Euronet Worldwide, Inc.

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 Gutters, General Counsel of Euronet Worldwide. Thank you. Mr. Guthers, you may begin.

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. Uranet'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.

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 platform gives us yet more growth opportunities and as it enables us to go after the $10 billion plus revenue TAM 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 a consumer credit. It's not just consumer credit. CoreCard also serves as a business lending sector. Let me continue my excitement. As Core Card was not enough, just this week, we signed a significant REN deal with one of the three largest U.S. banks. We've been in pursuit of this deal for a couple of years, which makes this announcement that much more exciting. Our REN 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 REN 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.

Thank you, Mike. Good morning and thank you to everyone for joining us today. I will begin my comments on slide seven. 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. I'm 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 6, 33, and 28% respectively. The revenue growth was primarily driven by volume via higher principal amounts set 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 five 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 five cents 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.

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 REN in the marketplace. Wren, a digital modern end-to-end payments platform that provides banks, fintechs, 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 U.S. 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 Bank 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 RIMS. Further evidence that banks around the globe recognize that Uranet'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 CoreCard 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 on to slide number 14 and we'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 quarter. 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 a 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 Uranet'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% increase decline in remittance volume, which could either be fewer cents or lesser amounts of money sent. This research suggests that while the potential negative impact of 1.6% is only two-tenths of a percent of our consolidated revenue, while we would clearly rather not see this tax, the research indicates it will not have a significant impact in 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 transferred 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 omni-channel 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 Nikkel, 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 territories. And in Austria, we renewed our partnership with the Austrian Post. DanaLion Wholesale continued to grow its client base, adding Union Bank in the Philippines, the 10th largest bank in the country, Peru's leading wallet, Yappe, 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 solutions, 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, Uranet has entered into a definitive agreement yesterday to acquire CoreCard Corporation, a leading U.S. 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 creative in the first full year post-close. CoreCard 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 CoreCard, 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's no real surprise here. The merits of CoreCard 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, CoreCard's platform spans debit, prepaid, and revolving credit solutions, not only for consumers but businesses as well. We are really excited about CoreCard's potential beyond the US. We plan to extend CoreCard's reach into emerging markets where Uranet 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 has highlighted, issuing is a core strategic growth initiative, illustrating how CoreCard 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 Uranet, we are targeting large addressable markets like the $1.8 quadrillion Uranet in global payments and the $320 trillion in foreign exchange and cross-border flows. By providing credit card processing, CoreCard 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 your own ATMs, and towards digital offerings. 2019, Uranet-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 offering 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 CoreCard to process the Apple Card. Cardless uses CoreCard 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 U.S. 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 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 prepaid, segments with capped interchange and limited margin, CoreCard 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 U.S. credit issuing market and beyond, backed by a leadership team with deep roots in the space. The platform supports a range of use cases, from stable coins and global brands, to lending, early wage access, healthcare, and commercial credits. 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 CoreCard 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 in asset size. CoreCard 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'll focus on cross-selling core cards 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 Pinchincha, and the Bank of the Philippines 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 cards 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 deliver integrated end-to-end solutions across the payments value chain. In Phase 2, we'll target new financial institutions and existing relationships and markets where we have strong brand equities. 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 RIA from a U.S.-centric position, we see an opportunity to use our global footprint to accelerate the growth of CoreCard. Emerging markets are our favorite hunting ground. and as demonstrated by our success signing those REN deals. Slide number 22. This acquisition represents an important step in Uranet'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 issuance. particularly revolving credit, which remains one of the most lucrative revenue pools in payment. CoreCard is one of three platforms in the U.S. 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 fintechs 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 U.S. 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 Uranet as the preferred innovation partner for fintech and a leading modern card issuing platform for fintechs and banks in the U.S. and globally. Now, I'll close out the course. Before I close, I'd like to address two emerging opportunities for Uranet. 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, 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 CoreCard. 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, with consistent track record of 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 core card 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 expectations of 12% to 16% growth for the year. We'll be happy to take questions. Operator, will you assist?

We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset to ensure that your phone is not on mute when asking your question. Again, press star 1 to join the queue. And our first question comes from the line of Vasu Govil with KBW. Your line is open.

Hi, thank you for taking my question. I guess maybe the first one just on the core card acquisition, Mike, you gave us quite a bit on sort of how you see the revenue synergies being 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.

We do. And we also have these potentials. I mean, we're out there doing debit card issuings. 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. And so 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 those. 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 has such a sophisticated superset of features that no other credit card in the U.S. 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 investment portfolio, you know, without, you know, without problems. So we figure we've got them for a couple, three years anyway, and that's if it was sold today. And then, and during that time, we will have a great marquee customer to use as our, you know, as an example, as a reference customer to sell into new people. And in the they sell it to, if they don't have CoreCard now, maybe that offers us an opportunity to sell CoreCard right back into them so they can upgrade.

