Euronet Worldwide, Inc. (NASDAQ:EEFT) Q4 2024 Earnings Call Transcript

Euronet Worldwide, Inc. (NASDAQ:EEFT) Q4 2024 Earnings Call Transcript February 13, 2025

Euronet Worldwide, Inc. beats earnings expectations. Reported EPS is $2.08, expectations were $2.02.

Operator: Greetings, and welcome to the Euronet Worldwide Fourth Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today’s conference is being recorded. It is now my pleasure to introduce your host, Mr. Adam Godderz, General Counsel for Euronet Worldwide. Thank you, Mr. Godderz. You may begin.

Adam Godderz: Thank you. Good morning, everyone, and welcome to Euronet’s Fourth Quarter 2024 Earnings Conference Call. On today’s call, we have Michael 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. Statements made on this call that concern Euronet or its management’s intentions, expectations, or predictions of future performance are forward-looking statements. Euronet’s actual results may vary materially from those anticipated in these forward-looking statements as a result of a number of factors, including those listed on the second slide of our presentation. In addition, the PowerPoint presentation includes a reconciliation of the non-GAAP financial measures we’ll be using during the call to the most comparable GAAP measures. At this time, I’ll turn the call over to our CFO, Rick Weller.

Rick Weller: Thanks, Adam. Welcome, everyone. Today, I will provide some brief comments about our Fourth Quarter 2024 as well as the full year 2024. With that, I’ll begin my comments for the fourth quarter on slide five. We delivered a record fourth quarter on all key financial metrics. We delivered revenue of $1 billion, operating income of $123 million, and adjusted EBITDA of $166 million. Leading the way was EFT 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% compared to the prior year fourth quarter. EPay delivered double-digit constant currency growth of 10% to 12% across all financial metrics.

Our adjusted EPS was up 10% compared to the prior year fourth quarter and exceeded consensus analyst estimates of a range of $2.02 to $2.06 depending on which consensus source you use. 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. Moreover, in the fourth quarter, we continued our track record of producing strong free cash flows, producing nearly $65 million. In the quarter, we took the opportunity to repurchase about 0.5 million shares. Given the timing of the repurchases, there was only a marginal benefit, about a half a cent or less than one quarter of a percent, to our fourth quarter adjusted EPS.

But we, as you know, and we know, these repurchases will improve earnings per share by a percent for all future periods.

Rick Weller: Next slide, please. 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. To normalize the impacts of these currency changes, we presented our results adjusted for currency on the next slide. On slide seven, it shows our results adjusted for currency fluctuations. EFT revenue grew 13%, operating income grew 35%, and adjusted EBITDA grew 19%. Revenue, adjusted operating income, and adjusted EBITDA growth in the fourth quarter 2024 was driven by some continued extension of the travel season in Europe, 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 and domestic and international access fees in certain existing markets. EPay revenue grew 10%, operating income and EBITDA each 12%. EPay’s double-digit growth was driven by continued growth in the core ePay business, including strong growth in digital branded content, together with promotional campaigns. Money transfer grew 9%. Revenue grew 9%. Operating income, 12%. And adjusted EBITDA 9%. Revenue, operating income, and adjusted EBITDA growth was the result of 14% growth in the US outbound transactions, 11% growth in international originated money transfers, and 8% growth in XE transactions, partially offset by a 14% decline in intra-US business. These transaction growth rates included 33% growth in our direct-to-consumer digital transactions.

Overall, we are very pleased that we have delivered double-digit growth across all consolidated financial metrics. Moreover, these double-digit growth rates produced operating margin expansions across all three segments. To use an old automotive maxim, we’re hitting on all cylinders. Our fourth quarter momentum, growth trajectory, and margin results nicely position us for a very good 2025. With that, I’ll go to slide eight and make a few comments about our balance sheet. Slide eight presents a summary of our balance sheet compared to the prior quarter end. As you can see, we ended the quarter with $1.3 billion in cash and debt of $1.9 billion. The net decrease in unrestricted cash and cash equivalents is the net result of working capital fluctuations, share repurchases, repayment of short-term borrowings, and cash generated from operations.

