Euronet Worldwide ((EEFT)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Euronet Worldwide’s recent earnings call painted a largely positive picture, highlighting the company’s significant achievements and robust financial performance. The acquisition of CoreCard and a major deal with a leading U.S. bank were key highlights, showcasing Euronet’s strategic positioning for digital growth. Despite challenges like the new U.S. remittance tax and rising expenses, the company remains optimistic about its future prospects.
Acquisition of CoreCard
Euronet announced its acquisition of CoreCard, a credit card processing platform, marking a strategic extension into digital payments. This acquisition complements their existing Ren platform and opens up a market with a total addressable revenue of over $10 billion, offering attractive operating margins nearing 50%.
Significant Ren Deal with Top U.S. Bank
In a highly competitive environment, Euronet secured a significant deal with one of the top three U.S. banks for their Ren platform. This deal underscores the confidence major banking leaders have in Euronet’s technological capabilities.
Record Second Quarter Performance
Euronet reported a record second quarter with $1.1 billion in revenue, $159 million in operating income, and $206 million in adjusted EBITDA. The Money Transfer segment was a standout performer, showing a 33% growth in constant currency operating income.
Continued Digital Transformation
The company continues to focus on digital transformation, reporting a 29% year-over-year growth in digital transactions within the Money Transfer segment. Euronet is expanding its digital capabilities through strategic partnerships and acquisitions.
Positive Outlook for 2025
Euronet reaffirmed its positive outlook for 2025, expecting earnings growth between 12% and 16%. This optimistic forecast is supported by strategic acquisitions and significant deals that bolster their digital strategy.
Impact of New U.S. Remittance Tax
The introduction of a new 1% remittance tax in the U.S. is expected to impact 27% of the Money Transfer segment, equating to 12% of Euronet’s consolidated revenues. While the impact is projected to be minimal, it remains a challenge for the company.
Higher Interest and Tax Expenses
Euronet experienced a $0.05 per share impact due to increased interest expenses and higher income taxes, influenced by state taxes and foreign operations.
Challenges in EFT Segment Growth
The EFT segment saw a modest revenue growth of 6%, with operating income and adjusted EBITDA aligning with prior year results. This was largely due to a challenging comparison with the previous year’s strong performance.
Forward-Looking Guidance
Euronet’s guidance for the upcoming quarters remains strong, with expectations of continued growth. The company reported $1.1 billion in revenue for the quarter, with a 14% year-over-year increase in adjusted EPS to $2.56. Despite challenges like the new remittance tax, Euronet is confident in its growth trajectory, reaffirming its 2025 earnings growth expectation of 12% to 16%.
In summary, Euronet Worldwide’s earnings call reflected a positive sentiment, driven by strategic acquisitions and robust financial performance. While challenges such as the new remittance tax and rising expenses exist, the company’s strong digital strategy and growth outlook for 2025 provide a solid foundation for future success.