Intermex reported its quarterly earnings last week. Focused mostly on remittances from the US to Central and South America, the company has proven to be resilient in the difficult year that is 2020 by reporting year-on-year growth every quarter.
We spoke to Robert Lisy, President and CEO of Intermex, to understand more about the growth drivers and the future of the company. For reference, Intermex’s reported market share for the US to Mexico, Guatemala, Honduras and El Salvador corridors is just under 20%… significant.
The main takeaways from our conversation:
1. A focus on key corridors instead of aiming for ubiquity
- Intermex has built a highly profitable agents network focusing on the company’s key corridors. A typical Intermex agent does at least twice as many daily transactions as one serving Western Union or MoneyGram.
- Thanks to fast customer processing (helping both the customer and the agent) and most of the payments being real-time, the 8.5 million transactions were up 13% year-on-year for Q3 and were even up 3% for Q2. Impressive performance for a cash/agent focused business during the lockdown.
2. Digital not the headline as brick and mortar remains vital
- For Intermex, digital means any transaction that is paid out using a method other than cash. In Robert’s words, Intermex is not just focused on moving all its customers online as the high costs of acquiring an online customer and the preferences of their target customers make agents more profitable. Nonetheless, transactions paid out in a bank account now account for approximately 20% of the company’s revenue (market comparisons here).
- Expect the digital business to grow as the company has a substantial amount of free cash flow to invest, but brick and mortar will remain the cornerstone of its strategy.
3. A positive outlook in a period of uncertainty
- Forecasting how the next quarter and 2021 will unfold is very difficult. However, Intermex had a strong October and expects the fourth quarter of 2020 to end with double digit revenue growth.
In the future, expect Intermex to explore M&A opportunities and new geographies such as Africa and Canada.