Title

Presentation

Euronet Worldwide, Inc. beats earnings expectations. Reported EPS is $1.58, expectations were $1.42.

Operator: Greetings, and welcome to the Euronet Worldwide First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. It is now my pleasure to introduce your host, Ms. Stephanie Taylor, Head of Investor Relations for Euronet Worldwide. Thank you, Ms. Taylor, you may begin.

Stephanie Taylor: Thank you. Good morning, and welcome to Euronet’s First Quarter 2026 Earnings Conference Call. On the call, we have Mike Brown, our Chairman and CEO; and Rick Weller, our CFO. Before we begin, I need to call your attention to the forward-looking statements disclaimer on the second slide of the PowerPoint presentation we will be making today. Statements made on this call that concern Euronet or its management’s intentions, expectations or predictions of future performance are forward-looking statements. Euronet’s actual results may vary materially from those anticipated in these forward-looking statements as a result of a number of factors that are listed on the second slide of our presentation. In addition, the PowerPoint presentation includes a reconciliation of the non-GAAP financial measures we’ll be using during the call to their most comparable GAAP measures. Now I’ll turn the call over to our Chairman and CEO, Mike Brown.

Michael Brown: Thank you, Stephanie. Good morning, and thank you, everyone, for joining. I’ll begin my comments on Slide #4. The first quarter here in 2026 represented a solid start to the year as we navigated what continues to be a fluid operating environment. Importantly, we continue to make meaningful progress on our growth initiatives that we believe will position Euronet as a long-term winner in the payments and cross-border space. We are pleased by the broad-based strength across our business, which drove 19% growth in adjusted EPS alongside accelerating momentum in several of our key digital efforts. Highlights include 35% growth in Ria Digital transactions and a 42% growth in new digital customers, the addition of approximately 2,300 new merchants in our Merchant Acquiring business, Dandelion delivering its strongest quarter to date and 3 EFT payment infrastructure deals signed and continued the expansion of our CoreCard client base.

During the quarter, we continued to face headwinds from immigration policy and ongoing economic pressures and the conflict in the Middle East introduced additional volatility across parts of our business. These impacts were most pronounced within the Money Transfer segment. We believe the softness associated with these factors is transitory, and we remain focused on what we can control, continuing to operate the business efficiently, executing our long-term growth initiatives across all 3 segments and maintaining financial discipline. We remain confident with our full year outlook, supported by our strong balance sheet and our historically disciplined balanced approach to capital allocation. We believe that we are well positioned to execute against our strategic priorities and deliver adjusted EPS growth in the 10% to 15% range for the full year.

Next slide, please, Slide #5. During the first quarter, the EFT team continued to expand our banking and payments infrastructure business with a particular focus on growing the REN platform, our ATM-as-a-Service offering and our merchant acquiring network. As a reminder, these are key offerings within EFT that we believe will play a significant role in accelerating growth at Euronet for years to come. Starting in Europe, in Austria, we implemented an ATM-as-a-Service banking infrastructure agreement with bank99. Under this long-term agreement, Euronet will provide full outsourcing services for bank99’s ATM fleet across the country, reinforcing our role as a long-term infrastructure partner to leading banks. In Poland, we signed an agreement with UniCredit Bank to deploy cash recyclers across its branch network.

This deployment also allows UniCredit’s customers to access Euronet’s market-leading depository network. In Latin America, the REN team signed its first banking infrastructure agreement in the region with Banco Itau in Paraguay. This agreement enables the bank to take full ownership and management of its ATM network, allowing it to exit the country’s centralized ATM monopoly and then transition to a modern independent processing model with direct scheme connectivity. I want to highlight the strategic importance of these banking infrastructure agreements. Across several European markets and even at an EU level, regulators are developing standards and in some cases, formal regulation that require banks to maintain ATM networks to ensure customer access to cash.

By leveraging Euronet’s REN technology and scale, banks can meet these requirements while delivering a better customer service at a significantly lower cost. For Euronet, these agreements generate long-term recurring revenue and deepen our position as a critical infrastructure provider. In addition to these core platform wins, we continue to expand our product footprint with existing relationships. In Ecuador, we extended our partnership with Banco Guayaquil through a 3D Secure agreement. This is notable for 2 reasons. First, it demonstrates our ability to cross-sell incremental REN products to existing clients; and second, it represents the first deployment of this product in Latin America, highlighting the cross-geography synergies resulting from our 2024 Infinium acquisition in Malaysia.

