Greetings and welcome to the Euronet Worldwide Fourth Quarter and Full-Year 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Please be advised that today's conference is being recorded. It is now my pleasure to introduce your host, Mr. Scott Clausen, General Counsel for Euronet Worldwide.

Thank you, Mr. Clausen, you may begin..

Thank you. Good morning, everyone, and welcome to Euronet's fourth quarter and full-year 2022 earnings conference call. On this call, we have Mike Brown, our Chairman and CEO; and 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's or its management's intentions, expectations or predictions of future performance are forward-looking statements.

Euronet's actual results may vary materially from these anticipated in the forward-looking statements as a result of a number of factors that are listed on the second slide of our presentation.

Except as may be required by law, Euronet does not intend to update these forward-looking statements and undertakes no duty to any person to provide any update. 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.

Now, I'll turn the call over to our CFO, Rick Weller.

Rick?.

Thank you, Scott, and good morning, and welcome to everyone joining us today. I will begin my comments on Slide 5. For the fourth quarter, we delivered revenue of $865 million, operating income of $79 million, adjusted EBITDA of $127 million, and adjusted EPS of $1.39.

These results produced strong double-digit constant currency growth rate, driven by strong growth from all 3 segments.

With particular reflection on the continued improved domestic and international cash withdrawal transactions in the EFT segment, where the improved demand for travel continues following the lifting of COVID restrictions across the globe. Next slide, please. Slide 6. presents a summary of our year-end balance sheet, compared to the prior quarter-end.

As you can see, we ended the year with $1.1 billion in unrestricted cash and $1.6 billion in debt. This increase is largely from cash generated from operations, partially offset by working capital changes. The decrease in debt was largely from the reduction in ATM cash, which was returned from the ATMs following the peak travel season.

Next slide, please. Now, I'm on Slide 7. Here, we present our results on an as-reported basis for the fourth quarter. Similar to the last several quarters, many of the currencies in our most significant markets declined in the 10% to 20% range versus the U.S. dollar, compared to the prior year.

I will note that towards the end of the fourth quarter, we began to see currency strengthen against the U.S. dollar, which has continued into the first quarter. The improving FX rates in the fourth quarter provided a benefit versus our guidance, which was largely offset by some higher-than-expected operating taxes.

Again, that's operating taxes, which goes up in the operating expenses, not in the income tax expenses. To normalize the impact of these currency fluctuations, we have presented our results on a constant currency basis on the next slide. Slide 8.

The strong improvements in EFT revenue, operating income and adjusted EBITDA were the result of increased domestic and international withdrawal transaction trends from the lifting of COVID travel restrictions across the globe, together with the addition of and the good performance from the acquisition of Piraeus Bank's merchant acquiring business in March of 2022.

On a year-over-year basis, revenue and gross profit per transaction were consistent. epay revenue grew 9%, operating income grew 12%, and adjusted EBITDA grew 11%, driven by the continued expansion of mobile and digital and branded payments together with the continued growth of the digital distribution channel.

Also included in the fourth quarter results was growth in loyalty reward programs delivered by epay on behalf of new large retailers. epay's revenue and gross profit per transaction were consistent on a year-over-year basis. Money Transfer revenue, adjusted operating income and adjusted EBITDA grew 9%, 6%, and 5%, respectively.

The growth was the result of 13% growth in U.S. outbound transactions, 13% growth in international originated money transfers, of which transfers largely initiated in Europe grew 13% and transfers initiated in the Middle East and Asia grew 14%.

In addition to these strong growth rates, XE transactions grew 25%, partially offset by a 17% decline in our intra-U.S. business. When you look at direct-to-consumer digital transactions on their own, they grew 38%. As we have in the prior quarters, we continue to monitor the impact of inflation across the business.

We have generally seen increases across all segments in salary expense, both our own and our suppliers. On the revenue side, we have not seen any direct impacts of inflation on our EFT and epay businesses.

However, in money transfer, similar to what we saw earlier this year, the average amount sent per transaction declined by about 3% or 4%, resulting in nearly a 1% offset in our revenue per transaction growth rates.

Overall, on one hand, we saw constant currency revenue per transaction come in by about 1%, largely attributable to the decrease in average send amount I just mentioned.

