Euronet marks record Q2 2024 in “hyper-competitive” environment
Euronet (which owns Ria and Xe) saw revenues rise 5% to a record $986.2m in Q2 2024, with 43% of this total ($421.8m) coming from money transfers. Revenue growth was slower this year compared to Q2 2023 (11%), but digital customer acquisition and an expanding network is still helping the company break records in an environment it referred to as “hyper-competitive”.
Revenue growth translated to profits, with the company seeing an adjusted EBITDA of $178.2m, a 7% increase from $165.8m (10% increase on a constant currency basis). This gave the company an adjusted EBITDA margin of 18%. However, the company’s share price did fall by as much as 7% on the day results were released.
While Euronet didn’t give specific guidance for how revenue and EBITDA could pan out for the rest of the year, executives did mention that it was still hoping to deliver earnings per share growth in the 10-15% YoY range for FY 2024.
Marketing investment paying off for digital growth
Across its money transfer business, Euronet reported total transactions grew by 8% to 44.3 million, though it once again noted a decrease in intra-US transactions. Total volumes sent increased by 9%, while the number of network locations grew 10% to approximately 586,000.
Much of the growth here has been down to digital transfers, with direct-to consumer digital transactions increasing by 24%; the company said that its digital product represents 12% of total transactions overall.
This share remains lower than other incumbent money transfer providers have seen on the market (e.g. Western Union), but Euronet is focusing on digital marketing, having increased spending on this by $3.9m this year, growing customer numbers by 44% in turn .
Adjusted EBITDA for the segment was down by 2% to $54m, which in turn decreased its margin by around 120 bps to 12.8%.
Operating income rose by 2%, but this would have been 10% excluding the additional marketing spending. Having said this, the segment’s gross profit per transaction was consistent with the previous year.
On its Money Transfers segment generally, Euronet said the company is looking to expand its network, customer base and the types of payments available to customers. Meanwhile, Ren – Euronet’s processing platform – and Dandelion – its cross-border payments network – have “significant pipelines” for long-term future growth. The latter saw a number of new partnerships, while HSBC grew transactions through the system by 170% sequentially during the quarter.
Money transfers growing at a slower rate than processing business
Euronet talked a lot about EFT Processing – the company’s payment processing business, including its ATMs and PoS systems worldwide.
EFT Processing revenues rose 8% to $305.4m, driven by more travel and growth in merchant services. Revenues were also more diversified, with more non-tourist related ATM transactions in Europe, and transactions generally growing in new countries outside of Europe.
This segment has continued to grow faster than Money Transfers in terms of revenue as well as adjusted EBITDA, which rose 17% to $105m (20% on a constant currency basis). This gave the segment an adjusted EBITDA margin of 34%.
Having said this, EFT Processing accounted for 31% of revenues, behind Money Transfers’ revenue share of 43% – and while revenue growth has been faster, there isn’t the same gap in growth as the previous year.
Meanwhile, Euronet’s epay segment, which covers a variety of flexible payment options for stores, online businesses and B2B brands, declined by 1% to $260.9m on the back of a difficult comparison to the previous year’s promotional campaigns. That said, adjusted EBITDA grew 10% when excluding promotional campaigns while transaction growth outpaced revenue growth due to the company seeing more high-volume, low-value transactions in India.
Euronet drives partnerships with big names while competitors exit
Euronet cited a number of partnerships with a remittances focus (21 partners across 15 countries). One of the big names was WeChat – China’s mobile wallet behemoth – which has been increasingly partnering with Western cross-border companies (e.g Flywire) to expand its reach.
The company is also pushing into Eastern markets through new deals with money transfer firms including Al Fardan Exchange in the UAE and Al Mulla in Kuwait – these countries continue to provide a ripe market for remittances.
Euronet also partnered with financial institution Banco Activo in Venezuela, where executives noted remittances exceed $4bn (more than 5% of the country’s GDP). Overall, the company’s current network spans 198 countries and territories, four billion bank accounts and two billion wallet accounts.
While the company is forming new partnerships, it also noted that the industry is seeing consolidation and that the company had seen Q2 growth of 35% YoY for new agent accounts signed due to two closures from competitors during the quarter.
Which are the biggest markets for remittances worldwide?