We also saw continued momentum in merchant acquiring, adding approximately 2,300 new merchants to our existing portfolio. During the quarter, we further strengthened our position in Spain through the announced acquisition of PaynoPain. This transaction enhances our ability to offer digital merchants a comprehensive and flexible suite of omnichannel payment solutions tailored to a wide range of customer needs and industries. Overall, I am pleased with the EFT Group’s solid start to the year. Their continued focus on expanding banking and payments infrastructure continues to provide long-term recurring revenue while also providing state-of-the-art technology for banks, merchants and fintechs, around the world. With that, let’s turn to Slide #6, and we’ll discuss epay.

During the quarter, epay continued to make steady progress expanding its digital content distribution capabilities across both established and developed markets or developing markets. We extended our digital content distribution relationship with Revolut into Brazil and Mexico for a total of 22 countries. Revolut is a banking super app and one of the most successful fintech companies in the world with over 65 million global users. This expansion reflects continued demand from global partners to leverage our distribution infrastructure across global markets. We signed and launched a B2B agreement with Apple for distribution through corporate benefits, a leading European employee benefits and rewards platform, across 6 countries. In Japan, we signed a content distribution agreement with Roblox, adding another global brand to our network.

This agreement represents continued progress in expanding epay’s presence in key digital entertainment markets. We also advanced our alternative payment initiatives during the quarter. We launched Amazon Paycode in partnership with Italy-based LIS PAY, increasing consumer access to alternative digital payment solutions through additional payment channels. In India, we launched Google Play and Apple Gift Card codes on Zepto, a leading quick commerce platform. This launch expands our distribution of key digital content and supports our strategy of partnering with digital platforms to capture the evolving consumer purchasing trends. Overall, epay continued to execute on its growth strategy during the quarter with incremental expansion across geographies, partners and product offerings.

We expect this trajectory to continue as we seek to leverage existing infrastructure into high-growth adjacencies, which we will discuss in greater detail at our upcoming Investor Day. The team remains focused on building its global distribution network to support long-term value creation. Now let’s go on to Slide 7, and we’ll talk about Money Transfer. In the first quarter, we continue to make progress in our Money Transfer segment, but a few external factors masked these positive developments. Pressure on transactions initiated in the U.S. retail business to countries south of the border remained persistent, largely due to the continued effects of U.S. immigration policy, where the industry has continued to experience a 1-2 punch of lost customers from deportation and a virtual freeze in replacement immigration.

To a lesser extent, we also saw some impact from the geopolitical developments in the Middle East. While these factors affected our reported results for the quarter, we do not view them as indicative of underlying weakness across our global business or long term in nature. While we faced challenges in the physical retail channel, we received benefits in the digital channel. The U.S. immigration policy, combined with a 1% remittance excise tax and our targeted investments in new customer acquisition, resulted in accelerated digital transaction growth of 35%, new customer growth of 42% and digital revenue growth of 42% year-over-year. The average spend per transaction increased approximately 6% and gross profit per transaction improved year-over-year.

Dandelion also posted its best quarter on record. So while external pressures remain, we stayed focused on execution. expanding our digital cross-border payments capabilities, including the launch of real-time payment services in 9 new markets and continuing to scale the Dandelion network. I want to emphasize an important differentiator in our Money Transfer business, the strength and the scale of our global cross-border payments network. Today, that network reaches more than 4 billion bank accounts, 3.7 billion wallet accounts and more than 4 billion debit card accounts as well as over 600 payout cash locations. The unparalleled reach, speed and product differentiation powers Ria, Dandelion and xe with real-time consumer and corporate payments at lower cost than competitor networks.

While cash pickup remains a critical service for a large portion of our remittance consumer base, we continue to see Ria, Dandelion and xe customers gravitate towards the convenience of digital payout. Our account deposit transactions grew 12% this quarter and now represent 44% of the money transfers transactions and 58% of the principal transfer. We see account deposits as the solution to driving long-term sustainable growth in cross-border remittances and payments. During the quarter, we remained focused on expanding digital payout capabilities in key corridors. We made a minority investment in the MIO Wallet, a fintech venture, which enables digital cross-border payout capabilities in the Dominican Republic. We also continued to invest in future-ready payment infrastructure.

