Q4 2024 Euronet Worldwide Inc Earnings Call
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Speaker Change: Greetings and welcome to the earn out worldwide fourth quarter 'twenty 'twenty four earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
Speaker Change: Ask your question during the session you will need to press star one on your telephone you will then hear an automated message at fighting your hand, just right to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded it is now my pleasure to introduce your host Mr.
Adam Goddard: Adam Goddard.
Speaker Change: General Counsel for your net worldwide.
Adam Goddard: Mr. <unk> you may begin.
Speaker Change: Thank you and good morning, everyone and welcome to <unk> fourth quarter 2024 earnings Conference call on today's call, we have Mike Brown, our chairman and CEO and Rick Weller, our CFO before we begin I'd like to call your attention to the forward looking statements disclaimer on the second slide of the Powerpoint presentation, we'll be making today.
Speaker Change: Statements made on this call that concern <unk> or its management's intentions expectations or predictions of future performance are forward looking statements.
Speaker Change: Actual results may vary materially from those anticipated in these forward looking statements as a result of a number of factors, including those listed on the second slide of our presentation.
Speaker Change: In addition, the Powerpoint presentation includes a reconciliation of the non-GAAP financial measures, we'll be using during the call to the most comparable GAAP measures at this time I'll turn the call over to our CFO Rick Weller.
Speaker Change: Thanks, Adam and welcome everyone.
I will provide some brief comments about our fourth quarter 24, as well as the full year 'twenty four with that I'll begin my comments for the fourth quarter on slide five.
Speaker Change: We delivered a record fourth quarter on all key financial metrics.
Speaker Change: We delivered revenue of $1 billion operating income of one point.
Speaker Change: The $123 million and adjusted EBITDA of $166 million, leading the way was <unk> with double digit constant currency growth across all financial metrics money transfer delivered constant currency fourth quarter revenue growth of 9% adjusted operating income growth of 12% and adjusted EBITDA growth of 9%.
Speaker Change: Compared to the prior year fourth quarter, <unk> delivered double digit constant currency growth of 10% to 12% across all financial metrics.
Speaker Change: Our adjusted EPS was up 10% compared to the prior year fourth quarter and exceeded consensus analyst estimates.
Speaker Change: A range up to $2 <unk> to $2 <unk>, depending on which consensus source you use.
Speaker Change: I'd like to also point out that while the $2.08. Adjusted EPS is an excellent finish for the year. It would have been about three to four cents higher if not for the decline in FX rates throughout the quarter.
Speaker Change: Moreover, the fourth quarter, we continued our track record of producing strong free cash flows producing nearly $65 million.
Speaker Change: In the quarter, we took the opportunity to repurchase about a half a million shares half a million of our shares given the timing of the repurchases there was only a marginal benefit.
Speaker Change: A half percent or less than one quarter of a percent to our fourth quarter adjusted EPS.
Speaker Change: But we as you know and we know these repurchases will improve earnings per share by a percent for all future periods next slide please.
Speaker Change: Slide six shows our results on a reported basis on a year over year basis, the currency headwind impact was modest with differences in the major currencies in the low single digits.
Speaker Change: To normalize the impacts of these currency changes we presented our results adjusted for currency on the next slide.
Speaker Change: On slide seven it shows our results adjusted for currency fluctuations.
Speaker Change: <unk> revenue grew 13% operating income grew 35% and adjusted EBITDA grew 19% revenue adjusted operating income and adjusted EBITDA growth in the fourth quarter 24 was driven by some continued extension of the travel season in Europe.
Speaker Change: Which shifted tourism related revenue from the third quarter to the fourth quarter growth in the merchant services business growth from new market expansion and attentive cost management revenue and operating margins benefited from rate increases related to interchange.
Speaker Change: <unk> and domestic and international access fees in certain existing markets.
Speaker Change: <unk> revenue grew 10% operating income and EBITDA each 12%.
Speaker Change: <unk> double digit growth was driven by continued growth in the core <unk> business, including strong growth in digital branded content together with promotional campaigns.
Speaker Change: Money transfer grew 9% revenue grew 9% operating income, 12% and adjusted EBITDA, 9% revenue operating income and adjusted EBITDA was the result of Port growth was the result of 14% growth in the U S outbound transactions.
Speaker Change: 11% growth in international originated money transfers and 8% growth in Z transactions, partially offset by a 14% decline in intra U S business. These transaction growth rates included 33% growth.
Speaker Change: In our digital and our direct to consumer digital transactions.
Speaker Change: Overall, we are very pleased.
Speaker Change: We have delivered double digit growth across all consolidated financial metrics.
Speaker Change: Moreover, these double digit growth rates produced operating margin expansions across all three segments.
Speaker Change: To use an old automotive Maxim, we're hitting on all cylinders.
Speaker Change: Our fourth quarter momentum growth trajectory and margin results nicely position us for.
Speaker Change: Very good 2025.
Speaker Change: With that I'll go to slide eight and make a few comments about our balance sheet.
Speaker Change: Slide eight presents a summary of our balance sheet compared to the prior quarter and as you can see we ended the quarter with $1 3 billion in unrestricted cash and debt of $1 9 billion. The net decrease in unrestricted cash and cash equivalents is the net result of working capital.
Speaker Change: Actual share repurchases repayment of short term borrowings and cash generated from operations.
Speaker Change: This net decrease in debt was due to repayment of short term borrowings availability under the company's revolving credit facility was approximately $1 $3 billion at year end compared to $670 million at the end of September.
Speaker Change: The additional availability under the revolving credit facility was the result of an increase and extension of our credit facility in December from a 100 from $1 billion to $5 billion to $1.9 billion.
Speaker Change: The increase in our facility includes a 10 basis point reduction in our borrowing cost.
