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Operator: Greetings, and welcome to the Euronet Worldwide Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. It is now my pleasure to introduce your host, Mr. Scott Claassen, General Counsel for Euronet Worldwide. Thank you. Mr. Claassen, you may begin.

Scott Claassen: All right. Thank you. Good morning, everyone, and welcome to Euronet’s third quarter 2023 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’re making today. Statements made on this call that concern Euronet or its management’s intentions, expectations or predictions of future performance are forward-looking statements. Euronet’s actual results may vary from those anticipated in these forward-looking statements as a result of a number of the factors that are listed on the second slide of our presentation. Listeners should avoid placing undue reliance on these forward-looking statements.

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

A close-up of a cash register, with passengers lined up at the window, illustrating the company’s payments and holdings. Editorial photo for a financial news article. 8k. –ar 16:9

Rick Weller: Yes. Thank you, Scott, and good morning, and thank you to everyone who is joining us today. I will begin my comments on Slide #5. For the third quarter, we produced revenues of $1 billion, the first $1 billion quarter in Euronet’s history. We achieved operating income of $167 million and adjusted EBITDA of $212 million. Adjusted EPS was $2.72 compared to $2.74 for the third quarter of 2022. Excluding the effects of share repurchases and FX headwinds during the quarter, the business performed in line with our expectations. Slide 6 presents the summary of our balance sheet compared to the prior year. As you can see, we ended the quarter with more than $1 billion in unrestricted cash and $1.7 billion in debt. The decrease in cash is essentially the share repurchases and working capital changes, partially offset by cash generated from operations and cash returned from the ATM.

Slide 7 shows our results on an as-reported basis. Let’s go to Slide 8 and talk about our results on a constant currency basis. On Slide 8 now. As we discussed in the second quarter of 2023, we saw a divergence in our international transactions compared to the international travel recovery. Mike will provide further comments on this subject a bit later. But we are pleased to have regained some footing at the end of the quarter. To that end, EFT revenue grew 2%. Operating income and adjusted EBITDA decreased by 15% and 12%, respectively. The decreases in adjusted EBITDA and operating income were the result of decreases in our most profitable international cross-border transactions primarily driven by the decline in Croatia due to its switch from the kuna to the euro at the beginning of this year, together with the impact of inflation, which reduced European travel budgets leading to fewer ATM transactions.

Transaction growth outpaced revenue growth due to continued growth in high-volume, low-value transactions in India. For epay, revenue grew 1%, while operating income and adjusted EBITDA decreased by 6% and 5%, respectively. These results were driven by continued digital media and mobile growth which was offset by declines in promotional campaigns delivered on behalf of our retail partners when compared to the same period last year. As you — as we have discussed in prior quarters, the epay segment experiences fluctuations from these promotional campaigns. We will continue to welcome the opportunity to grow our promotional B2B business, but we have to understand that these promotional campaigns will create some uneven comparisons from time to time.

Excluding our promotional activity for comparison purposes, our core epay business revenue grew 11%. Operating income and adjusted EBITDA grew 17% compared to 2022, highlighting the strength of our core epay business. Finally, epay revenue and gross profit per transaction were consistent year-over-year. Money Transfer. Third quarter constant currency revenue, operating income and adjusted EBITDA growth was the result of 7% growth in U.S. outbound transactions, 10% growth in international originated money transfers, which included 12% growth from Americas outside the U.S., 8% growth in transfers initiated largely in Europe and 7% growth in transfers initiated in the Middle East and Asia and 18% growth in xe transactions. These transaction growth rates included 20% growth in direct-to-consumer digital transactions.

These growth rates were somewhat tempered by a dislocation of FX rates in the informal market channel, specifically Bangladesh and Pakistan. Money Transfer revenue per transaction was relatively constant while gross profit per transaction improved year-over-year. Moreover, average amount sent by customers remained nearly the same this quarter versus last quarter — last year third quarter. And finally, as we close — as was the case in the second quarter, the Money Transfer team posted another quarter of improved operating margins, not only improved but the second best quarter operating margins other than the third quarter of 2020. So for all of those that have often asked whether Money Transfer could regain its operating margins, I know we consistently express the confidence that our Money Transfer team was committed to margin improvements.

So net-net, commitment made, commitment delivered. As I conclude my discussion on the financial results, I cannot help but to reflect on the strength of our three segments. First, a record consolidated revenue quarter, first quarter to exceed $1 billion in revenue; second, double-digit growth from the core epay business across all metrics; third, margin expansion and double-digit growth exceeding 20% in adjusted EBITDA and operating income in the Money Transfer segment. Finally, we saw EFT return to a solid footing with respect to international transactions largely back in correlation with Eurocontrol travel data in September of ’23. With that, I’ll turn it over to Mike.