However, on the other hand, constant currency gross profit per transaction improved in money transfer by approximately 2%, largely due to favorable mix and improvements in overall correspondent payout costs.

The drivers behind our full-year results for each of the segments were largely the same as the fourth quarter, so I won't go through the full-year results in detail, but we have presented them on the next few slides. As I reflect on 2022, I am pleased with the resilience of all three of our segments.

In EFT, we saw our transactions improve in-line with the improvement in travel trends, if not a little better. And our new merchant acquiring business continued to perform quite well.

Many of you may recall that epay started the year slow, but the business gained momentum in the second half of the year as we expected, and ended the year with double-digit constant currency operating income growth for both the fourth quarter and the full-year 2022. In Money Transfer, we continue to expand both our physical and digital networks.

We are also continuing to build momentum in our digital initiatives as we sign more rent agreements, and we see large banks and brands realize the value proposition of our dandelion network. I know that many of you are going to ask what we expect for the full-year 2023.

It is not our practice to give full-year guidance, but I do think it is helpful if we provide some direction for the full-year. As many of you know, on January 1 of this year, Croatia transitioned its currency from the Kona to the euro. Certainly, the currency migration will have some impact on our EFT results.

However, we believe that there are a number of new rate-related opportunities in the EFT segment that will nearly offset the impact. And we fully believe that we can carry the momentum we have built in 2022 forward into the new year.

To that end, we expect the first quarter adjusted EPS to be approximately $0.85 per share, which represents a 23% growth over last year, assuming consistent FX rates, interest rates and other unforeseen matters. We also continue to expect the full-year adjusted EPS to grow in the mid-to-upper-mid teens range over our full-year 2022 adjusted EPS.

I think it bears repeating that we have a strong balance sheet, while making the right strategic investments in our business, which we believe will allow us to continue to grow at double-digit rates. It was another great year at Euronet. And with that, I'll turn it over to Mike..

Thank you, Rick, and thank you, everybody, for joining us today. I'll begin my comments on Slide 15. Well, I guess, as I look back, all I can say is, what a year. We delivered very strong consolidated constant currency double-digit growth rates in the midst of ongoing economic and global uncertainties.

We have continued to prove that our business is resilient, and as Rick mentioned during the pandemic, we were not afraid to invest in places we believe that would continue our long-term growth trajectory. In EFT, our most profitable transactions continue to improve.

In epay, there continues to be a growing demand for mobile and branded digital payment content and consumers and businesses still need to send money across borders. The fourth quarter unfolded largely in-line with what we expected when we spoke in October.

Despite not seeing a full travel recovery, we are encouraged by the continued signs set, at least as it relates to travel, the end of the pandemic seems to be upon us in the U.S., and travel conditions are improving the father East to go.

The Euro Control outlook remains consistent, the passenger traffic in 2023 is expected to reach 92% or 93% of 2019 levels. While we'd like to see this data at least in-line with that 100% of 2019, this would still be roughly a 25% improvement from 2022.

We are also seeing positive signs from travel booking sites, which indicates a very strong demand for travel this coming summer and year, due to the backlog of people wanting to take trips that were canceled during the pandemic, or delayed due to the capacity restraints, which really vexed us and global travel last year.

On their recent earnings call, the Delta Airlines CEO was bullish on the travel industry recovery and expect double-digit top line growth in the coming years.

This optimism in travel together with some pricing opportunities, entry into new markets, continued growth in our POS acquiring business and sales of our Ren platform, add support for our expectation that we will deliver strong growth rates in 2023.

With this macro overview, let's get down to each specific segment, beginning with the EFT, starting on Slide Number 16. Slide 16. We have successfully grown our ATM deposit network in Poland this quarter, signing agreements with 23 new merchants who will have access to our broad deposit network.

For some perspective on the success of this network, we received more than $6 billion worth of Polish Zloty in ATM deposits in 2022. And now we are continuing to expand that growth in Romania with an ATM network participation agreement with Unicredit Bank.

These deposit ATMs allow customers and retailers to deposit money with nearly instant credit to their accounts, allowing them to avoid carrying large sums of money to the bank or having to wait until banking hours.

