Q1 2025 Euronet Worldwide Inc Earnings Call
Greetings and welcome.
Two the Euro net worldwide's first quarter 'twenty 25 earnings call.
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Adam: Please be advised that today's conference is being recorded it is now my pleasure to introduce your host Mr. Adam <unk> General counsel for the Euro net worldwide. Thank you. Mr. <unk> you may begin.
Speaker Change: Thank you and good morning, everyone and welcome to <unk> first quarter 2025 earnings Conference call.
Mike Brown: On the call today, we have Mike Brown, our chairman and CEO, Rick Weller our CFO.
Mike Brown: Before we begin I need to call your attention to the forward looking statements disclaimer on the second slide of the Powerpoint presentation, we'll be making today.
Mike Brown: Payments made on this call that concern euronext or its management's intentions expectations or predictions of further performance are forward looking statements <unk> actual results may vary materially from those anticipated in these forward looking statements as a result of a number of factors that are listed on the second page of our presentation.
Mike Brown: In addition, the Powerpoint presentation includes a reconciliation of the non-GAAP financial measures, we'll be using during the call to their most comparable GAAP measures now I will turn the call over to our CEO Mike Brown.
Mike Brown: Thank you Adam and thank you everybody for joining us today on the call I'll begin my comments on slide number five well, let's first just dive right into our results for the quarter and what a quarter. It was we achieved double digit constant currency growth in operating income and adjusted EBITDA higher.
Mike Brown: Lighted by an 18% increase in operating income over the prior year, we didn't just tiptoe into double digit growth territory, we kicked in the door.
Mike Brown: All segments contributed to these record earnings as we exited the first quarter ongoing commentary around immigration tariffs and the trade war have dominated the headlines there are a wide range of opinions regarding the macroeconomic impacts, but the simple truth is that it's too early to predict the <unk>.
Mike Brown: <unk> of these policies as witnessed by the volatility in the stock market How's.
Mike Brown: However, we did not see significant adverse impact on our business from these policy discussions on our first quarter result, and with three fourths of our revenues generated from outside of the United States, We do not anticipate any significant direct impact to our business as it.
Mike Brown: Result.
Mike Brown: With these strong first quarter results together with our diversified global business, we are reaffirming our expectation to produce between 12 and 16% earnings part of the year.
Mike Brown: As you may recall from our fourth quarter discussion our business model is built on two key revenue pillars that will continue to expand as payment functionality evolves and business becomes.
Mike Brown: More and more global the first pillar is payment and transaction processing with which we facilitate high volume transactions for banks merchants and brand partners continually expanding our use cases to stay aligned with evolving demands.
Mike Brown: The second is cross border and foreign exchange with which we power FX related use cases, and distribute FX services through a mix of owned and third party channels spanning both physical and digital touch points to meet consumer and business payment needs, while the methods have and will likely cause.
Mike Brown: <unk> two and to evolve we believe it is fairly safe to say that people will always need to make payments <unk> will continue leading the way with its innovative use cases.
Mike Brown: Now I want.
Mike Brown: To discuss the results in more detail.
Speaker Change: Thank you Mike Good morning, and thank you to everyone for joining US today I will begin my comments on slide seven for.
Speaker Change: For the first quarter, we delivered revenue of $916 million adjusted operating income of $75 million and adjusted EBITDA of $119 million.
Speaker Change: A record first quarter across all three metrics.
Speaker Change: These results were made possible by contributions from each of the segment, but with a particularly strong earnings contribution from the money transfer segment due to double digit transaction growth led by digital transaction growth of 31% compared to the prior year first quarter.
Speaker Change: And double digit cross border transaction growth.
Speaker Change: Adjusted EPS of $1 13, compared to the prior year of $1 28. However, it is important to look a little deeper for.
Speaker Change: For the first.
Speaker Change: For the year is for this year's first quarter. The dollar 13 included a one time charge.
Speaker Change: <unk> 20 per share for the repurchase of the convertible bonds.
Speaker Change: With respect to the prior year's first quarter. The $1 28 included a benefit of approximately <unk> 15 per share due to the reduction of certain tax matters.
Speaker Change: So on a pro forma basis, adjusted EPS grew 18% year over year.
Speaker Change: We were able to deliver this strong earnings growth due to our continued focus on expanding the business in new and existing markets, adding more products and continued investments in our industry, leading technology across all three segments.
Speaker Change: Needless to say this strong start to the year strengthens our confidence in the 12% to 16% annual adjusted EPS range expectation, we provided for 2025.
Speaker Change: Next slide please slide eight presents a summary of our balance sheet compared to the prior year.
Speaker Change: As you can see we ended the first quarter with some increase in cash and debt, which was the combined result of the generation of cash from operations and the use of $59 million of cash for repurchase of shares.
Speaker Change: And working capital requirements in Ft, and money transfer to meet holiday business needs.
Speaker Change: We repurchased we repurchased approximately $492 million of convertible notes using a combination of cash and debt. However, overall, our net debt leverage remains relatively conservative at about one times EBITDA.
Speaker Change: While the share repurchases, we made in the first quarter will benefit future periods by approximately 1% the repurchases add less than one fourth of a penny.
Speaker Change: Benefit for this first quarter result, Moreover, as we approach the seasonally strong part of the year, we will see more ATM cash, which will drive more interest expense, which you can see in our historical trends.