Michael Brown: Thank you, Rick, and thank you, everyone, for joining us today. I’ll begin my comments on Slide 10. I’ve got a lot of comments, so please bear with me. Thank you for joining. I’ve got to say, it’s been a bit brutal watching the decline in our share price since we spoke to you in July. I think I understand why the market reacted this way. But intellectually, it’s hard for me to comprehend given our continuous earnings growth history. So I’d like to take a minute and reflect on the diversity of our earnings. When I began this business, 100% of our revenue was earned from ATM cash withdrawals. Today, these same ATM cash withdrawals only account for approximately 35% of our consolidated adjusted EBITDA. However, it feels like The Street is only focused on the 35% of earnings from our ATM dispensing business and not seen or giving us credit in the value of all of Euronet’s business.

This year, 65%, that’s right, 65% of our adjusted EBITDA will come from product streams other than our ATM business lines such as POS acquiring, epay digital distribution, Dandelion digital money transfer, Ren and card processing. It is this diversity which, despite a difficult economic environment in Europe, allows us to deliver record revenue, record earnings and another year of double-digit growth. During a recent investor discussion, as we were discussing the state of the ATM business in Europe, one of our long-term investors told me, we are with you, Mike, but you’re going to have to prove it. So over the course of the next few slides, I hope that I will be able to convince you that people are going to continue to use cash. And then I hope you will realize the value of our consolidated business.

So let’s go to Slide #11 to jump straight into some data to support the view that people have not stopped using cash. Slide 11. In July, we told you about the sudden divergence of our international transactions from the Eurocontrol flight recovery data. You can clearly see in this chart from May to June. We shared with you that we intuitively believed and still believe a long-term very gradual cash-to-card transition continues. This long-term but subtle transition has been ongoing since I founded the company in 1994.However, the data demonstrates this abrupt change that we saw in June was largely attributable to European cross-border travelers who are experiencing significant economic challenges resulting in fewer ATM withdrawals. We do not believe that the divergence in our international transactions from Eurocontrol data this summer is an accelerated shift in cardholder behavior from cash to card.

Rather European travelers simply had less money to spend on their holidays. Now let me explain why. The orange line on this slide provides the number of international cards used on our ATMs in 2023 versus 2019, compared to Eurocontrol’s reported data versus 2019, which is the blue line. You can see for the first 5 months of this year, international cards used on our ATMs were tracking nicely ahead of Eurocontrol’s recovery level. However, you can see in June, actually starting in late May, the dramatic change in international card use we told you about in July. At that time, we told you that we didn’t believe that cardholder behavior would change so dramatically in such a short period. And as you can see in September, international card use on our ATMs was back above Eurocontrol recovery levels.

It stands to reason that customers didn’t suddenly shift from cards to cash in September, just like they didn’t suddenly shift from cash to cards in June. Given the recovery in international card use, let me walk you through what we’ve seen in our data now that we are largely through the peak travel season. So let’s first run over to slide — the next slide. Here we are on Slide 12. People have asked us if anything else has changed. What are the other variables? The two most important factors that popped out that could have impacted consumer behaviors regarding opt-in rates and average withdrawal amounts per transaction. On this slide, you can see the opt-in rates for our DCC transactions have remained consistent and perhaps we’ve even seen greater consistency recently.

The graph on the right shows average withdrawals per transaction on a constant currency basis. The withdrawal amounts have remained relatively consistent with some of — somewhat of an upward angle to the trend, that little spike you see there in the second quarter of 2022 was a result of the Ukrainian war, we believe, mostly. This data demonstrates that when people are walking up to our ATM, they are completing transactions in line with prior behaviors. Now with those two factors largely unchanged, let’s go to Slide 13 and talk about specific cross-border cardholder data. Here on Slide 13, you can see the number of international cards used on our ATMs by month for the years 2019, 2022 and 2023. The blue line is 2019. The gray line is last year and the orange line is this year.

What you will notice here is that at the beginning of ’23, there were more international cards used in our machines than in 2022 and even slightly more than 2019. Again, you can see the trend change beginning in May and even widening out a bit in July and August. However, the number of cards used in September came back in line with both previous periods, see the red oval, this graph, again, causes you to beg the question, why in the summer months, did transactions go lower and then return to historical trends in the fall. But let’s start getting behind that in the next couple of slides. So jump to Slide 14, please. The chart on this slide uses the same international data as the previous slide. However, it isolates a view to cards used on our machines that were issued outside of Europe, that is folks coming into Europe.

Here, you can see that the non-European issued cards were used at our ATMs at a higher level for each month this year versus 2022. And in April actually of this year, we surpassed and continue to surpass 2019 level, almost the reverse of the trend on the subset of data versus what we — when we look at the total card data, that is the previous slide. Moreover, we even saw an acceleration of card use versus 2019 on this non-European subset as we went through September. Clearly, this chart demonstrates that non-European travel withdrawals have not changed compared with pre-COVID times. Net-net, would this data suggest more customers are using cards versus cash than in the past? The answer is no. Now let’s go on to European travelers on the next slide, Slide 15.