As I reflect on the $6 billion in ATM deposits that we process, it seems like a good time to address one of the most common questions I receive.

Of course, that is, is cash dying? I am certainly not going to deny that digital transactions are popular and convenient, but what we have seen and what the $6 billion in ATM deposit once again show us is there continues to be a large volume of cash used in circulation.

Further, what we have seen is that in times of economic and other uncertainties, people tend to fall back to cash. So, I'd tell you that, no, we do not believe that cash is going away.

Accordingly, our core business has proven to be very profitable so we have continued to use these profits generated from our cash base withdraw and deposit transactions to invest in the next-generation technology and digital transactions, which we believe will continue to diversify our global business.

Moreover, the value of our cash business creates significant value to our shareholders. Getting back to the highlights in Spain, we signed a network participation agreement with Banco Caminos, this is the 15th agreement that we have signed to allow banks to provide their customers with convenient access to our market-leading ATM network in Spain.

Also in Spain, we leveraged the content relationships in our epay segment to cross-sell Spotify, Xbox, Nintendo, and Paysafe card sales on Euronet ATMs. The combination of these two business segments is a great example of our goal to allow customers to participate in the global economy in a way that is most convenient for them.

We signed two exciting agreements in the Philippines during the quarter. We signed our cardless cash withdraw on deposit agreement with payMaya, the second largest digital wallet in the country.

This wallet has platforms and services that cut across consumers, merchants, communities, and government and provides more than 41 million Filipinos with access to financial services through its consumer platform.

We also signed an agreement – a network participation agreement with the Bank of the Philippine Islands, BPI, to allow BPI cardholders to perform cash withdrawals and balance inquiries free of charge on the Euronet ATM network there in the Philippines, which now has approximately 900 ATMs in the country. Next slide, please.

Slide Number 17 provides you with an update on our ATM portfolio. During the quarter, we reduced our owned ATMs by approximately 450 machines. This is the result of a couple of measures. First, we removed about 350 ATMs in Croatia that were in places that would likely not be profitable given the country's conversion to the euro.

Second, a more robust post-COVID travel season last year, gave us another data point to analyze our ATM estate with higher transaction volumes, and we redoubled our ATM profitability management efforts.

As a result of this process, we removed about 250 ATMs, which we will relocate in which we expect will ultimately provide us with a stronger and even more profitable ATM network as we move into this year and next. The culling of the network was offset by the addition of about 158 new ATMs in new and existing markets.

We also reduced our outsourced ATMs by 200, due to the expiration of an outsourcing agreement in Poland. Finally, we deactivated about 3,900 ATMs for the winter season consistent with our historical practices. As we think about our ATM deployment plan for 2023, we expect to deploy between 3,500 and 4,000 machines in new and existing markets.

Moreover, as we see the return of travel and provide a travel recovery is more robust, our optimism for ATM deployment may very well increase. To sum up the year and EFT completely, I'd say, it was a great year. We were able to answer the most lingering question from the pandemic, will consumers still want cash when they travel.

We now know that, that answer is certainly a resounding yes. As our transaction growth paralleled the travel recovery reported by Eurocontrol.

With Asia Pacific now accelerating its opening, certain pricing opportunities across our markets, and entry into new markets and our digital initiatives, we anticipate that EFT will continue to produce strong growth rates in 2023. Now, let's go on to Slide Number 18, we'll talk about epay for a minute.

I am particularly pleased that epay closed the year with revenue growth slightly above the expectations that we provided over the last several quarters, with more than 40% constant currency growth above 2019 levels.

This is a strong testament to the demand for our mobile and digital branded payments content, together with the expansion of our digital distribution channel. This quarter, we continue to expand our content by launching McAfee renewals and Currys stores in the U.K. and Ireland.

In Spain, we launched digital subscriptions, for Disney+, we also expanded sales of Uber cars in Germany and Spain. We continue to expand our relationship with Microsoft to provide Microsoft 365 renewals in Germany, Brazil, UAE, and the U.S.

We really like these renewals and the agreements that we've signed as they leverage our industry-leading tech stack and give us a recurring revenue stream. Finally, we launched a digital branded payments agreement in [legal stores] [ph] in the U.K.