Speaker Change: Slide nine please year over year most of the major currencies, we operate in declined at low to mid single digit rates two.
Speaker Change: To normalize the impact of currency fluctuations, we have presented our results adjusted for currency on the next slide on slide 10 now.
Speaker Change: Building on the momentum from last year. We are pleased to start 2025 with record results across all metrics all segments played a role in the record quarterly results.
Speaker Change: Starting with our <unk> segment revenue grew 10% adjusted operating income grew 15, and adjusted EBITDA grew 10% when compared to prior year.
Speaker Change: This notable growth was fueled by a rise in both domestic and international cash withdrawal transactions further expansion into new markets and the addition of access fees and interchange rate increases in certain markets.
Speaker Change: Operating margins expanded nicely due to revenue growth complemented by effective cost management.
Speaker Change: <unk> grew revenue, 8% and adjusted operating income and adjusted EBITDA grew 5%. The main drivers of growth. This quarter were attributed to our payments business. The continued growth of our digital channel sales in multiple markets predominantly related to gaming.
Speaker Change: Content and mobile activation increases in Ipe USA.
Speaker Change: Adjusted operating income and adjusted EBITDA were impacted by the payment of $4 $5 million during the quarter to resolve an operating tax matter covering multiple years, excluding the onetime payment related to the operating tax matter Ipe grew.
Speaker Change: Adjusted operating income, 22% and adjusted EBITDA, 20%.
Speaker Change: Transfer revenue operating income and adjusted EBITDA grew 10%, 23% and 17% respectively.
Speaker Change: The 10% growth in revenue was primarily driven by double digit growth in cross border transactions.
Speaker Change: Offset by a decrease in intra U S transactions.
Speaker Change: Direct to consumer digital transactions increased by 31%, reflecting strong consumer demand for digital products.
Speaker Change: On a constant currency basis money transfers gross profit per transactions and amount spent improved compared.
Speaker Change: Compared to the prior year.
Speaker Change: Overall gross profit per transaction remained stable or improved across all segments.
Speaker Change: Moreover, consolidated operating margins expanded 80 basis points.
Speaker Change: Compared to the prior year, driven by volume growth gross margin improvements and scale across all segments.
Speaker Change: In summary, these meet and beat first quarter results further strengthen our confidence in the 12% to 16% earnings growth expectation. We have for 2025 with this I will turn it back to Mike.
Mike Brown: Thank you Rick I will continue my comments on slide number 12 today I wanted to talk about our business and how our growth strategy continues to produce results.
Speaker Change: Earlier, I mentioned, our growth strategy by the continued global expansion of our leading global Cros.
Speaker Change: Cross border payments network focused on high value FX transactions. Moreover, the results Rick just reviewed are evidence that our strategy works.
Speaker Change: Are you seeing double digit growth or maybe we could say doing double time.
Speaker Change: As we have discussed over the past few quarters the strength of our business lies in the diversity of our three segments as well as the diversity within those segments. This quarter was a great example of just that.
Speaker Change: As the graph on slide 12 illustrates over the past 10 years. Our first quarter revenue has continued to grow that continued constant growth year. After year is due to our team's execution of our strategy over the last 10 years, our first quarter revenues have more than doubled from $435 million to over 900.
Speaker Change: Third $37 million.
Speaker Change: Whether they are led by Ipe ft, our money transfer urine Ed continues to produce record revenues as we discussed our business was built on two key revenue pillars.
Speaker Change: That will continue to expand and reach more and more customers first is payment and transaction processing and the second is it cross border and foreign exchange without our diverse revenue streams, we would not have had the ability to produce consistent growth year after year, while our pillars will continue to expand in <unk>.
Speaker Change: Grow our global reach.
Speaker Change: That people will always need to make payments and <unk> will continue to lead the way.
Speaker Change: Now, let's move on to slide number 13, and I'll discuss what makes up our revenue.
Speaker Change: I'm on 13, now so to quickly recap our business <unk> started with one segment FTE by deploying our own Atms today, we operate three segments that each complement one another and represent a diversified global business with a collection of assets that have positioned <unk> as a global.
Speaker Change: Later in the payments industry.
Speaker Change: As you can see on the slide for the full year.
Speaker Change: 2024, only 19% of our revenue is generated from Euro net owned Atms are first quarter growth and product mix are in line with the full year of 2024 last year, while <unk> owned well our year net owned ATM revenue is growing our other revenue streams are growing at an even.
Speaker Change: Faster pace.
Speaker Change: We invested heavily in card acquiring and ran dandelion digital money transfer ebay and you can see those results said differently and simply while I am proud of our heritage. We are not just an ATM business now.
Speaker Change: Now, let's briefly discuss the payments global market based on a 2024 report issued by Mckinsey <unk> company entitled Global payments in 2020 for the.
Speaker Change: The global payment industry handled three four trillion transactions and a revenue pool of $2. Four trillion are just over 13 basis points per dollar process Mckim.
Speaker Change: Mackenzie predicts the revenue pool to grow at a rate of 5% per year, and we are sure and as we have shared with you our focus on cross border payments with seven times the opportunities the more valuable transactions have enabled us to achieve revenue per transaction at more than 20 times the mark.
Average.
Speaker Change: In addition in addition to getting the more valuable transaction.
Speaker Change: We are growing at twice the market ratio of growth with less than 1% of the overall industry revenue pool and a focus on higher value payments, we have a lot of room to continue to grow in the past three decades, we built an unmatched set of assets technology expertise.
