Q2 2024 International Money Express Inc Earnings Call

Speaker Change: 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 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.

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Operator: 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 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Alex Sadowski, Investor Relations Coordinator.

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Alex Sadowski: I would now like to hand the conference over to your first speaker today, Alex Sadowski, Investor Relations Coordinator. Please go ahead.

Speaker Change: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Alex Sadowski, Investor Relations Coordinator. Please go ahead.

Bob Lisy: Good morning and welcome to the Intermex second quarter, 2024 earnings call. I would like to remind everyone that today's call includes four looking statements, including our 2024 guidance and actual results made different materially from expectation. For additional information on International Money Express, which we have referred to as Intermex or the company. Please see our SEC filing, including the risk factors described therein. All forward-looking statements on this call are based on assumptions and beliefs as of today. You should not rely on our forward-looking statements as predictions of future events. Please refer to site two of our presentation for a description of certain forward-looking statements.

Alex Sadowski: Good morning, and welcome to the Intermex second quarter 2024 earnings call. I would like to remind everyone that today's call includes forward-looking statements, including our 2024 guidance, and actual results may differ materially from expectations. For additional information on International Money Express, which we refer to as Intermex or the company, please see our SEC filings, including the risk factors described therein.

Speaker Change: I would like to remind everyone that today's call includes forward-looking statements, including our 2024 guidance, and actual results may differ materially from expectation. For additional information on International Money Express,

Speaker Change: which we refer to as Intermex or the company, please see our SEC filings, including the risk factors described therein. All forward-looking statements on this call are based on assumptions and beliefs as of today. You should not rely on our forward-looking statements as predictions of future events.

Alex Sadowski: All forward-looking statements on this call are based on assumptions and beliefs as of today. You should not rely on our forward-looking statements as predictions of future events. Please refer to slide 2 of our presentation for a description of certain forward-looking statements. The company undertakes no obligation to update such information except as required by applicable law. On this conference call, we will discuss certain non-GAAP financial measures. Information required by Regulation G under the Securities and Exchange Act for such non-GAAP financial measures is included in the presentation slides, our earnings press release, and our annual report on Form 10-K and quarterly reports on Form 10-Q, including reconciliation of certain non-GAAP financial measures to the appropriate GAAP measure.

Bob Lisy: The company undertakes no obligation to update such information, except as required by applicable law.

Bob Lisy: On this conference call, we will discuss certain non-GAAP financial measures. Information required by Regulation G under the Securities and Exchange Act for such non-GAAP financial measures is included in the presentation slides or earnings press release and our annual report on Form 10-K and quarterly reports on Form 10-Q, including reconciliation of certain non-GAAP financial measures to the appropriate GAAP measures. These can be obtained in the Investors section of our website at intermexonline.com.

Speaker Change: On this conference call, we will discuss certain non-GAAP financial measures.

Speaker Change: Information required by Regulation G under the Securities and Exchange Act.

Speaker Change: Perception on GAAP financial Measures is included in the presentation slides. Our earnings press release

Alex Sadowski: These can be obtained in the Investors section of our website at IntermexOnline.com. Presenting on today's call is our Chairman, Chief Executive Officer, and President, Bob Lisy, and Chief Financial Officer, Andras Bende, as well as other members of the senior leadership team. I now turn the call over to Bob.

Speaker Change: These can be obtained in the Investors section of our website at intermexonline.com. Presenting on today's call is our Chairman, Chief Executive Officer and President, Bob Lisy, and Chief Financial Officer, Andras Bende, as well as other members of the Senior Leadership Team.

Bob Lisy: Presenting on today's call is our chairman, chief executive officer and president, Bob Lissy, and chief financial officer, Andrew Spendy, as well as other members of the senior leadership team.

Bob Lisy: Let me now turn the call over to Bob. Morning, shareholders, analysts, partners, and media representatives. I appreciate you joining us today. It's a pleasure to share the progress International Money Express has made in the second quarter of 2024. We're proud to report that our momentum has continued, and we are seeing substantial progress across our key focus areas. While just at IBA, ended up to shy of our own expectations, we successfully delivered on all metrics within our guided ranges, underscoring our robust performance and strong execution in a challenging market environment. Our total revenue for Q2 reached a record of $171.5 million, marking another significant achievement for the company.

Bob Lisy: Morning Shareholders, Analysts, Partners, and Media Representatives. I appreciate you joining us today.

Bob Lisy: It's a pleasure to share the progress International Money Express has made in the second quarter of 2024. We are proud to report that our momentum has continued, and we are seeing substantial progress across our key focus areas. While IBIDE ended up just shy of our own expectations, we successfully delivered on all metrics within our guided ranges, underscoring our robust performance and strong execution in a challenging market environment. Our total revenue for Q2 reached a record of $171.5 million, marking another significant achievement for the company. Additionally, we produced an impressive performance with regard to adjusted EBITDA, reaching $31.1 million, a margin of 18.1%. Our EPS and adjusted EPS for this quarter were $0.42 and $0.55, respectively.

Bob Lisy: I appreciate you joining us today. It's a pleasure to share the progress International Money Express has made in the second quarter of 2024. We are proud to report that our momentum has continued and we are seeing substantial progress across our key focus areas.

Speaker Change: Our total revenue for Q2 reached a record of $171.5 million, marking another significant achievement for the company.

Bob Lisy: Additionally, we produced an impressive performance with regard to adjusted IBA, reaching $31.1 million, a margin of 18.1%. Our EPS and adjusted EPS for this quarter were 42 cents and 55 cents, respectively, where we're extremely proud to have grown adjusted EPS by 10% versus last year, considering the very challenging market environment. This underscores our laser focus on operational efficiencies and our ability to deliver value to our shareholders during difficult times.

Speaker Change: Additionally, we produced an impressive performance with regard to Adjusted EBITDA, reaching $31.1 million, a margin of 18.1%.

Speaker Change: Our EPS and adjusted EPS for this quarter were $0.42 and $0.55, respectively.

Bob Lisy: We're extremely proud to have grown adjusted EPS by 10% versus last year, considering the very challenging market environment. This underscores our laser focus on operational efficiencies and our ability to deliver value to our shareholders during difficult times. Our digital business outpaced market growth by further expanding our margins and profitability. We feel our strategic agility and deep market understanding is a significant differentiator for the company, enabling us to excel across multiple metrics for digital at precisely the right moment for that product.

Speaker Change: We're extremely proud to have grown adjusted EPS by 10% versus last year, considering the very challenging market environment. This underscores our laser focus on operational efficiencies and our ability to deliver value to our shareholders during difficult times.

Bob Lisy: Williams. Our digital business, I'll paste market growth by further expanding our margins and profitability. We feel our strategic agility and deep market understanding is a significant differentiator for the company, enabling us to excel across multiple metrics for digital at precisely the right moment for that product. This quarter we've not only sustained our financial performance, but also achieved significant milestones in strategic initiatives. The integration of LaNationale continues to pay off with a threefold increase in its IVIDIA, underscoring the strategic merits of our acquisitions and the ability to enhance value by operating that division with a highly efficient, symmetrical approach that has become the Intermex way.

Speaker Change: Our digital business outpaced market growth by further expanding our margins and profitabilities.

Bob Lisy: This quarter, we have not only maintained our financial performance but also achieved significant milestones in strategic initiatives. The integration of La Nationale continues to pay off, with a three-fold increase in its IBDA, underscoring the strategic merits of our acquisitions and the ability to enhance value by operating that division with a highly efficient, metrical approach that has become the Intermex way.

Speaker Change: This quarter we have not only sustained our financial performance, but also achieved significant milestones in strategic initiatives.

Bob Lisy: Our global strategies are yielding revenue records in nine countries, reflecting our strong market presence and execution capabilities. Our retail operations remain a cornerstone of our success, delivering excellent margins and generating substantial free cash for the business. Our keen financial management and strategic initiatives driving our performance create the perfect backdrop to grow our digital business as a part of our omnichannel offering. Our digital channels have reached unprecedented levels of user engagement and profitability, showcasing the effectiveness of our disciplined growth approach and our strategic investments in product development marketing. We're continuously enhancing our digital offering through strategic partnerships, particularly within our wires as a service platform.

Bob Lisy: Our global strategies are yielding revenue records in nine countries, reflecting our strong market presence and execution capability. Our retail operations remain a cornerstone of our success, delivering excellent margins and generating substantial free cash for the business. Our keen financial management and strategic initiatives driving our performance create the perfect backdrop to grow our digital business as a part of our omni-channel offering. Our digital channels have reached unprecedented levels of user engagement and profitability, showcasing the effectiveness of our disciplined growth approach and our strategic investments in product development markets.

Speaker Change: Our global strategies are yielding revenue records in nine countries, reflecting our strong market presence and execution capabilities.

Speaker Change: Our retail operations remain a cornerstone of our success, delivering excellent margins and generating substantial free cash for the business.

Speaker Change: Our keen financial management and strategic initiatives driving our performance create the perfect backdrop to grow our digital business as a part of our omni-channel offering.

Speaker Change: Our digital channels have reached unprecedented levels of user engagement and profitability, showcasing the effectiveness of our disciplined growth approach and our strategic investments in product development and marketing.

Bob Lisy: We're continuously enhancing our digital offering through strategic partnerships, particularly within our wires as a service platform. The European market in particular holds immense potential, and we anticipate that our best-in-class digital solutions will be a great growth driver for us in that region in the coming months and years. During Q2, we encountered several economic and market-specific challenges. However, our nimble culture and adaptive business model enabled us to not only cope but to excel.

Speaker Change: We're continuously enhancing our digital offering through strategic partnerships, particularly within our Wires as a Service platform.

Bob Lisy: The European market, in particular, holds immense potential, and we anticipate that our best in class digital solutions will be a great growth driver for us in that region in the coming months and years.

Speaker Change: The European market in particular holds immense potential, and we anticipate that our best-in-class digital solutions will be a great growth driver for us in that region in the coming months and years.

Bob Lisy: During Q2, we encountered several economic and market-specific challenges. However, our nimble culture and adaptive business model enabled us to not only cope but to excel. Our success demonstrates our deep understanding of market dynamics and our abilities to swiftly adjust our strategies to maintain momentum and deliver profitability, as exemplified in our digital business. Our digital business has been a stand-up performer, growing significantly and boosting our bottom line. Recognizing the market embrace of these solutions, we see a tremendous opportunity to accelerate our expansion. At the same time, our robust retail base contributing over 600 million of revenue to portfolio provides us with a foundation to strategically invest in our digital business.

Speaker Change: During Q2, we encountered several economic and market-specific challenges. However, our nimble culture and adaptive business model enabled us to not only cope but to excel.

Bob Lisy: Our success demonstrates our deep understanding of market dynamics and our ability to swiftly adjust our strategies to maintain momentum and deliver profitability, as exemplified in our digital business. Our digital business has been a standout performer, growing significantly and boosting our bottom line. Recognizing the market's embrace of these solutions, we see a tremendous opportunity to accelerate our expansion.

Speaker Change: Our success demonstrates our deep understanding of market dynamics and our ability to swiftly adjust our strategies to maintain momentum and deliver profitability as exemplified in our digital business.

Speaker Change: Our digital business has been a standout performer growing significantly and boosting our bottom line.

