On Wednesday, Euronet Worldwide (NASDAQ:EEFT) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
This content is powered by Benzinga APIs. For comprehensive financial data and transcripts, visit https://www.benzinga.com/apis/.
The full earnings call is available at https://edge.media-server.com/mmc/p/mozaqgtb/
Summary
Euronet Worldwide reported a 19% growth in adjusted EPS for Q1 2026, driven by broad-based business strength, particularly in digital transactions, which saw a 35% increase.
The company expanded its EFT segment with significant infrastructure deals in Europe and Latin America, including a new ATM service agreement with Bank 99 in Austria and a cash recycler deployment in Poland.
EPAY segment made progress in expanding digital content distribution, signing new agreements with global brands like Apple and Roblox, and launching alternative payment solutions in several markets.
Money transfer segment faced challenges due to US immigration policies and Middle East conflicts but saw digital transaction growth of 35% and maintained a strong global cross-border payments network.
Future outlook remains positive with an expected adjusted EPS growth of 10-15% for 2026, supported by strong digital initiative momentum and a solid balance sheet.
Management emphasized the strategic importance of digital growth, infrastructure agreements, and disciplined capital allocation, including share repurchases and selective acquisitions.
Full Transcript
OPERATOR
Greetings and welcome to The Euronet Worldwide First Quarter 2026 Earnings Conference Call. At this time all participants are in a listen only mode. After the speaker’s presentation there will be a question and answer session. To ask a question during the session you will need to press Star one one on your telephone. You’ll then hear an automated message advising your hand is raised to withdraw your question. Please press star 11 again. Please be advised that today’s conference is being recorded. It is now my pleasure to introduce your host, Stephanie Taylor, head of Investor Relations for Euronet worldwide. Thank you Stephanie Taylor. You may begin.
Stephanie Taylor (Head of Investor Relations)
Thank you. Good morning and welcome to Euronet’s first quarter 2026 earnings conference call. On the call we have Mike Brown, our Chairman and CEO and Rick Weller, our CFO. Before we begin, I need to call your attention to the forward looking statements disclaimer on the second slide of the PowerPoint presentation we will be making today. Statements made on this call that concern Euronet’s 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 that are 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 their most comparable GAAP measures. Now I’ll turn the call over to our Chairman and CEO Mike Brown.
Mike Brown (Chairman and CEO)
Thank you Stephanie, good morning and thank you everyone for joining. I’ll begin my comments on slide number four. The first quarter here in 2026 represented a solid start to the year as we navigated what continues to be a fluid operating environment. Importantly, we continue to make meaningful progress on our growth initiatives that we believe will position Euronet as a long term winner in the payments and cross border space. We are pleased by the broad based strength across our business which drove 19% growth in adjusted EPS alongside accelerating momentum in several of our key digital efforts. Highlights include 35% growth in Ria digital transactions and a 42% growth in new digital customers. The addition of approximately 2,300 new merchants in our merchant acquiring business Dandelion, delivering its strongest quarter to date and three EFT payment infrastructure deals signed and continued the expansion of our CoreCard client base during the quarter we continued to face headwinds from immigration policy and ongoing economic pressures and the conflict in the Middle East introduced additional volatility across parts of our business. These impacts were most pronounced within the money transfer segment. We believe the softness associated with these factors is transitory and we remain focused on what we can control, continuing to operate the business efficiently, executing our long term growth initiatives across all three segments and maintaining financial discipline. We remain confident with our full year outlook supported by our strong balance sheet and our historically disciplined, balanced approach to capital allocation. We believe that we are well positioned to execute against our strategic priorities and deliver adjusted EPS growth in the 10 to 15% range for the full year. Next slide please. Slide number 5: During the first quarter the EFT team continued to expand our banking and payments infrastructure business with a particular focus on growing the Wren platform, our ATM as a service offerings and our merchant acquiring network. As a reminder, these are key offerings within EFT that we believe will play a significant role in accelerating growth at euronet for years to come. Starting in Europe. In Austria, we implemented an ATM-as-a-Service banking infrastructure agreement with Bank 99. Under this long term agreement, Euronet will provide full outsourcing services for Bank99’s ATM fleet across the country and reinforcing our role as a long term infrastructure partner to leading banks. In Poland, we signed an agreement with UniCredit bank to deploy cash recyclers across its branch network. This Deployment also allows UniCredit’s customers to access Euronet’s market leading depository network. In Latin America, the Ren team signed its first banking infrastructure agreement in the region with Banco ETAO in Paraguay. This agreement enables the bank to take full ownership and management of its ATM network, allowing it to exit the country’s centralized ATM monopoly and then transition to a modern independent processing model with direct scheme connectivity. I want to highlight the strategic importance of these banking infrastructure agreements across several European markets and even at an EU level, regulators are developing standards and in some cases formal regulation that require banks to maintain ATM networks to ensure customer access to cash. By leveraging euronet’s Wren technology and scale, banks can meet these requirements while delivering a better customer service at a significantly lower cost. For euronet, these agreements generate long term recurring revenue and deepen our position as a critical infrastructure provider. In addition to these core platform wins, we continue to expand our product footprint with existing relationships. In Ecuador, we extended our partnership with Banco guayaquil through a 3D Secure agreement. This is notable for two reasons. First, it demonstrates our ability to cross sell incremental REN products to existing clients and second, it represents the first deployment of this product in Latin America, highlighting the cross geography synergies resulting from our 2024 infantium acquisition. In