Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- International Money Express Inc (IMXI, Financial) achieved a new high in GAAP EPS for Q3 at $0.53, marking a 29.3% increase year over year.
- The company's adjusted EBITDA reached an all-time high of $33.9 million, growing 7% year over year.
- IMXI has expanded its send capabilities to over 90 destinations, including 14 of the top 15 corridors worldwide.
- The digital channels have shown significant promise, with digital revenue growth climbing over 66% year over year.
- The company successfully refinanced its credit line on favorable terms, enhancing financial flexibility for growth initiatives.
Negative Points
- The retail market growth has been flat to negative, with digital channels absorbing most of the industry growth.
- Interest expenses rose to $3.2 million, marking a 14% increase due to fees from refinancing.
- The company faces challenges in the retail sector due to slower market growth and economic shifts.
- The digital market, while growing, still represents a smaller portion of the company's overall business compared to retail.
- The company has removed its guidance, partly due to the initiation of a strategic review process, creating uncertainty about future performance.
Q & A Highlights
Q: Can we talk a little bit more about competition in brick-and-mortar retail here? Where are we seeing the most degradation at retail? Is this the pricing of the ramping agents or maybe in the existing agents, you're seeing more competition at the margins there for wire share? And should we take your commentary to mean digital share in LatAm is accelerating beyond what we expected?
A: Robert Lisy, CEO: There are no new competitive issues at retail that haven't existed before. The market that was growing at 12% is now flat to 2%, and digital business to core countries is about 30%. Retail is still more than twice as big as digital, but digital is growing faster. We're beating the growth rate at both retail and digital, but our mix is more retail-heavy compared to the industry.
Q: Can you talk about what you're seeing domestically in terms of more bank accounts amongst your centers? And are you seeing increased digitization changing behaviors?
A: Robert Lisy, CEO: There's steady movement towards more consumers having bank access in the US, but many are not bank account eligible. On the other side, a larger share of wires is being deposited into bank accounts in Latin America. Digital is growing, but retail remains significant, and we don't see it going away in the near future.
Q: You removed the guidance. Can we talk about why? Is that related to the strategic review?
A: Robert Lisy, CEO: It's not unusual to not guide during a strategic process. We're also beginning investments in digital, which affects our bottom line. These are the reasons for not providing guidance.
Q: It's good to see that digitally sent money transfers increased 76% in the quarter. Can you walk us through the economics of digital money transfers versus retail transfers?
A: Robert Lisy, CEO: Retail transactions have a gross margin of about $5 for Mexico wires. Digital transactions have a gross revenue per transaction around $11, with costs related to card processing and payers commission, resulting in a margin of $6 to $6.50 per transaction.
Q: What does the investment in digital look like between now and the end of '25? And can you talk about the customer acquisition cost (CAC) and payback?
A: Robert Lisy, CEO: We won't disclose the exact investment amount for '25, but we will begin investing immediately. The digital business now has a gross margin over $6 per transaction. Our CAC is reasonable, and we believe there's a great opportunity to build the business with necessary investments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