In partnership with Fire Block, we established stablecoin rails during the quarter. The initial deployment enhances our treasury management capabilities. And over time, we expect to expand functionality, including enabling our global assets across all 3 segments to serve as on and off-ramps for stablecoin users. This is important to understand as our ability to operate in a licensed and compliant manner across many countries, particularly in emerging markets, positions us to facilitate stablecoin movement in a way that few fintechs can. Turning to Dandelion. We continue to expand the client portfolio with the launch of 2 new partners. Master Remit, a leading money transfer operator in Australia and New Zealand; and U-Transfer, a South Korean-based fintech specializing in cross-border remittances and foreign exchange.

In addition, we signed agreements with 5 new clients, further broadening the platform’s reach. These additions underscore both the growing demand for Data Lion’s capabilities and its role as an increasingly important driver of long-term growth. Overall, the Money Transfer segment made measurable progress during the quarter with a continued focus on disciplined expansion, digital enablement and investment in scalable payment infrastructure. We remain focused on executing against our long-term strategy. With that, I’ll turn it over to Rick to walk you through the financial results in more detail.

Rick Weller: Thanks, Mike. Good morning, everyone, and thank you for joining us today. I’ll start my remarks on Slide 9. We delivered revenue of $1 billion, operating income of $72 million, adjusted EBITDA of $126 million and adjusted EPS of $1.58. Adjusted earnings per share increased 40% from $1.13 in the prior year. Excluding a onetime tax charge of $0.20 per share in the prior year, adjusted earnings per share increased 19% from $1.33. You can see we are on track to meet the guidance range we shared with you earlier in February. Further, this quarter, we continued our track record of producing strong free cash flows. And because we didn’t have any large pending acquisitions or other capital requirements, we repurchased $100 million of our shares.

Given the timing of the repurchases, there was only a marginal benefit of about $0.02 per share in the first quarter adjusted EPS. But we know this repurchase will continue to support per share earnings in the future. I’ll point out that our operating income of $72 million includes $5 million of additional noncash purchase price amortization reflected in the GAAP purchase accounting for the CoreCard acquisition and an additional $3.5 million for noncash share-based comp. Excluding these 2 noncash items, our operating income would have grown 7%. Slide 10 shows our first quarter year-over-year results on an as-reported basis. Most of the major currencies we operate in strengthened compared to the dollar. To normalize the impact of the currency fluctuations, we have presented our results adjusted for currency on the next slide.

I’m on Slide 11 now. The EFT segment delivered strong revenue growth in the first quarter of ’26 with constant currency revenues increasing 19%, driven by a combination of double-digit growth in REN and merchant acquiring, certain interchange rate increases and the full quarter inclusion of the CoreCard acquisition completed in the fourth quarter of 2025. Morocco, Egypt and Philippines led the way for the geographical expansion of our ATM footprint, together with deepening our banking outsourcing partnerships. ATM expansion was modest with installed ATMs and active ATMs up 1% after deinstalling approximately 1,400 nonperforming ATMs. In Poland, interchange increased during the first quarter with certain schemes implementing new interchange rates that include both fixed and variable components.

These rate increases reflect a similar theme where we have seen rate improvements across Europe. Looking ahead, we expect to continue to see improvements in interchange rates and direct access fees or DAF, as regulatory requirements evolve across Europe, where approximately 15 countries have implemented formal ATM cash access frameworks. These changes are designed to preserve customer access to cash while supporting the long-term sustainability of ATM networks. As additional bank branches decline, independently owned ATM networks are increasingly filling the gap, enabling banks to lower cost while still meeting regulatory requirements for access to cash. As these trends evolve, we expect pricing structures to adjust to support accessible ATM networks.

Adjusted EBITDA increased 12%. Operating income remained relatively flat, largely due to the approximately $5 million increase in noncash purchase price amortization related to the CoreCard acquisition. Absent this $5 million increase, operating income for the segment would have grown 21%. These double-digit operating results reflect the earnings leverage of revenue growth while exercising disciplined expense management. Operating margins were consistent year-over-year after adjusting for the inclusion of the $5 million noncash purchase price amortization. In epay, the segment delivered solid results for the first quarter of 2026 with revenue increasing 2% on a constant currency basis. Operating income rose 13% and adjusted EBITDA increased 12% on a constant currency basis.

