Euronet Worldwide, Inc. (EEFT) Q2 2025 Earnings Call Transcript

Euronet Worldwide, Inc. (NASDAQ: EEFT) Q2 2025 Earnings Call dated Jul. 31, 2025

Corporate Participants:

Unidentified Speaker

Adam Godderz — General Counsel

Michael Brown — Chairman and CEO

Rick Weller — CFO

Analysts:

Unidentified Participant

Vasundhara Govil — Analyst

Peter Heckmann — Analyst

Gustavo Gala — Analyst

Mike Grondahl — Analyst

Christopher Kennedy — Analyst

Charles Nabhan — Analyst

Presentation:

operator

Greetings and welcome to the Euronet Worldwide second quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press STAR followed by the number one on your telephone keypad. If you would like to withdraw your question Again, press the star one. It is now my pleasure to introduce your host, Mr. Adam Godders, General Counsel of Euronet Worldwide. Thank you Mr. Godders. You may begin.

Adam Godderz — General Counsel

Thank you. Good morning everyone and welcome to Euronet’s second quarter 2025 earnings conference call. Today on the call we have Mike Brown, our Chairman and CEO, as well as 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 further 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 that 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 at this time. I’ll turn the call over to our CEO Mike Brown.

Michael Brown — Chairman and CEO

Thank you Adam and thank you everybody for joining us on our call today. I’ll begin my comments on slide number five. But before I jump into the quarterly results, I’m sure you read our release last night where we announced the acquisition of corecard, a leading edge proven scaled credit card processing platform. This acquisition is exciting in so many ways. First and foremost, it extends our strategy into the digital payments processing space. Courtcard perfectly complements our REN platform with a modern revolving credit technology that is proven at scale. Moreover, I’ll remind you that issuing and processing of cards is not new to us.

We already process tens of millions of cards across Europe and Asia. The addition of this leading credit card platform gives us yet more growth opportunities as it enables us to go after the $10 billion plus revenue market with very attractive operating margins approaching 50% and elevated market rates of growth in large markets where we have strong footholds. Europe and Asia and finally, it is not just the consumer credit, it’s not just consumer credit. Corkard also serves as a business lending sector. Let me continue my excitement as Corcard was not enough. Just this Week we signed a significant REN deal with one of the three largest US Banks.

We’ve been in pursuit of this deal for a couple of years, which makes this announcement that much more exciting. Our WREN technology will be used to drive thousands of ATMs across the country. Clearly this was a very competitive process across all industry leaders and so to be selected for this deal it really underscores the capability and confidence that banking leaders have in our WREN platform. These two deals further our digital strategy, and while we are excited that these deals will contribute to growth in future quarters, I don’t want to overlook the great operating performance of the business this quarter.

The second quarter we delivered constant currency operating income growth year over year of 13%. I think this number underscores the strength of our business and these exciting digital announcements further position us to continue our 20 year track record of double digit earnings growth. We’re a growth business with even more exciting opportunities today than yesterday. Now I will hand it off to Rick to discuss our results in more detail.

Rick Weller — CFO

Thank you Mike, Good morning and thank you to everyone for joining us today. I will begin my comments on Slide 7. We delivered a record second quarter on all key reported consolidated metrics. We delivered revenue of $1.1 billion, operating income of $159 million and adjusted EBITDA of $206 million and finally adjusted EPS of $2.56. The money transfer segment led the way by producing constant currency operating income growth of 33% despite significant macro uncertainties that range from immigration reform to global conflict. A great quarter our second quarter adjusted EPS grew 14% year over year. During the quarter we repurchased $247 million of our shares.

Given the timing of the repurchases, there was only a marginal benefit to the second quarter adjusted eps. I’ll also point out that our consolidated operating margins expanded by more than 112 basis points over the prior year, and we expect to see a continuation of posting expanded margins as we go through the second half of the year. Slide 8 presents a summary of our balance sheet compared to the prior quarter. As you can see, we ended the second quarter with $1.3 billion in unrestricted cash and debt of 2.4. The decrease in cash is largely due to stock repurchases offset by cash generated from operations and working capital fluctuations.

Regarding our share repurchases, we anticipated that there was a reasonable likelihood of completing the Core Card acquisition, and it was important to Core Card that the deal be a stock for stock transaction for tax purposes. Accordingly, we knew a couple hundred million dollars for share repurchases made sense whether we completed the acquisition or not in that we have now signed the purchase agreement and look forward to closing. We essentially have done a cash deal after issuing shares that we just repurchased. Slide 9 shows our results on a reported basis year over year. The major currencies we operate in strengthen compared to the dollar.