Speaker Change: Recognizing the market's embrace of these solutions, we see a tremendous opportunity to accelerate our expansion.

Bob Lisy: At the same time, our robust retail base, contributing over $600 million in revenue to our portfolio, provides us with a foundation to strategically invest in our digital business. The decision by our competitors to de-emphasize retail has put us in a great position to outperform that market and enhance our returns as a company. The balance between retail and digital growth highlights our omni-channel strategy, which leverages the strength of both traditional and online digital financial services to drive future growth.

Speaker Change: At the same time, our robust retail base, contributing over 600 million in revenue to our portfolio, provides us with a foundation to strategically invest in our digital business.

Bob Lisy: The decision by our competitors to de-emphasize retail has put us in a great position to help perform that market and enhance our returns as a company. The balance between retail and digital growth highlights our omnichannel strategy, which leverages the strength of both the traditional and the online digital financial services to drive future growth. By investing in our digital capabilities while maintaining our strong retail operations, we're well-positioned to capture diverse market opportunities and sustain our growth trajectory. The long-term resilience of retail, combined with our own strategic digital investments, wrapped with the culture of medically-based efficiency, positions us to remain adaptable and poised to continue success.

Bob Lisy: By investing in our digital capabilities while maintaining our strong retail operations, we're well positioned to capture diverse market opportunities and sustain our growth trajectory. The long-term resilience of retail, combined with our own strategic digital investments wrapped with a culture of metrically-based efficiency, positions us to remain adaptable and poised to continue success. International Money Express stands at the forefront of fintech innovation, pioneering the omnichannel remittance model.

Speaker Change: By investing in our digital capabilities while maintaining our strong retail operations, we are well positioned to capture diverse market opportunities and sustain our growth trajectory.

Bob Lisy: International Money Express stands at the forefront of Fintech innovation, pioneering the Omni-Channel Reminds model. Our business is anchored by a robust retail network and a rapidly expanding digital sector. The Omni-Channel strategy ensures seamless integration of traditional retail transactions with cutting-edge digital solutions, providing comprehension's coverage across various customer touch points. At the core of our identity is our focus on quality service, targeted growth, and homing in on the most profitable agent retail locations in geographies to maximize profitability. Our ability to price services efficiently, below the zip code level and two, and by specific agent level underscores are sophisticated rifle shot operational capabilities.

Speaker Change: International Money Express stands at the forefront of FinTech innovation, pioneering the omni-channel remittance model. Our business is anchored by a robust retail network and a rapidly expanding digital sector.

Bob Lisy: Our business is anchored by a robust retail network and a rapidly expanding digital sector. The omni-channel strategy ensures seamless integration of traditional retail transactions with cutting-edge digital solutions, providing comprehensive coverage across various customer touch points. At the core of our identity is our focus on quality service, targeted growth, and homing in on the most profitable agent retail locations in geographies to maximize profitability. Our ability to price services efficiently below the zip code level and by specific agent level underscores our sophisticated rifle shot operational capabilities.

Speaker Change: The omni-channel strategy ensures seamless integration of traditional retail transactions with cutting-edge digital solutions, providing comprehensive coverage across various customer touchpoints.

Speaker Change: Our ability to price services efficiently below the zip code level and to and by specific agent level underscores our sophisticated rifle shot operational capabilities.

Bob Lisy: Our world-class call center, exceptional customer service, and strong banking and pair relationships are pivotal to our success in taking years to build and would take equally as long to replicate. We take pride in our reliability, having never failed to honor or pay out a transaction in a timely manner. Our retail operations are renowned for their cost efficiency and effectiveness and enable us to strategically nurture our digital ventures. This balance safeguards investor funds and promotes sustainable business growth, leveraging cutting-edge proprietary technology to deliver exceptional value-added services that strengthen our relationship with a highly productive network of retail agents.

Bob Lisy: Our world-class call center, exceptional customer service, and strong banking and payer relationships are pivotal to our success and have taken years to build and would take equally as long to replicate. We take pride in our reliability, having never failed to honor or pay out a transaction in a timely manner. Our retail operations are renowned for their cost efficiency and effectiveness, and enable us to strategically nurture our digital venture. This balance safeguards investor funds and promotes sustainable business growth.

Bob Lisy: Leveraging cutting-edge proprietary technology, we deliver exceptional value-added services that strengthen our relationship with a highly productive network of retail agents. These small locally owned businesses benefit from solutions that set us apart in the market. By blending the strength of both retail and digital technologies, Intermex captures diverse marketing opportunities driving future growth. This strategic equilibrium not only expands our service capabilities but also solidifies our position as a leader in the financial technology landscape. The second quarter of 2024 has brought transformative advancements for IMXI.

Speaker Change: Leveraging cutting-edge proprietary technology, we deliver exceptional value-added services that strengthen our relationship with a highly productive network of retail agents.

Bob Lisy: These small, locally owned businesses benefit from solutions that set us apart in the marketplace. By blending the strength of both retail and digital technologies, Intermex captures diverse marketing opportunities, driving future growth. This strategic equilibrium not only expands our service capabilities but also solidifies our position as a leader in the financial technology landscape.

Speaker Change: By blending the strength of both retail and digital technologies, Intermex captures diverse marketing opportunities driving future growth.

Bob Lisy: The second quarter of 2024 has brought transformative advancements for IMXI. Our strategic breakthroughs and operational progress has set a solid foundation for future growth. Our digital business has been particularly impressive, with consumer acquisition costs decreasing while unit economics have continued to become increasingly more profitable. This is due to increased revenue per transaction and significant processing cost efficiencies. Our diversification efforts have led to a full suite of products and services in answering our value proposition to consumers.

Speaker Change: The second quarter of 2024 has brought transformative advancements for IMXI.

Bob Lisy: Our strategic breakthroughs and operational progress have set a solid foundation for future growth. Our digital business has been particularly impressive, with consumer acquisition costs decreasing, while unit economics have continued to become increasingly profitable. This is due to increased revenue per transaction and significant processing cost efficiency. Our diversification efforts have led to a full suite of products and services, enhancing our value proposition to consumers. In July, we closed on the acquisition of a small remits company in England.

Bob Lisy: In July, we closed on the acquisition of a small remits company in England. This acquisition secures a remits license for the company in the UK, enhancing our ability to expand and grow in the European market. This addition compliments our existing pass portable EU license, providing us with access to the most critical markets in the region. Our presence significantly bolsters our growth prospects, especially in our digital segment and positions us to leverage new opportunities across the region.

Bob Lisy: This acquisition secures a remittance license for the company in the UK, enhancing our ability to expand and grow in the European market. This edition complements our existing PASSportable EU license, providing us with access to the most critical markets in the region.

Speaker Change: In July , we closed on the acquisition of a small remits company in England.

Speaker Change: This addition complements our existing PASSportable EU license, providing us with access to the most critical markets in the region. Our presence significantly bolsters our growth prospects, especially in our digital segment, and positions us to leverage new opportunities across the region.

Bob Lisy: Our presence significantly bolsters our growth prospects, especially in our digital segment and positions us to leverage new opportunities across the region. Domestically, we reworked our retail sales organization, bringing in new leadership, including head of retail sales, director of inside sales, and a regional vice president in the Northeast. This infusion of new talent is expected to drive strategic growth and enhance our strong market presence. Meanwhile, while their competitors have retreated from retail in the face of challenging times, we have invested with a total cost of sales and marketing and retail remaining at just 7% of gross profit, leaving ample room for future expansion of our retail and digital initiatives. That fact, coupled with the reality that about 75% or more of remittances to key Latin American destinations originate at retail, makes that channel a key component of any true omni-channel offer.

Bob Lisy: Domestically, we reworked our retail sales organization, bringing in new leadership including head of retail sales, director of inside sales, and a regional vice president in the Northeast. This infusion of new talent is expected to drive strategic growth and enhance our strong market presence. While the competitors have retreated from retail in the face of challenging times, we have invested, with a total cost of sales and marketing and retail remaining at just 7% of gross profits, leaving ample room for future expansion of our retail and digital initiatives. That's a couple with the reality that about 75% or more of remittances to key Latin American destinations originator retail makes that channel keep component of any true on the channel offering.

Speaker Change: Domestically, we reworked our retail sales organization, bringing in new leadership, including head of retail sales, director of inside sales, and a regional vice president in the Northeast.

Speaker Change: While their competitors have retreated from retail in the face of challenging times, we have invested, with a total cost of sales and marketing and retail remaining at just 7% of gross profit, leaving ample room for future expansion of our retail and digital initiatives.

Speaker Change: That fact, coupled with the reality that about 75% or more of remittances to key Latin American destinations originate at retail, makes that channel a key component of any true omni-channel offering.

Bob Lisy: Unlike many others, Intermex has the capacity and the will to compete and succeed at both the digital and retail markets.

Andras Bende: Like many others, Intermex has the capacity and the will to compete and succeed in both the digital and retail markets. Moving into the second half of the year, we will be supported by a strengthened sales effort led by our enhanced and upgraded team. Our focus remains to continue to be a leading player in any key market through the retail channel while growing our digital business efficiently, and most importantly, profitably. With that, I return the call to our CFO, Andras Bende, who will provide greater detail on our financial performance. Thanks, Bob.

Bob Lisy: Moving into the second half of the year, we will be supported by a strengthened sales effort led by our enhanced and upgraded team. Our focus remains to continue to be a lead player from any key market through the retail channel while growing our digital business efficiently and, most importantly, profitably.

Speaker Change: Moving into the second half of the year, we will be supported by a strengthened sales effort led by our enhanced and upgraded team.

Speaker Change: Our focus remains to continue to be a lead player from any key market through the retail channel while growing our digital business efficiently, and most importantly, profitably.

Andras Bende: With that, I would turn the caller to our CFO, Andras Bende, who will provide greater detail on our financial performance. Thanks, Bob. In the second quarter of 2024, international money expressed continued its trajectory of robust financial performance and said new records highlighting the strength and resilience of our omnichannel business model, which he's second quarter revenue 171.5 million, up 1.4% year every year in a market where others are struggling to maintain growth. Our digital channels have performed exceptionally well, with digital revenue up by almost 70% and gross margin per transaction close to double versus the same period last year.

Andras Bende: With that, I return the call over to our CFO , Andras Bende, who will provide greater detail on our financial performance.

Andras Bende: In the second quarter of 2024, International Money Express continued its trajectory of robust financial performance and set new records highlighting the strength and resilience of our omnichannel business model. We achieved second quarter revenue of $171.5 million, up 1.4% year over year in a market where others are struggling to maintain growth. Our digital channels have performed exceptionally well, with digital revenue up by almost 70% and gross margin per transaction close to double versus the same period last year.

Andras Bende: This performance reflects our focused efforts on expanding our digital footprint and enhancing user engagement through innovative offerings and a best-in-class product and client experience. Additionally, the gross profit per digital transaction is now about 40% higher than retail, highlighting the progress we've made on this product and its potential to self-fund significant future growth. During the quarter, our consumer base increased to 4.2 million customers, showcasing our strong brand loyalty and the successful enhancement of our customer engagement strategy.