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. The additional availability under the revolving credit facility was the result of an increase and extension of our credit facility in December from $1.25 billion to $1.9 billion. The increase in our facility includes a ten basis point reduction in our borrowing cost and highlights the strength of our banking partnerships and provides additional capital flexibility to continue to grow the business. 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 the repurchase notice. We anticipate that given where the bonds are trading, and our current share price, that the bondholders will exercise their put option. 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 among other alternatives. We are watching the market and have the flexibility to be opportunistic to make the best capital decision for the company. I’ll go to slide ten now. As you know, we set adjusted earnings per share guidance range for 2024 at 10% to 15%. And we said that we would be working hard to be at the high end or above that range. Well, we did exactly what we said by delivering above the high end of the range, rounding down to 15% growth year over year.

For the full year 2024, 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. 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. And further yet, you will see that the increase in interest and taxes was offset by the benefit from share repurchases. Essentially boiling down the 15% increase in adjusted EPS attributable to the 16% increase in operating income. That’s real earnings from real operating growth. I’d say that’s a high quality of earnings growth story.

The full year results are largely in line with the fourth quarter. So I won’t go through all the details again. 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. Before I wrap up, I want to provide a bit more analysis around our adjusted EPS guidance. We expected our 2025 adjusted EPS growth for the full year to be in the 12% to 16% range. We are currently forecasting in the first quarter a tax charge of approximately $0.20 to $0.25 per share attributable to state income tax expense related to the non-recurring first quarter repurchase of the company’s convertible bonds.

This charge has been considered in our full year guidance but will be recorded in the first quarter, essentially front-loading the tax, which obviously will make the first quarter look a little unusual. 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 twenties. Excluding this one-time non-recurring tax item, you will see that our annual effective tax rate is generally expected to be similar to this past year. It’s been another great year at Euronet, and with that, I’ll turn it over to Mike.

Michael Brown: Good morning, everybody, and thank you for joining us. I’ll begin my comments on slide number fifteen. Well, 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 2024 results were record results across all consolidated financial metrics, highlighted by operating income of over a half a billion dollars, 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. We thought it would be fun to calculate the compounded annual growth rate of revenue. Most companies would be proud to say they’ve grown revenue at a 37% compounded growth rate over 30 years, as we did.

Given everything that has happened in the past three decades, it is simply a remarkable achievement. The only time year-over-year revenue did not grow was during the pandemic in 2020, when 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. We continue to deliver these 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 just 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 could not help but wonder why the market does not always share my enthusiasm about Euronet’s results and our future opportunities. For instance, an analyst once told me, “You guys are great operators here at Euronet, but I don’t see a future for your model.” That made me realize we need to clarify precisely what we built and why Euronet is a well-positioned business operating in a very large market with multiple diversified revenue streams, poised to produce growth in the future. Let’s go on to the next slide. Slide number sixteen. This is a big one here. To quickly recap our extraordinary journey, we began our path in the EFT sector by deploying our own ATMs, which quickly expanded to processing for banks, running their ATMs, and offering access to our network.

But even in those early days, we recognized a tremendous opportunity. Today, we operate three segments that each complement one another and represent a collection of assets that have positioned Euronet as a global leader in the payments industry. Beginning five years ago, we recognized that we had app 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 revenue surged by an impressive 45% from $2.8 billion to $4 billion between 2019 and 2024. While our ATM network revenues, the dark blue here that you see on this pie chart, as a percentage of the total revenue, decreased from 25% to 19%, it still grew by 19%. Today, only 19% of our revenue is generated from Euronet-owned ATMs. While Euronet-owned ATM revenue is growing, our other revenue streams are growing at a faster pace.

We invested heavily in card acquiring and ran dandelion, digital money transfer, ePay, and you can see the results. Said differently and simply, while I am very proud of our heritage, we’re not just in the ATM business. Now let’s briefly discuss the global payments market. Based on a 2024 report issued by McKinsey and Company, entitled Global Payments in 2024, the global payment industry handled 3.4 trillion transactions and a revenue pool of $2.4 trillion, or just over 13 basis points per dollar processed. The market revenue pool is predicted to grow at a rate of 5% per year. Moreover, Euronet has focused on the more profitable subsegments of the market, as evidenced in the revenue per dollar processed for us being more than 20 times the market average.