Results benefited from the absence of a $4.5 million onetime operating tax impact in the prior year first quarter. epay revenue and gross profit per transactions were consistent to improving. In the Money Transfer segment, revenue declined 4% on a constant currency basis. Operating income was $38.9 million and adjusted EBITDA $45 million, both down year-over-year. Total transactions decreased 2% to $43.9 million, while digital transactions grew 35%. New digital customers increased 42% and the network locations expanded 4%. The decline in constant currency revenue was primarily driven by immigration-related pressures impacting transfers between the United States and Mexico, the implementation of a 1% remittance excise tax paid on cash transactions in the first quarter and reduced volumes in the Middle East.

These headwinds were partially offset by growth in markets outside the U.S., continued strength in consumer-to-consumer digital transactions and the expansion of our Dandelion cross-border payment network. While constant currency revenue per transaction came in a bit, gross profit per transaction improved, driven by a favorable mix toward account-based payouts, improved payout rates and more efficient network routing, highlighting the strength of our cross-border payments network. Operating profit benefited from expanded gross margins, which were reinvested in digital marketing to support long-term growth, resulting in lower operating profit year-over-year. At the consolidated level, despite a more challenging macro environment, we delivered solid earnings growth, supported by strong performance in EFT and continued momentum in our digital channels.

While Money Transfer faced near-term pressure, the underlying fundamentals of the businesses remain intact. Turning to the full year guidance. I’d note that as we continue to see the benefits of our key digital growth initiatives, we are seeing a corresponding evolution in our seasonal earnings profile. In prior year, earnings were more heavily weighted toward ATM tourist activity. As we continue to diversify the business and expand our digital products, we expect the second and third quarters to represent a lighter portion of full year earnings than in the past. As Mike mentioned earlier, our current operating momentum and pipeline of growth initiatives give us confidence in our ability to deliver adjusted earnings per share growth of 10% to 15% in 2026.

Let’s now turn to Slide 12 for a few brief comments on the balance sheet. As you can see, we ended the first quarter with $2.1 billion in unrestricted cash and ATM cash. Total debt was $2.6 billion at the end of the quarter. The increase in cash and debt was due to an increase in cash in ATMs in preparation for our tourist season in Europe as well as cash generated from operations, partially offset by share repurchases and working capital fluctuations. During the first quarter, we repurchased $100 million of our shares. Share repurchases remain a core component of our capital allocation strategy, funded primarily through our strong recurring operating cash flows. We believe share repurchases have been an effective use of capital and underscore our confidence in the long-term value of the business.

Over the past 4 years, we have returned, on average, approximately 85% of our annual earnings to shareholders through share repurchases, reflecting a strong return of capital to shareholders. Our broader capital allocation framework continues to prioritize maintaining an investment-grade balance sheet, investing in organic growth, pursuing disciplined and strategic M&A opportunities and returning excess capital to shareholders. With this, I will turn it over to Mike to wrap up the quarter.

Michael Brown: Thanks, Rick, and thank you, everybody, again. To close, we are pleased with the solid start to this year. We continue to benefit from product and geographic diversity, which allow us to deliver good results despite a complex and uneven macro environment. Our digital initiatives are clearly delivering results. We’re seeing accelerating adoption across the business, driving meaningful mix shift and operating leverage. That progress reinforces our confidence in our strategic direction and the investments that we have made to develop an industry-leading global payments network and expand digital access for our customers and partners. At the same time, our core platforms continue to scale globally. Long-term infrastructure agreements, expanding networks and continued partner wins across the portfolio are strengthening the durability and reach of the business.

We also remain disciplined on how we allocate capital. We are balancing organic growth and innovation with selective M&A opportunities while continuing to return capital to shareholders in a way that supports long-term value creation. Our balance sheet and cash generation remains strong, providing us with the flexibility to execute and give us confidence in our full year outlook while continuing to build long-term value for our shareholders. Thank you for your time today, and we look forward to seeing you at our Investor Day on May 20. With that, we will open the floor for questions. Operator, will you please assist?

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Operator: [Operator Instructions] Our first question comes from the line of Vasu Govil of KBW.

Vasundhara Govil: I guess the first one on the strong acceleration in the ESC segment. Just could you maybe help us think through how much was the contribution from CoreCard versus just organic growth in that segment?

Michael Brown: Yes. So CoreCard was a little bit squirly this time, Vasu. So we were able to pick up about $30 million in revenue. However, 40% of that $30 million was card stock purchases in anticipation of issuing lots of cards and that 40% was at almost no margin. So — but it is exciting that they bought so much card stock because they are — with that contract, they’re expecting to launch and issue a lot of cards.

Vasundhara Govil: Got it. So like should we be then modeling $30 million less the 40% as we look through the rest of the year in the EFT segment from CoreCard?