Andras Bende: This performance reflects our focused efforts on expanding our digital footprint and enhancing user engagement through innovative offerings and a best-in-class product and client experience. Additionally, the gross profit per digital transaction is now about 40% higher than retail, highlighting the progress we've made in this product and its potential to self-fund significant future growth. During the quarter, our consumer base increased to 4.2 million customers, showcasing our strong brand loyalty and the successful enhancement or customer engagement strategies. It's important to underscore that we continue to grow revenue despite the consumer-facing forces impacting the broader retail environment right now.

Andras Bende: This performance reflects our focused efforts on expanding our digital footprint and enhancing user engagement through innovative offerings and a best-in-class product and client experience.

Andras Bende: It's important to underscore that we continue to grow revenue despite the consumer facing forces impacting the broader retail environment right now. What's more, we have taken action early to get ahead of sluggishness in the top line by constantly rooting out inefficiencies, as you can see, salaries and general administrative expenses are both down year over year. In addition to the benefits we're reaping from prior cost actions, we're already taking steps to ensure we stay on the front foot.

Andras Bende: What's more, we have taken action early to get ahead of sluggishness in the top line by constantly rooting out efficiencies, as you can see, salaries and general administrative expenses both down year over year. In addition to the benefits we're reaping from prior cost actions, we're already taking steps to ensure we stay on the front foot. In the quarter, we booked a restructuring charge of $2.7 million, mostly for streamlined offshore operations. We anticipate over two million in annualized savings once all our actions are completed, and we'll start to see the benefits from that restructuring at the start of 2025.

Andras Bende: What's more, we have taken action early to get ahead of sluggishness in the top line by constantly rooting out inefficiencies, as you can see salaries and general administrative expenses both down year over year.

Andras Bende: In addition to the benefits we're reaping from prior cost actions, we're already taking steps to ensure we stay on the front foot. In the quarter, we booked a restructuring charge of $2.7 million, mostly to streamline offshore operations.

Andras Bende: In the quarter, we booked a restructuring charge of $2.7 million, mostly to streamline offshore operations. We anticipate over $2 million in annualized savings once all our actions are complete, and we'll start to see the benefits from that restructuring at the start of 2025. Efficiency is part of Dynamex DNA, allowing us to grow adjusted EBITDA in Q2 and reach a second quarter record for the company at $31.1 million, representing a 0.6% year-over-year increase.

Andras Bende: Efficiency is part of our dinnerbacks DNA, allowing us to grow adjusted EBITDA in Q2 and reach a second quarter record for the company at 31.1 million, representing a 0.6% year of rearing.

Andras Bende: Efficiency is part of our Dynamex DNA, allowing us to grow adjusted EBITDA in Q2 and reach a second quarter record for the company at $31.1 million, representing a 0.6% year-over-year increase.

Bob Lisy: I just need to be done. Margins that held steady at just over 18 percent. Earnings per share grew in the quarter 10 percent. Done an adjusted basis diluted gaps EPS was flat to the prior year impacted by the 2.7 million restructuring charge I mentioned earlier. Interest expense rose to 3.1 million reflecting slightly higher suffer versus a year ago, an increase from over usage as we continue to deploy more of our idle cash toward buyback program. Depreciation and amortization will up just under 10 percent, much driven by the new headquarters facility built out in 2023 and relocated to in one queue. Our tax rate came down to 29.2 percent in Q2 versus 30.2 percent one year ago, primarily from lower state taxes. Was another strong quarter for free cash generation. Our internal metrics that attempts to just for working capital swings in Q2 we generated another 13.3 million in free cash, up over 2.3 percent from last year. If you add back the last of the new HQ capex spend 1.6 million and Q2 free cash generated would be up almost 15 percent for the court. During the quarter we bought back over 521 thousand shares having to play just under 35 million dollars year to date towards the buyback program, so still very active. We stepped down our purchase rate from 1.2 as we closed on the UK acquisition and provided some additional growth capital to our Europe business. For the moment, we're also keeping a little more crowded drive for M&A. Looking ahead, we continue to lay a strong foundation for a long term success. We all position to differentiate and outperform in both retail and digital and execute with an ion efficiency and unity economics that is uncommon in our space. While we are confident our ability to manage the controllable, we're not immune to the top line headlands our entire industry and retail more broadly in this basin. With that, we feel it's proven to update our outlook and recalibrate closer to the lower end of our previous guidance. We're now projecting for 2024 full year revenue is 657.6 to 677.6 million dollars, fully diluted gap EPS of $1.73 to $1.87 per share, adjusted diluted EPS of $2.07 to $2.25 per share, and adjusted EBITDA of $1.21.1 to $1.24.7 million dollars. Through the third quarter specifically, we anticipate revenue 170.6 million to 175.8 million dollars, fully diluted gap EPS of 49 to 54 cents per share, adjusted diluted EPS of 57 to 62 cents per share, and adjusted EBITDA of $32.1 to $33.1 million. And with that, I'll turn it back to Bob. We are now ready to take your questions and provide future insights into our performance, strategic initiatives, and optimistic outlook for the future. We welcome your inquiries and are eager to discuss our future plans and projections. I'll open the session now for questions. Thank you.

Andras Bende: Adjusted EBITDA margins have held steady at just over 18%. Earnings per share grew in the quarter, by 10% on an adjusted basis. Diluted EPS was flat to the prior year, impacted by the $2.7 million restructuring charge I mentioned earlier. Interest expense rose to $3.1 million, reflecting slightly higher SOFR versus a year ago and increased revolver usage as we continue to deploy more of our EIDL cash to our buyback program. Depreciation and amortization were up just under 10%, much driven by the new headquarters facility built out in 2023 and relocated two in one. Our tax rate came down to 29.2% in Q2 versus 30.2% one year ago, primarily from lower state taxes.

Andras Bende: Adjusted EBITDA margins have held steady at just over 18%.

Andras Bende: Earnings per share grew in the quarter 10% on an adjusted basis. Diluted gaps EPS was flat to the prior year impacted by the $2.7 million restructuring charge I mentioned earlier.

Andras Bende: Depreciation and amortization were up just under 10%, much driven by the new headquarters facility built out in 2023, and relocated two in one queue.

Andras Bende: It was another strong quarter for free cash generation, our internal metric that attempts to adjust for working capital swings. In Q2, we generated another $13.3 million in free cash, up over 2.3% from last year. If you add back the last of the new HQ CapEx spend, $1.6 million in Q2, free cash generated would be up almost 15% for the quarter. During the quarter, we bought back over 521,000 shares, having deployed just under $35 million year-to-date towards the buyback program.

Andras Bende: It was another strong quarter for free cash generation, our internal metric that attempts to adjust for working capital swings.

Andras Bende: In Q2, we generated another $13.3 million in free cash.

Andras Bende: up over 2.3% from last year. If you add back the last of the new HQ CapEx spend, $1.6 million in Q2, free cash generated would be up almost 15% for the quarter.

Andras Bende: During the quarter, we bought back over 521,000 shares, having deployed just under $35 million year-to-date towards the buyback program.

Andras Bende: Though still very active, we stepped down our purchase rate from 1Q as we closed on the UK acquisition and provided some additional growth capital to our European business. For the moment, we're also keeping a little more prouder drive for M&A. Looking ahead, we continue to lay a strong foundation for our long-term success. We are well positioned to differentiate and outperform in both retail and digital and execute with an eye on efficiency and unit economics that is uncommon in our space.

Andras Bende: They're still very active. We stepped down our purchase rate from 1Q as we closed on the UK acquisition and provided some additional growth capital to our Europe business. For the moment, we're also keeping a little more prouder drive for M&A.

Andras Bende: Looking ahead, we continue to lay a strong foundation for our long-term success. We are well-positioned to differentiate and outperform in both retail and digital and execute with an eye on efficiency and unit economics that is uncommon in our space.

Andras Bende: While we are confident in our ability to manage the controllable, we're not immune to the top line headwinds our entire industry and retail more broadly are facing. With that in mind, we feel it's prudent to update our outlook and recalibrate closer to the lower end of our previous guidance. We're now projecting for 2024, full year revenue of $657.6 to $677.6 million, and Fully Diluted Gap EPS of $1.73 to $1.87 per share. Adjusted diluted EPS of $2.07 to $2.25 per share and adjusted EBITDA of $121.

Andras Bende: While we are confident in our ability to manage the controllable, we are not immune to the top line headwinds our entire industry and retail more broadly is facing. With that, we feel it is prudent to update our outlook and recalibrate closer to the lower end of our previous guidance.

Andras Bende: Adjusted diluted EPS of $2.07 to $2.25 per share.

Andras Bende: and adjusted EBITDA of $121.1 to $124.7 million.

Andras Bende: For the third quarter specifically, we anticipate revenue of $170.6 million to $175.8 million, Fully Diluted Gap EPS of 49 to 54 cents per share, adjusted diluted EPS of $0.57 to $0.62 per share, and adjusted EBITDA of $32.1 to $33.1 million.

Andras Bende: Fully diluted GAP EPS of 49 to 54 cents per share.

Bob Lisy: And with that, I'll turn it back to Bob.

Bob Lisy: We are now ready to take your questions and provide future insights into our performance, strategic initiatives, and optimistic outlook for the future. We welcome your inquiries and are eager to discuss our future plans and projections. I open the session now to questions.

Andras Bende: We are now ready to take your questions and provide future insights into our performance, strategic initiatives, and optimistic outlook for the future. We welcome your inquiries and are eager to discuss our future plans and projections. I open the session now for questions.

Operator: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. One moment while we compile the Q&A list. Our first question is from Gus Gala, with Mona Crespi, Harte & Co. Your line is now open.

Operator: At this time, we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press Dar 11 on your telephone and wait for your name to be announced. To withdraw your question, please press Dar 11 again. One moment will we compile the Q&A roster.

Gustavo Gala: Our first question is from Gustavo Gala with Mona, Press B, Harte and Co. Your line is now open. Hey, good morning, Bob. Good morning, Andras. Can we talk a little bit about the assumptions for growth? I mean, on both the key and markets and across the two channels? I mean, and can you comment, are you seeing incremental pressure in the U.S.? on your agent base? Your big peer has been made some interesting comments on agent activation. It's going up 50% so far this year. Just ain't even helped us out there. And when you, I'm sorry, it didn't catch the 50% of activations.

Speaker Change: One moment while we compile the Q&A roster.

Speaker Change: Our first question is from Gas Gala with Mona Crespi, Heart & Co. Your line is now open.

Gus Gala: Hey, good morning, Bob. Good morning, Andras.

Gas Gala: Hey, good morning, Bob. Good morning, Andras. Can we talk a little bit about the assumptions for growth, I mean, on both the key end markets?

Gus Gala: Can we talk a little bit about the assumptions for growth, I mean, on both the key end markets and across the two channels? I mean, and can you comment on whether you are seeing incremental pressure in the U.S. on your agent base? Your big peer has made some interesting comments on agent activations going up 50% so far this year. Just anything you can help us out there.

Speaker Change: and across the two channels. I mean, can you comment, are you seeing incremental pressure in the US on your agent base? Your big peer has been made some interesting comments on agent activations going up 50% so far this year. Just anything you can help us out there.

Gus Gala: And when you I'm sorry, I didn't catch the 50% of activations. Could you repeat that part?

