, so we're at 95%, and we'll probably grow a little bit past that. At the end of the day, this whole travel question is finally in the rearview mirror.

Speaker Change: Transcripts provided by Transcription Outsourcing, LLC.

Speaker Change: We miss Ben Perhead, okay?

Speaker Change: And so this year, it looks like it came in about where we thought it would.

Speaker Change: And as far as this whole travel recovery and everything, I think that's pretty much, you know, so we're at 95% and we'll probably grow a little bit past that.

Michael J. Brown: So, I think, from this point forward, it's about network expansion. It's about making that network, you know, more effective by getting rid of the ATMs that aren't as effective. And then, of course, with EFT, we've got a big chunk of business coming from our EMS, from our merchant services. Oh, and did you hear the word access fees? I mean, that's what I've been hoping for for a long time.

Speaker Change: You know, at the end of the day, this whole travel question is finally in the rearview mirror. So, I think, you know, from this point forward, it's about network expansion. It's about making that network...

Speaker Change: You know, more effective by getting rid of the ATMs that aren't as effective. And then, of course, with EFT, we've got a big chunk of business coming, you know, from our EMS, from our merchant services business.

Michael J. Brown: And what that means now is that, you know, when you get travelers within the Eurozone going from a Euro to a Euro country, and that country, the recipient country now gets that traveler, and there are access fees, there's possibilities for me to make, you know, two to three times as much on that transaction as we did before. And that's in multiple countries. Now, I think we opened up three countries or something this quarter, we've got several more in the offing, that's going to give us a nice little boost in margin because it's the same transaction, same number of transactions, you're just making, you know, three times as much money as you used to. Absolutely. Yeah, I've been talking about those for some time, so it's good to see those come through. Thank you very much, Mike. I appreciate the comments. Thank you very much.

Steve: Oh, and did you hear the word access, please?

Steve: Amen.

Steve: That's what I've been hoping for, for a long time.

Steve: And what that means now is that...

Steve: You know, when you get travelers...

Steve: within the Eurozone, going from a Euro-to-Euro country, and that country, the

Steve: Their recipient country now gets that traveler and their access fees.

Speaker Change: There's possibilities for me to make, you know, two to three times as much on that transaction as we did before. And that's in multiple countries now. I think we lit up three countries or something this quarter. We've got several more in the offing. That's going to give us...

Speaker Change: A nice little boost in margin because it's the same number of transactions, you're just making three times as much money as you used to make.

Michael Brown: the Main. Absolutely. Yeah, we've been talking about those for some time, so it's good to see those come through.

Michael Brown: Finally, thank you, Michael. Yeah, yeah. Appreciate the comments, Mike. Thank you very much. Thank you.

Speaker Change: Absolutely. Yeah, we've been talking about those for some time, so it's good to see those come through. Finally! Thank you very much, Mike. Yeah. Appreciate the comments, Mike. Thank you very much.

Peter James Heckmann: Our next question comes from Pete Heckmann with DA Davidson; your line is now open. Hey, good morning. Thanks for taking the question. Follow me on to the ATM access fees. I think you said three more countries are potentially going here in the world that out potentially in three more countries. Lake of this year. I guess so far, the countries that have rolled it out don't appear to be big. Where you're going to have a big footprint, correct me if I'm wrong there, but you see some of the countries like Paul and Spain. Any of the countries you have a very large footprint, also considering allowing those.

Operator: Thank you. Our next question comes from Pete Heckman with DA Davidson. Your line is now open. Hey, good morning.

Speaker Change: Thank you. Our next question comes from Pete Heckman with D.A. Davidson. Your line is now open.

Peter James Heckmann: Thanks for taking the question. Following on from the ATM access fees, I think you said three more countries are potentially going to, you're going to roll that out potentially in three more countries later this year. I guess so far, the countries that have rolled it out don't appear to be big ones where Euronet has a big footprint. Correct me if I'm wrong there, but do you see some of the countries like Poland, Spain, Any of the countries where you have a very large footprint also considering allowing those ATM access fees? So yes, they are a little bit smaller countries. Some of them are really good little tourist destinations, you know, like those island countries of Cyprus and Malta, etc.

Peter James Heckmann: Hey, good morning. Thanks for taking the question. Following on to the ATM access fees, I think you said three more countries.

Michael J. Brown: But, and they were all Euro countries, you know, so being able to add access fees is a great thing for us. With respect to the bigger countries, you mentioned Spain. Spain, we already have surcharges and access fees in Spain. So that's not going to change too much.

Speaker Change: are potentially going, you're going to roll that out potentially in three more countries later this year. I guess so far, the countries that have rolled it out don't appear to be big.

Michael Brown: Yeah, so, so that yes, they are a little bit smaller countries. Some of them are really good little turrets countries, you know, like those island countries of Cyprus and Malta, et cetera. But so, but and they were all Euro countries, you know, so being able to add access fees is a great thing for us. With respect to the bigger countries, you mentioned Spain. Spain, we already have search arts and access fees and Spain. So that's not going to change too much. I think access fees for locals may come to. But that's going to be later in the year we would expect, but the point is it's coming now, finally, after hoping for a long time.

Speaker Change: Any of the countries where you have a very large footprint, also considering allowing those ACM activities.