Euronet 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’ve built an unmatched set of assets, technology, and expertise that have positioned us as a global leader in payment processing, cross-border payments, and foreign exchange. The payments industry is growing, and it is not surprising that we are outpacing the market growth. What will it take to grow in the future? Well, let’s review what the industry experts are saying. I’m on slide number seventeen now. In the fourth quarter of 2024, the Boston Consulting Group published research surrounding the current state of the payments industry.

The title of the article was “Fortune Favors the Bold.” BCG focused on four disruptions within the payments industry that are and will be reshaping the payments landscape. The first was macroeconomic pressure. Second, slowing digital payment conversions from cash to digital. Regulatory scrutiny, and cost pressures and technological inefficiencies. One of the more interesting findings in BCG’s research was that cash to digital payment conversion is plateauing. The BCG research study indicated that payment companies need to adapt to these four disruptions quickly. As I reflected on this slide, I couldn’t help but think we had an advanced copy of this slide four to five years ago. The cash to digital plateauing observation, rather, we saw it accelerating, which it did.

But several years ago, we saw the global payments would be changing, which drove us to develop REN, Dandelion, and Skylight, to name some of the more prominent ones. We weren’t just sitting around milking the profit. We were investing in the future. In response to the need for modern technology, EFT launched REN in 2019, and REN is the most versatile real-time, POS and ATM switching system and the first modern platform that is database independent, platform independent, and microservices architected. In response to the need to reinvent payments for banks, money transfer launched Dandelion in 2021. Dandelion 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 wallets worldwide.

In response to the need to strengthen risk and compliance function, you might remember we have a pristine record there ourselves through our money transfer business. We launched Skylight. Skylight is a proprietary compliance solution launched in 2023. Finally, in response to the need to engage in emerging infrastructure, Euronet has built a powerful network of assets all over the world. Our network covers all three segments and includes over 50,000 ATMs, access to 4.1 billion bank accounts, 3.1 billion wallet accounts, and over 600,000 physical locations to send and receive money. We’re connected to over 250 banks, all 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, it’s foreign exchange as well.

The FX, licenses, compliance, and settlements to handle any form of payment, domestic and cross-border. Our assets represent our strength and a significant barrier to market entry for new competition. It takes time, it takes money and expertise 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 are BCG suggestions for industry participants to implement today. However, Euronet has already checked all of these boxes. We started checking them five years ago to establish Euronet as an industry leader. Our motto is lead, follow, or get out of the way. And as you can see, we chose to lead. Now I’m on slide number eighteen. Now let’s get a little bit more visibility into our specific strategic growth drivers.

But aside from our products and markets, let’s not overlook our strong balance sheet, investment-grade credit rating, and a $1.9 billion credit facility. When coupling financial strength with world-class assets, technology, and products in a huge market, we are well-positioned to continue strong double-digit growth well into the future. 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. The 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 is cross-border and foreign exchange, with which we power our FX-related use cases and distribute foreign exchange services through a mix of owned and third-party channels, spanning both physical and digital touchpoints to meet consumer business payment needs.

Hopefully, you can see how the combination of payment, cross-border, and FX enables us to produce revenues per dollar moved at more than 20 times the global payments average. While the methods have and will likely continue to evolve, I believe that it’s fairly safe to say that people will always need to make payments. Euronet will continue to lead the way, wherever, whenever, and however people want to pay or move money. Now let’s move to slide number nineteen, and I’ll bring out the specific element of each revenue pillar for each segment beginning with EFT. Slide number nineteen. In EFT, our focus on expanding the core services that we provide to banks and fintechs are led by these or can be seen by these five categories and or 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 processing. We have expansion of our card and POS acquiring business, which grew profits at over 300% over the last three years. 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 Baltic. The governments in these countries, like many others, have mandated that banks give customers the option to access physical cash, and the banks recognize that they could accomplish this with better technology at a lower cost by utilizing our platform.