Speaker Change: And highlights the strength.
Speaker Change: Of our banking partnerships and provides additional capital flexibility to continue to grow the business.
Speaker Change: As many of you know we have a march 15th put date on our $525 million convertible bonds. The indenture requires us to issue a notice next week informing the market of this put date. So you will likely see a procedural 8-K related to.
Speaker Change: The repurchase notice.
Speaker Change: We anticipate that given where the bonds are trading and our current share price that the bond holders will exercise their put option.
Speaker Change: We are fortunate to have a strong balance sheet, a good cash position capacity on our revolver and the option to issue another convertible bond.
Speaker Change: Other alternatives, we are watching the market and have the flexibility to be opportunistic to make the best capital decision for the company.
Speaker Change: I'll go to slide 10 now.
Speaker Change: As you know, we said adjusted earnings per share guidance range for 2024 at 10% to 15%.
Speaker Change: And we said that we would be working hard to be at the high end or above that range.
Speaker Change: We did exactly what we said by delivering above the high end of the range.
Speaker Change: Rounding down to 15% growth year over year.
Speaker Change: For the full year 'twenty four we.
Speaker Change: We delivered record results across all financial metrics, including consolidated revenue of 4 billion adjusted operating income of $500 million and adjusted EBITDA of almost $700 million.
Speaker Change: Additionally, if you look more closely at the details behind the $8 61, adjusted EPS you will see that we benefited from share repurchases you will equally see that interest expense and income tax expense increased year over year.
Speaker Change: And further yet you will see that the increase in interest and taxes was offset by the benefit from share repurchases essentially boiling down to 15% increase in adjusted EPS attributable.
Speaker Change: Attributable to the 16% increase in operating income.
Speaker Change: That's real earnings from real operating growth.
Speaker Change: I'd say, that's a high quality of earnings growth story.
Speaker Change: The full year results are largely in line with the fourth quarter. So I won't go through all the details again however.
Speaker Change: However, I think it bears repeating that we are extremely pleased with the full year record revenue and adjusted earnings per share driven by operating profits from all three segments and we saw gross margins and operating margins expand year over year.
Speaker Change: Before I wrap up I want to provide.
Speaker Change: Bit more analysis around our adjusted EPS guidance, we expected our 25 adjusted.
Speaker Change: Adjusted EPS growth for the full year to be in the 12% to 16% range we.
Speaker Change: We are currently forecasting in the first quarter, a tax charge of approximately 20% to 25 per share attributable to state income tax expense related to the nonrecurring first quarter repurchase of the company's convertible bonds. This charge has been can.
Speaker Change: <unk> in our full year guidance.
Speaker Change: But we will be recorded in the first quarter essentially front loading the tax, which obviously will make the first quarter look a little unusual for.
Speaker Change: Further to this point again fully considered in our guidance range. This additional tax will push our full year effective tax rate to the upper twenty's.
Speaker Change: Excluding this one time nonrecurring tax item.
Speaker Change: You will see that our annual effective tax rate is generally expected to be similar to this past year.
Mike Brown: It has been another great year at <unk> and with that I'll turn it over to Mike.
Mike Brown: Good morning, everybody and thank you for joining us I'll begin my comments on slide number 15.
Speaker Change: We did it again, we delivered above the high end of the adjusted earnings per share guidance actually a little better than 15%, but we rounded down to 15%. Moreover, our 'twenty 'twenty four results were record results across all consolidated financial metrics highlighted by operating income of over half a billion.
Speaker Change: With a 16% growth rate year over year as we prepared for our 30 year celebration that we had last year. It was great to reflect on our success.
Speaker Change: We thought it would be fun to calculate the compounded annual growth rate of revenue most companies would be proud to say they have grown revenue at 37% compounded growth rate over 30 years as we did given everything that has happened.
Speaker Change: In the past three decades. It is simply a remarkable achievement the only time year over year revenue did not grow as during the pandemic in 2021, the world literally shut down and even then two of our three segments grew and we produced positive cash flows from operations of over $100 million.
Speaker Change: We continue to deliver the strong double digit earnings growth rates, because the principles that helped us grow for the last 30 years have shaped our business our people and how we serve our customers as you can see on the right side of this slide we also have shown a remarkable ability to see changes in the market and not yet.
Speaker Change: Adjust but thrive in the face of these changes and challenges while no one knows what the financial landscape might look like in another 30 years. Our track record indicates that we will be ready to capitalize on the opportunities ahead. However, as I reflected on our results. This year I cannot help but wonder why the market.
Speaker Change: Does not always share my enthusiasm about <unk> results and our future opportunities for instance, an analyst. Once told me you guys are great operators.
Speaker Change: But I don't see a future for your model that made me realize we need to clarify precisely what we build and why youre in it as well as a well positioned business operating in a very large market with multiple diversified revenue streams poised to produce growth in the future lets go onto the next slide.
Speaker Change: Slide number 16.
Speaker Change: This is a big one here.
Speaker Change: To quickly recap our extraordinary journey, we began our path on the ft sector by deploying our own Atms, which quickly expanded to processing for banks running their atms and offering access to our.
Speaker Change: But even in those early days, we recognized the tremendous opportunity for innovation today, we operate three segments that each complement one another and represent a collection of assets.
Speaker Change: That have positioned <unk> as a global leader in the payments industry, beginning five years ago, we recognized that we had assets and technology that with investment could allow us to double down on our digital endeavors. The result, as you can see on this slide our revenues surge.
By an impressive 45% from $2 8 billion to $4 billion between 2019 and 2024, while our ATM network revenue the dark blue here that you see on this pie chart.
Speaker Change: As a percentage of the total revenue decreased from 25% to 19%, it's still grew by 9%.
Speaker Change: Today, only 19% of our revenue is generated from euro net owned Atms.