Speaker Change: And when you

Gustavo Gala: Could you repeat that part? Yeah, I mean, one of your larger peers talked about in the U.S. going after the independent channel from having quite a bit of success versus the past. Is this something you're seeing incremental pressure from? Or is this really just a macro? The retail side of remittances is just softening? Just one or two parts of those out. Yeah, no, I don't understand any question. Yes. I would say that most of any pressure that we see in retail would not be from who you would consider to be a major competitor. The small regional guys, and you know, they're not really regional; it's the term used, but that are not public are probably the most aggressive folks in retail.

Gus Gala: Yeah, I mean, one of your larger peers talked about in the U.S. going after the independent channel and having quite a bit of success versus the past. Is this something you're seeing incremental pressure from, or is this really just a macro, the retail side of remittances, softening? Just want to understand parts of those out.

Speaker Change: Yeah, I mean, one of your larger peers talked about in the U.S. going after the independent channels and having quite a bit of success versus the past. Is this something you're seeing incremental pressure from, or is this really just a macro, the retail side of remittances?

Bob Lisy: I would say that most of any pressure that we see at retail would not be from who you would consider to be a major competitor. The small regional guys, and, you know, they're not really regional, it's just a term used, but that are not public, are probably the most aggressive folks in retail. But from our perspective, what we're seeing is that by the best calculations we can get, because no one publishes digital versus retail, we extrapolate from our payers the percent that is digital today and its growth rate, we believe that we're beating the market at retail and we're beating the market at digital.

Bob Lisy: Yes or No? I understand that question. Yes.

Speaker Change: Just want to understand parts of those out.

Bob Lisy: But from our perspective, what we're seeing is that we believe that by the best calculations we can get because no one publishes digital versus retail. We extrapolate from our payers the percent that is digital today and its growth rate. We believe that we're beating the market at retail and we're beating the market at digital. The challenge we have is today that we're overweight in retail and underweight in digital. Now we continue to move to more balance that out. I want to be very careful and cautious to point out to everybody that 75 percent of the wires, at least, going to our core markets, are still originating at retail and they're not dissipating at a very large or very fast pace.

Speaker Change: But that are not public are probably the most aggressive folks in retail.

Speaker Change: The percent that is digital today and its growth rate, we believe that we're beating the market at retail and we're beating the market at digital.

Bob Lisy: The challenge we have is today that we're overweight in retail and underweight in digital, and we continue to move to more balance that out. But I want to be very careful and cautious to point out to everybody that 75% of the wires at least going to our core markets are still originating in retail, and they're not dissipating at a very large or very fast pace. As a matter of fact, when we saw a resurgence in the numbers in June to Mexico, we turned very positive in our own numbers to Mexico.

Bob Lisy: As a matter of fact, when we saw a resurgence in the numbers in June, to Mexico, we turned very positive in our own numbers to Mexico. So there's just this little inflection point right now where the market is soft and digital is really representing a large share of that growth that's causing a bit of an inflection where we see our retail suffering. But once the numbers get better, the macro numbers, we still think retail is a strong market. We just also think we need to rebalance and continue to invest in digital. And as we do that, we'll have a number that's more reflective of the market.

Speaker Change: to Mexico.

Bob Lisy: So there's just this little inflection point right now where the market is soft, and digital is really representing a large share of that growth that's causing a bit of an inflection where we see our retail suffering. But once the numbers get better, the macro numbers, we still think retail is a strong market. We just also think we need to rebalance and continue to invest in digital, and as we do that, we'll have a number that's more reflective of the market. The second part of that is that...

Speaker Change: positive in our own numbers to Mexico. So there's just this little inflection point right now where the market is soft.

Bob Lisy: The second part of that is that whereas I firmly believe that all the things we've done in the past, we're still doing and we're still beating the market at retail. We see a huge opportunity now with our new head of sales. Chris Guala has an extreme great success record, been through the industry for a long time, and the things that he's bringing along with some new folks. And we believe that we can greatly see the growth of the retail market in the coming months and years. That's going to take a little bit of time to kind of get back there, but it's not a softness now.

Bob Lisy: Whereas, I firmly believe that all the things we've done in the past, we're still doing, and we're still beating the retail market. We see a huge opportunity now with our new head of sales, Chris Guala, who has an extremely great success record, has been in the industry for a long time, and the things that he's bringing along with some new folks. And we believe that we will greatly see the growth of the retail market in the coming months and years.

Speaker Change: Whereas I firmly believe...

Speaker Change: that all the things we've done in the past, we're still doing, and we're still beating the market of retail. We see a huge opportunity now with our new head of sales, Chris Guala, has an extreme, great success record, been in the industry for a long time, and the things that he's bringing along with some new folks, and we believe that we can greatly exceed the growth of the retail market.

Bob Lisy: That's going to take a little bit of time to kind of get back there, but it's not a softness now; it's more of a macro softness. And from our perspective, we think we can do things to mitigate even if that softness remains through the actions we're taking today at retail.

Speaker Change: in the coming months and years. That's going to take a little bit of time to kind of get back there, but it's not a softness now, it's more of a macro softness. And from our perspective, we think we can do things to mitigate, even if that softness remains, through the actions we're taking today at retail.

Gustavo Gala: It's more of a macro softness. And from our perspective, we think we can do things to mitigate even if that softness remains through the actions we're taking today. I read. That's very helpful. And I mean, you kind of got into my second question. So the new sales folks, can we take this to mean, I mean, particularly on the outside sales part, we're going to be leaning into California and Texas, you know, the Western U.S. in the coming. I met him; this is not a by the end of the year, you'll see a big and much.

Gus Gala: Gotcha. That is very helpful. I mean, you kind of got to my second question. So the new sales folks

Gustavo Gala: And I met him as a calendar 25. And then you remind us on sigway that got, you know, they shut down on like earlier this year. I think at one point they're filing like from away, but they have like seven point seven and a half thousand locations. Kind of what was it when it was shut down. And then geographic dispersion. I mean, that sounds like one of the smaller players where you're going to be able to play in, maybe just comment on that. Yeah, so under the first question, certainly states like California and Texas that have large populations of foreign-born Hispanics that are our market, particularly Mexico and Guatemala, are going to be states that are going to be high on our list, but we feel like we've got opportunity to execute across the country.

Speaker Change: By the end of the year, you'll see a big inflection. I imagine there's a calendar 25 type thing. And then, can you remind us on SigWay, they got, you know, they shut down, like, earlier this year. I think at one point, there's a filing, like, from 08, but they had, like, 7,500.

Speaker Change: Locations. Kind of what was it when it was shut down? And then geographic dispersion, I mean, that sounds like one of the smaller players where you're going to be able to play in. Maybe just comment on that.

Bob Lisy: Yeah, so under the first question, certainly states like California and Texas that have large populations of foreign-born Hispanics that are our market, particularly Mexico and Guatemala, are going to be states that are going to be high on our list. But we feel like we've got opportunity to execute across the country. There's going to be places that we can execute and drive more wires in key markets that have been very strong for us. So we're going to play out our plans wherever we can be most efficient, and we're doing that today.

Speaker Change: Yeah, so under the first question, certainly states like California and Texas that have large populations of

Speaker Change: foreign-born Hispanics that are our market, particularly Mexico and Guatemala, are going to be states that are going to be high on our list.

Bob Lisy: There's going to be places that we can execute and drive more wires in key markets that have been very strong for us. So we're going to play out our plans wherever we can be most efficient, and we're doing that today. Obviously, the biggest opportunities are going to be Texas in California and other parts of the West, but that doesn't exclude that we don't that we doesn't exclude the East doesn't say that we don't see huge growth opportunities in states where we've been even dominant. Maybe not as big as the West, but still opportunities. On your second question, C.K.

Speaker Change: So we're going to play out our plans wherever we can be most efficient.

Bob Lisy: Obviously, the biggest opportunities are going to be in Texas and California and other parts of the West, but that doesn't exclude the East. It doesn't say that we don't see huge growth opportunities in states where we've been even dominant. Maybe not as big as the West, but still opportunities. On your second question, Seagate is really a great example of kind of what's going on in the marketplace, right? We've seen the demise of Seagate. We've seen the demise of Small World, which was primarily Europe but also had a large business in the Northeast of the United States. Both of them are no longer in business.

Speaker Change: And we're doing that today.

Speaker Change: Obviously the biggest opportunities are going to be Texas and California and other parts of the West, but that doesn't exclude that we don't, that we, doesn't exclude the East.

Bob Lisy: is really a great example of kind of what's going on in the marketplace, right? We've seen the demise of C.K. We've seen the demise of Small World, which is primarily Europe, but also had a large business in the Northeast in the United States; both of them are no longer in business. We've seen one of the two largest players or best known players cut their field force sales force by 60% and try to dedicate themselves more digitally. So we're seeing challenges in retail for a lot of folks. We don't believe those are permanent challenges. We don't believe that we think it's a little bit of a dip in the market, and we feel like the investing we do are going to get us past that.

Speaker Change: On your second question, CK...

Bob Lisy: We've seen one of the two largest players or the best known players cut their field force, their sales force by, you know, 60% and try to dedicate themselves more digitally. So we're seeing challenges in retail for a lot of folks. We don't believe those are permanent challenges. We think it's a little bit of a dip in the market, and we feel like the investing we do is going to get us past that.

Speaker Change: largest players or best-known players cut their field force, their sales force, by

Speaker Change: you know, 60% and try to...

Bob Lisy: C.K. in particular to answer that question had started at your fee and die on the vine for a long time. There wasn't much left of it. So what was happening with C.K. is by time it actually shut down. It was just a small fraction of itself. And in many cases, we were alongside C.K. or others were in those retailers, and those transactions began to sort of filter off to other players over time. So there wasn't a large insurgents of wires. I think that anybody saw when they finally went out of business because they were probably only about 20 to 25% of their original self by time they closed down.

Bob Lisy: Seagate, in particular, to answer that question, had started to atrophy and die on the vine for a long time. There wasn't much left of it. So what was happening with Seagate was that by the time it actually shut down, it was just a small fraction of itself. And in many cases, we were alongside Seagate or others were in those retailers, and those transactions began to sort of filter off to other players over time.

Bob Lisy: So there wasn't a large, you know, insurgence of wires, I think, that anybody saw when they finally went out of business, because they were probably only about 20 to 25% of their original self by the time they closed down.

Speaker Change: you know, insurgents of wires, I think, that anybody saw when they finally went out of business, because they were probably only about 20 to 25 percent of their original self by the time they closed down.

Gustavo Gala: Gotcha. That's super helpful. And then my very last one, I'll jump back into you. Can you talk?

Gus Gala: Gotcha, that's super helpful. And then my very last one, and I'll jump back in the queue.

Gus Gala: Can you talk, can we just expand on the capital allocation priorities? I think earlier in the year, we talked about, you know, roughly 20 million a quarter in buybacks. Is that off the table? Now we're just putting more towards M&A. And on the M&A side, are we looking more internationally or domestically? And is it more of a, you know, maybe expanding the distribution panel versus, I don't know

Bob Lisy: Can we just expand on the capital allocation priorities? I think earlier we talked about, you know, roughly 20 million a quarter of my back. Is that also people now? We're just putting more towards MNA and on the MNA side. Are we looking more internationally, domestically, and is it more of a, you know, maybe expanded distribution panel versus out-out corridors? Yes. On the capital allocation, I would expect that you would see, going forward for the rest of the year, activity looked a little bit more like too cute. I think in general during the quarter we did close in the U.K.

