Q2 2019 Earnings Call

Okay, guys barcode that the retailer can then scan to collect the money and deliver the top up with this solution. The phone number is no longer shared with several parties.

Solving a real problem in the nude GDPR compliant world.

This is a great example.

Excuse me.

Where we were able to combine several of our Microservices Tokenization top up compliance settlement and bar code presentation to create a unique GDPR privacy compliance solution that will spare mobile operators from the scrutiny of the u. and keep kind of consumers say.

We were also able to utilize several new micro services to create a first of its kind product offering money transfer stands from R.A.T.M.S in Poland, which I will expand to more upon when we get to the money transfer highlight.

Finally, we continue to utilize our technology to fuel our growth we were able to launch a new independent A.T.M. network in a new Asia Pacific market within weeks of signing a cash sponsorship agreement.

Because of the flexibility of our technology makes it very easy for us to add new market.

I hope that these examples give you a better understanding of just how advanced our technology is.

And how customers can connect to our cloud or install it in their own environment and number one expand their product platform number to expand capacity for customers.

To provide more products and more reach around the world and three to enable central banks financial institutions or Fintech companies.

To use our technology or software to meet their needs.

Now, let's fly let's move on to slide 15, and we will talk about the feet.

Okay. So a double digit growth across all metric he emptied delivered another exception old quarter of earnings growth.

We continue to be excited about the prospects of A.T.M. deployment.

In Asia Pacific and this quarter, we were able to launch a new independent A.T.M. network and one of those new markets.

Marking the 28th country, where you're in it A.T.M.S are available.

We have been telling you for the last several quarters that banks around the world are under pressure and closing branches.

Which also means that they are more willing to listen to our A.T.M. outsourcing value proposition.

This quarter, we launched a couple of new outsourcing agreements in Asia, which cover about a thousand A.T.M.S and two different markets one of which was the new.

These are great new agreement and support our hypothesis that the opportunities in Asia are plentiful.

We also signed a new network participation agreement with after bank in Cyprus.

And finally, you may remember that we launched a deposit service in Poland about six or seven years ago to accept which today, except billions of dollars and deposits each year at R.A.T.M.S. We continued to expand this offering and during the quarter, we signed a traditional card based deposit agreement.

With BNP pair of box and a black Cardless deposit agreement with getting bank in Poland.

These blech deposits.

Or a card list direct to account transaction, allowing customers to put funds in their account without using plastic.

And compliment the more than 10 million blech Cardless withdraws, we process annually.

Cash isn't going away, but the form factor of how one accesses his or her account is changing and this is another example of our ability to bridge the gap between the physical and digital worlds without plastic.

Slide number 16 place.

During the quarter, we launched urinate branded mobile A.T.M.S Impala, and you can see the little picture up there of the van with an A.T.M. on the side of it.

These specially outfitted bands will carry urinate A.T.M. for the most popular summer music and cultural events, making access to cash more convenient for customers creator I think so.

We also launched Q., our code based alternative payments for commercial bank in Sri Lanka.

And finally, we finished the quarter with 46636 activate T.M.'s, a 13% year over year increase.

We have mentioned in the past that if we signed a large outsourcing agreement we would break out those A.T.M.S to make the addition of high value A.T.M.S more transparent.

With the addition of a thousand new outsource day T.M.'s. This quarter, we have updated these A.T.M. roll forward. So you can easily see our deployment numbers.

During the quarter, we deployed about 1500, new A.T.M.S and we add in more than a thousand new outsource A.T.M.

We reactivated more than 20 208 teams that were seasonally inactive.

And we added 142, new A.T.M.S under our low margin agreements in India.

Finally, as a result of the link rate decrease in the U.K.. We have started to rationalize some of our loss producing A.T.M.S in the U.K. and this quarter, we were removed about 280 of them.

We expect to remove about a thousand of these A.T.M.S by the end of the year.

As you can see with the addition of almost 2100, new independent 810.

We are well positioned to hit the 3500 to 4000, Mark by the end of the year.