To normalize the impact of currency fluctuations, we have presented our results adjusted for currency on the next slide on slide 10 now EFT segment revenue grew 6%. Operating income and adjusted EBITDA were in line with the prior year results. It’s worth noting that the second quarter last year EFT posted exceptionally strong operating income, making it a tough comparison. While the second quarter is a difficult comp to the prior year, we expect to see the strength of EFT earnings grow to restore itself in the third quarter. EPAY grew revenue 5%, operating income 17% and EBITDA 15% when compared to the prior year.

The main drivers of growth this quarter were attributable to our payment business and continued growth of our digital channel sales in multiple markets, predominantly relating to gaming content, money transfer revenue. Operating income and adjusted EBITDA grew 633 and 28% respectively. The revenue growth was primarily driven by volume via higher principal amount sent per transaction and growth in cross border transactions offset by a decrease in intra US transactions. Direct to consumer digital transactions grew by 29% reflecting continued consumer demand for digital products. Operating income and adjusted EBITDA growth outpaced revenue growth, significantly leveraging of margin to the bottom line due to gross margin expansion driven by opportunities developed from foreign currency fluctuations, leverage of scale and effective expense management.

Before I close on the quarter, I’d like to point out that we saw roughly 5 cents a share impact due to higher interest expense due to carrying the refinance convertible at revolver rates. As you know, we have utilized convertible transactions in our capital structure and would expect to continue with acceptable market conditions and terms. We did not issue any such securities in Q2 but remain interested in doing so, thereby improving interest expense. Further, we had about $0.05 per share for higher income taxes, about half of which related to greater impacts from state taxes on the convertible retirement and the other half due to expense assignment to foreign operations.

Looking forward for the balance of the year, we would expect the tax rate to tick up a percent or two. In summary, we are pleased to reaffirm the 12 to 16% earnings growth expectation we have for 2025. With this, I’ll turn it back over to Mike.

Michael Brown — Chairman and CEO

Okay, thank you Rick and everybody move on to slide 12. The graph on slide 12 illustrates over the past 10 years, the strength of our business lies in the diversity of our three segments as well as the diversity within those segments. Now let’s move to slide number 13 and we’ll discuss the results for the segment starting with EFT. Slide 13. Our EFT segment, which was founded as a cash ATM business, expanded its digital capabilities through the acquisition of CoreCard, the previously acquired Infinitum, a two factor authentication provider, and continued traction of Wren in the marketplace.

Wren, a digital modern end to end payments platform that provides banks, fintech and governments an innovative solution to keep pace with the ever changing payments landscape. Wren provides acquiring, issuing, processing and access to real time payment networks. We are receiving accolades around the world for its digital innovation, including the recognition from one of the top three banks in the United States. This leading US bank isn’t alone. During the quarter we signed a deposit network participation agreement with Santander, the third largest bank in Poland, and ATM outsourcing agreements with security banks in the Philippines, Axis bank, the third largest bank in India, and Maybank in the Philippines.

And all of these services will be powered by Ren. Further evidence that banks around the globe recognize that Euronet’s technology allows them to serve their customers in a more modern and real time way. A few years ago we added Merchant acquiring another digital business line which continues to perform very well. In fact, this quarter we saw the highest card transaction volume we have processed since we acquired the business. To further the growth in the second quarter, we successfully completed the integration with Oracle Opi, which significantly strengthens our position within the premium hospitality sector. And we signed more than 9,000 new merchants, including one of Greece’s top basketball teams.

It’s been an exciting few days in the EFT business when combined with our existing strategic growth opportunities, including expanding international and domestic access fees, increasing interchange rates and a recent market expansion. The acquisition of Corcard and the agreement with this large US bank will continue to fuel EFT growth in the second half of the year and beyond. So now let’s go to slide 14 and I’ll talk about EPAY. EPAY has evolved from a retail based mobile top up business to a global partner who provides a broad offering of digital payment solutions for some of the largest consumer brands in the world, including Apple, Google, Sony, Netflix and a number of local players.

I commonly get asked, what is EPay? EPay allows the consumer to participate in the digital economy in the ways they prefer. Whether it is for budgeting, security or convenience. Today, 70% of our EPAY transactions are 100% digital consumer experience across e commerce merchants, digital banks and prominent wallets around the world. Moreover, the majority of the remaining 30% of the transactions use a digital payment method to purchase those services. Notable signings in this content distribution signing in Turkey this quarter with Riot Games, publisher of League of Legends. Another signing this quarter was with Etsy gift cards which had previously only been available for purchase from Etsy directly.

And lastly, we signed an agreement to launch Amazon prime subscription services in India. Now let’s move on to slide 15 and talk about money transfer. Okay, slide 15 this quarter our money transfer segment delivered exceptional results, underscoring the strength and breadth of our globally diversified business model. Operating income grew 33% year over year, fueled by disciplined cost management and strong performance across a wide range of channels and geographies. This performance is particularly impressive given the evolving immigration dynamics in North America and the recent announcement of the new remittance tax. To help you understand the impact, the revenue subject to the new 1% remittance tax affects only 27% of money transfer segment or 12% of Euronet’s consolidated revenue, limiting our overall exposure.