Speaker Change: Add that have positioned us as a global leader in payment processing cross border payments and foreign exchange the payments industry is growing and we're growing at double the market rate.
Speaker Change: There's that word again, we really like doubled now let's talk about the ft next slide please.
Speaker Change: During the first quarter ft delivered double digit growth across all metrics. Our FTE growth. This quarter was made possible by the expansion of core services to banks and fintech, including expansion of international and domestic feed growth in recently launched markets. These are the Philippines Albania, Belgium.
Speaker Change: Mexico, Egypt, Morocco in Malaysia continued growth of our Pos acquiring business and good expense management, they're taking advantage of ATM as a service opportunity.
Speaker Change: Notable examples in the first quarter of the expansion of our merchant services business in Greece included we secured a five year agreement with Volta <unk> faced travel retailer.
Speaker Change: We entered into an agreement with NRG <unk> energy company specializing in power generation and retail electricity sales.
Speaker Change: To assume all of the online payments for energy bills from consumers, we signed an agreement with snappy, our local digital bank in Greece to enable card based pop ups further digital wallet and we introduced a new revenue stream with the launch of now pay a service that offers same day settlement for our merchants for in <unk>.
Speaker Change: Additional fee.
Speaker Change: And finally, we signed an additional 7000 new margins this quarter.
Speaker Change: What about geographic expansion there.
Speaker Change: During the quarter <unk> launched two new independent ATM network in the Dominican Republic, and Peru through our JV partnership with <unk>.
Speaker Change: Let's discuss how our ATM network helps us grow our service offerings. We continue to add network participation agreement signed in 11, new margins in Poland for ATM deposits and what about rent during the quarter.
Speaker Change: We signed an agreement to implement Pos and ATM DCC via ran for bank of Ceylon in Sri Lanka.
Speaker Change: <unk> is a large commercial bank with 651 branches and 715 Atms.
Speaker Change: We signed an agreement with the bank of the Philippine Islands. That's the number two bag there to support the rollout of QR code based merchant payments on 40000 merchant Pos terminals.
Speaker Change: Terminals, leveraging our rent payments platform.
Speaker Change: And we signed a strategic agreement with yes bank, one of India's leading private sector banks to modernize and transform their retail payments infrastructure.
This new agreement the bank will transition to the year and Thats Rand and payments platform hosted on our private cloud infrastructure in India.
Speaker Change: As you can see our ERP business continues to grow across products solutions, and geographies, which will benefit our results as we move through the remainder of the year now lets move onto slide number 15.
Speaker Change: As I begin my comments on <unk> I want to repeat for you or Rick discussed earlier, excluding a onetime payment to resolve an operating tax matter for $4 5 million our core <unk> business grew revenue by 8% operating income by 22% and adjusted EBITDA by 20.
Speaker Change: Percent the growth was driven by expansion in our payments business growth of our digital channel.
Speaker Change: Sales in multiple markets predominantly related to gaming content and mobile activation increases in <unk> and.
Speaker Change: <unk> U S. In addition, we saw a broad growth across most of all of our ipe geographies are notable signing this quarter was a contract with Sony in Turkey for distribution in both digital and physical channels. This is a strong market, where EPA has established good digital and retailer penetration.
Speaker Change: During the quarter ebay.
Speaker Change: <unk> continued to grow its payment processing business, but the signing of a payment processing contract with the Munich Airport. This contract will include over 300, Pos terminal terminals and provides alternative payment methods as well like wechat pay alley pay access et cetera for vendors at the airport.
Speaker Change: Including retail outlets hospitality in parking we expect to launch this in the late second quarter early third quarter of this year finally, as we look to the second quarter.
Speaker Change: We expect to see an improvement compared to the prior year from the promotional activity related to our <unk> channel that was lighter than the prior year last year as we have mentioned before promotional activity and our produced incentive and rewards business is very profitable and will benefit our quarterly results.
Speaker Change: Quarters, where these campaigns occur.
Speaker Change: Now, let's move on to slide 16, and we will talk about money transfer.
Speaker Change: Okay, as we turn our attention to money transfer we achieved double digit growth across all metrics in the first quarter with adjusted operating income increasing by 23% compared to the prior same period last year, what a quarter for money transfer key metrics include transactions grew at double digit.
Speaker Change: Continuing to outpace the market by two five time digital transactions increased 31% compared to the prior year digital payout grew by 29% year over year accounting now for 55% of our total volume.
Speaker Change: Our exceptional performance in money transfer stem from our market, leading digital distribution channels strategic growth drivers include our global presence omnichannel capabilities was established brick and mortar and digital experiences.
Speaker Change: The world's best digital payout network, a wholesale strategy with dandelion and our strong competitive stance.
Speaker Change: The total addressable market this quarter, we signed 22, new agreements across 20 countries.
Speaker Change: Expanding our network into Iraq, and Sudan, We also launched 13 partners in 11 countries a key highlight is.
Speaker Change: As our integration with visa direct enabling customers to send funds within minutes.
Speaker Change: 4 billion visa debit cards. This service also simplifies sending money to a bank account by providing the recipient's name in debit card number further solidifying our leading position in digital payout one of our biggest growth drivers.
Speaker Change: On the send side, we renewed our exclusive agreement with Belgium post underscoring the.