Speaker Change: <unk> owned ATM revenue is growing and our other revenue streams are but the other revenue streams are growing at a faster pace, we invested heavily in card acquiring and ran dandelion digital money transfer ebay and you can see the results.
Speaker Change: Said differently than simply while I am very proud of our heritage where not just in the ATM business now, let's briefly discuss the global payments market.
Speaker Change: Just on a 2024 report issued by Mckinsey <unk> company entitled Global payments in 2020 for the global payment industry handled three four trillion transaction and a revenue pool of $2. Four trillion are just over 13 basis points per dollar process.
Speaker Change: The market revenue pool is predicted to grow at a rate of 5% per year. Moreover, <unk> has focused on the more profitable sub segments of the market as evidenced in our revenue per dollar process for us being more than 20 times the market average euro.
Speaker Change: Revenue grew 10% in 2024 twice as fast as the predicted market rate of growth with less than 1% of the overall revenue pool and a focus on higher value payments, we have a lot of room to grow in the past three decades, we have built an unmatched set of assets.
Speaker Change: And expertise that have positioned us as a global leader in payment processing cross border payments and foreign exchange.
Speaker Change: The payments industry is growing and it is not surprising that we are outpacing the market growth.
Speaker Change: Or will it take to grow in the future.
Speaker Change: Well, let's review what the industry experts are saying I'm on slide number 17 now.
Speaker Change: In the fourth quarter of 2020 for the Boston Consulting group published research surrounding the current state of the payments industry. The title of the article was fortune favors the bold.
Speaker Change: BCG focused on four disruptions within the payments industry that are and will be reshaping the payments landscape.
Speaker Change: So as macroeconomic pressure second slowing digital payment conversions from cash to digital regulatory scrutiny and cost pressures and technological inefficiencies.
Speaker Change: One of the more interesting findings in Bcg's research was that cash to digital payment conversion is plateauing the.
Speaker Change: The BCG research study indicated that payment companies need to adapt to these four disruptions quickly to survive as I reflected on this slide I Couldnt help but think we added.
Speaker Change: Advance copy of the slide four to five years ago, the cash to digital Platt, telling observation, rather we saw accelerating which it did.
Speaker Change: But several years ago, we saw that global the global payments model would be changing which drove us to develop ran dandelion and skylight to name some of the more prominent ones. We weren't just sitting around milking. The profits we were investing in the future in response to the need for modern technology.
Speaker Change: Ft launched ran in 2019 and ran as the most versatile real time pass and ATM switching system and the first modern platform that is database independent platform independent and micro services Architected.
Speaker Change: In response to the need to reinvent payments for banks.
Speaker Change: Money transfer launched standard line in 2021.
Speaker Change: <unk> is the largest real time cross border payments network in the world, enabling payments into billions of bank accounts cash pickup locations and billions of wallet worldwide.
Speaker Change: And our response to the need to strengthen our risk and compliance functions you might remember we have a pristine RF record there ourselves through our money transfer business. We launched skylite skylight is a proprietary compliance solution launched in 2023.
Speaker Change: Finally in response to the need to engage in emerging infrastructure <unk> has built a powerful network of assets all over the World are network covers all three segment that includes over 50000 Atms access to $4 1 billion Bank accounts $3 1 billion wallet accounts.
Speaker Change: 600000, physical locations to send and receive money we're connected to over 250 banks all of the major RTP systems and wallet essentially we offer our customers the ability to get money in and out of the network in whichever form they want and it's not just the network.
Speaker Change: Its foreign exchange as well the FX licenses compliance and settlements to handle any form of payment domestic and cross border or assets represent our strength and a significant barrier to market entry for new competition. It takes time, it takes money and expertise.
Speaker Change: To establish the infrastructure that we have built in 67 countries to get payments all over the world as I mentioned earlier. These key areas for long term success, our BCG suggestions for industry participants to implement today.
However, Europe has already checked all of these boxes. In fact, we started <unk> five years ago to establish <unk> as an industry leader are.
Speaker Change: Our motto is lead follow or get out of the way and as you can see we chose to leave now im on slide number 18.
Speaker Change: Now, let's get a little bit more visibility into our specific strategic growth drivers.
Speaker Change: But aside from our product and market, let's not overlook our strong balance sheet and investment grade credit rating and a $1 9 billion credit facility when coupling financial strength with world class assets technology and products and a huge market. We are well positioned to continue strong double digit growth well into the <unk>.
Speaker Change: Future.
Speaker Change: As you can see here our business model is built on two key revenue pillars that will continue to expand as payment functionality evolves and becomes more and more global.
Speaker Change: First pillar is the payment and transaction processing pillar with which we facilitate high volume transactions for banks merchants and branded partners continually expanding our use cases to stay aligned with evolving demand. The second scan is cross border and foreign exchange.
Speaker Change: With which we power our FX related use cases and distributed foreign exchange services through a mix of owned and third party channels spanning both physical and digital touch points to meet consumer business payment needs.
Speaker Change: Hopefully you can see how the combination of payments cross border and FX enables us to produce revenues.
Speaker Change: Revenues per dollars moved at more than 20 times, the global payments average, while the methods have and will likely continue to evolve we believe that it's fairly safe to say that people will always need to make payments.
Speaker Change: <unk> will continue to lead the way wherever whenever and however people want to pay or move money now, let's move to slide number 19, and I'll bring out the specific elements of each revenue pillar for each segment beginning with ft.
Speaker Change: Slide number 19 and ft are focused on expanding the core services that we provide the banks and fintech.
Speaker Change: Led by these.
Speaker Change: It can be seen by the five categories are these five categories in five areas first expansion of fees, including price increases in domestic and international interchange and the introduction of domestic and international access fees into additional markets. We have real time payment process, we have.