Let me start with research from the center of Global Development. They found that a 1% increase in fees resulted in a 1.6% decline in remittance volume, which could either be fewer sins or lesser amounts of money sent. This research suggests that while the potential negative impact of 1.6% is only 0.2% of our consolidated revenue. While we would clearly rather not see this tax, the research indicates it will not have a significant impact on our business when it begins next January. We also know that a significant number of our customers have bank accounts and while they may be more comfortable operating with cash, they may prefer a debit card to avoid this tax further, which further reduces the impact on our revenues.

Even with the turbulence in the market, our key performance indicators paint a compelling picture of our ability to continue to deliver growth. Our transaction volume increased 4%, but the principal transfer increased 10%, digital transactions grew 29% and our digital payout product, a powerful engine of our ongoing growth, is up 20% year over year, now composing 55% of total volume. These results highlight the powerful momentum behind our digital transformation and underscore our position as a global leader in money transfers. We leverage the world’s premier real time cross border payments network, robust omnichannel capabilities and our innovative wholesale strategy.

With Dandelion, we achieved an important expansion in the Asia PAC region last month through our acquisition of a majority position in Kyodai Remittance, a leading Japanese multi channel operator. This strategic integration not only gives us access to a license in the country’s evolving remittance landscape, but Kyodai produces a very rare type 1 funds transfer service provider license which allows it to deliver high value inbound bank deposits, an important capability for our Dandelion network. Japan is a sizable $6 billion outbound remittance market. With an influx of foreign workers, we anticipate outbound growth will considerably outpace overall market trends.

Notable enhancements to Money Transfer’s digital product were made through RIA’s and XE’s partnership with Google and Nickel, a European Neobank. Other noteworthy accomplishments included the launch of 20 new partners across 19 countries, extending our global presence that now spans 200 countries and territory. And in Austria we renewed our partnership with the Austrian Post. Dandelion Wholesale continued to grow its client base adding Union bank in the Philippines, the 10th largest bank in the country, Peru’s leading wallet YAPE, used by 65% of the adult population, Chile’s Vita wallet and UK’s BMS and Banco Guayaquil, Ecuador’s second largest bank and a Ren customer.

A very interesting cross sell that we got going there. Dandelion’s comprehensive solution, bank grade compliance, global reach, real time deposits, account validation and seamless integration through API or Swift BIC are increasingly recognized by leading institutions worldwide. With a 33% year over year growth in operating income, a healthy pipeline market expansion, our money transfer segment is positioned to maintain its strong momentum and deliver continued value for our investors and customers. Slide number 16 As I mentioned earlier, Euronet has entered into a definitive agreement yesterday to acquire Corecard Corporation, a leading US based provider of credit card processing platforms.

This acquisition marks a strategic milestone in our long term growth plan, reinforcing our commitment to scalable high margin digital businesses that align with global payment trends. As outlined in the press release, this is an all stock transaction valued at approximately $248 million. We expect the transaction to be adjusted EPS accretive in the first full year post close. Corcard has a proven track record of serving the strong global brands like Apple, Goldman Sachs, American Express and Fintech innovators like Cardless and Gemini. In certain analyst reports covering Corcard, there are concerns expressed over the new reports that Goldman Sachs may sell the Apple portfolio.

We are obviously aware of such a possibility and we have factored that into our purchase decision. So there is no real surprise here. The merits of Core Card go well beyond any single program and this transaction has been undertaken without any dependency on a positive outcome relating to the Goldman sales process. On the technology front, Corcard’s platform spans debit, prepaid and revolving credit solutions not only for consumers, but businesses as well. We are really excited about Corcard’s potential beyond the US we plan to extend CoreCard’s reach into emerging markets where Euronet has a strong presence and where demand for credit is growing.

This transaction will support the continued growth of our EFT segment while expanding our addressable market within our stated strategic pillars. Next slide please. You may recognize this slide which is slide number 17 from our year end and first quarter earnings announcement. As highlighted, issuing is a core strategic growth initiative illustrating how Corcard fits perfectly into our long term digital evolution. This acquisition is not just a tactical win, it is a strategic alignment with our long term growth thesis. To grow Euronet, we are targeting large addressable markets like the 1.8 quadrillion in global payments and the $320 trillion in foreign exchange and cross border flows.

By providing credit card processing, Corcard enhances our ability to serve the payment and transaction processing pillar. EFT will now cover prepaid, debit and credit card issuing along with our other proven abilities in acquiring real time payments switching and ATM management. Please move on to slide number 18. A lot of people ask us where we’re going if we transform our strategic vision into a simple illustration. You can see how our business mix is evolving and why this acquisition is strategically important. Over the past decade we’ve executed a deliberate shift away from our legacy cash based business lines like yearnet owned ATMs and towards digital offerings.