Speaker Change: Gotcha, that's super helpful. And then my very last one, and I'll jump back in the queue, can you talk, can we just expand on the capital allocation priorities? I think earlier in the year, we talked about, you know, roughly 20 million a quarter in buybacks. Is that off the table now, we're just putting more towards M&A? And on the M&A side, is it?

Speaker Change: Are we looking more internationally, domestically, and is it more of a, you know, maybe expanding distribution panel versus, I don't know, corridors?

Andras Bende: On the capital allocation, Gus, this is Andras. I would expect that you would see going forward for the rest of the year's activity, it looked a little bit more like 2Q. In general, during the quarter, we did close on the UK acquisitions, giving us a license in the UK, not huge, but about a million and a half, and that'll provide some additional growth capital and support our European business as well.

Andras Bende: On the capital allocation, Gus, this is Andras, I would expect that you would see, going forward for the rest of the year, activity looked a little bit more like 2Q. I think in...

Bob Lisy: Acquisition gives a license in the U.K. Not huge, but about a million and a half, and that will have some additional growth capital provided some additional growth capital to our Europe business as well. So taking those into account and some properties from an M&A perspective that are interesting. You know, we did dial back the buy back some in terms of what we're interested in. What do you want to talk about? Types of M&A were interesting. Yeah, I mean, we continue to look at things that will be diverse and bring us opportunities. So there's a couple of small things.

Speaker Change: In general, during the quarter, we did close on the U.K. acquisition, which gives us a license in the U.K. Not huge, but about a million and a half, and that'll have some additional growth capital.

Andras Bende: So taking those into account and some properties from an M&A perspective that are interesting, you know, we did dial back the buyback sum. In terms of what we're interested in, Bob, do you want to talk a little bit about the types of M&A we're interested in? Yeah, I mean, um, we continue to look at things.

Bob Lisy: Yeah, I mean, we continue to look at things that will be diverse and bring us opportunities. So there's a couple of small things, invest more in the digital and lead progress ahead of where we are very quickly. So those are both sort of on our agenda, as well as some other things that would play out at retail. So probably three to four things that we're looking at that are in the early to middle stages right now. Nothing that we could be any more specific about at this time.

Bob Lisy: There's a set of agent retailers here in the United States that are being operated by a bank that's offshore that we pay through that could potentially be an opportunity for us to look at. We're also looking at some opportunities related to our digital business that I think will be really great opportunities to have us invest more into the digital and lead progress ahead of where we are very quickly. So those are both sort of on our agenda, as well as some other things that would play out at retail. So probably three to four things that we're looking at that are in early to middle stages right now.

Speaker Change: Om. Om. Om.

Andras Bende: Banquets

Speaker Change: Offshore that we paid through that, you know, could potentially be an opportunity for us to look at.

Andras Bende: We're also looking at some opportunities related to our digital business.

Andras Bende: that I think will be really great opportunities to have us.

Andrew Hart: Nothing that we could be any more specific about this time. Thank you for all the colors. Thank you.

Speaker Change: Thank you for all the callers.

Operator: Our next question comes from Andrew Harte with BTIG. Your line is now open.

Andrew Hart: Our next question comes from Andrew Hart with BTIG. Your line is now open. Hey guys, two questions from me. One kind of macro and then one on Europe. I'll set second. I guess the first one just on macro. Bob, you alluded to in the first question. I just want to be clear on this. You said kind of June trends. I think particularly in Mexico got a little bit positive, but then obviously with the kind of top line reduction that we're looking at now. Is it safe to assume kind of what we saw in June from the Bank of Mexico data that we've been looking at probably didn't hold through August or through July?

Speaker Change: Thank you. Thank you.

Andrew Harte: Hey guys, two questions for me, one kind of macro, and then one on Europe, I'll ask that second one. I guess the first one is just on macro, Bob, as you alluded to in the first question. I just want to be clear on this. You said kind of June trends, I think particularly in Mexico, got a little bit positive, but then obviously with the kind of top line reduction that we're looking at now, is it safe to assume that kind of what we saw in June from, you know, the Bank of Mexico data that we've been looking at probably didn't hold through August or through July?

Andrew Harte: And then just kind of, I think there's also some commentary about the mix between digital and retail that you also saw there. So can you just kind of clarify that from the macro perspective? Are those June trends holding, or have they pulled up a bit? And then is that 3.5%, just under 3.5%, I think, Mexico assumption and prior guidance, is that no longer the case that we should hold?

Speaker Change: Be clear on this.

Speaker Change: You said kind of June trends, I think particularly in Mexico, got a little bit positive. But then obviously with the kind of top line reduction that we're looking at now, is it safe to assume kind of what we saw in June from, you know, the Bank of Mexico data that we've been looking at probably didn't hold through August or through July ? And then just kind of, I think there was also some commentary about the mix between digital and retail that you also saw there. So can you just kind of clarify?

Andrew Hart: And then just kind of, I think there's also some commentary about the mix between digital and retail that you also saw there. So can you just kind of clarify that from the macro perspective, are those June trends holding, or have they pulled up a bit. And then is that three and a half percent just under three and a half percent? I think Mexico assumption in prior guidance. Is that no longer the case that we should be considering?

Speaker Change: Robert Lisy, Michael Gallentine

Bob Lisy: Okay, so the June trend was driven by the some election stuff that was going on in Mexico that drove the peso to weaken. And when you see the peso, we can angle get a surge of business. It's been a little bit choppy, but certainly hasn't had any big swings. And what happens even though the peso sustained a more pesos per dollar exchange rate, consumers get used to that, and that trend doesn't continue. So we we don't expect that in certainly hasn't happened in July where that same resurgence was there. It was short lived because of the big drop in the peso really over a weekend in June, right at the end of May and June, that really played out in most of June or a big part of June.

Bob Lisy: Okay, so the June trend was driven by some election stuff that was going on in Mexico that drove the peso to weaken. And when you see the peso weakening, we'll get a surge of business. It's been a little bit choppy, but it certainly hasn't had any big swings. And what happens even though the peso sustained a higher pesos per dollar exchange rate? Consumers will get used to that if that trend doesn't continue. So we don't expect that, and certainly it hasn't happened in July, when that same resurgence was there.

Speaker Change: Okay, so, um, the June trend was driven by the...

Speaker Change: It's been a little bit choppy, but certainly hasn't had any big swings.

Speaker Change: And what happens, even though the pesos sustained a more pesos per dollar exchange rate, consumers get used to that if that trend doesn't continue, so we don't expect that.

Bob Lisy: It was short-lived because of the big drop in the peso really over a weekend in June, right at the end of May and June, that really played out in most of June or a big part of June.

Speaker Change: It certainly hasn't happened in July where that same resurgence was there. It was short-lived because of the big drop in the peso, really over a weekend in June , right at the end of May and June , that really played out in most of June or a big part of June .

Bob Lisy: We're not seeing that at this point. Hard to predict, but we don't see anything on the horizon like an election or anything else that would be as acute of a drop in the peso in terms of its valuation.

Bob Lisy: We're not seeing that at this point. It's hard to predict, but we don't see anything on the horizon like an election or anything else that would be as acute of a drop in the peso in terms of its valuation. And those are things that typically have a big spike in business if even they are only short-lived. On the second part, relative to retail and digital, so just to kind of like, so if you take the growth in the market, and it's about 6% is what's been published by the Bank of Mexico, extremely choppy, one negative month, one really high month because of the June sort of drop in the peso.

Speaker Change: We're not seeing that at this point. Hard to predict, but we don't see anything on the horizon like an election or anything else that would be as acute of a drop in the peso in terms of its valuation. And those are things that typically have a big spike in the business, even if they are only short-lived.

Bob Lisy: And those are things that typically have a big spike in the business, even they are only short lived on the second part relative to the retail and digital. So just to kind of like, so if you take the growth in the market and it's about 6%, is what's been published by the Bank of Mexico, extremely choppy; one negative month, one really high month because of the June sort of drop in the peso. So if you take that 6.1%, it's our belief from everything that we can put together that the digital business is about 25% of all the business going to Mexico.

Speaker Change: On the second part, relative to the retail and digital, so just to kind of, like, so if you take the growth in the market,

Speaker Change: And it's about 6% is what's been published by the Bank of Mexico. Extremely choppy, one negative month, one really high month because...

Bob Lisy: If you take that 6.1%, it's our belief from everything that we can put together that the digital business is about 25% of all the business going to Mexico. And we believe from the numbers we can gather, again, there's nothing published, that that's around 40% growth, which would give somewhere between an 8% to 10% lift on the overall market. And so if the market is 6.1, we would believe, as a consequence or as a deduction, that the retail market is probably minus three or minus four. And that's where we get our assumption, our belief that we're outperforming the market as it sits today.

Speaker Change: sort of drop in the peso.

Speaker Change: If you take that 6.1%, it's our belief, from everything that we can put together, that the digital business is about 25% of all the business going to Mexico. And we believe, from the numbers we can gather, again, there's nothing published, that that's somewhere around...

Bob Lisy: And we believe from the numbers we can gather, again there's nothing published that that's somewhere around 40% growth, which would give somewhere between an 8 to 10% lift on the overall market. And so if the market is 6.1, we would believe that, as a consequence or as a deduction, that the retail market is probably a minus three or minus four. And that's where we get our assumption, our belief that we're outperforming the market as it's today. We think that if you take our digital lift out of our number that we're still outperforming in retail and then outperforming in digital as well.

Speaker Change: 40% growth

Speaker Change: which would give somewhere between an 8% to 10% lift on the overall market.

Speaker Change: And so if the market is 6.1, we would believe that as a consequence, or as a deduction, that the retail market is probably a minus 3 or a minus 4. And that's where we get our assumption, our belief, that we're outperforming the market as it sits today.

Bob Lisy: We think that if you take our digital lift out of our number, we're still outperforming in retail and then outperforming in digital as well. It's the weighting that we have; we don't have a 25% weighting on digital; it's a much smaller business than that. It's in single digit numbers, growing very, very quickly, and is extremely profitable. I think the really good news is that, you know, our team has built a product now with a gross margin, and this wasn't what it was. I was one of the biggest detractors of digital because the numbers supported that.

Speaker Change: We think that if you take our digital lift out of our number, that we're still outperforming in retail, and then outperforming a digital as well. It's the weighting that we have, we don't have a 25% weighting on digital. It's a much smaller business than that. It's in single digit numbers growing very, very quickly, extremely profitable. I think the really good news is that

Bob Lisy: It's the waiting that we have. We don't have a 25% waiting on digital. It's a much smaller business than that. It's in single digit numbers growing very quickly, extremely profitable. I think the really good news is that our team has built a product now with a gross margin. And this wasn't what it was. I was one of the biggest detractors of digital because the numbers supported that. But today the gross margin in digital is better for us than our gross margin in retail by almost a dollar. And so that is really turned around. We're doing better on the revenue line, and we're doing better on the gross margin line because we've also done a great job related to processing costs and other fees related to taking those wires.

