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spk14: Good morning. My name is Julie, and I will be your conference operator today. At this time, I would like to welcome everyone to the EVO Payments Third Quarter 2021 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'd like to ask a question during this time, press star, followed by the number one on your telephone keypad. If you'd like to withdraw your question, press star one again. Thank you, Mr. Ed O'Hare, Senior Vice President, Investor Relations. You may begin your conference.
spk01: Good morning, and welcome to EvoPayments' third quarter earnings conference call. Our press release and slides detailing the company's recent volume trends are available on the Investor Relations portion of our website. Before we begin, I want to remind all listeners that EvoPayments desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act. Certain statements in this conference call, such as projections regarding future performance, may be considered forward-looking statements within the meaning of the act. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For additional information on these factors, please refer to our press release and filings with the SEC. Please refer to our press release for an explanation of the non-GAAP financial measures discussed in today's call, along with the reconciliation of those measures to the nearest applicable GAAP measures. Today, we will discuss our third quarter results and our overall business performance. Joining me on the call today is Jim Kelly, our Chief Executive Officer, Tom Panther, our Chief Financial Officer, Darren Wilson, President of the International Segment, and Brendan Tansel, President of the America Segment. I will now turn the call over to Jim.
spk07: Thank you, Ed. Good morning, everyone, and thank you for joining us today. Evo delivered solid volumes and earnings this quarter as economic activity rebounded across our markets and accelerated card utilization continued. As you can see from the slides, the company demonstrated volume growth of 15 percent compared to the third quarter of 2020. And on a currency neutral basis, revenue grew 14 percent, adjusted EBITDA grew 25 percent, and margin expanded 341 basis points to 38%. We have expanded our margin by over 300 basis points for four consecutive quarters. The excellent execution of the executive team and our global employees has enabled us to grow revenue at an expanding rate while also reshape our cost structure as we actively manage through the pandemic over the last 18 months. We are committed to delivering positive operating leverage and increasing our margins while also investing in long-term growth opportunities. Tom will cover our third quarter financial results in more detail. Our financial results reflect our ability to execute on our well-established bank referral and tech-enabled sales strategies across both Europe and the Americas. We continue to work closely with our international bank partners to facilitate digital payments acceptance and expand our geographic distribution as we enter new markets. Additionally, we are experiencing strong demand for integrated payment solutions throughout each of our markets, and we remain focused on growing tech-enabled referral network to capture the global shift of software at the point of sale. Further, we continue to address unique in-market payment solutions through our global tech-enabled product suite, including new integrations and our proprietary gateway solutions, including ClearOne in Spain, Way2Pay in Ireland, SF Systems in Mexico, Pago Facil in Chile, and Anderson Zacks in the UK. By enabling frictionless integrations to any software solution, we gain access to the entire integrated payments addressable market, enhancing our ability to drive outsized market growth for acquiring and payment processing. In the UK, we recently integrated our Anderson-Zach omnichannel gateway and now have access to more than 20 additional active ISV partners whose legacy merchant portfolios we are working to convert to EVO's acquiring platform. Further, we are deploying our sales and product expertise to sign additional ISV partners and drive sales for our business as we capitalize on the accelerated adoption of integrated payments, which is particularly strong across Europe. Turning to Chile, I'm very encouraged by our early success in the market since commencing operation last quarter. Our strong sales efforts have enabled us to expand our merchant portfolio to more than 5,000 customers. As we move through the fourth quarter and into 2022, we are continuing to grow our business together with our bank partner, BCI, leveraging EVO's direct sales force and tech-enabled capabilities. Our tech-enabled channel in Chile includes our recently acquired e-commerce gateway in addition to a growing ISV network. Brendan and Darren will provide more detail on our segment performance later on the call. As the impact of the pandemic recedes, we will continue to grow our business through investments in our sales distribution, new product launches, and M&A. We are seeing increased M&A activity related to both bank partnerships and integrated solutions and will continue to pursue opportunities that meet our strategic and financial objectives. We anticipate our strong momentum amid the global economic recovery will continue through the fourth quarter and into 2022, and we are confident that we will be able to execute our strategies and generate solid top line and bottom line growth. Finally, as we announced yesterday, I'm very pleased to welcome Nikki Harland to our Board of Directors. Nikki currently serves as the Chief Operating Officer of Paradis Lagardère and was recently named to the 2021 list of Atlanta Top 100 Women of Influence. Her strong leadership skills and merchant experience will greatly benefit the board and the company as we continue to grow. I'll now turn the call over to Darren to discuss our European business. Darren?
spk12: Thanks, Jim. I would like to begin by providing some first-hand perspective on how Europe is successfully emerging from the pandemic. While government restrictions remained in place through much of the second quarter, in the third quarter, as vaccination rates increased, restrictions were greatly reduced and economic activity significantly rebounded. Our markets are experiencing broad growth across most industry verticals, including travel and hospitality. which is expected to accelerate in 2022 as the reopening continues and transcontinental travel and DCC activity increase. These trends are reflected in our recent financial results, which now exceed pre-pandemic levels. For the quarter, European constant currency revenue increased 16% year over year. Volumes for the quarter were 16% higher compared to 2020, and grew 22% versus 2019. Excluding the impact of the Santander headwinds, which have now lapped, European volumes and revenue grew approximately 30% compared to 2019. Our strong financial performance demonstrates the success of our international strategy, which focuses on under-penetrated markets, coupled with our ability to capitalize on the recent macroeconomic tailwinds and accelerated demand for digital payments. We continue to execute on our proven business strategies to grow and diversify our merchant portfolio throughout our European markets as we work closely with our bank partners and leverage our rapidly growing tech-enabled sales channel. Across the segment, we now have more than 200 tech-enabled referral partners and multiple gateway acquisitions, including IPG, ClearOne, Way2Pay, and Anderson Zacks integrated into our platform. These tech-enabled solutions, together with our continued investment in market-leading products and capabilities, have enabled us to sign merchants, spanning multiple verticals, driving accelerated growth for our European business. Beginning with Ireland, we continue to work with Bank of Ireland to grow market share and bring innovative products and capabilities to the bank's customers. Over the last 18 months, we have established key in-market relationships to expand gift card solutions, as well as contactless and mobile payment acceptance for