2019 UNET owned ATMs represented 25% of our revenue mix. By 2024 that number was reduced to 19% and we’re targeting 7% by 2034. CoreCard helps drive this dramatic transformation by offering a high growth, high margin and highly differentiated digital offering. Let’s Talk more about CoreCard and their offerings so you can get a little bit familiar. CoreCard provides a modern revolving credit processing platform built for scale and designed for banks, brands and fintechs. It currently supports millions of card accounts and processes billions of transactions annually. While the technology is certainly impressive, their list of clients are equally impressive.

Goldman Sachs uses Corcard to process the Apple Card Cardless uses Corcard to power its various card programs and has been in the news recently as the chosen partner for the soon to be released Coinbase Credit Card. This, along with other marquee clients validates corecard’s ability to deliver at scale with precision and reliability, Revolving credit remains one of the most profitable and strategically important offerings for banks and FinTechs in the US and globally. This space is dominated by a handful of incumbents. Why? Because building and operating a revolving credit platform at scale is one of the most complex challenges facing solution providers. This isn’t just about writing code. This is about mastering the intricacies of revolving credit logic where balances shift due to delayed payments, disputes, returns and interest recalculations. It’s a domain where business logic is king and where even the most seasoned engineers can’t just simply code their way through without deep domain knowledge. Which CoreCard has and here’s the strategic kicker. While many new competitors focus on debit and prepay segments with capped interchange and limited margin, Corcard is built for where banks and fintech see real value.

In summary, CoreCard is not just a product, it’s a proven scalable platform trusted by some of the most innovative names in the financial services industry. It gives us a springboard into the US Credit issuing market and beyond. Backed by a leadership team with deep roots in the space, the platform supports a wide range of use cases from stablecoins and global brands to lending, early wage access, health care and commercial credit. Now let’s move on to the next slide and I’ll show you our go to market strategy for the U.S. our strategy to expand CorCard in the U.S.

is phased, deliberate and anchored in high opportunity segments. We will continue to participate in the embedded finance opportunity by partnering with fintechs, digital banks and program managers across diverse use cases. CoreCard’s flexible API driven architecture and marquee client roster including Apple, Cardless and Gemini give us a strong foundation to scale. Our existing EPAY relationships also offer a unique cross sell opportunity. Brand partners currently issuing prepaid credits may be interested in launching credit card programs, creating a natural adjacency for growth. Our next target here is unlocking the commercial credit opportunities with tier 2 and tier 3 banks.

Commercial credit presents a more immediate opportunity than consumer credit to the B2B digital initiatives. We are seeing more activity in this space as of late, especially with Tier 2 and Tier 3 banks. These are the banks that range from 10 billion to 250 billion asset size. Corcard has already signed one such bank, bank of California, and while commercial credit is our immediate focus, we also see a strategic path to consumer credit. By initially supporting banks with adjunct solutions, we can gradually modernize their consumer credit platforms, helping them differentiate in a market dominated by templatized offerings and slow turnaround times.

So while the US offers an attractive market, here’s where we get really excited. We see even more opportunity in the rest of the world. Let’s go on to the next slide and we’ll talk looking beyond the U.S. our global expansion strategy is anchored in our strong presence and trusted relationships across Asia and Latin America. These regions represent the next frontier for growth for modern credit issuance on the back of rising GDP per capita and an increase in consumption expenditures. In phase one, we will focus on cross selling core card’s revolving credit capabilities to our existing base of payment processing clients such as Grab, which is the Uber of Asia, Standard Charter, ICI Bank, Axis bank, bank of Penchincha and the bank of the Philippine Islands, just to name a few.

These relationships provide a natural entry point to introduce our credit solution. In India, for example, the number of credit card issuers has doubled in five years and more than half are already Euronet processing clients for other payment domains. The number of credit cards is expected to double again by 2029, driven by rising GDP and a fierce appetite for more consumer consumption. We also plan to leverage our broader ecosystem of FI partners, particularly our EPAY and Dandelion divisions which already serve banks and fintechs in high growth markets. These partnerships offer additional cross selling opportunities and reinforce our ability to to deliver integrated end to end solutions across the payments value chain.

In phase two, we’ll target new financial institutions and existing relationships and markets where we have strong brand equity. Many of these institutions are constrained by legacy platforms provided by regional and local players and are actively seeking modern scalable alternatives. Finally, we also anticipate a structural shift in the regulatory landscape across emerging markets. As credit markets deepen and regulations evolve, we expect a broader wave of fintechs to enter the credit card space, transitioning from prepaid to credit issuance. Today, many are held back by regulatory constraints and limited access to credit infrastructure as these barriers recede. With our established relationships and proven capabilities, we’re well positioned to lead with this transition.