Malaysia, we also saw continued momentum in merchant acquiring, adding approximately 2,300 new merchants to our existing portfolio during the quarter, we further strengthened our position in Spain through the announced acquisition of Painepain. This transaction enhances our ability to offer digital merchants a comprehensive and flexible suite of Omni channel payment solutions tailored to a wide range of customer needs and industries. Overall, I am pleased with the EFT Group’s solid start to the year. Their continued focus on expanding banking and payments infrastructure continues to provide long term recurring revenue while also providing state of the art technology for banks, merchants and fintechs around the world. With that, let’s turn to slide number six and we’ll discuss Epay during the quarter. Epay continued to make steady progress expanding its digital content distribution capabilities across both established and developed markets. Developing Markets we extended our digital content distribution relationship with Revolut into Brazil and Mexico for a total of 22 countries. Revolut is a banking super app and one of the most successful fintech companies in the world with over 65 million global users. This expansion reflects continued demand from global partners to leverage our distribution infrastructure across global markets. We signed and launched a B2B agreement with Apple for distribution through corporate benefits, a leading European employee benefits and rewards platform across six countries. In Japan, we signed a content distribution agreement with Roblox, adding another global brand to our network. This agreement represents continued progress in expanding Epay’s presence in key digital entertainment markets. We also advanced our alternative payment initiatives. During the quarter, we launched Amazon paycode in partnership with with Italy based LISPay, increasing consumer access to alternative digital payment solutions through additional payment channels. In India, we launched Google Play and Apple Gift card codes on ZEPTO, a leading quick commerce platform. This launch expands our distribution of key digital content and supports our strategy of partnering with digital platforms to capture the evolving consumer purchasing trends. Overall. Epay continued to execute on its growth strategy during the quarter with incremental expansion across geographies, partners and product offerings. We expect this trajectory to continue as we seek to leverage existing infrastructure into high growth adjacencies, which we will discuss in greater detail at our upcoming investor day. The team remains focused on building its global distribution network to support long term value creation. Now let’s go on to slide seven and we’ll talk about money transfer. In the first quarter we continued to make progress in our money transfer segment, but a few external factors masked these positive developments. Pressure on transactions initiated in the US Retail business to countries south of the border remain persistent, largely due to the continued effects of US Immigration policy where the industry has continued to experience a 12 punch of lost customers from deportation and a virtual freeze and replacement immigration. To a lesser extent, we also saw some impact from the geopolitical developments in the Middle East. While these factors affected our reported results for the quarter, we do not view them as indicative of underlying weakness across our global business or long term in nature. While we face challenges in the physical retail channel, we received benefits in the digital channel. The US immigration policy combined with the 1% remittance, excise tax and our targeted investments in new customer acquisition resulted in accelerated digital transaction growth of 35%, new customer growth of 42% and digital revenue growth of 42% year over year. The average send per transaction increased approximately 6% and gross profit per transaction improved year over year. Dandelion also posted its best quarter on record, so while external pressures remained, we stayed focused on execution, expanding our digital cross border payments capabilities including the launch of real time payment services in nine new markets and continuing to scale the Dandelion network I want to emphasize an important differentiator in our money transfer business, the strength and the scale of our global cross border payments network. Today that network reaches more than 4 billion bank accounts, 3.7 billion wallet accounts and more than 4 billion debit card accounts as well as over 600 payout cash locations. The unparalleled reach, speed and product differentiation powers ria, Dandelion and XE with real time consumer and corporate payments at lower cost than competitor networks. While cash pickup remains a critical service for a large portion of our remittance consumer base, we continue to see ria, Dandelion and XE customers gravitate towards the convenience of digital payout. Our account deposit transactions grew 12% this quarter and now represent 44% of the money transfers transactions and 58% of the principal transferred. We see account deposit as the solution to driving long term sustainable growth in cross border remittances and payments. During the quarter we remain focused on expanding digital payout capabilities in key corridors. We made a minority investment in the Meo Wallet, a fintech venture which enables digital cross border payout capabilities in the Dominican Republic. We also continue to invest in future ready payment infrastructure. In partnership with FireBlocks, we established stablecoin Rails during the quarter. The initial deployment enhances our treasury management capabilities and over time we expect to expand functionality including enabling our global assets across all three segments to serve as on and off ramps for stablecoin users. This is important to understand as our ability to operate in a licensed and compliant manner across many countries particularly in emerging markets, positions us to facilitate stablecoin movement in a way that few fintechs can. Turning to Dandelion, we continue to expand the client portfolio with the launch of two new partners MasterRemit, a leading money transfer operator in Australia and New Zealand, and UTransfer, a South Korean based fintech specializing in cross border remittances and foreign exchange. In addition, we signed agreements with five new clients, further broadening the platform’s reach. These additions underscore both the growing demand for Dandelion capabilities and and its role as an increasingly important driver of long term growth. Overall, the money transfer segment made measurable progress during the quarter with a continued focus on disciplined expansion, digital enablement and investment in scalable payment infrastructure. We remain focused on executing against our long term strategy. With that, I’ll turn it over to Rick to walk you through the financial results in more detail.