Speaker Change: So that, yes, they are a little bit smaller countries, some of them are really good little tourist countries, you know, like those island countries of Cyprus and Malta, etc. But

Speaker Change: So, but and they were all Euro countries, you know, so being able to add access fees is a great thing for us.

Speaker Change: With respect to the bigger countries, you mentioned Spain. Spain, we already have surcharge and access fees in Spain.

Michael J. Brown: I think access fees for locals may come, too, but that's going to be later in the year, we would expect. But the point is, it's coming now. Finally, after hoping for a long time, we should be able to have access fees in most countries. It'd be nice to get them in Poland.

Speaker Change: So, that's not going to change too much. I think access fees for locals...

Speaker Change: may come too.

Speaker Change: But that's going to be later in the year, we would expect.

Michael Brown: We should be able to have access fees in most countries. It'd be nice to get an impolen. I don't see that happening this year, but we'll have to wait and see. Okay, okay. I think one of these markets you, you can make money on a cross currency transaction, but the locals, you know, get by for 30 cents. So that's. That will help us. In the interchange, and also I'm sorry, the interchange increases are happening as well. There is, I mean, the reality is we're not the only ones to own ATMs in Europe. The banks own them.

Speaker Change: But the point is, it's coming now. Finally, after hoping for a long time, we should be able to have access to these in most countries. It'd be nice to get it in Poland. I don't see that happening this year, but we'll have to wait and see.

Michael J. Brown: I don't see that happening this year, but we'll have to wait. Okay, okay. And then just...

Peter James Heckmann: But it's all, it's all, yeah, it's all pure margin fee, you know, I mean, that's, that's the nice thing. And in a lot of these markets, you can make money on a cross-currency transaction, but the locals, you know, get by for 30 cents. So that's, that will help. And the interchange, and also, I'm sorry, the interchange increases are happening as well. There is, I mean, the reality is we're not the only ones to own ATMs in Europe. The banks own them.

Speaker Change: Okay, okay. And then just one comment.

Speaker Change: Yeah, it's all pure margin fee, you know, I mean, that's, that's the nice thing. And, and in a lot of these markets, you, you can make money on a cross currency transaction, but the locals, you know, get by for 30 cents. So that's, that will help us.

Speaker Change: And also, I'm sorry, the interchange increases are happening as well. The reality is, we're not the only ones to own ATMs in Europe . The banks own them. The big banks with the big...

Michael J. Brown: The big banks with a lot of overhead are over here allowing internet banks to utilize their ATM infrastructure at, you know, a third or a fifth of what it really costs them. So they're basically subsidizing their competitors, so the big banks are pushing for interchange increases. That's why we're starting to see that happen as well. Okay, that's great. That's great. I just wanted to follow up on the internal money transfer.

Michael Brown: The big banks with the big. With a lot of overhead, are over here allowing internet banks to utilize their ATMs infrastructure at, you know, a third or a fifth of what it really cost them. So they're basically subsidizing their competitors. So the big banks are pushing for interchange increases. That's why we're starting to see that happen as well. Okay, that's that's great. That's right.

Speaker Change: with with a lot of overhead are over here

Speaker Change: allowing internet banks to utilize their ATM infrastructure at, you know, a third or a fifth of what it really cost them. So they're basically subsidizing their competitors, so the big banks are pushing for interchange increases. That's why we're starting to see that happen as well.

Peter James Heckmann: I think there's a comment that some competitors were either exiting markets or something about competitor consolidation. And you had new agent accounts are up thirty-five percent year over year. Can you just give a little more color on that?

Peter Heckmann: I just wanted to follow up on the within money transfer. I think there's a comment that some competitors are either exiting markets or something about container consolidation. And you had new agent accounts around 35% year over year. Can you just give them more color on that. Okay, so yes, that's happening, but you know what, to be honest, that's always kind of happening. It's a hyper-competitive market. We saw two larger guys kind of go belly up this last quarter or so, but there's always somebody, you know, and their transactions, their money transfers, you know, get spread out across the industry because we're growing faster than everybody else.

Speaker Change: Okay, that's that's great. That's great. I just wanted to follow up on the within money transfer I think there's a comment that that some competitors were either exiting markets or something about competitor consolidation And you had new agent accounts were up 35% year-over-year. Can you just

Michael J. Brown: Okay. So, yes, that's happening. But you know what? To be honest, that's always kind of happening. It's a hyper-competitive market. We saw two larger guys kind of go belly up this last quarter or so.

Speaker Change: give a little more color on that. Okay, so

Speaker Change: So yes, that's happening. But you know what? To be honest, that's always kind of happening. It's a hyper-competitive market.

Peter James Heckmann: But there's always somebody, you know, and their transactions, their money transfers, you know, get spread out across the industry because we're growing faster than everybody else. You know, we kind of get more than our fair share. Okay. Okay. I'll get back in the queue.

Speaker Change: We saw two larger guys kind of go belly-up.

Speaker Change: Last quarter or so, but there's always somebody, you know, and their transactions, their money transfers, you know, get spread out across the industry. Because we're growing faster than everybody else, you know, we kind of get more than our fair share.

Unknown Executive: You know, we kind of get more than our fair share. Got it. Okay, I'll get back in the key. I appreciate it. Thank you.

Speaker Change: Got it. Okay, I'll get back in the queue. I appreciate it.

Operator: I appreciate it. Thank you. Our next question comes from Charles Nabhan with Stevens. Your line is now open.

