Euronet beat analyst estimates with its first billion-dollar quarter in Q3, driven by its money transfer division, which covers Ria and Xe, as well as a seasonal uplift in ATM transactions. Revenues rose 8% to $1bn, with money transfer revenues also rising 8% to $395.9m.
Euronet’s company-wide adjusted EBITDA saw nominal growth to $212.5m giving an adjusted EBITDA margin of 21.17% – slightly down on last year but continuing the trend of the company seeing a higher profit share in Q3. However, investor response was muted, and the company’s share price is yet to recover after a steep decline following its Q2 results.
Ria, Xe revenue growth drivers in Q3 23
While an 8% growth in money transfers revenue appears modest compared to other money transfer players tracked by FXC, this was the highest growth Euronet had seen since Q4 2021 and substantially up on 3% in Q3 2022. Money transfers still make up the largest share of Euronet’s revenue at 39%, and while the segment’s revenues aren’t growing as fast as its EFT processing business (which includes its ATM network), profits continue to climb, with adjusted EBITDA rising 24% to $60.7m.
Growth was driven by a 7% rise in US-outbound transactions as well as a 10% increase in international-originated money transfers. This included 12% growth from Americas outside the US, 8% growth from Europe-initiated transfers and 7% growth in transfers from the Middle East and Asia.
Ria entered the Cambodian remittance market earlier this year – one of several recent moves to capitalise on a burgeoning money transfer opportunity in Asia.
Expanding Euronet’s digital offering
Euronet is continuing to expand its digital offering, with a 20% growth in direct-to consumer digital transactions, but physical transactions are also driving growth, according to Euronet Chairman and CEO Michael J Brown.
Xe saw an 18% growth in transactions, contributing to an 8% rise in overall money transactions to over 40 million. Ria’s network locations are also growing faster this year than in 2022, with 6% growth to more than 540,000 agents worldwide.
ATM business revenues rise but profits decline
Euronet’s ATM business saw a familiar boost in Q3, with its EFT processing segment rising 8% to $345.8m, accounting for over a third of overall revenue share. Transactions and the number of installed ATMs rose by 29% and 4% respectively, with Euronet reporting continued growth in high-volume, low-value transactions in India.
Brown cited a positive reversal in international ATM trends as the company ended the quarter, with more people than expected withdrawing money abroad. However, the company’s most profitable international transactions are still being hit, partly by Croatia’s switch to a new currency and inflation hitting travel budgets.