Speaker Change: has built a product now with a gross margin,

Bob Lisy: But today, the gross margin in digital is better for us than our gross margin in retail by almost $1. And so that is really turned around; we're doing better on the revenue line, and we're doing better on the gross margin line because we've also done a great job on processing costs and other fees related to taking those wires.

Speaker Change: supported that. But today, the gross margin in digital is better for us than our gross margin in retail, by almost a dollar.

Speaker Change: And so that is really turned around. We're doing better on the revenue line, and we're doing better on the gross margin line because we've also done a great job related to processing costs and other fees related to taking those wires. And so part of what we need to do going forward is

Bob Lisy: And so part of what we need to do going forward is rebuild and exceed the market in retail the way we used to. I think we're beating the market in retail, but only by one or two percentage points. And then really invest in digital because that's a piece that has explosive growth opportunity.

Andrew Harte: And so we're a part of what we need to do going forward is rebuild and exceed the market at retail the way we used to. I think we are beating the market at retail, but only by one or two percentage points. And then really invest in digital because that's a piece that has explosive growth potential. And when we put those two together, that's going to be the key to the future going forward, you know, over the coming months and years. Okay, hopefully that answers your question. Okay, great. Yeah, that's really helpful clarification. Thank you.

Speaker Change: rebuild and exceed the market at retail the way we used to. I think we're beating the market at retail, but only by one or two percentage points.

Bob Lisy: And then I guess, follow up, you know, in the prepared remarks, Bob, you talked about digital having this fantastic opportunity in Europe. It sounds like it's more of a 2025, 2026 story. I guess maybe you could just size up both retail and digital, kind of how big the European business is as a percentage of Intermax as a whole. And then when we're thinking about digital in Europe, can you talk about branding and going to market, how it might be a little bit different than what we're seeing in the US? Will it be through the ITransfer brand?

Speaker Change: and then really invest in digital because that's a piece that has explosive growth opportunity. When we put those two together, that's going to be the key to the future over the coming months and years.

Andrew Hart: And when we put those two together, that's going to be the key to the future moment, you know, over the coming months and years. Okay, that's really helpful clarification. Thank you. And then I guess follow-up, you know, in the prepared remarks, Bob, you talked about digital having this fantastic opportunity in Europe. It sounds like it's more, you know, 2025, 2026 story. I guess maybe can you just size up both retail and digital, kind of how big the European business is as a percentage of Intermax as a whole. And then when we're thinking about digital in Europe, can you talk about branding and go to market?

Speaker Change: Okay, hopefully that answers your question.

Speaker Change: Okay, great.

Speaker Change: Yeah, that's really helpful clarification. Thank you. And then, I guess, a follow-up, you know, in the prepared remarks, Bob, you talked about...

Bob Lisy: Digital having this fantastic opportunity in Europe , it sounds like it's more, you know, 2025, 2026 story. I guess maybe, can you just size up both retail and digital, kind of how big the European business is as a percentage of...

Andrew Harte: Do you plan on bringing the Intermax brand there to drive digital? Just how is Europe going to look a little bit different with the digital offering than what we'll see in the US? Yeah, so today, our European business is relatively small as a percentage. Let's call it a low single-digit percentage of our overall business. It's primarily driven by Spain and Italy.

Bob Lisy: How it might be a little bit different than what we're seeing in the US? Will it be through the I Transfer brand? Do you plan on bringing the Intermax brand there to drive digital? Just how is Europe going to look a little bit different with the digital offering than what we'll see in the US? Yeah, so today our European business is a relatively small percentage. Let's call it low single digits percentage of our overall business. It's primarily driven by Spain and Italy. We have a small presence, one company store in Germany. So part of our opportunity there is a largest market is you probably know our Germany, France, and UK.

Speaker Change: Do you plan on bringing the Intermex brand there to drive digital? How is Europe going to look a little bit different with the digital offering than what we'll see in the U.S.?

Bob Lisy: We have a small presence, one company store in Germany. So part of our opportunity there is the largest markets, as you probably know, are Germany, France, and the UK. We just got a license now in the UK as part of buying our small acquisition there.

Speaker Change: It's primarily driven by Spain and Italy.

Bob Lisy: We just kind of license now in UK as part of buying our small acquisition there. So from our perspective, we have a big opportunity to build out where we are already, which is Spain and Italy, but then be able to expand into Germany, France, and the UK. Part of that will be built on the ability of ourselves to be able to get banking relationships in those countries because that's a big part of the retail network. We talk about the retail side. So today we have better banking relationships in Germany and get a banking relationship in France and maintain and expand upon the one we inherited in the UK.

Speaker Change: So, from our perspective, we have a big opportunity to build out where we are already, which is Spain and Italy, but then be able to expand into Germany, France, and the UK.

Bob Lisy: So from our perspective, we have a big opportunity to build out where we are already, which is Spain and Italy, but then be able to expand into Germany, France, and the UK. Part of that will be built on the ability of ourselves to be able to get banking relationships in those countries, because that's a big part of the retail network when we talk about the retail side. So today, we have to have better banking relationships in Germany and get a banking relationship in France, and maintain and expand upon the one we inherited in the UK.

Speaker Change: Part of that will be built on the ability of ourselves to be able to get banking relationships in those countries, because that's a big part of the retail network when we talk about the retail side.

Bob Lisy: That'll be a big part of that growth, but the European business can grow several times over in terms of its size today. If we only did proportionally in Germany, France, and the UK, which we're not anywhere near full growth in Spain and Italy, you know, it could triple our business because those markets are so much bigger than the Spanish and Italian markets. That's on the retail side.

Bob Lisy: That will be a big part of that growth, but the European business can grow several times over in terms of its size today. If we only did proportionally in Germany, France, and the UK, which were not anywhere near full growth in Spain and Italy, you know, can triple our business because small markets are so much bigger than the Spain and Italy market. That's on the retail side. On the digital side, the reason we talk about the opportunity and digital in Europe is because it's a much more advanced towards digital market. The biggest obstacle to digital in the US is that we have a lot of consumers who are not banked, and in many cases can't be banked because they may not be undocumented.

Speaker Change: and maintain and expand upon the one we inherited in the UK.

Speaker Change: That'll be a big part of that growth, but the European business...

Speaker Change: can grow several times over in terms of its size today. If we only did proportionally in Germany, France, and UK, which were not anywhere near full growth in Spain and Italy.

Speaker Change: You know, it could triple our business because those markets are so much bigger than the Spain and Italy markets.

Bob Lisy: On the digital side, the reason we talk about the opportunity for digital in Europe is because it's a much more advanced market for digital. The biggest obstacle to digital in the US is that we have a lot of consumers who are not banked, and in many cases can't be banked because they may be undocumented. That's not the case in Europe. There are fewer of those.

Bob Lisy: Most people tend to be banked. Most people tend to have debit cards. As a matter of fact, the small retailer that we bought, the small money transfer company in the UK, I think about 85 to 90% of the wires they do at retail are through a debit card. All of those customers are eligible to do digital. They have the means to do it today, and they're still doing retail.

Bob Lisy: That's not the case in Europe. It's less of that. Most people tend to be banked. Most people tend to have debit cards. As a matter of fact, the small retailer that we bought, the small processor, money transfer company in UK, I think about 85 to 90 percent of the wires they do at retail are through a debit card. All of those customers are eligible to do digital. They have the means to do it today, and they're still doing retail. So we find that market to be much more ready for digital. The key with air will be to drive consumers to that site; the same thing we have to do in the US.

Bob Lisy: So we find that market to be much more ready for digital. The key there will be to drive consumers to that site, the same thing we have to do in the US. Today in the US, we've built a wonderful application that people are rating very highly, and customers are very pleased with. Our unit economics are tremendously attractive, better than they are even at retail. But the challenge for us will be to make the investment to drive consumers to our U.S. business, to do wires digitally, and that will be the same challenge we face in Europe.

Bob Lisy: Today in the US, we've built a wonderful application that people are rating very highly, and customers are very pleased with, and our unit economics are tremendously attractive. Better than they are even at retail today. But the challenge for us will be to make the investment to drive consumers to our US business, to do wires digitally, and that will be the same challenge we face in Europe. But the opportunity is enormous. Not nearly what it is in the US for digital, but a very big opportunity there as well. and possibly easier to access because of the presence of bank accounts in the hands of those consumers that we would attract to our digital site.

Speaker Change: application that people are rating very highly and customers are very pleased with. And our unit economics are tremendously attractive, better than they are even at retail today.

Speaker Change: But the challenge for us will be to make the investment to drive consumers to our U.S. business, to do wires digitally, and that will be the same challenge we face in Europe . But the opportunity is enormous, not nearly what it is in the U.S. for digital, but a very big opportunity there as well.

Bob Lisy: But the opportunity is enormous, not nearly what it is in the U.S. for digital, but a very big opportunity there as well, and possibly easier to access because of the presence of bank accounts in the hands of those consumers that we would attract to our digital site.

Speaker Change: and possibly easier to access because of the presence of bank accounts in the hands of those consumers that we would attract to our digital site.

Andrew Hart: Thank you very much. Appreciate it. Thank you.

Andrew Harte: Thank you very much. I appreciate it.

Speaker Change: Thank you very much. I appreciate it.

Mike Grondahl: Our next question comes from Mike Grondahl with FNBO Northland. Your line is now open. Hey guys, thanks. First question, Bob, you've talked about invest in digital and how the gross margin is double what it was last year dollars, and it's even 40% higher than the retail gross margin dollars.

Operator: Our next question comes from Mike Grondahl with FNBO Northland. Your line is now open.

Speaker Change: Thank you.

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

Mike Grondahl: Hey guys, thanks. First question: Bob, you've talked about investing in digital and how the gross margin is double what it was last year, dollars, and it's even 40% higher than the retail gross margin dollars. Can you just, I don't know, maybe provide a few more details? Is investing in digital primarily marketing? Spend, I guess just defined investing in digital for, you know, specifically, what do you mean there?

Bob Lisy: Can you just, I don't know, maybe provide a few more details? Is invest in digital, does that primarily be marketing spend? I just defined invest in digital for specifically what do you mean there? Yeah, I mean, going forward, the biggest, I know we've invested a tremendous amount to have a site now, an application that we think stands with anyone, and that investment has been done. And it's being proven out through hundreds of thousands of wires going through our digital site monthly. So that we know and most of that, there's always going to be upgrades and stuff that will be done to that system and the application.

Mike Grondahl: Spend, I guess just defined invest in digital for, you know, specifically what do you mean there?

Bob Lisy: Yeah, I mean, going forward, the biggest I know we've invested a tremendous amount to have a site now, an application that we think stands up to anyone. And that investment has been made. And it's being proven out through hundreds of thousands of wires going through our digital site monthly. So we know, and most of that. There are always going to be, you know, upgrades and stuff that'll be done to that system and the application, but that primarily has been done. The biggest part now is in the area of product management, but then even more so in marketing.