Charles Nabhan: Our next question comes from Charles Nabhan, with Steven's your line. It's not open. Good morning, and thank you for taking my question.

Speaker Change: Thank you. Our next question comes from Charles Nabhan with Stevens. Your line is now open.

Charles Joseph Nabhan: Good morning and thank you for taking my question. With the acquisition of the ATM in Malaysia this quarter, I was wondering if you could just kind of level set for us and give us a sense of what the fleet looks like from a geographic...

Rick Weller: With the acquisition of the ATMs in Malaysia this quarter, I was wondering if you could just kind of level set for us and give us a fleet looks like from a geographic standpoint in terms of how much is in Asia, how much is in Europe, how you think about that fleet from a travel versus local or domestic concentration standpoint? So we got a little bit of a mixed bag here. The ATMs we just bought in Malaysia are focused more on locals, but of course there are international travelers to that. In the other markets where we deploy our own ATMs, we're really focusing more on travelers, but we're catching a lot of the locals too because those developing markets are just under ATMs, you might say.

Charles Joseph Nabhan: Good morning, and thank you for taking my question. With the acquisition of the ATMs in Malaysia this quarter, I was wondering if you could just kind of level set for us and give us a sense for what the fleet...

Charles Joseph Nabhan: In terms of, you know, how much is in Asia? How much is in Europe? How you think about that, I believe, from a travel versus a business perspective, local or domestic concentration. So we've got a little bit of a mixed bag here.

Charles Joseph Nabhan: looks like from a geographic standpoint, in terms of, you know, how much is in Asia, how much is in Europe , you know, how you think about that, I believe, from a travel versus local or domestic concentration standpoint.

Michael J. Brown: The ATMs we just bought in Malaysia are focused more on locals, but of course, there are international travelers to that. In the other markets where we deploy our own ATMs, we're really focusing more on travelers, but we're catching a lot of locals, too, because those developing markets are just under the ATMs, you might say. You know, so both the locals and the international tourists, I do need access to cash. As far as the total number goes, Rick, maybe you can help me here. Rick In Malaysia, there were about 800 ATMs, and they're all in Malaysia. None of those are in Europe or whatever.

Speaker Change: So, we got a little bit of a mixed bag here. The ATMs we just bought in Malaysia are focused more on locals, but of course there are international travelers to that.

Speaker Change: in the other markets where we deploy our own ATMs, we're really focusing more on travelers, but we're catching a lot of the locals too, because those developing markets are just under ATMs, you might say, you know, so both the locals and the international tourists do need

Rick Weller: You know, so both the locals and the international tourists do need access to cash. As far as the total number, Rick, maybe you can help us over here. In Malaysia, it was about 808. Yeah, and they're all in Malaysia. That kind of those are in Europe or whatever. Right. But as far as outside of Europe versus inside of Europe, you know, we mentioned Asia, we mentioned North Africa. Between across all of we must have 3, 3, 3, 580 ms, something like that. Yeah, I imagine outside of Europe. Oh yeah. And I would tell you that, you know, the concentration of ATMs deployed during the first half of the year, it's been a larger focus outside of Europe than inside of Europe.

Speaker Change: Do need access to cash. As far as the total number, Rick, maybe you can help me here. In Malaysia, it was about 800 ATMs. And they're all in Malaysia. None of those are in Europe or whatever.

Rick L. Weller: Right. But as far as outside of Europe versus inside of Europe, you know, we mentioned Asia, we mentioned North Africa, between, Across all of them, we must have 3,3500 ATMs-ish, something like that. I imagine outside of Europe.

Rick L. Weller: Right, but as far as outside of Europe versus inside of Europe , you know, we mentioned Asia, we mentioned North Africa, between

Rick L. Weller: Across all of them, we must have 3,500 ATMs-ish, something like that.

Michael J. Brown: Oh, yeah. And I would tell you that, you know, the concentration of ATMs deployed during the first half of the year has been a larger focus outside of Europe than inside of Europe. And you know, we've been talking about that for some time, that we see a number of new markets to go to. We see good opportunities in the Asian markets, those North African markets, the South American markets. And I would expect that we'll continue to see that kind of progress. Helpful caller.

Speaker Change: And I would tell you that, you know, the concentration of ATMs deployed during the first half of the year, it's been a larger focus outside of Europe than inside of Europe .

Rick L. Weller: And, you know, we've been talking about that for some time; that we see a number of new markets to go. We see good opportunity in the Asian markets, those North African markets, the South American markets, and I would expect that we'll continue to see that kind of progress. Got it, um, helpful color. I appreciate that.

Speaker Change: And, you know, we've been talking about that for some time, that we see a number of new markets to go to. We see good opportunity in the Asian markets, those North African markets, the South American markets.

Speaker Change: and I would expect that we'll continue to see that kind of progress.

Charles Joseph Nabhan: I appreciate that. As my follow-up, I believe you commented on ePay, the comps getting a little easier in the back half of the year and potentially exiting, exiting 24 at mid to upper single-digit operating income growth. I guess I first wanted to make sure I heard that correctly.

Rick Weller: So as my follow-up, um, I believe you had commented on, um, on EPA, the cops getting a little easier in the back half of the year, and potentially exiting, um, exiting 24 at, um, mid to upper single digit operating income growth. I guess, like a first one, to make sure I heard that correctly. And then secondly, um, I wanted to get a get some color around the revenue side of that equation. So if we're exiting and mid to high single digit, um, operate operating income growth, how should we think about that from a revenue standpoint?

