Euronet eyes money transfers expansion in Q1 2024

Euronet eyes money transfers expansion in Q1 2024

Euronet (which owns Ria and Xe) was propelled by international transactions in Q1 2024, with particular strength from its Electronic Funds Transfer (EFT) segment. Revenues rose by 9% to $857m, with money transfer revenues rising 7% to $384.6m on the back of an 8% rise in transactions to 40.6 million.

Ria and Xe produce record results for Euronet money transfers
Euronet quarterly money transfer division (Ria and Xe) performance, 2018-2024

Despite growing investments, Euronet achieved a 17% rise in its adjusted EBITDA to $108.8m, giving a margin of 12.7%. Looking specifically at Euronet’s Money Transfers segment, this grew by 8% to $44.5m, giving an adjusted EBITDA margin of 11.6%.

Euronet executives noted that the company was eyeing expansion into new markets with the ultimate goal of growing market share across both remittances and B2B global payments. They also remarked that digital transactions have continued to boost transfers across its global network, and that a trend in wage growth versus declining inflation could also spell even higher related travel spend in the quarters to come.

How do Euronet’s segments compare in Q1 2024? 

Euronet’s money transfer segment – mainly comprising money transfers across Ria and Xe – grew by 7%, driven by a near-double digit growth in cross-border transactions, though the company noted a decline of around 10% in intra-US transactions (but Brown mentioned this used to be roughly 20%). 

Euronet’s cross-border payments infrastructure for businesses, Dandelion, was key to this growth, with the platform now spanning 4.1 billion bank accounts and over 2 billion wallet accounts. During the call, Euronet CEO Michael Brown said that Dandelion was opening access to a $15tn TAM serving cross-border payment needs beyond the considerably smaller remittance market (i.e. B2B). 

Euronet continues to note the growth of digital, with direct-to-consumer digital transactions growing by 23%, continuing a theme from last year as remittance players continue to drive users towards digital channels (in this case, Ria’s eWallet product).

Euronet's company-wide EBITDA margin rises over time
Euronet adjusted EBITDA margins by segment, 2020-2024

The Money Transfer segment’s operating income of $37.2m was up 14% compared to last year, or 17% on a constant currency basis. Euronet also noted that Money Transfer improved its operating margin by approximately 60 bps compared to last year through effective cost management, alongside the benefits of scale from revenue growth. 

Total transactions grew by 8% to 40.6m, driven by a growth of digital transactions (this is also being seen by other players like Western Union, which saw 69 million transactions in Q1 2024). Brown mentioned that the company now has a digital money transfer offering live in 24 countries, and that it now accounts for 11% of Euronet’s overall business. 

During the call Brown broke down how the company is having to pay lower fees on digital payouts (i.e. to bank accounts or wallets, rather than cash) as well as on the send side, which is what is driving Money Transfer’s profitability as the company grows its digital transactions across a higher number of countries.

Ria and Xe (money transfers) remain key to Euronet's revenue mix
Euronet quarterly revenue by segment, 2020-2024

In terms of revenue growth, Money Transfer is still Euronet’s largest segment, but revenues didn’t grow as rapidly this quarter as the company’s epay segment – which provides payment processing and prepaid solutions – and the company’s EFT processing segment – which spans Euronet’s owned and outsourced ATMs and PoS terminals, alongside additional services. 

The epay segment saw revenues rise by 8% to $257.1m, while the EFT processing segment saw revenues rise by 13% to $217.2m. EFT processing also saw a notable 51% increase in EBITDA to $44.7m, with transactions growing by 36% to over 2.5 billion. 

Euronet attributed growth in its EFT segment to a rise in international transactions growth in its merchant service businesses, and investments in new markets. Much of this is powered by Ren – its end-to-end payments platform, which not only powers EFT but is also sold to banks and fintechs.

Meanwhile, Euronet’s Corporate and Other segment reported $21.3 million of expenses in Q1 2024, compared to $21.4m in Q1 2023. 

Euronet’s international business masks intra-US declines

Euronet is expanding its reach, with a 10% rise in network locations to 583,000 as of 31 March 2024. This was bolstered by the company signing 22 new correspondent agreements across 19 countries, and launching 16 new correspondents in 15 countries. 

It also launched a new prepaid Ria Mastercard in Malaysia, which allows Ria eWallet customers in Malaysia to make online and in-store payments, as well as withdraw funds from ATMs globally.

Ria network locations continue to rise YoY in Q1 2024
Euronet quarterly money transfer transactions and locations, 2020-2024

The focus on other countries is salient given that Euronet has continued to see declining intra-US payments – roughly 10% in Q1 2024, according to Brown. He mentioned that digital payment methods in the country – such as Venmo and Cash App – have continued to take market share from Ria’s cash-to-cash service with Walmart, through which customers could send money through participating Ria agents and pick up cash at US-based Walmarts. 

“The nice thing is all our international business is up, and thus, this cash-to-cash business becomes a smaller and smaller piece of our total,” Brown added in the earnings call. 

Growing Euronet’s market share in cross-border payments

During the call, Euronet executives spoke about the company’s progress in money transfers and remittances. Euronet claims that its share in the $800bn remittances market remains at around 7%, but also said that its growth has historically outpaced the market and that it has achieved this with payment licences in send markets that make up only about 60% of where that $800bn originates. You can read FXC’s analysis on how Euronet stacked up against other players in our FY 2023 state of money transfers report

Brown added that the company is now looking to grow its market share by entering new send markets that represent another 20-25% of the additional markets. He also said the company will capitalise on an ongoing “shift” in the market, signalled by consumers’ preference for transactions through account deposits, which grew 31% during Q1 2024 on the back of Euronet’s real-time capabilities.

“As the market evolves, whether [that’s] going to digital for sending; whether to bank accounts, wallets or cards for receiving money; whether for other use cases or in terms of population or migration shifts; we believe our Money Transfer segment is already well positioned to benefit from and actually lead into these market dynamics,” said Brown. 

Aside from new digital-focused agreements with WorldRemit and Bangladesh-based Nagad Wallet, Euronet has also signed new partnerships with B2B-serving companies, including Chinese payments provider PingPong and Singapore-based Wallex. 

Alongside the aforementioned focus on Dandelion, these partnerships reflect how money transfer companies (e.g. OFX) have recognised the size of global B2B payments and have introduced new products to serve this in recent years.

As a result of growth in Q1 2024, executives said that they were confident of 10-15% earnings per share growth for 2024, though they didn’t specify a revenue or EBITDA outlook. Focuses for the future including growing Dandelion and Ren, expanding Euronet’s merchant services business further and growing the company’s digital offerings. 

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