Here on Slide 15, you’ll see the same international card data as the previous two slides, this time isolating as a subset, the European-issued cards used cross-border on our ATMs. That is folks traveling within Europe but outside their home country. Again, in 2023, it started better or similar to 2019 and 2022. And in May, the card usage fell below those periods. As we ended the third quarter, what — as we ended the third quarter, what you can see is that despite the lower use during the summer months, during September, the number of European issued cards used cross-border came back into almost parity with both 2019 and 2022, see that red oval again. The stark contrast when looking at the international data for European cross-border cards versus non-European cards, together with the return to near parity in September, made clear that this was not an abrupt change in consumer behavior, but rather an economically driven contraction on ATM withdrawals.

Given that approximately 80% of our international transactions come from European travelers, this significantly impacted our expectations for a more robust tourism recovery. So why is it that we would see dramatically different behaviors from European card users versus users from outside of Europe. Let’s go to the next slide to explore. Slide #16 presents charts from several different third-party sources that provide additional insight into European economic data that could impact consumer behavior. You may remember last quarter that we referred to a consumer survey that was co-funded by the EU and the European Travel Commission. In that survey, travelers noted that due to a winter of high energy cost in a year of high inflation, Europeans had less disposable income for their vacation this year.

Instead of skipping their vacations altogether, the survey respondents noted that they would travel to more affordable destinations, spend fewer nights away, spend less on food, tours and trinkets and that certain respondents would travel to destinations outside of Europe or maybe even travel after the peak season in order to find cheaper flights and accommodations. It is also important to note that when a person travels to Europe from abroad, for example, approximately 4% or 5% of Americans travel to Europe annually, they are likely more affluent and it is likely a significant trip that they have planned and saved for, for months or even years in advance, so they are prepared to spend money while they’re there. On the contrary, for 70% to 75% of European, these are annual summer vacations that can easily be modified depending on their financial situation.

In fact, 2/3 of consumer survey respondents indicated that they would spend less on their vacations this year 2023. The data on this slide gives a clear picture of the economic factors that would explain why a European who earns an average income would have less disposable money to spend on a summer vacation this year. For example, mortgage interest rates have doubled over the past 12 months for the 15% to 20% of Europeans who have a mortgage. Food prices are up 10%. Energy prices have doubled and inflation averaged 8% over the last 12 months on top of double-digit inflation rates the year prior. With living cost increases of this magnitude, you might ask me why we only saw a lower double-digit break in transaction trends during the month of June, July and August.

While we can never be certain why someone didn’t use our ATM, we are confident that the consumer trends discussed above have impacted how Europeans approach their vacations this year. But all travelers coming from outside of Europe used our network more than ever. Next slide, please. So on Slide #17, I’ll conclude my trend comments with how I started. Our data shows that there has not been an accelerated shift in consumer behavior from cash to card, but rather the changes in the European economy, causing European consumers to spend less and shift their travel plans, to less costly destinations or later in the season. While this is good news for the long-term potential of Euronet, we expect that in the near term, higher interest rates, the ongoing conflict in Ukraine and continued inflationary pressures will limit the rapid recovery of European spending power.

With that in mind, let me tell you why we still believe in the long-term growth trends of the ATM business. First, we believe there is more room for expansion in parts of our existing markets and into new markets. These new markets outside of Europe have shown us excellent opportunities, and based on pre-COVID transaction levels, produced profit levels well exceeding our existing ATM fleet in Europe. Number two, there’s been a widespread consolidation of banks across Europe, which has resulted in bank branches closing and in turn, fewer ATMs. So our existing network will hold more market share. Third, the card schemes have increased interchange rates in markets like Poland, Czech, Romania and France and have allowed surcharge in Spain, Greece and Austria.

Similar changes will continue to offer more revenue opportunities across our existing estate. Finally, we have seen some easing of the inflationary pressures this September. We don’t expect that to translate into an immediate increase in transaction levels though. With that in mind, we’ll take a hard look at the profitability of our ATM fleet. You may see in the coming quarters that the ATMs aren’t produced — that ATMs that aren’t producing an acceptable return on capital will be removed and redeployed at new, more profitable sites or deployed altogether in a new market. This means that we may not need to purchase as many new ATMs to add to our existing fleet, but we intend to ultimately be more profitable by replacing these underperforming sites with new, more profitable locations.

In fact, we have already identified approximately $20 million in cost savings for next year. Now that we have discussed the promising future of our ATM business, let’s move on to a more complete discussion of EFT segment and the accomplishments of this quarter. Remember, EFT is more than just an ATM business. The next slide, please. We continue to expand and diversify our EFT product portfolio with new products and markets. By the way, we’re on Slide #18. We are very pleased with our POS acquiring business that grew in adjusted EBITDA 25% compared to the third quarter of 2022. Further, our POS acquiring business has doubled in the 18 months since the acquisition. On the heels of this success in Greece, we expanded our POS acquiring to Spain and Portugal and added 3,100 new merchants to our network.