merchants. This quarter, we also enabled MasterCard installments for our Irish e-commerce merchants as we continued to expand our payments offering, leveraging MasterCard's buy now, pay later capability. Additionally, we are actively expanding our tech-enabled referral network, evidenced by our strong e-commerce sales and the more than 20 in-market ISVs we have signed this year, enabling us to attract new customers, such as a large soccer stadium in Belfast this quarter. We now have integrations to over 40 ISVs in Ireland, which will continue to drive growth for this business as merchants continue to adopt software at the point of sale. In the UK, our growth strategy centers on tech-enabled solutions that capture the accelerating shift to integrated payments, given the relative maturity of the payments market. This quarter, we completed the integration of Anderson Sachs, our recently acquired omnichannel payment gateway, which will augment our integrated payments offering in the UK and Ireland, and expands our tech-enabled referral network. We now have over 75 integrated payments partners and a merchant portfolio that exceeds 35,000 customers and are actively signing new ISVs and merchants as we continue to grow this business. Today, our combined Irish and UK business represents 22% of our European revenue compared to 8% in 2017. Year-to-date, this business has demonstrated strong revenue growth of greater than 30%, with a significant portion driven by our tech-enabled channel. Turning to our Central and Eastern European business, which is anchored by our joint venture with PKO in Poland, we are generating strong sales results by working with our bank partners and expanding our tech-enabled referral networks as we increase our market share across this under-penetrated region. Today, we have over 100,000 merchants in Central and Eastern Europe, which represents approximately 50% of our European revenue. This quarter, we continue to expand our relationships with many of our Polish merchants, signing additional locations in Poland and the Czech Republic, as well as surrounding countries, including Hungary and Slovakia, among others. We have demonstrated accelerated growth from our tech-enabled channel by signing more than 20 ISVs this year, which focus on serving merchants at both the physical point of sale and e-commerce. Last month, we added three new e-commerce partners and launched our integration to a leading pharmacy software provider in Poland. Our tech-enabled revenue is growing more than 20% and now represents approximately 40% of our business in the region. Looking into next year, our business is well positioned to deliver high-teens revenue growth as we expand our merchant portfolio through our product capabilities and robust referral networks. In Germany, we have grown our tech-enabled network to approximately 20 referral partners. This quarter, we signed an agreement with SilkPay to provide gateway and acquiring services for their payments platform. SilkPay connects international customers to retailers across Europe by enabling merchants to accept international e-wallet payment methods, both at the physical point of sale and online. Lastly, turning to Spain, we are seeing strong business momentum in this market, and third quarter volumes are up 18% compared to 2020, now that the headwinds from Santander and the pandemic are largely behind us. We remain focused on augmenting our tech-enabled channel, which now leverages more than 60 active ISVs and e-commerce partners connected via our omnichannel Snap platform. We also continue to work with Lever Bank to expand our merchant portfolio, which has delivered steady sales growth even through the height of the pandemic. We believe our ability to execute our strategies will enable us to return to our historical growth rates. I am very pleased with the economic activity across Europe and a strong business execution in the third quarter. As Europe continues to reopen and cross-border activity, including DCC returns, we are well positioned to deliver additional revenue growth and margin expansion for the segment. I will now turn the call over to Brendan, who will provide an update on our Americas segment. Brendan?
spk02: Thanks, Darren. For the quarter, the Americas' constant currency revenue increased 12% year over year, which was driven by 15% volume growth in the quarter. These results were largely attributable to growth from our international bank referral channels and our tech-enabled businesses across all markets. Beginning in Chile, as previously discussed, Evo is now fully operational and delivering leading acquiring services and payment solutions to the market. We have worked with our bank partner, BCI, to generate strong sales results since we commenced operations in June. We continue to cross-sell acquiring services to the bank's initial targeted customer list of 15,000 merchants, which will strengthen the bank's existing customer relationships. In our Tech Enabled channel, we are leveraging our Pago for Seal acquisition, coupled with our sales expertise, to accelerate e-commerce growth. for our business as we also identify local ISVs with which to establish integrations and referral relationships consistent with our international sales strategies. We anticipate our partnership with BCI and tech enabled capabilities will result in a business that generates over 25 million of revenue within three years. Turning to Mexico, our volumes increased 23% this quarter compared to last year and 15% compared to 2019. I continue to be pleased with the solid growth from our bank and tech-enabled referral channels as we continue to deliver strong sales in the market, including the recent signing of several large merchants across multiple verticals, including healthcare and online retail. In our tech-enabled channel, which includes ISV and e-commerce, revenue is growing 40% this year and now represents approximately 20% of our Mexican business. Our total merchant portfolio grew 10% over the last year and now exceeds 200,000 merchants, further demonstrative of the health of the market and our ability to increase market share across all of our sales channels. In the U.S., volumes for the quarter were approximately 7% above the prior year, which was driven by our B2B and ISV business units. B2B and ISV together grew in the mid-teens this quarter. and today represent over 40% of our U.S. revenue. Specifically, in our B2B business, we signed a significant number of new referral partners to expand our B2B network and capitalize on the low card penetration of this fast-growing market. We also continue to cross-sell acquiring services to our proprietary PayFabric Gateway customers and expect the success of this conversion strategy to accelerate as the impact of the pandemic moderates. We remain focused on growing our B2B business through organic sales, expanding our referral networks, investing in proprietary products, and capitalizing on M&A opportunities, particularly additional ERP integrations. In our ISV business, volumes have continued to improve as merchants migrate to the software at the point of sale and consumer demand for hospitality services rebounds. We recently established integrations to international ISVs such as infinite peripherals, which will expand and diversify our merchant portfolio. As we work to meet the changing consumer demands that have remained in effect since the beginning of the pandemic, we will continue to invest in our capabilities and expand our referral network to support the growth of this business. I am pleased with our third quarter performance, especially our growing tech enabled business, which is not only a strong sales channel in the US, but in Latin America as well. We are continuing to invest in our Mexican platform and strengthen our infrastructure to support growth in this market in addition to Chile. As we expand our presence in Latin America, we will also look to grow our merchant portfolio by entering new markets with strong growth opportunities, leveraging our tech-enabled referral network and international bank partners. With that, I will turn the call over to Tom, who will cover the financials in more detail. Tom?