Speaker Change: The value of our service. Additionally, we expanded our digital offering into New Zealand with our rehab strengthening our digital presence in the APAC region.
Speaker Change: Shifting focus to our platform.
Speaker Change: Dandelion wholesale continues to enhance cross border capabilities for major players.
Speaker Change: This quarter, we signed new deals with money Trans of Brussels, based Fintech and the remittance industry and Sky E. A Hong Kong based Fintech specializing in cross border payments for E Commerce businesses.
Speaker Change: Notably dandelion easy to integrate model enabled money trans to connect to our full network in under a week, allowing them to rapidly scale their international payment capabilities and accelerate their time to market.
Speaker Change: These new dandelions deals.
Speaker Change: Together with the ease of integration are contributing to the 33% transaction growth a band a line that we saw this last quarter.
Speaker Change: Momentum is building as you can see we're hitting on all cylinders and money transfer and we have a robust pipeline of diverse opportunities ahead, given us confidence in our ability to continue our strong growth. Let's move ahead to the next slide and we'll talk about how we can close this quarter.
Speaker Change: As I close out my comments on our first quarter I want to reiterate that we are a diversified business. We have a leadership team with a proven track record of delivering growth year. After year after year and a revenue mix that continues to shift as we make investments acquire companies and launch new products.
Speaker Change: For the year ended 2024, and the first quarter of 2025, only 19% of our revenue was from our ATM owned network. As we have explained we have a robust business model that plays in a $2 four trillion dollars revenue global payments market with analysts potential for growth.
Speaker Change: Supporting our model, we have our core assets are ran technology or dandelion network, our global footprint of licensed and regulated entities.
Speaker Change: Distribution partners in the form of banks retailers company owned stores Atms and POS terminals, we have a very robust balance sheet that can support future growth initiatives and our people the best I could ask for.
Speaker Change: The consistent.
Speaker Change: <unk> track record of delivering growth year over year, our business stands on these foundational assets and we have a go to market strategy for our revenue pillars, two or three different segments in multiple use cases, enabling <unk> to reach the world of payments transaction processing cross border payments and foreign exchange.
Speaker Change: Through our network of networks.
Speaker Change: Our overall business is growing two times faster than the global payments market.
Speaker Change: Of growth and we expect that to continue as I conclude my remarks, I want to repeat we look forward to the remainder of 2025 with a strong first quarter and a strong start to the year, we are reaffirming our earnings expectation of 12% to 16% growth for the year.
Speaker Change: That I will be happy to take questions operator, please assist.
Speaker Change: Thank you at this time, we will now conduct a question and answer session. As a reminder to ask your question you will need to press star one on your telephone and wait for your name to be announced.
Speaker Change: Withdraw your question. Please press star one again, please standby, while we compile the Q&A roster.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Our first question comes from Pete Heckmann from D. A Davidson the floor is yours.
Speaker Change: Thank you and good morning, everyone. I'm wondering if you follow up a little bit on the Andy lie in the integration with.
Speaker Change: With these I guess.
Speaker Change: Is it possible to get a little bit more visibility into kind of quarterly trends, there or perhaps there.
Speaker Change: Year over year growth rates in 'twenty, four and what you're expecting for 'twenty three five it sounds like there is a number of deals getting done.
Speaker Change: It's kind of hard to see through the the rest to see exactly what the trends are there.
Speaker Change: So that we add.
Speaker Change: A 33% growth and I would tell you that virtually 100% of that is without visa direct as we just flipped on that visa direct switch.
Speaker Change: And a couple of weeks ago or so so we don't have any numbers in there for that we're very excited. This is this is a great distribution channel for.
Speaker Change: For our money transfer business and what it does is it makes it much much easier for somebody to send money digitally we like that because it costs us less than.
Speaker Change: Physical cash payout all you've got to do is give them your name in that give them the name in the.
Speaker Change: The card number of the recipient so it's really easy. So we're excited about this but but it's not in our numbers right now.
Speaker Change: Okay. That's helpful. Thanks, just a follow up on your on your.
Speaker Change: Partnership or joint venture.
And a couple of countries with <unk> do you anticipate that being an aggressive rollout or would you consider more of a pilot program how should we think Oh no no no.
Speaker Change: Okay. So as you May know <unk> is kind of the breaks of South America, Latin America, and also Spain, and they've got an excellent.
Speaker Change: An excellent reputation with all of the banks there so they give us the entre into these banks. So that we can get licensed in these countries.
Speaker Change: We want to go into.
Speaker Change: Im not saying every country south of our border, but most all of the countries south of our border. So we're excited about that now.
Speaker Change: How it works is we get though we light up those first few Atms, we make sure we've got everything working really well and then we start to blow it out like we have in these other markets. So so yes, we're expecting.
Speaker Change: Aggressive rollouts and the <unk>.
Speaker Change: Joint venture partner countries.
Speaker Change: Alright, great. Thank you.
Speaker Change: Yes.
Speaker Change: And one last thing on that excuse me operator.
Speaker Change: Don't forget that every country south of our border has a different currency. So we're not just talking about tourists from the U S. It might go to Ecuador or something.
Speaker Change: But it is just crossing the border there for those countries.
Speaker Change: Theyre going to need the local currency wherever they go whenever they cross the border so lots of opportunity.
Speaker Change: For us.
Speaker Change: Helpful. Thanks go ahead.
Speaker Change: That's great. Thank you for the question.