In France, we signed an exciting agreement with the supermarket chain of Super U to deploy Euronet ATMs in 150 Super U locations. This was a competitive win with the potential to increase our network significantly based on joint marketing and sales plans. In addition, we have a new relationship with Eurobank, which was formed from the merger between Direktna Belgrade Bank and Eurobank Serbia to provide ATM acquiring services to the merged bank. Now let’s discuss the state of our ATM network. Please move to Slide #19. During the quarter, we added 532 Euronet-owned ATMs, 425 new outsourcing machines and we winterized 851 ATMs as we wound down the peak travel season. We ended the quarter with 51,496 active ATMs. We previously mentioned that we intend to deploy 3,000 to 3,500 machines at the new locations by the end of 2023.

While we are on track to achieve this, we will continue to monitor the profitability of our existing ATMs, and we will de-install unprofitable sites. So on a net basis, additions may not reach 3,000, but expect our profitability to improve. Now let’s go on to Slide #20. We’ll talk about epay. Our epay team continues to make strides in diversifying our product portfolio and expanding our content distribution to new markets and retailers. A notable achievement is the expansion of our Sony Digital Code Server technology platform, a service developed and managed by epay to facilitate the digital distribution of PlayStation codes for Sony. Originally, catering to the U.S. and Latin American markets, this platform has now expanded its reach into Europe and Asia.

This expansion presents exciting opportunities for global scale transactions and digital content distribution. Moreover, we’re proud to announce a meaningful expansion of Prezzy proprietary prepaid card. Our Prezzy cards are now available in India on the Rupay network and in New Zealand digital channels. This Visa card can be used for online purchases as well as loaded to Apple Pay and Google Pay wallets and used for purchases in stores where these wallets are accepted. These launches further solidify our presence in these markets and underscores our commitment to expanding our digital content distribution capabilities worldwide. We signed a new agreement with Crunchyroll, an anime entertainment subsidiary of Sony to utilize epay’s Conductor Platform.

More specifically, Sony is leveraging our Conductor Platform to manage their entire prepaid distribution operation for Crunchyroll including PIN, code creation, SKU management, asset management and connectivity to global retail distribution. By leveraging epay’s technology stack, Crunchyroll gains considerable cost savings and operational efficiency. This is an exciting epay SaaS solution that enables Sony to make fast — and make a fast and substantial market launch. I am pleased that excluding the impact of last year’s promotional campaign revenue, the underlying core epay business grew at double-digit rates. We are pleased to have this momentum as we head into what is typically our strongest quarter. Now let’s move on to Slide #21, and we’ll talk about Money Transfer.

Our Money Transfer network has now expanded to cover 540,000 locations, also to approximately 4 billion bank accounts and 1.9 billion wallet accounts across 194 countries and territories. I think it is worth repeating, the network and the Money Transfer business is somewhat akin to product, the more product you have to offer customers, the more business you can do. Year-to-date, we have launched 68 correspondent agreements. This is the same number of correspondent agreements that we launched for the entirety of last year 2022. In addition to these achievements, we’re proud to announce the successful launch of 28 new correspondents in 21 countries and the signing of 26 agreements in 23 countries. Notably, our collaborations with Pan Oceanic Bank in the Solomon Islands and Samoa Commercial Bank have now given us a new presence in the Pacific Islands, reflecting our commitment to strategic expansion.

The strong growth in our bank account and mobile wallet networks drove 34% transaction growth in principal transferred to bank and wallet accounts which now represent 38% of total cross-border principal transferred. Our account deposit network has been a long-term focus of ours over the last decade and it enables Ria to produce strong double-digit CAGR growth in account deposit transactions and principal transferred over that period. To put it in some perspective, by the end of 2019, account deposit volumes were 23% of our total principal transfer compared to 38% this quarter. Ria had a foresight to build this network of the future and the network is unlocking growth opportunities not only for Ria’s business, but also for Dandelion customers.

Let’s remember what the real value of money transfer is: to get the money in whatever way the customer wants it. From digital wallets, to physical locations, our money transfer business, can meet the diverse needs of our customers. Given the positive activity on this page, we expect to see these growth rates to persist through the remainder of 2023. Now let’s proceed to the next slide and delve into our payment platforms, products commencing with Dandelion. And don’t forget Dandelion is part of Money Transfer. Throughout the quarter, our Dandelion customers continue to harness the power of our Money Transfer network. Our existing customers now utilize 141 of Ria’s 194 network countries. The strong growth is attributable to our network’s ongoing enhancement, particularly in terms of mobile wallet coverage, which spans 1.9 billion wallet accounts.