With strong A.T.M. deployment in both Europe , and Asia, New outsourcing agreement and the introduction of worldwide via the D.C.C. to R.A.T.M.E.F.T. is really hitting on all cylinders.

Now, let's move on to slide number 19, most talks about the fact.

Well as it turns out he F.T. is not the only one hitting on all cylinders.

E. Bay continues to deliver more digital media products to our portfolio.

Which continued to account for approximately 70%.

You pay gross profit.

During the quarter, we work closely with Microsoft.

To launch their new flagship store in London.

Our connection to Microsoft for the distribution of their digital media products allowed us to quickly bring alive content in their store.

In the close loop technology, we developed for other purposes allowed us to quickly resolve a problem they face per returns and rebates inside the store.

We also expanded distribution of Alley paid two new David Jones stores locations in Australia.

We added Sony products to point of sale terminals in Greece, and with co up a large grocery retailer in Norway.

We continued to expand our anti virus distribution this quarter, launching mcaffee and hungry and Norton in India.

Please move to slide 20.

As you can see on this slide we have more digital media content in the pipeline, we have signed agreements to expand alley pay to more than 500 retail or locations in Australia.

Again, we are winning these agreements because of the ease of integration with Allie pay.

And the retailers and that makes possible that it's made possible by our flexible technology.

In France, we want a competitive process to take over the gift card malls.

And the huge retailer car for and casino retailers, and we signed an agreement to distribute I tunes in Google play and <unk>, the leading electronics retailer in France.

In India, we signed a new agreement with our leading online mobile retail partner phone pay to provide utility and bill payment services under the National Bill payment system.

And before I wrap up I'd like to mention that for the first quarter in a while.

Core mobile business has shown some slowing of decline.

For the first time since we have only pay we saw one mobile operator actually increase their rates.

So while it is too early to declare that the mobile tied to have changed.

As you can see in the pay numbers slowing mobile declines gives us more ability to post better growth rates that deliver improved profits.

R.E. Bay business has reinvented itself as a leading provider of digital media content.

But also as the leading technology provider for our retailer and content provider.

Our success in both of these areas is evident by our third consecutive quarter of double digit operating income and adjusted gross and outstanding corridor for <unk>.

Now, let's go on the slide number 23, and we'll talk about money transfer.

Okay. So our money transfer network now reaches.

Three 385000 locations across 160 countries and 8% year over year increase we keep growing here.

During the quarter, we launch 20, new correspondence in 18 countries. This includes cash pick up service through 2800, Bulgarian Post office locations Bank deposits service to South Korea, with our partner 89 pay a bank deposit service with cash as the combo since sealer and Venezuela, a new market for us by the way as well as other network conditions in Latvia, Bangladesh layouts come Cambodia and menu Mar among others.

In addition, we also activated the transfer of funds into and out of mobile wallet account for M.T.N.

Air tell T. go and Vodafone money transfer accounts through a partnership with G.T. Bank in Ghana in Z. pay and we launched paid a wallet service you pay in Bangladesh do our correspondent United commercial banks.

Also in the corridor, we side 18 additional corresponded agreements in 16 countries, which will launch incoming corridors.

We continued to expand our digital remittance business to the launch of Rhea money transfer Dot com servers in Canada.

And last but certainly not least we launched A.T.M. to re m. money transfer service.

In Poland.

Customers in Poland can now stage of money transfer on there my Rhea App and pay for the transfer with a card at an A.T.M. or by depositing cash at one of our deposit.

Machines in Poland.

Their beneficiaries in the Ukraine can collect their money at any of our 20000 pay out locations in Ukraine.

As I mentioned earlier. This project is a perfect example of the utilization of our digital integrated payments cloud to make new products available using technologies from across our different business.

We were able to utilize our micro service products.

Including our App compliant Ria pay out network and R.A.T.M. network.

Now I'd like to comment on our growth this quarter.

As a wreck mentioned, we continue to see some softness in the X.C. business pending the final outcome brags, it and our domestic business from the additional I'd requirements.