Michael Brown: Yes. I think that would be — we’ll see what we do, but for sure, you don’t want to count that $13 million or whatever it is, the 40% of $30 million, you don’t want to count that chicken every single quarter.

Vasundhara Govil: Got it. And then just on the Money Transfer segment, I know there are a bunch of different macro headwinds ongoing. But just on the U.S.-Mexico corridor, I wanted to get a sense for whether you’ve seen the headwinds stabilize there? Or is it still continuing to get worse? And in light of the geopolitical events in the Middle East, just curious what you’re seeing in terms of trends in the month of April. That would be super helpful.

Michael Brown: Okay. So let me tell you, in the month of April is the first month of the new quarter. I have — for the last year, the last 3 quarters, the first month has always been pretty good. And then the following months gets crummy. And so I think it would be not in our best interests to expect what April does is going to look — is going to end up being for the quarter. We’ll just say that it’s a very choppy environment, a lot of unknowns out there. We continue to do well in comparison to our competitors. Our digital business is growing like crazy. And so we’re feeling pretty good about Money Transfer, but the reality is I think anybody who gives you a number for the quarter based upon April is really going out on a limb.

Operator: Our next question comes from the line of Rayna Kumar of Oppenheimer.

Rayna Kumar: I just want to go back to Money Transfer for a second. I see that you’re still growing agent locations. I think it was up 4% in the quarter. Like what are your expectations going forward on increasing physical locations just given the ongoing pressure from U.S. immigration and from the Iran war?

Michael Brown: Well, this pressure — this macro pressure that we see is certainly not in our favor, but it’s also not in the favor of our competition. So what we believe is we will continue to add more physical locations because some people just prefer to transact that way, whether they pay with a card or not. And so we will — we expect a continued growth there. And maybe there will be some opportunities for us to just be aggressive and get these agents quickly because we’re doing so well really as a company and the agents and the competitive pressures are not what they used to be.

Rayna Kumar: Got it. That’s helpful. And then on CoreCard, just like your thoughts on how that pipeline for CoreCard is looking? It sounds like CoreCard had a strong quarter. How should we think about it for the year?

Michael Brown: I think I said this on the last call, Rayna, when we bought CoreCard, in our business plan, we really didn’t expect to sign a new deal for the first 18 months because that’s kind of the closed cycle of signing new deals. We have been absolutely kind of floored and positively surprised with the fact that we’re selling new deals as we speak. And we’ve got a very strong pipeline in process. So we’re going to — by the time we get to that 18 months when I thought we wouldn’t close a one, we’re going to have a lot of deals under our belt, and that’s going to — and that’s the goal. We want to make sure that by the time the Apple business goes away, which we don’t — we’re not quite sure when that will happen, but it will be sometime after the end of ’27. We want to make sure that we filled that bucket and then some.

Rayna Kumar: Got it. If I can just sneak in a modeling question. Just, Rick, how should we think about interest expense for the rest of the year?

Rick Weller: Rayna, we’ve got about $700 million in our Eurobond that matures in May. And we would expect that we’ll finance that maturity with something that will be probably a couple of hundred bps more in interest cost. So if you would factor that into it, I think that would be pretty consistent.

Operator: Our next question comes from the line of Pete Heckmann of D.A. Davidson.

Peter Heckmann: Interesting dynamic playing out, has taken some time. But in terms of countries looking at ATM fee frameworks, I guess, are any of those alone, do you think significant to the near-term outlook of your business, particularly Poland, I think you have a fairly large number of ATMs there? Is the change in interchange rates there enough to really move the needle?

Michael Brown: Yes. I mean all these deals, whether it’s that or the infrastructure plays are all really good deals. And yes, they all move the needle a little bit. But in total, they continue to move our needle upward. And that’s the nice thing with where the world has kind of gone to. Now that we’ve had this kind of backlash with all the bank branches in Europe being closed, citizens are demanding access to cash. Already 15 countries are mandating cash access with more in the works. One, even Switzerland put it into their constitution. So we know that somebody has to bear that load and us as an independent provider with scale, best scale in Europe puts us in kind of the catbird seat for long-term infrastructure plays in these respective countries.

So — and every one of them is a good deal. So we’re — that’s one of the things that really has changed over the last 2 years. We’ve always done infrastructure deals, but they are accelerating now based upon the legislative and political environments within these countries.