spk05: Thanks, Brendan, and good morning, everyone. For the quarter, on a currency-neutral basis, revenue increased 14%, and adjusted EBITDA increased 25%, and margin of 38% expanded 341 basis points compared to the prior year. Further, compared to 2019, our third quarter revenue grew 10%, and adjusted EBITDA increased 22%. as our margin expanded 351 basis points. These strong results are despite the significant strengthening of the U.S. dollar during the quarter, which adversely impacted revenue by approximately $2 million. We again generated record volumes this quarter, which increased 16% compared to both 2020 and 2019. Sequential revenue spreads increased this quarter due to merchant mix and the seasonal increase in cross-border activity. DCC revenue increased 24% compared to 2020, but remains approximately 40% below 2019 levels. We view both spread improvement and DCC revenue as opportunities for additional revenue growth of over $20 million in 2022. This quarter's solid results demonstrate the company's ability to generate strong top and bottom line growth as economic activity gradually normalizes across our markets. We remain optimistic that these trends will continue as we leverage our capabilities to capitalize on the continued cash-to-card tailwinds that have persisted coming out of the pandemic. With respect to segment performance, in Europe, our year-over-year constant currency revenue increased 16%, and adjusted segment profit increased 18%. In the Americas, year-over-year constant currency revenue increased 12%, and adjusted segment profit increased 20%. Adjusted corporate expenses for the quarter were $10 million, which decreased 5% from the prior year, primarily due to the timing of various accruals last year. Adjusted net income for the quarter increased 44% to $26 million compared to last year, and adjusted net income per share for the quarter was 27 cents, which increased 8 cents, or 42%, compared to a year ago. At the end of the quarter, dilutive shares totaled $95 million, an increase of 1.7 million weighted average shares compared to the prior year. In the third quarter, capital expenditures were $6 million versus $4 million in Q3 2020. Of this amount, 78% was for terminals as our markets continued to reopen and board additional merchants. Free cash flow for the third quarter increased 33% to $40 million compared to the prior year, resulting in a free cash flow conversion ratio of 77%. This was driven by the company's record earnings and lower interest expense. We ended the quarter with leverage at 2.2 times, which is down from 2.6 times at the end of the second quarter. We also just completed the refinancing of our term loan B and revolving credit facility, which were set to mature in 2023 by entering into an all-bank term loan and renewing our $200 million revolver. which now mature in 2026. These new credit facilities lower our interest cost a full percentage point and enable us to retain the same flexibility to access additional capital to support M&A opportunities for the next five years. Turning to our outlook, we anticipate full-year revenue growth of 13% to 14%, 20% to 22% EBITDA growth, and 200% to 250 basis points of margin expansion. These results reflect our strong third quarter business performance and assumes FX rates remain consistent with the prior quarter and strong consumer trends continue in our market. With that, I will turn the call back over to Jim. Jim?
spk07: Thank you, Tom. I'm pleased with the company's performance this year as we've successfully executed our business strategies. Revenue and EBITDA growth rates have increased. Our margins have improved over 300 basis points and our balance sheet is extremely strong. As such, we remain focused on delivering consistent growth and expanding our geographic footprint and tech-enabled businesses. We have solid momentum heading into 2022 and are well-positioned to continue to deliver strong financial results through organic sales and capitalize on additional M&A opportunities. I'll now turn the call over to the operator to begin the question and answer session. Operator?
spk14: Thank you. At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. And your first question comes from George from Cohen. Please go ahead.
spk04: Great. Good morning, guys, and congrats on the solid results. Nice to see the momentum. I guess my first question. Tom, you talked about the DCC opportunity, that that's still sort of ahead of you, potentially another $20 million if it gets back to 19 levels for 22. Can you give us a sense of the distribution kind of by country to that sensitivity, meaning, you know, how much of that is really Poland versus, you know, a geography like Spain and the like, just any sort of clarity around that would be helpful.
spk05: Sure, hey, good morning, George. So the majority of that, as you would expect, is Poland, given that It's a significant portion of our European business. We do expect to see increased cross-border activity. Our domestic card activity in Poland was about still 90% domestic. So there's still an opportunity for more international and European cross-border activity that we see going forward. But as you heard in Darren's comments, we see a lot of opportunity in Spain. We have the Santander. matter that we've lapped and we think there's some really good growth opportunity within Spain that will also add to additional DCC momentum. Now one just thing to clarify, the 20 million that I referenced was a combination of both improvement in DCC as well as where we expect to see spreads continue to migrate up into 2022 based on transaction mix and merchant mix. I just wanted to clarify that you didn't attribute all of that to just DCC. there is a component of that that is spread improvement.
spk04: Really appreciate that color, Tom. And then, Jim, I know on the last call we were seeking out your expertise on a lot of things happening, real or perceived, in the payment space. And I'm just curious, given your experience, given you guys have a big European business, I'm curious what you're seeing with alternative payments specific to You know, things like account-to-account-based payments, which I guess with open banking might be a little bit more prevalent there relative to the U.S. Is that encroaching on the business at all? Are there opportunities for you guys to participate in things like that? And then maybe as a quick follow-up, obviously the balance sheet is in good shape. Anything you can say around M&A and maybe how valuations are trending for some of the assets that you're interested in? Thanks again, and I apologize for the long-winded questions.
spk07: No, George, your questions are much appreciated. So Darren, for the first time in, what, 18 months, is actually sitting in the room. We've been doing this by pointing to each other over the screen previously, so I'm going to let him take part of it. I think as you guys see these headlines, whether last time it was buy now, pay later, or here, bank-to-bank transfer, these are trends that are appearing in the marketplace, but the entrenched business of the core Visa, MasterCard, and the other cards, our job is to support the real estate in front of the point of sale. So it doesn't really matter to us in the end what the merchant wants to transact as long as it's running across our rails in some way or fashion. So we've seen probably more in Eastern Europe than in Western Europe a an interest in bank-to-bank transfers, which to us, I mean, I guess the equivalent to the U.S. would be kind of an ACH type of transactional. I think this is more real-time than an ACH, which is delayed. It's super early days, so I would not be overly concerned that it's going to have some material impact in the near term. And the other piece is we've seen Visa MasterCard. I think MasterCard made an acquisition in the space in Europe So my expectation is that you'll see those big brands find a way to be relevant in that space, and those are the primary relationships that we support Bellet. Darren, amplify something, and then I'll come back to M&A. Darren. Okay.
spk12: Thanks, George. Yep, I think Jim's covered it. Ultimately, yes. In Eastern Europe, we're seeing kind of great traction through the online channel, so e-commerce, where there's kind of a button to adopt an account-to-account type payment. It's not getting any traction in the card presence space, as you'd probably imagine, because of kind of the friction to try and do that, and they kind of muscle memory of paying by card or any wallet-type transaction. So we're seeing some intro into e-com. It's not material. That said, we see the trend. We've been working on ensuring we play in that capture space and ensure we participate in the economics of account to account where we see that growth opportunity. So it's not denting the volumes yet, but we'll have a footprint to capture those transactions in future.
spk07: Just to draw somewhat of a parallel, it's not bank-to-bank transfer, but there's a domestic scheme in Poland that was getting launched at the time we entered Poland in 2013, the end of 2013. It's called Blick. And Blick's been single digits since 2013. It's seen an uptick with e-commerce since the pandemic, so I don't know if it's out of single digits yet, but It has been a long runway, I mean, almost eight, nine years before it's become, you know, beginning to be relevant in the marketplace. So I think bank to bank's probably got some time too.