Both of which are transit in nature.

Despite these temporary headwinds we remain extremely optimistic about the future growth prospects for the money transfer business.

So let me tell you why let's not forget why we are so excited about this business.

Approximately two thirds of the 689 billion dollar cross border money remittance market is made up of transfers and the independent channel.

In research suggests that the market will continue to grow it and not had nice rates into the <unk> future.

We have a history of being the leading player independent channel.

As evidenced by our continued double digit growth rate in our international remittance business since Rhea joined you're in it.

We continue to be the best position player to gain share and this enormous market. In fact, we are growing at doubled to triple.

The average industry growth rates and based on the strength of the market dynamics and based on the momentum we see in our business we remain competent.

That we can continue to grow at double digit rates in the future just as we have for the last decade.

In addition, we have demonstrated we can serve the largest agents.

Just as well as we can serve small independent partners as evidence by our expansion with Walmart into domestic pay out of inbound transactions and our continued partnership with a variety of Walmart subsidiaries.

I'd be remiss, if I didn't highlight our abilities continued to attract business because of our flexible technology.

Which is enabling other fintech players to utilize our technology an asset.

To serve their customers such as <unk>.

And let me pause here for a minute to reflect on the additional I'd requirements, we're doing at Walmart.

I want to emphasize that this is not an additional industry compliance requirement.

Rather this is the result of us working proactively with Wal Mart.

To operate under non Regulatorily imposed requirements asked of them.

Due to their legacy money transfer provider.

We highly value our relationship with Walmart and accordingly have been pro active in working through this matter.

If it's important to Walmart, it's important to us.

That being said we know this is an isolated matter like others, we face we will effectively work through it.

Well.

All other very robust parts of our business give us the ability to post impressive growth results like our 28% year over year to to adjust the D.B.S.

So in summary, we are pleased with the double digit earnings contribution from our money transfer segment this quarter.

We're the only large money transfer company with a continued track record of growth and continue to capitalize on opportunities and attack that 689 billion dollar cross border remittance market.

Now, let's move on to slide number 24, and we'll wrap up for the poor.

To summarize we delivered A.B.S.O. of $1.69, 28% year over year increase.

We continue to utilize our technology to expand our own business.

We offer our customers direct access to our broad portfolio and we sell our technology to allow customers to create or modernize their own payment ecosystems.

F T delivered exceptional double digit growth rates, while continuing to invest a new market launches and A.T.M. network expansion.

He paid double digit earnings growth resulted from continued digital media growth and network expansion.

Money transfer continued to deliver earnings growth from expansion of both the international remittance and payments businesses.

<unk> successfully issued 600 million euros in long term low coupon senior notes.

That continued generation of free cash contributes to our strong balance sheet.

And finally, we expect third quarter adjust the D.B.S. to be approximately $2.80.

Assuming.

Consistent foreign exchange rate with that I'll be happy to answer any questions. Operator will you. Please.

Certainly.

Ladies and gentlemen, if you have a question.

Please press Star then one on your touch tone telephone.

If your question has been answered all you wish to remove yourself from the queue.

Just press the pound key.

To prevent any background noise.

What's your question has been state.

Our first question comes from the line of my Condo was awesome secure Securities. Your line is now.

Oh, yeah, Thanks, Mike and Rick Hey, any high level comment on how V.C.D.C. did kinda compared to your expectations.

Yeah pretty much write down the fairway Mike.

Got it in.

Do you think there's a little bit of a ramp up T.V.V.C.D.C.C., just kinda like educating the consumer or how do you think that plays out the kind of three Q4 q.

No. Okay. So there won't be any ramp up because basically you know we've targeted a lot of our consumers are tourist and so they don't you know, they're just in a country for a short while so they just walk up and then it's right. There on the screen just like Mastercard has been for many years.

But there is still a little bit more ramp up in the third quarter for some of the pass through agreements that we have.

So we'll get a little bit more of that the one these are banks, who are outside of Europe , who had never done D.C.C. on.