Rick Weller: And Pete, I’d just add that all of that just gives us greater confidence in the long-term durability of the business.

Peter Heckmann: Okay. That’s helpful. And…

Michael Brown: Yes, we’re just — in the old days, we were 100% focused on tourist-related revenue for ATMs. That has really changed.

Peter Heckmann: Yes, definitely, definitely. Okay. And then I missed it on Bilt. For some reason, I was confusing that was Bilt when you first mentioned it. But with Bilt, is that a U.S. card for…

Michael Brown: Yes, it is. It’s a very successful U.S. card. It is basically targeted to customers who rent their housing and then they get extra points and rewards and so forth if they use the Bilt credit card to pay their landlords for their rent. It’s spelled B-I-L-T, by the way, if you want to look at it.

Operator: Our next question comes from the line of Gustavo Gala of MCH.

Gustavo Gala: I’m going to keep it to one. It’s a little bit long. So with the Investor Day coming around, you guys have consistently delivered double-digit CAGR on revenue, but the multiples continue coming in. What is — was the Investor Day attendance correct? I think one of the things that has come up is a time to stop trade like it’s implying terminal decline. And as part of the Investor Day, is the Board considering any structural actions, anything from a spin-off, strategic review, anything that could help crystallize value?

Michael Brown: Well, the — I mean, the Board will consider anything that kind of pops up. We have to do that. We’re a publicly held company. But when you look at our digital initiatives and our growth aspirations for each of those, we’re pretty excited about where we’re going without that. And our whole industry, as you know, you track a lot of these people, the whole fintech segment is down probably 30%, 35% from a year ago. We kind of fell into that vortex with them. But the nice thing is we — structurally, we’ve got a growing, booming business. We’ve got some challenges with the immigration policy here in the U.S. and money transfer. Otherwise, Money Transfer continues to grow very well. And we’ve got this network that is without peer and allows us to sell infrastructure deals to lots of people.

So I mean, we’re not planning on doing anything aggressively with respect to that. When you’ve got as many growth drivers as we have and accelerators as we have, we’ll just keep putting more money on the bottom line, and we will do acquisitions. And if the acquisitions aren’t there, we will consider stock buybacks as we have in the past.

Operator: Our next question comes from the line of Mike Grondahl of Northland.

Mike Grondahl: Two questions. One, could you talk a little bit about the double-digit revenue growth you saw at REN and merchant acquiring? Just kind of what’s driving that? And then secondly, have you seen any effect of this $100 oil in your end markets or customer activity?

Michael Brown: I’ll answer the last one first. Well, the Middle East is not just $100 oil, there’s a little volatility going on there right now, and that has affected our Middle East transactions in Money Transfer. With respect to the $100 oil, we haven’t seen any direct effect. We do consider the fact that there’ll be a derivative, first or second derivative for that is with $100 oil, is that going to push up inflation? Is that going to reduce people’s spend, et cetera, just across anybody’s business? So that is something that we consider, but we haven’t really seen any direct effect of that so far. Now I’m trying to remember what the first question was, yes, double-digit growth in — in REN. I’ll tell you, REN just continues to do well.

We’re accelerating. We’re doing more deals. Remember, when we started REN, it was all in Asia. Now we’re signing deals. As you know, we’ve got one — we’ve got Bank of America here in the U.S. We’ve got several deals in Latin America. REN is one of those things where it is modern technology and the banks don’t have modern technology. So what you just need is some reference customers in their geographies. And that’s what we’re doing, doing more and more deals on account of that.

Rick Weller: I think and you add to that, Mike, that over the years, we’ve been just adding to the product functionality of the REN platform. As you may recall, it essentially started out as a switching product. But even here a couple of years ago, and we made reference earlier in the presentation on the deal with the 3D Secure. We acquired this little piece of business in Malaysia that directly lines up with it. The CoreCard thing directly lines up with it. So as you go into a bank and you talk to them about their payment infrastructure needs, it ranges from switching to credit, to debit, to real-time switching, to security, to payment transactions. This is where we get the leverage across our segments where we’re selling to customers that we have in multiple segments.

And so it’s not unusual that we will have a bank customer that we have in the — let’s say, a REN customer that we also talk to them about a Dandelion product. So I think it’s the addition of more and more product into the portfolio, and it’s the momentum that takes a while to kind of build the momentum. These are long sales cycles, et cetera. So I think it’s the combination of those that come together to really give us that momentum we’re seeing.