Speaker Change: Expansion of our card and Pos acquiring business, which grew profits at over 300% over the last three years.
Speaker Change: We're taking advantage of ATM as a service opportunities and serving customer to business payment needs. This quarter, we were able to expand our ATM as a service offering to the baltics. The governments in these countries like many others have mandated the banks give customers the option to access physical cash.
Speaker Change: And the bank recognizes that they can accomplish this with better technology at a lower cost by utilizing our platform.
Speaker Change: In merchant acquiring in the fourth quarter, we added more than 8000 traditional Pos terminals and more than 2000 merchants with digital with a digital Pos solution. Finally in 2024, and we saw regulation change in several markets, which allowed us to introduce domestic and international.
Speaker Change: Direct access fees.
Speaker Change: We expect to be able to add several more markets in 2025, increasing our revenue generating potential the revenue opportunities in the <unk> segment continued to grow driven by our strong asset base and an industry, leading modern technology platform that can serve banks and fintech well into the future.
Speaker Change: I am confident in our ability to continue to grow the profits of this business at strong double digit rates in 2025 and beyond now I'm on slide number 20, we will talk about APAC.
Speaker Change: As I mentioned last quarter ebay is the perfect example of our ability to utilize our assets to create new revenue generating opportunities from our early beginnings of converting prepaid mobile scratch cards to digital pens to our diversification from prepaid mobile airtime distribution to processing a third party.
Speaker Change: Branded content ebay has always been a pioneer in the industry ebay continues to offer consumers and businesses Omnichannel distribution opportunities for our branded payments partners in the fourth quarter. Our Ipe team signed an agreement with Blizzard Entertainment for code distribution for global digital brand brands.
Speaker Change: We also expanded our payment process through a new agreement with Amazon pay to launch a new gift card service.
Speaker Change: This initiative introduces a dedicated giftcard section with an Amazon pay offering fresh Avenue for customer.
Speaker Change: Customer engagement and distribution of gift cards with local retail brands.
Speaker Change: Finally, we signed an agreement with evolved bank to provide transaction monitoring and anti money laundering reporting capabilities using our skylite compliance as a service solution now let's move to the next slide and we'll discuss money transfer.
Speaker Change: As we discussed the money transfer segment I would like to highlight dandelion as a key growth engine into the future with access over 4 billion Bank accounts 3 billion wallet accounts and 600000 physical locations worldwide band alone Dandelion stands as the most strategic cross border network.
Speaker Change: For moving money globally beyond traditional family Remittance services Dandelion allows us to tap into new cross border payment markets, Unlike unlocking opportunities and a 15 trillion dollar industry.
Speaker Change: Nearly 20 times the size of the remittance market with our superior product and competitive DNA, we are well positioned to capture market share as banks and businesses recognize the value of this offering.
Speaker Change: Now, let's dive into the standout money transfer performance in the fourth quarter. There were the results were nothing short of exceptional underscoring our leadership in the marketplace and the growing momentum across our global distribution channel.
Speaker Change: Our money transfer segment delivered outstanding results this quarter reinforcing our market leadership and momentum we achieved double digit transaction growth with core what the core business outpacing market growth growth by two five times, our digital transactions grew 33.
Speaker Change: <unk> percent compared to the prior year and our digital payout grew 31% compared to the prior year, representing 54% of our total volume that's a big asset that people just don't get Mauro.
Speaker Change: Moreover, our strategic partnerships and geographical expansion remains central to our success. A Prime example is our collaboration with Pls financial services, which launched in the third quarter. Our first full quarter post launch lived up to expectations, yielding substantial volume with transactions at 100.
Speaker Change: Countries and territories on the back of this launch we assigned two additional check cashing chains.
Speaker Change: On the Geo expansion front, we are increasing our remittance tam by expanding to Mexico, Philippines, and Thailand outbound markets to wrap up money transfer less discussed dandelion wholesale our cutting edge cross border payments platform, which continues to power major players in the industry.
Speaker Change: A prime example of this was the launch of a new digital outbound service partner in the fourth quarter Al <unk> Bank in the UAE, the second largest outbound market in the world. According to the World Bank with our expanding sales team driving more deals our pipeline is stronger than ever with growing momentum signing four new <unk>.
Speaker Change: Partners in the fourth quarter guava pay a UK based payment provider, serving customers and Smes orbit remit, a leading digital MSB in New Zealand, and Australia, Panda remit and MSP headquartered in Singapore originating transactions from 39 countries with a strong position.
Speaker Change: And in Asia, and finally, we're excited to announce our new partnership with Ant financial are an international one of the largest and most innovative fintech in the world. Finally, we currently originate transfers from about 60% to 65% of the global remittance market, It's those markets, where we have life.
Speaker Change: Senses to have an outbound.
Speaker Change: Sand similar to re as expansion history, we will continue to expand to new markets whereby in the next few years, we expect to be at about 80% to 85% of the market with licenses.
Essentially more than 30% growth opportunity from market expansion alone.
Speaker Change: Hopefully you can see that there is a clear path there of continued growth in the money transfer segment, let's move up move onto the next slide I will wrap up the quarter.
Speaker Change: Yes.
Speaker Change: After all this activity over 30 years, the two fundamental revenue generating pillars that we have discussed are at the core of our success first its payment and transaction processing and the second is cross border and foreign exchange as I mentioned earlier, our leadership team continues to deliver our strategy.
Speaker Change: G that checks all of the boxes for long term growth as suggested by the Boston Consulting group. Moreover, we will continue to leverage on our fundamental revenue generating pillars of strength to grow our revenue mix continues to shift as we make investments acquired companies and launch new products.
Speaker Change: In 2024, only 19% of our $4 billion in revenue was from our <unk> network.