These than needed to get re certified so that just takes a little bit of time.

But the bulk of it is coming through and cute.

In Q2 started on April 13th.

Okay, great. Thanks, a lot guys.

Thank you annex question comes from the line of rain.

What's evercore I assign your line is now open.

Hi.

Good morning morning.

You mention it.

Sustainable in money transfer.

<unk>.

Seen in the past and how should we think about money transfer.

Well I mean, the nice thing is the bulk of our business and money transfer or the international remittances, both from the U.S. and from from North America, and from Europe , and Asia and that contain is very very strong you know we do have a challenge here with.

Primarily with with the additional I'd requirements, but we think that will subside at some point in time and the nice thing is the.

They're part of our business are growing so quickly and and and robustly that you know I think we can we can pass pass that up I'm, not sure which quarter that'll happen in but for you know medium to long term. We are just looking really good because this huge almost 690 billion dollar market is still out there for us and we are so well positioned for that that's what we're really good at that's really how Ria was born it was a attacking the independent channel around the world and we continue to do that <unk> Irena. We we started implementing this in the latter half of last year and so you know I think that it would be fair to say that you know we've got a just a little bit more time, just to kind of get through the annual <unk>. If you will of that and and when when we do that I think it's fair to say, we'll continue to see the robustness that we.

I've seen in in as Mike said in all the other parts of our business because we had we just add absolutely impressive growth coming out of.

Out of our European operations that as I mentioned gave us the ability to produce a little better revenue and profit per transaction. That's would obviously help give us double digit operating income kind of growth numbers. So the the the the strength that we're seeing out of the other parts of our business give us the ability to kind of get through this thing here, but I think it'll probably you know, we'll probably be a little bit of pressure for the next couple of quarters, we'll get through that Annualization and I'd like to think that is Mike said on the intermediate term bases there will be back into the same kind of nice double digit numbers that you've seen in the past.

That's that's extremely helpful.

Very strong you pay corner.

Understand what the sustainable.

Go ahead, well you know rain. We you know we've been you know probably a little bit more cautious on E. Bay over the last number of quarters, because you and it's really kind of hard to exactly predict when the mobile operators will just decide to stop lowering their prices and as you know the biggest you know most of our revenue. There is earned on a commission basis, which is a percentage of the top of value of those transactions. So it you know as Mike said you know, we we <unk>, we don't want to say that we've we've seen the last of it <unk>, but but we have seen at least one sign where where a mobile operator as as.

As raise their rates and and is is that kind of foretelling for the future now so I I think that certainly we we feel better about it but we're also want to continue to be you know mindful of you know the fact that there's a really competitive mobile operator, a market out there now that being said, we continue to add more and more digital content into our portfolio and even as you know we we point out these high volume low value transactions in in India. We are signing up with more and more wallets that are out there that will drive more and more value into our business. So we're we're feeling you know pretty good about the as we said kind of E. pay reinventing itself. So I you know I I don't want to go out on a limb and say Hey look I think that you know we've got.

A good site line to have a you know a a nice double digit growth number but you know on a on an adjusted once you take out those India transactions. You know, we we saw all transactions grow by grow by 9% and and revenues by double digits and it wasn't just this last quarter. So.

I think we we feel pretty good about it but I you know I, probably wouldn't you know throw that number you know into the double digit range.

<unk>, we we certainly have the ability to perform on the upper side of the single digit range and I think we'll have additional chances.

And opportunities to break into double digit category, but but Kevin <unk> you may want to make other observations arena. This is Kevin so the probably the as Rick said that a couple of exciting components of you pay or the continued expansion of the products that we carry and then the geographic experience.

<unk> graphic expansion into developing markets through digital channels.

And those geographic experiences typically start with one of the leading brands like a Google or an i. tunes.

To break into the market and then other content quickly follows and so I'm cautiously optimistic that we'll be able to sustain the the current growth and and hopefully accelerator.

That's that's great.

And just one final.

Question from me if you can.

On your capital allocation plan specific.