Speaker Change: Got it. Helpful caller. I appreciate that. So as my follow-up,

Speaker Change: I believe you had commented on on ePay the comps getting a little easier in the back half of the year and potentially exiting

Speaker Change: exiting 24 at mid to upper single-digit operating operating income growth. I guess I first wanted to make sure I heard that correctly.

Michael J. Brown: Secondly, I wanted to get some color around the revenue side of that equation. So if we're exiting at mid to high single-digit operating income growth, how should we think about that from a revenue standpoint? Yeah, we would always say that our operating income will grow at a rate a little faster than our revenue because we enjoy the benefits of leverage and, and, and that, but, but, yeah, I believe you did hear it right is that we expect the operating income growth to pick up here in the second half of the year because we're going to get the benefit of the execution of some of these promotional programs that we didn't see in the second quarter.

Speaker Change: And then secondly, I wanted to get some color around the revenue side of that equation, so if we're exiting at mid to high single digit operating income growth, how should we think about that from a revenue standpoint?

Rick Weller: Yeah, we would always say that our operating income will grow at a rate little faster than our revenue because we enjoy the benefits of leverage, and that, uh, but, but yeah, I believe you did hear it right, is that we expect the operating income growth to pick up here in the second half of the year. We're going to get the benefit of the execution of some of these promotional programs that we didn't see in the second quarter. And, um, we're, as I said, we would anticipate for the full year of our EPA that will, you know, be in that, uh, mid to upper single digit operating income growth range for the full year, which then, you know, by definition means that as we, as we go through the second half of the year, we're going to see, you know, even stronger numbers to get to that for the full year.

Speaker Change: Yeah, we would always say that our operating income will grow at a rate a little faster than our revenue because we enjoy the benefits of leverage.

Speaker Change: and that. But I believe you did hear it right, is that we expect the operating income growth to pick up here in the second half of the year. We're going to get the benefit of the execution of some of these promotional programs that we didn't see in the second quarter. And we're, as I said, we would anticipate for the full year of our ePay, that we'll be in that mid to upper single digit operating income growth range for the full year, which then, by definition, means that as we go through the second half of the year, we're going to see even stronger numbers to come.

Michael J. Brown: And we're, as I said, we would anticipate for the full year of our ePay business that we'll be in that mid to upper single-digit operating income growth range for the full year, which then, by definition means that as we go through the second half of the year, we're going to see, you know, even stronger numbers to get to that for the full year. So, yes, I think you heard me correctly that we should expect to see more momentum build in the second half of the year for ePay. And a little bit more, as Rick said; it's a little bit more weighted for the fourth quarter.

Rick L. Weller: So, yes, I think you heard that correct that we should expect to see more momentum build in the second half of the year for EPA. And a little bit more, as Rick said, it's a little bit more weighted for the fourth quarter. I mean, these, these promotions are signed up. We will implement them. We kind of know what's happening. So we know the time; you know, so there'll be more in the fourth quarter than in the third quarter. Report. Thanks again. Thank you.

Speaker Change: get to that for the full year. So, yes, I think you heard that correct, that we should expect to see more momentum build in the second half of the year for EPA. And a little bit more, as Rick said.

Rick L. Weller: It's a little bit more weighted for the fourth quarter. I mean, these promotions are signed up. We will implement them. We kind of know what's happening. So we know the timing of them. So there'll be more in the fourth quarter than in the third quarter.

Speaker Change: Got it. Thanks again.

Unknown Executive: Our next question comes from Darren Peller with Wolf Research. Your line is now up. Hi, this is Daniel Krebs on for Darren. I wanted to talk a bit about immersion services and high rayas. Is this expanded beyond grief yet?

Michael J. Brown: I mean, these promotions are signed up. We will implement them. We kind of know what's happening. So we know the timing of them. So there'll be more in the fourth quarter than in the third quarter. Got it, thanks again. Our next question comes from Darrin Peller with Wolf Research. Your line is now open. Daniel Krebs: Hi, this is Daniel Krebs on for Darrin.

Speaker Change: Thank you. Our next question comes from Darrin Peller with Wolf Research. Your line is now open.

Darrin David Peller: I wanted to talk a bit about Immersion Services and Hireus. Has this expanded beyond Greece yet, and how should we think about the sizing and impact of expansion into Spain, Portugal, and Italy in the coming years? Thanks. Okay, so most of the growth that the stellar growth that you saw in the second quarter was in Greece, but we are now expanding. We've signed up, you know; we've got sales forces out there pitching our product now in those three countries that you mentioned, which are Portugal, Spain, and Italy. So we've got a great platform. It's like it's screamingly successful in Greece.

Daniel Krebs: Hi, this is Daniel Krebs on for Darrin. I wanted to talk a bit about Immersion Services and Piraeus. Has this expanded beyond Greece yet? And how should we think about the sizing and impact of expansion into Spain, Portugal, and Italy across the coming years? Thanks.

Unknown Executive: And how should we think about the sizing and impact of expansion into Spain, Portugal, and Italy across the coming years? Thanks. Okay, so most all the growth, the stellar growth that you saw in the second quarter was in grief. But we are now expanding. We've signed up; you know, we've got sales forces out there pitching our product now in those three countries that you mentioned, which are Portugal, Spain, and Italy. So we've got a great platform. It's like it's scream and successful in Greece. We want to use that and attract similar merchants in these other Mediterranean-touching country.