Similar to how we grew REIA from a US centric position, we see an opportunity to use our global footprint to accelerate the growth of Corcard. Emerging markets are our favorite hunting ground as demonstrated by our success Signing those Signing those Ren Deals slide number 22 this acquisition represents an important step in Yearnet’s long term strategy to scale our digital payments business and deepen our presence into more resilient technology driven revenue streams. At its core, the rationale is anchored in the large and growing opportunity credit issuing, particularly revolving credit, which remains one of the most lucrative revenue pools in payments.

Corcard is one of three platforms in the US proven at scale for revolving credit and this is a rare opportunity to own such a platform which is API first and has already earned the trust of marquee innovative clients like Apple. It brings industrial grade stability and the flexibility to serve both fintech innovators and traditional banks. This acquisition provides a growth driver to support our digital diversification strategy. Corecard’s marquee clients and proven platform give us immediate momentum to scale across both fintech and the banking segments in the US and globally. The CoreCard world fits seamlessly into our ecosystem, complementing our strengths in payments processing, brand partnerships and global distribution, and enables us to deliver broader, more differentiated value propositions.

We are super excited about the opportunity this brings. This acquisition is a catalyst expanding our payments technology portfolio, accelerating our shift to Digital and positioning Euronet as the preferred innovation partner for FinTech and a leading modern card issuing platform for fintechs and banks in the US and globally. Now I’ll close out the quarter. Before I close, I’d like to address two emerging opportunities for euronet. First, artificial intelligence continues to shape the narrative across industries and for good reason. At our company, we view AI not just as a tool, but as a strategic enabler. Across our enterprise, we’ve harnessed AI to elevate the customer experience, making interactions more seamless, personalized and responsive.

Behind the scenes, it’s driving operational efficiencies in areas such as contract generation, regulatory compliance and multilingual communication. This is part of our broader commitment to building a smarter, faster and more agile organization. The second area of growing interest is stablecoin and its potential implications for our business. Our proprietary REN platform is already architected to support stablecoins and has in fact processed blockchain native transactions, positioning us well to pursue further integration. On the operational front, we’ve initiated discussions with several select partners regarding stablecoin facilitation and our treasury team is actively evaluating its utility as part of our capital management strategy.

While we’re still early in this exploration, we see promise in how digital assets may drive new use cases to deliver speed, transparency and efficiency. While we do not yet know how to quantify the future impact of AI or stablecoin, we will continue to pursue these opportunities that are beneficial to our business and hopefully we have conveyed the strategic shift to the digital business that plays in the 1.8 quadrillion global payments market. With endless potential for growth supporting our model, we have core assets. We have this newly announced acquisition of Corcard. We have our REN technology, we have our Dandelion Network, our global footprint of licensed and regulated entities.

We have distribution partners in the form of banks, retailers, company owned stores, ATMs and POS terminals. And our people. The best I could ask for was consistent track record delivering growth year after year. As I boil it all down, I hope you will take away three important messages we are moving in a strong strategic digital direction as evidenced with the CoreCard acquisition and the recently announced Ren deals. EPay is not a cash business. It’s now nearly all digital payment transactions and we have consistent double digit operating results reflecting the strength of our global asset diversity.

We’re looking forward to the remainder of 2025 and with a strong second quarter we are pleased to reaffirm our earnings expectation of 12% to 16% growth for the year. We’ll be happy to take Questions Operator, will you assist?

Questions and Answers:

operator

We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press Star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press Star one again. If you are called upon to ask your question and are listening via speakerphone in your device, please pick up your handset to ensure that your phone is not on mute when asking your question again, press Star one to join the queue. And our first question comes from the line of Vasu Goville with kbw.

Your line is open.

Vasundhara Govil

Hi, thank you for taking my question. I guess maybe the first one just on the core card acquisition like you gave us, quite a bit on sort of how you see the revenue synergies playing out over time just on the Apple partnership that you called out and the risk of it potentially going away given just the revenue concentration there. Just hoping you can give us some more color on how the math would work on making the deal accretive if that relationship went away. I mean do you have more visibility into other deals in the pipeline that’s giving you confidence there? Just any color there would be helpful.

Thank you.

Adam Godderz

We do. And we also have these potentials. I mean we’re out there doing debit card issuing for a whole bunch of banks and fintechs around the world, particularly in Asia and a bit in South America. And these customers have been asking about credit to be able to give them the most sophisticated credit platform in the world because Apple demanded that to give to their customers with their card. We’ve got a heck of an asset to cross sell. So when we did our analysis, we assumed that Apple would go away at some point in the future.