Dandelion customers today are primarily using our payment rails for family remittance. However, now with the successful launch of HSBC Bank, and the signing of Equity Bank, we have successfully stepped into the huge $156 trillion cross-border payments market served by banks around the world. As I said, we signed an agreement with Equity Bank, the largest bank in Kenya and a leading banking group in East and Central Africa. Equity Bank is our first Dandelion banking partner in Africa for B2B cross-border payments. While getting these 2 banks through the sales process of this disruptive greenfield product, I can sense the momentum beginning to build. We signed several agreements this quarter, including an agreement with Sendwave, a leading digital money transfer business in North America, Europe and the U.K. In addition, we signed an agreement with Flash Payments, an innovative fintech company based in Australia, specializing in providing payments and FX services to SMEs. Finally, we have reached an agreement with one of the world’s leading P2P payments platform.

We are being intentionally tight-lipped as this partner is focused on competitive positioning, but wanted you to know and have a little flavor of what’s coming in the pipeline. With the addition of these partners this quarter, Dandelion has further broadened its geographic diversity. We have now signed a partner in each of our key target verticals, banks, fintechs, MSBs and PSPs. This is a great achievement for such a new product offering. So let’s go on to the next slide, and we’ll briefly give you an update on Ren and Ren development. And don’t forget, Ren falls under the EFT segment of our business when reported. With our Ren technology, we are witnessing a notable shift towards real-time payments and settlements, reflecting the industry’s changing landscape.

As an example, in the U.S., would be the FedNow service, which launched in July of this year. Ren enables banks in the U.S. to connect to the real-time FedNow payments rails. The Ren team is pursuing numerous real-time payment opportunities like these with FedNow in the U.S. and with other switches worldwide. During the quarter, we proudly signed several agreements. Among them is a contract with Airtel Payments Bank, the banking arm of Airtel, India’s second largest telecom company. We will provide the bank with our debit card issuing platform and process transactions from the SaaS infrastructure of our private cloud. In addition, we secured a contract with Nium, a digital unicorn cross-border payments company based in Singapore that has a global presence to provide our SaaS multicurrency prepaid solution from our private cloud.

We signed an agreement with Zenus Bank, an award-winning digital bank from Puerto Rico that makes U.S. bank accounts available internationally without the need to be a U.S. citizen or resident. Zenus is the first bank to launch a single Visa Infinite debit card to a global audience. Ren is providing the issuing processing platform, SaaS infrastructure and expertise to deliver this solution. And as an update to the Mozambique agreement we told you about three years ago, we have signed an agreement this quarter to enhance — to add enhanced bill payment transactions, showcasing how we can continue to generate additional revenue from existing Ren clients. As we conclude our discussion on Ren, you can see that we have a lot of positive momentum.

Our pipeline of Ren signed deals is on a consistent growth trajectory, and we anticipate that these agreements will contribute approximately $140 million in revenue over the next 6 years. We continue — the continued strong interest in our Ren technology worldwide is encouraging, and we expect to see significant contributions as we roll out more deals in the coming quarters. Please move on to Slide #24. I would like to spend a few minutes talking about how we plan to reformat our guidance communications going forward. As you can see in Slide #24, Euronet has a long history of producing compounded annualized double-digit earnings growth, yet the market has recognized less than half the earnings growth in our share price. You can see here that the S&P over the last 10 years has grown earnings 7.2% compared to Euronet’s 13.5%.

For the S&P 7.2% compounded annualized earnings growth, their share price on average is up 137%. Comparatively, Euronet’s 13.5% compounded annualized earnings growth has only increased 59% increase, twice the earnings at less than half the value increase. Sure seems like something’s wrong. Something is missing or something is not understood. We’re not getting credit for our consistently stronger earnings growth. Maybe we’re too complex. To that end, we set out to see if there might be a better way to talk about our growth expectations on Slide #25. On this slide, we found that for more complex companies, keeping it simple, made a difference in the market value recognition. We found that in these cases when companies simplified their guidance, future share price significantly improved.

We believe this is a result of focusing on the most important driver of value creation, consistently making money rather than being evaluated against 8 metrics, where we might meet or exceed expectations on 7 of the 8, including earnings, the most important one, but miss on one of the other ones and the share price suffers. At the end of the day, does the value depend on getting 8 out of 8 right or deliver constant and consistent earnings growth. As you can see from Euronet over the years, we have consistently produced double-digit compounded earnings growth despite a range of challenges such as the 60% decrease in the Polish Visa MasterCard interchange rate in 2010 or the next year where Germany changes local debit card rate structure or the U.S. financial crisis of 2008 or the India cash demonetization or even the most recent COVID experience.

Through it all, not only did Euronet survive, but we produced compounded annualized double-digit earnings growth. And how did we do it? Next slide, please. We did it by building a very well diversified business, which includes diversity of product, geography, channels and customer bases and a consistent executive leadership team. We also recognize that while this diversity is a huge strength to Euronet, it also causes the business to be much more complex to understand than a simple company with only one product or one segment. To that end, as I mentioned earlier, we found that companies that struggled with complexity, overcame it with simplicity. Beginning in 2024, we will reformat our guidance communications from providing quarterly EPS and segment revenue and margin expectations to the simple expectation of annual double-digit earnings growth between 10% and 15%.

