Euronet (EEFT) Q3 Earnings Beat on Solid Money Transfer Unit
Euronet Worldwide, Inc. EEFT reported third-quarter 2023 adjusted earnings of $2.72 per share, which outpaced the Zacks Consensus Estimate by a whisker. Yet, the bottom line dipped 1% year over year.
Total revenues amounted to $1,004 million, which improved 8% year over year, or 3% on a constant-currency basis, in the quarter under review. The top line beat the consensus mark by 2.4%.
The quarterly results were aided by a solid point-of-sale ("POS") card acquiring business, consistent growth in physical and digital transactions coupled with favorable trend in international ATM transactions. However, the upside was partly offset by escalating operating expenses.
Euronet Worldwide, Inc. Price, Consensus and EPS Surprise
Euronet Worldwide, Inc. price-consensus-eps-surprise-chart | Euronet Worldwide, Inc. Quote
Q3 Update
EEFT reported a net income of $2.05 per share in the third quarter, which rose 9.6% year over year. Operating income came in at $167 million, which decreased 1% year over year, or 6% on a constant-currency basis. Yet, the figure beat our estimate of $143.5 million.
Total operating expenses escalated 9.7% year over year to $837 million in the quarter under review and came higher than our estimate of $832.1 million. The year-over-year increase was due to higher direct operating costs, salaries and benefits and selling, general and administrative expenses.
Adjusted EBITDA of $212.5 million fell 4% on a constant-currency basis but outpaced our estimate of $191.4 million.
Segmental Performances
The EFT Processing segment recorded revenues of $345.8 million, which advanced 8% year over year, or 2% on a constant-currency basis, in the third quarter. The figure beat the Zacks Consensus Estimate of $324 million and our estimate of $324.8 million.
Adjusted EBITDA slipped 8% year over year, or 12% on a constant-currency basis, to $128.7 million, which was higher than our estimate of $121.9 million.
The segment’s operating income of $104.8 million declined 10% year over year, or 15% on a constant-currency basis, in the quarter under review. The figure surpassed the consensus mark of $99 million as well as our estimate of $98.7 million. Also, total transactions in the segment climbed 29% year over year to 2,231 million.
Strength in the POS card acquiring business and consistent growth in high-volume low-value transactions across India aided the segment’s quarterly performance. However, decline in the profitable international transactions and inflationary headwinds on travel budgets in Europe acted as a partial offset.
The epay segment’s revenues grew 6% year over year (up 1% on a constant-currency basis) to $264.5 million in the third quarter. The figure outpaced the Zacks Consensus Estimate of $256 million as well as our estimate of $243 million.
Adjusted EBITDA of $30.1 million fell 1% year over year or 5% on a constant-currency basis. The figure came higher than our estimate of $20.1 million.
Operating income decreased 3% year over year, or 6% on a constant-currency basis, to $28.3 million, which was higher than the consensus mark as well as our estimate of $18.6 million. However, transactions of 925 million inched up 1% year over year in the quarter under review.
The unit’s results benefited on the back of consistent digital media and mobile growth, partly offset by absence of promotional campaigns in the third quarter of 2023 coupled with inflationary challenges.
The Money Transfer segment reported revenues of $395.9 million in the third quarter, which improved 8% year over year or 6% on a constant-currency basis. However, the figure lagged the Zacks Consensus Estimate of $402 million as well as our estimate of $409.7 million.
Adjusted EBITDA climbed 24% year over year, or 20% on a constant-currency basis, to $60.7 million, higher than our estimate of $55.2 million.
Operating income of $53.7 million grew 32% year over year, or 27% on a constant-currency basis, in the quarter under review. The figure surpassed the consensus mark and our estimate of $46.3 million. Total transactions of 40.6 million advanced 8% year over year.
Increase in U.S.-outbound transactions and international-originated money transfers contributed to the segment’s quarterly results.
Corporate and Other’s expenses elevated 11.9% year over year to $19.8 million due to higher long-term compensation expenses.
Financial Update (as of Sep 30, 2023)
Euronet exited the third quarter with cash and cash equivalents of $1,074.4 million, which fell 5% from the 2022-end level. Total assets of $5,162.9 million decreased 4.5% from the figure at 2022 end.
Debt obligations, net of the current portion, came in at $1,263 million. The figure tumbled 21.5% from the figure as of Dec 31, 2022.
Equity of $1,142.2 million declined 8.2% from the 2022-end level.
There was roughly $1,080 million left under EEFT’s revolving credit facilities at the third-quarter end.
4Q23 Outlook
Management projects adjusted earnings per share (EPS) to be $1.75 in the fourth quarter of 2023, which indicates an improvement of 25.9% from the fourth-quarter 2022 figure.
A Promising 2024 Bottom-Line View
Adjusted EPS for next year is expected to register year-over-year growth in the range of 10-15%.
Zacks Rank
Euronet currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Finance Sector Releases
Of the other Finance sector players that have reported third-quarter results so far, the bottom-line results of The Goldman Sachs Group, Inc. GS, M&T Bank Corporation MTB and Morgan Stanley MS beat the Zacks Consensus Estimate.
Goldman Sachs reported third-quarter 2023 EPS of $5.47 surpassed the Zacks Consensus Estimate of earnings of $5.32 per share. Also, the bottom line fell 34% from the year-earlier quarter. Net earnings of $2.05 billion plunged 33% from the prior-year quarter. Net revenues of $11.82 billion fell 1% from the year-ago quarter. Nonetheless, the top line surpassed the consensus estimate of $11 billion. The Asset & Wealth Management division of GS generated revenues of $3.23 billion in the reported quarter, down 20% year over year. The Platform Solutions division’s revenues were $578 million, rising 53% year over year.
M&T Bank’s third-quarter 2023 net operating EPS of $4.05 surpassed the Zacks Consensus Estimate of $3.94. The bottom line compared favorably with the earnings of $3.83 per share earned in the year-ago quarter. Net income available to common shareholders was $664 million, which increased 6.9% from the prior-year quarter. MTB’s quarterly revenues were $2.34 billion, beating the consensus estimate of $2.32 billion. Also, the reported figure increased 4% year over year. Total non-interest income was $560 million, down marginally year over year. The efficiency ratio was 53.7%, up from 53.6% in the year-earlier quarter.
Morgan Stanley posted third-quarter 2023 earnings of $1.38 per share, which surpassed the Zacks Consensus Estimate of earnings of $1.27 per share. However, the bottom line reflects a decline of 6% from the year-ago quarter. Fixed-income trading revenues decreased 11%, while equity trading income was up 2% year over year. While equity underwriting fees of MS increased 9%, fixed income underwriting income was down 31% and advisory fees tanked 35%. Therefore, total IB fees (in the Institutional Securities division) decreased 27% from the prior-year quarter. Net revenues were $13.27 billion, up 2% from the prior-year quarter. The top line also beat the consensus estimate of $13.08 billion. Total non-interest revenues of $11.3 billion increased 8%.
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