Speaker Change: As we have explained we have a robust and diversified business model that plays and a two four trillion revenue global payments market with essentially analyst potential for growth supporting our model. We have our core assets. We have are ran technology or dandelion network.
Speaker Change: Our proprietary and embedded compliance expertise global footprint of licensed and regulated industry entity.
Speaker Change: Distribution partners in the form of banks retailers company owned stores Atms and POS terminals, we have solid earnings at a very robust balance sheet that can support future growth initiatives and our people the best I could ask for with a proven winning track record and unbending ethics.
Speaker Change: One thing is to have these assets in one or two markets, but a completely different game is to have them at scale at a global level. As we said there are high barriers to entry to be in a position to go. After this immense market. We are not in the building mode. We are in the execution mode.
Speaker Change: And extremely well equipped to do so.
Speaker Change: Our business stands on the foundation of these assets and we have a go to market strategy for our revenue pillars, two or three different segments, enabling <unk> to reach the world of payments transaction processing cross border payment foreign exchange and so forth through our network of networks.
Speaker Change: We are currently growing two times faster than the global payments market rate of growth and we expect that to continue.
Speaker Change: As I conclude my remarks, I want to repeat we look forward to another great year in 2025 with a pipeline of opportunities to drive our results. We expect another strong year in 2025 with a 12% to 16% earnings growth with that I'll be happy to take questions. Operator will you.
Speaker Change: Lisa.
Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.
Speaker Change: And our first question comes from Reena Kumar of Oppenheimer. Your line is open.
Reena Kumar: Good morning, Mike and Rick Nice results here can you talk a little bit about what gave you confidence in raising your initial EPS outlook for 2025, and if you can help us understand what are the drivers.
Speaker Change: By segment.
Yes, 12% to 16% EPS growth implies.
Speaker Change: Well, let's not forget we I think we hit that number for this year is like 15, 3%. So we hit the high end of our 10% to 15% range last year. We've got all of the assets that I've just talked about for the last half hour and we've got momentum really in all three.
Speaker Change: Business segments. So it isn't one thing in particular.
Speaker Change: Ive itemize them in my comments on each of the three but we've just got a really strong backlog and a lot of momentum in all three segments.
Speaker Change: So.
Speaker Change: Particularly our digital segment I mean, that's that's drilling like a frigate week 30, plus percent and all of those kinds of areas.
Speaker Change: No.
Speaker Change: I could just I don't think it's any one thing right now.
Speaker Change: You get things like an FTE or we're getting.
Speaker Change: Where we've got our merchant services is growing like Crazy It grew 300% over the last three years.
Speaker Change: We do our ATM as a service business more and more banks are being mandated by their governments to provide easy access to cash to their customers and they rank and these banks have recognized that we can do this for them better than they can do it themselves and then of course, we have our own ATM.
Speaker Change: Net work ourselves where we've got.
Speaker Change: Lots of.
Speaker Change: Of <unk>.
Speaker Change: <unk> and other things changing to our benefit.
Speaker Change: Interchanges and so forth and then you've got the.
<unk>.
Continued.
Speaker Change: Locked in with all these big brands in the World.
Speaker Change: And they keep bringing us to new markets and that's very exciting we've got that skylite product, where we now have are really kind of our second our second customer for that we've pioneered this with a similar kind of <unk>.
Speaker Change: Solution for Kroger, some number of years ago now we have product ties that and we're making this available to banks and we've signed our first bank and then you've got a money transfer shoot look at that 33% growth in our digital payments 30, I forgot what it was 31 or something like that percent that we're paying out.
Speaker Change: Now into digital channels of which we have $3 1 billion.
Speaker Change: I mean, it's just across the board, we have a lot of stuff cooking.
Yes, that's great.
Speaker Change: Very helpful. And then if we can just get any help on our models the carb Kropko look by segment.
Speaker Change: You can follow on.
Yes.
Speaker Change: I think that I think so.
Speaker Change: Well.
Speaker Change: Again, we will put in Atms, where we can make money the new markets are still screamingly.
Speaker Change: These developing markets theyre going to have cash for the next maybe ever and not just for the next 20 years and so those new markets are certainly expansion areas, but I will just keep putting atms and where they are profitable and we still see that as a.
Speaker Change: As a big profit center for us and growth area.
Speaker Change: The interesting thing is the rest of the rest of the company is keeping up our overtaking it so well.
Speaker Change: And you saw that our our revenues.
Speaker Change: In 2019 were 25% of our revenues.
Speaker Change: And now we're down to 19%, while we grew our total revenue by 45%. So it's just the whole company's growing around the world and.
Speaker Change: We're pretty excited.
Speaker Change: Youll have to fill in your own cells in your spreadsheet.
Speaker Change: But rana.
Speaker Change: <unk>.
Speaker Change: What I would offer without giving you a bunch of numbers as Mike said.
Speaker Change: The business is doing well.
Speaker Change: We're fortunate to have a great deal of consistency, which brought is brought about because of a lot of good diversity in our business. We are a very geographically diverse business we've got.
Speaker Change: Very diverse consumer products.
Speaker Change: <unk> from direct to consumer to working with banks and things like that so I would tell you I would expect to see similar kinds of results again. This past year. We grew operating income 16% each of the businesses contributed to that growth. So.
Speaker Change: Given that we've got good momentum, we would expect to see similar continuity as we go into 'twenty, five and again as Mike said our mass.
Speaker Change: Mathematically, we were slightly above 15 point person.
Speaker Change: <unk>, So look where we said last year throughout the year, we X, we were driving to be at or above the range and what we delivered that.
Speaker Change: We actually delivered outside of the range above the range. So.
Speaker Change: I think theres a number of things there in terms of the confidence of our business continuity of the business that will.
Speaker Change: Give us the ability to talk to.
Speaker Change: To achieve excellent results.