Well I don't think anything's chance or maybe the last quarter were looking at acquisitions all the time.

We must be looking at five different ones right now.

So that would be an opportunity.

But you know by the time, we look at these things a lot of times, they turn out to be not what they've been purported.

So we don't do too many transactions, but that would be one place to use capital.

If you saw.

Some kind of.

<unk>.

Location in the market with respect to our stock we could buy back our stock, but those are the two areas that we see.

The two big areas that we see you know large user uses of our cash.

Thank you.

Hmm.

Thank you. My next question comes on the line and Jane Snyder.

Sex Your line is now open.

Good morning, and thanks for taking my question I was wanting to get maybe comment Mike on the E.F.T. segment and specifically your target for A.T.M. additions of high value you talked about 3500 or 4000 this year.

Maybe talk about what is rate limiting step on that is it still fight selection and whether the visa D.C.C. arbitrary an expansion there has actually kind of wide and the the range of potential available eat ham additions that might be profitable because of the just the overall higher profitability at some marginal locations.

That's exactly true James so.

When you were at when we're able to add the the the D.C.C. then you know maybe a b. plus side becomes an a. side or maybe.

The plus side becomes a b. side and so it kind of lowers the fruit of all the trees and so that's good so that opens up more sides for us.

And but we're also seeing as we mentioned here we see.

Opportunity even outside of Europe .

And and we've actually big gun now to deploy a T.M.'s at a brand new Asian country. So that's exciting.

And I think at the end of the day, if we don't hit our 4000.

Hey, Dan is for the year that'll be surprising it's up to our side to like just to do so they are they gaining a factor between five selection and municipal approvals et cetera, et cetera, just install kinds of things that as always.

A little bit of a module later on us a governor.

So, but we're we're out after it and you can see we've added more in the first half of this year than we did last year last year. We did 3800 A.T.M.S total so like I said it wouldn't surprise me if we can at least 4000, but we'll just have to see what happens.

That's helpful. Thanks, and then maybe on the money transfer a market overall can meet meet make any observations about what you are seeing in the overall market for international remains whether that's kind of accelerating are slowing down any we don't factors, where you're seeing some some changes in the margin relative to the last couple of quarters and then could you also separately address the reason for the bridges impact on the L.C. business and how long you expect that to last.

Well that I mean, the the the big shining part for.

Money transfer is the international remittance market I mean, it is just screaming for us I mean, we're growing two three some in some quarters four times faster than the markets grow independent on that.

The core doors, we find that you know we were really good at this when we were little well now that we're big and we can offer all these pay out countries you see that we've now got you know.

Almost 400000 locations to pay out it just you get that network effect and that makes it even more possible for you to get to to accelerate the growth of this business. So this was really exciting. This is really the big kahuna to this you know six Saturn.

Ninetym a billion dollars worth of remittances here. So we're accelerating I would say and we've been doing quite well up to this point. So so that's really good and then you asked about brag that you know what what the deal is is a lot of people are just being a in Britain, which is about oh color.

50, 60% of our business an X.C.

Our our sends that are originated in Britain everybody's being really pensive now nobody knows exactly where the pounds going to go there being conservative we're just seeing last transactions and that's not just with that because if you want to look at the results of our competitors.

You'll see a very similar thing so I I think you know all this was going to get put to bed on Halloween then we'll know from that point forward how it goes.

I think it's just it's just the uncertainty that's causing people to to pause.

Very good thank you very much.

Hmm.

Thank you annex question comes from the line of Andrew Jeffrey Wilson Trust. Your line is now open.

Hey, guys good morning.

<unk>.

Taking the question Mike.

I appreciate the detail on on ran and.

The digital payments cloud because I think you're right I think investors are kind of grappling with the the capabilities and exactly what it means.

I Wonder if you could it expand a little bit on your comments Mozambique.

Seems like a terrific opportunity are there other.

Similar markets out there, where you can provide sort of all bank connectivity and infrastructure or are we going to look for deals that are maybe a little more.