Although it’s going to take a few years to do that because it is such a sophisticated, it has such a sophisticated super set of features that no other credit card in the US has. So even if somebody buys it, they’ve got using somebody else or their own internal system, it’s going to take quite a bit of modification and then they’re going to have to bring over the $20 billion portfolio without problems. So we figure we’ve got them for a couple, three years anyway and that’s if it was sold today. And during that time we will have a great marquee customer to use as our, as an example, as a reference customer to sell into new people in the meantime, whoever they sell it to, if they don’t have Corcard now, maybe that offers us an opportunity to sell Corcard right back into them so they can upgrade.

Vasundhara Govil

That’s very helpful. And then maybe just a second question on the EFT segment growth on a constant currency basis that actually decelerated this quarter even though typically second quarter is a stronger quarter for you. So any color on what drove that decel and also how should we think about incremental margins for that business on a go forward basis? I know you’ve said structurally cost in the business are higher relative to pre pandemic, there’s just more inflation. But is high teens the run rate on incremental margins that we should be sort of modeling going forward or do you see room for improvement there?

Adam Godderz

Well, you know, last year, good quarter kind of haunts you this year. So we had just a killer Q2 last year. And so when we compare it looks like a deceleration. But the reality is where it was just a Q2 thing. That’s why we’re really looking at Q3 as we’ll get back into the driver’s seat with respect to acceleration. So we’re not really worried about that deceleration. We’ve got a lot of opportunity Q2 and Q3, the whole tourist season has elongated so there’s less actually less in the second and third quarters or less than we’ll call it May, June, July, August and it gets spread into more months on both ends.

So we think that our margins will increase there as our transactions increase. And we’ve just got new, we’ve just got some new stuff kind of that things like our daft transactions which basically are doing the same number of transactions but at A higher, higher revenue that will help our margins as well.

Vasundhara Govil

Thank you very much.

Adam Godderz

Thank you atu.

operator

Our next question comes from the line of Peter Heckman with D.A. davidson. Your line is open.

Peter Heckmann

Good morning everyone. Thanks for taking the question. Congratulations on the top three bank. Mike, when do you think we can start to see revenue start there and when you expected to hit the full run rate?

Adam Godderz

To tell you the truth, we already have revenue coming from them and it’s only going to accelerate. We kind of had pre full signature kind of revenue from them as we, we did some work with them to give them a super set of features they’ve never had before. This should start kind of immediately. So I’d say most of it’s going to come fourth quarter and beyond. But it’s a big deal with a top three bank. And let me tell you, every other bank in the country has the same problem this bank has. I can’t go into that detail right now, but we solved it and we’re going to cross sell the same solution to other banks as well.

With a great reference gun.

Rick Weller

Pete, while clearly we’re going to make money on it and stuff like that, I think the importance here is the significance of a bank that’s in the top three in the United States. We’ve sold rent around the world. We’ve had great success with that and things like that. At some point we’ll put out a press release that actually names the bank and that. But this is a bank recognizing that we have the leading industry technology out there. And I think that that will be a very strong statement as we continue the momentum of Wren sales.

So it certainly will bring in revenue. But I tell you what, having that as a reference customer will be very helpful for building on the Wren reputation. And now you put behind that the Core Card with arguably one of the most respected cards in the world, the Apple card and having that technology available. We think that this is just a super combination and a super play.

Peter Heckmann

That’s great, that’s great. And then so in terms of looking at software with the acquisition of Core Card and acknowledging that certainly the Goldman Sachs relationship is going to be around for three, four, five, potentially more years. When do you think the company should be able to hit that maybe $250 million software revenue target? Do you think that can be hit in 2028?

Adam Godderz

250 million is a little steep for 2028. Yeah, that’s a little steep. Our goal with Wren was to deliver 100 million in, in pre tax and op income, you know, and you know, so we’re a few years away from that. But these big deals are really accelerants. So we’ll see. We don’t really put, we’ll try to actually handicap that for you. We’re thinking even maybe about having an investor day in the fall. And when we do, we’ll kind of lay that out for you.

Peter Heckmann

Okay, that’d be great. I think the market would welcome that and welcome the opportunity to get deeper into the business.

Adam Godderz

Uh-huh.

Peter Heckmann

Thanks.

Adam Godderz

Uh-huh. Thank you.

operator

Our next question comes from the line of Gus Gala with Moniz Crespi Hart. Your line is open.

Gustavo Gala

Hi, Mike. Hi, Rick. Good morning. Thanks for taking our questions.

Adam Godderz

Good morning.

Gustavo Gala

Ren, I believe had grown to be, you know, sizable chunk, let’s call it eight digits. Right. Let’s call it mid millions, 80% margins. Is there an opportunity to bring up the core card margin number up? I appreciate all the comments on the cross sell and grow market opportunity, but really digging down on is an opportunity to maybe replatform, do a little cost removal.