We will no longer provide specific number targets, but rather a simple annual adjusted EBITDA — I’m sorry, EPS growth rate. And while we are committed to producing 10% to 15% earnings growth for 2024, you can bet that we will be shooting to deliver a heck of a lot more as we have in the past. We will continue to provide detailed segment reporting in all of our actual results. As we close out the year, we will provide an adjusted EPS expectation for the fourth quarter of $1.75 per share, which will round out the year with another year of double-digit earnings growth. We appreciate that this reformatted approach to performance expectations will be viewed by some as making their work more challenging, while at the same time, viewed it as others by simplifying their work.

Also, if you look at the analyst consensus, adjusted EPS for Euronet next year, you will see it is within this 10% to 15% committed range. Moreover, if you make some macro adjustments to the consensus number for next year for benefit of our recent share repurchases and the impact of the negative FX changes since the reporting of most analyst estimates, you will see a pro forma consensus that would be at the top of our range. We are comfortable with that range. We look forward to your continued support as we close this year and look forward to another quarter — another year of double-digit earnings growth. Now let’s go to Slide 27, and we’ll wrap it up. As I conclude my remarks, I trust that our analysis of travel data answered your questions on whether there was an abrupt shift from cash to card.

Let me be clear, our data shows that the EFT business has not experienced an abrupt shift from cash to card during 2023 but rather European travelers specifically spent less money on discretionary purchases while on vacations due to inflationary pressures. As I mentioned earlier, we are more than simply a cash business. We are a diversified business with multiple segments producing future growth opportunities. As you may remember, 2/3 of our business grew during COVID. As I reflect on our recent quarter, I look forward with optimism for many reasons. First, we delivered a record consolidated revenue quarter, eclipsing $1 billion in quarterly revenue for the first time in our history. Second, our core epay business grew double digits across all metrics in the third quarter of 2023 compared to 2022.

Third, our Money Transfer business grew adjusted EBITDA and op income by more than 20%, regaining its operating margin rhythm. And my final point, our ATM transaction data was back in sync with Eurocontrol travel data in September of 2023. There are reasons for future optimism, let’s discuss our expectations for the remainder of 2023 and 2024. Going forward, in 2024, we will no longer provide quarterly EPS segment revenue and margin expectations. We will shift to a simple expectation of annual adjusted EPS growth range. For 2024, we expect adjusted EPS and earnings growth to be in the 10% to 15% range and we expect to produce an adjusted EPS of $1.75 and will finish in Q4. And we will finish 2023 with yet another year of double-digit earnings growth.

With that, I’ll be happy to take questions. I talked a long time today, so we have a little bit less time than usual. So I would like to limit each of the questions — each of the questioners to just one question please.

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Operator: [Operator Instructions] Our first question is going to come from the line of Peter Heckmann with D.A. Davidson.

Peter Heckmann : Lots of information today, and I think you presented a good case. In terms of how we think about — I missed it, I’ll get the transcript, but in terms of kind of the repositioning of the current ATM footprint, how are you thinking about that Europe versus Asia Pacific, maybe Northern Africa. And I guess, do you expect like wage inflation to create some normalization of withdrawal transaction activity in next year’s third quarter?

Michael Brown: So this year’s inflationary pressures and so forth, were, I think, kind of a shock to people. In fact, we’ve got some data that shows that 1/3 of the home mortgages were adjusted with inflation this year because they don’t do long mortgages. So we think that a lot of what happened this year was a bit of a shock and continued on the inflationary pressures of last year. There are some sources that we have, one of our biggest retailers expect more purchasing power next summer. So that could be good because virtually every country now has raised the wages of all of its citizens, all the unions had to force that issue like you’re seeing here in the U.S. So we’re kind of cautiously optimistic about more money to be — money in people’s pockets next year.

But despite that, we’re going to make sure that we get rid of any ATMs that aren’t profitable for us in Europe. But those other places, the expansion markets outside of Europe already are profitable and getting more profitable as we get in more into their season. These guys over the — at least our past data shows that they’re over twice as profitable as our ATM locations in Europe. So we’ll continue to expand into these 4 countries, which, as a reminder, are Malaysia, Philippines, Morocco and Egypt, and we have several other countries that we believe that we can open in the next year that would be a similar kind of personality you might say. So we’re going to continue to do that and continue to expand. And by the way, for everybody, we will go maybe 5 or so minutes longer on this call because I talked a little long.

Operator: And our next question is going to come from the line of Andrew Schmidt with Citi Global Markets.

Andrew Schmidt : Really appreciate all the work that went into this. A lot of stuff here. I wanted to go to Slide 10 in which you talked about the adjusted EBITDA by segment. Fully understanding the simplicity that you’re trying to put in. I do think it’s important to kind of talk about relative growth rates here, just as you think about the long term. And it’s good to see the EFT other breakout, which I think contains your digital initiatives. But how should we think about just the growth of the EFT other more digital items versus the growth of EFT ATMs over the longer term from an adjusted EBITDA perspective. I think that might be helpful for folks.