Rick Weller (Chief Financial Officer)
Thanks Mike Good morning everyone and thank you for joining us today. I’ll start my remarks on slide 9. We delivered revenue of $1 billion, operating income of 72 million, adjusted EBITDA of 126 million and adjusted EPS of $1.58. Adjusted earnings per share increased 40% from $1.13 in the prior year excluding a one time tax charge of $0.20 per share. In the prior year, adjusted earnings per share increased 19% from $1.33. You can see we are on track to meet the guidance range we shared with you earlier in February. Further this quarter we continued our track record of producing strong free cash flows and because we didn’t have any large pending acquisitions or other capital requirements, we repurchased $100 million of our shares. Given the timing of the repurchases, there was only a marginal benefit of about $0.02 per share in the first quarter adjusted EPS, but we know this repurchase will continue to support per share earnings in the future. I’ll point out that our operating income of $72 million includes $5 million of additional non cash purchase price amortization reflected in the GAAP purchase accounting for the CoreCard acquisition and an additional 3.5 million for non cash share based comp. Excluding these two non cash items, our operating income would have grown 7%. Slide 10 shows our first quarter year over year results on an as reported basis. Most of the major currencies we operate in strengthen compared to the dollar. To normalize the impact of the currency fluctuations, we have presented our results adjusted for currency on the next slide. I’m on slide 11 now. The EFT segment delivered strong revenue growth in 1Q26 with constant currency revenues increasing 19% driven by a combination of double digit growth in WREN and merchant acquiring certain interchange rate increases and the full quarter inclusion of the CoreCard acquisition completed in the fourth quarter of 2025. Morocco, Egypt and Philippines led the way for the geographical expansion of our ATM footprint together with deepening our banking outsourcing partnerships. ATM expansion was modest with installed ATMs and active ATMs up 1% after deinstalling approximately 1400 non performing ATMs in Poland. Interchange increased during the first quarter with certain schemes implementing new interchange rates that include both fixed and variable components. These rate increases reflect a similar theme where we have seen rate improvements across Europe. Looking ahead, we expect to continue to see improvements in interchange rates and and direct access fees or DAF as regulatory requirements evolve across Europe where approximately 15 countries have implemented formal ATM cash access frameworks. These changes are designed to preserve customer access to cash while supporting the long term sustainability of ATM networks. As additional bank branches decline, independently owned ATM networks are increasingly filling the gap, enabling banks to lower cost while still meeting regulatory requirements for access to cash. As these trends evolve, we expect pricing structures to adjust to support accessible ATM networks. Adjusted EBITDA increased 12% operating income remained relatively flat largely due to the approximately $5 million increase in non cash purchase price amortization related to the CoreCard acquisition. Absent this $5 million increase, operating income for the segment would have grown 21%. These double digit operating results reflect the earnings leverage of revenue growth while exercising disciplined expense management. Operating margins were consistent year over year after adjusting for the inclusion of of the $5 million non cash purchase price amortization in Epay. The segment delivered solid results for the first quarter of 2026 with revenue increasing 2% on a constant currency basis. Operating income rose 13% and adjusted EBITDA increased 12% on a constant currency basis. Results benefited from the absence of a $4.5 million one time operating tax impact in the prior year. First quarter Epay revenue and gross profits per transactions were consistent to improving. In the Money Transfer segment. Revenue declined 4% on a constant currency basis. Operating income was $38.9 million and adjusted EBITDA was 45 million, both down year over year. Total transactions decreased 2% to 43.9 million while digital transactions grew 35%, new digital customers increased 42% and the network locations expanded 4%. The decline in constant currency revenue was primarily driven by immigration related pressures impacting transfers and between the United States and Mexico, the implementation of a 1% remittance excise tax paid on cash transactions in the first quarter and reduced volumes in the Middle East. These headwinds were partially offset by growth in markets outside the U.S. continued strength in consumer to consumer digital transactions and the expansion of our Dandelion cross border payment network. While constant currency revenue per transaction came in a bit, gross profit per transaction improved driven by a favorable mix toward account based payouts, improved payout rates and more efficient network routing. Highlighting the of our cross border payments network operating profit benefited from expanded gross margins which were reinvested