Mike Brown: Our next question comes from Mike.
Speaker Change: Grow dollar from Northland.
Speaker Change: The floor is yours.
Speaker Change: Hey, Mike and Rick.
Speaker Change: Congrats on a nice quarter.
Speaker Change: Curious, what you're seeing over in Europe on the ATM side.
Speaker Change: Any early read on summer travel or consumer spending over there how is it coming in according to plan.
Speaker Change: It seems to be at least with three weeks or so into April it's just tracking right. According to plan.
Speaker Change: And I mean, I think thats the thing everybody's got to remember is that 80% of our debt.
Speaker Change: The customers to our Atms, where travel makes a difference.
Speaker Change: Our European.
Speaker Change: So.
Speaker Change: And they are still going on vacation.
Speaker Change: There have been some people who've hypothesize because of the U s's stance towards Europe, and some Europeans are afraid to come here, maybe the vacation at home instead of in the U S or whatever but I think thats all on the edges.
Speaker Change: What we've seen so far is everything seems to be lining up like we thought very similar to last summer, but there will be more travelers. This summer.
Speaker Change: Got it.
Speaker Change: And then.
Speaker Change: 12% to 16% adjusted EPS growth this year guidance.
Speaker Change: How are you factoring FX into that Theres been a pretty nice move up.
Speaker Change: Euro to the dollar to $1 14, how are you thinking about that for 'twenty five.
Speaker Change: Okay.
Mike Brown: Yes, Mike we generally.
Speaker Change: Expect that FX rates will hold flat.
Speaker Change: So we've not we've not got increases built into our numbers.
Speaker Change: If we see.
Speaker Change: A measurable increase.
Speaker Change: It could give us a little bit of a tailwind, but we don't we don't try to Outguess. It you also have to keep in mind is that we've got a mix of currencies around the world. So you can't just look at one currency.
Speaker Change: And then as we said, we we do have about 25% of our revenues generated in the U S. So so.
Speaker Change: So we've definitely seen a little benefit.
Speaker Change: Tailwind, but the assumption on a go forward basis as always that we we don't think it or put some projections on what will happen there.
Speaker Change: Got it Rick maybe a better way to ask it were there any puts and takes to the 12% to 16% growth.
Speaker Change: Doing better anything doing a little worse.
Speaker Change: Call out maybe theres not.
Speaker Change: Yes.
Speaker Change: I think if you would really get behind all the math there. Yes, you would see we benefited a little bit more from some share repurchases year over year carryover of that on.
Speaker Change: On the other side of the coin, we we had more interest expense this because rates were increasing.
Speaker Change: We went through <unk>.
Speaker Change: Much of last year, then we started seeing a little bit of a dip in it.
Speaker Change: So rates interest rates, a little bit more so so that kind of offset some of that.
Speaker Change: Those were probably.
Speaker Change: The biggest puts and takes to call out there we didn't have any.
Speaker Change: Like I mentioned, there we didn't have any really significant benefit from share repurchases. This quarter because they were purchased towards the end of the quarter.
Speaker Change: Nothing really there we had just a slight benefit on.
Speaker Change: On income taxes not much.
Speaker Change: The probably the best thing on the headlines as you kind of sort through some of that math and you again focus on 18% growth in operating income that's the heart of the business. That's the strength in the fuel to the business. If we can't grow our business at those kind of rates, we won't have the earn.
Speaker Change: So at the end of the day, the quality of our earnings our year over year.
Speaker Change: Numbers, if you try to let's say cut out a lot of the noise that happens, whether it's purchased share purchases interest or tax or whatever and you go on a on a kind of an apples to apples basis, we had about an 18, 19% year over year.
Speaker Change: <unk> growth.
Speaker Change: Almost exactly what we had in operating income and if I reflect back even to the full year of 2024, you would see the kind of same kind of math there. So I think the real showcase to our strength of the business is the strength of the earnings growth, which I think is very.
Speaker Change: Very much to do with the with the diversity that we have across our business geographically product wise.
Speaker Change: Segment wise customer wise.
Speaker Change: And we feel pretty good about the momentum that's going in our business.
Speaker Change: Great. Thank you.
Speaker Change: Thank you great question.
Speaker Change: One moment please.
Speaker Change: Our next question comes from Chris Kennedy of William Blair The floor is yours.
Chris Kennedy: Yes, good morning, thanks for taking the questions.
Chris Kennedy: Can you just talk about consumers' willingness to pay ATM surcharge or access fees in Europe. So it's kind of a new concept over there any observations in the data.
Chris Kennedy: Well I think that.
Chris Kennedy: The data seems to say that they first first of all you've got to understand we're not the only people doing this.
Chris Kennedy: Much like the United States. If you go to any ATM, that's not your own banks ATM, you will pay what $3 54 bucks or whatever it is <unk> right.
Chris Kennedy: Xactly the same in Europe once.
Chris Kennedy: Visa and Mastercard have allowed it in a given market.
Chris Kennedy: We do it but everybody else does so at <unk>. When you think about it that people really don't if you want the cash that's just kind of a common denominator and so we don't really see.
Chris Kennedy: We don't see like a.
Chris Kennedy: Change in the price elasticity curve your mindset.
Speaker Change: Yes, the other thing I would point out is what is very common practice in Europe is that.
Speaker Change: The banks put on on their customers, what they call a disloyalty charge.