Speaker Change: Okay, so most all the growth that

Speaker Change: A stellar growth that you saw in the second quarter was in Greece.

Speaker Change: But we are now expanding. We've signed up, you know, we've got sales forces out there pitching our product now in those three countries that you mentioned, which are Portugal, Spain, and Italy.

Michael J. Brown: We want to use that and attract similar merchants in these other Mediterranean countries. We'll see more of that over the coming quarters because we're just starting there. But in the meantime, you know, with 15,000 new merchants per quarter for the last several quarters, that's pretty amazing. And we'll just keep growing.

Speaker Change: So, we've got a great platform, it's like...

Speaker Change: It's screaming successful in Greece. We want to use that and attract similar merchants in these other Mediterranean-touching countries. We'll see more of that over the coming quarters because we're just starting there. But in the meantime, you know, with 15,000.

Unknown Executive: We'll see more of that over the coming quarters because we're just starting there. But in the meantime, you know, with 15,000, we're getting new merchants per quarter for the last several quarters. That's pretty amazing. And we'll just keep, we'll just keep growing those. Got it, understood.

Speaker Change: Freaking new merchants per quarter for the last several quarters. That's pretty amazing. And we'll just keep we'll just keep growing those

Darrin David Peller: So do you expect that 15,000 merchant per quarter number to step up now with this geographic expansion or kind of more of the same going forward? Well, we'll just say that we're growing well faster than the market and we're going to continue to do our best. We'll find out what those numbers are. Obviously, if we can get into new markets, that would help us because most of those 15,000 were just in one market. And Greece is a great market, but it has 10 million people, and it's only so big.

Unknown Executive: So do you expect that 15,000 merchants per quarter number to step up now with this geo expansion or kind of more of the same going? Well, we'll just, we'll, we'll just say that we're growing well faster than the market. And, and we're going to continue to do our best. We'll find out what those numbers are. Obviously, if we can get into new markets, that would help us because most all those 15,000 are just in one market. And, you know, Greece is a great market, but it's 10 million people. And it's only so big.

Speaker Change: Got it, understood. So do you expect that 15,000 merchant per quarter number to step up now with this geo-expansion, or kind of more of the same going forward? Well, we'll just say that we're growing well faster than the market.

Michael J. Brown: So being able to get into three new huge markets would be really nice. Yeah, understood. That sounds great.

Speaker Change: and we're going to continue to do our best. We'll find out what those numbers are. Obviously, if we can get into new markets, that would help us because most all those 15,000 were just in one market.

Unknown Executive: So being able to get into three new huge markets would be really nice. Yeah, understood. That sounds great. Thank you so much for the color. Thank you.

Speaker Change: And, you know, Greece is a great market, but it's 10 million people and it's only so big. So being able to get into three new huge markets would be really nice.

Speaker Change: Yeah, understood. That sounds great. Thank you so much for the call.

Ken Satoski: Our next question comes from Ken Satoski with Autonomous Research. Your line is now open. Hey, good morning, Mike and Rick. Thanks for taking the question.

Darrin David Peller: Thank you so much for the call. Thank you. Our next question comes from Ken Suchoski with Autonomous Research. Your line is now open. Hey, good morning, Mike and Rick.

Speaker Change: Thank you. Our next question comes from Ken Suchoski with Autonomous Research. Your line is now open.

Kenneth Christopher Suchoski: Thanks for taking the question. Maybe just on the direct access fees. I mean, did something change in the market that allowed you to introduce those fees? And, I guess, is there any way to quantify the upside to revenue and operating income, you know, either this year or next year, from direct access fees and higher interchange rates? Thank you.

Rick Weller: Maybe just on the direct access seas, I mean, did something change in the market that allowed you to introduce those seas? And I guess, is there any way to quantify the upside to revenue and operating income, you know, either this year or next year from direct access and higher interchange rates? Thank you.

Kenneth Christopher Suchoski: Hey, good morning, Mike and Rick. Thanks for taking the question. Maybe just on the direct access fees, I mean, did something change in the market that allowed you to introduce those fees?

Speaker Change: And I guess, is there any way to quantify the upside to revenue and operating income, you know, either this year or next year, from direct access fees and higher interchange rates?

Rick L. Weller: Well, yeah, quantification, we'll hold off on that. I mean, we've tried to, you know, give you some good perspective that we expect our earnings to be growing 10 to 15%. As we've shown you, we've already grown it, you know, well outside that range for the first half of the year, and we feel very good about our opportunities to continue forward. This will just give us more confidence at delivering those kinds of results and put us in a good position to continue that growth trend into next year. Because obviously, this year, we're only going to get a small part of it because we're only getting a part of a year of it.

Rick L. Weller: Well, yeah, quantification will hold off on that. I mean, we've tried to, you know, give you some good perspective that we expect our earnings to be growing 10 to 15%. As we've shown you, we've already grown it, you know, well outside that range for the first half of the year. And we feel very good about our opportunities to continue forward. This will just give us, you know, more confidences at delivering those kinds of results and putting us in a good position to continue that growth trend into next year. Because obviously this year, we're only going to get a small part of it because we're only getting a part of a year of it.