In merchant acquiring in the fourth quarter, we added more than 8,000 traditional POS terminals and more than 2,000 merchants with a digital POS solution. Finally, in 2024, we saw regulation change in several markets, which allowed us to introduce domestic and international direct access fees. We expect to be able to add several more markets in 2025, increasing our revenue-generating potential. The revenue opportunities in the EFT segment continue to grow, driven by a strong asset base and an industry-leading modern technology platform that can serve banks and fintechs well into the future. 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 twenty.

We’ll talk about ePay. As I mentioned last quarter, ePay 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 pins, to our diversification from prepaid mobile airtime distribution to processing third-party branded content, ePay has always been a pioneer in the industry. ePay continues to offer consumers and businesses omnichannel distribution opportunities for our branded payments partners. In the fourth quarter, our ePay team signed an agreement with Blizzard Entertainment for code distribution for global digital brands. We also expanded our payment processing through a new agreement with Amazon Pay to launch a new gift card service.

This initiative introduces a dedicated gift card section within Amazon Pay, offering a fresh avenue for customer engagement and distribution of gift cards with local retail brands. Finally, we signed an agreement with Evolve Bank to provide transaction monitoring and anti-money laundering reporting capabilities using our Skylight compliance as a service solution. Now let’s move to the next slide and we’ll discuss money transfer. As we discuss the money transfer segment, I would like to highlight Dandelion as a key growth engine into the future. With access to over four billion bank accounts, three billion wallet accounts, and 600,000 physical locations worldwide, Dandelion stands as the most strategic cross-border network for moving money globally.

Beyond traditional family remittance services, Dandelion allows us to tap into new cross-border payment markets, unlocking opportunities in a $15 trillion industry, 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. Now let’s dive into the standout money transfer performance in the fourth quarter. The results were nothing short of exceptional, underscoring our leadership in the marketplace and the growing momentum across our global distribution channel. Our money transfer segment delivered outstanding results this quarter, reinforcing our market leadership and momentum. We achieved double-digit transaction growth with the core business outpacing market growth by two and a half times.

Our digital transactions grew 33% 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. Moreover, strategic partnerships and geographical expansion remain 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 in 160 countries and territories. On the back of this launch, we have signed two additional check cashing chains. On the geo-expansion front, we are increasing our remittance TAM by expanding to Mexico, the Philippines, and Thailand outbound markets.

To wrap up money transfer, let’s discuss Dandelion wholesale. Our cutting-edge cross-border payments platform continues to power major players in the industry. A prime example of this was the launch of a new digital outbound service partner in the fourth quarter, Al Hilal 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 partners in the fourth quarter: Guava Bay, a UK-based payment provider serving customers and SMEs; Orbit Remit, a leading digital MSP in New Zealand and Australia; Panda Remit, an MSB headquartered in Singapore, originating transactions from 39 countries with a strong position in Asia.

And finally, we’re excited to announce our new partnership with Ant Financial or Ant International, one of the largest and most innovative fintechs 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 licenses have an outbound TAM. Similar to Ria’s 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. Hopefully, you can see that there is a clear path here of continued growth in the money transfer segment. Let’s move on to the next slide and we’ll wrap up the quarter. So 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, it’s payment and transaction processing. And the second is cross-border and foreign exchange. As I mentioned earlier, our leadership team continues to deliver a strategy that checks all of the boxes for long-term growth as suggested by the Boston Consulting Group. Moreover, we will continue to leverage our fundamental revenue-generating pillars of strength to grow. Our revenue mix continues to shift as we make investments, acquire companies, and launch new products. In 2024, only 19% of our $4 billion in revenue was from our ATM network. As we have explained, we have a robust and diversified business model that plays in a $2.4 trillion revenue global payments market with essentially endless potential for growth. Supporting our model, we have our core assets.

We have our REN technology, our Dandelion network, our proprietary and embedded compliance expertise, a global footprint of licensed and regulated entities, distribution partners in the form of banks, retailers, company-owned stores, ATMs, and POS terminals. We have solid earnings and 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. 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 and extremely well-equipped to do so.

Our business stands on the foundation of these assets, and we have a go-to-market strategy for our revenue pillars through our three different segments, enabling Euronet to reach the world of payment, transaction processing, cross-border payment, foreign exchange, and so forth through our network of networks. We are currently growing two times faster than the global payments market rate of growth, and we expect that to continue. 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 please assist?