spk12: And there's a scheme called BISM in Spain as well that's got over 10 million registered users as in consumers, but similarly volumes small at the moment, but exclusively online as well. And we also play in that space in terms of capturing BISM transactions. So it's similar to Blick. Open banking, though, across the rest of Europe really is an account information service rather than a payment information service at this stage. We're not seeing any real traction in the UK, Ireland, or other Western markets.
spk07: And we have to remember the benefits of Visa, MasterCard, chargeback rights, all the rest, 30 days of credit. That is still an incredibly compelling... solution for consumers. So at the end of the day, it's not our decision or somebody else's decision. It's the consumer's decision as to how they want to transact business. And I'm still extremely bullish on the major brands continuing to be incredibly strong for a very long period of time. And then on your second question, as Tom said, and we're very, very pleased at where we are on leverage. Actually, I think, George, it was one of your notes pre-pandemic that highlighted that we were north of four. So to see us down almost below two, you know, we're at two, one, two, two, I think is a testament to the management team and the efforts. You know, we did bring in additional money before the pandemic, not knowing how long and how deep it was going to be, but there's a lot of effort that was taken across the company to tighten the belt during COVID and coming out of COVID. And this was my expectation is that we'd be well positioned to take advantage of M&A. I also mentioned, I guess it was sometime last year or this time, about it's difficult to do M&A when people aren't traveling. But as we see domestically and internationally, people are starting to travel again. And we are definitely having a lot more conversations on the M&A front. You saw we closed a deal in Chile for a gateway last quarter. and my expectation going into the balance of this year and definitely into next year that we'll be coming to market with more M&A announcements.
spk04: Really appreciate the color, and congrats again on the quarter. Nice results.
spk06: Thanks, George.
spk14: And your next question comes from Jensen Wong from J.P. Morgan. Please go ahead.
spk06: Hey, I'll echo what George said. Good results here.
spk17: It's good to see some clean numbers. Just on the volume side, I just wanted to make sure, given what we've heard from your peers, just from a surprise standpoint, month-to-month, intra-quarter, any change or anything concerning, anything to say around October, everything looks pretty consistent. Just wanted to make sure if there's been any surprises from a macro standpoint.
spk07: Good morning, Tenjin. Thank you. No, no surprises. Honestly, we're trying to wean the market off of us publishing volumes every single month. I really did that in the beginning because when we first hit COVID, we did the raise. I don't think the market appreciated how severe it was. And because we are heavily international, 65 plus percent international, The European market was seeing, I think, it faster than clearly Mexico and the US. So that was a catalyst to start producing the slides. We didn't put October on. October was sequentially stronger than September by a couple of percent. So actually, October was a very good month. It's one of the reasons we feel good about the quarter. I mean, FX is obviously out of our control. you know, all the news that we're seeing about supply chain issues and holiday issues. So, I mean, there still is a potential headwind in the world relative to that. But, you know, where we're sitting today, the fourth quarter and going into next year feels good.
spk17: Great to hear. Great to hear. My quick follow-up is just on margins. I'll ask you. You've been Just like you said, on the leverage front, you've done an amazing job getting costs down and producing strong margin here. Any change in philosophy as you go into 2022? Do you feel the need to invest more aggressively, or can we assume that a lower cost baseline here is here to stay? Thank you.
spk07: Yeah, I remember for the last 20 years getting the question on margins. You know, margins, I feel like we operate the company as we try to operate the company as efficiently as possible. We obviously over the last 18 months, not just on the payroll side, which we've already announced, but on the non-payroll side, we found ways to be more efficient, reduce expenses, reduce reliance on third parties that were, you know, either part of Legacy Evo or part of some of the companies that we acquired. And so largely what you're seeing is permanent. We've reduced the expenses. And as the company continues to get bigger, as we make more acquisitions, I don't say the margin goes up indefinitely, but I don't see pressure on the margin line. And I think the other important feature is it's not like we're starving off. We, like everybody else, is somewhat challenged in filling open positions. And it's one of the things I get feedback from the EVPs and the GMs who run the business day to day. But, you know, we're as competitive as we can be on salaries and attracting talent in. So maybe we'll see some incremental cost increase as we add more positions, but the company has not starved for employees. And as you see on the capital side, we're continuing to spend money to buy terminals because the business is coming back pretty aggressively. I think the other benefit we and everyone is benefiting from is that there's more spend on card as a result of the pandemic. So we're just a bigger company, not necessarily more merchants in the aggregate, but just a bigger company because consumers are spending more and Spending more on a card just drives a greater margin for us. So, you know, relative to your first comment, I'm super impressed by how the company has performed on the margin line. I remember going public and during the early days of the IPO, that was the question we got. Why are our margins so low? Why are our margins so low relative to the bigger guys? And I would say they're bigger guys. But, you know, we're within spitting different distance of, companies that are multiples of our size. So I think we're running a really efficient place right now.
spk17: Good stuff.
spk06: Thanks, Jim. Thanks. Thanks.
spk14: And your next question comes from Andrew Jeffrey from Trist. Please go ahead.
spk09: Hi, good morning. Appreciate you taking the question. Jim, you know, I think, you know, sort of following on to Tingen's question, we're clearly seeing a lot of noise in the market just around, I think differentiation of some of the more legacy players. And one of the things that consistently jumps out as I listen to you talk about your business is the focus on tech enabled and specifically the gateway strategy. And I wonder if you just spend a couple minutes talking about how you think Evo is positioned in the market, especially in the US and in North America. And how maybe some of your tech-enabled initiatives, absent owning vertical market software, for example, distinguishes the company and improves your competitive position, perhaps, relative to peers?
spk07: Okay. I may do this in tandem with others. Brendan, since he has the Americas. I think relative to our peers in the U.S., our peers in the U.S. are massively bigger than we and very successful companies. I personally think the reaction in the market has been a massive overreaction. These are very well-entrenched, strong companies with lots of technology and lots of capabilities, so difficult to compete against. We have positioned the U.S. around TechEnable, as you said, through an acquisition or a series of acquisitions. The piece of business that we are, or the two pieces of business that we're most focused on is our ISV business, which was based out of Tampa, which was through the Sterling acquisition. That has grown multiples of where it was when we first acquired it. And then the one that's even more impressive is our B2B business, which is based in Denver and Anaheim and focuses on the receivable side. And we've said this many times before. I think that has been and is going to continue to be our primary area of focus For our US business because you know, that's what consumers are looking for in particular on the b2b space We've made a series of acquisitions and I think we're going to continue to we have a differentiating product on the Microsoft plugins on SAP on Oracle these are sticker stickier and larger customers, you know customers the size of Levi's SAP is a customer Fujifilms is a customer And I think that's how we, at our size, without bank relationships in the U.S., as we have outside the U.S., I think that's how you're going to see us continue to grow in a meaningful way domestically. The other gateways we mentioned in the script, what we have learned over time, where we originally started with a U.S. SNAP gateway for ISVs, We've supplemented that by buying into smaller ones. Anderson's Act's a really good example, as Darren mentioned in his speech. This is something we chased for a number of years. It's got over 1,000 customers already connected to it, over 20 ISVs connected to it, I think, in total. We're like 40 or 50 ISVs in the UK market. That has been an incredible bright spot for us in terms of its growth rate. Actually, the UK market is almost as big or bigger than our Irish market, and it does not have a bank partner. Our UK business, think of the old Mercury business in the US on the ISV side. We're essentially just taking that playbook in each of these international markets and taking the learnings from the US, from our ISV business out of Tampa, and using that as a way to... you know, teach our GMs internationally where new opportunities are besides just relying on financial institutions. I don't know if I covered all of it, but Brendan, I don't know if you wanted to add something to that. Maybe Chili?
