ATM expansion across Europe and India helped boost transaction volume and second quarter revenue at Euronet Worldwide Inc., but economic issues in Spain and changes among key players in various markets kept some of the potential for growth at bay.
The Leawood, Kan.-based electronic funds transfer processor said this week that its revenue rose 8.1% for the three-month period ended June 30, to $302.4 million from $279.8 million a year earlier. Net income attributable to the company was $5.7 million, down 52.1% from $11.9 million. More than 75% of the company's revenue is generated outside the U.S.
"India, Pakistan, Poland, Romania, our cross-border acquiring business and the addition of Euronet Middle East contributed the greatest growth this quarter," Rick Weller, Euronet chief financial officer, told analysts during a conference call July 25 to discuss company earnings.
Euronet's epay segment reported revenue of $166.7 million, up 6.5% from $156.5 million a year earlier. The unit processed transactions initiated from 617,000 point-of-sale terminals, up 4.9% from 588,000. Total retailer locations rose 7.6%, to 297,000 from 276,000.
The epay segment saw modest transaction growth of 3%, to 272 million from 264 million, primarily from the U.S., Germany and the United Kingdom, the company said.
Offsetting these gains were declines in Brazil caused by changes in mobile operators' distribution strategies; in Australia, where certain retailers went direct with mobile operators; and in Spain because of challenges related to its economic landscape, Michael Brown, company CEO and chairman, said during the call.
"We feel like the business in Australia has largely stabilized, and once we lapped the losses of the retailers in the next quarter we will see more of a positive picture in Australia year-over-year," Brown said.
Deployment of brown-label ATMs in India and expansion in Europe added 1,434 ATMs, bringing to 17,048 the total under management, up 41.4% from 12,058 a year earlier. The growth helped propel a 15.7% increase in the EFT Processing segment's revenue, to $58.3 million from $50.4 million, according to the company's earnings release. Transaction volume in the unit rose 24.9%, to 291 million from 233 million.
During the call, Brown noted that in Romania Euronet launched an independent automated deposit terminal network, the first deposit terminals operated with participation from multiple banks in that market.
"Our EFT team also signed a global agreement with American Express to deploy ATMs at Amex locations," he said. "We won this agreement because of our global presence, our processing expertise, and our extensive value-added services portfolio. While this agreement won't cover a large number of ATMs, it speaks to Euronet's ability to create value for our customers."
Though an agreement in Poland to provide ATM-driving services for S.K. Bank involves only 35 machines, it is the first such deal Euronet has reached with a cooperative bank in that country, Brown noted. "To give you a little better eye of what this means now, and could mean in the future, there are 575 cooperative banks across the country, which operate a combined 3,100 ATMs," he said.
The company's Money Transfer unit generated $77.5 million in revenue, up 6.2% from $73 million a year earlier. Total transfers reached 7.4 million, up 21.3% from 6.1 million. Network locations grew 18.8%, to 158,000 as of March 31 from 133,000 a year earlier.
"Total money transfers grew 10% stemming from an 11% increase in U.S.-initiated transfers," Weller said during the call.
U.S. growth included an 11% increase in transfers to Mexico, while transfers initiated outside of the U.S. grew 9% despite the struggling European economy, he said.