Speaker Change: That's helpful. Thank you both.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Our next question comes from Gus scale.
Speaker Change: <unk> Crespi, Hardt and company your line is open.
Speaker Change: Hey, good morning, Mike and Rick. Thank you for taking our questions nice job on the quarter of the year.
Speaker Change: Can we start off on.
Speaker Change: Money transfer.
Speaker Change: Anything Youre I mean, clearly you're outgrowing the industry very nicely digital continues to ramp I think it was like $4 fifth quarter of acceleration in branded Transat.
Speaker Change: Transactions.
Speaker Change: Anything youre seeing intra quarter domestically in terms of foot traffic in brick and mortar.
Speaker Change: Insight into that.
Speaker Change: Then just longer term in money transfer how should we be thinking.
Speaker Change: Not to get like a number exactly but the puts and takes of.
Speaker Change: You have more and more digital which seems to be margin accretive because what we've heard on the prior calls you're going to be going into more deals and we have less share. So oracle is going to be lower contribution margin versus growing share in existing markets. So that's my first of all I have a follow up.
Speaker Change: Okay. So.
A quick comment on your last comment as you go into new Geos a lot of times. These deals may only have one.
Speaker Change: Player or two players so what you actually find when you go into a new Geo is your margins are fatter.
Speaker Change: Because.
Speaker Change: <unk> got a either a monopoly or an oligopoly, there and theyre basically mills gain.
Speaker Change: The the market and so then we entered the market.
Speaker Change: And we kind of equalize that with even.
Speaker Change: We can be a little bit cheaper and still get a ton of market share and be higher than our average around the world So money transfer.
Speaker Change: We've got we've got some.
Speaker Change: Long term opportunities getting into new Geos and then we're going to just keep growing like we have in the current geos and having all the.
Speaker Change: Touch points for payout is is really our single most biggest asset.
Speaker Change: And I would add to that is are our fundamental operating structure. We work off of a single platform. Each time, we go into a market, we're not having to redevelop the process, we leverage our technology across these businesses.
Speaker Change: Even for example, we don't have to set up different customer service centers, because we use AI applications to toggle between languages, So where our operations are fitted.
Speaker Change: Again, we're not we haven't just we havent just gone into our first country. We've got 60. Some countries. We have been doing this for years. So each time, we roll into another market, we're not starting from ground zero, we're simply leveraging the consistent infrastructure that we have and thats been made.
Mike Brown: Even more efficient by some of the more technology types of things, we roll out and as Mike said, we're able to go in their offer a good value proposition probably better than a couple of the folks that have dominated those markets and milk them before and so it works out real nicely and if you look back at Rio.
Mike Brown: We acquired Ria and it was there were 40 some thousand locations. We were it was principally a U S based outbound kind of business right. We're all over the world and we continued to grow those margins. So I think that we're well positioned to take advantage of that as we go on.
Speaker Change: Thank you for those comments are really helpful and on the not to harp too much on the 12% to 16% guide.
Speaker Change: How we took out last year that 10% to 15% bogey seem like medium ish.
Speaker Change: Ill frame.
Speaker Change: Medium time framework medium wrong framework.
Speaker Change: Should we be taking the 12% to 16 cannot replace a pump experiences what kind of a.
Speaker Change: A good number we kind of have in the out years of our model.
Speaker Change: With that I'll jump back in the queue.
Speaker Change: Yes.
Speaker Change: You look.
Speaker Change: Our average over the last 20 years, including the ugly years of Covid was 13, 5%.
Speaker Change: And if you take COVID-19 out it's going to be a lot higher than that so.
Speaker Change: I'm I'm, hoping that we could stick to 12 to 16 for a long time, and if I can get that higher I'll get that higher.
Speaker Change: Great Super encouraged and thank you.
Speaker Change: Also I'd like to.
Speaker Change: And like to also share if somebody's going to ask this question. So I'll answer it in advance.
Speaker Change: Been a lot of action going on in the press about immigration.
Speaker Change: And so we went back and we look through.
Speaker Change: Trump won which had similar kinds of Av.
Speaker Change: Notoriety and we found that.
Speaker Change: It actually Trump won earlier did not affect our money transfer business at all and in fact, what we see is the biggest contributor to strong money transfer growth as a strong economy at the end of the day, a stronger economy means more jobs for more people, including people who have families over.
Speaker Change: <unk>.
Speaker Change: So if you believe that.
Speaker Change: We can have a good strong economy going forward, then we're going to be a lot better off in money transfer.
Speaker Change: You can go onto the next question. Thank you.
Chris Kennedy: And our next question comes from Chris Kennedy with William Blair. Your line is open.
Chris Kennedy: Yeah. Good morning, Thanks for taking my question Hi, Thanks for taking my question and the results I think speak for themselves.
Chris Kennedy: The business mix on Slide 16 is really helpful is there any way to think about some of your newer initiatives such as Ren Sandy line and no skylight is very small.
Speaker Change: Well, Scott I would just kind of started youre right.
Chris Kennedy: I mean.
Chris Kennedy: If you just look at the asset.
Chris Kennedy: Pie chart.
Chris Kennedy: It's hard to see from looking at them, but when you go when you grow 45%, even and don't forget Covid was in the middle where we went to hell okay.
It shows that each of those are growing ebay is growing its 29% and 28%, but it's now 45% bigger.
Chris Kennedy: We will see I think we're going to see the way ran works is these are transat.
Chris Kennedy: Transaction based licenses so as as the banks to sign up with us sign up.
Chris Kennedy: They have kind of.
Chris Kennedy: Almost a hyperbolic curve for issuance of cards are doing real time payments or whatever it is so you end up making more money every year than you did the prior year. So youll, just see a bigger and bigger contribution there.
Chris Kennedy: Got it understood and then just broadly.