in digital marketing to support long term growth resulting in lower operating profit year over year. At the consolidated level. Despite a more challenging macro environment, we delivered solid earnings growth supported by strong performance in EFT and continued momentum in our digital channels. While Money Transfer faced near term pressure, the underlying fundamentals of the businesses remain intact. Turning to the full year guidance, I’d note that as we continue to see the benefits of our key digital growth initiatives, we are seeing a corresponding evolution in our seasonal earnings profile. In prior year earnings were more heavily weighted toward ATM tourist activity. As we continue to diversify the business and expand our digital products, we expect the second and third quarters to represent a lighter portion of full year earnings than in the past. As Mike mentioned earlier, our current operating momentum and pipeline of growth initiatives give us confidence in our ability to deliver adjusted earnings per share growth of 10 to 15% in 2026. Let’s now turn to slide 12 for a few brief comments on the balance sheet. As you can see, we ended the first quarter with 2.1 billion in unrestricted cash and ATM cash. Total debt was 2.6 billion at the end of the quarter. The increase in cash and debt was due to an increase in cash in ATMs in preparation for our tourist season in Europe, as well as cash generated from operations partially offset by share repurchases and working capital fluctuations. During the first quarter we repurchased $100 million of our shares. Share repurchases remain a core component of our capital allocation strategy, funded primarily through our strong recurring operating cash flows. We believe share repurchases have been an effective use of capital and underscore our confidence in the long term value of the business. Over the past four years we have returned on average approximately 85% of our annual earnings to shareholders through share repurchases, reflecting a strong return of capital to shareholders. Our broader capital allocation framework continues to prioritize maintaining an investment grade balance sheet, investing in organic growth, pursuing disciplined and strategic M and A opportunities and returning excess capital to shareholders. With this, I will turn it over to Mike to wrap up the quarter.
Mike Brown (Chairman and CEO)
Thanks Rick and thank you everybody again to close. We are pleased with the solid start to this year. We continue to benefit from product and geographic diversity which allow us to deliver good results despite a complex and uneven macro environment. Our digital initiatives are clearly delivering results. We’re seeing accelerating adoption across the business, driving meaningful mix shift and operating leverage. That progress reinforces our confidence in our strategic direction and the investments that we have made to develop an industry leading global payments network and expand digital access for customers and partners. At the same time, our core platforms continue to scale globally. Long term infrastructure agreements, expanding networks and continued partner wins across the portfolio are strengthening the durability and reach of the business. We also remain disciplined on how we allocate capital. We are balancing organic growth and innovation with selective M and A opportunities while continuing to return capital to shareholders in a way that supports long term value creation. Our balance sheet and cash generation remain strong providing us with the flexibility to execute and give us confidence in our full year outlook while continuing to build long term value for our shareholders. Thank you for your time today and we look forward to seeing you at our Investor Day on May 20th. With that we will open the floor for questions. Operator, will you please assist?
OPERATOR
Thank you. At this time we will conduct the question and answer session and as a reminder to ask a question, you’ll need to press Star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by. We will compile the Q and A roster. Our first question comes from the line of Vasu Goble of kbw. Your line is now open.
Vasu Goble (Equity Analyst)
Hi, thank you for taking my question. I guess the first one on the strong acceleration in the EFT segment. Just could you maybe help us think through how much was the contribution from CoreCard versus Just Organic Growth in that segment? Thank you.
Rick Weller (Chief Financial Officer)
Yeah, so CoreCard was a little bit uncertain this time base, so we were able to pick up about $30 million in revenue. However, 40% of that $30 million was cardstock purchases in anticipation of issuing lots of cards. And that 40% was at almost no margin. But it is exciting that they bought so much cardstock because they are with that contract they’re expecting to launch and issue a lot of cards.
Vasu Goble (Equity Analyst)
Got it. So like should we be done modeling 30 million less to 40% as we look through the rest of the year in the EFT segment from CoreCard?
Rick Weller (Chief Financial Officer)
Yeah, I think that would be, you know, we’ll see what we do. But for sure, you don’t want to count that 13 or whatever it is, the 40% of 30 million. You don’t want to count that chicken every single quarter.
