Euronet Worldwide, Inc.

Greetings, and welcome to the Euronet Worldwide Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. It is now my pleasure to introduce your host, Mr. Adam Godders, General Counsel for Euronet Worldwide. Thank you. Mr. Godders, you may begin.

Thank you. Good morning, everyone, and welcome to Euronet's second quarter 2024 earnings conference call. On today's call, we have Mike Brown, our Chairman and CEO, and Rick Weller, our CFO. Before we begin, I would like to call your attention to the forward-looking statements disclaimer on the second slide of the PowerPoint presentation we'll 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, including those 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 the most comparable gap measures. Now, I'll turn the call over to our CFO, Rick Weller.

Thanks, Adam. I will begin with my comments on slide five. We delivered a record quarter, second quarter, on all key consolidated P&L line items. We delivered revenue of $986 million, adjusted operating income of $134 million, adjusted EBITDA of $178 million, and adjusted EPS of $2.25. Leading the way for these results was EFT with double digit constant currency growth on all financial measures. For ePay, results were similar to the prior year and money transfer delivered constant currency revenue growth of 8% for the quarter with a modest increase in operating income on a constant currency basis. Our quarterly adjusted EPS was up 11% over the prior year. And when considering the first six months of this year, it's up about 16.5% over the prior year. You can see we are well on track to meet our earnings guidance range we've shared with you and lining up for an opportunity to exceed the range. Moreover, This quarter, we continued our track record of producing strong free cash flows, producing more than $80 million. And because we didn't have any larger pending acquisitions or other requirements for the free cash flow, we repurchased $114 million of our shares, or about 2% of the shares outstanding. Given the timing of the repurchases, there was only a marginal benefit to the second quarter adjusted EPS. But we know this repurchase will improve earnings per share by 2% for future periods. It also points out, I'll also point out that our consolidated operating margins expanded by about 90 basis points over the prior year. and we expect to see continued expansion through the second half of the year. Slide six. On slide six, we present a summary of our balance sheet compared to the prior quarter. As you can see, we ended the quarter with 1.27 billion in unrestricted cash and debt of 2.27 billion. The increase in cash is largely due to cash generated from operations of more than $80 million in the second quarter, offset by stock repurchases and a minor impact from the completion of the MEPS ATM network acquisition. Our next slide has as reported numbers for the segments, but let's go to slide eight where we present the results neutralized for FX translations. I'm on slide eight now. On a constant currency basis, the EFT segment revenue grew 10%, adjusted operating income grew 24%, and adjusted EBITDA grew 20%. The strong results in the EFT were made possible due to continued improvement in travel trends across Europe, strong performance from our merchant services business, expansion into new markets, and the rationalization of our ATM estate together with effective expense management. Both revenue and effective cost management contributed to nearly 300 basis point operating margin expansion in EFT. The ePay results were similar to the prior year across all measures, while the core ePay content distribution business grew 10% across the same range of metrics. As has been the case over the last couple of years, The timing of ePay's customers' promotional activity can create unevenness in quarterly results. In the second quarter of last year, of 2023, we had strong promotional activity that did not recur in this year's second quarter. However, we have a nice pipeline of promotional activity that we expect to execute during the remainder of the year. with more weight on the fourth quarter, which coincides with seasonal sales in the ePay business. So while these second quarter results show muted growth for the quarter, we continue to believe that ePay will produce mid to upper single digit operating income growth, and depending on consumer demand, we could see a path to double digit operating income growth year over year. Money transfer revenue grew 8%. Operating income grew 2% and adjusted EBITDA declined one. The 8% growth in constant currency revenue was primarily driven by near double-digit growth in cross-border transactions, offset by a decrease in intra-US transactions. Direct-to-consumer digital transaction growth accelerated to 24%, highlighting the benefit of some increased spend on marketing and promotional campaigns in the quarter. Based on the success of these campaigns to acquire long-term customers and our increasing confidence in delivering strong double-digit consolidated earnings growth for the full year of 2024, we made a choice to increase this marketing and promotional spend by about $3.9 million during the quarter. Had we not made this $3.9 million promotional and advertising investment, money transfer operating income would have expanded year over year, producing operating margins similar to the prior year. We will continue to have a somewhat higher level of spend on marketing and promotion, but we expect to see operating profit margin expansion over the second half of the year, producing full-year operating margins near or similar to 2023. Overall, we are very pleased that we have delivered two quarters of double-digit growth. These growth rates, inclusive of some timing differences in ePay and the flexibility to spend some investment, to make some investments for future digital growth and money transfer, give us even more confidence in our ability to deliver earnings growth in the 10 to 15% year-over-year range. And you can rest assured that we are always working to deliver results beyond that range. With that, I'll turn it over to Mike.