Adam Godderz

The other part of it’s a combination of, you know, we’ll be able to, as we combine, we’ll be able to get some cost synergies between the two companies. You know, that one was public and we were public. We’ve got other ideas as well, but volume is the easiest way. You just put more banks on the platform and you spread the overhead across more revenue. So it’s for sure those margins should increase.

Gustavo Gala

Got it. And then on the US deal, which congrats. How should we be thinking about the unit economics of that? I mean, clear like on the ramp timing, but is there anything we should be thinking of in terms of contribution margin, EBIT margin? Imagine being a top three bank. There might be some negotiating leverage on their end. Just thinking about that, how you balance that out.

Rick Weller

Well, it’s obviously a high margin business because it’s a software type of transaction. But in terms of how that flows into the rest of the P and L, I’d characterize it as it’s an important win. It doesn’t directionally change the whole P and L. It’s another brick in the, in building the building. So it’ll benefit it, but it doesn’t change the, it’s not going to change next year, next quarter’s numbers dramatically just because of that. What will change it is more and more of those Wren sales which will be more and more possible because of the continued recognition of the quality and contribution of this product.

So you know, I think I would view it as more of an indicator of where we can go as opposed to it, you know, moving the Excel schedule next quarter.

Adam Godderz

But it’s very, you know, it’s software, so it’s very, very high margin. So we’ll take it, you know, you don’t want. Yeah, it’s going to be wonderful.

Gustavo Gala

Got it. Got it. And if I can squeeze one more in on money transfer, anything on what you’re seeing in July for digital and retail? I mean, are you seeing perhaps a troughing in either of those and retail specifically around.

Adam Godderz

Well, funny you. Funny you should ask that, Gus, but I haven’t heard anybody say, holy smokes, you guys crushed it on the money transfer, which you should have said right out of the block. I mean, here everybody’s having all these problems and we are just crushing our numbers because we intend to be number one in the world. And we’re getting closer and closer every day. But with respect to what I saw, what we’ve seen so far in July, a big uptick over June. So we do not see any troughing. In fact, we see just the opposite.

We’re excited about both the digital growth, which is probably 6% higher than we saw in June, and we’re also seeing retail growth. The nice thing, let’s not forget the US only accounts for, call it 40% of RIA’s numbers and maybe even a little bit less, right?

Rick Weller

A third.

Adam Godderz

A third, yeah, 33%. We’re seeing strong growth around the world as well, where they don’t quite have these immigration challenges like what we’re seeing here in the United States. So money transfer doing really well. July’s doing even better than what we saw last month.

Gustavo Gala

Thank you for all the comments, guys.

operator

Next question comes from the line of Mike Crondall with Northland Securities. Your line is open.

Mike Grondahl

Hey, thanks, guys. Hey, just two quick questions. One, any update on Epay Promotions and how you think they’ll fall during the back half of the year? And then two, in regards to money transfer, I don’t know. Sometimes you’ve called out the strength from fx. Just any color on how helpful that was. We saw a lot of incremental margin in that business.

Adam Godderz

With respect to the promotions, we’ve got a few scheduled for end of Q3, beginning of Q4, so we’ll see when and how those work out for us. With respect.

Rick Weller

But, Pete, nothing right now on the drawing board that would. I’m sorry, Mike. Excuse me. I don’t know if that’s a compliment or not, but nothing on the drawing board that would dramatically change the comparisons on periods over periods, let’s call it business as usual as opposed to anything that’s an expected one time, huge change.

Mike Grondahl

Got it.

Adam Godderz

And then with respect to money transfer. Yeah. I think somewhere in my comment I mentioned that we did see some benefit because of the FX fluctuation gyrations that were going on during the quarter. So we did get a little bit of benefit out of that. As also pointed out, we saw a little higher average value per transaction come through, which again sometimes is what you see when you see a little bit of that volatility on the fx. So net net, we did see a little bit of benefit on it and you know, we’ll see, we’ll see if any of that happens again as we go forward.

But, but certainly it helped improve the margins a little which you know, obviously helps support like a 33%, you know, year over year operating income growth.

Mike Grondahl

Yeah. On that 6% revenue constant currency. So great. Okay. Hey, thank you.

Adam Godderz

Thank you, Mike.

operator

Next question comes from the line of Chris Kennedy with William Blair. Your line is open.

Christopher Kennedy

Good morning. Thanks for taking the question and appreciate all the detail. Corcard has talked about its business could grow like 30 to 40% if you exclude the concentration with Goldman. Is there any way to think about kind of what you’re thinking about the sustainable growth is of Corcard?

Adam Godderz

Well, I think they’re probably, their estimates are probably tighter than ours but we hope to supercharge that by just opening because they’re basically all in the US and we’re going to open up the rest of the world to them. So hopefully if they do what they say and we give these connections to different parts of the world, we can even accelerate that.