Speaker Change: All of these banks have.
Speaker Change: Two or three euros that they charge their customer anytime they use an ATM other than on their network. So so so for the most part customers are quite accustomed to paying a fee. If they are using the ATM that's other than their banks.
Speaker Change: And.
Speaker Change: And then the other thing that.
Speaker Change: Side from that as Mike mentioned here earlier too in the comments is that.
Speaker Change: We signed participation agreements with banks across Europe, and and that gives the bank the ability to extend its presence across a wider area a broader number of Atms.
Speaker Change: And.
Speaker Change: That's good for the customer and it's good for us so.
Speaker Change: Again, we see that the practices are pretty consistent where banks charge customers off.
Speaker Change: Bank kind of fees.
Speaker Change: So customers are let's let's say accustomed to that type of a fee and it does it does two things.
Speaker Change: First of all it.
Speaker Change: <unk> got and Thats as we call. It a surcharge here on Atms It opens up for us more Atms in that potential market. Because then we can go after the local transactions, where we might not have gone after that.
Speaker Change: Ahead of time and second like like Rick says, we signed network participation agreements with banks, so that they use our network our year net branded network as an extension of their own and they basically by transactions from us at wholesale.
Speaker Change: If you might remember the first country in Continental Europe that did this was Spain, and we must have 30 different banks in Spain, who have contracts with us so that their customers have access to our Atms at with a no fee agreement so.
Speaker Change: It actually lengthens, our runway for numbers of Atms in Europe, as more and more surcharges come into the market.
Speaker Change: Great.
Speaker Change: Very clear. Thank you for that and then just a quick update on the merchant services business. It seems like you're expanding into new geographies and Mike I think you mentioned tight expense management on that business.
Speaker Change: Well, yes.
Speaker Change: Our goal is to expand into Portugal, Spain and Italy.
Speaker Change: They have a similar kind, they're hyper competitive first of all.
Speaker Change: And so we're kind of starting from scratch, but we understand how to have a.
Speaker Change: <unk> proposition that's good for the small margins in these Mediterranean touching countries and so thats. Our goal is to take the tricks that we've learned in Greece and export them to those three other country and we're just on that beginning of that right now.
Speaker Change: Hired sales forces are going out.
Speaker Change: Selling to the merchants and.
Speaker Change: Trying to dislodge them from their current <unk>.
Speaker Change: Providers, because we've got a good value prop.
Speaker Change: Great. Thanks for taking my questions.
Speaker Change: Thank you for your question.
Speaker Change: One moment please.
Speaker Change: Our next question comes from Gus Galla from Mch, the floor is yours.
Gus Galla: Hi, Mike Hi, Rick Thanks for taking my questions could.
Gus Galla: Could you talk about the Ria digital shift two areas I want to dig in on can you talk about maybe efficiencies around.
Gus Galla: Digital marketing and so far is driving the strength in branded digital and then any commentary around how you're maybe gross profit dollar retention has been trending.
Gus Galla: Anything to quantify on that front would be helpful. And then on a similar front money transfer.
Gus Galla: Could you talk about how you've dealt with.
Gus Galla: More.
Gus Galla: More entrants into the independent channel domestically in the past it sounds like a larger peers more actively pursuing that space here in the U S. Thanks.
Speaker Change: Well I mean, you just look at our money transfer results from they speak for themselves I mean, we are absolutely crushed ore.
Gus Galla: With our.
Gus Galla: Our rehab business.
Gus Galla: Up and down the value chain, we start with Rio Rio at bricks and mortars, we have Ria money transfer dot com on the online side, you can see that our growth there is 30%.
Gus Galla: We continue to grow that kind of 30% quarter on quarter on quarter and it keeps on on happening.
Gus Galla: We do see.
Some entrants, but we also see people dying off I mean, this is a hyper competitive market last year. We saw two of the I would say major mid mid sized players just evaporate one in Europe, one in the U S. So it is competitive one of the things that we've got going for it is that we have an omnichannel strategy and.
Gus Galla: That's where you can have the same customer number and the same relationship with us whether you use bricks and mortar or use or you go digital.
Gus Galla: And.
Gus Galla: So what that's done is it's actually helped us.
Gus Galla: Continuing to keep these customers as they may migrate from bricks and mortar to more digital.
Gus Galla: Areas, yes.
Gus Galla: You also asked about gross profit as I mentioned earlier, there is actually we saw a little increase in our gross profit per transaction. So so we feel pretty good about the stability of the market out there.
Mike Brown: And to further Mike's comments about the other guys in the business.
Mike Brown: Look we purchased this rehab business, it's been in our group now since 2007 and theirs.
Mike Brown: There is rarely an agent that we have that you walk in there that there arent four or five other brands that are actively competing and so this is this has been the way. We have lived this it's the kind of day to day kind of hand to hand.
Mike Brown: <unk> hand combat battle that.
Speaker Change: <unk> and his team do every every single day.
Mike Brown: No.
Mike Brown: We do see sometimes the names on the.
Mike Brown: On the brands that we compete with change out there, but the competitive nature of the independent channel Hasnt been much today different than it has been over the last 15 years.
Mike Brown: While we appreciate the comp.
Mike Brown: Yes.
Mike Brown: Thank you for your question Oh.
Mike Brown: I will go ahead, if you have one more.
Speaker Change: Yes, sorry.
Mike Brown: And then one on the ESP.