Q&A Session

Operator: Thank you. And our first question comes from Reina Kumar of Oppenheimer. Your line is open.

Reina Kumar: Good morning, Mike and Rick. Nice results here. Could 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 by segment that, you know, your 12% to 16% EPS growth implies.

Michael Brown: Well, let’s not forget, I think we hit the number for this year. It’s, like, 15.3%. So you know, we hit the high end of our 10% to 15% range last year. We’ve got all the assets that I’ve just talked about for the last half hour. And we’ve got momentum really in all three business segments. It isn’t one thing in particular. Right? You know, I could 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. So particularly our digital segment, I mean, that stuff’s growing like a freaking weed, you know, 30 plus percent in all those kinds of areas. And you know, we just, you know, I can just, I don’t think it’s any one thing, Reina. Now, you know, I mean, you get things like in EFT where we’re getting where we’ve got our merchant services is growing like crazy.

It grew 300% over the last three years. You know, 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 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 network ourselves where we’ve got lots of DAP and other things changing to our benefit, you know, in interchanges and so forth. And then you go to ePay, we just we continue to we’re locked in with all these big brands in the world. And they keep bringing us to new markets. And that’s very exciting. We’ve got that Skylight product where we now have our really kind of our second customer for that, we’ve pioneered this with a similar kind of a solution for Kroger some number of years ago.

Now we’ve productized that and we’re making this available to banks. And we’ve signed our first bank. And then you go to money transfer. Shoot. Look at that. 33% growth in our digital payments. I forgot what it was. 31% or something like that percent. That we’re paying out now into digital channels of which we have 3.1 billion, you know. I mean, it’s just across the board, we have a lot of stuff cooking.

Reina Kumar: Yeah. That’s great. Very, very helpful. And then if we can just get any help on our models, just how growth can look by segment and anything you can say on your expectations for the year?

Michael Brown: I think that, I think, no. I well, it’s again, we will put in ATMs where we can make money. The new markets are still screamingly, you know, these developing markets. They’re gonna have cash for the next maybe ever. And not just the next 20 years. And so those new markets are certainly expansion areas. But I won’t we’ll just keep putting ATMs in where they’re profitable. And we still see that as a big profit center for us and growth area. And the interesting thing is the rest of the company overtaking it. So we’re and you saw that our revenues in 2019 were 25% of our revenues. And now we’re down to 19% while we grew our total revenue by 45%. So it’s just the whole company is growing around the world and we’re pretty excited. You’ll have to fill in your own cells in your spreadsheet.

Rick Weller: Alright. But Reina, what I would offer without giving you a bunch of numbers is, as Mike said, the business is doing well. We were fortunate to have a great deal of consistency, which is brought about because of a lot of good diversity in our business where a very geographically diverse business. We’ve got very diverse consumer products, you know, ranges 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, you know, given that we’ve got good momentum, we would expect to see similar continuity as we go into 2025. And again, as Mike said, you know, mathematically, we were slightly above 15.0%.

So look, we’re and we said last year throughout the year, we were driving to be at or above the range. And you know what? We delivered that. We actually delivered outside of the range, above the range. So you know, I think there’s a number of things there in terms of the confidences of our business, continuity of the business, that will, you know, give us the ability to achieve excellent results.

Reina Kumar: That’s helpful. Thank you both.

Operator: Thank you. Our next question comes from Gus Gala of Monness, Crespi Hart and Company. Your line is open.

Gus Gala: Hey. Good morning, Mike and Rick. Thank you for taking our questions. Nice job on the quarter of the year. Can we start off on money transfer? Anything you’re I mean, clearly, you’re outgrowing the industry, but you’re nicely digital. Continue Rhett, I think it’s, like, fourth, fifth quarter of acceleration in branded transactions. Anything you’re seeing intra-quarter, domestically in terms of foot traffic and brick and mortar? Any insight into that? And then just longer term in money transfer, how we be thinking, you know, just not to get, like, a number exactly, but the puts and takes of, you know, you have more and more digital, which seems to be margin accretive as we’ve heard on the prior calls. You’re gonna be going to more geos where you have less share. So my assumption would be lower contribution margin versus growing share in existing markets. So that’s my first one I have to follow-up.