spk02: No, I mean, I think Jim hit the question head on. I mean, what we're trying to do, not just limited to the U.S., but globally is build distribution. And our entree to the market, to distill the strategy and make it very simple. We go into a market with a partnership through a bank. The bank provides us a brand. We don't call ourselves Evo. We brand ourselves under the bank. The bank, its corporate bankers and retail footprint constitute our initial distribution. And then we immediately follow that up by introducing our other sales capabilities and product sets. And we try and buy a gateway in the market because that gateway accelerates our integrations to ISVs that have a significant presence domestically in whatever market we're talking about. And those ISVs and VARs and resellers become an extension of our distribution. And we think that in many of these international markets, we're not competing against the great companies domestically here that Jim referenced earlier. We're competing against financial institutions that aren't otherwise super focused on innovative point of sale solutions. So that, you know, the list that Jim referenced earlier, Anderson Sachs, Clear One in Spain, SFS in Mexico, DeLego and Notice here domestically, Pagafacil in Chile, they are all a replication of the exact same strategy. And we talk about it all day, every day here. How do we build distribution in a scalable way that doesn't just constitute hiring more heads? Because this allows us to attract a lot of merchants, grow the top line, grow volume, and not grow our headcount, which creates the EBITDA margins that we all enjoy.
spk07: I just want to add one other component to this. As Brendan just described, going into a market, again, we'll use Anderson Sachs or we could use SFS in Mexico. Going into those markets, we have two options. Go in with our own software slash buy somebody in the market. And now we're competing in a channel that's not core to our company. We're going to a market and try to partner with everyone. And, you know, maybe we have to give up 10 or 15 percent of our revenue, but we're not giving up 99 percent of our revenue, which you would see in a pay fact model with somebody like a toast or some of these other companies that have been enabled over the years to to basically harvest the value of processing the payments piece of it as opposed to making money on software. So we're partnered with software companies where we keep the majority of our revenue. And just like a sales commission, we pay them a sales commission for referring business to us. And that model has been replicated country after country after country. And again, I think it would be naive to think that I can develop a software in the United States that's going to be ubiquitous across the world. There's software everywhere. Everywhere we've gone, there's a point of sale infrastructure that is already in place. So that's the model internationally. Domestically, we do the same model on the ISV side and a very heavy focus on B2B where we do differentiate by buying software, developing software as plug-ins to ERP systems. And we're seeing dividends from that strategy. As we said in the script, the growth rates of those businesses far exceed the total growth rate of the company, which over time will pull the growth rate of the company up beyond where we are currently. Long-winded answer, but hopefully that answers your question.
spk09: Yeah, it does. Super thorough. Thank you.
spk14: And your next question comes from Bob Napoli from William Blair. Please go ahead.
spk08: Thank you. Good morning, everyone. Jim, maybe along the same lines, but how do you feel about the growth outlook for Evo today? You went public four years ago. You had a model that you had put out there. The market is kind of saying that there's been a lot of new technology and that some companies, I mean, your stock is kind of flat from four years ago, that you're not going to be able to compete against that new technology. It's going to take market share. But how do you feel about Evo's market position versus the new companies that are out there and your growth opportunities and the growth model versus when, say, you went public four years ago?
spk07: Yeah, I like my model. I mean, I can't speak to why the valuations that I see in the marketplace for companies that lose the amount of money that they do and have valuations that have a lot of zeros behind them. But, you know, our strategy is, I think, well documented, as we've just described here. I think this is a superior strategy on all levels. And banks are I think we have a lot of investors who are U.S. domiciled or maybe banks have become less relevant to the payment market, but 65% and growing of our business is outside the United States where banks are still very relevant or branches are still relevant. Business is done away differently than, say, it's done here in the United States. And the tech-enabled piece that we just described is very vibrant, is growing, is very low penetrated outside the United States. So inside the United States, we're not competing against some of the businesses I think that you're referring to relative to recent valuations. We're focused very narrowly on a B2B space, which has 24 trillion, as they say, of opportunity, which will float a lot of boats. And an ISV business that, again, is not based on owning software, because my experience has been software in and of itself is not making any money. They're making money on the payment side. And I think the mistake that some people have made is enable these software companies to make all their money on the economics and the infrastructure and the cost that companies like us have to bear to run our businesses. But we're not competing against a lot of the companies that you're referencing. Or you're not referencing, but you're, I think, referring to because we're domiciled in Chile and Mexico and countries across Europe where we're not seeing the the phenomenon that maybe is more prevalent here in the United States. But I also think there's a test of time. Let's see how these businesses do over the long haul. Do they morph into something else? Because at some point, they do have to make money. They can't just grow for the sake of growth. They have to be able to provide a return to shareholders. And some of the feedback that I got when we went public was about not just growth, but margins and leverage and all the rest. And those other ingredients of the company have been more than addressed. And you're seeing our growth continue to accelerate. And that's going to continue because what Evo started with was a small sales organization based in New York that was a traditional ISO model that all U.S. companies that are in our payment space have some remnants of. And it's still not an immaterial piece of our company. It's still a resident in the U.S., but outside the U.S., as you saw in the numbers, now some of this is a bounce back from COVID, but all our numbers are pointing in the right direction. And I feel very good about competing against any of the companies domestically or internationally. I don't see any concerns.
spk08: Thank you. And then just to follow up, just Tom, would you want to give any color on, growth rate into 2022? I mean, you seem pretty confident. Assuming kind of a stable recovery from COVID, would you expect growth rates to accelerate from here? And just any color you could give. So it seems like you're very confident on margins, and so maybe a steady, gradual margin increase. But just any thoughts around the revenue growth in 2022 would be helpful.
