MoneyGram (MGI) expects digital transactions to account for 50% of biz by 2024

MoneyGram International, Inc. (NASDAQ: MGI), a market leader in cross-border P2P money transfer services, has been busy transitioning to the digital realm to stay relevant in the rapidly changing business environment. The company serves around 150 million customers globally, collaborating with leading brands.

For driving growth, the Dallas-based company is looking to leverage MoneyGram Online, its direct-to-consumer digital business, global retail network, and the emerging embedded finance business for enterprise customers, MoneyGram-as-a-Service. It reported adjusted earnings of $0.13 per share for the third quarter of 2021, which is down from $0.16 per share reported a year earlier but above the consensus estimates.

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Moneygram International Inc Q3 2021 Earnings Call Transcript

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The bottom-line performance was impacted by a decline in revenues to $320 million and an increase in operating expenses. The company’s stock made modest gains since the earnings announcement, paring a part of the recent losses. It traded higher on Tuesday afternoon, after closing the previous session at $5.76.

Speaking to AlphaStreet, a representative of MoneyGram attributed the steady growth in digital revenue to the shelter-in-place orders, which made people use its app that allows customers to receive money without leaving their homes.

Excerpts from the conversation:

Do you expect the growth momentum to drop once normalcy returns to the market, post-COVID?

When forced to stay home, many consumers tried our leading app for the first time and also found that they could receive money from the comfort of their own homes through our leading digital receive network. For example, in India, about 50% of our transactions are received digitally, with the number of transfers sent to account up about 6-times, from just under 10% two years ago.

Looking ahead, we believe the shift-to-digital is permanent – both in our industry and across others. We’ve seen our newly acquired digital customers remain remarkably loyal to our brand, and we have continued to see extremely high customer retention rates that have exceeded our expectations. Digital remittances will continue to grow – some reports estimate nearly a 20% CAGR through 2026 for digital remittances, and we’ve said ourselves we expect digital transactions to account for over 50% of our business by the end of 2024.

Can you please elaborate on your plan to offer a broader suite of financial services?

Although we can’t expand into too much detail yet, we plan to broaden to deliver innovative financial solutions that connect the world’s communities – expanding geographically to launch MGO in new markets, expanding consumer demographics, and enhancing and expanding service offerings.

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Can we expect the positive effects of the new debt structure to translate into consistent bottom-line growth for the long term?

Yes, following the successful execution of our equity offering this year, which we completed in under two weeks, we used the proceeds to reduce our highest-cost debt balance by $100 million. This debt reduction is a significant milestone for MoneyGram and demonstrates our ability to enhance our capital structure and lower our cost of funds.

With the continuing growth of MoneyGram Online, along with momentum in many other parts of our money transfer business, MoneyGram is entering a new era of improved cash flow and growth.

What can investors expect from MoneyGram in the next two years?

We plan to continue leading the digital evolution of P2P payments and continue to focus on delivering the best customer experience in the industry.