Michael Brown: As you go into new geos, okay. So in a quick comment on your last comment, a lot of times these geos may only have one player or two players. So what you actually find when you go into a new geo is your margins are fatter. Because that you know, you’ve got either a monopoly or an oligopoly there and they’re, you know, basically milking the market. And so then we enter the market and we kinda equalize that with even 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, you know, money transfer is we’ve got some long-term opportunities getting into new geos, and then we’re gonna just keep growing we have. In the current geos. And having all the touchpoints for payout is really our single most biggest asset. You know, and I would add to that is our fundamental operating structure we work off of a single platform.

Rick Weller: Each time we go into a market, we’re not having to redevelop the process. We leverage our technology across these businesses. You know, even for example, we don’t have to set up different customer service centers because we use AI applications to toggle between languages. I mean, so our operations are fitted. And again, we haven’t just gone into our first country. We’ve got sixty-some countries. We’ve 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 that’s been, you know, made even more efficient by, you know, some of the more technology types of things we roll out. As Mike said, you know, we’re able to go in there offer a good value proposition, probably better than, you know, a couple of the folks that have dominated those markets and milked them before.

And so it works out real nicely. And if you look back at RIA, you know, we acquired RIA and it was, you know, where there were forty-some thousand locations. We were it was, you know, principally a US-based outbound kind of business. Right? We’re all over the world and we continue to grow those margins. So I think that we’re well-positioned to take advantage of that as we go on.

Gus Gala: Thank you. Those comments are really helpful. And on the not to harp too much on this. On the 12% to 16% guide, how we took it last year, that 10% to 15% bogey seemed like a, you know, medium-ish frame medium time framework, you know, medium-run framework. Should we be taking the 12% to 16% to not replace that time to 15%? Is the 10% to 15% a good number to kinda have in the out years in our model? And, well, that’ll jump back in the queue.

Michael Brown: You know, you look our average over the last 20 years, including the ugly years of COVID, was 13.5%. You know? And if you take COVID out, it’s gonna be a lot higher than that. So 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.

Gus Gala: Great. Super encouraging. Thank you.

Michael Brown: Also, I’d like to also share somebody’s gonna ask this question, so I’ll answer it in advance. There’s been a lot of action going on in the press about immigration. And so we went back and we looked through Trump won, which had similar kinds of notoriety. And we found that it actually Trump one really did not affect our money transfer business at all. In fact, what we see is the biggest contributor to strong money transfer growth is a strong economy. At the end of the day, a strong economy means more jobs for more people, including people who have families overseas. So if you believe that we can have a good strong economy going forward, then we’re gonna be a lot better off in money transfer. You could go on to the next question.

Operator: Thank you. And our next question comes from Cris Kennedy of William Blair. Your line is open.

Cris Kennedy: Good morning. Thanks for taking the question. Hi. Thanks for taking the question, and the results, I think, speak for themselves. The business mix on slide six is really helpful. Is there any way to think about some of your newer initiatives such as REN, Dandelion, and no Skylight’s very small.

Michael Brown: Yeah. Well, Skylight just kinda started. You’re right. I mean, if you just look at the two pie charts, I mean, it’s hard to see from looking at them, but 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. You know? ePay’s growing. It’s 29% and 28%, but it’s now 45% bigger. So we will see I think we’re gonna see REN. The way REN works is these are transaction-based licenses. So as the banks who sign up with us, sign up, they have kind of almost a hyperbolic curve for issuance of cards or doing real-time payments or whatever it is. So you end up making more money every year than you did the prior year. So you’ll just see a bigger and bigger contribution there.

Cris Kennedy: Got it. Understood. And then just broadly on REN, I think most of the business is outside of the US. Just what’s the market perception on that business and kind of what how do you think, you know, the growth opportunity there?

Michael Brown: Yeah. So the growth opportunities with the first place that we were able to sell this is into Asia. And why is that? Because Asia is when it comes to banking, they’re way more technologically advanced than the US. And, you know, they’ve got real-time payment systems across most of those countries. We pioneered RTP actually with the first settlement system for UPI, which is the big real-time payment switch in India, like, fifteen 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 US. We’ll be able to go to customers here in the US now that that was kind of a we’ll just call it a nascent version of that was launched last summer. And so and we’ve got several deals that we’re cooking in the US as well, but we actually to in the US till two years after Asia.