Incremental how how do you frame up the Tam and and how should we expect that business to grow and contribute to your overall growth.

Well well, if you're really look at it when we when we are complete with our.

Mozambique installation it probably will be the most advanced financial ecosystem on the planet.

So you say well are there you know what's the Tam while every damn country out there is really what it comes down to but more than that it's the banks and it's and it's others. I mean, we we see where all the big processors are still laden with 30 year old technology, and how slow it is for them to implement new things like our tentative payments.

And so we're getting leads from kind of all over the place you know because.

The reality is.

Plastic is kind of on its way out.

You know, it's not cash is on its way out I mean plastic is on its way out faster than caches on its way out.

And so people are trying to grapple with how did we get this legacy old 30 year old technology based on <unk> 583, you know one kilobit kind of records.

How are we going to get those things connected up to all these these these new wallets and stuff and we've got exactly the technology to do that you can see that by the fat.

Transition that we're doing in the fast implementations that are just amazing for people.

So I'd say.

<unk> darn big I'm, not quite sure how big but I I would say there isn't a financial institution or a national switch on the planet that couldn't use what we have.

And I I assume I mean that that.

And that all sort of makes intuitive sense I assume that.

Sales cycles are going to be probably pretty long I just wonder how we can think about that business, yeah, and the sales cycles are long, but guess what they they accelerate as we install.

You know as you put more and more things out there for people to go see.

You know nobody.

You know, what what financial institutions, they're conservative.

Nobody really wants to be the first guy, but for sure you don't want to be the last guy.

Yeah, and Kevin Kevin's actually been in the middle of a lot of these things I'll, let him speak.

Yeah today, we have about 12 of these type installations using our legacy technology.

So one opportunity to try to convert one of those 12 could <unk>. That's that's probably the quickest path and then in parallel with Mike said.

Nothing like having a incredible reference to generate new leads with new markets and there's a lot of inbound interest and regarding the Mozambique installation and I think we'll start to see an acceleration of the interest as we get as we motor through that delivering of that product.

I mean.

Another point just in terms of timing and people will see this more and more in the future. Andrew is that is that you know like like Mike said in in one of our Rollouts. We we enabled transactions to our code base transactions within three days.

We we we will essentially do a complete forklift change.

On the the payment infrastructure for Mozambique in in a year or less okay.

And and try to tell me what kind of you know have a world out there can do that type of infrastructure change in that kind of period. I mean, you see people take three to five years to do this kind of stuff. So I think that you know when we when we really you know put this went on more squarely on the map people will will really notice and it will it will make a difference in changing that cycle time made in the U.S., where there's all this legacy pointed sale terminals and card based payment that's one thing, but outside of the U.S. and outside of developed markets that infrastructure doesn't exist.

They're gonna, they're gonna skip the traditional payment method and go to all these new payment method and the existing infrastructure in many cases does not support that consumer desire. So so I think we see the timing was the question in terms of Ah when all this will happen, but the demand and interest is there.

Okay that helps a lot. Thank you.

You know in a in a in a kind of our you know our top secret plan here is.

The rest of our businesses really motoring, along you know and really strong double digit and bottom line growth rates.

And that gives us a lot of air cover as we continue to develop the the this brand new segment of our business.

And encouraging for sure.

[noise].

Thank you. Our next question comes on the line of Andrew Smith with Citi. Your line is now open.

Hey, guys. Thank you for taking my question and thank you for the comments in the technology.

Just wanted to ask a question about the third quarter EPS outlook.

Seems like you have a lot of momentum you have t. processing segment, a solid data ATM unit additions.

Could you talk about what it seems like that might be driving some some upside there relative to initial expectations for us for benefits from the visa TCC will change. So maybe just talk through any potential offsets to the to the processing segment or to the ATM growth whether its the UK rationalization incremental investments any below the line items. Just curious if you could just talk through the outlook for the third quarter help us get a better sense for that they'd be great yeah, Rick really theirs.