Vasu Goble (Equity Analyst)
Got it. Thank you. And then just on the money transfer segment, I know there are a bunch of different macro headwinds ongoing, but just on the US Mexico corridor. Wanted to get a sense for whether you’ve seen the headwinds stabilize there or is it still continuing to get worse? And in light of the geopolitical events in the Middle east, just curious what you are seeing in terms of trends in the month of April. That would be super helpful. Thank you.
Rick Weller (Chief Financial Officer)
Okay, so let me tell you. In the month of April, it’s the first month of the new quarter. I have for the last year, the last three quarters, the first month has always been pretty good. And then the following months get challenging. And so I think it would be not in our best interest to expect what April does is going to end up being for the quarter. We’ll just say that it’s a very choppy environment, a lot of unknowns out there. We continue to do well in comparison to our competitors. Our digital business growing like crazy. And so we’re feeling pretty good about money transfer. But the reality is, I think anybody who gives you a number for the quarter based upon April is really going out on a limb.
Vasu Goble (Equity Analyst)
Appreciate the color. Thank you, Mike.
OPERATOR
Thank you, Vasu. Thank you. Our next question comes from the line of Raina Kumar of Oppenheimer. Your line is now open.
Raina Kumar (Equity Analyst)
Good morning, Mike and Rick. I just want to go back to money transfer for a second. I see that you’re still growing agent locations. I think it was up 4% in the quarter. What are your expectations going forward on increasing physical locations, given the ongoing pressure from US Immigration and from there on, more. Thank you.
Mike Brown (Chairman and CEO)
Well, you know, this macro pressure that we see is certainly not in our favor, but it’s also not in the favor of our competition. So what we believe is we will continue to add more physical locations because some people just prefer to transact that way, whether they pay with a card or not. And so we will. We expect to continue growth there, and maybe there will be some opportunities for us to just be, you know, aggressive and get these agents quickly because we’re doing so well, really, as a company, and the agents and the competitive pressures are not what they used to be.
Raina Kumar (Equity Analyst)
Got it. That’s helpful. And then on Core Card, just like your thoughts on how that pipeline for CoreCard is looking. Sounds like Core Card had a strong quarter. How should we think about it for the remaining quarter?
Mike Brown (Chairman and CEO)
You know, I think I said this on the last call, Raina, when we bought Core Card, in our business plan, we really didn’t expect to sign a new deal for the first 18 months because that’s kind of the closed cycle of finding new deals. We have been absolutely kind of floored and positively surprised with the fact that we’re selling new deals as we speak. And we’ve got a very strong pipeline in process. So we’re going to, by the time we get to that 18 months when I thought we wouldn’t close A1, we’re going to have a lot of deals under our belt. And that’s going to. And that’s the goal. We want to make sure that by the time the Apple business goes away, which we don’t, we’re not quite sure when that’ll happen, but it’ll be sometime after the end of 27. We want to make sure that we’ve filled that bucket and then some.
Raina Kumar (Equity Analyst)
Got it. If I can just sneak in a modeling question, just Rick, how should we think about interest expense for rest of the year?
Rick Weller (Chief Financial Officer)
Oh, Reina, we’ve got about $700 million in our Eurobond that matures in May and we would expect that we’ll finance that maturity with something that will be probably a couple hundred bps more in interest costs. So if you would factor that into it, I think that would be pretty consistent.
Raina Kumar (Equity Analyst)
Thank you.
OPERATOR
Thank you. Our next question comes from the line of Pete Heckman of DAA Davidson. Your line is now open.
Pete Heckman (Equity Analyst)
Hey, good morning everyone. Thanks for taking the question. Interesting dynamic playing out has taken some time, but in terms of countries looking at ATM fee frameworks, I guess are any of those alone, do you think significant to the near term outlook of your business, particularly Poland? I think you have a fairly large number of ATMs there. Is the change in interchange rates there enough to really move the needle?
Mike Brown (Chairman and CEO)
Oh yeah. I mean all these deals, whether it’s that or the infrastructure plays, are all really good deals. And yes, they all move the needle a little bit, but in total they continue to move our needle upward. And that’s the nice thing with where the world has kind of gone to now that we’ve had this kind of backlash with all the bank branches in Europe being closed, citizens are demanding access to cash. Already 15 countries are mandating cash access with more in the works. Someone, even Switzerland put it into their constitution. So we know that somebody has to bear that load. And us as an independent provider with scale, best scale in Europe, puts us in kind of the catbird seat for long term infrastructure plays in these respective countries. And every one of them is a good deal. So that’s one of the things that really has changed over the last two years. We’ve always done infrastructure deals, but they are accelerating now based upon the legislative and political environments within these countries.