spk05: Sure. Yeah. Well, first comment on the macroeconomic environment. I think we expect for there to be a strong macroeconomic environment in 2022. Pandemic appears to be abating. Vaccination rates are increasing. You know, governments and consumers are getting a strong footing underneath them. So I think the macroeconomic environment, I think, is encouraging. We've said a couple of times that the cash to card tailwind seems to continue to be at our back. We would expect that to be sticky. I mentioned earlier in terms of the level of cross-border activity that we expect to see an improvement on, as I said, domestic volume was around 90% in our European market. Historically, it would have been, you know, we would have seen a higher level of international and cross-border activities. I think DCC will be a benefit to us. we think there's a lot of macroeconomic as well as industry specific opportunities in front of us and I think that bodes well for the growth potential of the organization I think you know obviously this year we're at that 13 14 15 growth rate we'll be all coming off of a tougher comparable obviously in 2021 but if historically we were you know eight to nine I think going forward With those tailwinds, you could see us above those historical levels on a go-forward basis. Hard to predict where we sit here today, but that would certainly be our expectation that you would see a rotation up from those historical top-line growth rates that we've generated before.
spk07: Just to add to that, one of the things, as I just mentioned, that has kind of held back our overall growth rate has been the legacy EVO business that we refer to as traditional EVO. But our ISV and B2B in particular, B2B has grown five times the size, six times the size, probably more than when we first acquired it from Sterling and added some acquisitions. So those businesses are now over 40% of our U.S. business. And as they continue to get bigger, and I think B2B is probably the one where we have bigger opportunities or better opportunities for M&A, as that becomes a bigger part, and it plays a bigger role in payment commerce in the U.S., then you're going to continue. We'll see the U.S. business accelerate. European and Latin America is already where we'd like it to be. It's really the U.S. that we've been working on trying to move it up the chain.
spk06: Great. Thank you. Really appreciate it. Yeah. Thanks, Bob.
spk14: Your next question comes from Ramsey from Barclays. Please go ahead.
spk10: Hi, gentlemen. Thanks for squeezing me in here. I wanted to ask about the Americas segment and how much revenue you generated in the quarter from BCI and the Pago Facil Gateway. I'm just trying to get a sense of the underlying U.S.-Mexico performance versus sort of what was incremental or new this year.
spk02: Yeah, I think you would see in the quarter the revenue from BCI and Pago Facil was relatively immaterial. I mean, I think we really only started boarding merchants in earnest in the second half of September through the JV. And then October, I will say we are the beneficiary of a very, very engaged bank partner there. And so we've prescreened, I think in the script we said 3,800 accounts. You know, we have very lofty ambitions in terms of the number of merchants we think we can board between now and year end. And they have a very significant foothold in the corporate banking segment. So some of these merchants could be considerably chunky in terms of volume and profitability. But in terms of contribution within the quarter, you know, from the JV, relatively immaterial. And then the Pago Facil Gateway, while profitable and attractive, is also relatively small at this stage as well.
spk05: Yeah, I think Randy, Tom, I think the story around, you know, BCI in Chile is really a 22 stories, as Brendan said, I mean, you're talking single digits, you know, low single digits on the revenue contribution measured in millions from, from the business, obviously, just getting, you know, started down there. But we do have expectations that from a revenue perspective, you know, you'll see that accelerate significantly in 2022 and beyond. And Brendan's script even commented on, you know, how that business we think can grow significantly over the next three to five years and, you know, generate outsized revenue growth for us.
spk10: Great. So strong organic drivers this quarter rather than anything sort of new or incremental or inorganic driving. I appreciate that. One follow-up question for Jim is, or maybe not necessarily for Jim, for whoever chooses to answer it, is you mentioned enabling MasterCard installments in Ireland. And I was just wondering if you could talk a little more about that implementation and maybe the opportunity to roll that product out more broadly across your footprint. And if you wouldn't mind also just commenting on your updated view on buy now, pay later in general, how it's evolving, how you see it as an opportunity or a potential challenge for the business specifically. Sure.
spk07: Well, there it is here. He's not Irish, he's English, but he goes there a lot. So I'll let him answer. The MasterCard, and I guess we can both talk about Buy Now, Pay Later.
spk12: Sure, thanks, Jim. So MasterCard installments is purely the MasterCard ensuring that they can support their issuer banks with installment solutions, or Buy Now, Pay Later, however you want to label it, but really more an installment product of ensuring that They play in the market, and we wanted to be front and center with them in terms of ensuring that integration, that we've got that functionality and capability. Clearly, at the minute, it's a fashionable time in terms of consumers seeking installments for a myriad of products, which some of it is questionable, I think, in terms of taking your groceries on three-month installments, et cetera. So I think there's a lot of froth in the markets Uh, but I think in terms of having a stable, secure legacy, uh, future product in terms of, uh, enabling merchants is important to partner with a MasterCard on a robust installment solution.
spk07: Yeah. So buy now, pay later is, is not limited to the U S and when we, I was talking to Poland recently and, you know, they're starting to see the, the shoots of people talking about buy now, pay later again for our industry, uh, My experience has been, and Discover would be a good example of this, Amex another, is that merchants like a single statement, a single deposit. It makes life easier to manage their business. So to have a buy now, pay later company coming in with a separate deposit as opposed to running everything through the acquirer, who again has the real estate, I think in the long term that's not a good outcome. So I see if As buy now, pay later, assuming it does continue to be a part of the options for consumers, then I think it's going to be at the point of sale. It's going to run through the same acquiring structure, infrastructure that's common across all the markets. And as some of our larger competitors have said, and I think we have a small buy now, pay later company that we process some transactions for, And they need someone to get to Visa MasterCard, at least for debit transactions. So they're going to ride the rails of the companies that have made the investment. Otherwise, they have to spend a fair amount of money to stand that up for themselves. So I think on both ends, whether it's processing for them or it's at the point of sale, I just see it as another tender type. I don't see it as a threat to the industry.
spk12: And just one more clarification, whilst we've enabled it in Ireland for e-commerce transactions, we can take it across all European markets, be it Germany, UK, Spain, et cetera. So it's an important engagement with MasterCard that I think continues, as Jim said, embedding us with the schemes to support this transaction type.
spk10: Got it. Very helpful. Thanks so much.
spk14: And your next question comes from Ashwin Shervekar from Citigroup. Please go ahead.
spk15: Good morning, gentlemen. Good quarter in result. Thank you, Ashwin. Sure. So from the bank perspective, I just want to look at sort of the propensity to continue doing continue doing bank partnerships and the pipeline. From the bank perspective, what has changed over the last few years? Are they appreciative of the fact that you're bringing a more tech-enabled product? How does that play into negotiations? What does the pipeline look like?