Michael Brown : Well, as we’ve said — first of all, we’re not going to like to dissect ourselves and give a number for each. But as we’ve said in the past, these other digital endeavors are really growing fast. So they’re going to — this 12 and 35, if you fast forward that, it’s going to be a different couple of numbers. Because you just — as we mentioned just in this call, we’ve watched our POS acquiring business, double its profit over the last 18 to 24 months. So — but that’s just one little segment. We’re just going to hold people to the thought that as a combined entity, that’s the key. We get money from all different directions. As a combined entity, we expect to grow 10% to 15% compounded growth rate year-over-year.

Rick Weller: Yes. And I would just also add that, that smaller wedge in the EFT segment, remember, scarcely 5 years ago, that wasn’t in there.

Michael Brown : In 2019, it wasn’t even there.

Rick Weller: And so I think that really kind of speaks to the fact that, that piece we would expect is probably going to have a more accelerated growth there. But I think it’s also reflective of how we’ve continued to diversify the business and put a lot more of the digital processing in the framework. So again, just recognize that 5 years ago, that piece was not an element on the page.

Michael Brown : And in 2019, the EFT business was just basically all ATMs in Europe and it contributed 58% of our EBITDA in 2019. So a big tick.

Operator: And our next question is going to come from the line of Chris Kennedy with William Blair.

Cristopher Kennedy : Just a follow-up on that last one. If you look at the EFT business and how that business has — the business mix has changed over time, can you talk about margin profile for the EFT segment going forward?

Rick Weller : Yes. Well, as we said, we’re going to refrain from getting 8 different data points out there to be measured by. But certainly, with respect to comparisons against today’s numbers, we would expect that to improve because, as Mike said, we’re taking a look at the profitability of every one of our ATMs with some new transactional data. We’ve already identified a big pile of costs that we’ll take out of the picture. And these other digital products will have very high margins on them. So that will continue to expand that. So certainly, against the numbers we see today, I would expect to see that those will be expanding. But I don’t want to start putting another number out there to be measure it against. Because all the detailed measuring really is kind of eclipsing the fundamental contribution, and I think you look at that chart there is why is it that the S&P for 7% growth gets a more than 2x value than we are.

The production of the money that we make year in and year out is just simply not valued, and we believe maybe part of it is that you deliver on 7 items, you miss on 1 and the market wants to beat you up. So I appreciate your question, but we’re going to try to be pretty consistent on really focusing on our earnings and cash production here.

Operator: Our next question is going to come from the line of Darrin Peller with Wolfe Research.

Darrin Peller: It’s obviously good to see the data you showed on the card usage, international card usage trending in the right way. I guess I was just a little bit surprised we’re not seeing the transaction growth rates pick up to the same degree. The ATM transaction growth follows suit yet. Maybe it’s just early. So I’d love to hear a little more thoughts on what you think the disconnect could be there? But second part of that question, just Piraeus versus the core ATM transactions, what we should expect? And then lastly, when you think of guidance — this is all the same question basically. So it shouldn’t take too long. When you think of guidance, again, the transaction with an ATM, I mean you can get to your 10% to 15% just given how much cash you generate, right, buying back stock, et cetera.

But when I think about the embedded opportunity on transaction growth, do you guys have a lot there, do you expect that to be strong and embedded or is that really not built in?

Michael Brown : Well, first of all, we just saw — when you look at the — when the transactions occur in a given quarter like Q3, the bulk of them come in July and August and well less of them come in September and then less in October. And we saw that kick up in September. So it’s just too early to see that make its way through the entire quarter. So that’s why you don’t see so much this quarter. It’s just a timing kind of thing. And so I think that was your first question. I’m trying to remember what your second question was. Rick, do you remember?

Darrin Peller : I’m just trying to think about next year, you guys are giving us a 10% to 15% guide on EPS. I would think there should be a lot of levers to get there without even transactions….

Michael Brown : And we think we’re even taking the negative FX headwinds plus the share repurchases, plus what everybody else has on their page right now, looks like we’re at the upper end of that range. But I want to tell you, that’s our range. And that’s all we’ll say. But our goal will be, do better than that. I mean, everybody in our company is focused. We really love the fact that from 2010 to 2019, for 10 years in a row, we never grew at less than a 20% growth rate over prior year. Those were the good times. We’d love to have those back, but we’re just giving everybody a guidance now of 10% to 15%. And when we beat it, then we’ll all be happy.

Operator: And our next question is going to come from the line of Andrew Jeffrey with Truist Securities.

Andrew Jeffrey : Appreciate the attempt to simplify everything. I think that makes a ton of sense. Mike, I want to shift gears a little bit and ask you about Money Transfer. You’ve done a really nice job building out the agent network and you mentioned the growth in deposits into connected accounts. Can you talk a little bit about the slowdown we’ve seen in the last 12 months in your digital transaction growth and whether that’s just sort of law of large numbers or normalization? And how you position yourself versus some of the digital-only competition in the market that has maintained significantly faster digital growth and kind of just how you think about the competitive positioning of the business overall, I guess?