Rick Weller

Yeah. And I’d also say, you know, look, they built a wonderful product and they’ve got a team that’s been very focused on the quality, the scalability, you know, and delivering a product that, you know, that’s been tested by Apple. So they put a lot of effort into the quality of that product, which we really respect. On the other hand, they haven’t put much effort into sales and marketing. And this is where we see kind of a hand in glove kind of fit. We’ve got operations around the world, we’ve got relationships with hundreds of banks, with brands like Apple and Google and paytm.

I mean we could just keep going down the list. New, which is an online bank in Brazil. I mean we have this, this tremendous list of relationships that cut across the money transfer business, the EPAY business, the EFT business. And so here’s where we see bring in a great technical product with our distribution around the world. And so, yeah, we expect to see that we will be able to essentially supercharge that sales process. Now, bear in mind that credit transactions, especially if it has anything to do with a conversion process, the sales cycle is not two weeks, but we’ll be actively going after it right out of the gate here.

Christopher Kennedy

Understood. Thanks for taking the question.

Adam Godderz

Thank you, Chris.

operator

Next question comes from the line of Charles Nabhan with Stephens. Your line is open.

Adam Godderz

Hi, Charles.

Charles Nabhan

Good morning, Mike. Hi, good morning, Mike. Rick, thank you for taking my question. Mike, you had referenced the complexities associated with revolving credit issuance and I was hoping you could double click on that. I know there’s only a handful of players in that market due to some of those complexities, but what is it specifically about that product that has created a moat within that industry?

Adam Godderz

Well, you know, Apple has been, I mean, you know, Apple came from nothing to a $20 billion portfolio in what, four or five years because they’ve got a super set of features and they’ve got a great brand, you know, and they do all kinds of things, you know, whether it’s cash back, whether it’s recalculating your interest all the way back multiple months, depending on if there were returns or chargebacks or whatever.

Rick Weller

Years.

Adam Godderz

Years even. Yeah, I mean, they made their system, they had to do this for Apple, but they made a system that’s extremely flexible, which means, you know, the next guy might want that same superset or some of those superset of features. So it’s a bigger moat than, you know, if it was easy, there’d be 20 people out there selling this stuff. There’s three. It’s these fringe cases, these kind of weird things that don’t happen. A combination of this, this and this that throw all these interest calculations into the trash for a lot of people. So it’s that kind of domain knowledge that R and D staff has that’s created this excellent product.

Rick Weller

Another thing to bear in mind on a product like this is you read a lot and hear a lot about things like stablecoin. How are they going to deal with things like chargebacks like fraud, like authentication? And those are complexities that aren’t even involved in the mathematics of calculating an interest on a chargeback that might be three years old or a chargeback and then a restore. And you know, I could give you thousands of different peculiarities, issues that happen within the processing business. But as we think about a platform like this, also imagine what it might offer in terms of abilities to players that do have stablecoin products and want to have on ramps and off ramps authentication approvals, you could see where there could be a lot of interesting future applications out there.

Charles Nabhan

Got it. That’s super helpful. And as a follow up, I wanted to get your thoughts on travel trends within the EFT business as well as the impact of some of the interchange increases you’ve heard highlighted over the last year or so. I know you noted the elongation of the travel season, but just kind of curious what you’re seeing on an absolute basis for Travel trends within 25 relative to your expectations.

Adam Godderz

So just one little interesting note is the Americans traveling to Europe, we love them. They’ve all got the wrong currency on their card that’s up 10% over last year. So that’s really exciting. As you’ve probably read, not many Europeans are going to the US they don’t feel like they’ve been treated very well by this administration. So what that means is they’re going to stay home or they’re going to vacation more closer to home. So all the numbers look good. We’ll see what the final numbers are for the year, but they’re certainly up from last year and all that’s great.

You know, so we’ve seen a strong, like I said, this Q2 with EFT kind of, you know, compared to last year looks kind of flattish. But that’s just because last year’s number was extraordinary and but we’re looking at Q3 being, you know, back to strong numbers. So we don’t have any concerns with respect to travel.

Charles Nabhan

Got it. That then that 10% is all the more interesting considering the weakening of the US Dollar.

Adam Godderz

So, but I think, you know, I think part of this is human nature. I mean, all us baby boomers are all going, boy, I better get to Europe before I die and before another pandemic, you know, closes it down.

Charles Nabhan

Great. Thanks again.

Adam Godderz

All right, I think we’re right at the top of the hour, operator, so we’ll end the questions now. I want to thank everybody for joining and spending the time with us. Look forward to talking to you in about 90 days.

operator

Ladies and gentlemen, that concludes today’s conference call. Thank you all for joining and you may now disconnect.