Our epay team continues to find innovative ways to give customers payment options in the way that they want them, whether that's in a physical store, online, at an ATM, or through a digital wallet. We believe that our content and technology solutions are industry-leading and will continue to give us new opportunities for expansion around the world.

Now, let's move on to Slide Number 19, and we'll talk about Money Transfer. Our network now reaches 522,000 physical locations, 3.6 billion bank accounts, and 428 million wallet accounts across 188 countries and territories. During the quarter, we launched 16 new correspondent agreements across 14 countries.

One of the more significant of these launches was with a Hong Kong-based OTT pay, which processes bulk small value cross-border business-to-consumer payments on behalf of companies that need to pay gig workers, influencers, and other independent contractors. We also signed 19 new correspondent agreements across 19 countries.

We added four new mobile wallets across Cameroon, Molly, Sierra Leone, and Colombia, and we added corporate payments in both Egypt and Morocco.

During the quarter, we acquired Sikhona, a global partner in South Africa, significantly strengthening our presence in the send and receive market with a license, a strong cash acceptance and promoter network, as well as a successful money transfer app.

We are already seeing a large number of new in-bound and out-bound opportunities in that country and we'll consolidate our presence – which will consolidate our presence in South Africa and the broader region. Finally, we continue to expand our digital assets, launching our App Store, I mean our app, moneytransfer.com app in Singapore.

This gives us another send market in our digital channel, where we are seeing direct-to-consumer digital transactions growing 38% year-over-year. Now, we'll talk about Slide Number 20 and our Dandelion successes.

Well, we're extremely pleased to announce that we have signed an agreement with HSBC, the world's eighth largest bank to utilize our Dandelion platform. As a major bank with strength in Asia Pacific and the Rest of the World, the HSBC Group has a key role to play in today's global economy.

We are very proud and very excited about this new relationship, and now we are laser-focused on going live with our first market this month.

The agreement with HSBC is a good example of the favorable market response to Dandelions differentiated value proposition, which includes a real-time payments, alternative payment channels, and complete payment solutions all available through a single API integration.

Dandelions’ sales pipeline grew significantly in Q4 with strong interest from banks, payment companies, MSBs, and fintechs across the globe. We will continue to work hard on this pipeline and hope to deliver more exciting announcements in the coming quarters. Now, let's move on to Slide Number 21, and we'll talk about rent.

Well, on Slide Number 21, you can see that we continue to expand our Ren pipeline of agreements. During the quarter, we launched Visa prepaid card issuance and switching with TNG Digital, the largest e-wallet issuer in Malaysia with approximately 22 million customers.

Using our Ren technology, Euronet will convert funds in the T&G e-wallet to a Visa-branded open loop program. We successfully ran the pilot program in December and did an official math launch in January. A few slides back, we told you about our ATM network participation agreement with BPI.

In addition to this agreement, BPI has recognized the value of our Ren offering, and we launched person-to-merchant payments through InstaPay. InstaPay as a real-time payment service to allow customers and businesses to transfer funds instantly between accounts from a number of different banks in the Philippines.

During this quarter, we expanded this functionality to allow person-to-merchant payments providing a comprehensive real-time payments experience to BPI's customers.

You may remember, last year, we told you about an exciting partnership we had with Grab in Singapore where Euronet's Ren platform was selected as Grab’s strategic partner to provide end-to-end open-loop issuer processing and switching services. We have now expanded that same relationship with Grab to Malaysia.

We also signed an agreement with Grupo Confianza in Honduras to become the SaaS card issuing solution and Mastercard BIN sponsor for their credit union clients.

This agreement is strategic and that it gives us entry into Honduras with our Ren cloud-native platform and creates a bridge to attend to smaller clients who are better served with an aggregator. As you can see, the investments we have made in our digital technology solutions are continuing to pay-off with a strong pipeline of new rent agreements.

We expect this Ren pipeline to contribute approximately 140 million in revenue over the next 6 years. Now, let's go to Slide Number 22, and we'll wrap up the quarter. As I stand back and reflect on 2022, it largely marks getting back to where we were [Technical Difficulty] Okay.