Rick Weller (Chief Financial Officer)
And Pete, I’d just add that all of that just gives us greater confidence in the long term durability of the business.
Mike Brown (Chairman and CEO)
Okay, that’s helpful. And just. Yeah, we’re just, you know, in the old days we were 100% focused on tourist related revenue for ATMs. That has really changed. Oh yeah, definitely, definitely. Okay. And then I missed it on Bilt for some reason I was confusing that with Blick when you first mentioned it. But with Bilt, is that, is that a U.S. card for. Yes, it is. It’s a very successful U.S. card. It is basically targeted to customers who rent their housing and then they get extra points and rewards and so forth if they use the Bilt credit card to pay their landlords for their rent.
Pete Heckman (Equity Analyst)
Got it. Okay, thanks.
Mike Brown (Chairman and CEO)
And spelled B I L T by the way, if you want to look it up.
Pete Heckman (Equity Analyst)
Great. Okay, thank you.
OPERATOR
Our next question comes from the line of Gustavo Gala of mch. Your line is now open.
Gustavo Gala (Equity Analyst)
Morning, Mike. Morning, Rick. Thank you for taking my question. I’m going to keep it to one. It’s a little bit long. So with the investor day coming around, you guys have consistently delivered, you know, double digit cagron revenue, but the multiples continue coming in. What is the investor day intended to correct? I think one of the things that has come up is at times a stock trades like it’s implying terminal decline. And as part of the investor day, is the board considering any structural actions, anything from a spin off strategic review, anything that could help crystallize value.
Mike Brown (Chairman and CEO)
Well, I mean the, I mean the board will consider anything that kind of pops up. We have to do that. We’re a publicly held company, but when you look at our digital initiatives and our growth aspirations for each of those, we’re pretty excited about where we’re going without that. And our whole industry, as you know, you track a lot of these people. You know, the whole fintech segment is down probably 30, 35% from a year ago. We kind of fell into that vortex with them. But the nice thing is structurally we’ve got a growing booming business. We’ve got some challenges with the immigration policy here in the US and money transfer. Otherwise, money transfer continues to grow very well. And we’ve got this network that is without peer and allows us to sell infrastructure deals to lots of people. So I mean, we’re not planning on doing anything aggressively with respect to that. When you’ve got as many growth drivers as we have and accelerators as we have, we’ll just keep putting more money on the bottom line and we will do acquisitions and if the acquisitions aren’t there, we will consider stock buybacks as we have in the past.
OPERATOR
I appreciate that. Thank you. Our next question comes from the line of Mike Grundal of Northland. Your line is now open.
Mike Grundal (Equity Analyst)
Hey, thanks guys. Two questions. One, could you talk a little bit about the double digit revenue growth you saw at REN and Merchant acquiring just kind of what’s driving that? And then secondly, have you seen any
Rick Weller (Chief Financial Officer)
effect of this $100 oil in your end markets or customer activity? I’ll answer the last one first. Well, the Mideast is not just $100 oil. You know, there’s a little volatility going on there right now and that has affected our Middle east transactions in money transfer. With respect to the $100 oil, we haven’t seen any direct effect. We do consider the fact that there’ll be a derivative, you know, first or second derivative for that is with $100 oil, is that going to push up inflation? Is that going to reduce people’s spend, et cetera, just across anybody’s business. So that is something that we consider, but we haven’t really seen any direct effect of that so far. Now I’m trying to remember what the first question was. Double digit growth. Oh, yeah, double digit growth. And Wren, I’ll tell you, Wren just continues to do well. You know, we’re accelerating, we’re doing more deals that, remember when we started Wren, it was all in Asia. Now we’re signing deals. As you know, we’ve got bank of America here in the us We’ve got several deals in Latin America. Ren is one of those things where it is modern technology and the banks don’t have modern technology. So what you just need is some reference customers in their geographies. And that’s what we were doing, doing more and more deals on account of that, I think. Add to that, Mike, that over the years we’ve been just adding to the product functionality of the Wren platform. As you may recall, it essentially started out as a switching product. But even here a couple of years ago, when we made reference earlier in the presentation on the deal with the 3D Secure, we acquired this little piece of business in Malaysia that directly lines up with it. The core card thing directly lines up, up with it. So as you go into a bank and you talk to them about their payment infrastructure needs, it ranges from switching to credit to debit, to real time switching to security to payment transactions. This is where we get the leverage across our segments, where we’re selling to customers that we have in multiple segments. And so it’s not unusual that we will have a bank customer that we have in the, let’s say a Ren customer that we also talk to them about a dandelion product. So I think it’s the addition of more and more product into the portfolio and it’s the momentum that takes a while to kind of build the momentum. And these are long sales cycles, et cetera. So I think it’s the combination of those that come together to really give us that momentum. We’re seeing.