Michael Brown: And I think we’ve got a couple of things up our sleeve for the Investor Day, too. We’re finding that REN typically is used by banks and fintechs. We will talk in the Investor Day how we’ve leveraged that platform into new verticals that we see a lot of potential growth in. So more news on that to come.

Operator: Our next question comes from the line of Josh Levin of Autonomous Research.

Unknown Analyst: Two questions from me. First, your competitor, Western Union said the Middle East was actually a source of strength for money transfer, meaning the war spurred some higher transfer activity. It sounds like you had the opposite experience. How might we sort of reconcile those comments? Second question, you launched stablecoin payouts. Can you give us some sense of the specific unit economics for stablecoin transaction compared to a traditional FX-based remittance?

Michael Brown: The advantage that stablecoin gives us — I’ll answer the second question first. The advantage that stablecoin has — gives us at this point in time is basically just treasury float. So we’re able to — what we have — the way money transfer works, an immigrant comes into either digitally or into one of our physical locations, they give them $300. They’ve got to send that to their mom in the Philippines. What happens is, we estimate what those numbers are every day. We prefund the Philippines correspondent bank in advance. And then over weekends, it’s multiple days of prefunding. So with stablecoin, we can kind of do that ad hoc. So you don’t have as much float. You can really do it — as we get better and better at it, it’s going to be kind of instantaneous. And so it just — it helps us on the float side.

Rick Weller: I think when you take a look at what happens really at the consumer level, there’s a huge range of what’s out there. If you’re a very — doing very large transactions, you can execute those at nearly — at very, very small rates, very few basis points to do large transactions. You get down to the consumer level and you see numbers that range from 3% to 4% to get on the chain and 3% to 4% to get off the chain. So if it’s costing you 6% to 8%, think of this in relationship to the money transfer industry, where you generally see something like sub-3% in terms of total consumer cost to send a transfer. So I think that there’s a lot of evolution that is to yet develop out there. But we would see on the low end, the transactions are not being more economical, at least today, what we see out there than what you see in your traditional technology that we move money.

Important thing is that we’ve got the technology ready to go. And as the use cases develop, we’ve got one of the best networks, if not the best network, as Mike said, to deliver on and off ramps around the world.

Michael Brown: And with respect to your first question on the Middle East, you said that our competitor has said that the Middle East has been an opportunity for them. For us, we don’t have as big of a Middle Eastern contingent of agents and everything. So it might be kind of country-specific as opposed to more broad-based.

Rick Weller: And I think that there might be a couple of aspects of the business in there where they have some increasing volume to a certain country that we don’t operate or send to. And there might be some movement in certain agents that they have there that they benefit from. So I think it…

Michael Brown: Yes, you might remember, they did quite well a couple — a year ago or so to Iraq. We don’t have Iraq as a payout. And so all that gets kind of mixed in there.

Rick Weller: Yes. Hats off to them for doing that. I think that’s nice work. But I think it’s different underlying business circumstances that we see over there.

Operator: Our next question comes from the line of Cris Kennedy, William Blair.

Cristopher Kennedy: Mike, you mentioned Dandelion had one of its strongest quarters on record. Can you just provide a little bit more color on those comments?

Michael Brown: Okay. So we’ve got a couple of big customers and then lots of little customers in Dandelion. So we don’t really — we’re not talking about its numbers specifically because it would give us a competitive disadvantage as we bring on new customers. But it was great to see good, strong double-digit growth, best quarter ever. Dandelion is one of those things where every quarter it’s a bigger quarter than the last one because more and more people are using it more often. So I really can’t give you any quantities, but really, as far as our digital endeavors, it’s going to be a big one.

Rick Weller: And I would just add to that, that continuing on a similar line as REN. I think we begin to see the momentum build. Clearly, we’ve been focused on the business. It’s a long sales cycle, but we’re continuing to see that momentum build. As you noticed, we made a mention of a number of other wins that we had in that category. So I think as we continue to see our sales success, we’ll continue to see that business do nicely.

Michael Brown: And just as an example, our very first big bank customer was HSBC. About every month is a new record for them. It takes a while for these banks to communicate to their customers, the ability to send money cheaper and quicker than they could through the old Swift channels. And so as more people find out about it, more and more people use it. So there’s this kind of innate ramp-up. And there’s more places as that bank as an example, there are more customers that they haven’t even begun to market it to, but they will as their confidence grows, and we just have to work with bank bureaucracy.