Speaker Change: Can we talk about the.
Speaker Change: Opportunity a little bit.
Speaker Change: Maybe is there a way to quantify what the.
Speaker Change: The opportunity to be in terms of ATM transactions and then a second later could you in the past you've talked about the productivity of these atms outside of Europe being much higher.
Speaker Change: You put a finer point on how this.
Speaker Change: So grow how their atms kind of look versus those numbers.
Anything of note that it would be.
Speaker Change: So some of this is too early to give you actually actual numbers I mean, we use <unk> as our JV partner just in two markets.
Speaker Change: That's the two new ones the Dr and Peru. So we're just starting we don't have any data however.
Speaker Change: We entered into Mexico on our own and Theyre extremely profitable for us.
Speaker Change: And the one thing you've got to remember is in Europe.
The bulk of Europe uses Europe right. These are euro two euro transaction and so theyre not cross currency. So you can't make a currency spread on those transactions in Europe. However, virtually every transaction that we do.
Speaker Change: Hi.
Speaker Change: And across.
Speaker Change: Cross border transaction that we do in <unk>.
Speaker Change: And.
Speaker Change: South America or Latin America is all cross currency, so much higher percentage of our transactions can be DCC transactions, which gives you the ability to make.
Speaker Change: More than a couple of bucks on a on a surcharge itself. So that there is a lot of opportunity there at the same kind of thing that we saw in North Africa, with Morocco, and Egypt, and the same thing, we see in Malaysia, and the Philippines.
Speaker Change: Lots of DCC opportunities there.
Speaker Change: Lots of travelers just reversing those geographic areas. So I can't tell you exactly how big it's going to be but we know the opportunity is large.
Speaker Change: Got you I appreciate all the comments as usual.
Speaker Change: Thank you for your questions.
Speaker Change: One moment please.
Speaker Change: Our next question comes from.
Speaker Change: Right now Kumar from Oppenheimer the floor is yours.
Kumar: Good morning, Thanks for taking my question. Good results here I think earlier, you had mentioned that 80%.
Speaker Change: Yes.
Speaker Change: Are you able to break that out a little bit further and talk about <unk>.
Speaker Change: Sure.
Speaker Change: Ah.
Speaker Change: We I think.
Speaker Change: I know that 80% of our customers in Europe are Europeans and of the 20%. That's left about half of that comes from Britain and the other half of it.
Speaker Change: Comes from the U S and all the other countries.
Speaker Change: Got it and I bet, you I don't know that number off the top my head, maybe Rick does but I'd say the U S might be.
Speaker Change: Half ish of the the last 10% pretty.
Speaker Change: Critical it's just slightly less than half, but we're.
Speaker Change: We're in the right ZIP code yes.
Speaker Change: Understood. Okay. That's really helpful and then I just.
Speaker Change: I will now ask about money transfer.
Speaker Change: Much benefit do you guys think you bought just the FX volatility on that quarter.
Speaker Change: I guess, what your competitors are doing.
Speaker Change: I don't think I don't think that we got much benefit in the first quarter I don't think that we started seeing the volatility move as much until kind of towards the end of the first quarter.
Speaker Change: We have seen more.
Speaker Change: Activity in the first part of April here.
Speaker Change: But.
Speaker Change: I would say on balance not much in the first quarter, but again it looks like April as activity has picked up and I think that kind of coincides with a lot of the perhaps I mean it.
Speaker Change: If you remember April 2nd was a big announcement date on the tariff.
Speaker Change: <unk>, So I think thats kind of when you really started seeing the volatility move.
Speaker Change: Understood. Okay, and then just finally on the ATM business.
Speaker Change: By making Republic of Korea on their ATM.
Speaker Change: Can you just comment on how many Atms in general.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: We as we said before we would probably start moving away from that kind of thing just so that's just another statistic that measure.
Speaker Change: But.
Speaker Change: Together and we had also announced that we had signed a transaction.
Speaker Change: In eastern Europe that will add quite a few atms from an outsourced basis.
Speaker Change: So I would tell you that we would expect our business to add Atms consistent with the prior years. So we werent.
Speaker Change: Wanting to put out a specific number on that but but you can expect that we will continue to put in about the same number of Atms.
Speaker Change: And if we see a little bit more traction somewhere or if we signed some larger outsourcing deals we could go through that but.
Speaker Change: Our R.
Speaker Change: Our momentum would be consistent with what we've done in the prior years.
Speaker Change: Great. Thank you.
Speaker Change: Thank you for your question.
Speaker Change: Okay.
Speaker Change: Our next question.
Speaker Change: Comes from Darden Peeler.
Speaker Change: With Wolfe research the floor is yours.
Speaker Change: Alright, Thanks Danielle.
Speaker Change: Darrin Peller I wanted to follow up on the merchant services outside of <unk>.
Speaker Change: Early efforts now.
Speaker Change: In your view, how long is the typical sales cycle and ramp period until we can start to.
Speaker Change: Material contribution.
Speaker Change: Thank you.
Speaker Change: Oh, I think I think materially one of the challenges. We got is that Greece is just crushing it. So when you say material material in comparison degrees or just kind of adds up to a few millions.
Speaker Change: I would say that that's probably not going to be till late this year early next year.
Speaker Change: But we're working hard we see the opportunity.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Pardon me.
Speaker Change: Yes.
Speaker Change: Well.
Speaker Change: I think another.