Michael Brown : I think we’ve done a pretty good job, but it has slowed a little bit, and we’re taking a harder look at that on the ways that we might be able to accelerate that. But we’ve also heard through — and you’ll probably see this start to bear out over the next quarter or two, there is some slowdown everywhere. I mean the reality is of the $800 billion family remittance market, only about 35% of it is done digitally. So that’s it. Most people come to a new country and they’re kind of cash-based citizens or workers just like they were in their old country. So that’s one of the assets that we have as we’re both bricks and mortar and digital. And so if you’ve got 35% of the market is digital, at some point in time after all this market share gets acquired, you start to bang up against the ceiling. And I think you’ll see us and others probably do that. But we’ve got some new tricks up our sleeve that we hope will reaccelerate that as we go forward.

Operator: Our next question is going to come from the line of Mike Grondahl with Northland Securities.

Mike Grondahl : Thanks for all the data on the ATM business. You talked about redeploying some of that ATM fleet and $20 million of cost saves next year. Roughly, are you talking 1,500 ATMs that need to be moved, 3,000? Just trying to get a feel for how many you’ve identified or what you think you need to move.

Michael Brown : Well, there’s over 1,000, but we’ll just have to see what the final numbers are. And we need to take into consideration there are some other changes in the works, Mike. For example, some countries are considering raising their domestic interchange fees. Other countries are thinking about doing surcharge. So you don’t want to be — you don’t want to pull an ATM that’s making a little bit of money, that could make a lot of money with those changes. So we’re going to be careful, but we have already identified some ATM. I think at the end of the day, we just want EFT’s profits to grow. And I think that’s more important to you than how many ATMs we have out there.

Operator: Our next question is going to come from the line of Ken Suchoski with Autonomous Research.

Ken Suchoski : The high-value transactions obviously had a nice rebound in September, and it sounds like some of this is just European travelers delaying their summer vacation from June, July to a less costly September. So I guess, is the expectation that you had this kind of jump this pop and that from here, you have a slower recovery because I’m not sure if people are taking their summer trip in the fourth quarter. And then I guess, more broadly, like what gives you the confidence that this isn’t just another headshake and that you’re going to track your own control trends more closely going forward?

Michael Brown : Well, I think the most obvious thing is you look at people other than Europeans, and we beat the number every month this year. So anybody traveling to Europe from outside is using ATMs more than they ever have. You’re right. Our challenge right now is the economics within Europe. And so the question is, how do you beat it? I think you beat it by continuing to expand into virgin territory. Certainly, these new markets outside of Europe are just killer markets. I mean, they just make lots of money, where we’ll continue to do that. And that gives us — and then we will find any of those ATMs that we believe are not profitable enough, we’ll take those out and use them instead of buying new CapEx machines and put them into the spots that we have.

We have several markets in Europe, for instance, that we’re opening up or starting to expand within, for example, France and Belgium and Albania that are three — France is not a new market for us. The other two are but it’s well underserved. We mentioned that we got that contract in France for 150 ATM. There are more tourists that come to France than to any other country in the world. So there are still spots that we believe that we can make money, and that’s where we’re going to redeploy these ATMs that we pull out.

Operator: And our last question is going to come from the line of Charles Nabhan with Stephens.

Charles Nabhan : Most of my questions have been asked already, but I wanted to get your perspective on capital allocation. You got about $1 billion in cash on hand and you’ve been pretty active buying back shares, but M&A has also been a small part of the strategy, and I think you did the Philippines deal last year. So I’m curious how you’re thinking about that balance going forward if the redeployment of ATM strategy changes anything with respect to going out and acquiring ATMs like you’ve done in the past?

Michael Brown : Actually really nothing will have changed. My preference is always an acquisition. You saw what we did with the Piraeus Bank merchant acquiring business that’s now called EMF, Euronet merchant acquiring that maybe has basically doubled its profits in less than two years. Those are the gifts that keep on giving. So we really love that kind of thing. We will look at purchasing — repurchasing shares as the market is treating us poorly like we did in this last quarter. But really, whether you’re pulling them out — so let’s say these ATMs cost $11,000 each, we used to buy, call it, 3,000 to 3,500. So that’s like $40 million in CapEx. We will, if maybe we only need to spend half of that this coming year, and it does give us more cash, but it’s not enough really to move the needle.

So we will just continue down our same path as we have in the past and that we’re actually very actively evaluating a number of companies right now that could be acquisition candidates. But we’re pretty tough when we look at these things. We do thorough due diligence and a lot of times find skeletons in the closet, so we have to walk away. But we’re always looking at — I mean we’re deal people. We love deals. So if I can do that, I will. But we’ll just have to see what pops up.

Michael Brown : And thank you, everybody, for taking your time with us today. I really appreciate it. I look forward to talking to you after Q4 is complete. Thank you very much.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.