I apologize for the – a little bit of a technology break there, but I will continue now. As I stand back and reflect, 2022 largely marked getting back to where we were pre-COVID. Had it not been for changes in currency, our full-year adjusted EPS would have been roughly at 2019 level.

I think it is worth repeating a comment that we made at the end of the third quarter. History can often be a good predictor for the future.

Through Euronet's history, we have been through every economic cycle, one-off events like cash demonetization in India, and now what appears to be the two biggest global economic setbacks in the last 80 years, the 2008 financial crisis and the COVID pandemic, and we have always come out stronger on the other side.

This has been made possible by our hard-working employees, of course, but also our balanced product and geographic portfolio, the disciplined management of our balance sheet and investments for future growth, together with the fact that our product portfolio consists of products that people want, use, and need.

With improving travel trends, more content, bigger networks, and more geographies, we believe our business is poised to continue to deliver double-digit growth rates in 2023 and beyond. With that, we'll be happy to take your questions. Operator, will you please assist..

[Operator Instructions] Our first question comes from the line of Rayna Kumar from UBS..

Good morning Mike and Rick. Thanks for taking my questions. It's good to see that you're reiterating your mid-to-upper teens EPS growth guide for 2023. I just want to make sure that's off of the new 6.51 EPS base for 2022.

And Also, if you can walk us through your expectations by segment for the year and for 1Q, that would be really helpful?.

Well, we – first of all, yes, it's off the full number for last year. So, when we say, kind of mid-teens, so we're thinking in that, kind of range of maybe 2014, 2015, 2016, maybe for a little bit like 17%, kind of growth rate over last year's total number yet.

And then with respect to each of the segments, we don't really break it down by segment, but as I've mentioned and Rick did in our comments, we're pretty excited about all three segments.

Of course, the one segment that's going to have the easiest growth you might say, will be the EFT segment because we do believe that we're going to get a lot more travelers to our ATMs this coming summer..

And Rayna, what I would add and consistent with what Mike said, we typically don't give all that, kind of level detail in each of the segments. But I know in the past, we have talked at different times about what we, kind of expect in longer-term growth rates for our segments.

And what we've consistently said and we continue to believe is that our epay business will have a revenue growth trajectory that would be in the upper single digits and the low – or the lower double digits on revenue, that operating income would be more on the lower double-digit side.

In our money transfer business, we believe that we move – our revenue will be in the, kind of lower double-digit range, but a little bit more aggressive than what we might be on the epay side.

So, that would be, kind of – it's possible that we could be into the low teens on that side of the revenue piece, but – so kind of think of that as a 12 or a 13 kind of a number. And we would then expect to see that our operating margins grew a little faster than that. And then on the EFT segment.

As you can appreciate with the return of travel as we see the number Mike said earlier, if we just, kind of take the euro control number that, that would be nearly a 25, kind of percent number.

What we saw as we, kind of finished up the year and what we're expecting is that the EFT would see a travel recovery, kind of in about the, kind of 70-ish kind of percent range that the end of the year we would end up a little stronger than that as that recovery continued, and that's exactly what we did see.

So, if you kind of think of that as being, kind of in a ballpark of 75, kind of percent. If you then again, use the [92, 93] [ph], as Mike says, well, that's merely a 25%. I think it mathematically calculates out to about 22% or 23%, but that's the way I think you probably ought to directionally think about the revenue growth out of the EFT segment.

And then obviously, that's going to contribute well stronger expansion on the operating income side. So that's, I think, very, very consistent with what we've talked about in the past. As Mike said, we continue to see very strong momentum going in the pipelines of our Ren product, our Dandelion products.

We couldn't feel better than to be able to announce an absolute marquee name like HSBC, recognizing the value of our product. And I think as we continue to build that business, we'll see those pipelines grow, but that kind of gives you some perspective of, again, confirmation of what we expect the continued growth rates to be in our business..

And I would like to also caution to, let's not forget, first quarter for the last 10 years has been our seasonally weakest quarter versus it's, kind of a perfect storm of all three segments tend to be weaker in the first quarter. So, just kind of bear that in mind.

And also, when we talk about other things, we're excited about, our acquiring business that we purchased from Piraeus Bank did quite well last year. So, we're excited about that one going forward..