Cristopher Kennedy: Understood. And then, Rick, you mentioned the three drivers of improving gross margin in the Money Transfer side. Can you just talk about the sustainability of gross margins on that segment?

Rick Weller: Yes. I would expect that we continue to see that, Cris. It, I think, speaks to the strength of the network and our volume. So it gives us a good opportunity to negotiate rates with payout agents. It gives — the bigger our network, the more choices that we have to route a transaction and more customers going to send money to accounts. And remember, this account could be a bank account. It could be a wallet account. So it’s account-based and account-based are lower cost payout structures for us. So Cris, I think we’ll continue to see the benefit of this really, really impressive network we’ve built.

Michael Brown: Operator, do we have any more questions? If not, we can close — we have one more, I think. Is that right, operator?

Operator: Yes. We have one more question. I’ll go ahead and bring them up now. We welcome Darrin Peller with Wolfe Research.

Darrin Peller: Can you hear me okay?

Michael Brown: Yes, perfectly.

Darrin Peller: All right. Just one question is more on the margin structure and the margin expectations on the Money Transfer segment. I know you expected it to be decent. I think you had expected 50 to 70 bps of margin improvement in the year. Just you were working through some of the restructuring that would help that despite some of the headwinds. I saw noticing margins were down year-over-year now. So just what is your conviction on that front first? And then overall, just thinking about that segment, I mean, it seems like this is hopefully in terms of the headwinds may not persist forever. But I’m curious how you think about approaching that segment given the context of the political environment and the migration that could last for a while?

Rick Weller: Yes. On the margin, I’d say, Darrin, we would expect to see that to be a little bit more back-end loaded. As we entered the year, a number of those programs are being worked on. In fact, some of the expense it takes to implement some of those things that we did is, again, a little bit more front-loaded. So the benefit will deliver a little more on the back end of the year. And as it relates to — I guess I’m going to say broadly your question on the industry. Well, when we take a look at Money Transfer and think of it over the years. I mean, I can’t remember a time in history that immigration has not been — has not, not happened. if you add up the population of all the developed countries, you only get to about 20% of global population, which means that 80% of the population continues to live in lesser developed countries.

And as with most humans, when they have an opportunity to improve their rotten life, they do that. And when they do that, they’re very loyal to their — they do that for their families, and they send money back home to their families. So I think certainly, we are experiencing the impact of a different political environment. You can take a look over the years on how that kind of attitude has moved positive, negative, positive, it ebbs and flows with politics. We also have an economy that’s dependent upon a certain amount of immigrant labor. And so we believe that we will continue to see in the future what you have over the history. And it’s a point of time that we get through. I don’t think you throw in the towel because of a particular immigration policy this year in the U.S. As we said, we saw the growth in our markets outside of the United States.

So we continue to believe it’s a great — it’s a big and growing market for sending cross-border money, has great margins to it. So we see long-term potential to it despite the challenges that we have to work through. But we’re also glad that we’ve got a very good durable diversified business, which gives us the ability to weather that.

Michael Brown: And you’ve seen our results over the last year even where we have outgrown our competitors, so we are picking up more market share. So as some of this stuff settles down in the U.S., we’re going to be in a better position, plus we continue to grow overseas.

Darrin Peller: Okay. That’s helpful. Mike, I may have missed this earlier, but just a quick follow-up on the Iran conflict. What were the implications on travel that you’re seeing? Or from your perspective, what kind of impact is that having on the EFT segment right now?

Michael Brown: So far, we’ve…

Darrin Peller: More traffic.

Michael Brown: Yes. So, so far, we haven’t seen anything. There are kind of threats that there may be some flights that may be canceled if they’re not able to get fuel for the summer, but we don’t know for sure. So we’ll just have to see what happens. The interesting thing is the one thing that the conflict has done is if you look at Europeans and where they travel, a lot of them liked to go to places like Dubai, to Turkey, et cetera, on their vacations. They’re probably not going to do that this year. So a lot of these people are going to stay a little bit closer to home where they can either take a short airplane ride or a train ride to their vacation, and that probably would be a benefit to us.

Rick Weller: And I think we’ve shared with you in the past that 75%, 80% of our cross-border transactions in Europe really come from Europeans going cross-border as opposed to people coming into Europe, so maybe we’ll see. But at least what Mike said a little bit ago is something that may be an opportunity for us as opposed to a challenge.

Michael Brown: Thank you, Darrin, and thank you, everyone, for joining us today. We’ll sign off.

Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.

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