Money Transfer Segment Is A Hit to Euronet Worldwide

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Money Transfer Segment Is A Hit to Euronet Worldwide

One of the leading payment and transaction processing company, Euronet Worldwide, has reported a sharp revenue growth in the fourth quarter of 2016. Below are key financial details from the report which was released on Tuesday last week after the close of trading. We have also provided details on each of the company’s operating segments.

Key details about Euronet performance this quarter

• While the Euronet’s total revenue increased vigorously during this trading period, the company’s net income declined as a result of higher income tax expense and slightly lower operating income margin.

• Euronet’s EFT processing segment reported $110 million in revenue which is around 18% increase from the previous year quarter. The company’s management attributed this low record to the high costs of deploying 1,100 ATMs in Europe and the negative effects caused by the demonetization of the rupee by the Indian government.

• Euronet’s EFT segment finished the year with more than 34,000 ATMs, including 1,500 winterized ATMs.

• Euronet’s Epay segment which is the company’s most challenged segment was able to achieve positive results for the first time. It recorded 3 % revenue growth to $195.9 and 8% growth of its positive operating income to $21.6 million.

• The growth of the company’s non-mobile services likeEpay’s paid content outpaced the continuing decline of mobile revenue streams.

• Money transfer which is the company’s largest segments recorded $214.3 million during the fourth quarter. This is around 15 percent increase from the previous year quarter. The segment’s operating income declined by 29 percent to $101.5 million.

• Money transfer revenue has increased by 40 percent over the last two years due to acquisitions and the benefits of the segment’s agreement to offer money transfer services to customers shopping at Wal-Mart. The segment's network grew by 9 percent over a year, and now it boasts over 300, 000 locations in 150 countries.

• During this quarter, the money transfer segment moved cross-border payments volume of its payment subsidiary XE's from the Western Union to HiFX, its currency subsidiary. This move is likely to benefit the segment's future operating income.

• The impact of the money transfer segment has boosted the company’s overall business. As the growth of Epay segment slowed, the money transfer segment has continued to record positive results. Money transfer's positive results during the fourth quarter helped the company to record a 5 percent increase in operating income, despite the decrease EFT’s operating income.

What the management had to say

During Euronet’s post-earnings conference, the management highlighted the company’s balance in recapping the full year. These highlights, which included details about the company's three segments, were presented by Euronet’s Chief Executive Officer Mike Brown.

“We moved XE from our competitor the Western Union to our HiFX platform. This is a significant achievement for the future of our money transfer business. We also purchased YourCash, a leading ATM business with roots in markets close to our legacy ATM business,” Mr Brown said

He also added that each of the company’s three segments contributed to bottom-line growth. The company was able to process more than 3.3 billion transactions, adding more than 3,000 legacy ATMs and more than 4,900 YourCash new ATMs.

Company Details

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