Speaker Change: Well, yeah, quantification will hold off on that. I mean, we've tried to, you know, give you some good perspective that we expect our earnings to be growing 10 to 15%. As we've shown you, we've already grown it.

Speaker Change: You know, well outside that range for the first half of the year, and we feel very good about our opportunities to continue forward. This will just give us, you know, more confidences at delivering those kinds of results and putting us in a good position to continue that growth trend into next year.

Kenneth Christopher Suchoski: In some of those cases, we may only be getting a month or two of them, which means that next year, that's going to be lining up for growth contributors there. So, we'll hold off on giving specific sizes of numbers, but suffice it to say that it really reinforces our confidence in growth this year and puts us in a very good position to see a path to similar double-digit growth rates for next year.

Rick Weller: In some of those cases, we may only be getting a month or two of it, which means that next year that's going to be lining up for growth contributors there.

Speaker Change: Because obviously this year, we're only going to get a small part of it because we're only getting a part of a year of it. In some of those cases, we may only be getting a month or two of it, which means that next year, that's going to be lining up for growth contributors there. So we'll hold off on giving sizings of numbers.

So we'll hold off on giving sizing of numbers. But suffice it to say, is that it really reinforces our confidences for growth this year and puts us in a very good position to see a path to similar double-digit growth rates for next year. Again, consistent with what we've done over the last 10 to 20 years.

Speaker Change: But suffice it to say is that it really reinforces our confidences for growth this year and puts us in very good position to see a path.

Kenneth Christopher Suchoski: Again, consistent with what we've done over the last 10 to 20 years. Okay, and just to be clear there, I mean, can you go into other markets and add the surcharging fees? Or does the does a rule have to be put in place?

Speaker Change: to similar double-digit growth rates for next year, again, consistent with what we've done over the last 10 to 20 years.

Speaker Change: Okay and and just just to be clear there I mean can you go into other markets and add these surcharging fees or is the does a does a rule have to be put in place?

Rick L. Weller: for that to happen. It does have to, there's a complicated kind of web of things that have to happen anywhere from card scheme rules to regulatory rules and things like that. So, but if you kind of go back, you know, several quarters and look, we've been talking about this now for several quarters. We can kind of read the tea leaves.

Speaker Change: for that to happen.

Speaker Change: It does have to, there's a complicated kind of web of things that have to happen anywhere from card scheme rules to regulatory rules and things like that. So, but if you kind of go back, you know, several quarters and look, we've been talking about this now for several quarters. We can kind of read the tea leaves.

Rick L. Weller: As Mike said, you know, these banks have gone years with cost increases and no increases in interchange rates. And there are more and more competitors that are non-bank competitors in the market, and those guys aren't deploying ATMs.

Speaker Change: As Mike said, you know, these banks have gone years with cost increases and no increases in interchange rates, and there's more and more competitors that are non-bank competitors in the market, and those guys aren't deploying ATMs, they're just living off of the benefit of their competitor. And so the environment's changing.

Rick L. Weller: They're just living off of the benefit of their competitors. And so the environment's changing. We're seeing that the banks are kind of getting to the end of their rope on this. We're seeing where, like in the UK a few years ago when LINC took down the rates, and ATMs were pulled out of the market. Now they've come back in, and they said you must keep ATMs in place and offered some additional incentives for ATM owners to keep them there. So, we've seen this kind of development, and we can't tell you exactly how many more countries will be available next year when they'll open up.

Speaker Change: We're seeing that the banks...

Speaker Change: are kind of getting to the end of their rope on this.

Speaker Change: We're seeing where like even in the UK, a few years ago when Link took down the rates and ATMs were pulled out of the market, now they've come back in and they said, you must keep ATMs in place and offered some additional incentives for ATM owners to keep ATMs there. So we've seen this kind of developing and we can't tell you exactly how many more countries will be available next year, when they'll open up.

Kenneth Christopher Suchoski: But we really feel confident that the inertia is moving in our direction on both the access fee front and the interchange front. Okay, great. That's really helpful, Rick. And then maybe just regarding the increased digital marketing spend on money transfer. I mean, why do this now?

Speaker Change: But we really feel confident that the inertia is moving in our direction on both the access fee front and the interchange front.

Rick L. Weller: Was there something you saw in the market from an opportunity standpoint, and you wanted to grow your digital footprint? I think digital is just 12% of transactions. Or was it more of a response to what competitors were doing in the market?

Speaker Change: Yeah.

Speaker Change: Okay, great. That's really helpful, Rick.

Speaker Change: And then maybe just regarding the increased digital marketing spend and money transfer. I mean, why do this now?

Speaker Change: something you saw in the market from an opportunity standpoint, and you wanted to grow your digital footprint. I think digital is just 12% of transactions, or was it more of a response to what competitors were doing in the market?

Kenneth Christopher Suchoski: Yeah, it didn't really have anything to do with competitors. We've got kind of a new digital marketing team over the last year. The results have been quite improved over the last year. And so, you know, we just want to put a little bit more gasoline on the fire of expansion because we see the results at the end of the day. Digital marketing, you know, should bring results. And if they're not bringing enough, you use less marketing.

Speaker Change: Yeah, it didn't really have anything to do with competitors.