Chris Kennedy: Ren.
Chris Kennedy: I think most of the businesses outside of the U S. Just what's the market perception on that.
Chris Kennedy: On that business and kind of what how do you think the growth opportunities.
Chris Kennedy: Yes, so the growth average with that the first place that we were able to sell this into Asia and why is that because Asia is when it comes to banking their way more technologically advanced than the U S and they've got real time payment systems across most of those countries we pioneered RTP.
Chris Kennedy: Actually with the first settlement system for Upi, which is the big.
Chris Kennedy: Real time payments switch in India like 15 years ago. So we have a lot of expertise there that's now moving to the rest of the world. We finally have fed now in the U S will be able to.
Chris Kennedy: Go to customers here in the U S. Now that that was kind of a we'll just call. It a nascent version of that was launched last summer and <unk>.
Chris Kennedy: So and we've got several deals that were cooking in the U S as well, but we actually didn't even deploy sales guys in the U S still two years after Asia because the Asia.
Chris Kennedy: The agent banks and Fintech were early adopters and right there on the forefront of technology and they can appreciate our superior technology. So we will you will see more.
Chris Kennedy: And we'll call them in the western markets as we go forward.
Chris Kennedy: But we still see a lot I mean.
Chris Kennedy: We've got we've got some like five or six banks in India connected to their real time payment system through <unk> connect we've got four banks in the Philippines doing the same thing to their real time payments switch.
Chris Kennedy: <unk> got.
Chris Kennedy: African was so the emerging markets, where the easiest one because they wanted to jump past the whole card thing altogether and.
Chris Kennedy: So, we'll just kind of keep in touch we'll have more and more.
Speaker Change: Got it thanks for taking my questions.
Chris Kennedy: Thank you.
Speaker Change: Yes.
Speaker Change: Our next question comes from Pete Heckmann of D. A Davidson your line is open.
Speaker Change: Okay.
Pete Heckmann: Hey, good morning, everyone. Thanks for taking the question more just trying to understand.
Pete Heckmann: The first quarter commentary here, if I remember correctly, you had about 15.
Pete Heckmann: Benefits in the first quarter of.
Pete Heckmann: 24, and now Youre talking about 20% to 25%.
Pete Heckmann: Higher tax provision in the first quarter.
Pete Heckmann: Due to the repurchase of the converts so just shaking out I mean, I just want to make sure. We're in the right ballpark, but something around $1. Dollar 10 is that is that in the ballpark of.
Pete Heckmann: What your math works out to.
Pete Heckmann: Yes, I guess, maybe another way to look at it is if you were at the higher end of the number you use you articulated and then you put 20% to 25 cents on top of that that probably starts putting in the right ballpark. So.
Pete Heckmann: I would tell you I'm not so sure that your math is directionally incorrect.
Pete Heckmann: Okay. Okay, and then in terms of can you talk about some of the success with.
Pete Heckmann: We have at the end of July and some of the some of the New Bank partners and channel partners I guess.
Pete Heckmann: Are you seeing volumes ramp.
Can you extract that and then talk a little bit about the trends there and then any relatively larger customers that you expect to onboard this year.
Pete Heckmann: Well, we have we have several large customers.
Pete Heckmann: And process and we're excited about them that we should be announcing over the next couple of quarters.
Pete Heckmann: Or maybe are you.
Pete Heckmann: You might call it or are our best are most well known customers HSBC.
Pete Heckmann: They're in Asia, they're all over the place their customers are all over the place they are making banking payments they use us to do.
Pete Heckmann: C to B and B to B kind of payments, we have not we've been live with them now let me count it out about 16 months.
Pete Heckmann: Every single month has been a record over the prior month.
Pete Heckmann: So what people find out.
Pete Heckmann: Is that.
Pete Heckmann: Our rails give a less expensive and faster settlement then use in other standard banking measures and they viewed this as a competitive dynamic to their competitor banks. So as we add more and more banks to this we've got CVA that we've signed which is the largest bank in Australia.
Pete Heckmann: We're getting close to turning those guys on.
Pete Heckmann: We like it when we enter a new market like that because all the other banks are going to have to compete with the better service.
Pete Heckmann: So we've got a lot cooking, but it's one of those bids.
Pete Heckmann: Businesses that just continue to grow and really never go backwards.
Pete Heckmann: That's great and just following up there on the HSBC.
Pete Heckmann: HSBC HSBC.
Pete Heckmann: They're seeing app.
Pete Heckmann: That was not using the underlying or.
Pete Heckmann: No. It wasn't in fact that I think I think the last time I read there as they've discontinued their zainab.
Pete Heckmann: That's correct, yes, okay. Thank you yes.
Pete Heckmann: Thank you.
Pete Heckmann: Yes.
Pete Heckmann: Our next clay, maybe they would maybe yes, maybe they wouldn't have discontinued their app had they been a day underlying customer.
Speaker Change: Our next question comes from Andrew Schmidt of Citigroup. Your line is open.
Andrew Schmidt: Hey, Mike Hey, Rick I appreciate all of the product detail as usual this is great.
Andrew Schmidt: Let me just start off Nitty gritty, just clarification question that 12% to 16%.
Andrew Schmidt: Cts growth for 2005, I just want to make sure that includes the tax impact correct you talked about for the first quarter.
Andrew Schmidt: Correct.
Andrew Schmidt: Okay.
Andrew Schmidt: And then I guess, just a quick follow up to that I mean, it seems like C U.
Andrew Schmidt: <unk>.
Andrew Schmidt: Add that back on an underlying basis. The operating performance here is pretty it's pretty impressive so.
Speaker Change: Are there one off things that you mentioned.
