Euronet Worldwide (NASDAQ:EEFT) reported a record revenue of $1 billion in the third quarter of 2023, marking the company's first billion-dollar quarter. Despite a challenging European market, the company saw growth in its Electronic Funds Transfer (EFT), epay, and Money Transfer segments. However, the company's ATM business experienced obstacles due to a decline in European cross-border transactions.
Key takeaways from the call include:
- Euronet's EFT and epay segments saw revenue growth of 2% and 1% respectively.
- Money Transfer segment experienced growth in revenue, operating income, and adjusted EBITDA, driven by U.S. outbound and international originated transfers.
- The company's ATM business faced challenges due to a decline in European cross-border transactions, primarily due to Croatia's currency decline and inflation impacting European travel budgets.
- Euronet reported an increase in the usage of international cards on their ATMs in 2023 compared to 2022 and 2019.
- The company highlighted opportunities for expansion in new markets and revenue opportunities in existing markets, despite challenges in the European economy.
During the call, Euronet discussed the behavior of European and non-European travelers, attributing the decline in European spending to high energy costs, inflation, and increased living costs. Despite these challenges, the company remains optimistic about the long-term growth of the ATM business.
Euronet also emphasized the expansion of its EFT product portfolio, including POS acquiring a business, ATM network, and digital content distribution through eBay (NASDAQ:EBAY). The company highlighted the growth of its Money Transfer network, with an increased number of correspondent agreements and strong transaction growth in bank and wallet accounts.
The company also discussed the success of its Dandelion platform in the cross-border payments market, with the signing of new banking partners and expansion into Africa. Euronet plans to focus on annual adjusted EPS growth instead of quarterly segment revenue and margin expectations. The company expects adjusted EPS and earnings growth of 10% to 15% in 2024, reaching $1.75 in Q4.
Despite a slowdown in digital transaction growth, Euronet has strategies in place to accelerate growth in this area. The company also plans to optimize its ATM footprint, expand into profitable markets in Asia and Africa, and improve margins in the EFT segment through cost reductions and digital initiatives.
Euronet expressed confidence in its competitive positioning and discussed its capital allocation strategy, including potential share buybacks and acquisitions. The company plans to expand into new markets outside of Europe that are more profitable and will remove unprofitable ATMs from existing markets. They also mentioned their preference for acquisitions and a recent successful acquisition in the merchant acquiring business.
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