Because the Asian banks and FinTechs were early adopters and right there on the forefront of technology, and they could appreciate our superior technology. So you’ll see more in we’ll call them the western markets as we go forward. But we still see a lot. I mean, we’ve got something like five or six banks in India connected to their real-time payment system through RenConnect. We’ve got four banks in the Philippines doing the same thing to their real-time payment switch. You know, we’ve got African ones. So the emerging markets were the easiest ones. Because they wanted to jump past the whole card thing altogether. And so we’ll just just kinda keep in touch. We’ll have more and more.

Cris Kennedy: Got it. Thanks for taking the questions.

Operator: Thank you. Our next question comes from Pete Heckmann of D. A. Davidson. Your line is open.

Pete Heckmann: Hey, good morning, everyone. Thanks for taking the question. We’re just trying to understand the first quarter commentary here, if I remember correctly, you had about five dollars of benefits in the first quarter of 2024. And now you’re talking about a 20% to 25% higher tax provision in the first quarter due to the repurchase of the converts. So, you know, just shaking out. I mean, I just wanna make sure we’re in the right ballpark, but something around a dollar dollar ten is that is that in the ballpark of what your app works out to.

Rick Weller: Well, yeah. Yeah. I guess maybe another way to look at it is if you were at the higher end of the number you use you are and that probably starts putting you in the right ballpark. So I would tell you, I’m not so sure that your math is incorrect.

Pete Heckmann: Okay. Okay. And then in terms of can you talk about some of the success with the Dandelion and some of the new bank partners and channel partners, I guess, are you seeing volumes ramp? You know, can you extract that and then talk a little bit about trends there? And then any relatively larger customers that you expect onboard this year.

Michael Brown: Well, we have several large customers in process. And we’re excited about them that we should be announcing over the next couple of quarters. Or maybe our best our most well-known customer is HSBC. They’re in Asia. They’re all over the place. They’re 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 sixteen months. Every single month has been a record over the prior month. So what people find out is that our rails give a less expensive and faster settlement than using other standard banking measures. And they view this as a competitive dynamic to their competitor bank. So as we add more and more banks to this, we’ve got CBA that we’ve signed, which is the largest bank in Australia.

We’re getting close to turning those guys on. We like it when we enter a new market like that because all the other banks are gonna have to compete with the better service. So we’ve got a lot cooking, but it’s one of those businesses that just continue to grow and really never go backwards.

Pete Heckmann: That’s great. And just following up there on HSBC then, the HSBC closing down their Zing app that was not using the underlying or

Michael Brown: No. No. It wasn’t. In fact, I think the last time I read their they’ve discontinued their Zing app.

Pete Heckmann: That’s correct.

Rick Weller: Yep. Okay. Thank you.

Michael Brown: Yeah. Maybe they wouldn’t have discontinued their app had they been a Dandelion customer.

Operator: Our next question comes from Andrew Schmidt of Citigroup. Your line is open.

Andrew Schmidt: Hey, Mike. Hey, Rick. Appreciate all the product details as usual. This is great. Maybe just start off nitty-gritty just clarification question. The 12% to 16% EPS growth for 2025, I just wanna make sure that includes the tax impact, correct, that you talked about for the first quarter?

Rick Weller: Correct.

Andrew Schmidt: Okay. Then I guess just quick follow-up to that. I mean, it seems like so you, you know, if you add that back on an underlying basis, the operating performance here is pretty impressive. So are there, you know, one-off things that you mentioned interchange, DAF? Obviously, business is doing fairly well, but are there things that came into the mix this year that were kind of, you know, an upside to surprise that are good guys to call out? Know, that we think about as we model subsequent years. Just wanna make sure we have the underlying trajectory correct. Thanks.