Okay. That's a really helpful detail.

Just on the point on travel, what are you seeing in terms of increased capacity at Heathrow Airport versus your expectations?.

Okay. So, we don't know exactly what it's going to do. All we know is that the travel caps were removed during the Christmas rush. Now, I would tell you also, let's not forget the Christmas rush isn't nearly the summer rush. So, we're cautiously optimistic that they're getting their act together there. So, we'll have to see what happens, but they know.

I think everybody recognizes what a mess up it was last year, and so, they're going to do their best to get it fixed..

And I think that's even reflected. You may have read some news about them having a change in their leadership there. So, they really want their travel industry to work well.

And as Mike said, we didn't see any real hiccups going through the fourth quarter, albeit it's obviously much lighter than the third quarter, but those are favorable signs as we look towards next year..

Got it. And….

Operator, we’ll move to the next caller. I’m sorry, Rayna, I got to get everybody else a shot..

Thank you. One moment for our next question. Our next question comes from the line of Andrew Schmidt from Citi..

Hi Mike, hi Rick. Good morning. Thanks for taking my question. To dig in on the – just the reiterated mid-to-upper teens EPS outlook, just, kind of a little bit of a technical question.

Are you flowing through the benefit of the FX rates, the favorability there? And then if you are, just wondering if there's offsets that [indiscernible] it seems like if you flow those through, you should be – could be a little bit higher or at the very minimum at the upper end of that range? Any thoughts there would be helpful. Thanks..

Yes, we did – essentially, we've assumed that the IFRS rates are the same as what they are today and that they'll remain unchanged for the rest of the year. And it just, kind of depends on exactly where you want to pinpoint your math on that.

As Mike said, if you were more towards the upper teens, it would be a little bit stronger, but yes, it has been appropriately reflected in that number..

We've also – a little bit to the offset of that is we're planning on a couple more Fed rate increases and more rate increases in Europe as well..

Got it. Okay. That makes a lot of sense. I appreciate that. And then just quickly on money transfer. If you just elaborate just a little bit on what you're seeing, it doesn't seem like, Rick, based on your commentary, that the growth rate has materially altered.

So, are you seeing something different as we, kind of enter 2023 and maybe the fourth quarter was a little bit of a point-in-time? Or are you seeing kind of these inflation – this inflation kind of impact persist with the remittance customers? Any color there in terms of what you're seeing in money transfer would be helpful. Thanks..

Well, we have essentially incorporated and we did this going back when we first started seeing what we thought were some inflationary impacts about impact on our growth rate because of inflation. So, we'll see how that kind of holds out. But if you take a look at just kind of the fundamental strength that we're seeing across the U.S.

outbound, Europe, Middle East. It came back a little bit stronger. Again, we're seeing some of the impacts of COVID starting to lift more consistently around the world, our digital product has continued to improve. We don't expect that we'll see a gusher of additional revenue from Dandelion this year. We're continuing to build and grow that pipeline.

It will be much more contributing next year. But I think all that just continues to build our confidence that we're going to be, kind of, like I say, in that kind of [12 to 13] [ph] kind of rate. As Mike said, we would expect to see that first quarter is a little bit slower as it always has been.

First quarter is the lightest quarter of all three segments. And – but we expect to see that momentum develop a little bit later as we go or more of that momentum. But – so I don't think that our view or our thinking on money transfer has really changed any.

I think that we've appropriately considered some impact of inflation, but we continue to see very good successes on customer addition, on network addition, as we go around the world..

Got it. Thank you very much guys. Appreciate the commentary..

Thank you. One moment for our next question. Our next question comes from the line of Darrin Peller from Wolfe Research..

Hey guys. Thanks for taking my question. Look, it's obviously good to see the progress on EFT.

I guess, Mike, when we think about the business in EFT and what the behaviors that we're seeing are today, would you expect that if we got back to that 92%, 93% of 2019 levels by the end of 2023, that your profitability levels of EFT should be the same or more than they were assuming it was 92% in 2019? In other words, like-for-like, has anything changed to push that profitability up in that segment beyond just what travel activity is? I imagine that [indiscernible] in some factors, but yes, Mike, I just want – then if you get to add on to that, the comments you made over rate potential and pricing potential.