spk07: Okay, I think I've mentioned this prior, but I think banks do this for two reasons. Do this meaning form a relationship with a third party. It's not uncommon internationally for banks to have partnerships with a variety of different companies that have specialization in anything from payments to insurance. And I think they do it for two reasons. One, in the case of a bank that needs to raise capital, there is a process to look across the bank as to ways to raise capital versus just selling stock. And in the early days of EVO's international expansion, we capitalized on that coming out of the 2010 crisis, and in particular in Europe, and I think even in Latin America to some extent. In the last several years pre-pandemic, and I think we're seeing it again now, it has more to do, if they don't need to raise capital, is capabilities. So it costs a lot of money to build companies like Evo or Global or FIS, et cetera. And the ability to replicate it, not impossible, but for a financial institution, it would be a very big undertaking. I think they would have to buy somebody for that to be able to get to market in any reasonable period of time. And the model works. It's been working since first data coined it back in the late 90s and into the 2000s. Mild Company Global Payments has been extremely successful, continues to be successful with it. Vantif when it was doing it, and now you're starting to see it with some European players. So because it works and has worked in Canada, the US, Asia Pacific, in Europe, Latin America, then I think the stigma of, oh, I'm going to have a partner who's going to touch my accounts just like I touch the same customers, I think that's gone. And the reputation that our company has, we've got 15, 16 of these relationships spanning several different continents. That gives somebody a level of comfort that they're dealing with an organization that knows how to appropriately build a business together, you know, because it's not all about us. As Brendan said, our model is to leverage a variety of things, one of which is the bank's name. And that's an important distinction. And our approach is going into a new market where nobody knows who Evo is. We go into Ireland and we're the Bank of Ireland payment acceptance. Or we go into Europe, Czech Republic, where we're aligned with Raiffeisen Bank and we're called Revo, R for Raiffeisen and Evo for our name. And I see that, as I said earlier, I see that starting to accelerate. There's still lots of banks in the world that need to be relevant in the digital world, and that's something that we and people like us have the ability to do, where someone who is like a Square or others who are competing for banking services, they're not going to be interested in partnering with somebody who otherwise wants to offer a service that the bank is otherwise used to doing. We are very clear with financial institutions that we stay within our lane, we do what we do, and they continue to do the other 30 or so banking products.
spk15: Great. The second question, could you remind me, credit versus debit by geo in your footprint? We're getting a few questions on that.
spk05: Hey, Ashwin, it's Tom. So as you would expect, in Europe, it's heavy debit market. It's probably over 80% debit market within Europe. Within the U.S., it's kind of the reverse, but not quite to the same level, 70% credit. We've actually seen the credit market card type actually move up recently. That's something I think that does influence our view around spreads. And then within Mexico, credit market is 40%, 50%. of the um of the business so it's a bit more balanced in uh in mexico between credit and debit and then as i mentioned earlier europe is is heavily uh debit card related um based thank you guys excuse me good thanks ashwin your next question comes from kartik meta from north coast research please go ahead
spk13: Hey, good morning. Jim, I know you've answered a lot on acquisitions. I'm wondering if you're seeing any change in who you're competing for those acquisitions with, especially since some of the valuations, at least on the public side, are coming down. And I'm wondering if that's changing maybe people who might want to compete for some of the acquisitions you want.
spk07: So I don't think, well, thanks, Cardick. I don't think I answered that question. Somebody else asked us something similar. So it's a fair proxy, but where we trade in the marketplace tends to, to some extent, drive what banks think their businesses might be worth. There's other dynamics in play. And yes, as the industry's trended up over the last many years, I think it has driven up the prices for either acquiring a business in an alliance structure or in a joint venture structure. But the going-in price relative to the things that both Brendan and Darren have described with making other acquisitions in the marketplace, integrating to our fixed infrastructure of back-end systems or back-end and front-end systems, it still provides a tremendous amount of leverage. But I think for now, I don't know that the prices – the impact as to our stock prices in our sector of the industry that has moved down pretty significantly recently. I don't know that that's translated into what the price for the next bank relationship is going to look like. I think it will have a bearing on it. But these relationships take a very – it's like a marriage, as I've said many times. It takes a long time to put together. You date for a while before – you're in a room talking about contracts and the like. But, yep, they take a variety of things into consideration, and clearly public multiples are part of that analysis.
spk13: And then just to follow up, I don't know, Tom or Brendan, you talked about the Chile business, and I know, I think, Tom, you said really 2022, you should start seeing some acceleration. I'm wondering if from a margin standpoint, is that business similar to kind of the margins you see in the Americas or is it different?
spk06: Yeah, and thanks for the question, Karthik.
spk02: So, you know, we run the company in a hub and spoke model. You know, we have kind of two big hubs internationally. We have Warsaw for the European business and then Mexico City for the Latin American business. And what that allows us to do is populate our in-market businesses with sales initially, so basically exclusively sales. And then over time, we'll move customer support in-market as the business scales. We are going to be processing the market, or we are processing the market off our Mexican platform, which ostensibly has no variable cost per transaction or very, very little variable cost per transaction. So, you know, listen, we may lose a tiny bit of money for the first couple months. We would expect to get to break even super quickly. We would expect there to be, you know, positive EBITDA for the first year. We would expect the margin to scale and normalize to what you would see in our other, you know, spoke markets around the world. So it would look very similar to what our Irish business or Spanish business or German business might look like. So, you know, and that would be way north of 50% contribution margins.
spk13: Perfect. Thank you very much. Appreciate it.
spk06: Yep.
spk14: Your next question comes from Brian Keane from Deutsche Bank. Please go ahead.
spk16: Hi, guys. Good morning. I know we're going long here, so I'll just keep it to a quick one question. When I just look high level, you know, you see the massive improvement in volume on the two-year in Europe. But on the two-year, the Americas dropped, I think, from 12% to 9%. So, Just thinking, you know, it's particularly in the Americas, you know, the cause for the drop on the two-year and the possible rebound on the two-year going forward.
spk05: Sure. Hey, Brian. It's Tom. You know, as we've said, the U.S. business doesn't grow as fast as our international business, so it's somewhat dilutive to that overall blended Americas growth number when you look at when you break it apart. Mexico is growing north of 20%. And the U.S. is, as we've said before, it's going to be in that mid-single-digit kind of grower until the tech-enabled piece continues to grow. We do see double-digit mid-teens growth in the ISV B2B business, not just on the top line but also on the volume. So it's just a function of those other businesses continue to kind of dilute. We look forward to when those businesses get smaller and and aren't influencing some of the blended numbers, but you're just seeing a blend of those other businesses continue to affect the overall. But internationally, whether it's Europe or Mexico, the volume numbers are very strong.