Bob Lisy: But that primarily has been done. The biggest part now is in the area of product management, but then even more so in marketing, and the marketing is really that customer acquisition cost that we think we've driven down much lower than it was. In the small amount of money we've been spending, their acquisition costs has come down probably half of what it used to be, but we still need to be able to invest a certain amount of dollars to drive digital wires because we need today. Most of what's happening is people that are coming to us and doing the wire because they understand or recognize the Intermex name and they're coming there to Intermex purposefully.

Bob Lisy: And then marketing is really that, you know, customer acquisition costs that we think we've driven down much lower than they were. And the small amount of money we've been spending, the acquisition cost has come down probably half of where it used to be. But we still need to be able to invest a certain amount of dollars to drive digital wires because, today, most of what's happening is people that are coming to us and doing a wire because they understand or recognize the Intermex name, and they're coming there to Intermex purposefully.

Speaker Change: that are coming to us and doing the wire because they understand or recognize the Intermex name, and they're coming there to Intermex purposefully. There's not, we're not spending the money the way some of the leaders in digital, not even a tiny fraction of that, to drive people to our site. And that will be the piece of investment that we need to make.

Bob Lisy: There's not, We're not spending the money the way some of the leaders in digital, not even a tiny fraction of that to drive people to our site. And that will be the piece of investment that we need to make. From our perspective, unlike some other companies that have built a strong digital business and had to build that by causing a great deal of red ink, we don't need to do anything at all like that as we talk about our future. Projections for this year, we're still making over $120 million in IBDA and still growing our earnings per share. We still throw off, you know, 60, 55, $60 million to free cash, $65 million if you don't count our movement of our moving to our new headquarters office.

Bob Lisy: There's not; we're not spending the money the way some of the leaders in digital, not even a tiny fraction of that, to drive people to our site.

Bob Lisy: And that will be the piece of investment that we need to make from our perspective, unlike some other companies that have built a strong digital business and had to build that by causing a great deal of red ink. We don't need to do anything at all like that as we talk about our future projection for this year. We're still making over $120 million in the BDA and still growing earnings for share. We still throw off, you know, $65, $60 million to free cash, $65 million if you don't count our movement of our moving to our new headquarters office.

Bob Lisy: So we have built into this strong fortress of financial performing company the ability to invest in it. What we have to do is do that in such a way that it's supported by the marketplace and supported by our investment community, our investors, as we invest in digital. And that's the challenge, and that's the line we've been walking. We feel like we've got a great digital product now; the application, the margins, as I said, in the unit economics are tremendously good. And lastly, we've done better in terms of getting a better, smaller, more affordable customer acquisition cost.

Bob Lisy: So we have built into this strong fortress of a financially performing company the ability to invest in it. What we have to do is do that in such a way that it's supported by the marketplace and supported by our investment community, our investors, as we invest in digital. And that's the challenge.

Speaker Change: and built into this strong fortress of financial performing company the ability to invest in it.

Bob Lisy: And that's the line we've been walking. We feel like we've got a great digital product now. The application is as good as any.

Bob Lisy: The margins on the, as I said, unit economics are tremendously good. And lastly, we've done better in terms of getting a better, smaller, more affordable customer acquisition cost. But it still requires that we make an investment in that to build that business to catch up to the market, if you will, relative to the waiting time between our digital and our retail. One more thing I want to say, and I want to ramble on, but I want to reinforce 75% of the wires today, not degrading by huge numbers, are still coming from retail.

Bob Lisy: But it still requires that we make an investment in that to build that business, to catch up to the market, if you will, relative to the weighting between our digital and our retail. One more thing I want to say, and I want to ramble on, but I want to reinforce 75% of the wires today, not degrading by huge numbers, are still coming from retail. And that fortress is only cost us about 7% in sales and marketing costs of our gross margin. A tremendous business that can give us the ability to leapfrog from that into being a large digital player while we're still a strong retail player.

Speaker Change: 75% of the wires today, not degrading by huge numbers, are still coming from retail. And that fortress only costs us about 7% in sales and marketing costs of our gross margin.

Bob Lisy: And that, that fortress, only costs us about 7% of our gross margin, a tremendous business that can give us the ability to leapfrog from that into being a large digital player while we're still a strong retail player. And I think that's the prescription for us going forward.

Bob Lisy: And I think that's the prescription for us going forward.

Mike Grondahl: Got it, got it, and then I guess I have a follow-up on retail itself and the challenges you're seeing there. I think what you guys have been saying is those are inflation and macro driven and not really coming from your competitors or the competitive environment. Could you just provide a little clarity there? Like what's the source of the challenges that retail driving minus three minus four to Latin America? Okay, so I think what we're seeing right now, and if we went back historically, we went when we've seen market downturns before in Mexico wires, we've seen the Mexico market contract on a consistent basis, middle to high single digits.

Mike Grondahl: Got it, got it. And then I guess I have a follow-up on retail itself and the challenges you're seeing there. I think what you guys have been saying is inflation and macro-driven, and not really coming from your competitors or the competitive environment. Could you just provide a little clarity there? Like what's the source of the challenges at retail driving minus three, minus four to Latin America?

Speaker Change: Got it, got it. And then, I guess I have a follow-up on retail itself.

Speaker Change: and the challenges you're seeing there.

Speaker Change: I think what you guys have been saying is...

Speaker Change: and not really coming from your competitors or the competitive environment. Could you just provide a little clarity there? Like what's the source of the challenges at retail driving minus three, minus four to Latin America?

Bob Lisy: Okay, so I think what we're seeing right now, if we went back historically, when we've seen market downturns before at Mexico wires, we've seen the Mexico market contract on a consistent basis, middle to high single-digit. I don't believe that there's a huge segment of the current consumers that have migrated to digital. I believe the fact that the digital is now encompassed within the overall number is what's driving that number not to be more negative than it is and to be, you know, negative some months and other months to be slightly positive. If we take out June, which was, you know, an anomaly because of the peso weakening.

Bob Lisy: I don't believe that there's a huge segment of the current consumers that have migrated to digital. I believe the fact that the digital is now encompassed within the overall number is what's driving that number not to be more negative than it is, and to be negative some months and other months be slightly positive if we take out June. It was an anomaly because of the pace of weakening, so I think from my perspective that what we're seeing is a retail market that's cyclical that we've seen before, and in retail I would suggest that the retail today for the quarter was probably a minus three percent or something like that, which means that we beat retail, not by a long shot, not like we used to.

Speaker Change: I don't believe that there's a huge segment of the current consumers that have migrated to digital.

Speaker Change: I believe the fact that the digital is now encompassed within the overall number.

Speaker Change: is what's driving that number not to be more negative than it is and to be you know negative some months and other months be slightly positive. We take out June which was you know an anomaly because of the the peso weakening. So I think from my perspective that

Bob Lisy: So I think from my perspective that what we're seeing is a retail market that's cyclical like we've seen before. And in retail, I would suggest that retail today for the quarter was probably minus 3% or something like that, which means that we beat retail, not by a long shot, not like we used to. So we need to execute better, but we still beat retail. Our biggest adversary is not the competition.

Speaker Change: What we're seeing is a retail market that's cyclical that we've seen before and at retail I would suggest that the retail today

Speaker Change: for the quarter was probably a minus 3% or something like that, which means that we beat retail, not by a long shot, not like we used to. So we need to execute better, but we still beat retail. Our biggest adversary is not the competitors.

Bob Lisy: So we need to execute better, but we still beat retail. Our biggest adversary is not the competitors; the biggest adversaries, the macro conditions, that the market at retail is smaller than it was a year ago, and that's where we're fighting against now. We also have recognized our ability to execute better, and that's why a lot of the changes we're making in the sales organization with Chris coming in and bringing in additional talent. But there is a challenge in the macro environment, not really from small competitors or others taking the business, certainly not from the competitor alluded to earlier that is spending a lot of time at retail trying to build their independent network.

Bob Lisy: The biggest adversary is the macro conditions: the market at retail is smaller than it was a year ago, and that's what we're fighting against. Now, we also have recognized our ability to execute better, and that's why a lot of the changes we're making in the sales organization with Chris coming in and bringing in some additional talent, but there is a challenge in the macro environment, not really from small competitors or others taking the business, certainly not from the competitor alluded to earlier that's spending a lot of time at retail trying to build their independent network. I got it. Hey,

Speaker Change: The biggest adversary is the macro conditions that the market at retail is smaller than it was.

Speaker Change: a year ago, and that's who we're fighting against. Now, we also have recognized our ability to execute better, and that's why a lot of the changes we're making in the sales organization, with Chris coming in and bringing in some additional talent.

Speaker Change: but there is a challenge in the macro environment, not really from small competitors or others taking the business, certainly not from the competitor alluded to earlier that's spending a lot of time at retail, trying to build their independent network.

Mike Grondahl: Got it. Hey, thanks a lot and good luck.

Mike Grondahl: Got it. Hey, thanks a lot. Good luck. Thank you.

Speaker Change: Got it. Hey, thanks a lot and good luck. Thank you.

Bill Does: Our next question is from the line of bill does will them with teed in capital management. Your line is now open. Thank you. That's tight. It's in capital two questions. One, which I think you have helped clarify, but relative to your multiple comments that you're focused on digital. That is, are we understanding correctly? That is because of the bank account and they're just a banking capability that the people transferring have versus the inability to have a bank account here in the US, and that really relegates them to retail. Are we understanding that correctly? I think that we believe we don't know for certain, right?

Operator: Our next question is from the line of Bill Dezellem with Teton Capital Management. Your line is now open.

Speaker Change: Thank you.

Speaker Change: Our next question is from the line of Bill Desalem with Teton Capital Management. Your line is now open.

Bill Dezellem: Matt, thank you. This is Tyatzen Capital.

Speaker Change: Matt, thank you. That's Tyatyn Capital. Two questions. One, which I think you have helped clarify, but relative to...

Bill Dezellem: Two questions. One, which I think you have helped clarify, but relative to your multiple comments that you're focused on digital in Europe, that is, are we understanding correctly that it is because of the bank account, and they're just a banking capability that the people transferring have versus the inability to have a bank account here in the U.S., and that really relegates them to retail?

Matt: your your multiple comments that you're focused on digital in Europe that is every understanding correctly that is because of the bank account and there are just a banking capability that the people transferring have versus the inability to have a bank account here in the US and that really relegates them to retail are we understanding that correctly

Bob Lisy: I think that we believe, we don't know for certain, right, but we believe that it's easier for somebody to get a bank account in Europe, and so people are more banked. And that's what we've seen from the small acquisition we made.

Bob Lisy: But we believe that it's easier for somebody to get a bank account in Europe, so people are more banked. And that's what we've seen from the small acquisition we made. As I indicated, as much as 90% or more of the wires that are going from their retail location are done with the debit card. And in the US, it's a different consumer. It's not only ability, but the faith in banks. You know, not everybody is banked in their home country that's coming to the US. So even if they can, if they're humble workers, we're not talking about people that are, you know, that are more upscale or more affluent, but the humble worker coming across the border, even if they have, even if they're documented, they may not have a bank account because they weren't used to having bank accounts.

Speaker Change: I think that...

Speaker Change: We believe, we don't know for certain, right, but we believe that it's easier for somebody to get a bank account in Europe so people are more banked, and that's what we've seen from the small acquisition we made, as I indicated, as much as 90% or more of the wires that are going from their retail location are done with a debit card.