Weve actually been living through the offsets because ever since linked changed it as a domestic interchange fees. Then we've we've received less revenue on those ATM. So we're really we're just removing loss, making or breakeven ATM as opposed so so that in essence that helps our PML. So we really don't have any offsets we it's really a it's all upside.

We're not worried about anything in the third quarter.

On ft.

Okay. Yeah. There is there anything I guess money transfer a below the line that might be it seems like you guys have some favorable interest expense refinancing did anything that.

What are you talk through in third quarter than it might be sort of holding back the EPS outlook.

No I don't think anything per Se is I think you know we.

We try not to Miss our numbers. So we've you know we've put a number on there that we think is based upon our roll up with that we believe is achievable and will try to deliver that.

Understood that's helpful and I Wonder if you could give us an update on the just the surcharge opportunity I know recently, Greece recently permitted surcharging.

Seems like pull it would be a big win it pulling went that way and then any updates as to that opportune that'd be great. So so no no no new updates. We've we've mentioned this before surcharges comp will come that every single market in Europe at some point in time, it's just a question of when and we don't quite know when that happens, but it's interesting just over the last six or eight months I think.

The.

The banks really woke up in Greece, and so now they allowed surcharging there because they're basically you know the big banks with all this expensive infrastructure and all these employees and all these branches. They said why should people use our infrastructure for less than it costs us to produce that.

So they kind of woke up I would imagine everybody will wake up at some point I can't tell you when but anytime it does it just layers on that much more profit on our installed base.

And it opens up you know.

Also new locations for us that might be primarily domestic focused.

So we've been a beneficiary of that and I think we will continue to be high just great. The only got 10 million people for the locals.

Now so.

You know I'd love, a big bigger country too.

To go to surcharge now that'd be really wonderful.

Understood and then I think you mentioned, you're entering one new market in Asia.

Could you talk about just the timeline for other new markets in terms of entrance and then just remind us.

What the timeline is in terms of how many teams you can add your one year to the maturity curve of new markets that would be helpful.

Well I mean typically what we do is we put about 25 to 58 dams into a market and double check all our assumptions.

And then we hire a whole bunch of sides like there is a kind of blow that out.

As fast as we can if we if.

All our assumptions are correct with respect to other new potential markets I'll, let Kevin talk to that because he's kind of responsible.

So currently we entered the one that we reported on this quarter. We have about three more that were in the process of working and I would expect us to be in a position to talk about that over the next subsequent two to three quarters.

Alright, Thank you very much guys appreciate it.

Thanks.

I think operator, we can take one more question because we're kind of over time. Thank you.

You're welcome. Our next question comes from the line of Chris Shutler with William Blair. Your line is now open.

Hi, guys. Good morning. Thanks, Thanks for taking my question.

So maybe just to as we think about the Q3 guidance.

Given this is your first time with the incremental visa DCC transactions in Q3.

Can you give us a sense of how you modeled that into Q3, not looking for specific numbers, obviously, but.

Just wondering how you are if you layered any conservatism in given this the first Q3, we've gone through a series of DCC.

And then Rick if you give the tax rate that's in the Q3 guide thanks.

Yes.

We didnt.

Try to provide too much body English to the numbers Chris because.

As as Mike said these these aren't new transactions. These are simply transactions that previously were not eligible for DCC. So we had visibility to the transactions that were coming to our ATM.

And so we could calculate our numbers off of that so you know I think thats why we were you know, let's say right on top of our numbers here for the for the second quarter, because we had that that visibility of what happened last year. So so we didnt try to you know overdue.

Or let's call it a handicap the numbers too much because we had a pretty good perspective, all of what was there.

So we expect it to be again pretty much down the fairway in coming up with our numbers for the for the third quarter.

So.

I think thats, probably probably yes and on the tax rate again, we've got the mid Twentys numbers in there.

Not a lot different than what we had for the second quarter.

Okay. Thank you.

And I guess, we'll wrap up now I want to thank everybody for their time on the call and I'll look forward to speaking with you again in about 90 days. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude todays program you may all disconnect.

Everyone have a great day.