spk07: And I'll just add to that. While the B2B business has done incredibly well through the pandemic relative to other business channels that we have, Our ISV business in the U.S., while we're growing outside of hospitality, the business we acquired years ago was predominantly hospitality. So, you know, that segment saw some closures, and that segment has rebounded and then retrenched and rebounded and retrenched and has had service issues and, you know, getting servers, et cetera. So I think that's been... Not really a headwind, but relative to volumes and maybe what the bounce back would have otherwise looked like, I think that has played into it a little bit too.
spk16: Got it. Helpful. I'll keep it there. Thanks, guys. Thanks.
spk14: Your next question comes from Jason Kupferberg from Bank of America. Please go ahead.
spk11: Hey, guys. This is Cassie on for Jason. I just wanted to follow up on the – October trends that you mentioned, which saw some improvement relative to September. Is that for both the Americas and the European segment? And are you assuming these trends are holding steady from these October levels in order to hit your 2021 guidance? Thanks.
spk07: So, yeah, I think it's, I mean, Tom can amplify, but I think we're pretty consistent in relative to where we were coming out of the quarter. And we would expect that they will continue. We have a holiday season. that we're approaching and two markets in particular have probably more exposure to big box type of activity. That would be Mexico and our Polish market as opposed to kind of most of our others would be more staple type of activity. So there may be some improvement in December just as relative to other months just because of the holiday.
spk11: Okay, that's helpful. And I just wanted to follow up on margins. I know you guys are expecting, you know, 200 to 250 basis points of margin expansion this year. You know, in terms of like next year, should we kind of be thinking about it as back to the sort of 50 to 75 basis points of annual expansion? And are there certain expenses that are coming back, which is kind of why foreseeing margins will see a little bit of a deceleration, you know, relative to the third quarter? Thank you.
spk05: Hey, Kathy. You know, similar to my comments, I think when I was answering Bob's question in terms of how do we think about 22, I was focused on revenue growth and talking about how we think it'll be a bit outsized relative to the long-term historical run rate. I think we'd feel the same way on margins as well. So before pre-pandemic, we were kind of 50 to 75 annually. I think that rotates up to 75 to 100. We'll continue to invest in the company long term, adding resources, predominantly people, customer facing people, whether that's customer support or sales, so that we can continue to feed the distribution engine. But we will be very focused on operating leverage. We've demonstrated strong execution through and coming out of the pandemic, and I think operating leverage will continue to be something that you will see us generate, which will cause those margins to continue to expand. Obviously, the 300 basis point is a complete pandemic reset. But from here, we see margins growing at a higher rate than historically.
spk14: All right. Thanks, guys.
spk06: Thank you.
spk14: Your next question comes from Ken Suchovsky from Autonomous Research. Please go ahead.
spk03: Hi, good morning, everyone. Thanks for taking the question here. I just wanted to follow up on the Chile opportunity. I think you mentioned it was a 25 million revenue opportunity within three years. I mean, can you talk about how you expect that revenue to ramp over the coming years? Is it linear? Call it 8, 16, 25 over three years? And I guess any other detail on how you came up with that estimate and if there's upside to that number?
spk05: Sure. Hey, Candace, Tom, and Brenda and I can kind of tag team this. So, no, we would see it, you know, obviously accelerating. As Brendan said, 2021 is our startup year. I mean, Pago Facil came with an established business, 5,000 merchants and growing. But the BCI, we're starting, you know, from scratch and partnering with the BCI very well to get that moving. We would see, you know, part of the reasons why I feel good about 2022, I left this out in one of my earlier remarks when I was answering Bob's question, but I think Chile is also a significant tailwind financially for us in 22. You know, we see that in kind of call it the, just to use round numbers, 10 million-ish kind of revenue number for 22, and then we can see it doubling from there as that business continues to accelerate. Strong margins. The margins will increase over time as we gain scale and cover more of those fixed costs that we put in the market. But given the hub and spoke structure that we have, those fixed costs are customer-facing, sales generation-type resources that will more than pay for themselves. So It'll accelerate to that $25 million number, but we see significant contribution in 22 coming from Chile. Brendan, you want to?
spk02: Yeah, I mean, as you think about the opportunity set, the bank's addressable audience, in terms of their customer base, they have mid-70s, 1,000 corporate customers, 75,000 to 80,000 corporate customers. And the goal is to service those as many as we possibly can. You know, I think the CEO of the bank, has set a target for 10,000 merchants this year. I think that's likely ambitious. I hope he's not listening, but we're going to give it our best shot. But I do think this gateway has been a huge addition to us in terms of capabilities, and we are seeing a lot of demand. I mean, that business boarded 1,500 customers in the third quarter alone, which is remarkable growth and I think validates the strategy that we had in buying it. So we feel really well positioned. Again, the competition there is relatively skinny. We are competing against an incumbent that has been operating as a monopoly since the origin of the payments market there. And the only other company that's sort of doing something along similar lines is Santander, but they are running it themselves, not in partnership with an acquirer like an Evo. So I think the positioning is good. I think our partner is good. As I said in an earlier question, they are super, super engaged. And, you know, I think the answer that Tom provided in terms of what the outlook looked like is spot on.
spk07: You know, I'd add to this that beyond how we think that's going to perform, and again, as Brendan said, the proxy to Ireland is a good one because that was likewise a startup. And this Chilean bank is incredibly supportive and has been a great partner, just as BOI has been. But this also gives us... footings within South America, which were the first international into the Chilean market. And there's real estate all around Chile. The bank is going to be supportive of us finding our way into other markets as well. So I think it's more than just an organic story, which is great, and high growth, great. But it's also, I think, going to be an M&A story in 22 and 23.
spk03: Got it. That's really helpful. And then just a quick follow-up to the question. I think in the opening remarks, I think the mention of a high team's revenue growth rate in 2022. And I just wanted to know, was that for all of Europe or was that for just Poland?
spk06: Yeah, that was specific to Poland, Ken.
spk05: But, you know, we think there's a lot of opportunity across Europe. So, I think as we look into 2022, we see the rest of Europe being, if not to that level, very near it. I mean, we also had in prepared remarks that we've seen UK and Ireland growing at 30%. So really, the only unknown is Spain and that economy coming back and travel returning and DCC. Those are things that are out of our control. But based on the things that we can control, we see it as mid to high teens. Okay.
spk03: That's really helpful. Thanks a lot, guys.
spk06: Thanks.
spk14: And there are no further questions at this time. I will turn the call back over to the presenters for closing remarks.
spk07: All right. Well, thank you, Operator, and thanks for everyone who we ran a little long today. But we continue to appreciate your interest in Evo, and have a good week.
spk14: This concludes today's conference call. You may now disconnect.
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