Speaker Change: Interchange staff, obviously business is doing fairly well, but are there things that came into the mix. This year that were kind of an upside surprise that are good guys to to call out that we think about as we model out subsequent years just want to make sure we have the underlying trajectory correct. Thanks.
Speaker Change: No Andrew I think as I said earlier.
Speaker Change: We see a great deal of continuity into the business. There is not any kind of one time items in there any kind of real extraordinary stuff, it's just continuation NOI.
Speaker Change: Often want to use the analogy of the real estate industry success in real estate is L. L. L location location location the success of our businesses mmm more and more and more.
Speaker Change: More product in more markets more distribution points.
Mike Brown: And Thats exactly what were doing except I would tell you that as Mike has said, we've got a much stronger focus we kind of launched in on this five six years ago to being more digital kind of focus okay.
Speaker Change: We're getting we're getting to the vein of transactions as we said that our 20 times the industry average and revenue per transaction. So we're getting a good.
Speaker Change: Good price per transaction.
Speaker Change: Is made possible because theres a lot of focus on cross border transactions Theyre also the transactions that are growing a little faster in that whole mix of transactions.
Speaker Change: We're connected to most every real time payment network that's out there because we've got the kind of technology to do it. So it's not any one thing thats driving it its just good nice consistent performance across what I would call very durable businesses.
Speaker Change: It was also encouraging I guess in some respects to see somebody like a Boston consulting group to say.
Speaker Change: The cash to card conversion is plateauing.
Speaker Change: Said to people that look we do believe that cash <unk>.
Speaker Change: Transactions will.
Speaker Change: Go down we continue to believe that.
Speaker Change: But it looks like.
Speaker Change: Most of the.
Speaker Change: The Prognosticators out there are saying that it's flattening out.
Mike Brown: Now that could certainly be a little bit of helpful to us because we've had so much focus on driving digital initiatives and whether that's a digital our origination on the money transfer as Mike said digital payout on the money transfer.
Mike Brown: So yes, no one particular thing it's just consistent production across the very broad in an enviable set of assets.
Mike Brown: Got it thanks, so much guys good results here.
Mike Brown: Thank you. Thank you. Thank you one more question operator, one more question okay.
Speaker Change: Our last question comes from Mike Grondahl of Northland. Your line is open.
Mike Grondahl: Hey, guys, thanks, and congrats on the quarter.
Speaker Change: My question.
Speaker Change: Surcharge interchange increases.
Speaker Change: In countries over 24.
Speaker Change: Roughly what was that contribution maybe to operating income dollars.
Speaker Change: What do you roughly think it's going to be in 'twenty five.
Speaker Change: First of all we won't we can't we won't really answer that question and dissect it that much but I will tell you that through 2020 for a number of countries and if you go back and listen to all our last three calls.
Speaker Change: It seems like every quarter.
Speaker Change: Another country or two opened up for either an increase in interchange fees or at our ability to offer either international or domestic DAP.
Speaker Change: And so and they kind of happen throughout the year, so that will give us a little bit of a bump into this year could love a full year of it.
Speaker Change: But.
Speaker Change: It's just.
Speaker Change: That.
Speaker Change: That market is a combination of those kinds of increases plus a few more atms.
Speaker Change: In the developed markets and then as many Atms as we can do into the less developed markets because they are so darn profitable so thats.
Speaker Change: And I would I would add to that a little bit of let's call. It reflection on what we've seen over the years. Many years ago, we saw where there was a dialog of decreasing interchange rates and things like that.
Speaker Change: Today, we don't hear that kind of dialogue about decreasing rather we hear a dialog about increasing and increasing because many of the countries are saying you know what it's really important that we maintain access to cash for our customers. They even talk about the concept of stored value win.
Speaker Change: When there are difficulties in the world economy politics Wars. All this other stuff people go back to cash.
Speaker Change: And what what central banks are beginning to say is that look we cannot have or our country. Our citizens to be dependent upon only a digital form we need to maintain cash in our business right.
Speaker Change: So you're starting to see a lot more discussion about supporting the banks to make sure that they have.
Speaker Change: Cash accessible or even deposits accessible.
Speaker Change: Again kind of plays to our hand, because we're going to see.
Speaker Change: More debate on improving interchange rates access fees, making depository.
Speaker Change: Opportunities available and so I say that because in today's world I think that we were seeing.
Speaker Change: A more pro kind of attitude toward ensuring that the banks are arent led to a decision to just completely get rid of their Atms. They want people to have both are there, but they are being regulated to.
Speaker Change: They are being required by their government to provide that service so.
Speaker Change: Think that the to use another kind of Maxim.
Speaker Change: Kind of Windows that are back now in that regard rather than a few years ago. When it was headwind for us so.
Speaker Change: Again, it's part of the many things many things that we have going that give us the confidence that we will continue this kind of really nice double digit growth rate yes.
Speaker Change: It's only 19% of our revenue today.
Speaker Change: But the nice thing is with all the changes we're seeing the mandated requirements from governments the banks and so forth I mean, it looks like it's going to be here for a long long time.
Speaker Change: It's great to see that pendulum swing back in your favor in the last year or two.
Speaker Change: When you say that you've seen the payment companies.
Speaker Change: The reason that.
Speaker Change: The numbers have slowed down and the reason a lot of payment companies are at.
Speaker Change: At a fraction of what they were four or five years ago is because this conversion from cash to digital has plateaued that growth rate just isn't there anymore and so that definitely gives a longer life to our ATM business.
Speaker Change: <unk>.
Speaker Change: And in the meantime, we're just going to grow the hell out of our the rest of our digital business.
Speaker Change: Great. Thanks, guys.
Speaker Change: I'd like to thank everybody for your for your time on that on the call today, we look forward to talking to you in about 90.
Speaker Change: This concludes today's conference call. Thank you for participating and you may now disconnect.
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Speaker Change: Okay.