Bob Lisy: As I indicated, as much as 90% or more of the wires that are going from their retail locations are done with a debit card. And in the US, it's a different consumer. It's not only ability, but it's faith in banks. Not everybody is banked in their home country that's coming to the US. So even if they can, if they're humble workers, we're not talking about people that are, you know, that are more upscale or more affluent, but the humble worker coming across the border, even if they have, even if they're documented, they may not have a bank account because they weren't used to having bank accounts.

Speaker Change: And in the U.S., it's a different consumer. It's not only ability, but it's the faith in banks. You know, not everybody is banked in their home country that's coming to the U.S., so even if they can, if they're humble workers, we're not talking about people that are, you know,

Speaker Change: that are more upscale, or more affluent, but the humble worker coming across the border, even if they have, even if they're documented, they may not have a bank account, because they weren't used to having bank accounts.

Bob Lisy: So I think it's very different in Europe. It's a different consumer. It's different, so that consumer might have different values from where they came from.

Bob Lisy: So I think it's very different in Europe. It's a different consumer. It's a different so that consumer might be has different values from where they came from. And then they also are coming into a system that makes a bank account. Accessibility much more easier for them. And those combined will make digital a bigger opportunity. That's not to say that we think retail won't be a big opportunity in Europe. We're, you know, we're already driving a business there that's profitable and does hundreds of thousands of wires per month at retail. But we think that there's more receptibility, even more receptibility in the client base that will offer our services to in Europe to do wires online because they're better ready to do that because of the presence of their bank account.

Speaker Change: So I think it's very different.

Bob Lisy: And then they are also coming into a system that makes bank account accessibility much easier for them. And those combined will make digital a bigger opportunity. That's not to say that we think retail won't be a big opportunity in Europe. We're, you know, we're already driving a business there that's profitable and does, you know, hundreds of thousands of wires per month at retail. But we think that there's more receptability, even more receptability in the client base that we'll offer our services to in Europe to do wires online because they're better ready to do that because of the presence of their bank account.

Speaker Change: In Europe , it's a different consumer, it's a different, so that consumer might be has different values from where they came from, and then they also are coming into a system that makes a bank account accessibility much more easier for them.

Speaker Change: and those combined will make digital a bigger opportunity. That's not to say that we think retail won't be a big opportunity in Europe . We're already driving a business there that's profitable and does hundreds of thousands of wires.

Speaker Change: per month at retail.

Speaker Change: But we think that there's more receptability, even more receptability in the client base that we'll offer our services to in Europe to do wires online because they're better ready to do that because of the presence of their bank account.

Bill Dezellem: And does that also apply to the migrant community in Europe?

Bob Lisy: And that does, does that also apply to the migrant community in Europe? Well, we don't distinguish our consumers: a migrant from a non-migratory. I mean, you know, in the UK, where we're talking about, where it's 90%, those are consumers sending money back home. I mean, whether you, I don't know how you define them as a migrant worker, you know, they may be permanently in the country or they may be temporarily in the country, but there still is that accessibility for bank accounts. More people are paid directly into a bank account and have a debit card there than they do here relative to potential centers.

Speaker Change: And does that also apply to the migrant community in Europe ?

Bob Lisy: But we don't distinguish our consumers as migrant from non-migrant. I mean, you know, in the UK, where we're talking about where it's 90%, those are consumers sending money back home. And I mean, whether you define them as a migrant worker, you know, they may be permanently in the country, or they may be temporarily in the country, but there still is that accessibility to bank accounts; more people are paid directly into a bank account and have a debit card there relative to potential senders.

Speaker Change: But we don't distinguish our consumers a migrant from.

Speaker Change: But non-migratory, I mean, you know, in UK, where we're talking about, where it's 90%, those are consumers sending money back home, I mean, whether you, I don't know how you define them as a migrant worker, you know, they may be permanently in the country, or they may be temporarily in the country, but there still is that accessibility for bank accounts. More people are paid.

Speaker Change: directly into a bank account and have a debit card there than they do here relative to potential senders.

Bill Does: Great, that's helpful.

Bill Dezellem: Great, that's helpful. And one additional question, please. Relative to the two competitors that failed, when you look back on their failure and dissect it, what do you believe were the key failings on their part that ultimately led to their demise? What are you doing different versus, and the surviving competitors, versus what they did?

Bill Does: One additional question, please, relative to the two competitors that failed. When you look back on their failure and dissect it, what do you believe for the key failings on their part that ultimately led to their demise? What are you doing different versus in the surviving competitors versus what they did? Yeah, I think, and again, you know, this is me from the outside, so I don't have any inside information, and I'm reluctant to answer that, but I'll try to answer as best I can. I think in the case of small world, they just, they, they just weren't too many things, too diluted into too many things at one time and they didn't focus in.

Speaker Change: Great, that's helpful. And one additional question, please. Relative to the two competitors that failed, when you look back on their failure and dissect it, what do you believe were the key...

Speaker Change: failings on their part that ultimately led to their demise. What are you doing different versus and the surviving competitors versus what they did?

Bob Lisy: Yeah, I think, um, and again, this is me from the outside, so I don't have any inside information, and I'm reluctant to answer that, but I'll try to answer it as best I can. I think in the case of Small World, they just were in too many things, too diluted into too many things at one time, and they didn't focus. We built our company. I built this company from the time that I came in on the fact that Mexico's the largest single country, um, US to Mexico in the world, and sending India gets us more money. China gets more money, but for many places, there's no, no single quarter that's big or that profitable.

Speaker Change: Yeah I think and again you know this is me from the outside so I don't have any inside information and I'm reluctant to answer that but I'll try to answer it as best as I can. I think in the case of small world they just they just were in too many things.

Bob Lisy: We built our company. I built this company from the time that I came in on the fact that Mexico is the largest single country US to Mexico in the world and sending India gets more money, trying to get more money, but for many places, there's no, no one single quarter that big or that profitable. And so we built the business on that, and secondarily Guatemala, which is an enormous market, which is secondary or second to profitability per transaction in Mexico. And that base is that base is built. This cash that gets thrown off every month that allows us to invest allows us to buy back stock.

Speaker Change: to dilute it into too many things at one time. And they didn't focus in. We built our company. I built this company from the time that I came in on the fact that Mexico is the largest single country.

Speaker Change: US to Mexico in the world and sending India gets more money. China gets more money, but for many places, there's now no one single quarter that big or that profitable.

Bob Lisy: And so we built the business on that. Then, secondarily, Guatemala, which is an enormous market, which is secondary or second to profitability per transaction in Mexico. And that base is that basis built this cash that gets thrown off every month that allows us to invest, and allows us to buy back stock. Others didn't really act metrically. They considered every country equal. They considered every destination equal in terms of its opportunity.

Speaker Change: And so we built the business on that, then secondarily Guatemala, which is an enormous market, which is secondary.

Speaker Change: or second to profitability per transaction in Mexico, and that base...

Speaker Change: is that basis built, this cash that gets thrown off every month that allows us to invest, allows us to buy back stock. Others...

Bob Lisy: Others didn't really act metrically. They, they, they considered every country equal. They considered every, every destination equal in terms of its opportunity, and we're very metrically driven, which is not what I think happened in some of the other companies. I think in the case of C. Gay technology was a big problem. And, and you know, we always sort of jump over the fact that technology retails a big deal. Well, I think a technology of just being digital. Well, digital is just the extension of the same thing that's had retail to the hand of the consumer in their phone.

Speaker Change: didn't really act metrically.

Speaker Change: They considered every country equal, they considered every...

Bob Lisy: And we're very metrically driven, which is not what I think happened at some of the other companies. I think in the case of Seagate, technology was a big problem. And we always sort of jump over the fact that technology at retail is a big deal. We always think of technology as just being digital. Well, digital is just the extension of the same thing that's at retail to the hand of the consumer on their phone.

Speaker Change: Every destination equal in terms of its opportunity and we're very metrically driven

Speaker Change: which is not what I think happened in some of the other companies.

Speaker Change: I think in the case of Seagate, technology was a big problem.

Speaker Change: sort of jump over the fact that technology at retail is a big deal. We always think of technology of just being digital. Well, digital is just the extension of the same thing that said retail to the hand of the consumer in their phone.

Bob Lisy: So C. Gay had a really not so good application at retail. And so they did a lot of their wires with what's called the Telehero product where the consumer goes in and picks up a phone and goes directly to a call center for C.Gay to do a wire. Their technology was not so good in their parts of the country where the telehero was not a real attractive option. So that, along with some misinvestments that they made trying to go into areas they shouldn't have been in, an acquisition a while ago. That unlike our acquisition of the national drain them and was very unprofitable.

Bob Lisy: So Seagate had a really not so good retail application. And so they did a lot of their wires with what's called a Telehero product, where the consumer goes in and picks up a phone and goes directly to a call center for Seagate to wire them. Their technology was not so good, and there are parts of the country where Telehero was not a real attractive option. So, along with some misinvestments that they made, trying to go into areas they shouldn't have, they made an acquisition a while ago that, unlike our acquisition of La Nationale, drained them and was very unprofitable. And those two things, I think the distractions in both cases, in Seagate's case, the lack of quality technology, those all drove them to where they are today.

Bill Dezellem: Thank you.

Speaker Change: So Seagate had a really not-so-good application at retail.

Bill Dezellem: Thank you for your time and perspective.

Speaker Change: And so they did a lot of their wires with what's called a Telehero product, where the consumer goes in and picks up a phone and goes directly to a call center for Seagate to do a wire. Their technology was not so good, and there are parts of the country where the Telehero was not a real attractive option.

Speaker Change: So that along with some misinvestments that they made trying to go into areas they shouldn't have and made an acquisition a while ago, that unlike our acquisition of La Nationale.

Bob Lisy: And those two things, I think the distractions in both cases in C. Gay's case, the lack of equality technology. Those all drove them to where they are today.

Speaker Change: drained them and was very unprofitable and those two things I think the distractions in both cases in Seagate's case the lack of a quality technology those all drove them to where they are today.

Operator: Thank you for the time and perspective. You all. Thank you.

Speaker Change: Thank you for the time and perspective.

Bob Lisy: I'm showing no further questions at this time.

Bob Lisy: I am showing no further questions at this time. I would now like to turn it back to Bob Lisy for closing remarks.

Operator: I would now like to turn it back to Bob Lisy for closing remarks. Thank you all for joining us today. We appreciate the questions, and we'll look forward to talking to you soon. Let us know if we can clarify anything else for you or be of further assistance. Thank you again. Have a great day. Thank you for your participation in today's conference.

Speaker Change: You're welcome. Thank you.

Speaker Change: I am showing no further questions at this time. I would now like to turn it back to Bob Lisy for closing remarks.

Bob Lisy: Thank you all for joining us today. We appreciate your questions, and we'll look forward to talking to you soon. Let us know if we can clarify anything else for you or be of further assistance. Thank you again.

Bob Lisy: Thank you. Thank you.

Bob Lisy: Thank you all for joining us today. We appreciate the questions and we'll look forward to talking to you soon. Let us know if we can clarify anything else for you and we'll be of further assistance. Thank you again. Have a great day.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Operator: This does conclude the program.

Operator: You may now disconnect.

Speaker Change: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.