Rick Weller: No. Andrew, I think as I said earlier, we see a great deal of continuity into the business. There’s not any kind of, you know, one-time items in there, any kind of, you know, real extraordinary stuff. It’s just continuation. You know, I often wanna use the analogy of the real estate industry, you know, success in real estate is location, location, location. The success of our business is more, more, more. More product in more markets, more distribution points, and that’s exactly what we’re doing except, you know, 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? We’re getting to the vein of transactions as we said, that are twenty times the industry so you know, we’re getting a good price per transaction.

That’s made possible because there’s a lot of focus on cross-border transactions. They’re also the transactions that are growing a little faster in that whole mix of transactions. We’re connected to most every real-time payment network, you know, that’s out there because we’ve got the kind of so it’s not any one thing that’s driving it. It’s just good, nice, consistent performance across what I would call very durable businesses. It was also encouraging, I guess, in some respects, to see somebody like a Boston Consulting Group to say, you know, the cash to card conversion is plateauing. We’ve said to people that, look, we do believe that cash transactions will go down. We continue to believe that. But it looks like, you know, most of the prognosticators out there are saying that it’s flattening out.

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 origination on the money transfer or as Mike said, digital payout on the money transfer. So, yeah, no one particular thing. It’s just consistent production across the very broad and enviable set of assets.

Andrew Schmidt: Got it. Thanks so much, guys. Good results here.

Michael Brown: Thank you.

Rick Weller: Thank you.

Michael Brown: One more question, operator. One more question.

Operator: Okay. Our last question comes from Mike Grondahl of Northland. Your line is open.

Mike Grondahl: Hey, guys. Thanks and congrats on the quarter. My question the surcharge and interchange increases in countries over 2024. Roughly, what was that contribution maybe to operating income dollars? And what do you roughly think it’s gonna be in 2025?

Michael Brown: First of all, we won’t we can’t really we won’t really answer that question. And dissect it that much. But I will tell you that through 2024, a number of countries, and if you go back and listen to all our last three calls, it seems like every quarter, another country or two opened up for either an increase in interchange fees or an ability to offer either international or domestic DAF. And so they kinda happened throughout the year. So that’ll give us a little bit of a bump into this year because we’ll have a full year of it. But it’s just I mean, that market is a combination of those kinds of end increases plus a few more ATMs, in the developed market and then as many ATMs as we can do in that less developed markets because they’re so darn profitable. So that’s

Rick Weller: You know, and 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 dialogue of decreasing interchange rate and things like that. Today, we don’t hear that kind of dialogue about decreasing, rather we hear a dialogue 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. When there are difficulties in the world economy, politics, wars, all this other kind of stuff, people go back to cash. And what central banks are beginning to say is that, look, we cannot have our country, our citizen, be dependent upon only a digital form.

We need to maintain cash in our business. Right? So you’re starting to see a lot more discussion about supporting the banks to make sure that they have, you know, cash accessible or even deposits accessible. Which again kinda plays to our hand, because we’re gonna see, you know, more debate on improving interchange rate, access fees, making depository opportunities available. And so I say that because in today’s world, I think that we’ve we’re seeing a more pro kind of attitude toward ensuring that the banks aren’t, you know, aren’t led to a decision to just completely get rid of their ATM. They want people to have

Michael Brown: Well, they’re being regulated too. They’re being required by their government to provide that service.

Rick Weller: So, you know, I think that the, you know, to use another kind of maxim in that regard rather than a few years ago when it was headwind for. So you know, again, it’s part of the many things many things that we have going that give us the confidence that we’ll continue this kind of really nice double-digit growth rate.

Michael Brown: Yeah. And it’s, you know, it’s only 19% of our revenue today, but the nice thing is with all the changes we’re seeing, mandated requirements from governments, the banks, and so forth, I mean, it looks like it’s gonna be here for a long long time.

Mike Grondahl: It’s great to see that pendulum swing back in your favor the last year or two. And clear

Michael Brown: Well, and you’ve seen the payment companies that’s the reason that the numbers have slowed down and the reason a lot of payment companies are, you know, are 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. And in the meantime, we’re just gonna grow the hell out of the rest of our digital business.

Mike Grondahl: Great. Thanks, guys.

Michael Brown: I’d like to thank everybody for your time on the call today. Look forward to talking to you in about ninety.

Operator: This concludes today’s conference call. Thank you for participating, and you may now disconnect.