Speaker Change: We've got kind of a new digital marketing team over the last year. The results have been quite improved over the last year. And so, you know, we just wanted to put a little bit more gasoline on the fire of expansion because we saw the results.

Speaker Change: At the end of the day, digital marketing is, you know, should bring results, and if they're not bringing enough, you use less marketing. So, but...

Rick L. Weller: So, we're happy with what we've seen. Well, we saw those results, which is the first and most important piece. And then secondly, we feel very good about what our earnings contribution for this year is going to be, and we feel that we have the earnings stream to be able to invest. Okay, great. All right, thanks, Rick. Yeah, and still pick up a million shares of stock on the side.

Speaker Change: We're happy with what we've seen. Well, we saw those results, which is the first and most important piece, and then secondly, we feel very good about what our earnings contribution for this year is going to be, and we felt that we had the, you know, the earnings stream to be able to invest in it.

Speaker Change: Yeah. Okay, great. All right. Thanks, Rick. Thanks, Mike.

Speaker Change: Yeah, and still pick up a million shares of stock on the side.

Kenneth Christopher Suchoski: Thank you. Our next question comes from Mike Grondahl with Northland Securities. Your line is now open.

Speaker Change: Thank you. Our next question comes from Mike Grondahl with Northland Securities. Your line is now open.

Michael John Grondahl: Hey guys, just to follow up on the 3.9 million marketing advertising spending for. Any regions to call out where you spent more of that, or was that kind of even across the globe? It's kind of even with where our transactions come from. We get the bulk of our transactions from the U.S., but most of it was there, but we spread it out and got it. And by the way, that 3.9 million was an increase in spend. It doesn't mean that if you take that away, we have no spend. That was just an increase this quarter over the run rate that we've had.

Michael John Grondahl: Hey guys, just a follow-up. The $3.9 million marketing advertising spending for money transfer, any regions to call out where you spent more of that or was that kind of even across the globe?

Speaker Change: It's kind of even with where our transactions come from. We get the bulk of our transactions from the U.S., but most of it was there, but we spread it out.

Speaker Change: Got it. And then...

Speaker Change: And by the way, that $3.9 million was an increase of spend. It doesn't mean that we, if you take that away, we have no spend. That was just an increase this quarter over the run rate that we've had. Yeah, the incremental amount. Great.

Michael John Grondahl: Yeah, the incremental amount. Great. Yeah. And then, hey, when you say access, is that a fee on top of, like, domestic interchange? or well, okay, usually, the way these things work is if you're a domestic access fee is the technical term for a surcharge, and usually, in these markets, the way it works is if you can do a domestic access, if you can do a daf, you then don't get the interchange.

Speaker Change: And then, hey, when you say access fees, Mike,

Speaker Change: Is that a fee on top of domestic interchange?

Mike: Well, okay, so usually the way these things work is, if you're, domestic access fee is the technical term for a surcharge.

Speaker Change: And usually in these markets, the way it works is if you can do a domestic access, if you can do a DAF, you then don't get the interchange.

Michael J. Brown: Okay, so this interchange at $0.20 or $0.30 or whatever goes away, but you pick up $2 or $3 on the domestic exit, got it. And I know you guys won't comment on a range for, let's say, 2025 from staff, but on average, is a fee going up, I don't know, 10 cents, 20 cents per transaction? Is there any metric you can give us to help us kind of size it

Speaker Change: Okay so this interchange at 20 cents or 30 cents or whatever goes away but you pick up two or three dollars on the domestic access fee.

Speaker Change: Got it. And I know you guys won't kind of comment on a range for, let's say, 2025.

Speaker Change: from these DAFs, but on average, is a fee going up, I don't know, $0.10, $0.20 per transaction? Is there any metric you can give us to help us kind of size it?

Michael John Grondahl: Okay, so you got to be careful because we've got a mix of transactions. So you don't necessarily have to dap. You know, like, like, let's say you've got a Euro card, I don't know, it's issued in France, and it goes to Romania or whatever. No, Romania doesn't have, let's say it goes to Cyprus, which is Euro as well.

Speaker Change: Okay, so you've got to be careful because we've got a mix of transactions, so you don't necessarily DAF...

Speaker Change: You know, like, like, let's say you've got a euro.

Speaker Change: Card, I don't know, it's issued in France and it goes to Romania or whatever. No, Romania doesn't have Let's say it goes to Cyprus, which is Euro as well. Okay, so before that

Michael J. Brown: Okay. So before that, we would make what's called an international interchange fee, which would be about one euro. Well, now we can make three euros more on each transaction by signing these network participation deals, which allow us to sell our transactions on a wholesale basis to people like these internet banks. So there's just a whole bunch of different things.

Speaker Change: We would make what's called an international interchange fee which would be about one euro. Well now we can make three euros.

Speaker Change: got it.

Speaker Change: And that's all margin. But you've got, you know, you can't say, you can't multiply it across all the transactions because we have cross-border transactions, cross-currency transactions, local transactions.

Speaker Change: It's a mixed thing. Network participation where we have arrangements. Yeah, we have network participation agreements in a lot of these markets. Actually, when DAF comes to a market, it gives us an opportunity to actually acquire even more transactions.

Speaker Change: by signing these network participation deals, which allow us to sell our transactions on a wholesale basis to people like these internet banks.