It was good to hear.

I'm curious if you can give us a little bit more specifics on that?.

So, I think the reality is if we only get 92% or 93% of the tourists that we did in 2019, we're not going to arrive at 2019's total revenue. However, we do have some opportunities and a lot of it comes down to mix.

So, as we spin up some of these new markets in North Africa, in Asia, as we do things our experience is that those ATMs are quite a bit more profitable on a per unit basis than our European ones, even though our European ones are quite good. So, if we can get a little bit of a travel recovery in Asia, that would be great.

If we're able – we have some supply chain issues of getting ATMs to expand into North Africa. As that abates, that will help us quite a bit as well.

And let's not forget, every one – we were planning on a lot of ATM rollout last year in and around the countries of Central and Eastern Europe, all the ones that now surround Ukraine, in fact, we are planning on almost 500 growth in Ukraine last year. And then, of course, the war happened. Those markets are all cross currency markets.

They all have their own [indiscernible] currencies. They're great contributors. And so, that's kind of – we obviously are going to do as much expansion there because last year, they only recovered in the [Technical Difficulty] 50% to 55%, where the rest of the market in general was in that [70%]. So, I think it's – we've got some opportunities.

We'll have to see what happens, but I think if we get to 92%, we'll be pretty darn happy, and it also gives us a little bit of gas in the tank for the next year to growth..

That does make sense.

When we think about China reopening, can you just maybe remind us, in your view, what kind of contribution China – base travelers did to your business back before the pandemic whether it's in any of the regions, frankly, I'm just curious if you have any insight on that?.

The biggest reason place where we have Chinese tourists would be in Asian markets like the Philippines, Malaysia, that opened up [Technical Difficulty] has that ticked up would be fairly good. They were 5% for European travel [Technical Difficulty] will be helpful as well.

But a number of these countries are also putting limitations on Chinese Tourism [puts a] [ph] little bit more friction in there, you know requiring COVID test before they come, et cetera..

The other thing that's important to remember about the China travelers is generally speaking, the China UnionPay card does not allow for DCC. Now, in markets where we have a surcharge opportunity and benefit there, but if China has not been that big of a contributor because we don't get the spread on the DCC.

We are working on opportunities to potentially enter into agreements with them to enable that, but as of now, it's not there. So, clearly, China travel would give us some benefit, but we've never had a lot of benefit in our P&L from Chinese [Travelers] [ph]..

Understood. Thanks Rick..

Thank you. One moment for our next question. Our next question comes from the line of Cris Kennedy from William Blair..

Good morning. Thanks for taking the question.

Can you talk about, kind of the timing of Ren revenue hitting your income statement and how that's tracking relative to your initial expectations?.

It's tracking pretty much right on what I said in prior quarters. So, in the very first year that we were really selling Ren, which was two years ago, we did about 8 million in revenue at about, call it, an 80% margin. Last year, we did almost twice that. This year, we're looking at 25 million to 30 million, if we can get everything installed.

So, it's kind of doubling up every year. So, we're really excited about Ren and it's only growing. And I understand, when we talk about 140 million, kind of in the pipeline, these are contracted minimum revenues in the contracts that we're installing. So, that's what's exciting about it.

That doesn't include anything we're going to – that we would sign this year. So, and our experience has been, once we put somebody on our platform, the transactions in almost every case exceeded their expectations. I think darn near every case as the transaction – their transaction-based licenses.

So, and as the transactions exceed the expectations of the people we contract with, we end up making a little bit more. So, there's a lot of optimism around Ren right now..

Great to hear. Thanks for taking the question..

Thank you. One moment for our next question. Our next question comes from the line of Pete Heckmann from D.A. Davidson..

Hey good morning. Most of my questions have been answer. I just wanted to follow up though on the digital money transfer.

Can you talk about how that's been growing at a very nice clip for several years here? Can you talk about how that has changed the mix of money transfer and what the implications are for both revenue growth and margins if we continue to see the digital growing at 3x, 4x the rest of the [business] [ph]?.

