Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Euronet Worldwide Inc (EEFT, Financial) delivered a record third quarter with revenue of $1.1 billion, operating income of $182 million, and adjusted EPS of $3.03.
- The company achieved double-digit growth in its EFT segment, with operating income and adjusted EBITDA growth.
- Money transfer segment saw a 10% revenue growth and a 30% increase in direct-to-consumer digital transactions.
- Epay segment experienced double-digit revenue and transaction growth, driven by digital media and mobile growth.
- Euronet Worldwide Inc (EEFT) continued to produce strong free cash flows, generating nearly $100 million in the third quarter.
Negative Points
- Euronet Worldwide Inc (EEFT) missed the average analyst EPS estimate of $3.11, reporting $3.03.
- The company noted a gradual earnings mix shift out of the third quarter, affecting quarterly earnings expectations.
- Operating income and EBITDA growth in the epay segment were impacted by changes in product mix and inflationary pressures.
- The company faced a decrease in intra-US money transfer transactions, offsetting some of the growth in cross-border transactions.
- Despite strong performance, the company acknowledged that the use of cash is in a slow decline, impacting its traditional ATM business.
Q & A Highlights
Q: Can you discuss the sustainability of same-store sales growth for international ATM transactions and how they relate to the overall market trends?
A: Michael Brown, CEO: International transactions are down by only 0.7%, which is roughly flat. We are expanding into new markets where tourists are underserved, allowing us to outperform the global trend. Rick Weller, CFO: We have an unequaled ATM network in Europe, and as banks close branches, our network becomes more valuable. This gives us a competitive edge in capturing a larger share of the market.
Q: What are you seeing in terms of US to Latin America money transfers, and how are you managing to outperform the market?
A: Michael Brown, CEO: We are growing our transactions over four times faster than the market, largely due to gaining market share and strategic partnerships like PLS. While there may be some market weaknesses, our growth in market share offsets any potential impact.
Q: Can you elaborate on the incremental margins in the EFT segment and the impact of fee structure changes at ATMs?
A: Rick Weller, CFO: We don't expect to return to pre-COVID margin levels due to cost increases. However, we see opportunities for additional access fees and interchange rate increases. Michael Brown, CEO: Our merchant acquiring business, which has tripled in size, has lower margins, affecting overall segment margins. We are expanding into new markets like Italy, Spain, and Portugal, which should yield results over the next year.
Q: What investments are being made in the epay segment, and what impact do you expect from major game releases like Grand Theft Auto VI?
A: Kevin Caponecchi, EVP: We are diversifying epay by developing proprietary products like gift cards and fraud solutions. The direct deal with Take-Two Interactive for Grand Theft Auto VI is expected to be significant, offering better margins than selling through platforms.
Q: Can you frame the opportunity around the domestic access fee expansion in Europe?
A: Rick Weller, CFO: While specific numbers aren't provided, the expansion into 10 countries signals a positive industry trend. Fixed price structures are being challenged, leading to potential increases in interchange rates and access fees, which will enhance profitability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