Michael J. Brown: But at the end of the day, it's pricing pressure up, you know. And the other thing that this does, which is so different from interchange, bear in mind that interchange, we have no just say in what that number is going to be. We have to take the 30 cents, and that's it. That's all you get. In the access fee world, we have some decisions that we can make on the price of that transaction. We could set it at two, we could set it at three euros, or we could set it at one euro.

Speaker Change: So there's just a whole bunch of different things.

Speaker Change: Sure. Well, hey, I'm glad you're getting a little bit of coverage. But at the end of the day, it's pricing pressure up.

Speaker Change: You know, and the other thing that this...

Speaker Change: This does, which is so different than interchange, bear in mind that interchange we have no just say in what that number is going to be. We have to take the 30 cents and that's it. That's all you get.

Speaker Change: In the access fee world, we have some decision-making that we can make on the price of that transaction.

Michael J. Brown: It really gives us more flexibility to manage our business than simply take whatever the card schemes are going to give you. Yeah. You can really, you know, use some price elasticity algorithms to figure out what the maximum is for.

Speaker Change: We could set it at 2, we could set it at 3 euro, we could set it at 1 euro. It really gives us more flexibility to manage our business than just simply take whatever the card schemes are going to give you.

Speaker Change: You can really, you know, use some price elasticity algorithms to figure out what maximum is for us.

Michael John Grondahl: Great. Well, hey, I'm glad you guys got that tail. It would be nice to get a little bit more color.

Speaker Change #100: Great. Well, hey, I'm glad you guys got that tailwind and be nice to get a little bit more color in the future quarters. Thanks, guys. Yeah, yeah.

Michael John Grondahl: Thanks, guys. Yeah. Yeah. Thank you. Our next question comes from Gus Galla with Moness Crispy Heart and Company. Your line is now open. Hi, Rick.

Speaker Change #100: Thank you. Our next question comes from Gus Galla with Moness Crespi Art & Company. Your line is now open.

Gus Galla: Hi Mike. Thanks for taking the questions. So, I think looking back after the emergent services, PRAIS, acquisition, Uh, you talked about structural margin, kind of a decrease in the F- Um, it's now been two quarters of plus 60 incrementally, but the margin, taking all the commentary on what's happening to the ATM fleet, beyond the access fees, just like the potential for geographic, like, that changes over time, and then REN, the margin structure is closer or Going back a year or two years, I'd definitely say yes. Okay?

Gus Galla: Hi Rick, hi Mike, thanks for taking the questions. So I think looking back after the emergent services PRAIS acquisition, you talked about structural margin, kind of a decrease in EFT. You know, it's now been two quarters of plus 60 incrementally with the margins.

Speaker Change #102: Taking all the commentary on what's happening to the ATM fleet beyond the access fees, just like the potential for geographic, like, that makes changing over time, and then REN.

Speaker Change #103: Do we think maybe the margin structure is closer or even better than we thought it was going to be going back, you know, a year or two years?

Rick L. Weller: But I think going back to, let's say, call it 19, in 19, I would say that we had a much lower cost structure. You know, the cost over these last few years has been very, very significant. And so, you know, my sense is that, certainly compared to a couple of years ago, definitely yes. And I would probably be more bullish today on what that operating margin in EFT would look like than I would have been six months ago because we're seeing the realization of some of these access fee opportunities come to the table.

Speaker Change #104: Going back a year or two years, I'd say definitely yes, okay, but I think going back to, let's say, call it 19,

Speaker Change #104: In 19, you know, I would say that we had a lot lower cost structure as you've heard us talk about. You know, the cost over these last few years have been very, very significant. And so, you know, my sense is that compared to, certainly compared to a couple of years ago, definitely yes.

Speaker Change #104: And I, you know, I would probably be more bullish today on what that operating margin in EFT would look like than I would have been

Speaker Change #104: six months ago because we're seeing the realization of some of these access fee opportunities come to the table.

Rick L. Weller: We've also seen the results of the management team being able to effectively manage costs and deal with that. So I would probably feel, and the, you know, the, as Mike said, the Piraeus Merchant Service businesses have been growing nicely. That margin on that business is probably more right in line with the lower end of the average for EFT businesses. But as it's growing pretty fast, it kind of helps solidify and anchor that. So, yeah, I'd probably feel a little bit more bullish about it now, but maybe not quite as strong as what we would have seen in 19.

Mike: We've also seen the results of the management team being able to effectively manage costs and deal with that. So, I would probably feel, and as Mike said, the Piraeus Merchant Service businesses has been growing nicely. That margin on that business is probably more right in line with the lower end of the average on EFT business. But as it's growing pretty fast, it kind of helps solidify and anchor that. So, yeah, I'd probably feel a little bit more bullish about it now, but maybe not quite as strong as what we would have seen in 19.

Gus Galla: Great, I appreciate all of you. Yeah, no problem. Thank you, Gus. And, and I think we've got to shut down now because it's the top of the hour. But Gus, thank you for your question. And for everybody else on the line. Thank you very much for listening. We'll catch you next quarter. This concludes today's conference call. Thank you for participating. You may now disconnect.

Mike: Great, I appreciate all the follow-up. Yeah, no problem. Thank you, Gus. And I think we've got to shut down now because it's top of the hour. But, Gus, thank you for your question and for everybody else on the line, thank you very much for listening. We'll catch you next quarter.

Speaker Change #105: This concludes today's conference call. Thank you for participating. You may now disconnect.