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 to decel? And also, how should we think about incremental margins for that business on a go forward basis? I know you've said structurally costs in the business are higher relative to pre-pandemic. There's just more inflation. But is high scenes the run rate on incremental margins that we should be sort of modeling going forward? Or do you see room for improvement there?

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 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. You know, the whole tourist season has elongated, so there's less in the second and third quarters, or less in, 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 DAF transactions, which basically are doing the same number of transactions but at a higher revenue. That will help our margins as well.

Thank you very much.

Thank you, Mathieu.

Our next question comes from the line of Peter Heckman with DA Davidson. Your line is open.

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 would you expect it to hit the full run rate?

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 did some work with them to give them a super set of features they've never had before. And 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 customer.

And, 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's 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 REN sales. So, you know, 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 REN 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.

That's great. That's great. And then so in terms of looking at software with the acquisition of CoreCard 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?

$250 million is a little steep for 2028. Yeah. Yeah, that's a little steep. Our goal with REN was to deliver $100 million in – in pre-tax and op income, you know, and, uh, you know, so we're, we're a few years away from that, but, but these big deals are really accelerants. Uh, so we'll, we'll see what we, we don't really put, we'll, 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.

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

Thanks. Thank you.

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

Hi, Mike. Hi, Rick. Good morning. Thanks for taking our questions. Good morning. REN, I believe, had grown to be a sizable chunk, let's call it, of 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-to-market opportunity, but really digging down on, there's an opportunity to maybe re-platform, do a little cost removal.

The other part of that... 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.

Got it. And then on the U.S. 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, even margin? I imagine being a top three bank, there might be some negotiating leverage on their end. Just thinking about that, how you balance that out.

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&L, I'd characterize it as, A, it's an important win. It doesn't directionally change the whole P&L. It's another... It's another brick in building the building. So it'll benefit it, but it doesn't change the, you know, it's not going to change next, you know, year, next quarter's numbers dramatically just because of that. What will change it is more and more of those rent and sales, which will be, you know, which will be more and more possible because of, 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.

But it is, 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 to. Yeah, it's going to be wonderful.

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 dropping in either of those and retail specifically around football?

Well, 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 box. I mean, here everybody's having all these problems. And we are just crushing our numbers because, you know, 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 dropping. 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. growth. So, and, you know, the nice thing, let's not forget, the U.S. only accounts for, you know, call it 40% of RIA's numbers, and maybe even a little bit less, right? A third, yeah, 33%. So, you know, 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 is doing really well. July is doing even better than what we saw last month.

Thank you for all the comments, guys.

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

Hey, thanks, guys. Hey, just two quick questions. Any update on e-pay 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.

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 – But, Pete, nothing right now on the drawing board that would – I'm sorry, Mike. Excuse me. Okay. 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. You know, let's call it business as usual as opposed to anything that's an expected one-time huge change. Got it. Yeah. 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 – 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 if any of that happens again as we go forward. But certainly, it helped improve the margins a little, which You know, it obviously helps support like a 33% year-over-year operating income growth.

Yeah, on that 6% revenue constant currency.

So great.

Okay.

Hey, thank you. Thank you, Mike.

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

Your line is open.

Good morning. Thanks for taking the question and appreciate all the detail. CoreCard 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 CoreCard?

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 U.S. 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.

Yeah, and I'd also say, you know, look, they've 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's been tested by Apple. So they've 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, you know, 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 a – an online bank in Brazil. I mean, we have this tremendous list of relationships that cut across the money transfer business, the e-pay business, the EFT business. And so here's where we see bringing 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. And, you know, now, you know, bear in mind that, you know, credit transactions, especially if it has anything to do with a conversion process, okay, you know, the sales cycle is not, you know, two weeks, right? But we'll be actively going after it right out of the gate here. Understood.

Thanks for taking the question. Thank you, Chris.

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

Your line is open.

Hi, Charles. Hi. 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?

Well, 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. Years. Years even, yeah. I mean, they've just, they've made their system, they had to do this for Apple, but they made a system that's extremely efficient. 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 that, you know, if it was easy, there'd be 20 people out there selling this stuff. But there's three. And 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 that R&D staff has that's created this excellent product.

Another thing to bear in mind on a product like this is you read a lot and hear a lot about things like stable coin. 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 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 stable coin products and want to have on ramps and off ramps, authentication, approvals. You could get to be, you could see where there could be a lot of interesting future applications out there.

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 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.

So just one little interesting note is that 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 U.S. 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 bet 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, uh, all that's great. You know, so we, we've, we've seen a strong, like I said, this Q2 with EFT kind of, you know, compared to last year, it looks kind of flattish, but that's just because last year's number was extraordinary. And, uh, But we're looking at Q3 being back to strong numbers. So we don't have any concerns with respect to travel.

Got it. And that 10% is all the more interesting considering the weakening of the U.S. dollar.

But 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.

Great. Thanks again, guys.

All right. I think we're right at the top of the hour, operators, 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.

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