Mike Brown (Chairman and CEO)
And I think we’ve got a couple things up our sleeve for the investor day too. We’re finding that Wren typically is used by banks and fintechs. We will talk in the investor day how we’ve leveraged that platform into new verticals that we see a lot of potential growth in. So more, more news on that to come. Thank you.
OPERATOR
Thank you. Our next question comes from the line of Josh Levin of Autonomous Research. Your line is now open.
Josh Levin (Equity Analyst)
Good morning. Two questions for me. First, your competitor Western Union said the Middle east was actually a source of strength for money transfer, meaning the war spurred some higher transfer activity. Sounds like you had the opposite experience. How might we sort of reconcile those comments? Second question. You launched stablecoin payouts. Can you give us some sense of the specific unit economics for stablecoin transaction compared to a traditional FX based remittance? The advantage that stablecoin gives us. I’ll answer the second question first. The advantage that stablecoin gives us at this point in time is basically just treasury float. So we’re able to, you know what we have the way money transfer works. An immigrant comes in either digitally or into one of our physical locations, they give them $300. They’ve got to send that to their mom in the Philippines. What happens is we estimate what those numbers are every day. We pre fund the Philippine correspondent bank in advance and then over weekends, you know, it’s multiple days of pre funding. So with, with stablecoin we can kind of do that ad hoc. So you don’t have as much float. You can really do it. As we get better and better at it, it’s going to be kind of instantaneous. And so it just, it helps us on the float side.
Mike Brown (Chairman and CEO)
I think, you know, when you take a look at what happens really at the consumer level, there’s a huge range of what’s out there.
Rick Weller (Chief Financial Officer)
If you’re a very. Doing very large transactions, you can execute those at nearly, you know, at very, very small rates, very few basis points to do large transactions. You get down to the consumer level and you see numbers that range from 3 to 4% to get on the chain and 3 to 4% to get off the chain. So if it’s costing you 6 to 8%, think of this in relationship to the money transfer industry where you generally see something like sub 3% in terms of total consumer cost to send a transfer. So I think that there’s a lot of evolution that is to yet develop out there. But we would see on the low end, the transactions are not being more economical, at least today, what we see out there than what you see in your traditional technology that we move money. Important thing is that we’ve got the technology ready to go. And as the use cases develop, we’ve got one of the best networks, if not the best network, as Mike said, to deliver on and off ramps around the world.
Mike Brown (Chairman and CEO)
And with respect to your first question on the Middle east, you said that our competitor has said that the Middle east has been an opportunity for them for us. We don’t have as big of a Middle Eastern contingent of agents and everything. So it might be kind of country specific as opposed to, you know, more broad based.
Rick Weller (Chief Financial Officer)
And I, you know, I think that there might be a couple aspects of the business in there where they have some increasing volume to a certain country that we don’t operate or send to. And there might be some, you know, movement in certain agents that they have there that, that they benefit from. So I think.
Mike Brown (Chairman and CEO)
Yeah, you must remember that. Yeah, they did quite well a couple, a year ago or so to Iraq. We don’t have Iraq as a payout. And so all that gets kind of mixed in there.
Rick Weller (Chief Financial Officer)
Yeah. And you know, hats off to them for doing that. I think that’s nice work, but I think it’s different underlying business circumstances that we see over there. Thank you very much.
OPERATOR
Thank you. Our next question comes from the line of Chris Kennedy. William Blair, your line is now open. Yeah. Good morning.
Mike Brown (Chairman and CEO)
Good morning. Thanks for taking the question. Mike, you mentioned Dandelion had one of its strongest quarters on record. Can you just provide a little Bit more color those comments. Okay, so we’ve got a couple of big customers and then lots of little customers in Dandelion. So we don’t really, we’re not talking about its numbers specifically because it would give us a competitive disadvantage as we bring on new customers. But it was great to see good, strong, double digit growth. Best quarter ever. Dandelion is one of those things where every quarter it’s a bigger quarter than the last one because more and more people are using it more often. So I really can’t give you any quantities. But really as far as our digital endeavors, it’s going to be a big one.
Rick Weller (Chief Financial Officer)
I would just add to that. Continuing on a similar line as Wren, I think we begin to see the momentum build. Clearly we’ve been focused on the business. It’s a long sales cycle but we’re continuing to see that momentum build. As you noticed, we made mention of a number of other wins that we had in that category. So I think as we continue to see our sales success, we’ll continue to see that business do nicely.
Mike Brown (Chairman and CEO)
And just as an example, our very first big bank customer was hsbc. About every month is a new record for them. It takes a while for these banks to communicate to their customers the ability to send money cheaper and quicker than they could through the old swift channels. And so as more people find out about it, more and more people use it. So there’s this kind of innate ramp up. And there’s more places as that bank as an example, there are more customers that they haven’t even begun to market it to, but they will as their confidence grows and we just have to work with bank bureaucracy.