Speaker Change: I think another demonstration of that.
Speaker Change: And the credibility of what we have to offer as we mentioned there earlier, we just signed the Munich Airport I mean this is a major a major.
Speaker Change: Player in Europe.
Speaker Change: The Germans Zev exacting standards of quality and.
Speaker Change: So.
Speaker Change: Sure.
Speaker Change: And I think speaks to the quality of what we have to offer so.
Speaker Change: That we start seeing the momentum grow there and.
Speaker Change: Yes.
Speaker Change: <unk>.
Speaker Change: We're not just a household name out there in the merchant processing, we've got a lot more strength in.
Speaker Change: In Greece, but we will continue to drive that but thats just a good example.
Speaker Change: People, recognizing what we have to offer.
Speaker Change: Yes.
Speaker Change: It's also recognizing the quality of our technology because.
Speaker Change: Really these folks are wanting to be able to have payments process from all people that come through that airport and they're not people carrying just a traditional visa or mastercard type of a product they've got QR code kind of products things like that there. This is non traditional.
Speaker Change: <unk> card processing type of payment and.
Speaker Change: So people are making a recognition of the technology difference, we make to help help them serve their customers better.
Speaker Change: Understood. Thanks.
Speaker Change: Just a quick follow up maybe on the travel trends.
Speaker Change: Do you potentially see a scenario, where while were inbound to the U S and the U S.
Speaker Change: I think activity.
Speaker Change: Some of that travel activity you could end up shipping to Europe I'm not sure if you've seen any of that in early bookings data perhaps.
Speaker Change: Haven't seen anything show up in the numbers.
Speaker Change: I think you raise a good question.
Speaker Change: We just haven't seen any kind of data on it.
Speaker Change: But but but you are right to the extent that someone from outside the United States that may have planned to come to the United States feels like they don't want to make the trip here well.
Speaker Change: The.
Speaker Change: The next largest tourist location is is Europe and so.
Speaker Change: And because we have deployed in some of the other Asia Pac markets. The Northern African markets. We've got a lot of those places covered so if consumers do shift their preference or their behavior there.
We might get a little benefit from that.
Speaker Change: Great. Thank you so much.
Speaker Change: Thank you for your question.
Speaker Change: Our last question comes from Zachary <unk> Ft partners the floor is yours.
Speaker Change: Hey, there thanks for taking the question I apologize if I missed that I just wanted to ask were there any incremental geographies that launched direct access fees. This quarter. I know there is a couple of expected to come on in 2025 and just.
Speaker Change: With that is there any way to think about the contribution of incremental countries.
Speaker Change: I would expect it to contribute to the EPS guide for the full year.
Speaker Change: I don't think we had any new ones come on in the first quarter.
Speaker Change: We had some debt and I can't remember, which countries are which I might have said it in my Q4 call.
Speaker Change: We had a few come on in the fourth quarter. So that we would get the benefit of them in the first quarter, but if they.
Speaker Change: But I can't remember anything past that DNR to recall.
Speaker Change: Nothing in terms of a new addition in the first quarter like Mike said, we're getting some full year benefit here from some of those others. We've got some others that are on the radar screen that we would expect this year.
Speaker Change: But.
Speaker Change: We're not the folks that make those announcements and so we don't want to put the names out there until it is.
Speaker Change: The card organizations that have to make those announcements and things like that so we do expect some more this year, but nothing new came onboard in the first quarter.
Speaker Change: Got it.
Speaker Change: And then just quickly as a follow up I just wanted to ask on the regulatory environment. Obviously money transfer came in strong this quarter, but we saw specifically fence.
Speaker Change: Put out some geographic targeting orders on ZIP codes in the U S and it's probably a small proportion of overall volume, but what are you seeing in the regulatory environment to say do you think that theres risk that these type of restrictions on filing ctr and decreasing the amount required that expands further just any.
Ontario and that would be helpful.
Speaker Change: Look I think it's always hard out guests that but maybe if we reflect a little bit on the.
Speaker Change: Kind of the world that we operate in an and.
Speaker Change: Essentially we operate.
And have been on a basis that generally has been taking ids on on folks in and.
Speaker Change: We've seen these kinds of things before we haven't seen any kind of like we said earlier any kind of significant difference show up out there.
And so our general view at this time is that we don't anticipate any kind of adverse reactions from that.
Speaker Change: But.
Speaker Change: It really all depends on what kind of action could be taken in the future.
Speaker Change: We operate on an <unk> basis pretty much around the world If you will.
Speaker Change: And.
Speaker Change: So when when people are sending money.
Speaker Change: They're generally accustomed to that.
Speaker Change: So again as I said, we haven't seen anything now.
Speaker Change: And.
Speaker Change: As of what we see in the market today, we don't expect anything significant in that regard.
Speaker Change: And aside from that are because of our very diligent view on on compliance and regulation and all of that we have an absolutely pristine compliance record.
Speaker Change: Our larger competitors cannot brag about that we certainly can over all the years over 30 years of doing this we don't get into travel because we play it by the book and we're very conservative.
Speaker Change: And I think with that.
Speaker Change: Yes, I think.
Speaker Change: We're going to have to cut it off but I. Thank everybody for their time today and I look forward to seeing them in about 90 days. Thank you.
Speaker Change: Thank you everyone for your participation in today's conference.
Speaker Change: This does conclude the program you may now disconnect.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Right.