Well, obviously, it's good. It changes the mix. So, if we're growing, kind of low teens in net, but that's growing 39% or whatever. It is changing the mix over time. It continues to gain more and more momentum. We open up in more and more countries. I mean, we have a real focus on digital, and it's profitable for us.

I'd like to also throw that out there because about 90% of everybody doing digital money transfers are losing money on them. And – but because we can leverage the rest of our bricks-and-mortar business, it is nicely profitable for us. So, I think the mix will continue to change as we go forward. And it will be just more and more on the digital side..

All right. And then in terms of just the Dandelion, I think you had said that you expect that to get some more momentum for 2024, and....

Probably not of revenues this year because now these deals are, you know you hook up a bank and then they start sending, then they have the – our distribution channels now available to their customers, which they didn't – heretofore did not have.

And so they then begin marketing to their customers, their customers use it, it gets its own momentum once you've signed up a bank and have it working. So, it's one of those things growing, growing, kind of over time.

So, we wouldn't expect much additional Dandelion revenues this year, unless we maybe nail another like Fintech, like we have with Zoom or Remitly because that's a pretty fast ramp up of these banks, which are really where the big money is. They're going to take a little bit longer because they're used to only offering Swift.

They didn't offer all the cash payouts, the wallet payout, and also the RTP payouts that we offer with Dandelion. So, but it's really interesting talking to these banks. They are absolutely starting to clue into this value proposition because they want to create a better product for their customers and be competitive..

Alright. Thanks Mike. I appreciate it..

Thank you. One moment for our next question. Our next question comes from the line of Mike Grondahl from Northland Capital Markets..

Hey guys, thanks. Can you guys roughly size up Croatia and that hit going to the euro? And then you did mention some offsets to that were rate related.

Could you kind of describe what those rate-related offsets are or what that means?.

Well, you go ahead..

Well, yes, Mike, we've not disclosed exactly what our impact is. We'd rather not do that for competitive reasons out there, but the offsets are really in, kind of a couple of categories, some opportunities where interchange rate will improve and some places where we'll be able to add some surcharge or access fees.

So – and then as Mike mentioned, we've been proactive on pairing back ATMs that we believe would not be profitable when we don't have DCC. So, it's largely the opportunities that we have to pick up some of this interchange and surcharge and then supplemented by some cost management to largely [Technical Difficulty]..

Got it. And then just real quick.

Any data points you can throw out there that makes you feel confident or decent about the 92% to 93% travel recovery?.

Well, I guess what I'd say is, really kind of two things. One, we have consistently seen, as Mike said in his comments, that our transactions have paralleled the Eurocontrol data. And it's just intuitive, I think, Mike. If people are on the plane, they get off the plane, they start walking down the street, they need cash, they stop by the ATM.

So, it just seems so intuitive that there should be direct correlation, and that's what we've consistently seen. So, again, looking to what the outlook of Eurocontrol is, and how they've looked at it, we feel pretty confident with that.

The second thing is, as I mentioned, as we kind of closed out the year, we saw that we're, kind of in that 75-ish, kind of percent range there. Some countries, a little better, some a little less, but overall about there. So, again, we've consistently seen this move up. We've seen consistent correlation with Eurocontrol. Mike said in their delta.

Again, somebody that's in the business of taking people to Europe. They're feeling pretty bullish about their expectations for this year. So, those are all things that basically point us toward a continuing improvement, and nothing at this point tells us that it looks like the 92%, 93% numbers in jeopardy.

So, that's where we continue to see and the optimism that we draw from..

And also, let's not forget, it is [Technical Difficulty] issue. So, our favorite group of travelers, our largest single group are people from Britain because they all have an island currency of [where they land] [ph] of our other territories.

And – but even though we averaged about 75% last year, we did the full analysis on flights coming out of Heathrow as an example. And they really – there's really only 62% of 19 travelers last year that came out of Heathrow. So, just by fixing Heathrow, will be good because it's not just the number of travelers, but where they come from.

So, that's one of the little, you might say, gives us a little bit of, umph, as we go into next year..

Okay. Hey, thank you guys..

Operator, I think that has to be the last call. We're at the top of the hour. So, I'd like to thank everybody for listening in and happy to talk to you in about 90 days..

This concludes today's conference call. Thank you for participating. You may now disconnect..