Chris Kennedy (Equity Analyst)
Understood, thank you for that.
Rick Weller (Chief Financial Officer)
And then Rick, you mentioned the three drivers of improving gross margin on the money transfer side. Can you just talk about the sustainability of gross margins on that segment? Yeah, I would expect that we continue to see that, Chris. It I think speaks to the strength of the network and our volumes. So it gives us a good opportunity to negotiate rates with payout agents. It gives the bigger our network, the more choices that we have to route a transaction and more customers going to send money to accounts. Now remember, this account could be a bank account, it could be a wallet account. So it’s account based and account based are lower cost payout structures for us. So Chris, I think we’ll continue to see the benefit of this really, really impressive network we’ve built. Great, thanks for taking the questions.
OPERATOR
Operator, do we have any more questions? If not, we can close. Oh, we have one more. I think Is that right, operator? Yes. We have one more question. I’ll go ahead and bring them up now. Welcome Darren Peller with Wolff Research. Your line is now open.
Darren Peller (Equity Analyst)
Hi, Darren. Hey guys. Can you hear me okay? Yeah, perfectly. All right. Just one question is more on the margin structure and the margin expectations on the money transfer segment. I know you expected it to be decent. I think you had expected 50 to 70 bps of margin improvement in the year. Just you were working through some of the restructuring that would help that despite some of the headwinds I saw, you know, noticing margins were down year over year now. So just what is your conviction on that front first? And then overall, just thinking about that
Rick Weller (Chief Financial Officer)
segment, I mean, it seems like this is hopefully in terms of the headwinds may not persist forever. But I’m curious how you think about approaching that segment given the context of the political environment and the migration that could last for a while. Yeah, on the margin, I’d say, Darren, we would expect to see that it’d be a little bit more back end loaded as we enter the year. A number of those programs are being worked on. In fact, some of the expense it takes to implement some of those things that we did is again a little bit more front loaded. So the benefit will deliver a little more on the back end of the year. And as it relates to, I guess I’m going to say broadly your question on the industry. Well, when we take a look at money transfer and think of it over the years, I can’t remember a time in history that immigration has not happened. If you add up the population of all the developed countries, you only get to about 20% of global population, which means that 80% of the population continues to live in lesser developed countries. And as with most humans, when they have an opportunity to improve their lot in life, they do that. And when they do that, they’re very loyal to their family. They do that for their families and they send money back home to their families. So I think certainly we are experiencing the impact of a different political environment. You can take a look over the years on how that kind of attitude has moved. Positive, negative, positive. It ebb and flows with politics. We also have an economy that’s dependent upon a certain amount of immigration, immigrant labor. And so we believe that we will continue to see in the future what you have over the history. And it’s a point of time that we get through. I don’t think you throw in the towels because of a particular immigration policy. This year in the U.S. as we said, we saw the growth in our markets outside of the United States. So we continue to believe it’s a great, it’s a big and growing market for sending cross border money, has great margins to it. So we see long term potential to it despite the, you know, the challenges that we have to work through. But we’re also glad that we’ve got a very good, durable, diversified business which gives us the ability to weather that.
Mike Brown (Chairman and CEO)
And you’ve seen our results over the last year even where we have outgrown our competitors. So we are picking up more market share. So as some of this stuff settles down in the US we’re going to be in a better position. Plus we continue to grow overseas. Okay, that’s helpful. Mike, I may have missed this earlier, but just quick follow up on the Iran conflict. What were the implications on travel that you’re seeing or from your perspective, what kind of impact is that having on the EFT segment right now? So far we’ve traffic, yes. So far we haven’t seen anything. You know, there are kind of threats that there may be some flights that may be canceled if they’re not able to get fuel, you know, for the summer. But we don’t know for sure. So we’ll just have to see what happens. The interesting thing is one thing that the conflict has done is if you look at Europeans and where they travel, a lot of them like to go to places like Dubai, to Turkey, etc. On their vacations. They’re probably not going to do that this year. So a lot of these people are going to stay a little bit closer to home where they can either take a short airplane ride or a train ride to their vacation. And that probably would be of benefit to us.
Rick Weller (Chief Financial Officer)
And I think we’ve shared with you in the past that 75, 80% of our cross border transactions in Europe really come from Europeans going cross border as opposed to people coming into Europe. So, you know, maybe, you know, we’ll see. But at least what Mike said a little bit ago is something that, you know, may be an opportunity for us as opposed to a challenge. Okay, all right, that’s very helpful guys.
Darren Peller (Equity Analyst)
Thank you.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.
Recent Comments